An office of profit after the Crown

An office of profit after the Crown

1 November 2005

Suddenly, the heat of summer was almost upon us. For most of the year the sun arcs across the sky too low to fall deep into Werrong Lane, but now, as the days lengthened, it was starting to caress the pavement for hours at a time. In spite of which, an atmosphere of fear and loathing pervaded the Brushtail Café. The regular customers huddled around their tables, shaking their heads over the prime minister’s proposed security legislation and muttering words like “draconian”, “tyranny” and “dictatorship”.

They also muttered about the Cross City Tunnel, the regime of the Roads and Traffic Authority, its front organization (known as the NSW Government) and the recently revealed secret deal under which the tunnel consortium would run the bugger for the next 30 years.

When I went down to the café for lunch, angry and confused motorists, trying to avoid the toll – or just find their way to familiar places – were clogging the nearby streets. Nobody was happy, not the motorists, who were being slugged $3.56, each way, for a couple of kilometres, nor the public transport users who discovered that, under the contract, the consortium would have to be compensated if public transport development hit traffic flowing into the toll booths. It was a double whammy against the public interest.

“What do you make of this $100 million payment the successful consortium made to the RTA?” The old retired colonel asked me as I sat down with my vegetarian pide thingy.

“At first they explained it as a normal commercial fee for ‘assessing’ the details of their contract bid or as a payment for RTA ‘research’”, I replied. “That might have washed if the payment was $100,000, even a million, but $100 million – nah. Nobody believed the story for a second, and by the next day the payment was being explained as a contribution to the relocation of services. That didn’t wash either. Finally the spin doctors just came straight out and said the payment to the RTA was a ‘business consideration fee’ for awarding the successful bidder the contract.”

He wiggled his neatly clipped moustache. “Which raises some big questions: was this ‘fee’ negotiated? If so, did all the tenderers offer the same amount? Did the unsuccessful tenderers offer less?”

“Let me see if I’ve got this straight”, said Joadja, putting my long black down on the table, “In effect, it wasn’t just about the consortium bidding for the right to build and operate a road for public use in the hope of attracting enough traffic and collecting sufficient tolls to make a profit, the state itself was, as it were, selling that right to the consortium. Doesn’t that mean that the fee would have to be factored into the cost of the road and the tolls would have to be higher?”

“I guess so. And in return for the so-called fee, the government shouldered the political blame for closing roads all over the place so as to force motorists to fill the coffers of the consortium. You know me, I’m all in favour of charging motorists the full price of the damage and disruption excessive car use causes, but I’ll bet they didn’t put the hundred million towards public transport development. I’ll bet it stayed with the RTA to be used for more roads.”

“If that business consideration fee was being actively ‘negotiated’, that would be a bit like the notorious tax-farming system of ancient memory, wouldn’t it?” the colonel mused. “You know, the Roman system of auctioning the right to raise taxes. Some entrepreneur would bid, say, 100,000 Denarius to raise a million D in the province of Bovinius. He’d pay the emperor a million plus the 100 thou – borrowed of course – and then send his boys out to collect two million from the subjects.”

“Ugly. Hey, wasn’t Bob Carr big on Roman history?"

“Yeah, but the Romans weren’t the only ones. The French emperors used the system too. It was called tax farming and it wasn’t exactly popular. After the revolution the ‘farmers’ all lost their heads.

“Well, this is a bit different. It’s sort of a combination of providing a public facility that’s privately built and operated plus paying the state a consideration for the right to do so. But I agree, over time, this thing will surely morph into something more sinister. I wonder if this type of fee was part of other big contracts, like the Eastern Distributor?”

I didn’t mention that I had a client who wanted to know just that.

Joadja snorted. “Well think about this: a few weeks ago Bob Carr suddenly quits, he’s followed by the deputy premier and the minister for planning. Of course they’ve all got plausible reasons for quitting. Oh, and then there’s the treasurer, Mike Egan. He quit in January. That’s the whole top leadership of the state government gone in a period of six months. Before these contract details leaked, lots of people were speculating that the mass exodus meant something damning was about to come out. And now Carr’s landed a $500,000-a-year consultant job with the Macquarie Bank, the major toll-road operator and probably the government’s biggest quote, unquote, business partner. It stinks.”

“That’s on top of his generous pension. You know, there’s a ban on running for office if you hold ‘an office of profit under the Crown’. I reckon it’s high time the former cabinet ministers were banned from slipping into jobs with major government partners … at least for a few years”.

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We've been online since 1997. Check out the archives or … powered by FreeFind © Nick Possum/ Brushtail Graphics	An office of profit after the Crown 1 November 2005 Suddenly, the heat of summer was almost upon us. For most of the year the sun arcs across the sky too low to fall deep into Werrong Lane, but now, as the days lengthened, it was starting to caress the pavement for hours at a time. In spite of which, an atmosphere of fear and loathing pervaded the Brushtail Café. The regular customers huddled around their tables, shaking their heads over the prime minister’s proposed security legislation and muttering words like “draconian”, “tyranny” and “dictatorship”. They also muttered about the Cross City Tunnel, the regime of the Roads and Traffic Authority, its front organization (known as the NSW Government) and the recently revealed secret deal under which the tunnel consortium would run the bugger for the next 30 years. When I went down to the café for lunch, angry and confused motorists, trying to avoid the toll – or just find their way to familiar places – were clogging the nearby streets. Nobody was happy, not the motorists, who were being slugged $3.56, each way, for a couple of kilometres, nor the public transport users who discovered that, under the contract, the consortium would have to be compensated if public transport development hit traffic flowing into the toll booths. It was a double whammy against the public interest. “What do you make of this $100 million payment the successful consortium made to the RTA?” The old retired colonel asked me as I sat down with my vegetarian pide thingy. “At first they explained it as a normal commercial fee for ‘assessing’ the details of their contract bid or as a payment for RTA ‘research’”, I replied. “That might have washed if the payment was $100,000, even a million, but $100 million – nah. Nobody believed the story for a second, and by the next day the payment was being explained as a contribution to the relocation of services. That didn’t wash either. Finally the spin doctors just came straight out and said the payment to the RTA was a ‘business consideration fee’ for awarding the successful bidder the contract.” He wiggled his neatly clipped moustache. “Which raises some big questions: was this ‘fee’ negotiated? If so, did all the tenderers offer the same amount? Did the unsuccessful tenderers offer less?” “Let me see if I’ve got this straight”, said Joadja, putting my long black down on the table, “In effect, it wasn’t just about the consortium bidding for the right to build and operate a road for public use in the hope of attracting enough traffic and collecting sufficient tolls to make a profit, the state itself was, as it were, selling that right to the consortium. Doesn’t that mean that the fee would have to be factored into the cost of the road and the tolls would have to be higher?” “I guess so. And in return for the so-called fee, the government shouldered the political blame for closing roads all over the place so as to force motorists to fill the coffers of the consortium. You know me, I’m all in favour of charging motorists the full price of the damage and disruption excessive car use causes, but I’ll bet they didn’t put the hundred million towards public transport development. I’ll bet it stayed with the RTA to be used for more roads.” “If that business consideration fee was being actively ‘negotiated’, that would be a bit like the notorious tax-farming system of ancient memory, wouldn’t it?” the colonel mused. “You know, the Roman system of auctioning the right to raise taxes. Some entrepreneur would bid, say, 100,000 Denarius to raise a million D in the province of Bovinius. He’d pay the emperor a million plus the 100 thou – borrowed of course – and then send his boys out to collect two million from the subjects.” “Ugly. Hey, wasn’t Bob Carr big on Roman history?" “Yeah, but the Romans weren’t the only ones. The French emperors used the system too. It was called tax farming and it wasn’t exactly popular. After the revolution the ‘farmers’ all lost their heads. “Well, this is a bit different. It’s sort of a combination of providing a public facility that’s privately built and operated plus paying the state a consideration for the right to do so. But I agree, over time, this thing will surely morph into something more sinister. I wonder if this type of fee was part of other big contracts, like the Eastern Distributor?” I didn’t mention that I had a client who wanted to know just that. Joadja snorted. “Well think about this: a few weeks ago Bob Carr suddenly quits, he’s followed by the deputy premier and the minister for planning. Of course they’ve all got plausible reasons for quitting. Oh, and then there’s the treasurer, Mike Egan. He quit in January. That’s the whole top leadership of the state government gone in a period of six months. Before these contract details leaked, lots of people were speculating that the mass exodus meant something damning was about to come out. And now Carr’s landed a $500,000-a-year consultant job with the Macquarie Bank, the major toll-road operator and probably the government’s biggest quote, unquote, business partner. It stinks.” “That’s on top of his generous pension. You know, there’s a ban on running for office if you hold ‘an office of profit under the Crown’. I reckon it’s high time the former cabinet ministers were banned from slipping into jobs with major government partners … at least for a few years”.