Robyn A. Lewis [1] and Professor Michael Johnston[2] examine the concept of Elite Cartels, and how it might be applied to the Australian state of Tasmania. This is the first of a short series of blogs on Tasmania.
How corrupt is Tasmania?
In short, no-one knows. Corruption is usually concealed, and valid metrics for Tasmania are scarce. Analysts might consult Transparency International’s Corruption Perceptions Index (CPI) which ranked Australia 14th of 180 countries in corruption control in 2023, scoring 75 points of 100 (TI, 2024). However, the CPI gives a single score for a country and does not disaggregate at regional or state level, which may mask or fail to capture what is going on in some areas.
Being a large, historically-diverse Federation whose states vary economically and socially, corruption in business-oriented New South Wales may vary from mining-dominated Western Australia or South Australia’s manufacturing and agriculture. Increasingly, corruption is therefore being analysed on a regional basis (Heywood, 2017; JANAR, 2024). Within Australia, local influences, geography and historical factors are important (Perry, 2001; Graycar, 2015), particularly for understanding Tasmania, Australia’s smallest state.
Johnston’s typology identifies four mutually-exclusive syndromes: ‘Official Moguls’, ‘Oligarchs and Clans’, ‘Influence Markets’ and ‘Elite Cartels’ (Johnston, 2005; 2014).
The dominant syndrome in Australia’s largest states, as in most market democracies, is ‘Influence Markets’, where official powers, political influence and personal networks are traded or ‘rented’ to private interests contending over specific stakes such as contracts and favourable policy changes, and are power and wealth-oriented. This – and associated bribery – resembles what many Australians are likely to think of as corruption.
However, applying Johnston’s (2014) corruption typologies assessment suggests that Tasmania differs. Its syndrome of corruption, known as ‘Elite Cartels’ (hereafter ECs), is characterised by networks of elites (Osifo, 2018), as observed in Italy and Hungary (Paar-Jakli and Molina, 2023). These are often ‘old boys’ – in business, clubs, sports and professional associations, media, non-profit organisations, unions, academe etc – dominating decision making, frequently in both the public and private spheres. Such networks typically by-pass, rig or distort formal or official channels such as public procurement and public appointments. One example of many in Tasmania – described by Barnsley as “crony capitalism” [3] – involved the notorious Gunns Pulpmill Project. This project should have received extensive public scrutiny on economic and environmental grounds but progressed for several years – thanks to its backers’ political connections – without public consultation or social licence, only being halted by financial difficulties, not by considerations of public good.
EC corruption is mostly legal; indeed, it can look a lot like ‘business as usual’, especially in an isolated economy with few benchmarks. Johnston notes that bribery is relatively uncommon, partly replaced by what economists Murray and Frijters (2022) describe as ‘grey gifts’ – why break the law if you can do deals with your allies? ECs often practise corruption by inaction, public obfuscation, charades of consultation, and state capture (Dávid-Barrett, 2023) – blocking unwanted changes, keeping benefits and power within the cartels, and distorting public-interest outcomes. Corruption in the form of processes that should occur but do not, issues kept off the public agenda and decisions not made or taken behind the scenes are unlikely to affect perception-based scores. Instead, ECs often foster a de facto stability congenial to major economic interests, favoured investors or anyone with a stake in the status quo. Over time, they may even be accepted as the way things work, as is apparent in Tasmania.
Why is this corrupt?
One important clue to why this can be considered corrupt lies in what Warren (2004) called ‘duplicitous exclusion’ – denying citizens the chance to participate in decisions affecting their lives – which he sees as the essence of corruption in a democracy. EC players can readily secure business and contracts, exclude competitors, weaken or avoid public consultation processes, regulations and tendering procedures (Johnston, 2014). Insiders benefit from a casual, almost dismissive approach to transparency and accountability (Paar-Jakli and Molina, 2024). Over time they find it easier to pass advantages onto family, favourites and clients, excluding others.
Globally, there is a significant correlation between ECs and institutional or legal corruption as described by Harvard scholars Lessig (2013) and Thompson (2018).[4] EC corruption is thus subtle, inward-looking and tenacious, not least because it benefits the well-connected. Exclusion from “old boys’ networks” imposes penalties from which insiders are exempt.
Corruption costs
Whatever syndrome applies, it is hard to argue that Tasmania is benefiting from corruption. Even in a relatively well-ranking country like Australia, in 2018 corruption was estimated to cost 4% of GDP annually, which has since increased.[5] Its effects are yet to be quantified in Tasmania, where State Government is the biggest employer.[6]
Costs are also indirect. By connecting interests across sectors, ECs can influence public policy and broader decision-making. Their self-serving stability and generally legal activities can restrict growth and skew public expenditure, discourage innovation (Dincer, 2019), handicap economic or political competitors and harm public health and the environment. Corruption also impacts small business and business confidence, workplace morale, brand and reputation.
How ECs Developed in Tasmania
Historical factors including distant colonial rule played an important role in the evolution of ECs in Tasmania (Perry, 2001). Numerous corruption cases have occurred since Federation, recently including Edmund Rouse and John Gay and involving political and institutional corruption. But geographic, cultural and economic factors are also influential, including Tasmania’s relatively small population and less diverse economy which helps maintain a relatively static elite stratum. Historical isolation and limited clout in the national arena reduce scrutiny by Federal agencies and national news media.
An oft-cited issue is the lack of an anti-corruption agency (ACA) in Tasmania, instead having an under-resourced Integrity Commission with limited investigative and prosecution powers, which has referred only two people for prosecution and is often described as “toothless”[7]. However, this is as much a symptom of EC corruption as a cause. EC insiders have little interest in improving accountability and scrutiny, and the Tasmanian Government has been described as “the most secretive in Australia”. Their response when these types of issues arise appears to be to say nothing and hope the public forget or are distracted.
What can be done about Elite Cartels corruption?
All other states (and major territories) of Australia – except Tasmania – have an ACA known as an ICAC[8] (Independent Commission Against Corruption). Whilst a fully independent and resourced ICAC with greater scope and powers might help Tasmania address the law enforcement aspects of reform, it would also need a wider remit to address the broader problem. Successful public-sector corruption control depends on understanding how it works, must be multifaceted, and – as argued recently by Pyman and Heywood (2024) – implemented through strong leadership on a sectoral basis. Increased public education and awareness is also needed (Meagher, 2005), for in the relatively few cases where ICACs are effective (Heeks and Mathisen, 2012; Quah, 2015) they depend upon the sort of active reform agenda and popular support that ECs tend to suppress (Johnston, 2022).
Continuous monitoring by the media and public will also be essential. But because much EC power and dominance are won and exercised in legal ways, political action will be equally critical, including political advertising reform. Where ECs are entrenched and maintain a deceptive ‘business-as-usual’ atmosphere, creating political challenges is notoriously difficult. But political opportunities do sometimes arise, and it was recently proposed that Tasmania’s 51st Parliament has a unique opportunity to commence reform.[9]
Increased external attention and scrutiny by the national press and civil society would also be of benefit, as would greater oversight by the Commonwealth Government in accounting for Federal expenditure within Tasmania.
Conclusion:
Tasmania has flown beneath the corruption radar for too long, with significant, unsustainable costs to development, prosperity, community welfare and the environment – and to Australia nationally, given Tasmania’s reputation as a “mendicant state”. However, by applying the lens of Elite Cartels corruption, its sources and consequences become more apparent, as do opportunities for reform. In general, to address a problem, you must first identify it. In future blogs we will explore specific cases of EC corruption in Tasmania, looking at effects and costs, and suggest ways to replace it with more open and responsive ways of governing and doing business, to the benefit of all.
Bibliography[10]
Dávid-Barrett, E. (2023) ‘State capture and development: a conceptual framework’, Journal of International Relations and Development, pp. 1–21. Available at: https://doi.org/10.1057/s41268-023-00290-6.
Dincer, O. (2019) ‘Does corruption slow down innovation? Evidence from a cointegrated panel of U.S. states’, European Journal of Political Economy, 56, pp. 1–10. Available at: https://doi.org/10.1016/j.ejpoleco.2018.06.001.
Grabovsky, P. and Larmour, P. (2000) Public Sector Corruption and Its Control. 143. Canberra, ACT: Australian Institute of Criminology, p. 6.
Graycar, A. (2015) ‘Corruption: Classification and analysis’, Policy and Society, 34(2), pp. 87–96. Available at: https://doi.org/10.1016/j.polsoc.2015.04.001.
Heeks, R. and Mathisen, H. (2012) ‘Understanding success and failure of anti-corruption initiatives’, Crime, Law and Social Change, 58(5), pp. 533–549. Available at: https://doi.org/10.1007/s10611-011-9361-y.
Heidenheimer, A.J. (2002) ‘Perspectives on the Perception of Corruption’, in Johnston, M. (ed) Political Corruption. 3rd ed. Routledge.
Heywood, P.M. (2017) ‘Rethinking Corruption: Hocus-Pocus, Locus and Focus’, The Slavonic and East European Review, 95(1), pp. 21–48. Available at: https://doi.org/10.5699/slaveasteurorev2.95.1.0021.
JANAR Anti-Corruption (2024) 32nd Virtual Roundtable on Measuring Corruption, ft. Lamar Crombach. Osaka, Japan (Measuring Corruption Roundtable). Available at: https://www.youtube.com/watch?v=B79uuW_-YO8.
Johnston, M. (2005) Syndromes of Corruption: Wealth, Power, and Democracy. Cambridge: Cambridge University Press. Available at: https://doi.org/10.1017/CBO9780511490965.
Johnston, M. (2014) Corruption, Contention, and Reform: The Power of Deep Democratization. Cambridge: Cambridge University Press. Available at: https://doi.org/10.1017/CBO9781139540957.
Johnston, M. (2022) ‘It takes a whole society: why Hong Kong’s ICAC cannot succeed alone’, Public Administration and Policy, 25(2), pp. 109–123. Available at: https://doi.org/10.1108/PAP-05-2022-0042
Laing, A. and Anon. (2023) ‘Costing Corruption and Other Efficiency Losses’, Artificial Fiscal Intelligence, 31 March. Available at: https://artificialfiscalintelligence.com/afi_home/costing-corruption/.
Lessig, L. (2013) ‘FOREWORD: “Institutional Corruption” Defined’, The Journal of Law, Medicine & Ethics, 41(3), pp. 553–555. Available at: https://doi.org/10.1111/jlme.12063.
Meagher, P. (2005) ‘Anti‐corruption agencies: Rhetoric Versus reality’, The Journal of Policy Reform, 8(1), pp. 69–103. Available at: https://doi.org/10.1080/1384128042000328950.
Murray, C. and Fritjers, P. (2022) Rigged – How Networks of Powerful Mates Rip Off Everyday Australians. Queensland, Australia: Pubilicious Pty Ltd. Available at: https://gameofmates.com/
Osifo, O.C. (2018) ‘A Network Perspective and Hidden Corruption’, Journal of Public Administration and Governance, 8(1), pp. 115–136. Available at: https://doi.org/10.5296/jpag.v8i1.12697.
Paar-Jakli, G. and Molina, A.D. (2024) ‘Democracy, Authoritarianism, and Political Corruption: Elite Cartel Corruption in Hungary and Italy’, Public Integrity, 26(5), pp. 520–538. Available at: https://doi.org/10.1080/10999922.2023.2256091.
Perry, P.J. (2001) Political Corruption in Australia – a Very Wicked Place? 1st ed. London, UK.: Routledge Revivals, Taylor & Francis.
Pyman, M. and Heywood, P.M. (2024) Sector-Based Action Against Corruption: A Guide for Organisations and Professionals. Cham: Springer Nature Switzerland (Political Corruption and Governance). Available at: https://doi.org/10.1007/978-3-031-59336-9.
Quah, J.S.T. (2015) ‘Evaluating the effectiveness of anti-corruption agencies in five Asian countries’, Asian Education and Development Studies, 4(1), pp. 143–159. Available at: https://doi.org/10.1108/AEDS-10-2014-0050.
Thompson, D.F. (2018) ‘Theories of Institutional Corruption’, Annual Review of Political Science, 21(Volume 21, 2018), pp. 495–513. Available at: https://doi.org/10.1146/annurev-polisci-120117-110316.
Warren, M.E. (2004) ‘What Does Corruption Mean in a Democracy?’, American Journal of Political Science, 48(2), pp. 328–343. Available at: https://doi.org/10.1111/j.0092-5853.2004.00073.x.
[1] Robyn Lewis is an MA student in Corruption and Governance, Centre for the Study of Corruption, University of Sussex, UK.
[2] Michael Johnston is the Charles A. Dana Professor of Political Science Emeritus at Colgate University, in Hamilton, New York, USA.
[3] To be detailed later in this blog series.
[4] Discussed later in this blog series.
[5] To put this in perspective, 4% of Tasmania’s GDP of AUD 42.062 billion (CEIC, 2024) is AUD 1.682 billion, per annum, equivalent to over a football stadium, per year. Such a leakage can be catastrophic in a small economy like Tasmania’s (Laing et.al., 2023)
[6] Costs are the subject of a later blog.
[7] Discussed later in this blog series
[8] IBAC (Independent Broad-based Anti-corruption Commission) in Victoria
[9] Discussed in a later blog article
[10] All other references are linked in text. A full Bibliography will be published at the end of this blog series.
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