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Tasmanian Attorney-General Vanessa Goodwin has defended a Government Business Enterprise’s (GBE) membership of an industry lobby group which has donated almost $35,000 to the Tasmanian Liberal Party in the last two years.

“The Government plays no role in determining which professional organisations GBEs hold membership in,” Goodwin stated when asked if it was appropriate for the Public Trustee of Tasmania to belong to the Financial Services Council (FSC), a financial industry lobby group which is a major donor to the Tasmanian Liberal Party.

The Public Trustee is a state government-owned business enterprise which assists Tasmanians with legal and financial management services including preparing wills and acting as executor where there is no will.

For its part the FSC is a national lobby group for life insurance companies, private superannuation funds and financial services companies. Major members of the FSC include the wealth management arms of ANZ, the Commonwealth Bank and National Australia Bank plus a raft of other financial companies. Public trustees from Tasmania and other states are also members.

The head of the Public Trustee dismissed the significance of the FSC’s donations to the Tasmanian Liberals. “The Public Trustee of Tasmania is an a-political organisation and as such does not have a view on the issue of political donations,” said David Benbow, the Chief Executive Officer of the Public Trustee.

Goodwin too has defended the Public Trustee’s membership of the FSC. “The Public Trustee advises that it has been a member of their industry peak body for many years, under Governments of all persuasions, in order to access professional development and education support,” she said.

In the last eight years the FSC has contributed over $556,000 to political parties around Australia including the Labor, Liberal and National parties and associated groups.

However, the Public Trustee has been a member of the FSC for only part of the period political donations have been made. Until the end of February 2012 the Public Trustee of Tasmania – along with its interstate counterparts – belonged to the Trustee Corporations Association (TCA).

However, on March 1, 2012 the TCA merged with the FSC and representatives of the public and private trustees became members of the council’s Trustee Board Committee. (One of the other current members of the Trustees Board Committee is Miles Farrow, the Principal Legal Officer - Risk and Compliance for Tasmanian Perpetual Trustees.)

Since the Public Trustee of Tasmania joined the FSC in March 2012 the lobby group has donated $34,950 to the Tasmanian Liberals. Of that $18,300 was contributed in just one year: the year of the March 2014 state election. (Since the FSC started making political donations over seven years ago, the FSC has contributed a total of $41,870 to the Tasmanian Branch of the Liberal Party.)

In the financial year of the 2014 state election the FSC made two donations: a modest $3,300 donation in August 2013 – during the term of the Labor/Greens Government – and a more significant $15,000 contribution a little over six weeks before the March 2014 polling date.

The following year the FSC donated a further $15,000 to the Tasmanian Liberals but nothing to any other Tasmanian party.

Since the FSC first started making political donations above the AEC’s disclosure threshold to Tasmanian political parties in the 2009 financial year the Tasmanian Liberals have been the only beneficiaries in the state. While the FSC has been a generous political donor to the Labor Party elsewhere in Australia, it has made no contributions at all to its Tasmanian branch, even when it was in government.

Asked by Tasmanian Times what criteria were used to decide which parties to contribute to or even which branches or other groupings within parties were supported, the FSC spokesperson stated only that each year the lobby group “provides the same monetary value to the ALP and Coalition across Australia.” No further detail was provided.

The FSC’s returns to the Australian Electoral Commission indicate that in the most recent financial year the lobby group’s donations were slightly greater to the Liberal Party and related entities. Of the $47,500 contributed to the Labor Party, over half went to the national office and the remainder to the NSW branch. Of the $52,500 contributed to the Liberal Party and related groups the contributions were spread across five state branches, with the $15,000 to the Tasmanian Liberals the largest donation to any branch.

As to why it contributes to political parties the FSC’s spokesperson said the lobby group “has a policy of supporting the democratic process through donations to the major political parties.”

However, the FSC spokespersons did not directly explain why the lobby group has donated to the Tasmanian Liberal Party in recent years. Nor did he address why it was that the FSC donated, for example, to state branches of the Labor Party in Victoria and NSW in 2013-14 but not in Tasmania or other states and territories.

No role for donations, says governance expert

In the ranks of the FSC, the Public Trustee – which had a turnover of just $8.3 million in the most recent financial year – is a minnow. The FSC’s membership roll is dominated by the wealth management arms of the major Australian banks. How much the Public Trustee pays to be a member of the FSC is unknown as the agency refused to disclose details of the cost. (Fees are levied based on the turnover in Australia of the member.)

The Public Trustee declined to clarify whether it knew of the FSC’s political donations prior to being contacted by Tasmanian Times. “I will not be making further comment in relation to this matter,” Benbow, who commenced as CEO of the Public Trustee in mid-February 2014, wrote in an email.

Benbow is a member of the FSC’s Trustee Board Committee which includes among its objectives to “promote sound governance practices in the traditional trustee services sector.”

The FSC’s website also makes it explicit that the Trustee Board Committee has a role in making representations to government agencies on issues affecting both private and public trustees.

The committee, the FSC states on its website, “has oversight of the Financial Services Council’s relationship with relevant regulators and government departments that have responsibility for and/or an impact on Licensed Trustee Companies and Public Trustees, including: the Australian Securities and Investment Commission, State/Territory Attorney General Departments, the Australian Taxation Office and the Department of Treasury.”

Benbow insists that while the Public Trustee of Tasmania is a member of the lobby group “we have no role in decision making by the Financial Services Council.”

Dr Tom Baxter, the Corporate Governance Course Coordinator and a lecturer in the University’s Tasmanian School of Business and Economics, believes political donations by the FSC to the Tasmanian Liberal Party make the Public Trustee’s financial membership of the lobby group “problematic.”

“The Public Trustee is one of Tasmania’s Government Business Enterprises liable to pay dividends into the Consolidated Fund. Assuming it pays membership fees to the Council, those payments reduce the Public Trustee’s profits from which it could otherwise pay dividends into consolidated revenue. It would be inappropriate for a Tasmanian GBE to pay political donations directly to a Tasmanian political party. Contributing to such donations through financial membership of the Council is less direct, but nevertheless seems inappropriate for a GBE,” said Baxter.

Membership of a group making political donations, he said, “also risks undermining the Public Trustee’s claim on its homepage that ‘we are an independent and impartial organisation’.”

Baxter thinks the FSC should abandon its practice as a political donor. “I question whether the Council should make political donations at all given its membership and that it lobbies for particular legal, regulatory and tax regimes. It would be better for the Council to cease doing so, leaving its individual members to determine whether to make political donations themselves.”

This, he said, would ensure “the Public Trustee can communicate directly with the Tasmanian Government regarding legal or regulatory change it considers desirable.”

Baxter believes the Public Trustee “should request the Council to cease making political donations” but if it doesn’t then it has no option other than to cancel its membership.

The Public Trustee’s membership of a vocal lobby group – and one that has made large donations to the Tasmanian Liberal Party – raises awkward issues for its Board of Directors and the two Tasmanian Government Ministers it has a direct relationship with. (The board of Directors of the Public Trustee report to the ‘portfolio minister’, Attorney-General Vanessa Goodwin and to the ‘stakeholder minister’, Treasurer Peter Gutwein.)

The Public Trustee’s five-person Board of Directors – who each earn at least $23,000 – includes some major players in Tasmanian legal and policy circles. One of the directors is Liz Gillam, the Chair of the Tasmanian Electoral Commission (TEC), a member of the Tasmanian Integrity Commission and a member of the Local Government Board.

“As a Director of the Public Trustee I am quite comfortable with membership of the FSC, the peak body for trustee organisations.  Membership of such peak bodies, particularly in small jurisdictions such as Tasmania, is useful,” she wrote in an email to Tasmanian Times.

“In relation to the donations that may have been made by FSC, the Board of the Public Trustee is not involved in any way,” Gillam wrote.

“As a Government Business Enterprise, the relationship between the government of the day and the Public Trustee is clearly defined by legislation and is very different to the relationship that might exist with a private organisation, such as a peak body,” Gillam wrote. “We also appear annually before parliamentary scrutiny committees. It is difficult to see in what circumstances a perception of partisanship might arise.”

Asked whether she thought it appropriate that the Public Trustee belonged to a lobby group which donated to the Liberal Party, Attorney General Vanessa Goodwin did not respond directly. However, she stated that “the Government plays no role in determining which professional organisations GBEs hold membership in.”

None of the Integrity Commission’s educational resources or guides specifically address the issue of whether it is appropriate for a GBE to belong to a lobby group which donates to a Tasmanian political party. (The Integrity Commission is not alone in this: neither does the much larger NSW Independent Commission Against Corruption.)

However, it has released a 1-page document titled Flowchart - Ethical Decisions in Government Business Enterprises which cautions “the law alone my not provide an ethical solution.”

While the flowchart provides little detailed guidance, it suggests a rough rule of thumb for GBE staff to consider: “what if it was front page news?”

•See also:

The Attorney-General, the Public Trustee and donations to the Tasmanian Liberals

*Bob Burton is a Hobart-based Contributing Editor of Tasmanian Times. His earlier articles on Tasmanian Times are HERE

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EARLIER on TASMANIAN TIMES ...

• December 15: Will Tasmania be left as the last state without regulation of political donations?

• December 14: Who are the invisible major donors behind the Tasmanian Liberal Party?

• October 29: What happens if a major political donor doesn’t disclose?

• October 28: Who’s a Liberal donor gonna call? Rentbusters!

• October 27: The private pathology industry emerges as major Tasmanian Liberals donor

• Luigi in Comments: It seems that Vanessa Goodwin and the CEO of the Public Trustee have taken a leaf out of Will Hodgman’s book on The Crisis: “Nothing to do with me”. As a fan of Cold War spy novels and movies I seem to recall that the Central Intelligence Agency acts on the precept of Plausible Deniability in its covert actions.  Here in Tasmania our government is working to perfect Implausible Deniability.  I suspect its practise will reach its zenith when Matthew Groom’s Crisis Investigation Alliance submits its report next year. Anyway, this is small beer.  Of greater concern to me would be to discover that the Tasmanian Minerals and Energy Council (whose members include Bell Bay Aluminium, Norske Skog, Nyrstar and South32 who own Temco) are donors to the Tasmanian Liberal (or Labor) Party at a time when our government is sitting down to decide who is getting blacked out. Someone knows, I’m sure.

COMMENT: The right to know & donations to the Tas Liberal Party by the Public Trustee’s lobby group