Joe Tripodi and the sale of public assets

By Simon Longstaff

A version of this article was first published: The Sydney Morning Herald - 17 August 2006

The series of transactions in which public assets were sold to entities in which the NSW minister Joe Tripodi had a beneficial interest raises ethical issues precisely because Tripodi's conduct will probably be found to have fallen just inside the line defined by applicable laws and codes.

The ethical issue is not whether a rule has been bent or broken. It is whether an important principle has been honoured in practice. This principle is that those who exercise public power do so exclusively in the public interest, free from the temptation to pursue private gain.

The application of this principle most clearly affects those people who make up the government of the day: the subset of parliamentarians who are ministers of the Crown.

Such people have real power and we should reserve the most significant constraints for their dealings. However, there are sound ethical reasons for ensuring that all MPs make their deliberations free from conflict.

As events in the Federal Parliament demonstrated this week, governments do not make laws, parliaments do. Each MP has a right to speak and vote in a manner that shapes the environment in which we live as citizens.

What MPs say and how they vote really matter (even if the operation of the party system obscures this fact).

There was a time when the remuneration for MPs was so low as to require many to have a second job. Apart from tending to favour the wealthier candidates, who could afford to win, the network of continuing commercial interests surrounding an MP might sometimes distort their judgement (or, at least, be seen to do so).

That is one of the reasons we should support the idea of offering decent remuneration to our MPs.

In doing so, our public policy objectives should be to allow a broad range of people to seek election unconstrained by limited economic means and to ensure that, once elected, MPs act solely in the public interest.

Of course, this requirement has to be balanced with recognition that politicians have lives beyond Parliament and arrangements may already exist that it would be unfair to 'unwind' as a consequence of their election to Parliament.

That is why we have disclosure regimes; they are intended to allow the public to see what interests may be capable of influencing the judgement of the MP. As Justice Louis Brandeis, of the US Supreme Court, once famously observed: "Sunlight is the best disinfectant."

That said, the ideal is to have MPs seeking, as far as is practicable, to limit the range of interests that might conflict with their public duties.

The trouble with Tripodi is that he may have met the letter of the rules, but perhaps not the spirit of the principle. For example, his disclosure provides access to the names of legal entities, but not their particular activities or interests.

Furthermore, it seems that a number of key transactions involved the generation of profits by unlocking residual value in public assets.

This is a legitimate activity for a private citizen to engage in, but it entails 'risky business' for an MP - especially if there is any perception that the MP has encouraged, supported or facilitated the conditions under which such profits can be made.

Of course, legislators constantly enact laws that may benefit them (among others). The problem only really arises when the MP stands to benefit from activities that are somewhat specialised and where the benefits from legislation, regulation or policy innovation can be enjoyed only selectively.

In my opinion, property development falls in this latter class.

Tripodi has said that in some cases he did not know what was being done by the companies in which he held a passive investment. This may be so. To be absolutely sure of his position, Tripodi should have made use of a genuinely blind trust, or have instructed that there be no dealings which might give rise to the suggestion that his independence of judgement had been or could be compromised.

My guess is that the general application of the principles outlined above would find Tripodi joined by many other MPs from across the political spectrum.