Sydney's beleagured Opal tower. (Image: AAP)

An important industry is deregulated in the name of efficiency and growth, with competition and innovation expected to do the job formerly left to regulation of protecting consumers and ensuring stability. Initially, everyone benefits. But the industry uses its growing wealth to distort the political system in its own interests. The media cheers them on both for ideological and commercial reasons. Competition vanishes as a few companies grow ever bigger. Crooks take advantage of the lack of regulation. Consumers and other businesses suffer. Firms that want to do the right thing face ever-growing pressure to succumb and join in the gouging and rorting. Eventually so egregious are the misconduct and rip-offs that governments are compelled — against furious lobbying by the industry and its media allies — to dramatically intervene, both to punish wrongdoers and re-establish the rule of law.

Sounds familiar, right? But which industry am I talking about? Financial services? How about the energy sector? How about vocational education? How about the retail sector’s wage theft epidemic? Or how about residential development? In NSW the state government announced the “biggest shake-up in building and construction laws in our state’s history”, bringing to an end decades of lax regulation in which developers and builders found innovative ways to evade responsibility for shoddy work. 

The Opal tower scandal in Sydney that prompted the crackdown represented an almost perfect cycle of neoliberal policymaking: ramp up immigration, putting a rocket under property prices, forcing ever more people into high-rise apartments built by developers making millions from the system (in Sydney, a system that often features local councils handing out super-profits to mates based on dodgy zoning decisions) in an industry lacking adequate regulation to protect people making the most important investment of their lives.

Aged care is next, via the royal commission. A royal commission is needed when existing legal and enforcement structures have failed. In two major industries in two years, governments have been forced to admit such failure. One at the heart of the economy, one central to our personal hopes of a dignified and comfortable end of life. In a third crucial industry, electricity, the reaction from government — from the notional champions of deregulation — has been a complete backflip on deregulation, in favour of massive intervention.

Where next? The road transport industry, where the Turnbull government celebrated the deregulatory victory of abolishing the Road Safety Remuneration Tribunal? Disability services, where the influx of government funding is luring shonks and spivs? In our burgeoning defence manufacturing industry, where protectionism, flag-waving and national security secrecy combine to shield industry players from scrutiny?

The problems are not sui generis for each industry; rather, they are a symptom of a wider problem of the fundamental instability of neoliberalism — under which deregulation becomes a pretext for the stripping away of basic regulation and protections for consumers, workers and other business — combined with a profoundly flawed political system in which vested interests pump millions into political parties, policymaking is conducted in collaboration with those vested interests with no transparency or visibility, and what’s left of any regulatory framework is enforced by gutted regulators or even outsourced to industry itself. And the whole process is backed by a compliant media that supports those interests and opposes any threat to them — witness the campaigning by The Australian and the Financial Review against a banking royal commission.

Heavy-handed reforms by politicians fearing an electoral backlash is just treating the symptoms of a deeper problem that isn’t going away. Those reforms won’t even last — in time new politicians will arrive and spruik the benefits of deregulation. The media will forget what happened the previous decade. Voters will be told of the virtues of competition and getting out of the way of business. Companies and trade unions will continue to pump money into politics. Politicians and bureaucrats will continue to work in near-total secrecy (we don’t even know which lobbyists and CEOs frontbenchers and key crossbenchers meet with at the moment). Major media outlets will continue to run campaigns for powerful industries.

So it will keep happening. The gouging. The rip-offs. The pressure on businesses that want to do the right thing to join in. The soft corruption of political donations and lobbying. The hard corruption that we’ll never know about because of the lack of a commonwealth anti-corruption body. The Australian way of making policy is now broken. Fixing that is the challenge, not addressing the scandal du jour.

Peter Fray

Join us today for just $1 a week.

Get your first 12 weeks for $12. Cancel any time.

Our journalism is funded directly by our members — that’s how we maintain our fierce independence. We don’t rely on advertisers, clickbait or culture war obsessed columnists.

If you like what we do, join us today.

Peter Fray
Editor-In-Chief of Crikey

JOIN NOW