The NSW Labor Party has be­come a crime scene. Sus­sex Street has been cor­doned off and foren­sic sci­en­tists sent in to gather ev­i­dence. On the other side of the thick yel­low tape, a crowd of con­fused ALP branch mem­bers has gath­ered in search of answers.

Some things are clear. Whether or not for­mal charges are brought against Ian Mac­don­ald and Eddie Obeid fol­low­ing the In­de­pen­dent Com­mis­sion Against Cor­rup­tion hear­ings, the crime against Labor’s rep­u­ta­tion has been hor­rific. Two se­nior party fig­ures, num­bers men from the Left and Right fac­tions re­spec­tively, are being in­ves­ti­gated over the is­su­ing of lu­cra­tive min­ing leases – Labor gov­ern­ment de­ci­sions that, ac­cord­ing to coun­sel as­sist­ing ICAC, in­volve the worst level of im­pro­pri­ety in the his­tory of the NSW par­lia­ment.

Not since the 1963 elec­tion, when con­tro­versy about the gov­ern­ment fund­ing of Catholic schools flared up in NSW, have state is­sues been so dom­i­nant in na­tional pol­i­tics. As old Jack Lang used to say, where NSW goes, so goes the rest of the coun­try.

On the ev­i­dence be­fore ICAC, wrong­do­ing has oc­curred, ei­ther in the form of in­flu­ence-ped­dling or mal­ad­min­is­tra­tion – quite pos­si­bly both. But who al­lowed Mac­don­ald and Obeid to ad­vance through Labor’s ranks into the cab­i­net room of state gov­ern­ments? Who gave them fac­tional sup­port and en­cour­age­ment to do their worst in po­si­tions of power? Who stood by and al­lowed a cul­ture of prefer­ment and self-in­ter­est to flour­ish at the high­est lev­els of the NSW branch? These are the mat­ters puz­zling the Sus­sex Street crowd.

Pub­licly, at least, no­body has been will­ing to de­fend Obeid. His ac­tions are seen as a log­i­cal ex­ten­sion of the wheel­ing and deal­ing cul­ture of the NSW Labor Right. This was a style pop­u­larised by Gra­ham Richard­son, the state party gen­eral sec­re­tary from 1976 to 1983, then sen­a­tor and fac­tional num­bers man in Can­berra from 1983 to 1994. In re­cent times Richard­son has res­ur­rected him­self as an omnipre­sent media com­men­ta­tor, trad­ing on his rep­u­ta­tion as a “po­lit­i­cal in­sider”.

Subtly pointing in Richardson’s direction, Keating’s advice was to “avoid being a clown like some people in politics”

For Labor’s sake, one small fringe ben­e­fit might have been ex­pected to flow from the ICAC in­quiry: we would no longer have to lis­ten to Richard­son’s repet­i­tive cri­tique of Julia Gillard’s judge­ment. After all, Richard­son’s own judge­ment was such that he re­cruited Obeid to the NSW Leg­isla­tive Coun­cil. For a pub­lic fig­ure, it is rare for a mis­take com­mit­ted two decades ago to bring down a fed­eral gov­ern­ment. But that’s Gra­ham Richard­son for you. His fa­mous ethos of “what­ever it takes” po­si­tions pub­lic life not as a con­test be­tween right and wrong, but as an ex­er­cise in short-term op­por­tunism.

This was a mes­sage Paul Keat­ing con­veyed to me in 1986. It was in the Syd­ney Town Hall at the NSW party’s an­nual con­fer­ence, where I, as a 25-year-old green­horn, had just spo­ken in favour of fed­eral Labor’s eco­nomic re­form pro­gram. Within the ALP at that time, ad­vo­cat­ing free trade and mar­ket dereg­u­la­tion, as I did, meant being howled down by the Left, as I was.

In recog­ni­tion of my ef­forts, Keat­ing’s off­sider in Bankstown, Peter Sams, in­tro­duced me to the great man. As we spoke, Richard­son was at the con­fer­ence mi­cro­phone. Sub­tly point­ing in the sen­a­tor’s di­rec­tion, Keat­ing’s ad­vice was to “avoid being a clown like some peo­ple in pol­i­tics and make sure you stick to the big pol­icy is­sues”. I tried to fol­low this in­struc­tion, ad­mit­tedly with lim­ited suc­cess, dur­ing my time in par­lia­ment. Nonethe­less, I re­main proud of one achieve­ment. I was never part of the Richard­son cul­ture within the NSW Right.

In un­der­stand­ing Obeid’s ad­vance­ment through the party, the Keat­ing dis­tinc­tion is vital. Not all mem­bers of the NSW Right in the 1990s were wheel­ers and deal­ers. The fac­tion had a strong core of mem­bers in­ter­ested in pub­lic pol­icy – peo­ple like Bob Carr, Michael Eas­son, Stephen Loosley, John Della Bosca and, of course, Keat­ing. Un­for­tu­nately, this was a mi­nor­ity group­ing.

The dom­i­nant ten­dency was Richard­son’s. As his leg­end grew, both in the media and in­side the ALP, his style be­came an op­er­a­tional tem­plate for the next gen­er­a­tion of ap­pa­ratchiks – most no­tably, Eric Roozen­daal, Mark Arbib and Karl Bitar, the NSW gen­eral sec­re­taries from 1999 to 2008. Dur­ing this pe­riod, Obeid’s in­flu­ence as a num­bers man in state par­lia­ment con­tin­ued to blos­som.

When I was ac­tive in pol­i­tics, I never had much of a han­dle on the wheel­ers and deal­ers. They were dif­fer­ent to me; I didn’t like them, so I did my best to avoid them. But hav­ing re­tired from par­lia­ment and re­flected on the pe­riod, I now un­der­stand the Richard­son and Obeid cul­ture was dri­ven by three forces.

The first was the de­bil­i­tat­ing im­pact of the NSW Right fight­ing the Left for ad­min­is­tra­tive con­trol of the party. The no­tional Labor val­ues of equal­ity and so­cial jus­tice were mar­gin­alised, in favour of the Right fac­tion’s daily rou­tine: the hard-ball pol­i­tics of smash­ing its op­po­nents. This power strug­gle in­stilled a dual cul­ture: when the num­bers favoured the Right, the ruth­less­ness of using them; when the num­bers were not clear-cut, the ne­ces­sity of fac­tional com­pro­mise. In this en­vi­ron­ment, num­ber-crunch­ing and deal-mak­ing be­came a way of life.

The sec­ond fac­tor was laid bare in Richard­son’s 1994 mem­oir, What­ever It Takes. In a mo­ment of can­dour, look­ing back on his early years as a right-wing or­gan­iser, he wrote:

Meet­ing the right peo­ple in the Labor Party was not part of a bril­liant strat­egy, [rather] I wanted to meet them be­cause every­thing they did fas­ci­nated me ... And while most peo­ple who at­tain po­si­tions of power may be re­luc­tant to say so in these terms, the prospect of peo­ple de­fer­ring to me one day – in the way they were de­fer­ring to the “right peo­ple” I was be­gin­ning to meet – was pretty at­trac­tive.

This is not how pol­icy-ori­ented peo­ple look at pol­i­tics. They see a pub­lic prob­lem and try to apply a pub­lic pol­icy so­lu­tion.

For Richard­son and his acolytes, how­ever, the party ma­chine of­fered spe­cial re­wards, in the form of ca­reer and so­cial sta­tus. It al­lowed them to stand over their un­der­lings, with a feu­dal at­tach­ment to peck­ing or­ders and the pol­i­tics of in­tim­i­da­tion.

The third fac­tor re­lates to time man­age­ment. For ac­tivists who join a party but have lit­tle in­ter­est in pol­icy re­search and ar­gu­ment, an ob­vi­ous ques­tion arises: how do they oc­cupy their time once they have achieved paid pro­fes­sional po­si­tions as party ad­min­is­tra­tors or mem­bers of par­lia­ment? One ready way of fill­ing up an empty day is through mis­chief: work­ing the num­bers, rough­ing up en­e­mies and mak­ing new al­liances. This is the stock-in-trade of the ap­pa­ratchik.

In the Richard­son style, in­ter­nal party mis­chief was syn­ony­mous with the pol­i­tics of self-pro­mo­tion. To keep his un­der­lings in line, a fac­tional chief con­stantly needs to prove he is the smartest op­er­a­tor in the room. For the sub-or­di­nates, it’s the per­ma­nent, un­spo­ken fear of know­ing that if they be­tray or even dis­obey their boss, he will de­stroy them po­lit­i­cally. Thus fac­tional war­lords are con­stantly hop­ing to pull off out­ra­geous ploys and stitch to­gether un­ex­pected deals. They need no­to­ri­ety to cul­ti­vate def­er­ence.

Im­por­tantly, this trait was not con­fined to the rul­ing Right fac­tion. A sub-fac­tion of the Left, led by the hus­tling NSW front­bencher Frank Walker, also adopted these meth­ods. Its mem­bers were known as the Hard Left. Among their num­ber was the Walker staffer-cum-MLC, Ian Mac­don­ald. Dur­ing the 1988 NSW elec­tion, for in­stance, the Hard Left spe­cialised in run­ning fake in­de­pen­dent can­di­dates who si­phoned pref­er­ences to Labor – a dar­ing scam. In some seats, as many as six of these bodgie cam­paigns were or­ches­trated, pulling off un­ex­pected vic­to­ries in tough elec­torates.

Richard­son’s cul­ti­va­tion of Obeid dis­played the core el­e­ments of ma­chine pol­i­tics.

When they first met in the late 1970s, Obeid owned the largest Ara­bic news­pa­per in Aus­tralia, El Tele­graph. He was an ideal po­lit­i­cal as­so­ci­ate for Richard­son: he tapped into a new source of party do­na­tions while also en­cour­ag­ing Lebanese Chris­tians to join the ALP and help with local pre-­s­e­lec­tions. When a Labor upper house va­cancy arose after the 1991 NSW elec­tion, Richard­son used his dom­i­nant po­si­tion within the fac­tion to se­cure the seat for Obeid, at the ex­pense of the party’s longest-serv­ing speech­writer, Gra­ham Freuden­berg.

For many ap­pa­ratchiks, Labor pol­i­tics is a cir­cuitous path to serv­ing the rul­ing class. As Richard­son, Arbib and Bitar have left pol­i­tics to take up highly paid po­si­tions with the Packer or­gan­i­sa­tion, a pat­tern has emerged: lead­ers of the NSW Right leav­ing Labor be­hind and liv­ing off the human bru­tal­ity of gam­ing rev­enue. If you’re seek­ing sta­tus in life, there is only so much the ALP can do for you. The real money and power lie else­where.

If the NSW Right is to have a fu­ture, the ICAC in­quiry must be used to kill off the rem­nants of the Richard­son legacy. The fac­tion must re­turn to its pol­icy ori­gins, aban­don­ing ran­cid ma­chine pol­i­tics. The jig is up. The pub­lic has seen how wheel­ing and deal­ing can per­vert the Labor move­ment’s pur­pose. The fac­tion’s next gen­er­a­tion of lead­ers now has the per­fect model to fol­low: build­ing an anti-‘Richo’ Right.

The Left fac­tion faces a dif­fer­ent chal­lenge. Over the past decade, the in­flu­ence of the Walker Left has faded. New lead­ers like An­thony Al­banese have emerged with a stronger in­ter­est in pub­lic pol­icy. This is not to sug­gest, how­ever, that an­other Mac­don­ald will never push through the ranks of the NSW Left. As long as se­nior fig­ures such as Sen­a­tor Doug Cameron, the for­mer AMWU sec­re­tary, con­tinue to argue for so-called in­dus­try pol­icy, the risk of im­pro­pri­ety is real.

What­ever else might be said about eco­nomic ra­tio­nal­ism, it doesn’t lend it­self read­ily to gov­ern­ment cor­rup­tion. Fi­nan­cial de­ci­sion-mak­ing is left to mar­ket forces, keep­ing politi­cians and rent-seek­ers at arm’s length. In­deed, when­ever gov­ern­ments in Aus­tralia have adopted a free-mar­ket out­look, they have been com­par­a­tively trou­ble-free. His­tor­i­cally, scan­dals have been as­so­ci­ated with in­ter­ven­tion­ism, most no­tably with the “White Shoe Brigade” of de­vel­op­ers in Queens­land under the cor­rupt Na­tional Party pre­mier, Joh Bjelke-Pe­tersen, and “WA Inc” under Labor’s Brian Burke in the 1980s.

In­dus­try pol­icy en­cour­ages politi­cians to be­lieve they can pick win­ners, by al­lo­cat­ing sub­si­dies and pro­tec­tion to se­lected com­pa­nies. Once gov­ern­ments start med­dling in the in­vest­ment de­ci­sions of the mar­ket, they are only one step away from min­is­ters pick­ing win­ners to suit their own fi­nan­cial in­ter­ests and as­so­ci­ates. Mac­don­ald lived for decades within this pol­icy cul­ture, at­tend­ing hun­dreds of meet­ings of the Left where mar­ket forces were de­nounced and gov­ern­ment in­ter­ven­tion praised. As a NSW min­is­ter, not sur­pris­ingly, this be­came his modus operandi.

In­stead of recog­nis­ing this pol­icy fail­ing, se­nior Left fig­ures have been off with the pix­ies. Both John Faulkner and Rod­ney Cav­a­lier have been quoted in the Syd­ney Morn­ing Her­ald fin­ger­ing Mac­don­ald as a long-stand­ing right-wing “plant in­side the Left”. “There were no se­crets any more,” Faulkner said. “Ian Mac­don­ald had fi­nally come in from the cold.” This Cold War–style para­noia was echoed in the March issue of this mag­a­zine, in which Mark Aarons de­scribed Mac­don­ald as “a triple agent”.

It is hard to know whether to laugh or cry. Mac­don­ald was not spy­ing for the Right. He was im­ple­ment­ing the Left’s pre­ferred eco­nomic model – the prod­uct of scores of Left­ist pol­icy man­i­festos. Their man, ‘Macca’, had no hes­i­ta­tion in pick­ing win­ners, in this case con­fer­ring pub­licly sourced ben­e­fits to min­ing in­ter­ests linked to the Obeid fam­ily. The Left’s lack of self-aware­ness is stun­ning. If Faulkner, Cav­a­lier and Aarons want to know where the Mac­don­ald ef­fect came from, they ought to study the pol­icy res­o­lu­tions of their own meet­ings.

For NSW Labor, the ICAC in­quiry has been the per­fect storm: the ex­po­sure of the wheel­ing and deal­ing cul­ture of the Right co­in­cid­ing with the log­i­cal end­point of the eco­nomic ethos of the Left. The eye of the storm now hov­ers over Gillard and her gov­ern­ment.

Mark Latham

The Rolling Of NSW Labor - Party Boys