May 13 2022
Australia’s lack of vision in its leadership is the cause of most of our problems. (warning- long post)
Undeveloped economies rely on capital input and land development, and sadly the philosophy of making an easy dollar has dominated our approach to public policy.
A key element in this has been the approach to housing. Negative gearing of property has made housing a commodity, and the no-brainer way to make money has been to buy property with as little deposit as possible, so as it rises on an endless speculative bubble, the return on capital invested is as great as possible. The unit of real estate development might be thought to be what a person can borrow and pay off in a lifetime. That is what would be home owners go to the auction with, so developers can charge that, and do. The huge profit margin then makes developers able to influence the political system, such that it becomes largely controlled by them.
Of course it is all a Ponzi scheme. As someone sells with their huge capital gain, where does the money come from? The buyer has to borrow it, of course. The property is the same as it was. They borrow it from an Australian bank, who borrows it from a foreign bank. So Australia’s private debt is close to the highest in the world, largely because we have arbitrarily over-valued our houses, and given tax concessions to achieve this. Our kids now cannot afford houses unless their parents give them theirs.
But it is more extensive than this. Banks do not have to evaluate business proposals carefully. It is much easier just to demand the mortgage on your home, or not to lend to risky stuff like businesses when real estate is so easy. So we have no money nationally to develop our own industries and we sell our assets.
It permeates the national psyche. The status of professions tends to follow their incomes, with a bit of a lag. Teachers, nurses, GPs, and middle-grade public servants have had large relative falls in incomes. Public service experts are neglected, their consistent plodding in their niche area undervalued. When knowledge in that niche is actually required ‘Consultants’ charging exorbitant rates replace them, pandering to the political minders or residual managers who do not know what they do not know.
Gambling in Australia has been huge. With no serious research on the effect of gambling on society, it was assumed that if the clubs were non-profit that they would put back as much into society as they took out. No one actually measured the social effect and they just kept growing. The hotels were not able to compete. They tried live music for a while and Australia had a rash of world-class bands, but then they got into pokies as well so that NSW has a huge percentage of the whole world’s poker machines All easy money; no independent research please. We have ads for gambling. Basically people always lose, so there might as well be ads that say, ‘Do not have a financial plan or savings- give your money to us’. But no one comments.
But even that was not enough. We had to have a casino, just one, to get some foreign money.
And was it to be in the middle of the desert, like Las Vegas to make some industry and jobs out there? No, after minimal discussion it was in Sydney. And after a bit more time, we had two. After all, Packer was a favoured son. Now, or course it will be foreign owned, so the profits, as far as they can be calculated (or not) will go offshore.
Some years ago I went on a political study tour to the USA. We went to Las Vegas and stayed in Caesar’s Place. The casino people were pleased to talk to those who were assumed to be Australia’s future political leaders. Their message was clear, ‘Leave us alone. We are just like other businesses. Do not interfere. Enjoy the shows’. After we had seen them, we were shown the rest of Las Vegas. The city officials were very proud of their new ‘one-stop shop’ for social problems. All the facilities were in one place, homelessness, alcohol, drug addiction, domestic violence, and gambling. It took a quite a few questions to get past the euphemisms to the fact that Las Vegas had about the worse social problems in the USA.
Just as Al Capone profited from alcohol being illegal, so gambling profits from the fact that organised crime needs to launder its money. There is so much of this money that it forms an imperative- no business could possibly ignore that much money. So the regulator does little, the political class turn a blind eye, and of course some well-connected political folk get on the board to smooth government relations and pick up a generous pay packet for their services. They don’t really need to know what goes on- ‘Don’t ask, don’t tell’.
So organised crime gets a huge foothold, but we don’t prosecute rich people here, the worst that happens is that someone has to say that they are humbled and shocked and resign.
Now as we read daily of one gangland shooting after another, we can conclude that the prohibition of hard drugs is going about as well as the prohibition of alcohol went, with the added benefit of the casinos to attract overseas crime profits as well.
We might ask what is to be done?
At a crime level, it would be good to close the casinos and systematically try to reduce gambling on poker machines and everything else. It would be smart to look at alternatives to criminalising drug use, and systematically make legal drugs like alcohol and vaping less attractive; ban the marketing and have some health promotion for starters. And at a national level, stop any new negative gearing and build houses as they did on the 1950s where families could rent and then purchase. Build the public service and public expertise, and fund education, health and an equal opportunity for all. It is not rocket science, and naturally there are resource constraints, but as much money and effort is wasted, and human misery sown there is a lot of money to be saved.
It might be called a vision or even, more modestly, common sense. But if you look at the strength of the lobbies that have been created by the decades of appalling public policy, one has to admit it will be difficult. So difficult that not a word of any of this has been in any election discussion at all.
Here is today’s SMH article on how crime is out of control.
Criminals Run Rampant
Nick McKenzie SMH 13 March 2022
TOP OFFICER’S BRIEFINGS
Organised crime is running rampant across Australia and agencies are struggling to fight it, according to secret briefings given to cabinet ministers and public servants by the highest-ranking fighter of organised crime in NSW.
The briefings challenge ‘‘tough on crime’’ rhetoric by state and federal governments while also revealing claims from officials that NSW Premier Dominic Perrottet has ignored calls for counter-crime reforms from the offices of two of his senior ministers.
The problems are so severe that the person who delivered the briefing, NSW Police Assistant Commissioner Stuart Smith, claimed that: ‘‘With the current legislation and the current powers, we’re [police] swinging a pool noodle and they’ve [crime bosses] got guns.’’
It is extremely rare for a confidential assessment from a serving, high-ranking police official to be made public, and Smith’s candid views are likely to cause significant political and agency discomfort.
One of the briefing attendees, NSW cabinet minister Victor Dominello, told Smith (pictured) that if the public learned of the assistant commissioner’s unguarded views, ‘‘that would freak everybody out. They would shoot us because we are not looking after the public interest,’’ Dominello said. Another official in the meeting was the chief of staff for then police minister David Elliott.
Smith also claimed in his December briefings that the fight against organised crime was hampered by the lacklustre approach of the nation’s financial crime agency, Austrac. Smith said Austrac was ‘‘not swinging hard enough’’ and had failed to more aggressively combat organised crime because of its focus on banks. At one point, Smith described Austrac as ‘‘nitwits’’.
‘‘Stop picking on the banks and start picking on organised crime,’’ he said.
Smith also savaged what he described as abysmal anti-organised crime laws in NSW, the state with the highest number of nationally networked organised crime and bikie gang bosses.
He warned that crime groups were carrying out ‘‘assassinations’’ in NSW and in Europe and vast resources were required to effectively monitor them as they not only trafficked in drugs but rorted federal and state government schemes such as the National Disability Insurance Scheme.
In a statement, Perrottet said yesterday that the government was working closely with police on a ‘‘range of options’’ to deal with the problem.
‘‘Money laundering and organised crime are completely unacceptable in any form,’’ he said.
‘‘In December last year, I welcomed the decision of the NSW Crime Commission to commence an inquiry into money laundering at licensed premises in NSW. The inquiry is being conducted in collaboration with the Independent Liquor and Gaming Authority and the Australian Criminal Intelligence Commission.’’
Perrottet said the commission had extensive powers and had the full support of the NSW government. ‘‘We will consider the findings of the inquiry when they are made available.’’
On Tuesday, Comanchero national sergeant-at-arms Tarek Zahed, 41, was injured in a Sydney shooting attack that claimed the life of his brother Omar Zahed, 39.
There have been more than 40 incidents of organised crimelinked violence in the past two years in NSW, including 12 murders.
In his briefings, Smith also singled out poker machine venues, including clubs, pubs and casinos, as having been exploited by money launderers, as well as the crypto market and the property market.
An overview of Smith’s briefings
– sighted by this masthead – also reveal Dominello warned the assistant commissioner that lobbyists from the gaming industry would use their political contacts to fight efforts to combat money laundering in pubs, clubs and casinos.
‘‘The gambling lobby is very, very powerful and they have very, very deep roots inside the cabinet and opposition,’’ Dominello told the senior officer.
There was also deep frustration among others briefed by Smith at the government’s failure to fully engage with efforts to more aggressively counter organised crime and crack down on the exploitation of poker machines by money launderers.
NSW’s chief gaming regulator, Philip Crawford, told officials at the briefing that it was ‘‘scary’’ how gaming officials had ‘‘very few regulatory levers to pull on this industry’’.
Crawford chairs the NSW Independent Liquor & Gaming Authority and unsuccessfully pushed Perrottet in December for a public facing inquiry into money laundering and problem gambling at poker machine venues.
‘‘The industry doesn’t want us anywhere near it,’’ he said.
Smith said in his briefings that his frustration at the failure to get political backing to bolster the fight against organised crime had led him to seek and gain backing from state and federal agencies to privately brief politicians and public servants on the severity of the problem.
Smith said the then police minister David Elliott had been left ‘‘out on the ledge’’ trying to get legislation through to solve the problem.
The Herald has confirmed the authenticity of detailed records of the briefings Smith delivered last December to senior politicians and public servants from the offices of the Premier, then police minister David Elliott and then minister responsible for gaming, Victor Dominello, who both lost their portfolios during recent reshuffles.
Descriptions of the briefings reveal Elliott’s chief of staff, Tanya Raffoul, revealed she had tried repeatedly to alert Perrottet about the police’s organised crime concerns but been rebuffed by the Premier’s office.
‘‘I’ve tried three times to get it through … and the answer has been no,’’ Raffoul said, describing efforts to get backing for reform as a ‘‘war of attrition’’.
‘‘The Premier wouldn’t be able to stand up and say that we’ve got the toughest money laundering laws in the country. They are significantly weak,’’ Raffoul said.
Dominello was moved out of the gaming portfolio by Perrottet after pushing for inquiries and reforms to combat money laundering and problem gambling at The Star Sydney, Crown Resorts and at pokies venues.
The casino inquiries exposed major organised crime infiltration and abysmal governance within the gaming sector, while the NSW Crime Commission is probing criminal infiltration of pubs and clubs.
Smith’s briefings build on comments from the federal police’s top organised crime official, Assistant Commissioner Nigel Ryan, who last October warned the majority of organised crime was operating with impunity.
The head of the Australian Criminal Intelligence Commission, Mike Phelan, has also warned organised crime had become a multibillion-dollar behemoth that was corrupting Australian public officials and penetrating border security via corrupt insiders.
In his briefing, Smith warned that organised crime in Australia was earning almost $40 billion via its main source of income – drug trafficking – and by rorting state and federal government programs, including the NDIS.
‘‘Micro grants, they [organised crime] love those things. Childcare schemes, they’re into that. The NDIA [National Disability Insurance Agency], they steal from that.’’
He warned of drug-laden ‘‘ships circulating Australia’’ whose cargo was put out to auction. The highest bidder won the right to have the drug shipment delivered via an entrenched corrupt ‘‘transport network’’.
Smith described NSW as the epicentre of organised crime and as the host of the largest numbers of outlaw bikie club members, nominating other states as key drug markets and the Gold Coast as Australia’s new version of the infamous 1980s Kings Cross vice strip.
Newcastle’s port and transport industry was a weak point, said Smith, given it was deeply infiltrated by serious organised crime. Smith named fugitive Comanchero bikie leader Mark Buddle as one of several crime bosses damaging Australian interests from offshore.
Buddle has been instrumental in creating ‘‘The Commission’’, a crime cartel that charges drug traffickers a fee to allow them to import drugs into Australia and promises to regulate the drug market using its muscle.
FAILING LAWS
Smith also repeatedly highlighted the role of ‘‘clever lawyers and clever accountants’’ in helping crime bosses and corrupt officials hide their money.
The veteran crime fighter’s comments highlight the 15-year failure of successive federal governments to introduce financial crime reforms targeting lawyers, accountants and real estate agents.
Smith identified alleged organised crime boss Mostafa Baluch as an example of those who police suspect had employed accountants and lawyers to defeat law enforcement efforts to identify the proceeds of crimes.
His comments will increase pressure on the major parties to commit to introducing long-stalled anti-money laundering laws – known as ‘‘Tranche 2 reforms’’ – that place far greater obligations on lawyers, accountants and real estate agents to report suspected money laundering.
The changes have been backed by almost every policing agency in the country.
Smith also savaged the state of NSW’s proceeds of crime and money laundering laws, describing them as ‘‘wonky’’, ‘‘old’’ and easily defeated by organised crime.
Smith said other jurisdictions, including Western Australia, had far more effective laws that shifted the onus onto suspects to explain the origins of unexplained wealth. ‘‘We just need to put the balance back in the [legislative] weaponry, so that these drugs pay for the damage they do,’’ he said.
Smith described how policing agencies had identified poker machines and venues as having been used to launder drug money. The assistant commissioner said the pokies floor at The Star casino in Sydney had hosted a money laundering syndicate but also warned that NSW clubs ‘‘are either turning a blind eye, or being utilised to launder large sums of money’’.
‘‘We don’t want a club industry and pub industry following the same stupid operational model’’ as those businesses already infiltrated by bikies and organised crime, Smith warned. But he said NSW ‘‘hasn’t got the weaponry’’ in terms of laws or regulators to fight money laundering in pubs, clubs and casinos.