The health of our democracy also needs protecting in a crisis

2 April 2020

As Australia and the rest of the world deal with the deadly outbreak of Covid-19 and its economic fallout, many countries, regions and cities have declared a state of emergency. This has granted authorities extraordinary powers to try to prevent the spread of the virus. But at what cost to our democracy?

Covid-19 infections have been growing at an exponential rate, and more than a million Australians have joined the jobless queue. States of emergency have been declared and extraordinary powers authorised to speed up decision-making and allocate resources. This is important and often necessary to deal with a crisis, but we have a right to be alarmed at the curtailment of accountability and transparency.

Worrying trends

Disruption, uncertainty and distraction contribute to an environment in which corrupt actors can take advantage of the crisis for their own benefit. Decisions can be influenced, contracts and licences granted, purchases made outside of procurement guidelines, and tenders secured without the same level of scrutiny and due diligence that may normally apply.

We need to be alert to the granting of special powers to senior politicians that could damage our democracy long-term. It’s never easy to wind back powers once granted. The concentration of power should not, under any circumstances, lead to its abuse. And special powers in response to the pandemic, must only be used for the purposes for which they were granted.

In Australia as elsewhere our civil liberties are being curtailed and new police powers are being introduced.

This may be necessary at this point in time, but it needs to be monitored. The New South Wales government has introduced a fine of up to $11,000 for breaching lockdown restrictions and prison for up to 6 months. Meanwhile, for potentially the next five months there will be little federal parliamentary oversight, questions and review as billions of dollars flow into various stimulus packages.

It’s a story playing out around the world. In Hungary, a decree has been passed giving the prime minister unlimited powers sparking fears of a clamp down on human rights. In Israel temporary laws were passed overnight, and bypassing parliament to enable security agents to access the phones of suspected coronavirus sufferers. In Serbia, procurement rules are being tossed aside. Clearly at a time like this emergency powers are needed, but they must have a clear deadline and limited in scope.

The Council of Europe has stated: it’s essential to protect the rule of law, parliamentary oversight, independent judicial control and effective domestic remedies, even during an emergency.

Transparency and accountability needs a booster shot

At times like this, transparency in government decision-making is essential to counteract the risk of abuses of power when many oversight and accountability processes have been disrupted, regulators are distracted, and the public is looking the other way.

Transparency, openness and integrity must not only be maintained but ramped up. Safeguards against corruption and misconduct must never be weakened or disregarded, otherwise decisions are made that are not in the public interest.

Corporate fire sale

Of course, we don’t want to slow down the response to the crisis, but we need to be alert to the risks of undue influence and lobbying by special interest groups who may jostle to be first in line for public bailouts, or self-dealing government officials who make decisions to benefit friends and family. We need tough safeguards that will protect against self-interested parties taking advantage of this emergency for their own benefit. For example, in the US allegations of insider trading have been made against lawmakers who received confidential Covid-19 briefings and then cashed in their stocks just before the market tanked.

If we accept the crisis as a reason to reject transparency and accountability, it will inevitably lead to corruption.

Australia has just announced changes to the foreign investment review framework which will require all foreign investment proposals to be assessed by its Foreign Investment Review Board (FIRB) during the duration of the coronavirus crisis to prevent a fire sale of distressed corporate assets.

This sounds good, but in reality these restrictions can be easily side-stepped because Australia’s anti-money laundering and counterterrorism laws (AML/CTF) are weak and don’t apply to the Accountants, Lawyers and Real Estate Agents – those who enable the sales to happen.

Combined with the lack of beneficial ownership checks, the ease of making a company appear to be Australian owned, gaping holes in the ASIC corporate register, and ASIC’s inability to conduct due diligence on their own register, understanding if it is really a foreign investment is unlikely and Australia’s property market will keep its doors wide open for money laundering.

The trust factor

The announcement of three coronavirus stimulus and wage support packages worth a combined $214 billion has been almost universally welcomed. What is worrying though is the granting of new powers to ministers, and a cranking up of spending authority. For example, the government’s annual discretionary fund of $1.2 billion under the control of Finance Minister Cormann for unforeseen expenses was increased to $40 billion without any other approvals required. Again, that may be ok in the circumstances, but with parliament suspended and reportedly not meeting again until August 2020, what confidence can the public have that the necessary checks and balances are in place? Can the public be confident that spending will occur based on need and without political bias or undue influence?

Trust and confidence in government has been steadily declining for years, reaching record lows before the covid-19 crisis. It’s not surprising why – undue influence, lobbying, dodgy deals, sports rorts, and corruption have dominated the front pages of our press. Trust in our leaders is more important than ever in an emergency. Trust is what compels us to follow the government’s urgent advice, and it gives us hope that we can emerge out of this crisis. When trust is lost, it cannot easily be regained, even in times of a pandemic.

To earn our trust, governments must provide a solid explanation for the choices they make; they need to govern with transparency and accountability, and they need to act with integrity, always.

The media and civil society play a critical role in providing the public with reliable, independent and up-to-date information during times of crisis.

They can also shine a light on the unscrupulous conduct of self-interested players, that inevitably rise to the top, and given the opportunity, will take advantage of a crisis for their personal gain.

The voices of the media, investigative journalism and civil society must be protected, and emergency powers must never be used to stifle freedom of the press.

Is this a tipping point?

What world will we step into? In the coming months political decision-making must be as open, transparent and as evidenced-based as possible.

Already there are suggestions of coal mine expansion in Australia ‘being even more important’ to create jobs and bounce back – but at what bigger cost?

For sure extensive consultation and participatory decision-making is not easy in a time of crisis but protecting and strengthening our democracy is a precious ball that can’t be dropped.

This state of emergency should not be taken as an opportunity to bypass transparency and accountability. Access to information is key so that there can be accountability in the future for the decisions made now.

Serena Lillywhite
About the Author

Serena was the CEO of Transparency International Australia from March 2017 to July 2022.

Serena is an experienced corporate accountability practitioner, researcher and advocate, with an extensive career in responsible business conduct. Her expertise includes governance, corruption, human rights, labour rights and land and resettlement issues. She has worked across the financial services, mining and garment and apparel sectors.