CMC complaint over Costello audit
A complaint about former federal treasurer Peter Costello lodged with Queensland's Crime and Misconduct Commission highlights potential conflicts of interest between his job overseeing the future of the state's finances and his ownership of a lobby group representing companies that could benefit from state asset sales.
Epstein Costello Gazard (ECG) Advisory Solutions – the private lobby group owned by Mr Costello and two of his former parliamentary staffers – made a declaration in February on the federal register that it lobbies for clients including SP AusNet, Primary Health Care, ASG Group and Serco Asia Pacific. All are companies that could benefit from the recommendations of Queensland's "independent audit" of the state's finances, which has been chaired by Mr Costello.
That Commission of Audit last week handed down recommendations to sell or outsource many of the state's assets and services, including electricity and healthcare.
The complaint to the Crime and Misconduct Commission – made by an Australian business figure and past donor to the Liberal Party – draws attention to Mr Costello's role as a co-owner and chairman of ECG.
Mr Costello helped raise funds for the Liberal-National Party ahead of the 2012 Queensland election. He was subsequently appointed chairman of an "independent audit" of the state's finances.
Tim Nicholls and Peter Costello prepare to brief journalists in Brisbane. Photo: Glenn Hunt
The complaint states that in 2011 Mr Costello hosted an event for the LNP in Melbourne attended by Queensland's Treasurer Tim Nicholls – then shadow treasurer.
At the event attended by current and prospective ECG clients, Mr Nicholls allegedly highlighted the importance of Mr Costello's advisory role to him, the complaint states.
In a statement issued last night, Mr Nicholls said he attended a “QForum business breakfast in Melbourne as a guest speaker” while shadow treasurer, but denied it was a fundraiser.
In a statement from his office last night, Mr Costello claimed he did not host a Melbourne fundraiser with Mr Nicholls but "attended a business briefing for no charge and at which no funds were raised". It stated he had "no role in raising funds for the 2012 LNP State Election".
An invitation for the "QForum Business Breakfast", obtained by Fairfax Media, states the host is "the Hon Peter Costello AC". To attend the forum, participants had to join the QForum (the fundraising arm of the LNP), at a cost of $1500.
Mr Costello denied he had a conflict of interest, and stated ECG had not lobbied for SP Ausnet in Queensland and had not represented the company since November. He said he had never represented SP Ausnet.
The CMC has not begun a formal investigation into Mr Costello since receiving the complaint on January 24. A principal lawyer from the CMC Integrity Services has contacted the person who lodged the complaint and requested more information.
The CMC declined to comment to Fairfax.
ECG Advisory Solutions is a lobby group formed by Mr Costello with two of his former parliamentary staff members, David Gazard and Jonathan Epstein, in August 2011.
Mr Costello is chairman of ECG's advisory board and owns one-third of the company. He works from an office at the Melbourne headquarters of the company.
A review of the Australian Government lobbyist register on April 26, 2012, one month after Mr Costello was named as the head of the audit commission, shows that ECG was the lobbyist for 12 companies, predominantly those with mining and exploration interests.
A review of ECG's latest register, updated on February 1 this year, shows changes to their client list; chief among them, the addition of SP Ausnet, a member of the Singapore Power Group that manages electricity and gas networks in Australia.
One of the key recommendations of Mr Costello's audit is a privatisation of Queensland's power assets. Queensland and Tasmania remain the only states that still own their power generation assets.
A second recommendation of the Costello audit is the privatising of many healthcare services in Queensland, following the lead of Victoria.
ASX-listed Primary Health Care – which employs ECG to lobby on its behalf and was entered as a client on the Queensland lobbyist register in July 2012 – on Wednesday confirmed it was interested in expansion into Queensland's healthcare market.
“Primary Health Care supports any process which leads to a more efficient use of the health dollar, shifts limited healthcare funding towards frontline service delivery and results in better outcomes for patients," said a spokesman for the company.
“The private healthcare services sector has proven that it can save taxpayer dollars, enabling governments to divert healthcare expenditure to frontline healthcare services, and simultaneously meet the increasing needs of patients and their treating doctors in particular areas. This was particularly borne out by the Victorian government's experience with pathology services.”
The Queensland government has also flagged plans to outsource services such as IT. Clients of ECG include ASG Group, which “specialises in professional information technology solutions”, and Serco Asia Pacific, a firm which specialises in delivering public services. ASG was listed as a client of ECG in June 2012 on the Queensland lobbyist register.
Serco Asia Pacific and SP Ausnet are not listed on the Queensland lobbyist register, but are on the client list that ECG supplied to the federal government.
The Commission of Audit executive summary makes no disclosures regarding Mr Costello's business interests with ECG Advisory Services, or its clients.
It is not known if the disclosures are contained in the full 1000-page report, which is in the hands of of the Queensland Treasurer and the premier's office.
The business figure who has lodged the complaint states: "I was invited to the 15th December 2011 LNP fund-raiser with Tim Nicholls hosted by Peter Costello. I was invited by ECG director Jonathan Epstein. At that fund-raiser, Tim Nicholls explicitly advised . . . that Peter Costello would be an important adviser to him in government."
The event was held three months before the LNP was swept to power at the 2012 Queensland election.
On March 26, Tim Nicholls was sworn in as Queensland Treasurer. Three days later, on March 29, Mr Nicholls announced that Mr Costello would head the Commission of Audit for the new government. Mr Costello was in attendance at the press conference. His role with ECG was mentioned in his bio released that day.
The commission was charged with reviewing and reporting on Queensland's financial position and finding ways to improve it, including “policy settings and strategies to address any structural factors affecting the state's finances, and to restore its AAA credit rating”.
Mr Costello was paid $3300 per day for the role, plus GST, which earned him at least $140,000. The Queensland government maintained that the audit was "independent" despite Mr Costello's history with the Liberal Party.
- with Bridie Jabour and Georgia Wilkins