The Half-Million-Dollar Cure
By Mike SeccombeAugust 23, 2013
How to lose half a million dollars and feel better in no time.
Not many of us could give away $500,000, then forget we’d done it. Paul Ramsay is one of the few.
But, hey, that kind of money probably looks like small change, when you’re worth roughly $2.5 billion.
Still, the tale of the forgotten half-mill is worth telling, because of where the money went – to the Liberal Party of Australia. It’s interesting, too, because of the timing, which we’ll get to later.
First a little background on Ramsay, who made his billions in the health sector. Ramsay Healthcare, established in Sydney in 1964, currently operates 120-odd hospitals and day surgeries globally. Ramsay also has various other interests, including Prime Media.
The other important thing to know about Paul Ramsay, is that he is extremely politically partisan, even by the standards of Australian business leaders.
The Global Mail’s analysis of Australian Electoral Commission donations data shows that over the past 14 years, his companies Ramsay Healthcare and Paul Ramsay Holdings have given more than $1.8 million to the Liberal Party.
And they’ve given nothing to Labor or any other party.
Now, as we’ve noted before, business donors tend to prefer the conservative parties, and to donate accordingly. But it’s also true that pragmatism encourages them to hedge their bets, particularly when Labor is in power or is likely to win power. You can see it quantified in our graphs here.
And the health sector is no different from any other industry sector. It prefers the conservatives, but hedges with Labor.
Medicines Australia, the peak body representing the pharmaceutical industry, is pretty typical; over the past 14 years, it gave about $355,000 to the Coalition, and about $266,000 to Labor. The Pharmacy Guild gave $820,000 to the conservatives and $784,000 to Labor.
Not Paul Ramsay. Regardless of who’s in power, or what policy issues are running, his donations all flow one way. In both the magnitude and the one-sidedness of his giving, Ramsay stands out.
Now, to the wayward $500,000.
Paul Ramsay Holdings kicked the money into the federal Liberal Party can on February 2, 2012. On March 1, it gave $10,000 to the Victorian division of the Liberal Party, and on June 22, gave another $5,000 to the federal division.
But, here’s a funny thing: the company’s return to the AEC, submitted on November 16, just one day before the reporting deadline, records only the two smaller donations. Apparently they just forgot half-a-million dollars.
But here’s the second funny thing. The return submitted by the federal Liberal Party to the AEC does not record the $500,000 either. The Libs’ return does record a $100,000 donation from another Ramsay company, Ramsay Health Care Limited, given on August 26. But of the much bigger donation, given six months earlier, no sign.
As for the separate $5,000 donation – it does not turn up on the party return either, because the Howard government (as we’ve also mentioned before) increased and indexed the threshold above which parties must report donations. That threshold currently stands at $12,400.
So, how do we know about the big donation, given that both the donor and recipient did not mention it in their returns?
Because the electoral laws also require returns to be submitted by so-called “associated entities”, which is bureaucrat-speak for front organisations. These organisations collect money on behalf of parties and then pass it on, scrubbed of the details of the actual source of the dough.
It’s basically a laundering service. In order to find out who’s really bankrolling politics, it is not enough to just search the party returns to the AEC; you also have to look at the donor returns and the associated entity returns.
One of the biggest of the associated entities is called the Free Enterprise Foundation. Over the 14 years analysed by TGM, the foundation has collected more than $3 million on behalf of the Liberal and National parties.
In years past, the foundation has bundled donations from large numbers of donors, but when it submitted its return for the 2011-12 financial year, on October 20, it recorded just one donation: $500,000 from Paul Ramsay Holdings.
After laundering through the Free Enterprise Foundation, the money, or at least $490,000 of it, went on to the Liberal Party, which recorded the source as the foundation, not Ramsay.
But clearly somebody noticed that Ramsay, by failing to declare the huge donation, was in breach of its obligations under electoral law. Whether it was the AEC – which does check these things – that spotted it and got onto Ramsay Holdings, or whether the company noticed the omission itself, we can’t be sure.
But a correction was made. Three months after the deadline for filing its return, on February 24, 2013, Ramsay Holdings submitted an amendment to its original disclosure return, declaring the $500,000.
The return says the money went to “Liberal Party of Australia, PO Box 6004, Kingston, ACT, 2604”.
Which isn’t correct either, because it went to the foundation. But at least the money was, finally, declared by the forgetful donor.
Now let’s go to the timing of the donation.
As we said earlier, Ramsay is a consistent supporter of the Liberal Party. However, this donation was huge, even by his standards.
The question is why so much, and why then?
Well, as we’ve noted before in this series of stories on political funding, donation patterns are apt to shift when companies are lobbying on matters of specific policy interest. For a classic example of this, relating to poker-machine reform, look at this.
And sure enough, in February 2012, when Paul Ramsay Holdings made its lavish gift to the Libs, there was a big policy issue before federal parliament. One of great concern to an owner of private hospitals.
The Labor government was proposing to means test the private health-insurance rebate, which had been introduced by Ramsay’s friends in the previous, Howard Liberal government.
Such a move would direct traffic away from the private sector and back into the public health sector.
No doubt the government was primarily motivated by the immediate pressures of its blown-out budget, but there are also good longer-term public-policy reasons for means testing rebates for private health insurance – indeed for scrapping them altogether – as you can see here.
But those corporate interests which benefit from the rebate, health insurers and private hospitals foremost among them, immediately began a huge campaign to prevent change.
And Liberal Party parliamentarians were with them all the way, arguing vehemently against this bit of good policy, as you can see in this graph from our Party Lines tool.
Alas for them, it did no good. The changes scraped through with the support of the Greens and independents.
That battle was lost. But fast-forward to election 2013, and the announcement of the Liberal Party’s health policy, and what do we see? A promise by Tony Abbott to restore the rebate, as soon as budgetary conditions allow.
And you can bet that is one promise he is very keen to keep. Conservative ideology demands it. More than that, conservative party funding depends on it.
During the 2010 election, The Global Mail’s philanthropic backer Graeme Wood made (fully and properly declared) donations of $1.68 million to the Australian Greens.