The real story behind ICAC, Peta Credlin and Brickworks

Investigations by the NSW Independent Commission Against Corruption around illegal political donations have uncovered a trail of emails that lead all the way to Tony Abbott’s chief of staff, Peta Credlin.

The suggestion is that Brickworks (which is a major brick manufacturer but also has a side interest as a property developer) managed to achieve some degree of sinister influence over Liberal Party policy to axe the carbon tax via $384,000 of donations to various Liberal Party entities from July 2010 to April 2011.

It’s rubbish. But the truth is far more sinister and, indeed, bizarre.

The interaction between the Liberal Party and Brickworks’ chief executive in fact provides an insight into how business representatives faithful to the Liberal Party were skilfully used to assist Tony Abbott in an elaborate lie to scare the Australian people into voting for him.

The emails released by ICAC essentially involve a Liberal Party official seeking to pass on to Tony Abbott, via Credlin, encouraging comments from Brickworks chief Lindsay Partridge about Abbott’s already well-established scare campaign against the carbon price.

The email from Partridge says, “Tell Tony to stick to his guns on no carbon tax” and spurts a phrase tailor-made for sloganeering; “Business does want certainty. We want certainty that there is no new tax.”

Credlin – always on the look-out for another vacuous but catchy slogan for her boss – then replies to the Liberal Party official, and asks whether she could get in contact with Partridge to use his slogan and his business as an example of businesses’ attitudes to the carbon tax in parliamentary Question Time.

Labor is suggesting this shows a pattern of corruption where political donations buy favours. Brickworks is paying "cash for questions", Labor’s Mark Dreyfus exclaims.

Actually, the favours are being granted in the other direction.

In the lead up to Abbott’s election, the chief executive of Brickworks, and other business executives and lobbyists aligned with the Liberal Party, repeatedly put out claims to the media about how a carbon emissions trading scheme would lead to jobs flowing overseas and lead to significant increases in householder costs. In almost all cases the claims failed to materialise and were horribly exaggerated. But they served to provide vital ammunition for Abbott to scare the general public about the impacts of an ETS.

Thanks to the Partridge, we saw headlines like ‘Carbon tax will make house prices soar’. The Brickworks' chief claimed the carbon tax would increase the cost of building a new home by 10 per cent while at the same time making the contradictory claim it would dangerously squeeze company earnings, putting business under threat from overseas competitors.

He boldly stated on the carbon tax:

“The end result will be an exodus of manufacturing industries and investment offshore, jobs will be lost, the cost of housing will increase and there will be no change to carbon emissions. The sooner the current plan is abandoned the better.”

Being a clever political operator, Credlin no doubt saw a fantastic opportunity for her boss to use a friendly business executive to help his campaign. Abbott visited Brickworks sites several times, donning the hard hat and fluoro vests while shrilly repeating Partridge’s claim the carbon tax would lead to a 10 per cent increase in Brickworks’ costs.

But what we actually find within the hard data is all rather different.

The National Greenhouse and Energy Reporting System is a wonderful thing because it tells us just how much CO2 emissions Brickworks, and a range of other businesses around the country, produce directly or via their electricity consumption.

This shows, in the year the carbon price commenced in 2012-13, Brickworks emitted 317,834 tonnes of CO2 directly and indirectly via electricity consumption. At $23 per tonne this was $7,310,182 in extra costs on revenue for the building products division that year of $568 million – or 1.3 per cent. If we delve further into its annual report and another government emissions database – the LEPID – we find Brickworks was exposed to a direct carbon tax bill of something far lower – $2,765,221, or 0.5 per cent of revenue.

How this was supposed to lead to a large surge in the cost of building homes is anyone’s guess. But the 2012-13 annual report reveals:

EBIT [a measure of its profits] was $32.8 million, up 14.9 per cent on the prior year, driven primarily by a strong improvement in the Austral Bricks division. Good pricing outcomes in this division enabled margins to be enhanced despite flat volumes.

In other words, Brickworks appears to have cleverly hiked its prices in the period the carbon tax commenced, well above any increase in its costs over this period.

So, perhaps Brickworks isn’t at risk of being wiped out by overseas competition...

So, did the cost of new homes surge by 10 per cent?

Thankfully for us, bricks aren’t the only input into building a house. The Australian Bureau of Statistics produces an index of the cost of residential house construction which shows a rise of 3.7 per cent from June 2012 to June 2013. This is almost spot bang-in-line with the average annual rise in the cost of house construction since 1997.

What’s also interesting is that Brickworks' 2012-13 annual report notes that it was slated to be a major beneficiary of funding from a program set up under the carbon pricing policy package called the Clean Technology Investment Program, a program the Abbott Government abolished.

Brickworks is listed as the recipient of government grants totalling $17 million, which would support energy efficiency projects that, the company claimed, were expected to save it $11.7 million per annum on its energy bill.

In other words, not only did Brickworks pass on price increases exceeding the carbon cost to its business but, in addition, it took funding from a carbon pricing initiative to save it money on its energy bill which was significantly greater than its entire carbon price liability.

So what did Brickworks shareholders get for their $384,000 donation to the Liberal Party?

It’s not really clear.

Another email released by ICAC shows that Liberal Party official Paul Nicolaou invited Partridge to a "very private dinner" with Abbott and 10 senior business leaders in mid-2010. Partridge replied, "Send me the details, will I get a photo with Tony like I got from John Howard?".

In spite of Partridge donating $250,000, the event was cancelled leaving him without a photo with Tony. But no doubt he got one later, when Abbott came visiting with his hard hat and fluoro vest.