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Speech: Private colleges and political donations

Speeches in Parliament
Lee Rhiannon 2 Sep 2014

Senator RHIANNON (New South Wales) (21:06): This is about political donations and political influence. It is also about how the Abbott government proposes to divert money from public education to private colleges with little oversight of quality and accountability. We cannot answer all the questions this saga throws up, but it certainly warrants being opened up for public scrutiny. The state of private colleges littered with failures and questionable dealings is where we begin.

We only have to look at TAFE to see what effects the diversion of substantial public funding from TAFE to private, for-profit training providers has had on technical education in Australia. Thousands of TAFE jobs across the country have already been slashed as a result of this privatisation agenda, and there have been enormous fee increases, putting TAFE out of reach for many prospective students. TAFE's historic role in providing high-quality technical and further education to Australians of all ages and backgrounds and from all communities, including regional Australia, has been trashed. The same is set to happen to our public universities. If the coalition government has its way, universities will be forced to compete with private for-profit higher education companies for government funding.

Under the Abbott government's regressive reforms to higher education, we may see millions of dollars of public money flowing to private for-profit higher education providers such as Group Colleges Australia. Before the election, considerable lobbying by the private sector targeted high-profile Liberals to pressure them into adopting a policy that favours private for-profit higher education providers. A search by the Greens Democracy For Sale project shows that at least $200,000 in donations flowed from private for-profit education providers to the New South Wales branch of the Liberal Party from 1999 to 2011. By the end of 2011, it was generally thought such donations would cease after an extensive campaign by community groups and the Liberals. On 14 September 2011, a bill was tabled by then Premier Barry O'Farrell which banned any donations from corporations, unions or other organisations. Only individuals would be permitted to donate up to a cap of $5,000 to a political party and $2,000 to a candidate.

One of the private for-profit providers who made the donations between 1999 and 2011 is Group Colleges Australia. GCA is actually five colleges offering a range of educational qualifications from certificates to degrees. The Universal Business School of Sydney is one of these five colleges. In 2009 UBSS was accredited by the New South Wales government to offer degrees. Under the system set up by federal Labor, it then also had to apply for federal accreditation. Group Colleges Australia donated over $90,000 to the New South Wales Liberals between 2003 and 2011. In the year 2010-2011, GCA donated $53,249 to the New South Wales Liberals, far more than any other education provider.

The New South Wales Liberal-National government came to power in March 2011. The husband and wife team of Group Colleges Australia, managing director Alan Manly and general manager Jennifer McCarthy, have also made individual donations totalling $11,588 to the Liberal Party. Donations from Group Colleges Australia to the New South Wales Liberal Party dried up in 2012 when then Premier Barry O'Farrell introduced the new laws banning corporate donations. Ms McCarthy, who previously had never donated to the New South Wales Liberals but whose corporate credit card was used to make donations on behalf of Group Colleges Australia, made her first donation of $3,500 in April 2012, two months after the legislation prohibiting businesses such as Group Colleges Australia from donating was passed.

Paul Nicolaou is one of three directors of the board of Group Colleges Australia. While he was a director of the company he was also the executive chair of the New South Wales Liberal Party's main fundraising body, the Millennium Forum. ICAC has received evidence that Liberal Party officials used the Millennium Forum and the Free Enterprise Foundation, both Liberal Party associated entities, to direct prohibited donations, including from property developers, into the 2011 New South Wales election campaign. This became public knowledge in May this year.

In July Fairfax Media revealed the New South Wales Liberal Party had shut down the Millennium Forum. A new body, the Federal Forum, was established to raise political donations for federal election campaigns. The Liberal Party connection with illegal fundraising has become even more questionable. Mr Nicolaou has been accused by ICAC of using the Millennium Forum to direct illegal political donations, including from property developers, to the New South Wales Liberals 2011 state election campaign. This was achieved by passing them through the Free Enterprise Foundation.

In July Mr Nicolaou resigned as chief executive of the New South Wales branch of the Australian Hotels Association, just days before resumption of the next round of ICAC inquiries. Mr Nicolaou has also faced questions in ICAC about lobbying on behalf of Australian Water Holdings—a company linked to the family of disgraced former Labor minister Eddie Obeid. Before ICAC, Mr Nicolaou was required to answer questions about an email that detailed a meeting that Mr Nicolaou negotiated between the then Brisbane lord mayor, Campbell Newman, and AWH chief executive Nick Di Girolamo. This was in 2007. A $5,000 donation to Mr Newman's re-election fund was made at this time. Mr Nicolaou also admitted to activities that damaged the reputation of businesswoman Kerry Schott. Ms Schott was then the chief executive of the Sydney Water Corporation, with which AWH was in dispute. Mr Nicolaou has acknowledged to the ICAC that there were no grounds for his unfounded remarks.

The saga continues. We understand that this Friday the executive of Brickworks will give evidence at ICAC about a $125,000 donation to the New South Wales Liberal Party. This was in 2010. I understand that Mr Nicolaou became a director at GCA on 3 December 2013, and I do acknowledge that these events that ICAC has investigated did not happen during the time when Mr Nicolaou was one of the three Group Colleges Australia directors. However, the way the political donations have flowed to the Liberals, I have come to the conclusion that these issues warrant investigation. For this reason I referred the discrepancies in the donations to ICAC. This is my letter to ICAC:

Dear Commissioner Latham,

Below please find information about Paul Nicolaou's links to Group Colleges Australia (GCA), which could profit from government funding under the coalition government's changes to higher education. GCA is a donor to the Liberal Party. There are discrepancies in the disclosure from the NSW Liberal Party and GCA. I believe these matters warrant investigation by ICAC.

Mr Nicolaou is a former chair of the Liberal fundraising body, the Millennium Forum, and a non-executive director of GCA. This company is well placed to benefit from federal government reforms to higher education that will see millions of dollars of public money flow to private for-profit higher education companies, such as GCA.


In particular, ICAC may wish to consider:

Nationally, the private college sector has donated at least $300,000 to the Liberal Party in the past decade.

Donation disclosures suggest that GCA is the largest single political donor across the sector, providing almost $80,000 to the NSW Liberals since 2009 in 35 separate transactions.

In 2010 and 2011, before the NSW Coalition government came to power, GCA donated $53,249.

From June 2010 to July 2011, only $22,164 of the total $38,709 donations can be traced in Liberal Party records, leaving a discrepancy of $16,545 in donations not declared by the party.

Liberal Party disclosures show donations that may not have been declared by the company.

Disclosures lodged with the NSW Election Funding Authority reveal personal donations from the husband and wife team of GCA, Managing Director Alan Manly and General Manager Jennifer McCarthy, totalling $11,588 since 2010. Donations from Ms McCarthy only began to flow after corporate donations were banned in 2012. Since that time, Ms McCarthy has made individual donations to the party totalling $7,770.

According to public documents Ms McCarthy, who had not previously donated to the NSW Liberals, made her first donation of $3,500 in April 2012—two months after the legislation banning corporate donations was passed.

I can supply documentation for the above information which was obtained from an analysis of information on the NSW Election Funding Authority and the Australian Electoral Commission websites.

I request that these matters are investigated by ICAC to determine the legality of these activities.

Further, I believe an investigation into whether figures linked to GCA lobbied the Liberal Party in relation to recent changes to higher education policy is warranted. These changes will benefit private colleges such as GCA.

I look forward to hearing from you.

Yours sincerely …

That is the letter I sent to ICAC. ICAC have referred my concerns to the New South Wales Election Funding Authority and I will now be taking this up with them. I think an investigation is warranted into why donations by Group Colleges and its owner are missing from Liberal Party returns.

In an interview with investigative journalist Wendy Bacon, a past GCA director told her that he was not aware of the details of the donations. Past director Mark Euvrard told New Matilda that he was aware that the only other director at that time, Alan Manly, who wholly owns GCA, was 'very close to the Liberal Party' but was 'not aware whether they'—that is, the donations—'were being done through him personally or through his wife or where they were coming from'. And he was 'astonished' when the New South Wales Liberal Party's chief fundraiser Paul Nicolaou was appointed as a director to Group Colleges Australia. I believe that Mr Nicolaou should step aside from his senior role with Group Colleges Australia while it is still possible he may be called to give evidence at ICAC. Mr Nicolaou continues to be one of three directors of GCA. The other two directors are owner Alan Manly, a person with a long involvement in Liberal Party politics, and an academic who is based in China.

In 2013 Alan Manly accompanied New South Wales MP Geoff Lee on a trip to India. As reported by New Matilda, also on the trip was Sanjay Patel, who, according to Mr Lee's pecuniary interest register, paid for Dr Lee's travel costs. In 2011 Manly made a presentation to the then Leader of the Opposition, Tony Abbott, and a host of senior Liberals on the deregulation of the tertiary sector at a Liberal Party think tank. It was attended by a who's who of Liberal Party MPs and donors, including Mr Michael Baird and Senator Eric Abetz, along with Mr Abbott.

In June this year, after I put out a press release about GCA donations and that I had written to ICAC about it, I was sent an extensive email about GCA from a former employee. The email from the former employee said in part:

My first day I wandered in and bumped into Tony Abbott coming out of the lift. Other teachers told me that he was a regular there because of his friendship with the college's owner, Alan Manly. They told me that it was Manly who had stacked the Warringah branch for Abbott's 1994 preselection.

An investigation of GCA's registration with TEQSA, the Tertiary Education Quality Standards Agency, shows that on 6 February 2014 GCA was given only conditional approval. The conditions require:

GCA must by 1 December 2014 and 1 December 2015 provide TEQSA with evidence which demonstrates that GCA’s Academic Board:

i. has implemented systems to protect academic quality and integrity to meet the requirements of Provider Registration Standard 4

ii. provides academic leadership, develops and oversees progress in implementation of a culture of scholarship at GCA, and on staff professional development

iii. ensures GCA has appropriate numbers of suitably qualified and experience staff for management and delivery of its higher education courses of study, in light of actual and projected enrolments in the courses

iv. ensures quality assurance is implemented effectively to drive improvement of GCA’s higher education operations

v. undertakes systematic monitoring, review and improvement of GCA’s higher education operations, including through the collection and analysis of relevant data.

Despite these conditions, Universal Business School Sydney continues to state on its website:

… UBSS is subjected to rigorous scrutiny and review by TEQSA, where it must evidence: academic quality, sound corporate governance, sound financial management …

…   …   …

… UBSS has full government approval to offer its Bachelor degree programs, equivalent to those offered by Australian universities, as the Australian government has certified it meets the above requirements.

There is nothing on Group Colleges website to warn prospective students that UBSS has only been given conditional approval. Only a rare few would know to look at TEQSA's national register, where they will discover that GCA was unable to meet the basic threshold standards for corporate governance, which are set out in detail under the Higher Education Threshold Standards. GCA's inability to satisfy TEQSA raises questions about its original NSW accreditation, and why, in the light of its inability to demonstrate basic board accountability, TEQSA has allowed GCA to keep offering its courses.

If this is the current situation with Group Colleges, one can only fear for the education sector if it is exposed to problems that will come with even weaker regulation and cuts to TESQA. In fact, Group Colleges is a mixed business which has also invested in a travel agency recently relaunched by Prime Minister Tony Abbott's sister, Liberal Sydney City Councillor Christine Forster. There is more to Group Colleges operations in Sydney. Its registered office is based in the centre of Sydney at MyQual, which was registered as a migration and educational consultant that advertises itself as handling international application for study for other local colleges and universities, for which those institutions pay it a commission.

Group Colleges is not the only one to foster links with the Liberal Party that were not transparent. There has been considerable reporting in the media about the Whitehouse School of Fashion and the $60,000 scholarship that it gave Mr Abbott's daughter, Frances Abbott. The Guardian reported in May:

The managing director of the Whitehouse Institute of Design, who is understood to have personally funded an unadvertised $60,000 scholarship for the prime minister's daughter, issued a direct "plea" to Tony Abbott to "reduce red tape across the board" in higher education at an exclusive event last year, but the institute says any suggestion these remarks were an attempt at lobbying or seeking to interfere with the regulatory process are "ridiculous".

There are many concerning aspects to this flow of private money to the Liberal Party. Was the law broken? Was the money given to buy access and influence? Did people collude to bypass the stricter donation laws in NSW? These questions should be answered.

We need national uniform electoral funding laws that put in place a ban on donations from for-profit groups and strict limits on all other donations, caps on election expenditure, and greater transparency of donations to help clean up the corrupting influence of political donations. And, most importantly, we need a national ICAC. It is time that there was a corruption watchdog for federal politics.

With all the revelations at the NSW ICAC, I find many people joke with me about how corrupt NSW is. Yes, what is happening is shameful. But let's remember why we know about it is because some courageous people have given evidence and, most importantly, we have a state ICAC. What would be revealed if there were an ICAC-type body in Queensland or at the federal level? Why is the Abbott government resisting setting up a national ICAC? This question will grow louder the longer the federal parties—Liberal, National and Labor—refuse to set up a national ICAC.

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