Icac’s drama and dirt files show NSW’s ‘guns for hire’ problem. But neither major party is serious about reform

A dirt file on a state minister peddled to journalists. A subterranean campaign to discredit the building commissioner. Convincing the Liberal party to unseat councillors in the Hills district who were blocking a developer.

The New South Wales corruption watchdog’s recent inquiry, Rosny, revealed the ease with which the key protagonists – a group of rightwing Liberal operatives known as the Reformers, all of whom were former staffers – could move along the corridors of NSW parliament.

The Independent Commission against Corruption (Icac) has alleged that, unbeknown to their fellow Liberals, the operatives – including the then treasurer, Dominic Perrottet’s own brother Charles Perrottet – were being paid $2m by one of NSW’s most notorious developers, Jean Nassif, and that they worked to progress his interests.

Only one of the rightwing operatives involved in the Rosny inquiry was a registered lobbyist and subject to rules about declaring his clients and keeping records of interactions with ministers.

Yet all of them were on first name terms with many of their former colleagues and bureaucrats, affording them easy access for a chin-wag or to mix with powerful players – especially within the Liberal party’s machine.

Nassif – who told Icac he was “not corrupt” – has fled to Lebanon after the collapse of his company Toplace, leaving hundreds of buyers with substandard buildings. Charles Perrottet has repeatedly denied taking payments from Nassif for political outcomes. Dominic Perrottet is not a person of interest in Icac’s inquiry and is not accused of any wrongdoing.

The issue of access for former staffers – whether they be third-party lobbyists employed by specialist lobbying firms who are “guns for hire”, or “government relations” specialists employed directly by companies or industry groups – has long been a concern for Icac.

As Rosny showed, there was no way politicians could know who some of these figures were working for because these were allegedly undeclared guns for hire.

The NSW Labor government has now introduced a bill to clarify obligations for at least one class of lobbyist: the guns for hire. It passed the lower house on Wednesday, though it may not become law before the election.

Chris Minns’ efforts to address the threat that undeclared lobbying poses fall well short of what Icac recommended five years ago.

First, the good bits of the proposed legislation.

It would formally establish the NSW Electoral Commission as the regulator of third party lobbyists and bolster its investigative powers to audit compliance with the Lobbying of Government Officials Act and lobbyists code of conduct.

Icac recommended a separate lobbying commissioner but, given the electoral commission already has responsibility for the register, Minns has proposed it get the job.

“Third-party lobbyists are already subject to information and disclosure obligations, including disclosing information to the electoral commission for publication on the lobbyists register,” the special minister of state, John Graham, told Guardian Australia.

“The bill would allow the NSW Electoral Commission to audit compliance of third-party lobbyists and require relevant accounts, documents, information and explanations.”

It also extends the act to third party lobbyists interacting with councils. Lobbyists interacting with councils will need to register and adhere to the code. This had been identified by Icac as a gap that needed fixing.

But the bill also has bad bits. It ignores some of Icac’s most important recommendations.

The most glaring loophole is that the disclosure regime doesn’t extend to staff employed directly by companies – usually with a title like “government relations” or “corporate affairs” – even through they also lobby politicians.

These individuals make up about 80% of the people floating round the corridors of power. Most are former political staff members.

Graham said registering in-house lobbyists would have “created unnecessary red tape given it is already clear whose interests are being served or represented, and ministerial diary disclosures provide transparency of lobbyists’ interaction”.

This ignores the need for record keeping under the lobbyist regulations. If inhouse lobbyists were subject to the rules, they would be obliged to keep records of who they lobbied, as would the ministers and bureaucrats who were approached.

The government argues it plans to enhance ministerial diary disclosures, to make them fully searchable, rather than issuing them quarterly in pdf form.

The legislation will also clarify that third party lobbyists will need to disclose attendance at fundraising events involving exclusive or private access to a minister.

But the bill does not extend to lobbyists’ interactions with key ministerial staff, such as their chief of staff – which Operation Rosny demonstrated were important conduits to the minister.

“We’re regulating ministers and senior public servants because they’re decision makers. Ministerial staff are not decision makers,” Graham said.

Chiefs of staff can be almost as powerful as their minister, because they control access – and can direct policy staff.

Operation Rosny heard allegations about how the Liberal operatives, in their quest to smear the reputation of the building commissioner, provided material to a chief of staff, who then passed it to the chief of staff for the minister responsible for the building commissioner. The Liberal figures denied to Icac they were seeking to remove the building commissioner on behalf of Nassif.

Icac also heard evidence that Charles Perrottet talked to ministers directly about the building commissioner. He was not a registered lobbyist, yet he enjoyed extraordinary access and influence.

Neither the chiefs of staff nor the ministers were aware that Charles Perrottet was being paid by Nassif via a lobbying firm.

The government has also watered down Icac’s proposals for a six-month prohibition on certain public service roles taking on lobbying roles in either lobbying firms or private enterprise when leaving the bureaucracy.

Icac wanted certain sensitive roles to require six months’ “gardening leave” – as occurs when public servants leave the state’s gambling regulator.

If the bill ever reaches the upper house – and its future is now uncertain – debate is likely to be feisty.

The Greens have introduced a private member’s bill into parliament that would implement most of Icac’s recommendations from five years ago – including extending the lobbyists scheme to inhouse lobbyists.

Kobi Shetty, the minor party’s anti-corruption spokesperson, said her bill would have included a four-year exclusion for some public sector employees.

“When industries with deep pockets get a louder voice than the communities affected by their decisions, public trust in our democracy is eroded,” Shetty says.

The Centre for Public Integrity senior counsel Geoffrey Watson says the government’s bill is a step in the right direction and he hopes it passes the Legislative Council.

But he wishes the government had been more ambitious.