Power of perception: Australia’s moral compass has changed direction

10 March 2022

Each year Transparency International releases their Corruption Perceptions Index (CPI), an anticipated and influential report scoring countries and territories based on how corrupt their public sector is perceived to be. In the recently published 2021 CPI report, Australia received its worst score on record, just 73 points, ranking 18th out of 180 countries globally. Historically, Australia has consistently been ranked in the top-ten of the least corrupt countries but this has been on a gradual decline since 2012, falling behind other Commonwealth nations, Canada, UK and New Zealand.

Australian politics have not been immune to allegations of corruption over the last several years. The Australian National Audit Office’s (ANAO) 2020 report identified favourable allocation of grants to targeted electorates while another ANAO report outlined serious concerns into shortfalls in “ethical standards” regarding the alleged overpayment for land acquired as part of the new Western Sydney Airport.

In NSW, an Independent Commission Against Corruption investigation in 2021 saw the resignation of the state’s third Liberal Leader, Gladys Berejiklian. In a separate matter, former politician Eddie Obeid, along with other accomplices were sentenced to significant custodial sentences for their roles in misusing public office for granting mining, café and water licences for personal benefit. More recently, a NSW Auditor-General report into the Stronger Communities Fund found it lacked integrity around the assessment and approval process and that 96 per cent of funds were allocated to the incumbent government’s state seats.

“In poll after poll, year after year, Australians have been stating loud and clear that they are concerned about the level of corruption and misconduct in Australian politics. Australians overwhelmingly want a strong national anti-corruption watchdog.”

Serena Lillywhite, CEO, Transparency International Australia

It’s hard not to see the connection between the aforementioned examples and Australia’s falling score. Important factors noted from the launch are Australia’s lack of a federal anti-corruption body (which has been postponed until at least after the next federal election slated for May 2022) and Australia’s hesitation to introduce tranche two of the Financial Action Task Force’s AML/CTF standards in line with global standards, with Australia being one of only five countries failing to do so.

Worldwide, the CPI report found 86 per cent of countries made little to no progress in the last 10 years, with those countries that performed well stagnating or backsliding. Canada’s perceived level of corruption has deteriorated to a record low, dropping five places since 2017. According to Transparency International, Canada has become a destination for money laundering, also known as snow washing, with fraudsters taking advantage of Canada’s positive international image. Experts estimate that $43-113 billion dollars per year are laundered through Canada.

In contrast, over the last five years Armenia, Angola and South Korea have had their corruption perception ratings considerably improved. In Armenia, government corruption improved following the instatement of a reform-minded government that expanded civil liberties with improved engagement and accountability, following mass protests in 2018.

But higher scoring countries should also be vigilant and avoid complacency, with Ms Lillywhite noting We know that various forms of corruption exist in all countries, even those with good CPI scores. Many high-scoring, or relatively ‘corruption-free’, countries are safe havens for the world’s dirty money by allowing corrupt leaders to stash their cash there“.

Australia must do more. An increase in the perception of corruption not only undermines trust, but it may also render Australia vulnerable to threats both internally and abroad seeking to exploit perceived systematic weaknesses. Conversely, if Australia’s perceived corruption risk is increasing, genuine and productive domestic or foreign investment could be deterred, with concerns about a possible undercurrent of corruption threatening the success of their investments.