Time to end the lobbying protection racket

When Michael Munger explained that there’s a point at which the first dollar companies spend on lobbying becomes more profitable than the last dollar they spend on the pursuit of honest profits, it was meant to be a warning about creeping crony capitalism, not a business plan. And yet Australian businesses have taken very seriously the US economist’s advice on how to capture a market. Now, as the government prepares its May budget, some are experiencing regret.

At the end of last year, advisory firm General Strategic posted a chart to LinkedIn that I can’t get out of my head. It shows the number of new lobbyist registrations since 2009. The chart draws on data from the official lobbying register, which everyone who wants to directly interact with politicians and their staff on behalf of a business interest must join.

I have to stress that these are new registrations only, so they’re in addition to lobbyists who were already registered. Hold tight. In 2009, under the Rudd government, there was only one new registration. But in 2010 there was a spike in registrations, with 60 lobbyists joining the register. New registrations then fell again for the rest of the Rudd/Gillard government and there were only about 10 a year added under Abbott and Turnbull from 2013 to 2015. That number remained low but started creeping up during the Turnbull/Morrison government from 2016 to 2018.

Under Morrison there was a steady rise – 34 in 2019, 40 in 2020, 44 in 2021. That jumped when Albanese was elected, with 99 registered in 2022, 137 in 2023, peaking at 226 new lobbyist registrations in 2024, ahead of the last election. Another 206 were added in 2025.

That tells you everything about how profitable businesses find lobbying to be. But it may also indicate that we’ve reached a tipping point.

Before I go further, it should be said that lobbyists often get a bad rap. The job title itself is a denigrating word for people who frequent the hallways and lobbies of power, hoping to accost and influence legislators. It’s true, there are lobbyists who just peddle influence. While I do campaign work, I have never been a lobbyist, but I know and have worked with lobbyists who are not parasites on power. Good lobbyists perform an important function, explaining the complexities of business to policymakers who might never have worked in the private sector, much less the sector being regulated, taxed or otherwise politically interfered with.

But the proliferation of newly registered lobbyists points to a couple of developments. First, businesses no longer trust that government will engage with them directly and in good faith unless they hire a special workforce to get them access – basically, extremely highly paid personal scheduling assistants.

Second, there is more money to be made by securing government grants and rigging regulation to create a barrier to entry for would-be competitors than by innovating in the private sector.

Third, the returns on government engagement are diminishing, leading businesses to keep increasing their investment in lobbying in the hope of replicating the return on investment it used to achieve, like junkies chasing the initial high.

This is the crony capitalist economy Munger was warning against, in the words of the Merriam-Webster Dictionary: “an economic system in which individuals and businesses with political connections and influence are favoured (through tax breaks, grants, and other forms of government assistance) in ways seen as suppressing open competition in a free market”.

There’s evidence that it’s no longer working out for businesses the way they’d hoped. The Albanese government forces businesses and organisations who are affected by policy to sign non-disclosure agreements to have a seat at the negotiating table. The government punishes those who reveal the substance of the discussion by excluding them from consultation. But there are so many NDAs that it’s now getting safer for organisations to acknowledge, off the record, that they’ve been gagged. It’s become impossible to identify who blabbed.

Divulging the contents is another matter entirely. Regardless of how heinous the proposals that are the subject of the discussions, the ease with which leaks could be traced, and the threat of excommunication, deters participants from speaking about bad policy until it’s too late. Unions refuse to sign the agreements because it would stop them communicating with their members. They get away with it because they own Labor. Businesses have become trapped in a disadvantageous power structure within a system of patronage they helped create. It’s now a protection racket, in which the government is the standover man.

As General Strategic director Damian Damjanovski tells me, “We’re seeing more lobbyists and fewer outcomes. When organisations haven’t updated their advocacy strategies since the ’90s, they default to hiring more lobbyists. That’s not a plan, it’s a headcount. And in a political environment where government feels confident enough to say no, more bodies don’t deliver results.”

At this stage, it should dawn on business leaders that they need to extricate themselves from this toxic relationship. The first dollar they spend on restoring a competitive, productive, market-based system will have a higher return on investment than the last dollar they’ve spent on the pursuit of government favours. Yes, it will also benefit their competitors. But if there’s more to go around, everyone wins.

Economic analysis suggests there could be considerably more. A 2024 paper concluded that eliminating lobbying in the US would increase aggregate productivity by 6 per cent. So there’s a potential 6 per cent productivity boost to dialling back the type of lobbying that ties up competitors in regulatory red tape.

That’s good for businesses and good for individuals. The Productivity Commission reckons if Australia had maintained its productivity rate over the past 25 years, we’d all be $25,000 better off – each – a year.

Now businesses are playing chicken, fearing the one who moves first has most to lose. It’s the other way around. In a suppressed environment, the first organisation to frame the new game wins the biggest prize. It’s time for business to champion the kind of policy that makes us all richer.

Parnell Palme McGuinness is an insights and advocacy strategist. She has done work for the Liberal Party and the German Greens and is a senior fellow at the Centre for Independent Studies. She is also an advisory board member of Australians For Prosperity, which is part-funded by the coal industry.

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