By Bob Burton on October 16, 2007

An extract from Bob Burton's Inside Spin: The Dark Underbelly of the PR Industry.

Cover of Inside Spin: The dark underbelly of the PR industry"It's a little bit like my yacht club" is how Mike Nahan, the former veteran activist with the Melbourne-headquartered Institute of Public Affairs (IPA), described the process of hand-picking members for the Australian think tank. "We go out and say 'would you like to become a member' and they do." 1 The IPA, however, is not in the business of organising genteel sailing trips for its 54 members.

Since its formation in 1943, the IPA has been the spear carrier for those within corporate Australia willing to fund and promote ideas for restructuring the economy and weakening the power of the unions. If the term 'think tank' conjures up an image of studied reflection on weighty topics, the reality could hardly be further from the truth. The IPA unashamedly sees its role as being to clear the way for supporting politicians and officials to implement policies deemed too politically toxic to touch.2 Central to its strategy is trading on its self-description as being 'independent' to help amplify what would otherwise be a marginal dissident voice by utilising relationships with friendly media commentators and political movers and shakers.

Within the world of PR, corporate-funded think tanks have long been seen as arm's length 'third-parties' that, with some -- usually secret -- funding, will advance a sponsor's message. In this guise, think tanks are more like a non-profit PR firm. Where PR consultants crave public invisibility, the IPA needs a high-profile visibility to survive and thrive. Corporate contributors are treated more like clients than the average financial supporter. But like most PR firms, they seek to keep the details of who is paying them secret.

The Executive Director of the IPA, John Roskam, insists that the think tank never tailors its research findings to match a sponsor's interest. But where does the think tank draw the line in what influence a donor has on a project? "It can get very up close and friendly, certainly. We can't and won't guarantee the direction that we go in but it varies from issue to issue," he said.50

Who's That Calling?

One issue the IPA have taken a keen interest in is the debate over the regulation and ownership of Telstra, the Australian telecommunications giant that was majority government-owned until the bulk of the government-held shares were sold in late 2006. Over recent years, IPA staff have churned out a series of opinion columns in leading national newspapers, letters to the editor, articles in its own magazine, a backgrounder on telecommunications, 51 and submissions to government inquiries touching on Telstra's interests. In early 2001, the IPA's then Executive Director, Mike Nahan, railed against the Australian Competition and Consumer Commission (ACCC) "micro-managing" Telstra and the telco industry.52 When in the 2001 election campaign, the Opposition Labor Party stated its opposition to the further privatisation of Telstra, the IPA's Jim Hoggett popped up with an opinion column in The Australian denouncing Kim Beazley's policy.53 In another opinion piece published on the think tank's website, Gary Johns argued for full privatisation and against any further regulation of Australia's largest company.54 When there was widespread public debate about the quality of Telstra's service in regional areas, the IPA's Andrew McIntyre extolled the virtues of the telcos's service. He wrote in an opinion column in The Australian:

I don't think I have seen so many Telstra phone booths in my life; in every single town and, it seemed, on every single corner. In the remotest, most unlikely places, the familiar phone booth, with microwave link and solar power, a fully automatic and autonomous phone, complete with instant dial tone, infallibly works as reliably and as clearly as my phone in the city.55

When the telco was criticised for a sub-contractor outsourcing information technology jobs to India, Nahan jumped to Telstra's defence.56 When the Productivity Commission issued a draft report floating the possibility that Telstra be split to separate its retail and wholesale functions to increase competition, the IPA reacted with a critical submission. "The IPA sees this as an unnecessary and largely retrogressive step," it argued. Within the IPA, the role of being Telstra's defender was shared around. However, in late 2004 the IPA appointed Chris Berg as the head of the telecommunications and media unit. The ACCC, he complained soon afterwards, were subjecting the telco to "overly aggressive regulations".57 Berg co-authored a submission to the Productivity Commission urging the full privatisation of Telstra.58 In one column, Berg complained that mobile phone use, "as with smoking, is being subjected to heavy handed social regulation and legislation". His particular gripes were with the ban on using mobile phones in cars and restrictions on airline passengers making calls.59

Rod KempThe IPA's enduring enthusiasm for Telstra was finally explained in February 2004 when the Senate representative of the Minister for Communications, Information, Technology and Arts, Rod Kemp, answered a question from the Labor Party Senator Kerry O'Brien.60 Kemp -- who had worked at the IPA for seven years prior to entering parliament in 1990 -- explained that Telstra had funded the IPA to the tune of more than $165,000 over the preceding five financial years.61 Despite the notional IPA policy of not accepting government funding, it seems that taking money from a majority government-owned company was fair game.62

For its part, Telstra states that its "community sponsorships, partnerships, grants and awards aim to provide real benefit to our communities," but initially refused to discuss its funding of the IPA. Rod Bruem, from Telstra's National Media Office, explained to the author that the company wouldn't disclose details of any current funding of think tanks unless required to by parliament.63 However, documents subsequently obtained under the Freedom of Information Act shed light on the intimate relationship between the IPA and the telco company. "We have been keen to draw out the shortcomings of some ACCC decisions and approaches that have adverse ramifications for business and have been in the forefront of the debate on privatization", Nahan wrote in a funding pitch in late 2004 to Bill Scales, Telstra's managing director of Corporate and Human Relations.64 Berg, Nahan assured Scales, "is developing material, which we intend to publish, demonstrating the benefits of forgoing regulation."

Noting that in 2000 Telstra had funnelled $50,000 into the think tanks coffers compared to the previous year's $9,000, Nahan begged Scales to double the company's contribution. Of course, he noted, he'd be willing to meet Scales to "discuss the past and future nature of the IPA's work."65 In a follow-up email, Nahan flagged that a funding proposal he'd like to prepare would be for "market based solution [sic] to rural environmental issues and specifically water markets and corporate governance."66 Appended to the funding pitch was a list of IPA newspaper columns, dominated by attacks on the ACCC's regulation of telecommunications and a smattering of submissions on Telstra related issues. Despite Nahan's plea, Telstra's contribution remained unchanged.67

In mid-August 2005, Roskam met with Telstra's Group Manager of Regulatory Public Affairs, Julia Foley, to discuss the think tank's plans, and the following week sent her a copy of the IPA's work program for the telecommunications and media unit. It was, Roskam noted, "derived from the things that we talked about". Needless to say, it was Telstra-friendly.68 Entertainment and communication, the think tank wrote, "should not be micro-managed by regulators." They also opposed Telstra being constrained by community and universal service obligations to provide a basic standard of service. Nor did the IPA favour an 'open access' regulatory regime that would require Telstra to provide access to its fibre-optic broadband network for other telecommunications companies wanting to sell competing retail services.

The work program stated, "A major aim of the IPA will be to change the 'accepted wisdom' in Australia that access regulation is appropriate to the telecommunications sector." They also opposed the regulatory regime imposing access standards for the aged or those living in rural areas. "The IPA will emphasise the positive effects that a sensible policy framework would have, not just for the technology literate users, but for all members of the community," Roskam wrote.69 Close collaboration between Telstra and IPA staff was not a new development either. In a letter to Nahan in September 2001, Telstra's then Group Manager of Public Affairs, Andrew Maiden, noted that he had recently met with the IPA's Dr Jim Hoggett, "to discuss projects for the forthcoming year."70 The following year, Maiden commended Nahan on the "fine contribution to public debate on public policy matters of interest to Telstra" by the IPA and Hoggett in particular.71 (Both the Centre for Independent Studies and Gerard Henderson's Sydney Institute also receive Telstra funding.)

Caller ID

The IPA's enthusiastic defence of Telstra raises important questions about all involved. It is extraordinary that at a time when it was a majority government-owned company that Telstra funded a think tank to run a mutually discussed campaign that included attacks on the government's own corporate regulator, the ACCC. In none of the pro-Telstra columns and letters did IPA staff publicly disclose that their organisation received funding from the company or disclose the funding link when making submissions to parliamentary inquiries. Telstra's Rod Bruem concedes disclosure would be best. "I think all think tanks should disclose how they are funded and let's be open about it," he said.72

As the most prolific provider of free opinion columns by an Australian think tank to newspapers around the country, the IPA routinely avoid disclosing actual or potential conflicts of interest. More perplexing, though, is how infrequently major media outlets require them to disclosure any details of relevant sponsors before publication. As a result, readers are routinely deceived as to who is refuelling the battle tank.

A simple first step for journalists would be to get into the habit of asking think tanks to disclose actual and potential conflicts of interests. Those publications that publish a steady stream of free opinion columns should adopt a simple standard -- no disclosure, no free space. When publications require disclosure, outfits such as the IPA have been willing to reveal relevant funders. Keeping funding sources secret from the public also means that, at least for companies listed on the stock exchange, shareholders are kept in the dark too. If corporate executives want to support a think tank, they should do it out of their own generous packages rather than secretly lifting funds out of shareholders' pockets. Even if participation in public policy debates has the support of shareholders, companies should be honest enough to run the campaigns in their own name.


This is an adapted extract from Inside Spin: The Dark Underbelly of the PR Industry by Bob Burton, published by Allen & Unwin (Australia), A$24.95, ISBN 9781741752175 which is available from booksellers, as an ebook for US$17.45, or from Allen & Unwin. Inside Spin will be available in the US in April 2008. Footnotes cited in the text feature the original numbering from the book and can be viewed here.

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Comments

For someone who preaches about honesty and ethics in business, author Bob Burton doesn't set a very good example. He's completely misrepresented comments I made to him in the course of his research for his book. I initally refused to give him information on Telstra's sponsorship of think tanks, not for any sinister reason, but merely because he refused to say who he was or what he wanted the information for. However I did explain that the information was on the public record (in Hansard) and told him where he could find it. Later, when I learned about who he was and what he was working on (through my own research), I was very forthcoming with comments and information, even going so far as to advise him to use the Freedom Of Information Act to get up to date details. You won't read that in his book. I also recall asking him whether he'd be applying the same scrutinty to some of the more left-leaning think tanks, as he was clearly applying to the pro-business Institute of Public Affairs. Having read Mr Burton's book I can see did not. Clearly that doesn't fit with his political agenda. As you can see from my comments in the book, I believe we should be open about this. Let's have a public debate about think tanks and how they are funded. I happen to believe they are very useful in Australia in promoting debate and discussion which is essential in public policy making. The problem with Mr Burton is one of bias... he sees some think tanks as evil and others are not. That's why his book is disappointing.

There are five key points I'd like to respond to in Rod Bruem's post about the extract from Inside Spin

1. He claims that he initially refused to provide information on Telstra’s sponsorship of think tanks because I refused to say who I was or what I wanted the information for.

The facts are these. In mid-December 2004 I contacted Telstra's Warwick Ponder by phone and stated that I was a freelance journalist researching the issue of think tanks. I indicated that I was interested in getting details on which think tanks Telstra funded and the specific amounts of data for 2003/04 and 2004/05 financial years.

I followed up the same day with an email in which I again specified that I was a freelance journalist and indicated that I wrote for a range of media outlets. I also indicated that I was interested in details on how much Telstra provided, if anything, to think tanks including the Institute of Public Affairs, the Center for Independent Studies and the Sydney Institute. A week went by and there was no response .

I e-mailed Ponder again and got an e-mail from Rod Bruem stating that the information had been tabled in response to Senate Estimates hearings and that's where such information would be provided in future. If Bruem was uncertain about who I was or why I was asking for the information all he had to do was read the e-mail that he responded to. And if he was still uncertain, he could easily have e-mailed or phoned me but he didn't .

Indeed, after I interviewed Bruem for Inside Spin in September, 2006 -- twenty months after the email exchange -- he wrote in an e-mail "please accept my apology if appeared dismissive last year when you first made contact." Notably, he did not claim that he had been "dismissive" because I refused to say who I was or what the information was for.

2. In his post Bruem states that "however I did explain that the information was on the public record (in Hansard) and told him where he could find it".

It is worth pointing out that my original inquiry was prompted by reading the February 2004 Hansard (the record of parliamentary proceedings) [http://www.aph.gov.au/Hansard/senate/dailys/ds100204.pdf response] to a question in the Australian parliament by Senator Kerry O’Brien, who had asked for information on Telstra’s funding of the IPA alone between 1996/97 and 2003/04.

My request was for funding data for all think tanks, not just the IPA. I also wanted the data up to 2004/05. So referring me to the answer to O'Brien's narrower question which was based on older data was, at best, a misunderstanding of the specific information I was asking for or, at worst, "dismissive".

3. Bruem claims that "later, when I learned about who he was and what he was working on (through my own research), I was very forthcoming with comments and information, even going so far as to advise him to use the Freedom Of Information Act to get up to date details. You won't read that in his book."

Bruem has the timetable of events all mixed up. On November 11, 2005 I filed a Freedom of Information request with Telstra along the lines of my original inquiry, though specifying that I was interested in all records between 1999 and November 2005. (Again, I set out who I was and the range of media outlets that I worked for). After some exchange of correspondence and appeals, I received the final tranche of documents from Telstra in April 2006. (As I wrote in the acknowledgments for Inside Spin, I appreciate the professional handling of my Freedom of Information request by Telstra staff).

In September 2006, I phoned Bruem to ask about the issue of think tanks public advocacy without the disclosure of funders. His statement that he suggested at this point that I seek the information under the freedom of information act is mistaken. And even if he had made the suggestion, it would have been irrelevant as I had completed my request four months earlier.

So he's right that "you won’t read that" in Inside Spin because if I had written that, it would have been wrong.

4. Bruem writes that "I also recall asking him whether he'd be applying the same scrutinty [sic] to some of the more left-leaning think tanks, as he was clearly applying to the pro-business Institute of Public Affairs."

Bruem did ask whether I was looking at all think tanks in my book but the answer was no. By the time I called him in September 2006 the focus of the "Battle Tanks" chapter was on the role of the IPA in a number of public debates. (As it was, I didn't have space to include material I had I had obtained on other think tanks that Telstra fund, such as the Center for Independent Studies and the Sydney Institute). It is worth pointing out that one of the reasons that I focused on the IPA was their enthusiastic advocacy of other groups being transparent, accountable and well-governed.

It's worth noting that he indicated in September 2006 that Telstra don’t fund "left leaning think tanks" such as the Australia Institute. And he’s very generous in describing the IPA is "pro-business". I doubt that Telstra's corporate competitors, who are used to seeing the IPA run a Telstra-friendly agenda, would describe them that way.

5. Bruem also wrote that "as you can see from my comments in the book, I believe we should be open about this. Let's have a public debate about think tanks and how they are funded."

As I note in the book, Bruem stated his support for think tanks being transparent about the sources of funding. But in the year since I interviewed him, Telstra still haven’t publicly disclosed -- aside from the information obtained from my FOI application -- which thinks tanks they fund, the amount they contribute or the purpose of the funding.

So, in the interests of advancing the debate beyond point and counterpoint, let's agree that Telstra has the potential to be a leader in ensuring that think tanks are transparent about the funding.

Here are some specific, cheap and easy steps that are within Telstra's power to ensure greater transparency now.

* In another post on this thread, Bruem could disclose the amount of Telstra grants and other payments to the IPA and other think tanks in the 2005/06, 2006/07 and 2007/08 financial years. (Or he could do it on Telstra's own website). This is not really such a big ask. If the greenhouse dinosaur, Exxon, can disclose in the U.S. which think tanks it funds, then surely Telstra can manage it.

* Telstra could include the amount of funding and purpose of payments to think tanks in its annual corporate social responsibility report.

* Telstra could detail in its annual report the amount and purpose of funding for think tanks so that shareholders are given the option of expressing an opinion. After all, it is their money.

* Telstra could make it a contractual obligation that think tanks they fund must disclose the company's funding in all media interviews, opinion columns, submissions to parliamentary inquiries and public comments on topics where a conflict of interest exists or could be perceived to exist. A breach of that condition could made the basis of termination of funding. After all, it is Telstra's reputation that is on the line if a think tank is exposed engaging in stealth advocacy.

* If a think tank does make a public comment on Telstra-related topics without disclosing its funding from the company, Telstra should promptly disclose the funding connection to the media outlet, parliamentary committee or whoever is most relevant in the specific context.

For example, on October 2 ABC Online posted a [http://www.abc.net.au/news/stories/2007/10/02/2048953.htm column], "Telco industry's 'red tape' burden unfair" by the IPA’s Chris Berg. In it, Berg objected to government regulation of Telstra. "For Telstra, this constitutes nearly 500 regulatory reports to government agencies a year," he complained.

So if Telstra is still funding the IPA, Bruem could write to the editor of ABC Online requesting that a brief statement be added to Berg's bio note stating that the IPA is funded by Telstra. That way readers of that column can make up their own mind about the weight they should give to his Telstra-friendly views.

I look forward to Rod Bruem's response.