Barry O'Farrell had no option but to resign his premiership, given his emphatic denials of receiving a $3000 bottle of Grange from the chief of the company lobbying intensively for a water contract. Once his warm thank you letter surfaced, he was done for.
But how come he dug himself into this hole?
One school of thought is that O'Farrell, despite his clean reputation, deliberately sought to mislead the Independent Commission Against Corruption in his Tuesday evidence, trying to cover up the gift, which he had not declared on the appropriate registers.
To intentionally mislead ICAC, however, would hardly have been rational behaviour from a man previously regarded as having good political antennae.
O'Farrell would have known that if his story came unstuck, he’d be in an untenable position. He was giving evidence on oath.
Also, ICAC had already made it clear it didn’t believe he was involved in any corruption in relation to events surrounding Australian Water Holdings and its pursuit of the Sydney Water contract (a position re-asserted by counsel assisting the inquiry, Geoffrey Watson even after the wine debacle and O'Farrell’s resignation). O'Farrell did not give AWH CEO and Liberal fund raiser Nick Di Girolamo any favours for the 1959 Grange.
If O'Farrell remembered the wine and had said so at ICAC, he’d have suffered political pain, but could have weathered it. If he’d said he didn’t recall but might have received the bottle, he could have survived, even with his thank you note surfacing.
Instead he not only denied the gift when before ICAC but was repeatedly emphatic at a subsequent news conference and in a statement that insisted “the 1959 Grange was not received by me or my wife”.
In favour of his “massive memory fail” claim is that the alternative explanation – that he knowingly advanced a lie in, at it were, capital letters -- seems even less credible.
That leaves the question of why he didn’t declare the wine at the time, when it obviously was in his mind. This makes no sense. He had just become premier – there was every reason to follow the rules. He told ICAC he’d have known a 1959 bottle should be declared.
A shocked Tony Abbott said of O'Farrell’s decision to resign: “We are seeing an act of integrity, an act of honour, the like of which we have rarely seen in Australian politics.”
Despite this strong show of solidarity Abbott and O'Farrell were neither ideological soul mates nor close friends. Abbott was angered by O'Farrell’s signing up to Julia Gillard’s Gonski package before the election; the NSW government played hardball over Gonski later too. O'Farrell has been critical of the proposed changes to the Racial Discrimination Act.
Infrastructure was another matter. O'Farrell had been due to be with Abbott for Wednesday’s announcement of the federal package accompanying the proposed second Sydney airport.
A stunned NSW government now has to get itself a new premier, with the options Treasurer Mike Baird and Transport Minister Gladys Berejiklian.
The two -- both in their 40s and with backgrounds in banking -- are good friends, which makes a contest awkward. Both have been competent ministers. Baird is a mate of Abbott’s. His state electorate is within Abbott’s federal seat, and they sometimes surf together. Berejiklian is good mates with federal treasurer Joe Hockey – both are of Armenian extraction.
Berejiklian is from the party’s left. Baird -- although son of former state and federal politician Bruce Baird, a prominent moderate -- is more conservative, especially on social issues (an Anglican, he is very religious).
Abbott would prefer Baird to be the successor, given the political hue of Berejiklian. Baird was discussing his position on Wednesday night with his family, ahead of Thursday’s party meeting.
It will take a while to judge what federal implications there might be out of the O'Farrell resignation.
O'Farrell’s falling on his sword is likely to make things harder for Arthur Sinodinos -- who has stood aside as federal assistant treasurer -- to resume his position if there is criticism of him from ICAC. Sinodinos was a director and then chairman of AWH as well as state treasurer of the Liberals but denied knowing of the company’s donations to the party. His performance in the witness box was not impressive, although he is not accused of any wrongdoing.
The ICAC investigations, which had originally been focused on corruption in Labor, have now engulfed the Liberals, undermining the NSW government’s ability to fully exploit Labor’s record at next year’s election.
The spectacular hits scored by ICAC have produced a backlash from some commentators and politicians, with accusations that it is a “star chamber”. (The critics don’t include O'Farrell, who specifically reaffirmed his support for ICAC.)
There is no doubt ICAC is more freewheeling than a court. But if we take the cases of O'Farrell and Sinodinos, is there any reason to blame ICAC? The demise of the well-regarded O'Farrell is most unfortunate, but he brought on his own destruction by his emphatic denials. As for Sinodinos, ICAC exposed that someone who should have had his eye on what was happening in a company that was acting improperly apparently, on his own account, did not.
What the ICAC inquiry into the AWH affair has highlighted is that unsavoury intersection where business, political donations/gifts, and lobbying meet. In this it has done a public service.
Abbott some time ago clamped down on party officials also being federal lobbyists. O'Farrell banned success fees. Clearly, further action is needed at the state level and that will be a challenge for the new premier.
More generally, the lobbying industry and the influence of big money in politics are becoming serious issues for the integrity of the Australian democratic process even when actual corruption is not involved.
O'Farrell legislated a ban on donations from corporations and associations. It was an obvious strike against Labor and the unions, but would have had a cleansing effect on the conservative side as well. The High Court struck down the legislation, in a case brought by the unions.
Michelle Grattan does not work for, consult to, own shares in or receive funding from any company or organisation that would benefit from this article, and has no relevant affiliations.