Peter Costello’s celebration of his 65th birthday on Sunday was barely over when The Australian today published an embarrassing story on its front page, revealing James Packer’s claim that he paid Costello $300,000 in 2011 to try and lobby his friend and former staffer Michael O’Brien, the then Victorian gaming minister.
While Costello is yet to comment and the claim is unconfirmed, the story is embarrassing on a number of fronts, one of which being Peter is the younger brother of Australia’s longest-serving gambling reform campaigner, Tim Costello.
The churchgoing former federal treasurer used to paint himself as being anti-gambling, having agreed to establish the first of two productivity commission inquiries into the gambling industry in 1999 while serving as Australia’s longest-serving treasurer. Indeed, in his Higgins victory speech after the Coalition’s 2007 election, he said the following:
I do agree with Stephen on some of his other policies including poker machines, which I think are completely out of control in this state. Poker machines is a means of taking from the poor and giving to the rich.
Fast-forward four years, and the anti-gambling advocate allegedly was being secretly paid $300,000 by Australia’s most powerful billionaire gambling oligarch to influence his political mates.
The framing of “paid to lobby Michael O’Brien” was Packer’s language in a bundle of leaked emails obtained by The Australian, but Packer is correct that Peter Costello appears to have taken the money but was unable to deliver, because O’Brien was quoted in the story saying that he never spoke to Peter Costello on the issue. Presumably, O’Brien’s mobile number was provided to Packer.
Indeed, if anything, things went from bad to worse for Packer because O’Brien was promoted to Victorian treasurer in March 2013 and within eight months had announced a massive tax slug on Crown Melbourne without even first advising state cabinet.
The tax grab comprised an additional annual levy of $22,715 on each of its 2700 poker machines, which would have cost Crown Melbourne more than $60 million a year. Packer told me in a December 2014 meeting that this proposal “would have taken away a third of my Victorian business”.
Packer certainly spoke to O’Brien directly, who told colleagues at the time he was abused in a way that had never happened to him before in politics. The parties later settled their dispute in August 2014, with Packer committing to make unconditional additional one-off payments of $500 million, plus up to $200 million in further revenue-linked payments in exchange for a 17-year licence extension to 2050, a cut in high-roller tax payments, and a modest expansion of pokies and table games.
Costello was only receiving all these emails from Packer — those sent to Nine related to journalist Nick McKenzie’s Crown reporting — because he was chair of Nine at the time McKenzie was destroying Packer’s and Crown’s reputations. But it raises questions as to whether he is suitable to remain in the position.
Costello’s path to the chairmanship at Nine was an interesting one. He was first appointed as a director via the courts and law firm Gilbert + Tobin in 2012-13, when private equity giant CVC and various vulture funds put Nine into administration before engineering a debt for equity swap.
He then landed his first public company board seat when Nine was refloated in December 2013, and assumed the chair at Nine in February 2016, replacing former Murdoch executive David Haslingden who was juggling too many conflicts of interest as the part-owner of an independent television production company.
He then became chairman of Australia’s most diverse media company in December 2018, when Nine’s merger with Fairfax Media was completed.
From a governance point of view, the biggest issue here is the lack of disclosure of payments to former politicians who, while in office, made decisions that benefitted a powerful billionaire oligarch.
So, what did Peter Costello do in Parliament which had the effect of enriching the Packers? As treasurer, he was the ultimate decision-maker on foreign investment. And after Family First’s Steve Fielding delivered the Coalition Senate control in 2004, the Howard government lifted the ban on foreign control of television licences, with Costello himself then directly approving CVC’s $5.5 billion purchase of a 75% stake in PBL Media.
This was the Packer family’s most lucrative deal, eclipsing the famous $1.05 billion Channel Nine deal with Alan Bond in 1987 and the more recent $3.3 billion exit from Crown Resorts.
When Costello retired from Parliament in October 2009, he set up the lobbying firm ECG with two former staffers, David Gazard and Jonathan Epstein. He remains chairman to this day, despite being appointed to the Future Fund board in 2009 and becoming chair in 2014. Again, this was an example of Costello ultimately benefitting from a decision he made, because as treasurer he drove the establishment of the Future Fund in the first place.
Costello’s two former staffer partners at ECG ended up fighting in the Victorian Supreme Court in 2021 over $4.5 million in controversial Afterpay profits. Gazard then left ECG, but interestingly Epstein’s profile on the ECG website says that “Jonathan was recently employed as a Senior Investment Analyst at the Future Fund — Australia’s sovereign fund”.
Was the Future Fund’s powerful non-executive chairman a referee ahead of this six-figure salary appointment? In light of all the John Barilaro revelations, these sorts of connections are increasingly sensitive.
Peter Costello has faced conflict-of-interest claims in the past, notably in 2013 when he was tapped by the then Queensland opposition to conduct an independent audit of Queensland’s finances, despite ECG being a registered lobbyist in Queensland. The denials were predictably emphatic at the time, as is the way when it comes to Peter Costello and integrity issues.
He also arguably shouldn’t have spent time during his final few months in Parliament working on his memoir, which was launched in August 2009 and delivered him a six-figure windfall.
There’s no doubt that Peter Costello is now a multimillionaire, aided by the fact he is entitled to a six-figure indexed parliamentary pension for the rest of his days. This is pretty handy considering that the Future Fund chairmanship is now paying him $215,000 a year.
However, his big-earning days may soon be coming to an end. It is hard to see the Albanese government following the lead of Kevin Rudd and Wayne Swan by reappointing him to the Future Fund board when his third five-year term expires in February 2024 (see page 60 of its latest annual report).
There’s also the question of chair succession at Nine, particularly given this year’s change of government, Costello’s lack of Labor connections, and the optics of having a Liberal Party life member as “independent“ chairman of a media conglomerate selling itself as “Independent, Always”.
After more than six years as Nine chair and almost a decade on the board, Costello is expected to retire no later than the 2023 AGM — 15 months from now — when his latest three-year term expires.
He should go sooner than that, as his presence in that position opens him up to direct lobbying from current and former lobbying clients such as James Packer.
Thankfully, Costello appears to have maintained his solid record of not interfering on editorial matters at Nine, as Nick McKenzie went on to destroy Packer’s reputation at Crown through the most powerful dual platform available in Australia: 60 Minutes and the front pages of The Age and the SMH.
Remarkably, Packer doesn’t appear to be bitter with McKenzie, telling his email correspondents at Nine that he had produced the “best story of the year” and “definitely knew more about what was really happening at Crown than I did”.
However, Packer did advise Costello to “resign from your public positions and get on with your life again”, which is probably fairly sound advice from the angry billionaire to someone he sees as his failed former lobbyist.
Packer has a team of spin doctors in place trying to restore his reputation. This is why he recently donated $250,000 to the Julian Assange campaign. However, this hit on Peter Costello also suggests that he has revenge on his menu as well.
