And so we now can ask, what’s gone wrong? And why were obvious questions not asked by governments and regulators – until slapped in the face with the obvious.
Investigations into Crown’s casino culture, operations, management, processes and practice have identified numerous problems that have resulted in extremely poor public outcomes. In short time, we have tangible evidence of corrupt practice, poor internal management, incompetent governance, a dysfunctional board culture and regulatory culture of oversight that sees nothing, knows nothing and does nothing.
At the same time, as we have been subjected to insights as to how Crown really conducted business, the Australian Government has a renewed emphasis on regulators. This has included a new Regulator Performance Guide, which is to help regulators meet government expectations by engaging with a regulated community more effectively and enforcing the law more effectively.
The guide sets out a clear framework for regulatory assessment, beginning with the statement of expectations by the minister. Next, comes the regulator statement of intent, which is based on these expectations. Then follows the plan to deliver the regulator’s corporate and strategic plans. Finally, the regulator acts with proper intent to perform its duty and review and report on progress and results.
One way to test if the guide is worth the paper it’s printed on is to conduct a simple thought experiment and ask an uncomplicated question, Would a regulator performance guide have changed Crown and the regulation of Crown for the better? Would it have reduced criminality? Improved reporting? Reduced money laundering?
The problem here is that no matter how good the performance framework is, if the regulatory settings are wrong, the regulator will be hamstrung in its attempts to regulate.
Crown is an important source of revenue and employment in Victoria. Over the years, it appears to have convinced all that its operations would by definition benefit Victoria and, therefore, that it should be left alone to its own devices.
Not bothered by rigorous, diligent or effective oversight.
This lack of oversight renders moot the idea of effective or efficient regulatory performance. It’s hard not to conclude that the sorry story of Crown – the allegations of corruption and criminality – comes from the unwillingness of governments to build, develop, and maintain a dedicated, independent regulator within a fit for purpose legal and regulatory framework.
A simple principle of regulatory practice is that where regulator’s decisions have a significant impact on the interests of the powerful – those who can draw on powerful economic resources, and who have the ability to lobby secretly and successfully – regulatory independence is essential. It is central to the integrity of the decision making of the regulator. It assures the community that decisions are being made at arm’s length from political players, without bias and with integrity.
The need for independence is greatest when governments themselves are players that have a vested interest.
Independence is necessary to maintain public confidence in the regulator’s decisions. The public good cannot be upheld if a regulator is pressured to put aside decisions made on the basis of evidence, of harms. Without independence, lobby groups and interested parties will game the system to the cost of the community and society.
If the community and society are to be properly protected, then we need fearless regulators. One that that is clear in its role and objectives. One that and carries a big stick that it is not afraid to use.
Obviously, from its behaviour, Crown feared nothing and nobody. As an employer of choice for superannuated politicians and senior bureaucrats, it acted in the apparent belief that it was immune and could act with impunity. In large part this seems to have been because the political environment and culture around Crown were more important than any regulatory objectives.
Speaking at the 2021 ACCC/AER Regulatory Conference, the Chair of the Australian Competition and Consumer Commission, Rod Sims, argued that many of Australia’s key economic assets have been privatised without regulation oversight and often with rules that are designed to protect them from competition.
That is, the decisions of government explicitly made economic regulation difficult or impossible – and, according to Mr Sims, made Australia poorer as a result.
And so it is with Crown. The decisions of Victorian governments have made the work of good regulators impossible.
It is inexplicable, for example, that the terms of reference for the Crown Royal Commission do not explicitly provide for a very close look at the work of the Victorian Commission for Gambling and Liquor Regulation: its performance; its culture; its independence; its objectives; powers and resources; the adequacy of legislation generally.
Once the dust of the Royal Commission settles comes the hard work of implementing a change in regulatory structure and practice. The need is for a world class regulator who is diligent, competent and assiduous in its strategic and operational work.
All this counts for nothing, however, without clear objectives, regulatory freedom to move, the necessary tools and proper resources. Without these, a performance guide is good only for papering over gaps.