Not much political nous was required to anticipate that John Barilaro’s appointment to a plum trade post in New York – a post Barilaro helped create when he was trade minister – would unleash a firestorm the minute it became public in mid-June.
“We were all scratching our heads to be honest” a senior minister said this week, after trade and investment minister Stuart Ayres fell on his sword. “It was such an obvious own goal. As soon as senior ministers saw [the Barilaro appointment] we were just furious.”
The mystery is this: why was the political risk not obvious to the premier from the outset? Why was it not obvious to his chief of staff, Bran Black? Or, for that matter, to deputy premier Paul Toole, who like Perrottet, knew about it by the end of April at the very latest?
Why was it not glaringly apparent to Ayres, who knew as far back as December of Barilaro’s interest in the role and texted him a link to the press notice advertising the job?
Even the senior public servant who made the final decision – with plenty of input, it now emerges, from Ayres – confessed to a NSW upper house inquiry this week she’d harboured some “nervousness” about appointing Barilaro to the half a million dollar post, which came with a hefty living allowance and snappy new offices in the Big Apple.
Amy Brown, head of the department of enterprise, investment and trade, told the upper house committee: “I was nervous about it … because he [Barilaro] had some history with the NSW government that [could] make it difficult for him to take up the role without media and public controversy”.
She was nervous enough to take soundings from the head of Perrottet’s department, Michael Coutts-Trotter, who – she claimed – raised no red flags after she asked him to check with the premier about it on April 12.
(Coutts-Trotter has declined to comment. He says Brown’s evidence will be “addressed” in the still-unpublished review of the Barilaro appointment commissioned by Perrottet from former public service commissioner Graeme Head.)
But Brown’s observation that Barilaro had “history” is pertinent.
As one senior MP reminded the Herald this week, that history included Barilaro getting into heated text exchanges with ministerial colleagues. It included nearly blowing up the Coalition government in late 2020 when, as deputy premier, he threatened to take the Nationals to the crossbench in a dispute with Gladys Berejiklian over koala habitat.
It included Barilaro once publicly telling then prime minister Malcolm Turnbull to resign, and labelling then federal Nationals leader Michael McCormack a failed leader. Liberal colleagues saw him as an unpredictable powder keg.
More recently, Barilaro’s objection to media intrusion saw him involved in a scuffle with a camera crew outside a Manly hotel in late July.
“It goes to temperament,” says a former colleague, querying whether the volatile former deputy premier could ever have been a prudent choice for what was a quasi-diplomatic role.
In fairness to Barilaro, he was unanimously endorsed by a public service selection panel. But in bombshell evidence to the upper house inquiry on Friday, independent panel member Kathrina Lo, the public service commissioner, said she would never have endorsed the selection panel’s proceedings “had I known [then] what I know now”. That included knowledge since revealed about the extent of “ministerial input” into the appointment process.
Ayres’ resignation late on Tuesday – offered even as he was insisting he’d done nothing untoward – caps a disastrous two months for Perrottet.
The Ayres/Barilaro saga has overshadowed a carefully crafted budget which was meant to put the near 12-year-old Coalition government on a war footing for the state election in seven months’ time.
It threatens Ayres’ hold on the highly marginal seat of Penrith and blows a hole in the attempt to woo back voters in the city’s west who are still smarting from the harsher pandemic lockdowns they suffered.
It comes hard on the heels of Perrottet’s sacking this week of Fair Trading Minister, Eleni Petinos, for alleged bullying, and coincides with the looming suspension from state parliament of another former minister John Sidoti, found by ICAC last month to have acted corruptly.
The Barilaro controversy dogged Perrottet for the entire duration of his recent trade mission to Asia, which included a defiant Ayres joining him for the Indian leg of the trip.
And it has ignited a divisive contest for the deputy Liberal leadership vacated by Ayers, inflaming factional tensions that have only been thinly been papered over since the shock departure of Berejiklian less than a year ago.
Little love is lost between the two front-runners, moderates leader and treasurer Matt Kean, and pugnacious centre-right faction boss, transport minister David Elliott.
Just weeks ago Elliott was publicly accusing Kean of “treachery” for secretly egging on a journalist to pressure Scott Morrison during the federal election campaign over the Katherine Deves affair. This week Elliott continued a thinly veiled attack on Kean on radio 2GB over delayed compensation for taxi plate-holders.
Perrottet’s woes also stretch into the parliament, which will sit next week.
Only six sitting weeks remaining until NSW goes to the polls in March, and the Coalition’s hold on government is increasingly precarious because of its minority status. Currently, it holds 45 seats, two short of a majority. The situation is made worse by Kiama MP Gareth Ward remaining suspended from parliament while he faces a charge of sexual assault and Sidoti’s impending eviction.
That means two more votes from former Liberals, which the government could have depended on to pass legislation, are gone. Lake Macquarie MP Greg Piper, one of the kingmaker independents who the government relies on for confidence and supply, acknowledges that the Coalition is in a downward spiral.
However, the long-term MP, who often forms a voting bloc with fellow independents Alex Greenwich and Joe McGirr, remains reluctant to cause more trouble for Perrottet. “There’s no practical benefit, no utility in looking to bring down the government at this stage. Our role is to make sure the government continues to perform correctly,” Piper says.
For Ayres, the way in which the week has played out must have been personally shattering. Brash and energetic, Ayers held a raft of ministerial posts – including enterprise, tourism, sport and western Sydney on top of trade and investment – which placed him at the centre of a network of powerful Sydney business and sporting interests.
He and partner, former foreign minister Senator Marise Payne, were among the city’s power couples, often seen at sporting fixtures, well known in racing circles and both senior figures in the Liberal party’s moderate faction.
On Tuesday morning, Ayers stood on the freshly laid turf at the rebuilt Allianz stadium, a pet project of his for years, and basked in its completion.
But that fleeting moment of triumph would be overshadowed within hours by a blast from ARLC chair Peter V’landys, furious that suburban stadiums were no longer to get promised funds from the state government. (Ayers’ local Penrith stadium retains its promised $300 million).
By late Tuesday, Ayers was calling it quits from the ministry, after Perrottet called him in and handed him a draft section of the Head report which flagged a possible breach of the ministerial code of conduct over the Barilaro appointment.
Ayers quit with a defiant statement denying any such breach and maintaining he’d always acted with “the highest levels of integrity” as minister.
The turmoil engulfing the government has generated a febrile internal atmosphere, with gossip, rumour and conspiracy theories running riot through Liberal ranks. One senior source postulated on Thursday that a challenge to Perrottet was imminent. Most senior ministers regard that as far-fetched but their confidence in Perrottet’s judgment has been severely shaken.
Senior Liberals fear the premier does not have politically astute minds in his office helping guide him. Black, his right-hand man, is a former lawyer in the NSW Liberals’ head office who is viewed as a “lovely bloke”, according to ministers, but lacking in political nous.
The turmoil engulfing the government has generated a febrile internal atmosphere.
“His office will let him down,” according to one senior minister. He also faces the loss of some wise heads at the election, with his friend, infrastructure minister Rob Stokes and Customer Service minister Victor Dominello widely tipped to retire from politics at the election.
The protracted process the premier settled on to manage the Barilaro controversy is seen by senior colleagues as illustrative of the shortfalls in his political management.
Ayers had originally told parliament the appointment of Barilaro was, under current rules, entirely a matter for the public service and had been conducted at “arms length” from the government. Perrottet echoed that view and indeed initially predicted that Barilaro would do a “brilliant job”.
But once the upper house inquiry started it quickly became clear that Ayers’ definition of “arms length” was different to that of his colleagues.
Brown has spoken of having “multiple intersection points” with Ayers throughout the process of appointing Barilaro and many of Ayers’ colleagues now believe he misled parliament – something the former trade minister vehemently denies. Barilaro quit the New York role at the end of June, never having set foot there, saying his position had become untenable.
Perrottet thought he was solving a problem by setting up the Head review in June, but created another dilemma.
It meant that until Head reported, the upper house inquiry would continue having a field day, producing one damning revelation after another.
Many of Perrottet’s colleagues believe he didn’t need a full-blown inquiry from Head in any case. “The early evidence coming out of the upper house hearings was clear enough” says one minister. “Every person in the pub was calling it”.
Perrottet has now announced a third inquiry into whether Ayres has indeed breached the ministerial code of conduct. This appears to relate to that portion of the code (incorporated in ICAC regulations) that forbids a minister from acting in a way that would require public servants to breach the law or their own ethical obligations.
The revelations from evidence before the upper house inquiry have been many. They include unmasking the fact that a senior woman, Investment NSW executive Jenny West had originally been told she had the New York job late last year, before later being advised by Brown that the government was changing the appointment process so she no longer had the role.
Then it emerged that a second woman, Kimberly Cole, had outranked Barilaro when a second round of interviews were conducted, but that the rankings were subsequently altered to place the former deputy premier in front. (Brown addressed this on Wednesday saying she had the report amended because she did not believe it fairly reflected the selection panel’s assessment).
It was also clear from Brown’s evidence that the bureaucracy was in a state of confusion over how the appointments of Barilaro and five other new overseas trade posts were to proceed.
The original decision had been for them to be public service hires. Then, in September last year, Barilaro got cabinet to agree to make the posts political appointments. That was just days before his resignation as deputy premier and trade minister.
When Ayres succeeded Barilaro as minister, he decided to change the trade commissioner roles back to public service appointments, but that decision was never conveyed to the public service via any formal instrument. Brown says she was left trying to straddle an ill-defined hybrid process that amounted to a “grey” zone. Ayres and colleagues differ over whether he ever got the changed process endorsed by the relevant cabinet committee.
Brown’s evidence to the upper house inquiry has generated collateral damage for another of the NSW overseas trade posts, the office of the state’s Agent-General in London.
Brown revealed to the inquiry that there’d been “protracted” and “difficult” contract negotiations with the successful candidate, former Business CEO Stephen Cartwright, who whenever negotiations hit a “particularly difficult” patch would say “Well, I’ll just escalate this to the deputy premier or the premier”.
“I got the impression that he [Cartwright] felt he had some sort of elevated status,” she said.
Brown added that she was concerned that the whole inquiry process was damaging the public service’s prospects of attracting “high-performing” applicants for posts in future.
Perrottet has chafed under the background grumbling from his colleagues that he was acting too slowly. The swift removal of Petinos within days of complaints against her surfacing was one sign he’s now listening.
The second was his decision to call in Ayers and confront him with the draft section of the Head review on Tuesday without waiting for the full report to be released.
By Wednesday, Ayres was officially gone and his extensive suite of portfolios parcelled out among three other ministers.
Concerning his interactions with Brown, Ayres has said “it’s a standard practice of secretaries and agency heads to update their ministers”. He’s also told colleagues that he had no legal power to overturn the Barilaro appointment – and perhaps he’s right, though that doesn’t address whether he should have steered Barilaro away from applying in the first place.
Barilaro will give evidence to the committee on Monday. The government’s travails from this affair remain far from over.
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