The Australia Institute has conducted an extensive study of 20 of Australia’s largest and most influential trade associations. The study assesses and compares the size, membership, political activities and members’ services offered by each association, and finds that there is tremendous variety in the types and scale of trade association activity.

Most trade associations had some political associations and resources for members, and had made submissions to government or parliamentary inquiries – but the extent of each varied greatly across associations. A minority of associations made political contributions, and only two were found to have produced mandatory standards for members.

Motivated by concern that trade associations might be a “conspiracy against the public”, as Adam Smith warned, the research identified potential misalignment between the conduct of trade associations and the interests of their members, their members’ shareholders, and the public. These include trade associations overstating the contribution of their sector in order to win a social licence to operate; downplaying climate or public health risks; exploiting political connections; and prioritising the careers of the trade association’s staff over the interests of the companies they are meant to represent.

Historical examples show that trade associations in Australia have wielded power and money to frustrate policy reform and win preferential treatment. However, recent failures of trade association lobbying suggests that their influence may be waning.

Better regulation of trade associations could include political transparency measures – like truth in political advertising laws, publishing ministers’ diaries and stricter donation disclosure laws; requiring shareholder approval of memberships and donations; and removing tax deductions for lobbying and political campaigning.

Shareholders and the public as a whole can be reasonably concerned that a company’s trade association memberships are not always in the public interest, or even in the interests of the owners of that company.