Australians are being very poorly served by their politicians at present. They are consumed by combat and we are being spiflicated by spin.
In the midst of the greatest economic crisis in 60 years and an impending climate disaster, there is no spirit of bipartisanship or even a modicum of reluctant co-operation during crisis. There is no intelligent debate on any issue.
I can’t remember a time, apart from 1975, when the issues were more important and the political discussion emptier.
Both sides of politics are as bad as each other. No-one, it seems, can make a speech without the main point of it being an attack the other side; no politician seems capable of assessing any idea on its merits except as an opportunity to gain short-term political advantage.
And everything, everywhere and always is about spin: frankness and substance no longer exist. The media are so cowed by the relentless pressure from political advisers and from cost cutting, and business leaders are so worried about retribution, that the politicians are not being held to account.
Yesterday’s stable door closures on executive salaries were typical, albeit minor in the context of climate change and recession.
It has been plain for years that the law on termination payments needed to be changed: with executive salaries rising at many times the rate of ordinary earnings, the limit of seven times final salary before shareholder approval was required had become too high.
But instead of a simple announcement of a change in the law to bring it up to date, what we get from Treasurer Wayne Swan and Assistant Treasurer Nick Sherry is: “We’ve identified a major loophole in current law, left to us by the previous government”, plus the public ‘naming and shaming’ of Owen Hegarty and John Alexander.
Both of these men plainly got too much on termination, especially Alexander, who didn’t actually go away, and in each case their businesses have since crumbled which makes it worse, but yesterday’s effort was pathetic.
It was not a “loophole”, but simply an out-of-date law, and Oxiana and PBL acted entirely within it. From now on, whenever old laws are updated will the government publicly “out” those who have been obeying the previous version?
In addition to that, we will now have an inquiry into director and executive remuneration in Australia conducted by three underpaid bureaucrats.
Nothing wrong with that in principle, although presumably its outcome will be filed away with all the other inquiries that have been announced by this government to create the appearance of action, before being ignored.
And while it might be argued that outsiders can bring a fresh approach to the subject, asking three bureaucrats to inquire into private sector salaries is a clue that genuine solutions are not required.
Gary Banks, Robert Fitzgerald and Allan Fels have all had modest government or not-for-profit salaries all their lives, and few if any complications to worry about in the form of bonuses.
Their collective experience with the complications of incentive payments approximates zero, but they are intelligent, forensic individuals, so there is no reason they can’t come up with some interesting ideas.
When you drill past the crust of community outrage, the issues surrounding this subject are complex and difficult, and largely result from the unintended consequences of apparently sensible laws.
All directors know, and admit, that they lost control of executive salaries after they were published in the annual reports and their CEOs saw what their peers were getting. Companies began crowding into the top quartile of remuneration to ensure they were seen as a good employer.
And then bonuses were turbocharged by the sharemarket boom and, more importantly, by the pressure for short-term performance from institutional investors.
That pressure, in turn, was fanned by superannuation choice.
Will Banks, Fitzgerald and Fels recommend that salaries should be removed from public view again, and that competition between super funds also be removed by the cancellation of fund choice?
Hardly. Perhaps they will suggest that non-binding votes on remuneration be made binding, which would make for an interesting debate. The government wouldn’t do it, of course: all the best executives would immediately emigrate and we’d end up with ninnies — as soon as Europe and America came out of their own excessive-salary induced recession, of course.
The best result would be some ideas from the Productivity Commission trio about how best to structure short-term incentives, which is the most problematic area of remuneration.
They don’t have a clue at the moment, of course, so they start with a blank sheet (in my view there should definitely have been someone from the private sector on the panel, if not two people — a remuneration consultant and a company director).
But hopefully the PC three will approach the task with an open mind, and not envy, and the business community will take the inquiry seriously and work hard to educate them on the complexities.
Perhaps the best solution is to simply cancel short-term incentives entirely and just have base salary plus long-term incentives. Simplifying the hurdles and making them fully transparent will be suggested to them, but do we really have to force companies to disclose what they are asking their CEOs to achieve over the next three years in order to bring some sense to salaries? No government would do that anyway.
And in any case the bonuses are over now and the recipients are trying to sell their holiday houses and in many cases trying to find another job.
This is indeed the stable door inquiry.
I agree entirely with Alan Kohler but he might have extended his commentary on yesterday’s parliamentary shenanigins to include Joe Hockey’s disgraceful behaviour when asking a question about the so-called RuddBank. At a time like this, to openly question a specific property development in central Brisbane and, while doing so, to accuse the Treasurer of some sort of skullduggery [‘brown paper bags’ etc] was surely the very height [depth?] of irresponsibility. Quite apart from the matter of jobs which was subsequently canvassed, is Hockey just too thick to realise that many people’s self-managed superannuation funds have some exposure to this company and its developments, especially the one in question. Having a big Liberal buffoon talking the project down in Parliament is exactly what those people want eh?
I agree with a lot of what you say.
I listen to the parliament as do you unless your actually there and present.
I too am disappointed but I find it as clear as a sunny day to a winter storm that the opposition pollies performance almost without exception offends grossly in the way you describe while government pollies resort to it in bits or mildly with just a few exceptions that are worse.
On this subject you have to be (by the ‘scientific’ laws of psychology) at least somewhat biased to your constituents, the business community.
I also share with pc remorse for the absence of the ‘spirit of bipartisanship or even a modicum of reluctant co-operation’ and feel you (as a media person with more qualifications) should note that on a number of occasions Malcolm Turnbull was quick to clearly articulate with great detail the opposition’s absolute commitment to bipartisanship which immediately fades before he can demonstrate it with action once he has had a few fabulous headlines.
This has stopped as the media won’t be fooled any more and there will not be a fabulous headline in it.
Alan,
Can you ever remember a ‘spirit of bipartisanship or even a modicum of reluctant co-operation’ occurring when the coalition was in Opposition. The Liberal Party’s ‘born to rule’ mentality prevents this from happening, although there was a glimpse of it early in Malcolm Turnbull’s leadership before he was effectively shut down by the threat of Peter Costello. Having a lightweight like Joe Hockey as Shadow Treasurer doesn’t help – his bluster about cats and dogs benefiting from the stimulus package was painful to listen to.
When the then Major General Peter Cosgrove commanded the force in East Timor in 1999, his pay was three and one half times that of a private soldier, Earlier, after the first Gulf War in 1991, the US senior General Norman Schwarzkopf directed a review be conducted of armed forces pay. For the United States with a force very much larger than Australia’s, it concluded that its most senior general should be paid no more than nine times that of a private soldier. Surely in Australia the principle of a ratio of the least paid to the most generously paid could be a multiple of average weekly earnings, determined by a panel of shareholders, employees, yes employees, and adjudicated by the Industrial Relations Commission if needed. Finally it should be policed by the Australian Tax Office. The besuited corporate wolves need to be put on a short lead.
Please, Alan,
Your suggestion that “all the best executives would immediately emigrate and we’d end up with ninnies” is absolutely outrageous.
To the average joe on the street, given the current situation, it would appear that the (greedy) ninnies have been in charge too long.
Maybe, just maybe, with reasonable and proportional salary and bonus payments, we could attract some CEO’s who are in it for the passion, the challenges and the reward of running a succesful business for the benefit of all stake holders.
Instead of being in it for over-inflated, ego-stroking salaries and short term, high risk improvements to the bottom line. (what did happen to the triple bottom line? just talk while the money is good eh?)
Also to those arguing over labor v liberal, this was perfectly summed up in a previous thread with the comment “two cheeks of the same arse”