Australia’s refugee problem has attracted global attention. This from the New York Times.
Exec salaries: Rudd opens fire on the business community
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The Kevin Rudd narrative is a strange affair. One day he’s blasting extreme capitalism and bank pay packets and the next he’s sitting down with 150 business leaders as commander in chief during a rolling economic security crisis. The solutions that Rudd is proposing is largely an offshore issue that would have worked well on the massively leveraged Bear Stearns and Lehman Brothers. Australian banks have largely managed their risks prudently whilst still making a fortune thanks to delivering the world’s most expensive banking system to long-suffering Australian citizens. However, at least Rudd has triggered a long overdue debate that will throw up some classic examples of hypocrisy and conflicts of interest. There was Elisabeth Knight in The SMH today cautioning against Rudd’s move and concluding her column by declaring that Macquarie’s “excess bonus-granting days are long gone”. No disclosure that Elizabeth is married to well-paid Macquarie media analyst Alex Pollack. It was also most amusing to hear everyone from Malcolm Turnbull to News Ltd executive chairman John Hartigan point the finger back at shareholders when it comes to responsibility for excessive executive pay. That, of course, would be the same Malcolm Turnbull who made about $50 million from the original Millionaires Factory, Goldman Sachs, and the same John Hartigan who works for a bloke paid $40 million last year who denies 70% of the News Corp shares a vote. And they would be the shares his family doesn’t own, of course. There is so much that needs to be changed in the Australian financial services sector, but linking executive pay to risk management is just one small component. The really easy reforms would include things like requiring super funds to reveal the pay of top executives. Why should they vote on everyone else’s pay without revealing their own? Even better, the Government should close the loophole which requires public companies to disclose the pay of their top 10 “executives”, the effect of which is that shock jocks like Alan Jones at Macquarie Radio and fund managers like John Sevior at Perpetual are not included in the public figures even though they earn millions. However, the biggest and most fundamental reform needed is a separation of debt and equity in the economy. It’s all very well to say shareholders should vote down executive pay, but the institutions which so blundered on banking risk also happen to be some of the largest fund managers in the world. Swiss giant UBS is the world’s biggest fund manager for the wealthy and has just been bailed out overnight after dropping more than $50 billion on toxic loans. The same applies in Australia where the Commonwealth Bank is both the biggest bank and the biggest fund manager with $100 billion under management. Are fund managers across the country really going to launch a campaign against executive pay at financial institutions when they are the most overpaid group in the community? By launching an attack on bank pay, Rudd has opened fire on the entire business community because the boards of the big banks also happen to dominate the boards of our biggest companies and fund managers. That will make today’s discussion in Sydney very interesting. |
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14 Comments
Simple solution.
Limit wages/salary packages to 20 times the minimum wage.
Only greed dictates that you need more to live comfortably.
Only a tabloid-style journalist would think that calling for CEO pay cuts and sitting down to talk with those CEOs was hypocritical. It is like saying that it is hypocritical to tell your child to clean up their room but then sitting down to have dinner with them even though they haven’t cleaned it up yet.
Most people would think that kind of ‘hypocrisy’ is just normal behaviour.
David Sanderson: there you go giving oxygen to you know who….
I’d prefer to pity the angry,disorientated little child in you JamesK.
Excellent article!
We need journalists who will ask questions like:
1. ‘How much money are the banks actually making?’,
2. ‘Is it true that Lehrman has walked out with a $60 million bonus?’
3. ‘When are politicians’ retirement payments going to be brought in line with every one else’s pensions, and also be means tested?’
We need politicians with the balls to say, ‘Let’s seize the assets of the corporate cowboys- and their wives - who got us into this mess, and put them in state houses, and force them to use public transport. And let’s spend the money on hospitals and schools,’
Jillian, don’t be so nit-picky serious! Consider my last comment a verbal cartoon.
How about my forst 3 points?
This is long overdue. I noted the CEO of Lehman’s blamed everyone else for his woes and accepted no responsibility for the collapse.
We are constantly fed the absurdity that these salaries are justified based on the responsibility of the job yet, if the Lehman example is any guide, they don’t take any?
Whichever way this is cut ,it still boils down to basic greed; greed of a generation who cannot delay gratification and want it all now; greed of shareholders, greed of Directors and greed of CEOs. Go get ‘em Kevin
Jillian, you may be more right than most can know.
The reason why our friend below can smell the roses is ‘cause he’s still suckling at his Mothers breast. Current modern ‘smart’ western man has been suckling on the great breast of words from all the experts for so long he can’t tell when the milk is off. The sustenance makes you believe in the breast. What we’ve missed is that the US (WhiteHouse) Govt has clearly been a bit like some Nazis and also a bit like some Commies I had learned to be weary of in my youth. Of course it dresses its ugly bits in dazzling coats that blind us very successfully.
Peter, The idea of seizing people’s assets is ridiculous. Thousands of investors would leave the country taking their assets with them.
It’s not the corporate executives who caused the current financial crisis. It began with subprime loans that the US government put enormous pressure on US banks to grant.
Or, like Mr T, you can pity the fool.
Heaven help us in Frank “brother of Edward” Said’s world. My idea of comfort won’t be reached for a few million yet.
Stephen Mayne you are as usual well worth reading and thinking with.
Thanks & congrats.
Except -
“The Kevin Rudd narrative is a strange affair. One day he’s blasting extreme capitalism and bank pay packets and the next he’s sitting down with 150 business leaders as commander in chief during a rolling economic security crisis” — I think its cool, it may be more of an experiment than a ‘pre-ordained’ usual political thingy. All the greats in the ‘world’ today are saying stuff like ‘humans will have to innovate their way out of all the shit that’s pouring down on them now’.
Thanks for pointing out that excruciating ‘disclosure failure’. There are bats hiding in every hidden dark place hanging by a claw. I do have a weakness for the name Elizabeth though.
There is no simple solution, however, Rudd & Co keep pushing the problem offshore. When Rudd & Swan were elected the first thing they said was the credit crunch would not hurt Australia. Our Banks were well run, arms length from the problems facing the USA. Well not quite accurate. Next the economy was overheated and spending cuts had to be put into place. Ttwo months later it’s spend, spend, spend !
Next we are told our Banks never lent money like those fools in the USA. Well excuse me, what are low doc loans, balance transfers on credit cards if they are not subprime. Capacity to repay debt was based on the premise that if the ability to repay fell away then the house or property would simply be sold and monies recovered. This was predicated on exactly the same fundamental premise used by the US lenders. Property would keep rising in value. Strange Rudd is yet to mention this yet has moved to guarantee deposits.
In a slowing economy jobs are shed, loans are not repaid and delinquincy rates explode. Banks are required for the first time to support their doubtful debt provisions with hard cash, before it was simply a book entry. Mr Rudd has no comment.
Then we have the holy grail of greed, the Banks found a new revenue stream credit defaults swaps, effectively insuring bad debt for USA and offshore consumer lenders. Great for revenue. The Age the other day suggested our Banks are holding markers for $40 billion. Rudd & Swan are silent. Its off balance sheet and undisclosed. Will anybody claim this? Maybe Rudd and Co. should look back in history see how the members of Lloyds of London fared all those years ago in the 1990’s when they greedily thought they were untouchable, family fortunes were lost…the sure do claim it..perhaps Mr Rudd has a magic wand. We exported most jobs to China so there is little to export. Look at each person in your street ,who buys what they produce at work?
It will not matter what executives are paid there will be so few.
Just cheap populism from Rudd and rather unhelpful politics in this crisis.
That is not to say that the salaries are not ludricous but that has much to do with the lack of influence has on corporate boards and policy of the average shareholder. That is a regulation problem.
Besides the banks here are well run as Rudd is oft wont to inform us.
Pity the child in David Sanderson’s household.
Your statement about the Australian Banks being the most expensive in the world is interesting. It is obvious that the other Banks in the world are and were too cheap. They provided a service which is a false economy to their taxpayers not just their clients.. We and you can not have it both ways. The cost of security in banking is expensive.
ciao Sandy Clarkson