Another week, another government-appointee giving the Liberal Party
grief. First it was Robert Gerard and now Professor Ian Harper, the head of the federal government’s new Fair Pay
Commission, which takes over from the Australian Industrial Relations Commission.

The well-respected economist was a non-executive director of Australian Derivatives Exchange
(ADX), a company that flew into ASIC’s radar four years ago, says The Age, following up on today’s AM report. ADX, a futures exchange set up in 2000 with the approval of the government, went broke owing workers more than
$700,000, according to a report, and it may also have breached corporations law.

At the time, administrators Steve Parbery and Vince Barilla found that
while there were possible defences available to the directors there was
also “an arguable case that the
directors may have committed offences pursuant to the insolvent trading
provisions of the corporations law.” See also their March 2002 report to creditors.

The story – which has been on the public record since 2001 – has been revisited just days after the Governor-General gave Royal Assent to laws setting up the Fair Pay Commission.

So did the government know of Harper’s involvement with ADX?
says Ian Hanke, press secretary to Kevin Andrews. This matter
discussed with Professor Harper – an “eminently suitable” candidate to
head up the Fair Pay Commission – and was “no secret,” Hanke told Crikey
today. All the “due and appropriate processes were followed” and the
$700,000 repaid, he says.

The company did appoint a voluntary administrator, but only after ASIC had made formal queries about its financial position. ASIC reported at the time that ADX
had “announced that it was in breach of a condition in its licence that
requires ADX to have sufficient liquid funds at all times to meet
reasonably foreseen cash requirements for the following three months.”
The directors also admitted that ADX had breached the covenants set by its bankers, reports AM, and the administrators concluded that ADX may have been operating while insolvent for
3 months.

Only four months ago, Professor Harper was appointed
to the Fair Pay Commission. An Executive Director of the
Centre for Business and Public Policy at the Melbourne Business School
and “one of Australia’s most distinguished and respected academic
economists,” it was Harper’s Christian beliefs that provoked the most media attention. “He
will be bring a new level of economic rigour to the wage-setting
process, and will be scrupulously fair-minded and independent,” said Minister
for Employment and Workplace Relations Kevin Andrews.

But how independent is an interesting question. Just recently, PM unearthed a little-known paper by Harper which it said “may help explain why he was chosen for the job.”

In it, Harper is critical of The
Harvester judgement of 1907, which defined a “fair and reasonable” wage
as “a basic wage” sufficient to meet “the normal needs of a human being
living in a civilised community.” Harper argues that wage rises exceeding
growth in labour productivity hurt the economy and cost jobs, reports
PM. And he suggests that even sweatshop labour rates can have a virtue.
article, titled “Quo Vadis Australia,” is scathing about the judgement
regarded as the cornerstone of Australia’s unique arbitration system.

Crikey tried to contact Professor Harper for his response but he wasn’t able to get back to us before deadline.