The decline of The Australian Financial Review under Michael Stutchbury and Brett Clegg continues apace. Last week was a terrible one for what is supposed to be Australia’s economic and financial journal of record.
Things went badly awry for the paper the previous weekend: while Peter Martin at the Fairfax broadsheets had secured details of Monday’s MYEFO, The AFR ran with the prognostications of Canberra economics consultancy Macroeconomics, run by former Treasury official Stephen Anthony, that Wayne Swan faced a $9 billion fall in revenue that would leave the Budget over $13 billion shy of previous estimates and that the Commonwealth would rack up $72 billion in deficits through to 2016.
Two days later, the Macroeconomics prediction turned out to be wrong, with Swan revealing a $4 billion fall in revenues and a surplus reduced to $1 billion. But The AFR gave Macroeconomics another crack. Last Wednesday it claimed that “independent forecasters have warned the Labor government’s mid-year review won’t deliver a surplus”:
“Analysis of the Mid-Year Economic and Fiscal Outlook by Canberra-based modelling group Macroeconomics suggests if growth slows to the pace forecast by many economists, Treasurer Wayne Swan’s $1.1 billion surplus target will turn into a $7.6 billion deficit … Macroeconomics director of budget and forecasting Stephen Anthony predicts the economy will grow 2.6 per cent this year.”
MYEFO had downgraded growth forecasts for this year to 3%.
So was 3% growth too optimistic for this year, and next year as well? What do “independent forecasters” say? Westpac’s growth forecast is 3.5% for this year and 3.2% next year. The Commonwealth predicts 3.4% and 2.9%. UBS predicts 3.2% for this year. HSBC predicts 3.5% this calendar year, 3.2% next year and 3% in 2014. Even the outfit normally found prognosticating about the budget, Chris Richardson’s Access, predicts 3% this year and 3.2% next year.
At the same time as The AFR was bagging the government’s forecasts, it was cheering on James Packer plan for a second Sydney casino, with column after column of supportive coverage and near adulatory reporting of an “interview” Packer deigned to give in public last week, in which, thoroughly grilled by the AFR’s James Chessell with tough questions such as “does Australia still foster entrepreneurialism” and “who are your influences”, yielded such insights as his comparison of Paul Keating to Fifty Shades of Grey.
This “conversation” was sponsored by The AFR and Deutsche Bank. Along with UBS, Deutsche Bank is closely linked to Packer and a serial agent for his dealmaking. So, apparently, is The AFR now.
The stench emanating from Barangaroo and Macquarie Street over Packer’s push should have been an ideal politics and plutocracy story for The AFR, especially with two of arguably the most despised men to emerge from the NSW Labor Party in a generation, Karl Bitar and Mark Arbib, minions for Packer. Instead, The AFR has been a key part of Packer’s media push.
Then there was a yarn about how an independent report from Booz and Co showed the coal industry that its low productivity and high cost base will make a third of the country’s coal mines unprofitable. The AFR thought sufficiently highly of the Booz report to cite it in an editorial complaining about how Labor had “gone backwards on the reform agenda”.
But a closer look at the report itself reveals that the study is a pretext for an advertisement flogging a Booz management consultancy product, Fit for Growth:
“If you are a mining company CEO or senior executive, the low productivity rates and high costs remaining from the boom leave you with a dilemma. Commodity prices are still high enough to justify new investments, but not at current cost levels … This Fit for Growth approach starts with an analysis of the distinctive ways you create value for customers. Identifying the capabilities that directly support your value proposition gives management a road map for setting investment priorities, realigning cost structures, and reorganising the company …”
And The AFR has become a paper in which stories that don’t fit the pro-business narrative don’t get a look in. Take the case of the collapse of the Hastie Group earlier this year after the emergence of a $20 million hole in accounts. A management-generated $20 million black hole earned but passing interest from The AFR, despite the group struggling through 2011 amid serious questions as to its viability, including an extended trading halt and share price collapse.
If there’d been a $2 million, or $200,000, black hole in trade union accounts, The AFR would be all over it — the HSU saga has been a regular feature in its pages. But a strange lack of curiosity pervades the current incarnation of The AFR about management failures in Australian business.
In July when the federal Treasury’s David Gruen raised the issue of poor management performance affecting Australian productivity, The AFR attempted to nail the messenger and ignored the message. Gruen questioned the performance of management in obtaining productivity gains based on an international study that had concluded that Australian managers were ranked well behind the likes of managers in the US, Germany, Canada and Sweden.
Gruen is “a fine economist”, The AFR condescendingly admitted, but had done us a disservice by providing “support for the alternative and distracting narrative from Prime Minister Julia Gillard that productivity is as much about management capability as industrial relations regulation”.
Staff at the paper knows there’s a problem with the gushing support of business. They know the paper is mutating to become a clone of its rival, The Australian, when for years the one thing that stood The AFR apart was an intellectual rigour when assessing success and failure. But while that was clearly present under editors Max Walsh, Fred Brenchley, Paddy McGuiness and Tony Maiden, it has lessened in the past few years, especially under Glenn Burge. But compared to the performance of Michael Stutchbury (who first joined the paper in the early 1980s), the Burge reign at the paper is now seen by staff in a golden haze.The combination of CEO Brett Clegg (who replaced Michael Gill) and Stutchbury as editor-in-chief (replacing Burge) has seen the paper reflexively take a pro-business line on every issue, from industrial relations, climate change, the productivity debate and trade to innovation and regulation.
Neil Chenoweth seems to be a lonely beacon in his work on the Murdochs and the News Corp empire. But that seems to be a one-off. The paper certainly doesn’t probe the empire of James Packer, Kerry Stokes, Twiggy Forrest or Gina Rinehart with a similar enthusiasm as it has chased down Craig Thomson and the HSU, or Peter Slipper.
Take this morning’s edition. The page one lede is a story about big business rejecting Asian board quotas (a call in the Asian Century paper). And yet the biggest story in the business community yesterday was the virtual implosion of Elders as it put its rural services division (its strongest business) up for sale and prepared to do a deal with its banks that will see the company shrunk with yet more losses for shareholders.
Chanticleer did a lengthy analysis on the back page that was more than enough in terms of explaining the tangled history and lack of performance — Elders was first ruined by John Elliott and his band of merry men back in the 1980s and early 1990s. What should have been mentioned was the destruction of capital achieved by the likes of Elliott, Fosters and the most recent managements and boards of Elders, and the attendant dud management. The billions of dollars of capital (and bank loans and shareholder investments over the years) wiped out by the company’s managers and boards, affecting productivity in sectors such as beer making and liquor and wine growing and distribution, car parts manufacturing, rural services, the timber industry especially, and financial services and minerals.
Elders’ history from the 1980s to today fits neatly with the Gruen comments on poor Australian management. Elders has frittered away billions of dollars over the years, all for no real purpose. At least the most recent management attempted to right-size the company and put it on an even footing where it might have a chance to survive.
For your average investor, anxious for an independent source of financial and economic information, The AFR was once compulsory reading. But under its current leadership it has stopped being a newspaper about business and become one instead for business, an echo chamber for the views of a sector that, as far as the paper’s editors and executives are concerned, can do no wrong.