The extent to which The Australian Financial Review’s business coverage is distinguishable from a media release distribution service is increasingly unclear: perhaps the only real value-add Australia’s business daily offers is a willingness to provide editorial cover for business when they stuff up.
Take Myer’s Bernie Brookes’ sublimely stupid comment about the NDIS levy being money consumers “might have spent with us”.
Brookes’s complaint didn’t even make sense. The $3 billion the levy will raise in 2014 is just over 1% of retail spending last year. Any number of regular business cycle events would dwarf that sort of impact – a surge in the value of the dollar, a spike (or fall as now) in petrol prices, a rise in unemployment, the relentless rise of online retail because chains like Myer have lost the plot in giving Australians what they want. Compared to those, a less than 1% drop in discretionary consumer spending is trivial.
But where does Brookes think the $3 billion raised by the levy will go? His comments suggest he thinks it will somehow vanish from the economy, as if those greedy disabled people will simply be eating $100 notes. In fact, the money will support jobs in the disability services sector, as well as additional spending on goods and services that will circulate within the domestic economy, with much of it ending up, yes, back in retailers’ pockets.
The AFR‘s view on the disability scheme, via its editorial on the issue this morning, was “while the disability cause is worthy, it should be paid for by cutting spending on something less worthy.”
It’s always easy to say something elsewhere in the budget should be cut, without specifying what. So, how about cutting into the $20 billion dividend imputation budget impact that benefits superannuants and super fund managers, or halving the tax deductibility of interest from 30% to 15%? They are far less worthy issues than disability insurance. If you got rid of dividend imputation, you could give business a tax cut and help pay for the NDIS, and help cover the budget deficit.
That won’t appear on too many business wishlists because dividend imputation and the tax deductibility of interest are among the cherished tax advantages for business, especially the fee gouging funds management industry sucking billions from the $1.4 trillion dollar super savings pool.
But business always prefers everyone else to feel the pain.
Nor is there much corporate memory about the role taxpayers and levies have played in saving key business sectors. We’ve forgotten about the levies imposed during the Howard government’s time in office, from insurance, to sugar, to airline travel to milk. They collected billions of dollars to help specific sectors rather than support them directly from the budget. There weren’t too many business complaints about the $5 billion-plus collected under the HIH levy after the insurer of the same name collapsed. The sugar and milk levies allowed those industries to restructure and become more efficient. The airline travel levy helped pay out the creditors and staff after the failure of Ansett.
And now there’s another levy of around $1 billion (one third the impact of the NDIS) in NSW as that government sensibly moves towards switching the funding fire and emergency services costs from a levy on home and contents insurance policies to all householders, not just those with insurance. Will the AFR and the business community decry this reform, or support it (which would undermine their views on the NDIS funding)?
And remember how the two cash splashes from the Rudd government, and the spending on schools, helped save retailing and the construction industry from a nasty slump in 2008-10? While some business leaders and the media carped about wasteful spending, they happily took consumers’ money and used it to bolster their sales and earnings, including the media companies that benefited from an advertising market kept buoyant by stimulus spending and government-supported consumer confidence, and big retailers who directly enjoyed the benefit of the government’s stimulus measures.
It seems Bernie Brookes and co are happy to be part of Australian society when it comes to getting a handout but suddenly want out if they think they may have to contribute. Or, put another way, privatize the profits and socialize the losses.
Social media impacts can be overstated, but anyone who looked at Facebook or Twitter yesterday would have seen how Brookes’ remarks trashed the Myer brand, and a check on the company share price would have confirmed it. When people started proudly cutting up their Myer credit cards, it was clear Brookes’s stupidity had inflicted lasting damage. Nor was it helped by Brookes issuing one of those annoying half-apologies directed at “those who have taken offence”, as though it was others’ fault they were offended, rather than his for uttering such stupid remarks in the first place.
A newspaper committed to giving investors and financially-engaged readers an informed, independent perspective on business issues would have called out Brookes, and maybe even given a little history lesson in the role levies have played in the Australian economy in recent years. The AFR, however, now regards its role as reflexively supporting whatever business says, regardless of the lack of logic or evidence for it. As a result it is failing the business community it is spruiking for and not playing the important role of examining issues with an independent eye for what is the national good.