Corporate corruption catches up with govt
Business Spectator 8 APR, 5:00 PM
Alan Kohler
The Government is finally making it clear that it can’t fight an election on union corruption while at the same time ignoring the stink emanating from the corporate sector.
The political atmosphere around corporates and wealthy people has turned dramatically toxic, arguably worse than that around the unions.
In fact, in many ways the 2016 election should really be fought on corporate corruption, not union corruption, or at least both together: the behaviour of corporations and wealthy people, globally, looks rather worse than that uncovered by the Australian Trade Union Royal Commission.
Four things have happened to change the political atmosphere around the corporate and high net worth sectors:
1. The offshore bribery revealed by Fairfax and the ABC;
2. The massive “Panama Papers” leak of documents from law firm Mossack Fonseca which also names a number of Australians;
3. The controversy about multinational corporate profit shifting to reduce tax;
4. The constant revelations about banks behaving badly, culminating in this week’s ASIC action against Westpac for rigging the bank bill swap rate;
It took a while — perhaps longer than it should have — but there has been now a clear shift in the relationship between the big end of town and the Coalition.
The Government is still resisting a Royal Commission into banking, as the Opposition is calling for, but the Prime Minister Malcolm Turnbull signalled on Wednesday, in a speech at Westpac’s 200th anniversary lunch, that things have changed: something is going to happen, and it may not just be aimed at banks.
My understanding is that there will be at least a big lift in enforcement, possibly accompanied by some sort of inquiry.
The Coalition, he was effectively saying on Wednesday, can no longer protect the corporate sector.
“…we have to acknowledge that there have been too many troubling incidents over recent times for them simply to be dismissed.
“The singular pursuit of an extra dollar of profit at the expense of those values (integrity, trust) is not simply wrong but it places at risk the whole social licence, the good name and reputation upon which great institutions depend.”
Obviously the rhetoric is somewhat softer than the ferocious attacks on the CFMEU to justify the return of the Australian Building and Construction Commission and possibly a double dissolution on the issue, but it reflects a historic shift in Coalition’s relationship with companies.
The evidence of tax avoidance, bribery and corruption by corporations and the wealthy has simply become too great: the Coalition must distance itself from them all lose credibility, especially while trying to run an election on the bad behaviour of unions, or rather one of them, the CFMEU.
What’s more, the trade union royal commission revealed plenty of bad behaviour by companies as well as unions.
The fifth thing that has happened lately is that the Australian Electoral Commission’s move to shut down the donation disclosure loopholes, which has caught up with Cabinet Secretary Arthur Sinodinos.
That has made it more difficult for corporations to pay the Coalition enough protection money, er … donations, to wash away the toxic politics around them.
Unfortunately for Turnbull, the day after his Westpac speech, on Thursday morning, an exposure draft of the Government’s amendments to life insurance commissions was sent out and it severely undermines his new message.
The draft is a blatant attempt to allow banks and life insurance companies to keep paying big commissions for the sale of life policies.
In his speech on Wednesday, the PM said: “…remuneration and promotion cannot any longer be based solely on direct financial contribution to the bottom line.”
Yet the amendment that is meant to ban the payment of commissions for selling life insurance contains a big loophole: it doesn’t apply to employees.
Obviously the drafters didn’t get a copy of the PM’s speech in time to tighten the new regulations before they went out on Thursday morning.
At the very least, though, the Coalition’s efforts to repeal the Future of Financial Advice — Labor’s crackdown on conflicts in financial planning — and its attempt to disrupt the governance of industry super funds, must now be dead.
The Prime Minister can hardly say, as he did on Wednesday, that “our bankers have not always treated their customers as they should” and complain about the “singular pursuit” of profit, and at the same time direct all of the Government’s reform efforts at the not-for-profit sector and the unions.
Not any more.