Double standards
Recently, two newspaper articles stared up from the same front page. In one, the corporate regulator rightly warned companies not to issue misleading profit figures, reminding directors that this carries serious penalties. There’s nothing particularly unfair about that. But in the other piece, Treasury Secretary Ken Henry revealed how governments do the same thing as if it’s acceptable.
The Federal government had only been able to trumpet that its “breakthrough” agreement with the mining industry on the super profits tax would sacrifice a mere $1.5 billion in revenue, he revealed, because it had conveniently cherry-picked new, higher commodity price and volume assumptions. Of course, that hadn’t been disclosed at the time of the announcement.
What a stunning example of a double standard. Our governments throw the book at deceptive businesspeople, as they should. Yet, they seem to think they have complete licence to do it themselves.
If politicians – as business people do – risked prosecution, or years embroiled in litigation, or millions (billions in their case) in damages, or prison, we might see better standards from them. But that will never happen. They don’t even get sacked – more on that below.
At a practical level, it boils down to the public and the media – and the politicians themselves – demanding higher standards. Oddly, though, neither business nor the general population seem overly hot under the collar about this. That’s because most of us shrug it off. Sadly, we’ve grown to expect the chicanery, double-speak and spin as normal and, worse, as acceptable behaviour from our politicians.
But isn’t it time to say “stop” – that we want honesty in politics, just as politicians demand it from us in business?
Recently, we got close but not close enough. A Prime Minister was dumped because his party, it seems, feared the Australian people had lost faith in him and would vote it out. His offence might kindly be described as overpromising and under-delivering, and tearing up many billions of taxpayers’ funds in the process.
But what’s his penalty? Hurt. Embarrassment. A trashed ego. A demotion – a serious one, true – in job and pay. But that’s it. He is still on the public purse, cooling his heels and his pain on the backbench. Yet, at the same time, his treasurer and his deputy, elbow deep in all of it, actually get promoted. Go figure.
Politicians and the public slam companies for being too soft on failed CEOs and boards. “Just show them the door” is the standard rant, but it doesn’t seem to get applied in politics.
The former Prime Minister famously promised “the buck stops with me”. Partly, that was how he built the considerable trust and goodwill he began his term in office with. Yet, if your company had run the roof insulation scheme so poorly that four young workers died, 189 homes caught fire and monumental amounts of money were wasted, your senior executives and board would not just have been fired, but may be facing serious charges.
What about the rorts in the absurdly-named Building the Education Revolution? People used to joke about how the US Pentagon would buy $5 hammers for $1,000. In Australia, school halls and shelters have become Pentagon hammers. And, the Green Loans shambles? And, the $43 billion National Broadcasting Network with no cost-benefit analysis?
Accountability for managing taxpayer funds appears to have gone by the wayside.
But let’s get back to the mining tax. Past Australian governments did not announce major shifts in policy affecting business without serious, genuine consultation. After being so successfully trail-blazed by the Hawke/Keating governments, consultation became a process government and business found so effective, we had grown to expect it.
So the recent about-face was startling, particularly when the policy announced was so breathtakingly ignorant of the real world, and so thoughtless as to the consequences. Hubris in business can ruin a company. Hubris in government can ruin an industry or an economy.
The totally preventable imbroglio over the mining tax was not the only instance. Remember the government-led debacle over employee share schemes? Years of careful work to get a closer alignment between employees and shareholders were tossed to the wind because attacking “fat cats” was short-term populist politics.
Australia experienced little of the scandalous executive behaviour sadly common overseas, and for good reason: we had developed a far better regulatory environment and corporate culture brought about after, yes, years of close consultation; particularly thoughtful consultation after some shocking episodes of corporate wrongdoing in the past.
Even worse, all this needless crisis management was foisted on business during the toughest, ugliest environment we have faced in a generation. Despite that, government has in a series of cavalier flicks of the wrist forced already harried business people to take their eyes off the scary balls still bouncing treacherously around from the financial crisis.
Australia faces a Federal election on 21 August. Whichever side wins has a disappointingly low standard to follow. Let us hope they don’t follow it.
John M Green FAICD is a company director, a writer and co-founder of a publisher, Pantera Press, and was formerly an investment banker and a lawyer. His first novel, Nowhere Man, was recently released