Well done, Murdoch and shame on you Business Council etc.

While not retreating from my earlier accusations of systematic bias in the main Murdoch press, let me now strongly commend The Australians Mike Steketee for his column in todays edition of the paper. He takes on the business lobby for telling big fibs in their advertisements on workplace reform and being totally hypocritical in claiming their ads are non-political. I suggest you all read Steketees opinion piece.

I expressed similar sentiments to Steketee in a letter I wrote to several newspapers a few days ago. Only one published the Canberra Times (22/8/07). It read as follows:

Start of my first letter

The Business Coalition for Workplace Reform has advertisements appearing in daily newspapers. They are clearly intended to mischievously deceive the reader in the lead up to the federal election. The advertisement warns that if workplace reforms are scrapped, interest rates would rise by 1.4 percentage points. The impression it is trying to convey is that that such an interest rate effect would result from any rollback of the Howard Governments Work Choices. In fact, the independent economic research which the business groups commissioned from Econtech sought to estimate the interest rate effects of scrapping the workplace liberalization reforms of not only the Howard Government, which the ALP may partly or wholly unwind, but also those reforms (in many ways more important) initiated by the Keating Government, which the ALP has no intention of reversing.

The public policy debate on IR reform will be derailed if business groups add further to the mountain of misinformation that already exists.

End of first letter

This first letter was criticized by Tom Waring in the Canberra Times and I have now responded to him as follows.

Start of second letter

In an earlier letter I said that the modeling commissioned by business groups wrongly assumed Labor would abandon all Keating s reforms. Tom Waring (no accord in place 22/7/07)), dismisses my reassuring letter and warns of a return to the traditional, disruptive union era that existed before Keating.

I am neither a member of the ALP nor have any special access to any of their leaders. But Julia Gillard has made it clear that, while the workers safety net and the right to freedom of association will be stronger than under Howard, unions will be more shackled than they were under Keating:
– the strike action will be more severely restricted;
– bargaining will have to be at the enterprise level: pattern bargaining will not be allowed;
– employees who do not like unions will be free to make collective agreements with their employers without any involvement of unions or to embrace individual common law contracts;
– many of the Howard government workplace reforms, such as the tight control over trade union finances and many of the building industry reforms, will be partly or wholly retained; and
– unions will not be able to enter business premises without a permit and prior notice.

In short, if my understanding is correct, trade unions will almost certainly be very much weaker under Rudd than they were under Keating.

End of second letter

I do not deny that the Unions have been stretching the truth too but they represent the narrow interests of workers. Business should have regard for all its diverse shareholders, including workers or people with children who are workers or (like the Industry Super Funds) groups representing workers. If one believes the opinion polls, many of these working class shareholders may be very concerned about the impact of WorkChoices on the quality of life in their workplace and on the wider community. They (or their superannuation trustees) might be happy to forego a potential dividend or capital gain from WorkChoices for the sake of the wider good as they see it.

In the UK any corporate involvement in politics, including donations to political parties, requires shareholder approval. A similar law is badly needed in Australia. And in the meantime, isnt there an ethical obligation on our large corporations to at least consult shareholders?

And if they dont consult, isnt there an ethical obligation to make sure they tell the truth and nothing but the truth? The Business lobby ought to be ashamed of themselves.

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Sacha
14 years ago

What about the scenes at the end of the advertisments of the closed-down business with the words “closed down by union activities” (or equivalent) painted on the windows?

Bring Back CL's blog
Bring Back CL's blog
14 years ago

the economic modelling is silly.

Chris Murphy is simply a shonk and has been seen as such in the past two elections.

how can you have assumptions in your model that the ALP has rejected many a time.

Mr Denmore
Mr Denmore
14 years ago

Econtech are so shop soiled now they must be trembling in their boots about the prospect of a change of government. That’s what happens when one party has been in power too long. Too many people singing for their supper.

Jc
Jc
14 years ago

They (or their superannuation trustees) might be happy to forego a potential dividend or capital gain from WorkChoices for the sake of the wider good as they see it.

How do you raeach ths conclusion, Fred?

whyisitso
whyisitso
14 years ago

“I do not deny that the Unions have been stretching the truth too but they represent the narrow interests of workers”

Exactly. And that small proportion of narrowly interested constituents will be controlling the government of 100% of the population. I don’t buy any of the facile assurances to the contrary of Gillard (the real power after the election), Rudd (the “front”) nor the leftist Argy.

Jc
Jc
14 years ago

Telstra results in o6
Sales revenue 22,750
EBITDA (4) 9,584
EBIT (4) 5,497
Profit before income tax expense 4,561
Profit for the year after minority interests 3,181
Dividends declared for the fiscal year (5) 4,231
Dividends declared per share(cts per share)(5) 4.0
Total assets 36,175
Gross debt 13,746
Net debt 13,057
Equity 12,832
Capital expenditure and investments 4,303
Free cash flow 4,550

Fred these are Telstras results for 06. I thought we could use it because its a large Australian firm with oodles of employees.

Note that the stock fell around 11% because the market was expecting they would make about $200 million more and they came in under expectations.

They are paying a 28 cents dividend which represents about 5.7% on current price of the stock. The reason it is yielding so high is because investors think they are in a very competitive environment and the other players will continue to eat away at their market share.

As I said, a $200 million short fall had about an 11% downward effect on the stock price. That means that every time you lose $1 of profit investor disappointment could cause the stock to fall 18 times. This ratio is about right these days as the market punishes stocks that dont meet expectations.

Do you really think investors would want to lose 18 times the value of the stock price for every dollar leeched from the profit line?

Please note that the dividend this year and last was paid on borrowed funds due to the very high capital commitments the firm is going through.

Where would you take the money from, Fred? Would you take it from the dividend, or would you take it from profits? Keep in mind that the dividend is below cash rates and is about 150 basis points higher than other comparably large firms due to the inherent risks. Note, the cash rate is now 6.5%.

Take a look at the borrowing. Pretty big nut to crack with interest payments and in case something goes wrong.

Jc
Jc
14 years ago

That means that every time you lose $1 of profit investor disappointment could cause the stock to fall 18 times.
This means

Please note the ratio is 18 dollars of loss suffered on the stock price for every $1 lost in profit.

observa
observa
14 years ago

“In the UK any corporate involvement in politics, including donations to political parties, requires shareholder approval. A similar law is badly needed in Australia.”
Which would also beg the immediate question, if it’s good for organised capital, why not organised Labor? The problem being it’s a can of worms. How would you legislatively give effect to the intent of such a law? I’m an incorporated sole trader and what I do with my pay, I can do as an individual anytime. So could Sol Truillo and Co after awarding themselves an extra pay rise to cover the cost of their private tax deductible political donations.

Nicholas Gruen
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Nicholas Gruen(@nicholas-gruen)
14 years ago

Fred,

It’s a reasonable argument that businesses should engage in political advertising with a vote of owners – not too sure about other stakeholders. But presumably you’d extend the principle to require unions to poll their members before spending their money on similar ads?

pondie84
pondie84
14 years ago

Nicholas, the unions ad campaigns are run on money that is voluntary contributed by union members. You need to opt in. It doesn’t just come out of general union fees. As such the advertising is based on funding solely raised by those who wish to contribute to it.

It is, however, true that some union members who have chosen not to contribute to the ad campaigns may not support the purpose of the ad campaign. Still, no analogy can be drawn to the way the business unions have come up with the money for their ad campaigns. If they, instead, wrote to their members and asked each member to donate to a separate fund to be used for political advertisements it would be a much better process.

I’m not overly cut up about the advertising. I’m sure many people look at the ads and wonder what’s in it for Big Business to want so desperately for the Coalition to be returned. They’re not doing this for our benefit surely, but for their own. You could also question what they want in return should the Coalition be returned.

The best option, politically, for the Government and business, all along was to simply say nothing, not advertise, and to try and shut down all avenues of debate on the issue. I personally think they’ve made the wrong move on this one.

Fred Argy
Fred Argy
14 years ago

Nicholas, yes I would extend the same principle to unions.

As things stand at present, it seems to me that what unions are doing is much more transparent than what business is doing.

As I understand, trade unions raise a special compulsory levy to pay for the ads and members who disapprove can resign – and some have (please correct me if I am wrong). Unions make it clear they support Labor and openly campaign against the Coalition. The levy they raise is for a clear purpose to defeat the Coalition.

By contrast, the business groups are trying to pretend their advertising is non-political (which is a lie) and not telling anyone where the money is coming from (which companies are funding the campaign). If a particular company in which I had shares was known to be funding the deceptive advertising, I could sell my shares in that company (if it were that important to me). But I do not have this information and I am not being told the truth anyway about the true purpose of the ads.

Fred Argy
Fred Argy
14 years ago

Reading the comments of Pondie84 alongside my own, there needs to be some clarification on how the Union ads are being financed. I suspect Pondie84 and I are both right in that there is a compulsory levy AND voluntary contributions. Perhaps someone from the union movement can enlighten us?

Tony Healy
Tony Healy
14 years ago

I’m pretty sure the ACTU Workchoices campaign has been paid out of general revenue, not a special levy. The call for donations is simply to supplement that funding.

However it’s worth remembering that union officials are elected by the people they represent. Activity that wasn’t supported by the membership would be penalised at elections, but that hasn’t been happening. As well, the explicit role of unions is to provide more bargaining power to individual Australians in employment. In that context, lobbying against Workchoices is perfectly justified.

I think pondie84 is correct in suggesting the business lobby has scored an own goal. The message many viewers get from the business ads is that there’s something sneaky going on. This is exacerbated by the attempt to imitate the ACTU’s use of honest working people in the ads, which comes across as patronising and duplicitous.

Personally, I think this whole saga has much deeper implications as to the poor quality of Australian business management and Australian business schools.

L.Duce
L.Duce
14 years ago

Jc are you one of Crosby&Textor paid trolls from their 24 hour media unit and are you on an AWA? May i suggest you tone it down a bit,the fear of defeat is is making appear a tad hysterical.Trying to find the truth about something is not purely a leftist position.

Jc
Jc
14 years ago

Duce
Who the hell is Crosby&Texter? I’ve heard of Crosby Stills&Nash. It Crosby in the same band?

Incomes are rising like we have never seen and Fred thinks it not enough for his preference group, so he wants to raid the stock market. Jeesh there’s no satisfying some people.

“Trying to find the truth about something is not purely a leftist position.”

Where did I mention a leftist position in all this? This is not the inner voice of unreason speaking to you is it?

derrida derider
derrida derider
14 years ago

I’m with Pondie84; the big business ad campaign is not so much immoral as stupid. Every ad they run reminds Howard’s battlers of how Howard betrayed their particular interests with Workchoices and that would be a political fact even if in fact Workchoices did serve the wider national interest.

There’s a reason that “union thuggery” campaigns only excite the Lib’s small-business base rather than swinging voters. The median voter is much more likely to have first-hand experience of “boss thuggery” at some time in their life than “union thuggery”.

And that’s without considering the implications of their behaviour for their organisation when Labor is elected. They may find it a bit harder to arrange lunch with the Minister next year …

Ken Lovell
14 years ago

Unions and employer associations are both voluntary organisations. They elect governing councils from amongst the membership to oversee the management of the organisation. If members don’t like the way they spend the association’s income they can either leave, or try to get replacement council members who will adopt practices more to their liking.

Everything unions and employer associations do is political in the sense of advancing the members’ interests as against the interests of others. It’s the nature of a pluralistic society. I don’t see why advertising to promote members’ interests should fall into some special category requiring explicit member approval.

Fred Argy
Fred Argy
14 years ago

Ken, I agree that the issues are far from clear-cut but let me reiterate my point to see if I can convince you of it.

The ultimate source of trade union funding for the ads is the members (workers) and the purposes for which the money will be spent (promotion of Rudd) are clearly known and understood by members and almost certain to have their full approval. Those who dont approve can argue with their leaders, try to change their leaders or simply resign.

The employers’ association get their money from individual companies but the ultimate providers are the shareholders of these companies and they have no say and know nothing about it. Many may object strongly (if they see their interests differently from the managers) but they don’t know if their directors are funding it and have not been told the truth about the purpose of the business ads – promotion of Howard .

It is more an ethical issue of democratic legitimacy than a legal issue.

Jc
Jc
14 years ago

Fred

You think the unions are more morally virtuous to be runnng ads than the employer groups. Am I getting this right?

How many degrees of separation is there between both ACTU to the members and the employer groups to the shareholders?

Ken Lovell
14 years ago

Well I understand your argument Fred but you haven’t persuaded me that this kind of advertising is a special case justifying special measures, on ethical or any other grounds. Management spends company funds on all sorts of things that shareholders don’t know about and mightn’t approve of.

I mean where do you draw the line? As a shareholder I’d be far more concerned if a company decided to open a branch in Zimbabwe than about it supporting a bit of BCA advertising, while another shareholder might be aghast at the thought of their company investing in technology that produces greenhouse gases. If shareholders are concerned about such things it’s up to them to inform themselves. It would make management’s job impossible if they had to seek shareholders’ approval of any measure that had an arguable ethical dimension.

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