Bernard Keane on the hypocrisy of business

Nice to see a journalist with a memory. Not that there’s much point in complaining about political actors acting like political actors – responding to the incentives they face. Business associations are into solidarity long before they’re into principle. The one thing Keene left out that I’d hoped he’d mention was the way the BCA sat schtum when, early in its first term the Howard Government gave the automotive industry the easy ride with tariff cuts they were after.

Here’s a major reform proposal for improving productivity in the Australian economy: Australian business shuts up about economic reform until it’s prepared to talk intelligently about it.

Business last week was out again demanding further tax reform, while representatives of the biggest polluters flagged that they needed even more compensation under a carbon price then they were scheduled to get under the CPRS.

. . . Its calls for the Henry tax review to be “back on the agenda” are particularly risible after its stone-cold silence while the Rudd government was mugged by the mining industry. The only sector that put its weight behind the RSPT reform package was the superannuation industry. The non-mining business sector, which stood to gain a significant tax cut from the RSPT package, went missing in action. Then they complained when the Prime Minister and the Treasurer cut a dodgy deal with the foreign transnationals that slashed the tax cut.

The Business Council of Australia, in particular, likes to pat itself on the back for its role in economic reform since its inception in 1983. . . .  It was, after all, the recently formed Business Council that stopped a broad-based consumption tax in 1985, when Bob White rose at the tax summit and declared that the council didn’t like any of the Hawke government’s three reform options, because it objected to proposals for a Fringe Benefits Tax and Capital Gains Tax. As a result, business got the FBT and CGT, despite an hysterical anti-Hawke campaign that labelled the FBT the “farewell Bob tax”, but Australia didn’t get a consumption tax until 15 years later.

Nor did the council back the Hawke government’s remarkable decision to wind back protectionism. The council was so internally conflicted among its membership that it couldn’t take a position on the first round of tariff cuts in 1988.

Peak business groups also tried to block the extension of superannuation beyond high income earners. In response to Accord Mark II, which featured for the first time an award-based 3% superannuation contribution, the Confederation of Australian Industry and other employer groups went to the High Court in 1986 to argue it was unconstitutional, and lost. Employer groups have consistently and bitterly opposed compulsory superannuation. . . .

The other consistent theme is that whenever peak business bodies talk about tax reform, they only really mean cuts in the corporate tax rate — the same sort of coded communication that means “workplace reform” only ever means making it easier to undercut employees’ wages and conditions. Heather Ridout was at that game again today in the Fin Review — in fact, a week doesn’t go by without a front page headline in the Fin along the lines of “Business demands tax reform”. In a piece ostensibly exploring the unfinished work of the Henry review, what was Ridout’s “highest priority”? Why, cutting the corporate tax rate to 25%.

This isn’t merely vested interests pleading their case. The same pattern of behaviour emerges, whether it’s Bob White in 1985 or Heather Ridout 26 years later — the pretence of commitment to the national interest and the ostensible rigour of detailed analysis, coupled with a strange inconsistency that only accepts the benefits, and never the costs, of reforms. The latter are wished away, or to be borne by taxpayers, or low-income earners or, in the case of climate change, our descendants.

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Paul Frijters
Paul Frijters
13 years ago

good on Bernard.

13 years ago

I don’t know, it seems a bit unfair.

First, I should have thought this: “The non-mining business sector, which stood to gain a significant tax cut from the RSPT package, went missing in action.” was evidence against the proposition. I suppose Keane is just assuming that the RSPT was unarguably good and so any stand against it must be driven but self-interest.

As for the tariff cuts, well, any director of a protected company that argues against that protection is derelict in his or her duties. So unless business group membership is determined on a free / non-free trade basis they are going to struggle with that issue.

“The other consistent theme is that whenever peak business bodies talk about tax reform, they only really mean cuts in the corporate tax rate”.
Well, maybe that is a legitimate policy position.

Surely the point of a business group is to push policy for the benefit of members. Expecting anything else is crazy. Commentators that assume away contrary policy positions make a pretty shallow contribution to any debate.

13 years ago

Well what would we reasonably expect from business groups used to the rent-seeking treadmill that is Canberra and the States nowadays? A perpetual bunch of left green quantity control freaks engaging in the divine right of elected kings, anointing their preferred courtiers. As an example Labor wants to ‘make the big polluters pay’, yet admits at least half their CO2 tax will go back to ‘working families’ to make them better off, but leaves the other half hanging out there for the rent-seekers to squabble over. And all this to progress to the ultimate nirvana- the creation and trading of CO2 credits, smack bang after the greatest Madoff scheme(Ponzi was an amateur) in derivatives trading the world has ever seen.

Still one can dream of level playing fields and a constitutional marketplace where we all just pay CO2E and resource taxes to better reflect the true social cost of turning the natural environment to our wants. Equitable, neutral, simple to collect and administer, frees up all that accounting/legalese and unavoidable with no impediment to sweat, toil and entrepreneurship. There you go biz. No more company, payroll, income, capital gains tax or stamp duties, just level playing field resource tithing. Now piss off and get on with it and no more rent-seeking and the same goes for the rest of you. The left green quants are having kittens right about now! Solar panels, windmills, geothermal, hybrid cars, pink batts, green inspectors, biofuels, solar HWS, rainwater tanks, worm farms, garden mulch, etc, etc all having to stand on their own two feet in the marketplace? Good God, what would their world be coming to?