Hockey Brings In The Privatisers

0

"The age of entitlement is over," Joe Hockey declared in April 2012. He followed up on Tuesday with the prophetic claim that "the age of personal responsibility has begun". But hang on — what do we call the interregnum, the 715 day period after entitlement ended, but before personal responsibility kicked in?

Whatever it's called (I nominate the Age of Razor Sharpening), the Coalition spent it picking winners. Three of them ended up on the productivity commission: Karen Chester and Philip Weickhardt as full commissioners, and Paul Lindwall as an assistant commissioner.

Karen Chester is the spouse of Peter Boxall, the former Chief of Staff to Howard-era Treasurer Peter Costello. She had a number of high-powered jobs in Treasury herself, and later at Mercer and ACCESS Economics. At ACCESS she was Mercer's global head of infrastructure, and also did a lot of management of "late-stage private equity assets" — a particularly relevant nugget of past experience given the current major Productivity Commission inquiry is looking at removing private sector barriers to buying up public assets.

Chester spoke to Pensions and Investments Online about this very issue around a month after the election last year. There's a lot of "Pent-up demand among institutional investors for those lower-risk operational assets in Europe, North America and Australia" (that's the staff writer's paraphrase) which, because of an "obvious mismatch" (Chester) has produced a shortfall in demand. In other words, the privatisation wolves are at the door.

She also co-authored an op-ed for the Australian, setting out some broad principles for fiscal reform in 2012 to cope with the "continuing fallout from the global financial crisis". See if you can make sense of the very fiscal conclusion:

"Overall these three fiscal policy objectives should be embedded in fiscal policy rules. It is only through such an enduring and transparent fiscal policy framework that we can conduct fiscal policy and have a way to meaningfully assess the government's fiscal policy credentials and credibility."

Realistically, the piece is a paean to small-government that shills the Coalition's obsession with budget surpluses, a jargon-filled rejoinder to Kevin Rudd's stimulus package:

"Australia was well positioned to use fiscal policy when the GFC hit. Reforms in monetary policy and the earlier establishment of, and compliance with, disciplined fiscal rules were the key."

Also of interest is a gig Chester had way back in 1998, where she was a "key participant" in a Treasury working group on advertising the GST. Labor Senator John Faulkner gave the group a red hot go in one particular session of Senate Estimates, claiming that the group was politicised because its leader was appointed by Costello from Howard's PM&C.

The new assistant commissioner, Paul Lindwall, is a former staffer for Malcolm Turnbull. I say former, because he resigned "about a fortnight" before the then-opposition leader's darkest hour: the Godwin Grech debacle. News Limited everyman David Penberthy wrote at the time that his sources indicated Lindwall was mixed up in it:

"I was told by several sources that the AFP wanted to establish who in Mr Turnbull’s office had been talking to Godwin Grech, and Mr Lindwall was named as that person."

The AFP never talked to him, so Penbo published a very contrite apology on The Punch.

Lindwall's other claim to fame is that he was mentioned in dispatches by WikiLeaks, regarding the variable support in the Liberal Party for an emissions trading scheme. It can't be put plainly enough — he was informing on his own party to "econoff", the US Economic Office. In the 2008 cable Lindwall was paraphrased as saying that Peter Costello was making noises about a political return, and wanted to introduce a "very loose system" of free permits reliant on India and China adopting similar schemes. He regarded this as an "empty promise", because India and China would never come to the party.

The second full commissioner, Philip Weickhardt, has been on the PC since 2004. He was given a 12-month part-time reappointment by Hockey so he could sit on the infrastructure review. Before he was on the commission, he was, in Hockey's words, "an Associate Commissioner in 2002 and 2003. Prior to this period, he was CEO and Managing Director of Orica Limited (previously ICI Australia Limited)."

Wait a minute — Weickhardt has spent over a decade patiently ushering in the age of personal responsibility on the Productivity Commission, when he could have been making megabux out in the private sector? He went from CEO and MD of Orica, an enormous chemicals and plastics company, to a life of dry biscuits and long reports? What could have driven a man to such heights of public sacrifice? From the 26 December 2000 "Troubled Company Reporter" at the website bankrupt.com:

"Orica delivered its frustrated shareholders a few parting jolts to cap off a disappointing year, telling them at yesterday's annual meeting the company had terminated a major chemicals distribution contract and had placed its dividend policy under review.

"Management was keen to pitch both developments in a positive light but shareholders were in no mood to brook excuses after sharp declines in earnings and returns to shareholders over several years.

"In three hours of hostile questioning, they repeatedly called for the company's entire board to stand aside, criticised directors' remuneration and lamented a more than halving of the Orica share price since 1997.

"What we need is a new chairman, a new chief executive and further changes in the board," said Mr Ted Rofe from the Australian Shareholders' Association, who likened Orica to the BHP of 1998 before its shake-up under Mr Paul Anderson."

Weickhardt managed to hold on for a half a year after that shareholder revolt, but resigned after a two-day long board meeting in 2001. It's easy to see why — when he took the reins Orica was trading at A$13 per share. The day after his resignation they were at $4.59. According to ICIS.com's John Richardson, this was due in some part to a botched acquisition of a mining explosives company, where "the expectation was that a return on capital (ROC) of 15-16% would be achieved. Instead, the ROC has been closer to 5-7%."

This massive collapse in Orica's share price happened against the backdrop of the company's essential monopoly in Australia on petrochemical products. "Australia remains to a large extent a protected market, despite the country's liberal tariff regime, because of logistics and the size of the market," Richardson wrote. "As a result of the distances involved and the size of shipments required, it is often not economic for Asian producers to compete with Orica"

An industry source put it differently: "Australia is essentially a safe, niche, rather dull petrochemical market which will provide you with steady returns."

After one of the last memorable Productivity Commission inquiries, into the effect of online sales on bricks and mortar retail stores, Weickhardt said in a statement that "Government's role is not to shield the industry from competition but to remove constraints which restrict the industry in responding to this heightened level of competition".

What constraints? Those "imposed by workplace relations regulations which may impede retailers in improving their productivity and lifting customer service levels", Weickhardt wrote, referring to wages and conditions, penalty rates and so on. For a commission that's meant to improve competitiveness and innovation, they do seem to produce the same advice over and over. Or as the conservative historian John Hirst asked in an op-ed this week, "Why are we paying for a body that always gives the same answers?"

This story is part of our series on Tony's Cronies, on the Abbott Government's appointments. Read the rest here.

https://newmatilda.com/shop/
New Matilda

New Matilda is independent journalism at its finest. The site has been publishing intelligent coverage of Australian and international politics, media and culture since 2004.

Comments

comments