Australia’s current corporate leaders, the ‘managerial class’, are slowly destroying the capitalism that has made us such a great and rich nation. Helping them do so is another variety of the same – those professional managers running the union-dominated superannuation funds that are imposing their leftist social agendas on a generally spineless corporate Australia. As Keating told the ACTU when introducing compulsory super 26 years ago, ‘You are losing your industrial muscle; I have given you the opportunity to take on financial muscle through your superannuation funds’.
The problem of diminishing support for capitalism, as shown in opinion polling, arises not simply from the public perception that the hugely over-rewarded top end of town lacks integrity, fuelled by headline-grabbing scandals, like the banks and AMP robbing their clients, multinationals cheating on tax, Woolworths and Coles losing billions of shareholders’ dollars on reckless and incompetent ventures, profit gauging by AGL at power-users’ expense and the daily examples of corporate leaders involving their companies in contentious social issues, like same-sex marriage and gender equality without bothering to establish the wishes of their owners, the shareholders. All this has destroyed any prospect of garnering a political consensus for the much-needed cuts to larger companies’ tax rates.
It took a visit home by Chris Corrigan to focus media attention to the threat to capitalism in Australia, when he revealed the nature of bullying he received while chairman of Qube Holdings from Industry Superannuation Funds to implement their social agenda on gender, as well as the institutionalising of rules and regulations that damage the free enterprise that is the basis of capitalism. Mediocrity, he claims, has been embedded into boardrooms by a set of ASX rules (quite apart from the new 30 per cent gender target favouring underqualified women) requiring most directors to be ‘independent’ by owning less than 5 per cent of a company’s capital – and having no inside knowledge of the company and no real alignment with shareholders. This, he says, is ‘a complete misunderstanding of the functions of a company and capitalism itself….We need more people on boards who think like owners’; the more shares they own the more they feel like an owner not just a hired manager.
There is danger ahead in the methods used in the gender bullying from union-dominated industry super funds, the success of which with an acquiescent Qube Holdings was a factor in his decision to resign from what was a re-invention and extension of his Patrick waterfront business that 20 years ago broke the union stranglehold on our ports. It comprised not simply a request to adopt the gender target of women filling 30 per cent of board seats, but a warning that Industry Funds would vote against the re-election of directors on single-gender boards. As Corrigan noted, there is no mention of board candidates having appropriate qualifications or industry or company experience – or the consequences for the company’s shareholders of the replacement of a key director with a less-qualified female. But gender is only one part of an agenda that reflects ‘the collective voice [of 38 union-controlled Industry Funds] on environmental, social and governance issues’. So compliant boards will bend to demands that will increase in line with the rapidly-growing power created by the huge union-controlled shareholdings of which the great bulk are held on behalf of non-unionists who get no say in Industry Fund appointments or policies.
And the managerial class that run the stock exchange are making matters worse; new ASX corporate governance rules will require directors to follow ‘social values’, further diluting a director’s duty to place the interests of shareholders first. Corrigan questions its legality: ‘A director is not elected on a platform of social values – and whose social values? Directors have a legal responsibility to maximise profits within the confines of the law and acceptable risk parameters….Where do we get the mandate to decide what social values we’re going to ascribe to your shareholders….The corporate rule-setters fight for every cause except the one that delivers prosperity – Capitalism.’
Subscribe to The Spectator Australia today for a quality of argument not found in any other publication. Get more Spectator Australia for less – just $20 for 10 issues