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John Passant

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My interview Razor Sharp 18 February
Me interviewed by Sharon Firebrace on Razor Sharp on Tuesday 18 February. (0)

My interview Razor Sharp 11 February 2014
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Time for a House Un-Australian Activities Committee?
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Save Medicare

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Me on Razor Sharp this morning
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Investment bankers, tax and Australian of the year

How appropriate that the Australian of the year under Gillard Labor is an investment banker.

Simon McKeon’s award highlights once again the complete and utter capitulation of the ALP to neoliberalism.

This is a Labor government committed to the market. What better way to celebrate that than to reward an exponent of financial wizardry, the sort of sleight of hand writ large which helped produce the global financial crisis?

Simon McKeon is of course tailor made for the role of Australian of the year. Not only is he one of the wizards of mergers and acquisitions, he is also what polite circles call a philanthropist. He does ‘good works’.

He is on the board of one of the World Vision bodies. He is on the Board of indigenous youth organisation, Red Dust Role Models.  McKeon  is a member of the Big Issue Advisory Board. He is a director of the global poverty project. He has done a lot of work on various MS bodies.

In other words he is a do gooder from on high, changing the world with his Board memberships and similar work. How effective these activities are is a moot question.

What these good works display is the failure of government to adequately address homelessness, poverty, aboriginal disadvantage, health research and the like and leaving the field for the rich to do something inadequate if they wish about the issues when the revered market doesn’t work. Most don’t do anything substantial because it isn’t profitable for them.

This all reflects a worldview, one which thoroughly infects the Labor Party, whose priority is profit, not people.

What a perfect candidate for Labor’s market project and the possible rehabilitation of finance capital specifically and capital generally after the Global Financial Crisis as the saviour of humanity. It’s the market economy, stupid.

Unlike last year’s Australian of the year, McKeon won’t raise nasty controversial issues like mental health and refugees. He’ll deal with nice safe controversies like the bourgeois republic and the nonsensical debate about what flag best represents Australian capitalism.

Given his background and experience McKeon might even mention the false god of micro-credit as the saviour of the poor.

The thinking of philanthropy seems to be that the more business gives in crumbs from the table of their feast, the less restless the servants might be… Tunisia and Egypt might show the futility of such an approach and a fundamental reordering of society as the possible solution.

If neoliberal governments of both the Labor and Liberal persuasion won’t and can’t address social disadvantage then business can apply a few band-aids.

But band-aids don’t cure cancer. The system is terminally ill. McKeon is giving it palliative care.

There is another side to McKeon. He is, as he says, from the big end of town. He makes clear his support for the exploitative relationship between capital and labour. He agrees business is there to make a profit first, second and third.  But what if the profit system is itself the cause of poverty, hunger and alienation across the globe?

McKeon is an investment banker. He is executive chairman, part time, of Macquarie Group in Melbourne.  His remuneration, including share schemes and the like, is likely to be in the hundreds of thousands of dollars.

Investment bankers advise clients on … investments. They are big on multi-billion dollar mergers and acquisitions. They handle things like private equity takeovers and IPOs – share offerings to the public. They make a lot of their money from government enterprise privatisation programs around the world.

One of their key functions is to devise and implement ‘tax effective’ investments for their clients. This is tax avoidance to you and me. The global nature of investment banking gives all the players lots of opportunities for this tax planning.

Investment banks themselves also don’t pay much tax. After the Global Financial Crisis, according to its own media statement, Macquarie Groups’ effective tax rate was 2 percent. The company tax rate in Australia is 30 percent. For the financial year before the GFC it was 15 percent and last year returned to that level, at 16 percent.

So despite all of the talk about community and helping people, McKeon is part of an establishment group which pays little tax. Indeed, tax planning is a hallmark of the finance industry, given its ability to shift profits around the world.

McKeon’s intimate links to capitalism extend beyond business. He has a long history of state involvement. 

Recognising his expertise in mergers and acquisitions, between 1999 and 2010 he was president of the Takeovers Panel. According to its website: ‘The Panel is a peer review body that regulates corporate control transactions in widely held Australian entities, primarily by the efficient, effective and speedy resolution of takeover disputes.’

Or as it is put elsewhere: ‘Its primary power is to declare circumstances in relation to a takeover, or to the control of an Australian company, to be unacceptable circumstances.’

So McKeon is a key figure in the state regulation of takeovers. He is a thoroughly establishment figure.

The Chair of the Takeovers Panel receives daily fees of $847 for sitting days of takeover proceedings and Panel days and an annual fee of $18,280 as Chairman.

But McKeon has moved on. Late last year he was appointed Chair of the Commonwealth Scientific and Industrial Research Organisation. How is it that Labor can appoint an expert in mergers and acquisitions to head up Australia’s pre-eminent scientific body?

Both neoliberal governments have had a commercialisation and quasi-privatisation agenda for the CSIRO. They have squeezed its funding, reorganised its structure and forced it to rely more and more on commercial funding, all at the same time expecting more, and more profitable, results from the CSIRO.

As an expert in mergers and acquisitions McKeon is the perfect candidate to continue the marketisation of the CSIRO. Part of this will be attacks on staff.

How does CSIRO treat its staff? According to the relevant union the CSIRO leadership ‘is offering a proposed agreement where there are cuts to redundancy entitlements; where consultation is severely restricted and where staff would experience a real wage cut over the next 3 to 4 years.’

As a 2008 Parliamentary enquiry found the Labor Government’s efficiency dividend – arbitrary ongoing cuts to funding of f up to 3.25 percent depending on the year and agency but more ‘normally’ 1.25 percent per annum – wreaked havoc on the CSIRO.

But McKeon will be OK. As part-time chair of the CSIRO he is on an annual retainer of almost $100,000 a year.

McKeon is the perfect Australian ruling class representative as the Labor Government’s Australian of the year. He represents everything Labor stands for – the market, aggressive restructuring, tax effective arrangements, fake efficiency and squeezing workers.

His award is but another epitaph for Labor’s reformist credentials.



Comment from Arjay
Time January 27, 2011 at 8:39 am

What most people don’t realise is that banks under the fractional reserve system are allowed to create money in their computers from nothing.

Every year with an expanding economy,new money is created to equal increases in porductivity.Banks in reality are allowed to own this productivity by creating this new money to equal it.They create this extra productivity as debt when in fact it should be created as a tax credit.When the Commonwealth Bank was sold off, we lost a major source of debt free money.

The basic question is;who should own our increases in productivity?

Comment from Catching up
Time January 27, 2011 at 9:21 am

The aim of anyone, especially those who are rich and powerful, who cares about the poor is to see the cause of poverty removed. I see many of the powerful who dabble in so called good works are either attempting to ease their conscience or justifying poverty as the fault of the poor, not society and the economical system. Charity entrenches poverty, is makes the charity worker feel good but does little for the poor and weak. Charity is a tool that the powerful use to protect them. The protestant work ethic does not hurt big business also.