Abbott’s Business Advisory Council Hypocrisy
by Doug Cameron
27sc
on January 31, 2014
The loudest critics of Commonwealth government debt and those who are demanding that it be cut – and right now thank you very much!! – are often the leading lights of big business and their cheerleaders from “think-tanks” like the Institute of Public Affairs and the Centre for Independent Studies.
Some of these people have actually been appointed to high level bodies advising the Abbott government, like the Prime Minister’s Business Advisory Council.
The Prime Minister’s Business Advisory Council is headed by former stockbroker, banker and Howard-appointed ABC chairman Maurice Newman. Newman recently got a lot of media coverage as one of Australia’s leading climate change deniers and as someone who knows almost nothing about labour market economics.
Putting Mr. Newman aside though, my interest is in the alleged evils of debt so I was curious to learn about the levels of debt carried by the companies associated with the Prime Minister’s Business Advisory Council. So last December I asked the Parliamentary Library to provide me with information about the level of debt and gearing of some of the companies of which Advisory Council members are associated, either as executive or non-executive directors.
According to the Final Budget Outcome for fiscal year 2012-13 released last September, the Australian government’s net debt stood at $153 billion. Total government revenue was $351.1 billion of which $326.4 billion was raised in taxes. Net interest paid on public debt was $8.3 billion. In 2102-13 Australia’s GDP was $1,525 billion. The government’s debt position can be summarised as follows:
By way of comparison, the following table outlines similar metrics for the companies of which members of the Prime Minister’s Business Advisory Council (BAC) are either senior executives, board chairs or directors:
If the neo-liberal rule book that business wants to impose on government were to be imposed on these companies, their boards and management would be turfed out on their collective ear, debt would be retired almost immediately, staff would be sacked and of course, the businesses themselves would collapse within a matter of months.
Back in 2012, Steve Keen published the following graph in an article for Business Spectator and posed the question, “If you were told the following graph showed two indicators of Australia’s economic health, and one of them had to be addressed urgently, which one would you expect politicians and economists to try to bring under control first?”
The blue line is the ratio of private debt to GDP in Australia while the red line is the ratio of government debt to GDP.
“If you picked the blue line you’re obviously not a politician”, said Keen.
Nor, I might add, are you likely to be a modern Australian business leader who has scored a plum job advising the Prime Minister on behalf of business.