August 29, 2019 Edition.
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President Trump has gone off the reservation in the trade war last weekend with his latest tariff impositions on China and seemingly is heading towards a forced collapse of the global trading system which will be bad for all of us, but especially for medium trading powers such as Australia. He really needs to be stopped – but I am not sure how. Nothing he is doing at this point seems to be good for Australia.
Brexit rumbles on and it is hard to know where it ends at this point. Boris J. is closing down parliament for weeks on end and there is widespread fury at his action
ScoMo has now done a year as PM and we a now waiting to see how the next couple of years play out as he tries to navigate all the global tensions and a softening economy and stalled wage growth as home. I suspect it will not be easy to say the least! We sure need steady hands on the tiller at present!
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Major Issues.
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Look beyond the bubble and do as we say, PM tells mandarins
Aug 18, 2019 — 10.30pm
The public service needs to better represent the needs of the vast bulk of Australians rather than just the rich and poor, who are represented by lobby groups, and it must improve its expertise by opening itself up to the private sector.
As well, senior bureaucrats offering advice must always be mindful it is their minister, not them, taking the political risk, and therefore they should ultimately do what the minister wants, Scott Morrison says.
In a speech to be delivered Monday to a public-sector function in Canberra, the Prime Minister will outline six areas of cultural change he wants to see implemented, which in some cases, he says, will require challenging conventional wisdom.
Mr Morrison's speech, which builds on performance improvements he has demanded since the May 18 federal election, also precedes the completion of the review into the public sector led by businessman David Thodey.
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Ok but not OK: Iceland bids farewell to a glacier for the first time
By Seth Borenstein
August 19, 2019 — 7.35am
Okjokull glacier, Iceland: It was a funeral for ice.
With poetry, moments of silence and political speeches about the urgent need to fight climate change, Icelandic officials, activists and others bade goodbye to what once was a glacier.
Icelandic geologist Oddur Sigurdsson pronounced the Okjokull glacier extinct about a decade ago. But on Sunday he brought a death certificate to the made-for-media memorial.
After about 100 people made a two-hour hike up a volcano, children installed a memorial plaque to the glacier, now called just "Ok," minus the Icelandic word for glacier.
The glacier used to stretch 15 square kilometres, Sigurdsson said. Residents reminisced about drinking pure water thousands of years old from Ok.
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We're relying on a government that spurns economic advice
Ross Gittins
Economics Editor
August 19, 2019 — 5.30am
I’m starting to wonder if the trouble with our politicians is that they’ve evolved to do politics but not economics, making them unfit to cope with the economic threats we now face.
On the one hand, they’ve been able to leave the management of the economy to the independent Reserve Bank, whose tinkering with interest rates – up a bit, down a bit – has successfully kept the economy growing for 28 years.
On the other hand, the pollies have been locked in a decade of unprecedented political instability where, since the demise of the Howard government in 2007, no prime minister has been safe from attack – from their own side.
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Coalition lead on Labor dips post-election
The Coalition has a 51-49 per cent two-party-preferred lead over Labor, the Newspoll published in The Australian newspaper shows.
AAP
The Coalition’s lead over Labor has slipped, the latest Newspoll shows.
The coalition has a 51-49 per cent two-party-preferred lead over Labor, the poll published in The Australian newspaper shows.
It shows a two-point drop in the two-party-preferred vote for the Coalition since the electoral surge in July, which saw the Government increase its lead over Labor 53 to 47 per cent.
Popular support for the Coalition has dropped two points to 42 per cent while Labor’s primary vote jumped a point to 34 per cent in the latest survey of 1623 voters.
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Climate change will make insurance hard to come by
The problem with being on the wrong side of reality is that you can get tangled up. Which is what happened to poor Deputy Prime Minister Michael McCormack last week when he got annoyed at “people in those sorts of countries pointing the finger at Australia and say we should be shutting down all our resources sector so that, you know, they will continue to survive”.
He added, generously, that they will “continue to survive because many of their workers come here and pick our fruit”.
Maintaining the Australian conservative line that global warming is crap when you’re among people who see it as an existential threat must have been challenging. The Deputy PM, speaking as Acting PM, failed that challenge, as did the entire Australian delegation to the Pacific Islands Forum.
But his use of the word “survive” is interesting and not exactly the party line, and the notion that there is a choice between the survival of Pacific island nations and Australia’s resources sector even more so.
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We’ve been lucky so far, but time to focus on Darwin
Defending a large country with a small population has always been Australia’s biggest strategic challenge. That we have successfully done so has been due to luck, great and powerful friends, our unique continental-island geography and the military technological edge we have enjoyed historically in our near region.
But we may not remain a lucky country for much longer if US military power and our geographical and technological advantages continue to erode. We need to be smarter and more strategic in how to defend ourselves, starting with a better appreciation of the critical importance of northern Australia to defence and national security.
This is the essential conclusion of a path-breaking report on the future security of Australia’s north by the influential Australian Strategic Policy Institute. Its author, John Coyne, mounts a compelling case for an overhaul of our disjointed, siloed and piecemeal approach to defending the north.
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Business watchdogs agree on climate change
The nation’s top financial regulators are now in lock step on climate change.
Subject to the usual materiality considerations, exposure to the world’s increasingly volatile climate is seen as a serious risk worthy of inclusion in financial statements; no longer can it be airily dismissed with a few generic lines in the corporate sustainability report.
The Australian Accounting Standards Board helped lay the platform last December, saying in a practice note that companies “may need to consider” formalising disclosure of climate and other emerging risks in their accounts.
The risks included potential, acute or chronic natural disasters, change in climate patterns and shifts in government policy.
“Existing and potential investors, creditors, insurers and customers are all increasingly demanding more specific information about a corporate entity’s exposure to, and management of, climate-related risks,” the AASB said.
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Markets are adjusting to a turbulent world
Aug 19, 2019 — 10.23am
Paradigm shifts tend to happen slowly, and then all at once. That’s the lesson I’ve taken away from the recent market turmoil. As I wrote last week, the surprise is only that the upset didn’t come sooner.
Pundits may have pegged the worst Dow drop of the year to fresh bond yield curve inversions in the US (a historic predictor of downturns) but the underlying signs of sickness in the global economy have been with us for a long time. The question was when the markets were going to put aside the complacency bred by a decade of low interest rates and central bank money dumps, in the form of quantitative easing, and embrace this new reality.
Consider that since January 2018 every major economy except India’s has seen a deterioration in its purchasing managers’ indices. PMIs are one of the best forward-looking indicators of economic conditions for the manufacturing sector, which is a bellwether for overall economic activity. The slowdown in the eurozone has been dramatic — particularly in places such as Italy and Germany, where the economy is now officially shrinking.
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Penny Wong's coal conversion concedes a difficult lesson
Aug 19, 2019 — 1.54pm
Penny Wong became one of Australia's most respected public figures by combining a fascinating personal story - gay, Christian and Eurasian - with an almost preternatural calmness that she can dial up to passionate outrage seemingly at will.
In the wake of last week's Pacific leaders summit in Tuvalu, Wong demonstrated another reason for her political success: the ability to cloak pragmatism with cant.
After helping drive minerals-dependent Queensland into the arms of the Coalition at the election, Labor's foreign affairs spokeswoman on Sunday endorsed an industry that many of the inner-city elite who worship her regard as evil.
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Generational progress can no longer be taken for granted
By Danielle Wood
August 18, 2019 — 11.37pm
Baby Boomers are awful, right? The big houses, the franking credits and the gratuitous advice about young people’s breakfast choices. At least so says Twitter, the most Millennial of social media platforms. So are these cross-generational salvos just another manifestation of young adult angst, or are young people justified in feeling aggrieved?
Generation-on-generation progress in living standards has been the happy dividend of Australia’s strong economic performance since the Second World War. On average, children could expect to be substantially healthier, wealthier and better housed than their parents at the same age. This generational progress can no longer be taken for granted.
The wealth of households under 35 has barely moved in 15 years. And poorer young Australians have less today than poorer young Australians did 15 years ago. In contrast, wealth for older households has grown rapidly. A household headed by someone 65-74 now has on average $1.3 million in assets, up from $900,000 for a household of this age group in 2004, helped by the housing boom and growth in superannuation assets.
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Murdoch, Gorman join push to dump shareholder-first capitalism
Aug 20, 2019 — 4.58am
Washington | US-based Australian chief executives Lachlan Murdoch and James Gorman have joined some of the world's biggest companies in a pledge to scrap the decades-old view that the main purpose of business is to put shareholders' interests first.
Mr Murdoch, chief executive of Fox Corp, and Morgan Stanley chairman James Gorman, put their signatures on the landmark Monday (Tuesday AEST) declaration by the the US Business Roundtable.
The statement, spearheaded by JPMorgan Chase &Co. CEO Jamie Dimon, says the purpose of a corporation is to serve all of its constituents, including workers, customers, investors and the broader society.
"While each of our individual companies serves its own corporate purpose, we share a fundamental commitment to all of our stakeholders," the group said in the statement.
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Australia's yield curve doesn't always predict recession
Aug 19, 2019 — 7.01pm
Australia's inverted yield curve has given false readings on predicting a recession at least five times in the last 30 years and should not be so heavily relied upon by investors as an indicator of negative growth.
The inverted yield curve - where the official cash rate yield (now at 1 per cent) is higher than the 10-year bond yield (now 0.92 per cent) can often point to a recession because when investors pile into long-dated bonds it means they are becoming more risk-averse about the economy.
Last week the US saw the yield on its 10-year bond fall below that of the 2-year bond yield, causing a widespread stockmarket sell-off on Wall Street. In Australia, the 10-year bond is just 15 basis points off falling below the two-year bond, which could spark another stockmarket sell-off here.
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Families feel squeeze as healthcare, education costs outpace inflation
By Shane Wright
August 20, 2019 — 12.00am
Working families are being squeezed as the cost of essential goods and services including hospital visits, property rates and education climbs at twice the rate of inflation, prompting calls for stronger competition in government-dominated sectors.
An analysis of Reserve Bank of Australia (RBA) data since the Coalition took office in 2013 shows the biggest price rises in areas directly controlled by federal, state and local governments despite a string of policies aimed at keeping a lid on the cost of living.
The head of the RBA has told the government it's now up to them to prevent a dangerous economic slowdown.
Since the final quarter of 2013, the overall consumer price index has increased 10.4 per cent, while the cost of government-administered or controlled goods and services jumped 23 per cent.
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Upbeat stocks or gloomy bonds: which is right?
Aug 20, 2019 — 2.51pm
Bonds, oil, copper and gold are all telling us a consistent message: beware climbing recessionary risks in the US and, by extension, in the global economy.
Sharemarkets? Not so much.
During the worst of the recent near-panic over inverting yield curves and trade escalation, the S&P/ASX 200 equity index fell by 6.4 per cent from its July peak. A hefty fall, but not a whiff of a collapse. And its sprung back quite handily since. It's a similar story on Wall Street.
Moreover, Aussie and US stocks remain well higher this year, both up 17 per cent in price terms.
Compare this to economic bellwether assets, such as bonds, gold, oil and copper. The first two have soared as scared investors have sought the relative safe haven of government securities and precious metal. The second two have plunged as a global manufacturing recession has intensified through the year amid an escalating trade war.
In other words, "stock returns have decoupled from the growth signal from other assets in 2019", as Macquarie analysts recently put it.
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Why gold could reach $US10,000
Aug 20, 2019 — 11.14am
Gold aficionado, central bank critic and best-selling author Jim Rickards reckons Federal Reserve chairman Jerome Powell faces an "impossible situation", arguing gold may rise to $US10,000 an ounce over the next five years amid strains in the financial system and as US rivals accumulate the precious metal.
A long-time critic of the embrace of unconventional monetary policy, Mr Rickards said the Fed boss faced a tough task in trying to balance the need to normalise US rates to prepare for the next recession without steering the world's largest economy into a slowdown.
He said there is only a 35 per cent chance of a recession in the US over the next year, thanks to the Federal Reserve's change in monetary policy direction in July when the central bank cut rates by 25 basis points to 2-2.25 per cent.
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RBA reviews 'unconventional' methods of boosting economic growth
By Eryk Bagshaw and Shane Wright
August 20, 2019 — 12.55pm
The Reserve Bank of Australia (RBA) board discussed methods of pumping more money into the economy amid growing concerns over trade tensions between China and the US, and fears of a local downturn.
The minutes of its July meeting reveal the board reviewed the use of "unconventional monetary policy measures" by other countries in response to the global financial crisis, suggesting it was preparing to implement quantitative easing measures if required.
The rare step could include purchasing government securities, providing longer-term funding to banks to support credit creation, purchasing private sector assets and foreign exchange intervention to stave off the threat of recession.
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University crisis talks as China fears grow
Aug 21, 2019 — 12.00am
Education department officials as well as national security and cybersecurity experts will meet university representatives on Wednesday to thrash out guidelines governing collaborative research, amid government concerns over growing Chinese encroachment.
Senior sources said the government was especially concerned with collaboration in such areas as artificial intelligence, quantum physics and some engineering disciplines.
In addition, the government worries that the access China has secured to the sector may have enabled the massive data breach at the Australian National University in late 2018, and only discovered in June, which resulted in two decades of student and staff date being accessed.
After weeks of growing pressure on universities from the government and its security apparatus over growing Chinese influence, the meetings in Canberra are designed to give the university sector the clarity which it has been demanding.
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Australia to join United States-led coalition to protect ships from attack in Straits of Hormuz
By Max Koslowski
Australia has accepted an invitation from the United States to join a coalition of countries protecting oil tankers and cargo ships from attack by Iran in the Straits of Hormuz.
"This destabilising behaviour is a threat to Australia's interests in the region," Prime Minister Scott Morrison said on Wednesday morning.
"The government has decided that it is in Australia's national interest to work with our international partners to contribute. Our contribution will be limited in scope and it will be time bound."
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Call for pension, super and family home to be part of retirement review
By Shane Wright
August 21, 2019 — 12.00am
The Morrison government has been warned that older Australians' chance for a "dignified life" will be undermined unless its review of retirement incomes take on some of the nation's most politically poisonous policies, such as including the family home in the pension assets test.
The Actuaries Institute, in a report on Wednesday, said everything from the age at which people could access their superannuation to the creation of a universal concession card for all retirees had to be considered now, before the nation's finances deteriorated due to demographic change.
Treasurer Josh Frydenberg is expected to release the terms of reference for the review, which was recommended by the Productivity Commission as part of its investigation of the superannuation sector, by year's end.
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Universities hit back at criticism of growing reliance on China
By Fergus Hunter and Max Koslowski
August 21, 2019 — 12.00am
Universities have hit back at intensifying concerns about their growing reliance on China, defending their significant enrolments of international students and research collaboration projects with Chinese researchers.
Following tense and sometimes violent confrontations between pro-Hong Kong students and pro-China counter-protesters on university campuses, the sector has faced renewed criticism for its management of increased Chinese Communist Party influence on campus.
Responding to the concerns, senior figures in higher education have highlighted the financial benefits of international education and said they were protecting themselves and students against the risks. They are also working with security agencies to safeguard against risks in collaboration on sensitive research.
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Where to invest if the RBA opts for quantitative easing
Aug 21, 2019 — 12.24pm
Buying government bonds of less than 10 years in duration could be where the smart money heads, given the Reserve Bank of Australia's warning that it could engage in quantitative easing through buying government securities.
Central banks around the world have been engaging in quantitative easing in the effort to try to get interest rates down, increase the money supply and power economies.
Some central banks have bought other assets such as mortgage-backed securities and corporate bonds, while the Bank of Japan has bought equities.
In Australia, Reserve Bank governor Philip Lowe told a parliamentary hearing earlier this month that the bank was "prepared to do unconventional things if the circumstances warranted it."
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US seeks to pressure Australian universities over China research
Aug 21, 2019 — 6.05pm
The university sector fears the government could be pressured by the United States to crack down even harder on its collaboration with China, following a series of measures being proposed by US Republicans, one of which directly implicates Australia.
As government, university and national security officials began two rounds of meetings in Canberra on Wednesday to thrash out a set of guidelines governing collaboration with Chinese institutions, the Group of Eight, which represents the nation's most prestigious universities, said it did not want to see the US measures being applied in Australia.
Group of Eight chief executive officer Vicki Thomson declined to comment on the content of Wednesday's meetings but indicated the sector was willing to work with the government and national security agencies to iron out concerns.
"We wouldn't like to see the same level of overreach in Australia as is being proposed in the United States,'' she said.
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Victoria prone to blackouts this summer as grid wilts
Aug 22, 2019 — 12.01am
Up to 1.3 million households in Victoria are at risk of blackouts during heatwaves this coming summer if no extra power generation is secured and two power plant outages last longer than expected, the Australian Energy Market Operator has found.
Failures at AGL Energy's Loy Yang coal power plant and at an Origin Energy gas plant in Victoria pose a "significant risk" of blackouts of up to four hours if repairs last longer than their scheduled date in December into the summer, AEMO said in a report on Thursday.
It also warned of "elevated" risks of blackouts continuing over the next 10 years, but did not find supply was scarce enough over the next three years to trigger new rules requiring retailers to guarantee reliable supply that came into effect on July 1.
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Shareholder-first capitalism failed the people
Andrew Ross Sorkin
Aug 22, 2019 — 11.41am
Democracy is a messy thing. Shareholder democracy may be even messier.
For nearly a half-century, corporate America has prioritised, almost maniacally, profits for its shareholders. That single-minded devotion overran nearly every other constituent, pushing aside the interests of customers, employees and communities.
That philosophy was rooted in an idea that has an air of nobility about it. Shareholder democracy was the name given to investors asserting themselves in corporate governance. The idea was that investors would wrest control of companies from entrenched managers, letting the actual owners set their corporate priorities. But what we really got was something else: an era of shareholder primacy.
That may have a chance - a chance - of changing now that 181 chief executives have lent their signatures to a new "Statement on the Purpose of a Corporation" that was published by the Business Roundtable this week. The statement from the leaders of companies including JPMorgan Chase, Apple, Amazon and Walmart affirms that the nation's largest companies have a "fundamental commitment" to all their stakeholders: putting employees, suppliers and communities on a pedestal that once belonged only to shareholders.
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CFD players accused of 'regulatory arbitrage'
Aug 22, 2019 — 9.27am
The corporate regulator has accused global financial companies of flogging billions of dollars of risky derivatives via Australia, in a "regulatory arbitrage" that has caused $2 billion in losses to a million investors, mostly in Asia.
A whopping $22 trillion of "contracts for difference" and "binary options" has flooded through 65 Australian licensees in the past year, the Australian Securities and Investments Commission said on Thursday, as it moved to restrict the products.
The volume of money pouring into Australia has doubled in the past year, in a direct response to regulatory crackdowns in Europe, Japan, North America and China, the regulator said.
"Regulatory arbitrage is a concern," said ASIC commissioner Cathie Armour. "We are concerned if an Australian licensee is bringing detriment to clients, wherever they are located."
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Investors should be worried about the music stopping
Investors are underestimating and under-pricing the risks diminished market liquidity could pose in the next downturn.
Satyajit Das
Aug 23, 2019 — 6.31am
Several factors are roiling world markets right now, from fears of a possible US recession to erratic policymaking, trade tensions and general uncertainty.
But the unusual size of the moves -- regularly on the order of 1 per cent to 3 per cent -- is being heightened by something else: the struggle to find someone with whom to trade.
The decline in trading liquidity is evident in several metrics. Volumes have declined. Since 2007, average daily trading in US Treasury bonds (measured as a percentage of market size) has fallen by over 60 per cent.
Trading in traditionally less liquid corporate and high-yield bonds has shrunk by similar amounts. The number of small trades (under $US1 million) has grown, suggesting a lack of partners for larger deals.
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PM Morrison heads into G7 minefield
Aug 23, 2019 — 9.22am
Biarritz | Prime Minister Scott Morrison jets into France on Saturday night (Sunday AEST) to mix it with the world’s big fish at the G7, but his prized one-off invitation comes at an awkward time: the annual confederacy of leading democracies is primed for a make-or-break meeting that could resolve or deepen the West’s existential crisis.
He'll have to sidestep trans-Atlantic tensions and the internecine European stand-off over Brexit. And he will need to navigate tricky sessions focused on climate change targets as well as taxes on tech companies – issues that could put him at odds with many leaders in the room.
His host, French President Emmanuel Macron, sees his mission as no less than the rescue of the international order, which is riven by trade tensions, frayed alliances and abandoned agreements and treaties – all exacerbated by a global economic slowdown and by US President Donald Trump's unwillingess to offer the sole superpower's guarantee of a stable, predictable system.
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Business leaders sound alarm over looming energy threats
By Benjamin Preiss, Nick Toscano and Darren Gray
August 22, 2019 — 11.30pm
The threat of blackouts in Victoria has sparked alarm from some of the nation's biggest businesses with Coca Cola Amatil boss Alison Watkins comparing the situation to challenges it usually faced in developing countries.
The Australian Energy Market Operator warned on Thursday more than a million Victorian households could face blackouts this summer if power plant repairs at key facilities ran behind schedule without replacement supplies being secured.
The move reignited political divisions over energy policy and prompted sharp warnings from industry that greater certainty was required to bring stability to the energy network as the owners of the power plants - AGL and Origin Energy - issued fresh assurances both would be up and running by mid-December.
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Why we should really be worried about falling rates
The Reserve Bank's determination to cut rates even lower is not because it sees a recession around the corner. So why do it?
Aug 23, 2019 — 1.01pm
If futures markets are right, by February next year the RBA cash rate will be at 0.5 per cent. If that makes you feel a touch uncomfortable, join the club. But what exactly is the cause of this unease?
This week a banking executive expressed, with remarkable clarity, why so many of us are troubled by the Reserve Bank's apparent determination to extend monetary policy to its absolute limits.
Speaking at an Australian Business Economists' event in Sydney, Westpac Institutional Bank boss Lyn Cobley wondered why the RBA was even entertaining the idea of implementing experimental policy measures in Australia, such as a quantitative easing (QE) program of the sort implemented in the United States, Europe, Britain and Japan.
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Is it time for a universal death duty?
Aug 23, 2019 — 3.45pm
The typical inheritance is now worth around $500,000 - an estimate that doesn't even include superannuation - and beneficiaries are usually in their late 50s.
Inheritances are tax-free and mostly serve to make the rich richer, according to the Grattan Institute, which says Australia is an outlier among OECD countries in that it “actively subsidises” inheritances via superannuation tax breaks and the special treatment of the family home in the age pension assets test.
All this makes death taxes a likely point of debate as part of the government’s forthcoming review of retirement incomes.
Although the terms of reference have yet to be announced, the Actuaries Institute has waded in early, calling for serious consideration of a universal death duty.
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China debate raises spectre of White Australia Policy, says uni chief
By Jordan Baker
August 23, 2019 — 11.35pm
The head of one of Australia's top universities fears the country is veering towards a new White Australia mindset amid the escalating debate over Chinese influence on campus and in the wider community.
Sydney University vice-chancellor Michael Spence said some voices were dangerously close to arguing anyone who supported the Chinese government had no place on a university campus.
"That's just frightening as well as kind of dumb," he told the Herald.
Debate over China's influence has raged over recent weeks, triggered by federal MP and former soldier Andrew Hastie saying that China's ambitions threatened to erode Australia's sovereignty and freedoms.
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How strange could money matters get if the worst came to the worst?
Ross Gittins
Economics Editor
August 24, 2019 — 12.05am
With our official interest rate heading ever closer to zero, there’s much talk that the Reserve Bank may be forced to join other central banks in resorting to “unconventional monetary policy,” including QE – “quantitative easing”. But how likely is this? What might it involve? Are there alternatives? And would it be good or bad?
These questions were debated by Dr Stephen Kirchner, of the United States Studies Centre at Sydney University, Dr Stephen Grenville, a former deputy governor of the Reserve now at the Lowy Institute, and Lyn Cobley, boss of Westpac’s institutional bank, at a meeting of the Australian Business Economists in Sydney this week.
But let’s start with what the Reserve’s governor, Dr Philip Lowe, said on the subject to the House’s economics committee earlier this month.
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We need to talk about our reliance on overseas students
A recent research paper by the Centre for Independent Studies bells the cat on the growing reliance of Australian universities on full-fee-paying international students. It’s a reliance built at least in part out of necessity.
Government funding to Australian universities hasn’t kept pace with what these once lofty institutions receive in other parts of the world. In real terms there have been cuts to funding per student and to research funding in recent years. This, however, isn’t a focus of the CIS study.
Additionally, because undergraduate student places were uncapped back in 2010, there has been a growing number of students studying at university. When per student funding goes down in real terms, the growth in numbers because of the uncapping of places exacerbates the fiscal shortfall.
But the decision to rely on overseas students doesn’t end there. Australian universities effectively are being used by governments as a backdoor visa program to pump new money into the economy (the sector is our third largest export industry) and to enlarge the skilled population base paying taxes, to ensure national economic growth prevents us dipping into a technical recession.
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A nail in Friedman’s coffin as America’s leading companies revise their game plan
This week the US Business Roundtable, their version of the Business Council of Australia, published what it called a Statement on the Purpose of a Corporation, signed by 181 CEOs, including Lachlan Murdoch, the chairman and CEO of Fox Corporation, and co-chairman of News Corp, the publisher of this newspaper.
On its surface, it was a momentous event, overturning 57 years of corporate orthodoxy, which has held that the only purpose of a corporation is to make money for its shareholders.
According to this week’s statement, corporations are now there for all of their stakeholders, and they were listed in this order: customers, employees, suppliers, communities … and shareholders.
Some are saying it was a PR stunt, or that shareholders will kick up and not let it stand; only time will tell on that score. The fact is that shareholders own the company and appoint the directors, and they might not take kindly to being relegated to last on the list of stakeholders, so if it’s not a stunt there could be a stoush.
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