THE BRIEFING PODCAST
TUESDAY, 2 FEBRUARY 2021
SUBJECTS: Billionaires getting richer while battlers struggle; Companies using JobKeeper to pay out executive bonuses; Companies repaying JobKeeper payments after reporting huge profits.
JAN FRAN, HOST: When Bloomberg tallied all this up, Australian billionaires saw their wealth go up by 50 per cent during the pandemic.
TOM TILLEY, HOST: Yeah, and the Aussie billionaires do particularly well, because in the US and the UK billionaires saw their wealth go up by 25 per cent. So compared to the Aussies on 50 per cent-
FRAN: 25 per cent, that’s terrible.
FRAN: So in today's briefing, we're asking, is this fair? Should they be sharing their wealth?
TILLEY: Yeah, especially given people had such a tough time during the pandemic. When you think back to the start, remember when everyone was like cheering for the nurses? They were clapping the frontline workers in supermarkets, delivery drivers, teachers, cleaners. Well, they’re paid wages and wages have stayed flat. And overall the economy, during that same period as the Rich List, went backwards 3.8 per cent.
FRAN: So I guess the question is, how do we stop wealth disparity getting even worse from here? Andrew Leigh has a few ideas. He's a Labor MP. He's the Shadow Assistant Minister for Treasury, and he was also a professor of economics before he went into politics.
TILLEY: Andrew Leigh, thanks for joining us. It's mind blowing to see how the year panned out for billionaires. Is there an inherent unfairness here? Should more of that money be trickling down to everyday Australians?
ANDREW LEIGH, SHADOW ASSISTANT MINISTER FOR TREASURY AND CHARITIES: It is astonishing to see how well billionaires have done this year. I mean, when I first looked at the figures, I expected billionaires might have increased their wealth a little bit, given that the stock market has done better than the labour market. But a 50 per cent increase in the average wealth of billionaires is just astonishing. And it does suggest that there is an opportunity for billionaires to show they're part of the Australian community and that they understand that we're all in it together - particularly for those billionaires whose firms have benefited from government support via the JobKeeper program. It's a chance for them to say their firms, ‘give the money back, given we didn't need it’.
TILLEY: Yeah, we'll get to the JobKeeper debate in a moment. But let's look at that rich list. Right at the top is Gina Rinehart, Twiggy Forrest. Gina’s wealth has doubled, Twiggy Forrest’s has tripled. They both profiting from iron ore. That's a resource that's in the ground, in Australia. That's our resource. So are they sharing their wealth enough?
LEIGH: There's always going to be a question about the fairness of the tax system, and also whether people are engaged in sufficient philanthropy. If you look at philanthropy in Australia, compared to the United States for example, it's more modest. On the other hand, our top income groups do pay a little bit more tax than they do in the US. So we need to make sure that we've got the system that's fair. We do know that this has been a generation in which billionaires have performed a whole lot better than battlers, in which wages have basically been flatlining for many people while the wealth of billionaires has been going up. You see that in the housing market too. Those who have multiple investment properties have done well out of property boom, those who haven't managed to get in finding themselves locked out of the property market. So I worry too much that Australia's splitting into a nation of the haves and have-nots.
TILLEY: Yeah, the other big boom in wealth has been in the tech sector. You know, the top 10 wealthiest people in the US are almost all tech entrepreneurs. Now, in the Australian top 10 rich list, you've got the Atlassian co-founders who are doing really well. Their wealth has almost doubled. Do we need to think about how that sector is sharing its profits and its wealth differently? We know in the US, Bernie Sanders suggested a 60 per cent one-off wealth tax, which would affect a lot of those tech entrepreneurs. Is that the sort of idea you would support?
LEIGH: I don't think that's likely to be feasible in Australia. But I do think it's important that those billionaires are conscious of the social responsibility for Australia. At least in the context of tech billionaires, you've got people who are making their wealth out of creating new products and services for the Australian community, rather than just taking advantage of increased prices. I know the Atlassian co-founders have placed significant emphasis on philanthropy and also on encouraging philanthropy within the firm. I’d frankly like to see more of that through Australia's corporate sector.
TILLEY: Yeah, Twiggy Forrest has been big on that as well. But that, I guess, depends on them being good citizens. Do we need different laws that mean that all billionaires are, you know, participating in that kind of philanthropy or finding other ways to share the wealth more equally?
LEIGH: Warren Buffett and Bill Gates have led the charge in terms of asking billionaires to give back a significant share of their wealth to the community, and that sort of ethos will hopefully permeate through to Australia's billionaires. Now, we haven't always seen it. Often, some of our billionaires have been focused just on themselves and their families, and their contribution to philanthropic causes has been smaller as a share of income than many middle class families. I hope that shifts. I hope there is a recognition that with great wealth comes an obligation to give back to the community, and that wealth is created in a social context in which people have the chance to make use of their skills – it doesn't just come as a result of pure hard work, as the old Ayn Rand myth would have it.
FRAN: So one debate that's happening now is whether companies that have done well in the last year should be paying back JobKeeper money that they got from the government, which essentially means our taxes. Now some companies have done this voluntarily, Toyota being one of them, and here’s what the Treasurer Josh Frydenberg said when asked whether they should be forced to pay back.
JOSH FRYDENBERG, TREASURER: I would welcome any business that decided to pay that money back.
DAVID SPEERS, INSIDERS HOST: Why don't you require them to do so?
FRYDENBERG: Because again, that was not what they signed up to when they took the JobKeeper payments.
FRAN: That was the Treasurer Josh Frydenberg there on ABC’s insiders. Andrew Leigh, what do you think? Should these profitable companies be forced to pay back JobKeeper?
LEIGH: I think we need to firstly call out the firms which are receiving JobKeeper, paying executive bonuses, paying big dividends and enjoying increased profits. One of those is Premier Investments. Another one is Harvey Norman. We've seen significant largesse being given by firms to their corporate executives at a time in which we've got a million people out of work and a million people wanting more hours. It just doesn't seem fair that you've got government subsidies going to prop up executive bonuses and firms which are enjoying a profit bonanza.
FRAN: So you would just encourage them to pay it back? If you could speak to one of those people who runs those companies now, what would you say to them exactly?
LEIGH: Your firm has a corporate responsibility policy. It says that it's committed to helping not just shareholders, but the community. Yet the way in which you put that in place is through giving small donations to charity every year. If you're really serious about your corporate social responsibility pledge, now's the time to put it into action. Follow the lead of firms like Super Retail Group, Toyota Australia and Domino's, which have voluntarily given back JobKeeper payments. Now that'd be the message that I'd be sending to these firms, and I think frankly their customers and their shareholders would welcome them doing the right thing.
TILLEY: That sounded quite well rehearsed.
LEIGH: Look, I've been banging on this drum for a couple months now. I think it's something that's high time we look into harder.
TILLEY: So you aren't advocating that we force them to do that? You're sort of taking the same line as the Treasurer, it sounds?
LEIGH: Well, the Treasurer is just going to say he welcomes anyone pays it back. He's not going to call out those that have been paying executive bonuses. In that, he's completely at odds with the tax office and the Business Council of Australia. They say that you should not be getting government subsidies and using it to pay executive bonuses.
TILLEY: Is there no way to force them to do it? This encouraging business sounds a little bit wishy washy. Can you not force them to do it?
LEIGH: Well, in New Zealand they have a repayment scheme. That's something that was put in place in the outset. You know, if they're not moving on it, then obviously there's going to be a growing pressure for firms to be forced to do the right thing.
TILLEY: Is there a way though, because Josh Frydenberg’s argument when he spoke about this on Sunday was that these weren't the conditions in which that money was given in the first place when JobKeeper were set up. So he was saying there’s no way to force them to give that back, given that situation.
LEIGH: He's technically right. But it's the tax office that said very clearly that if you're paying executive bonuses, you shouldn’t be getting JobKeeper. Given that the tax office has taken a pretty firm line on executive bonuses, I think it's appropriate that Josh Frydenberg starts to call out those firms that are acting at odds with what the tax office says, that are getting taxpayer subsidies and using it to pay multimillion dollar bonuses to executives. I mean, look at Premier Investments. They paid a $2.5 million bonus to a CEO who's finishing up on $5 million. Now, I'm guessing most of your listeners earn nothing close to a $5 million annual salary. Most people in Australia won’t earn $5 million in a lifetime. So the fact is that at a time we're facing down a recession and a pandemic, we need every government dollar we can get. We just can't afford to be giving government dollars to firms that are using them to assist billionaires and millionaires.
TILLEY: Labor MP and economist Andrew Leigh there.
Authorised by Paul Erickson, ALP, Canberra.