Sometimes I wonder whether the economy is being managed for our benefit
or for the benefit of the big businesses that dominate it. The two big
supermarket chains we get to choose between, the two domestic airlines
and privately owned airports, the three foreign mining giants that were
allowed to redesign the mining tax they didn't like, and the four big
banks that control so much of our superannuation and the investment
advice we get, not to mention our savings accounts and mortgages.
I'm
old enough to remember when economic life seemed to be dominated by big
unions. Hardly a month passed without our lives being disrupted by some
strike. We'd be walking miles to work or finding someone to mind the
kids while the teachers were out.
I remember finishing a holiday
in New Zealand with our young family, only to find the baggage handlers
in Sydney were on strike and being stuck in Christchurch for an extra
two days.
Thank goodness we don't have to put up with all that any
more. But in place of being bossed around by the unions, we now have
big business calling the shots. They don't inconvenience us like the
unions did, but they do seem to have the ear of government.
Big
business is always complaining about some way the economy's being run
that doesn't meet with its approval. It's always warning of the terrible
economic price we'll pay if it doesn't get what it wants. Its
complaints are always treated with reverence by the media. And always
taken seriously by the government, Labor or Coalition.
We seem to
be developing a new economic religion that what's good for big business
is good for the country. No one believes this more fervently than the
big business people themselves - plus their never-silent lobby groups.
These paragons of industry want to be unfettered in their efforts to
expand their businesses and make higher profits, which they're doing
purely in the interests of you and me. And they're always terribly
impatient. They want to frack wherever they want to frack, they want to
start tomorrow and they don't want selfish, short-sighted people to slow
them down, let alone stop them.
They want to invest in a new mine
or a new something which will create tens of thousands of new jobs in
the district, and what other consideration could possibly trump that? If
you want to consult the locals before granting permission, this is "red
tape", which by definition is bad and must be swept aside. If you want
time to investigate the environmental impact of the project, this is
"green tape" and just as much economic vandalism as the red.
Another
problem is the breakdown of "caveat emptor" - it's the buyer's job to
make sure they're not ripped off. Products, particularly financial
products, have become complex and hard to compare - deliberately so, you
have to suspect.
In theory, we're supposed to read every word of the
contracts we sign, know whether the nice man giving us advice on our
savings is being paid to push some products but not others, know whether
he'll go on receiving a commission for years without contacting us
again, check continually to see whether our bank is now offering a
better deal than we get without telling us or whether we should be
moving our banking business, check what fees we're being charged on our
superannuation and whether a different fund would give us a better deal.
In
theory, we should devote much of our free time to doing all that. In
practice, few do. We like to relax when we're not working and are
diverted by an ever-multiplying range of commercial entertainments.
In
practice, big business knows far more about this stuff than we do. So we
need governments to protect us from being exploited, prohibiting
certain kinds of behaviour, requiring financial institutions to keep us
informed in ways we can understand and not take advantage of our
inferior knowledge and inertia.
After many people lost their
savings during the financial crisis, the previous federal government
decided to tighten up on financial advice. Its original plans were
modified after lobbying by the banks and their lobby groups, and now
they've been watered down further by the present government - all in the
name of reducing red tape.
The government compels most employees
to contribute 9.5 per cent of their salaries to superannuation, from
which the people running those funds extract very high fees - now equal
to an amazing 1 per cent of gross domestic product - which greatly
reduce final payouts.
The interim report of the inquiry into the
financial system found that the fees appeared high by international
standards. It found little evidence of strong fee-based competition
between funds. The funds have got a lot bigger in recent years, but
these economies of scale haven't led to lower fees.
The previous
government introduced a new, simpler super account called MySuper in an
effort to reduce fees, but the report says it's too early to assess its
success in doing so. Last week, the Financial Services Council lobby
group began arguing strongly that fees aren't too high. We must hope it
isn't as influential in resisting the push for lower super fees as it
was in getting the investment-advice protections watered down.
