Battlers and plutocrats: How political connections reward Australia's super-rich

Posted August 26, 2015 10:48:34

Research reveals a huge proportion of Australia's richest people amass their wealth via political connections rather than via innovative businesses - which is helping them at the expense of everyone else, write Paul Frijters and Gigi Foster.

The Washington Post ran an article last week reporting that 65 per cent of the richest people in Australia had amassed their wealth via political connections rather than via innovative businesses.

According to the quoted research, Australian residents are rewarded for their political connections about as much as Indonesian or Indian residents, with Colombia offering the biggest rewards. Notably, the Australian situation is in stark contrast to that of the US, where only 1 per cent of the billionaires reportedly made their wealth through political connections.

Is Australia really such a plutocracy? Our own research, using different empirical methods, agrees with the conclusions reported in the Washington Post.

In fact, we put the figure closer to 80 per cent, making Australia potentially on par with Colombia. The authors whose research was reported in the Post only counted wealth that was visibly obtained via political connections, which may explain why their number is slightly lower than ours.

Our method was to look at the industry of operations of the 200 richest Australians on the BRW list. Based on the rich list from 2009, we reported the following finding in our paper:

Over 80 per cent of the wealthiest Australians have made their fortunes in property, mining, banking, superannuation and finance generally - all heavily regulated industries in which fortunes can be made by getting favourable property rezonings, planning law exemptions, mining concessions, labour law exemptions, money creation powers and mandated markets of many stripes.

Looking in more detail at the life histories of these people, none of the 200 richest Australians in 2009 looked like Bill Gates or Warren Buffett - namely, innovators who made their money by inventing, producing, or distributing cheaper products bought by millions.

Instead, the list abounded with mining magnates who enjoyed favourable government concessions; CEOs of superannuation funds who personally benefitted from government guarantees locking hundreds of thousands of people into doing business with them; banking and finance CEOs who received government guarantees and favourable legislation; and - the largest group of all - property developers who rely on rezoning and other favourable political decisions.

As the research reported in the Washington Post suggests, Australia's plutocracy has severe negative consequences for the rest of the economy.

For example, the overhead costs of superannuation firms are now 1 per cent of their total funds per year. Over a whole working life, this 1 per cent tax on total superannuation holdings each year easily amounts to 40 per cent of total superannuation wealth accumulated by retirement age. In comparison, in Denmark the overhead costs are 0.1 per cent, making the Danes 35 per cent better off in terms of accumulated superannuation wealth. Another way to put this is to say that 35 per cent of superannuation wealth is needlessly taxed away in Australia by the super-rich, on the back of favourable legislation.

Similarly, Cameron Murray calculated that some 60 per cent of the increases in house prices following rezoning in Queensland flow to politically connected developers, which can be seen as a direct tax on the rest of the population, who would otherwise benefit that much more from rezoning.

The story is the same when it comes to high bank fees, high mortgage costs, high school fees, high health costs, high legal costs, high administrative burdens in various sectors, and high food prices: in each of these cases, political capture by a small group (such as university administrators, over-paid medical specialists, and bank CEOs) enables these groups to divert disproportionately large margins of our society's economic surplus to themselves. In short, the economic power derived from political connections in our society makes life for the unconnected much more expensive than it should be. The end result is a few who get special favours, and a vast majority who are kept poorer and less educated than they should be.

And the plutocrats are still winning, on both sides of politics. The last budget could have been written by the super-rich and the Treasurer is already making noises about more income tax cuts that will predominantly favour the rich.

The tragic part is that solutions are available. For example, we could legislatively limit the salaries of all workers whose income depends largely on the state, using a benchmark like the PM's salary as a cap. This would take away the honey pot created when the system makes it possible for the well-connected to achieve control of state-favoured institutions, and would force creative people to make their money competitively rather than via free-riding on the state.

Another avenue of reform would be to establish a national public bank that makes direct, cheap, minimal mortgage loans to the population, replacing the current system where the Reserve Bank lends cheaply to a few private banks who then lend expensively to the population.

Seeing what should be done is not the hard bit. The hard bit is the politics. Solutions like those suggested above will be bitterly resisted by the plutocrats who personally gain so much from keeping the population ignorant of their parasitic feasting.

The first step is to get the population to wake up and realise the massive degree to which they are being fleeced, and to feel outraged because it does not have to be this way.

Paul Frijters is a Professor of Economics at The University of Queensland. Gigi Foster is an Associate Professor of Economics at the University of NSW.


Comments (212)

Comments for this story are closed.

  • Erick Quang:

    26 Aug 2015 10:57:27am

    This article may explain why Abbott wants to interfere with industry based super funds, the smell of corruption is getting stronger all the time. The proposed remedies are worth a good look at.

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    • spacey 101:

      26 Aug 2015 11:14:28am


      Industry superfunds outperform their retail counterparts.

      They achieve this because of how are structured. All profits go to members. They play the same markets, use the same mechanisms, but don't have to pay dividends to shareholders.

      Abbott wants to get his hands on superfunds because his donors see a chance to get their hands on an enormous amount of capital.

      In essence they want to turn industry superfunds into retail and commercial superfunds so that people other than members can make a buck out of it.

      What's the point of turning an industry fund into a retail fund? To divert some of that wealth currently going solely into the hands of its members into the hands of rent seekers.

      That's is, plain and simple.

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      • Marbeek:

        26 Aug 2015 12:01:55pm

        Erick agrees with you Spacey 101. Good argument based using evidence that has been agreed on experts should be accepted.

        Politics is now only taken seriously by fools. The internet allows any opinions to be aired and this makes opinion worthless.

        Worthless debate has the consequence that politicians do what they want. We should be very careful.

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      • Q...:

        26 Aug 2015 12:09:07pm

        I think that's what Erick was referring to...

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      • Jerry Attrick:

        26 Aug 2015 12:13:05pm

        I think Erick was hinting that Abbott gets no benefit from industry super-funds, but there is a fair chance of the wrong people benefiting from "retail" funds.
        I had money in one of those years ago, then realised that they were paying me about the same as bank interest (barely above inflation).

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        • spacey 101:

          26 Aug 2015 1:01:39pm

          My apologies to Erick.

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        • Colmery:

          26 Aug 2015 2:30:08pm

          Don't apologise spacey 101. Almost everything we all say is wrong to one degree or another. Democracy is a process to halt dictators not a way of making wise decisions. An average opinion is only valued by advertisers and the media people who peddle stuff to the largest possible audience.

          The ABC needs to be free of commercial pressure (and those who would pressure for them) because it is the only feasible mass audience outlet likely to promote the fundamental that cogent argument based on established fact is the foundation of our civilization.

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        • HPH:

          26 Aug 2015 3:32:12pm

          On The Drum, each article and the accompanying comments under it, make up a whole picture. The role (and the job) of The ABC is to make sure that this picture is satisfactory to the Powers that be. This picture is similar to a jigsaw puzzle. What we are doing is providing 'the pieces' by posting our comments. So the moderator(s) chooses each comment that best fits to make up the whole picture. Whether your comment is relevant/irrelevant, true/false, informative, eye opening or not, the aim is to create and present this predetermined picture.

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        • Zing:

          26 Aug 2015 6:26:02pm

          "Democracy is a process to halt dictators not a way of making wise decisions."

          Cynical, but true.

          When a nation is a democracy, the only thing you can take for granted is that half the people voting are dumber than the national average.

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        • HPH:

          26 Aug 2015 6:52:18pm

          Hahaha you're funny Zing.

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        • Martin:

          27 Aug 2015 1:22:45am

          Not necessarily, we only have two options basically and no matter who we vote for we always get the same.

          The independents do not last long here.

          In the end it makes no difference wether you are wise or an idiot when you cast your vote.

          I only go to vote to avoid the fine.

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        • Nicholas Fisher:

          27 Aug 2015 1:28:01pm

          There are more than two options, and we have preferential voting so you never waste your vote - even if you vote for the candidate who polls 1% and doesn't get in.

          If you hate Labor, but think they're the only 'realistic' alternative to the Liberals, but what you -really- want is for the Greens/PUP/Independent to get in... vote for the one you want! Then put Labor or whoever 2nd.

          If more people realised this, Labor and Liberal would lose a lot of their votes, and the other parties might become viable options. Even if not, it would shake up the kind of 'it doesn't matter what we do if we're the only 2 options' quasi-democracy we have going right now.

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        • Trite:

          27 Aug 2015 7:48:08am

          Correction 60%

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    • Bulldust:

      26 Aug 2015 1:00:25pm

      The original research sounds like complete bunk. Hardly surprising considering a lot of the dross that is passed for research these days.

      Explain how the "political connectedness" of individuals is measured objectively, i.e. scientifically. It cannot. From the looks of it (the publication is paywalled) they have used proxies of industries that are heavily regulated as being a representation of political connectedness. That would be complete BS.

      And excuse me, but how is Warren Buffet an innovator? He is an investor first and foremost. He famously only buys into businesses he understands (a wise strategy BTW). He is hardly a technology innovator.

      So the answer is to drop all legislation on mining, for example, so that it's political connectedness is reduced? Clearly not. I don't think you'll find a single mining exec that will state that the mountains of red tape are helping their business. To the contrary, most clamour for it to be reduced and/or streamlined. Clearly the vested interests are not smart enough to know what is good for them, if this "research" is to be believed.

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      • rockpicker:

        26 Aug 2015 9:15:25pm

        He thinks he should pay tax and CEOs should not get hundreds of times their employees wages. That's way out there these days

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      • Q...:

        27 Aug 2015 7:43:00am

        The legislation/regulation noted as "political connectedness" are the ones that prop up an industry. Not the regulations that an industry has to comply with but the ones that benefit them. Things like diesel rebates for miners, the government paying 30% of private health insurance and the fact that superannuation is compulsory.

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        • Bulldust:

          27 Aug 2015 10:40:25am

          The diesel rebate is not a subsidy.

          Miners and farmers still pay a diesel excise, but it is less than that paid by the users of public roads, the reason the excise was brought into existence. If you want to make an argument, it helps to have the facts straight. The Greens "diesel rebate subsidy" meme just refuses to die at The Drum.

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      • MS:

        27 Aug 2015 9:05:23am

        It certainly can be quantified and measured. Membership of political entities; marital, social and financial relationships, old-boy networks etc. A German study about 10 years ago concluded that in that country, only 3% of executives and board members were outliers, 97% had pre-existing relationships like these.

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      • Kismet:

        27 Aug 2015 9:14:17am

        Have to agree, Bulldust. I think even blind Freddy could have predicted the outcome before this piece of 'research' even started. Warren Buffet an innovator, not likely. Many of the ideas in Windows such as the icons were first 'invented' by Apple. Bill Gates made his money out of selling a product that broke down regularly and depended on its customers finding the problems and in many cases telling Microsoft the workarounds/fixes.

        The truth is money, attracts politicians so there will always be a strong connection between those with money and politics. If this is all that this pair of economists have to do in academia, then no wonder we keep having economic crises. The only innovator in economics that I can recall was Adam Smith, and he did it by noting that there were patterns to human behavior when it came to making (or losing perhaps) money so he documented it all. The rest is history, as they say.

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      • Lucy:

        27 Aug 2015 12:59:09pm

        To me the original research is a load of as, doesnt it make sense that rezonning laws will always favour the person who applies for the rezonning? Anyone can apply for rezonning but they have to be willing to go to council meetings and argue their case if they are going to stand a chance of getting it through and by the research that means they are more "connected" when in reality it is an option for anyone, just that the vast majority never attempt it.
        Doesnt it make sense that the business who hunts for government contracts, visits and talks to decision makers, stands a better chance of getting the contract than the one who sends a fax to a government agency and expects that will encourage decision makers?

        Really it is useless research. Anyone who puts in the effort will be rewarded...if they effort makes any sense that is.

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    • John51:

      26 Aug 2015 4:23:48pm

      Erick, as the author outlines this should be obvious to all, especially when it comes to the privatisation of public assetts. The first thing that happens when a public assett is privatised is that the political parties have created a new Rent Seeker to donate money to their political party.

      And who wins out most with a privatised assett. It is those who have the greatest political connections, it is those who have the money to invest in these assetts, not simply to keep but to buy and sell. You can't do that or make money linke that from an assett that is still a public assett, although even here those with close political connections make money through the privatisation of its workforce.

      Look at how many public assetts, government departments and local governments especially contract out their work to private companies and especially to labor hire companies. So it is hard to get past the impression at least that good conections with governments of ever level is a wealth creator for many of these individuals and their businesses.

      In Australia when it comes to business whether with private corporations or with government it is hard to get past the view that connections play a big part. You can see why so many people are willing to spend big money sending their children to the top private schools because of the connections they create there. I would suggest go and have a look at all of the Boards of the top companies in this country to see how much of a Boys club it is based at least on appearance to a large degree on who you know.

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      • dubious the third:

        26 Aug 2015 5:20:09pm

        It's in the dna of Nation State Australia, which is made up of colonies established to British Instruction.
        The squattocracy of the colonies then formulated a way to federate the colonies, and with Westminster approval, including the blessing of the Remembrancer, the Commonwealth of Australia came into being as a means for British and squattocracy investment.
        Since all politicians still must swear or affirm to serve the nominee of the Empire, it seems obvious that by design, it is skewed to favour the wealthy, and the politicians role is to facilitate that, usually for a fee.
        ....and all along, the First Nations have endured continued loss, watching, sadly.

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      • Bev:

        26 Aug 2015 5:35:28pm

        Exhibit one Medibank. They are reducing benefits and heavying hospitals and the ink is not dry on the sign over documents yet.

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        • harvey:

          27 Aug 2015 8:23:26am

          Yes I hope that customers are voting with their feet.

          I would not want to go into hospital not knowing if I'm covered or whether I'll be left with thousands of dollars worth of bills.

          Medibank is now a stalking horse for US healthcare taking over in Australia. And privatised by Abbott to do this very role.

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    • harvey:

      27 Aug 2015 8:20:49am

      Erik's comment is hard to decipher. Is he saying that Abbott wants to interfere with industry super funds due to himself or the super funds being corrupt ? Can be read either way.

      In any case, this research proves that Australia is a Banana Republic, in the company of Colombia, India and Indonesia FFS.

      It explains why one of the richest countries in the world has a government telling the ordinary people to do without quality education (see NAPLAN), and hospitals (see Waiting Lists), and roads (see Sydney).

      We need a Federal ICAC to find out where all our money is really going.

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  • Old Bill:

    26 Aug 2015 11:00:16am

    Great article. It seems that every three generations or thereabouts we have to learn the same lessons.

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    • Muddie:

      26 Aug 2015 11:51:29am

      I can remember my father complaining on government corruption and the benefits those in government were getting from their actions some 6o years ago.

      I also grew up in the Bjelke era in Qld and corruption was very blatant then, accepted by a docile electorate, who had the philosophy of "nothing we can do they are all the same."
      Nothing changes
      This article, however, spells out the costs to society that one does not readily associate with the activities of politicians. Frightening.

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      • harvey:

        26 Aug 2015 3:14:31pm

        And now Abbott has asked Obama to ask Abbott to send troops into Syria. What arms industries do we have in Australia ? Who stands to gain $$$ from this ?

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        • Joh:

          26 Aug 2015 3:25:19pm

          Well done, Harvey, say what you want to say irrespective of the question.

          Could not have done it better myself.

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        • harvey:

          26 Aug 2015 5:20:36pm

          I thought the question was how having connections enrich selected people in Australia. Perhaps weaponry is one of the vehicles du jour Joh, it doesn't all have to be peanut farms and real estate.

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        • Justin:

          26 Aug 2015 5:47:32pm

          Well the cynic would suggest Abbott wins. If he can create some form of security issue, its been shown over the years that incumbant governments rarely get voted out when there is a war or security issue. In turn liberal donors and big business then wins.

          There is definate truth to the article. Whether the numbers are correct I'm not sure, but look at the most popular tool for wealth creation. Negative gearing of property. Its not about being innovative, creating new business or growing australia. Its about jumping on a government subsidised wealth creation method. Its legit, but has consequences that people prefer not to talk about, because as long as they are ok they don't care.

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        • lilly:

          27 Aug 2015 9:26:13am

          I think bombing Iraq and Syria is done for two reasons:
          a) To create fear among the population which will in turn aid the LNP at the next election and,
          b) To use as political leverage in trade negotiations with the US. This was how we got the free trade aggreement with the US first time round.

          I'm hoping, for the sake of our freedoms, that the fear Abbott tries so hard to generate from terrorism will cease to become an effective political tool as the community become desensitized to the fear mongering (i.e. never cry wolf).

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    • Alternatvue:

      26 Aug 2015 11:53:26am

      We had better get this cycle better set up. We may not get a better chance ever again.

      Just a couple of words in this article worried me - creative and competitive used in close conjugation. Creativity does not need to be nipped in the bud by entrenched and ruthless competitors for any buck on their horizon.

      The Invisible Hand of my economic faith is no doubt rather different from the Hand of the authors' economic religion but theirs and mine are poles apart from those of the Abbotteers and their grises.

      Thank you for this article. I hope people think out towards the consequences and the alternatives it touches on or suggests.

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  • mike:

    26 Aug 2015 11:03:00am

    Absolutely correct and shameful! Lobbying by the gambling industry is blatant and intimidating, alcohol and banking is done sneaky, supermarkets focus on state and local government. How can these politicians claim they are not influenced???

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    • Steve_C:

      26 Aug 2015 12:02:39pm

      "How can these politicians claim they are not influenced???"

      The same as the rest of us can... and DO!!!

      I'd bet London to a brick, that you give the best gifts to your closest family or friends.

      How many of us can say we've given a complete stranger a gift that was better than what we'd give a partner or family member or a friend?

      But we sure have little problem denying that we are innately nepotistic.

      It's not like our pollies/business leaders are born in test tubes and raised in hermetically sealed, carefully managed conditions... They come from the same suburbs and streets as the rest of us; so rather than do as they do when they blame "us" for things that don't go their way - how's about we take a look in the mirror and recognise their deficiencies come from within us.

      If society in general has lost it's moral compass, then there's no way we can expect our 'representatives' whether they be in government or business to be anything other than like the rest of us.

      We - in the end; are just as influenced as they are.

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      • foolking:

        26 Aug 2015 2:29:34pm

        Regulate advertising and content in media so as that misrepresentation, lies and untruths are phased out. When we don't have a head full of utter rubbish things will start to make sense again.

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        • black belt:

          26 Aug 2015 3:36:17pm

          "We - in the end; are just as influenced as they are".

          Equating love of family to that of love of money is a bit of stretch. To say the least. As the above comment attempts to.

          However, it would be nice if politicians developed a love of the community they serve though. Or, at least a respect of it to start off with for now....

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    • virgil:

      26 Aug 2015 2:09:22pm

      Lobbying and political donations are democratic cancer. Will someone from the political elite please have the guts to stand up to the corporate sector and push for publicly funded elections, banning political donations & restricting access to lobbyists.

      Banning property developers from council is a good first step!

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  • whohasthefish:

    26 Aug 2015 11:03:18am

    If ever a country needed a revolution its Australia. I am not advocating violence of any sort but we really do need our political classes to operate for us the people. An ongoing Royal Commission or ICAC style body exposing the huge connection between lobbyist, those that employ them and politicians is needed more so now than at any time during our history. Every day we really are reminded of the disconnect between the very well off and the rest of us plebs. Its disgusting, most likely illegal and absolutely immoral what has been going on for far to long. We are being fed lies, lies and more bloody lies every day about debt, deficit and the economy. The rich, and I mean very rich are taking us all for a ride with a complicit and no doubt corrupt political system. Viva the revolution.

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    • Dove:

      26 Aug 2015 11:51:31am

      If I bring my own overalls and pitchfork can I join? The biggest con, IMHO, is that the two major parties are the only alternatives we have for running the show. As they represent the same interest groups one wonders if they aren't, for all practical purposes, the same party and we just get to select which faction signs the cheques? It's easy to say "vote for somebody else" but they are entrenched, they abuse every organ of government and the state to stay in power, they influence the media and as we know from history, they unite to viscously attack any new comers who might threaten their patch. It would take a social and economic catastrophe to winkle them out of power.

      All we have to do is read the posts here. Whilst contributors aren't, as a whole, a very representative bunch, they are, as a whole, far more education and well read than the general population. Even the ones we disagree with. Sometimes especially the ones I disagree with most! And they are overwhelmingly wedded to their political party in the manner and with all the sophistication, nuance and empathy of a football fan. If this ship of fools can't see domestic politicking for what it is, what hope home anyone else?

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      • Jerry Attrick:

        26 Aug 2015 12:20:11pm

        "overwhelmingly wedded to their political party".
        It's a question of alternatives. I'm overwhelmingly disgusted at the antisocial behaviour of this governing political party (come on Nationals, stop pretending you're different).
        Labor are fractionally better at giving back to the electorate, but still have a long way to go before they are "trustworthy".
        Other parties have some idealogues among them, but usually on narrowly focused topics.
        What we need is a proper coalition of ideologically diverse parties who understand the meaning and spirit of the word "negotiation".

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        • petenotpeat:

          26 Aug 2015 4:42:52pm

          The narrow views of the major parties is down to their narrow selection base. Where are the non-lawyers and people whose work /life experience extends beyond being an assistant (researcher? / advisor?) to a serving politician?
          How can we expect a rational science based collective when there are no educated individuals. Same goes for many other areas.

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      • Lexx:

        26 Aug 2015 12:44:29pm

        "And they are overwhelmingly wedded to their political party..."

        Sometimes Dove, in a field of two it's more that they find the other option antithetical rather than being quite so wedded to their own "side". A subtle distinction, perhaps.

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        • Dove:

          26 Aug 2015 4:20:05pm

          Lexx, for sure it is only a two-horse race, but there are more than two ideas, more than two options, more than two potential policies. We are railroaded into choosing between one or the other, who only differ in the margins, who adopt the same programmes but with slightly different names or emphases. That's the nature of the system, not the nature of the electorate. We inherited a second hand system of a government perfectly evolved for Britain in 1850. We then built our chambers to replicate a left and right, a combative government and opposition. Just imagine if everyone was arranged by electorate instead of sitting together like school-yard gangs. We were dumb enough to leave much of the workings of parliament and government to precedent and tradition, although we are systematically smashing them apart. Irrespective of the roots of Labor, as a movement it is dead. It's just a different brand of liberal. Now both sides take their coin from the same interests and make the same decisions for the benefit of those interests. It doesn't matter which side is "in" because they both govern for the same people, and it aint us. Rant over!

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    • Michael:

      26 Aug 2015 12:24:13pm

      A federal ICAC with a judge appointed by the politicians who became a judge because of political connections. Good luck with the judiciary.

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    • Spinebill:

      26 Aug 2015 2:09:07pm

      'There will be no revolution in Australia whilst there are couches'

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      • bobtonnor:

        27 Aug 2015 10:27:35am

        Pure gold, you have made my morning, thankyou

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  • dr dig:

    26 Aug 2015 11:04:09am

    What a bizarre selection of statements from a Professor and an Ass. Professor.

    By the logic you have relied on in this piece, everybody in Australia draws their wealth from political connection due to the fact that government oversees and provides laws and regulations of the industries we work in.

    The implied meaning that these wealthy people have made their money because of their personal connections with politicians is clear and not borne out by your research at all.

    The health and medical industry is also very highly regulated by government, so then I assume you would equally say that all wealthy doctors and health specialists have made their money due to political connections.

    Sad, so very sad for the academy that such loose thought from academicians is broadcast to the public.

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    • Edward:

      26 Aug 2015 11:38:17am

      My thoughts as well. The headlie and initial blurb promised a tale of dirty dealing. The body gave us nothing more than a tale of those who managed to play the system as it stands.

      If the article had focussed more on how the uber rich use their wealth to influence politicians then I'd have a little more respect. How often do we hear about a certain miner (or other nob) getting into the ear of a minister and the media to influence social and other policies? It wouldn't bother me if they actually knew what they were talking about, but they don't.

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      • Prime Lemur:

        27 Aug 2015 11:58:26am

        Dr Dig & Edward,

        I'm not sure that's the heart of the article.

        I believe what is said is that politicians, their parties and sectors of the economy enter into relationships that entrench political power and financial wealth.

        The implication is that there is a feedback loop, where political power, which requires incredible amounts of money to self-promote in the process of becoming elected, acts to reward actors who engage in ideologically compatible activities or sectors of the economy. These corporate or other entities take part in the public discourse, pretending they are disinterested parties, but in fact they're advocating for the political party who has assisted them. It doesn't hurt to be a substantial financial benefactor to the party either.

        I believe the old-fashioned term is a shill.

        Its not just about wealth and the wealthy. Its about lobbying, corruption and changing the rules to benefit those who in return will sing the praises of a political party. Its about seeking advantage for yourself, to the disadvantage of others.

        Both sides are up to their necks in it. I always sit up and take notice whenever a government proposes a change in law or regulation that is clearly and unambiguously to the advantage of a single company, business or organisation. You can bet your bottom dollar its a two way process ... "I do this for you, now what can you do for me".

        We saw it with ICAC and both sides having sleazy quid pro quo dealings with wealthy and powerful interests.

        No, the article isn't about bashing the rich. Its about exposing the inequity of making changes that benefit the few, and in consequence disadvantage everyone else.

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        • Ghost of Christmas Present:

          27 Aug 2015 3:46:29pm

          This article is about dog whistling the financially naive to support a leftist political agenda intent on fomenting class warfare.

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    • Yorker:

      26 Aug 2015 11:55:57am

      "you would equally say that all wealthy doctors and health specialists have made their money due to political connections"

      Without a doubt the AMA falls firmly into this bracket, and Medicare rorting by doctors, path labs and imaging centres is widespread.

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      • Ghost of Christmas Present:

        27 Aug 2015 3:47:43pm

        Prove it Yorker. I don't believe that this is the case.

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    • PDP11:

      26 Aug 2015 12:15:44pm

      Pity you didn't join me and sit through some of the Planning Panels hearing land rezoning applications through Council Planning scheme amendments. This is not a level playing field for all participants. You need to correct your naivety.

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    • oh- owe:

      26 Aug 2015 1:58:48pm

      Have you forgotten about the MRI scandle when Michale Wooldridge was health Minister? it might be a while ago, but the funds are still rolling in.

      So sad that people forget the evidence.

      Ps, there are some dedicated medicos, but they do not become super rich.

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    • Maynard:

      26 Aug 2015 2:34:15pm

      It's called the AMA the best union in the land.

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    • Ghost of Christmas Present:

      27 Aug 2015 3:43:21pm

      I agree with you Dr Dig. Their analysis is so flawed as to be laughable. For starters a 40% impost as claimed by the authors could only be possible if the fund earned zero returns over 40 years. The reality is that the long term returns from super average about 5.5%-6%. Assuming that I put $100 in super and achieve a rate of return of 5% and am charged 1% admin fee the total impost is at most 19% of the accumulated fund value but note that my $100 will have grown to $419 at the end of the 40year period.
      The next point is that it is most likely that my $100 will have been invested by my superfund in Australian shares and property, most likely in the companies established by the politically connected developers described in the article. In other words, I will accumulate wealth at the same rate as those that have benefited from the regulatory regime put in place by the Government.

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  • spacey 101:

    26 Aug 2015 11:08:48am

    Well duh!

    In all seriousness though, I was a banker for many years and a good portion of that time was spent in private banking. High wealth private banking to be exact.

    Very few of my clients were start from scratch wealthy. Possibly 1 in 50.

    The rest inherited their money, were part of well off families, or used the leverage and the collateral of their families, or the political and social connections of their families to attain wealth.

    True innovators, or entrepreneurs? Maybe 2 out of every 50.

    Most of them just sat on their funds. There comes a point where once you have enough money it's almost impossible to stop accumulating wealth. There's only so much you can spend.

    Once you get to a certain point all you need is a good banker, a good accountant, a good financial/business adviser and you can sit back and just watch it all flow in.

    Innovation and entrepreneurial business acumen? Not needed.

    Only extreme freakishly bad luck will see these people lose their money. Or death.

    Oh. And I don't know what it is, but very few of these people are happy. They ski in Aspen and dine on enormous yachts and drink and eat the very best food, but they are all in all a pretty miserable lot. Terribly grumpy too. That's what I saw the most of. Grumpiness.

    Almost makes you not want to get rich. What if I were to catch the 'grumpiness' illness they've got?

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    • GCS:

      26 Aug 2015 11:52:34am

      An honest banker who tells is as it is.

      I was in the Corporate world for many years and take it from me - it is all about who not what you know.
      Stacked boards- stacked shareholders' meetings. Compromised bankers- auditors- 'experts" union officials and of course -politicians

      I live in a very affluent t area - not much innovation around here- but heaps of financial engineering.

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      • barsnax:

        26 Aug 2015 12:04:14pm

        No effort to get the wealth but plenty of effort to keep it.

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        • Steve_C:

          26 Aug 2015 12:39:11pm

          I take it you've never seen how hard a lion works at keeping all the other lions away from any carrion it comes across...

          It's not just humans who'll fight hard to hang onto their gravy train.

          We're just the species who've made ourselves not only the creator of but also the continuing provider of that gravy train to those who are either cunning, devious or violent enough to claim their spot on board it.

          Mind you; like the lion, the greed motivated spend their whole lives till the grave trying to defend their spot on the human created gravy train - though there have been (as one ought to expect with evolution being what evolution is) the odd abberations who've recognised that the price to be paid for riding the gravy train is way too high, and they've gotten off of it before they really needed too.

          What's surprising in their cases is the assessment of their friends and family as well as history. They're seen as 'weird' or that "they lost the plot" when they bailed from "the top".

          They always seemed much happier for having got off the gravy train as far as I could see... but there's always someone who reckons they'll be able to have all that wealth and not be affected.

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        • Heretic:

          26 Aug 2015 4:21:58pm


          Here's my feminist 2 bob's worth:

          Continuing on from your lion analogy, it's actually the lioness that does the real work - both in terms of hunting down and bringing in the bacon and as far as keeping the pride (pun intended) together.
          The lion merely arrives after all the work is done to grab the best pieces for himself.

          Behind every wealthy man is an invisible hard-working woman.

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        • Morestone:

          26 Aug 2015 7:01:24pm


          "Behind every wealthy man is an invisible hard-working woman."

          .. and going by the excellent Australian Story series on wealthy Australian dynasties, sad, often bitter offspring who rarely saw their fathers.

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      • CHERYL:

        26 Aug 2015 3:25:09pm

        Australia is a grubby corrupt little 3rd world country. Foreign corporations come in and exploit our resources.
        Corporate and government corruption are institutionlised. Corruption thrives at the highest level and trickles down.
        we criticize countries like Indonesia where a $5.00 bribe can get you off a traffic fine. Yes it is corrupt but they are amateurs we are professionals.

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    • Jerry Attrick:

      26 Aug 2015 12:29:43pm

      As with power, which does not corrupt but merely attracts the corruptible, wealth does not cause grumpiness or dissatisfaction. Wealth simply allows them the leeway to express the grumpiness that was always there and often arises from the irritation caused by the realisation that their wealth does not ensure true affection, appreciation, or the happiness that those can bring.
      Happy rich people do exist, but they are the ones who are also decent enough people to earn respect and are smart enough to distinguish that from obsequious toadying.

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    • Lawrence of Bavaria :

      26 Aug 2015 1:17:14pm

      Just goes to show that we're everything but a clever country. True innovators, entrepreneurs or cutting edge scientists are underfunded, marginalised, trivialised and effectively hounded abroad. Mining is supported, renewable energy demonised, the environment, which belongs to us all is time and time again exploited to the benefit of a few, manufacturing is abandoned, TAFE is stripped but the numbers of 457 visa workers are rising constantly. Throw in a government that tends to burden the poor and makes concessions for the rich and you have a perfect storm of social disparity that continues to grow. "Services", "Education" or "the common good" are dirty words for the well off because they can look after themselves and are not willing to share. It starts in Private school where connections are formed and it ends in politics and board rooms where "the elite" keeps feathering its own nest, where managers are Captain-picked and former politicians are rewarded with cushy and lucrative seats helping to run companies they used to shape laws for.
      It is an endless cycle of one hand feeds the other, rewarding mediocrity and entrenching a place in society very few actually deserve. What to do ? For starters: No taxpayer funds for private schools, no fees for studying at uni, no more political donations, no company board seats for retired politicians for a lengthy period of time and - ideally - more political representation outside the two major parties.

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      • Wildfire2013:

        26 Aug 2015 4:53:20pm

        Whilst a little off topic, we can add an interesting dimension to the mix and that's the middle class squeeze. There was a story on the ABC last night about automation and robotics and the impact it will have. Claims of 40-50% of middle class jobs being displaced by automation and robotics within the next 20 years. That's not a long time. It will have a devastating effect. I bet there's plenty of CEOs, directors, boards and institutional investors happy to see the backs of workers as they shove them out the door. The more I hear and see how corporates operate the more disgusted I get...they're the wrecking balls of society, and our collective futures.

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  • Victor:

    26 Aug 2015 11:08:58am

    We get the government we deserve.

    The things you have outlined, Paul and Gigi, are in part the result of a unique mindset that pervades this country. I don't want to elaborate here as it is complex, but I have no doubt that you both know what I am talking about.

    We seem content, for example, to accept a situation where we have a small number of banks, supermarkets, airlines, utility providers and al, and although this doesn't relate directly to the situation you outline, it is all part of the bigger picture.

    I once though that our small population didn't attract the variety and competition that is needed, but when you consider that Taiwan, for example, with a population almost identical to ours, has a much greater range of choices in many of these areas then that argument doesn't stack up.

    The inward looking mindset that allows these "non creative" industrialists to dominate our society and keep us as a primary producer is, I believe, at the crux of the matter you have discussed.

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    • Henry Porter:

      26 Aug 2015 1:05:10pm

      If Victorians deserve the Andrews government then we have been a very sick and sorry lot but both the major parties have created an environment whereby those in environments where the money comes from government or legislation and regulation protect favoured individuals at the expense of the population at large. Those of us who had to endure the disingenuous phoney calls to call back radio and stand-over tactics of self interested public sector unions at last year's Victorian election booths had the sense of entitlement of those on the government payroll and in the political class well and truly rammed down our throats. Sadly many from the minor parties have made it clear that they have been more motivated by the lure of entitlement than a call of duty and many of those on so called "independent tribunals" are there because of political patronage. I am greatly attracted by the idea of tying all political and public service remuneration to an equivalent of what people in small business get for the same work but can't see the entrenched self interest in the system allowing it to happen.

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  • the yank:

    26 Aug 2015 11:09:47am

    "Research reveals a huge proportion of Australia's richest people amass their wealth via political connections rather than via innovative businesses " ... man the barricades!

    Seems we had a national bank at one point but those capitalist Labor sold it off.

    I think people feel like they are being fleeced but are unsure what or how to deal with the problem.

    I do however like the idea of creating a national bank but I doubt it will get much support.

    What I think would be appropriate is similar to your idea regarding government workers wages being set against the PM's. I would however make it more far reaching and apply the idea across industry as a whole.

    Something like a CEO's income could only be so many percentage points above the lowest paid worker. I doubt this idea will gain much traction either but what the heck I thought I'd throw the bone out there for people to fight over.

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    • Hellen Wheels:

      26 Aug 2015 1:13:47pm

      Have to agree. The excellent points made about how Australia's rich got their wealth were soon lost in whinging about private schools and private health.
      I've long despaired about the relationship between government and developers and how little anyone cares (including this author who seems to view the problem only because it stops people joining the market). The relationship between developers and government stops communities from having a say in their future. In Queensland under Bjelke, Beattie and Bligh it meant environmental vandalism and heritage destruction. It leads to Councils that are either corrupted by money or crushed into submission. Queensland's recent (Labor) history of the relationship between developers and government makes the Bjelke years look like kindergarten.
      Next time you hear of the amazing success of "an immigrant" in Australia, look at how they made their fortune. You can bet it was about property development.
      However, lots of small investors are also making money by subdividing individual blocks and creating infill housing. Equally destructive to the greenness of cities and to existing communities but happily sanctioned by most of the social science brigade.
      I would like to see an article - anywhere - than lifts its sights beyond resentment and whinging about superannuation, private schooling and private healthcare. This one had promise, but....well, what do you want to do about it?
      Every article which fosters resentment between those who can and cannot afford housing supports Australia's biggest government-funded industry - construction - and all the developers and cronies who are associated with it.

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  • dr dig:

    26 Aug 2015 11:13:57am

    In addendum, I will add that after looking at the authors cited paper, the biased assumptions underlying the research and causing these contorted findings become clear. This is after all, published in a relatively lowly ranked socialist economics journal as evidenced by the aims and objectives of the journal.


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    • Son of Zaky:

      26 Aug 2015 11:43:23am

      Melbourne University's Australian Economic Review journal is "...a relatively lowly ranked socialist economics journal..."?

      Wow. Heady stuff from someone yet to discover the joys of using capital letters in their "name" as well as the correct usage of the word "addendum". A tough marker, to be sure.

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      • dr dig:

        26 Aug 2015 5:55:09pm

        SoZ, in case you didn't realise, that is not my name. It is a social blog handle and it is well within the norms or prose on blogs to present such in that fashion.

        Yes I am known as a hard marker, and I do believe Professors and Ass. Professors should be held to high standards. No problem there, is there?

        I am interested to know why you think I have used the term addendum incorrectly. The post in question was put forward in relation and subsequent to my earlier one, hence a correct use of the term in my book.

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    • Stirrer:

      26 Aug 2015 12:27:57pm

      So? - disprove the "biased assumptions"- and come up with your research.
      I have yet to come across a commentator to disprove the growing global inequality and the downside of debt driven financial capitalism.

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      • dr dig:

        26 Aug 2015 3:40:09pm

        My earlier post clearly highlights how false these conclusions and implications are. They don't need to be disproved because they weren't proven in the first instance.

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        • GCS:

          26 Aug 2015 7:09:34pm

          Growing inequality and rising private debt proves them.

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    • Fred Longbottom:

      26 Aug 2015 3:16:23pm

      dr dig, The Journal of Comparative Economics is published by Elsevier, a longstanding and prestigious publishing house. To describe the journal as "a relatively lowly ranked socialist economics journal" is laughable.

      The sentence you quote from the journal's statement of aims and scope has nothing to do with its political leanings. It refers to the shift in economic research following the collapse in the late 1980s of the soviet union and its satellites. At that time, interest shifted from comparative economics (various forms of communism economies and capitalist economies) to the transition of former communist economies to capitalist economies.

      The world must be a very confusing and insecure place for you, if you can't even grasp a clear reference to the collapse of the communist regimes and their transformation into capitalist economies.

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      • dr dig:

        26 Aug 2015 4:22:38pm

        Fred, I called it a relatively lowly ranked journal. The reputation of the publishing house does not come into that assessment. I admit my determination was based on impact factor which has its flaws but relatively speaking, as I was, the journal in question is a low ranking economics journal.

        Your assumption about the nature of my world is very wide of the mark. Although I will admit I am often confused by the logic, or more accurately the lack thereof, of others on here.

        Your description of the outlet in question sounds nice, though my reading of the intent and objectives sees the socialist theme still very strong and the perspective of showing how flawed the notion of shifting to a capitalist society is is evident in the published articles from what I can see.

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  • R Supwood:

    26 Aug 2015 11:18:26am

    We have inherited and continually developed a low grade version on British political, economic and social community here in Australia, with built in deficiencies, inequities, primitive conventions and assorted ridiculosities. Having a professional political class is sure to lead to unfairness, career gougers and insiders, inadequate decision making and endless hostility and controversy. Since the dawn of history, an insider executive class has formed, based on religious, military and legal executive operators. This insider group effectively enslaves the others, reduces them, controls them, exploits them and grows ever fatter. In satiable acquisition drives them, substituting property and money for herds of females, or endless masturbatory satisfaction. The drive is irrational in modern times, for some of the inner and upper figures cannot stop the drive, beyond personal need or satisfaction. Thus the rich get not only richer, but keep control and dominate all aspects of life's directions. Only a participatory democracy might help change this to the benefit of all, but those such as the Koch Brs. or R Murdoch would not permit it and can control the political forces accordingly. I expect to be further reduced.

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    • Desert Woman:

      26 Aug 2015 12:25:26pm

      R, sooner or later we will have a participative democracy, it just takes time for people to get sufficiently fed up with the status quo and used to the new idea.

      The Kochs and Murdochs have been able to fool some of the people some of the time but as we are seeing with climate change, they can't stop large scale movements based in reality. It will be the same with participative democracy, they will fight like sex crazed cats but all it will do in the long term is lose them money and influence.

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      • TC:

        26 Aug 2015 2:31:42pm

        I do laugh at the lefties who think a market based mechanism is the answer to the climate change problem... another trading market with people in the kinow and with connections becoming rich off 'schemes' that are rorted and ill-managed in places like Nigeria and Russia...and 'traders' creaming it off every 'credit' purchased ...yep perfect answer lefties!!

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        • Desert Woman:

          26 Aug 2015 4:59:07pm

          TC, the ETS Julia Gillard brought in reduced emissions by almost 8% in a very short time. Since the Abbott govt repealed it and instituted Direct Action instead, emissions have gone up again.

          ETSs have been place in many places for quite a while now. They are obviously getting the job done.

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        • Gordon:

          26 Aug 2015 6:11:22pm

          If I were to propose a market mechanism for: education, public transport, health, security and justice, you DW, among many others would leap down my throat in an instant. Why do you imagine the "greatest challenge of our time" can be solved by a mechanism you yourself would not trust to run a bus company? A market needs willing buyers and willing sellers. CO2 is a waste product - no-one wants it - there is no market.

          Like trash, you have to pay someone to deal with it. Like building submarines if you want to let out a government service you do it by tender. A public tender for activities that reduce the emission of CO2 is no worse a mechanism than some BS "market" designed by people who would not know a real market if one bit them on the arse.

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        • Desert Woman:

          26 Aug 2015 7:03:53pm

          Gordon, do you know what an ETS is and how it works? Your comments suggests not so indulge me.

          A cap is set on the amount of emissions allowable. If an organizations exceeds the cap, they are forced to buy a permit which increases the costs of their business. Very few businesses wish to increase their costs so they innovate or reform their business practices for greater carbon efficiency. This saves them money.

          The cap is reduced over time so there is continual reform and innovation such as changing their energy source from carbon based to renewables. Smart businesses make money by selling permits to the laggards. Neat isn't it?

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        • Gordon:

          27 Aug 2015 10:13:19am

          Thank you. You express it very well. It is indeed a reasonable system, one of several that could be proposed. I remember thinking the original Rudd CPRS was OK and was annoyed at the Greens for holding out for something more perfect. I dare say a Shorten govt will bring in something similar and no great harm will ensue.

          The market however is for pieces of paper mandated by authority, indulgences if you will. Energy is already expensive, smart business already optimise their use of it. A mandated requirement to buy & sell indulgences is just an overhead, regardless of how well-intentioned, necessary or dressed up in commercial language.

          A transition in energy supply will cost money. If it didn't we would have done it already. The ETS is one way of spreading that cost out into the community that has demanded it. The current tender system is another. Which system will do more good for least harm is debatable. The current system has boondoggle written all over some elements of it too.

          Question 1 was why do market-oriented folk (other than those who will trouser a percentage in transaction fees) lean away from ETS-like ideas? Answer - it is no more a market than the current arrangement, really. Question 2 is why do people who instinctively distrust markets suddenly entrust one with such an important matter? Let me put it this way: what other important aspects of our future are you prepared to see put out to market?

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        • graazt:

          27 Aug 2015 12:35:54pm

          With respect to Question 1, could be such folk would rather the externality which is carbon emissions continue to be treated as an externality.

          I was always bemused however that internalising this cost was implicitly conveyed as a tax on consumers rather than a cost of doing business.

          This always reflected the price-setting nature of industry in this tiny-outpost of the competitive world called Australia. As if industry, by the large, ever did cost-based pricing.

          I have no answer for Question 2. It's certainly not a consistent position on the face of it.

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        • Gordon:

          27 Aug 2015 1:51:27pm

          Certainly the externality argument is difficult because it suffers from the "quick, make up a number" phenomenon. Yes various worthy types believe they have added up the cost of climate change - and I'm not accusing them of anything - but really we do and can not know the exact net effect of something that mostly hasn't happened yet.

          There is also positive externalities that are rarely considered.

          For instance your purchase of an airfare includes the cost of fuel for that travel, maybe it covers the existence of that airline, the shiny new airplane itself. but it does not include the benefit that the entire world derives from the very existence of air travel - a carbon-based invention if ever there was one - and which is external to the transaction that you paid for.

          The same could be said of ambulances, 24 hr hospitals, fertilizers made from natural gas. etc. The overall benefit of their existence is extraln to the invidiaul transaction

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        • graazt:

          27 Aug 2015 2:51:45pm

          Arguably the acceptance of the marketplace as the best arbiter of supply and demand is preferred because it can better foster those positive externalities than command economies can.

          But let's face, there's no shortage of effort in internalising many such positive externalities on the balance sheets of for-profit enterprises.

          Just need to look at the conga line of user-pays models and for-profit enterprises getting involved in wealth-enabling infrastructure and operations (plenty of private outfits offer ambulances for example).

          Could it be something about that truism that we privatise profits and socialise the losses reflected in our respective attitudes to what gets accounted for?

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      • HPH:

        26 Aug 2015 4:35:33pm

        "Participative democracy" is a contradiction in terms, Desert Woman.

        There is no such thing.

        We, the people, choose our political representatives. And these representatives once they are in the office after a general election, make decisions on behalf of the people who put them there in the first place. We, the people, don't make political decisions.

        The political representative I chose and voted for in a state election decades ago went along with his counterparts and privatised public utilities.

        Needless to say, I was shafted.

        This is Democracy.

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        • Desert Woman:

          26 Aug 2015 4:52:55pm

          HPH, "this is democracy" - it is representative democracy. There are two forms of democracy, representative and participative. Just because we do not have the latter does not mean it doesn't exist.

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  • Hudson Godfrey:

    26 Aug 2015 11:21:27am

    We need to get the money out of politics for a start. There's no way a system that in any way links political sense with donations is anything but anti-democratic. It is an outrage, as it should be!

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    • Steve_C:

      26 Aug 2015 12:18:54pm

      "We need to get the money out of politics for a start."

      Easy to say... not so easy to do!

      So we stop paying everyone in Government? Or only the "external inducements"? But what if they aren't monetary inducements?

      What if they are the sort of inducement that even you'd like to have offered to you - you know, like recognition for all your hard work at a lovely little ceremony attended by your peers... and to get you there and put you up for a couple of nights at a plush hotel it just so happens to cost quite a few thou?

      You going to deny yourself such a longed for opportunity that doesn't actually take the form of money - on the surface anyway; but everything, as they say... "has a price".

      And that's before one even gets to those folks who are the 'employees' of Government - namely the public servants. Are they also to be included in the "no money" prescription, or only the elected representatives?

      If it's only the elected representatives you're excluding from monetary remuneration, then history has shown the idea you're espousing is a complete and utter failure.

      Human nature is what human nature is. We are the supreme opportunists...

      For every simplistic scheme designed to curtail the loopholes offered for the most self-absorbed and narcissistic opportunists amongst our species, there's armies of the aforementioned individuals who see nothing more than a challenge to be overwhelmed.

      I'd personally like to bring back the stocks for those pollies/executives/etc who have failed in their stated duties. If subordinates lose their brownie points, it's only fair that those at the top cop a public humiliation because of their loftier positions...

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      • Hudson Godfrey:

        26 Aug 2015 3:20:52pm

        I agree it may not be easy, but for entirely different reasons.

        Seems like you're searching for a reason not to do or even discuss taking the perfectly obvious first step....

        We forbid campaign spending and shut down political donations.

        It's almost impossible to level a clear accusation, but the whole scenario of politicians needing money is, however you choose to construe it, open to corruption. It needs to be stopped as does anything that gives money more power than it ought to have in a democracy.

        Money will still have power and influence. It has to, because it forms the capital for investment in enterprises that one way or another make up our economy. But the thought that some quarryman who creates fewest jobs and sends most profits offshore gets a politician's ear ahead of a major manufacturer is a sobering reality that bodes ill for the country and needs to change.

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        • Ghost of Christmas Present:

          27 Aug 2015 3:53:57pm

          Hudson. I agree with you. I would also increase politicians salary to reflect a level that is consistent with their level of responsibility.

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      • Done Now:

        26 Aug 2015 3:31:58pm

        We could always freeze political pay rises until they're at least in-line with other western democracies. Tony Abbott (or any other PM) should not be earning more than Barack Obama. Australia is the size of a single large American City: why should its administrators be paid more than almost any other in the world?

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        • Hudson Godfrey:

          26 Aug 2015 4:43:12pm


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        • floss:

          27 Aug 2015 2:14:40am

          Done Now; because they and their political connections all agree that they should be paid more?

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      • John51:

        27 Aug 2015 9:39:37am

        Steve_C, it is very simple. The fundamental principle of a democracy is one person one vote. You don't get 'X' number of votes according to the wealth or power you have.

        Why than do we allow business and corporations who do not have a vote within our democracy the right to buy government throught the power of their donations to political parties?

        This is what we allow in our democracy when we allow wealthy individuals, business and large multination corporations the right o fund our political parties. This is what we allow when we allow all of these wealthy and powerful rent seekers so much power and access to our politicians, Parliament and government.

        The 99.9% of voters who actually have the right to vote do not have the same level of access to our politicians and government as these rent seekers do. This distorts the whole process of our democracy and the power of we the people over the obvious power and wealth of those we know as rent seekers; of those that corrupt the whole political process; of those who gain the greatest economic benefit from corrupting that political process.

        I would suggest that it is about time the 99.9% took back their democracy from these rent seekers who go out of their way to buy government and shape the policies that govern and tax them for their own personal benefit and not the benefit of the 99.9% of us.

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        • Steve_C:

          27 Aug 2015 12:20:41pm

          "You don't get 'X' number of votes according to the wealth or power you have."

          You do if you're a business operating in the Sydney City Council region.

          The 'law' has been changed there to allow the business and it's owner to have votes effectively giving the owner of a business in the Sydney City Council area more than one vote...

          Just pointing out how an assumption about the immutability of something can be shattered by the machinations of humanity at it's most devious.

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  • barsnax:

    26 Aug 2015 11:24:03am

    Didn't we have a public bank once?

    Wasn't it called the Commonwealth Bank?

    Aren't we continually told by politicians and commentators that the market should control the economy?

    Look forward to hearing the conservatives tell us why the CEO's of once public owned assets should be paid millions in salary and bonuses.

    Personally I think a bit of socialism is a good thing and the people should take back what is ours through the ballot box.

    What say comrades!

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    • Steve_C:

      26 Aug 2015 12:58:06pm

      "Aren't we continually told by politicians and commentators that the market should control the economy?"

      Oh my God!!! That old refrain of the dolts of the World!

      They must think that babies are born 'competent' so they can go into "private industry", or born 'incompetent' so they go inevitably into "Government"!!

      Their brains fry when the issue of 'semi-government' employment/departments/authorities is raised!!

      To them, the fire brigades, teachers and other "non-full public service" employees just don't compute, or if they do compute... the revelation that they're actually "Government" explains to them (and them only!) why their own education was so bad, and the police never catch the real crooks, let alone why the time they lit that barbecue in a national park during a fire ban they got fined and the fire fighters hosed the flames out before they'd even got a decent steak of the barbie!!

      What sort of vacuum headed individual who's been living in a dream world, could possibly believe that "private industry" somehow employs ALL competent people, while government can't possibly employ competent employees?

      Well; from what I've seen and heard, they're the majority of current Australians!!!!

      What a bunch of buffoons! If McDonald's runs out of pickles for their quarter pounders and big macs, there's a plentiful supply of dills they can use instead!

      And if government is so lousy at things; how come business seems so ready to offer board positions to former prime ministers/ministers let alone departmental heads of department?

      I guess it must just be a lie that only 'the dills' of the voting mosh are meant to swallow faster than a sauce dripping well greased frankfurt!!

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    • TC:

      26 Aug 2015 2:34:48pm

      you and your comrades can get lost... the 'ecconomic questions' still need to get answered and I prefer the market to make the decisions thank you, not some ideologue 'official' on a power trip, deciding his family and friends will get the best of what society has to offer

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      • aspidistra kid:

        26 Aug 2015 3:40:32pm

        Ha, guess who's drunk the free market Kool-Aid! The Market is nothing like the wise, infallible force that you seem to think it is.

        You should realise that the world's most influential proponents of economic liberalism are in fact manipulative hypocrites. Far from engaging in perfect competition, they are the first to think of ways of exploiting the helpless and uninformed, and excluding their competitors by setting up barriers. And far from disdaining government, they will scream blue murder for taxpayer-funded bailouts when it matters to them.

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      • Done Now:

        26 Aug 2015 3:53:25pm

        That very much sounds like the current situation we're having with our good friends the LNP. They're pretty awful Neo-liberals, that's for sure. Keep trying to feed subsidies to their rich buddies and pulling it from anyone who doesn't give them party donations.

        Such free market, so competition. As the kids would say.

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      • CHERYL:

        26 Aug 2015 4:26:04pm

        "The market " is like an omoeba or alternatively could be likened to the primitive "repitile brain. The former responds to stimulae of things like heat, light nutriments. The latter responds to danger by a flight or fright response. Neither can plan for the future. The market responds to greed and fear; that is all it can do.

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      • Steve_C:

        27 Aug 2015 12:32:29pm


        Not even if that "ideologue" was your brother who offered you the chance to tender for something that you and your family would directly benefit from, such as improved transport access/better telecommunication services for instance?

        Hmmm... I doubt very much that you'd be a saint - much like I doubt anyone of any political persuasion would pass up such an opportunity if it presented itself.

        Still; there's always the exception and you might just be it - though I expect to hear 'jingle bells' being played as the other one is pulled.

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  • ResPublica:

    26 Aug 2015 11:26:07am

    This is a good article, both startling and disturbing and if we consider how the 'system' has been so easily 'played' , then the continuity of government is the prime issue.
    We have a 2 horse race for government with the old parties taking it in turn to rule.
    If we had proportional representation then we would have more parties and independents in parliament, with no more certainties and entrenched continuity to exploit.
    A bit of fresh air and democracy would go a long way to solving many of our existing problems in society.

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    • Maynard:

      27 Aug 2015 8:17:49am

      Well if we take the Senate as an example of what you are after, we have an undemocratic shambles degrading our society and holding us to ransom by a small minority.
      Why not every three years have an election for a government that is permitted to govern? After that three years we have another election for a government that can govern for three years... da capo ad infinitum.
      For those of us with attention deficit disorder like me, three years is only 36 months whereas senators get 72 months or 6 years which is way too long.

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  • ThingFish:

    26 Aug 2015 11:27:39am


    Well, of course!!! That is how the feudal aristocracy of monarchist England has always worked!!

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  • ThingFish:

    26 Aug 2015 11:29:48am


    It's not working! I've been outraged for decades and it's getting worse instead of better!

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  • Nova4avr:

    26 Aug 2015 11:30:10am

    What a brilliant article. So Australia ranks amongst the worst countries for organised business corruption. That will certainly be an eye opener.

    Right now we have a Govt. that is doing it's best to make our situation even worse. Opportunities for the big donors. Legislation to favour the wealthy & nothing being done to correct it.

    This is a disgusting indictment of our political system. It certainly is a case of who you know & not what you know. Now we can see why coal mines get the nod & renewables are cut back.

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  • GJA:

    26 Aug 2015 11:33:33am

    Super, for one, seems to present ample opportunities to "untax" and improve the situation. Why, for example, am I paying for life insurance I don't want or need? It's just one of the features that allows super schemes to milk my contributions and the earnings thereon to increase their profits. Fee Regulation and product offering terms and conditions opt-in/opt-out structures aren't unfeasible or unreasonable.

    Property developers in council seats also presents at the very least the appearance of an ethical conflict, and we don't need the recent example out at Auburn, in NSW, to highlight it. Politicians in the US must put their investments into a blind trust so as to ensure such potential conflicts of interest aren't manipulated , although one wonders how well that worked with a candidate like Mitt Romney or how well it might with The Donald. Requiring divestiture or other controls wouldn't be unreasonable, and any prior relationship or knowledge of political donations between private persons and politicians pushing such changes as outlined in the article should be published and reviewed publicly.

    The connection between Labor and labour unions needs to be more attenuated and I have no objections to scrutiny of the latter, regardless of who among those in the former may have issues come to light that need to be addressed, whether criminally or by civil action.

    But I'm much less worried about Labor and unions relationships, which are at least already known, than I am with the more hidden collusion that may occur between big business and the Liberals, except that it's readily apparent whose interests the latter serve.

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  • anote:

    26 Aug 2015 11:35:14am

    Helps dispel the notion that privatisation is necessarily more efficient.

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  • Zing:

    26 Aug 2015 11:35:20am

    Well, the cited research isn't freely accessible.

    And while I'm rich enough to fork out the twenty bucks required to do the author's research for them, I think I'll just put this in the "interesting but unverified" pile.

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  • Snufkin:

    26 Aug 2015 11:47:38am

    Good article. Well done.
    Inextricably related to this matter, why do we pay our retired politicians, Peter Beattie being a relevant example, what we do when they are clearly capable of making a very good living out of connections formed in the course of their former jobs?
    Have a good one.

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  • Gordon:

    26 Aug 2015 11:49:28am

    And yet around half the entire population - that is supposedly being "massively fleeced", is receiving more in services than it pays in tax, and 1/6 of the entire workforce is paid out of taxation revenue. If that is being "massively fleeced" bring it on.

    The sneakiness and circular logic in the rhetoric in this article knows no bounds. The elaborately regulated world that business operates in is the product of people such as the authors. If the only way a property can be built, mine developed, factory or shop opened etc, is to seek some variation in a thicket of overlapping regulations it is unsurprising that those with access will prosper.

    You are building the very world you claim to despise.

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    • RobP:

      26 Aug 2015 12:31:10pm

      I'd just make the point, Gordon, that those that want to do well financially will always do so, no matter what legal regime is in place. To take the polar opposite of your example, if there were no regulations in place at all, all you would have in society is a bunch of tyrants ruling over the rest of us in the jungle. It would just be another type of a**hole in charge (and our living environments would be a whole lot worse).

      The answer from here has to be that society takes a new lead and heads off in a new direction thus stranding the current crop of a**holes (and institutionalised whingers) because I can't see how the changes that have already been made can be rolled back.

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      • Gordon:

        26 Aug 2015 5:14:00pm

        The trick is to harness the admittedly self-centered drive of those who would "do well under any regime" to generate wealth, activity, work, etc, that through tax and through wages keeps the pot boiling. Some of this may be innovative products - three cheers if it is. Some of it may be just doing well at what we already do. Basically you can have these people expending effort on productive work, or on circumventing impediments, I think the former benefits us more.

        I am not anti-regulation per se - we accept laws as necessary for civil life, and commerce is no exception. The authors seem to be taking the view that all commerce and industry is "getting away with something" whereas many of the things they cite, mining concessions for example, are perfectly legal, transparent, and open to any citizen that cares to apply for one.

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  • Hawkeye36:

    26 Aug 2015 11:50:31am

    And we're heading down the same US style parliament path, where the big corporations control the government with money and bribery for their vested interests, sickening.

    Our democracy had died ever since the Liberals got into power from the 2013 federal election and worsening our countries economy to support their wealthy mates.

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    • Michael:

      26 Aug 2015 12:26:38pm

      If it's not the big corporations it's the union movement who don't always do their best for their members if money is passed from the employee to the union it seems.

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  • deluded_jim:

    26 Aug 2015 11:59:49am

    I really don't like the idea of government setting up businesses to compete with all industries for pseudo-regulatory purposes... but I must say I've always thought there was merit in having a public bank as a competitor to the private ones given the extreme relative profitability of the sector and the amount of fee rorting that goes on... credit card surcharges, loan fees, foreign exchange fees all have innumerable subcategories where consumers get gouged and financial planning is crying out for better regulation. Setting up competition to combat these false charges would potentially work better than regulation.

    Limiting salaries of workers who's income depends on the state isn't a legitimate solution as it would also punish entities that are doing a good job and performing efficiently - but industries which receive government funding and don't provide value for money should be properly regulated or receive a government competitor - for example the employment service and VET sectors have been highlighted specifically as poorly regulated and wasteful as a result.

    Politics is too hard though. There is massive appetite in the electorate for reform in these areas (financial sector especially), but no brave politicians.

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    • Rae:

      26 Aug 2015 2:15:19pm

      What is your opinion then on governments using taxpayer funds to build the businesses for the private sector?

      CBA, Telstra, ports, toll roads, electricity retailers and power stations, airports etc built by taxpayers then flogged off to the lowest bidder. Probably dams as well, remember The Sydney Water Holdings thing.
      The employment service worked fine when it was public and so did TAFE. Sold off now too. And let's not get to the private contractors running the prisons and detention centres and who knows what else.

      The government is still at it with the NBN and the new Sydney Airport and taxpayers think it a great idea.

      Privatisation was supposed to provide better service, cheaper.

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      • deluded_jim:

        26 Aug 2015 4:49:04pm

        I don't agree that privatisation is always bad.

        CBA, Telstra and electricity retailers should have been privatised. The government shouldn't operate in competitive industries. Privatisation is fine as long as its done properly.

        Telstra should have been split into infrastructure, retail and wholesale portions, with the infrastructure provider not permitted to operate retail or wholesale functions, to promote even competition.

        Electricity assets should get sold aging infrastructure needs significant upgrade. The reason prices are going up is the replacement cost more than anything. Replacement is done more efficiently by the private sector. Further, the uncertain future about whether current assets will even be used in 25 years (coal generation plants may be worthless and localised solutions in solar and wind negating poles and wires) meaning now as a good time to get out of the business of holding such assets.

        Having government competition is pseudo regulation and should only be the domain of lazy capitalist systems who's governments are only interested in regulating for big business... wait... that sounds like both the Coalition and the ALP!

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      • Gordon:

        26 Aug 2015 5:45:11pm

        So, not sure how old you are, but an STD call in the good-old-day was very expensive. Your dad would give you a lecture if you talked too long. An airfare was dearer then than it is 20 years later. State-owned banks went broke one after the other sparking the debt-phobic and infrastructure-poor position of the state governments today. The power stations that we call worthless stranded assets today were sold for billions into state coffers to pay off previous debt. Would you really rather we still owned them?

        I recall the old CES... I rocked up in the fruit picking capital of Aust to be told at the CES "f__ off this is a high unemployment area. 2 farms later I had work for weeks.

        Exa The TAFE is another matter. Gross failure of oversight. You and I would agree I think that confusing education with a business has been a terrible mistake.

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    • foolking:

      26 Aug 2015 9:19:55pm

      deluded -jim: I 've been wracking my brain for a solution to how do you properly regulate a market so as it has proper checks and balances. And how do you encourage a government to work with it's public service and opposition so that proper objective evaluation is possible.. It seems to me that a player in quite a few industries is the answer, if the industry becomes efficient then the public owned one may go into sleep mode . We are severely lacking in research and development and training, some things need to be done for the common good, not short term profit. I get your reluctance but we need help and I think we are more than capable of helping ourselves.

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  • Jerry Attrick:

    26 Aug 2015 12:08:41pm

    "65 per cent of the richest people in Australia had amassed their wealth via political connections"
    More importantly and more interestingly, those political connections are unlikely to be offering such benefits for no return.
    What is the payoff to the politicians? Who benefits?
    Out the lot of them and let's reinstate pillories as a means of punishment.
    Plus, of course, take away their wealth and redistribute it to the populace with incomes below $50k.

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  • dlb:

    26 Aug 2015 12:13:43pm

    We have an anti science government who want to drive us back to monarchy and religious rule.

    Remember only those of high birth have the right to rule!

    Oh and those who fund the LNP and their family investments.

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  • Alpo:

    26 Aug 2015 12:15:03pm

    "where only 1 per cent of the billionaires reportedly made their wealth through political connections"... Ah, the US, always believing that their water is more pure and crystalline than everybody else's.... until you drink it.

    "For example, we could legislatively limit the salaries of all workers whose income depends largely on the state".... But, but, to a Neoliberal disease you are offering a Neoliberal solution.... Spot the nonsense!

    "Another avenue of reform would be to establish a national public bank that makes direct, cheap, minimal mortgage loans to the population... " ..... Now, this sounds more Social Democratic, does it? But wait for the Neoliberals to cry: "Market distortion!".

    "The first step is to get the population to wake up and realise the massive degree to which they are being fleeced, and to feel outraged because it does not have to be this way".... Very good point, I agree!

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    • Ghost of Christmas Present:

      27 Aug 2015 5:04:21pm

      Alpo. I note that one of the witnesses from the ETU to be called for before the Royal Commission received $585K in emoluments for sitting as a member of a number of high profile Boards. He was appointed to these Boards by virtue of his union affiliations but did not contribute the fees to the Union because he claimed to have been doing the work on his own time. The code of conduct adopted by companies is that such fees are always paid to the company. Given that you are keen to comment on "the sense of fairness", can you please explain:
      1. Whether the approach adopted by the ETU official is fleecing the Union and the workers he represents?
      2. Whether you are happy for a Union official to be Paid $585K by an employer group and not declare it to his Union or its members?
      3. Where I can get a similar part time job.
      Workers are being fleeced by their Unions and yet from your previous posts your appear to be content to do nothing about it. I have posed the same question to both you and the Yank. I hope that you have the courage of your convictions to respond, but I doubt it.

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  • ISee 88:

    26 Aug 2015 12:16:09pm

    Knowing who to vote for is indeed a problem as most people standing for election will not detail just what they will do if elected. Many voters are fed up with the Libs and Labor and even some independents although we tend to end up with enough independents to have balance of power issues.

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  • Caffettierra Moka:

    26 Aug 2015 12:16:28pm

    When the last and best piece of Harbour land goes to the richest man in the State to build another casino you can be sure of that. Former Premier O'Farrell basically just handed it over to the Packers, a family that are notoriously tax-shy. Next time you want to complain about how working families here get more back in services than they pay in tax, go down to Barangaroo. Then you can take a look at how the serious bludgers go about gaming the system.

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  • paulinadelaide:

    26 Aug 2015 12:19:06pm

    You actually wasted time researching this?
    Common sense says every bit of regulation benefits someone at someone else's cost.
    Everyone loves regulation that benefits them.
    It's why pretty much every regulation (maybe excluding those covering the 10 commandments) should be scrapped.

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  • Geronimo:

    26 Aug 2015 12:20:22pm

    Likewise, the smorgasbord of fees for managerial fund services in Australia can total up to 8% p/a, a big chunk of an annual return irrespective of the fund making a profit or not.

    Alternatively, fees applied to EFTs available via the ASX rarely exceed 1% annually.

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  • Regionalgranny:

    26 Aug 2015 12:21:30pm

    Seems to me there is some truth in the old adage' birds of a feather' but it seems to really be obvious in the extremely wealthy. Politicians of the conservative side rely on the largesse of the wealthy and in return they think pretty much the same way the wealthy do. On the other side of politics they also rely on the largesse of the wealthy though not to the same extent because they also rely on funds from workers and this perhaps makes them more likely to have a better honed social conscience.

    There are plenty of people who have made a very nice way of life by hard work and that opportunity is broadly available to most Australians unlike in the Great Britain of old.

    I do not envy the very wealthy because as someone has already pointed out, they are generally a miserable lot. They spend a great deal of time and energy contemplating how to hang in to what they have and how to stop others from taking anything from them.

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  • Stirrer:

    26 Aug 2015 12:23:14pm

    'The first step is to get the population to wake up and realise the massive degree to which they are fleeced and to feel outraged because it does not have to be this way"

    Actually I believe the population is waking up-which is why there is so much mistrust of Governments- politicians in general-big business - unions and growing aware ness that the system is rigged.

    I believe more and more are beginning to realise they were sold a pup with neo liberal economics/free market ideology.

    That globalisation and free trade agreements have not delivered the equality -fairness- transparency and well being they were supposed to.
    Instead, along with other 'reforms: they have been used to-in the words of Mr Das-"create a colossal financial machine which makes a few individual staggeringly rich-and sacrifices everyone else on the altar of risk' And makes debt -soon to be labour slaves of us.

    many are now waking up to the fact that all forms of Government =Labor -LNP- Republican- Democrat and in between have allowed financial capitalism to create the debt driven economy and the debt trap we are now caught up in.

    The rusted on-supported by MSM will argue back and forth as to the evils or otherwise of sovereign debt and which party is to blame but neither will admit they are both to blame for the much bigger evil- the level of household and other private debt.

    The population will, it certainly should, become really enraged when the vultures holding all that lovely QE-printed and ill begotten profits cash swoops down on it - as in Greece.

    Meanwhile the oligarchs are meeting to discuss more 'reform".

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  • firthy:

    26 Aug 2015 12:25:16pm

    I have a significant amount of sympathy with the article - the author though should sharpen some of the arguments to avoid mistakes that vested interests will latch onto to push their own agendas. The superannuation issue is a good example. The article attacks the compulsory nature of the system which really isn't the problem here; as noted further on in the article the author correctly attacks the high level of fees we pay on our super which is simply gouged from the system by those who run it. As such the fix isn't removing compulsory super it is regulating fees - heavily.

    The banking argument is similar. Some good points meshed in with errors. So no argument from me on the bank salary point (in heavily regulated and protected industries like banking people shouldn't be able to make a fortune) but I have a problem with the point made re high mortgage costs. It is fact that our mortgage rates are at historic lows - if we have a problem with our mortgages it is because various government policies (tax, planning, allowing the big banks to effectively set their own capital adequacy rations for residential mortgage lending) has led to massive increases in house prices that are actually detrimental to many of us. Great of course if you have owned your house for decades and can sell and downsize but hopeless for the rest of us (and that includes anyone who has benefited from the rise but then has to pay inflated prices when they move to a comparable property). This issue has a nasty flow on effect too - increased mortgages mean increased interest payments which suck money out of other areas of the economy. It also causes reductions in rates of savings. It has caused a problem in our stock-market too where financial services stocks are worth nearly 50% of the total value of the sharemarket. That is simply too high

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  • awake:

    26 Aug 2015 12:28:21pm

    Wow what a wake up call. Great article, so folks what do we do? What can we do? How do we get back to a normal democratic society? How do we make Australia a "fair go" place to live?

    There will always be wealthy people, that is not the problem, the problem is the cost to others to allow this to happen. The cost to "others" education, health, children, social support in fact every facet of Australian's lives.

    I cannot imagine a revolution in Oz, and neither am I advocating one, but my God this mob have got to go - the liberal "born-to-rule" attitude that has permeated this country for decades has to stop.

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    • Stirrer:

      26 Aug 2015 1:07:27pm

      That wake up call has bee ringing for over 30 years- ever since the unhealthy relationship between the financial capitalism and the political system became entrenched.

      What do we do? Well seeing as neither the Government nor the Opposition will do anything to break that unhealthy relationship- but will actually will do the reverse and get us even more ensnared in the financial capitalist debt trap- we have to do it ourselves.
      Bugger Joe Hockey- we do NOT 'go out and borrow and spend. Particularly if we have good equity in our assets. If we do not-remember what Alan Bond said 'if I borrow small or medium I have a problem-if I borrow big time-the bank has a problem"
      Now if we do not borrow - our debt driven economy will undoubtedly suffer-in the short to medium term some will be worse- get together- work together-form self help groups- start cooperative businesses- trade with each other -use peer to peer lending- do not buy stuff you do not need with money you do not have- study, educate yourself more and never ever believe anything a politician says without doing your own fact check-then call him/her OUT- get active,
      in other words opt out of the economic system but become more engaged in the political/social system.

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    • Keith Lethbridge Snr:

      26 Aug 2015 1:27:52pm

      G'day Awake.

      "What can we do?" Of course none of us know, but we can speculate. In my humble opinion, the notion of identifying "the Evil Plotters" & then somehow nullifying their influence, is unlikely to work. The alleged Evil Plotters are actually no more or less evil than the rest of us. They are responding to the circumstances as they find them (& as we all do).

      If we are seeking widespread equity, then we first require stability. Australia currently seeks "Growth supported by Debt", which has, to date, been a sure recipe for inequity. We need a population level that does not exceed the resources available to support each of us. To achieve this, we must have a Population Policy. Once population exceeds resources, survival becomes competitive, at which time the Evil Plotters do better than the rest of us.

      To achieve optimum population, we would need to restrict immigration to the same level (or less than) emigration & to replace Baby Bonuses with Baby Credits. Under a Baby Credit scheme, eligible applicant couples would be issued with a BC to cover health & education costs & to guarantee one job when education is completed. BCs would be tradeable & the numbers issued would influence population numbers upward or downward as required. People would still be free to breed without a BC but would receive no taxpayer-funded benefits.

      Once optimum population had been achieved & stabilised, equity could more easily be implemented. Not only that, but other factors such as clean air, social harmony & survival of non-human species could also be enhanced.

      That's what I reckon. Regards,


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  • Ray:

    26 Aug 2015 12:41:08pm

    We could also assume that the reason for manufacturing in Australia to be half that in the US, as a proportion of GDP, is the excessive influence of unions in pricing local production out of the market.

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    • Caffettierra Moka:

      26 Aug 2015 2:03:22pm

      Only it isn't 'twice', last year Australia =7% and USA = 12%. That isn't double. What is interesting is that the decline in our manufacturing base is nothing like that for the US. Australia dropped a couple of percentile points, at the same time the USA just about halved. And they tend to have very 'business-friendly" laws about wages over there.

      Next, you might have noticed that we have never had a huge manufacturing base to begin with. Our GDP comes from agricultural products and mining resources, totally different to an industrialised nation. You are comparing apples with oranges.

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  • TombeiThe Mist:

    26 Aug 2015 12:41:23pm

    As usual citizens dead last unless we all smarten up and stand for something other than the hip pocket politics. We have allowed it to drive the political process without good policy to go with it. Not hard to work out. We are treading water when on the best advice available we should be swimming strongly towards something worthwhile.

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  • Jay Somasundaram:

    26 Aug 2015 12:56:19pm


    A slight alteration would make it even better: peg public servants' salaries to the median wage. Including the PM's - say the PMs salary set at twice the median wage. We'll see the government working much harder to increase wages :)

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    • Steve_C:

      26 Aug 2015 1:30:15pm

      "We'll see the government working much harder to increase wages"

      For themselves.

      BTW, (full) public servant salaries are already tied to politician's salaries utilising a sliding scale that means those on the highest grades receive the same wage increases as their politician counterparts, and those on the lowest grade receive minimal salary increases.

      The only thing politicians can be guaranteed to work "hard" towards, is an increase in their own salaries. ;)

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  • ram:

    26 Aug 2015 1:03:10pm

    The super rich control the banks. The banks just "print" the money (i.e. lend it into existence). When the bulk of the population realises this it will be "game over" for fiat currency.

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    • ThingFish:

      26 Aug 2015 3:04:13pm

      "The banks just "print" the money (i.e. lend it into existence). "

      No they don't. The government does that by way of the RBA issuing bonds.

      "When the bulk of the population realises this it will be "game over" for fiat currency."

      Actually, when the bulk of the population realises this they will also realise that Australia doesn't have a problem with Federal Government debt, that Australia is nothing like Greece in those terms, and Australia is in no danger of debt default.

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    • Keith Lethbridge Snr:

      26 Aug 2015 3:23:11pm

      G'day Ram.

      I believe that the bulk of the Australian population does indeed understand that money is created through debt, as you correctly suggest. We still want this money, & are deliberately encouraged by low interest rates. These same low interest rates discourage saving. The underlying economic policy of every Australian government since Federation has been the encouragement of Growth, supported by Debt.

      This worked well while Australia benefitted by Growth. However, we are now environmentally, economically & socially "grown". Further growth does not benefit the general public, but requires massive infrastructure & service growth to match. Business likes growth, while governments feel a need to please business, in order to gain donations.

      In my humble opinion, perpetual growth is not sustainable. We must learn to create & maintain a stable, equitable society within a stable population. "Go forth & stabilise!"



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      • Guima:

        26 Aug 2015 10:10:35pm


        I would doubt that very much. Hell, there are economists out there that believe that the act of lending is just transferring someone's savings to someone who is willing to spend them. I believe that the majority of the population would not even understand the concept of double entry accounting let alone how the banks profit from this exercise by creating asset bubbles.

        The ability to create money should be taken away from institutions that can profit from doing so.

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  • Amethyst:

    26 Aug 2015 1:07:04pm

    Let's start with politican's entitlements and work our way up. Yes, remember when we were 'outraged' by them recently?

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  • foolking:

    26 Aug 2015 1:08:11pm

    What a classic piece of reporting, congratulations ABC, I wonder what funding is going to be stripped for daring to publish this.

    Jay S: a poster picked this up on Monday it really is a little mind boggling to see it so starkly exposed. Something else came up on Monday,..I was watching Q and A and it was mentioned that members the two major parties can't say what they actually think because this would be treacherous. Every thing is so dumbed down that it isn't possible for a polly to say what he thinks because the opposition and the media will tease him/her if they do. Complexity isn't allowed so stupidity rules.

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    • foolking:

      26 Aug 2015 1:45:53pm

      Complexity isn't allowed so stupidity rules.. One of the driving forces behind this phenomena is advertising,that and television media having such incredible access to people . We are complete newbies to this critical transfer of information and should expect everything we see to be untrue , not factual and misleading. This is because the industry is self regulated. This is what a politician is competing with. It is no wonder they all talk utter crap, this is the medium they are expected to work in. We are effectively favouring the charletons the snake oil sellers by placing pollies in this environment.

      The only way we are going to get any sense out of these people is if we change who regulates media so there can be human complexity in politicians.

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  • artofthefirstpeople:

    26 Aug 2015 1:09:27pm

    Why am I not surprised?

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    • critic:

      26 Aug 2015 4:04:00pm

      But are we still

      1. outraged
      2. going to try to do something about it?

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  • purgatory:

    26 Aug 2015 1:10:45pm

    I cannot believe how gullible people are.
    Real democracy can only exist with/in a capitalist economic system if Governments impose strict regulations to counter the power of money and the greed of individual interests.
    Unfortunately, Capitalism has taken control through manipulation and indoctrination.
    Capitalisms call to Governments is for the maximum deregulation-claiming the free market dogma is the best way to create growth/wealth for the collective interest. Realistically, it is so Capitalists have control of the market and resources. A free/unregulated market, at the whim of random(anarchic)individual interests, may be destructive of Capitalists interests rather than beneficial.
    Thus, if governments aren't regulating markets, the self-labelled 'free' marketeering capitalists are, for their own individual interests.
    Governments are big consumers, and just become another source of profit (rent seeking) and the more on offer, the more they will take, and with privatisations/contracting services our current Gov't is giving the rent seekers more and more and more (the original contracts didn't cover expenses so need to increase electricity prices, bus tickets, health insurance rates).

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  • Righto:

    26 Aug 2015 1:14:47pm

    Certainly true for the urban development and mining industry.

    If you have political connections, then you will be able to get either the Local Council to relax the planning rules or contraints or get the State Government to intervene to achieve the same. You will also usually be able to get the relevant level of Government to cut you a deal or even assist you with infrastructure to service your development at taxpayers / ratepayers expense.

    This will directly and significanlty increase your land value / development yield / profits.

    "Normal" people will not be able to achieve this, because they can only deal at "officer level" where the actual rules and planning merits are applied more stringently.

    This is pretty much the status quo in urban develompent across Australia. The use of political connections through Councillors or the State is literally the daily run of the mill approach to development and planning - its certainly not an exception.

    The Mining industry is even worse. The whole process is only accessible to the extremely wealthy - and the legal access tenure system is set up to deliver massive financial benefits to miners over other land uses - because they have a guaranteed right to access any land notwithstanding it is someone elses. Then even if their mine is no financially feasible - the Government will step in an look at paying you for your own private use infrastructure.

    Just look at the discussion around paying for coal railways in Queensland.

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  • sleepykarly:

    26 Aug 2015 1:34:55pm

    Once upon a time we HAD an national bank that made direct cheap and minimal mortgage loans to the population.

    It got sold off for a once-off injection of cash, so one government's budget looked slightly better for one year.

    Same with Telstra. If Howard had not sold that, then the NBN could have been piggy-backed on that for half the current cost.

    Any government that talks privatisation goes to the bottom of my preferences.

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  • Smiley:

    26 Aug 2015 1:37:18pm

    IMHO money doesn't change people. It makes them more of what they already are. So if you're not a nice individual, more money will only amplify that fact ....

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  • raymond:

    26 Aug 2015 2:04:55pm

    I'll tell you what my research has revealed...censorship is alive at the ABC.
    Lefties always censor stuff that doesn't agree them but really what's the point of inviting comment when you can just write it yourself?

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  • Pub Politix:

    26 Aug 2015 2:08:16pm

    It's a useless article. What's the point of it?

    "Property, mining, banking, superannuation and finance" all provide hundreds of thousands if not millions of jobs Australia wide and the income taxes that they generate pay for a good piece of Govt bureaucracy.

    No body is preventing any body from doing exactly what the so called plutocrats have done. It's a free country.

    Quit your jealous whingathon about successful people and get off your bums and do something for yourself instead of relying on other people to put food on your table.

    These two resident 'economics' professors should follow the same advice. If they used their brains in an enterprising way instead of whinging on the ABC about successful people they might be the next Gates or Buffett.

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    • RealityCheck:

      26 Aug 2015 2:32:30pm

      Hi Pub Politix. :)

      You said: "It's a useless article. What's the point of it? "Property, mining, banking, superannuation and finance" all provide hundreds of thousands if not millions of jobs Australia wide and the income taxes that they generate pay for a good piece of Govt bureaucracy."

      Be very careful to avoid facile analyses/conclusions, mate. The point is that such financial/business etc activity, which makes obscene profits from exploiting the 'political club network' system rather than creating real wealth from genuine innovation, skews the 'market mechanisms' which would otherwise operate properly to allocate resources and sustain the economy. This article speaks of activity/profiteering of a kind which destroys economic/social sustainability, and inevitably produces GFCs and depressions/recessions; when all the much touted 'benefits' evaporate, but the wealthy 'exploitative manipulators' remain wealthy/wealthier, while the hard working and the economy/society at large 'get the shaft' in last GFC. It never works 'like advertised'; history has shown this again and again. Good luck. :)

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      • Gordon:

        26 Aug 2015 5:29:15pm

        So, ask yourself when was the last time you invested your own money in genuine innovation. Do you seek out prospectusof of new techie IPOs so you may take a risk and invest? Fact is Australia tends to put money into property, and not much else. If the money wasted in pokies, scratchies and geegees had indeed gone into productive industry we would be a vastly different country. However, that is not to be and we must deal with what is not what we dream about.

        Most of what this article decries is simply the industry that survives the cumulative impediments of daily life. Sure , it would be wonderful if we were techie R&D geniuses. Fact is the vast volume of Australian investment dollars is not interested: some new shopping mall, is lower risk.

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    • Maynard:

      26 Aug 2015 2:56:35pm

      I see it as one of the most important article ever seen on The Drum.
      It is saying that we cannot compete anywhere without government someone else needs to subsidise us.
      That may have worked in the past but it is not viable for the future.

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      • critic:

        26 Aug 2015 4:06:33pm

        Heck yeah! To realise that the plutocrats in Australia are comparable to those in Columbia makes us realise how crooked the whole set up is here.

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        • cangaiman:

          26 Aug 2015 4:52:40pm

          Hi critic.
          As we are all no doubt aware, the Colombian plutocrats obtained their wealth and power through the exportation of cocaine.
          As our politicians keep telling us, we are experiencing an meth epidemic.
          Some very strange decisions are being made by our government, seemingly against the interests of the general population.
          I just wonder if some of our plutocrats are trying their hand in a new line of business?
          And I also wonder if some of "them" are crack heads? It would explain the agression, the constant repetition, the loss of "narrative", the back flips over backflips, the sale of public assets to the local pawn broker etc.

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  • Gr8Ape:

    26 Aug 2015 2:14:58pm


    Maybe using Tasmania as a case study would help.

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  • Paul:

    26 Aug 2015 2:17:26pm

    well, now that we have all vented and fumed at this fact, lets get back to our regular jobs and make it through the day cause no one higher ups gives a damn. remember what dashy dept. mayor of Auburn said?

    "I am not of your ordinary people!!!"

    that's what we are to the politicians, ordinary people!!

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    • Gr8Ape:

      26 Aug 2015 2:40:30pm

      One of my favourite quotes: "I'm building a dynasty that will last generations".

      PS. It's not built on poetry.

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      • foolking:

        26 Aug 2015 9:41:38pm

        Sounds like Keating,it sure wasn't poetry, it is only just dawning on the general population he stuffed the joint. The champagne and white shoe brigade should have been the give away.

        We owe far more have to work far longer hours and quality of life has not improved although no one is prepared to do a proper study.

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  • Reinhard:

    26 Aug 2015 2:31:20pm

    It does reinforce the old adage, "It's not what you know but who you know"..
    It also disproves the false image of the mega rich as "entrepreneurs" or "wealth creators" We can see now that how they acquire their wealth is not via innovation or plain hard work, but via closed networks, inside information, loopholes and market manipulation.
    The recent excesses of Auburn deputy mayor Salim Mehajer has brought this to light as it seems he made his fortune in property development, but closer inspection reveals he had taken full advantage of changes to the Local Government Act. The Baird Coalition govt had removed a restriction on local govt councilors being able to vote on matters in which they have a pecuniary interest, providing they reveal that interest.
    Then we have govts that cling stubbornly to the rich man's economic fantasy, supply side or "trickle down" economics. For an detailed explanation of how the wealth of the mega-rich doesn't ever actually trickle down, I would highly recommend a BBC two-part series called "the super rich and us"..

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    • Ghost of Christmas Present:

      27 Aug 2015 5:06:36pm

      Rainhard. The analysis and conclusions contained in article are fundamentally flawed. The projections that support their conclusions are simply not factually correct.

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  • JQR:

    26 Aug 2015 2:41:18pm

    Does anyone else get the feeling that maybe the Greens are the only liberal party in Australia? Seriously. Let's get the government out of our personal lives, except when they are needed, such as to prevent violence. And let's encourage a capitalism which rewards innovation. And maybe, just maybe, let's support education so people are armed with the knowledge which underpins innovation. We could be such a great country if we just shifted our emphasis away from mines and houses and into good old fashioned (frequently university driven) R&D while simultaneously working on developing pipelines for commercialising new discoveries. We won't be the lucky country forever. One of these days we need to become the smart country. Is this crazy? And yet the votes continue to flow into the major parties, both of which just don't think this way. There is actually nothing to fear in the Greens. As they gain more votes they will move towards the economic centre.

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  • Tropical:

    26 Aug 2015 2:58:07pm

    Lets have a look at those that accumulated wealth by political Labor/green connection:
    Jonothon Green; Heather Ewart; Trilioli, Kelly, Cassidy, Jones, O'Brien, Faine, McCullum, Rolley, Uhlman, Barry, Holmes, Sales, Lane et al.
    I have missed many but you get the drift.

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    • RealityCheck:

      26 Aug 2015 3:27:49pm

      Hi Tropical. :)

      The mega-rich who have milked the system as per the above article is what the point is about. I don't care which side of politics does it. It's akin to the issue/effect of 'politician's entitlements'; anyone rorting the system is bad news, because it distorts motives/actions and leaves less money for the honest ones/budget/society at large. It's these exploitations by the big-fish (the biggest/worst kind of 'leaners') that is sucking the life, joy and values out of Australia's future generations/sustainability. Good luck to us all.

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    • Dove:

      26 Aug 2015 5:15:35pm

      Being an employee of the ABC doesn't really qualify as "accumulated wealth". But yes, people with left wing views can be wealthy- is this news to you?

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  • Erick Quang:

    26 Aug 2015 3:07:45pm

    This article raises very serious concerns of corruption and parasitisim and warrants a royal commission. The recommendations from this commission would probably mirror Paul Frijters ideas. Such a royal commission and it's recommendations if they were in acted would certainly financially benefit the Australian people no end.

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    • GCS:

      26 Aug 2015 5:17:10pm

      it sure does warrant a Royal Commission Eric. A RC into the finance industry along the lines of the one on unions would be a good start.

      Greed and corruption are endemic in this country. Our brand of capitalism has morphed into one with no concept of right and wrong. It recognises only what is profitable and what you can get away with.

      We need a RC to flush out the culprits then a change of mind set to a truly free enterprise system controlled by the real wealth builders not the financial engineers. and their political connections.

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  • Breach of peace:

    26 Aug 2015 3:22:22pm

    Every country has its oligarchy which is nothing revealing. It has been a 'revolving door' with the Australian politicians assisting those from foreign countries and foreign corporations unfortunately that needs to be 'regulated fairly' and properly for the benefit of Australia with fines and punishment. It is always hotly denied and touted as having a "Fair Go." There are some very discriminating business practices that also need to be curbed. The regulations are one sided against the population and always always skewed towards the corporations.

    There is also the issue of Australia being a subservient and docile 'client state' to the US, the Uk and Israel in particular with the trans-corporations with their bribes called donations. The saying "the rich are getting richer and the poor are getting poorer is blatantly obviously and will have its social consequences backfire in the end. Whatever happened to the.05% tax on everything for everybody?

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  • saline:

    26 Aug 2015 3:54:43pm


    We have had government banks. Remember the Rural, NSW, Commonwealth. They were flogged off and none of us got a bean from it.

    Can anyone remember the reasons for it?

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    • Gordon:

      26 Aug 2015 7:44:23pm

      The state banks went broke and lost a motza. The commbank was sold for bunch of money. That money either went to pay off debts incurred by some previous boondoggle, was spent on some current boondoogle, or is still sitting in the treasury for a future boondoggle. What did you expect - a cheque?

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  • howardp:

    26 Aug 2015 4:03:56pm

    These people who have amassed vast fortunes are safe under Abbott and the LNP from any land tax - the LNP does not want to upset the geese that keep on laying the golden eggs.

    If the ALP and Greens got together to implement a land tax these same people will use all their influence to stop such a move.

    Meanwhile Australia just become more divided between the haves and have-nots.

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  • toorightmate :

    26 Aug 2015 4:13:12pm

    Why not an article about how political connections assist the criminals in our society (Setka, bikies, etc).
    Oh no, no, no.

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  • 123:

    26 Aug 2015 4:16:40pm

    Research shows that a lot of research is meaningless and the headlines associated with the usually more so. Statistically speaking you can make anything sound plausible if you skew things the right way.

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  • petenotpeat:

    26 Aug 2015 4:34:16pm

    Of course by selling off Telstra and forcing the public to become shareholders Howard's battlers have been conned into contributing further to the rich and politically powerful by further diversifying their risk whilst not relinquishing any power and influence.
    Take the person who builds up a business, then sells 49% of it - retains control but halves the risk. Then forms a management company which buys the 51% majority. Then sells off 49% of the management company retaining control of the original business with only 26% ownership. And so on. The mum and dad shareholders with their fraction of % holding are supporting the rich to do this.

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    • Gordon:

      26 Aug 2015 5:11:29pm

      Except that to buy the 49% they would have to come with 49% of the money, thus making their risk back to to square one. And to buy the whatever-comes-next, ditto. There is no magic in capitalism.

      Nobody forced anybody to buy telstra shares. Those that chose to buy, bought. Those that chose to be dog-in-the-manger can please themselves.

      Telstra has gone from a money-burning subdivision of the postmaster generals department to one of Australia's biggest companies. The opposite example is the govt-owned residue Aust Post: a moribund outfit that if it had been sold at the right time would be a giant in delivery of secure online services, bill payment, B2B logistics,and parcel delivery. Currently it loses money delivering Christmas cards no-one reads anymore.

      No better two examples of the benefits of privitisation could be cited.

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      • GSC:

        26 Aug 2015 6:34:02pm

        'Nobody forced anybody to buy Telstra shares" True- it is such a pity that so many fell for the spin as so many always do- where would the system be without them and DEBT?

        You are very selective in your comments- do you not mention all the dividends Telecom Australia- Australia Post- TAA- Qantas- CBA and many other Government owned enterprises paid.
        Why not mention the problems Telecom Engineers overcame- like the sheer distance problems- lack of Australian manufacturing capacity and decades by neglect by successive Governments.
        Government owned enterprises in telecommunications- transport -science- agriculture and others were and still are trial blazers.

        How much did Qantas lose last year- who bailed out the banks-who subsidises the mining industry? Who stuffed up the economy?

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        • Gordon:

          26 Aug 2015 7:37:49pm

          Did they pay dividends really - or did they just get free capital funded from the budget. I doubt TAA paid a real dividend in its life. Telecom engineers did a grand job. No question. Legends, every one of them; the edifice they built connected Australia. The value of that edifice is now sitting in the future fund earning its own money. Not lost, sold for fair value.

          I have no idea how much qantas lost last year. Don't care. The bigger that was the more it suits my position. If it was Govt owned it would have been your money lost and one less hospital funded. Is that what you want? This is the thing forgotten in these arguments: lovely dividends one year loss the next. Own as many public enterprises as you like, but accept the risk that losses cost you some other needed expenditure. Aust post will be down the toilet shortly: your taxes at play.

          No one bailed out any Australian bank. Not. one. single. dollar. They were provided -and they paid for- an insurance policy against collapse. The govt actually made money from this as it was never called upon.

          I expect there is no point discussing what a subsidy is and is not. The collapse in mine profitability due to collapsed prices has blown a big hole in tax revenue. If these so-called subsidies were a net loss to the economy, reduced activity should have saved money, no? The subsidy argument is total BS.

          Who stuffed up the economy? Not me, I've been working and paying my taxes. I'd suggest that the fact Australia has become the most expensive place in the world to do anything might have something to do with it.

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        • GCS:

          27 Aug 2015 9:18:27am

          TAA paid the Government a dividend for every year of its existence bar its first three of four and one other.

          Who guaranteed bank deposits in Australia? Who provided a stimulus so that people had money to spend and borrowing power - so that banks could lend?

          You do not know or care who much money Qantas lost last year?- if it was in Government hands the loss may not have been as great or possibly not at all- to know that for sure you will need to examine where the costs were- exec packages?

          OK you did not stuff the economy- you worked and paid taxes- as we all did. But you do not know who did? Well do some research= read Satyajit Das- James Rickards- Steve Keen. Clue - it was the financial capitalism.

          At least we agree on the Telecom Engineers- they are a legend- as are the real wealth builders who actually built useful things- like the Snowy mountains scheme and the middle class-which is being strangled by the oligarchs.

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      • foolking:

        26 Aug 2015 9:49:58pm

        Gordon:The opposite example is the govt-owned residue Aust Post: a moribund outfit that if it had been sold at the right time would be a giant in delivery of secure online services, bill payment, B2B logistics,and parcel delivery. Good idea Gordon it sounds like it hasn't been run well but why not now, a government backed alternative to paypal, good idea . Do you think they ran this past the govt. and were knocked back?

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        • Gordon:

          27 Aug 2015 10:24:44am

          I think the guy they have running it has ideas along those lines but the horse may have bolted. It could be turned around either by govt or by private management but it would need new capital and inside government it has to compete with every other important (i.e. vote winning) priority and promise not to make any tough (i.e. vote losing) decisions like sacking posties or changing services.

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  • Mick:

    26 Aug 2015 4:36:28pm

    So let's have an asset tax levied on individuals and businesses? They might have corrupt gains but they can still get taxed.

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  • BJ:

    26 Aug 2015 4:51:05pm

    Fantastic article! This is why property development is the only industry left. Australia is anything but an "innovative" nation and we will be in dire straights in a few years because of it. The politicians are selling off our quality of life, making homes less and less affordable. They subsidize property developers but make no real investment in innovation or our future. It also explains why they regularly break election promises. They need our votes to get in, but the real power brokers are their property developer mates and others who fund them. Democracy is at risk.

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    • foolking:

      26 Aug 2015 9:53:22pm

      You would have to say that this article suggests good policy would be to encourage investment in innovation.

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  • W A Pleb:

    26 Aug 2015 5:26:56pm

    "Research reveals a huge proportion of Australia's richest people amass their wealth via political connections "

    It is the politicians, who are getting rich, through the money paid to them by their rich mates, in the buying of favours and the buying of legislation favourable to their rich mates, as has been happening in the WA state parliament.

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  • Patrick Collins:

    26 Aug 2015 5:54:05pm

    Thank you to the authors of this great article. An actual article about an underlying not just superficial issue. Real journalism . I may just frame this to show my grandkids in a couple of decades.

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  • Harm:

    26 Aug 2015 6:45:16pm

    A very interesting read.

    Considering all the foregoing maybe it is a suitable time to canvass for an increase in number of responsible independent representatives in the Upper House in time for the next election.

    Independent representatives who are prepared to state their position and submit relevant personal details concerning qualification to their capacity to sit may have a beneficial influence on the proceedings.

    Currently it seems that partymembership is the only qualification held to be important.

    But it seems to me that a greater number of independent representatives, and this goes for both Houses could well be benificial to the general proceedings and have better outcomes for the community.

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  • David:

    26 Aug 2015 7:57:43pm

    This is laughable. The authors should out themselves as the recipients of tax payer funded political connections, despite not being able to do credible academic research.

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  • DocStrange:

    26 Aug 2015 8:10:43pm

    It's the old American democratic ideal: one million dollars, one vote.
    Don't know why people have a problem with it - if you've made a lot of money you have earned your right to influence politics more than some stupid battler working hard every day for low pay.
    Equal rights are a left-wing conspiracy and illusion.
    Welcome to capitalism, go work in China if you don't like it.

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  • Why this debate now:

    27 Aug 2015 5:37:55am

    This article presents a problem which could be addressed through implementing a range of strategies, such as those already mentioned.

    It could also serve as a foundation platform for those who might want to launch a debate around the need for political system reform, eg; from Westminster to Republic.

    Be careful what you wish for.

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  • Burrum Boy:

    27 Aug 2015 6:56:16am

    In Columbia it is called corruption, and so it is here; plain simple corruption.

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  • Eura:

    27 Aug 2015 7:03:48am

    Back benchers have to untie on this. The reason Australia became great was our egalitarian law systems now that has been hijacked by naracisstic and psychopathic personalities who are ruling our country and ensure only others who share the same traits join their ranks. People of integrity (the vast majority of the population) are not able to fathom why these people do this and hope they will come good . They won't they need to be removed their institutions who have ripped off the country have to pay all the ill gotten gains back and those at fault JAILED.

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  • Lehan Ramsay:

    27 Aug 2015 7:47:42am

    What strikes me is that an opportunity has been sniffed out! If you go and talk to your politician now they can sign you up for the new plutocracy. This new plutocracy is like a big bank, you can be a deposit, and the new regime can use the interest. And if you don't like what they do or you think anyway you can get some investment out of it, you make your withdrawal.

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  • Dodgy Knees:

    27 Aug 2015 8:48:10am

    Banks are some of the worst villains, along with " bank-owned " politicians. Right now, in the interests supposedly of " cooling " the housing investment boom, banks are writing to EXISTING investment property owners advising rates are jumping. To discourage potential investors MIGHT have policy merit to cool the sector, but only the banks benefit from this apparently endorsed change in policy. It seems the banks have taken the Reserve' s hint to help cool NEW investors, but choose to make up the potential loss of profit by gouging EXISTING loans. Not a sign of long term consequences being considered

    The banks are not silly-they have career bankers as KGB style " sleepers " in Hockey & Frydenberg'
    s offices

    The banks own 4 big life insurers, with records of bad advice & payouts totalling millions. They have decided its NOW better to flog products without advice ( and responsibility ), but to do that they have to eliminate non-bank insurance businesses

    Easy peasy. Sell the idea to an ex-banker Asst Treasurer in the guise of " consumer benefit " and reduce commissions ( fees are not viable in this market ) together with a vague un-sustainable suggestion of cheaper premiums. And protect the banks business further by instituting a 3 year liability

    Bugger the 8000 businesses of independent insurance advisers, its win for the banks because there will be no sickness-based claims payable for 5 years

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  • Kaycee:

    27 Aug 2015 8:57:30am

    Why do not we name and shame them.
    Salim Mehajer is a good place to start as a councillor....

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  • coppo:

    27 Aug 2015 9:08:54am

    Banana Republic? This research seems to suggest that future for Australia & it is hard not to agree with elements of it. What amazes me is how the political class have been able to saturate the media coverage of this country & create their own form of "content". From 24 hour news, to breakfast tv and onto evening debate we are never free of having to watch & listen to politicians. Maybe NETFLIX and iview can distract us long enough to break that cycle, maybe rediscover books and start thinking independently?

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  • Lehan Ramsay:

    27 Aug 2015 9:24:28am

    I think what happens next is you persuade someone to get a false profit together, or they do it themselves, kind of like to trump them at something they've not yet announced. That way all the negotiation can go on out of the public eyes because the public is really just looking for the punchline, they've gotten to understand that there is a punchline.

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  • ShaunR:

    27 Aug 2015 10:13:06am

    Thanks for an interesting analysis. There is one step in the solution offered that I would like to hear more about: and that lies in salary caps for "workers whose income depends largely on the state". How does this actually reduce the influence of the plutocrats discussed earlier in the argument? I assume that plutocrats are not actually directly employed by government, but rather rewarded in other ways, such as through the direction of contracts which are influenced through political connections. The attack on bureaucratic pay scales seems a red herring, and a diversion to the mechanisms of power described earlier. If it is political connections that are so influential, shouldn't more attention be turned to how such connections are developed and maintained, such as through private school connections, old boys/girls networks etc? And direct conflicts of interest should be made more transparent and accountable in terms of disincentives.

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  • Phoenix:

    27 Aug 2015 10:40:56am

    The classic example of this corruption can be seen in the government approach to population growth.

    From any objective measure population growth is bad for the existing citizens of Australia. It supresses wages, increases unemployment, increases house prices, increases pollution output and environmental degradation, increases government debt and decreases the amenity of living places.
    And yet both sides of government have a made a pact to not even discuss the issue of population increase or its impacts. Why is this ??

    It just so happens that the greatest beneficiaries of population increase are the banks and property developers. "Coincidentally" the largest donors to both major political parties are banks and property developers.
    It is a disgrace. It is about time we voted the major parties out of existence. If for no other reason than to send the message that we will not stand for such corruption.

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  • Gerg:

    27 Aug 2015 11:29:44am

    Fundamentally, the more market driven businesses become by being able to identify growth areas the more saturated the economy becomes in the same products and services. Yes, business people will always take risks to sustain themselves/employees by taking advantage of an opportunity that is passed there way in a very competitive environment.

    My view is there is enough to go around for everyone however Australians need to ensure that our leaders stay grounded(including realistic local CEO wages) with us and understand our day to day concerns plus contributions. Global style leadership after-all does not work in Australia's robust democracy.

    Our leaders should always being looking at ways of helping innovative and exceptionally creative people or groups grow the economy. By selfishly living lavish lifestyles they do nothing for the good of there neighbor's and become very isolated. It is important for us not to ostracise them for being successful but embrace them as they are reflections of our own contributions as well. We need to stay connected with them emotionally, ethically and help them find constructive paths forward.

    Furthermore I'd like to think that most Australians would have the moral fortitude and courage to voice any activity that they saw as underhand or unfair in the distribution of wealth to others in the country to the authorities. The systems are already in place to correct unwanted behavior.

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  • Ghost of Christmas Present:

    27 Aug 2015 3:20:48pm

    This comment is absolutely ridiculous! It is mathematically inaccurate and its conclusion can not be justified. Shame on the ABC for publishing such pure, unadulterated, inaccurate drivel.

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  • Phil 1943:

    27 Aug 2015 4:33:53pm

    Leaving aside all the usual comments here from trolls trying to score points in their own mindless games. this article is well-researched and therefore quite worrying. Not that we didn't suspect that our very own Aussie brand of corruption was alive and well, but it's much more common that I'd thought as well as making a mockery of much of what Toned Abs and his mates say. There's no 'fair go' here - just who you know and how to scratch each others' backs. There's no shortage of examples in the daily press if we read between the lines and dig out the connections between the powerful and those whom we elect to supposedly serve us. What it portends for our future as a nation is frightening.

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