Despite fire, plague and the fog that perpetually shrouds Lake Burley Griffin, Josh Frydenberg’s agenda has become clear in 2020.
Never one to miss the opportunity a crisis presents, the treasurer has used the coronavirus pandemic to ram through changes to the way the Australian economy is regulated that will significantly shift advantage away from ordinary people.
But who benefits? With one significant and telling exception – the banks – the answer is not, as you might expect from the conservative side of politics, the forces of capital. Or at least, not so much.
Instead, a lot of the Frydenberg program favours what you might call the managerial class – the executives who in normal times prowl the mahogany-lined corridors of CBD towers but this year have been confined to their luxury homes in Point Piper or Toorak.
Frydenberg, aided or spurred on by a ginger group of backbenchers – it’s difficult to tell which is cart and which horse – is increasingly pursuing an agenda that will weaken the power of the owners of capital to hold the managers of their money accountable for bad decisions.
This is the unifying link between things as seemingly random as attacking industry super, making it harder for shareholders to sue company directors who cause losses by failing to keep the market properly informed and declaring war on the corporate regulator.
The nature of both management and capital have changed over the past decade or so.
Executive wages have moderated somewhat over the past couple of years, especially in finance where the banking royal commission trashed many an expensive reputation. But years of rising salaries have wrought a permanent change in the way the executive class sees the world.
This year, one banking source who’s been in the game for decades marvelled at how big pay packets had become.
Executives at the big four banks were always paid well, but “it’s generational wealth now” he says.
Meanwhile, the nature of capital in Australia has also changed, with control shifting somewhat from the big banks and financial institutions to industry super, with its – to corporate eyes – inherently suspicious links to the union movement.
It’s important not to overstate the case. Retail super funds, which are are run by the finance sector for the benefit of a steady flow of fees, still have plenty of money in them.
But the litany of horrors exposed by the Hayne royal commission in 2018 accelerated a move away from the retail sector and towards the industry fund sector, which, while not free from problems, is generally the home of superior investment returns.
The results have been spectacular, with the nation’s biggest fund, AustralianSuper, this month hitting $200bn in retirement savings – a result achieved despite Frydenberg kicking the sector in the shins during the crisis by allowing people hurt by the economic effects of the virus to withdraw up to $20,000 from their super.
Many activists say industry super has not been nearly vigilant enough in holding the directors of companies in which they invest accountable for their decision-making.
Company directors would beg to differ. Between the industry funds and the hedge funds, there’s barely time for a nap during board meetings these days.
Executives also suffer a multitude of indignities as newly alert directors suddenly start asking difficult questions about, say, whether blowing up sacred rock shelters is a good idea or whether bonuses are really in order this year.
As company executives tend to be Liberal voters, it’s perhaps no surprise their agenda is reflected in party policy. The only real change is that those interests no longer so perfectly align with those of capital.
There are limits to this thesis, of course.
For example, coal fetishism among the Nationals and rural Liberals needs to be accommodated, through the government backing a George Christensen-led push to have parliament inquire into the unwillingness of banks to lend to coal companies and projects.
And the banks themselves remain both a potent source of capital and political lobbying, as can be seen from their victory in persuading Frydenberg to quash responsible lending laws after the “wagyu and shiraz” case.
While the banks are fleeing superannuation after copping a flogging at the hands of Hayne, the broader finance sector is still able to field powerful battalions in the fight against industry super in what amounts to a case of capital-on-capital violence.
But nonetheless, an understanding of the shifting power dynamics within Australia’s financial world goes a long way towards explaining what Frydenberg has been up to – and why we can expect more of the same in the new year.