The Guardian 28 May, 2008
Editorial
Saving the system from itself
If anyone thinks that the resources boom is going to insulate the Australian economy from the international financial crisis already hitting the major capitalist countries, they only have to look at the rash of bankruptcies and the mergers and take-overs taking place.
Opes Prime, Centro and Beechwood are only the most recent companies facing bankruptcy while St George and Westpac Banks are attempting to merge, which would create Australia’s biggest financial institution.
In the case of the bank merger, jobs and branches will go. As the National Secretary of the Finance Sector Union, Leo Carter summed up: "As night follows day, bank mergers lead to job losses …". Unions NSW is backing the FSU in opposing the bank merger. One estimate puts the potential job losses at 3,500.
In the case of bankruptcies it is not only staff who get the axe but smaller shareholders are hit also, in some cases losing everything. Those who had signed up to have their houses built by Beechwood have all lost their deposits and in some cases have lost almost completed houses.
But there are those who are celebrating. They are the managers, board members, the CEOs and the swarms of "consultants" who seem these days to be on hand for every occasion, whether its boom or bust.
The big shareholders and managers (usually one and the same) are almost certainly in the know and can divest their shareholdings in time, or receive huge share options and obscene salary packages whether they are involved in a merger or a bankruptcy.
For example, Gail Kelly’s St George shares are worth over $37 million following a leap in the value of St George shares on news of the possible merger, while Allan Moss of Macquarie Bank has walked away with a reported $90 million. Is he just getting out before a crash?
Apart from saying "tut! tut!" and urging business executives to exercise "restraint" the Federal Treasurer and Prime Minister do not intend to do anything about these big business obscenities.
Their cry for restraint is really aimed at Australian workers. They fear that the huge company payouts will encourage pay demands by workers and that is what they intend to prevent at all costs.
The federal government is retaining the huge penalties against trade unions if they back up wage demands with strike action. There are no similar penalties for corporate high flyers. There is nothing "fair and reasonable" about this situation.
Another major consideration relating to mergers is the false cry about "competition". Commenting on the St George/Westpac merger proposal, PM Kevin Rudd said: "The key thing for us is to make sure we’ve got enough competition in the Australian banking industry."
Competition among the four major banks is already a joke and the benefits of switching from one bank to another is next to zero. One of the objectives of corporate mergers is to eliminate competition not to promote it and that is one of the purposes of the St George/Westpac merger.
Once again neither the government nor the so-called company watchdog, the Australian Securities and Investment Commission, will do anything decisive in support of competition. The process of mergers and take-overs has been going on for decades until the economies of all capitalist countries are now dominated by a very small number of Transnational corporations.
It is on this background that the government’s talk of competition and the introduction of regulations to make it easier for those who have bank accounts to switch banks has to be judged. It is on a par with the federal government’s proposal to set up a Petrol Watch system. This body will do nothing to stop the leaps in petrol prices. Pleading with the banks to keep competition in mind and appeals to corporate bosses to "restrain" the payouts to themselves is empty, meaningless prattle.
A final point: the international collaboration of the banks is shown by the fact that a a group of eight banks has come together in an attempt to rescue Centro. They are the CBA, NAB, ANZ, WestLB (German), BNP Paribas (French), Sumitomo Mitsui (Japanese) J P Morgan (US) and the Bank of Scotland. They all have one aim — to bail-out corporate mates and save the capitalist system from collapse.