WAYNE SWAN MP
MEMBER FOR LILLEY
ABC RADIO THE WORLD TODAY
THURSDAY, 15 MARCH 2018
SUBJECTS: Global Financial Crisis; excessive CEO pay; Turnbull’s $65 billion corporate tax cut; Labor's fairer tax plan
RACHEL MEALEY: It’s ten years since the subprime mortgage crisis that took the world’s financial system to the brink of meltdown. While the global economy has recovered and Wall Street is surging, one big question is whether another crisis might be around the corner. Wayne Swan was the Treasurer at the height of the Global Financial Crisis and he’s worried that chief executive pay packets are bulging again, just as they did in the lead-up to the events of 2008. He’s speaking with our senior business correspondent, Peter Ryan.
WAYNE SWAN, MEMBER FOR LILLEY: Well, it was a rollercoaster ride. And the financial system was simply melting down. Following the collapse of Lehman Brothers, the global economy fell off a cliff and there was a real fear that we were facing the Great Depression Mark II.
PETER RYAN: Now ten years on, you’re seeing some worrying signs again and as you mentioned the big one is surging chief executive pay, now back to an average $5.2 million a year. Are we seeing complacency here?
SWAN: There’s no question about that. We’re also seeing arrogance. I think executives suffer from a blindness of affluence. At a time when we’ve got record‑low wage growth and a record‑low wage share, to see executive salaries shoot up in that environment is simply incredible. And I think it shows that our executives suffer from a blindness of affluence.
RYAN: So realistically, having been Treasurer with a front-row seat at the height of the GFC, do you feel convinced that another crisis is imminent?
SWAN: I don’t know that another crisis is imminent. But you see the business sector is constantly lecturing the rest of the country for the need for big structural reforms, whilst at the same time never including themselves in the reform of corporate governance. For example, the NAB CEO is paid 108 times average weekly earnings. So you get the feeling that the slogan of NAB, “More Than Money”, might as well read “More Money”.
RYAN: Around the time of the 1987 crash, 30 years ago, the mythical Gordon Gekko said “greed is good”. Is that what we’re seeing now – short memories about the greed that contributed to the last crisis?
SWAN: I think there are short memories if CEO salary is now shooting up almost to pre-Great Recession levels. So it was only last year we had the spectacle of seven CEOs coming down to Canberra to lobby for a $65 billion corporate tax cut, and their combined salary amounted to $65 million.
RYAN: Just on corporate tax, the former Treasury Secretary Ken Henry says there is a case to cut corporate tax, but he’s told business there needs to be a social compact because voters just don’t believe the benefits will flow down to them. That’s quite a statement when it comes to trust in selling this package.
SWAN: Well there is no trust in the corporate sector. You’ve got a disconnected executive class which breeds a disaffected working class. And I think we need fundamental structural reform – not just to executive pay in the corporate sector – we need a good hard look at corporate governance across the board. Who sits on the boards of our largest companies is a very large part of that equation.
RYAN: And speaking of reform, do you have any concerns that Labor’s policy to scrap dividend cash refunds risks a backlash from voters because average workers stand to suffer?
SWAN: Well I don’t think average workers will stand to suffer. The people who do best out of this are some of the wealthiest people in the country. The corporate sector, if they were serious about reform, would be backing in this sort of policy, so we could get greater equity into the system, not less.
MEALEY: Former Treasurer Wayne Swan, with senior business correspondent Peter Ryan.
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