Monthly Archives: May 2016

Another episode in the drama of Victorian dairy farmers supplier pricing has the Murray Goulburn Co-operative reducing prices paid for milk at the farm gate without consulting the farmers affected. The co-operative was brought into play to stop the gouging of dairy farmers by the market dominant retailers. Instead, their own co-op is the one now screwing them over. Given that Murray Goulburn has been partially listed on the ASX, its status as a co-op is in doubt.
These events point to two failures of the social contract between producers, manufacturers and consumers. The first is to fail to see that the participants in this drama are all humans who have (I would say) an equal right to share in the benefits of the productive economy we are all engaged in. Manufacturing and distribution, in the form of Murray Goulburn, principally its managers, but also its shareholders, have treated the farmers instrumentally by preferring their own welfare over the welfare of the farmer’s and their families. (I would say they have not seen the farmers as creatures made in the image of God) Management has done this by accepting high salaries and plush accommodation and the shareholders by accepting dividends and capital growth of their equity while allowing the managers to force  prices down. Consumers are complicit by accepting low prices and giving the their business to retailers which participate in the price gouge. Political commentator Waleed Aly has pointed to this problem in his call for consumers to pay a few cents per litre more for their milk and to eat more of other locally made dairy products. Incidentally, such a move would help Murray Goulburn too.

The second failure is that business and consumers have not seen the whole chain of production, manufacturing and distribution as an organic part of society that needs to be nurtured to ensure that it is sustainable as a key component of our food system. Bleeding the farmers dry will break that system and destroy community, especially small, fragile rural communities.
This problem needs us to respond as active and committed consumer activists, as Aly suggests.

Providing young people with an internship that pays effectively $AUD 4 per hour (this week’s Australian federal budget) has been, understandably, criticised in the press and social media as exploitation. Most of the commentary focuses on the relative amounts of the payments and on arguments over the contribution to the person of an existing welfare payment. These concerns skate over some deeper problems.

First, the low payment embeds the notion that young, yet-to-be-skilled people deserve less remuneration and so a lower standard of living than everyone else, or that they should be subsidised by their parents, if they live at home, as some need to do given the low pay rates.

Second, it reinforces the idea that internships are cheap labour, opening the door to exploitation.

Third and more importantly for society as a whole, is the idea that the training of staff is not the responsibility of the organisation employing people but someone else – usually not identified, or that the employee should pay for it personally. This is especially problematic where the same employer expects the employee to arrive work-ready and productive (read profitable) on day one. The concern here is that the business organisation is not really participating in society in the broad sense of making a social contribution at the community and personal level through careful development of a skilled workforce that is valued and well provided for in all respects.

Most businesses are not like this. Good businesses contribute to the common good in a variety of ways including the building of good, employable, productive people. These businesses reap a reward by creating workforces that are enthusiastic and therefore productive, committed and therefore careful, and loyal and therefore with low absenteeism and turnover costs. They are also good product ambassadors in the community and will go on to be, themselves, good employers and community participants

This policy move by the Australian Federal Government only gives oxygen to those who are not like this, the exploiters.

Ferrovial, a Spanish infrastructure company, has made a take-over offer for Broadspectrum (formerly Transfield), the company that manages Australia’s detention centres as well as a large amount of infrastructure like toll roads. According to press reporting (The Guardian 30 April 16) Ferrovial does not see a strategic position for detention centre management in its business portfolio, has not included it in its valuation of the Broadspectrum business and implied it will be divested once the take-over is completed.

Coming in the week that the PNG Supreme Court found detention of Australian asylum seekers illegal and the PNG Prime Minister’s announcement that the Manus Island detention camp must close, Ferrovial’s intention to divest looks like good news and a perhaps surprisingly honourable decision by the company. It will not do any harm to the growing protest in Australia against detention and criticism of Australian migration policy that is supported by both major political parties, especially with an election only weeks away.

But I say perhaps honourable; we don’t know what was at the heart of Ferrovial’s motivation. Is this a principled decision from Ferrovial’s business ethics standards? Their 2015 Management Report states: ‘The Code of Business Ethics provides that “all actions undertaken by the company and its employees shall scrupulously respect the Human Rights and Civil Liberties enshrined in the Universal Declaration of Human Rights.”’

Looks good, however, the executive director of the ‘No Business in Abuse’ organisation suggests this move is in response to the ‘legal and financial liability’ of detention centre management, that is, it is a business risk issue. If so, the decision is not in fact principle­–based but is instrumental, on an assessment that weighs risk to the business on financial and, probably, reputational factors.

That means if the business climate changed or if the business could be managed in such a way to minimise reputational damage, then the business of detention would be on again. More importantly, the business decision is made on the basis of the welfare of the company, principally its shareholders, not on the basis of the welfare of asylum seekers. What looks like a welcome ethical decision would be instead an entirely instrumental business decision financial on financial grounds.

Indeed it may put asylum seekers – the ones in Nauru at any rate – at greater risk. Ferrovial will sell-off the detention centre business at a discount because of the high business risk profile and so possibly to a lower cost provider. This would ultimately mean a decline in the volume and quality of services to asylum seekers, if that is possible.