NAB’s Ken Henry slams government and business leaders
Henry said these investors allow spending on “reputation-enhancing advertising” or “greenwashing,” but ultimately the private sector is solely driven by profit maximization.
“The defining characteristic of capitalism is that corporations should have no responsibility for doing anything but maximizing profits and, like everyone else, obeying the laws of the land,” he said. “More than that, companies shouldn’t be looking to do anything else.”
Henry resigned from the NAB after being personally singled out in the royal commission’s final report for failing to learn of the bank’s misconduct. His defensive responses at public committee hearings were heavily criticized and he eventually resigned alongside former chief Andrew Thorburn after the bank suffered an investor uprising over executive pay.
Businesses around the world are facing unprecedented pressure to put environmental, social and governance standards at the heart of their operations. Henry said the failure of governments to enact policies to address societal problems has created unrealistic expectations from the private sector.
“Today many governments seem totally disinterested in politics,” he said. “Because of the failure of government, capitalism has been replaced by what is called stakeholder capitalism.”
Henry said it was “simply foolish” to expect community and shareholder interests to converge – even in the long term – because their aspirations were mutually exclusive.
“Every customer of every company would prefer a more competitive market with lower prices. While every business would prefer less competition,” he said. “All workers want job security, while all companies want job flexibility.”
The private sector has a huge influence on society, Henry said, including setting wages, employment levels and the pace of economic and industrial development.
“Business decisions shape the world. So it’s hardly surprising that the community is interested in how businesses work,” he explained. “Sometimes, and for good reason, he will be disappointed by what he sees.”
Henry said the financial services sector had “attracted a lot of attention” in recent years, but there are “many, many other areas where Australian businesses have failed to meet community expectations”, such as as fracking, live animal exports, gambling and coal. mines in farmland.
Henry blamed political leaders for engaging in “corporate bashing” and “pointing an accusing finger” rather than enacting serious reform to shape the private sector for the better.
“Exercising effective governments in a democracy depends on elected officials having a certain detachment from indignation and mania, not seeking to immerse themselves energetically in it,” he said.
Australian citizens have “abandoned government”, Henry said, before calling on voters to expect more from politicians. “It’s up to us as citizens to elect governments to set the rules of the game that make this unique profit-driven business work for society.”
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