According to our esteemed Prime Minister, the root cause of the financial crisis is high pay rates to CEO’s, and the solution is to regulate what they get paid.
God I wish I was making the opening sentence up, but I’m not. Just as I was starting to warm to him, he resorts to the most bizarre, populist attack perhaps ever delivered by an Australian PM. Here’s the press quotes:
Linking executive remuneration to a financial instituion’s capital adequacy would discourage “excessive risk-taking” and promote financial stability, Mr Rudd said to the National Press club in Canberra today.
To this end the Government would work with the Australian Prudential Regulatory Commission (APRA) to set up new rules for executive pay.
“It’s necessary, I believe, to get a better set of rules in place to rein in any executive greed and, at the same time, point in the best direction possible for greater stability in the financial system in the future,” Mr Rudd said.
Exorbitant executive salaries may get a trim under a Federal Government plan to deal with the “extreme capitalism” at the root of the global financial crisis.
Prime Minister Kevin Rudd today revealed the government will work with the Australian Prudential Regulatory Authority (APRA) to bring fat-cat pay packets under control.
Mr Rudd believes better rules are required to “rein in any executive greed”.
He told the National Press Club that the “failure of extreme capitalism” had forced governments to prevent the financial system’s collapse.
“You’ve got to act at home and you’ve got to act abroad on this.
“This is not just a question of fairness and perceived fairness in the system, it goes actually to the kernel of the incentive structures around risk-taking.
Of course, crony capitalism and a distorted market caused by constant Government favoritism had NOTHING do to with it.
Now that it’s Australian Government policy to dictate wages of CEO’s, how much further will wage dictation go. We’ve moved past the days of the wage accords, but will we soon see a return? Will Labor throw away its half reasonable credentials as economic liberals in the states (at least compared to more than a few Liberal Oppositions), and go so red that Doc Evatt will rise from the grave, singing the Internationale will salivating over a picture of Lenin?
PS: bonus points to the first person who can name the next Australian car manufacturer that closes up shop. 1 out of 3 chance. Double bonus points for naming how many billions Rudd will spend to save the remaining ones. Hey, lets nationalize Holden! Indeed, lets just buy GM outright, their market cap as of close business Oct 14 was only $3.7billion, or $5.3 billion AUD. Lets relive the glory days of Ben Chifley! C’mon Ruddy, you’ve started now, why stop at dictating to private businesses what they should pay CEO’s, automatically killing any chance of top Australian companies attracting overseas talent in the free market. After all, Rudd knows best, that’s what his mates in the censorship loving People’s Republic of China say! 🙂
