That’s the headline on the front page of the Sydney Morning Herald. The article says that “you could work every day of your life, for two lifetimes, and still earn less what Australia’s top executives are paid in one year.”
Top of the fat cat list is Allan Moss, a former Macquarie banker, earning $24.8 million, which is 417 times the average Australian wage of $59,000, followed by Wal King, the Leighton boss, who earned $16.5 million or 278 times the average Aussie wage. Former Air NZ CEO Ralph Norris is up there, earning $8.7 million, or 146 times the average wage.
The most interesting thing about the piece is that Australia’s Productivity Commission is due to report tomorrow on its inquiry into executive pay and that will be fascinating.
The G20 leaders have agreed to link financial sector salaries to performance, and the UK Labour Party has just announced Labour will outlaw automatic annual bonuses for bankers through legislation.
Inquiry in NZ anyone?
Let it go. The private sector can pay their executives what they like. It has nothing to do with the government and everything to do with shareholders are the company’s board. You can’t put in price floors stopping people from earning money this isn’t a communist country. Linking performance to salary is okay for the fianancial sector because it’s the fianancial sector. Private companies like Telecom can do what they like. The government should butt out and this is coming from a labour supporter.
Are you not aware that ENVY is one of the Seven Deadly Sins?
Each should only be paid acording to their economic worth. If these two gentlemen can demand and be paid such salaries and the shareholders agree to pay them at the levels quoted then good on them. If the average cleaner can demand more because he has a particular skill then I applaud that as well. Certainly it is not for some unionist / MP to determine what a private business would pay it’s top ranked employee.
What PDM and Monty said.
It is one thing to be rewarded for a job well done, and another to create a culture of inanity and excess. And as for the so-called politics of envy – if you were drowning, and I was standing on the shore eating an ice-cream, should I simply dismiss your shouting and flapping as envy of the air I was breathing, and perhaps even the ice-cream?
pdm – envy is more the domain of the right than the left. You people who idolise the John Keys of the world appear to want what he has – lots of money, a McMansion and several holiday homes. What you fail to understand is that when those of us on the left look at him, we don’t want what he has, we want what he has to be shared a little more evenly.
For us it’s about fairness and justice. That doesn’t mean making rich people poor. It just means decreasing the gap between Mr Key and someone on the minimum wage, even just a little.
Monty – I couldn’t agree more. And I sincerely believe that someone’s economic worth, as a wage, should be at $25 million per year. These are executives, right? They work FOR someone, for a salary. Is their time SO valuable? Unless they’re pooping gold then there’s no argument that could justify being paid so much.
Olwyn – you demonstrate that you are a leftist fool. I expect the left to compare the worth of the school teacher or housewife and the CEO. Of course internationally there are entrepreneurs who increase their worth many times the rather impressive examples given above. Our own Sam Morgan is but one local example. Peter Jackson is another – next the left will be saying that Peter Jackson should not make so much money because well because, oh because oh bugger because we hate rich pricks. Go and get a life and be happy for people who can use their skills to make millions.
If the teacher wants to make millions then maybe the teacher should go and up-skill and see who will pay them great money – nothing stopping the teacher inventing a widget that we all need.
An interesting comment.
How much would the country lose if Auckland was shut down due to a cholera epidemic caused by dirty toilets?
How much was that cleaner worth again?
The shareholders are rewarding the wrong people but that’s not surprising due to them being woefully uninformed.
In reality, of course, there shouldn’t actually be any shareholders (due to the dead weight loss of profit) and the wages of the administrators of any business should be determined by the workers within that business.
@Dominic “pdm – envy is more the domain of the right than the left. You people who idolise the John Keys of the world appear to want what he has – lots of money, a McMansion and several holiday homes. What you fail to understand is that when those of us on the left look at him, we don’t want what he has, we want what he has to be shared a little more evenly.”
You dont want it “just shared a little more evenly” – you want the $$$ without having to work for it.
Key contributes to society in taxes and probably ’shares’ a lot more than the majority of NZ’ers.
but the ‘left’ still want more and more. but arnt willing to work for it.
Envy? Ergh… how? I don’t care that Allan Moss, Wal King or Ralph Norris earn more than I do. They deserve to.
That’s not envy.
Can those on the left make similar statements? Darien can’t, she just wont let it go.
“maybe the teacher should go and up-skill”
Pure ignorance.
Great stuff Darien. You know you’re on the money when you make the likes of Cactus and Monty scream.
Typical Social Darwinism from the right. Try looking past your animal instincts and develop what makes us human: Empathy.
Monty: I did not say anything to suggest that people want millions – that’s your story, not mine. I implied that those who suffer from privation do actually suffer, and should not be taken as simply envying people with inane amounts of money. What they want is justice, not millions. Dominic is onto it.
@Olwyn “if you were drowning, and I was standing on the shore eating an ice-cream, should I simply dismiss your shouting and flapping as envy of the air I was breathing, and perhaps even the ice-cream?”
No but if I gave $1000 to the lifeguard who saved me, would you be upset that I had not shared the bounty amongst all who witnessed the spectacle who were safely stood on the shore.
You appear to be an innocent bystander in life.
Yeah, Monty et al, let’s all upskill and become CEOs, we’ll be rich, rich I tells ya!
The fact is, we are interdependent – CEOs couldn’t function without those they pay so relatively little.
The wealthy only get more because they are in powerful positions within the capitalist system, not because their work is more inherently necessary than a cleaner’s or a teacher’s.
Chris: What makes people human is reason. Reason means that some people create or protect sufficient value for many thousands of shareholders on a scale of billions that they can get offered such sums of money to do so. It is demand and supply. If more could do it, the price would be lower.
Dominic, because you don’t understand someone can be worth this much because of how they contribute to the net value of a company worth billions, doesn’t mean it doesn’t happen.
Oh and it isn’t about “justice”. People are paid for what they offer others in trade, menial work can be performed by millions of people, so is worth precious little. Nobody has taken from them, except of course governments.
Sadly those peddle this Marxist nonsense will happily spend other people’s millions, destroying wealth on a grand scale (ala Kiwirail bought for double its market value), without even thinking about apologising to those whose money it was in the first place. The state can consistently fail to deliver expectations and accountability is largely absent.
There is something fundamentally wrong in the World that it’s resources…our resources…are so unevenly spread. I get the whole point that the market is an efficient allocator of scarce resources. I get that risk and reward are implicit in the system and some people will, as a result, get paid more than others. But that’s why I am a social democrat. I believe that there has to be cap on the disparity. It is a key feature of unfettered capitalism that resources get aggregated into fewer and fewer hands. Social democracy provides a redistributive framework for minimising the most excessive aspects of this. That being said, I think there has been a slow creep to unwind the great consensus around social democracy. It’s not broken, but the principles of redistribution are increasingly stretched. The real challenge not just for the Right but also for the Left in developed countries is how we can extend the social democratic principles to the entire World. It’s a travesty that we get to live so well in New Zealand and other developed nations while most of the rest of the World live in great poverty. It makes the excesses of these executives seem even more repellent. We must lift our view though. This is not just a NZ issue or a developed economy issue…it’s a global issue.
groan. “Its resources…” No edit function!
Cactus Kate – “Darien can’t, she just wont let it go.” And good on her for that! But still, you want to paint Darien as envious while denying you suffer that. Lose the slogan. The original post makes it clear that ths issue is not just how much these people are paid – it’s how much they are paid in context of the average wage. Darien is tying it to fairness.
I know labour strategy for ‘09 is to butt kiss the unions in order to get some cash to pay off the overdraft but this post is just embarrassing.
Next.
Well off topic, but this is the biggest farming story of the week –
http://www.interest.co.nz/ratesblog/index.php/2009/09/28/exclusive-nzs-biggest-dairy-farmer-allows-calves-to-starve-to-death/#comment-39474
and InterestNZ has since run interviews with the Minister, David Carter.
This is NZ’s largest exporter, Fonterra, and its largest supplier, Crafar Farms. Not a good look.
Comments, anyone?
Comments?
Who lent those inbred halfwits a quarter of a billion dollars?
expat – reducing inequality is a core plank of what Labour does.
Next.
I don’t really mind what CEOs earn, especially if times are good. The only time I get bothered is when there are layoffs and no or poor redundancy and in that case I think CEOs could take a pay cut to help out those people.
AndyC: The lifeguard who saved you would be responding to your need and need is what concerns me: need is a different thing from envy, and they are all too often conflated, to justify certain groups and individuals spoiling themselves while ignoring the needs of others.
“The salary of the chief executive of a large corporation is not a market award for achievement. It is frequently in the nature of a warm personal gesture by the individual to himself.” J. K. Galbraith
@Draco
How much would the country lose if Auckland was shut down due to a cholera epidemic caused by dirty toilets?
How much was that cleaner worth again?
The cleaner’s worth no more or less than before, because you don’t get Cholera from a dirty toilet (unless we’re all dogs drinking from the bowl).
You get Cholea from infected water supply.
And much to your delight, sanitation engineers at sewerage treatment plants get paid a great deal more than cleaners.
Ok, thanx for the correction Phil, now insert any other infectious disease you’d like to name that would be increased if all the toilets weren’t cleaned. The argument remains the same – we put far too much importance on the wrong jobs.
Big wages come with big taxes which pay for big welfare states. Which leg do you want to take out ?
Ok, thanx for the correction Phil, now insert any other infectious disease you’d like to name that would be increased if all the toilets weren’t cleaned
The point is often made that there are a lot of people willing/able to be cleaners – the consequences of not having cleaners are of course dire, but the likelihood of not having people to do such work seems low, to my knowledge – no one’s advertising for cleaners overseas.
Ralph Norris at CBA runs a company which made a profit of 4.7 billion, paid taxes of 1.5 billion employs 38,000 people (paid their paye too). He has 700,000 shareholders to answer to for his wages.
As has been said Draco. It is simple supply and demand. There are a large number of people able to do the cleaning job because it is relativley simple to become skilled enough to do it. If one person quits because they don’t like the pay there are 50 more willing to do it.
Bridging the wage gap is a very good goal. It would be a much better world if the people at the top earn’t less and the people at the bottom earnt more. The problem you face is that if you cap the wages of top executive in NZ then we won’t have any. Any one good enough to run a multi million or even billion dollar company will go over sea’s where they are rewarded more. We will be forced to get less skilled or talanted CEO’s and as much as you like ot gloss over it the performance of a company will drop if the CEO is less skilled.
The G20 leaders have agreed to link financial sector salaries to performance
I didn’t fully appreciate the hilarity in this on first reading.
Does anyone else see the irony that it was, as claimed by many on the left, the linking of salaries/bonuses to performance that was the cause of the financial crisis in the first place?
How does a financial corporation improve performance? By making more money.
How does a financial corporation make more money? By getting a better interest rate on their assets (or; by lowering their cost of funds/deposits)
How does a financial corporation get a better interest rate on their assets? By taking on more risk.
Pure comedy gold.
@Phil Anderson 12.30 LOL
, woof, 
@Unpleasantly Odouriferous – I agree that it’s good to take away the extremes of poverty.
@Thread – I don’t think CEO wages should be capped, as Geek says – they might go for greener pastures. Plus, it’s up the their companies and them what they get.
As for cleaners, I think that they should get better wages, cleaning, while not the most skilled job in the world, is hard and tiring work. Let’s face it – who would want to stay at a hotel if they had to clean it themselves? I also think the minimum wage should be raised to $15 an hour.
Interesting debate and thanks for the comments. For those who didn’t work it out, the post was a direct quote from the front page of the Sydney Morning Herald. Not my words – theirs.
I’m in Australia, and this is a topic of intense debate over here. The productivity commission has reported on its inquiry today, so follow the link in the post if you want to read it. My view is that it won’t satisfy anyobne.
Actually, no it’s not. According to WINZ, 70% of positions aren’t advertised but are filled through social networking. It’s entirely possible that some of those cleaners actually could run a multi-billion dollar just as well as the CEOs already there – they’re just not even hearing of the job vacancy to apply for it.
Darien, I’m keen to know, are you actually serious about wanting an enquiry in NZ? I see the inquiry is “into the regulatory framework around remuneration of directors and executives of companies regulated under the Corporations Act.”
What companies do we have in NZ that are similarly regulated? I guess where I’m coming from is that I can’t see how the government could have any power to regulate the remuneration of executives of privately owned companies, so what would the scope of the inquiry be? SOE’s mostly I would think?
Groan… I thought Labour believed in an egalitarian society that everyone should have their essential needs and the same opportunity in life..?
Look at Fraser and Kirk they hated sloth, any suggestion that someone should have their ability to earn through hard work capped wouldn’t really be taking advantage of the early life opportunities provided by the state would it..? Otherwise what the hell is Labour fighting for with universal healthcare and education..?
Seems like a good excuse to appear to beat up on CEO’s, garner a few votes and do nothing to me…