• Tue. Oct 19th, 2021

Gerry Harvey is an emblem of Australia’s corrupt economic system

ByWilliam W. Feldman

Jun 10, 2021

Gerry Harvey, the Australian retail mogul, is not afraid of controversy. In a now infamous interview on an Australian news program 60 minutes, the billionaire described COVID-19 as a great business opportunity. In a backlash, Harvey complained that “everyone thinks I’m that callous old bastard who takes advantage of other people’s misery.” For once Harvey was absolutely right.

As the closures forced many people to stay at home, sales of furniture, housewares and appliances have skyrocketed. As a result, Australian chain store Harvey Norman more than doubled profits to $ 462 million last year. Gerry Harvey, who owns more than 30 percent of the company, harvest over $ 70 million in dividends, increasing his personal wealth by 24%.

Financial prosperity didn’t mean Harvey Norman was above government handouts, however. The company has raised an additional $ 22 million in JobKeeper wage subsidies designed to prevent struggling companies from making layoffs. Not content with benefiting from a massive upward redistribution, the company launched in November 2020 a call for volunteers to help “busy back-to-school period. “In return for their services, these volunteers received vouchers and store credits.

Social media users blasted the company as unions staged protests at Harvey Norman stores to demand an increase in the minimum wage. Harvey Norman’s social media operators responded to this criticism by taking to Twitter blocking and censor comments and posts on its Facebook page. When that didn’t work, the company launched a charm offensive, responding to complaints with bizarre and tactless emojis. Finally, Harvey Norman deleted his official Twitter account.

Tact and decency were never virtues associated with Harvey. He is in the file saying that donating to homeless charities is like “helping a whole bunch of hopeless people survive for no good reason.” And, in 2016, he suggested that Australia’s political stalemate could only be resolved by install a dictator.

The social crisis caused by the pandemic clearly did not lead Harvey to reveal a more sympathetic side of his personality. True to form, in March of last year he wondered “Why are we so afraid of catching this virus? … There is almost nothing to worry about. Citing the recent record sales of his company’s air purifiers as an example, Harvey urged people to see the pandemic as “an opportunity.”

It’s easy to get bogged down in the horror of the personality of a man like Harvey. Many of his public remarks are so obnoxious that any honest person cannot help but be disgusted. As socialists, however, we should aim to see through this quagmire and understand the ideology behind Harvey’s statements.

The keys to understanding this ideology are found in Master CEOs: the secrets of Australia’s main CEOs, a series of modestly titled interviews with members of the Australian bourgeoisie. There, Harvey presents himself as a Randian titan of the industry, a benevolent Atlas who supports the world:

I have helped a lot of people earn a lot more money and have helped them get into positions that they never would have had [sic] if they hadn’t met me. They could make $ 600,000 a year now and I think in 90 percent of those cases they wouldn’t be making anything like that if they hadn’t come to my territory.

Throughout his interview, Harvey praises the competitive culture his company fosters, which rewards sales with ever greater benefits. This culture may be good for Harvey’s bottom line, but its social consequences have been devastating.

Several years ago, the company’s Alice Springs store was caught falsifying information in order to register people to store credit cards. Clients without a stable income, often with poor English proficiency, found themselves burdened with unaffordable debt. In some cases, these debts were then deducted from their social assistance benefits. An investigation by the Australian Securities and Investments Commission forced the company’s finance division to repay around $ 1.5 million in fraudulently generated debt.

Paid to companies and introduced in March last year, the JobKeeper wage subsidy was supposed to prevent layoffs due to the pandemic. Be eligible, companies only had to declare, or credibly predict a one-off drop in income. Once qualified, they continued to receive payment, even though employees have returned to work.

Although eligibility rules were tightened in September, profitable companies like Harvey Norman had already received six months of JobKeeper money. It was not uncommon. According to a report By governance consulting service Ownership Matters, 20 percent of large companies that received JobKeeper payments last year increased their profits. Alan Kohler, economist and former editor of the Australian Financial Review, valued that if all companies are taken into account, the total value of unnecessary payments can approach $ 30 billion.

Even this figure can be an underestimate. Unlike similar wage subsidy programs in the United Kingdom, New Zealand and the United States, Australia has not kept any public records of JobKeeper subsidies paid to private companies. Despite public outrage, there is no legal mechanism to force the companies that killed during the pandemic to reimburse JobKeeper payments.

JobKeeper’s business-friendly orientation is more than an unfortunate consequence of the policy having been hastily created in response to a crisis. Rather, it is the result of the broader pro-business agenda of the Liberal Party, as argued by Lauren Kelly in Jacobin Last year.

Handing over responsibility for distributing wage subsidies to businesses is one way of privatizing welfare and strengthening business support for the Liberal Party. As Director of Ownership Matters, Dean Paatsch observed:

The winners of the JobKeeper game – employers, small businesses, private companies, private schools – clearly qualify… but this represents a simple transfer of wealth from the public purse to the private funds.

Harvey complaints that he will repay that money by paying $ 42 million in higher taxes. It is, however, easy to see how misleading this claim is when one remembers that any tax levied against Harvey Norman would only take a portion of that sum.

Since Harvey Norman Holdings pays the standard Australian corporate tax rate, only 30 percent of the JobKeeper payments he received will be clawed back. The remaining 70 percent will remain pure profit. The only way to recover the full amount through tax would be to levy a 100 percent profit tax.

Alison Pennington, senior economist at the Center for Future Work, identified a pattern in the behavior of corporate JobKeeper seekers. While she did not go so far as to allege that the policy was designed to funnel money into the pockets of companies, she noted that:

It is no accident that real wages are stagnant, the share of labor in national income is declining and companies are racking up record profits. That’s the whole plan. That’s why Gerry Harvey is publicly celebrating his record profits and expanding his stores, while arguing that higher wages for his workforce are unaffordable.

Instead of requiring profitable companies to repay the subsidy, the government simply appealed it is up to them to do it voluntarily. When asked if these companies should reimburse the money, the Prime Minister noted: “It was up to them to decide.”

The National Retail Association (NRA) represents large retailers like Harvey Norman. In a recent submission at the Fair Work Commission, which sets the federal minimum wage, the NRA argued that the minimum wage should not be lifted above inflation. In some industries, they proposed, even this should be delayed until November.

In the past, Gerry Harvey also argued that because Australia’s minimum wage is the highest in the OECD, wage increases should be limited to make the country more competitive. Alison Pennington pointed out, however, that like-for-like comparisons of Australian wages with those of other countries distract attention from inequalities within the country. A better measure of the minimum wage in Australia is, according to Pennington, against the median wage.

Compared to other OECD countries, Australia is on a downward trend in terms of the gap between the minimum wage and the median wage. According to Pennington: “The minimum wage in Australia is now 54% of the median wage. In 1992, it was 65 percent. Compared to other OECD countries, Australia is not, contrary to what Harvey claims, a world leader but in fact ranks twelfth out of twenty-nine.

Despite Australia’s average status when its minimum wage is fairly compared to that of other OECD countries, the federal government believes wage increases should be limited. In their submission at the Fair Work Commission, the government argued that a higher minimum wage would impose a “major constraint on the recovery of small businesses and could hamper employment in the sector”.

Unsurprisingly, the NRA agrees. This argument is, according to Pennington, often used to justify the wage freeze.

The main beneficiaries of a minimum wage freeze are powerful market dominants like Harvey Norman, Woolworths and Coles. They have by far the largest minimum wage workforce – hundreds of thousands of people. Higher wages would give Harvey Norman workers back some of the windfall profits they created…. Almost two-thirds of Australians think the minimum wage should be higher. Gerry is playing an unpopular card that is ripe to be denounced by the unions.

The unreasonable greed of companies like Harvey Norman cannot be justified by appealing to the need to remain competitive in a global market. The outpouring of anger towards Gerry Harvey shows that there is a large electorate out there to challenge our corrupt elite. It’s time to demand that billionaires pay back more than their ill-gotten JobKeeper superprofits.


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