Enjoy Wry & Dry: a cynical and irreverent blend of politics, economics and life.
Seven stories you may have missed
- Yes, Alan
- Negative satisfaction
- GDP up
- A week is a long time...
- Thucydides
- Absolutely Ansett
- Teals
Yes, Alan
The word ‘Qantas’ received more bad media mentions last week than Chairman Dan has in a year. How did the Yes, Alan chairman of Qantas respond?
Well, Richard Goyder hastened to How To Keep My Job as Chairman In A Crisis For Dummies, a bright yellow tome that sits on the bookshelf of most listed company chairpeople. Wry & Dry is sure that it would not be found in the library of the AICD1, of which Mr. Goyder is a ‘Fellow’.2
He ripped open the Panic Envelope glued on the inside front cover. Inside was Plan A:
- Crank up the media relations department (tick: soft stories, flights of mercy, etc)
- Offer a head on a plate (tick: someone else’s i.e. Joyce’s)
- Apologise without taking responsibility (tick)
- Promise humility and to listen (tick)
- Make it clear that someone else will take responsibility to pick up the pieces (tick: Vanessa Hudson)
- Ensure media focus on how the company has (a) helped build Australia; (b) created jobs; (c) created shareholder value, whether or not this is the case (tick)
- Disappear from view for while (tick: AGM some weeks away).
Hold the phone. Mr. Goyder is complicit in two Qantas matters.
Firstly, he would have been well aware of the $570m flight credits scandal. And that Qantas, before the ACCC twisted Joyce’s arm, was going to cancel them on 31st December. This matter would have been discussed at board level. And he would have known how difficult Qantas was now making it for disentitled passengers to use the credits. How long can a wannabe passenger wait on the phone?
It’s a bit demeaning for a company chairman if the ACCC has to tell your CEO how to behave honourably and fairly. And legally. Which it did. How did you feel, Mr. Goyder?
Secondly, Mr. Goyder would have known of the ACCC’s investigation into Qantas’ sale-of-tickets-on-ghost-flights scandal. This is because some months ago the ACCC would have requested significant documentation from Qantas, with details of flights, dates, etc. It is inconceivable that Joyce would not have told the board.
So, what should Mr. Goyder have done?
Not only what he eventually did (i.e. give Joyce the DCM). But also DCM himself. Mr. Goyder, and the Qantas board, exemplified a Yes Alan governance process, blithely accepted all the reassurances that Joyce told them – but they failed to exercise independent judgement, listen to the customers and heed the court of customer opinion.
Mr. Goyder’s speaking-to-major-shareholders-Zoomathon week to “obtain their views” shows a monumental failure to understand his role. It’s time the Yes, Alan Chairman hung up his boots.3 Then get the shareholders to appoint a decent chairman, who can in turn review the Yes, Alan board.
1 Australian Institute of Company Director. A somewhat woke and bloated industry association from which Wry & Dry recently withdrew his membership. The coodapaid subscription fees were donated to a charity.
2 Readers who might be interested in Goyder’s views on being a ‘leader’ should read his AICD interview at Richard Goyder speaks out on how boards can lead the way (aicd.com.au). And chuckle at the hypocrisy.
3 Goyder is also Chairman of the Australian Football League.
Negative satisfaction
The Australian newspaper breathlessly reported on Monday that Albo had recorded his first ‘negative satisfaction’ rating as Prime Minister from We-The-People. Aside from the idiocy of such a term, it was drily noted that it has taken as many as 35 months for Albo to register his first negative satisfaction rating. Which is a long time in politics.
Wry & Dry notes that it took Scott Morrison as few as two months to descend to negative satisfaction. Lucky not to get there from the off.
GDP up. Err, not really.
Treasurer Grim Jim was measured on Wednesday in the presser about the GDP growth figures. GDP was up 0.4% in the June quarter. And that makes it 2.1% for the year to June. What’s not to like?
Err, the fine print. Readers would have noticed two alarming items hidden in the 3-point font.
Firstly, GDP was up only because there was a 350,000 boost to net migration last financial year. This brought new buyers of ‘goods and services’ to this sunburnt country. The sequitur is that GPD per capita went backwards for the second successive quarter. This is bad for living standards.
The fall in GDP per capita is only the third this century, the others being in covid and in 2006. Both tough times. Before that it was Keating’s ‘recession we had to have’ in 1991. And before that the early 1980s.
It would be folly to blame Grim Jim for this outcome. There is much economic untangling to be done at all levels. The test is the future: what will he and Albo now do?
Secondly, and significantly more importantly, labour productivity fell 2% in June, making it minus 3.6% over the year. Productivity is now back where it was in March 2016. Unit labour costs (the difference between wages and productivity) increased by 7.5% in the year. Well above the 3% limit required to reduce inflation to below 3%.
Productivity is and will be the Achilles heel of the government. Its industrial relations bill, now before parliament is a sure way to reduce labour productivity. It will push up costs, both direct (wages) and indirect (structural changes), without in any way adding to productivity. See more, below.
Don’t yet be alarmed. But remember that next time China will not be there to rescue our economy, like it did during the GFC. Emperor Eleven has his own troubles at mill.
So, it’s not yet time for Readers to flee to [insert Reader’s Shangri-La here]. But if you are planning to do so, make sure it’s not a Qantas flight. Or one not known to have been cancelled.
A week is a long time
“A week is a long time in politics” is one of the voluminous number of quotes misattributed to Churchill. It was actually said by that erudite UK prime minister from Yorkshire, Harold Wilson.
And so, Albo is now finding out. Well, it’s a little more than a week. What is now clear is that his cabinet is like Forest Gump’s box of chocolates. It reflects factional and geographical realities as much as it does the A-Z of competence. At least two of his ministers are clearly not up to the task.
Of course, this is no different to Scott Morrison’s cabinet. Except that in the latter’s case, he was Exhibit A of Z-level competence. Albo is, at the moment, in the A- or B-level.
Aside from his emotional and blinkered management of the whole Voice matter, Albo has generally performed above expectations. But the going is going to get tougher. He needs to more clearly show that he has leadership mettle: it’s time to tighten the screws on some heads and chop off a few others, even at the risk of upsetting factional allies. There is a range from ‘doing fine’ to ‘DCM time.’
The notable ‘doing just fine’ group includes himself, Marles (defence), Wong (foreign affairs), Chalmers (treasurer), Farrell (trade), and Clare (education).
The ‘must do better’ group includes: Shorten (NDIS), Dreyfus (Attorney-General) and Jones (Assistant Treasurer).
The control-these-Zealots group includes: Burke (Workplace Relations) and Bowen (Climate Change).
DCM candidates include (in order): King (Qantas transport), Burney (Indigenous Australians) and Gallagher (Finance, Women).
Of course, Albo will sensibly wait for a break in the traffic. And sit on his hands until after the referendum and until at least Christmas. And ponder that he cannot rely on Peter Dutton being the best thing going for him.
Thucydides and China
Last week, Wry & Dry leapt into Greek history to identify the possibility that China will not, relatively, succeed. And noted some consequences.
Without patting himself on the back (well, not too much), on Wednesday the economists at Bloomberg followed suit. And reported that China is no longer set to eclipse the US as the world’s biggest economy. That fact might have pricked Emperor Eleven’s ego. Actually, it probably didn’t, because his own advisers would have been telling him the same for some time.
Bloomberg Economics forecast that China’s GDP will exceed that of the US in the mid 2040s. But then only by a small margin over the US and only for a short time.
The economists now see growth in China’s economy slowing to 3.5% in 2030 and to near 1% by 2050. That’s lower than prior projections of 4.3% and 1.6%, respectively.
Why? As Wry & Dry noted last week: falling population, low hanging fruit of economic transition from third world to second world mostly spent, reactive economic policies and centralised decision-making.
Absolutely
Younger Readers will remember the 2001 advertising campaign of the smiling countenance of Ansett Airline’s CEO4 beaming the rhetorical question: “Am I with Ansett? Absolutely.” And the rest of Ansett’s ‘Absolutely’ advertising campaign.
In September 2001 Ansett Airlines turned to porridge.5
Last Monday, the board of Qantas released a mea culpa media release, stating that it is “absolutely determined” to fix the airline’s reputation.
Wiser heads would have advised against the use of ‘absolutely’. But it seems that there are none left at Qantas.
4 Gary Toomey?
5 Thereby ruining Wry & Dry’s family vacation. And those of thousands of others. And squillions of frequent flyer points shredded. Ansett’s collapse was a textbook example of a corporate hubris.
Teals
Wry & Dry is watching with much interest the actions of the Teal Representatives in the House and independent Senators, as each consider the government’s industrial relations bill.
Each of Teals Zoe Daniels (Goldstein), Kylea Tink (North Sydney) and Allegra Spender (Wentworth) have voiced “deep concerns” about the bill. Each represents a majority of constituents who would find many sections of the bill disturbing, to say the least. Only Ms. Spender has put one of the bill’s problems in a nutshell: “There’s no point in providing short-term wage increases at the expense of long-term prosperity.”
But, when the bells actually ring, on which side of the house will they sit? Will they sit with their constituents or those of their puppeteers?
Not that their vote counts in the House, as Albo’s team has the absolute majority (by only two votes). The real action will be in the Senate. There, the Greens will make fairy tale demands and independent Senators Pocock, Lambie and others will ponder thoughtfully, with brows furrowed and countenances stern.
The government’s zealous IR minister, Tony Burke, has done great job in headlining the changes as being to ‘close the loopholes.’ And even named the legislation such6. The PR machine is all about the non-threatening emotional hooks: ‘wages theft’, ‘same-job, same-pay’ and ‘the gig economy.’ These are generally laudable measures.
The reality is much deeper. As Readers will note, as they wade through the 284 pages of the bill and 500-page explanatory memorandum.
Which is why the independent senators deferred the whole thing until February. Thereby infuriating Minister Burke. Who wanted the whole thing passed before Christmas.
6Fair Work Legislation Amendment (Closing Loopholes) Bill 2023.
Don’t mention the war
There is an electric car war between Germany and China. In which it seems that China is winning.
Petrol Electric heads will know that the massive I.A.A. Mobility7 auto show is on this week in Munich.
Wry & Dry’s spies report that it were the Chinese EVs that stole the show. For example, BYD, an all-electric Chinese carmaker, announced five e-vehicles for Europe, making it six new models in Europe within 12 months. That is warp speed. And all at market-share winning prices.
Readers will know that BYD this year overtook Volkswagen as China’s best-selling brand. It now sells more EVs than Tesla. Which is probably why Warren Buffett invested in BYD and not Tesla. Berkshire Hathaway owns 9.8% of the company.
At the show, Mercedes, BMW, Volkswagen and Audi paraded legacy line-ups. Their next-generation displays of concept cars will not see the road until 2024 at the earliest. Korean and Japanese manufacturers were absent.
There are three things at play, here.
Firstly, Emperor Eleven’s economy is in a funk. And one of his solutions is for it to export its way out of trouble. Chinese EV manufacturing is massively subsidised. Their skill will be to avoid charges of ‘dumping’. Older Readers will remember when the Japanese auto market got into stride and tried to flood the French market. The French, being French, didn’t impose tariffs, but instructed that every Japanese car coming into France had to be customs-processed through a village in the middle of France. Brilliant. Voluntary limits were then agreed. How will Germany react to this foreign challenge?
Secondly, German automakers, critical to the economy, have become a drag. In June, production in the auto industry shrank by 3.5%. The makers are reluctant to invest.
Thirdly, BYD, for example, has a technological edge over German carmakers, as it’s building more efficient batteries, without cobalt and nickel, at lower prices. German manufacturers have to rely on numerous cooperative ventures to source its batteries. The Germans are also lagging behind when it comes to state-of-the-art automotive software.
By the way, why the fuss and rush about EVs? Sometime soon people will realise that zero-emission doesn’t mean zero-environmental damage. EVs leave a massive negative environmental footprint during their manufacturing.
7 Internationale Automobil-Ausstellung Mobility, the new name for the International Motor Show Germany. It is Europe’s largest auto show.
Tsar Vlad’s defence technology
“Needs must when the Devil drives.”
It is now clear that Tsar Vlad is in a ‘needs must’ frame of mind. And so he has taken to old technology to defend his bombers. The technology? This is genius: placing tyres on the wings, to reduce the plane’s thermal image, thereby making it more difficult for Ukrainian drones to target.
Readers will instantly recognise the above as a Tu-95 bomber.8
This, of course, is an experiment. If the planes are not attacked, then Tsar Vlad has ordered that the Kremlin be re-roofed with large truck tyres.
8 The Tu-95, code named “Bear,” is a large, four-engine turbo-prop-powered strategic bomber, first flown in 1952. It is the only propeller-powered strategic bomber still in operational use today.
Snippets from all over
1. Tsar Vlad’s Cuban recruitment centre
The Cuban government says it is breaking up a clandestine effort in Russia to recruit Cuban fighters for the war in Ukraine, a move that comes as Moscow attempts to woo developing countries to its side in the conflict. (Financial Times)
Wry & Dry comments: Dulce et decorum est pro patria mori, or rather Tsar Vlad’s country.
2. Oil is up
Oil prices surged above $90 a barrel for the first time this year after Saudi Arabia and Russia, the world’s second- and third-largest producers, said they would continue to limit output. (The Economist)
Wry & Dry comments: Saudi Arabia is choking supply at around 9m barrels per day, 25% below its declared maximum output.
3. Kim Jong-Un on the road, err, rail.
Kim Jong-un, the leader of North Korea, plans to travel to Russia this month to meet with President Vladimir V. Putin to discuss the possibility of supplying Russia with more weaponry for its war in Ukraine and other military cooperation. (New York Times)
Wry & Dry comments: As Kim only travels by armoured train, the number of meeting places is limited, which makes Vladivostok, a mere 700 kilometres from Kim’s home, the likely host city. Tsar Vlad will have to travel 6,500 kilometres from Moscow. He will be happy to do so, as he is a keen buyer of what Kim is selling: armaments. The border between Russia and North Korea (the Tumen River) is a mere 17 kilometres long. There is only one bridge, the Korea-Russia Friendship Bridge (of course): will Kim risk it?
There is actually a direct train service from Pyongyang to Moscow, operating every 14 days. It involves a change of carriage bogies, as North Korea is standard gauge (1,435mm) and Russia a uniquely broader gauge (1,520mm). At 10,272 kilometres it is the longest direct (one-seat) rail service in the world.
4. Sleepy Joe’s war room
The White House has established a war room as it launches an aggressive counteroffensive against House Republicans calling for an impeachment inquiry into President Biden. (The Times)
Wry & Dry comments: Why bother? He would save us all a lot of grief if he said he will not again run for the top gig.
5. Steak is, well, steak
Meat names like “steak” and “spare ribs” could be banned on plant-based food made in France as Emmanuel Macron’s government seeks to avoid “misleading claims”. (UK Telegraph)
Wry & Dry comments: Quite right, too.
6. Another accidental death in Russia
Professor Vitaly Melnikov, a top Russian rocket scientist, has died from “mushroom poisoning” weeks after Putin’s failed moon landing, reports claim. (UK Sun)
Wry & Dry comments: A mere coincidence. Of course.
Data
- Australia: the RBA left interest rates unchanged at 4.1%.
- Australia: GDP grew at 0.4% in the June quarter, compared to 0.2% in the March quarter.
- Turkey: inflation spiked to 59% in the year to August.
- Eurozone: share of world GDP fell to 14% in 2022, from 27% in 1992.
- USA: credit card and car loan defaults hit a 10-year high of 3.8% and 3.6% respectively.
And, to soothe your troubled mind…
“The US Senate is the most privileged nursing home in the country.”
Nikki Haley, wannabe Republican candidate for the president, speaking after Mitch McConnell, the Republican Senate leader, again froze while speaking to reporters.
She has a point. Don’t worry about Sleepy Joe (80), Dianne Feinstein, the 90-year-old Californian senator, is told by aides how she should vote.
PS The comments in Wry & Dry do not necessarily reflect those of First Samuel, its Directors or Associates.
PPS Patrick Cook, Wry & Dry’s resident cartoonist and lampoonist is taking a vacation. His amazing wit will be absent from Friday 22 September, and returning Friday 3 November.
Cheers!
Anthony Starkins