February 18th 2006

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Articles from this issue:

COVER STORY: AWB biggest scandal to hit the Howard Government

EDITORIAL: Tide turns on global capitalism

SCHOOLS: Why our children don't know history

ECONOMICS: Sky's the limit with CEO pay increases

EDUCATION AND TRAINING: Engineer shortage hurting economy

RURAL CRISIS: Black Friday for Canadian farmers

MEDICAL: Abortion pill a bonanza for lawyers

STRAWS IN THE WIND: The humbug revolution / Iran / Bush, oil addiction and the environment

AUSTRALIAN SOCIETY: Is pornography just harmless fun?

ENTERTAINMENT: American awards honour traditional values

EAST TIMOR: Will Indonesian military be let off the hook?

WAR ON TERROR: Tackling a home-grown security threat

OPINION: 'Human rights' charter a backward step

OBITUARY: Colin Pike, champion of the underdog

Religious persecution during the Spanish Civil War (letter)

B.A. Santamaria on Toynbee's 'creative minorities' (letter)

BOOKS: MANHOOD: An action plan for changing men's lives, by Steve Biddulph

BOOKS: HEAD OF STATE: The Governor-General, the Monarchy, the Republic and the Dismissal, by Sir David Smith

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Sky's the limit with CEO pay increases

by John Morrissey

News Weekly, February 18, 2006
The average Australian CEO now earns more in a week than the average Australian worker earns in a year, according to a new study.

Obscene salaries and pay-outs pocketed by the chief executive officers of the 51 member companies of the Business Council of Australia make a mockery of the Federal Government's call for workplace reform and wage restraint.

As these same CEOs trumpet, in the name of international competitiveness, the need for wage restraint to maintain low inflation and interest rates, the irony is not lost on the union movement.

Big end of town

"The moral of the story coming from the big end of town seems to be 'do as we say, not as we do'," commented Australian Workers Union national secretary Bill Shorten.

University of Sydney academic John Shields recently illustrated with a barrage of damning figures just how far out of kilter are the size and rate of increase of Australian CEOs' salaries and payouts, when compared with those of the average workers.

His research was published in the Journal of Australian Political Economy and given national prominence in The Weekend Australian (January 28-29, 2006).

According to Shields' research, the average weekly salary of $65,800 paid to the average CEO is more than the average worker earns in a year, while the average CEO's pay increase (1989-2005) was 13.5 per cent a year, compared with the average workers' 4.2 per cent.

Shields lists other hefty salary payouts, such as Macquarie Bank's $18.1 million to Alan Moss and BHP's $9.1 million to Paul Anderson.

Predictably, the rationale for these obscene figures is the need to compete on a global market for the best talent to run a company - an argument made familiar by the old maxim, "If you pay peanuts, you get monkeys!"

By this measure, shareholders should be asking why dividends and values have increased only 60 per cent in the past five years, while the CEOs have doubled their remuneration.

And don't suppose that the Australian Tax Office will claw back 47 per cent, the top marginal rate.

The CEO fat cats - who are, incidentally, part of the chorus demanding that this tax rate be reduced - have access to companies, trusts and other techniques to minimise their income tax.

Perhaps tax reform should comprise not only abolition of the tax on superannuation, but imposition of a hefty super-tax on million dollar salaries. It would certainly lessen the hypocrisy of asking the rest of us to "become more competitive".

  • John Morrissey

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