This was published 10 months ago
Opinion
Corporate lawbreakers should be jailed. Imagine what their spouses would say
Ross Gittins
Economics EditorWhen we’ve got big business behaving badly, what can we do about it? Most of the answer’s obvious: strengthen the laws against misbehaviour, greatly increase the penalties and then, most obvious of all, police them vigorously until the fat cats get the message.
As the banking royal commission showed, much of the misbehaviour uncovered involved breaking the existing law. And the casinos in Sydney and Melbourne seem to have been breaking the law.
Illustration: Simon Letch. Credit:
If PwC’s decision to pass on to other clients the information it had been given by the Treasury after promising to keep it confidential wasn’t illegal, it should have been. And obviously, the many big businesses found to have been paying their workers less than they were legally entitled to were breaking the law.
The High Court has just confirmed that Qantas’ dismissal of 1700 workers was illegal, just as the Federal Court had originally found it to be many months ago. Qantas had appealed against the Federal Court decision but failed, so it took its appeal to the High Court and was again rebuffed.
Think how much shareholders’ money was spent trying to escape what most people would have thought was the company’s legal duty to its employees. And how much the shareholders will now have to pay to compensate the unlawfully dismissed employees.
Now the Australian Competition and Consumer Commission is taking legal action against Qantas, alleging it continued selling fares on flights it had already cancelled. Should the airline lose the case, it will be up for hefty fines.
It’s hard to believe that in all these cases big businesses, with their own legal departments, didn’t know that what they were doing could be found to be against the law. Much easier to believe they thought the chances of being prosecuted were low.
It’s possible some thought that, should they be prosecuted, they could afford the legal firepower to find a way to get them off the hook. But I think the main reason so many big companies have been acting as they have is their confidence that they wouldn’t be prosecuted.
Of course, in competitive markets – even markets like ours, where competition on price isn’t nearly as strong as it’s supposed to be – when one big business is seen to be gaining an advantage by finding neat legal arguments, the temptation for other businesses to do the same is intense. And it’s all too human to assume that the test of what’s ethical behaviour is what you imagine everyone else is doing.
Remember, too, that although many personal crimes are committed in the heat of the moment, big-business lawbreaking is likely to be the result of carefully considered advice.
The ACCC, under chair Gina Cass-Gottlieb, is suing Qantas over selling tickets on flights the airline had already cancelled.Credit: Alex Ellinghausen
That’s why penalties for business lawbreaking need to be very high. I think going to jail – even for just a few months – would be a highly effective deterrent. Think what your spouse would say if you got caught.
But why have chief executives been so confident their misdeeds would go undiscovered and unpunished? Because for a long time, it was pretty true.
During the now-ended era of “neoliberalism” – the doctrine that what’s good for business is good for the economy – successive governments used nods and winks to let corporate watchdogs, competition and consumer watchdogs, and wages watchdogs know their job was to look impressive without ever biting anyone.
And, if that wasn’t enough, governments would deny them the funds needed to police adequately the laws they were responsible for. Even the Tax Office wasn’t funded to do as many audits of taxpayers as it should have done – despite those audits bringing in far more revenue than they cost.
But, as I say, the neoliberal era is over, a victim of the manifest failure of much privatisation and outsourcing, and the exposure of big business misconduct by investigative journalists – most of them working for this august organ and the ABC.
And, of course, the crossbenchers are using Senate committees to draw attention to failures the two major parties would prefer to go unnoticed.
Once the public’s attention is aroused, governments have to act, calling royal commissions and being seen enforcing the law.
Now the watchdogs are better funded, and the ACCC is calling for stronger powers. Last week its chair, Gina Cass-Gottlieb, told a parliamentary committee that many unfair trading practices currently fall outside the scope of Australian consumer law, “despite causing considerable harm for consumers, small business [note that; big businesses often mistreat small businesses] and competition”.
She was referring to practices such as making it hard for people to cancel digital subscriptions, online sites with opaque and confusing trading terms for small businesses, manipulative sales practices such as misleading scarcity claims (“Hurry, stocks limited”), or deceptive design patterns such as sites that confuse you into buying things you didn’t actually want.
In the post-neoliberal world, there’s much cleaning up to be done.
Ross Gittins is the economics editor.
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