Friday, November 5, 2010

Maintaining Safety Must Come First

The uncontained engine failure on Qantas flight QF32 yesterday is the latest in a growing list of serious incidents to have affected Qantas flights in the last few years. It is obviously premature to make any assumptions about what may have caused yesterday’s failure, but the obvious question has to be whether concerns about cost cutting and offshore maintenance have any substance. Is it just a coincidence that, at the same time that the Australian Licenced Aircraft Engineers Association has raised the alarm about reduced staff numbers and outsourcing of maintenance work, things seem to have started to go wrong for Qantas? Or is the airline industry, and not just Qantas, now under too much pressure to cut costs, and as a result cutting corners?

It’s a fact that Qantas has reduced its staff numbers so that less maintenance work is done in house and more is done by outside contractors. It’s true that this arrangement means sometimes relying on the quality standards of foreign companies operating in jurisdictions which might not have the same regulatory standards as our own. There are many good reasons for keeping jobs in Australia instead of outsourcing to foreign countries. Preserving Australian jobs not only helps Australian workers and their families, it is good for the community, it preserves our national skills base and it is good for the economy. It’s even good for business, even if they are sometimes too short-sighted to see it.

If by chance it also means better safety standards then the argument becomes overwhelming.

Thursday, November 4, 2010

What’s the difference between a banker and a mobster?

While many of us have been criticising the banks for years, and while the banks have always appeared to be quite happy to provide plenty of ammunition, the events of this week might just have provided the proverbial last straw. At a time when household budgets are already stretched by increasing utilities prices, the big banks have stunned the nation by first announcing record profits, then following up with the Commonwealth Bank deciding to almost double the official interest rate increase. On top of that Westpac has confirmed plans to reduce staff by as many as 6000 people, roughly one job axed for every million dollars of the profit just announced. It’s not the size of the profits that is the problem. The problem is the callous disregard for customers and employees who are bled dry to create those profits.

Profits are good, necessary and healthy. Profits create prosperity. Profits expand the economy, pay for jobs, and contribute to taxes. A big profit should be welcomed as good news. Instead, bank profits have come to be seen as a sign of corporate greed for the simple reason that in spite of these record profits, the banks still consider it necessary to destroy people’s jobs, impose unjustifiable fees and charges on their customers, and arbitrarily increase mortgage rates over and above the adjustments made by the Reserve Bank. Despite making record profits, banks keep telling us how tough it is for them to source offshore funds. Despite making record profits banks insist that you and I must pay more. It’s the same sort of behaviour that you would expect from Tony Soprano, only their clothes are more expensive.

What’s the difference between a banker and a mobster? Nobody likes a banker.

Wednesday, November 3, 2010

A Worthwhile Investment.

The announcement by Prime Minister Julia Gillard of a commitment to spend $500 million on building 2000 schools should have been greeted with a chorus of approval. Unfortunately, the schools are to be built in Indonesia and so the chorus was singing a different song, with widespread public criticism of the plan. Why spend so much money on fixing another country’s schools when so many of our own schools are in desperate need of better resources, repairs and maintenance? Not to mention our public hospitals and our public housing? Surely, the argument goes, charity should begin at home, and only when we can completely provide for our own needs should we seek to provide for others.

Unfortunately, this argument misses a few very important points. First, foreign aid is an investment, not a gift. The money that we spend assisting other countries in our region helps to foster stability and improves our national security. It helps to facilitate trade agreements providing Australian businesses with greater opportunities. And in many cases money spent on foreign aid is actually spent on Australian contractors delivering the assistance. But in the case of the Indonesian schools there is another even more important bonus. Investing in the education of Indonesian children helps to fill a vacuum which is often otherwise filled by radical fundamentalist schools such as the one run by Abu Bakar Bashir where many of the Bali bombers received their indoctrination.

That’s an investment which is worth making.

Tuesday, November 2, 2010

Banks Must Recognise Their Debt To Society

By the time this is broadcast we will not only know the winner of the Melbourne Cup, but we will also know whether or not the Reserve Bank has decided to increase interest rates. At the time of writing, the widely held expectation is that the Bank will leave the 4.5% cash rate untouched, but the much more important question remains just what will the big retail banks do in response? In recent weeks they have been making more noises about the increasing costs of funding and the supposed need to set interest rates independently of the Reserve. While treasurer Wayne Swan has asked for the 31st time for the banks to behave responsibly and exercise restraint, shadow treasurer Joe Hockey has attracted some flak of his own for daring to suggest that the parliament should do something to act against banks colluding on interest rates.

Much of the criticism of Joe Hockey centred around an assumption that he was proposing some sort of reintroduction of regulated interest rates, which is not actually what he said. But interestingly, the Daily Telegraph has today published the results of a survey by Essential Research which shows that 82% of respondents are in favour of the government forcing banks to keep their interest rate increases in line with the Reserve Bank. 91% supported regulations which would restrict fees to no more than the actual cost of services, and 84% wanted the salaries of bank executives to be capped.

The fact is that none of these measures is likely ever to happen because re-regulation of the financial markets is not on the agenda of either major party. But there is a significant difference between that kind of market regulation, and reasonable, effective regulations pertaining to corporate governance and marketplace behaviour. It is that type of appropriate regulation which is supposed to be designed to prevent the kind of excesses and stupidity which occurred elsewhere in the world and contributed to the Global Financial Crisis. And that same regulation should protect consumers from being gouged.

But there is another reason why there is room for greater supervision of the banks. While it is only right and proper for private enterprises, including banks, to make their own commercial decisions, the fact is that banks are more than just private enterprises. They also provide an essential service which is not only an integral part of the economy, but forms the fundamental platform for our economy. Moreover, during the Global Financial Crisis the taxpayer stepped in to provide a guarantee for our banks. They now have a firm basis from which to conclude that they can always rely upon the taxpayer to underwrite their existence. On that basis alone it is clear that banks now have a duty to consider not only their own interests and the interests of their shareholders, but to also to consider the national interest.

They owe us all at least that much.

Monday, November 1, 2010

The Personal Touch

Some years ago I was in hospital for some surgery. I was in a general ward with a range of other men, some of them considerably older, and some of them with quite serious conditions. In this environment it can be quite hard to ignore the prospect of our own mortality. My own condition was not supposed to be life threatening, but that doesn’t do anything to prevent an underlying sense of anxiety about the prospect of things not working out. Others in the ward may have had less to look forward to. On the whole, the nurses I have encountered have always been wonderful, caring, and above all professional people. But in this ward there was one nurse in particular who was special.

I don’t know her name, but I remember the impact that she had on her patients. She was only small, and relatively young. She spoke softly and gently, in a calm and soothing voice, leaving every patient with the sense of being not only cared for, but cared about. When she called the old blokes “sweetheart” it sounded reassuring and heartfelt, not at all in any way suggestive or inappropriate. Hers was a personal touch that is impossible to fake, and I believe that she really made a difference for some of those old men. But under the new professional ethics guidelines for nurses she might just be accused of flirting, and that is an accusation which could destroy her career.

While it’s obviously important to have proper professional standards, it is less clear just what is and is not flirting. Whether it is the warm reassurance given by this young nurse, or the playful repartee that can so often lighten the mood in an otherwise serious situation, there is the risk that a strict ban on flirting could see natural friendliness misinterpreted. Clearly, anything which is exploitative, abusive, or harmful to the dignity of either patients or the nurses who care for them is completely unacceptable. Clearly, cultivating personal relationships can place the professional relationship in jeopardy. But if we allow such rules to completely eradicate any sense of humanity from the unique relationship between patient and nurse, then we will have lost something very precious.

Besides, flirting with nurses is a time honoured tradition in hospitals around the world, and life would be a lot more dull without it.