If oil goes to $US150 to $US200 a barrel, thousands of SMEs will be crushed. So why isn’t anyone talking about it? COLIN BENJAMIN
By Colin Benjamin
If oil goes to US$150 to $US200 per barrel, expect to see a huge collapse of small and medium businesses. Yet neither the Treasurer nor his current opposition spokesperson can bear to tell the truth about the impact of rising fuel costs, a declining $US and the impact of speculation in commodity stocks upon the rate of small business insolvencies anticipated this year.
The capacity to walk away from accountability for the impact of one’s decisions, deny impending financial threats to small and medium enterprise, and the acquiescence of the legal and business establishment is understandable, but does not bring back falling levels of business and consumer confidence.
Yesterday’s National Press Club address by the shadow treasurer must represent the best evidence that the triple-T standard (truth, trust and transparency) appears to have little to do with the realities of national policy formation. Malcolm’s assertion that the 5c petrol tax reduction is now good politics, as it places pressure on the Rudd Government on the rising costs of fuel and household living costs, cannot be faulted – especially as we see international comments that we may be paying in excess of $A2 per litre by the end of the year with up to 10c increments if $US200 pre barrel becomes the reality.
A week ago Malcolm was advising against a 5c reduction while a 10c option was deemed beyond reason for a considered Opposition policy when each 10c rise would involve a $3.6 billion raid on the budget and a $1.5 billion raid on state treasuries. Wayne informed a business leaders’ lunch this week that small business would benefit from enterprise centres (while losing the services of regional advisers) because the overall impact of the budget was directed towards keeping a downward pressure on inflation.
It was interesting to hear Malcolm’s assertion: “I’ve been involved in business, economics, most of my 53 years. A whole range of enterprises, large and small,” he said. “I’ve been through stockmarket crashes, several. I’ve been involved in very big companies and seen how similar they are to run as governments, which is a key insight.”
In this context it is interesting to note what Susan Long of RMIT’s Creative Organisational Systems Group says to the effect that “pride makes them blind to the risks they were taking. Why should these really intelligent people not see the risks they were taking?”
Australia’s biggest corporate collapse of HIH Insurance in 2001 demonstrated sloth as the board stood by and let founder Ray Williams hold sway. Long say: “It’s not just a turning away but almost a wilful not looking at what the issues are – often (such) human propensities get in the way.”
Another example of failures of financial institutions is the bank that has been accused of misleading investors by failing to fulfil its legal obligation to disclose ownership of shares before the collapse of Opes Prime. It appears that the code of conduct approved by the ASX permits private deals between banker and potential client on projects that may collapse, being only reported after they collapse.
Hindsight has a marvellous 20-20 capacity, but it would be more helpful if these large institutions were prepared to advise the market when they are “holding internal discussions” about major projects that may impact on the environment well into the year 2020.
In the context of the massive cost to consumers and investors of the collapses that have come from a failure of the ASX and ASIC to overcome Long’s concern with corporate blindness, we can only hope that Nick Sherry is seriously considering stripping the ASX of its role as market supervisor. Nick has raised fears about a run on superannuation funds because of the market turmoil.
Every small and medium enterprise knows how close they are sailing to the wind at present, but if the US Fed and the RBA are both seriously reporting (a great triple-T step) that they believe there will be more risks and also heightened prospects of both a wage breakout and rising interest rates to control inflation, it is time to rethink speculative projects and pin down excellent staff. The prospects of another collapse in the western economies needs to be directly factored into business planning.
Yet you won’t hear that from our leaders. And this is no way to run a market – with no-one talking about what is really happening.
Dr Colin Benjamin is Entrepreneurship and Strategic Thinking Consultant at Marshall Place Associates, which offers a range of strategic thinking tools that open up possibilities for individuals and organisations committed to applying the processes of innovation, creativity and entrepreneurship. Contact: CEO Dr Jane Shelton.
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