Gerry Harvey, the Australian retail magnate, doesn’t shy away from controversy. In a now infamous interview on Australian current affairs show 60 Minutes, the billionaire described COVID-19 as a great business opportunity. Following a backlash, Harvey complained that “everyone thinks I’m this callous old bastard out making a profit on other people’s misery.” For once, Harvey was completely right.
As lockdowns forced many to stay at home, sales of furniture, homewares, and appliances went through the roof. As a result, the Australian retail chain Harvey Norman more than doubled its profits to $462 million last year. Gerry Harvey, who owns more than 30 percent of the company, reaped more than $70 million in dividends, growing his personal wealth by 24 percent.
Financial prosperity did not, however, mean that Harvey Norman’s was above taking government handouts. The company raked in an additional $22 million in JobKeeper wage subsidies that were intended to prevent struggling businesses from implementing layoffs. Not content with benefiting from massive upward redistribution, in November 2020 the company appealed for volunteers to help with the “busy back to school period.” In return for their services, these volunteers received vouchers and store credits.
Social media users have castigated the company while unions have organized protests at Harvey Norman stores demanding a hike in the minimum wage. Harvey Norman’s social media operators responded to this criticism by going on a Twitter blocking spree and censoring comments and posts on its Facebook page. When this didn’t work, the company went on a charm offensive, replying to complaints with bizarre, tactless emojis. Finally, Harvey Norman deleted its official Twitter account.
Tact and decency have never been virtues associated with Harvey. He is on record saying that donating to charities for the homeless is like “helping a whole heap of no-hopers to survive for no good reason.” And, in 2016, he suggested that Australia’s political impasse could only be solved by installing a dictator.
The social crisis caused by the pandemic has clearly not led Harvey to reveal a more sympathetic side of his personality. True to form, in March last year he wondered “why are we so scared about getting this virus? … There’s pretty much nothing to get scared of.” Citing his company’s recent record sales of air purifiers as an example, Harvey urged people to see the pandemic as “an opportunity.”
It is easy to get bogged down in the sheer awfulness of the persona of a man like Harvey. Many of his public remarks are so odious that any decent person cannot help but be disgusted. As socialists we should, however, aim to see through this morass and to understand the ideology behind Harvey’s utterances.
Keys to understanding this ideology can be found in Master CEOs: Secrets of Australia’s Leading CEOs, a modestly titled set of interviews with members of Australia’s bourgeoisie. There Harvey paints a picture of himself as a Randian titan of industry, a benevolent Atlas holding up the world:
I have helped many people make a lot more money and helped them into positions that they would never had [sic] got into had they not come across me. They might be earning $600,000 a year now and I think in 90 percent of those cases they wouldn’t be earning anything like that if they hadn’t come into my territory.
Throughout his interview Harvey praises the competitive culture his company fosters, which rewards sales with ever-greater perks. This culture may be good for Harvey’s bottom line, but its social consequences have been devastating.
Several years ago, the company’s Alice Springs store was caught falsifying information in order to sign people up to store credit cards. Customers without a stable income, often with a poor grasp of English, found themselves burdened with unaffordable debts. In some cases, these debts were later deducted from their welfare payments. An Australian Securities and Investments Commission investigation forced the company’s finance division to pay back around $1.5 million in fraudulently generated debts.
Paid to businesses and introduced in March last year, the JobKeeper wage subsidy was supposed to prevent layoffs due to the pandemic. To be eligible, companies only had to report, or credibly forecast, a one-off downturn in revenue. Once qualified, they continued to receive the payment, even if employees returned to work.
Although eligibility rules were tightened in September, by then profitable companies like Harvey Norman had already received six months of JobKeeper money. This was not uncommon. According to a report by governance advisory service Ownership Matters, 20 percent of large companies who received JobKeeper payments last year increased their profits. Alan Kohler, an economist and former editor of the Australian Financial Review, estimated that if all companies are taken into account, the total value of unnecessary payments may be close to $30 billion.
Even this figure may be an underestimate. Unlike similar wage subsidy programs in the United Kingdom, New Zealand, and the United States, Australia kept no public register of JobKeeper subsidies paid to private companies. Despite public outrage, there is no legal mechanism to force companies that made a killing during the pandemic to return JobKeeper payments.
The business-friendly bent of JobKeeper is more than an unfortunate consequence of the policy having been created hurriedly in response to a crisis. Rather, it is a result of the Liberal party’s broader pro-business agenda, as Lauren Kelly argued in Jacobin last year.
Passing on the responsibility for distributing wage subsidies to businesses is a way of privatizing welfare and shoring up business support for the Liberal Party. As Ownership Matters director Dean Paatsch observed:
The winners of the JobKeeper game — the employers, the small businesses, the private companies, the private schools — clearly qualify … but this represents a simple wealth transfer from the public purse to private coffers.
Harvey claims that he will repay this money by paying $42 million in higher taxes. It is, however, easy to see how disingenuous this assertion is if we remember that any taxes levied against Harvey Norman would only take a proportion of this sum.
Because Harvey Norman Holdings pays the standard Australian corporate tax rate, only 30 percent of the JobKeeper payments it received will be reclaimed. The remaining 70 percent will remain pure profit. The only way to reclaim the full amount through tax would be to levy a 100 percent tax on profits.
Alison Pennington, a senior economist at the Centre for Future Work, has identified a pattern in the behavior of corporate JobKeeper claimants. Although she did not go so far as to allege that the policy was designed to funnel money into the pockets of business, she noted that:
It’s no accident real wages are stagnant, labor share of national income is falling, and business are racking up record profits. That’s the whole plan. It’s why Gerry Harvey publicly gloats about his record profits and store expansion, while claiming higher wages for his workforce are unaffordable.
Instead of demanding that profitable businesses repay the subsidy, the government has merely appealed to them to do so voluntarily. When asked whether these businesses should return the money, the prime minister said: “That was up to them.”
The National Retail Association (NRA) represents big retailers like Harvey Norman. In a recent submission to the Fair Work Commission, which sets the federal minimum wage, the NRA argued that the minimum wage should not be lifted any higher than inflation. In some industries, they proposed, even this should be delayed until November.
In the past, Gerry Harvey has also argued that that because Australia’s minimum wage is the highest in the OECD, wage increases should be restrained to make the nation more competitive. Alison Pennington has, however, pointed out that like-for-like comparisons of Australian wages with those of other countries draws attention away from inequalities within the country. A better measure of Australia’s minimum wage is, Pennington has argued, against the median wage.
Compared with other OECD countries, Australia is on a downward trend in terms of the gap between the minimum and the median wage. According to Pennington: “Australia’s minimum wage is now 54 percent of median wages. In 1992 it was 65 percent.” Compared to other OECD countries Australia is not, contrary to Harvey’s assertion, a world leader but in fact ranks twelfth out of twenty-nine.
Despite Australia’s middling status when its minimum wage is compared fairly with those of other OECD countries, the federal government believes that wage rises ought to be limited. In their submission to the Fair Work Commission, the government argued that a higher minimum wage would impose a “major constraint on small business recovery and may dampen employment in the sector.”
Unsurprisingly, the NRA agrees. This argument is, according to Pennington, often used to justify freezing wages.
The biggest beneficiaries of a freeze in minimum wages are powerful market dominators like Harvey Norman, Woolworths and Coles. They have by far the largest minimum-waged workforce — hundreds of thousands strong. Higher wages would return to Harvey Norman workers a portion of the bumper-profits they created…. Almost two-thirds of Australians think the minimum wage should be higher. Gerry is playing an unpopular card that’s ripe for exposing by unions.
The unconscionable greed of corporations like Harvey Norman cannot be justified by appealing to the need to stay competitive within a global market. The outpouring of anger toward Gerry Harvey shows that there is a large constituency for challenging our corrupt elite. It’s time to demand that billionaires repay more than their ill-gotten JobKeeper superprofits.