IF YOU might be heading into danger, whose advice would you seek? Someone independent and well informed OR someone you can control and who will tell you what you want to hear? Would you want your doctor to tell you about incipient sickness as soon as symptoms appear…or would you want them to play down any potential problems?

These are important questions for leaders because independent voices can alert you to dangers, and opportunities, that employees and contractors may choose not to tell you about (e.g. because they believe you will be hostile to them).

As you may have noticed, Australian governments have a dreadful tendency to want to subsidise chosen industries regardless of that industry’s value to the community. Politicians often justify this with fatuous statements like ‘…but we need that industry’ then produce a load of justifications that can only have come from the subsidee.

In Australia, subsidised businesses are allowed to facilitate the ongoing flow of taxpayers’ money into their pockets by donating some of the money directly to political parties. Australian authorities do not recognise any connection between giving political parties money, and gaining influence. Neither do they have any problem with subsidised companies acting as a laundering facility for taxpayer funds.

The desired outcome is a reliable, steady and expanding flow of money from the general public, and their assets, to a few wealthy people, with percentages sticking to the various political parties on the way through.

This is the gravy train.

We can now reveal how you too can join the hallowed ranks of those with their snouts well and truly in the public trough.

Getting on board

A good way to get onto the gravy train is to act for a large concern, that is one that the government can easily believe has a lot of cash and a long term future that will keep the money flowing through time.

With any gravy train, there’ll be various gatekeepers who make sure that any future applicants for the gravy train are suitably ‘controllable’.

You must make sure that your project is one that the government can plausibly claim will deliver benefits for which the government is ostensibly responsible, such as creating jobs or helping the balance of payments. Everything should be framed in politically correct terms to keep all the various minders and bureaucrats happy – i.e. not fearful of being hauled up in court.

Once your overall story is sorted out – ‘world class project, unprecedented opportunity, union support, Order of Australia potential, boundless profits, environmentally friendly etc’ it’ll be time to see one of the most senior gatekeepers. (N.B. Usually organised via an A list network introduction)

This is your opportunity to close the deal by finding out what the government wants – ‘$50K in the election fund, introduction to overseas contacts etc.’

If you make the pill sweet enough then you should be able to get the government’s support. Of course, with a kleptobibulous government, you also have to be sure that your contacts aren’t too blitzed to remember what was agreed. You can sometimes turn this to your advantage if you can convince your contacts later that additional agreements had been made at the meeting depending on whether there are any reliable witnesses present. Note that most of these people don’t want reliable witnesses anywhere about, in fact witnesses are usually only called in after the nuts and bolts of the deal are done…‘could you just come and witness this please’.

You’ll also need to offer other favoured folks some ‘slice of the action’ to stay in everyone’s good books and not upset any apple carts. This might mean committing to buy from particular suppliers. Your background research plus tips from savvy minders can help you to get on the front foot and close the deal quickly with a tasty offering.

Once you’re connected to the A list, you can pretty much rely on subsidies and payments coming through regularly as long as you don’t rock any A list boats. Many problems can be fixed with a phone call. Of course, you’ll want to buy your contact lots of meals and take them out on plenty of ‘complimentary’ trips to keep your relationship sweet, stay on the lookout for new opportunities and make sure that you’re ready to head off any potential trouble.

Just remember…“One hand washes the other.”

But can it last?

Subsidies replace skill and effort

If the subsidy levels that you command are sufficiently high, you aren’t going to want too many ‘eager beavers’ on your management team (particularly in accounts).

Over time, you’ll find that you are selecting for a certain type of personality rather than looking for skill and competence. Competent and honest people can make trouble so you’ll only keep people who’ll go along with your special priorities. That often means that your business ends up with little in the way of distinctive competence. No worries though, falling profits merely create a stronger argument for more subsidies to keep up jobs, or investments or whatever is today’s politically correct hot button.

The longer term result is to slowly but surely deplete your company of straight shooters and cautious planners. The longer term effects of these staff losses depend upon your company’s dependence on subsidies.

In one case, a major listed company receives about $200 million per year in mixed subsidies and cost relief, but only posts a profit of around $80 million, thus relying on subsidies to stay in ‘business’.

After a while, less rigorous management takes over from prudence and good planning.

From this point on your subsidised company will slip into a progressively weaker position as they ignore ‘external’ (i.e. non subsidised or controllable by the A list) events that could threaten their world. Because your profits are made from subsidies, there’s little incentive to invest in maintenance, or research, or skill development. Indeed, when you’ve got networks of A list-ers scattered through most of the traditional industries, and with mega influence over government, there’s a lot of hand washing to do, which reduces time spent on ‘external’ factors (like climate change, global economies and the like).

Once the board is stacked with A list connected drones, there’s little chance of the company making its way up any competitive ‘ladder’.

In this world, increased profits are achieved by increased subsidies, not smart investment or competitive ideas. New projects are selected by their potential to attract greater subsidies for a longer period of time.

The overall effect of subsidies is to cushion your organisation from the effects of the free market, lock in support from political parties and slowly create a company executive that is deficient in skill or strategic foresight, but very astute at keeping government support.

A nest of ?

Over time, the A list networks, and the subsidised companies, fill up with people who expect backhanders and easy business access - that’s where their skills lie. The entire environment shifts to accommodate A list needs so that all significant work is controlled by the A list group. Government departments, legal systems, local government, every aspect of the social milieu becomes organised around the A list – ‘it’s the way business is done around here’.

This leads to certain predictable weaknesses in the system, the most consistent of which is internal paranoia. Deep down inside, most of the participants understand that there’s something not quite right about living off subsidies, and they feel they have something to hide.  Having various internal purges of people who threaten leaks or disclosures causes everyone to become suspicious of just about everyone else. It’s an atmosphere conducive to paranoia that can cause people to behave in weird ways until they enter a death spiral of mutual suspicion.

Outsiders can facilitate those death spirals quite easily, but it requires both care and subtlety, both characteristics that are virtually unrecognisable to the people cosseted by subsidies.

Representative organizations

Representative organisations such as chambers of commerce etc. all can be brought into line with A list priorities by a combination of A list pressure and government grants and favours.

With business leaders, political heavyweights and representative organisations all in line, the media will soon follow. Stir and allow to settle for a few decades …

For those citizens not on the gravy train, one option is to start adding up the various subsidies and cost relief to show the totals. Many subsidies are conveniently buried in lots of relatively modest things, like fuel rebates and government sponsored research. Each can be defended as being ‘worth it’ but the total can start to look pretty scary.

In the example case above,  total subsidies of around $200 million per year would solve Tasmania’s health and education concerns, while the small company profit figure clearly demonstrates that it’s not a business…it’s a justification for subsidies. Without that company’s help to reduce government coffers, we’d all be a lot better off. But why should they operate to the free market, after all there’s not much point being a favourite if you’re treated like everyone else.

With a change of federal government, there’ll be a lot of action to protect those subsidies from ‘interference’ by ‘misguided’ federal politicians.

Since the feds want to cut over $10 billion a year from their budgets, it could be interesting. You can have your say by writing your ideas for federal budget cuts, or your ideas for government collecting new revenues (like selling trees at market prices or charging all industries equally for road and bridge repairs) to .(JavaScript must be enabled to view this email address) before Jan 18 ‘08.

Good luck.

Mike Bolan
  ABA http://www.abetteraustralia.com

Mike is a complex systems consultant, strategist and executive and management trainer.

Mike Bolan

The overall effect of subsidies is to cushion your organisation from the effects of the free market, lock in support from political parties and slowly create a company executive that is deficient in skill or strategic foresight, but very astute at keeping government support.