Terry McCrann: Andrew Leigh proves to be the shadow minister for ignorance

ANDREW Leigh must immediately step down as Labor’s number two treasury spokesman behind shadow treasurer Chris Bowen or opposition leader Bill Shorten has to sack him, writes Terry McCrann.

Shadow assistant treasurer Dr Andrew Leigh.

ANDREW Leigh must immediately step down as Labor’s number two treasury spokesman behind shadow treasurer Chris Bowen or opposition leader Bill Shorten has to sack him.

For Leigh — sorry, Dr Leigh, and a Harvard PhD no less, purportedly in ‘public policy’ — has publicly announced his total inadequacy for the position, even in opposition far less, disturbingly, in a future government.

This has got nothing to do with ideology or even policy. Simply, we have Leigh publicly announcing that he doesn’t have the faintest clue of the most basic elements of the financial system.

And he has done so in the most humiliating fashion, over nearly 1000 excruciatingly awful words in an ‘opinion piece’ for Fairfax Media’s Sydney Morning Herald.

He could just as well have written: banks? What are they? What do they do? Does it have anything to do with money?

I could do no better than defer to Joe Aston, the acerbic Rear Window columnist on the fellow — but vastly more sane — Fairfax publication, the Australian Financial Review.

Aston wrote: “Dr Leigh put on the most incredible display of corporate/financial sector ignorance we have ever seen by a Treasury portfolio frontbencher. Period.”

Now it needs to be said, he did so in ‘good’ company. The SMH makes a practice of publishing the most complete rubbish on matters financial, business and economic — as I have detailed on a (large) number of occasions.

Such things as not knowing the difference between revenue and profit.

Or the difference between companies that pay company tax and trusts that, well, don’t pay ‘company’ tax — as it’s so hard to spot the clue in that term company tax.

In keeping with this great Fairfax tradition, Leigh claimed that just five investors were “the biggest owners” of Australian-listed companies.

Indeed, that these five “faceless investors” had a majority (ie: controlling) stake in the biggest players in our 20 largest industries!

Leigh went to draw all sorts of malevolent consequences that could or, hint, hint, nudge, nudge, were happening as a consequence.

Shadow treasurer Chris Bowen. Picture: AAP

Just to underline the malevolent intent or behaviour, he opened with analogies to some of the great criminal corporations of popular culture — Lex Luthor’s Lexcorp in Superman, Cyberdyne Systems Corporation from The Terminator.

Just in case you missed the linkage, he added: “As Oscar Wilde once said, life often imitates art.” Righto Andrew, we get it, not that I’d really describe the Superman movie as ‘art;’ more pop art.

Unfortunately, it was all based on the totally false assumption that the five names nominated actually owned the shares.

In fact all five would own little or none of the shares listed in their names. They hold the shares as nominee or as custodian for the real owners. And it is the real owners who control and vote them.

LET me explain to Leigh something about the workings of the industry that he would purport to oversee.

A super fund or a manager for a super fund buys shares in a company. For all sorts of basic reasons it doesn’t physically hold those shares; they are held by a nominee/custodian.

There’s often one of those hard-to-see clues in the shareholder name. One of Leigh’s nefarious five is National Nominees; another is not HSBC the Hong Kong bank as written by Leigh, but a subsidiary HSBC Custody Nominees (Australia).

Why, you could even think that they did that just for Andie — that if he missed the ‘Nominees’ he might have twigged on the ‘Custody.’

No luck there, for Leigh thundered: “investor HSBC, for example, in petrol retailing, owns one-third of Caltex and one-fifth of Woolworths.”

If he or his co-‘researcher,’ the ANU’s Adam Triggs, had the slightest idea of who does what in Australian business, they could have highlighted ‘HSBC’s’ even greater stranglehold — ‘its’ 17 per cent of Wesfarmers which owns Coles which operates petrol stations.

But if they had the ‘slightest idea’ they could for example have gazed up the page in the Caltex annual report which showed ‘HSBC’ — actually of course, HSBC Custody etc — ‘owning’ an incredible 31 per cent of Caltex (amazing, no-one else had noticed the Hong Kong Bank seizing control of Caltex!), to the list of “substantial shareholders.”

This list looks through any ‘nominal/custody’ ownership to the real shareholder.

And what do you know? No sign of ‘HSBC,’ in any form.

Opposition leader Bill Shorten must sack assistant treasurer Andrew Leigh, if shadow treasurer Chris Bowen refuses to do so.

There are just three (small) big shareholders: Black Rock 7.24 per cent, Lazard Asset Management 6.05 per cent, and Perpetual 5.1 per cent. Oh dear, conspiracy deflated.

Now, this is not some small gap in understanding of some arcane or complicated corner of the financial system — like for example how you price three-month repo calls on a fixed/floating rate swap.

But an ignorance that was absolutely basic and simple — not that distant from my (sarcastic) example of Leigh potentially querying whether banks had anything to do with money.

Further, the real heft of Leigh’s stunningly embarrassing ignorance — and the reason he has to be sacked as assistant treasurer — was his arrogant preparedness to make ‘learned’ critical comments on corporate and investment behaviour as a consequence of his false belief.

It is simply not good enough to respond that, well, at least in office, there’d be a Treasury officer to tell him: minister, you do realise banks have something to do with money.

This is a person who in government would have carriage of policy and regulation, fundamental to our economy and financial system.

It simply cannot be allowed to happen.

Originally published as Terry McCrann: Andrew Leigh proves to be the shadow minister for ignorance