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Lex Greensill’s and Julie Bishop’s payday pitch to Mathias Cormann in Davos falls flat

Lex Greensill’s efforts to tap into wages on demand for 150,000 public servants were not Mathias Cormann’s ‘cup of tea’.

Finance Minister Mathias Cormann did not pursue the pitch from Lex Greensill to roll out his ‘‘wages on demand’’ to 150,000 commonwealth public servants. Picture: Getty Images
Finance Minister Mathias Cormann did not pursue the pitch from Lex Greensill to roll out his ‘‘wages on demand’’ to 150,000 commonwealth public servants. Picture: Getty Images

Finance Minister Mathias Cormann did not pursue a direct pitch from billionaire financier Lex Greensill to roll out his ‘‘wages on demand’’ to 150,000 commonwealth public servants after the Department of Finance said it was “economically similar to payday lending”.

Mr Greensill’s Asia-Pacific chairman, former foreign affairs minister Julie Bishop, arranged the meeting with Mr Cormann and another ex-politician that Mr Greensill has recruited, former British prime minister David Cameron, at Davos in January.

The Australian-born farmer from Bundaberg turned financier, who now lives in Britain, has described the rollout of his wages on demand scheme to Britain’s National Health Service as “a free cup of tea”.

But The Australian can reveal that following the meeting, which happened on the sidelines of this year’s World Economic Forum in Davos, Senator Cormann did not pursue Mr Greensill’s pitch or make any further inquiries to his department.

No further advice was sought by the Minister from his department about Mr Greensill’s overtures, while the Morrison government has rejected any changes to the way commonwealth public servants are paid.

“The government is not considering any changes in this space,” a spokeswoman for Senator Cormann said.

Department of Finance officials prepared Senator Cormann a briefing ahead of his meeting with Mr Greensill, cautioning him that the “legal, regulatory and procurement requirements and the benefits, costs and risks to the government and its employees” would need to be investigated ahead of any changes to public servant pay arrangements.

Mr Greensill’s Asia-Pacific chairman, former foreign affairs minister Julie Bishop, arranged the meeting with Mr Cormann and another ex-politician that Mr Greensill has recruited, former British prime minister David Cameron, at Davos in January.
Mr Greensill’s Asia-Pacific chairman, former foreign affairs minister Julie Bishop, arranged the meeting with Mr Cormann and another ex-politician that Mr Greensill has recruited, former British prime minister David Cameron, at Davos in January.

The meeting in Davos on January 22 came two days before The Australian began a series of articles revealing how some of Australia’s biggest companies, including Rio Tinto, Telstra and CIMIC, were using supply chain financing to extend payment times for their smaller suppliers.

The department told Senator Cormann Greensill’s “scheme represents a “wages on demand” approach, that enables employees to request payment of wages as they accrue, rather than payment at the end of each employment period (for example, at the end of each fortnight)”. It then told the Minister “the scheme would be economically similar to payday lending, except that the financing and administration costs are met by the employer, not the employee, and — at the end of each pay period — the employer would be responsible for repayment direct to the lender”.

“Any consideration of the scheme for use by Australian government entities would need to consider legal regulatory and procurement requirements and the benefits, costs and risks to the government and its employees.”

Greensill firmly denies its scheme is similar to payday lending, with representatives bridling at such a suggestion, saying “thousands of employees at dozens of companies in Australia” have signed up to the scheme.

Greensill has also written to all state premiers offering the scheme to their health workers.

Mr Greensill, who was made Commander of the British Empire for services to the economy in the 2017 Queen’s Birthday Honours List, generated publicity in March when he announced he was giving the National Health Service free access to the scheme, available via its Earnd app.

Greensill acquired Earnd, an Australian fintech start-up, in early March, which according to its website, does not affect an employee’s income level. “Earnd simply removes the reliance on a particular payday and allows you to access up to 50 per cent of your earned net income before pay day,” the company said.

“What we have seen with the arrival of COVID-19, there is a need to help those frontline staff — the nurses, janitors, porters, doctors in our National Health Service who are protecting our country,” Mr Greensill told Sky News UK.

“We are working with more than half a dozen national health trusts across our country to ensure that frontline staff are able to get paid every day … completely for free — both free for employees and the NHS. In a way, it’s our free cup of tea.”

A Greensill spokesman said: “The service is provided at no cost to the employees or public sector employers. It was established to give employees access to their pay as it is earned to help them manage their finances and avoid relying on forms of credit between pay cycles”.

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Original URL: https://www.theaustralian.com.au/business/financial-services/lex-greensills-and-julie-bishops-payday-pitch-to-mathias-cormann-in-davos-falls-flat/news-story/512954ab7d18ca6ed227a59252c6045d