Greens confirm they know nothing about business

Greens senator Nick McKim has confirmed the wisdom of the saying that it is better to remain silent and be thought a fool than to speak and remove all doubt. His histrionic performance in Senate questioning of departing Woolworths chief executive Brad Banducci confirms the worst about the disconnection of our political class from the realities of profitable endeavour in the capitalist system. As associate editor Eric Johnston observed on Tuesday, if Senator McKim’s performance reflects the attitude of politicians towards business, investing and private capital, Australia is moving towards an economically destructive place.

Senator McKim’s tangled fiscal logic was reminiscent of former ABC economics correspondent Emma Alberici’s confusion over company turnover and profit. The senator, who is chairing the inquiry into supermarket prices, wanted to skewer Mr Banducci over what the former presumably thought was Woolworths’ unreasonable return on equity, 26.8 per cent. Even if Mr Banducci were tempted to do so, he refrained from adopting the bombastic demeanour of media magnate Kerry Packer, who famously subdued his Senate interrogators through force of personality. But when Mr Banducci took the question on notice and said it was not the logical metric on which to judge a retailer, Senator McKim threatened him with jail for not co-operating with the Senate. Mr Banducci remained calm, but the numbers speak for themselves.

Return on equity may be a useful measure for some businesses, but not retailers and certainly not to make a point about price gouging, as Senator McKim was seeking to do. A more appropriate figure, as Mr Banducci said, was return on funds employed – which in Woolworths’ case was 10 per cent after tax, which happens to be the five-year average of the ASX top 100 companies. Coles chief executive Leah Weckert was able to give further business insight with the disclosure that Coles made less than 3c profit for every dollar of turnover and this margin had remained consistent across the past five years.

By firing blanks against the retailers, Senator McKim has exposed why business and the public have every reason to despair about the financial acumen of our political class. This extends from the Albanese government’s market interventions and subsidy dreams and reaches its zenith with the Greens’ calls for rent controls and zero future gas developments. With the Greens holding the balance of power in the Senate, the fiscal fairies have been freed to roam wider than the bottom of the garden.