I have a friend who I’ll call Trevor (for the sake of discretion).
I’m sure that many of our readers will know someone just like Trev.
This is because Trev is the anti-entrepreneur. He works for the public sector, crawls into his workplace at 9am and skips out at 5pm (with visible glee). He associates commercial creativity with greed and is never more energised than when talking about his hobbies and his home renovations. (Generating a capital gain from bricks-and-mortar seems the lone exception to his anti-business bent.)
It’s great to have a friend like Trevor because very few things are better able to crystallise my thinking than his largely unprovoked, usually well-intentioned remarks.
For example, only yesterday, Trevor boldly declared (with perhaps the tiniest hint of mischief in his eye):
“Who needs employee share schemes anyway?”
Of course, this was like dangling a doughnut in front of Kirsty Alley, and I rose to the bait.
I don’t need to sell to Anthillians the benefits of employee share schemes.
(In fact, if you have any thoughts on why they are helpful, please do share your comments below. You’ll save this lazy journalist some time and effort. I might even send you a prize… most probably a DVD from our prize drawer… to the most interesting post, chosen according to our not-so-humble opinions).
But then he said something out of left field, even for Trev (and I’m not referring to his political beliefs… Trev doesn’t vote out of principal).
He said, “If Employee Share Schemes are so great, why doesn’t Mrs Rudd [Therese Rein] use them?”
The implication was that Prime Minister Kevin Rudd should logically refer to his wife when seeking an opinion from the coal-face of commercial policy, particularly when such policy relates to growing SMEs.
Now, I have no idea whether Therese Rein, the founder of Ingeus, a company that runs job placement programs for the Federal Government worth $58 million a year and generating global revenue worth more than $170 million, takes advantage of Employee Share Schemes.
But it feels as though I can reasonably assume that neither K-Rudd’s policy advisers or the big man himself considered SMEs at all when formulating the rationales for the troublesome tax at the heart of this post.
The purpose of the tax was largely to collect an estimated $200 million from Australia’s top 1,500 execs, who logically use Employee Share Options to pay only 26% on the dollar (rather than the highest personal income tax rate).
And this, I fear, is symptomatic of the government itself and the root cause of my concluding rant.
If our Prime Minister had associated Employee Share Schemes as a tool to assist growing businesses in Australia, he might have progressed his inquiry through the formal mechanism of an official SME adviser or even consulted his wife (at least, we can only hope that our PM occasionally seeks the counsel of his ‘better half’). If he had done so, the government might not be now forced to back-step on this otherwise well intentioned budget initiative.
But the issue here is not whether the PM listens to the people around him (he has a lot to think about and many to advise him). The issue is that the current government (in sync with its predecessors) seems fixated on the macro, on big business, on commodity exports and global deals. Now, that’s fine. But a trend appears to be emerging.
What attention is being given to the innovators, the pioneers and future of commerce and industry in Australia? Once again, we’re left feeling neglected.
You know my argument (I’ve made it before).
Dragging minerals from the earth is not sustainable. Only new tech and commercial IP will lead to long term economic prosperity. The practical (and hopefully temporary) loss of Employee Share Schemes as a tool for motivating staff might be today’s issue, but it seems that unless some real attention is given to the rest of commercial Australia (i.e. those other than the 1,500 high-rollers, for whom the tax was intended), Australia will be doomed to spend another decade hanging on commodity demands from China.
Forget Employee Share Schemes. I just hope you share my frustration.
*UPDATE (21 May 2009)
Not that it matters, but it seems that Ingeus did offer Employee Share Benefits to its staff under Therese Rein, at least that’s what the company’s 2006 annual report indicates. “The share are issued to the staff member and paid for by the employee accepting an interest-free loan for the same amount… On termination of employment with the group, the shares are bought back by Ingeus Group at the current deemed valuation,” the report says, according to the AFR (whose reporters must also have talked to Trev).
