Not much learned from Fong - he fizzed and was gone

Australia Day weekend was eventful in WA. We made headlines all over the country as Neale Fong, CEO of our Health Department, Australia’s highest paid public servant, fell earthward. Almost as if art and ceremony were mimicking life, Fong had lit the sky brilliantly for a short moment. Yes, just like the fire crackers that illuminated Perth’s skyline later in the day. And then the light and colour were gone. Fong is to collect his outstanding $43,000 in lieu of four weeks notice but apparently, no one wants him to show up for work for a single hour.

Have I made a mistake? No, sadly not; that is $43,000 - an amount of money that many have to work a year for - and Fong was getting that much each month plus bonuses to make up his $600,000 annual pay packet.

Fong had been handpicked by the Minister for Health, and Attorney General, Jim McGinty a couple of years ago to steer reform in WA’s troubled Health Department. Now Fong, a controversial appointment from day one, has been accused of misconduct by WA’s energetic Crime and Corruption Commission. The dashing public servant is accused of gross misconduct in the performance of duties - lying to his Minister and breaching the trust and confidence of Cabinet. He protests innocence but isn’t hanging around to argue the toss.

Crimes like Fong’s are sometimes forgiven, but not in WA, and not if Brian Burke is involved. And he was again, at the centre of this storm. According to the current Premier, Alan Carpenter, the former Premier is Beelzebub incarnate, destroying everything good and virtuous he touches - including the endlessly talented Neale Fong. Fong was touched, and in a tragic reverse of the fairy tale, transformed from a handsome prince into an ugly frog. It was done to him: Premier tackles the “poison of Burke” read The Australian’s headline story (January 29, 2008).

Worse, said the Premier, even the State had mistreated and damaged Fong by paying him a $600,000+ salary. “What we had done” said the Premier “was hang a very big target around Neale Fong’s neck”. Poor Neale. Of course, he had argued vigorously for much less pay at the time. Next we will hear that Neale has suffered enough and that there will be no need for criminal prosecution. It’s a pity the Premier treats the citizens of his state as complete idiots.

McGinty, again, was the man who had handpicked Fong and insisted on the excessive pay packet in the first place. What did the WA Salaries and Allowances Tribunal know about recruiting scarce talent in a tight market? Only McGinty knew. That was the line at the time of Fong’s rise. When the press suggested over the weekend that he, too, should resign, McGinty in a customary display of arrogance, dismissed the Westminster principle of ministerial accountability as “silly” - yes, his word. The Premier now thinks so too and is, for one reason or another, backing his Minister all the way. Everyone, apart from Brian Burke, is an innocent victim. It’s a story of sorts, I suppose.

But how could McGinty not have known of the friendship and former business connections between Fong and Burke? How, at the time of his original appointment as CEO in an acting capacity in 2004, could McGinty have been ignorant of the fact that Fong was a non-executive director of a company called Australian Healthcare Technology? How could he not have known that Burke's family company Abbey Lea was a major shareholder in AHT? I am not suggesting conspiracy here. Just political pathology born of uncontrolled arrogance and excessively secure hold on power. WA lacks an Opposition.

Back in 2005, when Fong was confirmed as Health Department CEO, McGinty and the whole Cabinet knew some things with absolute certainty. They knew that Fong was so far ahead of the executive pack that he could do this job with just one hand. He could easily do it while managing and ministering to Western Australian football as chairperson of its Commission. Easy. A few sceptics considered that to be a full-time job but not Fong or his fans. Anyway, even for his one hand, Fong warranted twice the normal CEO’s pay.

McGinty, again, is a powerful guy, sufficiently powerful to define reality for the ALP in WA. If he paid much more than the going CEO rate for Fong and said Fong was great, then Fong was great. End of story.

Fong, it turns out, was not that great. He was spread too thinly, too much in love with himself, a pain to work for, a disappointing reformer and, according to Corruption and Crime Commission, worse. But these were all McGinty’s misjudgments even if the Premier has carelessly, or under duress, claimed some of the credit.

It’s a pity he cannot see how dangerous and foolish McGinty’s cavalier ways and political experimentation have been. It was good to see the Premier use the word “experiment” to describe the Fong appointment even if he did not fully understand the nature of the experiment.

I have had a shot at an alternative analysis of this experiment in a longer article entitled Reach for the Stars: CEO Salaries and the Culture of Celebrity in WA’s Public Service posted a little over a year ago on the APO website and at www.citizenonline.org. Fong was ready-made for the part: his youthful good looks and swashbuckling ways, the drinking, driving and speeding, neighbours-get-stuffed private mansion plans and, of course, the high risk wining, dining and sharing confidences with Beelzebub on the wrong side of town.

The Premier’s “very big target” case at least suggests that my argument may be on the right track. Perhaps, the Premier read my piece (just joking) for I have it on good authority that there is a hard copy in his Office library (not joking). Let me just say here that the politics and psychology of celebrity are poison to democracy and even to the functioning of rational markets - despite McGinty’s foolish appeal to the role of markets in establishing executive pay packages. His appeal, I argue, is to malfunctioning and corrupted markets - corrupted, again, by the culture and social psychology of celebrity. You need to know the difference between functioning and corrupted markets, of course - or, at least, to allow for the latter. The neo liberal political imagination, holding Labor in its grip, cannot do either.

This neglected corner of the corporatising state has received insufficient critical attention. The contemporary democratic state has, for three decades, been modelling itself on the corporate sector. This also now involves a clumsy and destructive attempt to mimic a corporate management elite, fuelled by high octane image management and manufactured celebrity. It remains a more speculative argument, perhaps.

Sadly for McGinty, evidence in the private sector unequivocally reveals that performance hardly matters at all in determining executive pay level. The Fong folly confirms this point yet again. Huge rewards often attend, or herald, huge failures.

In Australia, private sector CEO salaries now reach into the tens of millions - $33 million in the case of Macquarie CEO, Alan Moss - while in the US, top salaries are calibrated in obscene hundreds of millions. And in both countries, the gap between average elite, has widened spectacularly. Thus, in 1970, CEO pay for the top 500 US corporations was 40 times the pay of the average US worker. By 2002 that 40 had become 500 times. In Australia’s case, even though numbers are fewer, inequality is galloping at more rapid rate. Moss has taken the differential to around 550 - up from the low 20s in 1992.

McGinty was Fong’s fan - and so apparently was the whole WA Cabinet.. Fong threw his footy jocks at them and they went wild. It’s an obscene and over-stated image but it captures the logic of misplaced celebrity well enough. It’s that primitive and that powerful. Corporate compensation committees, corporate boards and apparently government ministries can share in the excitement of this “surrender” to celebrity as it unleashes a chemistry that diminishes reason and endangers institutions that depend on it: not just democratic government but also markets that depend on the exercise of rational self-interest.

Of course, Fong’s pay was miniscule when compared with big time corporate executives and the damage the private sector does to the public sector is initially indirect. It establishes a false and destructive benchmark against which public sector remuneration is set and against which it constantly chafes. A permanent and unwarranted upward pressure, making quality public service harder for states to buy, is set in constant and corrosive motion.

That corrosion applies also in those vital human service mass professions like teaching and nursing. Why are we short of both? Because one third of the country’s million or so university students are enrolled in schools of business, commerce or marketing. Why are they there? They are heeding the siren calls of the celebrity manager disguised as market calculus.

In surrendering the state to this logic, our leaders set in motion forces that continually degrade the value of productive work and civic effort even in its last but weakening fortress - the public service. McGinty is not alone in this destructive undertaking but he has moved more boldly than many dared before.

Luckily civic culture, also under siege, survives and ambitious public servants remain under critical public scrutiny in democracies enjoying a relatively free press. Too bad that private sector ambition and performance are not as closely watched - but that’s another story. Fong has fallen victim to democracy - not to Beelzebub Burke or a Cabinet careless in exposing its tender young CEOs.

WA political scientist and Howard biographer, Peter van Onselen has noted that Cabinet talent is too thin for the WA Government to lose a McGinty. Sadly, he may be right. Even more sadly, talent is thin here for the same reason that we are short of teachers and nurses: too much human and institutional energy is given over to preparation for careers in management, commerce and advertising. That’s where the young people go, heeding the call of a market which too many of us have decided best determines the allocation of everything, the whole world over. Sound familiar?

Finally, the Fong experiment reveals the futility and counterproductive character of the neo-liberal state’s short term response to this longer term problem. Where thought and wisdom counsels the use of political authority to curb market excess, McGinty believes it better to throw taxpayers money into the competitive fray buying up good looking but dysfunctional Fongs at an ever higher price - not in a rational market but in the market become theatre of excess, unreason and abandon. This is nothing less than the subversion or the rot of democracy from within. Well done, Jim! Well done, Alan!