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Beersheba and philanthropy

By David Flint - posted Wednesday, 9 April 2008


Australia has an extraordinary heritage. One of the world's oldest and most successful democracies, but with a small population, the nation has played a remarkably significant role in world affairs, and above all, in the struggle for freedom.

An example of a truly outstanding Australian contribution occurred during the Sinai and Palestine campaign in World War I. The charge on October 31, 1917 by the Australian Light Horse Division's 4th Brigade against the Turkish positions at Beersheba under Brigadier William Grant was a turning point in the campaign. It was probably the last great - and successful - cavalry charge in history.

Last year, on its 90th anniversary, a group of  dedicated  Australians re-enacted the charge. It is a signal event of which they were rightly proud, as should be all Australians.

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Three days after Anzac Day this year, the Governor-General, Major General Michael Jeffery and the President of Israel, Mr Shimon Peres, will jointly open The Park of the Australian Soldier at Beersheba.

The Park features a landscaped recreational area and playground catering for children with disabilities. The central feature is a sculpture by Peter Corlett, an Australian. The sculpture commemorates the charge of the Australian Light Horse at Beersheba.

Such a memorial, particularly one on this scale, is normally undertaken by the Commonwealth government. On this occasion the Park is being funded by a unique Australian family, one with a truly magnificent record of disinterested philanthropy.

To be fair, the government was not asked to contribute, although the Minister for Veterans Affairs, Alan Griffin, is considering maintaining the sculptured monument. And the government was closely involved in planning the project and is sending a military delegation and seven Light Horse veterans to the opening ceremony.

The Park is an initiative of the Pratt Foundation, whose benefactors are Richard and Jeanne Pratt. It is only one of a surprisingly vast range of charitable, educational and cultural causes which they have aided, and aided with great generosity and without any hope whatsoever of personal advantage.

Just in the last decade Richard and Jeanne Pratt have, through the Pratt Foundation, donated $84,000,000 to such charities. In fact, since the Foundation was established in 1978, they have given away - given away without strings - around $130,000,000. And in this, they have acted as a wonderful magnet to others to give to these very worthy causes, helping raise an estimated $200,000,000.

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And this family are not just passive benefactors. Both have served the community and the nation voluntarily in leadership roles in a wide variety of charitable, educational and cultural organisations.

In the meantime Richard Pratt has been a leading contributor to national debates on a remarkable range of issues - water management, population planning and immigration, climate change and industry.

Now Mr Pratt has been criticised in recent times for his role in a recent trade practice case about a price fixing and market sharing agreement between the Visy Group and Amcor. Amcor subsequently reported this to the ACCC in return for a guarantee of immunity, and as a result the ACCC sued Visy, but not Amcor.

According to the agreed facts, the executives of Visy and Amcor had reached an understanding about prices and market shares. As Visy chairman, Richard Pratt had one meeting - one meeting - with the head of Amcor where he said he would adhere to the understandings reached between the executives.

In this Visy has consistently said that it entered into the understanding to take advantage of Amcor. This is not of course a legal defence, but it is not improbable. Indeed it is more than likely.

The cardboard container market is highly concentrated, in fact so much so an agreement to fix prices is hardly necessary. In such markets, prices are determined by the players watching one another. One of the players is often accorded the status of price leader. When it changes its prices, the others follow, sometimes observing a decent margin from the price leader.

Such "conscious parallelism" is a very well known phenomenon in concentrated markets. To customers in a concentrated market the effect is the same as price fixing.

A good example, ironically close to newspaper critics, is the weekday broadsheet newspaper market in Sydney. The price of the Sydney Morning Herald and for The Australian is exactly the same - $1.30. I would be surprised if Fairfax and News Limited have agreed on this price, even by a nudge or a wink. The point is, they don't have to. The journals in which some righteous commentators have talked about Visy are a living example of conscious parallelism. This is price fixing by more than just osmosis, but just outside the law.

Now in a market where there are many participants a price fixing agreement can be very effective. It can significantly change the price, which doesn't usually happen in a concentrated market.

The best example is in labour markets, provided of course there is no labour shortage. One of the great struggles in the nineteenth century was to legalise price fixing by workers through unions.

I doubt whether anybody would seriously argue against collective bargaining by workers. The only argument has been whether and to what extent they could opt out of the state supervised system of conciliation and arbitration.

A lot has been written about the cost to the consumer of the Visy-Amcor understanding. It is doubtful whether the prices would have been much different had the agreement not been entered into.

But although in concentrated markets it is likely to be a breach of the law without a victim, the law still comes down hard on price fixing. This is termed an offence per se, that is, you don't have to prove that it actually led to higher prices. Just engaging in price fixing is an offence in itself. Ironically, we have just mitigated that anomaly in defamation law, where vast damages used to be awarded without proof of economic loss.

Some zealots even say it should be a criminal offence. It is hard to see the public benefit, except in those imperfect markets which are not concentrated. Even then, there is often a very good reason to exempt them, for example, to allow collective bargaining by workers.

Now the decision of Amcor's new management to go to the ACCC was undoubtedly greeted with some delight by that body. The ACCC would have seen Visy and Richard Pratt as wonderful trophies, perhaps a vindication of their work in making the Australian economy more competitive.

It is doubtful that outside of a few media commentators and antitrust zealots, anyone else would see it that way. In one area closest to their daily lives, Australians have in the last few decades seen a duopoly move in to control the greater part of retail grocery trade in Australia. Vast numbers of small businesses have been driven to the wall, often it is alleged, by predatory practices. Petrol pricing and the pricing of land distress Australians. They will probably have little confidence in the efficacy of competition policy.

The Federal Court imposed a massive penalty, some would say disproportionate, on Visy - $36 million. In his comments, the judge went further than what was before him, the statement of agreed facts. He cast doubt on whether Mr Pratt's contrition was genuine. In saying the cartel would not have continued without his approval, he suggested a closer personal involvement than was demonstrated by the statement of agreed facts. He was clearly irritated by any suggestion that Visy was motivated by a desire to take advantage of their competitor.

The case, and those comments from the bench, worked up some journalists into a state of moral outrage. Most are not known for their interest in antitrust matters, and in the intricacies of the law and the working of the markets in conditions of oligopoly. Worked into a frenzy of self righteousness, they came to resemble the bloodthirsty Paris mob in the French revolution.

When such a feeding frenzy begins, not too many in the media and elsewhere are prepared to consider the issues fairly and in a balanced way.

It is surprising sometimes how few will have the courage to ask the obvious, whether this reaction is fair and well considered.

Those who demanded that Richard Pratt be stripped of his honours hardly considered much less balanced the reasons why he had received them, and the enormous contributions he had made against the facts in the case.

It is to his credit that Richard Pratt, a dignified, generous and honourable man, decided not to put the Council of the Order of Australia into the unenviable position of having to consider this, and to stand up to the hysteria whipped up by frenzied self righteous media commentators. It was not after all that he had been convicted of a criminal offence. Even the penalty was imposed on a corporation, not on him. He was criticised from the bench, but further than was in my view justified.

It seems those affected by tall poppy syndrome are never satisfied. Recently there was even a call for Richard Pratt to be stripped of his honorary academic awards. This is mean and unworthy.

Honorary degrees are given in recognition of contributions to the community, and on any measure Richard Pratt's contributions are remarkable and worthy of recognition.

What next - a lettre de cachet incarcerating Richard Pratt?

Will they never be satisfied?

And just who in this frenzied pack has contributed, in any comparable way, to the welfare of people of this nation as Richard Pratt so clearly has?

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About the Author

David Flint is a former chairman of the Australian Press Council and the Australian Broadcasting Authority, is author of The Twilight of the Elites, and Malice in Media Land, published by Freedom Publishing. His latest monograph is Her Majesty at 80: Impeccable Service in an Indispensable Office, Australians for Constitutional Monarchy, Sydney, 2006

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