Banducci and Joyce shared special talents, and one crucial weakness

Banducci and Joyce shared special talents, and one crucial weakness

In the new testament of modern-day Australia, I envisage a new proverb: regulatory capture goeth before the fall.

This week, Woolworths boss Brad Banducci fell. Last year, Qantas boss Alan Joyce fell. What tripped them? Excellent lobbyists whose success blinded their masters to what the public would bear. Both secured advantages for their companies by playing the political game. Both masters tumbled when the public cottoned on that those advantages were at Mr and Ms Citizen’s expense.

Alan Joyce is long gone, having flown the company and the country before he was forced to face a Senate enquiry. Banducci this week announced his retirement after losing his cool at a journalist in an interview with the ABC’s Four Corners.

Banducci presented to the TV interview in the uniform of a Woolworths cashier, complete with name tag “Brad”, staged in front of shelves full of no doubt heavily discounted wares. The optics were great; shame about the output. In the course of the interview, it was put to Brad that Rod Sims, the former chair of Australia’s competition regulator the ACCC, has said we have one of the most concentrated supermarket industries in the world. Banducci became agitated, suggesting that Sims’ knowledge was out of date. When the journalist challenged that statement, he demanded his outburst be edited out, storming off when the journalist demurred.

The temper tantrum remained in the final Four Corners episode. In fact, the ABC used the clip for promotional purposes. And thank Brad, ABC ratings inflated like supermarket profits. Monday’s show was watched by nearly 1.4 million Australians.

Now, if this had been a failure of media training, I’d be the first to sell you a workshop. But it patently wasn’t. Chances are Banducci was trained within an inch of his life – he was certainly dressed down and staged by someone with public relations in their job description – but he was incautious in a way that only someone used to not needing the media would be.

His media trainer likely carefully explained what “on the record” means. Brad was probably warned that the supermarket giant had no leverage with the ABC, which isn’t dependent on advertising revenue. Its odds-on that the Banducci disaster happened despite, not in the absence of, extensive preparation. Brad simply couldn’t suppress his contempt for a growing public sense that the supermarket giants aren’t playing the competition game straight. Let’s shorten that: Brad simply couldn’t suppress his contempt for the public.

That’s not the fault of his PR team. It’s a problem with the way very big companies work in Australia. It’s true that the public don’t really understand poor Brad. I mean, Woolworths competes fiercely with Coles. They both also have to compete with Aldi, which has taken a small but decent share of the public’s grocery (and ski onesie impulse buy) spend. So Woolworths (and Coles) find other ways to keep increasing profits.

These include squeezing suppliers, as Four Corners showed, but also, as previous supermarket inquiries have revealed, can get quite creative. In 2010, a report prepared for the Commonwealth Treasury by SGS Economics found there is a range of regulatory barriers to entry for would-be competitors, which can include rules “or other types of consumer protection that may make it difficult for new firms to develop products”.

The report points out that “the concept of regulation in this case is broader than the conventional sense and includes things such as intellectual property law, the planning regime, voluntary or compulsory standards and codes of practice”. That is, there are all kinds of little kinks and chinks in the laws government makes that a diligent and well-resourced government relations team can exploit.

The important thing about the Banducci tantrum was that it revealed a CEO who has been so preoccupied with using Australia’s heavily regulated environment to deliver for shareholders that he’s stopped thinking about, or caring about, how it looked to the public. He was caught short when the world changed because of the cost-of-living crisis, which led Australians to suddenly train their attention on the way the big two function.

As happened for the Apostle Paul, the scales have fallen from our eyes. In the brief moment in which we can bear our enlightenment, we should recognise this is not just a supermarket issue – just as the favours Qantas negotiated with the government were not just an airline affair. This is about the deeper underlying issue of a complex regulatory system, which can be twisted and used against the public. Whenever we say, “the government should do something about this or that” and the government does, it opens another avenue of potential market distortion.

Right on cue, the Greens. Since the focus has shifted to supermarkets, the Victorian Greens have proposed getting governments to freeze the price of comestibles, and this week went further to suggest the government should even just set prices themselves. How lucky we are as a nation to have a political party that dedicates itself to satire, providing such moments of comic relief. As we should now see, bringing in laws like that would be terrible for consumers, who would struggle to get the wares they want, and great for the big two, which could squeeze their suppliers into even more usurious terms.

As always, this moment of clarity will quickly pass for people busily trying to live without thinking about government. But perhaps a CEO or two could derive a moral, or at least venal, lesson from the fate of Joyce and Banducci. Pride goeth before destruction, as the proverb says, and without a public-oriented CEO, a really good government relations team goes before a fall.

Parnell Palme McGuinness is managing director strategy and policy at award-winning campaigns firm Agenda C.

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