Australia: A few bad eggs? The collapse of Australian Capital Reserve

Australian Capital Reserve recently went bust leaving thousands of small investors at risk of impoverishment, among them pensioners who were convinced to sink their life savings into their various speculative schemes. It has already been made clear that the small investors will be the last to receive any compensation, an example of what we may see elsewhere.

The property company Australian Capital Reserve has recently announced that it is going into voluntary administration leaving thousands of its small investors at risk of impoverishment. The TV screens have been full of sobbing pensioners who were convinced to sink their life savings into their various speculative schemes and now face the prospect of losing everything. The administrators have already made it clear that the small investors will be the last to receive any compensation, as the priority is the reimbursement of large corporate investors. Some on the left have argued that we should have little sympathy for small investors who delude themselves about the possibility of a quick buck. The reality is that changes to superannuation schemes over the last few years have made it impossible to achieve a decent standard of living in retirement for most workers and therefore workers have desperately sought any means to support themselves in their old age.

The collapse of ACR follows close on the heels of the collapse of Westpoint and Fincorp. Like Westpoint, ACR has been under investigation by the Australian Securities and Investment Commision (ASIC) the federal government's corporate watchdog. ASIC had issued a stop order against Fincorp on the grounds that its advertising misleadingly portrayed their highly risky investments as safe bet which would allow investors to 'sleep soundly in their beds at night.' In the Westpoint case, Norm Carey had built up a termites' nest of investments with made the Albanian pyramid selling scheme of the early nineties look prudent by contrast.

Needless to say the capitalist media have been keen to portray these events as the unfortunate consequences of the actions of a few bad men, rather than something endemic to their system. The truth is that the shady practices of the likes of Norm Carey are merely the logical conclusion of the 'free market'. Whole industries exist to enable Capitalists to evade taxes and other social responsibilities and all this is entirely legal and fully in keeping with the niceties of bourgeois morality but God forbid if an unemployed worker should aim to supplement his Centrelink payment by a bit of cash-in-hand work. In the same week that this bunch of gannets went bust the median house price in Perth reached $500,00 pricing most younger working people entirely out of the housing market. The Treasurer Peter Costello and the Prime Minister, John Howard have been on the news telling Australian workers that the anti-union laws are good for us, since they prevent us fighting for higher wages and thereby threatening the health of the economy. In a country where workers are indebted at historical high levels the prospect of an interest rate rise constitutes a clear and present danger to living standards.

Doesn't it seem odd that Liberals should argue against workers seeking higher wages when the whole idea of the free market is that every man should aim to enrich himself! In reality, there is no automatic connection between wages and inflation. Inflationary pressures exist because of the need of capitalism to turn a profit. Thus there is one law for the rich who are lionised for their greed and conspicuous consumption and one for working people who are constantly told to tighten their belt and invest in order to pay for their retirement, which actually constitutes a further level of taxation. It is imperative that the Australian Labor Party take a clear and unequivocal stance on this matter. An incoming Labor government should nationalize the property industry and offer compensation only on the basis of proven need. In the context of a socialist planned economy a massive programme of house building could then be undertaken which would enable young people to have a decent place to live. In that way the Australian dream could become a reality for all Australian workers.


10th June, 2007

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