Fonterra bosses pay out should be trim milk not full cream

Alliance Party media release FOR IMMEDIATE RELEASE Thursday 20 November 2008

The Alliance Party says it expects Fonterra executives to take a major cut in their pay following the melamine scandal.

Dairy giant Fonterra chief executive Andrew Ferrier is making just under $4 million a year, almost $1 million more than he made two years ago, according to the latest annual report.

Alliance Party trade spokesperson Victor Billot says the 2008 melamine scandal in China had been a personal tragedy for thousands of families, had damaged New Zealand's standing in the world, and had caused great economic damage.

"It was the dark side of free trade globalization in action, and it happened because our corporations and our Government were blinded by the promise of profit from an unregulated market economy at the expense of every other ethical, social or even common sense value."

He says salaries for Fonterra bosses should be "trim milk not full cream" to reflect recent events.

"We hear a lot about how the free market rewards success and penalizes failure, so let's see if this is the case for the people at the top of the free market food chain."

Mr Billot says he noted during the election campaign there was a strong message from the National Party about bureaucratic waste.

"I will be interested to see if the same standard applies to corporate bureaucrats, that is, Mr Key's friends."

He says that a disturbing trend in recent years is for executive salaries and directors payments to be disconnected from performance or any objective measure of their actual value, with huge increases and golden parachutes being handed out even in the case of outright failure.

Mr Billot says there is some truth in the claim that there is bureaucratic wastage at the top end, but the same case is doubly true for the vast level of corporate bureaucracy that is dedicated to looking after its own interests, not the interests of the public, the consumer, or the worker.

"They say the market sets corporate salaries, presumably this is the same market that decided that the melamine disaster occurred under the watch of highly paid Fonterra executives, the same market that led to the global financial crisis, and the same infallible market that is now plunging the world into a see-saw of recession."

"Could the market be wrong now and then?"

Mr Billot says the one common theme through these disasters is that it is the public who ends up paying, while those responsible seem to be magically rewarded regardless of the level of failure.

"These days, it seems Government intervention is always bad unless it is assisting the corporates out of their own mess at great expense to everyone else."

"Part of the problem is the replacement of a culture of public service with a culture of personal greed over recent years."

ENDS

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