Misaligned incentives in the Australian immigration system, or: moving to jail

Mandatory sentencing isn't so scary if you would quite like jail

Mark Dodd of the Australian, News International's flagship antipodean paper:

Mandatory sentencing – a key element of Labor's policy to deter asylum boats – is having the opposite effect, encouraging Indonesian crew attracted by Australia's relatively high prison pay. Lawyer and former diplomat Anthony Sheldon says jailed crew members can make $20 a day in Australian jails, in his submission to the Gillard government's expert panel on asylum-seekers.

"The preference of a number of older fishermen is to remain in detention in Australia," Mr Sheldon says in the submission. "Depending on their jobs in prison, they can earn up to $20 per day, making them wealthy beyond comparison upon their return to their villages after their sentence is served. They also receive free dental and medical services during their imprisonment. Combined with the relative safety of their work in prison compared to the dangerous work at sea, Australian imprisonment is very desirable."

If you are trying to deter people by threatening bad things, it really is a good idea to make sure that they actually think of those things as bad. Australia is attempting to deter the people-smugglers asylum seekers pay to get them to its shores by mandating a five-year sentence for any crew member caught. Since the whole point of "asylum boats" is to end up in the hands of the authorities, that ought to be a valid deterrance.

Unfortunately, although Australian prisons aren't very nice by the standards of Australia, for an Indonesian fisherman contemplating a career change, they make an awfully good pitch, as Sheldon makes clear.

Of course, the Indonesians involved are working from incomplete information; as the policy is new, no-one has yet returned home after serving the full sentance. It may be that eventually they get back and tell everyone "steer clear", in which case the issue will come out in the wash. But until then, Australia has to find some other way to render the plan ineffective.

Making Australian prisons as bad as Indonesian ones isn't quite on, but Sheldon has a better idea:

A public awareness campaign about a prisoner exchange treaty with Indonesia, highlighting the fact that boat crews could face the risk of serving the balance of their prison terms in Indonesian jails would have a desired deterrent effect, he said.

Of course, all of this is based on the assumption that deterring the boats is good public policy – which may be the standard view in Australia, but is not necessarily true.

An asylum boat carrying 150 people crosses to Australia. Photograph: Getty Images

Alex Hern is a technology reporter for the Guardian. He was formerly staff writer at the New Statesman. You should follow Alex on Twitter.

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BHS is Theresa May’s big chance to reform capitalism – she’d better take it

Almost everyone is disgusted by the tale of BHS. 

Back in 2013, Theresa May gave a speech that might yet prove significant. In it, she declared: “Believing in free markets doesn’t mean we believe that anything goes.”

Capitalism wasn’t perfect, she continued: 

“Where it’s manifestly failing, where it’s losing public support, where it’s not helping to provide opportunity for all, we have to reform it.”

Three years on and just days into her premiership, May has the chance to be a reformist, thanks to one hell of an example of failing capitalism – BHS. 

The report from the Work and Pensions select committee was damning. Philip Green, the business tycoon, bought BHS and took more out than he put in. In a difficult environment, and without new investment, it began to bleed money. Green’s prize became a liability, and by 2014 he was desperate to get rid of it. He found a willing buyer, Paul Sutton, but the buyer had previously been convicted of fraud. So he sold it to Sutton’s former driver instead, for a quid. Yes, you read that right. He sold it to a crook’s driver for a quid.

This might all sound like a ludicrous but entertaining deal, if it wasn’t for the thousands of hapless BHS workers involved. One year later, the business collapsed, along with their job prospects. Not only that, but Green’s lack of attention to the pension fund meant their dreams of a comfortable retirement were now in jeopardy. 

The report called BHS “the unacceptable face of capitalism”. It concluded: 

"The truth is that a large proportion of those who have got rich or richer off the back of BHS are to blame. Sir Philip Green, Dominic Chappell and their respective directors, advisers and hangers-on are all culpable. 

“The tragedy is that those who have lost out are the ordinary employees and pensioners.”

May appears to agree. Her spokeswoman told journalists the PM would “look carefully” at policies to tackle “corporate irresponsibility”. 

She should take the opportunity.

Attempts to reshape capitalism are almost always blunted in practice. Corporations can make threats of their own. Think of Google’s sweetheart tax deals, banks’ excessive pay. Each time politicians tried to clamp down, there were threats of moving overseas. If the economy weakens in response to Brexit, the power to call the shots should tip more towards these companies. 

But this time, there will be few defenders of the BHS approach.

Firstly, the report's revelations about corporate governance damage many well-known brands, which are tarnished by association. Financial services firms will be just as keen as the public to avoid another BHS. Simon Walker, director general of the Institute of Directors, said that the circumstances of the collapse of BHS were “a blight on the reputation of British business”.

Secondly, the pensions issue will not go away. Neglected by Green until it was too late, the £571m hole in the BHS pension finances is extreme. But Tom McPhail from pensions firm Hargreaves Lansdown has warned there are thousands of other defined benefit schemes struggling with deficits. In the light of BHS, May has an opportunity to take an otherwise dusty issue – protections for workplace pensions - and place it top of the agenda. 

Thirdly, the BHS scandal is wreathed in the kind of opaque company structures loathed by voters on the left and right alike. The report found the Green family used private, offshore companies to direct the flow of money away from BHS, which made it in turn hard to investigate. The report stated: “These arrangements were designed to reduce tax bills. They have also had the effect of reducing levels of corporate transparency.”

BHS may have failed as a company, but its demise has succeeded in uniting the left and right. Trade unionists want more protection for workers; City boys are worried about their reputation; patriots mourn the death of a proud British company. May has a mandate to clean up capitalism - she should seize it.