Mao’s dictum that power comes from the barrel of a gun does not apply in a stable democracy, like Australia. Rather it comes from money, influence and knowledge.
Those three combined with peculiar force in the person of Hungarian migrant Emil Herbert Abeles one day in November, 1988. That day, the by then Sir Peter Abeles, went to Kirribilli House, the official Sydney residence of the Prime Minister. Here he witnessed a deal between his longtime friend and now Prime Minister, Bob Hawke, and the then Treasurer, Paul Keating. The other witness was the secretary of the ACTU, Bill Kelty.
The two witnesses gave a promise of secrecy, which they kept. The Prime Minister gave a promise that he would step down in favour of Keating before the 1990 election, which he did not keep.
It was one of the most extraordinary meetings in Australia’s political history. And thus Sir Peter Abeles had knowledge of a secret that only three other Australians had: that Paul Keating would soon be Prime Minister.
That tells us much about the force and drive of a man who came to Australia in 1949 and started a transport empire with two trucks and a company called Alltrans.
Alltrans merged with TNT in 1968 and Abeles became managing director, a post he resigned from on Monday after building a $6 billion conglomerate employing 52,000 people.
The Kirribilli House deal represented many of the things Abeles dislikes most: big powerful unions and broken promises. But it also represents something at which he has been very successful: achieving power through money, influence and knowledge. Whether he actively sought it is another matter.
“”Think globally act locally” would be a good summation of Sir Peter Abeles’ economic philosophy. The slogan, of course, was intended as a green one, not an economic one, but it is just as apt.
What made him continue building and expanding? Why didn’t he, when he was worth say four or five million, put the money in the bank and retire to the beach? Perhaps, it was because for the Sir Peters of the world creating huge business enterprises out of opportunities is lying on the beach. Perhaps, it is what he enjoys.
From what Abeles says, it is clear he gets great enjoyment out of turning opportunities into profit. It is a question of seeing what others do not see. He saw Europe was poorly served with transport links, compared with the US and Australia. A history of national customs and language barriers had given Europeans low expectations of parcel-delivery times. He knew that with the unified market he could deliver in the sorts of times achieved in Australia and the US. When that happened business would boom. And perhaps it would have, but for the recession and TNT’s huge debt.
The idea was a good one. Moreover, it was the exact opposite of the cultural cringe. Here was something Australia did well and Europe did badly. Let’s export it. Abeles, the keen bridge player, was using knowledge and opportunity.
Inevitably there is risk. Last year TNT posted a $195 million equity net loss last financial year. The line between great wealth and the verge of bankruptcy, in a capitalist society, is inevitably a fine one, ask Bart Cummings. It is not that Abeles is anywhere near that. None the less, capitalism on the scale of TNT invites risk-taking that inevitably results in massive gains or losses.
The TNT-Ansett link is an example. What in some years has generated great profit and extra business for TNT last year yielded a loss of $66 million and a further write off and provisions for its sister airline, East-West.
Another example was an alchemist’s nightmare: TNT’s foray into the gold miner Normandy Poseidon turned to lead.
The risk has been whether profits in new ventures can service and repay the debts chalked up to launch them. In 1979, TNT had assets of $400 million. By 1991 total assets were estimated at $9 billion, but they were built on borrowing. Total debt was estimated at $4.5 billion. Now assets are down to $6 billion and the is still a problem. The share market recognises this. On Monday, shares closed on a 12-month low.
Despite that gloom, there is nothing to say that the risk will not pay off and the TNT will recover on an even bigger base: that is the aim of capitalism.
Abeles sees opportunities everywhere. Out-of-season fruits and flowers could be sold to Europe and the North America.
“”The Northern Territory has melons which could supply the whole of Asia . . . There are so many opportunities to get into global trade,” he said earlier this year.
In 1987 he said: “”As an individual I can see an opportunity in China. Every minute I see an opportunity.”
He saw an opportunity in 1989. He had a close friend in the then Prime Minister, Bob Hawke. Abeles does not like unions. He has said executives should run companies, not workers. Hawke, on the other hand was head of the ACTU. He has always thought workers should play a greater, not lesser, role. None the less, they found a common foe. Hawke did not like unions that refused to obey the rules of the Industrial Relations Club. The pilots’ union was one such union. It refused to obey the Industrial Relations Commission and sought to make its own wage deal outside the Accord.
So there was a meeting of minds between the great entrepreneur anti-unionist and the prime minister from the union background. There was one union they did not like.
Abeles saw his opportunity to remove the pilots union as a powerful force that had cost Ansett dearly. He surmised, knew or guessed Hawke would back him.
The result was that now Ansett does not have the millstone of the strong pilots’ union around its neck.
As it happened, the strike cost Ansett and Australia dearly. Abeles no doubt would have liked it to have run smoother, but that was part of the risk in taking that opportunity.
Hawke did back him, according to the Opposition which asked why did the airlines get a 75 per cent discount on RAAF flights during the strike; why were $8 million in FAC charges waived; and why was a 25-year lease arrangement on domestic terminals signed just before the 1987 deregulation?
Hawke said ending the two-airline agreement was proof enough that he did not favour his friend.
It was never substantiated, but when the pilots’ union was sued for damages, a pilot told the Victorian Supreme Court that Ansett’s general manager had told him that Abeles had given an undertaking not to break the Accord and Hawke had agreed to fund the airlines for losses during the strike.
Abeles has always cultivated good political contacts. We will never know if he did so to further his business, whether they were just friendships built up from social contacts or part of general drive for power and influence. Whatever, he was good at it.
He was knighted by Sir Robert Askin in 1972. Askin later joined TNT’s board.
He was appointed to the Reserve Bank Board and in 1990 was appointed to head a group to advise the Government on impediments to Australian business in Europe.
Abeles decries the failure of Australian companies to take up export opportunies. Other than the top 200 companies Australian companies were too timid about export, he said recently. They began with a negative view that their product was not needed. Australia should attack its current-account deficit by increasing exports, not by cutting imports. If Australian companies were given some export help (perhaps with tax) for the first couple of years, they would not need help after that.
Tax incentives were a theme Abeles took up with the Very Fast Train. TNT was one of the joint venturers. However, the Government did not take it up, despite Abeles’ considerable ability in persuading governments. He thought some tax-relief in the early days would pay off in the long run as the nation would get the benefit of intrastructure built by private enterprise.
The VFT now languishes.
Abeles said Australia needed to concentrate on the positive. The Australian media kept repeating the stories of the 1980s failures. Other places had failures in the 1980s, too, but their media moved on.
Abeles does not like the media much. He seldom gives interviews or makes public statements on what needs to be done. Perhaps, that is an endearing quality.
Abeles has often been used as the example of the migrant-made-good. Clearly, he is a good example of hard work yielding results. He has been described as tireless. But now, at 68, what a TNT statement described as “”the immense amount of time and effort expended over the past 18 months” in keeping TNT on course has made him resign, though he will remain a director and deputy chairman, but these are not full-time executive positions.
As TNT and Ansett struggle and as Abeles’ foray (back) into Europe takes longer than first thought, Abeles will no doubt get the ultimate accolade of his adopted country and become another victim of the tall-poppy syndrome.
Let’s hope that he can spare some time during his retirement writing a detailed account of what went on between the other three tall poppies at Kirribilli House that November day.