June 27, 2017 by Dymphna 11 Comments

TBT: Accountants getting shafted

The exploding scandal over at the CPA highlights a real mentality problem in this country.

I don’t know whether to laugh or cry about this one.

I don’t miss being an accountant. I don’t miss being chained to a desk doing other people’s tax returns. But I still have a bit of a soft-spot for the profession.

So I don’t know if you’re following the scandal blowing up over at the CPA – one of Australia’s peak accounting bodies.

Most of the board directors have resigned in the past few weeks. On Friday, the CEO, Alex Malley, was forced to quit, under heavy fire for his “outrageous” $1.8m a year salary (for running a not-for-profit organisation!), and the funds the CPA sunk into promoting his “Naked CEO” book.

Seems the people at the top have been feathering their nest and the whole executive needs to be held to account.

(I know, the irony.)

But, Mr Malley retorted, the CPA was growing quickly, and the number of members was expanding rapidly. Business was doing well.

That sounds like a good thing right?

Well, actually… not so much.

It turns out that much of the growth in members is coming from foreign residents using the CPA as a defacto immigration service.

In fact, immigration assistance is now the CPA’s dominant profit centre!

The Australian Financial Review is running the story:

CPA Australia is waiving charges to assess visa applications by foreigners if they agree to join the accountancy body… 

A top accountant from Sri Lanka said that accountants overseas were joining CPA Australia because they thought it would help them get a visa even though they weren’t qualified to work in Australia…

As a legally accredited migration assessment agency, CPA sets standards for accountants, accredits them and assesses the qualifications and work history of foreign accountants seeking to work in Australia…

This combined role has helped drive CPA’s growth overseas to the point where its foreign operations subsidise its Australian operations, according to its annual reports… 

… The CPA successfully lobbied to keep accountants among the occupations permitted visas under the 457 temporary skilled work scheme that will be replaced by the Temporary Skill Shortage scheme next year. Some local accounting graduates complain they can’t get jobs…

Yep, its local business of representing Australian accountants is running at a loss. But that’s ok, because it’s operations selling migration assistance are pumping and keeping the whole organisation afloat.

That Malley is a genius.

But do you see the conflict of interest here?

You might remember back in 2014, there was bit of anger in the profession after the government chose to keep accountants on the skilled migration list.

Both the Department of Employment and the Australian Workforce and Productivity Agency’s (AWPA) recommended that accountants should be dropped.

Why? Those guys thought accounting should be removed because there were simply too many accountants in Australia. The ‘acconto-glut’ was creating “deteriorating outcomes for graduates . . . relatively low pay rates for bachelor graduates and weak employment outcomes for masters graduates”.

But they got rolled because the universities and two of the major accounting bodies lobbied to keep accountants on the list.

Why? Well, universities get serious fee money from overseas accounting students, who then hope to live in Australia. And the accounting bodies, as you can see, were pivoting into the immigration assistance business.

So they stitched it up.

To me it’s a shameless betrayal. The CPA is supposed to represent its members. It says on its website that it is “known for being the world’s best member service organisation.”

What a joke. By flooding the market with accountants, it supressed local wages and eroded job prospects. It created a profitable business model – profitable enough to pay it’s CEO an “outrageous” salary – but only by screwing it’s local members.

If I was still a member I’d be furious.

And this is something I think we just don’t get in Australia – there is a really important difference between total growth and growth per person.

There’s been a lot of hoo-ha and celebration about Australia’s economic growth numbers. Longest run without a recession and all that.

But people don’t realise that we’re only able to do that because we have a very strong immigration program.

If you have lots of people then total output goes up.

But it doesn’t tell you anything about out standards of living. For that, the best measure is output per person, or GDP per capita.

And what does that show you?

It’s a very different story. It shows you that we’ve actually had a couple of recessions since 1991, including a doosey in the GFC.

(Does that fit better with your experience?)

It doesn’t matter if the total pie is growing, if everyone’s slice of the pie is shrinking.

Now just to be clear, I’m pro-immigration. (I married a foreigner!) Diversity is strength and I think there are a lot of strategic benefits to having a larger population.

But it makes my eyes roll (and steam come out my ears in the CPAs case), when I see all this back-slapping about amazing growth, when the lived experience of actual members or actual citizens is nothing more than a footnote.

But what are you going to do? I’m not here to mount a crusade on this one. It’s the way it is. It’s the way it has always been.

And you’re not here to hear me rant about integrity in the accounting profession. You’re here for insight into the property industry and my unconventional use of grammar and punctuation^!

And so when it comes to property, the one thing I would say is that immigration is the laziest growth lever. It doesn’t require productivity reform, or tax reform, or industry policy or anything difficult like that. Import more people and the total GDP numbers automatically go up.

Too easy.

So if things got tough, which lever do you reckon the government would lean on?

And what happens to property prices if we’re adding more and more people to our bulging cities?

Yep, you guessed it…

What do you make of all this business?