Trust in the future is about trust now - grass roots trust.

Lots has been written and said about 'Trust' in recent days - here is my 5 cents worth. (UPDATED 2 October 18)

We need to confront the lack of trust. The lack of faith. The lack of confidence. Before it becomes a lack of hope.

I have been reliably informed that there are very few trusted groups in our modern society, yet trust is what most people are looking for - other people they can trust, media they can trust, businesses they can trust and institutions they can trust.

I have also been reliably informed that the few institutions or groups that are trusted include small business, health, welfare and the farm sector. No surprise there. The welfare workers, health workers, farmers and small business people are found in community, at the grass roots. If people don’t trust them they either go out of business or are sent a very firm message from the community that they aren’t welcome.

In spite of all this Australia is in a great position. There are still areas where we must improve but like it or not we have an economy the envy of the world. Our wages are some of the highest in the world, conditions for workers is world class, our public service is rated third best on the planet, we are rated as a very happy nation on the happiness scale yet we have still lost trust in our institutions.

So why have big institutions lost our trust? This includes obviously politics but also banks, other financial businesses, unions, some big retailers, multi-nationals, some regulators, major and national sporting teams, key government agencies, energy providers and even the education sector. In my opinion it is because they are not connected to community; they do not have a good line of communications to community. They are lacking a reliable source of intelligence, of information, of facts - from the grass roots.

Big government has a serious problem with making decisions. More and more often their decisions are based on text books and the opinion of a few not the many. It was not always like this, once there was a government organisation focused on micro economics that gathered information for the government of the day, information from all over Australia, from the smallest regional community to the major cities. It was the Commonwealth Employment Service (CES). It gathered intelligence on small labour markets which put together informed national policy and also informed communication strategies. The information collected by the CES helped give credibility to governments and policy makers; the information helped the community have faith and trust in the system. Then along came text book ideologues who practiced their dark arts of ‘disempowerment & control’ and the CES was dismantled and trust and faith in the system of government declined.

For many decades Australian unions held sway and were in the main trusted. They had lots of members and achieved many good things, around safety in particular. Then along came the ideologues. The unions stopped talking to the members and started talking among themselves. They started merging to either maintain power bases or create mega unions. As a result, connection with members was severed, trust and faith disappeared along with their union members. Australia is fifth lowest in the OECD when it comes to trust in unions. Finland is the highest with 68% trust and Australia comes in just ahead of the mafia run unions in the USA with 25%. Why the difference? Because, I’m guessing, unions in Finland work with their members and community, unions in Australia work among themselves. There is also the issue of the largest unions also believing they can control community opinion from centralised positions of power.

The banks have recently copped a shellacking over their behaviour and attitudes. There is no doubt in my mind that the rot set in when they scrapped the local bank managers. For decades the local bank manager was seen as a stalwart of the community, an honest broker who would do what was right for his (and rarely her) customers and community. These managers would also report back to state HQs and eventually national HQs on the state of the market, the feelings and beliefs of the community and the needs of customers. Senior bank management would see the early signs of worry or distrust and do what was necessary to rebuild confidence. But now we have no bank managers in the biggest banks and we have no trust or faith. Interestingly two of the smaller banks that people seem to trust, Bank of Queensland and Bendigo Bank, have local managers and as a result a greater connection to community.

The reason the banks dumped their managers is a mix of things. Firstly, the ideologues who followed economic and business philosophies embedded in theory not reality held sway and gutted ‘local bank’ resources as a cost saving. Secondly, technology provided a real challenge on maintaining communications but was instead seen as an opportunity for further cost cutting. The big banks cut costs but lost connection to their customers. They now need to come up with a model where they have trusted representatives in the community. To be trusted they must live in that community, understand that community and be able to communicate to HQs and to the community just like they did in the old days. It should be easier now with technology? Technology provides lots of information, big data, that can be analysed forensically, but it does not, yet, replace the emotional human part of communications upon which community thrives.

Has the insurance sector lost its way due to the decline of the local insurance agent? Local communities knew who to trust. Have we discovered that we actually can't trust a website or a phoine call as much as we can a local personb?

Media is also going through great change. Modern societies have more sources of information than any society in history. So, what and whom do we trust? Which commentator, journalist, blogger, shock jock, website, news anchor, face book page, Tinder, Instagram account, twitter feed, LinkedIN connection do we trust? Is GetUP still a trusted source (hint: sometimes). How do we decide whom or what to trust? Is the rise of ‘fake facts’ due to the proliferation of so many information channels? If a person doesn’t want to believe certain facts they can, it seems, find the facts they want to believe somewhere else.

Multi-national corporations are a mixed bag. More and more of them are pursuing legitimacy and are confronting tax and supplier payment issues. As always, it’s the minority that give the rest a bad name. Amazon is a major culprit. It basically pays no tax, pays lousy wages, rips off small businesses, dodges VAT and GST taxes and tricks governments and some journalists into thinking they are a good thing. They aren't.

The payment regime of some big businesses and multi-nationals is a crime. Nestlé for example has pushed the payment time for suppliers out to 120 days. How does a business survive without money, how does a small business manage cash flow? But Nestlé understands that and so offer to lend money to their suppliers until they, Nestle, pay the supplier. But Nestlé claim they are good corporate citizens because they will offer low interest rates on that loan. Nestlé think that it is a legitimate behaviour to lend someone the money that Nestlé owes them at a profit for Nestlé. This is nothing but extortion. Nestléisn’t alone. No wonder we lose faith and have little trust with behaviours like this.

Most Australian regulators are world class, not perfect (who can be?) but still world class. When a regulator’s reputation is tarnished the reason will more often than not be rooted home to either the poor and inappropriate attitude of an official in that regulator or poorly designed process and communications. There is also on the other side of the argument the ‘haters’ that exist in the business and general community. There aren’t many, but they take great delight in attacking and vilifying regulators and regulations and pretty much everything to do with government. The haters and the officials with poor attitudes help to create questions in people’s minds about whether they can trust a regulator. That is disappointing because, nearly always, you can. The recent problems with ASIC not taking on large business in court is perhaps a sign of the attacks they constantly get? They, like the ATO, are more often damned if they do and damned if they don't. Perhaps that shouldn't be an excuse but it is a reason.

If the government had a new contemporary version of the CES out in the community then it could also connect regulators to communities in a different supportive transparent way. It would also help to identify and bring to task the dishonest and dodgy people and businesses that will always, disappointingly, exist.

To regain trust then big business and big organisations need to be seen and be active in communities. This reconnection to community can’t just be someone visiting a community to gather or give information. The person and the organisation they represent must be a participant in the community. Otherwise they will be seen as observers and the information they collect will be tainted by a lack of relevance. Real intelligence is gathered by participants who are known and trusted. Real information comes through process and participation not just by asking questions.

It may actually be the fact most industry, union and community associations can be trusted. The peak bodies and the biggest associations are the ones that can give the rest a bad name (and my organisation COSBOA is a peak body but, hopefully, we are trusted). In the business sector most out spoken ideologues will exist in peak bodies but rarely in the industry groups that have businesses as direct members. We need outspoken people to confront issues and ensure transparency and good change management. Its those who close their eyes to reality or want some crazy type of revolution that are a curse on modern society.

Out of interest we at COSBOA have been holding focus groups on the employment of people with disabilities in the small business sector. The focus groups have, among other things, highlighted that business people trust their industry associations. They also trust their local grass roots support networks through bookkeepers and their accountants.

Industry associations are connected to community. Peak bodies aren’t.

Another contributor to the lack of trust has been the centralisation of decision making on everything to do with the economy, including the smaller economies around the nation. We have a person based in a central public sector office, maybe a team of people, making decisions on behalf of Geelong or Dubbo or perhaps Tennant Creek or some other small community even though they might have never visited the place nor understand its particular needs. This Orwellian behaviour has to stop. Perhaps the autocrats do know better but if they get it wrong it isn’t their community or their family that suffers. We all know they at times do get it wrong (think Pink Batts).

In these times of constant change, it is now the role of these people to get their knowledge out to the people in the community. Get more information and resources to those who have the cash to invest and who will garner the benefits or reap the bitter grapes of failure. Either way it is the local people who can grow their success or mend their failures. Centralised decision making is sensible for deciding interest rate levels or tax policy but as many decisions as possible must be passed down to the community. For example, a changed interest rate can be good for one community and bad for another, so give business communities the capacity to take advantage of the good and better manage the bad. Local small and medium business people should at least be making recommendations on their own economic future, particularly around skills development.

As mentioned above one point of importance when it comes to trust is the role of peak bodies. Some peak bodies live for theory and laissez-faire economics and have caused a great many problems for small businesses. Some business and union peak bodies are generally seen as a representative of a political party and as a result many people have no faith in what they say. Peak bodies should either be transparent in their representation of ideology and politics or actually represent the needs of their constituents, you can’t do both.

In the end ideology (laissez-faire economics in particular) has favoured a few big businesses and big institutions but has held back innovation and caused prices in Australia to be higher than they should be, groceries prices being the best example. These laissez-faire economists don’t realise that they are actually lazy and unfair. Instead of droning on with the hackneyed expression ‘let the market decide’ they should be embracing good policy with the more relevant expression ‘let’s make sure the market can decide’.

We need to confront the lack of trust. The lack of faith. The lack of confidence. Before it becomes a lack of hope.

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© 2018 Peter Strong CEO, COSBOA  

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