April 7th 2001

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Articles from this issue:

CANBERRA OBSERVED: BHP goes offshore as Australia goes broke and ill

EDITORIAL: IMF or UN intervention - what's the difference?

New Zealand sets up a People's Bank

BRITAIN: Foot and mouth: the real costs

Straws in the Wind

QUEENSLAND: Horan has the hardest job in Queensland

DRUGS: Beazley's drug policy: more of the same



TRADE: Europe's Common Agricultural Policy flourishes

ECONOMICS: The Aussie peso is dropping; but so is the penny


COMMENT: Islam and the West

BOOKS: 'Damaged Men: The Precarious Lives of James McAuley and Harold Stewart', by Michael Ackland

BOOKS: 'LIFE IS A MIRACLE: An Essay Against Modern Superstition', by Wendell Berry

BOOKS: King's servant: 'David Collins: A Colonial Life', by John Currey

Books promotion page

The Aussie peso is dropping; but so is the penny

by Bob Browning

News Weekly, April 7, 2001
After 15 years of "economic reform", the Australian dollar has never looked sicker and the bromides offered by government spokesmen are increasingly unconvincing. Bob Browning can see a new consensus emerging.

In developing the concept of potentiality, Aristotle reflected on the difficulty of properly describing an acorn if one had never seen an oak tree. Based on "promises-promises", neo-liberalism has had a dream run in public policy circles since the 1970s. But now, for many people around the world, the oak tree economy it predicted is turning out to look more than a little weedy.

More people can now see for themselves the answer to the indispensable old question, Cui bono - Who benefits? The special interests behind the international push for what neo-liberal propagandists misleadingly pass off as free trade are daily more apparent. So too are the effects of economic rationalist policies on society and culture.

Recent media coverage confirms that the penny is finally beginning to drop, that the actual effects of economic rationalist policy are very different from those we were told to expect.

Under the headline "Australia Sells Out", the Herald Sun (March 8, 2001), for example, reported on its front page that foreign interests had amassed a "staggering" 46 per cent share of Australia's private financial corporations and almost a third of all stocks in public companies. Foreign ownership of Australia was set to smash the $1000 billion barrier.

Foreign-owned firms already earn almost half of Australia's export dollars. Now another multinational giant, Shell, is making a $10 billion hostile takeover bid for Woodside Petroleum. If successful, the takeover will raise foreign interest control of Australia's oil and gas production to 40 per cent. According to the Herald Sun, it would put foreign interests in total control of the nation's entire liquefied natural gas export.

The head of the National Institute of Economic and Industry Research, Dr Peter Brain, commented that foreign investment was good if and when it created jobs and exports and improved local infrastructure. However, in his opinion, the economic rationalist policy of governments over recent decades had created a "virtual free-for-all" in which key Australian industries were being "picked off".

The United States is leading the charge to buy Australian assets, according to the Herald Sun. And the Australian Financial Review notes the aggressive readiness of US corporations to attack aspects of Australian government they think impede their operational freedom and profits.

Under the heading "Drug trade attacks Australian subsidies" (March 8, 2001), the AFR reported that the Pharmaceutical Research and Manufacturers of America (PhRMA) had "strongly condemned" the low prices offered to companies under the taxpayer-funded Pharmaceutical Benefits Scheme.

The drug giant is urging the US government to put Australia on its "Watch List" - i.e., a list of countries considered to be breaking trade obligations under the new trade conditions being imposed around the world. The AFR commented:

"The attack confirms the global industry's hostility to Australia which some critics have seen as driving the Howard Government's controversial overhaul of the Pharmaceutical Benefits Advisory Committee responsible for assessing new drugs. In the past two months the old PABC has been almost totally replaced, experts considered hostile to industry removed and an industry figure appointed for the first time."

A big part of the US drug companies' hostility to Australia is the fact that a number of European countries, including the UK, the Netherlands, and Finland, had begun to follow Australia's pricing policy - the policy developed by the very committee which the Howard Government has now purged.

BHP chief Don Argus added to recent warnings by going public to state that once vibrant Australian businesses were being transformed "into subsidiaries of global corporations" (Herald Sun, March 8, 2001). The effects were not just economic, he said. Australia was losing its "national identity" to foreign corporations.

Even a former Kennett Government advisor and the current director of the Australian Companies Institute, Lynne Wilkinson, commented that:

"[U]nfortunately overseas interests are able to buy without restriction into strategic industries such as power, oil, transport, telecommunications and manufacturing. It's no coincidence that our welfare bill is now $55 billion. Foreign buy-outs have devastated manufacturing and people who would have been working in factories are now on the dole."

The body with watchdog responsibilities over foreign investment in Australia has rejected fewer than three per cent of the 21,423 foreign investment bids over the last five years. Many others have escaped government scrutiny altogether. Under the agenda of Coalition and Labor governments, control over foreign investment in Australia has become virtually non-existent.

Just a few of the foreign-owned companies now dominating Australia's "branch-office economy" include Bankers Trust Australia, National Mutual, Mercantile Mutual, David Jones, TNT, Ansett Airlines, News Corporation, Optus, and Ampol. Leading Australian brand icons like Four'n Twenty pies, Arnott's biscuits, Heinz baked beans, Kraft Vegemite, Allen's Minties, IXL jams and endless others have gone down the black hole.

Historian Eric Hobsbawm, writing in the New Statesman (March 5, 2001), analysed the way ideology as well as the pressure of globalised corporations has induced governments to abdicate the national sovereignty they are supposed to exercise on behalf of the national populations who elected them. He argued among other things that the power of governments to protect the interests of their citizens has been:

"so undermined not only by the weakening of state power but, since the 1970s, by a return among politicians and ideologists to an ultra-radical, laissez-faire critique of the state. It is argued, with more theological conviction than historical evidence, that any services our public authorities can provide are either undesirable or better supplied by 'the market'.

"Post offices, prisons, schools, water supplies and even welfare services have been handed to or transformed into business enterprises, while public employees have been transferred to independent agencies or replaced by commercial subcontractors. Even parts of warfare have been subcontracted.

"The modus operandi of the profit-maximising private firm has become the model to which even government aspires. Thus, the state tends to rely on private economic mechanisms to replace the active and passive mobilisation of its citizens.

"Market sovereignty is not a complement to liberal democracy: it is an alternative to it. Indeed, it is an alternative to any kind of politics, as it denies the need for political decisions, which are precisely decisions about common or group interests as distinct from the sum of choices, rational or otherwise, of individuals pursuing private preferences. Participation in the market replaces participation in politics. The consumer takes the place of the citizen."

Recent electoral landslides against Coalition governments should be making Labor as well as Liberal politicians reconsider the wisdom of rushing to give multinational corporate and financial interests whatever they want. National governments are not entirely toothless unless they make themselves so.

Democracy demands that elected politicians put the interests of their people before those of the international minority to whom the new economy is over-generously redistributing wealth through the mechanisms of globalising corporations and financial markets.

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