The four corporate industries that rule Australia
The Forbes Billionaires list released last month included almost two dozen Australians in its ranks. Among them was mining boss Gina Rinehart, who has now become the richest person in Australia with a fortune of $17 billion.
This placed her 36th in the world, but her net wealth was still double that of her nearest fellow Australian billionaire, chief executive of commodities firm Glencore, Ivan Glasenberg.
Also on the list were finance elites, gaming kingpins and several other mining corporation owners.
The Australia Institute’s (TAI) recently released reportCorporate Power in Australia offers vital insight into how these billionaires amass their fortunes and then entrench their wealth further by wielding power over government policy.
Research from the United States has exposed the role of big money on national policy and its effect on the working class. The report said: “Big business exerts influence through campaign contributions, influence over university funding, sponsorship of think tanks and in other ways that create an agenda for low tax for the rich, low entitlements for the poor and poor services for the middle class.”
TAI then asked which industries in Australia appear to have “disproportionate influence” over governments and how they rule, by using a subjective appraisal based on recent examples and evidence.
It concluded that the four most powerful industries in Australia were mining, banks, superannuation and gambling.
The mining industry is said to generate up to 21.6% of Australia’s wealth, although about 83% of the industry is owned by overseas companies.
That said, Rinehart’s wealth more than demonstrates the type of “distribution” going on for the remaining 17%.
As for the companies, BHP Billiton posted a profit of $14.7 billion last year. Rio Tinto had a half-year profit of $4.88 billion.
Mining companies generate these huge profits, TAI says, by pushing governments to lower royalties, cut taxes and build the infrastructure to ship the resources oversees.
Mining companies pay royalties to state governments so that they can dig, drill and extract the minerals owned by government on behalf of its citizens. TAI says royalties for coal and iron ore are one tenth of their market value. So mining companies have the “ability to acquire minerals from the state government at a low price before exporting them for a high price” and reap huge profits.
These profits are “enhanced further” by huge tax concessions and cuts. The mining industry pays the lowest rate of tax on profits than any industry in Australia. Any attempts by the federal government to raise taxes on mining industry super-profits results in a multi-million-dollar smear and fear campaign, vicious lobbying, blackmail threats to move overseas and — literally — the overthrow of the elected leader of the country.
Add to that the mining industry’s ability to persuade governments to fund the transport and ports that ship Australia’s resources overseas.
They have also successfully managed to prevent any serious effort to address climate change; the renewable resources boom required would render the minerals their profits depend on worthless.
TAI concludes that it is the mining industry’s inscrutable ability to manipulate the will of government that makes it so powerful: “If power is the ability to write government tax policy while the same government builds your infrastructure for you then the mining industry has plenty.”
The lobbying power of these companies is not big news to most Australians, and many don’t assume it is a problem. Rio Tinto can finance Aboriginal academic Marcia Langton, who is critically favourable of Aboriginal people selling their land to be mined in the Pilbara. It can also fund a journalist’s trip to the Pilbara, who then publishes a story in the national media slamming detractors of Langton’s views.
This is met with little more than shrugs, and “What can be expected?”
Similar can be said of the highly concentrated banking sector.
The “big four” banks in Australia — the Commonwealth Bank, ANZ, NAB and Westpac — are the most concentrated and profitable banks in the world, TAI’s report said. Thanks to deregulation in the 1980s, banks raised their market share from half to 90%. Of this, the big four raised their share by two-thirds to 83%.
Most Australians are more than aware of the banks’ petulant reluctance to pass on interest rate cuts and their ability to force extortion-level fees onto customers.
TAI said the banks had taken on the characteristics of a powerful oligopoly and, as a united front, were able to “stare down” parliament to win increased market share and profits. This took place in 2009, when the banks “unilaterally increased their mortgage lending rates above the increase in ‘official rates’.”
The two big parties and the Greens all proposed plans to “reign in the banks”. But the banks managed to “get the parliament to do the exact opposite of what they said they would”, so the banks “clearly have significant power”.
The third industry named in the report, superannuation, almost entirely avoids scrutiny but manages about $1000 billion of workers’ funds that are compulsorily deducted each year. From this, super funds are able to extract up to 4% in fees, reaping the industry $20 billion in profit.
Despite this, the super industry doesn’t have to explain itself, even avoiding scrutiny under the Henry tax review.
Last, the gambling industry is incredibly lucrative. Gaming heavyweight and casino owner James Packer was the third richest Australian on the Forbes’ rich list.
According to TAI, the gaming industry can influence development planning guideines — such as the changes made to allow James Packer’s Sydney Harbour casino — and shut down regulation changes it doesn’t like, such as forcing Prime Minister Julia Gillard to break a promise to independent MP Andrew Wilkie around the introduction of minor reforms to tackle gambling addiction.
TAI pointed out how extraordinary this is: “If the ability to force a prime minister to break a written promise and risk losing her governing majority is evidence of power then the gambling industry has plenty.”
The overwhelming message of TAI’s report is that the industries it discusses have the power to both howl outrage and veto policies that affect their profits or autonomy, but also to instigate near silence when policies that favour them pass through parliament.
superannuation and gambling surprised me..i knew the other 2 dominated..nothing about farming or agriculture..times change..