Foreign Interests Are Real Bushfires: A Tragic Tale of the Australian People (II)

Power and Australian Politics – Living in a temporary world

Australia appears to have a vibrant representative democracy. The Australian political system is centered upon parliaments around the country and which party commands the majority of seats in each legislature and forms a government. If the government doesn’t perform to the satisfaction of the public, electors in the next election have the opportunity to vote out the government and install another one in its place. Over the last few decades this has been the pattern where both major parties have each spent time in government and opposition. Democracy seems to be well in Australia.

The Australian House of Representative is primarily an electoral college to determine who has the right to govern. Even in the life of the current Parliament where the Gillard labor Government is in a minority, the primary aim of the house is to facilitate the executive[i]. Debates within the Australian Parliament tend to be adversary in nature, usually short of new ideas or constructivism, unless it is in support of a Bill. Most policy discussion, agreements, pledges of support, and collaborations are discussed and decided outside of the Parliament. The committee system in Australia doesn’t have the clout and power of those within the US Congress. Political power in Australia appears to be vested in the executive, led by the Prime Minister.

However, entering executive government in Australia appears to be restricted to those that make politics their career[ii]. This has been the case with only a few exceptions. A person joins one of the two major political parties and rises through the ranks within the party by making alliances, joining factions, collaborating with others to gain support and influence, eventually winning pre-selection as an electoral candidate in a constituency and makes it to parliament.

Inside the parliamentary party, these career politicians continue to build alliances and a few become leaders which entitles them to become either prime minister or opposition leader. Consequently a person can become the Prime Minister of Australia on the votes of around  just 100 parliamentary colleagues.

The Prime Minister  then selects (or in the case of the ALP ministerial posts are also voted upon where the Prime Minister allocates portfolios) to form a ministry and cabinet. What is important to understand here is that the Prime Minister of Australia and Ministers come from a very select group of mostly career people.

What is most interesting here is that most leaders of parliamentary parties who are either Prime Minister or leader of the Opposition have been elected based upon an agenda they present rather than the strict party platform. If Prime Minister, he or she rules on agenda rather than party policy. Prime Ministers and Governments run on agenda rather than policy of late in Australia (see Table 1).

Table 1: Pursued Agenda of Recent Australian Governments

Government	Years	Agenda
Fraser Government (Liberal-National Coalition)	1975-1983	Strong fiscal management Some aboriginal rights Multiculturalism – relaxed immigration Anti-apartheid stance towards South Africa and Rhodesia Pro-state’s rights Pro-US alliance
Hawke Government (Australian Labor Party) – The Hawke Government came under great party criticism for departing for party policy and willingness to cooperate with big business[iii].	1983-1991	Deregulation of the financial system, dismantling of the tariff system, and floating of the Australian dollar Privatization of Commonwealth Bank of Australia Implementation of fringe benefits and capital gains tax Creation of an accord with the union movement that increased the social wage Dramatically boosting lower income levels and poverty eradication Restoration of Medicare system dismantled by Fraser Expanded funding for education Some focus upon environmental issues
Keating Government (Australian Labor Party)	1991-1996	Introduction of national superannuation scheme Introduced native title of land Creating an Australian republic
Howard Government (Liberal-National Coalition)	1996-2007	Conservative social policies Debt reduction Pro-Commonwealth and Monarchy Pro-US alliance Deregulation of industrial relations Continued improvement of social security measures Focus on Asia and improving bilateral relations, as well as taking an active role in the establishment of APEC
Rudd Government (Australian labor Party)	2007-2010	Focus on building infrastructure Continued strong ties with US Strong focus on the environment – signing Kyoto Protocol Attempted to increase Australia’s international influence Phased out workplace agreements introduced by Howard Government for new award structures Apology to indigenous peoples for the “stolen generations” Proposed large increase of Australia’s population Proposed resources super profits tax
Gillard Government (Australian Labor Party)	2010-present	Aim to develop a national consensus on a carbon trading scheme Proposal for internet controls Introduction of plain cigarette packaging Introduction of My School website Reintroduced off shore processing of asylum seekers Continued strong support for US alliance taking US troops onto Australian soil New “Asian Century” White Paper

 

There is little point for NGOs, lobbyists, and interest groups to talk to political party machinery. Most lobbying is undertaken directly to Government in Australia.  The party is effectively only a campaign and selector of who will become a member of the parliamentary party. There is a fear that while Australian politics has the trappings of a democracy, it masks an oligarchy where political power rests with only a few rich and powerful citizens and corporations[iv].

The reality is that political power in Australia is something very temporary. Individuals through a network of supporters who are able to negotiate, garner support, reach compromises and collaborations within a party with the majority of members (or supporters) in the lower house of parliament can become the Prime minister and run an agenda that he or she has agreed upon in deals and bargaining both with party stalwarts and parliamentary members of the party. This alliance build upon all these contingencies will only last a couple of parliamentary terms maximum, or until another group within the parliamentary party musters up enough support to dislodge the sitting leader.

Consequently power is limited to agenda and both outside and inside groups of influence allow a prime minister to hold office for the time the agenda suits them[v]. If a prime minister falls out of favor with any of these groups, new alliances, agreements, collaborations, and contingencies arise that will eventually change over the reins of power to someone else[vi]. Thus political and executive power is only something temporary, where a change also changes all the powerbrokers with them. Power possession is something of a cyclic nature, and it’s very rare that any agenda is passed on from one prime minister to another. With any change, there seems to be also a change in agenda. In this way issues (and agendas) are organized into politics while others are organized out[vii]. So understanding who is in control is about understanding what the politics is about and who has a say.

Is the Public Service still the real tai-pan of government?

Almost all contact between the people and government and the dissemination of services are directed, managed, and delivered by the Australian or respective state public services. This includes health care, education, policing, public transport, immigration and customs officers, and the armed forces. Behind these frontlines are public servants who administrate and conceptualize, develop, and implement government policies and programs. Traditionally the public service is the principal agent of agenda setting for government and what it should be concerned with[viii].

The Australian Government employees over 300,000 people, of which over half are employed within the Australian Public Service. The rest are employed in the Australian Defense Forces, within agencies like Australia Post and Medibank Private, etc. Since 1990, there has been a gradual shift towards a more ‘top-heavy’ public service, with an increasing proportion of employees in the Executive or Senior Executive Service (SES). Correspondingly, a decreasing proportion of employees are now in lower level positions.

Almost all positions (94%) in the senior public service are still dominated by people of white Anglo-Saxon or other European origin[ix]. In the words of Donald Horne which are still applicable today, these bureaucrats “share personal characteristics, the power elite are uncommonly bright, intellectually dexterous, verbally adroit, hugely persistent, agile, passionate and tough as nails. Very few of them possess a below-average ego. Many of them possess an above-average libido“[x].

Over the decades there has been an over proportionate number of public servants who were freemasons compared to the number of freemasons in the general Australian population[xi]. It is also believed  that Freemasonry was particularly strong in sections of the business and trade union communities, as well as in the police and fire services, defence forces and the legal profession[xii].

Even though demographics are rapidly changing in Australia, the characteristics of the public service are not following these changes. The APS workforce is less diverse than the Australian community in general, with fewer people with disabilities, fewer Aboriginal or Torres Strait Islander employees, and a continued under-representation of women in the senior levels[xiii].

Evidence also exists that the Australian public service has historically exemplified the practice of “social closure” where staff selection has been biased towards those that display of economist characteristics as an ‘ideology of recruitment and promotion’ serving the interests of groups within the public service[xiv]. In addition there have been accusations of bullying within the public service to ensure conformity to agenda[xv], and the misuse of mental health assessments to neutralize complainants[xvi].

The public service up to the 1970s was almost the sole advisor to the government on policy, agenda, and implementation[xvii], and not used to having their work open to scrutiny[xviii]. A minister after his or her duty in the electorate, political responsibilities, parliamentary duties has very little time to scrutinize a complex ministry and was almost at the mercy of department heads when it came to advice and policy. However the newly elected Whitlam Government very quickly found frustration with a public service that was not used to being questioned and directed, so governments began using their own appointed advisors on policy matters.

This trend has continued from the 1970s to today where the Rudd Government spent almost $800 million on 6,534 consultancy contracts during its first 18 months in office[xix]. Public servants have also been seconded to Ministerial offices and become involved in work that is often compromising to their apolitical stance. For example, during critical moments of public policy development and implementation such as the Tampa and ‘children overboard’ refugee crises, public servants have been seen as politically compromised and far from independent, and even become collateral damage in political events[xx].

The Gillard Government is planning further cuts to the Australian Public Service, and cap the senior executive level[xxi]. Now ministers are taking the policy lead in their respective portfolios, armed with advice from their own consultants and staffers. However with the environment of 24 hour media cycles and opinion polls, there is risk that policy formulation within ministerial offices is short term orientated[xxii].

The Administrative Law Monster

The Australian Public Service, state public services, and local government are responsible for enacting, implementing, and enforcing administrative law. There has been an exponential increase in the volume of legislation in the last 50 or so years. In 1955 the Commonwealth Parliament passed a single volume of legislation of 580 pages; in 2005, it passed seven volumes of legislation in excess of 4000 pages. Tax law, migration law, income support law and the Corporations Law are clear examples[xxiii].

However within each new law there is provision for the Minister to make regulations under the Act. Over the last few years there has been an introduction of more than 20,000 new or amended regulations with only 104 repealed, drowning small business in a sea of red tape and burdensome regulation. These administrative laws are set by unelected officials in obscure offices around the country on a daily basis.

The common theme in the different mechanisms of administrative law around the country is an emphasis on the control of over the area of each Act. Officials framing regulations should remain within the scope of that authority. However this is not easy to determine and through the Administrative Appeals Tribunal expensive to challenge. Technology, especially interconnected ICT is becoming a major tool of power and compliance for agencies without exhibiting very much transparency or accountability.

Thus administrate law has become a means of entrapment where departments like the Australian Taxation Office have issued formal targets of ensuring taxpayer objections to audit decisions are upheld in less than 20% of cases[xxiv], striking a severe blow to the doctrine of transparency, fairness, and objectivity in public service administration[xxv].

Certainly at the local government level in Australia there are numerous corruption  cases involving local government officials involved with administrative law[xxvi]. The sheer volume of regulations, lack of resources to scrutinize by authorities, and lack of time and resources of citizens to understand them has created opportunity for individuals and business to benefit. In addition a current review of Freedom of Information Legislation by Dr. Allan Hawke may restrict it on the basis of cost justifications further reducing transparency[xxvii].

Consequently, administrative law and technology has gone a long way of creating a “compliance society” in Australia, exercised across all jurisdictions of government and law enforcement agencies. Thus this framework gives government through the enforcement agencies great powers over citizens in most aspects of daily life. Authority comes from regulation produced by unelected people where great difficulty on the part of any citizen to challenge.

One of the “spin offs” of the “compliance society” is an increased cost of living. In addition the start-up and operational costs of businesses rise making the cost of products and services more expensive. The question here is who is this “compliance regime” benefitting?

 

 

 

The reserve Bank of Australia is looking after whose interests?

The Reserve Bank of Australia was formed in 1960 to take over the role of banknote issuing authority from the Commonwealth Bank. The Reserve Bank also supervised the banks, and governs monetary policy in Australia. Then from 1 July 1998, the banking supervision function was transferred from the RBA to the newly created Australian Prudential Regulation Authority.

The Reserve Bank Act was amended also to create a new Payments System Board, with a mandate to promote the safety and efficiency of the Australian payments system. New legislation, the Payment Systems (Regulation) Act 1998 and the Payment Systems and Netting Act 1998 were introduced, giving the Bank relevant powers in this area.

The Reserve Bank Board’s obligations with respect to the formulation and implementation of monetary policy are laid out in the Reserve Bank Act. Section 10(2) of the Act states:

‘It is the duty of the Reserve Bank Board, within the limits of its powers, to ensure that the monetary and banking policy of the Bank is directed to the greatest advantage of the people of Australia and that the powers of the Bank … are exercised in such a manner as, in the opinion of the Reserve Bank Board, will best contribute to:

(a) the stability of the currency of Australia;

(b) the maintenance of full employment in Australia; and

(c) the economic prosperity and welfare of the people of Australia’[xxviii]. 

In 1993, the Reserve Bank focused on the objective of price stability where inflation was to be held to an average of 2-3 per cent over a period of years.

In December 2007, following the change of Government, a new Statement on the Conduct of Monetary Policy was jointly issued by the new Treasurer  Wayne Swan, and the Governor of the Reserve Bank, Glenn Stevens. This Statement incorporated substantive amendments enhancing the independence of the Reserve Bank and covered practices regarding transparency and communication.

A revised Statement on the Conduct of Monetary Policy was issued following the 2010 election, which explicitly covered the Reserve Bank’s mandate for financial stability[xxix]. Effectively the Reserve bank of Australia became fully autonomous.

The Reserve Bank Board is made up of nine members which include the three ex officio members of the Board, consisting of the Governor of the Reserve Bank, who is Chairman of the Board, the Deputy Governor of the Reserve Bank, who is the Deputy Chairman of the Board, and the Secretary to the Treasury. In addition, there are six external members who are appointed by the Treasurer for a period of five years. The board normally meets eleven times each year, of which one of the responsibilities is to set official interest rates (the overnight bank cash rate).

The RBA is intended to be independent of government to enable impartial economic decisions. It effectively controls the country’s monetary policy. Public pronouncements by the bank governor can stir stock and currency markets. Those decisions are made by an independent board who get their advice from both formal and informal sources that are undisclosed. This lack of any transparency in decision making can run potential conflict. Former Prime Minister John Howard blamed the Reserve Bank for his election loss in 2007, accusing the bank of meddling in domestic politics by announcing a rate rise[xxx].

If one undertakes a very quick internet search on the current RBA board members, one will find that the directors have links to multinationals, media, right wing think tanks, and other foreign interests. The Reserve Bank Governor Glenn Stevens, portrayed by the Australian Financial Review as the most powerful man in Australia is an avid New American Standard Bible reader[xxxi]. Who is importantly not represented on the RBA board are small business and Australian wage earners.

The RBA has allowed the Australian Dollar to rise to record highs against the US Dollar and other currencies. Although this reflects some weakness in the US Dollar, the Australian Dollar is high in its own right and is attracting inflows from investors wishing to benefit from relatively high interest rates in Australia.

The high Australian Dollar although making imports cheaper, which is keeping a check on domestic inflation, is putting exports from Australia in a precarious position, where industries are being devastated, which is costing many thousands of jobs. Rural industries in Australia are also finding it very tough competing against cheap primary produce imports, which over a long period of time could shut down many rural industries all together. The higher Australian Dollar is also making Australian Universities more expensive for foreign students, where drops in enrollments are occurring[xxxii], and a there is also a decline in foreign tourists visiting Australia[xxxiii].

There is very little concern from the parliament of executive government on the loss of industry and employment. Again the question can be asked, whose interests are the RBA Board acting for?

The Commercial Banks – Too big to fail, too few to be competitive

The ANZ was started in London as The bank of Australasia in 1835. British based shippers, commodity traders, merchants, pastoralists, miners, merchant bankers, and joint-stock bankers, were joined by a group of eminent British businessmen where cross directorships were commonplace, developing a strong relationship with the City dynasty[xxxiv].  The first bank established in Australia in 1851 was the Bank of New South Wales, where it quickly expanded around the colonies.

The early standing of the Anglo-Australian banks in the City of London greatly depended upon who the directors were. The National Bank of Australasia was formed in Melbourne in 1858, and very quickly expanded across the colonies, also opening a branch in London, important for financing wool, gold, and other commodity exports and imports back to Australia. The Commonwealth Bank was formed through the amalgamation of a number of smaller banks under the Commonwealth bank Act 1911 as a savings and general trading bank in a similar fashion to banks that the Australian states had been founded.

Until 1961 the Commonwealth Bank acted as the central bank for the Australian Government. All states owned a savings bank, along with a number of private banks operating under very stringent regulation, where the government used tightly controlled monetary policy to regulate the economy. Bank interest rates and liquidity ratios were tightly controlled thus limiting the profitability of Australian banks[xxxv]. Two types of banks were allowed. Savings banks took deposits and paid low interest rates and lent money out for mortgages, while trading banks operated more like merchant banks dealing only with commercial customers.

The increase of migration after the Second World War increased savings and opportunities for lending on mortgages, made lending risks very low[xxxvi]. The booming economy of the 1960s enabled other forms of financial institutions to develop like building societies, credit unions, life assurance, and later finance companies that could charge and pay higher interest rates and also subject to less stringent regulations. The diversity of these institutions greatly restricted growth of the banks in the Australian economy.

The Hawke Government in the 1980s began deregulating the banking sector. There was no longer any distinction between savings and trading banks and banks were allowed to operate in money markets. A partial float of the Australian Dollar and allowing foreign banks to come in and directly compete in retail markets, along with the turbulent economic conditions of that decade led to many mergers and acquisitions by the banks. The Commonwealth bank was privatized during the 1990s in a public offering.

Foreign banks found it very difficult to take up a new license and compete alongside the local banks initially. However with general liberalization of the Australian economy, foreign banks stated investing in the existing Australian banks from the late 1990s. This was encouraged by the Australian Government adopting the “four pillars” policy that disallowed any mergers between the four Australian banks, ANZ, Westpac, National, and Commonwealth, weakening the influence of the Trade Practices Act, but at the same time allowed foreign banks to takeover any bank[xxxvii].

The global crisis of 2008 wiped out Australia’s banking diversity and highly competitive banking system. The four major banks aggressively took on the smaller banks like  George, BankWest, Bendigo Bank, Aussie, Adelaide Bank, RAMS, Wizard, and Challenge bank, eventually buying most of them up and consolidating the sector into a situation where they control 80-90% of all financial transactions executed across the country. In addition, the introduction of government guarantees for the first time during the 2008 crisis provided the big four banks with a unique competitive advantage.

The above has effectively provided the four major banks with extremely high credit ratings because they are guaranteed “extraordinary government support” in any future financial crisis. This effectively provides the banks with the ability to borrow money at lower rates than other banks, thus putting smaller Australian banks at a great disadvantage.

In addition to the big four banks being able to borrow funds cheaper than their competitors, policy makers have favored their exclusion from the extra capital buffer that the IMF is insisting upon.  Extra capital holdings would greatly lessen taxpayer risk with the Government’s obligations as a guarantor. An extra capital buffer would also help keep any designs by banks to follow high risk growth strategies in check.

With the four big banks having higher credit ratings, they are able to borrow from the RBA, where smaller banks cannot achieve the ratings required. The big banks are able to issue bonds that are secured with assets where the smaller banks cannot. Over the last few months the major banks have been able to raise more than $20 Billion of new funding through their AAA-rated covered bonds to government and other investors all around the world in the lucrative environment of a high Australian Dollar and higher interest rates[xxxviii].

Government action of guaranteeing private banks according to Mark Bouris has created a “moral hazard” where the banks are insured as too big to fail, which history has shown as a recipe to irresponsible behavior. Government policy has also created a scenario in Australia where the tradeoff between risk and return has been eliminated. In Australia, the lower risk banks with the highest credit ratings are able to provide higher returns than the smaller banks with the lowest credit ratings , a complete reversal of the inverse relationship between risk and return, that the Australian taxpayer has guaranteed[xxxix].

1997 gave the opportunity for foreign equity to flow freely into the banking sector and today the ownership landscape of Australian banks is very different from the traditional idea that Australian banks were owned by the “average Australian” through superannuation and investment funds. Although major shareholders are in fact mutual and investment funds, they are now managed by foreign interests as table 2 shows.

Table 2. Major Shareholders in Australia’s “Big Four” banks

	Company	Combined HSBC (Nominees)[xl]	JP Morgan Nominees	Combined Citicorp
1	Commonwealth Bank[xli]	14.10%	11.13%	4.18%
2	National Australia Bank[xlii]	16.94%	14.47%	3.33%
3	Westpac Bank[xliii]	15.10%	12.27%	4.60%
4	ANZ Bank[xliv]	18.88%	15.65%	5.41%

 

Apart from the top four shareholders shown above, an inspection of the data in the respective annual reports shows that most of the other top 20 shareholders are companies with a stake in more than one big bank. Moreover, ownership figures for the second tier banks, Bendigo and Adelaide Bank Limited, Suncorp-Metway Limited and Bank of Queensland Limited, show they are also owned by the same organisations that own the big four.

When one looks closely at who owns the big four banks it becomes clear that there is a lot of common ownership, suggesting that those banks may not in fact be independent, competing entities.

Due to the complex nature of the legal structures of shareholders and ways that the various shareholders work together, it is virtually impossible to determine who really controls the banks. Many of the other minor shareholders in the banks also have HSBC, JP Morgan and Citibank, along with many other European and US banks as their major shareholder. This argument is often countered by arguing that HSBS, J.P. Morgan and Citibank are only investing on behalf of small investors.

What is of issue here is control and it is the prerogative of the funds to appoint a director to the board of their choice, not the investors. These figures are also consistent with a worldwide study showing that most of the world’s company equity is controlled by no more than 25 companies, of which have many of these companies have equity in the Australian banks[xlv].

One of the most interesting aspects that complement the cross-ownership in the big four Australian banks is the number of cross directorships in other foreign banks and financial institutions that exist in a wide manner. Studies have shown how even small cross-shareholding structures, at a national level, can affect market competition in sectors such as airline, automobile and steel, as well as the financial one[xlvi].

Debt is the financial sector’s key tool to extract wealth from governments, companies and families. The tactic is to load economies (governments, companies and families) with debt, siphon off their income as debt service and then foreclose when debtors lack the means to pay. Indebting government gives creditors a potential lever to pry away land and assets. Currently a massive redistribution of assets is taking place [xlvii]. Debt is an extremely powerful method of ruling and controlling what happens in society.

Consumers are losing out in this cross ownership. Interest rates and bank charges are already some of the highest in the world, with the government not seeming to be too concerned. Even financial planning companies are owned by the banks which provide advice on products of which parent companies own, taking away all prudency to customers[xlviii]. When banks are found to be wrong, there is very rarely any acknowledgement or apology[xlix].

Many actions such as the four banks all raising interest rates without the RBA raising rates appear to be collusion[l]. Banking is now an area where consumers need to be vigilant about their rights to protection, as it appears the Government of today has left the Australian people to the big four’s mercy. The four big banks are becoming larger and larger in the Australian economy, to the extent that 2.3 cents in every dollar spent in Australia becomes their pre-tax profit, compared with 0.7 cents in 1986[li].

Big Business and Mining – Welcome to Australia, the land of oligarchy

When the ownership of public companies in Australia is examined, one will find that it is very similar to the banks. Both commercial and mining companies ownership are dominated by HSBC Nominees, JP Morgan Nominees, and Citibank Nominees as the top three shareholders of most companies (see table 3). If one examines company directorships there is a tight cross-linking across commerce, banking and mining in Australia today. Commerce, banking and mining are now part of an oligopoly.

Table 3. Major shareholder of Australia’s largest public companies

	Company	Combined HSBC (Nominees)	JP Morgan Nominees	Combined Citicorp
1	AMP[lii]	19.23%	13.88%	4.6%
2	BHP Billiton[liii]	17.36%	13.29	10.75
3	Brambles[liv]	25,85%	21.73%	8,77%
4	CSL[lv]	24.39%	17.43%	6.1%
5	Fosters Group[lvi]	23.29%	21.23%	6.31%
6	Macquarie bank[lvii]	19.06%	19.96%	6.08%
7	Newcrest Mining[lviii]	37.83%	16.57%	4.94%
8	Origin Energy[lix]	15.83%	14.10%	5.17%
9	Rio Tinto[lx]	19.59%	16.68%	4.89%
10	Sun Corp[lxi]	20.23%	17.09%	7.1%
11	Telstra[lxii]	18.49%	12.5%	1.36%
12	Westfield[lxiii]	31.44%	25.0%	7.03%
12	Westfarmers[lxiv]	16.31%	13.77%	6.43%
13	Woolworths[lxv]	16.50%	11.34%	4.025
14	Woodside[lxvi]	16.19%	11.97%	2.25%

 

The reality is that much of Australian are owned by faceless people hiding behind big nominee companies that are virtually impossible to research. Not to mention global investment banks, insurance companies and the Commonwealth public servant superannuation scheme. Many companies have directors that are involved in media, banking, and politics, with many ex-politicians coming onto boards when they leave the parliament. We have seen the close relationships between business and politicians over many governments.

And Labor has been able to stay long in government with this accommodation with business interests, ever since Bob Hawke achieved an understanding with a significant group within the dominant corporations of Australia[lxvii]. Big business probably has greater influence at state level where government can directly facilitate access to prime land and assets that each state contains.

Big business now is able to practice what could be called “bully capitalism” where they dictate terms unfairly to smaller businesses. For example rents charged to tenants in large shopping malls are calculated as a percentage of turnover, with systems that allow landlords to audit tenant sales, where profit is virtually regulated. Supermarkets in Australia now that a duopoly exists with control over 90% of retail sales have been able to increase profit margins from 20% in the 1970s to over 50% today[lxviii].

With so much ownership concentration of Australian business and industry through skillful fund control and use of company law and cross directorships, a very few people can exercise great influence over the Australian economy. Many company boards and directors can operate without much accountability[lxix].

As the recent Jonathon Moylan case has shown, any statement about a company can easily manipulate share prices and make profits or losses of hundreds of Millions of dollars instantly. The potential to easily manipulate share prices is there on a huge scale[lxx].  HSBC Nominees, JP Morgan, and Citicorp Nominees are the 1st, 2nd and 4th largest shareholders in the Australian Stock Exchange as well[lxxi].

This has potential  consequences for local innovation, consequences for sustainable exploitation of resources, consequences for which industries survive and which industries are lost, and consequences for the cost of living for Australians, not to mention fairness and transparency in the marketplace.

The unions have been big losers

Unions have played a major part in Australian work life for the last century. Up until the early 1990s approximately 50% of the workforce were members of a union. Today union membership is just a fraction of what it was. This decline has been due to the shrinking of the country’s manufacturing base, and federal and state legislation  prohibiting compulsory unionism and moving towards individual contracts under the Howard Government in 1996.

The final factor is structural labour market change. Across the developed world, unions have traditionally had their strongholds in the manufacturing sector, public sector, among full-time workers, and in large firms greatly weakened through industry decimation. The rise of the service sector, downsizing of government, casualisation of the workforce and rise of smaller firms are all changes that have decreased union strength.

Under the Rudd and later Gillard Governments, the Fair Work Act which aimed to bring back collective bargaining, modern awards, minimum wage fixation, dispute resolution, approval of enterprise agreements, and handling claims for unfair dismissal with a body called the Fair Work Commission to Replace the Australian Industrial Relations Commission.  However this change in the industrial relations structure had little effect in raising union membership[lxxii].

What is interesting in the labour sphere is the Gillard Government’s plan to bring in foreign workers for the mining industry, under Enterprise Migration Agreements (EMA). This is a very contentious issue with both the unions and some Australians, who see this move as costing Australians jobs, thus politically dangerous[lxxiii].

The media – A “closed shop”

The media may have taken over from religion as the prime creator of social reality[lxxiv]. What becomes important in Australian society very heavily depends upon what the media reports and focuses upon. Reality is what television stations put on the screens each night, newspapers report, and online news sites and social media focus upon. And as a consequence the media proclaims what is important in politics, the significance of parliamentary debates and how they are projected to the public, and what issues are important in elections[lxxv].

A research project conducted into the Australian media conducted by the Australian Centre for Independent Journalism (ACIJ) scanned through 2,203 different media stories to determine whether there was any bias in stories. The results found that 555 of stories where public relations driven[lxxvi]. The author has found scanning through news sites that most media organizations prefer their own group of contributors and the Australian online media is basically a “closed shop” for outside opinions, so little diversity of opinion exists.

Thus the consequences of this are that although Australia may have a free media, this does not equate to the right of freedom of expression. There are indeed a narrow range of views put through the Australian media, surprisingly less than other “Western countries”. Influential political blogger with US website The Nation, John Nicholls, said in Australia in 2010 that, despite the new “players”, “content” and “platforms”, people have never received less information and less of it from alternative sources[lxxvii].

Just like the banks and corporations, the Australian media too appears to be an oligopoly with four major media corporations. Australia is ranked 41st in the world for media diversity[lxxviii]. Currently two newspaper groups, News Limited and John Fairfax Holdings account for over 90 per cent of the circu­lation of daily newspapers, and Australia has only three commercial television networks.

Even with strict cross ownership laws in Australia with the emergence of the internet media diversification has not increased very much and formats have become very blurred, where a single story from a journalist can now be reported across a number of formats, i.e., radio, television, print, and internet.

In October 2006, the Australian Government introduced new media laws. These amendments reformed the Broadcasting Services Act 1992 which regulates ownership and control rules for commercial television and radio broadcasting, subscrip­tion television broadcasting, international broadcasting, data casting transmitters and newspapers. The purpose of the original Act was to encourage diversity and quality of media services, controlling access to the market and the services that are offered. The new ‘two out of three’ rule that allows companies to own up to two media outlets, i.e.,  television, radio and newspaper in a single area.

However, since these amendments foreign and cross ownership has increased, mergers are allowed if the proposed acquisition passes a media diversity test that ensures there are five remaining independent media groups in metropolitan markets and four in regional mar­kets. Under the amended laws, media mergers are subject to the approval of the Australian Competition and Con­sumer Commission (ACCC)[lxxix].

There have been many critiques about the political power of media companies like the Murdoch group running their own agenda which favors a particular side of politics, or smears another with very powerful results[lxxx].

An example of the extent that the media is intermingled with politics can be seen with the News Corporation scandal of 2011 where allegations of phone hacking and close relations with politicians were aired. Investigations found that News Corporation went as far as obtain private bank information, medical records, and legal files of individuals.

The findings of the Leveson Inquiry in the UK indicate just how closely related politicians and the media have been over the last few decades[lxxxi]. There has been little scrutiny of these issues in Australia.

 

Prof. Murray Hunter is one of the frequent contributors for The 4th Media.

 

[This series will continue in Part III]

 

NOTES

 

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