Resource Tycoons Threatening Australian Democracy, Swan Says
Australian Treasurer Wayne Swan said resource tycoons including Gina Rinehart, Clive Palmer and Andrew Forrest are threatening the nation’s democratic process by using their wealth to shape policy to their interests.
In an article in The Monthly magazine, Swan said the billionaires are undermining the Australian notion of a “fair go” -- where everyone has an opportunity to prosper. He cited a mining companies’ campaign against the resource profit tax in 2010 that contributed to the ouster of former Prime Minister Kevin Rudd.
“The infamous billionaires’ protest against the mining tax would have been laughed out of town in the Australia I grew up in, and yet it received a wide and favorable reception two years ago,” Swan said. “A handful of vested interests that have pocketed a disproportionate share of the nation’s economic success now feel they have a right to shape Australia’s future to satisfy their own self-interest.”
The article is a signal of stepped up efforts by Prime Minister Julia Gillard’s administration to build public support for taxes on mining profits and carbon emissions due to take effect on July 1. Her government trails the opposition Liberal- National coalition by 10 percentage points, a margin that if replicated at the election due in the second half of next year would represent a landslide defeat.
“This government, if anything, has been too circumspect in criticizing vested interests,” said Paul Strangio, a senior lecturer on Australian politics at Melbourne’s Monash University, who primarily researches the Labor party.
“These very wealthy people -- some have described them as oligarchs -- are throwing their weight around in public policy and if they do enter the public arena, and try to impose their influence over public policy, it’s within the government’s ambit to answer that,” Strangio said.
BHP Billiton Ltd. (BHP), Rio Tinto Group (RIO) and Forrest’s Fortescue Metals Group Ltd. (FMG) campaigned against the government’s proposed 40 percent tax that helped turn public opinion against Rudd. The former prime minister’s weakening poll ratings were among reasons Labor lawmakers cited for his ousting in a late-night coup in June 2010. Gillard negotiated a lower tax rate to assuage the resource industry.
Fortescue said in a statement that its board met earlier today to discuss the “unfounded attacks” by Swan on Forrest.
The company said it will pay more than A$1 billion in taxes, royalties and other government assessments this year and is projected to pay more than A$2 billion next year. Fortescue described Swan’s comments on its taxes as an “irrational outburst.”
Forrest “started with nothing and repeatedly put everything he had earned at risk in building one of the most important mining operations in the world,” the company said in response to the treasurer’s comments. “Andrew epitomizes the spirit of what an Australian can do if given a ‘fair go’.”
Mark Bickerton, a spokesman for Rinehart’s Hancock Prospecting Pty Ltd declined to comment. Palmer spokesman Andrew Crook said he wasn’t currently available to respond.
“To be blunt, the rising power of vested interests is undermining our equality and threatening our democracy,” Swan said. “We see this most obviously in the ferocious and highly misleading campaigns waged in recent years against resource taxation reforms and the pricing of carbon pollution.”
The opposition Liberal-National coalition criticized Swan’s article, saying the treasurer was searching for a scapegoat for the Labor government’s failings.
“Labor always falls back on class warfare and the politics of envy when they have nothing left in the cupboard to talk about of any substance,” opposition frontbencher Christopher Pyne told Australian Broadcasting Corp. radio.
Swan criticized the nation’s four biggest banks last month after Australia & New Zealand Banking Group Ltd. (ANZ) boosted interest rates independent of central bank policy. The Reserve Bank of Australia kept its benchmark unchanged at 4.25 percent at its Feb. 7 policy meeting.
“For reasons that they can explain themselves, from time to time they decide that they want to give priority to their shareholders over their customers,” Swan told reporters Feb. 10. “The fact is that the major banks in this country are very profitable and their interest margins are back to where they were prior to the global financial crisis.”
Praise for Business
In the article, Swan praised the majority of Australian business, limiting criticism to what he described as the 1 percent, or even 0.1 percent, of Australian entrepreneurs who he said were blind to the national interest.
“For every Andrew Forrest who wails about high company taxes and then admits to not paying any, there are a hundred Australian business people who held on to their employees and worked with government to keep the doors of Australian business open during the GFC,” Swan said, referring to the global financial crisis of 2008-2009.
Rinehart, whose $18 billion fortune tops Forbes Asia’s rich list for women, is set to become the world’s wealthiest woman this year, surpassing Wal-Mart Stores Inc. (WMT)’s Christy Walton. Forrest has a net worth of $5.3 billion, making him the third- richest Australian, Forbes said. Australia’s BRW magazine estimates Palmer’s wealth at A$5.05 billion ($5.5 billion).
Australia’s economy is propelled by a mining boom predicted to last decades as the urbanization of hundreds of millions of people in China and India drives demand for iron ore, liquefied natural gas and coal.
Rinehart, Hancock Prospecting and associated interests this year boosted her investment in Fairfax Media Ltd. (FXJ), which trails only Rupert Murdoch’s News Corp. (NWSA) in Australian newspaper sales. The group publishes the Sydney Morning Herald and Melbourne’s Age, the best-selling broadsheets in the nation’s biggest cities, and owns the Australian Financial Review, the most popular business newspaper.
Rinehart also controls a 10 percent stake in Ten Network Holdings Ltd. (TEN), the nation’s third-ranked commercial television broadcaster.
Forrest has appealed to the High Court a lower court ruling that he misled shareholders in describing contracts with three Chinese companies as binding and that he couldn’t use the excuse that he was exercising his business judgment as chairman of Fortescue. Forrest faces removal from the post if the court affirms the lower court’s ruling.
Palmer has been struggling this week with Australia’s top soccer body. Football Federation Australia revoked the A-League soccer license held by Palmer, Gold Coast United’s owner, who said he intends to take legal action against the decision.
The executives “pour their considerable personal fortunes into advertising, armies of lobbyists, dodgy modeling and corporate and commercial maneuvering designed to influence editorial decisions,” Swan said in the article during a week in which Gillard fended off a comeback attempt by Rudd to take her job.
Gillard today named former New South Wales state Premier Bob Carr as foreign minister as she reordered her Cabinet, seeking to heal a divided Labor party after the leadership battle. Robert McClelland, a former attorney general and a Rudd supporter, lost his housing and emergency management portfolios and was dropped from the Cabinet.
Swan is scheduled to discuss his essay in The Monthly at the national press club in Canberra on March 5.
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