Who owns Australia?

By ASHLEY LAVELLE [email protected]

(A version of this article appeared in Socialist Worker Review No 4, May 2001.)

The recent bid by Shell for majority ownership of Woodside Petroleum and the announced merger of BHP and Billition have reignited debate about foreign investment and its impact on the "national interest", investment and jobs. It follows other cases that have given foreign investment a bad name, such as the coal mine in Gordonstone, Queensland that sacked its workforce in 1997. Management eventually hired non-union employees and its owner, American multinational Arco, used security guards for high-level surveillance to intimidate unionists. A year later Ghana-owned Ashanti Gold closed its Cobar copper mine in NSW, putting 260 out of a job and leaving many of those without pay for work already done.

That this could happen at the height of "prosperity", after years of economic growth, helps explain the growing mood of hostility to capitalism. Yet the mine closures also highlight dilemmas facing the anti-capitalist movement. Do we fight global capital on a nationalist basis, seeing foreigners as the enemy; or do we fight it on the basis of international solidarity?

The former approach predominates, both in mainstream consciousness and mainstream trade unionism.

Throughout the Gordonstone dispute, the Construction, Forestry, Mining and Energy Union (CFMEU) argued that the company’s methods in hiring guards and carrying out surveillance on the workers were American-style tactics and reprehensible on those grounds. Several workers in the dispute carried placards declaring, "Americans ruining communities of Australia" and "Australian coal for Australians". The union’s district vice-president, Jim Lambley, said:

In America, it does get violent. Miners go in and get shotguns and start wrecking all the gear and blowing up the mine...[I]n the history of this union, never have I heard of a member reacting in such a way. It’s un-Australian.

The Australian described Ashanti Gold’s actions as "the unacceptable face of foreign capitalism", which threatened "the hard-won reputation of the mining industry as a good corporate citizen". You would never know that the paper’s owner, Australian-born Rupert Murdoch, was one of today’s more unsavoury global robber barons. And the good reputation of mining firms in Australia would, of course, be news to most Aboriginal people and mine-workers. More importantly, The Australian didn’t refer to the actions of Advance Coal in sacking 125 miners at the Oakdale Colliery in 1999, without the payment of $6.3 million in entitlements, as the "unacceptable face of Australian capitalism". Yet Oakdale was almost an identical case to Cobar.

The problem at Gordonstone and Cobar was not the company’s nationality; it was competition and the quest for profit. At Gordonstone, militant unionists were an obstacle to management’s determination to reduce labour costs and improve its bottom line. At Cobar, falling prices made it unprofitable to continue mining. That the copper might be useful to humans was not the overriding reason for its extraction; rather, it was the price on the world market.

The emphasis on foreign ownership had unfortunate consequences. Gordonstone occurred in the context of a general assault on mine workers: at the time the CFMEU was embroiled in a dispute in the Hunter Valley with Rio Tinto, and another at the Curragh mine in Queensland over similar issues. It was an opportune moment to wage a militant industrial campaign. The CFMEU could have mobilised its membership to occupy the mine in response to the company’s sacking of the workers, and it could have broadened the dispute beyond Gordonstone. The union opted instead to take on the mining companies in the courts, a tactic that has not led to reinstatement of the sacked unionists.

In the case of Cobar, upon hearing of the company’s intentions to close the mine, the union could also have occupied it until workers had been paid their full entitlements (workers were owed $7.5 million) -- if not by the company then by the government, who should have been forced to keep the mine running, at least until the workers were provided with jobs elsewhere. As it turned out, the mine was bought by Swiss-based Glencore International and Tasmanian-owned Mt Lyell Mining in a joint venture. However, only 120 jobs were promised -- less than half the 260 lost originally -- and the company, as a precondition for closing the deal, was relieved from paying stamp duty and payroll tax, while government royalty payments were deferred.

Foreign ownership, in both cases, proved to be a distraction from the responses that could have saved the workers’ jobs. At Cobar the consequences were even more tragic, with a majority of the sacked workers apparently voicing their intention to vote One Nation. A militant response from the union, aimed at saving jobs at all costs, would have shut off avenues for One Nation to pursue its anti-foreign and racist agenda. The waterfront dispute in 1998 showed the capacity of class struggle to silence One Nation’s racism, as barely a word was heard from the party throughout the duration of the struggle.

Often blaming overseas ownership is a cover for outright inactivity by union leaders. For example, the Finance Sector Union approved the Federal Government’s ban in 1998 on foreign ownership of the four major banks, saying:

[T]he liberalisation of rules governing foreign banks raises serious concerns about how a ... global transnational bank would (consider) our domestic interests. Secondly, with new technology a global player could contract out a lot of processing work currently performed by Australian employees to labour markets in the Third World.

At least the 50,000 workers in the finance industry who have lost their jobs through restructuring and rationalisation since 1991 could be consoled by the fact that their jobs had not been contracted out to the Third World!

Historically, Australian bosses have often resorted to strong-arm tactics. Police shot four waterside workers in 1927, when they boarded ships to remove scabs used by the Bruce-Page government after the introduction of coercive legislation. A miner was killed at Rothbury in 1929 when shot in the stomach by police, during a dispute in which unionists were locked out for refusing to take a wage cut. There is nothing "un-Australian" about this.

In the 1998 waterfront dispute, it was an Australian firm, Patrick, which sacked its workers using security guards and dogs, replacing them with non-union workers; British multinational P&O sought to distance itself from these extreme tactics. Of course, P&O didn’t fundamentally disagree with Patrick’s objectives, or even the way in which it went about achieving them. More likely P&O feared the dispute would blow up in Patrick’s face and lead to a national port shutdown. BHP mine manager Greg Chalmers explained during the Gordonstone dispute why BHP took a different approach to Arco: "There’s more than one way to skin a cat ... If you back people into a corner, they’re going to come out swinging."

How a company treats its workforce has little to do with the owners’ national culture. It depends on what gets results, including factors such as the level of workers’ organisation. In 1988 Westpac bank workers in South Korea were locked inside for several days and starved of food and water merely for demanding a collective agreement. Westpac might think twice about trying that here.

Nor are our local bosses especially generous in their provision of wages and conditions. According to one study, Australian workers are the third worst paid among workers in ten industrialised countries, with only Korean and British workers earning less. When holidays are accounted for, Australians work the longest hours in the developed world.

Yet worries about foreign ownership of local industry have been incredibly persistent throughout Australian history.

Nationalism and the left

Most struggles by workers and the oppressed begin by accepting the capitalist system as a whole, and identifying only one section of it as the enemy. In the 20th Century, the labour movement and most of the left have tended to view things foreign -- overseas investors, multinational corporations, imports and sometimes immigrant labour -- as the dominant threat.

Thus the Labor Party was consolidated partly on the basis on the basis of White Australia. Groups further left, like the Industrial Workers of the World and the early Communist Party of Australia (CPA), counter-posed an internationalist approach, but they remained in the minority.

Later the Communists themselves moved in a nationalist direction. Civil war, economic isolation and the failure of revolutions elsewhere produced a new ruling class inside Russia by the late 1920s, headed by Stalin. The role of CPs outside Russia was to facilitate the implementation of Russian foreign policy. In the run-up to World War II, Stalin needed allies among the western ruling classes, and instructed the Communist Parties to accommodate themselves to the bourgeoisie. Nationalism became part of the ideological cement for this new alliance. During the war itself, the CPA broke strikes and supported the Curtin Labor Government’s conscription policy.

In the postwar era the CPA and Labor left were disdained by the ruling class, but tried to win support based on a different kind of nationalism, which portrayed Australian governments and sections of the ruling class as subordinate to US imperialism. The left’s propaganda and cultural work laid some of the basis for a new peak of nationalism associated with the Whitlam government; next the left blamed Whitlam’s fall on the machinations of foreigners.

During the labour movement’s confrontations with Whitlam’s nemesis, Malcolm Fraser, unions and left intellectuals codified much of this nationalist approach in theoretical works. The adoption of an economic platform by the Australian Labor Party at its 1977 national conference advocating as little foreign ownership as possible occurred at the same time as the publication of Australia Uprooted by the (partly CPA-led) Amalgamated Metal Workers Union (AMWU). A sequel, Australia Ripped Off, followed in 1978.

According to these publications, the central problem in the Australian economy was the unrestrained actions and influence of multinational corporations. Australia Uprooted and Australia Ripped Off reflected the balancing act required of union officials between reformism and its bedrock, nationalism, and rhetorical support for class struggle, which was still running at relatively high levels.

Throughout the 1980s, a number of leftwing academics, especially Ted Wheelwright and Greg Crough of the Transnational Research Project at Sydney University, provided sophisticated support for the AMWU’s arguments. The project produced a range of publications arguing that the Australian state had been captured by multinationals, who were crowding out domestic business interests and de-industrialising Australia by destroying manufacturing industry. In the late eighties, Wheelwright and Abe David wrote a book, The Third Wave, arguing Australia was on the verge of takeover by Asian investors, who had merely replaced Britain and the US as colonisers. The cover of Marxist historian Humphrey McQueen’s book Gone Tomorrow depicted a large crater where once lay Australian industry.

Concerns have arisen more recently about volumes of overseas investment. The rapid increase in foreign direct investment (FDI) in the 1990s, of which Australia received a large share, revived claims that if Australia had not already been sold off, that was certainly happening now. News in late 1997 that the Organisation for Economic Cooperation and Development (OECD) was seeking to implement the Multilateral Agreement on Investment (MAI), a project to reduce regulations governing global foreign investment, seemed to provide further evidence of a feeding frenzy by multinationals. The Gordonstone coal mine dispute and Ashanti Gold’s actions inflamed opponents of foreign investment and unleashed more nationalist claims about the pernicious influence of carpetbaggers from abroad. But did any of this make sense?

Has Australia been sold off?

There are two main types of foreign investment, direct and portfolio. The OECD defines foreign direct investment (FDI) as "capital invested for the purpose of acquiring a lasting interest in an enterprise, and exerting a degree of influence on that enterprise’s operations". It includes the purchase of assets that give the buyer control of more than 10 per cent of an enterprise to the buyer. In contrast, portfolio investment "involves purchasing assets without acquiring any control of the institution or establishing a lasting presence therein".

Thus one key difference between the two types of investment is the degree of control. Another is the nature of the investment. Unlike FDI, which usually goes into physical assets such as factories and machinery, portfolio investment is highly speculative; often the portfolio investor is not aware of the identity of the firm, or even the industry, where their capital is deployed. The capital is usually handled by a fund manager, who allocates it (together with that of many other investors) to a basket or "portfolio" of diversified investments to reduce the risk.

FDI has been the main target of those concerned about foreign investment, because it is only FDI that offers the potential for foreign control, and because of its visible effects, ie, the sale of Australian icons such as Arnott’s biscuits.

FDI levels have been comparatively high in Australia in recent years. Between 1985 and 1995 Australia was, according to the World Trade Organisation (WTO), the world’s eighth biggest recipient of FDI (see chart). The 1998 United Nations Human Development Report ranked Australia as the fourth largest recipient of FDI as a proportion of Gross National Product, and as one of the few net investees (countries where inflows exceed outflows) in the top 15.

However, higher FDI inflows have not been confined to Australia. World FDI increased from $58.3 billion to $235 billion between just 1985 and 1990. By 1999 it had risen to a staggering $827 billion, a 25 percent increase on the previous year. The US, by far the world’s largest investor, experienced an increase in FDI inflows from $49 billion in 1994 to $90 billion in 1997. Britain saw its FDI intake rise over the same period from $10 billion to $35 billion. In the decade to 1996, the flow of private capital to developing countries (investment by business, as opposed to official capital lending by governments and international institutions) increased from approximately $20 billion to $250 billion.

Furthermore, Australia has not only played host to high levels of FDI; increasingly it has been a source of them. Between 1980 and 1992, Australian firms invested overseas at an average annual rate of 16 per cent -- the highest rate among industrialised countries for that period. In fact, during the 1980s investment overseas by Australian companies grew at a faster rate than inward foreign investment. In the five years to 1994, the number of Australian firms operating in the Asia-Pacific region rose from 460 to 680, investing in the process $14 billion in some 1,470 multinational subsidiaries.

As a result, five of the world’s 500 largest multinationals are of Australian origin. This may not seem like much, but it is significant given that 443 of the largest 500 come from the US, the European Union and Japan. BHP, in some ways still Australia’s pre-eminent multinational, was in 1994 the 66th largest industrial company in the world, and had mining, oil, steel and engineering operations in 25 countries. Between 1981 and 1995, the proportion of BHP’s workers employed overseas rose from 1 per cent to 25 per cent, while by the end of that period two thirds of its sales were conducted outside Australia.

The high levels of foreign investment in Australia in recent years are part of a global trend. In fact on some measures FDI levels in Australia have not kept pace with world levels. In trend terms Australia’s share of world FDI has remained stable in the 25 years from 1967, while other countries have seen dramatic increases over the same period. According to the US Department of Commerce, Australia received 4.4 per cent of the world’s investment flows in 1991 compared to 4.6 per cent in 1967. At the same time the US increased its share from 9.4 per cent to 22 per cent, Germany from 3.4 per cent to 6.5 per cent, France from 2.8 per cent to 4.7 per cent, and Britain from 7.5 per cent to 12.5 per cent.

Foreign ownership data does indicate that substantial portions of industry have passed into non-resident hands. This is particularly so when measured in dollar terms. For example, ownership of industry in Australia by non-residents doubled to $A300 billion during the five years to 1992 and was expected to rise to $A500 billion by 2000. This has been manifested in the sale of Arnott’s biscuits, Dreamworld, Birds Eye Frozen Food, Four ‘n’ Twenty pies and the partial sale (via privatisation) of Qantas, the Commonwealth Bank and Telstra. Critics point to the fate of these icons as evidence that Australia is being sold off.

Yet in percentage terms, statistics suggest that foreign ownership has remained stable, at least in recent years. (Long-run historical comparisons are unreliable, as the ABS began to compile statistics on foreign ownership in percentage terms, as opposed to dollar terms only very recently.) Although FDI inflows exceeded outflows by more than $20 billion between 1990 and 1995, the level of foreign ownership of "Corporate Trading Enterprises" (CTEs -- mainly private and public sector corporations, including Telstra, for example) actually fell from 32 percent in 1995-96 to 30 percent in June 1999.

While 32 per cent may seem high it is a rather misleading statistic, since it combines direct and portfolio investment and therefore doesn’t differentiate between ownership and control. Just as owning a few shares doesn’t give Telstra workers a say in running the company, so shares held by overseas investors below a certain level (10 per cent, according to the ABS), do not entail foreign control.

If we distinguish the two types of investment, we find that of the total equity held in CTEs by non-residents ($A219.8 billion) approximately 60 percent is in the form of direct investment, with the remainder being portfolio investment. This means that of the total CTE equity held by both Australian and non-Australian capitalists ($A723.2 billion), only $A132.6 billion is FDI. Thus in the OECD’s words, non-residents as at June 1999 had a "lasting interest" in and a "degree of influence" over around 18 percent of the private sector in Australia.

The proportion of equity held in majority foreign ownership is even less. The ABS separates direct investment into categories of investment that involve 10 to 50 per cent and greater than 50 per cent (majority) ownership. As of June 1999, the proportion of direct investment involving majority ownership was around 90 per cent ($A117.7 billion). Therefore, as a percentage of all equity issued from CTEs, majority foreign ownership equity amounts to just 16 per cent. Non-residents have majority ownership of less than one-fifth of corporations in Australia.

According to the most recent Business Review Weekly survey of Australia’s 1000 largest corporations, 32.2 percent (or 322 of the 1000 firms) are deemed foreign-owned. The BRW hastens to add, however, that they represent "only 23% of the list’s total revenue and 12% of profits." The great bulk of the Australian economy remains under the ownership and control of the Australian capitalist class.

We should not forget one other feature of foreign investment: its concentration in a few sectors. As of December 1996, the Finance/Insurance Sector as of December 1996 had received almost a third of all foreign investment in Australia. All other sectors except "Other" and manufacturing (16.9 percent), received less than 10 per cent, with the Retail and the Electricity/Gas/Water sectors both receiving less than 2 per cent. (Leaving aside subsequent energy privatisations in Victoria, which may have increased Electricity’s proportion).

Foreign Investment by Sector


Percentage of total foreign investment



Property/Business Services
















Finally, the ABS statistics demolish the myth that foreign investment is predominantly Asian. This myth was propagated most forcefully on the Left in the late 1980s by David and Wheelwright, who claimed Australia was "being sold to those who have the most money; increasingly these are Japanese and other Asian capitalists". Today the the UK and the US are the largest foreign owners, owning respectively 32 and 31 per cent of total non-resident owned CTE capital. By comparison, Japan accounts for a modest 6 per cent, and the countries comprising the Association of South East Asian Nations (ASEAN) just 2 per cent of all foreign-owned capital in the Australian economy.

And while fear-mongers such as David and Wheelwright made much of Japanese purchases of property on the Gold Coast in the late 1980s, comparatively little mention was made of the subsequent resale of the same property at below purchase prices. It was the Japanese who got burnt.

An advanced capitalist economy

Nevertheless, the fact is that non-residents own around a third of Australia’s largest corporations and control around a fifth of the private sector. This warrents explanation, in addition to the fact that Australia, which contributes only around 1 percent of world GDP, has received such a high proportion of the world’s capital inflows over 25-year period from 1967 -- receiving shares comparable to France and Germany -- and that it ranked as the 8th largest recipient of FDI during 1985-95.

Three reasons stand out: Australia’s historic dependence on foreign capital as a means by which it could be integrated into the world economy quickly; its proximity to East Asia, which has until recently been the fastest growing region of world capitalism; and the simple fact that Australia is one of the 30 or so modern, industrialised countries among the world’s 200-plus nation-states, and thus possesses many characteristics attractive to investors.

Australia’s early development followed the needs of the mother country:

Integration of the new areas ... involved foreign inputs of capital and in some countries of labour too; and in many cases, integration [into the world economy] was achieved through foreign political control as the industrial countries acquired primary producing regions as colonies.

Foreign capital transformed Australia from a hunter-gatherer society to a middle power in a short period of time; it was a precondition for Australian capitalist development. And this country’s continued dependence on foreign capital is a product of its historically low savings rate. Driving Australia’s current economic strength is heavy consumer and business spending, leaving little surplus capital available for reinvestment. (Conversely, Japan’s comparatively low level of foreign investment can be attributed partly to its historically high savings rate.) Foreign capital, in part, compensates for this shortfall.

The second reason is geography. In the years 1990-97, non-Japan Asia contributed about 55 percent of world economic growth. Multinationals wishing to access these booming markets, such as IBM, Kodak, Kraft, Heinz and Du Pont used Australia as a springboard.

Thirdly, Australia is an advanced industrial economy. Foreign investment is attracted to high levels of infrastructure; an educated work force; secure access to tradeable currencies, production inputs and raw materials; and political and economic stability. This helps explain the flow of foreign investment here; it also explains the high levels of Australian investment flowing to other advanced countries. As of June 1994, nearly 90 per cent was destined for OECD nations, with the US and UK gaining almost a third and a quarter respectively. By contrast the depressed, low-wage regions of Africa accounted for negligible amounts.

In other words, the inflow of foreign cash does not mean Australia is a oppressed. Just the opposite: it’s member of the club of a dozen or so wealthy nations comprising the core of the world system, which present the best prospects for high investment returns. Conversely, those countries that do not record high levels of foreign investment tend to be among the most oppressed (Japan is one exception). For example, in 1995 the 50 underdeveloped nations comprising Africa, North Africa and Other Africa combined, received less investment than Australia alone.

The influx of foreign investment has met no serious opposition from the Australian capitalist class. If it’s so bad for the local economy, why don’t they resist?

Some may indeed resent foreign investment, if it means increased competition or the threat of a hostile takeover. Harry Wallace founded the anti-foreign investment Australian Owned Companies Association after a Swiss competitor bought up his struggling ink business. Dick Smith established an all-Australian owned food manufacturer in response to the high level of foreign ownership in that sector, yet even he has often emphasised that the overall economy can’t dispense with foreign capital altogether.

But in any case these are mavericks, because foreign investment brings net benefits to the local capitalist class. On this, there is consensus among the bosses’ economists. In debates about the merits of foreign investment, big business has usually opposed restricting it. In the midst of such a debate in 1997, Mark Paterson from the Chamber of Commerce and Industry was quoted as arguing: "Overseas companies bring new capital, new expertise, new technology, which have substantial benefits to ... Australian industry." The Federal Government’s August 1999 lifting of the value at which merger and takeover proposals require formal approval from the Foreign Investment Review Board -- from $A5 million to $A50 million -- thus raised no opposition from big business.

Benefits to local capitalists include an increased pool of funds (especially important in Australia, due to its historically low savings rate); improved access to modern technology and management techniques (such as Japan’s "just-in-time" auto-manufacturing system), savings on research and development and training; and the inputs which might otherwise be unavailable in the absence of foreign investment (the motor-vehicle, computing and biotechnology industries would not exist here without foreign investment).As Treasury put it 1965:

Although we cannot know with any precision how the economy would have fared in the post-war period had we had no overseas capital inflow, we can be sure that it would now be a smaller and less wealthy economy than it is ... as well as adding to resources, overseas capital has in many cases brought with it new processes and techniques of production and management ("know-how") which have stimulated and strengthened the Australian economy.

Similarly the Financial Review tells us:

If Australia is not going to improve its savings rate very quickly, it is even more important that it remains a competitive location for foreign investment to help balance the current account deficit. That makes the Federal Government’s decision to liberalise foreign investment rules quite timely.

It is not only Australia which is easing restrictions on foreign investment. The Department of Foreign Affairs and Trade says it’s a global trend:

During the past decade, screening mechanisms have been simplified or abolished...while authorisation requirements have been maintained only for politically sensitive large new transactions or acquisitions. Sectoral restrictions have also been abolished or eased, and new sectors and activities have been opened to private enterprises and foreign participation.

Competitiveness depends on access to modern technologies, production techniques, distribution networks and the cheapest resources. Prolonged isolation from these can, in the end, only bring stagnation, which is one of the reasons for the eventual collapse of the state capitalist regimes of Eastern Europe.

The pressures on states to attract investment has grown in recent years in inverse proportion to the deterioration of the world economy. Competition between nation-states for every investment dollar intensifies. As Charles Handy observed at the World Economic Forum in Davos: "The businessmen ... do not go there to butter up the politicians; it is the other way round. The heads of state step up to the podium in turn to proclaim the virtues of their countries. Bill Gates attracts more interest in Davos than any Prime Minister or President." Thus in order to persuade silicon chip manufacturer Intel to build its third $1.6 billion chip plant in Ireland in 1998, the Irish government was required to provide a subsidy of $100,000 to Intel for each one of the 2,000 jobs produced by the investment (a total subsidy of $200 million). In doing so, the Irish government had to compete with a very lucrative offer from Germany.

It is not foreigners, but the ruthless domination of big capital as a whole, which represents the real and truly sinister threat to workers everywhere.

Local control and "fair trade": who benefits?

Although foreign investment and ownership in Australia are comparatively high, still 75 percent of Australian industry remains under local control. However, there is still opposition to it on the premise that Australian workers benefit economically from Australian owners of even the most reactionary type. Historian Humphrey McQueen once said of right wing mining boss Lang Hancock:

Despite Lang Hancock’s reactionary attitudes, Australia’s working people would have been better served if he, and not foreign investors, had owned the Pilbara mines since his profits could be recycled through Australia thereby creating jobs; and even if he invested all his mining profits in Asian factories which then took jobs away from Australians, our balance of payments could benefit from these repatriated profits instead of suffering from dividends passing out of the country.

It seems logical: don’t foreign investors repatriate profits overseas, depriving Australia of jobs and tax revenue?

But profits don’t always go offshore. A recent Centre for International Economics study found that, on average, 96 percent of the value of output generated from foreign investment remains in Australia. Similarly a 1995 KPMG survey of 189 foreign-owned companies in New Zealand found that only ten percent of their profits were remitted offshore. Meanwhile former Trade Minister Tim Fischer says around one-quarter of Australia’s exports is produced by firms with substantial foreign ownership.

And in practice very few Australians enjoy the benefits of the profits earned by Australian investors. Dividends are distributed to wealthy shareholders. As for government revenue, Kerry Packer’s Consolidated Press Holdings Ltd made over $A1.6 billion in profits in the 1997-98 and 1998-99 financial years, yet paid no tax because he has smart lawyers. Without the deductions and losses they claimed, and if taxed at the standard corporate rate of 36 percent, Packer’s tax bill would have been almost $A600 million.

McQueen hopes the likes of Hancock will throw a few crumbs to workers in the form of jobs and higher wages; but they’re just as likely to invest it in labour-saving devices or financial speculation.

Trade union officials place similar vain hopes in greater industry protection in the form of tariffs, subsidies and "Buy Australian" campaigns. The slogan that has emerged in anti-globalisation protests is "fair trade", pushed hardest by Doug Cameron of the Australian Manufacturing Workers’ Union (AMWU). In the run-up to S11 Cameron called for "social audits" of trade and "social tariffs" against countries that violate labour and human rights.

The irony is that Australia itself is guilty of abusing both workers’ rights and human rights (ask the Aborigines), but there is no sign of our union leaders calling for "social tariffs" against this country. While it takes on a humanitarian guise, "fair trade" is really just a new version of protectionism.

But protectionism has a poor record on saving jobs.

Tariffs increased substantially in the Textile, Clothing and Footwear (TCF) industry over the ten years to 1984, whilst TCF employment fell by some 20 per cent. They did nothing to prevent layoffs and downsizing caused by low profitability and new technology. Swapping a foreign employer for an Australian one will not address these systemic issues.

Once employers are given direct subsidies or protection in the form of tariffs there is no way to guarantee a flow-on of jobs or higher wages. The Australian Financial Review noted in 1997:

By 2000, TCF firms will have gobbled up nearly $1.2 billion in direct Budget subsidies ... Much of this will end up as higher executive salaries, shareholder profits or even subsidised capital investment that will displace more workers.

Elsewhere on this site, Tom Bramble has examined the impact of imports on jobs in considerable detail. He shows that industry sectors which don’t compete directly with imports (utilities, transport, finance and government) accounted for 61% of job losses in the decade ending 1998. Those exposed to import competition accounted for only 39% percent. Moreover, the majority of the imports come from high wages countries (the USA and Japan top the list) and hence are not produced with cheap labour.

But even if such measures could successfully create jobs, it would be only at the expense of the jobs of workers overseas. McQueen considers it more desirable for the supposed benefits of investment to accrue to Australian workers rather than their sisters and brothers in other countries. How can we fight global capital if we allow ourselves to be divided this way? The choice between jobs for Australian workers or Asian workers is no choice at all; the huge resources of today’s world economy can provide for everyone’s needs.

We saw where protectionism takes the labour movement in 1997, when union-buster Jeff Kennett spoke to wild applause, at a Melbourne rally organised to defend tariff protection in the TCF industry. It is no coincidence that in the TCF industry, where campaigns for protection and alliances with the bosses have so often replaced militant action, workers are among the lowest paid and suffer some of the worst conditions.

Eroding national sovereignty?

What about national sovereignty? This has been a common theme in anti-globalisation protests, but it’s not new. The left wing former Victorian Trades Hall secretary John Halfpenny argued that in principle foreign investment meant "the national government ... also the people of Australia, forego control over the destiny of the economy". The ACTU said the MAI was against the "national interest" since it would cede decision-making power currently held by governments to foreign investors. Leftwing journalist John Pilger dismissed the relevance of an Australian republic, saying the Queen was less likely to infringe on Australian sovereignty than Rupert Murdoch.

Those who want the government to reconquer national sovereignty significantly overestimate the capacity of any government under capitalism to determine events. Variables such as employment, interest rates, prices and economic growth are only partially subject to government manipulation; they owe more to decisions taken in the boardrooms of the world’s largest corporations.

They wrongly portray this loss of decision-making power as a one-way process: governments pressured by business. Yet as Scott Burchill pointed out in the Australian Financial Review, "national economic sovereignty has not so much been lost as enthusiastically given away". The reduction of state control was conscious government policy.

Moreover the sovereignty argument overlooks the fact that all major decisions about investment, production and distribution under capitalism are made by a tiny minority of individuals whose nationality is of little consequence: Kerry Packer is not likely to offer much improvement, either in performance or accountability, on Bill Gates or the Sultan of Brunei. Failing to see this is dangerous for the labour movement and the left. The nationalism among MAI opponents, who distinguished Australian business from business in general, united sections of the left with the right, and opened the door for Pauline Hanson. Yet it was the capitalist class in each OECD country that stood to gain from the MAI.

Our Australian bosses were no exception. BHP representatives sat on the board of the pro-MAI US Council for International Business, alongside other multinationals such as Ford, Nabisco, American Express and BP. The Australian Financial Review suggested that the best thing for Australian business would be to have the MAI "extended throughout the Asia-Pacific so as to allow Australian multinationals to better share in the region’s growth".

The rampage of global capital is a real problem, but the solution doesn’t lie in allying ourselves with Australian bosses. There are much better ways to fight.

It was strikes that defeated the attempt to privatise the ANL shipping line in 1995. At a time when TCF workers were foolishly looking to Jeff Kennett and tariff protection to save them, Victorian nurses used industrial action in 1997 to force the union-busting Kennett government to concede a deal including an 11 per cent pay-rise over three years, extra jobs and no trade-offs. It was the 24-hour illegal strike by 20,000 miners in 1999 that contributed most to the Liberals’ back-down on paying the $6.3 million in entitlements owed to the Oakdale workers. It was pickets, industrial action and the preparedness to confront employers that saw Victorian construction workers achieve a 36-hour week in early 2000.

Since the announcement of the BHP-Billiton merger, maintenance workers at BHP’s Port Kembla steel works, fearful that their jobs are threatened by the sell-off of the company’s steel interests, have held protest stoppages. Takeovers and mergers have often been the vehicle for corporate restructuring that has resulted in job cuts and attacks on working conditions. Socialists are not neutral in the defence of jobs and working conditions.

But as we have seen, it is not the nationality of the owners that explains their attitude to jobs and union rights. Well before the merger, BHP had wound down its steel operations (its Newcastle operations were closed in 1999) to increase its profitability. It will be the active defence of jobs with strikes, and demonstrations by workers defending their class interests that will be the key to defending the steelworkers’ jobs.

It was mass pickets and the preparedness to disobey court orders, along with solidarity by workers from Los Angeles to Tokyo to London, that defeated the Liberals’ attempt to smash the Maritime Union. "Buy Australian" is a recipe for defeat. "Workers of the world unite!" is a strategy for victory.

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