Foreign ownership and control is continuing to devastate the Australian economy to the detriment of all Australians. It undermines the economic base for national independence.
For decades, successive Australian governments have argued that Australia cannot produce sufficient capital investment to develop key sectors of the economy. Foreign investment has therefore been encouraged. This has also meant that Australian enterprises, in some cases entre industries, have fallen under foreign control through majority share ownership.
Foreign ownership means that foreign entities, with allegiance to foreign shareholders, can make decisions of significance for sectors of Australia’s economy. Driven by considerations of ‘profitability’ in the short term, trans-national corporations can decide on whether to expand particular industries and/or terminate others.
According to the Department of Foreign Affairs and Trade, total foreign investment in Australia was $3.8 trillion in 2019. Investment by country of origin as a percentage of total foreign investment was:
- USA 25.6%
- UK 17.8%
- Belgium 9.1%
- Japan 6.3%
- Hong Kong 3.7%
- Singapore 2.1%
- Netherlands 2.2%
- Luxembourg 2.2%
- China 2.0%
The US and the UK between them represent nearly half of all foreign investment.
China plus Hong Kong represents 5.7%.
A classic example of foreign ownership and control in Australia was the car industry.
In the 1960-80s the federal government allowed the car industry to become virtually 100% foreign owned and controlled. The foreign owners found that the cost of local labour hurt maximum profitability and threatened to take the industry out of Australia. Successive governments gave the industry significant subsidies to try to keep it here. Finally, the Coalition government under Treasurer Joe Hockey called time on the subsidies. The foreign owners shut down the local car industry, taking the manufacturing to countries where they could better exploit the workers through lower wages.
Australia lost a major manufacturing industry with consequential loss of jobs and the skills which went with it.
Len Fox in his Multinationals take over Australia, published in 1980, provided the following figures for foreign control of various industries:
- Motor vehicles 99.8%
- Oil refining (ownership) 90.8%
- Basic chemicals 78%
- Pharmaceuticals 77.8%
- Transport equipment 54.6%
- Basic metals 38%
- Textiles 33.3%
- Food, beverages, tobacco 33.2%
These figures were obtained from the Australian Bureau of Statistics (ABS) but unfortunately more up to date figures are no longer available from this source.
Clinton Fernandes published more recent information on foreign ownership of industry in Australia in his book Island off the coast of Asia (2018):
“Right now US corporations eclipse everyone else in their ability to influence our politics, through their investments in Australian stocks. Using company ownership data from Bloomberg, I analysed the ownership of Australia’s 20 biggest companies a few days after the 2019 federal election in May. Of those, 15 were majority-owned by US-based investors. Three more were at least 25% US-owned.”
The list included the following companies and their US ownership percentage:
- Commonwealth Bank of Australia 62%
- BHP Group 73%
- Westpac Bank 64%
- National Australia Bank 63%
- ANZ Bank 54%
- Woolworths 66%
- Rio Tinto 65%
- Wesfarmers 56%
Clinton Fernandes goes on to explain how foreign corporations can sue a government for laws passed that affect their profitability under the so-called investor dispute settlement (ISDS) clauses. The US government has systematically pushed the ISDS provisions in its trade deals with other nations. It means a foreign investor can sue a government for compensation in an international tribunal if the government makes any change in law or policy that “harms” an investment. This is something no Australian citizen can do.
Another Australian miner sues another poor country, this time Barrick’s Porgera in PNG
Foreign investment and ownership can severely distort a nation’s economy. For example, the mining industry has seen a huge increase in foreign investment in recent years, which has led to accelerated resource extraction rates in many areas. It is predicted that at the current rate of extraction, Australia will be depleted in the sources of many minerals within decades.
According to a briefing paper by Naomi Edwards for The Australian Greens:
“At current extraction rates, economic resources will be depleted by 2036 for iron ore, and by 2026 for gold.”
Decisions by foreign investors in pursuit of short-term profits deprive future Australian generations of access to, and use of, their mineral resources.
And when the Australian people want action to slow down and halt human-induced climate change, the foreign-dominated, very profitable energy sector is working to maximise extraction and sale of fossil fuels. With the ownership of this sector predominantly in foreign hands, the federal government has limited scope to redirect the energy industry away from fossil fuels to renewables.
Foreign owned multinational corporations do provide employment for Australians, but they tend to invest in industries that are not labour intensive and thus minimise labour costs. They also use transfer pricing, offshoring, divestment and so on to minimise the tax they pay compared to Australian owned companies in the same sectors.
Foreign ownership dominance has helped destroy the manufacturing industry, has ripped out resources at excessive extraction rates to maximise profits, and the result is an accelerated depletion of our mineral resources. Many corporations pay minimal, if not zero, tax and are net exporters of capital in profits and dividends. And their heavy extraction of fossil fuels goes against the desire of the Australian people for action on human-induced climate change.
Foreign ownership distorts and weakens the Australian economy to meet short term profitability objectives, and in doing so undermines the economic base for national independence.
Bevan Ramsden is a former telecommunications engineer, TAFE teacher and member of the NSW Teachers Federation. He is a long-time peace activist and advocates for Australia’s independence. He is a former member of the coordinating committee of the Independent and Peaceful Australia Network) IPAN) and current editor of its monthly e-publication, Voice.
Comments
7 responses to “Foreign ownership hits hopes of national independence”
Hi, interesting article, but I don’t think foreign ownership entails a loss of sovereignty. Australia can still make laws regulating businesses that are owned by foreigners. (I assume there is no treaty giving foreigners a right to challenge laws on grounds of expropriation, etc.)
Investments in Australia can be founded: (i) from local savings, (ii) from overseas lenders (“debt”), or (iii) from overseas investors (“equity”). If we reject foreign equity, and there are insufficient local savings, then the only other alternative is either foreign debt, or to simply forgo the investment altogether.
Perhaps there is a 4th alternative – i.e., prohibit Australians from investing in foreign assets, and so subsidising local investment. But I doubt anyone thinks this is sensible, let alone feasible.
So if we are complaining about foreign equity, which of the alternatives are you implicitly arguing for? Forgo the investment??
Great to read the comments on Bevan’s article all of which would be ideal contributions to the IPAN led People’s Inquiry into the costs and consequences of Australia’s subservient relationship with great powers. To enter a submission is very straightforward using the Inquiry website https://independentpeacefulaustralia.com.au/
Congratulations Bevan for telling and showing clearly, how foreign ownership and control is devastating not only our economy but our national social and economic independent base.
I was particularly interested in your quoting from “Island Off The Coast Of Asia”(2018) by Clinton Fernandes, which I enjoyed reading.
However his latest,”What Uncle Sam Wants” U.S. Foreign Policy Objectives in Australia and Beyond”(2019), where he uncovers the relevant Wikileaks cables relating to US / Australia relations, is most enlightening.
I quote from pages 142 – 143 :-
“The cables also help us understand the key enablers of American corporate power: control of labour, enforcement of intellectual property rights and favorable tax arrangements. They show US diplomats keeping tabs on trade unions abroad: they monitor strikes, labour shortages, unemployment, labour hire practices, political parties’ attitudes towards industrial issues and other subjects. They also demonstrate the importance of intellectual property rights; US corporate power is dominant in a world of Global Value Chains (GVCs) and intellectual property provides the revenue streams that flow out of this world. And, since the objective in a GVC world is to declare profits in the lowest possible tax jurisdiction, we see diplomats reporting on tax arrangements in many parts of the world.”
I suggest it is not difficult to understand why the US wants Julian Assange, Bernard Collaery & Witness K silenced and / or put away, with our federal government and opposition’s supine compliance.
Here we are beating ourselves up by skewing our fears solely towards the actions and behavior of China.
When quite clearly, with friends like the US, who needs enemies?
I agree with you very much, but I doubt the feasibility of independence at the moment. The reality is that the development of domestic industries often does not conform to the comparative advantages of economics. In other words, it is uneconomical in the short term. Therefore, it is necessary for the government to use administrative power to promote it, which often requires the sacrifice of democracy.
I could not agree with you more, Bevan. Thank you for this post. I wonder if you have personal experience of what happened to Telecom Australia. It is always a battle to maintain local manufacturing but it is a battle that must be fought.
Excellent article by Bevan Ramsden
Our Government bangs on about Values and Sovereignty. I have written extensively on Values and if Morrison and his merry gang of hypocrites could spell the word and look up the meaning in a dictionary they may make some progress but I doubt it.
Bevan’s article, which focusses on sovereignty, is important and disturbing. Firstly it dispels the myth that we are being overrun by and taken over by China. Secondly it highlights the level of control held by the US. By all measures the last four years have highlighted that the US is a broken and corrupt state. It is certainly not democratic and Americans control key industries through dominant shareholding positions. How Australia signed onto ISDS conditions is beyond my ken.
Another of your correspondents commented on Morrison’s photo op sitting in an F35 jet. Is he not aware these things cannot fly unless the US maintains them. I recall reading some time ago they cannot fly effectively in wet weather.
So much for our sovereignty!
The second biggest foreign owner is the UK. Not exactly governed by mature adults – look at the mess they have made over the shambles called Brexit?
In Australia we seem to be headed down the same governance (or lack thereof) path as the US. There is certainly a disturbing lack of responsibility or accountability on the part of Government.
Kind Regards
Erik
Makes you wonder how the 2% Chinese investment can result in the massive amount of the Fear & Loathing.
You have to give due credit to Scott from Marketing and the LNP for exceptional skills in pressing ever so gently the Yellow Peril buttons. If you read the comments section of the SMH or the Age regarding Chinese investments, you would conclude that this one factor must equate to at least 1 million electoral votes for the LNP!