02/06/2011 - 00:00

Barnett shows independent streak

02/06/2011 - 00:00

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Orthodox views on the role of state governments and company directors were questioned at a Perth function last week.

Barnett shows independent streak

PREMIER Colin Barnett was in fine form last week, clearly enjoying his stoush with the embattled Labor government in Canberra.

He was among friends when he spoke to a 300-strong audience at a business lunch, where he shared the stage with outgoing Woodside boss Don Voelte and Shell Australia chair Ann Pickard.

The lunch has attracted plenty of headlines, including Mr Barnett’s comments about the unravelling of federal-state financial relations.

Another pearler was Mr Voelte’s – and Mrs Pickard’s – complimentary view on some federal government ministers, such as Resources Minister Martin Ferguson, and their deliberate silence when asked about Treasurer Wayne Swan.

It was not a broadside, as some labelled it, but Mr Swan was damned by omission.

There were other comments that were less newsworthy but just as interesting and thought provoking.

Mr Barnett, for instance, gave some insight into the interventionist philosophy that guides some of his decisions.

One example he offered was the process followed by Infrastructure Australia (at least in its early days), when it selected infrastructure projects that warranted financial support from taxpayers.

‘It was about picking winners,” Mr Barnett told the lunch, organised by rival newspaper The Australian and Deutsche Bank.

“I know that’s not pure, particularly for the financial world, but Australia needed to pick a few winners.”

Mr Barnett said the Oakajee port and rail project was a good example. It was originally set up as a purely private-sector development, until Mr Barnett decided the state government should invest in the project

“A difficult project, but boy, what would that mean for the Australian and Western Australian economies,” he asked rhetorically.

Mr Barnett went a step further when he spoke about social and community infrastructure, such as sinking the rail line between the city and Northbridge.

“That had been talked about for 100 years but hadn’t happened,” he said.

“Now that project will never pass a cost-benefit test, it never ever will.

“The waterfront project will never pass a cost-benefit test. Oakajee might struggle, in terms of getting your money back.

“But every now and then, nations and states need to think big and take bold decisions.”

It’s pretty much the same philosophical position federal Labor is using in its efforts to secure public support for the NBN – to howls of disapproval from the opposition and some media.

While most people agree that governments have a role in delivering nation-building projects, there is an important qualifier for those of us who are wary about interventionist policies.

When governments do invest, they need to ensure there is a transparent decision-making process, so the costs and benefits can be openly evaluated.

Mr Barnett’s interventionist streak also came to the fore when he was asked if BHP Billiton should be able to take over Woodside.

“I can’t give a rational economic response to that but I can give a broader one,” he said.

Mr Barnett said it was not in WA’s interests to find any one company dominating either the LNG industry or the iron ore industry.

But curiously, he wasn’t talking about state development, but rather the state’s commercial interests.

“States are in a different position from the Commonwealth in one very important sense,” Mr Barnett told the audience.

“The Commonwealth has a broader policy role, the states also have a policy role, but the state is the owner of the resource so it has a commercial interest. The proposed merger of BHP and Rio Tinto, whatever you might think of the merits of that, would not be in Western Australia’s commercial interests.”

That’s a curious point of view for a Liberal premier, who would normally be expected to leave commercial matters to the private sector.

Mr Voelte was also asked about BHP’s rumoured interest in Woodside, and like Mr Barnett delivered an answer that departed from the orthodox.

The traditional response from company directors is that they need to look after the interests of shareholders, and are obliged to accept any financially attractive takeover offer.

But Mr Voelte said he and Woodside chairman Michael Chaney had discussed the issue, and agreed that Woodside’s board should take a broader view.

“We agree that we have a fiduciary responsibility to protect the shareholders and the company,” he said, before admitting he has become very parochial.

“We are Australian and, by golly, with all due respect to fiduciary duty to company and shareholders, I hope Woodside stays independent forever.

“It is a great company and a great asset of Western Australia,” he said to applause from the audience.

 

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