Business staring down the barrel

Western Australia’s sometimes-too-cosy business relationship with China could soon be put to the test, as the state’s biggest trading partner butters up a man with blood on his hands, Russia’s president Vladimir Putin.

Until Russia invaded Ukraine, it was possible for the WA government and business leaders to talk down the unpleasant side of dealing with the bullies of Beijing.

Money, as always, spoke louder than the obvious problems of dealing with a dictatorship, even after the trading relationship took a sour turn for Australian exporters of barley, wine, seafood, and coal.

While the rest of Australia reacted with anger every time China ratcheted up its one-sided trade war, the WA response was to dodge the issue because so much depended on maintaining a strong flow of iron ore to feed China’s steel industry.

Critics of WA’s heavily compromised position found it difficult to have their voices heard, and the state government ducked for cover due to its addiction to the flow of cash from iron ore royalties.

However, as the Ukraine war drags on, and could become more complicated due to a Russia-China deal dubbed the ‘no limits’ partnership, WA’s see-no-evil, hear-no-evil stance will be challenged by the rest of the country, and possibly on the international stage.

The problem is the potential for a re-run of what haunted the late Robert Menzies when he was Australia’s prime minister, forced to wear the nickname of Pig Iron Bob.

Menzies’ mistake was to allow the export of pig iron, which is partly processed iron ore, to Japan in the late 1930s despite concern that it would be turned into armaments and used in Japan’s invasion of China.

(This is exactly what happened, despite attempts by waterside workers to block pig iron shipments.)

By turning a blind eye to Japan’s military adventures in China, Menzies was later blamed for helping supply raw material for Japanese attacks on Australia.

History has a way of repeating, and while WA is several steps removed from Russia’s murderous assault on Ukraine, there is a risk that if Chinese weapons are supplied to Russia, it will involve the use of minerals and metals supplied by WA.

Hopefully, it will never reach the point of WA being seen as the source of Chinese weapons delivered to Russia for use in Ukraine, but it’s a possibility that can’t be ignored. According to international media reports, China is becoming concerned it has been drawn into a war that will damage its reputation, and the possibility it might be on the receiving end of trade sanctions like those it has applied to Australian exports.

If that happens, WA’s official policy of not mixing trade with geopolitics will become untenable, just as it was when Menzies was tagged Pig Iron Bob.

A tricky situation is developing for WA’s business leaders.

Do they stick with the state government line and argue that business is business, or recognise that sometimes there are issues greater than money?

Industrial unrest

As if the challenge for government in dealing with the China-Russia question wasn’t big enough to keep the WA government on its toes, there is another problem about to replace COVID-19 as the biggest local concern: industrial unrest.

The industrial scene has been relatively peaceful for the past two years, with most protests about COVID controls such as mask wearing and vaccine hesitancy.

But that will change as the cost of living rises in harmony with the oil price and an inflation rate that risks getting out of control.

Wage caps imposed on some government workers are becoming a bitter pill for lower-paid employees such as nurses and teachers, especially as they learn more about the whopping salary increases achieved by mine workers during the COVID crisis in the name of keeping the mines open to fund the broader economy.

High oil prices, however, are the equivalent of an economy-wide tax increase that hurts the lowest-paid workers; those who don’t have the choice of working from home and often have a long and expensive commute to and from work.

One recent study by the Australian Bureau of Statistics showed that industrial action in the final quarter of last year cost the economy close to 70,000 days, the most in 10 years.

A strike by NSW school teachers was the biggest contributor to that decade-high figure, but it will almost certainly not be the last big strike by organised labour as the cost of living moves sharply higher courtesy of rising petrol prices and with higher interest rates on home loans to come.