23/05/2006 - 22:00

Kicking it around on wages case

23/05/2006 - 22:00

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I regret I didn’t take advantage of the Western Australian Industrial Relations Commission’s live streaming of its hearing into the Trades and Labor Council’s application for a 4 per cent wage rise.

I regret I didn’t take advantage of the Western Australian Industrial Relations Commission’s live streaming of its hearing into the Trades and Labor Council’s application for a 4 per cent wage rise.

The TLC case is being supported by the state government and, I noted, that State Treasury official and well-known economist Nicky Cusworth had been put forward to provide “considerable evidence regarding the capacity of the state’s economy”, according to a note put out by WAIRC registrar John Spurling.

While no-one would have regarded Ms Cusworth as the most hard line of capitalists, it still must have been a hard ask for the former long-serving chief economist at heavyweight business group, Chamber of Commerce and Industry WA.

A year ago, Ms Cusworth may well have been arguing the case against the application. Then again, if it was two years ago, it may well have been her former boss at CCIWA Lyndon Rowe who may have taken the stand to argue against the pay rise.

Mr Rowe now works for the government’s Economic Regulatory Authority.

Of course, the connections go deeper. Mr Rowe’s replacement as CCIWA boss, and Ms Cusworth’s most recent former employer, is John Langoulant, who used to be under-treasurer, a role that would effectively be coordinating the state’s arguments for the wage rise today.

In the world of economics, it seems there’s a high chance the boot may be on the other foot at some stage.

Benefits of progress on native title

AS Indigenous Australia hits the headlines again it is by coincidence that WA Business News has decided to cover off what is the key business-linked issue in Aboriginal Australia – native title.

While many of the problems surrounding this field have seemed intractable, stifled by vested interests who simply won’t budge, there appears to be glimmers of hope that solid deals are being done.

This issue has bogged down the mining industry and largely been to blame for the dramatic slowdown in minerals exploration.

The rights or wrongs of the arguments over the longer term may by harder to settle, but the short-term damage to industry has been significant.

However, Indigenous Australia has many visible and shocking problems, with more than a fair share found in Western Australia.

If resolving native title and giving some control of the land use and, therefore, its value helps to solve this much bigger issue it will be welcome by all – even those who see it merely as a hopeless barrier today.

This may well be wishful thinking but you’ve got to have a bit of that, don’t you?

Fiddling with the figures

In a recent editorial critical of modern budgets I made parting comment that I hoped I didn’t have to eat my words. I’m not sure whether I need to or not.

Without the benefit of seeing the state or federal budgets (we go to press too early on a Tuesday, these days), I could write that it was largely irrelevant.

Some might argue I was wrong, given the federal budget tax cuts and superannuation changes.

Perhaps.

The super changes were really the closest thing that I thought would get an industry excited. Financial planners and super experts will certainly be enjoying all the additional opportunities provided by such a shake-up.

The tax cuts are great, and welcomed, but really much less than the real reform a growing number of people have called for recently.

On balance, the only reason this budget was exciting was because political observers view it as a pre-cursor to Peter Costello’s ascension to the prime ministership.

At a state level, there was very little to get excited about. Maybe this underlines the growing irrelevance of state governments, rather than budgets.

I couldn’t really believe the state government’s attempts to claim the Mandurah railway would be debt-free.

However you attribute debt, its still debt. The capital cost of the railway and the servicing of the underlying debt (or fall in available capital) created by that, remains unchanged by fancy bookwork.

This may be a clever way of pretending to keep the cost of tickets down or making the railway look more economic but it won’t mean that someone somewhere doesn’t have to foot the bill.

Law of the jungle in the business world

A few years ago, I wrote an offhand piece about the geographical growth of business based on natural history.

The premise for my argument was a book on North America by controversial scientist Tim Flannery. In effect, Mr Flannery showed that in the migration of animals, those from larger continents generally overcame those from smaller ones when natural barriers were removed.

The destruction of local fauna in Australia is an obvious example but the record shows Asia’s wildlife took to the Americas far better than those migrating the in reverse direction.

The reason, it seems, is that being part of a bigger melting pot may strengthen an animal’s genetic ability to adapt to new regions.

So I wondered for a few years whether the same couldn’t be said for business. The facts are writ large, in my view. American companies, whose economic and regulatory base market is the world’s biggest, dominate global business. Europeans come second, with many of their gains coming as the European Union has created a more cohesive and bigger home market from which they can project themselves.

Australia’s track record abroad, by contrast, is dismal when it comes to business performance.

So it is with interest that I have noted talk of iiNet plans to potentially float its New Zealand business.

New Zealand is one of the few places where Australians have succeeded, in my view because of the reasons listed above.

iiNet has done well there and is only thought to be considering an exit because of problems at home. That is where I wonder if such a move isn’t short sighted.

WA firms have an average track record in New Zealand – arguably because it’s a bigger market than here – Peters & Brownes ended up being bought out by New Zealanders and Foodland Associated got out of most of its business there. But these companies have largely skipped the east-coast market.

iiNet hasn’t done that and has a considerable Australian base from which to launch into smaller markets.

Selling might provide management relief, but it also limits the growth potential of the future, if the Australian business is indeed sound.

Then again, maybe the law of nature has no place when it comes to arguing the law of the market.

STANDING BY BUSINESS. TRUSTED BY BUSINESS.

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