16/12/2010 - 00:00

Playing the political game at a safe distance

16/12/2010 - 00:00


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Politics and business are closely linked, but sometimes the connection can get too close for comfort.

Playing the political game at a safe distance

MOST people in business do not think of themselves as political animals. They might soon.

The Australian government’s ham-fisted attempts to introduce a new mining tax has polarised business, with a further hardening of views and the rise of a new class of politically active business leader certain in the New Year.

Gina Rinehart is the most obvious business name currently linked with politics, using her fortune to buy a seat at the national media table and to spread her views on matters related to tax, labour and capital.

She will not be alone, which is comforting for her, but could prove uncomfortable for others in the business community.

Mrs Rinehart’s hard right views are perfectly acceptable as a debating topic, and perhaps need airing so that we can see the world they would create – just as it is useful to hear hard left views of the sort spouted by unreformed Marxists in university coffee shops, and the Green movement, which wants to stop the world from doing anything.

But the danger in allowing the extremes in any debate too much leeway is that they can seize control of events and then demand that other people state their position.

Boiled down, business people might soon be asked by the rising right: ‘are you with us, or against us’.

In theory, it’s hard for anyone in business to argue against lower taxes on company profits, or fixed wages to minimise labour hire charges, or that importing low-cost Asian workers to build new resource projects in the outback makes sense if Australian’s don’t want the jobs.

To the average working man, however, they sound absurd, and an attack on his lifestyle and living standards. They are also views that fall into the category of free kicks for the left.

And that’s where the real problem lies for business, especially in Western Australia, where the anti-tax lobby is strongest and where there is a sense of isolation and the need to fight back against what is perceived as a direct attack by government.

Deep resentment against the mining tax, in its various forms, has triggered the start of a new, business-based, political movement, and while it is yet to get a name it wouldn’t be surprising to see the resurrection of the Workers Party co-funded by the late Lang Hancock back in the 1970s.

Hancock, father of today’s far right heroine, Mrs Rinehart, put his money into the ironically named right wing Workers Party in reaction to Australian government policies of the day, especially the nationalisation proposals of then prime minister, Gough Whitlam, and his far (far) left ministers, such as Tom Uren.

Back then the fight was all about money, taxes and strange loans being organised by dodgy middlemen, such as Tirath Khemlami, who claimed to represent the owners of vast piles of Middle East ‘petro-dollars’.

What Whitlam and Uren did, with their loony left ideas, was stir the loony right into action.

Today, history is repeating itself thanks to the mining tax, which we are told will only be applied to iron ore and coal but which we all know will eventually be spread to all resources, with the argument being that we need to slow a run-away economy and redistribute the wealth through social welfare handouts.

In the middle of this cocktail of government mismanagement (don’t mention the National Broadband Network), envy, greed and tax, sits WA, a plump duck waiting for the plucking.

That’s why some of Mrs Rinehart’s ideas will go down well in WA, just as Pauline Hansen’s views made her a popular figure, for a while, in Queensland.

The risk for business is getting too close to the fireworks, so when asked to become involved in the next anti-tax campaign think deeply about where you’re heading and whether you really think politics and business can mix.

Tip-top tips

SPEAKING of the year ahead, it’s worth considering some of the forecasts floating around, such as ever higher interest rates and higher commodity prices, and more predictable events such as the 10th anniversary of the 9/11 terrorist attacks and Barak Obama’s 50th birthday.

First stock tips from a look into the 2011 crystal ball came from investment bankers at Goldman Sachs, who produced a list of stocks they believe will go well next year. The Goldman top 10 is Amcor, BHP Billiton, James Hardie, News Corporation, Qantas, Asciano, Computershare, Lend Lease, Onesteel and Woodside.

No-one can argue with those tips. All rock solid stocks. But lurking in the background is a small piece of history that Goldman seems to have successfully lived down – the infamous mortgage-bond selling affair.

Back in 2007, Goldman assembled, at the request of a client, John Paulson, a fund called Abacus and loaded it with mortgage instruments that were likely to fail. Mr Paulson made a fortune when the sub-prime mortgage crisis hit and Abacus crashed.

Unfortunately for Goldman, while it was assembling a fund of failures another arm of its business was selling units in the same fund, with one particularly infamous email from a Goldman salesman, Fabrice Tourre, reading: “I have managed to sell a few Abacus bonds to widows and orphans I ran into at the airport. Not feeling too guilty about it”.

Hopefully there will be no guilt about Goldman’s 2011 investment recommendations; though James Hardie, with its obligation to fund perpetual asbestos-related medical bills, is a very interesting tip.

WA driving rates

PROPERTY, an asset class that Australians follow more closely than most, is the hardest of all sectors to predict for 2011, though the consensus seems to be that prices will fall further next year.

Rising interest rates are the property killer, and for that the entire country can thank WA because we are the primary cause of this year’s rate rises, and the major factor in next year’s rises as the resources boom gathers pace.

Little wonder that people in Sydney and Melbourne are in favour of the mining tax, which will soon be sold by the federal government as a way of keeping interest rates down by slowing the boom.


“Prediction is very difficult, especially if it’s about the future .”

Niels Bohr.



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