How long before Australia’s growing number of industrial disputes leads investors to take their business elsewhere?
How long before Australia’s growing number of industrial disputes leads investors to take their business elsewhere?
LAST week I wrote about how Perth’s number of heatwaves was somehow news when, in my view, it is the duration of these hot spells that really matters.
I mentioned 1978, Perth’s acknowledged hottest summer, as having fewer ‘heatwaves’, but for many more days. I know which I’d rather – the shorter the hot period the better.
To bring the conversation back to something more pertinent to business, however, it seems the same issue exists with industrial relations disputes.
The statistics recently released from the federal government show that the number of strikes has dropped but the number of days lost to industrial action has jumped.
I know which is worse for the economy, but the government has tried to paint the rosy picture of fewer IR disputes. In doing so it is ignoring that, not only is the number of days cumulatively greater, longer strikes must be exponentially more catastrophic for the slightly smaller number of employers involved.
There is no upside to these figures, no matter what the government wants to say.
The militancy of the unions involved is out of control and will come to haunt investors, both foreign and local, as they come to realise that Australia has become too hard to do business in. Those decisions don’t happen overnight, but they also take a long time to undo – as miners know from the long capital drought in the north after the unions belted them around in the 1970s and early 1980s.
But the unions aren’t the only ones who have let hubris get in the way of understanding that boom markets don’t last forever. Many businesses in Perth are infected with the same disease.
Last week at a Consult Australia event I had the opportunity to hear Woodside CEO Peter Coleman and quiz him on stage. After 10 months, he has clearly got a handle on what he thinks is coming.
Mr Coleman said business in Western Australia was not ready for the shock of falling commodity prices; the end of the boom, he said, had left the station, it just hadn’t arrived yet.
A drop in resources investment might generate some form of schadenfreude in the rest of Australia, briefly, until the flow-on effect shocks the rest of the nation, which has being enjoying the party even more than Western Australians.
I firmly believe that, despite Mr Coleman’s warnings, most business in WA has learned from the GFC and recalibrated accordingly. They are now more flexible and more nimble, taking advantage of the boom still underway but ready for the moment it all goes bust.
It is the rest of the nation that is not prepared.
The mining tax is an example of hubris about Australia’s ability to dictate to the rest of the world when, in reality, commodity-based economies are price takers and need to be as efficient as possible to maximise their opportunities. When minerals prices fall, this tax will leave a huge hole in the budget, which is promising to pay for things Australia simply hasn’t earned and can’t afford.
Union members, too, will learn that the past few years of savaging business will come back to haunt them. They have toyed with companies and abused managers in a way that should not occur in any workplace.
Those against the mining industry point to the sector’s job losses in the GFC as an example of how ruthless the industry was. In reality, few jobs were lost; most were in nickel, which hasn’t really recovered, and others were in projects that had not got off the ground at the time.
In truth, most miners held on to their loyal staff. If anything they tended to shed the job hoppers, especially those who had built their careers on exploiting short-term contracts with whoever paid the most.
It is a pity those who claim to want a fair go – the government (on behalf of its voter heartland) and the unions – have abused the recent boom. In reality, they are much greedier than the very business people they include in their attacks.
Squatters’ rights
WHILE I am defending the rich, I ought add my two cents to the debate started by Treasurer Wayne Swan, even if by doing so I only add additional oxygen to his ridiculous notion.
In 2010, when he surprised the resources industry with his clumsy Resource Super Profits Tax, Mr Swan’s venom was aimed at foreign companies, or foreign investors, who were profiting from our minerals.
Never mind that foreign investment over the past 50 years had effectively built the industry that made Australia rich, and helped us sail through the GFC. Never mind the jobs and royalties that investment had generated, even in tougher parts of the commodity cycle, when there were no profits to be made.
Yet, when push came to shove, his government made a deal with the most foreign of those companies – notably Rio Tinto and Xstrata.
Fast forward to this month and Mr Swan seems to have conveniently forgotten that. Now his targets are prominent Australians, people who have devoted their energies to developing Australian assets (and only so). Yes, they have become rich, but so what? Mostly they are rich on paper, in assets, and what cash they have is spent on developing their businesses and new opportunities elsewhere in Australia.
I am no real fan of soccer, but good on Clive Palmer for spending his money on the sport.
What was the terrible thing that Mr Palmer, Andrew Forrest and Gina Rinehart did?
They have opposed a tax that Mr Swan created after doing a deal with companies that are far more foreign than the individuals he has turned his attention to.
I, of course, have no problem with foreign investment. So long as they pay royalties to the state and 30 per cent of profits to Australia and employ local people (or the best migrants) on their ongoing operations (after construction) I think we win.
Trade Minister Craig Emerson seems to realise this. He wants foreign investment in agriculture, just as previous governments welcomed offshore investment in mining.
The problem for Mr Emerson is his treasurer has made that harder by telling the world that we are prepared to renege on previous deals because we have become greedy as a nation.
Can he give any reassurance to foreign investors in farms or related agri-businesses that future governments won’t decide that they are too profitable and tax them accordingly?
Or maybe a deal will be done with the biggest foreign rural investors and the most successful farmers will become the target of some future treasurer’s wrath as the squattocracy of the day.
• mark.pownall@wabn.com.au
