Buying back the Farm!

Australia has one of the greatest percentages of foreign ownership in the developed world. Our federal government gives preferred treatment to foreign owned companies. Is it in the national interest to have so much of our economy under foreign control? Do we need to buy back the farm?

The Australian Owned Companies Association argues that if everyone did their shopping giving a preference to products made by Australian owned companies it would create jobs for our children because the profits would stay in Australia

This is a somewhat simplistic answer to a complex problem but it has truth. Multi- national and foreign owned companies also manufacture in Australia, employing many thousands of Australians. Supporting the products these people make ensures jobs continue, or at least some jobs. Companies, especially large ones with capital, are ever willing to invest in technology that makes workers redundant, decreasing their workforce, increasing productivity and so increasing profits for their shareholders. And if the shareholders are overseas, this affects our balance of payments.

The workers thus thrown onto the scrap heap are picked up by the government in countries like Australia, which still has a reasonable sytem of social services and un-employment benefits. In other countries best of luck! However, these same companies often pay little and decreasing taxes as they put pressure on government so they take no responsibility for the community they manipulate. Intractable governments are warned that they will depart if they don't get their way. Governments respond with shock and provide "incentives" for the company to remain. They still can and do depart.

So we now have a situation where the big foreigners are lower taxed than the Australian owned companies. Hardly fair! Our governments are in turn faced with declining taxation revenue from the large corporations and, unwilling to increase general taxes, find it increasingly difficult to maintain public services at reasonable levels. Then neo-liberal economics comes to the "rescue" by arguing that governments should privatise these services and get out of the welfare game. In the short term this appears very attractive. In the longer term it is disastrous as the user pays principle kicks in. Do we really want to get to the situation like the United States where it becomes the individuals' bad luck, the poor have to fend for themselves and the state takes no responsibility? As Michael Moore points out in his book, STUPID WHITE MEN, this me, me me selfish attitude is at odds with a caring community where we take responsibility for others.

Australia was the land of a fair go and mateship meant caring for the other fellow. This is what we are losing when we go the American way. This is what we lose if economics dictates what we can and can't do. Why do we need tax cuts? Why do large corporations and multinationals pay so little? Why do the very rich pay comparatively less than the poor. Why are tax havens allowed and the tax laws so complicated? In whose interests is this country being governed?

Soon if our current government has its way we will enter into a Free Trade Agreement with the US which will, if some observers are to be believed, submit us to determined entry by US companies with an even greater advantage over local business. What benefits we get are debateable.

If we are to change this situation the following policies need to be implemented.

  • Tax laws should benefit Australian Owned Companies or at least treat them equally.
  • Dividends exported abroad should be taxed. Funds retained in Australia for reinvestment in plant etc, should be allowable as a tax discount against exported dividends but not if the money is used for takeovers.
  • Foreign based takeovers should be discouraged unless in partnership with a minimum 51% Australian ownership retention.
  • Foreign companies setting up in Australia should be required to invest in plant and equipment and not be allowed to buy out competitors. In other words foreign investment should provide tangible benefits to the nation.
  • Hostile foreign takeovers should be banned where the object is the only remaining major player in an Industry. e.g. Goodman Fielder by Burns Philp!
  • Real partnerships should be encouraged.
  • Natural monopolies should be required to remain in Australian Ownership (with foreign partners if appropriate). e.g. water, power transmission and communication infrastructure....
  • Companies should not be supported with taxpayer funds and be required to comply with the requirements of the ACCC. Unfair trade practices by foreign companies should not be tolerated especially where the victim is an Australian owned company.
  • Australian Ownership should be celebrated publicly.

Peter Russell
August 2003