This week Treasurer Wayne Swan effectively killed the foreign takeover of the Australian Securities Exchange. He declared it was ''contrary to the national interest''. This is further proof, if ever it was needed, that Australia is far from a free-market economy.
Cities, countries and companies all have versions of their own foundation myth. Rome was founded by twins reared by a wolf. America was founded by the Pilgrim Fathers fleeing oppressive government Apple was founded in Steve Jobs's garage.
The modem Australian economy has its own foundation myth. It goes something like this: Until the early 1980s the economy was closed and inward looking, protected by high tariff barriers and fixed exchange rates and subject to extensive government regulation. Bob Hawke and Paul Keating then began a process of liberalisation, globalisation and privatisation, continued by John Howard. By the mid-2000s the Australian economy had been transformed into something resembling a free-market one.
The evidence of the power of this myth is not hard to find. For example, just after last year's federal election, in a speech boasting of her reform credentials, the Prime Minister gave a word perfect recital of the myth: ''Twenty-five years of hard-won economic reforms ... internationalised our economy ... drove competition in domestic markets and delivered surplus budgets ... Reforms which mean that our open economy's ability to resist global shocks has become the envy of the world.''
The problem with the foundation myth of the modern Australian economy is that, while elements of it are accurate, its central premise is false. It's true that the Australian economy is more free in 2011 than it was in 1981 -- but that's not saying much. Tariffs might have come down and the dollar floated, but we still have a car industry existing only at the whim of ministers who impose the taxes that pay for the subsidies to car companies.
We too often ignore the fact that the industry-wide government regulation that prevailed in the 1970s and 1980s has been replaced by specific and targeted regulation often aimed at single sectors of the economy or sometimes even at single companies. This new form of regulation is more dangerous because it is more arbitrary and more likely to be the outcome of day-to-day political considerations compared with the sort of regulation imposed in previous decades.
A quick rundown of Australia's 10 biggest companies reveals the threats they face. BHP Billiton and Rio Tinto are No.1 and No.8. The mining tax was aimed directly at their profits and it was at least as bad as anything Gough Whitlam tried to do. And the way those two companies and the government negotiated in secret to have their tax reduced was likewise straight out of the 1970s.
The big four banks take up the second to fifth spots. It's hard to know where to begin when it comes to talking about what the government wants to do to the banks. At No.6 is News Corp. For politicians media regulation is more than a hobby, it's an obsession. At No.7 is Wesfarmers, which is having to face a federal parliamentary inquiry because it is selling its products too cheaply. At No.9 is Woodside Petroleum, which is facing a carbon tax. At No.10 is Telstra, which has been savaged by government and government regulators for years.
And the list could go on. If it were extended to Woolworths at No.11 we could discuss how the poker machines it operates are the subject of a single independent member of parliament holding the federal Labor government to ransom. And yesterday, the Health Minister, Nicola Roxon, revealed legislation to introduce the plain packaging of cigarettes -- which even she admits is the most draconian regulation of tobacco products in the world Wesfarmers and Woolworths sell cigarettes. All of these companies employ workers. They all have to deal with the country's industrial relations system, which is arguably more regulated than at any time since Keating was prime minister.
The scale of government regulation over these companies demonstrates it is now impossible for any large public company to ever give an honest opinion on any public issue -- big business is now simply too compromised by its relationship with government. We believe the myth of Australia as a free-market economy because it's convenient to believe it allows politicians to think the hard work of reform finished some time around 2004, and now all they need to do is tax and spend the proceeds of the resources boom.
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