Columnists Australia

Business/Robbery etc

Keep politics out of the marketplace

23 May 2015

9:00 AM

23 May 2015

9:00 AM

Now Heaven knows, Anything Goes. Especially if it is one of Tony Abbott’s unrewarding ‘Captain’s calls’. When the Cole Porter musical hits Sydney later this year, radio shock-jock Alan Jones will be playing the song-and-dance role of The Captain. And his captain’s call, during an on-air chat with the PM last week, was for the government to hold an enquiry into iron ore pricing that Fortescue Mining’s financially discomforted ‘Twiggy’ Forrest wants the government to regulate – and has persuaded Jonesy to support. Dancing to Alan Jones’s populist tune by agreeing there was a need for an enquiry, Abbott is risking the re-emergence of some seriously discordant notes within his party room. There are media reports of at least two senior cabinet ministers strongly opposed to an action they consider seriously damaging to Australia’s international standing.

Although he did not formally commit to it, Abbott has made it difficult for cabinet to do other than support this political stunt. Let’s be clear; there are some political agendas, not just Alan Jones’s populism, prompting this worrying departure from the traditional Liberal belief in market forces. After the Twiggy-supporting Nick Xenophon’s push for a Senate enquiry failed last week, he had discussions with Treasurer Hockey about a government sponsored one; a fact which can be seen in the context of the government’s need to establish friendly cross-bench relationships for when Hockey’s budget measures hit the Senate. And then there is the $20 billion hit to budget revenue caused by the collapse in iron ore prices that Hockey had to cope with; the Treasurer would not have welcomed the price-depressing decisions of Rio and BHP (along with Brazil’s Vale) to continue to maintain their traditional market share by expanding production through implementing their recently installed capacity in the face of slackening Chinese demand.

The key players in this farce are a revenue-diminished Treasurer who is a ‘Twiggy’ sympathiser, a similarly-inclined Finance Minister from Western Australia where his Liberal state Premier is suffering a $12 billion squeeze on mining royalties, and a PM who, ignoring the recent finding of the chairman of the ACCC that criticism of Rio and BHP was ‘misguided’, asserts that ‘We do need to know the facts of what’s going on here because I am conscious of the claims being made by Andrew Forrest and others’. So an inquiry ‘could make sense’ as it would ‘get to the bottom on claim and counter claim about what’s happening inside the iron ore industry at the moment’.This has prompted the Minerals Council of Australia to note that any such enquiry would at least have the benefit of ‘exposing the folly’ of calls from Mr Forrest for government intervention in favour of selected producers – and at the expense of Rio and BHP.

But if all that Abbott and Hockey really want is about transparency and ‘providing a better understanding… of how iron ore prices are determined in the global marketplace’, about the competition from Brazil, about future demand, there are plenty of better ways of doing it. Former ACCC chairman Graeme Samuel is quoted by Fairfax media saying ‘it was inappropriate for parliament to intervene in a global market and would damage Australia’s international image. The very reason we have independent competition authorities is to ensure politicians don’t get involved in political situations.’

At least Tony Abbott has recognised the thin ice he is on in taking up Twiggy Forest’s cause: ‘What we don’t want is a witch-hunt against any particular business… I’m full of admiration for what companies like Rio and BHP have done… I want them to continue to flourish, but I also want a level playing field, I want to ensure that there’s no predatory behaviour, I want to ensure that everyone is able to compete freely in an open market… that the market is operating as it should.’ In that case, Australia’s interests, and Abbott’s objectives, would be better served be keeping politics out of the market place and leaving its regulation and supervision to the objective professionals entrusted with that task.

Got something to add? Join the discussion and comment below.

You might disagree with half of it, but you’ll enjoy reading all of it. Try your first 10 weeks for just $10

Show comments