MINING CHRONICLE, November 1998

Level playing field. . .or lawn cemetery?

by Brian Jenkins

As world commodity trading falters and investors scramble for cover, it seems Australian governments may have incorrectly read the nature of global competition, in which very different rules are needed for productive industries as against banking and speculation where most paper profits are made.

Local companies are feeling the bite of unfair competition--deregulation has left them naked among wolves. Remote officialdom may accept offshore capture of over 50 percent of our major construction contracts, but it is a tragedy.

In 'Yes, Minister' fashion, the miscalculations will be swept under the carpet. Politicians of both major parties share the responsibility for having adopted the flawed 'level playing field' concept.

MAI TREATY AN EXAMPLE

The problem was highlighted last month when Australia's subservience to OECD negotiations of the MAI (Multilateral Agreement on Investment) came to a head with the withdrawal of France in defence of its national sovereignty.

The MAI is a treaty which would give multinational corporations a standing previously only granted to nations, and would enable them to seek compensation for laws that reduce corporate profits. Larger corporations feel this is justified, especially those which have wealth in excess of most nations.

It took our Government several years to reluctantly arrive at a conclusion which readily occurs to the average businessman in half an hour of glancing through the draft MAI's 135 pages. The conclusion: "The agreement should be pared back to core elements. Governments should continue to have the sovereign right to regulate to protect and promote environmental and other important objectives."

A member of the Joint Standing Committee on Treaties, Senator Shayne Murphy, noted that Treasury officers had been taking trips to Paris every six weeks for several years--yet were unable to explain what benefit, if any, the treaty would give Australia. The senior officer responsible for negotiating the MAI, Mr Tony Hinton, snubbed the Committee's May 6 public hearing to fly again to Paris.

TENDER INEQUITIES

On a related front, the chairman of the Federal Parliament's Standing Committee on Industry, Science and Technology warned in March that "the national local content policy is being circumvented - local industry is not being given the opportunity to tender for work because developers give contracts worth millions of dollars to their overseas-based alliance partners".

Now, complaints are intensifying from anxious tenderers in fabrication and construction industries that they are at a big competitive disadvantage to overseas tenderers even in the purchase of basic material such as steel.

It is common knowledge that Australian firms are being beaten for major domestic contracts by Asian and even New Zealand tenderers who benefit from a price advantage of $200 or more per tonne of BHP-supplied steel. When our best managed contractors are not able to win even 50 per cent of projects in their own backyard, it is time to question the meaning of a 'level playing field'.

Mr Richard Dow, a spokesman for the Heavy Engineering Manufacturing Organisation (HEMA) told Mining Chronicle that the price of steel is discussed at every monthly meeting, but no solution can be found to the overwhelming advantages accruing to offshore nationals whose governments work with, not against them.

BUREAUCRATS "INDIFFERENT"

There is an abundance of evidence for HEMA's claims in the report "Sea of Indifference" (March, 1998), available on the parliamentary website at http://www.aph.gov.au/house/committee/ist/nws/report/contents.htm

The foreword baldly states: "The Committee regrets that the Federal bureaucracies still do not appear to play a significant role in promoting and fostering local industry content in major projects. Indeed the Committee believes they are indifferent to the real opportunities for domestic industry growth which continue to be presented by the vast potential of fields to the north and west of Australia."

It is not necessary to have read Perth inventor Paul Ritter's book "Curses from Canberra" to appreciate that bureaucrats in Treasury, Austrade and other key departments possess crucial powers which can literally make or break businesses exposed to overseas market forces.

The mantras of the "level playing field" and "international competitiveness" have been adopted for a generation by career public servants at the urging of representatives of overseas multinationals. The concepts have been onsold to a succession of ministers.

However, our downsized business survivors are only too well aware that their overseas competitors, whether in Japan, South-east Asia, Europe or the US, are protected by their governments through tariffs, subsidies, tax breaks and other measures which are a thing of the past in Australia.

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