Who controls Australia? by Humhrey McQueen.
Who owns Australia? The answer is nowhere near as simple as it used to be. In 1963, E.W. Campbell summed up under the title The Sixty Rich Families Who Own Australia. Even then, to focus on families was behind the times. Publicly-listed corporations had taken charge.
Today, BHP-Billiton is bigger than ever. It is no longer the Big Australian. It is possible to uncover who owns it. But where is its control center? It is no longer along Collins Street.
Even if a project is owned and managed by locals, we still need to know from whom they get their loans.
A hundred years ago, Bukharin and Lenin wrote about monopolising capitals. They referred to this stage in the expansion of capital as imperialism. They pointed to how banks were binding with manufacture, mining and transport. Marxists call this integration ‘finance capital’.
That dynamic is still at work. But there has been a further change in the relations between the productive and the financial. The connections are no longer just a matter of legs under the same table. The financiers do more than get the money together to finance projects. More than ever, they own the other sectors.
When the authors traced the Australian branches of manufacturing companies back to the USA they found that the great majority are owned by finance capital. Only 16 percent are in the hands of other industrials.
In Lenin’s day, finance capital was not so involved in the ‘making’ of profit. Instead, banks ‘took’ profits that had been realised from surplus value produced in other corporations. That division no longer prevails. The finance houses now buy into the corporations where wage-slaves add value. The financiers know that they cannot all get all of their money by swindling each other.
The latest pattern is called ‘financialisation’. The ‘flight of capital’ is part of what capital needs to expand. Its flight can be from one nation-market-state to another in ‘a race to the bottom’. But capital also has to be free to move between corporations inside a nation-market-state. Money-capital can thereby chase better average rates of profits. The current patterns of finance capital speeds that switching. The crisis intensified the need to do so.
Two Griffith University scholars, Georgina Murray and David Peetz, document the changes in corporate ownership since the 2008 crisis. Their results appear in the winter 2013 issue of the Journal of Australian Political Economy. They show how much more local production is in the hands of overseas finance corporations.
Murray and Peetz base their results from the top 128 corporations ranked by revenue in mid-2010. They track how the patterns of ownership have changed since 2006. They take up three questions. Where are the owners of biggest Australian corporations? How significant is finance capital here? Did overseas finance capital expand here through the crisis?
Key findings include a 13 percent jump in the US slice. US finance-capital corporates now hold 28 out of every 100 ordinary shares. The UK slice has fallen by 6 percent. China has 0.2 percent.
There has been a 5.5 percent drop in the Australian-owned segment. Before the crisis, locals held Number One spot with 29 percent. The overseas were then at 27 percent. That order is now reversed. But in non-financial corporations, the locals are down at 13 percent . Overseas owners stand at 23 percent.
In the twenty largest corporations, the fraction held by overseas finance corporations rose from 35 in 2006-07 to 45 percent.
The increases in overseas ownership are broad and substantial. In broadcasting and TV, it is up by 27 percent. For health manufacturing and supply, it is up by 19 percent. In food and other manufacturing, the increase is 15 percent. By contrast, the overseas slice in transport, utilities, construction and heavy manufacturing dropped by nearly 12 percent.
The highest rate of foreign ownership is in mining. Miners also account for a third of the total price of all share-market capitalisation among the top firms. Mining saw a 12 percent increase in overseas ownership, despite the czars. Rinehart. Forrest and Palmer together hold under 5 percent of the sector. Rinehart gets most of her billions through a troubled joint venture with Rio Tinto.
The finance sector
The slice of finance houses held from overseas more than doubled to 65 percent. The overseas share among banks went up from 41 to 52 percent.
In 2006-7, the top five Australian-based finance capital entities held 19 percent of significant shareholdings. This fraction fell by a third to 13 percent. By contrast, the top five from overseas grew from 15 to 19 percent.
The changes inside finance capital are equally striking. Banks dropped back by a third to just 14 percent. The Commonwealth Bank, for example, slipped from first to third, down from 8 to 4 percent. Non-bank financial houses shot up from 11 to 23 percent.
The newcomers are spearheaded by the US Master of the Universe, BlackRock. BlackRock is the world’s largest funds manager. It controls four trillion dollars. In Australia, BlackRock scored 11 percent of shareholdings by 2010. It bought an arm of the British Barclays bank which held lots of Australian shares. BlackRock CEO, Larry Fink, was a key advisor to US administrations during the bailout. BlackRock itself did not need an injection of funds. Fink is a Democrat. His most valued asset is Obama’s ear.
These numbers add to the information we need to detail who ‘controls’ Australia. Corporations, however, cannot rule by themselves. They need the clout of a state. US finance capital dominates through its political and military links. Washington pushes the Pacific Trade Partnership as one more weapon for finance capital.
So-called globalisation has not overwhelmed all nation-market states. Rather, global power remains a game of snakes and ladders. The US empire is still able to impose its will on its allies. Iraq is several times weaker than in 2002. Venezuela is much stronger.
Australia has been snaking downwards. The most significant sell-out was to float the dollar in December 1983. Next, Hawke-Keating let in forty firms to speculate on foreign-exchange. One consequence is the high-dollar. It makes other sectors of the economy unable to compete.
More than ever, the independence of Australia depends on realising the needs of working people. Our welfare will be secure only under socialism.
The ground for our campaigns is solid. More than two-thirds of Australians object to level of overseas ownership of mining.
[The Journal of Australian Political Economy costs $24 for four issues, c/- Department of Political Economy, University of Sydney, 2006. The current issue also includes a study of the locals who craft surfboards.]