Foreign ownership and control is continuing to devastate the Australian economy to the detriment of all Australians. It undermines the economic base for national independence.
For decades, successive Australian governments have argued that Australia cannot produce sufficient capital investment to develop key sectors of the economy. Foreign investment has therefore been encouraged. This has also meant that Australian enterprises, in some cases entre industries, have fallen under foreign control through majority share ownership.
Foreign ownership means that foreign entities, with allegiance to foreign shareholders, can make decisions of significance for sectors of Australia’s economy. Driven by considerations of ‘profitability’ in the short term, trans-national corporations can decide on whether to expand particular industries and/or terminate others.
According to the Department of Foreign Affairs and Trade, total foreign investment in Australia was $3.8 trillion in 2019. Investment by country of origin as a percentage of total foreign investment was:
- USA 25.6%
- UK 17.8%
- Belgium 9.1%
- Japan 6.3%
- Hong Kong 3.7%
- Singapore 2.1%
- Netherlands 2.2%
- Luxembourg 2.2%
- China 2.0%
The US and the UK between them represent nearly half of all foreign investment.
China plus Hong Kong represents 5.7%.
A classic example of foreign ownership and control in Australia was the car industry.
In the 1960-80s the federal government allowed the car industry to become virtually 100% foreign owned and controlled. The foreign owners found that the cost of local labour hurt maximum profitability and threatened to take the industry out of Australia. Successive governments gave the industry significant subsidies to try to keep it here. Finally, the Coalition government under Treasurer Joe Hockey called time on the subsidies. The foreign owners shut down the local car industry, taking the manufacturing to countries where they could better exploit the workers through lower wages.
Australia lost a major manufacturing industry with consequential loss of jobs and the skills which went with it.
Len Fox in his Multinationals take over Australia, published in 1980, provided the following figures for foreign control of various industries:
- Motor vehicles 99.8%
- Oil refining (ownership) 90.8%
- Basic chemicals 78%
- Pharmaceuticals 77.8%
- Transport equipment 54.6%
- Basic metals 38%
- Textiles 33.3%
- Food, beverages, tobacco 33.2%
These figures were obtained from the Australian Bureau of Statistics (ABS) but unfortunately more up to date figures are no longer available from this source.
Clinton Fernandes published more recent information on foreign ownership of industry in Australia in his book Island off the coast of Asia (2018):
“Right now US corporations eclipse everyone else in their ability to influence our politics, through their investments in Australian stocks. Using company ownership data from Bloomberg, I analysed the ownership of Australia’s 20 biggest companies a few days after the 2019 federal election in May. Of those, 15 were majority-owned by US-based investors. Three more were at least 25% US-owned.”
The list included the following companies and their US ownership percentage:
- Commonwealth Bank of Australia 62%
- BHP Group 73%
- Westpac Bank 64%
- National Australia Bank 63%
- ANZ Bank 54%
- Woolworths 66%
- Rio Tinto 65%
- Wesfarmers 56%
Clinton Fernandes goes on to explain how foreign corporations can sue a government for laws passed that affect their profitability under the so-called investor dispute settlement (ISDS) clauses. The US government has systematically pushed the ISDS provisions in its trade deals with other nations. It means a foreign investor can sue a government for compensation in an international tribunal if the government makes any change in law or policy that “harms” an investment. This is something no Australian citizen can do.
Foreign investment and ownership can severely distort a nation’s economy. For example, the mining industry has seen a huge increase in foreign investment in recent years, which has led to accelerated resource extraction rates in many areas. It is predicted that at the current rate of extraction, Australia will be depleted in the sources of many minerals within decades.
According to a briefing paper by Naomi Edwards for The Australian Greens:
“At current extraction rates, economic resources will be depleted by 2036 for iron ore, and by 2026 for gold.”
Decisions by foreign investors in pursuit of short-term profits deprive future Australian generations of access to, and use of, their mineral resources.
And when the Australian people want action to slow down and halt human-induced climate change, the foreign-dominated, very profitable energy sector is working to maximise extraction and sale of fossil fuels. With the ownership of this sector predominantly in foreign hands, the federal government has limited scope to redirect the energy industry away from fossil fuels to renewables.
Foreign owned multinational corporations do provide employment for Australians, but they tend to invest in industries that are not labour intensive and thus minimise labour costs. They also use transfer pricing, offshoring, divestment and so on to minimise the tax they pay compared to Australian owned companies in the same sectors.
Foreign ownership dominance has helped destroy the manufacturing industry, has ripped out resources at excessive extraction rates to maximise profits, and the result is an accelerated depletion of our mineral resources. Many corporations pay minimal, if not zero, tax and are net exporters of capital in profits and dividends. And their heavy extraction of fossil fuels goes against the desire of the Australian people for action on human-induced climate change.
Foreign ownership distorts and weakens the Australian economy to meet short term profitability objectives, and in doing so undermines the economic base for national independence.