This month's Bulletin

It has become clearer that Australia's place is increasingly peripheral: no replacement has been found for its leadership in basic commodities; very few Australian companies have successfully built global businesses...

Australia's marginalisation is entering a new phase -an exodus of Australian companies... Global corporate players cannot, on the whole be run from Australia. The rest of the world is just too far away and our own consumer and capital markets are too small. [Alan Kohler, AFR 22-26 Dec 2000]

The big sleeping issue for corporate Australia in 2001 could be our future as an independent economy. In some boardrooms there is a strong view that, with last year's record level of mergers and acquisitions, we are in danger of heading down the New Zealand road to the branch plant economy. This could mean a massive downgrading of corporate head offices and the surrender of our economic sovereignty. The mega takeovers in the resources sector in the year 2000 raised the question again of the extent to which these downgrade our corporate head offices and reduce our economic sovereignty. [Richard Gluyas, The Australian, 26.12.00]

Offshore bids for Australian companies almost doubled in 2000, accounting for nearly 40% of all merger and acquisition activity, according to KPMG Corporate Finance. The number of deals increased, and their combined value almost doubled, to $41.5 billion. [Julian Yella, The Australian 29.12.00]

The Chairman of the Australian Competition and Consumer Commission, Professor Alan Fels, has warned business to expect an enforcement blitz in 2001, including a major push into a new frontier of competition regulation - international price-fixing cartels. He said globalisation was creating new corporate cowboys who conspired to fix prices across borders and carve up markets. He said there had been a recent surge in detection, as more countries adopted special immunity programs for whistle blowers. [Australian Financial Review 3.1.01]

Two new giants were created in the drug industry. Glaxo Wellcome announced a union with Smith Kline & Beecham. Pfizer acquired Warner-Lambert. General Motors entered an alliance with Fiat. Ford took over Land Rover from BMW. Renault took a Japanese partner, Nissan. Mitsubishi took a stake in Hyundai Motors. Daimler-Chrysler bought a one third stake in Mitsubishi, and also bought into Hyundai. In investment banking, UBS bought Paine Webber, Credit Suisse acquired DLJ, and J.P. Morgan sold out to Chase Manhattan. [The Economist, 23.12.00]

The latest Building Industry Prospects by BIS Shrapnel, says there will be a marginal rise in the short term in non-residential construction activity, followed by a major decline. Retail and hotel sectors will be the hardest hit, reflecting the slowing economy and the oversupply in the industry left by the Olympics. "The downturn will be quite severe, with commencements falling by 16%". [Carolyn Cummins, Commercial Property Editor, Sydney Morning Herald 11.12.00]

According to David Gaunt, co-owner of Gleebooks, a number of Australian-owned bookshops will "go under" as a result of increasing competition, especially from large American-owned book shops. He said booksellers faced an unprecedented combination of challenges - the GST, the Olympics, the falling Australian dollar, competition from heavy discounters, such as the Big W, and tightened trade conditions from publishers. He said his own business had dropped by over 20%, [Susan Wyndham, SMH 22.12.00]

The Australian Institute has produced a Genuine Progress Indicator [GPI] for the year 2000. Its basic premise is that economic growth and welfare are not the same thing. In fact, some growth can be a cause of declining welfare. For example, increased pollution and traffic congestion can be caused by the unbridled pursuit of economic growth. The GPI includes a range of important factors excluded in the GDP. For example, it includes an estimate of the financial and psychological costs associated with being unemployed. It also includes the costs of hidden unemployment, and overwork.

For the first time, the GPI now includes measures of the costs of problem gambling, and an assessment of the value of advertising. It also deducts a proportion of the total expenditure on advertising, on the grounds that much of it is misleading and leads to a decrease in welfare. The GPI now claims to represent a much broader indicator of social welfare than GDP. Since 1950, GDP per capita has increased by almost 200%, but GPI has increased by less than 60%. It shows that current policies are failing to substantially improve the welfare of citizens. [Clive Hamilton & Richard Denniss, Tracking Well-being in Australia, Australian Institute, Canberra, December 2000]

Gamblers at Australia's 13 casinos are switching betting preferences from table games such as black jack and roulette to poker machines. Income generated from betting on the 10,825 pokies installed at the 13 casinos has exceeded income from the 1,119 gambling tables. $938 million went into poker machines at casinos in the last financial year, and $900 million was spent on the tables. This poker-gaming machine income represented a net loss of $67 per head of the Australian adult population, compared with $62 in 1998-9. In March there were 75,256 machines in clubs, and 20,733 in hotels. [ Les Kennedy, SMH 15.12.00]

Australia has the largest number of addicted gamblers in the world - almost 2% of the people have a problem. Most plough money into poker machines - 21% of which are found in Australia - most in NSW. The State government has begun a new purge, by imposing a surcharge, stopping machines accepting high value notes, and slowing the speed they can take the gamblers' money. [Patrick Barkham, Guardian Weekly 28.12.00]

Prostitution and loan sharking flourished in the Star City casino's high roller room in Sydney, according to a report by Peter McClellan, Q.C., who was appointed by the Carr Government last May to investigate. He said the Commissioner of Police had been slow to act on information provided, despite the fact that criminals known to the police were among the biggest gamblers. McClellan's report is critical of management, but also of the Police Commissioner, the Casino Control Authority, and the Director of Casino Surveillance. He found that criminals -actual or suspected - comprised almost half of Star City's "best" hundred customers. [Neil Mercer, SMH 23.12.00]

The commonwealth, as an ideal, is just about knackered. The term is hardly ever used. Instead we have moved into a society where the wealthy are astronomically so, where a chief executive can earn 100 times more than a typical employee, whilst managing to pay little or no tax. "I know the attitudes I'm expressing are hopelessly anachronistic. My enthusiasms for public ownership, public libraries, public whatever, represent sentiments attached to social values that are being, or have been demolished. Nonetheless, the slow murder of public education seems one of the more monstrous perversions of public policy. [Philip Adams, The Australian, 9.12.00]

You walk around the campus these days and you can feel a cloud hanging over it. I think lecturers are really pressured to do much more work. Tutorials are being cut across the board... In my first year I did an art history course, and we had to sit on the stairs or outside for lectures. It was hopelessly overcrowded. Courses get cancelled all the time because there aren't enough teaching staff. University administrations now seem to operate on the rhetoric of money. Their focus is on efficiency, output and productivity, which seem totally inimical to the values of education... What I would really love to see in Australia is a shift away from the dominance of economic thought. I find it really constricting and narrow and unimaginative. [Anna Clark, student, The Australian, 1.1.01]

The eight premier research universities say they need a funding boost of $13 billion for research and development. Without it they think Australia will not be able to compete with other nations, build high technology equipment, or reverse the fall in the dollar. Research infrastructure has been squeezed and academic staffing, especially in mathematics, engineering and science, has been cut. [Aban Contractor, Higher Education writer, for SMH 30.12.00]

The NSW Ombudsman has warned the state universities that a major investigation into one institution could result in an overhaul in the way all of them are run. Many complaints have been made under the Protected Disclosure Act, which encourages whistleblowers to speak out about corrupt conduct, mal-administration, and substantial waste in the public sector. Complaints have included poor marking procedures, bullying, sexual harassment, and disciplinary hearings behind closed doors. [Aban Contractor, SMH 26.12.00]

According to Aban Contractor, the Sydney Morning Herald Higher Education writer, over 70 professors at NSW universities are sponsored by companies, government departments and private benefactors, from major banks to James Packer, Bill Gates's Microsoft, and Australia's largest maker of gaming machines. A Herald survey of 11 universities has found that the sponsors of academic chairs provided resources and facilities, and paid or contributed to, the salaries of at least 73 academics. Sometimes sponsors have vetting rights over appointments; some can decide what type of research is to be undertaken, and in some cases contracts give first preference on any commercial contracts that may eventuate. [SMH 11.12.00]

The Australian stockmarket is said to be worth $700 billion. Of the 1,300 stocks listed, the top ten account for almost 50% of the entire market capitalisation. The Australian Stock Exchange has demutualised and floated, and has arranged a co-trading

plan with the Singapore Stock Exchange. It goes on-line in July. The largest players in world stock markets are still the New York Stock Exchange, and "Nasdaq", the US National Association of Securities Dealers by Automatic Quotation.[Andrew Main, AFR 28.12.00]

The Australian Securities and Investment Commission has banned 57 financial advisers during the past 16 months - 20 of them for life; 47 have been banned from involvement in company management. Since the start of the 1999-2000 financial year 36 corporate criminals have gone to prison. [Trevor Sykes, AFR 9.12.00]

Ninety per cent of all discretionary family trusts have been set up to cheat on taxes, by shifting taxable profits on income to those who did not earn it by their own enterprise or personal exertion. All of the trusts objectives can be met in other ways, the only difference being that more tax would be payable... The middle is paying for the bottom, and the top end is masquerading as the poor and getting a free ride. [Peter Apps, letter in AFR 11.12.00]

According to the Australian Tax Office, over $4 billion is financing tax minimisation schemes by 58,000 investors. The ATO is facing difficulty in bringing matters to court, and is considering introducing penalties for the promoters of the schemes. So far it has decided that 231 schemes involving 57,667 participants and $4.3 billion in deductions, contravene the tax law. [Paul Cleary, AFR 11.12.00]

The Australian Taxation Office has released its guidelines on GST and the sex industry. Brothels, like any other business, must register for an Australian Business Number (ABN), and if their turnover exceeds $50,000, must register for GST, along with other workers. A worker who is not registered for GST cannot claim input credits on business-related expenses such as room hire or shift fees.[Allesandra Fabro, AFR 19.12.00]

Traditionally, investors in foreign tax havens have been able to get "superior interest earnings, asset protection, enhanced confidentiality, and tax minimisation". This is now changing for American investors. The US Internal Revenue Service [USIRS] is forcing uncooperative foreign banks to report the identity of every investor in American securities or face a 31% tax on all securities in US markets not held by a qualified intermediary. The IRS hopes this will increase its take of the US$124 billion in income paid to foreign investors annually. [In the latest tax year it collected on 1.9% of this. [Fiona Buffini, AFR 29.12.00]

This is the term used by labour market economists for the tendency of the economy to polarise between top and bottom end jobs. There has been a substantial growth at the top of the skill hierarchy, and at the bottom; with a big hollowing out in the middle, according to Mark Cully, senior researcher at the National Institute of Labor Studies at Flinders University. The result is a chasm of income and opportunity between the haves and have nots of the new economy which is creating a dividing line between "insiders" and "outsiders". Highly paid knowledge workers in the high-tech industries are a small proportion of the work force, and will remain so for the foreseeable future. [Alan Mitchell, AFR 9.12.00]

Australia's banks have clashed with the Federal Government over its policy on foreign takeovers, claiming that Treasurer Peter Costello would not allow an offshore finance house to buy one of the big four. Westpac's outgoing chairman, John Uhrig, told shareholders that the Government had a policy of not allowing a foreign company to take over one of the four major banks. The Treasurer is believed to have blocked three attempts by foreigners to take over large financial institutions. The Government has said it would not revisit the so-called "four pillars policy that bans mergers or takeovers among the four banks until there was evidence of greater competition. [Anne Hyland and Miranda McLachlan, AFR 17.12.00]

New guidelines for multinationals have been adopted by the OEC. They could become effective tools for trade unions seeking to strengthen the occupational health, safety, and environmental practices of the world's largest companies. The guidelines deal with disclosure and performance rules related to employment and industrial relations, and contain procedures for government to promote and implement them. [ICEM, Global 2, 2000]

In the industrial past, there were natural limits to the power of a strategically placed corporation. It was restricted in how many businesses, or customers... it could draw into its sphere of influence... But in the "creative economy" the power to exert influence is nearly unlimited... Global corporations will try to take advantage of their transnational status to operate beyond the control of national governments. [ In the USA a majority of corporations paid no US income taxes]. The past year's outcries against globalisation spell troubles for transnationals, and there is no sign the protests are diminishing.[Peter Coy, AFR 4.1.01]

Professor Ross McCallum of the University of Sydney has called for greater links between unions in different countries. He said the forces of globalisation would change permanently the way unions fought their battles, as multinationals increasingly stamped their influence on the world, and capital became more mobile. He said the current trend is for multinationals to dominate global markets, and to counter this unions had to organise globally. [Tom Allard, SMH 30.12.00]

Australia's health care system is dominated by publicly funded universal health insurance; consequently most of the profits flowing to the new corporate health care companies come straight from the taxpayer. Concern has been expressed about the potential for corporate interference with medical autonomy. Some State Governments have introduced laws to try to curb any such influence, as Australia moves rapidly towards the market-based medical system of the USA. Sprawling new medical empires are transforming the health care landscape; some are telling GPs that bulk billing will soon be a thing of the past. [Ray Moynihan, AFR 28.12.00]

A study of premature deaths in NSW has revealed a widening gap between rich and poor areas. The difference between male death rates in the richest and poorest parts of the state has grown by 19% over the past 25 years, according to a study by Dr. Lillian Hayes, of the Faculty of Nursing at the University of Sydney. The predictors of high mortality in Sydney were unemployment, low income, single parent, and lack of education. Areas of highest mortality included South Sydney, Liverpool and Blacktown. Areas of lowest mortality included Kuring-gai, Lane Cove, and North Sydney. Male life expectancy is 13 years higher in the northern suburbs compared with the southern ones. [Sarah Crowe, University of Sydney News, 14.12.00]

Australia is on its way to becoming the fattest nation in the world, with many teenagers being diagnosed with heart disease and diabetes. The rate of childhood obesity has doubled in the past 10-15 years, according to Professor Ian Caterson, of the University of Sydney's Department of Human Nutrition. If current rates of increase in obesity continue, Australia could become the fattest nation in the world. A key reason for the rise in obesity was physical inactivity, with some children spending up to five hours a day in front of television or computer screens. [Sharon Verghis, SMH 12.12.00]

The majority of illegal migrants who claim asylum are placed in the hands of Australian Correctional Management (ACM), which is a subsidiary of the US based Wackenhut organisation, contracted by the Federal Government to run six detention centres, where about 3,500 illegal migrants are kept. ACM is said to be paid an average of about $70 a day for each detainee when the camps are full. The secrecy of the contract has concerned some Labor MPs, and the Human Rights and Equal Opportunity Commission. [Bernard Lagan, SMH 12.12.00]

According to Larry Elliott of the South Centre, in Switzerland, a subtle shift in attitude to globalisation has occurred over the last year. Before Seattle it was assumed there was inexorable logic to the process, which would benefit rich and poor alike.

Since then the mood has changed; it is now recognised that "there are inherent problems in a system where capital calls all the shots and has total freedom of movement, while labour is voiceless and has to stay where it is". A UK discussion document has the subtitle: "Making Globalisation Work for the Poor". The authors, Singh and Zammit, say that there has been greater slippage in labour standards in the North than the South.

The main cause of this they argue, "lies in the current processes of economic globalisation, which emphasise free trade, free movement of capital, and labour market flexibility within national economies... The last two characteristics disadvantage labour... and favour capital". [Guardian Weekly 14.12.00]

Globalisation is a disciplining threat that makes us accept higher levels of competition that lower the quality of our lives. In countries where there still is a viable trade union movement, the issue of globalisation re-vitalises the necessity of international cooperation and solidarity. As long as the unions identify themselves with the nation state and the interests of national capital, and not international solidarity and cooperation, there is no effective counter force against the anti-social programme of neo-liberalism and its effects. [Jens Lind, Aalborg University, in Transfer: European Review of Labour and Research Vol 3, 2000, p.538]

In a Report by the House of Lords Committee on Flight Health Hazards, Airbus and Boeing admitted that about half their airflow was reticulated, not fresh, and that the main source of humidity in a cabin after a few hours was moisture, sucked out of the lungs and mucous passages of passengers. There is an almost universal practice of directing fresher air to the cockpit, and the removal of individually controlled air ducts above passenger seats. The Inquiry said aircraft makers should restore personal control over airflow for passengers. "If there was any glamour left in the fanciful images created by the markets of air travel, it has been suffocated by evidence about tightly packed, unwashed, virulent and flatulent travellers stressed to their smelly armpits by a mass transportation system that confiscates their liberty and dignity". [Ben Sandilands, AFR 29.12.00]

Transparency International (TI) was founded by former World Bank executive Peter Eigen in 1993. It now has "chapters" in over 70 countries. It publishes, among other things, an annual index of corruption. IT ranks countries on the basis of the amount of corruption thought to exist. A third of its budget comes from donations by international organisations; another third is given by development agencies such as the World Bank; the rest is donated by large corporations. There is no evidence that it has links with the CIA, but some of its donors have had dealings with official bodies in the USA, and there is no doubt that it agrees with US free market ideology. The World Bank estimates that corruption amounts to about $80 billion a year. [Pierre Abramovici, Le Monde Diplomatique, November 2000]

Recessions happen because imbalances develop in the economy - and inflation is only one possibility. The greatest threats today lie in over-extended consumer and investment spending. The US is at the end of a speculative spree. In early 2000, the stock market traded for a short period at 39 time profits - almost three times the average for 1946-96. People spent on perceived wealth...companies invested heavily, in part because money could be raised easily from venture capitalists.

This induced spending boosted jobs, profits and probably productivity. The spending boom prompted the Federal Reserve to raise interest rates to pre-empt inflation or more speculation. The aim was to contain the boom without causing a collapse... Confidence is almost everything - if falling stocks, high debts and job fears unnerve consumers, the effects could be devastating. [Robert J. Samuelson, AFR 28.12.00]

America's nine-and-a-half year expansion, the longest in history, is clearly slowing sharply... will the economy make a soft or hard landing? ... Clearly, it is not only Mr. Greenspan who should now be keeping his fingers firmly crossed. The fate of the whole world economy hangs on America. The American economy may yet get its soft landing. But only a fool would take this for granted: the risk of a much bumpier touchdown is real. [The Economist 9.12.00]

US investors are braced for a "hard landing" of the economy following a slump in manufacturing orders to its lowest level since 1991. Money is deserting the US economy at a very quick rate. The Commonwealth Bank Economist, Michael Workman, said the US and Australian economic cycles were closely correlated, hence the US slowdown will translate reasonably quickly to the Australian economy. [Nick O'Malley, SMH 4.1.01]

Most newspapers expose only the misdemeanours of the powerless, while the political issue of our age, the corporate take over of public life, is left to tiny underfunded groups such as Corporate Watch to investigate. Almost every commercial development is represented by the media as a "jobs boost", even if in reality it is a job-destroying monstrosity. In the UK even the Web is proving vulnerable to censorship. Shell is seeking to close a site that alleges irregularities in the company's handling of nuclear waste. [George Monbiot, Guardian Weekly, 28.12.00]

Privatisation is part of the agenda of aggressive globalisation, organised by the International Monetary Fund, the World Bank, and the Bank of International Settlements, with the participation of international financial funds and speculative capitalists. The main privatisation schemes have been completed or are well under way. The thrust of the policies of right-wing forces is to emulate Thatcher's Britain when water, rail, electricity, gas, telephones and bus transport were all privatised. [Steve Cooper, Privatisation: A Challenge of our Times, report based on a trip to Eastern Europe in October 2000]

As noted in our last issued, a revolt against orthodox economic teaching began in France. The education minister Jack Lang (!) set up a commission to investigate the students' complaints. At the 10th World Congress of Social Economists held at the University of Cambridge, it was reported that a kind of "Stalinisation" was afoot, phasing out courses on the history of ideas in economics, in favour of a less critical acceptance of the economic rationalist status quo.

Raymona Koval points out that Australia has its own white knight of Economics, Professor Hugh Stretton of Adelaide University. The thrust of his work, she says was to re-establish a moral sense in the public domain - to counter the view of the selfish and greedy "rational man" so beloved of his intellectual enemies. His latest book is Economics: A New Introduction (UNSW Press). One reviewer said: Stretton's book is right for the times because the times are wrong. Future historians will ponder over the capture of the commanding heights of the world's economy by religious maniacs masquerading as scientists in the 1980s and 90s. [The Australian 6.1.01]

Postscript

I look at the ABC and fear a national asset is being wrecked before our eyes. I look in vain for the Labor Party to come to its defence. What has become of the party formed from the belief that the creation of human societies could not be left to the random impulses of business? All this and more is currently showing at the ABC. Whatever you do, don't switch off. [Martin Flanagan, staff writer with the Age in SMH 30.12 .00]