Well, ouch. That didn’t fit the narrative at all.
Campbell Newman not merely raised coal royalties in Queensland on Tuesday, but went on to attack coal mining companies yesterday, blaming poor management for their high cost:
“Now the mining industry’s had problems for some time. They’ve allowed their costs to get out of control. They’ve allowed basically poor industrial relations practices, poor management practices. The productivity has dropped. If there are going to be mines that are closing, well that’s not just about royalties, it’s a lot to do with the performance of the companies themselves.”
Let’s roll back a few weeks in the productivity (non)debate to recall what happened when Treasury released a paper suggesting that poor management practices might have contributed to the decline in multifactor productivity in the manufacturing sector: it was criticised (“dramatically miss[es] the target” opined Henry Ergas, who’d know a thing or two about poor management) and cited as evidence of Treasury’s Labor bias. We copped a blast from Judith Sloan for daring to mention the paper.
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But it turns out concerns about the quality of Australian management aren’t confined either to an allegedly partisan Treasury or to manufacturing. Campbell Newman, whom the conservative commentariat is cheering on as he cuts a swathe through Queensland’s public services, shares them.
A clutch of commentators and industry players are thus left having to rework their narratives. Clive Palmer, who used to dwell at length on how the federal government’s mining tax was evidence of Labor’s “communism” or “socialism” (he apparently thinks they’re the same), had to resort to blaming Newman’s lack of business experience (along the way claiming that he himself was “the most successful Queenslander in the commercial world that’s ever lived”). And by the way, did you spot Palmer’s unsubtle plug for Lawrence “three-time loser” Springborg in the course of that interview?
The egregious Mitch Hooke, king of the rent-seekers, sounded forth from his Barton Minerals Council redoubt, but seemed unable to comprehend that it was a state conservative government that had lifted royalties and criticised mining management. “Increasing budget deficits, worsening industrial relations, the carbon tax, tax grabs in lieu of tax reform and a focus on redistribution rather than boosting the productive side of the economy is having an adverse material impact on costs, productivity and sovereign risk reputation,” he intoned to the AFR.
Ah, sovereign risk. So when Labor imposes a taxes, including one that Hooke himself helped to water down, it’s “sovereign risk” but not when a conservative government unilaterally lifts royalties.
The AFR today devoted extensive coverage to remarks by Jac Nasser, faithfully noting down seemingly every word that fell from the lips of the BHP chairman at “The Australian Financial Review and Deutsche Bank’s inaugural ‘Conversation Series'”, complete with photo of Nasser and editor Michael Stutchbury listening raptly to James Packer, whose views on how to effectively exploit gambling addicts were, alas, either unsought or unreported.
Nasser is most famous for being sacked from Ford. And as we’ve pointed out too many times to mention, BHP-Billiton track record of wasting money, including most recently with its massive write-down on US shale gas investment, is truly impressive. But he continues to exert a bizarre hold over the local business media, who regard every half-baked prognostication he utters (“it is a cyclical industry in a cyclical global economy”) as the wisdom of Solomon.
No wonder it’s apparently heretical to raise questions about the quality of local management when executives are treated as semi-divine by the local media no matter what their record (a point, incidentally, the excellent Ian Verrender touched on in his final column for Fairfax).
Nasser also repeated his claim that mining companies would go elsewhere unless Australian fell into line with industry demands. It was only in March that Australia was ranked the best destination in the world for mining investment for the third year running by US mining analyst Behre Dolbear. We’ll see how Australia fares in the same survey next year. But the only thing that will have changed in 12 months is a conservative government slapping a royalties increase on coal miners.
Odd how governments, charged with the real-world task of raising revenue and balancing budgets, suddenly take a different perspective on the self-interested claims of industry than they did in opposition, no matter what their political stripe. Unfortunately, it tends to cause severe cognitive dissonance for media cheerleaders used to blaming Labor for everything.