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Sep 13, 2012

Cognitive dissonance as Newman flails the coal industry

Concerns about the quality of Australian management, once claimed to be partisan sniping, are now shared by a conservative premier. That didn't fit the narrative at all.

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.

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.

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162 thoughts on “Cognitive dissonance as Newman flails the coal industry

  1. Jimmy

    More evidence Campbell Newman is the best thing to happen to the ALP in years.

  2. Bob the builder

    If only Labor had Newman’s backbone, they would have vigorously defended their modest mining taxes in the face of outrageous rent-seeking, rather than timorously put their views in a debate framed by the mining companies.

  3. Jimmy

    Bob – It’s pretty easy to have backbone when you have the media on your side and you know that the miners will get the increased royalties compensated under the MRRT so all he is doing is effectively charging the Fed’s more.

  4. izatso?

    Odd ….. Cognitive Dissonance/Media Bias/Management Fudgeing/Incompetence/Inaptitude …… Business As Usual, CYA/Best Practice etc, etc, ad inf….. Not So Odd then ……………

  5. MJPC

    Well said Jimmy;
    ALP had Mark Latham and now the LNP has Campbell Newman (as well as Tony Abbott).

    As for Newman’s backbone…it’s easy to slash and burn when you have no opposition and only one house of parliament which allows you to do as you wish. In another country this would be called a dictatorship.

    Let’s see what happens Queenaland as the mining lobby starts to contract with the mining slowdown and rational voters start to regret what they did to allow a loose canon unfettered power.

  6. Jimmy

    MJPC – I surprisingly found myself agreeing with Clive Palmer last night, he was actually bagging Newman’s austerity measures as counter productive, slashing jobs will lead to lower payroll tax, lower GST take because of lower spending etc.

  7. geomac62

    Bob the builder
    I agree with you but not entirely as The Rudd mining tax came out of the blue . I guess you could say the same about QLD but everyone knew their budget would be a shocker , just didn,t realise it would so bad .
    I had never heard any discussion from Rudd or ministers informing the public prior to the announcement of the mining tax . Industry might have been aware but the public had nothing and thats the first thing a government should do , inform the public to get them onside .
    Trouble with Clive is that he comes across as part parody and part businessman . How many take him seriously or actually separate which hat he is wearing when he speaks is the concern . Imagine QLD slashing health of all things ? One thing Clive did nail was regarding Costello and the vast difference between a large state like QLD and a smaller state like Victoria and the people required to provide public service .

  8. Jimmy

    Geomac – I didn’t see all the interview, I am one of those who don’t take him seriously so I went to bed, but from what I have seen it wouldn’t be hard to point to errors in Costello’s report, it appears to be a very shoddy piece of work that decided what the answer was then set out to prove it anyway it can.

    All three eastern state conservative govt’s have made some stupid decisions re budget cuts, Newman targeting Health, O’farrell slashing education (despite supporting GOnski) and O’Farrell & Baillieu whacking TAFE when everyone is crying out “skills shortage”. If this is a precursor to Abbott (which it almost certainly is) we should be very worried.

  9. CML

    @ JIMMY – I also found myself agreeing with Clive Palmer, to my great surprise! He had many interesting things to say, not the least of which is that Newman will be gone before Christmas. Since Clive is supposed to be the biggest bankroller of the LNP in Qld, and that presumably gives him some clout, there could be interesting times ahead to our north?

    Funny that the Crikey editorial today was used to tip a bucket on Kevin Rudd (as usual), when Clive’s interview was much more pertinent to both the national and state scenes. Go figure!

  10. SBH

    Did I hear someone say ‘Orwell’? No – oh well any way, Bernard Keane seeing as it’s apparently beyond the Ken of a whole raft of people including Alan Kohler and Mitch Hook, Can you please tell us all, wtf ‘sovereign risk’ means or like ‘social capital’ it now just means precisely what I want it to mean (apols Lewis Carroll)

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