Crony capitalism noun (derogatory): an economic system characterised by mutually beneficial relationships between politicians and business owners. Collins Dictionary.
That getting rich in Australia is mostly about working your political connections in heavily regulated industries like mining, property development and finance has been known for quite a while. Cameron Murray and Paul Frijters explained how in the excellent Game of Mates.
If anything, however, the extraordinary extent to which the Australian economy is centred on favours for the well-connected is only becoming greater, particularly under Scott Morrison.
Morrison, after all, began his prime ministership saying: “My value is: we look after our mates.” If nothing else he’s lived up to that.
This week’s energy policy announcement, centring on a commitment to build an unnecessary power plant and pipeline infrastructure to boost gas consumption, continues Morrison’s pattern of rewarding major political donors Santos and Origin Energy. Those companies are also boosters of the fossil-fuel industry’s carbon capture and storage scam, which the government is announcing handouts for today.
But Australia’s economy is littered with examples of the same forms of crony capitalism.
Media policy has always been the clearest form of crony capitalism in this country but it has become purified to an unprecedented level in the government’s extortion of Google and Facebook at the behest of News Corp, which literally dictated the legislation and the treasurer’s talking points.
Agriculture and water policy under the Coalition is almost as egregious, with massive handouts delivered to the agriculture industry (though never enough to satisfy its political representatives, the Nationals).
In its most recent review of taxpayer subsidies, the Productivity Commission (PC) reported that the government had increased handouts to farmers by more than $1 billion under the guise of drought relief, despite repeated warnings from both it and farming groups that such handouts rewarded inefficient and lazy farmers and punished those who had prepared properly for drought.
The latest win for agriculture is the announcement the government was abandoning altogether environmental water buybacks in favour of handouts to irrigators to upgrade their water infrastructure — despite years of advice from the PC that irrigation infrastructure investment was a far more expensive way to reduce water loss, and extensive evidence of water theft and rorting in the Murray-Darling Basin by irrigators.
National Party connections are also at the heart of one of the more blatant examples of crony capitalism during the pandemic: foreign-owned regional operator Rex Airlines, chaired by former Nationals transport minister John Sharp, received tens of millions in taxpayer handouts that other airlines couldn’t get.
Australian banks, big financial institutions and their customers still pay the price for another especially blatant form of crony capitalism — the long period in which the Liberal Party, in exchange for huge donations, protected the big banks and AMP from regulatory scrutiny and proper, customer-centred financial planning rules.
Unusually, this ended up blowing up in the faces of both parties, with the banks so egregiously abusing the privileges bought from the government that a political backlash resulted so violent as to force a whole new period of reregulation and industry restructuring.
The big banks have been replaced as major donors to both sides by the big four accounting firms, which enjoy hundreds of millions of dollars in government contracts, secured through a deliberate government strategy of cutting the public service and outsourcing policy work to the big four, who are even more pliable than bureaucrats.
If you’re not a mate, of course, and you don’t give generously to the Coalition, you can expect no favours. The government has used the pandemic to target the university sector and the much-hated industry super funds while sitting back and watching the arts sector expire.
Labor is gripped by its own form of crony capitalism. Key unions — which bring membership numbers and massive donations — heavily influence state and federal policy. The people of New South Wales and Queensland paid a heavy price for the role played by unions in blocking electricity privatisation in those states, leading to higher power bills and lower infrastructure investment in the name of preserving union featherbedding.
Unions are also behind the enthusiasm of state Labor governments for propping up inefficient, carbon-intensive sectors such as aluminium smelting, and costly local procurement requirements that inflate the cost of taxpayer-funded projects and services.
But under the current government, the Australian economy — always small, prone to oligopolies and special dealing enabled by an unregulated and opaque system of political influence-wielding — more than ever resembles a banana republic where the best way to make money is to befriend the ruling junta.
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Sorry Bernard, if you think the privatisation of electricity works, check out SA, a total disaster as was the water privatisation…..it very rarely is cheaper, if ever.
“Featherbedding” or not, is in the eye of the beholder.
I am not a member of a union, nor a member of any political party,
However! I am from far North Queensland, land of the oversupply of electricity. 2 hydro power stations, multiple solar pumped hydro schemes, multiple solar farms and a young black coal fired power station means that the coal fired station is not under any strain,
During the Queensland state election that caused the 27 seat majority of the Campbell Newman led LNP evaporate, the one thing I heard loudly and clearly was that Queensland should not sell or “lease” profit making assets.
Power prices always go up when there is a private company involved.
The management of a private company has a duty to maximize the profit returned to shareholders, whereas, the state government wants good return.
The state government will not forego maintenance to achieve a higher rate of return. As a north Queenslander, I can attest to the fact that when things go wrong because of a cyclone with its flooding, the Energex teams are ready to roll as soon as they can.
A private company would wait until all the water had gone down before thinking about fixing anything.
John Sharp is not the chairman of Rex Airlines, he is the deputy chairman. The executive chairman is Lim Kim Hai. Why don’t we ever hear from the chairman?
“…carbon-intensive sectors such as aluminium smelting,…”
but only if the electricity which they use for that purpose is carbon generated.
And, whenever have private companies actually reduced the cost of electricity to domestic consumers?
Why, Oh why do you insist on undermining your credibility with partial truths and ill researched articles.
Crony capitalism is indeed a blot on society, but is merely an extension of the human propensity for tribalism and ‘mates rates’ in general.
Agreed. Aluminium smelting doesn’t have to be “carbon intensive” if it uses carbon-free electricity. We need aluminium for its superior end-of-life destination as soil. Glass, on the other hand will continue to cut children’s feet for millennia to come.
Not so, Roger, glass loses its sharp edges over a decade or so.
Any time in the future, stomping on our discarded glass breaks it, the fresh edges as dangerous as ever to bare feet. Many ancient glasses devitrify into harmless fragments, but modern glasses are designed to last forever.
A government corrupted by it’s own sense of entitlement.
The really striking aspect of of this comprehensive looting of Australia and its tax-payers by the Coalition and its mates is how much is done in the open. There is no shame, no fear of retaliation. The media is mostly either tame or part of the gang. There are few if any laws that could restrict them, and if they are clumsy enough to trip over a law occasionally there is no law enforcement or investigation agency that will do anything. The AFP, for example, has shown it will never willingly inconvenience a serving minister. An opposition worth the name might have something to say, but instead we have Labor, where the role of shadow minister is usually a far too apt description and its options are few and weak anyway; Parliament is held in contempt by both government and public. It seldom even sits any more. So it’s hardly surprising the Coalition is so confident. What chance is there of anyone putting a spanner in the works any time over the next few decades?
“…. The AFP, for example, has shown it will never willingly inconvenience a serving Coalition minister….”?
Think Angus Taylor and his hatchet job on Sydney Lord Mayor Clover Moore
Or Cackles Cash, Bribie Bridget pr the entire Howard government over Iraq/AWB.
Bent Bridget another moniker…
What the left have failed to understand is that social engineering/indoctrination halts the emotional maturation process and produces infantile obedient adults incapable of challenging authority who live in a state of deep denial, and vent their frustrations on the defenseless scapegoats provided by scum sucking bottom feeders in the media. The government are acutely aware they can get away with anything, we have turned a blind eye to 2 decades of war crimes and pretend they are not happening, while a hit of ice will land you in jail?
As for the law and the psychiatric community, they are the gate keepers of the status quo, something I learnt first hand taking on corrupt police, covering up the domestic violence murder of a close friend, as they failed to investigate concerns raised as required by law.
The personal attacks, slanders, gaslighting were full on to the point I ended up framed and jailed for four months, though the evidence I possessed was incontrovertible, while the murderer walked away scot free.
What eats at me is the fact that this is a psychological battle and psychopaths’/narcissits have an achillies heel against which they have no defense due to their pathology that we never exploit
Social engineering does that? I thought rampant capitalism causes it.