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Former Liberal Party Acting Federal Director now BCA Executive Director Andrew Bragg rallies support against the power of "special interest groups". (Screen shot via @abc.net.au.)

The Business Council of Australia is running a hysterical campaign against trade unions, GetUp! and the Labor Party as if corporate Australia is facing an existential threat. That’s partisan rubbish, writes Ian McAuley 

FORESHADOWING the Business Council of Australia’s (BCA) announcing its intention to take a prominent stand in the next election, Andrew Bragg wrote in the Financial Review:

'If the playing field isn’t levelled, Australia risks becoming the Argentina of the 21st Century: blessed with opportunity but captured by isolationists, special interest groups and quasi-socialists.'

Although I’m not sure who he’s calling “quasi-socialists” – the Perón movement was mid-20th Century – it’s a reasonably sound precis of Australia’s situation.

At the turn of the 20th Century, Argentina and Australia were vying for top ranking as the world’s most prosperous countries. Both were fabulously wealthy and were indeed “blessed with opportunity”. And as we know, while Australia prospered, Argentina stalled economically.

But Bragg’s use of that analysis to support the BCA’s unashamed campaign to throw its weight behind the Liberal Party defies both historical facts and economic good sense.

'When the public’s money is used to support a ruling political party’s election campaign, that’s called “corruption” in most countries'

Drawing on comparisons between Argentinian and Australian history, Princeton University historian Ian McLean, author of Why Australia Prospered, showed how in Argentina, a wealthy elite used its political power to shape the nation’s policies to its own short-term benefit.

He wrote:

'If a wealthy elite emerges early, they will likely oppose the extension of the franchise, offer limited support for universal and publicly-funded education, and secure an immigration program that suits their own labor requirements, thus reinforcing a skewed distribution of income and wealth in the community…'

With a little shifting of context, it seems as if it’s the Liberal/BCA platform that’s taking us down the Argentinian path. We already have universal franchise, but in its hysterical reaction to GetUp!, the BCA wants to tip the electoral field in its own direction and has asked its 130 members each to contribute $200K to a fighting fund.

As a so-called “business-expense”, that would be a tax deduction — meaning that, for each such donation, $60,000 would be paid by taxpaying Australians. And the money doesn’t belong to the corporate executives or board members — it belongs to the shareholders of these public companies. By contrast, donors to GetUp! are spending their own money — and they don’t enjoy a tax deduction.

When the public’s money is used to support a ruling political party’s election campaign, that’s called “corruption” in most countries. And when it’s combined with attempts to muzzle voices of dissent, such as GetUp!, that’s the path to a one-party dictatorship.

On immigration, education and labour conditions, the Liberal/BCA platform is quite in line with serving the interests of corporations’ supposed labour requirements. We have an inflow of low-paid short-term foreign workers, lax enforcement of labour standards, a hostile attitude to trade unions and a government that, for all its rhetoric, is allowing our education standards to slip.

A poorly-paid and under-educated workforce may suit corporations’ short-term bottom line and may help the Government get its unemployment figure down (slave economies don’t have an unemployment problem), but as any first-year economics student knows, it’s a path that leads capitalism to its own destruction. The dynamic of capitalism rests on a well-paid workforce whose spending sustains economic activity and when workers are well-paid, there is an incentive for employers to make sure labour is employed productively.

Bragg is right when he refers to the risk of isolationism, but why is the BCA supporting the Liberal Party? The BCA’s beloved party has turned its back on multilateral institutions such as the World Trade Organisation (WTO), pursuing bilateral and small-group trade deals instead. And on climate change, with its parochial interest in supporting the coal industry, it is turning its back on the world’s most pressing problem.

Bragg's punchline is his reference to “special interest groups”. The Liberal Party and its National Party colleagues have form when it comes to protecting rent-seekers and special-interest groups. Health insurers enjoying an $11 billion public subsidy, irrigators stealing water, multinational firms and millionaires paying little or no tax, corporate owners of once publicly-owned monopoly utilities enjoying the benevolence of weak regulators... Occasionally, their best efforts fail, as when they had to yield to a royal commission on financial services, but they have to be given credit for trying.

Does not Bragg realise that his new employer, the BCA, is probably the nation’s most strident special interest group? Does he not realise that it’s bad form to publicly dump on your own employer?

The BCA has never been known for non-partisan objectivity. But its concerted attacks on unions, the Labor Party and GetUp! have an air of hysteria. On last Monday’s (30 April) 7.30 programBCA chief Jennifer Westacott seemed to be distressed — as if a mob of murderous Bolsheviks were about to storm the Melbourne Club.

Then, two days later, she said in an interview:

“I will not allow retrograde, backward-looking anti-business attacks to stand unchallenged."

There is no siege of the Melbourne Club. There is no “anti-business” mob seeking to destroy capitalism.

If there is a threat to our prosperity, it comes from the ill-considered policies the BCA is promoting. An economic system that tends only to the interests of a privileged elite does not endure. Not only does it undermine the market forces that drive capitalism, but it also destroys capitalism’s social licence and parties supporting it lose their political legitimacy. If the BCA doesn’t realise that business needs a social licence, it must have been too busy worrying about the unions, the Labor Party and GetUp! to have noticed what’s been happening at the Financial Services Royal Commission.

Bragg is right. We have a lesson to learn from Argentina. In the early 20th Century, while Argentina let privileged elites guide public policy, we in Australia – often with a struggle – developed institutions that were to save capitalism from its own destructive forces — trade unions with a stake in the nation’s prosperity, a taxation system to fund public goods, an understanding that the benefits of prosperity should be fairly distributed and a lively political culture with voices from every quarter. That’s why Australia prospered while Argentina languished.

Ian McAuley is an Adjunct Lecturer in Public Sector Finance at the University of Canberra and a Fellow at the Centre for Policy Development. This article was published on 'Pearls and Irritations' and is republished with permission.

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