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Australian political economy of violence and non violence

AUSTRALIAN
POLITICAL ECONOMY
OF VIOLENCE AND
NON-VIOLENCE
Erik Paul


Australian Political Economy of Violence
and Non-Violence



Erik Paul

Australian Political
Economy of Violence
and Non-Violence


Erik Paul
Centre for Peace and Conflict Studies

University of Sydney
Sydney, New South Wales, Australia

ISBN 978-1-137-60213-8
ISBN 978-1-137-60214-5
DOI 10.1057/978-1-137-60214-5

(eBook)

Library of Congress Control Number: 2016939227
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To Keiko



ACKNOWLEDGEMENTS

I am indebted to the anonymous reviewers of the manuscript and to
Christina Brian and her team at Palgrave Macmillan. This book also
benefited greatly from the stimulating research, teaching culture, and


friendly environment at the Centre for Peace and Conflict Studies
(CPACS), University of Sydney.

vii



CONTENTS

1

1

Violence

2

Corporatism

11

3

Commodification

27

4

Enemies

43

5

Alienation

51

6

Non-violence

59

7

Heterodoxy

63

8

Justice

69

9

Human Rights

79

ix


x

CONTENTS

10

Convergence

87

11

Struggle for Democracy

93

References

103

Index

105


CHAPTER 1

Violence

Abstract Australian democracy is largely defined by the character and
function of the country’s political economy incorporated in the existing
neoliberal corporate security state. Violence is built in a hegemonic order
characterized by the concentration of private power and wealth, the commodification of people and nature, the construction and manipulation of
antagonisms and enemies, and the politics of fear as a US client state.
Australian politics is conducted as a one-party state, a new authoritarianism by privileged elites. Democratization requires a clearly defined opposing hegemonic order, a radical democracy, and a counter-culture to the
existing one. Its potential exists in progressive non-violent movements,
parties, unions, and other formations struggling for a new political economy based on social, economic, and political equality.
Keywords Political economy • Neoliberal corporate security state •
Systemic violence • Radical democracy • Counter-hegemony • Equality

What is the purpose of Australia? Australia, like other nation-states, is the
site of a political struggle over equality: the social, economic, and political equality of its citizens. The core of this struggle is about the nature of
democracy and the role and function of the country’s economy, in other
words, the purpose of the Australian economy, how should it be organized
and why, and for whose benefit?

© The Editor(s) (if applicable) and The Author(s) 2016
E. Paul, Australian Political Economy of Violence and Non-Violence,
DOI 10.1057/978-1-137-60214-5_1

1


2

AUSTRALIAN POLITICAL ECONOMY OF VIOLENCE AND NON-VIOLENCE

Australia’s neoliberal corporate security state is a hegemonic order
backed by both mainstream political parties.1 Both have transferred considerable public power and wealth to corporations and wealthy private
interests. Under their governance, political and economic inequality has
considerably increased. Thomas Piketty’s study on capital shows that in
Australia and other western countries, an increasing share of economic
growth has largely benefitted the upper classes (Piketty, 2014a, 2014b).2
In turn, the growing concentration of capital and wealth controlled by
corporations and wealthy private interests directly and increasingly influences the nature of politics, contracting the political process and politicians
to serve their interests. In other words, private wealth and power eventually captures and dominates the state apparatus and disempowers citizens.
Systemic violence is built in growing political and economic inequality
because it leads to the expansion and proliferation of conflict and violence
in society and the militarization of social life.
Australia’s political economy is an integral part of the American imperial project for a neoliberal free-trade global economy backed by military
power. This world order system is flawed because it increases global economic and political inequality and leads to violent resistance and challenge
to western hegemony. As a result, Australia is increasingly involved in
military intervention overseas and in the use of violent means to confront
political upheavals, rebellions, and situations which are viewed as threats
to the national interest and to the American imperial project. Australia’s
role in the ‘war on terror’ furthers entrenches domestic violence and the
militarization of Australian society.3
Democratization requires a clearly defined opposing hegemonic order,
a counter-culture to the existing one, based on a political economy of
social, economic, and political equality.4 The Australian Labor Party
(ALP), which has traditionally been at the forefront of progressive social,
economic, and political reforms in the past, no longer fills that role. With
the 1983 election of the Hawke government, the ALP became another
major spear-carrier for neoliberal capitalism in Australia. The outcome is
a one-party state doing the bidding of corporations and wealthy private
interests allied with a national security state engaged in the ‘war on terror’
and the military imposition of a US-led world order.5 This new form of
authoritarianism requires the constant manipulation of morality to manufacture consent about the benefits of economic growth and the verity of
the mantra that there is ‘no alternative’ to the one-party state, and to
legitimize a US-dominated neoliberal globalization.


VIOLENCE

3

Australia’s neoliberal corporate security state represents the emergence
of a post-democratic order, a reversal of democratization by a new form
of authoritarianism to discipline bodies and minds to the demands of the
dominant ideology of market relations, while the state neutralizes dissent
and militarizes civil society with a new history of Australian wars for freedom and democracy. The central proposition of Australian new authoritarianism is captured by Colin Crouch when he writes that ‘politics and
government are increasingly slipping back into the control of privileged
elites in the manner characteristic of pre-democratic times, and that the
one major consequence of this process is the growing impotence of egalitarian causes’ (Crouch, 2008:6). Australian political economy is not compatible with democracy because it is essentially a political project of class
power to disempower ‘labor relative to capital, adopting policy measure
such as privatization in order to enable further capital accumulation and
institutionalizing wealth, privilege and power within the upper-classes
without cease’(Harvey, 2013:5).
Democratic politics in Australia cannot survive without what Chantal
Mouffe calls ‘the agonistic struggle’, a confrontation between adversaries, not a competition among private elites and between leaders of the
ALP and the Liberal Coalition. The struggle must be between opposing
hegemonic projects, says Mouffe, ‘which can never be reconciled rationally; one of them needs to be defeated. This is the real confrontation but
one that is played out under conditions regulated by a set of democratic
procedures accepted by the adversaries’ (Mouffe, 2002:10). Democracy
is work in progress; it exists as a vision of the common good and a better
and more peaceful world. Democratization, Mouffe would argue, requires
‘confrontation between democratic political positions’. An unwritten pact
between the ALP and the Liberal Coalition has undermined democracy
and constructed a broad macroeconomic consensus to ensure national stability. The outcome has been a major decline in the politics of the left and
a rising shift of discontent towards right-wing populism and the passion
for xenophobia and war. Mouffe warns that the absence of a democratic
outlet, a radical and different hegemony, stops ‘the construction of more
democratic, more egalitarian institutions’ and, instead, ‘lays the ground
for forms of politics that articulate essentialist identities—nationalist, religious or ethnic—and for increase confrontations over non-negotiable
moral values’ (Mouffe, 2013:xiv; 2002:11).
The alternative to the existing neoliberal hegemonic order in Australia
is a radical democracy, which exists largely in the activities of non-violent


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AUSTRALIAN POLITICAL ECONOMY OF VIOLENCE AND NON-VIOLENCE

progressive movements. Social movements have played a major role, ending the ‘white-only’ Australia policy, constructing greater equality between
people, and ‘challenging those who abuse power’ (Burgmann, 2003:43).
Verity Burgmann’s study on late-twentieth-century social movements in
Australia identifies the Aboriginal, the women’s, the green, and the anticorporate globalization movements, and she writes that they ‘sharply highlight the connection between corporate capitalism, racism, patriarchy and
environmental degradation’ (ibid.). Early twenty-first-century progressive
non-violent social movements in Australia activate for the empowerment
of citizens, justice and human rights, and struggle against social injustice
and the causes of violence in Australia and in the world. Each incorporates
and projects the meaning of the common good in its understanding and
vision of democracy and a more peaceful world, and mobilizes passions
towards democratic ends.6 Democratization in Australia depends on the
advances of these movements and their potential for convergence to succeed in challenging and displacing the existing orthodoxy and political
economy of violence.
Violence is about human suffering built in the political economy of
advanced capitalist societies like Australia. The World Health Organization
defines violence as ‘the intentional use of physical force or power, threatened or actual, against oneself, another person, or against a group or
community, that either results in or has a high likelihood of resulting
in injury, death, psychological harm, maldevelopment or deprivation’
(WHO, 2002:4). In his pioneer studies on conflict, John Burton provides the political economy context of violence when he defines structural
violence as ‘damaging deprivations caused by the nature of social institutions and policies…and avoidable, perhaps a deliberate violence against
the person or community’ (Burton, 1997:32). Violence is structured in
the economic, cultural, and political systems of the nation-state and the
world order. At the core of any major structure is power. Power is about
control, domination, and exploitation, and is constructed as relations of
force because power involves coercion and repression (Foucault, 2004;
Heilbroner, 1986). Unequal access ‘to resources, to political power, to
education, to health care, or to legal standing, are major forms of structural violence’ (Winter & Leighton, 2001).
The link between capitalism and violence is the extent to which capitalism creates inequality, poverty, unemployment, and alienation. Miliband
argues that capitalism is inherently violent because it is ‘a system of domination and exploitation; and the fact that it is unable to make rational and


VIOLENCE

5

humane use of the immense productive resources it has itself brought into
being’ (Miliband, 1991:209). The power of the state is fundamental to
capitalism and the embedding of society in market relations. Foucault’s
analysis of the construction of the modern European nation-state reflects
the imposition of a ‘tight grid of disciplinary coercions that actually guarantees the cohesion of the social body’ (Foucault, 2004:37). Power,
Foucault reminds us, ‘is essentially that which represses’, and political
power ‘is perpetually to use a sort of silent war to reinscribe that relationship of force’ (ibid.: 16). However, where there is power, and therefore
repression, there is always resistance. Relations of force cause suffering, and
where there is suffering, there is disobedience and the desire and demand
for change. Power and resistance confront each other everywhere, and the
struggle is everywhere.
Norway’s peace activist Johan Galtung argues that violence should be
understood ‘as avoidable insults to basic human needs, and more generally
to life, lowering the real level of needs satisfaction below what is potentially possible’ (Galtung, 1996:197). Galtung has argued that violence is
‘the cause of the difference between the potential and the actual, between
what could have been and what is…and shows up as unequal power and
consequently as unequal life chances’ (Galtung, 1969:168,171). Systemic
violence is implied in the level of incarceration of any country, for example. The number of prisoners per 100,000 in 2013 was 60 for Sweden and
143 for Australia (ICPS, 2014). In the case of Australia, systemic violence
is the difference between reality and the potential for non-violence. The
potential is presented as what is possible for Australia when compared
with other advanced capitalist societies, such as the Scandinavian countries, where levels of incarceration are considerably lower (Wilkinson &
Pickett, 2010:148).7
What this means is that, unlike Australia, Sweden has made considerable progress in addressing the causes of violence, particularly relating
to crime, because it is more egalitarian and, therefore, more democratic
than Australia. This is reflected in the rankings of the Global Gender Gap
Report, where Sweden ranks fourth after Iceland, Finland, and Norway,
while Australia ranks 24th after Bulgaria and Slovenia (WEF, 2014). When
people play a meaningful role in the decision-making process about the
social purpose of the economy and how to live in terms of the quality of
life for all, and share more equally in the well-being of society, they will be
healthier and less alienated, and trust others more (Paul, 2009). The task
of a critical political economy is to provide an explanation for the violence


6

AUSTRALIAN POLITICAL ECONOMY OF VIOLENCE AND NON-VIOLENCE

structured in the institutions and political, economic, and social relations
of Australia’s neoliberal corporate security state and to identify the processes and mechanisms which cause harm to people and further endanger
the prospects for peace in Australia and the region. Democratization, as
a democracy to come, should be viewed as a process of empowerment of
the citizenry and the struggle against inequality and injustice, and towards
a political economy of non-violence.

NOTES
1. Australia’s neoliberal corporate state is a form of corporatism. Corporatism
has to do with the fusion of state and corporate power. It is the coming
together of the state and corporations to form an ongoing entity collaborating and working closely together to consolidate power in the pursuit of
stated goals invariably coming under the rubric of ‘national interests’.
Jacques Ellul studied the phenomenon in his work on techniques and technology in the construction of the technological society, which, he suggests,
invariably leads to a form of totalitarianism (Ellul, 1964). Technique, he
argued, ‘converts spontaneous and unreflective behaviour into behaviour
that is deliberate and rationalised’ (Ellul, 1964:vi). In her analysis of the rise
of disaster capitalism, The Shock Doctrine, Naomi Klein labels the US political regime as corporatist. She writes: ‘[A] system that erases the boundaries
between big government and big business is not liberal, conservative or
capitalist but corporatist. Its main characteristics are huge transfers of public
wealth to private hands often accompanied by exploding debt, an ever-widening chasm between the sizzling rich and the disposable poor and an
aggressive nationalism that justifies bottomless spending on security’(Klein,
2008:15). Corporatism is moving advanced capitalist societies to a new
phase in politics, further undermining democracy by morphing governmentality into the management of violence and inequality. This is made possible
with the sophisticated tools of surveillance, the accumulation of metadata
on society, and the use of algorithms. A data-based approach to governance—algorithmic regulation—is what the Italian philosopher Giorgio
Agamben discusses in the transformation of democracy, ‘whereby the traditional hierarchical relation between causes and effects is inverted, so that,
instead of governing the causes—a difficult and expensive undertaking—
governments simply try to govern the effects’ (Morozov, 2014).
2. Oxfam report that ‘85 richest people on the planet have the same wealth as
the poorest 50% (3.5 billion people)’ and that by 2016, the ‘richest 1%
would own more than 50% of the world’s wealth’ (Elliott & Pilkington,
2015).


VIOLENCE

7

3. The militarization of social life and society is a process characterized by a
number of developments such as the militarization of Australian history in
the political indoctrination of school children and the general public by
means of curricula, media coverage, and public activities; the militarization
of the police force in its training and equipment; the waging of the politics
of fear to control behaviour and gain consent for a foreign policy attuned to
US global military strategy; and the construction of a military–surveillance–
industrial complex in support of Australia’s role as a US client state. A recent
development which illustrates the process is the emergence in 2015 of the
Australian Border Force as the result of the merger of the Department of
Immigration and Border Protection with the Australian Customs and
Border Protection Service. Its law enforcement arm, with more than 5000
officers in black uniform, has the power to stop and challenge anyone in
Australia. Journalist Richard Flanagan depicts the country’s newest paramilitary force as an Orwellian ‘goon squad’ (Flanagan, 2015).
4. Tariq Ali argues that democracy in the West has ‘taken the form of an
extreme centre, in which centre-left and centre-right collude to preserve the
status quo; a dictatorship of capital that has reduced political parties to the
status of the living dead…the convergence of political choices…a new market extremism has come into play. The symbiosis between politics and corporate capital has become a model for the new-style democracies’ (Ali,
2015). A situation where there is no ideological differences between major
political parties and a political class competing for the same jobs gives rise to
forms of politics articulated by religious, nationalist, or other forms of political identification. In Australia, the loss of vision of the Australian Labor
Party, except as an alternate leadership in guiding the neoliberal corporate
security state, has led to the emergence of an increasing number of small
parties, such as the Palmer United Party funded and headed by the billionaire Clive Palmer, who shares a number of characteristic with the US
real-estate tycoon Donald Trump. Ian Buruma, writer and professor of
Democracy at Bard College, diagnoses the emergence of ‘Trumpism’ in the
2015 US Republican presidential nomination as a revolt against political
elites and explains his popularity as part of ‘a wider phenomenon throughout the democratic world. Disaffected voters are not only turning away from
mainstream political parties and following populists who promise to clean
out the corrupt elites; they also share a taste for political entertainers, or
clowns if you like’ (Buruma, 2015).
5. The national security state is increasingly dependent on subcontracting its
activities to corporations, including activities such as surveillance, special
operation, and assassination. In the case of the USA, where the process of
outsourcing is most advanced, the use of torture in the wake of 9/11 was
extensively subcontracted, as revealed by a US Senate report on detention


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AUSTRALIAN POLITICAL ECONOMY OF VIOLENCE AND NON-VIOLENCE

and torture conducted by the Central Intelligence Agency (CIA). One contractor was a company formed by two psychologists who received in excess
of US$181 million for interrogating and torturing prisoners (US, 2014:11).
6. Chantal Mouffe’s use of ‘passions’ denotes all the strivings and passions in
oneself to find an answer to one’s existence, making sense of the social, economic, and political world, and of finding meaning in life. Passions are part
of the internal strivings of the self to avoid insanity and suicide. Passions
exhibit a survival response to crisis in the living process, demanding adaptation to minimize harm (violence) to oneself and others. Passions in that
context are critical in the construction of one’s identity because they play an
important role in the expression and resolution of conflicts in one’s relations
with others. Conflict is about active hostility or opposition to someone,
about something, that requires expression and resolution. One’s relations
with others are largely based on unequal power relation; all individual relations in society are political and require political resolutions. Therefore, it is
critical that passions be mobilized towards democratic designs. This requires
activism and engagement on the part of the individual in politics. The danger is for passions to be mobilized and diverted away from the political by
market forces, greed for more goods and services, and dependency on
drugs. Another danger is the capture of passions by nationalistic and patriotic propaganda to hate and kill ‘others’. Sociologist Zygmunt Bauman
warns of the danger of the rise of the politics of fear and of the hidden possibilities in modern society for another holocaust (Bauman, 2005).
7. Nordic countries are more equal in the distribution of income and wealth,
more peaceful, and their standard of well-being and sense of social solidarity
are considerably higher than for most countries (Paul, 2009; Stiglitz, 2012;
Wilkinson & Pickett, 2010).

REFERENCES
Ali, T. (2015, February 13). How to end empire. Jacobin Online.
Bauman, Z. (2005). The demons of the open society. Presentation at the London
School of Economics, 20 October.
Burgmann, V. (2003). Profit, power and protest: Australian social movements and
globalisation. Sydney, Australia: Allen & Unwin.
Burton, J. (1997). Violence explained. Manchester, England: Manchester
University Press.
Buruma, I. (2015, August 11). Trumpism a revolt against political elites.
Australian Financial Review.
Crouch, C. (2008). Post-democracy. London: Verso.
Elliott, L., & Pilkington, E. (2015, January 19). New Oxfam report says half of
global wealth held by the 1%. The Guardian.


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9

Ellul, J. (1964). The technological society. New York: Vintage Books.
Flanagan,R. (2015, August 31). Australia’s treatment of asylum seekers was bound
to lead to something like Border Force. The Guardian.
Foucault, M. (2004). Society must be defended. London: Penguin.
Galtung, J. (1969). Violence, peace, and peace research. Journal of Peace Research,
6(3), 167–191.
Galtung, J. (1996). Peace by peaceful means. Oslo, Norway: PRIO.
Harvey, D. (2013). Contesting capitalism in the light of the crisis: A conversation
with David Harvey. Journal of Australian Political Economy, 71, 5.
Heilbroner, R. (1986). The nature and logic of capitalism. New York: W.W. Norton.
ICPS. (2014). Australia. World Prison Brief. International Centre for Prison
Studies, London.
Klein, N. (2008). The shock doctrine. London: Penguin.
Miliband, R. (1991). Divided societies. Oxford: Oxford University Press.
Morozov, E. (2014, July 20). The rise of data and the death of politics. The
Observer.
Mouffe, C. (2002). Politics and passions: The stakes of democracy. London: Centre
for the Study of Democracy. University of Westminster.
Mouffe, C. (2013). Agonistics. London: Verso.
Paul, E. (2009). The political economy of violence in Australia. Journal of
Australian Political Economy, 63, 80–107.
Piketty, T. (2014a). Capital in the twenty-first century. Cambridge, MA: Harvard
University Press.
Piketty, T. (2014b). Dynamics of inequality. New Left Review, 85, 103–116.
Stiglitz, J. (2012). The price of inequality. London: Penguin.
US. (2014). Committee study of the central intelligence agency’s detention and
interrogation program. Washington, DC: Senate Select Committee on
Intelligence. United States Senate.
WEF. (2014). Global gender gap report 2014. Geneva, Switzerland: World
Economic Forum.
WHO. (2002). World report on violence and health. Geneva, Switzerland: World
Health Organization.
Wilkinson, R., & Pickett, K. (2010). The spirit level: Why equality is better for everyone. London: Penguin.
Winter, D., & Leighton, D. (2001). Structural violence. In D. Christie, R. Wagner,
& D.  Winter (Eds.), Peace, conflict, and violence. Englewood Cliffs, NJ:
Prentice-Hall.


CHAPTER 2

Corporatism

Abstract Privatization of public assets and deregulation of the economy
constitute a major transfer of public power and wealth to corporate and
wealthy private interests. These have succeeded in capturing mainstream
politics, and hence the state, to protect and advance their vested interests.
The scale of transfer of public power and assets to the private sector, both
domestic and foreign, is a threat to democracy, characterized by growing
inequality in the distribution of income and wealth. It results in negative
impacts on society and damage to the social fabric, and scarcity in the provision of public services. Growing inequality and corruption undermine
political stability and public trust.
Keywords Privatization • Corporate power • Capture of the state
• Corruption • Disempowerment • Growing inequality • Maldevelopment

A major source of violence in Australia derives from the accumulation of
wealth by dispossession by the neoliberal state, because it disempowers
citizens by transferring vast amounts of public wealth and power to corporations, mainly foreign entities, and other private wealthy interests such
as family trusts and foundations, and many charities, including religious
institutions and universities. According to Cahill, Humphrys, and Stilwell,
the effect of signing the Accord by the 1983 Labor government ‘was to
manage the neoliberal transformation of state and economy by tying the

© The Editor(s) (if applicable) and The Author(s) 2016
E. Paul, Australian Political Economy of Violence and Non-Violence,
DOI 10.1057/978-1-137-60214-5_2

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leadership of the labour movement to this process’ (Cahill, 2008:326;
Humphrys, 2014:175).1 The Australian corporate state that emerged with
the signing of the Accord by the Hawke government had a clear agenda
of pushing hard for economic growth by deregulating the economy, privatizing public assets, and commodifying everything and everyone (Leys &
Harriss-White, 2012; Maddison, 2006).
Privatization accelerated with the official end of the Cold War in 1991
when support for socialism collapsed and capitalism spun into a more
undiluted and rapacious form of neoliberal capitalism. By 2003, a single
corporation, ‘led by one of the wealthiest, most influential and politically
determined cultural warriors of the contemporary Right’, gained ownership of some 70 % of the Australian press (Manne, 2010); and large transfer of crown land to the private sector took place, particularly in Western
Australia. More than A$33 billion of public assets had been transferred
to the corporate sector, including the country’s 22 biggest airports, all
public banks, big chunks of Australia’s maritime and land transport infrastructure, and other valuable assets such as the Commonwealth Serum
Laboratories and the Australian Defence Industry (ADI). According to
accountants Bob and Betty Walker, ‘total proceeds from Australian sales of
government enterprises over the past two decades have been some A$118
billion, A$50 billion for the states and $68 billion for the commonwealth’
(Walker & Walker, 2008). Privatization has continued unabated with sales
of major public utilities, including Queensland Rail (QR), and the 2014
sale of publicly owned Medicare Private to the private sector for more than
A$5 billion, likely to lead to a costly US-style and worse ‘managed-care’
health outcomes, all closely linked to insurance companies, all in the business of providing hefty returns to mostly overseas shareholders.
A major instrument of privatization by stealth is the public–private
programme (PPP). The PPP is essentially a cover for the perpetuation
of corporate interests and power. PPP is privatization by another name
and covers a wide range of strategies and assets. The scheme involves
government paying private companies to provide, operate, and maintain
government facilities such as hospitals, roads, railway lines, and schools.
The programme calls for the transfer of government-owned assets on
‘long term contracts up to fifty-four years, revenue guarantees and compensation for future policy changes by governments’ (Hodge, 2003:5).
Fundamental to any PPP project is to borrow almost the entire value of any
project. Shaoul warned Australians in 2005, ‘[D]on’t touch public-private
partnerships with surgical gloves…the UK’s hospital, road and transport


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13

PPPs were forcing up public-sector costs and lining the pockets of the
private sector’ (Allen, 2005). Goldberg claimed that the Macquarie Bank
NSW toll road projects are not viable without substantial taxpayer subsidies (Clow & West, 2005). He maintains that many major projects will
not survive ‘without continuing government subsidies and are likely to fail
anyway, leaving taxpayers to foot the bill for billions of dollars in debt…
the modelling on which the projects are engineered is to maximise profits to investment banks rather than provide the best possible service for
motorist’ (West, 2006).
Deregulation of the economy has greatly favoured multinational companies and private capital in their control of the Australian economy. By
2014, most major sectors of the economy were controlled by foreign
investment, dominated by Anglo-American capital, with more than 50 %
of the stock of foreign investment in Australia. In 2012, the USA was the
largest investor, with control over many large companies; it also exercised
considerable economic leverage because of sizeable shareholdings in major
Australian companies held by powerful US financial institutions such as
JP Morgan Nominees and Combined Citicorps (Coghlan & MacKenzie,
2011; Hunter, 2013). They hold major shareholdings in Australia’s big
four banks—Commonwealth, National Australia, Westpac, and ANZ—
as well as major companies such as BHP Billiton, CSL, Origin Energy,
Rio Tinto, Westfield, and Woodside Petroleum. JP Morgan, Citicorp
Nominees, and HSBC Nominees also control a substantial investment in
the Australian Stock Exchange as well (Paul, 2014:20).
Corporate wealth dominates and finances both mainstream parties.
Business donations sustain Australia’s political party machine and politics as a lucrative investment in the accumulation of personal and corporate wealth. The situation in Australia is best explained by Thomas
Ferguson’s investment theory of politics, which says that ‘elections are
occasions on which segments of private sector power coalesce to invest
to control the state’ (Chomsky, 2010:32; Ferguson, 1995). Ferguson
believed that the state is controlled by ‘coalitions of investors who join
together around some common interest. To participate in the political
arena, you must have enough resources and private power to become
part of such a coalition’ (Chomsky, 2011:137). Politicians are essentially
in business for themselves as members of blocs bidding for the support
of private wealth and power, and political donations amount to the legal
and illegal bribery of politicians and political parties and the gross corruption of the electoral process.


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The Australian electoral process is largely funded by corporations and
other powerful and wealthy interests. For the 2010–2011 financial year, the
major investors in the Labor and Liberal parties were the Telcos, health,
media and public relation, mining and energy, financial services, property
development, building, and infrastructure sectors (Williams & Butler, 2012).
In the 2011 federal elections, they received some $215 million; tobacco, mining, alcohol, and gambling interests were big givers (Orr & Costar, 2012).
In 2012, mining and gambling interests were large contributors to political
parties ‘at a time when the government was considering dropping poker
machine reforms and fighting off a sustained attack over the carbon tax’
(Greens, 2013; Peatling, Hall, & Hurst, 2013). Both parties received more
but undisclosed funding because of major loopholes in the legislation and a
weak and under-resourced regulatory regime, exemplified in the Australian
Electoral Commission allowing more than 3.2 million eligible citizens not to
cast a vote in the 2010 federal election (Costar & Browne, 2010).2
Capture of the state by private power has further enriched corporations and other wealthy private interests in their reliance on tax havens
to minimize, if not negate, their tax obligation. Sydney airport, which
was privatized by the government, has paid no tax in the last 10 years
despite booking more than A$8 billion in revenues during that period
(West, 2013a). Transurban, another infrastructure monopoly created by
privatizing public wealth with billion-dollar revenues, only paid tax once
in recent years (West, 2013b). Recent investigative reports show that most
major companies operating in Australia are involved in tax minimization
schemes linked to overseas tax havens to transfer most of their profits out
of Australia. Almost ‘60 percent of the ASX 200 declare subsidiaries in
tax havens…nearly a third of companies pays an effective tax rate of 10
percent or less’ (Aston & Wilkins, 2014). IKEA, for example, earned ‘an
estimated $1 billion in profits since 2003—and almost all of it has been
transferred tax free to Luxembourg and the Netherlands’ (Chenoweth,
2014b), and Google ‘paid just $74,000 in Australian tax in 2011, despite
an estimated $2 billion in revenue from Australian ads’ (Wilkins, 2013).
Another giant business, American Express, ‘paid no income tax on its
multibillion-dollar operation in Australia for seven years’ (West, 2015a).
In the past decades, Apple ‘shifted $8.9 billion in untaxed profits from its
Australian operations to Ireland’ (Wilkins, 2015). The US-based Rupert
Murdoch’s media empire has ‘siphoned off $4.5 billion of cash and shares
from his Australian media businesses in the past two years, virtually tax
free’ (West, 2015b).


CORPORATISM

15

A report by the Tax Justice Network Australia, “Who Pays for Our
Common Wealth?”, suggests that between 2004 and 2013, there was ‘up to
$80 billion in tax foregone in that period’ from the ASX 200 alone (Aston
& Wilkins, 2014; TJNA, 2014). Tax avoidance schemes have been ‘by
the big four global tax advisory firms, PricewaterhouseCoopers, KPMG,
Deloitte and Ernst & Young—as evidenced in the recent LuxLeaks scandal’ (West, 2014). According to the Australian Taxation office, ‘more than
half of Australia’s trade is money being sent offshore by companies to their
overseas arms—with almost a third going to Singapore and Switzerland’
(Khadem, 2015). Many Australia-based business and wealthy private interests have set up businesses and residences in Singapore and take advantage
of the island city-state efficient enterprise and tax minimization schemes
to shift and hide considerable wealth. In 2015, the Australian Taxation
Office referred to some $60 billion in transactions from Australia to tax
havens for the 2011–2012 financial year (Aston, 2015). In the case of
BHP Billiton, the company sale of iron ore from Australia to China is
organized through Singapore and the company ‘paid no Singapore tax
on $US5.7 billion in profits reported to its chief Singapore marketing
company since 2006, with all the earnings repatriated to a Swiss parent
company then to the Netherlands’ (Chenoweth, 2015).
It is not surprising that Australian tax collection as a percentage of
gross domestic product (GDP) has fallen over the years in comparison
with other Organisation for Economic Co-operation and Development
(OECD) countries. Frankel makes the point that had Australia followed
the examples of the Netherlands, Austria, and Sweden, the country should
have collected an additional $175–$280 billion a year (Frankel, 2012:39).
The Australia Institute points out the impact of the Howard and Hawke/
Keating governments ‘lowering the top tax rates from 60 cents in the
dollar in 1983–1984 to 45 cents in the dollar today’, and suggests that
‘the cumulative cost of the income tax cuts introduced by the Howard
and Rudd government since 2006 are more than $170 billion’ (Friel &
Denniss, 2014:13). More tax could have been raised had the Australian
government not succumbed to the mining lobby at the height of the mining boom. As a result of the tax concession given to the well-off during
the Howard years, the federal government lost $169 billion in revenue.
According to Richardson, Denniss, and Grudnoff, ‘of the $169 billion in
tax cuts, 42 percent, or $71 billion, went to the top 10 percent of income
earners, the top 10 percent got more in tax cuts than the bottom 80 percent’ (Douglas et al., 2014; Richardson, Denniss, & Grudnoff, 2014).


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