To What Extent Does Business Dominate Industry Policy in Australia - Case Study Example

TO WHAT EXTENT DOES BUSINESS DOMINATE INDUSTRY POLICY IN AUSTRALIA? To what extent does business dominate industry policy in Australia? Author Author’s Affiliation Date Introduction Australian economy is considered as a mixed economy in which private and public sector working together for achieving economic goals and making public policies. The true balance of mixed economy can be created if both private and public sectors contribute equally. In the case of Australia some businesses and powerful industries have more influence on public policies than others. This essay will not only describe the extent to which business dominates the industry policy but also explain how they manage to control on industry policy. This will also represent the critical analysis of industry policies and their impacts. Moreover, this paper will also describe how Australian government take this influence and how incorporate that into industry policy. Australia has one of the successful economy of the world. It has been ranked at 12th position by CIA fact book. Services sector contributes 68% of GDP that is biggest industry of Australia, it includes banking and financing, tourist, media, retail, wholesalers, entertainment, health and education services provided by government and all other personal and private business services. The biggest industries of Australia are mining, banking, manufacturing and agriculture Likewise, agriculture represents 2.3% and mining is the second largest industry after services sector that contributes 19% in GDP (IBP, 2015). Australian government has always been a supporter of industry whether they are privately or publically owned and that is the important reason of Australia’s progressive economy. Australian government has always designed business friendly policies. They have always considered the interest of prominent industries before design industry policy to promote growth and development of the country’s economy. Undoubtedly, the concept of industry policy always been controversial for all countries even for Australia as well. In some countries, industries have more influence over government policies and on the hand in other countries government is strictly regulating the industries but both of these extremes are dangerous. In Australia, there are many industries that are yielding money by pressurizing government to design industry policy for their interest. Similarly, there are many big industries in Australia that are dominating industry policies in Australia .The most important in this matter is mining industry which is one of the biggest and influential industry of Australia.it is responsible in yielding almost 21.6% of total profit of Australian economy (Australian Bureau of Statistics, 2012)with employing only 2.3 % (Statistics, 2012) Moreover, 83% of the mining industry is currently owned by foreign companies (Edwards, 2011) With only rest of the 27% Australian companies are earning such a huge profit. Mining industry of Australia is generating huge profit turnover just by pressurizing government to cut taxes. They does not pay any taxes on profit because of generous tax concession that has been provided them by the government of Australia. They arguing that royalties are the kind of tax that they pay to government but in reality it is not merely than an absurd justification because everyone knows that royalties are the permanent payment to government for extraction of resources even they compel government to reduce royalties as well. Most of the generated profit is earned by selling or exporting national resources on high prices that acquire from state on lower prices. Moreover, they also ask government for providing them ease in shipping and transportation expenses. Similarly they also interrupt in Australia’s national development projects as they ask government to priorities mining shipping and transportation projects. Powerful lobbies and relation with influential polities are some tactics of control industry policy. If any government do any effort to raise the taxes or royalties the antigovernment campaigns and threats of overthrow the elected government are used by powerful industrialist to subjugate the efforts. So in this way mining business dominate the industry policy in Australia. Furthermore, banking sector has also significant power on industry policy of Australia. According to IMF report Australia has one of the successful banking sector of the world. Since 1980 after the deregulating the banking system in Australia the power and market share of banking sector has increased significantly by 50% to 90% and top four banks has managed to increased their market share from two-third to 83% (Richardson, 2012). Even after the period of global financial crisis the four biggest bank of Australia have managed their financial stability and that is the reason they are in the list of top ten banks of the world. Moreover banking system became powerful when 15 banks merged and had taken the characteristics of strong oligopoly in banking sector. This power had been shown by banking sector in 2009 when without any official notice banks had increased their lending and mortgage rates. Parliament opposed that and many opposition leaders launched various campaign against this announcement of banking sector like, Joe hockey announced “9 point plan” (Hockey, 2010) and Treasure Wayne Swan announced 5 point plan (Martin, 2012) but all plan proved failed and banking sector won the negotiations. Moreover, superannuation industry of Australia is also one of the influential industry. Australian have to pay superannuation fund till their retirement. The average fees is paid by Australian is almost 2% of his income (Professional, 2012). For instance, if someone earns 100,000 $ per year he has to pay almost 2000$ for superannuation fund with additional 4 $ per week fee to managing superannuation fund. There is no scurrility and check and balance are available by government. Super industry of Australia is taking advantage of the super fund. Australian employees are being burdening by this influential industry. Government of Australia is ignoring this exploitation even don’t ask where this fund is spending and super industry is earning huge profit turnover from that fund. Superannuation industry is also exempt from scurrility under henry tax review that shows the power of this super industry on industry policy. Another important business of Australia is retail and wholesale textile business. Since 1990 retailers and wholesaler of Australia became lead player in assembly they started influencing industry policy for creating good distribution networks with customers. They were become influential in two ways. Firstly, they started influencing public retailer based policies .they compelled government to design policies to ease supplier and retailer relationship.it shows the power of dominant retailers on public policies. Secondly, they started pressurizing government to adopt new technology in textile business to make textile industry more innovative and creative, in this way retailer and wholesaler became influential in textile industry policy of Australia (Leon Mann, 2011). Moreover, gambling is also one of the biggest business industry of Australia. Gambling industry has influence over development planning guidelines of Australia because they don’t allow to build more than one casino in one state, if more than one casino would be built in any city or state it can harm the local monopoly of casino of that city. Likewise they are also controlling regulations of gambling industry. They show hostility to every new regulation that is introduced by the government. The most important example of Prime Minister Julia Gillard who made promise to Minister Andrew Wikki of launching new reforms to tackle gambling addiction but gambling industrialist pressurized her to break her promise. This shows the power of successful business on government and its policies. Furthermore, Australian government has introduced number of industry policies to promote trade industry. They have remove trade barriers on various goods, services and also on investments. They provide innovative technology to its trading industry. In this way Government take competitive advantage of their production by intervene through its policies .They also provide economic integration, cheap labor, and also investment to all small as well large industries. This is true industry policy is something very important and imperative for the growth of the economy.it has many benefits if both industry and government make policies for the betterment of general public. undoubtedly, industry policy helps in shaping industrial structure and that structure facilitate the economic progress (Acker, 2010).But in the case of Australia business industry is controlling industry policy and in return government legitimize their influence by giving the name of protectionism . Hawke the former Prime minster of Australia who was the biggest critic of industry policy state that: “we have rejected this so called new protectionism because we have isolated from rest of the world because of this industry policy.it caused us great damage that we all are working to repair (Hawke, 1991)”.so, excess of everything is bad whether it is protectionism or Conclusion Business dominates Australian industry policy to great extent. We have discussed different industries examples and concluded that Australian government need to draw a clear line between business industry and industry policy. To sum up these, we can say that Australia needs policy reforms because powerful business class exploiting traditional industry policy for their own purposes and interest. Moreover government also need not to intervene in the business affair. The intervention policies of Australia are violating free market principles. So, Australia should make industry policy not only for the betterment of few business groups but also for the whole Australian population. Industry policy can very beneficial for the business industry if it will use in some premises. References A. B. (2012). Labour force of Australia. Canberra. Acker, V. (2010). Innovation and Industry Restructuring in Business and the Politics of Globalisation. Australian Bureau of Statistics. (2012). Australian System of National Accounts. Canberra. Edwards. (2011). Foreign ownership of Australian mining profits. Hawke, B. (1991). Building a Competitive Australia. Australian Government Publishing Service. Hockey, J. (2010). It’s time to talk banking. IBP, I. (2015). Australia Oil, Gas Resources and Exploration Handbook. IBP USA. Leon Mann, J. C. (2011). creativity and innovation in Business and beyond. new york. Martin. (2012). Treasurer bashes bank profiteers. The Sydney Morning Herald. Professional, W. (2012). SMSF fees lower than any other superannuation sector. Wealth proffesional Magzine. Richardson, D. (2012). The rise and rise of the big banks: Concentration of ownership. The Australian Institute. Statistics, A. B. (2012). Labour force of Australia. Canberra. Read More