The View
PUBLISHED : Monday, 25 August, 2014, 10:55am
UPDATED : Tuesday, 26 August, 2014, 5:11am

China to thank for Aussie bubble

Clive Palmer's rant is groundless as Australian workers still have a lot of power and the country has China to thank for its economic growth


So imagine yourself around the dinner table with the family of a Chinese mining executive who is just back from a posting in Australia. Maybe the conversation would go something like this:

"We had to pay the gravel-truck drivers more than the Americans pay their Federal Reserve chairman. We had to put gyms and swimming pools in the workers' dorms, and make leak-proof roofs, they don't even know how to stuff a bit of plastic in.

"Their environmentalists demanded we build a whole extra bridge costing US$60 million so as not to bother some bloody crabs! Then our chairman blew a US$2 billion hole in the company accounts with a currency hedge their bankers sold us.

"Now, all these years later, that fat, bulbous-nosed man who sold us the mine, and who actually named a political party after himself, was on the TV calling the Chinese 'bastards' and 'mongrels'."

And why did Clive Palmer, the Australian mining magnate and head of the Palmer United Party, erupt in this way against the Chinese last week?

Mostly because he is rich and big-mouthed, but also because he is in a dispute over royalties he thinks Citic Pacific owes him on its Western Australian mine project.

Even in the early 1990s, nearly half of Australia’s labour force was unionised

To rouse some broader sympathies, Palmer (pictured) made sure to include Australian workers in his rant, saying the Chinese were out to "destroy the wage system" in Australia.

Admittedly, he is right that if they could, the Chinese would bring their own workers to mining investment projects in Australia and get the job done much cheaper as a result.

But his rant is disingenuous because the reality is the Australians just did not allow this. Fewer than 5 per cent of workers on the Sino Iron project were overseas Chinese.

Compare this to, say, Canada, where Chinese firm HD Mining was able to import a sizeable temporary labour force for a project in British Columbia after saying it could not find adequate local labour. Mind you, their local job advertisements included the requirement that applicants "must speak Mandarin", but the Canadians allowed it.

Labour has traditionally had a lot of power in Australia, a legacy inherited from the country's long history of worker shortages.

But Australia's "labour bubble" has been gradually deflating for two decades. Indeed, for an anecdotal reminder of the power that unions used to have in that country, let us consider the experience of another foreigner who once came under attack while trying to do a little business there.

American crooner Frank Sinatra and his entourage flew in for a concert tour in 1974. Vexed by the local tabloid coverage of his visit, he said something crass on stage about a female journalist. She wrote a complaint letter to her powerful press union, which in turn got the word out to all the unions.

A blockade ensued. The hotel workers would not serve his entourage food, the transport workers would not drive them places, the airport workers indicated that Old Blue Eyes could find himself a raft somewhere and float home.

Those were the days. Most of the labour force was unionised and high tariffs made imports uncompetitive.

Even in the early 1990s, nearly half of Australia's labour force was unionised. Today it is in the mid-teens, similar to the United States.

The press union that sparked a multi-industry boycott of Sinatra is pretty weak these days. In the face of falling print advertising dollars, journalists in Australia have not been able to save jobs or yesteryear's bigger wage and benefit packages. Most manufacturing jobs have left the country.

But workers in Australia still have a lot more power than in most other countries in the Organisation for Economic Co-operation and Development. The unemployment rate is relatively low, collective bargaining remains common and the minimum wage is twice the US federal minimum wage.

And guess what? So far, the economy has survived. The country has not had a recession for two decades. It has one of the highest per-capita wealth holdings in the world and is always topping livability surveys as one of the best countries to live and work in.

In many ways, Australia is the last OECD bubble economy left. And in no small part, thanks to the Chinese appetite for its resources.

So just shut up, Mr Palmer.


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China to thank for Aussie bubble

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