Chris Lewis, David Marsh and Jenny Chester, University of Canberra

Larry Saha Seminar Room 2175, Level 2, Haydon-Allen Building,
The Australian National University

According to Treasurer Wayne Swan, the super-wealthy, notably mining magnates Clive Palmer, Andrew Forrest and Gina Rinehart, are trying to assert too much influence over Australian politics. Swan suggested both that their opposition to the carbon tax and the mining tax misrepresented “their self-interest as the national interest” and that they are part of a new global concentration of power in the hands of a few which is “undermining our equality and threatening our democracy”.

We examine such assertions focusing upon a detailed analysis of the Labor Government’s mining tax (which began operating from July 2012), using, as a frame, Lindblom’s (1977) arguments about the veto power of business in contemporary politics. We argued that the case does illustrate the power of big business, and in particular the importance of the relative flexibility of large companies, especially in the form of ‘investment strikes’, albeit that such a strategy is more constrained in the resource sector. However, we explore three other factors which are important in this case. Lindblom argues that the power of business can be constrained because Government has significant resources which big business needs, authority/legitimacy, control over investment in infra-structure, ability to be able to provide incentives for government etc., so it rarely gets its way.  However, that argument is dependent on governments being competent in negotiations with, and more broadly in relation to, the large companies. In this case the Labor Government displayed a high level of incompetence.  Second, such negotiations between business and government are more complicated in federal where States have considerable power that effects such negotiations. Third, Lindblom argues that business power owes a great deal to its capacity to manipulate the ‘volitions’ of citizens in their favour. Here, we find some evidence that this is true, but again suggest that business was helped by the failure of the Government to effectively make the case for a mining tax.