For many months, senior figures in the Howard Government have been quietly concerned about the political fallout from an overseas takeover of BHP. It rated lower than concerns about the deteriorating local and international economies, and the growing pains of the GST, but it was a serious concern nonetheless.
The cheap Australian dollar and the relative poor performance of our local sharemarket over recent years, has made many profitable and productive Australian companies particularly vulnerable to being take over by overseas predators.
This, together with the fact that Australia needs to find $100 million every day of the year to pay for the mortgage on our national debt and maintain our standard of living, means that no government can do much to stop such things happening anyway.
The unfillable gap in our current account means that we have to keep selling power stations, real estate, farms, trams, factories, and much else besides, just to stay afloat.
However, losing an icon such as BHP had the potential to become another public relations disaster for the Howard Government, a massive dent to our national prestige, and the final confirmation in the minds of ordinary Australians that all our national institutions would one by one be hocked overseas.
But when it finally came, the departure of BHP from Australia came not with a bang, not even with a whimper, but with the triumphant boasting of a nation deluded. And the symbolic surrender of such an important part of the history and development of our nation on March 19, 2001 occurred in such a way that it is impossible to know exactly where to lay the blame or how to react.
You could start with a gullible and uncritical media for swallowing the line that BHP had suddenly become the “Huge Australian” and that we were giant-killers, just like our sporting heroes.
Or you could condemn the major political parties, both Liberal and Labor, for their decades-long embrace of globalism and the myth of free international markets which have handed over most of our claims to national sovereignty.
You could also blame “government” for its monumental failure to set out a long-term plan for Australia’s economic development, its population, and infrastructure.
Those in power today have already been sold-out by their predecessors. So that when John Howard said it was “marvellous” news, he had to. The so-called merger of BHP and Billiton into the world’s biggest resources company was the best possible outcome for a government powerless to stop the sale of Australia overseas.
Opposition Leader Kim Beazley, with one eye on what the markets would think and one eye on popular opinion, without conviction said that a “globalised BHP would be bad for Australia”.
If not the media and the government, you could blame an extremely mediocre and unimaginative Australian business sector, which has destroyed so many great corporations from Burns Philp to Pacific Dunlop, and which rushes from business fashion to business fashion without regard to long-term planning or national interest.
The latest of these fads is the moving of companies offshore to the larger capital markets with the warning that if Australian companies don’t follow this trend Australian businesses will simply become “branch offices” of large multinationals.
The simple fact is Australia has just kissed goodbye to a company, which historically and strategically, is the most important one we own.
BHP was run by an American, Paul Anderson, who was imported to Australia for his unique expertise (another trend in Australian business practice) but whose remuneration was dependent to a large degree on the short-term goal of boosting BHP’s share price. An American CEO of Australia’s most important company hands over the reins to a South African CEO of a British mining conglomerate for which BHP pays a 20 per cent premium.
The South African CEO, Brian Gilbertson, is to take over from Anderson in a year’s time, after which the American will probably retire to Miami on the bonuses he has earned from the deal. Australian shareholders emerge from the deal with an equity of 40 per cent, but with inevitable further equity raisings overseas this is likely to fall to 5-10 per cent, or even less, over the coming years.
There will be a dual share registry, but effectively BHP-Billiton will move to London. Despite the fact BHP-Billiton is a resources giant, London is for some reason “closer to the action” than an Australian city in the southern hemisphere where most of the stuff is dug out of the ground.
Amid considerable relief to the Howard Government, the head office of the new company stays in Melbourne, but BHP chairman Don Argus says within hours of the announcement that this arrangement may only be for the first few years, after which, who knows?
A few days later, it is announced that BHP’s oil and gas division will actually be run out of London, and may have to be sold off anyway. And the best news of all is that BHP’s steel division will probably be “spun off” and sold as a separate entity – possibly to a Korean steelmaker!
All this is greeted with gushing approval by the Australian media, without any examination of the long-term consequences to the nation.
BHP is likely to be slowly gutted, the new owners in Europe and America will have no interest whatsoever in Australia, and, following BHP’s example, many more companies are likely to follow.
Once BHP is gone, there will surely be nothing to stop Australia’s banks going into similar “international joint-ventures”.
It is hard to know what is more distressing – the actual departure offshore of what has been our most significant company, or the apathy which has coincided with the event.
If anyone would like to take a look at Australia in the future after the remaining jewels are plucked from our shores, take a trip out to the town that started it all – Broken Hill.
The once proud but now dying town, whose houses are being jacked up and driven away as we speak, is kept alive by welfare, tourists and the occasional film set.
Welcome to Australia: broke and ill.