World trade and economic growth has some well meaning rules which if broken, whilst relying on others to keep them, can deliver an immense strategic advantage.
The reality is that our sense of a fair wage is not another nation’s, our occupational health and safety standards are an overhead cost for us and a mere dream for other countries, discrimination is a fact of life for many elsewhere but for us it is abhorrence.
It is paradoxical that at times we let go of what is the commercial and cultural essence of our nation because of an excessive belief in the theory of global benevolence, capital efficiencies or compliance to treaties that in reciprocation there may not be even token compliance.
If hurdles are encountered, slip in a cheque to assist in ironing out those little moral bumps. To get on the right side of God and clear the conscience find a commercially virtuous theory andif you want to know what the theory de jure will be, then the best approach is to pick the one that puts the most money in the key person's pocket.
Cynical, maybe, but reflect on the global scorecard and ask this question, who is winning and how did they do it? I prescribe to the theory that the desire to make money is pre-eminent over more illuminating theories. This way I am never surprised by the motivations or outcomes and concur that this drive has been an essential part in delivering the standard of living we enjoy.
But we must not be naive and reflect on the history. Domestically the initial Rio Tinto merger in 1995 was to have the eastern hemisphere operation managed from Melbourne. It took merely 15 months for this agreement to be broken and now the reality is the company’s managerial role is operated out of St James's Square, London.
The proposed Qantas purchase led by the private equity firm Allco was apparently an eminently sensible thing, something I fought emphatically against. The result, the deal fell over and later Allco went broke, so would have Qantas if the deal had gone through.
China's takeover / merger (mark 2) of Rio was to be a great outcome for Australia and desperately needed for Rio’s survival. Result, shareholders realise that key management was about to pay themselves $300 million to hand over an economic gold mine. Even more galling was that Australia’s Foreign Investment Review Board thought that the Chinese government owning a major section of Australian mining was a great outcome for Australia.
Very close to my heart is this, the deregulation of the single desk for wheat was needed for a stronger Australian wheat marketer; result, US firm Cargill our biggest competitor is now buying the AWB so our biggest competitor is now to become the marketer of our wheat.
Now to our latest stroke of genius; we are not going to hand over just another company we are about to hand over the whole share market. The ASX will ultimately be run from Singapore and of course this is much better for us. Singapore can not sleep at night because of concerns they have for us.
We have been here before. There was a spate of inter-country sharemarket mergers about five years ago, which then dried up because the rhetoric did not match the outcomes. As noted in The Economist just last month, “Everyone talked breathlessly about the critical importance of 24/7 global pools of liquidity, which did not mean anything but proved to be an excellent chat-up line”.
So much for the commercial hub in Sydney, if we had done a better job then the Singapore Exchange would be moving to Sydney, not the other way around.
On this occasion some of the theorist may be out of a job, especially if they are in the share broking or merchant banking game. See the place to be will not be Sydney it will be Singapore, slightly more than the usual commute from the Eastern Suburbs.
No matter, the efficient use of human capital will no doubt have them happily driving trucks in mines in Western Australia or Western Queensland. If they are lucky it might even be an Australian one, listed on the Singaporean Stock Exchange.