Who owns Australia?
By Norm Dixon
The Salvation Army expects to help a record 100,000 families cope during the Christmas period. Other charities are gearing up to help similar numbers. The 1.7 million Australians who survive below the poverty line would need to take home about $270 each over the two-week Christmas-New Year period to cross that line with a few dollars to spare. Kerry Packer, Australia's richest individual, makes that much in six and a bit seconds.
The $500 million that the poorest 10% of Australians need to enjoy Christmas marginally above the poverty line represents just 1% of the total wealth of Australia's richest 200.
The myth that Australia is the "lucky country" — an egalitarian, classless society committed to everybody having a "fair go" — quickly dissipates in the face of the staggering wealth of a tiny minority.
According to the annual "Rich List" published in Business Review Weekly in May, Australia's 200 richest individuals and 24 richest families have a combined personal worth of $47.7 billion, up from $40.6 billion a year earlier. These 200 or so people alone account for 2.2% of Australia's total private wealth, according to the Treasury statistics cited by BRW.
The super-rich are not a recent breed. Economist Ted Wheelwright found that in 1953 the top 5% of shareholders in Australia's largest 102 companies owned 53% of the shares. In a study of the top 300 companies in 1962-64, Wheelwright and Miskelly found that the top 20 shareholders in each company owned an average of 58% of the shares.
In 1963, Communist Party of Australia researcher E.W. Campbell documented how 60 or so leading capitalist families controlled Australia's major banks and industries. Campbell showed that key families have dominated decisive sectors of the economy since early in the century.
Australian Financial Review journalist Trevor Sykes in 1973 found that in the 251 largest companies, the top 4% of shareholders held 55% of the shares.
The richest 200 people accounted for 1.3% of Australia's total wealth in 1984, rising to 2.9% in 1987, dropping in the years following the stock market crash to 1.8%, rising again to 2.4% in 1994 before settling down at around the current level of 2.2%.
It is no coincidence that the wealth of the super-rich trended upwards from 1984, while — under the impact of the federal Labor government's wage-cutting accord with the ACTU — workers' real wages were eroded by 25%.
Contrary to the self-serving claims by the mega-wealthy and their media sycophants that these fortunes derive from "hard work", "entrepreneurial flair", "risk-taking" and "intelligence", the real source is the fundamental swindle upon which capitalism is based — workers are paid less than the value they produce; the boss pockets or invests the rest; so the cycle continues and the loot mounts (see "Arguments for Socialism" on page 10).
If you want to be mega-rich, it helps to be related to somebody who is very rich, or know somebody who is.
Four individuals and one family are billionaires. Media mogul Kerry Packer heads the list with$5.2 billion. Packer's fortune increased by $1.3 billion, or 25%, in 12 months — that's $3.5 million a day or $146,000 an hour (the average hourly wage rate is about $18, but 60% of workers earn less than that).
Packer inherited his capital from his father, Frank Packer, who went into business with former Queensland Labor premier and one-time federal treasurer "Red" Ted Theodore to mine gold in Fiji with super-exploited labour in the 1930s.
This loot helped fund Frank Packer's emergence as a press tycoon, and paved the way for young Kerry to become an even bigger broadcasting tycoon.
While Kerry spends more time at race courses and casinos making million-dollar flutters, his cash cow Publishing and Broadcasting Limited is run by son James. He also makes a few million on the side building up-market flats, buying pubs to cash in on the pokie boom and from owning a big chunk of the One-Tel phone company.
The second richest person, Westfield shopping complex emperor Frank Lowy, increased his stash by $700 million in 12 months, to $2.1 billion. With partner John Saunders, deli owner Lowy opened a shopping centre in Blacktown in 1958, just in time for the 1960s shopping mall boom.
Lowy's three sons, all in management positions at Westfield Holdings, will take over. Saunders, who died last year, left his $300 million estate to his three offspring.
Richard Pratt, the richest Victorian, comes in third at $1.8 billion. Pratt inherited his father's cardboard box factory in 1969.
Melbourne "investor" (and owner of 1991 Melbourne Cup winner Kingston Rule) David Hains' wheeling and dealing have made him Australia's fourth richest person, with wealth estimated at $1.2 billion. Hains' five children will thank him.
A vast and varied array of investments, based on the meat and manufacturing fortune amassed by the Smorgon brothers, who arrived in Melbourne in 1927, allowed the extended Smorgon family to squeak into billionaires' row with collective wealth of $1 billion.
Notably absent from the "Rich List" is the other richest "Australian", international media colossus Rupert Murdoch, now a US citizen. Murdoch's private company, Cruden Investments, controls Australia's equal second largest company (based on revenue), News Corporation, which has assets valued at $54.5 billion and profits of $1.42 billion.
While the "Dirty Digger" is missing in name, his presence is still felt via the appearance of the families of his three sisters — the Calvert-Joneses (worth $228 million), the Kantors ($175 million) and the Handburys ($100 million).
Murdoch and his sisters inherited Cruden Investments from patriarch Sir Keith Murdoch in 1952. In 1991, Rupert bought his siblings' portion of Cruden, reportedly for $500 million. Some of the money — at least $20 million each — was paid directly to Uncle Rupert's 14 nephews and nieces.
Murdoch is grooming his offspring to eventually take over his global empire. Lachlan (who as heir to the throne heads Murdoch's Australian operations), Elisabeth (the eldest, but as in most royal families, a woman cannot be heir if a son is around) and James have been appointed to company positions to follow in Dad's footsteps.
Key establishment families identified by Campbell in 1963 remain prominent. The Myer family ($840 million) rose to dominate retailing in Melbourne in the 1920s, and its wealth today is based on 73 million Coles Myer shares.
The wealth of the Baillieu family ($160 million), linked by marriage to the Myers, can be traced to its stake in the companies that developed the rich silver and lead deposits in Broken Hill in the 1880s.
Those huge profits bankrolled a group of tightly allied companies that came to be known as the Collins House Group, which dominated big business in the 1960s and continues to play a major role in Pacific Dunlop, Western Mining, North Limited, Pasminco, Amcor and Fosters.
The other major corporation built from the exploitation of Broken Hill miners is BHP. When the Broken Hill deposit began to decline, BHP's small number of share owners, headed by John Darling II, shifted to making steel.
With generous tariff protection guaranteeing massive profits, BHP produced its first steel in Newcastle in 1915. Michael Darling, a descendant of John Darling, is today worth $95 million. BHP remains Australia's largest company (based on revenue).
Three strands of the feuding Fairfax dynasty, which controlled the Sydney Morning Herald for more than a century before losing control in 1987, have a combined wealth of $1.23 billion. The Hannan family, which is in partnership with John B. Fairfax, is worth $320 million.
Huge sums are set to be inherited in the next decade. Six members of the 1997 "Rich List" died, sending $1.1 billion to fortunate relatives. Forty members of the 1998 list are over 70 and 17 older than 80, their fortunes worth $9.6 billion. A study by Monash University estimated that in the next decade, $607 billion in family business assets will be passed on.
This vast unearned wealth reflects the economic power wielded by a tiny number of people. The owners and top executives of the largest companies make decisions every day that affect the lives of millions of Australians.
Capitalists decide what to produce, how to produce it, where and when to produce it and whether to continue to produce it. They close factories and throw thousands of workers out of work, replacing them with new technology. They use industrial processes that pollute the environment and poison workers.
The only criterion for such decisions is whether it boosts profits. The majority have little power to make this minority accountable for their actions.
In Australia, the top 1000 companies account for almost 59% ($870 billion) of the total revenue of all enterprises ($1510 billion) even though they represent just 1.7% of all businesses. The largest 30 companies account for 20% of revenue on their own.
The top 1000 employ more than 33% of the work force, or about 3 million people. The top 30 employ more than 800,000.
This concentration of economic power is even greater than the above figures indicate. The most recent study of the top 250 Australian companies shows that in 1992 they were closely linked at the level of the board of directors. Previous studies in 1965, 1979 and 1986 found similar results.
Griffith University School of Humanities' Malcolm Alexander, writing in the August 1998 Journal of Sociology, reported that 175 of the top Australian companies are linked to at least one other, and that the number of links increased with the size of the company.
The four banks and the major financial companies had the most links with other companies. Another study by Alexander, published in 1994, revealed that 1755 directors held all the 2092 director positions in the 250 top companies in 1991. Over time, the number of directors holding four or more positions (known as "big linkers") was increasing.
In 1997 Damian Giddens, from the Department of Accountancy and Law at the Victoria University of Technology, pointed out that when the boards of the top 100 listed companies were examined in 1985 it was found that 685 directors occupied the 875 available positions and 58% of directors held multiple directorships.
In 1995, 657 directors held the available 847 positions, and 62.4% held multiple directorships. The average number of directorships in the top 100 held by "big linkers" was 5.67.
Alexander found that the 20 companies with the most director links in 1992 were (in order): National Australia Bank, CRA, Amcor, BHP, Commonwealth Bank, AMP, Santos, Boral, Telecom, Pacific Dunlop, ANZ Bank, CSR, IBM, Mayne Nickless, AGL, David Jones, Spicers Paper, Tooth, Brambles, Adsteam. Ten were among Australia's 20 largest companies at the time. Australian-owned listed companies dominated, IBM being the only foreign company.
Alexander concluded his 1994 article by describing this group of directors as a "fairly cohesive and self-conscious business elite" reflecting "strategic networking justified by a class-wide perception of [the national interests] ... of a small nation in an open international economy".
In other words, this small core of capitalists and managers plays an important role in organising and leading the Australian capitalist class in its struggle for international markets.
In his 1998 article, Alexander adds: "Some versions of globalisation theory would suggest that globalisation fragments the concentration of economic power at the national level as 'stateless' transnational corporations move into Australian markets and Australian companies internationalise.
"Other studies cast doubt on this scenario. They suggest that transnational corporations use the support of a home government to facilitate their international expansion, and, thus, the majority still retain a strong home base orientation ... [They also suggest] that the forces which gave rise to market protection in the older system will continue in the age of globalisation but the forms of state support to big business will shift. This study of Australia's largest companies provides support for this second picture of globalisation."
The real rulers
Australian governments, conservative and Labor, have always seen their role as serving, strengthening and defending big business, not challenging it.
Nearly all senior public servants, ministers and MPs, the judiciary and the commanding officers of the armed forces are drawn from the same social backgrounds as the capitalists. They are educated in the same private schools.
The occasional recruit from a more humble background can get ahead only by fitting in with political party and government structures designed to serve the wealthy.
MPs are paid hefty salaries, given generous lurks and perks and provided with huge pensions that mean that they can enjoy luxurious lifestyles. They hob-nob with the rich and powerful. If they serve the ruling class loyally and stay around long enough, they can accumulate capital themselves.
Former ministers and prime ministers are assured of well-paid directorships and consultancies when they leave parliament and can utilise the contacts they made while in office to go into business.
This close collaboration between the Australian state and big business was most recently illustrated in the privatisation of Telstra. When the formerly government-owned telephone company was floated on the stock exchange in November 1997, it amounted to a massive gift of public resources to Australia's richest people.
Capitalists on BRW's "Rich List" grabbed almost 18 million shares at $1.95 a share. More than 80% of the richest 200 bought shares. Michael Darling bought 2.9 million shares, worth $10.5 million; the Myer family grabbed 2.4 million; John and Tim Fairfax snapped up 1.5 million; the Baillieu family 480,200, worth $1.7 million. There were smiles all around (except on the faces of ordinary Telstra consumers and workers) when the value of the shares increased 53%.