A Secret Country

by John Pilger

  Keating’s de-regulation of the fragile Australian economy, with its small manufacturing base and traditional reliance on agriculture and wool, has been swift, unsparing and disastrous. As farm, commodity and mineral prices began to fall in 1983, Keating suddenly lifted all banking controls and floated the currency in a highly unstable speculators’ market. This has left a deeply wounded Australian dollar – sometimes known contemptuously as the ‘Pacific peso’ – and world record interest rates, as testified by the frequent evictions of small farmers unable to pay up to 34 per cent on their loans.

  Since Keating abandoned exchange controls, more than $A7,000 million has fled Australia every year. A major industrial economy, like Britain’s, can sustain bleeding of this magnitude for some time. A small economy cannot; and unless the flight of capital is stemmed, Australia will be left with an insoluble balance-of-payments’ deficit and is likely to join the ranks of Latin American states in permanent hock and bereft of their sovereignty. Indeed, in surrendering one of the few weapons with which a small country can defend its economic sovereignty, Keating has given away almost all that the Labor Government in the 1940s fought to preserve against extreme American pressure. No Australian Government now can afford to stand up to the power of the international money markets or to major foreign investors. If, for example, the Government wants to improve rather than further reduce its welfare provisions, the international banks almost certainly will ‘sell down’ the Australian dollar, and bring intolerable pressure to forestall such a measure. Brokers in New York have said as much when consulted by Australian politicians and by those Australian commentators who constantly seek Wall Street’s approval of Australian policies.

  This is reminiscent of the Great Depression when Sir Otto Niemeyer, on behalf of the British banks, insisted that ordinary Australians accept reduced wages and a lower standard of living so that their Government might continue paying interest on the nation’s overseas debt. Then, as now, the call was for ‘tightening of belts’. Australia’s new entrepreneurs have had their own response to what Keating has called ‘this emergency for all of us to bear’.

  In the late 1980s the official company tax rate stood at 49 cents in the dollar. In 1987 Rupert Murdoch’s News Corporation paid less than 13 cents and Alan Bond’s Bond Corporation paid less than 9 cents.60 By 1988 Bond had got his tax down to even less than that, of which more later. In 1989/90 Kerry Packer’s Consolidated Press Holdings also paid only nine cents in the dollar.61 The huge Elder’s IXL company (Foster’s lager), which paid less than 11 cents, was run during the 1980s by John Elliott, an outspoken character who has had gold buckles installed in his private jet. Elliott has threatened to move his business empire to England, saying ‘Australia would be the last place you would want to invest.’ His ingratitude remains a mystery. Australia’s newly de-regulated banks granted entrepreneurs like Elliott access to virtually unlimited funds. And when Elliott left Elders in 1990, with the company crippled with debt, he walked away with $A20 million in ‘free’ shares.62

  ‘A new establishment is in the making,’ rejoiced Sydney’s Business Review Weekly in 1986, ‘its fortunes growing with a rapidity not seen since the word “millionaire” first entered the English language. Entrepreneurs are breaking down the boardroom doors.’ In the following years, a ‘billion dollar club’ was established and the magazine published a ‘gold edition’ celebrating the 200 richest Australians. Of those, it was said that only one made his fortune out of pure brain power – inventing a computerised betting system for horse-racing.

  The Australian Labor Party has always had its conservatives and dreamers, even radicals, but for the most part their differences have been reconciled by a shared belief that, under Labor, the rich should not grow richer while the poor become poorer. When Hawke and Keating came to power in 1983 the combined wealth of the top 200 was less than five billion dollars. In 1989 it was twenty-five billion dollars and still climbing. Before the recession got under way, Australia had an estimated thirty-one thousand millionaires, compared with seven million wage earners, whose wages are falling in real terms, and two million people living in poverty, including one Australian child in five. Put another way: at the beginning of the 1980s the top one per cent of the population owned as much as the bottom 10 per cent. Now that one per cent owns as much as the bottom 20 per cent.63 Such is Keating’s ‘historic transformation’.

  Keating is an egocentric and pugnacious man, self taught in economics, antiques dealing and neo-classical art, subjects upon which he pronounces a great deal. For example: ‘You couldn’t get any better [than neo-classical art]. There hasn’t been any better since; and, since deco, there have been only fag packets and bottletops.’64 His descriptions of the Opposition and others opposed to his economic policies include the following: harlots, sleazebags, frauds, immoral cheats, boxheads, brain damaged, loopy crims, stupid foul-mouthed grubs, pieces of criminal garbage, rustbuckets, scumbags, dimwits, dummies, perfumed gigolos, piss-ants, gutless spivs, stunned mullets, ghouls and barnyard bullies. Inexplicably, Keating is described by his supporters as ‘eloquent’. According to Alan Ramsey, if you probe too deeply into the man himself, ‘he’s as likely to tell you to piss off and mind your own business. He is, and always has been, very much his own man.’65

  Keating has spoken a great deal about Australians’ need for sacrifice, although he does not mention those exempt from his strictures, notably himself. Up until 1987 Keating listed his ‘principal place of residence’ as Sydney. This allowed him to claim more than $A17,000 a year as tax-free living-away-from-home allowance, designed to compensate him for separation from his family. In fact, he and his family lived together virtually full-time in a rented house in Canberra. A Remuneration Tribunal has now ‘regularised’ Keating’s expenses for a home he seldom visits. In response, Keating has boasted openly that he could make $A17,000 in a day, an hour, even a minute, on the Stock Exchange. Such is the contemporary voice of the Australian Labor movement.66

  One of Keating’s closest Mates is the multi-millionaire property developer, Warren Anderson. Keating has been a frequent house guest in all of Anderson’s five luxury homes, which are worth some $A50 million. Anderson was ordered to pay $A1.2 million in back taxes by the Perth office of the Tax Department, while the Sydney office wanted several million more, although the final figure was reduced after negotiations. When Keating was blaming the nation’s housing crisis on the greed of Australians who own a quarter of an acre of suburban land, his best Mate was knocking over six surrounding mansions to provide a five-acre garden for his residence in Perth. Anderson’s other homes include an imitation eighteenth-century English ‘stately home’ in the Northern Territory. Called Tipperary, it has an $A800,000 chandelier and a real hippopotamus in the grounds. Anderson’s interest in animals came to light when he paid $A30,000 to Eskimos for the right to shoot a polar bear, which he stuffed. He gave his wife a $A2 million diamond-studded choker for her fortieth birthday. His collection of antiques represents a passion which he shares with his Mate, Paul Keating, who is often transported by Anderson helicopter to one of Anderson’s five estates.

  In 1986 Anderson was convicted of bringing a loaded .38 revolver into the country on a private jet that had flown in from Papua-New Guinea. The Treasurer wrote him a reference for presentation to the court hearing the charges. Keating, a minor union official before entering parliament, has amassed a small fortune in antiques, especially French empire clocks and eighteenth-century European silver. He has dealt in clocks with Anderson but refuses to disclose the details.67

  Anderson is also renowned for hiring strong men with criminal records whose jobs include visiting those opposed to his many property development schemes. They are known as ‘enforcers’. One of them, Tom Domican, is a much feared individual who has talked about ‘stacking’ and ‘rigging’ Labor Party pre-selections in Sydney on behalf of right-wing candidates. Tax records show that Anderson has paid more than $A20,000 to Domican, who was given fourtee
n years in prison for shooting with intent to murder a fellow hit man, his wife and child. He was subsequently acquitted on appeal.68 Speaking on television about his admiration for Warren Anderson, Treasurer Keating said, ‘I haven’t got much time for the wimps, and there are lots of wimps around. As far as I am concerned, wimps are out.’69

  As part of his de-regulation policies, Keating abolished the Federal Reserve Bank’s power to monitor money leaving the country, which allowed the very rich to practise ‘tax avoidance’ on a previously unheard of scale. Moreover, the interest incurred on the huge amounts borrowed on world money markets in order to finance takeovers is tax deductible in Australia. This has helped to give Australia a foreign debt which, under Keating’s stewardship, rose from $A25 billion in the early 1980s to $A114 billion in 1990 and is behind only that of Mexico and Brazil.

  The scandal of this is that Australia, with one of the smallest public debts in the world in relation to Gross National Product, has had to bear two-thirds of the overall debt because of the private borrowing of corporations, banks and individuals like Rupert Murdoch, Sir Peter Abeles and Alan Bond.70 In 1990 the Bond empire alone owed between $A8 billion and $A14 billion. This meant that the company, which was unaccountable to the Australian Government and the Australian people, was responsible for at least 10 per cent of the national debt – a debt that the nation as a whole has to reduce by earning export income. In one year, 1986, Sir Peter Abeles’s company, TNT, had foreign loans which accounted for almost half its assets. While Abeles reaped tax relief on the interest on his loans, Australia’s balance of payments suffered proportionately, particularly as almost all foreign loans are in US dollars, which have steadily appreciated against the Australian dollar. During the same period almost 40 per cent of Murdoch’s News Corporation’s assets were funded by foreign loans; and this was to increase sharply in January 1987 when Murdoch paid $A2.3 billion for the Herald and Weekly Times publishing group.71

  Buying the Herald and Weekly Times group was Murdoch’s dream. The Melbourne Herald had been his father’s paper; Keith Murdoch, its most famous editor, had been something of an Australian Lord Northcliffe. Although the paper was never owned by the family, the Murdochs considered it theirs, and the son’s ambition was to buy it and to honour his father’s memory by restoring it to its albeit exaggerated former glory. Another factor, entirely unrelated to filial sentiment, was that the Herald group was the largest newspaper empire in Australia and its acquisition would give Murdoch unprecedented dominance of the Australian press.

  Apart from having to borrow to pay an inflated share price, Murdoch faced a trickier problem. The Foreign Takeovers Act stood between him and his dream; for he was now an American citizen. The Government’s foreign investment guidelines were unambiguous: ‘Foreign investment in mass circulation newspapers is restricted.’72 Moreover, Section 51 of the constitution gives Parliament power to prevent concentrated ownership of any section of the economy. Clearly, Murdoch needed a Mate.

  On November 13, 1986, three weeks before Murdoch flew to Melbourne from Los Angeles to make his bid for the group, his Australian published a surprising editorial beneath the headline, ‘Opposition flounder around aimlessly’. The conservative coalition was described as ‘an opportunistic rabble . . . looking less and less like an alternative Government’. Although the Murdoch press had given Hawke the gentlest ride of any Labor leader, it had endorsed the ‘new right’ policies of the Opposition leader, John Howard. The shift was sudden and unexplained.

  Shortly before the editorial appeared, Murdoch met Keating in the United States, where they discussed proposed changes in government policy towards the media. On their return to Australia, they met again, this time with Hawke present. It was a jocular, first-names encounter. They discussed ‘putting the Herald and Weekly Times into play’ (jargon for making a company vulnerable to takeover). Within days of the meeting, Murdoch’s senior executives were left in no doubt that his papers now supported the Federal Labor Government.73

  Murdoch flew to Melbourne on December 2 and offered $A1.8 billion for the Herald and Weekly Times Group. The Minister for Communications, Michael Duffy, whose portfolio covered the press, described Murdoch as ‘the prodigal son returned’. The Murdoch papers could barely contain their obsequiousness. On December 4 the front page of the Sydney Daily Mirror carried a half-page picture of Murdoch in running shorts, jogging ‘before the battle’. Beneath the headline MURDOCH HAS THEM ON THE RUN! the Mirror informed its readers that ‘Mr Murdoch had a peaceful night’s sleep’ and had said that ‘journalists should do this every day’ (jog). ‘Mr Murdoch said he was pleased with the morning newspapers which splashed headlines of his lightning move for Australia’s biggest media company.’ When it was pointed out to him that the chairman of the Trade Practices Commission had said that the takeover might contravene the law, Murdoch said, ‘That is not an insurmountable problem’: just as the Foreign Takeovers Act and the constitutional safeguard were no longer ‘problems’.

  The only remaining ‘problem’ was a law which prevented Murdoch from owning television and radio stations that were part of the Herald and Weekly Times empire. Murdoch dealt with this problem by vanishing. His company, News Limited, announced his disappearance thus:

  1 Although Mr Murdoch was formerly a director of News Ltd he is no longer a director and he holds no office in the company.

  2 Mr Murdoch has no authority to speak on behalf of or to bind News Ltd . . .

  The ruse beckoned endless court action, so Murdoch tried another. Now in de facto control of the Herald and Weekly Times Group, he arranged the sale of its television and radio interests before he took it over officially. That one worked. The Australian Broadcasting Tribunal, although pressed by the Australian Journalists’ Association and other groups to investigate the deal, was outmanoeuvred and, with no encouragement from the Government to do otherwise, simply gave up.74

  Bob Hawke had only to remain silent to acquiesce. The Minister of Foreign Affairs, Bill Hayden, and the Opposition spokesman on communications, Ian Macphee, called for an urgent public enquiry into the Murdoch bid, to no avail. Hayden was silenced by the Cabinet and Macphee was visited on a Sunday morning by his frantic leader, John Howard, who had interrupted a holiday to tell him that under no circumstances was Murdoch to be offended. On both sides of the Australian Parliament the silence was contagious. One MP told me, ‘The hostility of Murdoch would mean my political death. So I shut up and I’m not proud of it.’ Another, in seeking to justify his silence, recounted a famous Murdoch ultimatum to a politician in the 1960s, ‘Look, you can have a headline a day or a bucket of shit a day. What’s it to be?’75 That the public trust had been breached behind veils of political expediency, fear and cowardice was one more Australian secret.

  Few other dogs barked. Coverage by the non-Murdoch media of such an historic shift in power was primarily of the gee-whizz-isn’t-Rupert-clever school. Financial journalists allowed the spectacle of Murdoch’s cunning to obscure the critical issue of ownership of a national resource. That freedom of expression was in trouble, that censorship now could be conducted across a majority of the press, by commission and omission, was not an issue.

  One young journalist, Paul Chadwick, resigned from the Melbourne Sun, a Herald and Weekly Times paper, in protest and helped to set up the ‘Free the Media’ organisation. As Chadwick put it, journalism in Australia was now distinguished by ‘a kind of feudal service to one’s proprietor’. ‘Many of my colleagues’, he told me, ‘believe that their professional identity derives from being a Murdoch journalist or a Fairfax journalist rather than from any set of principles which are not appropriated by any owner.’

  The Australian Press Council, the ‘watchdog’ of the press, all but disintegrated as a result of the Murdoch takeover. Of its fifteen members, seven represent the newspaper proprietors, and all of them closed their ranks behind Murdoch and voted unanimously against a proposal for an enquiry into the takeover. The chairman, Hal Woott
en, a Queen’s Counsel and former judge, resigned in protest, saying with bitterness that the Government had made a ‘mockery of the Foreign Takeovers Act’. He said,

  Allowing Murdoch to assume control of Australian newspapers was unparalleled outside totalitarian countries. The Federal Treasurer could stop the takeover if he wanted to . . . in this case it is a man who has renounced his citizenship to further his worldwide media power, and who makes no secret of the fact that he intends to make personal use of his control of newspapers.76

  When Hawke finally spoke out about the Murdoch sale, he and Keating had been entertained by Murdoch on his estate at Yass, a short drive from Canberra. The episode was then declared over. ‘If we are going to be a free market economy based on the operation of market forces,’ said Hawke, ‘then I think [the sale to Murdoch] has to work its way through.’ He made no mention of the law, which is above market forces and which a Prime Minister is meant to uphold and protect. Nor was the Australian public made aware of Keating’s boasting that he had helped Murdoch. In a meeting with a senior executive of the Fairfax group, Max Suich, Keating made clear his support for ‘our crowd’. In a Fairfax internal document, Suich wrote, ‘The Treasurer is a product of the New South Wales right wing (of the Labor Party) and his conversation is littered with threats, references to getting even, doing deals and assisting “our crowd” in business, the press and within the (Labor Party). He is very blunt about the fact that the right are “deal-makers” and that they provide favours for “our crowd” in return for favours given’.77

  Ian Macphee refused to accept the Government’s silence on the Herald and Weekly Times and pursued his own investigation. Under the Freedom of Information Act, he requisitioned from Keating’s office documents relating to the takeover and especially the Foreign Investment Review Board’s recommendations. Six of the eight pages he received were blacked out and stamped ‘commercial in confidence’. One paragraph, released almost two years after the sale, indicated that the Board had opposed the takeover. In 1989 Hawke told Parliament the opposite. When pressed by Ian Macphee, Keating still refused to release the Board’s report.78