One Per Cent: how a few big companies shape the laws

Economy & Markets||

Case studies of Woolworths, Coles, News Corp, Telstra and the Big Four banks show how a few large companies exert excessive influence over Parliament and increasingly scrape out the wealth from their supply chains, a phenomenon which is leading to further inequality. Lindy Edwards reports. 

In 2012, the federal Treasurer Wayne Swan took the startling step of publicly declaring “the rising power of vested interests is undermining our equality and threatening our democracy”. He argued “a handful of vested interests that have pocketed a disproportionate share of the nation’s economic success now feel they have a right to shape Australia’s future to satisfy their own self-interest”.

At the time, some were quick to dismiss it as the rhetorical posturing of a Labor government that had mishandled major reforms. But there are also good reasons to believe this may be a growing problem. Economic power has become much more concentrated over the last 30 years. The ACCC reports that the ASX top 100 companies’ share of GDP has increased from 27% in 1993 to 47% in 2015.

At the same time economic power has become more concentrated, it has also been mobilised politically like never before. Business lobbying was fragmented, haphazard and unprofessional in the 1980s, but now it is a recognised career with an estimated 5,000 professional lobbyists in Canberra.

I set out to test the evidence and see whether it was as bad as it looks, by examining clashes between government and nine of the ten largest companies on the Australian stock exchange over a ten year period. I looked at clashes with the miners, the banks; Coles and Woolworths, Telstra and News Corp as well as unfair contract laws and big business’ treatment of small business.

These policy battles appear quite disparate at first. Yet, at their heart, they each come down to the same core phenomenon. In most cases, the sector is dominated by between one to four big companies that dominate supply chains made up of tens of thousands of people. A lot of the corporations’ business strategy is focused on redistributing wealth along their supply chains and into their own hands.

In each of these case studies the corporations were battling with government over laws which shape where profits sit in the supply chain. The struggles are critical because the wealth of the 1% has grown disproportionately over the last thirty years in part due to the powerful scraping the wealth out of supply chains.

The method of the study was to identify what the corporates stated to be their preferred positions at the beginning of the policy development process and to compare it to what the Parliament passed into law at the end. It gives us a clear measure of who is winning the policy battles.

The case studies also include a blow-by-blow account of the how the political battles unfolded. Part of the reason for doing this is to keep things real. Discussions of corporate power can blur into conspiracy theories where faceless figures behind the scenes are calling the shots.

In following how the issue unfolded, it becomes clear that it is not possible for anyone to exercise such control over our Parliaments. The case studies reveal the complex swirl of countervailing forces,  random events, and a hundred hands on every decision. Yet some players bring so many resources and such influence that their odds of triumphing are higher no matter which turn the dance takes.

The deep dive into seven of Australia’s most iconic political battles reveals the extraordinary extent to which the major corporates are being able to dictate laws that entrench their wealth and dominance. But it also reveals the unexpected places power resides, and where the opportunities might be to resist it.


This is an edited extract from Lindy Edwards’ new book, Corporate Power in Australia: Do the 1% Rule?, Monash University Press. Read Lindy’s analysis of political donations here.

Editor’s Note: The research by Lindy Edwards corroborates the view of this publication, indeed our raison d’etre, that the power of corporations over democracy is on the rise. This is exacerbating inequality and the proliferation of lobbying, along with increasingly concentrated corporate power, has also led to a stasis in political reform and failing public confidence in government.

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