I really don’t believe that someone who only looks at balance sheets can effectively manage a business that they don’t have an intimate connection with, and which operates a thousand miles distant.

If BHP went offshore, they’d still mine here, and so they’d still support heavy engineering here. I would think manufacturing jobs would be the one area that would be least affected.

So in conclusion, yes I was oversimplifying the situation, but I still believe that moving the BHP head office offshore would have a substantial negative effect on Australian heavy industry.

http://www.bluescopesteel.com.au/

I can’t find the exact number of shares that BHP owns in Bluescope but it’s reasonably well understood that although Bluescope have been spun off as a separate legal entity, BHP still have a lot of influence over the way Bluescope operates. Suffice to say that Bluescope and BHP are pretty darn close on the corporate web. I believe that the current situation is that BHP owns most of Whyalla while Bluescope owns most of Port Kembla but there’s a lot of details I don’t have (I could hunt them down if you really need to know). Products such as railway track will tend to carry the BHP brand, OTOH colourbond roofing is it’s own brand but owned by Bluescope.

There used to be a subsidiary called Tubemakers of Australia but I think they have been slurped back into the parent company (BHP bought them back). I have no idea who owns that pipe making infrastructure now.

Anyhow, the whole incestuous ecosystem of metalworking in Australia is another reason why putting a local boy into the big chair is a good idea. Having the head office in London would detach the brain of the operation from understanding of what the body is doing. It is completely disingenuous to believe that BHP operates as an isolated entity like a corner shop milkbar.

What does BHP manufacture?

The head office generates the corporate, financial, legal and insurance services and the highly skilled jobs that come with them.

Highly paid? Yes. Highly skilled? Hmmm, maybe for suitable definitions of skill.

What really matters is that these people make decisions that affect a large number of other people. In economic theory, their decisions are rational, clinical and depend only on the money involved, not on the person making the decision. We all know that real people don’t work like that, they make decisions based on grudges, hunches, beliefs and guesswork. Real people also factor a great deal of non-financial information into their judgements, primarily because the financial system does not accurately track all the personal motivations that go into a big decision such as closing down the Newcastle steel mills. Note that I’m not suggesting these decisions are irrational, they are quite rational, from a particular perspective, and the perspective does matter.

BHP is one of the few Australian heavy industries doing manufacturing in Australia and turning a profit (admittedly with a bit of help from guaranteed government “buy Australian” policies). While I’m not a fan of using tax money to prop up a failing industry by any means, in cases where we do have a success, we don’t want to take it for granted. It is entirely likely that foreign decision-makers would far less aligned with the Australian national interest than would a local.

Hard working Chinese who save their pennies should be rewarded for such values in a world full of profligate owners of troubled and overgeared assets up to a point.

In an abstract sense, it makes sense that they would be rewarded, but from my own point of view I see absolutely no reason to offer them any particular assurance of reward.

That point is one where no owner can abscond with the social responsibility to pay the duly assessed communal tithe for their right to enjoy private property, by transfer pricing or any other means.

Oh very fine, “duly assessed” by you? by Australian voters? by Chinese party committee? The penny-saving Chinese get what they can grab with the power and influence available to them, and the collectors of the communal tithe get what they can grab with the power and influence available to them, so don’t bother with any deep spiritual principles of true justice. We have a system of private property because it works, it provides motivation, efficiency and stability. Even the Communists have come to this conclusion.

The answer is to sensibly redesign the constitution of our marketplace so we couldnt care less who owns the extraction rights.

I suspect that you will find that making the extraction rights worthless would result in the minerals staying in the ground (until some time later when we all change our mind once again).

By the way, I don’t think it’s entirely fair to score Keating against Costello. Keating turned around a big heavy ship after being handed an economic disaster by the Fraser government, while Costello got handed the wheel and only made a few minor adjustments to trim the sails. There may well be examples of Costello doing a better job of trimming those sails than Keating did, but nothing will change the fact that Keating was a visionary and Costello was a very ordinary treasurer (not a bad treasurer by any means, but nothing special).

The fact that these people form a large part of his constituency, donors and supporters was surely only a coincidence.

The bottom line is that his decision making in the BHP case amounted to a form of protectionism for white collar jobs in Melbourne.

Whether this is a good thing or not I am unsure.

The headline discusses a particular topic. If I was discussing another topic – the one you wish to discuss, who wore the better suits, or which one had a sense of humour, or which one was the most modest for instance – all these topics would have brought forth a different heading.

…but I wonder how much does it count for if it’s a company that’s basically forced to be here? FWIW, I certainly agree it wouldn’t be a good look for Australia if all our best companies ended up being acquired/merged and/or headquartered overseas. But it would seem more productive to investigate if there are things that can be done that make it more attractive for such companies to stay (e.g. lower corporate tax rates) rather than rely on the power of government to keep them here.

Why if someone is making an observation about a particular argument are they to be assumed to disagree with any argument you want to dredge up?