Corporate social responsibility and micro-economic reform

There is no doubt that Australia is suffering from some confusion about where it goes next in relation to the place of business in society and the place of Australia in the world. Globalisation, while not new for this country, is posing challenges. There are concerns about the so-called branch-office economy, as though both the syndrome and the fear of it are new. There are concerns about rural and remote regions being left behind. There are also concerns about a possible re-regulation of Australian business. That the Australian Competition and Consumer Commission got a remarkable increase in its budget this year points to its popularity in Canberra on both sides of politics.

Business was a major architect of micro-economic reform in Australia. This was because a consensus emerged among those who did business in this country that a parochial, closed and over-regulated Australia would see it consigned to becoming an irrelevant backwater. This consensus still remains. Most business leaders would agree that the consequences for business of Australia re-regulating and protecting anew its tiny markets would be low growth and capital flight. That said, it follows that business should become critically interested in the state of its particular and collective social relationships, and expert in managing them.

The Legitimacy Gap

Those of us in the more socially contentious sectors of business know that quite profound challenge to the legitimacy of our businesses has been afoot for some time. The mining sector has probably lived longest with the knowledge that its basic legitimacy will be contested for as long as it pretends to live only in narrowly operational, economic and financial dimensions.

I would refer you to what happened to Australia’s shiny new, globally competitive resources sector of the 1960s by the 1970s and 1980s. It became seen as Australia’s No.1 environmental aggressor and its chief oppressor of Aborigines. You will recall all of the bumper stickers on students’ cars "Land Rights – Not Mining" in that era. Without quite meaning to, Australia’s most efficient and competitive industry found itself the symbol of White Australian guilt and Aboriginal activists’ views of what was wrong.

Now, of course, the mining industry has adjusted and responded, or is in the process of doing so. Far from being the target of the bumper stickers, the major miners are in the process of developing historic partnerships with Aboriginal people all over Australia. My company, Rio Tinto, through its aluminium subsidiary, Comalco, has recently agreed the Western Cape Communities Co-existence Agreement with the Aboriginal people of the areas connected to our Weipa bauxite deposits. This is the first major brownfields agreement the Group has entered into, and it comes on top of three major agreements for new mines, greenfields agreements and over 25 exploration agreements.

It is only now that we look back and ask ourselves why it took so long.

I say this because those of us in the mining industry can see the same processes taking place in the newly de-regulated, or privatised, sectors of the Australian economy. Clearly, there were winners and losers from de-regulation, but the experience of the losers has the potential to overwhelm the experience of the winners. From the experience of the mining industry, this is a fairly standard operating reality. Other sectors, such as pulp and paper, telecommunications, gaming, and so on have all experienced emerging and comparable alienation or distrust.

How do we capture this sense of social disconnection with business? This is often unclear in the particular, but in general it has to do with unrequited expectation founded upon poorly articulated assumptions of an Australian sense of social obligation. In other words, it’s all very well if Australian businesses do well, perform better, provide cheaper products, and go offshore successfully – that’s what business is supposed to do. It’s all very well if the customer is better served, but is that all there is? What business does for me as a customer is one thing, but what does business do for me as a person, for you and those people over there? Is business all there is to business?

Business Didn’t Matter Before

It is hard to imagine that the current focus on corporate social responsibility in this country would be so acute was it not for the fact that business must matter now. This is unusual in the Australian context. Traditionally, business does not matter or at least business does not matter as much as other things. In Australia, sport matters. Government matters. Politics matters. Private and voluntary activity matters.

A list of National or State honours still shows how little business matters. A brief look at the list will show that business does not matter like science, or jurisprudence, or civil service, or even architecture and a host of professions including trade unionism.

How did business achieve its traditional invisibility in Australia? There’s not the space here to go into the history, but it is something of a long story that runs as counterpoint to the triumph of the mixed economy and its subsequent dismantling in pursuit of micro-economic reform and international competitiveness.

The Mixed Economy

What was the mixed economy and when did it peak? We can say broadly that the mixed economy was the Australia of the mid-1960s, where import-substituting industrialisation had reached the limits of the domestic market, where the basic wage could still provide a general safety net outside the social welfare system, where credit was rationed and allocated according to socially approved criteria, where infrastructure commonly used by the wider population was publicly-owned, and finally, where the costs of this system on Australia’s export sectors were able to be compensated to an extent through farm and regional cross-subsidies and universal education, health and pension provision.