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AWB Scandal: a wake-up call for Australia

By Krystian Seibert - posted Thursday, 9 February 2006

While the ongoing AWB scandal has focused on the impropriety of AWB in conducting its business with the regime of Saddam Hussein, the whole affair is an important wake up call for Australia in a much broader sense. It tells us to wake up and examine how we allocate power in our society, whether that be to government or business, and the consequent effects of that process.

One major flaw in the structure of many societies in the world, now and in the past, is they often concentrate power, and this concentration often leads to problems. Just look at the example of countries that suffered under communism until the 1980s: the fact they concentrated power in the government led to widespread corruption and the suppression of individual and community initiative.

These countries still grapple with these problems, as formerly state-owned assets were and are sold off to so-called "oligarchs" who now have immense power in countries such as Russia. But examples of the problems caused by the concentration of power are not limited to former communist countries, as the AWB scandal and similar corporate scandals in Australia and overseas demonstrate. But that leads to an important question; how exactly should power be distributed in our society?


Given the fact big government leads to problems such as corruption, what is obvious is that more government involvement in our lives won't solve the problem - we need a solution that minimises government involvement. However, the power of big business can also lead to problems such as corruption, so the key is to find a way of avoiding the extremes of big government versus big business. The most effective method of doing this has two parts, a highly competitive market place as the cornerstone of our society, and a highly active civil society as way of countering the power of big government and big business.

First, a highly competitive market place is vital. Competition forces business to focus on the needs of their customers and inhibits their ability to acquire significant power. This is because they must look over their shoulder constantly to see what their competitors are doing. Without significant power, business is unlikely to be corrupted, they simply won't have any time for it. Therefore, competition in our society, whether it be in the retail sector, health sector, education sector or any other sector must be reinforced. The process of deregulating our society needs to continue and any monopolies must be given notice that their time is up. AWB is one of them.

Second, a highly active civil society is important. Australians need to be encouraged to address their problems at a community level, to limit the involvement of big government. Whether by allowing the development of community enterprise such as community schools and hospitals or by decentralising the provision of law enforcement and transport services, such policies allow power to be taken away from government and given back to communities.

The process of deregulating our society is well underway. The reforms of the Hawke-Keating Government commenced in the 1980s, and continued by the Howard-Costello Government through the 1990s, have decreased the involvement of government in our lives. What is unfortunate is the process of deregulation has, in a number of cases, transferred power from big government to big business. Policy makers should be mindful of that outcome and look at other structures for deregulation, particularly as the process of privatising Telstra gains momentum.

The process of decentralising our society is far less developed and the community still lacks the empowerment it needs. Policy makers need to consider new ways of transferring power away from government to the community and policies such as those pointed out in the paragraph above need to be given more attention. And the time to act is now, while the AWB scandal is the centre of attention and the corrupting effect of power is on display for all to see.

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About the Author

Krystian Seibert is a public policy professional based in Melbourne. He has worked as a policy adviser to two Australian Ministers and studied regulatory policy at the London School of Economics.

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