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Stone's attack on the Rio deal is very much Nationals' and outdated

Comments on news “Curbs on Chinalco worthless, says John Stone” by reporter Jennifer Hewett of the Australian, 27/05/2009, http://en.wikipedia.org/wiki/John_Stone_(Australian_politician.

Mr Stone is still very much in the Nationals shoes now.

The Australian reported that Mr John Stone had condemned the proposed Rio Tinto-Chinalco deal as against the national interest, warning that any government conditions imposed on the giant Chinese company would prove "utterly worthless".

It is reported that Mr Stone’s attack on the proposed deal undermines the claim that it is possible to protect the Australian national interest through the traditional sort of concessions aimed at maintaining Australian control. The Australian said that he was one of the most powerful Treasury Secretaries of recent decades, and his vehement criticism would add to the political pressure on the Rudd Government over the issue.

Is that the true? Let’s have a look at Mr Stone’ background to put his attacks in the appropriate context. I searched the web and found the following information from Wikipedia (http://en.wikipedia.org/wiki/John_Stone_(Australian_politician:

John Owen Stone (born 31 January 1929) is a former Australian politician. He served as Secretary to the Treasury between 1979 and 1984,[1] and as a Senator for Queensland representing the National Party in the Senate from 1987 to 1990.
After gaining
First Class Honours in Mathematical Physics for his Bachelor of Science degree and representing Western Australia (under 21) at hockey, Stone was selected as the Rhodes Scholar from Western Australia for 1951.
Oxford he was awarded First Class Honours in Politics, Philosophy and Economics (PPE) and won the James Webb Medley Prize for Economics before joining the Treasury in 1954.
Stone rose within the Public Service to become Secretary to the Treasury under
Prime Minister Malcolm Fraser. He penned a severe critique of Fraser's economic policies which was used against the Liberal party once the Australian Labor Party won the 1983 federal election. Stone resigned from the Treasury in 1984, after the election of the Hawke-Keating government, some of whose economic policies he supported.
Following the release of the
Coalition's One Australia immigration policy in 1988, John Stone, as Shadow Finance Minister said:
"Asian immigration has to be slowed. It's no use dancing around the bushes"
Despite his economic rationalist views, he initially opposed floating the currency and introducing a consumption tax; indeed he has repeatedly criticised the GST (and Treasurer Peter Costello) in print.
An informal advisor to
Joh Bjelke-Petersen, Stone was elected to the Senate from Queensland as a member of the National Party at the 1987 election, and resigned in 1990 to unsuccessfully contested the House of Representatives seat of Fairfax, his place being taken by Bill O'Chee.[3]
Since retiring from the Senate, Stone has been a critic of multiculturalism and a supporter of the Samuel Griffith Society, which he helped found. He formerly had a column, on economics and politics, in The Australian Financial Review. Most recently, Stone has been critical of the Howard Government for its efforts at eroding the power of the states within the Australian federal system, regarding this as a departure from long-standing Liberal/National coalition "states' rights" ideology.
In its March 2008 issue, Quadrant Magazine published an article in which Stone argued that
John Howard had been Australia's greatest Prime Minister.[4]

There is no doubt that Mr Stone was a distinguished Australian and was strong in economic policies as his two-decade long services in the Australian Treasury, including as the head of that department for a number of years, indicated. His voices should carry considerable weight in Australia. As an amateur economist, I respect his opinions on economic policies.
Does that mean his attack on the proposed Rio Tinto-Chinalco deal is correct? I have thought about it for a while and came to a negative conclusion. The following shows why.

Although Mr Stone served as the Secretary of Treasury, that experience had predated his role as a National Party Senator, for Queensland from 1987 to 1990. His economic views have much been influenced by his experience as a National Party Senator. This can be seen from his view about immigration, his opposition to floating the currency and the introduction of the GST, as well as a critic of multiculturalism in Australia.

Most economists agree that the floating of the Australian dollar was one of Hawke-Keating Labour government’s main structural reforms that, in conjunction with other reforms like reducing trade barriers and the introduction of enterprise bargaining, improved Australia’s productivity and brought enormous benefit to the nation’s wellbeing. Equally, the introduction of the GST enabled the abolition of a number of inefficient State taxes and the reduction of personal taxes and hence enhanced economic efficiency and productivity in Australia. Majority Australians now have now realised and enjoyed the benefits of those reforms.

What Mr Stone did to those important reforms at those times? He opposed them. Was he correct? No, he was wrong and has been proven wrong on all those occasions. Were his economic views proven correct? No they were not, they have been proven wrong. I am puzzled by the fact that a former Treasury Secretary could have had those incorrect economic views, but I am content that his views have reflected his experience of a National Senator in the 1980s when it might have been fashionable to have those protectionist views politically, particularly from the National point of view.

What about multiculturalism in Australia? Again, main stream Australians would disagree with Mr Stone on his critical views of multiculturalism. On this there is no need for me to say anything more at all. Everyone but Mr Stone, and possibly Pauline Hanson, understands that point. But all Australians understand what Pauline Hanson has been standing for - one white Australian nation! That idea has been burried by main stream Australians many many years ago.

From all these I can’t help form the view that Mr Stone, though well respected during the time as the head of the Treasury Department, has changed and now has had a very narrow, old fashioned, closed and nationalistic view of the economy and society. That view is very much outdated and does not sit well at all with main stream economics of free trade and investment, economic integration and globalisation.

He appears to have forgotten the benefit to Australia and Australians of our trade with Asia and the role of investment made by and capital inflow from Japan and other countries in or to Australia to complement the insufficient savings we Australians have compared to Australia’s investment needs. That is not strange since new memories can take the place of old ones.

After this research and analysis, I don’t feel that, as the Australian reporter claimed, Mr Stone's attack on the proposed Rio deal will undermine the fact that it is possible to protect the Australian national interest through the traditional sort of concessions aimed at maintaining Australian control as Swan did on other deals recently.

His views regarding the floating of $A, the GST and multiculturalism in the past, were completely ignored and thrown to the dust bin by both sides of Australia’s main political parties. I will be surprised at all that his opposition to the proposed deal will now have little weight either, even though Mr Barnaby Joyce a current National Senator from Queensland has been very vocal in opposing the deal too.

Does Mr Stone’s claim that “The resource assets under Rio's control are so potentially enormous the company has barely scratched the surface," hold any water? The answer is no. Mr Stone seems to suggest that he is much better than the market in determining the value of a company.

If he is to use that in his personal investment, good luck to him, but very few investors do not agree with him at the moment. He is dreaming gold beneath Rio’s mines! Yes, there is some in some mines, but for that investors don’t know any less than him, I would assume.

So, based on these facts, I could not disagree with Mr Stone more on his view of the proposed Rio deal! In fact, I wouldn’t risk in listening to his view regarding investment at all. I might have done that when he was the head of Treasury, but not when he had become a Nationals Senator. And definitely not now!

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