2004GIR Government-Business Relations

Workshop 6 – GBR Models & GBR in Australia

1. WHAT ARE THE KEY CHARACTERISTICS OF THE DIFFERENT MODELS OF GBR?

Adversarial - Matches the U.S current situation – patriotic, A lot of conflict between various people.

Cooperative - More deference to elites, state directed interventions, perhaps the case in China
and Japan.

Developmental - Some disagreements, but managed, institutionalised and parties come together
such as unions, labour and government to work through the issues. Works in a small open
economy, more collected, good idea to approach politics. – Collective good.

2. WHICH MODEL WORKS BEST FOR BUSINESS?

The cooperative model is founded on the social democratic traditions of political thought that
encourage mixed economies and welfare states. This model closely resembles the coordinated
market economy variety also discussed above. While this model is still based on free enterprise
and a free market economy, government plays a more expanded role. Through processes of
consultation and compromise, governments in this model seek to achieve a stronger consensus
with business and labour. Established institutions manage conflict between the various actors.
Good examples of this model are Sweden and Germany, even if there is considerable diversity
between them.

3. WHICH MODEL OF GBR BEST DESCRIBES THE AUSTRALIAN CASE?

- All three models of GBR are evident within Australia.
- Developmental because the government’s proactive role is accepted. In Australia there are
high tariffs for the car industry to protect it. There is also strong regulation of business practice.
- Cooperative because business has some input in political decisions, although it is limited.
- There is a 3-way deal between labour (employment and wage security), capital (tariff protection,
regulated markets) and government.
- Regulatory because Australia, whilst possessing aspects of a cooperative model, also
possesses strong features a strong separation between business and government. The
Australian government sets the basic framework and heavily regulates, businesses are often
‘told’ what to do by government, however this is definitely changing.

4. WHY CAN THE AUSTRALIAN ECONOMY CONSIDERED TO BE VULNERABLE?

- Australia’s small population - largely populated countries often ‘do’ better because they have
more labour and knowledge.
- Australia’s reliance on other countries.
- Example – Australia relies on China to buy their iron-ore, what would happen if they stopped
purchasing it?
- The Brazilian iron-ore company Vale and China is currently working very closely together to
expand the company, with China set to loan money to Vale in order to invest in huge iron-ore
carries. Australia, however, continues to see iron-ore prices rise, when Vale the third cheapest
product of iron-ore is set to possibly take over Rio Tinto and BHP Billiton.
- In this situation, Australia displays its vulnerability because it doesn’t appear to be trying to
keep up with the Brazilian mining giant, when iron-ore is one of Australia’s most successful and
profitable exports to China.
- Another reason is due to globalisation, which means that negative impacts are felt globally,
thus rendering Australia’s capabilities to remain unharmed.
- We do not manufacture much, thus relying on other countries to export their goods to us.