How Giant Corporations Secretly Control Australia

Australia's economy is highly monopolized by a few powerful corporations in key sectors like groceries, airlines, and banking, leading to reduced competition, higher prices, and significant political influence, ultimately diminishing public trust in democracy.

• Australia's economy is heavily concentrated, with duopolies controlling major sectors like groceries, airlines, and banking.

• Corporate power significantly influences political processes and policy-making, as seen in the mining tax debate.

• The lack of competition leads to higher prices, reduced innovation, and a less complex economy, eroding public trust in democratic institutions.

Australia has become one of the most monopolized economies globally, with duopolies and oligopolies dominating essential sectors such as supermarkets, airlines, and banking. This concentration of corporate power is attributed to geographical factors, historical political choices, and a lack of effective competition policy. The resulting lack of competition has led to higher prices, stifled innovation, and allowed corporations to exert undue influence on government policies and even political leadership.

Corporate Monopolization in Australia

• 00:00:54 Australia's economy is characterized by significant corporate concentration, with duopolies and oligopolies dominating key industries. For instance, two supermarkets, Woolworths and Coles, control over 65% of grocery sales, two airlines handle over 90% of domestic flights, and four banks hold the savings of most Australians. This level of market dominance is notably higher than in other developed economies like the UK and US, where competition is more robust.

• 00:03:25 Several factors contribute to Australia's high corporate concentration, including its vast geography and sparse population distribution, which create 'thin markets' with weak competition and ease of price control. While geography plays a role, political choices have exacerbated the issue, with Australia opting against breaking up companies to foster competition, unlike other countries facing similar challenges. This concentration allows powerful corporations to influence the political process through lobbying, pressure on regulators, and large-scale public campaigns to maintain their market advantage.

• 00:06:47 The banking sector in Australia is severely concentrated, with four major banks cornering approximately 75% of the market. This lack of competition has led to a business model focused almost exclusively on home loans, with 70% of these banks' existence dedicated to financing housing, unlike banks in other countries that diversify across various sectors. This overreliance on the housing market has distorted the Australian economy, making it less complex and diverse, ranking it behind countries like Botswana on the Harvard Economic Complexity Index, and poses a systemic risk due to high exposure to potential economic shocks.

• 00:11:37 Historical privatizations in the 1980s and 90s, intended to boost competition, often cemented the power of a few players, as exemplified by Telstra Communications which still controls over 70% of fixed-line services post-privatization. The impact of corporate dominance is also evident in practices like the 'milk wars,' where supermarkets undercut prices to destroy competition, then raised them, and 'high-low pricing' cycles that create an illusion of discounts. These practices result in higher costs for consumers and a diminished trust in the democratic process, as evidenced by a significant decline in public satisfaction with democracy and a belief that politicians prioritize corporate interests.