Crown: the trials of a tributary state

Of all the indicators of Australia’s evolving relationship with China, Crown Casino’s current problems are some of the most striking, unexpected and revealing. They present an unflattering but painfully accurate vignette of this country’s increasingly dependent relationship with the People’s Republic.

We have all become accustomed to the idea that Australia’s economic future is inextricably bound up with China’s. The Australian dollar is increasingly seen as a proxy for the health of the Chinese economy.

Likewise, there are growing concerns that China’s real estate bubble may be infecting ours, as wealthy Chinese look for seemingly more secure investment opportunities outside China.

We also seem to have become resigned to the idea that we don’t make much in Australia anymore: we simply cannot compete with China when it comes to manufacturing, the argument goes. Luckily we can still dig things up. We can also develop the service sector, where we seem to have a comparative advantage.

At one level this looks like an unambiguously good thing. The industry in which I work would struggle without the fees paid by Chinese students. They are also very good ambassadors for this country when – or if – they return home.

Australia’s booming tourist trade with China also looks like the sort of benign win-win outcome so beloved of government spokespeople the world over. Or it does up to a point, at least.

The reality is a little more complex. Not only are many of the jobs on the tourism sector notoriously low-skill and low-pay – as opposed to, say ,the disappearing car industry, for example – but some of them are downright dodgy.

It’s not necessary to be a joyless wowser to recognise that the “gaming industry”, as its euphemistically known, is not without its downsides. The industry’s association with sleaze, money-laundering, and a range of social ills is well-established, but no obstacle to its growth or ability to promote itself endlessly despite its direct, well-documented pernicious consequences.

One of the most egregious impacts of a massive domestic gambling industry is the dependence state governments have on the taxes it generates, and their consequent willingness to tolerate the further immiseration of society’s most vulnerable.

The unwillingness of state and federal governments to control the growth of this industry is the backdrop against which the current imbroglio is unfolding. The gaming industry is, we are encouraged to believe, one of Australia’s glittering attractions as far as the world’s most affluent are concerned.

Lest the “high rollers” of the world are unaware of the potential charms of a gambling holiday in Australia, Crown thoughtfully sends delegations to China to schmooze the so-called “whales”, who are apparently happy to lose millions in their casinos.

Whatever your view about this as a business model or a way of making a living, a few questions arise.

First, did no-one in the Packer empire realise that it is actually illegal in China to organise these sorts of gambling activities and trips, or that a Korean casino suffered a similar fate recently?

Second, did no-one notice there’s a major crackdown on corruption occurring in China at the moment and that conspicuous consumption – if that’s quite how to describe losing millions gambling – is considered to be rather bad form in China at present?

Third, where do the Chinese high rollers actually get all their money from in the first place? Best-case scenario is that they are just remarkably successful “communist” entrepreneurs with a few spare million to blow. Worst-case – and most likely? – scenario is that all that loot is ill-gotten and the product of corruption of one form or another.

The Chinese authorities might not be too pleased to see all that money disappearing out of the country at the best of times. But when it’s possibly generated from illegal activities at a time when relations with Australia are rather tepid, what’s to be lost by a heavy-handed crackdown?

This episode doesn’t reflect well on either country, but is likely to prove the proverbial storm in a teacup, albeit a rather embarrassing one as far as Australia is concerned.

Not only do recent events reveal a remarkable lack of understanding of the current climate in China, but they also reveal just how dependent Australia has become on the Middle Kingdom.

Bad enough, one might think, that we’ve become a palm-fringed quarry whose economic fate and wellbeing is decided far from our shores. Even worse when one of our apparently most important growth industries is almost entirely parasitic and devoid of any obvious social good. May you live in interesting times.