Mondays can be slow in commentary land, providing a quiet chance for our scribes to reflect on the week that was. This time around, BHP Billiton's search for a new chief executive is still on everyone's tongues – the question now being, what happens in the interim? Also this morning, one jotter suggests the slowdown at Oakajee signals a major change in resources investment, while another provides figures that back up the argument. Big business is also apparently to blame for political paralysis in Australia.
But first, The Australian's Barry Fitzgerald compares Marius Kloppers' "seamless and no-drama rise to power" at BHP Billiton, with the "wild response" to a leak last week suggesting the miner had stepped up its search for his replacement. Fitzgerald worries about how Kloppers will be perceived as the hunt heats up.
"Unlike the transfer of power from Goodyear to Kloppers, the 12 to 24 months timetable on Kloppers' departure was news to the market, even if BHP did not think so. And it has created a problem in that Kloppers will now be seen as something of a lame duck chief until BHP clarifies its intentions for a new chief."
Adele Ferguson, writing in the Fairfax press, expands on Fitzgerald's point.
"While it is true that one of the most important tasks of any board is ensuring a smooth succession plan, it raises questions about how BHP found itself in a situation in which its CEO is now under intense speculation about when he will leave, and who will replace him. As one analyst said: 'The company's strategy will be sterile until the new bull comes in the gate.' Another described him as being in the 'departure lounge', while an investor said he was a dead man walking. …Whether Kloppers stays for two months, a year or longer, the point is it is disruptive, and the board will need to shine a light on its own role in managing leadership risk."
The Australian's John Durie, also concerned "conjecture about his [Kloppers'] position is damaging the company," urges chair Jac Nasser to put the distraction to an end.
"The second leg of BHP's annual meeting will take place at month's end and it makes sense for the company to clear up Kloppers' status before then. Ultimately, yet another vote of confidence from Nasser would help but best of all for shareholders would be a definitive statement on succession timing to stop all the market chatter."
Also in resources, The Australian Financial Review's Jennifer Hewett argues Mitsubishi's decision to all but halt work on its Oakajee port and rail system, designed to open up the WA's mid-west, underlines the the changed commercial prospects for mining.
"Given reduced prices for exports running straight into high costs of construction and development in Australia, projects have to be extraordinarily efficient to add up. Even the big miners in the Pilbara like BHP Billiton and Fortescue are more cautious about expansion. Smaller marginal or high-risk investments need not apply. Success is about volume rather than the price of commodities – and a smaller and higher-cost mid west project still struggling to get started looks even more dubious. Despite Barnett’s overtures, the Chinese have remained reluctant to become partners."
Indeed, as The Australian's David Uren points out: "Cost blowouts are now the only source of growth in the resource pipeline, with no new projects being commissioned in the past three months while the number of deferrals and cancellations has risen." And resources pessimism from miners, the central bank and private forecasters will only make things more difficult going forward.
One of the more thoughtful reads this morning comes from Fairfax's Ross Gittins, who argues big business must share the blame for politicians on both sides losing the political will to make the tough decisions. The best reforms are passed with bi-partisan support, he contends, without scare campaigns seeking to take advantage of voters' unhappiness.
"So, the first lesson big business needs to learn is that it's not enough to pressure the government of the day to show 'political will'. You must also pressure the opposition to resist the temptation to score cheap political points… The second lesson is that big business won't get far until it abandons its code of honour among thieves. That is, when one industry goes into battle with the government to resist a new impost or get itself a special concession, all the other industries keep mum, even though they know the first industry is merely on the make."
Case in point: "Big business looked the other way as the three big miners connived with the opposition to destroy the Rudd government. Its reward was to have its precious cut in company tax snatched away."
Elsewhere, as the US races towards its so-called "fiscal cliff," The Australian Financial Review's Alan Mitchell urges lawmakers there to consider a value-added tax, as a way of raising larger amounts of money in steps over time. Not only would it raise revenue to service debt, it might also help achieve something the US Federal Reserve has struggled with: "The expectation of future higher prices encourages consumers to accelerate their purchases of durable goods, including cars and appliances and new houses."
Also at The Australian FInancial Review, Christopher Joye warns Australia cannot afford to free-ride off its US alliance – especially given the apparent risk of a war between America and China in the years ahead. Joye suggests we lease a small fleet of nuclear-powered and conventionally equipped submarines from the US.
And finally, Fairfax's CBD columnist, Ben Butler, wryly reviews ANZ's ATM on Singapore's main shopping strip – a machine supposedly at the front of Mike Smith's drive into Asia. Unfortunately the machine is at the base of a seedy commercial building – home to businesses with names like Bongo Bar and Crazy Horse – known as "four floors of whores". Charming.