You can't fix this. Wmode is implemented differently in each browser. It works in some, not in others.
What possible workarounds are there other than having the background on the swf ?
EDIT: I just installed safari 3.2.2 and the transparency works fine. It looks like its only safari 4 thats causing problems.
Problem fixed. It was a bug with my version of the flash player. I updated it to the latest version and that fixed the transparency issue.