June 23rd 2012

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Articles from this issue:

CANBERRA OBSERVED: Gillard government's surrender on illegal immigration

EDITORIAL: The carbon tax: Labor's own form of insanity

ECONOMIC AFFAIRS: Will Australians or foreign interests develop our north?

SOCIETY: Same-sex relationships are simply not marriage

EUTHANASIA: Vigilance needed to protect the vulnerable

NATIONAL AFFAIRS: Left demonises opponents on environment, same-sex laws

FREE SPEECH I: Finally, a victory for free speech in Canada

FREE SPEECH II: Uproar at Sydney University over pro-life student group

UNITED STATES: US Presidential race narrows over economic concerns

TAIWAN: Taiwan's globally competitive manufacturing sector

SYRIA: The Moscow-Minsk-Tehran axis propping up Assad

EDUCATION: High school graduates told: you're not special

FAMILY: Madrid hosts inspiring World Congress of Families

POPULATION: China reinforces "one-child policy" with $200,000 fine


CINEMA: A heart-warming and heart-wrenching story

BOOK REVIEW Getting back to nature

BOOK REVIEW Finding a good man

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Will Australians or foreign interests develop our north?

by Patrick J. Byrne

News Weekly, June 23, 2012

Three policy papers soon to be released by the Liberals on developing northern Australia beg the question: with Australia still addicted to foreign borrowing, who will develop the north — Australians or foreign investors?

Prompted by recent huge floods, the Liberals are about to release two papers aimed at building new dams and opening vast new areas to farming in northern Australia.

The intention is to drive broader economic development and turn the region into a food bowl for the booming Asian middle-class.

In 2008, annual consumption expenditures in the Asian region totalled $4.3 trillion, about one-third of all the developed OECD nations.

However, the Asian Development Bank estimates that by 2030 developing Asia’s annual consumption will reach $32 trillion — nearly 43 per cent of total global consumption.

Today, Asia contains less than 25 per cent of the world’s middle-class population, but this figure will double in the next 15 years.

The Liberals are also preparing a third paper on foreign investment, which has the potential to split the Coalition “along city and country lines”, according to the Australian Financial Review (June 7, 2012).

The Foreign Investment Review Board examines investments of more than $50 million in residential property and more than $244 million in farms and major industries.

While the Nationals and Katter’s Australian Party are concerned that lax foreign investment rules are allowing a major buy-up of Australian farms by the Chinese government and other foreign interests, many Liberals are more relaxed about such foreign investment.

However, it should be asked: why should Australia rely on foreign investment for developing agriculture and mining, when our massive superannuation industry is struggling to find opportunities to invest the vast savings of Australians in national development?

Australia’s net foreign liabilities are now $880 billion, about 65 per cent of Australia’s $1,350 billion economy.

Yet, with a deft policy tweak, Australia could be weaned off foreign borrowing by turning to the superannuation industry as a major source of investment. It is set to explode from $1.3 trillion today to about $8 trillion in 20 years.

Alex Dunnin is the research and financial services director and superannuation industry researcher for the Rainmaker Group.

According to Dunnin, in 20 years Australia’s superannuation will “be the biggest pot of money this country has ever seen, and yet we haven’t even begun to think what we will do with it”.

He said: “In fact, by then the government will in all likelihood be earning more money from taxing overseas dividends on shares owned by our super funds than they will get from the mining tax.” (The Australian, May 29, 2012).

Dunnin suggests that the federal government could issue special bonds linked to inflation, or create some equity participation investment projects, so that super funds can get behind such projects.

This is another variant on creating a conduit for funds from the super industry into national development either by tweaking the Future Fund into a national development agency, or by creating a national enterprise bank.

In either of these scenarios, special government bonds would become a means for super funds to invest in a government-backed agency for infrastructure investment and/or for funding the massive expansion of mining agriculture and other enterprises.

This would replace our over-reliance on foreign borrowing and foreign direct investment from government-owned business in countries such as China.

The new Liberal focus on developing the north is long overdue. However, it raises other questions.

First, will the funds for developing the north originate from Australia or from overseas? Who will own the projects, the land and the food that is produced? Will the profits go to Australians or to foreign producers?

Second, who will run the farms — Australians or foreigners?

Almost every rural industry has been sliding backwards for 25 years because of radical free-trade policies, the deregulation of 14 rural industries under National Competition Policy, open water-trading combined with radical environmental policies, the lowering of the nation’s quarantine standards, the failure of the ACCC to curb the growing concentration of economic power of the two major supermarkets and food-processors, and the unregulated expansion of mining in prime agricultural areas.

This approach has seriously damaged farming.

Ask any farmer and he’ll tell you, “I don’t want my kids in farming.”

Third, while the Coalition parties decry Labor’s Murray-Darling Basin Plan, they are yet to say what they are prepared to do instead. Many farmers fear that the Basin will be abandoned to a radical environmental agenda while the Coalition becomes increasingly preoccupied with northern development.

While northern Australia can produce tropical crops, it can’t produce the Basin’s temperate-climate crops, such as grains (particularly wheat), wine-grapes and wool.

Developing the north will take more than water policies.

It will need funding from Australia’s super industry and a raft of new agricultural and trade policies to make farmers profitable again.

Furthermore, the Liberals have to commit to stopping Labor’s Murray-Darling Basin Plan and changing their own ill-conceived Water Act 2007.

Patrick J. Byrne is vice-president of the National Civic Council.



Johan Kharabi, “Asia’s rising middle class”, In Asia (The Asia Foundation, San Francisco), January 26, 2011.
URL: http://asiafoundation.org/in-asia/2011/01/26/asia%E2%80%99s-rising-middle-class/

Gillian Bullock, “Super has huge potential”, The Australian, May 29, 2012.
URL: www.theaustralian.com.au/business/wealth/super-has-huge-potential/story-e6frgac6-1226370144404

James Massola, “Three plans for a great northern land”, Australian Financial Review, June 7, 2012.

David Farley, “We can feed the world ourselves”, Australian Financial Review, June 7, 2012. 

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