Throughout Australia's period of European settlement, our national development required the savings of foreigners. A small population on a vast continent could never muster the domestic savings needed to fund Australia's agricultural expansion, minerals and energy development, infrastructure investment and urbanisation.
Our living standards today would be drastically lower if past policymakers had spurned foreign investment. For most of our history these realities have been acknowledged by the main political parties. But with the rise of state capitalism in China, the oil-rich Middle East and other countries with large sovereign savings, bipartisan support for foreign investment has broken down.
Barnaby Joyce, a senior shadow cabinet minister and would-be deputy prime minister, has been ranting against Chinese investment interest in Australia's agricultural development. The alternative prime minister, Tony Abbott, refuses to repudiate Joyce's tirades against Chinese state investment. Instead Abbott has backed Joyce, bizarrely arguing for a lowering of the Foreign Investment Review Board screening threshold for state-owned enterprises from $244 million when it is already at zero.
Joyce has advocated using Australia's superannuation savings to fund our agricultural expansion, despite the Coalition continuing its longstanding opposition to compulsory superannuation. Australian funds managers already invest in our agribusinesses, and the Gillard government welcomes all job-creating investment, domestic and foreign.
But limiting agricultural expansion to that which could be funded from domestic savings would be to squander an opportunity for regional revival and development. Africa and South America are preparing to take advantage of Asia's rising middle classes in the Asian century. Yet in the interests of harvesting votes, a Coalition government would say no, Joyce likening state-owned investment to foreigners moving into your house.
The Coalition argues that state-owned enterprises are instruments of foreign governments and, in serving the interests of their masters, must be against Australia's national interest.
Underlying this proposition is a belief that foreign investment is a zero-sum game; if a foreign investor gains, Australia must lose. It fails to comprehend that the purpose of investment is to yield net benefits that can be shared between the parties; that investment is a vehicle for wealth creation.
Modern state capitalism was pioneered by Lee Kuan Yew's Singapore. Today Singapore's $150 billion sovereign wealth fund, Temasek, helps transform economies around the globe, including tapping the potential of numerous resource and agricultural projects in Australia.
The world's 13 biggest oil companies and largest natural gas corporations are state-owned. Malaysia's Petronas has a 27.5 per cent stake in the Gladstone liquefied natural gas project in Queensland that during the next 25 years will generate $9bn a year in exports and employ 6000 workers. China's Sinopec has recently announced it will increase its stake from 15 per cent to 25 per cent in the Australia Pacific LNG facility at Gladstone, a project delivering another 6000 jobs. Chinese state-owned Qenos has acquired two Australian chemical plants in Melbourne and Brisbane.
China Minmetals acquired Queensland's Century zinc mine when it was under threat of closure, and has investments in the Golden Grove mines in Western Australia and the Rosebery mine in Tasmania, both supporting hundreds of Australian jobs.
China's Southern Airlines carries thousands of Chinese visitors to Australia each week and has big plans for further expansion, tapping into China's emerging outbound tourism market.
Opponents argue it's unfair that state-owned enterprises enjoy access to sovereign funds at favourable interest rates. But does it follow that the Australian government should reject investments from state-owned enterprises? The Gillard government says it doesn't. Instead, each dollar of proposed investment by state-owned enterprises and associated entities is screened by the FIRB to ensure it is in our national interest.
The Business Council of Australia's report released this week into Australia's investment future says the unprecedented $921bn investment pipeline in our economy will be the main driver of future exports, which are vital to future income growth. But it warns success is not in the bag. It says we need to maintain an open investment and trading regime to realise these vast opportunities.
As for selling off the farm, in 1984 5.9 per cent of Australian farmland was foreign owned. By 2010 that had increased to 6 per cent, hardly the "exponential increase" that Joyce mischievously claims. In an Australia-China agricultural study nearing completion, there is no proposal to sell off the farm, dedicate production to the Chinese market or import cheap foreign labour to do the farming. But this hasn't stopped Joyce wilfully misrepresenting the exercise for crass political purposes.
In 225 years of foreign buying and reselling bits of farmland, not one square metre of it has been taken overseas, but it has helped create prosperity for Australians.
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