All posts by AUSBUY

Australian Businesses Competing in the 21st Century

In 1995 Australian government bodies agreed to implement a National Competition Policy after a period of time when there had been an influx of foreign companies operating in Australia. The policy aimed to ensure Australian companies were not being disadvantaged by this change in business environment and that Australians had choice and were able to source products and services that suited them.

Twenty years on the Australian business environment has greatly changed and as a result the policy is under review. The review is a move that AUSBUY greatly welcomes as the current environment does not bode well for Australian owned companies.

Foreign companies have continued to invest in Australia which in theory aids in healthy competition, creating jobs for Australians and bringing more money into the local economy. Look a little closer though and you’ll see that many foreign companies are not on equal footing.

We have strict standards that must be adhered to particularly when it comes to food products and electronics. Naturally, ensuring standards compliance can add costs to the production process and consequently create a more expensive product. Fine except that many foreign companies don’t always have to adhere to the same standards, making their product cheaper. Similar costs come up when supply chain and packaging are considered and even some of the levies applied when importing goods are higher for Australian companies than when compared with local companies.

Taxation has been addressed in another article in this issue but is also a major contributing factor to anti-competitive behaviour.

The rise of the digital economy has been one of the biggest disrupters to business over the last decade. The online world has often meant that competitors don’t even need a physical presence in Australia to do business here or that a lot of operations can be easily outsourced. It is true that Australian companies can do the same but often to a far lesser extent and this can mean that jobs and money go offshore, a disturbing trend we are seeing. Online business and the digital economy is one of the major points that will be considered as part of the review.

Submissions were received by the review committee at the end of 2014 after the release of their draft report last September. We applaud a number of the draft recommendations but will wait for the full report before further feedback.

As the environment around us changes, the policies and laws that govern need to be flexible and adapt to these changes. The online world we now live in must be addressed in the way we do business and our government policies in order to create a healthy business environment that also ensures the best outcomes for all Australians.

You can read the full draft review at http://competitionpolicyreview.gov.au/draft-report/

www.ausbuy.com.au

The Global Agreement Most of Us Know Nothing About

While focus has been on the recent Australia – China Free Trade Agreement, signed at the end of November, an agreement that could eclipse that and all other recent FTA’s Australia has signed continues to be debated and progressed with little knowledge from consumers or Australian businesses.

The Trans-Pacific Partnership could be Australia’s biggest trade deal for decades, but most people have not even heard of it. A survey released at the end of last year by the Australia Institute found 55 per cent of respondents did not know about the TPP, as it is known. Another 19 per cent said ”I’m not sure.”

Despite this there could be a range of significant consequences for AUSBUY members and the wider Australian business community.

For instance it has been reported that negotiations around government procurement in the TPP could restrict the ability of governments, including Australia, to preference local products and services over imported ones, including sustainable, locally grown food. This would limit their ability to shift towards a more sustainable food system on a local scale.

According to the Consumer advocacy group CHOICE, we can also expect higher medicine prices, the potential for Australians to face new criminal penalties and the right for big businesses, from overseas markets, to sue us if they don’t like consumer laws. A leaked draft suggests the US is pushing for criminal penalties, even jail, for illegally downloading popular television shows.

Leaked documents released by WikiLeaks also reveal the TPP include provisions to lengthen patents for some lifesaving drugs for up to an extra 12 years leading to Australian patients paying more for drugs for longer.

It is concerning that agreements that could have such far reaching consequences for Australian consumers and businesses alike have not had the open scrutiny they deserve. The main reason for this is that the negotiations are shrouded in secrecy. Convention dictates that international trade agreements such as this need to be discussed behind closed doors and the negotiating texts must remain confidential, driven by an agreement signed by the Labor government when the talks started.

In response to the claims by a number of groups of the secret nature of the agreements DFAT defended its position by saying that it ‘safeguards our negotiating positions and strategies’ and that there had been a lot of consultation. But many have claimed to have been excluded from real and meaningful dialogue.

Others have said that despite the secrecy Parliament will still need to ratify any agreement reached with our international partners. But others, such as Greens Senator, Peter Whish-Wilson, says they won’t have enough time to give it the proper review it deserves with only 20 days allocated to review the huge and highly complex agreement which goes far beyond a normal trade agreement.

“What is really unusual about the TPP deal is it goes way beyond what we would call the traditional trade in goods and services and breaking open market access. It straddles enormous areas of public interest and public importance, like for example internet usage, intellectual property, food labelling, quarantine standards. You really have to wonder what Australia has left to trade away in these deals, because the nature of these negotiations is you don’t get something unless you give up something.”

AUSBUY is concerned that we are being left in the dark about what we’re giving up during negotiations. We need transparency and a proper, considered process with adequate time to review the agreement to ensure Australia, consumers and business, don’t lose out.

www.ausbuy.com.au

Abbott: Open For Business — And Multinational Lawsuits

By Mike Seccombe September 20, 2013

Labor rejected it outright. Even the Howard government issued America with a rare “no” over the legislation, declaring it contrary to national interests. But now the Abbott Coalition is flirting with a trade agreement that would allow companies, acting increasingly in secret, to sue Australia if they don’t like its regulations.

Australia’s government under Prime Minister John Howard was not notable for its willingness to say “no” to America. Consider, for example, its eager enrolment in the coalition of the willing-to-believe-anything, and in the war of false pretences in Iraq.

And then there was the matter of trade. Coincidentally, a major purpose of John Howard’s visit to Washington in September 2001, where he was when the terrorists struck, was the pursuit of a free-trade deal.

Reversing a long history of resistance to the prospect of a bilateral free-trade agreement with America (Australia had rejected previous overtures as being not in our national interest, and was a leading proponent of multilateral trade reform, through its leadership of the so-called Cairns Group of nations), the Howard government was at first almost pathetically keen to do a deal with the United States.

If a mining company is unhappy with environmental safeguards which inhibit its operations, if a tobacco company does not like laws restricting cigarette sales, ISDS provisions in trade agreements give them the means to challenge government policy and to seek compensation.

In the end, however, Australians’ growing hostility to the trade agreement forced Howard, for once, to say “no” to George Bush.

It wasn’t a blanket refusal of an Australia-United States Free Trade Agreement (AUSFTA); a deal was eventually stitched up and began operating in 2005. The “no” was to one of America’s key demands: a provision called Investor-State Dispute Settlement, or ISDS.

What this arcane phrase refers to is the right of foreign companies to sue national governments of the signatory countries, not in domestic courts, but in opaque international forums, if they think some element of that government’s policy is harming their interests.

If a mining company, for example, is unhappy with environmental safeguards which inhibit its operations, if a pharmaceutical company is unhappy with the prices it gets for its drugs, if a chemical company is upset with the banning of an agricultural pesticide, if a tobacco company does not like laws restricting cigarette sales, ISDS provisions in trade agreements give them the means to challenge government policy and to seek compensation.

And they do this increasingly often, sometimes claiming enormous amounts of money. According to a report in May 2013 by the United Nations Conference on Trade and Development, which monitors these things, a record 58 ISDS cases were begun in 2012. In the same year, decisions were made on 42 cases by an assortment of more or less credible international arbiters. Only 31 of these were publicly disclosed, but of those, 70 per cent went in favour of the corporations, at least in part; and nine resulted in significant awards for damages, including one – to an oil company which sued Ecuador – for a record US$1.77 billion.

 

Is Free Trade Fair?

Fools rush in where angels fear to tread
And so we come to you, our (goods), our heart above our head
Though we see the danger there
If there’s a chance for us, then we don’t care. (Mercer and Bloom)

It is welcome news to see some discussion from Westpac’s Senior Banker Rob Whitfield about the FTA with China. (No need to give away farm in FTA – the Australian 15/9/14). Years spent sitting on the side lines waiting to play might not seem so bad if we look at what has happened when we played the FTA game in recent years. In our rush to sign FTAs we have not considered whether they are fair to Australian interests. Trade is important, but should be win/win.

Over the past four decades our trading partner options have changed from a UK European focus. We were effectively locked out of the old trading relationships with the formation of the EU. The USA is a major trading partner with investment in many of our major companies operating here but did not necessarily give reciprocal rights to our farmers when we signed a FTA with them in 2005.

In recent years our exporters have had to deal with a high AUD$. Our mineral commodity exports hid the decline in exports in our food and manufacturing sectors to the national bottom line. Manufacturing has struggled to stay viable or move off shore, resulting in loss of jobs and critical mass in the supply chain in key industries. When companies close, the flow on effect is felt by those businesses here that supply goods and services. We lose critical mass.

Australia has had a wake-up call to better manage our income and debt, but we have not counted the costs of past Agreements. We can always live in hope.

However, hope will not pay our bills if we do not own the exports or set an equitable price for suppliers. And when our dollar goes down we will be dependent on rising import costs that impact inflation. Viable, locally owned and sourced businesses would be a buffer against our dependence on imports.

The idea that everyone gains from Free Trade Agreements is an oft cited motherhood statement, but not necessarily true if our history is any indication. For example, while not the primary cause for withdrawal by the motor vehicle industry here, its decline was exacerbated by FTA in 2005 with Thailand which allowed access for cars from South Korea and Japan via the back door into our market. In that case, we did not get a bilateral agreement so our exports to Thailand had the burden of high tariffs. Score – they win we lose. Instead we blame the workers’ wages when factories close.

History is not kind to our negotiators. This situation is not helped by a naive and commercially, inexperienced public service, who are our negotiators and political advisers.

   To gain from FTAs we have to obtain access to sales that our businesses and growers would not get locally or from other customers, and in return give access for imports of similar dollar values, but not in direct competition with our own.

     Since some of our domestic companies will lose as a result of import competition, our negotiators need to continually model the possible gains and losses. The least they could do would be to consult locally owned businesses not just the big end of town.

The rest of the world wants to “Feed Asia” and they are doing their own deals. Their own producers and processors will get priority. Agricultural products unfortunately are politically sensitive in most countries who “protect their farmers”, but not here.

The lure to allow these Agreements with Asia is concealing the real picture here. Current negotiation’s main target is agricultural products. However as we have highlighted over many years the majority of our food export commodities are controlled beyond the farm gate by foreign interests.

Fresh food may present other opportunities, but if we are importing fresh produce to satisfy FTAs then where are the efficiencies in transport costs and quality controls for our producers? Where is the assurance that our consumers and processors have access to quality, safe and affordable food here? Will AQIS and Biosecurity Australia be resourced to ensure diseases do not enter, and will poor growing conditions put our people at risk? Will our labelling laws require and enforce Country of Origin so consumers are free to choose?

    Earlier this year the Government is promising 1745 jobs will be created in the next year here, and the boost will continue for at least 15 years, with 950 new jobs expected in 2030. (Source DFAT). However, there is no evidence in government papers where these jobs will be created and what levels of exports are from Australian owned operators. Nor have we identified how many jobs will be lost.

A quick review of DFAT shows import duty into Australia shows 0% to 10% on many of the goods we are proposing to open our doors to off shore. Whereas in the case of South Korea our exports in the same products have export tariffs between 10% and over 500% plus and will be gradually removed over 15 years. Does this sound like a fair deal? Ask our rice growers who have been excluded.

Some owned growers and manufacturers will gain opportunities in these Agreements. But those products excluded are not happy.  Without due consideration of the real benefits to Australia we will continue to “paint ourselves into a corner” exposing our economy. It has been all too easy to call “takeover of our wealth creating assets” investment, locking Australia out of the decisions, real profits and putting our jobs, skills and reinvestment at risk.

And when we consider that many of our agriculture exports here are controlled beyond the farm gate by foreign interests, and our farmers’ income is declining as their on farm debt rises, then the real value to Australia is reduced further. It does not augur well for deals with China.  Who is looking after our interests?

The Australian Companies Institute Limited (AUSBUY) Lynne Wilkinson CEO

Say NO to the sale of our wealth creating assets until we have a national interest test.

While the economic rationalist might deride these concerns as populist, the people spoke last weekend and they are concerned about our future.

There are three issues which will test the resolve of the new Government to represent the long term interests of Australians, to pay off our national debt and create productive jobs and skills here and reinvigorate our Australian owned manufacturing base. SIGN THE AUSBUY PETITION HERE!

Questions:

• How can we take advantage of the Asian Century if we do not own the land and the assets and our people are locked out of control of these assets?

• How can our food manufacturers secure and source supply of key commodities if they are owned and controlled by foreign countries and companies?

• How can Australia benefit from Free Trade Agreements if we open our doors to countries that do not meet our standards or they own the assets here and our effectively selling to themselves?

• How can Australia benefit when our tax laws favour foreign interest with just 10% withholding tax on profits which are declared after they have been siphoned off shore in consulting fees and repayment on borrowings?

Three issues are on the table.

1. The sale of Graincorp to the USA owned ADM, which means that Australian grain growers will have little representation for exports. Every major food commodity except rice is controlled beyond the farm gate by foreign interests making our farmers price takers not price makers. The infrastructure assets that Australian farmers invested in will be foreign owned and controlled.

2. The sale of 25 dairy farms to Fonterra and the Chinese in Tasmania which means that the dairy processors there will not have access to the commodity for their own businesses and the export benefits go off shore. Last year New Zealand stopped the sale of 8 dairy farms to the Chinese because it was not in their national interest. Fonterra is the largest dairy company in the word. Australia has not major food companies and the foreign owned global companies either move off shore (Heinz) or threaten to do so and are paid to stay – SPC and Cadbury.

3. The Indonesians want to buy 1.5 million hectares so they can grow cattle on our land for their market. The economic rationalists might say this is competition in and open economy. The countries buying our land do not even let their own citizens buy land. Decisions our Minister made last year threatened the viability of our cattle producers.

We are not saying no to foreign investment, but first give Australians a chance to invest in our own assets, and change the rules of foreign ownership to 49% so there is transparency in the transactions – private companies, countries and companies not registered on our stock exchange are siphon profits off shore before tax and pay only 10% withholding tax on declared profits. Some say these foreign interest are creating jobs, but as is evidenced by closures of factories here which then set up off shore and sell back to us, there is not loyalty to our long term interests. If countries are buying our assets they do not play by the same rules as companies – they are here to stay.

We want our owned businesses to thrive. Only Australian ownership means the decisions, profits jobs skills and reinvestment stay here.

SIGN THE AUSBUY PETITION HERE! Interviews can be arranged with Lynne Wilkinson, CEO of AUSBUY on 0294375455 or 0418314923.

Defining Rulers

India has several thousand years of history under various ruling regimes, and today is the largest democracy. So not unexpectedly they have identified four kinds of rulers that would be in power any one time in a country’s history. These definitions apply whether the regime is democratic, republic, monarchy, communism or dictatorship.

Leaders: provide vision and cohesion, engage people to realise and share the vision; Intellectuals: have ideas, but unable to translate these and gain wide support; Warriors: Defend what Leaders or Intellectuals have created or overthrow until new rulers energy; Proletariat (the Masses): Mob rule and anarchy. The cycle of such rule can over centuries. The masses do not rule for long.

Under our current system of government small parties are entitled to run in an election without evidence that they have the capacity to represent their members let alone the wider constituency. When small Parties or individuals are in such numbers that they can override the majority in our preferential system, governing for all is not workable. We have seen this happen over the past three years especially and may yet see it again in our House of Review.

It could be a lesson to the major Parties to listen to the concerns of our citizens more and to be seen to be acting accordingly.

It is a lesson to us as citizens, that the rights we enjoy were hard won and it is not what Australia can do for us but what we can do for Australia.

Stop the Sale of Graincorp – it is not in our national interest – please consider the sale of these assets continue to threaten our food security. How can we pay off our national debt if we continue to sell our wealth creating assets?

If you do nothing else this week send two emails before the election to these two politicians.


[email protected]
[email protected]

Spread the word for your friends to do the same. Here are the reasons why.
Whoever is the treasurer next week will have the final say on the sale of this public company to the US owned ADM. The sale has already been approved by the FIRB (all public servants) and the ACCC. Together these organisations have a history of never saying no to foreign takeovers. Every major food commodity except rice is now majority controlled beyond the farm gate by foreign interests.
It is not foreign investment when they buy our assets and our cash flow. It is takeover.
When foreign companies or countries own the assets beyond the farm gate is makes our farmers price takers not price makers. Foreign owned companies do not pay the same taxes as Australian owned businesses – only 10% withholding tax on their declared profits, and borrow off shore at low interest rates which then adds to our national debt.
We do not count the cost of loss to Australian if these assets are owned by private interests or a public company which does not trade here.
Already 20% of our grain exports are owned by Cargill a private US family company that also controls many of our beef exports and the processing infrastructure. Once Australian grain was sold as the best in the world, now it is bundled in so that the foreign owners’ countries give priority to their own.
25% of Graincorp shareholders have said no. ADM needs 51% to buy the company.
If they want to invest then they can buy up to 49% of the shares and keep the company here so Australians have the chance to invest in our own country and companies.
If Australia is to take advantage of the Asian Century then we urgently need to secure the benefits all Australians will derive.

Selling Our Land & Wealth Creating Assets to Foreign Interests & Countries

If anyone can put up a rational case for what is happening in this country and who is really making the decisions, then we would welcome the discussion.

The sale of our wealth creating assets, our land and our businesses continues to be condoned unabated by our decision makers in Canberra. The countries buying our assets do not reciprocate the opportunities even to their own citizens. No one seems prepared to count the long term cost to Australia’s long term security and financial viability when you combine the lenient tax rules for foreign interest to buy our assets and cash flow, and the Australians acting as real estate agents with companies set up to siphon profits off shore.

Again we see a Chinese company not only purchase the farm, it has bought the port facilities that were built using Australian taxpayers money. The Chinese company has been allowed to buy assets giving it a vertically integrated operation from paddock to plate to sell to itself. While over the past few decades we have allowed the control of every major food commodity except rice to be controlled beyond the farm gate by foreign companies. Several of which are privately owned and dominate in more than one commodity sector.

How does it benefit Australia when they own the land, the supply chain and are exporting to themselves?

How does it benefit Australia when Australian governments give foreign interests money to invest here – $450M from WA Government and $174M from the Federal Government to encourage the Chinese to buy the lease for Stage 2 of the Ord – a $600m asset from which they will benefit. Fifty years is a long time in a country’s history.

It has taken Australian over 200 years to build these assets, it will take less than two decades to dismantle our control of these.

In the meantime our farmers are under great financial pressure and our government wants to “lend” them money at variable market interest rates to help them survive the drought.  Is this representing our short and long term interests?

 

Australian Broadcasting Corporation http://www.abc.net.au/7.30/content/2013/s3809433.htm

Broadcast: 23/07/2013

Reporter: Bronwyn Herbert

China’s biggest state-owned agricultural conglomerate has bought farmland and port facilities in Western Australia and the move has sharply divided responses.

Transcript

LEIGH SALES, PRESENTER: It’s an emotive issue across rural Australia. Cashed up foreigners buying land and speeding the demise of the family farm.

In the latest example China’s biggest State owned agricultural conglomerate has for the first time invested in the Australian market, buying up vast tracks of farmland in Western Australia as well as port facilities to ship its grain out of the country.

There’s no doubt foreign capital helps boost economic growth but it’s also breeding resentment, as Bronwyn Herbert reports.

WILL CROZIER, VICSTOCK GLOBAL: Yeah, g’day, mate, it’s Will. Good, really good, thanks. Look, just want to go over that asset register for our eastern property.

BRONWYN HERBERT, REPORTER: Will Crozier has a lot on his mind. The former farmer from Geelong is now an international deal maker in agriculture.

WILL CROZIER: Yeah, fantastic. Ten mills, overnight.

BRONWYN HERBERT: And the purchase of this farm four hours south of Perth is one of the biggest he’s negotiated. It’s part of a $150 million investment by China’s largest agricultural company.

WILL CROZIER: The vision is massive. The development is massive so far and it’s only a start.

BRONWYN HERBERT: Beidahuang lays claim to being the world’s biggest farming operation. It already grows more than 70 million tonnes of grain globally, has a permanent work force of 300,000 people and operates in more than 30 countries. But the purchase of more than 40,000 hectares of farmland in WA’s south is the company’s first foray into Australian agriculture and this is its first crop.

WILL CROZIER: Beidahuang farm all over the world. They’re the biggest farming operation in the world. I think it’s 70 million tonnes of grain annually that they crop. This is the first time that we’ve, that they’ve been introduced to Australia, Australian techniques, Australian technology and Australian climate.

BRONWYN HERBERT: Beidahuang through its new Australian subsidiary Heilongjiang Agriculture, hasn’t just bought the farm. It’s also purchased port facilities at nearby Albany to vertically integrate its operations. This creates its own paddock to plate supply chain from WA to northern China.

MARY NENKE, WEST AUSTRALIAN FARMER: They’re going to be shipping the grain out of Albany. Are they going to be bringing in empty ships or are they going to be filling them with their own machinery, their own fertiliser, their own chemical?

BRONWYN HERBERT: Mary Nenke and her family are fourth generation wheat farmers in southern WA who have also diversified into yabby farming.

MARY NENKE: These are business people, they’re not there for our good, they’re there for their good. In our patch there are people paying up to 17 per cent interest. These people will be, you know, it will be Chinese money, what interest rates will they be paying? When you can’t compete in your own country what next?

WILL CROZIER: There’s nothing to be afraid about. This is simply a new stream of capital coming in to rural Australia.

BRONWYN HERBERT: The Beidahuang deal like the Ord River expansion signed last year with a private Chinese firm are exactly what the WA Premier Colin Barnett and his ministry are promoting.

KEN BASTON, WA AGRICULTURE MINISTER: I believe that that investment, you know, employs people, employs jobs, it has regional development because they’re obviously they’re not city centric, they’re out in the country so regional areas thrive with that capital investment there. And of course what we’re actually doing is we’re supplying the food chain of the world.

BRONWYN HERBERT: Bill Heffernan leads the Senate rural and regional affairs committee which has been investigating whether purchases like these are in the national interest.

BILL HEFFERNAN, LIBERAL SENATOR: It would be a great pity if Australia’s farmers ended up as tenants and tenant farmers and unlike the prospect of capital growth to hand on to the family, only have the job to hand on and I guess there’s a warning there.

BRONWYN HERBERT: At last count around 11 per cent of the nation’s farmland was in foreign hands. But Bill Heffernan says no one really knows what the exact figure is, which is why it’s crucial a foreign land registry is set up.

BILL HEFFERNAN: We need to do that and then we need to model that out for 20 or 30 years given the present law and the present practices and then say to ourselves “is that where we want to be in 20 or 30 years as a nation?” Because it’s my view that under the present arrangements we are redefining sovereignty.

MARY NENKE: The thing is they’re saying it’s good for us. Would it be good if all our suburbs of the city were owned by China and then we were renting back the houses from China? That’s exactly what it is. They’re suggesting, and banks are suggesting this, that it would be better for farmers to sell their land and then rent it back.

BRONWYN HERBERT: For Will Crozier, it’s the way of the future.

WILL CROZIER: Looking at substantial gains, we’re looking at substantial markets coming in here. It’s a great thing for Australia. I’m very, very proud to be a part of it.

LEIGH SALES: Bronwyn Herbert reporting.

Free Trade Agreement With China

Historically the FTAs Australia has signed have seen us fail to negotiate fair agreements and greater competition in our local market. What our your thoughts?

Article from The Business Spectator  http://www.businessspectator.com.au/article/2013/7/16/china/seizing-sino-free-trade-moment#ixzz2ZMuAO4Di

Newly re-installed Prime Minister Kevin Rudd has declared he wants a free trade agreement with China. Chinese President Xi Jinping seems receptive. While any agreement is unlikely in the life of the current parliament, it will remain an issue for whoever wins this year’s federal election.

There are a number of hurdles to an agreement, but perhaps the chief stumbling block is Australia’s regulation of foreign direct investment. China wants the threshold for screening its investment proposals raised to around $1 billion, on a par with Australia’s agreements with the United States and New Zealand.

Under current arrangements, very little Chinese FDI in Australia escapes scrutiny because of Canberra’s policy of screening all investment by foreign government-related entities, regardless of transaction size.

Canberra maintains that this policy is applied in a non-discriminatory fashion to all foreign government-related investors. But the rules for these entities were only publicly articulated subsequent to the surge in Chinese investment from 2008 onwards. The Chinese can thank the US Embassy in Canberra and Wikileaks for confirming their suspicions that the policy is unofficially directed at them.

The marked deterioration in Australia-China relations during Kevin Rudd’s previous occupancy of the Lodge was in no small part due to the inability of his government to articulate a coherent policy on FDI from China.

Most Chinese FDI proposals are ultimately approved, which in itself is strong evidence that the current level of regulatory scrutiny at the border is costly and unnecessary.

Chinese direct investment in Australia is subject to the same competition, tax, industrial relations, planning, development and environmental laws that apply to other investors.

The additional layer of regulatory scrutiny Australia imposes at the border adds little to these robust regulatory frameworks behind the border. It serves mainly as a vehicle for political interference in commercial transactions the government does not like.

The rejection or modification of foreign investment proposals has often been explicitly protectionist in intent.

Former Treasurer Wayne Swan rejected Singapore Exchange’s bid for the Australian Securities Exchange in part because it would “risk us losing many of our financial sector jobs”.

Minmetals’ acquisition of OZ Minerals was made subject to conditions that were, to quote the former treasurer again, “designed to protect around 2000 Australian jobs”.

The Australian government has even sought to use the FDI screening process to regulate the level of output and employment in local mining operations.

Such micro-management of FDI trivialises the concept of the ‘national interest’ that is meant to inform the application of the treasurer’s discretion under the Foreign Acquisitions and Takeovers Act.

Some foreign investment proposals could raise genuinely vital national interest concerns. Parliament has already proscribed foreign investment in some sensitive assets.

But it is important that our regulation of FDI does not become an arm of protectionist industry or employment policy or a thinly-disguised proxy for domestic political concerns, harming Australia’s reputation as an investment destination.

What about China’s regulation of Australian outward FDI? It is true that China heavily regulates foreign capital inflows, including FDI. But China is a net importer of FDI and has become home to the world’s second large stock of FDI outside the United States. China is anything but closed to foreign investment.

Canberra no doubt wants significant concessions before lowering the threshold for screening. Yet it is in our interests to lower these barriers, regardless of the level of reciprocity.

The conclusion of a free trade agreement with China will require Canberra to give up some of its discretion over FDI. Yet given the current prime minister’s track record, it is difficult to imagine this occurring on his watch.

For its part, the Coalition has signalled an even tougher approach to regulating FDI, especially in agriculture and agribusiness.

The 2005 Australia-US Free Trade Agreement almost foundered on the issue of FDI. Yet most of the benefit from that agreement for Australia came through the liberalisation of investment screening thresholds.

Australia stands to benefit from being more open to Chinese investment, but only if it chooses to become less like China in its regulation of FDI.

Dr Stephen Kirchner is a research fellow at The Centre for Independent Studies. 

Dairy Farmers in Victoria cannot afford to feed their cows because of the drought. So what is the Government doing about it?

What is the “intent” of our governments as they continue to compromise Australian farmers’ and businesses’ capacity to create wealth and reinvest here? The Weekend Australian identified Victorian dairy farmers’ plight during a drought which has impacted the largest dairy producing areas in Australia. The Victorian Government has said they have to have a two year drought before they are entitled to help. Mother Nature is harsh, but dairy farmers are not being paid enough to cover their costs, hemmed in by rising energy and water costs aided by carbon tax imposts. Add to that Coles sell milk for $1lt compared to bottles of water for $2.50 for 350ml. Where is the justice in that?  This also puts great pressure on the Australian dairy processors who use Australian milk, and do not want to source off shore.

The Farmer Power Group that formed in Victoria earlier this year had already raised the issue of declining on-farm income and rising debt. The Victorian and Federal Governments were obviously not listening.

In addition,  last year the Victorian government allowed the Chinese to buy the Victorian Dairy Research Centre and allowed them to outbid the dairy farmers by just $10K as the farmers stretched their bid using their own money.  The centre was developed by and for Australian farmers. It is now idle until the Chinese send their scientists to operate it.

Last year New Zealand stopped the sale of eight dairy farms to the Chinese because it did not meet the national interest test. New Zealand had the largest dairy company in the world, Fonterra. Australia has not major food companies since Fosters was sold.

How can Australia take advantage of the Asian century if we do not own the assets and support our skilled farmers and their knowledge of our land?

This is not the only issue impacting our capacity to feed ourselves and benefit Australia. Graincorp’s future is precarious as USA owned ADM will own assets that once belonged to Australia, and the US will determine the price our farmers get.  n fact, our Governments  have condoned the sale and majority foreign control of every major food export except rice.

Earlier this year the Federal and WA government gave over $600M to the Chinese to “invest” in the Ord with a 50 year lease. $Bs have been given to Ford and Holden only for them to leave and not reinvest in this country. Yet we cannot find money to alleviate the plight of those who feed us.

Interviews can be arranged with Lynne Wilkinson, CEO AUSBUY on (02) 9437 5455.