Backs to financial future

Australia is turning its back on the world.

Not only is it seeking to put up barriers against people moving here, but it is also now looking decidedly protectionist and xenophobic about Chinese investment in particular.

It is not only the Greens who are peddling this recipe for economic disaster, but elements of the major parties, even the supposedly free market-oriented Liberal Party.

Let's set out what is at stake here.

Since Paul Keating became Treasurer in 1983 and there emerged a bipartisan political consensus about the need to reduce trade barriers and liberalise the domestic economy, Australians have experienced strong economic growth. The recession of the early 1990s was the only blip on the screen.

John Edwards, a Keating biographer and economist, has argued that the reason Australia has experienced strong economic growth since 1991 is because "tariff cuts and the float of the currency and banking deregulation in the '80s opened new opportunities at the same time as they sharply increased competition in the Australian economy".

The other driver of growth was the switch from wage arbitration to enterprise bargaining at the beginning of the '90s "allowed the redeployment of labour just as cheap new technologies in communications and information technology were offering the opportunities to reorganise production, distribution and exchange".

And now the major factor driving economic growth in Australia is globalisation, says Edwards.

"Australia's increasing participation in the global economy, itself driven by powerful and long-term forces, is now helping to sustain a robust expansion of indefinite duration," Edwards argues in a 2006 paper published by the Lowy Institute, a think tank.

But politicians with wrecking balls in their hands are threatening Australia's open and liberal economic outlook. The Greens are at the forefront of this counter-revolution.

Greens Leader Bob Brown is an old-style economic nationalist.

He lines up with Pauline Hanson, Barnaby Joyce and Bob Katter on the issue. Brown recently made a song and dance about a possible takeover of the Australian Securities Exchange by its Singapore counterpart.

"We don't see an advantage for this nation in having that stock exchange being controlled from Singapore, particularly where there is such a big controlling - and I use the word 'controlling' outside the number of shares - interest from the Singaporean authorities," Brown said on October 26.

The Greens' policy is to "reduce Australia's foreign debt and foreign ownership through use of trade, financial and regulatory measures to ensure more productive use of foreign capital and strengthening of Australian manufacturing, recognising the need to support economies in developing countries".

In other words, the Greens want to go back to the dark days when governments protected industries from foreign competition or foreign capital.

Then there is the Greens' idea of monitoring foreign ownership of agricultural land, a policy supported by the xenophobic Liberal Party, which these days is fast becoming the Tea Party of Australian politics.

Deputy Greens Leader Christine Milne said last week: "We need to secure land and water for food production by improving sustainable production and we need to keep farmers on the land by making sure they can make a living in the face of Coles and Woolworths' duopoly and cheap imports."

Christine Milne wants us all to pay high prices for meat, fruit and vegetables and support farmers' lifestyles.

She seems to care little for the fact that such a policy will hit low-income earners, who will be unable to afford these high-priced products.

The rise of economic nationalism goes hand in hand with xenophobia.

This time the scapegoat is the Chinese.

Last year when Chinalco bid for Rio Tinto, Brown fumed that this "nation should not vest power over its future resource management in the hands of the brutally repressive Beijing bosses".

"There is a real danger of Chinalco's bid to control Rio Tinto today extending to the CIC's control over roads, public transport or privatised water corporations in Australia tomorrow," Senator Brown warned on February 18 last year.

Once again, as he did in the case of Singapore, Brown dresses up an otherwise nakedly xenophobic attack on China with a concern for human rights.

The problem is that Brown does not make the same noises about other foreign investors from other countries - after all, no nation has a perfect human rights record.

Foreign investment is critical to Australia's future.

If we send a signal to the world that we are putting up the shutters, then capital, being footloose, will simply head elsewhere.

Claiming, like Brown, the Liberal Party and some wacky independents, that we need to assess the national interest in deciding whether or not to allow forcing investment is simply a recipe for giving in to vested interests like farmers and other protected species who think they have a right to an income.

If the Greens and the xenophobes in the major parties are allowed to set the rules on foreign investment then Australia can kiss goodbye to the days of sustained economic growth.