Wake up to our future

Perhaps we should invest our mineral wealth in more shares given Andrew Leigh’s observation that Australia’s superannuation system “ensures that individuals get the benefits of a sharemarket that has historically outperformed all other asset classes”. Only trouble is that the Reserve Bank has indicated that having your money in term deposits in Australian banks between March 2000 and February 2010 would have delivered an average interest rate of 3.92 per cent compared to 3.7 per cent earned by the median retail super fund (according to the research company SuperRatings). While this period involved “two big busts on equity markets, the Bank for International Settlements indicates that globalisation and financial market liberalisation has made financial crises more common”.

Oh, I almost forgot. There is Labor’s great broadband plan, the National Broadband Network, although it will create new possibilities and save much time and travel. But who is to say that businesses will not utilise faster broadband to acquire more cheaper goods and services overseas. For instance, faster broadband could make radiologist costs a lot cheaper if carried out offshore.

Fortunately there are signs that parliament may be stirring.

Concern about the foreign ownership of agricultural land has already led South Australian independent senator Nick Xenophon to indicate, in late July 2010, that he would put forward a Private Member’s Bill requiring the Foreign Investment Review Board to look more closely at foreign ownership of rural land.

The Nationals MP John Cobb also backed a Greens plan for the registration of all foreign purchases of land and water supplies, despite the Coalition Treasury spokesman Joe Hockey opposing the idea of a registry. Cobb declared “I think there is a good case for Australia, particularly the federal government and the department of agriculture, being aware of how much agricultural land is owned by foreign interests”.

The Liberal Senator Bill Heffernan also supported the register plan given his belief that Australia should re-think its approach to agricultural resources. Heffernan noted that China is embarking on a plan of agricultural ownership to safeguard future food supplies.

Currently, the Foreign Investment Review Board only examines purchases of more than $231 million, although all investments by foreign governments, or any company owned by them, must notify it and receive approval before making a direct investment regardless of the value.

Will a Labor government do much? I don’t know. After all, even at a time of record home unaffordability, foreigners are still predicted to buy a significant proportion of Australian homes. A recent National Australia Bank residential property survey believed 9 per cent of all house purchases in the next 12 months would be by offshore buyers (or about 47,000 of the 520,000 properties). This was despite foreign investment laws (from April 2010) again restricting foreign investors to new-home purchases with temporary residents only able to buy existing housing for their own use while residing in Australia.

I hope Labor can address various industry concerns rather than merely allow an industry structure even more dependent on mineral exports and the growth of China. But I am more hopeful that independents and individual MPs (and others) may express their industry concerns to counter an almost blind faith in freer trade. As Grow SA chief executive Mike Redmond noted in June 2009, “If consumers knew what they were trading off, in fair wages, superannuation and food safety by not insisting on local food, they’d be quite surprised”.

Although I remain a supporter of freer trade (within reason), all evidence needs to be exposed to inform the public and show that the world does not simply operate in accordance to any theory or ideal. This is demonstrated by a protectionist EU easily outperforming Australia in agriculture, and the current free trade climate continuing to benefit communist China most.