Is it a sin to sell the farm?

The gossip around town is that a majority of Australians believe that, when foreigners invest in farming in Australia, they actually dig-up the land and take it back home, lamentably leaving us with a continent which is just a massive hole in the ground.

From what I hear, the same majority enthusiastically applaud Australians who invest overseas; this is seen as courageous entrepreneurial activity by fine Australians who want to help lesser beings to prosper from our benevolence. Naturally, we expect that they would not have the audacity to protest about our presence in their nation.

All of this means that the loud cries to stop foreign investment in any Australian business are sanctimonious hogwash. The reality is that Australians will accept with alacrity a generous offer from anyone who wants to buy their farms, as a majority of them want out of their cycle of decreasing revenue, rising costs, growing debt, monopoly marketers and overpowering miners — as well as the reluctance of their children to inherit the family farm.

If they can get good money for a sale and put the proceeds to more sustainable use, then I for one will applaud them. They are acting totally within their rights. Even that grand old defender of the Aussie farmer, Steele Rudd, would have been sorely tempted.

What we fail to acknowledge is that when we do allow a foreigner to invest in Australia, the transaction has, if managed properly, the potential to stimulate the economy, provide new tax revenue, create jobs and encourage competition that will reduce prices for consumers.

All the signs indicate that our main bugbear is China. We now have the same attitude of hostility that we had towards them in the gold rush days of the nineteenth century when we got around to killing some of them, the most notable being the appalling massacre at Young in New South Wales.

It’s time that we calmed down and faced the fact that we cannot believe that it is fair play for us to sell our minerals to China, then take their money and run, while telling them to stay out of Australia — hypocrisy at its very worst.

The anti-foreign section of our population should take time out to read David Uren’s splendid book on Australia’s relationship with China, as it is an excellent analysis of the potential and pitfalls of China’s ability to make or break our nation. Uren is a senior journalist with The Australian, who has been a China observer for many years.

Malcolm Turnbull recommended that I read Uren’s book, which is called The Kingdom and the Quarry. It traces our ‘romance’ with China since Gough Whitlam became the first leader of a non- communist nation to open a diplomatic relationship with them in the 1970’s.

While I have read a number of interesting books about China, this one is the most informative, and I enjoyed the chapters that outlined the crises that have occurred in the relationship down the years.

The section on the Chinalco affair makes compelling reading.

In my view, the key recommendation that Uren makes is that we should cease trying to establish a Free Trade Agreement with China and work on completing an Investment Agreement with them as a matter of urgency. Such an Agreement would set-out the terms upon which citizens and entities from each nation can invest in the other so that acquisitions are not one way traffic. Each side would have equal opportunities, and there can be limitations to the ability of our Foreign Investment Review Board, and its Chinese equivalent, to intervene with transactions that adhere to the Investment Agreement.

Of special significance in drafting the Agreement would be to determine the conditions upon which State-owned corporations can invest, as this creates a potential for governments to dictate how investments will be managed and operated. China has many more such corporations than we do, but this could re-stimulate our interest in public corporations that could be owned by our governments but managed outside of the Public Service. Many nations are now following the Chinese example of State Capitalism.

However, three significant matters should be included in an Investment Agreement.

The first would relate to conditions under which either side can ‘buy back the farm’. Then, there would be terms that relate to the employment of Australians and Chinese, both here and in China. Thirdly, and crucially, there would be a replacement of taxation by royalties based solely on revenue, not profits, as this will stop any back door repatriation of profits from either nation for tax avoidance purposes.

The fact is that the development of new Australian industries, particularly in primary produce, is retarded by the failure of our banks to make loans, and a lack of sufficient risk capital from investors here in Australia — our superannuation funds being interested in investment only when a business is established and running profitably.

We need overseas investment now, together with the possibility of having the capacity to buy back the farm when opportunities arise as the years go by.

A prime instance of the urgency of this is the proposed food bowl in northern Australia, which is now evoking public interest. I have referred to it in earlier editions of this newsletter, and it requires significant capital to be invested in several very large farms to get it started.

This can best be achieved by allowing in overseas investors who can provide guaranteed markets back in their homeland to ensure financial viability, particularly as they will be required to invest in the water infrastructure needed to irrigate the great black soil plains located between the Gulf of Carpentaria and Longreach.

You can read more about this by replying to this newsletter and requesting a document produced by John Thompson called The Gulf to the Darling. It is a project just made for China or India, as they have a long-term shortage of fodder for their livestock, which our northern food bowl could produce and provide to them a security of supply.

Returning once more to David Uren’s book, it has a fascinating chapter on China’s attitude to our Prime Ministers. Rudd does not rank highly in their popularity stakes, as they felt patronised by his constant attempts to appear to be Chinese when he speaks Mandarin in public, and they constantly worried about his worship of the 24 hour news cycle.

Gillard ranks at the top of their list, as she is a skilled behind-the-scenes negotiator, as shown by the way that she has held her minority government together for two turbulent years. She is not a good public performer, but this is what the Chinese like, as they are not good public performers either.

So, we come to a point of policy decision. Do we continue to strive for free trade agreements with as many nations as possible, or do we switch to a policy of establishing investment agreements that will make our economy more stable and prosperous in the long term?

It has to be the latter, as nations that invest heavily, one with the other, do not have to worry greatly about their military defences.