Is it a sin to sell the farm?

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.