Wayne Swan's misplaced confidence in Australia's recovery

Somewhere the cost of increasing CO2 on planet earth requires accountability and a strong and determined government response to replace the current waffling and trying to be all things to all people for all occasions.

As for options, there are a number, but only if governments have the guts to act in their nation's best interest and for future generations.

One realistic option appears that of a carbon tax on scheduled manufactured products with a penalty carbon tax imposed on exporting countries failing to commit to realistic caps and accept a meaningful role in global warming reduction.

A careful perusal of IMF, WTO and other international bodies will reveal other options for consideration including jobs, jobs, and jobs.

Australian resources and post recession

Once the recession is over and market normality returns, Swan apparently expects market forces to come into play to lift demand and prices.  But consumer demand will not return to the heady pre 2009 days, and resource exports and jobs will reflect that change.

As a point of interest, can Swan enlighten Australians on the volumes and prices for iron ore, coal and gas that he used in his projection to produce a surplus in 2016? Surely, it cannot be another rule of thumb estimate like that used in job forecasts for the stimulus consumer-spending package!

Conflicts of interest?

In 2016, China could be the 800-pound gorilla in the iron ore market.

In 2016, Japan and South Korea will still be recovering from recession and China will have government officials in senior management positions on Australia's and other countries resource corporation's boards. This raises a question; can China be relied on not to exploit its confidential corporate knowledge and influence on pricing for its own advantage and to the disadvantage of its competitors?

China has been very open in its intention to control iron ore prices. The successful foray into Australia's iron ore mining companies has witnessed the appointment of Chinese executives to senior management positions. In light of the foregoing, some buyers of Australian iron ore have quietly expressed concern for confidentiality in negotiations with a competitor government involved in the negotiating panels and on the boards.

Irrespective of residency conditions and inferred responsibilities, it will be interesting to see how senior management from China's state-owned enterprises respond to conflicts of interest posed by their appointment to boards and/or management executive positions in Australian public resource companies.

Japan and South Korea have proved reliable in avoiding conflict of interest, but there are clear differences between these two and China’s state-owned enterprises, and there are clear grounds for concern.

The clear conflict of interest facing Chinese Directors and executive officers will be their Chinese Communist Party membership. The implications are foreign to developed countries private enterprise directors. CCP membership and cultural loyalty is mandatory for all in senior management positions in China's state-owned enterprises. Membership demands unquestionable obedience and loyalty, whereby duty is first, and foremost to the interest of the CCP, and then China as a whole. Everything else has a lesser priority. There are severe penalties for breaches.

The CCP is China's government and is present in every state-owned enterprise from village level up through the entire corporate network and throughout the government itself.

The next seven years will indeed be interesting.