How much economic damage will Agriculture Minister Barnaby Joyce be allowed to inflict during the course of this government? If successful, the efforts of the Nationals, led by Joyce, to block the sale of GrainCorp to Archer Daniels Midland will send a clear signal to foreign investors: Australia is closed for business if you fall on the wrong side of the government’s political calculus. Australia already has one of the most restrictive agricultural investment regimes in the developed world — the Organisation for Economic Co-operation and Development ranks us 10th in terms of restrictions on foreign direct investment in agriculture, ahead of most of Europe and the United States, countries not exactly known for their commitment to free trade in agriculture. That’s one reason why the overall level of foreign investment in Australian agriculture is so low: 1% of Australian agricultural businesses are foreign-owned or part-foreign-owned, and they hold less than 12% of Australian agricultural land — and around half of that is held by companies that are majority Australian-owned. Joyce has long railed against foreign investment in mining and agriculture — indeed, foreign investment full stop. He was forced out of the opposition finance portfolio in 2010 after making a series of howlers about a looming Australian debt default, including conflating government and private foreign debt into a single “gross foreign debt” figure of over a trillion dollars that he said would bring on a biblical-sounding “day of reckoning”. For Joyce, it seems, borrowing from foreigners is always bad, no matter what the circumstances. So where should investment come from if we cut off foreign investment? Easy: taxpayers. That was Joyce’s alternative last year to allowing a Chinese-led consortium to acquire Cubbie Station, a failed confection of water licences whose interests Joyce has reflexively supported during his entire time in politics. He wanted the government to purchase the property and break it into smaller lots. What is it with the Nationals and foreign investment?
“Short of the development of technology that enables foreign owners to pick up Australian farms and fly them offshore, the only ‘food security’ policy needed is a free market.”
Xenophobia has been a recurring phenomenon in rural politics over the decades. The anti-Semitic League of Rights, which struggled for control of the Country Party in the 1970s, was intensely hostile to foreign investment. So too was One Nation, a primarily regional entity. And it was the Coalition that brought to an end Australia’s post-war open-door policy on foreign investment, with the Gorton and McMahon governments establishing foreign investment and ownership restrictions; the Whitlam government took that economic nationalism further after 1972, and it has never been substantially wound back except via selective free trade agreements. But the Nationals have been growing ever more hostile to foreign investment in agriculture in recent years, and the reason lies in the success of that industry. Success? Why, yes — agriculture has been one of the most successful industries in Australia in recent decades. The Productivity Commission notes that in the 40 years to 2004, total agricultural output has doubled in real terms. According to the Australian Bureau of Statistics, in the 30 years up to 2011, our agricultural exports grew by 5% a year, nearly quadrupling in value. Australian Bureau of Agricultural and Resource Economics and Sciences data shows that even during the appalling drought of the 2000s, we were still exporting significantly more agricultural products than in the 1990s. And this has been achieved while the industry has dramatically shrunk its workforce, mostly over the last decade. In 2001, the agricultural workforce stood at over 440,000; in August this year it was just over 300,000. That is, labour productivity has increased massively in the agriculture sector. And the average size of farms has increased significantly as well, further improving productivity. Deregulation has also helped, and has caused investment, including foreign investment, to lift in agribusiness companies, drawn by ever-increasing export levels. Much of that is bad news for the Nationals, because it means smaller rural workforces and further pressure on regional demographics, with people moving to larger regional centres and cities. There’s a reason why Joyce wanted not merely to use taxpayers’ money to buy up Cubbie but to split it up — the Nationals prefer smaller family farming over commercial farming. In attacking foreign investment in agriculture and agribusiness companies, the Nationals are targeting the symptoms of a “problem” rather than the cause — and that problem is the growth and success of Australian agriculture as a deregulated industry. This is also why the Nationals have fastened on “food security” as a reason for opposing foreign investment. “Food security” in the Australian context is an absurdity: short of the development of technology that enables foreign owners to pick up Australian farms and fly them offshore, the only “food security” policy needed is a free market. But for Joyce, the very existence of a free market for agriculture is a problem, because Australia is in danger, he claims, of becoming a “net food importer”. This myth also peddled by independent Mp Bob Katter and is easily debunked, but it is the basis for this “food security” nonsense that the Nationals, the Greens and even the previous government like to go on about. The challenge for Treasurer Joe Hockey is to see off this noxious, deeply damaging xenophobia and approve the Archer Daniels Midland bid — and not approve it with conditions that prevent it from proceeding, which you sense some in government see as a solution to the dilemma. The delay in approval of the bid was bad enough, and merely puts off a key moment in the history of this government. If the Nationals win, they will be emboldened to prosecute a deeply damaging agenda of economic obscurantism. All power to Hockey in his fight against them.
Then again a lot of what Cousin Jethro says in public, for the punters, and what he says in private do seem at odds?
“Cutting his troth to suit his dote”?
The facts, no matter how innocuous, will never come between a craven hayseed and his constituents. Grow up, Barnaby. Stop fixating on this and find the money to fix the deathtrap of a road between Woodenbong and Legume, much of which runs through your electorate. You are the member for New England before you are the Minister for Agriculture.
Settle down H. Jethro is from St George remember.
The key problem with foreign investment is that the best paid jobs go overseas, capital expenditure goes overseas and the way these corporations dont pay tax – the Government loses a revenue base and finally if things go bad like the car industry they want a handout. Right now the best place for foreign investment is in source countries for refugees to make them happier places rather than in places like Australia where all the investors are going to do is to exploit whatever they can take for value. Generic growth generates communal happiness, foreign investment generated growth generates a culture of slavery and basically dumbs down the whole community.
Thanks Bernard.
A couple of comments.
I think you will find the Greens concerns over “food security”, are more to do with stability of production over the longer term, rather than who owns the means – although, of course there’s a good dose of agrarian socialism just below the skin.
The progressive increase in size and intensity of farms from the postwar period on, which from your political and economic perspective has been so beneficial, is simply not sustainable. Australia’s aeons-old soils combined with ever worsening climatic conditions present a very real threat. The bigger the farm, the less able they are likely to cope.
The massive improvements in worker productivity are good for business but bad from just about every other perspsctive. If manual labour is needed in agriculture in future, it will expect to be FIFO-ed and paid handsomely.
A side issue with foreign ownership – one wich Joyce is very keen to ignore – is that Australian farmers are already massively indebted to foreign multinational companies through chemical dependency, loans/financial products (crop insurance is huge these days) and machinery rental.
Barnaby is not any help at all. Neither is Mr Keane’s ranting from the sidelines of Canberra.