Matter of Public Interest: Foreign Investment (Agricultural Development in Northern Australia)


I have been an advocate for the interests of Northern Australia for my entire Parliamentary career. For twenty-three years I have been drawing the attention of this chamber, the media and the people of Australia to the diversity and abundance offered by the North.

In the past, my colleagues and I have been labelled alarmist when we have suggested that if Australia did not develop the natural abundance of the North then somebody else would.[1] Recent talk has, however, suggested these concerns may not be entirely fanciful.

It may come as no surprise then, that I am encouraged to hear about the Governments reported engagement with Chinese interests in investigating infrastructure and agricultural developments in the Ord River in Western Australia, through various regions of the Northern Territory, and also the Atherton Tableland.[2] I will always welcome any action that encourages development in the North, however I would inject a note of caution.

The current joint Australian/Chinese study is expected to report over the next few months, but the Government is yet to indicate the exact terms of reference of the review. The expected controversy over foreign ownership is perhaps also a distraction from the more critical logistic challenges that are faced by any development program for Australias North. The media may be reporting potentially divisive reactions to foreign ownership however I would encourage this chamber to give more considered thought to the greater implications of developing Australias North.

The attractiveness of the idea of opening up the North of Australia to development is self-evident, but any actual action that is taken must be managed with great care to ensure that the results we seek are achieved, and that these results are sustainable.

Farm Institute of Australia Executive Director Mick Keogh recently drew attention to the developing view that Australia is being reckless with its agricultural assets and that future generations may not be appreciative of this cavalier approach.[3]

Australias agricultural abundance allows farmers currently to export approximately 60 per cent of their production. This does not automatically mean that Australia is geared to become the food bowl of Asia. Only a thoroughly planned and meticulously executed strategy will yield the best-case result that all parties seek. The challenges that have economically marginalised production in Northern Australia must be acknowledged and addressed.

Craig Emerson may well see the Chinese hunger for Australian agricultural assets as an opportunity. It remains to be clarified whether it is the Chinese seeking to invest for their own food security reasons, or if it is the Australian Government is seeking to secure billions of dollars of Chinese investment in order to deliver on infrastructure promises, and balance the current account.

The population of China was estimated as one billion, three hundred and forty-three million, two hundred and thirty-nine thousand, nine-hundred and twenty-three in July 2011. To put this in perspective, Australias population is just 1.6 per cent of this vast figure.

Hunger remains a widespread problem in China. As recently as 2007, 130 million Chinese people, or 10 per cent of the Chinese population, were judged to be suffering the effects of malnutrition.[4] These startling statistics are, perhaps, simply an indication of the challenges that are faced when attempting to administer and feed such a large population.

Economic development, however, has led to an increasingly affluent Chinese society with expanding dietary aspirations. These aspirations and the need to overcome hunger are placing increasing pressure on Chinese officials to deliver food safety and food security to the population.

The twin Issues of food security and food safety in China have been variously described as challenging[5] and sensitive.[6]These issues, along with the elimination of hunger, are key imperatives for Beijing at the moment.

Not surprisingly, the same economic development that is increasing pressure for food security, is creating conditions that are making food security more difficult to deliver. Rapid urbanisation is consuming vast tracts of accessible arable land. Since 1990, China has lost around 8.3 million hectares of food-producing land to the needs of urban growth.[7]

It is also worth noting that food security and social stability in China may interact in ways that we do not experience, or in fact understand, in Australia.

Inevitably, Chinese officials are seeking alternatives to producing foods of sufficient quality and quantity within Chinas borders.

At this stage, however, the exact manner in which the Australian Government seeks to engage with Chinese state-owned industries in the North of Australia, remains to be clarified.

In 2010-11 the Foreign Investment Review Board approved more than 5000 Chinese investment applications with a total value of $15Billion. Chinese investment in Australia is nothing new. Agricultural development across Northern Australia is also not a new idea I and several of my colleagues have long championed the principle of developing the North. These projects, then, are not really breaking any new ground.

It is common knowledge that the imperatives of providing safe and secure food to the populace in the long term, far outweigh any financial or environmental considerations for Beijing. The priority for Beijing is to maintain social stability by providing safe and sufficiently abundant food sources for its population.

The intent of the current study has been expressed by Dr Emerson as augmenting Australias food production delivery to world markets. This intent remains to be tested.

Indeed, the information provided thus far suggests that Beijing would provide substantial investment to allow the development of agricultural infrastructure and then allow the food that is produced to be raised for sale on world markets. Once on the open market, the Chinese along with other customers would compete for the purchase of these food stuffs. This sounds ideal for Australia, however, it raises questions.

Principal among the questions raised by this insufficiently defined investment model are:

    • Who will own and operate the farms;

    • Will operational ownership be freehold or leasehold;

    • Who will own the produce;

    • Who will own the infrastructure; and,

    • How will Australia, through the ATO and the collection of Tax, benefit from this activity


If the means of production, and the food that is produced, are both owned by foreign Government entities then how does the Australian Government propose to enforce an agreement for such activity to provide benefits for Australia as well as China Any clear advantage to Australian interests in this scenario remains to be clarified.

The Trade Minister is reported to be advocating for increased productivity to take advantage of burgeoning demand in the developing world.[8] This may make good economic sense, but is little more than empty rhetoric where no concrete plans are presented on how this can be achieved.

Carefully managed investment can produce benefits like decent privately funded or encouraged public infrastructure. Clearly suggestions of thousands of lowly-paid Chinese workers crossing the borders and putting Australians out of work is scare-mongering nonsense. All people working in Australia even those foreign workers being encouraged by the Gillard Government for the Roy Hill Iron Ore project in WA must be subject to Australian wages and working conditions.

Whether or not a parcel of agricultural land is able to sustain production will be largely determined by effective water management.

Substantial interest has evidently already been shown by Chinese investors in acquiring land for agricultural development in the North of Australia. It has been widely reported that Shanghais Zhongfu Group a company with a close association to Former Prime Minister Bob Hawke has shown interest in a 30,000ha parcel of land at the Ord River in WA.[9]

The Ord River Scheme is a useful example for us today of the challenges that exist in water management and agricultural development in Northern and Remote regions of the Australian continent. My support for the Ord is well-known, but political will alone is sometimes not enough to overcome the challenges presented to us by Mother Nature. But these are challenges that science, goodwill and political leadership can overcome.

Water catchments in the North are currently inadequate for the kind of agricultural production that is being discussed. As such, most of the rain that does fall simply drains off the coast rather than being caught to any functional extent. Any catchments that are developed, by necessity must consider local ecosystems, coastal biodiversity and other downstream consequences.

The prevailing weather conditions in the North also pose evaporation issues.

The major capital projects required to make Northern development proposals a reality extend far beyond the construction of transport corridors and the installation of utilities. Before we turn a sod, we must first turn our minds to the construction of Dams and water-management systems.

The work that has been done by my colleagues and I on the Dams Taskforce has engaged with these very issues.

Some important work has also been done by a company called MWH in the area of re-charged aquifers. Their work in the Pilbara, and in the Sierra Nevadas in California shows promising results.[10] If these results prove to be open to duplication in the challenging Northern environments, then they may be able to be utilised to address water-management challenges in the North.

Storage of water underground may prove an advantageous approach to water management in the climate of Northern Australia. The use of re-charged aquifers for crop irrigation has been the norm for some time in my home town of Ayr in the Burdekin Delta in North Queensland.

Cane farmers in Ayr have used this system to great effect, and good water management is enabling an expansion of cane in the Burdekin. Efficient water management is also enabling new interest in Rice and Cassava crops in the Burdekin Delta.

Any proposal to develop the North of Australia will naturally be heavily reliant on overcoming the challenges of water management. And it is clear that the water management models that are employed to meet these challenges must be sympathetic to the environment, to the needs of industry, and to the needs of the growing population.

The Coalition has been providing leadership and serious debate on developing Northern Australia for some time and currently, I and my colleague Andrew Robb have a policy in development for the expansion of Northern Australia. This policy has been in development for some time and we continue to advise the leader of the Opposition Mr Abbott as to the progress of the work.

Developing the North of Australia will take far more than foreign investment in agriculture. The potential of Northern Australia is vast. As well as agricultural opportunities there are vast opportunities in mining and resources, and opportunities in tourism. With the development of infrastructure and industry will come increasing population and the cycle of development will commence.

Population growth in the North will be critical to the success of any developmental proposals for the remote and Northern regions. A recent Newspoll indicates that 63% of Australians believe that increasing the population in the north is a good thing.

I have never hesitated in reminding this chamber that despite creating around 40 per cent of Australias export earnings, the North of Australia is home to a mere 5 per cent of the population. A substantial increase in this population, coupled with improved infrastructure, improved transport and more efficient water management, may well render the North of Australia able to become the food bowl of the world.

Achieving these goals and becoming the significant global citizen that Australia is well-placed to become, will however take more than a single agricultural study, and a single engagement with foreign investment.

The Western Australian and Western Queensland mining and resources industries are bringing prosperity not just to the North but to the entire country. Zinc projects near Townsville, Mt Isa and Gladstone, and the prospect of a new Bauxite project at Weipa are among the projects that are forming positive engagements between government and the private sector.

The multi-billion dollar development of the Port of Dampier, and installation of rail lines across the North of Western Australia to provide transport corridors to the mines, is another example of the great gains that can be achieved when there is synchronicity between Governments and Corporations.

The North of Australia has been my home for half a century and I am proud to be part of a team that seeks to address the challenges of utilising the resources of the North.

Development of the North of Australia is inevitable. The abundance of natural resources, availability of land, and proximity to our trading partners makes it a matter of common sense and urgency to apply ourselves to Northern expansion.

The principle of development of Northern Australia is a goal that Coalition supports. To achieve a best-case outcome for all Australians, however, the development of the North must occur as part of a wide-ranging, inclusive and comprehensive plan.

The Coalition has such a plan. Regrettably, the Gillard Government does not.

 

End






[1] Morris, Sophie, Food Security Nudges China to New Lands Australian Financial Review 1.06.2012, page 48.



[2] Grigg, Angus, Labours China Foodbowl Plan Australian Financial Review 31.05.2012, page 1.



[3] Morris, Sophie, Food Security Nudges China to New Lands Australian Financial Review 1.06.2012, page 48.



[6] Chan, Catherine Chinas Food Insecurity http://thediplomat.com/chinapower/2011/04/20/chinas-food-insecurity/, April 20, 2011, page 1 (accessed 14.06.2012).



[7] Chan, Catherine Chinas Food Insecurity http://thediplomat.com/chinapower/2011/04/20/chinas-food-insecurity/, April 20, 2011, page 1 (accessed 14.06.2012).



[8] Morris, Sophie, Food Security Nudges China to New Lands Australian Financial Review 1.06.2012, page 48.



[9] Morris, Sophie, Food Security Nudges China to New Lands Australian Financial Review 1.06.2012, page 48.



[10] Pearce, Vaughan, MWH Discussion Paper, 10.05.2012.

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