The Rudd government is not, of course, the inventor of the damaging ‘Star Chamber’ procedures of the Foreign Investment Review Board. But it appears to have submitted willingly to the FIRB’s expensive and utterly useless sanctions on the lifeline of our external accounts—foreign investment.
“Xenophobia” is a ready explanation, but not a completely satisfactory one (Stephen Kirchner’s excellent update of Wolfgang Kasper’s classic Capital Xenophobia has a more sophisticated analysis). Since China accounts for just 1% of the flow of foreign investment to Australia (see ABS data here, extracted below) fear of foreign ownership does not explain why a labor government should now erect barriers over the bridges built by the conservative Howard government.
I think the truth is that they had no settled intention of doing so but allowed events—including weeks of media innuendo—to lead them where they never intended to go. This is merely a sutff-up; an unintended slight to a neighbor that we may long regret. Here is Simon Crean, now Trade Minister, then Leader of the Opposition, welcoming Chinese President Hu Jintao before his address to a joint sitting of Parliament in 2003:
“…As China seeks to fulfil its destiny as a leader in regional and international cooperation, no country is better placed to assist it and encourage it than Australia. This is something on which there is bipartisan agreement. That is why my first overseas visit as opposition leader was to your country. I am delighted that our relationship is gaining new strength, and I want to turn it to our mutual advantage. Mr President, we are old friends, but there are unlimited opportunities for new partnerships. It is in the spirit of goodwill, the purpose of peace and friendship and the determination to be partners in the development of our region that I join the Prime Minister in the warmest of welcomes to this parliament of the people of Australia” Extract from Hansard, emphasis added
It’s time to give substance to this pledge by abolishing the pointless FIRB inquisition and doing what we know we should do: welcome those “unlimited opportunities for new partnerships”.
|Chinese investment (flows)|
($millions, ABS 53520, May 2009)
|China share of total (%)||0||1||2||1|
|Foreign investment in Australia||30||1,281||2,682||1,887|
|Direct investment in Australia||-58||244||23||2,597|
|Direct investment in Australia, Equity capital and reinvested earnings||np||np||np||np|
|Direct investment in Australia, Other capital||np||np||np||np|
|Portfolio investment liabilities||np||np||np||np|
|Portfolio investment liabilities, Equity securities||–||–||np||np|
|Portfolio investment liabilities, Debt securities||np||np||np||np|
|Financial derivative liabilities||np||np||np||np|
|Other investment liabilities||-280||727||2,477||-978|
|Total all countries||37,235||172,902||160,044||148,998|