A solution to the foreign sale of Australian farms

The emotional and political debate about the sale of Australian agricultural assets, particularly to Chinese interests,   needs a more objective perspective. 

Two types of assets

Cubbie Station - a political football

What is an asset like Cubbie Station?  It's actually two assets. One is the land and resources under the land. The second is the right to produce food or crops from farming. 

This isn't just a technical point, it's critical to the security of Australia and to the debate. 

Separate the assets

A lot of the debate quite rightly surrounds the ownership of large tracts of Australia by foreign owners, especially foreign governments.

There is also acknowledgment that Australia lacks the capital and commitment to farm our arable resources to their full capacity. So, we need to work with foreigners to make productive use of the land.

So, we can lease the asset, rather than sell it. 

The UK model

For centuries, the UK property model has sold long term leaseholds over residential property.  If you "buy" a flat you are most likely buying a 90 year lease, not the freehold. 

We should adopt this model for significant Australian agricultural landholdings. Sell a 100 year lease. It provides food security for the Chinese buyer, but does not relinquish the ultimate ownership of the Australian land. 

Selling long term leases of Australian agricultural properties is a win-win for all. 

Let me know what you think. 

Mark S 

It affects me - that's why I must support the private health insurance means test

I want Australia to be more productive, more creative, more fair and economically successful.  Some of these goals require change - change that impacts on real people.

So, when the Gillard government proposed the private health insurance means test, I had to ask myself, does this fit the criteria? Will it make us more productive, or economically successful.  The answer is probably yes.  We need to afford a health system, we need a public dental care system, and for individuals earning over $83,000 or families over $166,000 it seems fair to reduce the rebate they are receiving for purchasing health insurance in return for a $2.4 billion saving over just 3 years.

And it affects me - so I can't very well argue for some changes that don't impact me directly if I won't support changes that do affect me.

Productivity changes affect real people - that's why we need them

If productivity changes didn't impact on anyone, then they are probably not doing anything.  At the moment, Australia is in a once in a century mining boom.  Yes, it's impacting on many industries.  Yes, a lot of people can't see that this is doing them any good.  But, the impacts are real, and they have the potential to transform Australia for the better.

If we want to preserve old manufacturing industries, who is going to pay for it? All of us.

If we want to protect old fashioned retailers, who is going to be affected? All of us.

If we want to continue to drive our economy with polluting, carbon-intensive fuels, who is going to be affected? All of us.

So, we need to embrace the changes that are needed and take advantage of the one in a century opportunity that we are being handed.

I might have to pay and we all might have to change

At the moment, my job isn't impacted by the changes to the economy.  It wasn't always that way - I've been made redundant when the Marketing industry went through change.  So, if you are a manufacturing worker at the Toyota plant, or a retail worker whose shifts are being cut, it would be natural to be concerned. 

For most workers, there are other opportunities.  95% of people who want a job currently are employed.  For the retail worker, you have sales skills - there are currently over 2,000 sales jobs being offered in Melbourne alone.  For the manufacturing worker, there are over 1,500 jobs in Manufacturing, Transport & Logistics in Melbourne.  Change can seem scary, but it's what we have to do as society changes.

For me, I have to pay more for my private health insurance.  I can't ask you to adapt if I won't.  We all have to share the journey.

Tony Abbott's position makes no sense

Given that I will have to pay more for my private health cover, I don't understand why Tony Abbott wants to give me a hand out. Here is his statement on radio...

"Private health insurance is in our DNA. It is our raison d'etre, that is why we exist as a political movement, to give more support and encourage for people who want to get ahead. So, look, private health insurance is an article of faith for us. We will restore the rebate in government as soon as we can.''

So, is he saying that if you are wealthy, we will give you more money to make you more wealthy? Huh?? Honestly, that makes no sense.

Or is he saying he wants to do away with Medicare, and just have private health insurance? That would make even less sense, and be even less equitable.

I'm really trying to understand his perspective, but frankly, I can't see it at all.  Then again, I can't see why Prime Minister Gillard insists on bailing out foreign car companies either ... but that's a discussion for another day.

Times are changing, and we all have to step up to the plate.

Let me know what you think

Mark S

Business models change. Industries must adapt or die.

Although we are now well into the 21st century, I'm still surprised at how often there are calls to protect certain dying industries in Australia. Protectionism is simply bad economic policy. All it does is delays the inevitable.

The foreign competition argument for protectionism is growing from Bob Katter

Most arguments in favor of protectionism focus on the threats of foreign competition. Bob Katter and his new Australian Party are now leading the charge to "protect" Australia from China, Thailand, Philippines and Singapore. Of course, Bob is just pandering to those who see themselves as under attack from foreigners.  He is drawing on a potentially potent mix of short-term self interest and misguided patriotism, verging on xenophobia.

The Australian Party is committed to providing support and protection to Australian industries and reversing this madness - Bob Katter

Technological change is more important than foreign imports

Horse & buggy, Port Melbourne c.1900

The most important argument against protectionism is actually about technology change. Technology is not new and it will continue forever.

Let's take transport as an example. At the turn of the 20th century, the horse was the most common form of urban transport. But when the motor car was invented, jobs for blacksmiths and farriers declined sharply.  Yes, it was an economic problem for those employed in the horse-related industries.  On the flipside, the motor car created a whole new range of employment opportunities.

The same is happening in the early part of the 21st century.  Technological change from improved manufacturing processes have reduced items that were highly technical to mere commodities, and made them unprofitable.  That's the reason some forward thinking companies such as GE have moved on from manufacturing appliances to focus on higher value products such as medical equipment.

It's (the appliances business) a low-margin low-growth company being attacked by foreign competition

Those appliances are still being made - but by lower cost labor in emerging economies.

Technology change from the Internet is more dramatic

Over the next few years, the Internet will accelerate the pace of change of existing industries.  For example, already the development of Google Maps has rendered the old map making business model obsolete.  And this is just the start.

The big change is that services which used to be provided by experts will now be accessed by individuals themselves.  Instructions and systems are popping up all over the Internet, to do it yourself:

• Do it yourself wedding stationery - is fast making printers obsolete
• Do it yourself will kits - reducing the role of the family solicitor
• Digital photography and Facebook - cutting deeply into the professional photography market.
• A Google search - reduces the need for the average computer technician
• ETrade - means most shareholders no longer need a stock broker

If you are a wedding stationery printer, family solicitor, stockbroker or professional photography there is a natural desire to call for some protection for your industry.  Yet, that will only delay the inevitable.  Your industry is changing - you need to change with it.

Create the infrastructure for the layman.  The democracy of Google.

Industries that are currently serviced by experts will slowly become the realm of the layman.  One by one, professional services will be simplified, codified and made accessible to everyone.  It's democratisation by Google.

In 1985 when I was first trading shares, I never thought I'd be able to transact myself.
In 1990 when I was audio taping focus groups, I never thought it would be possible to video tape and edit them on a laptop computer.
In 1991 when I published a book via a publisher, I never thought I'd be able to self publish online.
In 1996 when we built our first website, I never thought I'd be able to create a website.

Instead of each of these services providers being paid for the labor, now we are happier that their knowledge has been transferred into infrastructure that we can tap into as we want.

Consultants and professional services are like manufacturers - be ready for the change

In 2011, there are a lot of things that I still need an expert for, but that won't be the case in 2020.  Consultants and professional services will become more and more accessible.  The change will be towards more and more automation, and online access.  I'm one of those consultants, and I'm enthusiastic about the change.  If you are a manufacturer, you should embrace it too.

If you are in an industry facing change, embrace it.  Specialise, innovate, develop infrastructure.  Just don't ask for protection.

Let me know what you think

Mark S

A budget preview - a patchwork economy means not everyone's a winner

Tomorrow night, Australia's Treasurer Wayne Swan will announce the Federal Budget. It will show that Australia's economy is the envy of the developed world.

Overall, the economy is doing very well because of China and India's huge need for our coal and iron ore.

But a key theme will be the "patchwork" nature of the economy. This is Swan's preferred phrase to explain that whole the resources sector is in a once-in-a-lifetime boom, manufacturing and tourism are suffering.

So, how should Treasury respond to a patchwork economy?

Free marketeers would say the economy will take care of itself. If that was allowed to happen, everyone who has suffered from the floods would be left to rot. Surely that's not an economically rational approach, as these people who could return to being productive would take much longer than if they were given a helping hand.

On the other hand, protectionists would want the old, struggling manufacturing industries to be supported. They would add tariffs to imports in the name of protecting jobs. All that would do is produce an environment of complacency. Rather than encouraging product innovation and increased efficiency, it would create a culture of laziness. No, that is not an option either.

Instead, the budget will seek to strike a balance between these two extremes. And as the Treasurer said in his most recent economic note, "you often have to choose between what’s right and what’s popular".

Australia has been blessed with a series of excellent Treasurers on both sides of politics for many years. Striking the continuing balance to achieve a stable economy allows each of us as individuals to strive to achieve our economic potential.

Let me know what you think

Mark S