AT LAST, I thought to myself as I read
the front page of Saturday's The
Advertiser, people are starting to
invest again in South Australia.
A special investigation revealed that a
Qatari company has spent $500 million
buying 250,000 ha of land in eleven
regions of the state.
The Advertiser published the story under
the headline "Foreign Land Grab" with a
lesser headline proclaiming "Middle East
targets our farms".
Well, that's all a bit tendentious. A
Qatari company is not "grabbing" land,
it's buying it. Grabbing suggests they
are just marching in and stealing it.
And the words Middle East conjure up
images of Sunnis blowing up Shia mosques
and Israeli helicopter gunships hunting
down Palestinian rockets.
Sure, Qatar is in the Middle East, but
it's a long way from most of that
action. And although there is undeniably
violence in the Middle East, most Arabs
are as peace-loving as you and me.
Let's try to think about what's going on
with a cool head.
One of the first equations you learn in
economics is "savings equals
investment". As well, savings are always
looking for somewhere to invest. In our
country, we don't save much. Our
instinct is not only to spend what we
earn but to borrow as well so we can
have every consumer good we dream of,
now.
That means we import capital from places
that have high savings. In some parts of
the world, thrift is seen as virtuous.
East Asia is a case in point. In others,
their export income is so large, the
country accumulates a massive pool of
savings. In both cases, those countries
have savings they can lend to or invest
in savings-poor countries - like
Australia.
China, Japan, South Korea and Singapore
are all big savers. So are the oil and
gas-rich states of the Persian Gulf,
like Qatar. In the case of Qatar, they
have sold huge quantities of
hydrocarbons to an energy-hungry world.
So, when it comes to investing in South
Australia, the money has to come from
somewhere. And we need investment. It's
pretty obvious there will be no jobs or
economic growth without a steady flow of
new investment.
Now don't think there is a way around
being dependent on the savings of
foreigners.
If the Government invests, these days it
borrows. It sells bonds. And plenty of
them are bought by foreigners. If you
knew who owned South Australian State
Government debt, you might be surprised.
Our State Government borrows from the
Chinese, of course, but it's hard to
believe Qatar isn't buying some of our
bonds.
As for private sector investment, locals
could, of course borrow - and they do.
And, you've guessed it right, they
borrow the savings of savers from banks.
Sure, some of those savings are the
gross savings of Australians but plenty
of bank capital comes from overseas -
including Qatar.
If we want direct investment, then we
have to accept that a lot of it will
come from abroad. That's where the
savings are. Originally, modern
Australia developed using the savings of
the Brits.
Then it was the Americans, then the
Japanese. These days, we draw heavily on
the savings of the Chinese and the oil-
rich Gulf states - like Qatar.
South Australia desperately needs a
lift. Its economy has stagnated for some
time.
We need to get more investment into the
resources sector. The Chinese are
putting money into iron ore, uranium and
other minerals.
We need investment in new property
developments. The Asians in particular
are investing in property in Adelaide.
We need investment in the wine industry.
The French, as well as Asians, are
investing there. And, yes, we need
investment in agriculture. Some of our
farms have been bought by the Qataris.
When a farm is bought by a Qatari
company, it's bought from someone; a
South Australian.
That person receives money from Qatar.
They can then invest that in other
activities - or use it to finance their
retirement. In other words, the Qatari
money is savings poured into our
community, which we would not otherwise
have obtained.
Then there's the farm itself. Presumably
the Qatari company wants to get a return
on its investment. If they didn't, they
wouldn't invest here. That's obvious.
Typically, they would employ local
managers to run the property.
That's more jobs for us. Then they may
invest further in the farm to make it
more efficient. That's less certain. If
the farm was already efficient, it
mightn't be necessary. But believe me,
not all farms are efficient. Plenty are
undercapitalised. So the injection of
new capital could make the farm more
productive. That's good for everyone,
including consumers.
Now some people think that foreigners
shouldn't own land here. It's okay for
them to own mines, factories and urban
buildings but not land. Well there are a
couple of pretty obvious points about
that. First, foreigners can't take the
farms away. They can't load the whole
farm on to a ship and whisk it off to
Qatar.
Secondly, as owners of farms they have
to obey our laws, pay our wage rates and
pay taxes to the State and Federal
governments. Now plenty of politicians
will tell you that all we need is a
lower threshold for Foreign Investment
Review Board approval and a register of
foreign land holdings that is made
public.
Let's call a spade a spade.
This is code to get you to believe they
are pretty much against these foreign
acquisitions. After all, the FIRB is
hardly likely to knock back about $5
million investment in a farm near
Bordertown. As for the register, well
you could look at it if you wanted, but
so what?
No, the truth is, many Australians are
just opposed to foreigners investing in
land.
If that's the message we want to send to
the world, then we will end up a poor,
isolated, sad place. We need to
encourage investment in SA, not send
investors to Latin America and Africa.
the front page of Saturday's The
Advertiser, people are starting to
invest again in South Australia.
A special investigation revealed that a
Qatari company has spent $500 million
buying 250,000 ha of land in eleven
regions of the state.
The Advertiser published the story under
the headline "Foreign Land Grab" with a
lesser headline proclaiming "Middle East
targets our farms".
Well, that's all a bit tendentious. A
Qatari company is not "grabbing" land,
it's buying it. Grabbing suggests they
are just marching in and stealing it.
And the words Middle East conjure up
images of Sunnis blowing up Shia mosques
and Israeli helicopter gunships hunting
down Palestinian rockets.
Sure, Qatar is in the Middle East, but
it's a long way from most of that
action. And although there is undeniably
violence in the Middle East, most Arabs
are as peace-loving as you and me.
Let's try to think about what's going on
with a cool head.
One of the first equations you learn in
economics is "savings equals
investment". As well, savings are always
looking for somewhere to invest. In our
country, we don't save much. Our
instinct is not only to spend what we
earn but to borrow as well so we can
have every consumer good we dream of,
now.
That means we import capital from places
that have high savings. In some parts of
the world, thrift is seen as virtuous.
East Asia is a case in point. In others,
their export income is so large, the
country accumulates a massive pool of
savings. In both cases, those countries
have savings they can lend to or invest
in savings-poor countries - like
Australia.
China, Japan, South Korea and Singapore
are all big savers. So are the oil and
gas-rich states of the Persian Gulf,
like Qatar. In the case of Qatar, they
have sold huge quantities of
hydrocarbons to an energy-hungry world.
So, when it comes to investing in South
Australia, the money has to come from
somewhere. And we need investment. It's
pretty obvious there will be no jobs or
economic growth without a steady flow of
new investment.
Now don't think there is a way around
being dependent on the savings of
foreigners.
If the Government invests, these days it
borrows. It sells bonds. And plenty of
them are bought by foreigners. If you
knew who owned South Australian State
Government debt, you might be surprised.
Our State Government borrows from the
Chinese, of course, but it's hard to
believe Qatar isn't buying some of our
bonds.
As for private sector investment, locals
could, of course borrow - and they do.
And, you've guessed it right, they
borrow the savings of savers from banks.
Sure, some of those savings are the
gross savings of Australians but plenty
of bank capital comes from overseas -
including Qatar.
If we want direct investment, then we
have to accept that a lot of it will
come from abroad. That's where the
savings are. Originally, modern
Australia developed using the savings of
the Brits.
Then it was the Americans, then the
Japanese. These days, we draw heavily on
the savings of the Chinese and the oil-
rich Gulf states - like Qatar.
South Australia desperately needs a
lift. Its economy has stagnated for some
time.
We need to get more investment into the
resources sector. The Chinese are
putting money into iron ore, uranium and
other minerals.
We need investment in new property
developments. The Asians in particular
are investing in property in Adelaide.
We need investment in the wine industry.
The French, as well as Asians, are
investing there. And, yes, we need
investment in agriculture. Some of our
farms have been bought by the Qataris.
When a farm is bought by a Qatari
company, it's bought from someone; a
South Australian.
That person receives money from Qatar.
They can then invest that in other
activities - or use it to finance their
retirement. In other words, the Qatari
money is savings poured into our
community, which we would not otherwise
have obtained.
Then there's the farm itself. Presumably
the Qatari company wants to get a return
on its investment. If they didn't, they
wouldn't invest here. That's obvious.
Typically, they would employ local
managers to run the property.
That's more jobs for us. Then they may
invest further in the farm to make it
more efficient. That's less certain. If
the farm was already efficient, it
mightn't be necessary. But believe me,
not all farms are efficient. Plenty are
undercapitalised. So the injection of
new capital could make the farm more
productive. That's good for everyone,
including consumers.
Now some people think that foreigners
shouldn't own land here. It's okay for
them to own mines, factories and urban
buildings but not land. Well there are a
couple of pretty obvious points about
that. First, foreigners can't take the
farms away. They can't load the whole
farm on to a ship and whisk it off to
Qatar.
Secondly, as owners of farms they have
to obey our laws, pay our wage rates and
pay taxes to the State and Federal
governments. Now plenty of politicians
will tell you that all we need is a
lower threshold for Foreign Investment
Review Board approval and a register of
foreign land holdings that is made
public.
Let's call a spade a spade.
This is code to get you to believe they
are pretty much against these foreign
acquisitions. After all, the FIRB is
hardly likely to knock back about $5
million investment in a farm near
Bordertown. As for the register, well
you could look at it if you wanted, but
so what?
No, the truth is, many Australians are
just opposed to foreigners investing in
land.
If that's the message we want to send to
the world, then we will end up a poor,
isolated, sad place. We need to
encourage investment in SA, not send
investors to Latin America and Africa.
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