21/11/2012 - 08:06

Political edge to Ord investment decision

21/11/2012 - 08:06

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At last the premier has something to hang his hat on - a $700 million investment in the Ord.

SWEET WIN: Colin Barnett at the announcement of the Ord River irrigation project deal. Photo: Annaliese Frank

At last the premier has something to hang his hat on - a $700 million investment in the Ord.

THE promise of a Chinese-owned company spending $700 million developing a sugar industry as part of the expansion of the Ord River irrigation project is a rare win for Premier Colin Barnett.

While I hesitate to fully endorse such an investment without knowing the details of the company involved and the transaction, there are several strong points to such a deal beyond the fact that Mr Barnett receives a positive boost to his otherwise-hag-gard pet project list.

Firstly, despite being vital to food processing, the sugar industry has struggled elsewhere in Australia and has increasingly fallen into foreign hands. So if we want the industry to survive, it appears that foreign countries seeking food security are the most likely to see the benefit beyond a pure return on capital.

In fact, much the same could be said of the major Chinese investment in other sectors in Western Australia. Their participation as either a substantial backer or full owner is mainly skewed to projects whose viability is questionable.

Secondly, there is a diplomatic element to this. Chinese investors have been put through the wringer with regard to our very hazy foreign investment rules. Allowing them to take on something with a high state government component will make them feel more reassured about investing in Australia. It is a bit ironic, of course, that it is Mr Bamett leading the diplomacy, not Foreign Minister Bob Carr.

Thirdly, this a major win for agricultural development of the Kimberley. For too long the Kimberley has been beholden to the relatively low-value industry of pastoralism because the rales forbad diversity and government dissuaded foreign capital. The Ord deal offers a glimmer of hope that more intensive agriculture could spread beyond Kununurra to help broaden the economy of the region, which is rich in water and fertile soils.

Fourth, the Aboriginal people of the Kimberley and elsewhere have to see the benefits of development. This project, backed by the Miriuwung and Gajerrong people’s investment and development vehicle, MG Corporation, offers them both substantial opportunity and leverage. This is something some other indigenous groups have failed to come to grips with - economic development is a two-way street.

Clearly this last point is most relevant in relation to the issues around James Price Point, where local indigenous people cannot seem to agree that a major project with real jobs, economic opportunity and $1 billion in direct investment in community assets is a good thing.

Then again, the indigenous people from around Broome have former Greens leader Bob Brown doing fly-in, fly-out interference in the issue. Mr Brown cracked me up when, on the ABC’s recent WA version of Q&A, he suggested that the companies involved in the Browse ought to pipe the gas to the Pilbara and give the Broome indigenous people the $1 billion.

The gas is hundreds of kilometres off the coast, and while the Goolarabooloo and the Jabirr Jabirr people of the area have established their rights as traditional landowners, I am pretty sure they were not seafaring people.

Like any owner, a transaction involves give and take. In this case, the deal involves using a small part of their land in return for a direct and indirect investment in their region and community assets. Mr Brown’s alternative is just another version of the welfare strategy that has proved ineffective in the north for decades.

Returning to the Ord deal and Mr Barnett’s relief at getting a big tick on at least one pet project -1 do have concerns. Pet projects and forthcoming elections often lead to political expediency; let’s hope a deal has not been struck simply to give the state government something to crow about before the coming poll and to reduce the opposition’s ammunition for suggesting Mr Barnett can’t make things happen.

Management failure

RESOURCES Minister Martin Ferguson has a unique place in contemporary Australian politics; he is a federal Labor minister who is appreciated by an industry for which he has responsibility.

In town last week, Mr Ferguson took time out of his schedule to officially open the new offices of Mount Gibson Iron.

He is able to speak his mind. He has called the resources sector downturn, much to the chagrin of his peers and many in the industry, and told the industry to get over itself when the mining tax was introduced.

Most recently he has been highlighting the rising cost of doing business in Australia, as increasing blowouts at major resources projects risk denting future investment in the sector.

Mr Ferguson was prepared to spread the blame for this. While he acknowledged the cost of labour, he believes that state governments, especially their royalty increases, and companies, via poor management of projects, ought to wear some of the responsibility.

Of course, sharing blame is a political device.

In reality, a lot of the issues Mr Ferguson raises (but not all) can be sheeted back to the poor conditions for business set by his government through its Fair Work legislation, duplication of environmental regulations and tighter immigration rules.

It should be no surprise that project managers whose recent experience came from the Howard-era WorkChoices IR laws struggle to get staff at reasonable rates to work in remote locations and have been held to ransom by union action even where they pay enormous wages.

The blowout in private sector wages, especially in WA, has put pressure on the state government’s own workforce practices. Ultimately, it has been forced to do more with less in a boom, meaning slow progress through bureaucratic approvals processes has added to the cost of projects and, potentially, put them beyond reach.

It is even worse when these tedious processes, such as environmental approvals, have an unnecessary federal government overlap that doubles the cost and time.

Goodwill hunting

I WAS heartened to see that the University of Western Australia plans to offer new scholarships in honour of the vice-president of Indonesia, the succinctly-named Boediono, a UWA graduate in economics who was awarded an honorary doctorate last year.

Boediono is also a professor of economics at Gadjah Mada University.

The bit I like best is that his original studies were through the Colombo Plan, a broad program of economic development which included students from poorer parts of the region studying at universities in more developed nations.

When I travelled throughout Asia 20 years ago I was struck by the fact that professionals such as doctors advertised that their qualifications were from an Australian university. This gave me great confidence, not just in the brand of education Australia had, but also the rich ties that come when a smart young individual and their family decide to invest in education in a foreign nation.

“If someone asked me what was the greatest influence that this institution has had on me personally, I would say that it was its contribution to the formation of my attitude toward people and toward society,” Boediono said.

“Yes, the basic building blocks of my subsequent view of the world. With my UWA experience, and credentials, new doors of opportunity suddenly opened up for me.”

So much of that incredible goodwill and strong branding for Australian education was undone by the federal government’s mishandling of the visa rules over the past few years. I hope that is back on track so that we can enrich other lives as much as this VIP.

• mark.pownall@wabn.com.au

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