There are moments when Briefcase struggles to understand the modern world. Perhaps because it has become a grumpy old man (or always was, according to Mrs Briefcase), or perhaps because some really silly issues are dominating local news.
Two of the silliest are the debate over buying local fruit and vegetables, and the argument over whether workers should be allowed to cash in a portion of the their annual leave.
Briefcase feels free to comment on these because, though they have a political core, they also touch on business and more specifically they touch on the question of free trade and freedom of workers’ rights.
With the fruit and vegetables debate it seems that there are two central themes. The first is why we should buy local and support local farmers. The second is that we should be told where our fruit and vegies come from.
Both arguments sound logical. Local farmers deserve our support and it would be nice to know where the products we eat come from.
But the whole question goes totally off the rails when some people start arguing that shoppers should boycott foreign goods in favour of the home-grown stuff. It is this call which causes Briefcase to wonder whether we really have entered the 21st century, and whether the people saying such things understand how this country survives.
Consider first the simplistic nature of the ‘locals first’ argument because, whichever way you look at it, a potato is a potato whether it is carrying an Australian or a foreign passport. But, cutting through the question of origin is the question of trade, and the fact Australia is a truly modest importer of food – and a major exporter.
Consider for a nano-second (because that’s all it takes) what would happen if Australia’s trading partners suddenly decided that they would only buy local wheat, beef, dairy, fruit and vegies.
Get the picture. Apparently it’s okay in the minds of some people to criticise the importing of foreign food, while expecting people in Singapore, Egypt, the US and Japan to go on eating the food they import from us.
Believe Briefcase, a ‘locals only’ campaign will do Australian farmers a lot more harm than good if our trading partners react with a similar ban.
The issue, when everything else is stripped away, is cost, and understanding the effects of free trade. Most of what we do in Australia is world class and highly efficient. Some industries are yet to make the transition, and will be hurt until they can match it with the best international producers of goods and services.
The other issue, cashing in leave entitlements, is a similar sort of ‘stop the world I want to get off’ argument which also has a free trade, or freedom to negotiate, core.
As Briefcase understands it, the contentious new laws proposed by the Federal Government contain a clause which will allow workers to swap two weeks of their annual leave for cash.
Unions are opposed to this because they believe it is the right of all workers to have four weeks annual leave. The WA Government also says it is now opposed, despite it being a law introduced by a previous coalition government – and not considered an issue in the first four years of the Gallop administration.
What makes this such an interesting subject is that it represents a classic confrontation of free market theory with good, old-fashioned, socialism and social engineering.
In favour of the cash argument is this simple point; an awful lot of workers would actually prefer an extra $1,500 or $2,000 in the hand rather than two weeks sitting at home arguing with the family, or trying to find the cash to pay for a holiday. Even a week at that one-time workers’ paradise, Rottnest Island, has become prohibitively expensive for the average blue collar man.
Against the cash argument is the belief held by social engineers that we must take our four weeks annual leave, because we are (a) entitled to it and (b) it’s good for us.
Briefcase will not argue with the fact that a holiday is good for the soul but it will argue that every worker is entitled to make up his (or her) own mind about whether to take the four weeks, or two plus cash in the hand.
The argument that bosses will force workers to take the cash is an interesting one because it must surely be the first time that the union movement has campaigned against workers getting more money.
It is this curious position of saying ‘take the holidays and not the money’ that leads Briefcase to the conclusion that this is all about ‘other people’ deciding what’s best for you. It’s a classic case of one size will be made to fit all, whether you like it or not – social engineering at its worst.
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Gina Rinehart’s well-structured deal with Rio Tinto on the Hope Downs iron ore project will ensure that she retains her position as Australia’s richest woman and may, in time, challenge Kerry Packer for the title of Australia’s richest person.
But every good deal has a flipside and in this case the company facing enormous pressure is Fortescue Metals Group (FMG), the vehicle which made Andrew Forrest a half-billionaire for a few days, and has now reduced him to the status of a quarter-billionaire.
Few will shed a tear for Mr Forrest, who appears to be down to his last $225 million, a valuation based solely on his 50 per cent stake in FMG. But they may find the full value of $550 million still being applied to FMG by the stock market a little hard to fathom.
Briefcase reckons that Ms Rinehart’s deal with Rio is very bad news for FMG because it eliminates a potential partner in developing a rail system, and ensures that the iron ore market will get a major new source of supply sooner, rather than later.
Filling market demand is the key to what’s happening rather than worrying about railways, ports and the quality of ore reserves. It is one of those situations where a market window of opportunity is wide open today, but can already be seen to be slowly closing as new mines rush to satisfy demand – and mineral prices begin their inevitable downward cycle.
In other words, FMG has now chalked up the following – upset potential Chinese customers, upset the stock exchange over reserve statements, lost Ms Rinehart as a potential railway partner, and been made to watch other people start new mines to meet demand – and the stock is still valued at $550 million.
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“Grey hair is a sign of age, not of wisdom.” Anon
