Misguided protectionism versus strategic investment

Misguided protectionism versus strategic investment

Senators Barnaby Joyce, Scott Ludlum and Nick Xenophon have recently called for strategic Australian assets to be taken off the shelf, for international shoppers.

Given the kerfuffle with China over Oz Minerals recently, the idea is bound to ignite passions in both countries.

“You sell the milk, not the cow” says Xenophon, but power-sound-bytes aside, is the idea even remotely practical?

We live in a world where companies control the rights to mine and sell resources. And those companies are generally listed on the ASX, with loyalties to shareholders irrespective of the country they hail from.

Short of nationalising all Australian assets and mining companies, the reality of the situation is that in a free-market world, minerals – Australian, Brazilian, Russian and South African alike – are for sale to the highest bidder.

Image copyright BHP Billiton

Fortunately Australia isn’t some backwater that needs to protect its resources because it can’t afford to purchase on a world market.

Interestingly, the Senator’s intentions mimic those of the ASX listed companies, in that they’re focused on their own “shareholders”, the people of their electorates. If the politicians keep their “shareholders” happy they get to keep their jobs (minus the executive pay, but that’s another story).

So is there another way of keeping assets “in Australia”, without ending up like Venezuela or Bolivia?

Australians hold over $1 trillion in superannuation funds. And there’s another $66 billion in the Future Fund – one of the largest sovereign wealth funds in the world (the politicians don’t get the executive pay, but they do get their retirement benefits guaranteed while the rest of us have to fend for ourselves. That’s also another story).

Why not bring in a simple piece of legislation that says that those funds must be either wholly or majority invested in Australian assets?

It would strongly advantage Australians without any of the xenophobic, protectionist overtones that Senators Joyce, Ludlum and Xenophon are bringing to the table.

And with more Australian money piling in, the underlying assets are no longer bargain basement opportunities for overseas buyers.

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Tags Senator Nick XenophonminingprotectionismSenator Barnaby JoyceCommodities

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