It has now been almost three years since Prime Minister Scott Morrison mobilized for the construction of infrastructure in China, the Belt and Road Initiative (BRI) with $ 3 billion in various funding to create an Australian alternative mainly in The pacific.
So, it was notable to see that when the Council of the European Union entered this territory on Monday, there was no mention of Australia.
The “Declaration “A Globally Connected Europe” follows up on Group of Seven summit Rebuilding a better world response to the BIS and describes cooperation with Japan, India, ASEAN Group and the United States.
But the EU’s promised “geostrategic approach to connectivity” does not shed more light on money or practical alternatives than the G7 communiquÃ©, which only raises the question of how Australia’s own BRIs are maturing.
Australia’s Pacific Infrastructure Fund could be under pressure to step up abroad near Australia just as banks and some construction companies have pulled out in recent years.
The Pacific Step-up involved $ 500 million in grants, $ 1.5 billion in non-concessional loans, an additional $ 1 billion in callable capital for the former Export Finance Insurance Corporation (EFIC), and additional infrastructure cooperation with the United States and Japan. But hearings last month on the Senate budget estimates found that so far only $ 5.3 million of the Australian Pacific Infrastructure Fund (AIFFP) grant had been disbursed for the planning of five projects.
And although 14 projects were approved, none of the loan funds were drawn. At the Blue Dot Network – a US-led infrastructure standards cooperation initiative with Australia and Japan – Australia spent just $ 200,000 on a scoping study of a project cable to Palau.
It is therefore perhaps not surprising that Minister of Commerce Dan Tehan announced unexpectedly Three weeks ago, Export Finance Australia (renamed EFIC) would gain the power to make equity investments in addition to loans and other export support. Tehan said:
The equity power would allow EFA to better support overseas infrastructure development and Australian export-related companies in areas of economic importance.
It sounds like a stolen version of the development finance institutions that some other countries use to launch strategic value business ventures in developing countries and that some Australian aid experts have already supported.
EFA has become the advertised little hobbyhorse of economic diplomacy with the responsibility of implementing a $ 3 billion defense export support program and funding exploration for critical minerals in addition to the Pacific Step-up role and normal trade credit responsibilities. For example, exposure to its national interest account – which contains the most strategic loans like last year’s $ 440 million emergency budget loan to PNG – grew from $ 610 million in 2018 to $ 992 million in 2020.
But it’s worth noting that in the midst of all the talk about strengthening China, the $ 1.8 billion trade account exposure in 2020 was actually lower than the $ 2 billion exposure in 2018. when the Pacific Step-up was announced.
The mandate of the FTA extends beyond the Pacific. But with the slow pace of the AFIFP, it could be under pressure to step up abroad near Australia just as banks and some construction companies have pulled out in recent years.
Although Australia’s population declined for the first time in a century last year, only 9% of those polled last Lowy Institute survey thought it was something to be worried about.
But the closing of the borders has nonetheless triggered a series of divides in the management of immigration, raising questions about the demographic approach of âBig Australiaâ often favored by economic and security decision-makers.
Much of this debate was sparked by the release of the five-year report Intergenerational relationship which implicitly but quietly assumes a growing dependence on temporary migrants to make its 40-year economic growth, welfare and budget forecasts politically acceptable to the government of the day.
But swirling around this, we also saw:
- Reserve Bank of Australia Governor Phillip Lowe has signaled that he is questioning the ‘Big Australia’ consensus by pointing out in a speech that low-skilled immigrant workers reduce the training and wages of resident workers.
- Education Minister Alan Tudge halted the endless growth of overseas students in Australia by telling universities to focus more on offshore options using both online education and overseas campuses .
- Agriculture Minister David Littleproud secured a new visa category for low-skilled temporary agricultural workers from Southeast Asia, perhaps at the expense of the more established and strategic agenda to employ workers from the Pacific Islands.
- A Grattan institute study demand the abolition of the investment visa for companies in favor of hiring more highly skilled workers, as âmillionaireâ investors are generally older, less involved in the economy and have poor English skills.
- Lobbyist and former Coalition government member David Alexander call to the end the erosion of Australia’s âfirst world wage modelâ due to the overuse of imported workers.
It is too early to judge how these and other differences between experts and within governments will affect what is an economically and culturally vital aspect of international engagement.
The education of future Asian rulers may once have been Australia’s fourth largest export earner, but it was also a long-term soft power asset if done the right way. And some recent reports ranging from Export Council at Business Council / Asia Society Australia noted how the diverse Australian diaspora community is a valuable asset for trade diversification, which is now a key aspect of the national security strategy.
But the problem is not only a question of absolute numbers, it is also a question of the composition of immigrants. It’s hard to ignore the Grattan study’s argument that:
The closure of the Australian border to migration offers an unprecedented opportunity to take stock of the parameters of migration policy.
Unloading the bucket
Three weeks after the rejection of the Morrison government China’s dumping complaint as “petty,” the protest received implicit support from government advisers on economic reform at the Productivity Commission.
The Productivity Commission has long been a relatively lonely voice highlighting Australia’s massive use of dumping duties on imports into its country, despite being an advocate of free trade abroad.
China complained to the World Trade Organization about Australia’s anti-dumping duties over Chinese exports of railway wheels, stainless steel sinks and wind turbines in latest escalation of trade tensions after Australia’s complaint about China’s wine dumping duties.
The Commission has long been a relatively lonely voice highlighting Australia’s massive use of dumping duties on imports into its country, despite being an advocate of free trade abroad. It is therefore commendable to see him stick to his guns in his last Trade and Assistance Review despite this time, getting into the middle of a bigger geopolitical power game.
The Commission points out that at the end of last year Australia had put in place anti-dumping measures for 72 products from 22 different countries, the highest number for products from China being 17.
And just to reinforce the point that Australia uses these measures more than most countries, it repeats its previous conclusion:
Australia ostensibly maintained an anti-dumping system simply because it was allowed under WTO rules and the arrangements – at least at the time – made Australia worse off on a national welfare basis.
The next step in this stalemate is the slow pace of the WTO, where Australia unexpectedly lost a similar complaint filed by Indonesia in 2017.
Follow the money
While the new Trade and Assistance Review is not surprisingly consumed by the cost of domestic spending on Covid-19 aid, it also marks the Commission’s first foray into reviewing foreign investment under an expanded government mandate. It contains a long-term analysis that shows how the inflow of foreign direct investment into Australia last year at $ 29 billion was only about half of the ten-year average.
This suggests that beyond the global investment slowdown, Australia’s swift decision in March last year to reduce its screening thresholds for all investments to zero to warn of foreign predators could also. to have contributed to this.
The Commission reiterates its concerns about opaque decision-making on foreign investment. But oddly, it doesn’t build on additional disclosure from the Foreign Investment Review Board’s latest annual report on what happened to investment requests that were specially vetted because of the lower thresholds.
As previously reported, the vast majority of these potentially “predatory” attempts to buy Australian companies devalued by the pandemic have in fact been approved with fewer conditions than those placed on applications normally considered.
But that doesn’t seem to be the liberal tone Treasurer Josh Frydenberg wants to give to foreign investment these days, judging by this recent comment:
I see more and more requests for foreign investment that are pursued not necessarily for commercial purposes but for strategic purposes, and as you know I have said no to requests which in the past may have be approved.