Anne Garnett

In his 2013 election campaign, Tony Abbott promised his government would build a world-class “five pillar economy”, encompassing manufacturing, agriculture, services, education and mining. Two years later, as his government prepares its second federal budget, just how are these sectors faring? The prices of exported goods over the past year have stabilised or fallen, particularly for iron ore, oil and coal. Australia’s mining sector is also moving from the construction phase (which creates considerable employment) to the operation phase (which requires up to 10 times fewer workers). So it’s a good time to have a look at the mining sector in a more historic context and examine the outlook for the future. Australia’s mining sector has been hailed as a saviour to the economy, protecting it from the effects of the severe economic downturns experienced in the USA, Europe and other countries during and after the global financial crisis of 2007-08. There is no doubt that the minerals and energy boom of the 2000s was responsible for much of the growth in commodity export earnings. It also protected economic growth rates and, to some extent, jobs during this time. The mining boom was in large part due to the significant increase in demand for raw materials and energy by China and India during their very rapid economic growth over the past decade.

Farm debt in Australia has increased by almost 75% over the past decade, from A$40.3 billion in 2004 to an estimated A$70 billion in 2014. Barnaby Joyce, the Federal Minister for Agriculture, has argued the government should take on $7 billion of the riskiest proportion of this debt. The suggestion by Joyce is that a government Rural Reconstruction and Development Bank be established to buy up bad loans, making the government joint owner of some farm businesses until the loans are repaid. The federal budget is in deficit by A$47 billion dollars, total net debt is approaching A$200 billion and interest repayments will soon exceed A$10 billion per year. It will be a hard sell to convince the government to take on $7 billion of risky debt, and Treasurer Joe Hockey has already poured cold water on the idea, arguing “there are swings and roundabouts in agriculture all the time”.

Why do we clamour to keep foreign-owned car makers here, paying them billions of dollars to stay, while being wary of foreign investment in farms? Around 0.1% of foreign investment last year was in agriculture, with mining receiving 30%, manufacturing close to 19% and the rest in various service industries. We know that foreign investment creates jobs and brings new technology and production methods. We don’t want the mining boom to suddenly stop and neither do we want foreign investors to pull out of our struggling manufacturing sector. There is no reason why we should wish anything less for our agricultural sector. Recent interest in buying farmland has come from Chinese and Indonesian companies, whereas in the past, overseas investment in farmland has been mainly from US and British companies, which are still by far the main players in foreign-owned farmland in Australia.