Morrison scatters the China roaches. Now what?

Via Paul Kelly:

The new law will give the Foreign Minister discretion similar to that enjoyed by the Treasurer on foreign investment decisions. In relation to agreements between Australian states and other governments, Foreign Minister approval will be required at two points — before negotiations begin and when the agreement is finalised. The minister can veto at either point. In relation to lesser agreements, at state, province, city or university level, notification is required and the minister can veto.

The purpose of this law is designed to change behaviour. The main targets at present seem to be Victoria’s BRI and Confucius Institutes. The government has identified, so far, about 135 agreements that will be assessed. Don’t expect vetoes en masse. That’s not the purpose and would be a blunder. There will be a public register established listing all agreements. The symbolism may prove to be more important than the substance. The government is still sorting how far to draw the line on university agreements.

…The law has wide support. Former trade minister Robb told the ABC it made “complete sense”. Former defence, foreign affairs and ASIO chief Dennis Richardson said: “In principle I think it’s perfectly reasonable.” He said it was “unwise” for Victoria to sign up to the BRI and give China “a propaganda win”. Raby, a strong advocate of China trade, said: “If the commonwealth feels it needs this legislation for greater clarity, then so be it.” Labor can be expected to support the law.

…For universities, the risks are obvious — that the Morrison government is adding yet another layer of regulation likely to inhibit genuine Australia-China research collaboration. Not all university agreements will be caught up in the new net but those closely related to Chinese government interests will fall under the new law. The cultural gulf between the Morrison government and the university sector is only deepening — the lack of trust within the cabinet for university leaders has become a national liability.

Richardson said universities were seen by the intelligence community as a “point of vulnerability” that “needs to be closed” but that Australia must beware the idea that any agreed research with China was bad. He said that would be a “foolish” conclusion.

It would be impolite to single out wildly-pivoting China apologists. The China fire was out at the AFR as well on the weekend (though there are embers today). A squeak from ABC soft-touch, Laura Tingle, is all we got:

Payne and Morrison’s views at the time reflect the difference between day-to-day diplomacy and politics, as much as they do questions about when exactly an agreement by a state government becomes a matter of international relations.

This is not day-to-day politics. Political normatives are a powerful thing. They govern reputation and access. Which is why the China apologists are…err…swapping guernseys. Grab a green and gold one yourself, Laura.

That said, Tingle does make a very good point about timing.

It is by now abundantly clear that the CCP strategy on Australia is to respond with increasing economic force. You can see why from Sauron’s Xi’s point of view. If pissant Australia can push around the CCP then anybody can. That’s untenable for the dictator. His power is much better served by the example of a burning post-China failure than by joyful post-China hobbits frolicking Downunder.

That means we will see fewer Chinese students and tourists in due course. Local acquisitions by Chinese firms are over. Any and every commodity trade will be pressured wherever it is possible – coal, softs, LNG, eventually iron ore – they already are.

In short, Australia’s great China era just ended and it will be all downhill from here.

Which brings us back to the timing of the pivot. Is Scotty from Marketing ready for this? If he were, then he would be busy creating a very different economic plan than the one he has, which might be summarised as:

  • open all domestic borders to spread COVID-19 across Australia so he can reopen the national border;
  • flood the joint with foreign students and temporary foreign workers to reboot mass immigration, and
  • force up house prices.

That plan can be labeled ‘Homicidal Howardism’. For its general outline, let’s turn to a speech by Immigration Minister Alan Tudge on Friday:

Addressing the National Press Club, Mr Tudge said Australia’s fast population growth of recent years had largely relied on migration.

It was now “effectively down to zero” and Mr Tudge said it would take some time to get back towards normal.

Once migration processing services got back to normal, the government would focus on those people who could make a substantial economic boost.

“It’s going to take some time before we’re anywhere near back to where the [net overseas migration] figures were,” he said.

“When that happens, we’re going to want to prioritise those people who will be job-making migrants who will come here to help create jobs for further Australians.”

“Back to normal”. Cripes it was never “normal”. It was out of control on every economic measure. Far above long term averages and astronomically above previous periods of wide output gaps.

The results for that “normal” are in for anybody with eyes. Crushed wages, force-fed house prices and crush-loaded living standards. There is no “job-making migrant” to support mass immigration. There is only a hoard of insecure and unskilled workers banging down the gates.

And that’s before we even consider who will replace the lost Chinese numbers, which were the wealthiest and most “job-making” migrants of the lot.

Tudge said more. There’ll be free and unlimited English-language training for migrants going forward which is great. Plus, as yet undisclosed stricter Australian values considerations (knowing Bradman’s average?), as well as warnings about further pushback against the CCP exploiting the Chinese diaspora with fear (yes, ban WeChat).

So, even as he unleashes the political and strategic pivot from China, Morrison’s only economic plan is to shift backwards into Homicidal Howardism, an untenable foreign student and cheap foreign labour trade while radically boosting the marketing apparatus around it.

Which brings us back to Tingle’s point about timing. Such a “plan” makes Morrison’s China pivot look like it dropped out of thin air. That is not to say that the pivot is not real. It is and it has been a trend with very popular political support. But the Morrison Government clearly has no understanding of the gravity of it beyond it’s belief in the power of marketing to make everything hum.

Consider. If the economic plan to reboot immigration succeeds then the Australian economy is in for a terrible time as Aussie wages and consumption free fall into the post-COVID output gap grand canyon while fiscal policy is run too tight. Property is an open question but may deflate anyway given the extraordinary wages assault and no more rate cuts.

Or, the plan fails, and the Australian economy is in for a terrible time as Aussie wages and consumption crash into the post-COVID output gap grand canyon, fiscal policy turns chaotic, property deflates, but markets take time time to figure it out and the Australian dollar crashes too late.

A measure of just how far short of any kind of China-pivot economic plan is Morrison is what it should actually look like:

  • massive taxation and export tariffs on mining rents shoved into a sovereign wealth fund;
  • RBA and APRA banged together and Phil Lowe replaced by a mercantilist to force all monetary easing into the currency;
  • negative gearing reform to deflate property;
  • any and every productivity reform unleashed;
  • get the universities off the Chinese tit and fund research publically;
  • gut the gas cartel to crash energy prices;
  • a huge push into renewable energy and post-carbon economy;
  • massive tax and regulatory incentives to rebuild the industrial base;
  • huge infrastructure investments to keep the nation employed as we transition.

That is, a competitiveness and nation-building agenda so far outside of the world view of contemporary IPA-driven Coalition trickle-down numbskulls that it is heresy.

Now, some in the Canberra bubble argued on the weekend implicitly (that is, without realising it) that the lack of an economic alternative is a part of the Morrison China strategy. That the Government is happy to push back against CCP violations of sovereignty and wait for the diplomatic and economic largesse to resume. Morrison himself confirmed this at the AFR today:

Australia is dealing with China using a doctrine of “strategic patience and consistency” and will never trade away its sovereignty or security in the face of threats to its economy, Prime Minister Scott Morrison says.

Mr Morrison said it was in Beijing’s interest to recognise its relationship with Australia was “mutually beneficial” because the two-way trade between the countries had “been of great benefit to China”.

“If you’re asking me what’s changed in several years, I would say that our positions haven’t changed, and so it is open to analysis then what has,” he told The Australian Financial Review in an exclusive interview.

Yet, if that is a plan, then it sure ain’t anything much more promising than crossing your fingers under the table. Such a notion relies on the assumption that Xi Jinping can change. In the case of the US, there is evidence that China is in a tactical retreat as Trump turns assertive. But for Australia? Moreover, it leaves all of the economic power in the hands of the CCP to wield as it sees fit. Hardly risk mitigation in the national interest.

If we are going to pivot away from China politically and strategically then we should do so as best we can economically at the same time to share and mitigate the adjustment to keep Australiana intact. This is a political opportunity as well, as much for Labor as it is the Coalition. Australians understand this in their bones even if the political gangs do not:

The Morrison Government has finally scattered the CCP roaches, as it should (we won’t mention the Gladys problem). In all good parental conscience, we couldn’t keep going down the path of absorption into the illiberal Chinese empire under its dictator Xi Jinping. But the Government appears to have absolutely no idea what the alternative economic policy path looks like.

David Llewellyn-Smith
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Comments

  1. The money quote:

    “ a competitiveness and nation-building agenda so far outside of the world view of contemporary IPA-driven Coalition trickle-down numbskulls that it is heresy.”

    What IS done will be the polar opposite of what SHOULD be done. This country is fuc€ed.

    • kierans777MEMBER

      It behooves those with wisdom and capital to protect the latter to later employ the former. There will come a time when the Coalition comes crashing down and enters the political wilderness. However something better has to be there to fill the vacuum and begin the reforms that will consume a generation to unwind the LNP stupidity.

  2. RobotSenseiMEMBER

    “But the Government appears to have absolutely no idea what the alternative economic policy path looks like.”

    lol. I’m having flashbacks to “Great Ders Of History” on Full Frontal.

  3. If the plan is to wait Xi out, then it’s going to be a long wait. As you say, Xi isn’t going to let 25m Australians shift the CCP agenda for world domination. And control of Australia would give the Chinese a massive chip on the poker table.

    Agree on A$ and on mining tax. It’s long overdue. Impose the tax and use it to purchase foreign assets. Stop crush loading the cities and allow property prices to deflate as in Perth. Focus on a round of microeconomic reform to boost productivity and then put the universities back in their box. Outright ban on collaboration on research projects with China and Chinese owned enterprises.

    Start actually governing for Australians not the banks, property spruikers and the oligarchs.

    • They will continue to crash load cities, they can’t even wait for the virus vaccines, they want to be foreign students in under quarantine first. The only thing will change is where those students come from, instead of China many will start coming in from the middle east, the Islamic nations, that is the new source of cheap labor and students. Oh may Oz will be a wonderful place in future.

  4. ashentegraMEMBER

    Spot on DLS. The CCP will cease trading with Australia, IO and met coal excepted. Anyone dependant on those flows better start diversifying right now. I hope the bureaucracy has some ideas. The Morrison government certainly hasn’t, though their instincts have led us correctly to this inflection point.

    • Instinct? BS, the LNP including Morrison were all on board the China train. Politics and opinion polls are what is driving this, ever time the LNP is down they raise security: Tampa, refugees, Muslims etc. Oh, except homegrown RW extremists.

  5. Chinese students weren’t coming back anyway, CCP already advised them not to come.
    Can’t replace with Indians, $$ and the current COVID Numbers suggests they won’t be recovering anytime soon.
    Maybe some Albanians

      • Yeah but can they afford the university fees like those rich Chinese?

        And I don’t use those delivery providers, wouldn’t trust them, but I am a minority of the majority

  6. SnappedUpSavvyMEMBER

    I laughed out loud at- “Former trade minister Robb told the ABC it made “complete sense”.

  7. MB readerMEMBER

    A lot of great proposals there. One more: don’t hold your breath waiting for them to be implemented!

    • Achilles Tskakis

      They current VIC disaster is because of Indian “australians” in hotel quarantine.

      Everyone in VIC is infected with a descendant of an Indian Covid strain.

    • It’s racist not to open the boarders. Just ask Innes Willox (Anus Bollox) the forelock tugger and shoe polish licker for his industry masters. Our bonnie Scottish Anus has put extra glue on his rug to weather these cold economic winds down at the Albert Park Golf club. Cheap labour and mass immigration happens to be the best way to show that you’re not a racist. Funny that. And being an ex-Fairfax spin doctor for Jeff Kennet and Alexander Downer (Bummer) he’s as impartial as a bagpipe player at a haggis tasting convention in Aberdeen.

  8. I can’t think of any country that has ever lost 30% of its export revenue over the time period of a couple of years and not suffered an economic collapse.
    If we back away from China then that’s the magic trick that Scotty needs to pull out of the bag.
    It’s never been done before so there are no proven pathways.
    Where I stumble is in acknowledging that the importance of this action is fully understood by your average Aussie.
    Will Mr and Mrs Investment Property owner understand why their IP student flat must remain empty or rent for a fraction of what it was once worth?
    Will Aussie youth accept that their AUD are practically worthless and that their dreams of a post Covid European vacation are unlikely to ever happen?
    Will Aussie Importing businesses accept and absorb Inflation or will they pass it on to the consumer?

    It’s easy to say that we should be tough on China but the follow on consequences will shape policy in a hundred unexpected ways with the primary problem being our ability to finance the desired policy.

    • The great news is that we don’t actually need (need being the key word here), any of the things you list as negatives to ditching our reliance on China. The reliance on China has ruined Australia as a productive economy and the sooner we are done with it the better off Australian society will be.

      • So apparently Australia does not need to finance their plans, I guess China will just ship us all the money we need if we ask nicely.
        Or maybe the US will buy Aussie goods instead of cheering each time China slaps another tariff on Aussie produce.
        Maybe the US will ship us truck loads of dollars (but what will they want in return?)
        The belief that these are things we don’t “need” and that every Aussie will therefore dig in and do their part to drag us back onto the Productive pathway is frankly delusional
        Which markets will we sell our Productive output into?
        What return will this Productive output earn us (will this return be sufficient to finance the equipment we need to make these things). Will a falling dollar leave anyone with the ability to buy the machines they need to become “Productive”?
        Maybe you need to put your thinking cap on before verbalizing such nonsense.

        • All good, but we don’t make plans! We outsourced that to other countries & Multinationals even before the Neoglib thingy….. Ahead of our time 😉

          • Planning, that sounds like a commie thing to do, we don’t want any of that sort of loose talk around here.
            In the end we trying to defeat these Chinese commies not beat them at their own game /sarc

    • On landline the other week they had a story about out barely trade. China has gone to Argentina for their barely (they have basically ever scrap of barely Argentina has) Argentina acknowledged that they now will lose their export market in the ME to Australia.

      • The global market for commodities is definitely fungible, Argentina’s barley goes to China so it can no longer go to the ME we therefore redirect our excess barley to ME. All sounds like a zero sum game however if the ME price (including shipping) is slightly lower then China price then our barley exporters have to survive on a lower margin with possibly greater risk. this is just how commodity markets work.
        Manufactured product markets do not work in exactly the same way although at the commodity widget end of the market they do function in a similar way. The more you move up the manufacturing food chain the less fungible the products are because they are often manufactured (or certified to meet) a particular countries standards.

  9. The problem is that the idiots running the ponzi scheme here needed a marketing man to continue to sell it, not someone with actual brains who could see it for what it was.

    • Seeing it for what it is and actually taking action based on what you see are two entirely differnt things.
      I know we all think that SFM is as thick as two short planks, but surely even he can see it for what it is, just purposely not admit it or act on it!!!

  10. TailorTrashMEMBER

    Uncle Xi really needs to go for strayas jugular
    and stop the buying of our children’s homes
    ….white flags will be flying all over the place in short order .

    • Maybe red and white flags with ‘FOR SALE’ signs, with commentary outlining that this is a ‘fire sale’!

  11. Jumping jack flash

    “we’re going to want to prioritise those people who will be job-making migrants who will come here to help create jobs for further Australians”

    I think he meant to say “future Australians” as in potential migrants that haven’t arrived yet.

    Nice, so Australians can’t make jobs for Australians any more, we need migrants to make jobs for Australians now?
    Well that would be great if it were really true, but we all know what actually happens; the migrants make jobs for other migrants, and steal their wages.

    Besides, you also need to take into account the minimum wage level that is required to be paid to a debt-soaked Australian in order for them to be able to service their gargantuan debt pile, and/or acquire the necessary amounts of debt. But would even these so-called migrant “job creator” experts be able to offer that much in wages? Not on your life. They’re looking to steal wages. Not pay them.

  12. Now what? They’ll just wait in the shadows to see if he’ll actually use the roach bomb to get rid of the infestation or just wave it around ineffectually. Many will still persistently agitate for special privileges because a roach is gonna roach.

    What’s left of Australiana has some cold turkey to get through come what may, but she just might be more willing if the Prime Marketer is really up to it?

  13. kierans777MEMBER

    Meanwhile all this noise about China is distracting the public from Shady Sukkar and the branch stackers in the Liberals. Abbott loved a good foreign policy diversion, and seems ScumMo does too.