I don’t think Australians fully realise how much growth potential we have in the longer term. On the Great Ocean Road, Victoria, I have seen first-hand the avalanche of Chinese, Indian, Japanese, and other tourists increasing every month.
We are going to need to build a lot of hotels and facilities because all the indications suggest this trend is going to rise sharply.
James Packer at Crown clearly understands this and is planning a new hotel tower in Melbourne. He is, of course, also involved in the extra high-roller facility in Sydney.
Crown has attracted criticism for extending itself and could be vulnerable if there was a temporary Chinese downturn, but there is no doubt that Crown has the longer term tourism trend right, particularly given the lower Australian dollar.
Australia has similar opportunities in education, health and agriculture, including northern development (Andrew Robb: Time to reset the message, August 21).
In agriculture we have many opportunities to harness China’s demand, but dairy is important. We have had the unusual situation where a flood of milk in Europe caused by Russia banning cheese imports has depressed the price and made the Saputo purchase of Warrnambool Butter and Cheese uneconomic in the short term. But Saputo are planning a much longer game.
We have to hope that Murray Goulburn and others will find the money to take advantage of the Chinese opportunity.
We have completely messed up our LNG industry by exporting vast tonnages for prices which, given current oil prices, will be barely profitable given the cost. In some cases there may be losses incurred after depreciation. Worse still, we have exported much of the gas earmarked for the Sydney and Melbourne markets, so we will have to somehow increase the price of gas to attract new production.
Yet amid this gloom there is future growth if we are smart enough and are prepared to use fracking technology and tap the gas in central Australia and now being discovered in the Cooper Basin.
The Middle East is set to become more and more unstable and yet the large chemical companies have invested large sums in this high risk area. Dow Chemical Company chief executive Andrew Liveris wants Australia to free up gas pricing and access to gas, which he believes that will generate a lot of production and therefore encourage large chemical companies to hedge their Middle Eastern plants and erect plants in Australia (Liveris: Australia should be a petrochemical power, August 19).
Of course, no one is going to erect plants in Australia unless they have the management to avoid a construction disaster like Gorgon.
Nevertheless we have an opportunity that has been concealed by the lower oil price. The traditional way that Australia escaped downturns was via higher government spending, which drove consumers to buy goods and services. Governments don’t have the money to do that anymore so we have to use our intelligence to foster industries that will create employment and wealth. If the current government does not work out how to do this, it will certainly be replaced.
For the most part, companies don’t want subsidies. What they want is insulation from industrial relations attacks and freedom from oppressive regulation.