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The one minister who has a vision for Australia

Amid the chaos in Canberra, one politician has big ideas on growth. At the same time, a corporate titan says there's opportunity to turn our gas crisis into a new era of development. Infrastructure spending is crucial to both plans.
By · 19 Aug 2014
By ·
19 Aug 2014
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As Australia swims in the sea of negativity and Canberra chaos, at the ADC Hayman Leadership Retreat suddenly it became clear how we could open up a new era of Australian prosperity and actively employ the next generation.  

Vision is scarce from both sides of parliament but Trade Minister Andrew Robb explained how he and his colleagues are planning a totally different set of strategies that will promote growth rates equal or better than those achieved in the mining investment boom. 

And after years of warning of a looming gas crisis in eastern Australia (which is now a reality) the chairman and chief executive of Dow Chemical Corporation Andrew Liveris showed how Australia can turn the current crisis into a new era of development that will greatly benefit our major cities as well as the rural community. And all of this can be greatly enhanced by Australia’s unique asset – its self-managed superannuation movement. To capture the vision of the two men we have prepared two videos (one above, the second below) that I recommend you take time to watch and adjust your own strategies accordingly. We have to hope that people such as Prime Minister Tony Abbott can grasp the magnitude of the Robb and Liveris plans and lead the country forward rather than continue to sound like an opposition leader.

And if Abbott continues to fail to embrace a vision then Bill Shorten can take up the banner because these ideas cross party lines. 

Like so many of my generation I fear for my grandchildren but now I can see a way forward. Underlining both plans is the need for infrastructure spending in a time of budgetary constraint.

Robb’s foundation premise is that the current level of the middle class population in the countries to our north is about 600 million people but in the next 30 years it will explode to 2.5 to 3 billion and the demands of the Asian and Indian middle classes will totally transform the outlook for Australia. 

For generations Australia dreamed of developing the north and tapping the enormous wealth latent in its water and arable land resources. 

To-date such projects have been uneconomic because the food produced would be high-cost food given the expenditures required to harness the water and the land. There was a very limited market for high-cost quality food so northern development was purely theoretical.

But Robb believes the explosion of the Asian and Indian middle classes will create a demand for higher cost clean food that will make northern Australian development economic. We are looking at the prospect of development on a scale we have never previously dreamed of and Robb explanation the video that he has found excitement in capital markets not just in China and Japan, but Europe and the US. The overseas money is available because the world is looking to invest in politically stable countries and wants to take the advantage of the boom in the middle class of Asia and India. Robb explains the proposed Northern Australian development would go much further than just simply creating rural capacity and that new cities and associated infrastructure would emerge including manufacturing and research development. Northern Australian development has not been on the agenda for more than half a century but if Robb can ignite the fuse in the next year or two it will move to centre stage. But the Asian middle class explosion will also create booms in other Australian areas including tourism. The number of Chinese touring the world is set to explode and currently we have less than 1 per cent of the market so an enormous labor-intensive tourism industry is set to develop. 

Similarly our education and health services have the opportunity to greatly expand. The big weakness of the Abbott government is while it has pronounced a need to be prudent in containing expenditure levels, it did not take the necessary steps towards showing there were rewards at the end of the process. 

That is what Robb did at Hayman. 

Meanwhile there is now a high likelihood that NSW will face a gas shortage in 2016 and will attempt to overcome the shortages by paying top prices for Victorian and Queensland gas and pushing hard to use coal to generate more power to cover the shortfall. Australia’s disastrous energy policies, which are mainly the fault of the previous government, are now there for all to see. But an important part of the current problem is that parts of the community are petrified of the process of fracking that is currently transforming the American energy outlook. Liveris says that central Australia, Victoria and NSW have substantial gas reserves that can be safely extracted but to do this will require extensive community explanations. In addition he believes the people who own the land should be rewarded if gas is extracted from their properties. This would substantially boost the prosperity of rural landholders and, as happening in the US make them supporters of gas development.   

Liveris says development of the gas from these fields will require pipeline investments to bring it to market and a free market for gas should be established, which will promote that development. The pipelines would be ideal infrastructure investments for our self-managed funds that would then involve the wider Australian community in the projects. Of course fracking received a bad name in Australia partly because of the scramble in Queensland that saw bad practices emerge.  But the developments envisaged by Liveris will, of course, increase supply and avoid Australia paying top price for gas and reduce our dependence on coal. Unless quickly addressed the looming shortages will boost gas prices that will cost Sydney some 15,000 jobs and that decimation will spread to Victoria. At the moment Dow is investing in gas processing in countries that are not as politically stable as Australia. Liveris believes Australia must honour its LNG exports but for a great deal of gas in the local market it is uneconomic to turn to LNG due to the high cost. Substantial domestic gas markets could be opened because companies such as Dow would invest in gas processing. 

We all know Australia will benefit from the revenue from the gas and iron ore projects but as I explained yesterday steaming coal will struggle. We desperately need a vision to give the country momentum to make sure our young people can be employed and so we can bring in skills from overseas. At Hayman such a vision was set out. We now have to find out whether the current government or Bill Shorten embrace the task to take Hayman ideas to the next stage. It is clear that the money is available to invest in the required infrastructure either locally or overseas.

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Robert Gottliebsen
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