Australia could potentially double the production of the people it feeds directly and indirectly from almost 500 million to nearly a billion people with the resources the country has, according to former Federal Trade and Investment Minister Andrew Robb.
This could be achieved by employing the right technology and development of northern Australia, which consisted of about 17 million hectares of arable country (about the size of Cambodia), and currently supported just one beast to 10 acres (4.04 hectares), he said.
“Sixty per cent of the water that falls in Australia falls in the north. Currently we capture 2pc of it. If we capture 5pc you could irrigate those pockets of arable land right across the north,” Mr Robb told a Weekly Times DecisionAg magazine breakfast meeting in Melbourne in March.
“If we don’t develop it someone else will; that’s the bottom line. Also I think we’ve got a responsibility to develop the resources we have in this country. But it requires capital, political commitment and commitment from business.”
Mr Robb said over the long term there was an opportunity to massively improve productivity with technology.
But, he warned, that even if Australia doubled its production it still couldn’t feed one province in China.
While it was a nonsense to suggest Australia could become the food bowl for the Asia Pacific it could provide for those at the “premium end” with a “gold standard” reputation.
“Forget the mass markets and competing against Brazil and all the others,” he said. “We can only supply the top one per cent whether your talking food or services.
“Two years ago we sold 60,000 tonnes of meat to China. Last year we sold 260,000 tonnes. It went from being our 12th biggest meat market to our third. It’s at the premium end largely. If we get to the premium end we are even more protected from the (economic) ups and downs.”
Mr Robb believed horticulture would be one of the big growth export areas.
Development however required attracting new foreign investment. “We are the 12th biggest economy in the world, the sixth biggest landmass but we’re the 51st largest population,” he said.
Because Australia’s population didn’t support the opportunities that were out there, ongoing foreign investment was needed to develop further.
The history of the country’s development had seen waves of foreign investment like the English Vestey family who established many of the top end cattle stations and abattoirs before selling them back.
Mr Robb said there had been a lot of focus on China, which was the “leading the pack” in trade terms. But other countries like Indonesia offered “phenomenal opportunities” with a middle class which had grown from 4 to 50 million since 2000 and was right “on our doorstep”.
He conceded Indonesia and other regional neighbours were difficult to do business with, had corruption issues and needed to establish rules that investors had confidence with. But they were changing, which they had to if they wanted to attract investment.
The same applied to India, which also needed foreign investment and services. It was the hardest country in the world to do a deal with but Mr Robb remained hopeful of concluding a free trade agreement with them.
The big thing about the China free trade agreement, which was concluded at the end of last year, was not just the food but the services side. “We now have unbelievable access to services that no-one else has got.”
Mr Robb gave as an example Australia’s water management services, irrigation and expertise, which China needed. “I think a lot of the growth from Australia will come out of the services sector.”
With all the free trade agreements (FTAs) Mr Robb had successfully negotiated over the last two years, he said, Australia had secured an early comparative advantage. “We have to use that especially in the services space to get market share and in an established position in those countries,” he said. “That can set up our country in the region for the rest of this century and beyond.”
Mr Robb said Australia still had the fastest growing economy in the developed world. “We’ve just come off the mining boom and we’re transitioning into services and agriculture in a way that is maintaining our growth,” he said.
He predicted the Trans-Pacific Partnership (TPP) Agreement involving 12 Asia Pacific countries, representing 40 per cent of world trade, would be ratified later this year or early next year including the US no matter who the president was or who was in Congress because of the economic benefits.
The same applied to RCEP (Regional Comprehensive Economic Partnership), which involved 16 countries, six of which were also part of the TPP – Australia, Vietnam, India, China, South Korea and Japan.
“You put the two together and you’ve pretty well got an Asia Pacific Economic Zone.” Mr Robb was hopeful of that deal being concluded by 2025.
“It’s not just access, its a common set of rules across the region. it will be an enormous boost to trade and investment across our region and the world,” he said.
Mr Robb forecast a FTA with the EU, one of Australia’s biggest investors, would take another two and a half years to complete. (With Britain’s decision to leave the EU, this deal could become less attractive for Australia because of its reliance on the UK for exports and investment there and to Europe: ed)
The Productivity Council has long questioned the benefits of bi-lateral FTAs, which it argues can lead to trade distortions and overlapping rules between countries. But Mr Robb said bi-lateral agreements were a far more effective starting point before moving to regional ones.
He pointed out there had been 350 bi-lateral regional deals concluded around the world and nothing had happened at a multi lateral level.
“It’s like adding bricks to a wall. This way you slowly transform economies and remove barriers. You don’t do it all in one big hit, which is usually too much for one country to swallow.”
– JOHN CARSON