Money or Sovereignty? Australia Has Arrived at it’s Moment of Truth

Dear Reader,

Victorian Treasurer Tim Pallas has officially joined the likes of Andrew ‘Twiggy’ Forrest and Kerry Stokes on Team Australia.

Like Forrest and Stokes, Pallas knows where his bread is buttered…in China.

What did Pallas do to get on the team?

He criticised the Federal Government’s handling of calling for an investigation of the origins of the pandemic. While there is a need to investigate, he says, there is no need to single out China. The tariff slapped on barley exports, then, is Australia’s fault, not China’s.

That earns Pallas a walk-up start on the team. No trial required.

So despite the virus originating in China, and being allowed to escape on international flights while the rest of the Chinese economy was in lockdown, Australia is at fault here?

OK…

Now for some context.

You see, our glorious and progressive Victorian state leaders are mates with China’s communist and authoritarian regime. They have been for years. As The Australian reports:

The Pallas intervention is the latest chapter in a long and close relationship between Mr Andrews and China, which blossomed in 2013 when he was opposition leader and conducted an official visit to Beijing.

Since coming to office in Nov­ember 2014, Mr Andrews has visit­ed China six times. In his last official visit in October last year, he signed the “framework agreement” locking Victoria into inking the deal by mid-2020.’

The deal?

That’s the One Belt, One Road deal between Victoria and China. Given Victoria is nowhere near the Silk Road route, what’s it all about? Here’s how abc.net.au explained it in an article last year:

It’s technically a non-legally binding agreement for Victoria to be involved in the Belt and Road project; the Silk Road for the 21st century that includes new ports, highways and railways across the globe.

It is essentially a commitment by Victoria to work together with Beijing on future projects for the benefit of both parties.

Mr Andrews will co-chair a group that will meet half yearly.

A big part is for Victorian infrastructure experts to get access to the hundreds of billions of dollars of projects slated for the Belt and Road.

But it also encourages Chinese infrastructure firms to establish a presence in Victoria and to bid for major projects.

Two Chinese firms are part of bids for the $16 billion North-East Link.

Let me get this straight…

Victorian infrastructure experts get access to Chinese money, and Chinese firms get to bid on our infrastructure projects and get that money back in revenue?

Sounds fair.

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China will continue to take advantage of us

What does Victoria get out of it?

Well, hopefully some decent new infrastructure, which as my colleagues over at Cycles, Trends & Forecasts point out, will go straight into surrounding land values. (If you’re an investigative journalist, have a very close look at the property holdings of Victorian state politicians.)

As an aside, the Cycle Trends & Forecasts team believe the massive amount of infrastructure spending planned will go a long way towards pushing land values into a cycle peak around 2026. We’re in a mid-cycle slowdown now, which means now is the time to look for opportunities.

Apart from giving business to Chinese banks and infrastructure companies, what else is ‘in it’ for Victoria? Again, from abc.net.au:

Foreign policy doesn’t usually fall under the jurisdiction of state governments, but essentially it will mean a bigger market to sell wine, beef and lamb, as well as an opportunity for Victorian institutions to teach future Chinese doctors.

International education is already the state’s biggest export.

Voicing public support for a major Chinese foreign policy initiative is likely to ease the way for Chinese companies to get approval from Beijing to make investments in Victoria, and for Victorian-based companies to sell to China.

For example, the partial granting in April of a licence for Bellamy’s infant formula to sell Chinese-labelled product after years of delay came just days before a visit by Mr Andrews to Beijing for a Belt and Road forum.

This bigger market to sell our stuff into is now under threat. China just slapped a tariff on barley, which is Victoria’s second largest agricultural market after wheat. It’s threatened to boycott a whole range of other industries too.

And I’m not sure how directing our educational resources towards teaching ’future Chinese doctors’ is good for us either. Education is an investment in the future productivity of a nation, not a ‘business’ for the state to be involved in.

Turning higher education into an export sector is a long-term disaster for genuine education outcomes.

Finally, the article fails to point out that China’s authorities pulled the pin on Bellamy’s regulatory approvals in August 2019, tanking the share price. Soon after, Chinese dairy group, Mengniu, which is part owned by the Chinese government, made a takeover bid.

What a partner!

As long as China continues to deal with sell outs like the Victorian state government, they’ll continue to take advantage of us.

You can sign all the deals and have all the handshakes you want, but if you think these communist dictators play by the rules, you’re an idiot.

Peter Hartcher (hardly a hawk on these matters) summed it up well in a recent article for the left-leaning Sydney Morning Herald:

Australia has arrived at its moment of truth. It is now presented with the explicit choice between sovereignty and money.’

Indeed…

Regards,


Signature
Greg Canavan,
Editor, The Rum Rebellion

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Greg Canavan approaches the investment world with an ‘ignorance is bliss’ philosophy. In a world where all the information is just a click away at all times, Greg believes we ingest too much of it. As a result, we forget how to think for ourselves, and let other people’s thoughts cloud our own.

Or worse, we only seek out the voices who are confirming our biases and narrowminded views of the truth. Either situation is not ideal. With regards to investing, this makes us follow the masses rather than our own gut instincts.

At The Rum Rebellion, fake news and unethical political persuasion are not in the least bit tolerated. It denounces the heavy amount of government influence which the public accommodates.

Greg will help The Rum Rebellion readers block out all the nonsense and encourage personal responsibility…both in the financial and political world.


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