Ideas@TheCentre brings you ammunition for conversations around the table. 3 short articles from CIS researchers emailed every Friday on the issues of the week.
The issue of foreign investment made an impromptu appearance during the federal election campaign, with Tony Abbott and Kevin Rudd both signalling a more cautious approach.
The new Coalition government has a policy of reducing the monetary threshold for Foreign Investment Review Board (FIRB) scrutiny of foreign acquisitions of agricultural land. However, in the absence of a change in the criteria applied to these acquisitions, the policy will serve only to increase the workload of the FIRB, without changing the already very low rejection rate for such acquisitions.
The government's caution on foreign direct investment (FDI) sits uneasily with its desire to develop Australia's potential as an exporter of food to Asia and to secure a free trade agreement with China. Agriculture is increasingly capital intensive, requiring new investment from abroad. Australia's regulation of FDI has been the chief stumbling block to the successful conclusion of a free trade deal with China.
Australia's caution on foreign investment also stands in sharp contrast to international developments. In July, China restarted negotiations on a comprehensive bilateral investment treaty with the United States. In August, the Chinese cabinet moved to create a new free trade zone (FTZ) centred on Shanghai that will serve as a test case for a much more liberal approach to its regulation of FDI. If successful, the new Shanghai FTZ will become a template for a much broader liberalisation of China's capital account. China is already a net importer of FDI and home to the world's largest stock of FDI outside the US.
Australia's regulation of FDI risks being left behind by these developments.
The Coalition should move to raise the monetary threshold for scrutiny of foreign acquisitions of Australian businesses to an inflation-indexed $1.078 billion, the same level that currently applies to US and New Zealand investors. This would eliminate the costly delays and uncertainties that currently affect the many foreign acquisitions that are too small to raise potential 'national interest' concerns.
The new government should also not trivialise the concept of the 'national interest' that is meant to inform the exercise of the Treasurer's discretion to reject foreign investment under the Foreign Acquisitions and Takeovers Act. The 'national interest' test should not become a thinly-disguised proxy for domestic political concerns.
Instead, the new government should demonstrate political leadership on the issue by actively working to allay community concerns about foreign ownership.
Dr Stephen Kirchner is a Research Fellow at The Centre for Independent Studies.
Epicurus, the great ancient Greek philosopher, had a pragmatic attitude towards his own vocation. One of his aphorisms, the source of which remains uncertain, reads: ‘Vain is the word of a philosopher, by which no mortal suffering is healed.’
The newly elected government seems to have taken some inspiration from Epicurus.
Last week, the Coalition called for a reprioritisation of Australian Research Council (ARC) funding away from what have been labelled ‘ridiculous‘ otherworldly projects on Hegelian idealism and the Heideggerian understanding of self to where it is ‘really needed’ in medical research and the applied sciences.
Academics were quick to fire back, attesting to the value of esoteric research and accusing politicians of being unqualified to pass judgement on the value of intellectual pursuits ‘they don’t understand and don’t care about.’
However, in the rush to rally around their profession, the academics weighing into the debate ignored the most important stakeholder in ARC-funded research: the community-at-large.
The rationale for reprioritising ARC funding is not that theoretical research is useless; it is rather that some highly specialised intellectual pursuits might not offer value for money for taxpayers.
In a democracy, taxpayers’ dollars need to be wisely used in the service of society, and public benefit tests must be a key determinant of how government funds are distributed.
University research should certainly not be held hostage to the personal judgements of politicians, but it behoves government-funded academics to offer a return on investment from the public purse.
To be sure, it would be unrealistic and counterproductive to expect research paid for with taxpayers’ money to always produce immediate and obvious benefits for society.
Research without a clear ‘real-world’ use can yield massive but unforseen dividends: Alan Turing‘s arcane philosophical work on logic, metaphysics and mathematics formed part of the groundwork of modern computer science.
The wider contribution of research is also sometimes diffuse: Rigorous academic output, even in seemingly out of touch disciplines, helps fuel Australia’s colossal $15 billion worth of annual education exports by securing the high international standing of our universities and luring lucrative foreign students.
Taking cheap pot shots at supposedly ‘ridiculous’ ARC projects is ungracious and short-sighted; it does a disservice to the world-class research being done at Australian universities and the contribution it makes to our social and economic life.
Nevertheless, a more broadly epicurean outlook that stressed the importance of healing ‘mortal suffering’ and other earthly concerns would give due regard to Australian taxpayers – the often unacknowledged patrons of ARC research.
Benjamin Herscovitch is a Beijing-based Policy Analyst at The Centre for Independent Studies.