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ALTHOUGH Australia is a prosperous country, are we so wealthy that we can spurn investments that would increase our wealth? Some people certainly think so.
America’s economy is about to coming roaring back to life, not because Obama or the Congress are doing anything useful (they aren’t), but because low cost shale gas is transforming the country’s competitiveness.
The US is rapidly becoming a magnet for manufacturing while drastically reducing reliance on imported oil and, coincidentally, reducing carbon dioxide emissions.
Fairly soon now millions of Americans will be back in jobs and paying taxes, reducing pressure on the country’s massive budget deficit and helping to even up the trade imbalance with China.
France is thought to have Europe's largest reserves of shale gas, yet it remains untouched as the government has imposed a ban on fracking.
As a result the country continues to import 93 per cent of its gas, a quarter of it from Russia and Algeria, and its industries remain chronically uncompetitive. Furthermore, the economy will be mired in recession for years to come with a relatively new government that does not understand the need for balance between expenditure and revenue.
Australia is currently somewhere between these two.
While our coal seam gas (CSG) is starting to be exploited, it is far from reaching the transformative scale seen in America. On the other hand, many people are starting to regard it as something like venereal disease – to be kept well away from civilised people.
The NSW government has repeatedly moved the goalposts, while the federal government is not much different from that of France. The outcome is slowing investment, with Metgasco’s withdrawal from NSW the latest indication.
Plenty of people will argue they prefer to be like the French than the Americans, and when it comes to food and wine it is hard to disagree. But a lot more is required to maintain a growing, successful economy than that, as France can confirm.
It is a simple fact that Australia has far more food than it needs for itself. Not that CSG requires much land, but the loss of agricultural land to CSG extraction, whether “prime” or not, would make no difference to our food security, wine security or the competitiveness of our racehorse industry for that matter.
However, taking full advantage of CSG availability would make a huge difference to our energy security as well as greatly strengthening our overall economy.
Like France, we import a high proportion of our fuel and are highly vulnerable to interference to its availability and delivery. While it will soon be irrelevant to the US economy where Islamists are attempting to impose Sharia law or Shiites and Sunnis are fighting each other, it will continue to be important to Australia. And while it ought to be obvious, if there is not enough fuel for tractors there won’t be much food produced.
Unemployment among French men under 25 is now 26.4pc, with overall unemployment at 10.6pc despite tough laws that prevent sackings. Underlying unemployment is much higher. There are plenty of French people who cannot afford to enjoy the benefits of French cuisine and wine and live a life best described as genteel poverty. Eight million are said to be living in relative poverty, with incomes far below the national average.
If Australia turns up its nose at investments that increase our wealth, that’s the fate that awaits many of us too.
David Leyonhjelm has been an agribusiness consultant for 25 years. He may be contacted at email@example.com