Nats power play a mistake

High costs in getting produce to market at the right time can wipe out any competitive advantage

THE National Party claims to represent the interests of rural and regional Australia. While it has merged with the Liberals in Queensland, elsewhere it exists as a separate party and holds a number of regional seats. The federal Minister for Agriculture in a Coalition government is invariably from the National Party and the party dominates rural issues in both the national and NSW Coalition governments.

According to its website it supports private enterprise and ownership with minimum government interference in industry, commerce, production and distribution. It also claims to support lower taxes, smaller government and individual economic freedom. One of its members in the House of Representatives, George Christensen, recently made a brilliant speech in opposition to the nanny state.

The problem is, as a party it does not practice what it preaches. As a result, it does regional Australia a major disservice.

Karl Marx defined socialism as ‘social ownership of the means of production, distribution and exchange’. He was not referring to some kind of farming collective, but to ownership by the government. Socialism means government ownership.

You might think a party that believes in private enterprise and smaller government would therefore be quite opposed to social ownership. Not the Nationals.

The NSW government has floated the idea of privatising the State-owned electricity grid via a 99 year lease. The initial proposal is to lease 49 per cent of the network, but the rest is expected to go in due course. The objective is to use the funds raised, estimated at up to $15 billion for the first half, to pay for essential infrastructure. In case anyone needs reminding, NSW has a huge budget problem and cannot afford to pay for the massive infrastructure backlog.

Members of the National Party in NSW have been vociferous in opposition to the proposal and, as a result, Essential Energy, the supplier to rural and regional areas, is likely to remain socially owned. The funds raised for infrastructure will be reduced accordingly.

The party claims that privatising Essential Energy will threaten local jobs, reduce infrastructure maintenance and cause an increase in prices. These are emotive rather than fact-based claims, designed to appeal to low information voters. If fewer employees and less maintenance are adequate to provide the service, why should prices rise? And since when has the public service been more efficient at running something than the private sector?

But even if the claims were right, opposing privatisation is a lot more harmful to the people the party purports to represent. Regional areas are in desperate need of infrastructure investment and, given what it is, the private sector is never likely to provide it. The negative consequences are far greater than any disadvantage that might arise (and probably won’t) from private ownership of electricity distribution.

The key to prosperity in most regional areas is a healthy agriculture sector. If farmers are making money, the benefits flow through to the entire community. There is not much the government can (or should) do about commodity prices or the competence of individual farmers, but there is a lot that can be done to reduce external costs and regulation. These can have a massive effect on profitability.

Infrastructure is a glaring example. There are dozens, probably hundreds, of country bridges in such poor condition that trucks cannot use them to transport wheat, wool or livestock to markets. Journeys are therefore longer and the costs of freight higher. The government’s existing program, known as Bridges for the Bush, is severely constrained and barely scratches the surface.

The same goes for country roads. Rural councils struggle to keep many of these passable, let alone in good condition. A shower of rain is all it takes to turn some into quagmires. On others, erosion and corrugations force slow journeys and cause damage to vehicles.

No matter how efficient and competent a farmer is, high costs in getting produce to market at the right time can wipe out any competitive advantage.

There is also the rural rail network. Many grain growers will be seriously inconvenienced by the decision of GrainCorp to close 72 grain depots, many due to inadequate rail infrastructure. The company notes that if the government were to invest in upgrading the rail network, returns to growers could increase by $10 a tonne.

The National Party was vociferous in its opposition to the company’s takeover by American company Archer Daniels Midland earlier this year, notwithstanding ADM’s offer to invest $250 million to upgrade storage terminals and rail facilities. You have to wonder if it consulted any farmers before coming to that position.

If the National Party were to adhere to its own principles, which I share, it would embrace the privatisation of the electricity network with open arms. Indeed, it would apply pressure to the government to ensure it maximised the proceeds. And having done that, it would then use its leverage within the Coalition to ensure that a sizeable share of the proceeds was used to upgrade the infrastructure that holds back the competitiveness of our farmers.

Australia’s economy relies on agriculture and mining, and rural and regional Australia deserves a voice in our parliaments. What it doesn’t need is a voice that promotes social ownership.

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FarmOnline
David Leyonhjelm

David Leyonhjelm

has worked in agribusiness for 30 years and is a Senator for NSW representing the Liberal Democrats.
Date: Newest first | Oldest first

READER COMMENTS

Mug
9/06/2014 6:35:58 AM

David you are like a bull in a china shop. Surely you are not defending the mess that is power generation/ supply/ retail that is Vic / SA ? I can't speak for other States.
Grumpy
9/06/2014 7:16:36 AM

While I agree that the Nats have long abused and forgotten their roots. The assertion that every thing is fixed by the free hand of the market is codswallop. The worst of the declining terms of trade for farming has taken place under the neo-liberal policies of the past three decades. No significant social investment back into regional Australia culminating with the current budget. As to the agglomeration by the multinationals it is toxic and working against humanity with no care for a future. I suggest the writer takes his own advice an gets down off his high horse and talk to farmers.
Bruce Watson
9/06/2014 7:30:21 AM

The fundamental problem here is that, despite the increasing idiocies of governments, we know we have some influence on governments through elections every few years. We have absolutely no influence on private corporations and their - mostly - overseas shareholders. We might not trust either mob much, but we can change governments and bureaucracies.
Whitehall
9/06/2014 9:04:10 AM

Seems that this diatribe contains the argument for the reinstatement of tolls on key bridges and rural roads so the 'market' can fund them. The early settlers would feel right at home - fortunately we've moved on with publicly funded infrastructure.
Inverell
9/06/2014 9:10:03 AM

Not everything is black and white like you suggest David. There are times when Govt ownership of an asset is vital. Only a FOOL would put a monopoly asset in the hands of private business. There can be no competition in the poles and wires business. Selling them can only hurt regional AU. Are you for regional AU David? From this article I would say your not. I can guarantee the money from the sale would be used in the city to buy votes for the next election and wouldn't be spent on regional needs, the Nats are a walk over as you know.
Farmer Jo
9/06/2014 4:18:18 PM

The problem with people like this author is that they live in a wonderful little theoretical world and blissfully and ignorantly assume that the real world is the same.
GFA
11/06/2014 2:30:08 PM

If you are as true to your free market philosophies as you claim David, what do you intend to do about our labour market? There is nothing more highly regulated than it. What is worse is that it is regulated right through to the top. And that means through to your income as a Senator shortly. Unless you speak out now against it and do something in Parliament, you are nothing but hot air! Until then no more lectures on free trade and market driven pricing please.
Dave
11/06/2014 3:39:41 PM

David and Bushie Bill both graduated from the school of shameless hypocrisy with high distinctions, GFA.
Inverell
12/06/2014 6:39:07 AM

Hear hear GFA. Every employed worker in AU is subsidised by business and protected from competing globally. Yet farmers have their protections broken down and removed. Farmers are competing with subsidised commodities every day, most of which aren't produced with the same restrictions and costs lumped on them like we have. How about the employed workers getting paid what the open market will offer just like our commodities? They won't but business will move to competitive labour overseas in droves because those workers compete globally AU workers don't.
GFA
13/06/2014 11:41:15 AM

Dave, I am prepared to give David Leyonhjelm more rope; but bushie bill is a waste of oxygen. Maybe he tried to rip off a farmer somewhere in his past and got caught out. Now he spends all his time on childish revenge and hence lacks any rationality..
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Agribuzz with David LeyonhjelmCommentary, news and analysis with agribusiness consultant David Leyonhjelm. Email David at reclaimfreedom@gmail.com

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