Bitter Aussies moaning about our FTA with China

Australia is in the grip of a debilitating wind down of their economy after the mining boom popped. I’ve always said that Australia had a two track economy, one in the bush based around minerals and mining and the cities. The two are not as inter-related as many suspected.

The cities have been struggling for some time, while the bush boomed. Then it all came crashing down and the minerals sector caught up with the rest of Australia.

Things are not good for their economy.

Our economy is growing, but the Aussie commentators still attempt to bring us down to their level.

Uppity Kiwis feeling boastful about their dollar approaching parity with the mighty Aussie might do well to stick to rugby for their kicks. Their China-driven boom is coming to an end as quickly as Australia’s. And they have less to fall back on when it does.

Meanwhile, reports of Gina Rinehart going long on dairy farms could prove as reliable a warning as many another billionaire diversifying outside his or her area of expertise.

The New Zealand economy’s resurgence has owed much to China’s demand for milk products and getting in early for a comprehensive free trade agreement with the Middle Kingdom.

Trouble is, China has been busily investing and encouraging others to invest in increased and globally diversified milking. Just as iron ore miners have ramped up production both from existing provinces and new projects from Africa to Mongolia, New Zealand’s farmers are facing increased competition from South America to Russia and all points in between, including Australia.

People have got to eat.

This time last year I was in Uruguay, a country that, in several ways, is the New Zealand of South America. It’s small, agricultural, relatively peaceful (the lowest murder rate of the continent), has a similar population of 3 million or so and a large diaspora, manages to perform disproportionately well in its chosen football code, is socially advanced on several levels (gay marriage, legalised marijuana) and has ridden cows to posterity, courtesy of Chinese demand.

Chinese investment in Uruguay is obvious and remarked on by the locals: Chinese cars on the roads, new buildings sporting Chinese brands. And Uruguay is just one small corner of the global market China has been developing as a source of commodities and consumers. It’s been doing that developing both as a matter of Beijing policy and individual entrepreneur’s search for opportunities.

Is he suggesting that New Zealand and Uruguay ignore dealing with China? So Aussies can feel better about their crap economy.

With iron ore returning to earth, so to speak, it is bemusing to observe some of the hype around agricultural commodities. I have a fear that any minute now, Bob Katter will say something like, “if every Chinese just bought one more pair of woollen socks or a decent steak …”.

The reality is that the rise and rise of China (and other developing nations) of course means greater demand for, and consumption of, “Western” foods. The cooler heads know the laws of supply and demand have not been repealed; increased demand moves the price point, which, in turn, encourages increased supply.

Contrary to some of the more alarmist environmental views, the world is not short of potentially more productive agricultural land, given sufficient incentive and climate change notwithstanding. Australia alone has millions of hectares of the stuff, if we wanted to use it. The US is so oversupplied it can subsidise people to grow food to burn in cars. Africa remains, by and large, some decades, if not a century, behind the times and if just Russia, Ukraine and Argentina ever became efficient, Australian commodity farmers should consider another career.

It’s why those same cooler heads know the stuff about Australia becoming the “food basket of Asia” is nonsense. Some produce should do better than it has. The China free trade agreement means many Top End cattle stations have a future other than bankruptcy or glorified subsistence farming. There is rich potential for the best few per cent of agribusinesses to capitalise on opportunities at the top of the market – the high-quality stuff – but the average farmers won’t because the average farmers already don’t; it’s why they’re average.

Which comes back to the hype around the kiwi dollar’s rise. It doesn’t look like a happy story at all, except for those seizing the opportunity to visits “bros” on our side of the “dutch”.

Oh that makes the commentator so much more credible…mocking our accent. What a dick.

He misses a valuable point as he shills of the iron industry…you can’t eat steel, but hungry mouths do actually have to be fed…and one thing the Chinese have got down pat, more so than any other former communist nation ever achieved and that is the ability to feed their people.

Tourism is more important to the New Zealand economy than it is to ours, and we are their main source of visitors. At $1.05, the New Zealand travel experience is expensive: Noosa kills any kiwi bay of anything, there’s only so much sauvignon blanc you can drink and the only remarkable part of skiing the Remarkables is the appalling dirt road to get there.

Barring the discovery of real hobbits, dragons and treasure, the place needs any currency advantage it can get. New Zealand is facing the same problem Australia has known too well: a dollar that is too strong for its own good and too slow to adjust to weakness in its key commodity export.

And there he shows his bigoted Australian centric view of the world, the same attitude that sees Aussies hated in most of Asia and almost all of the S0uth Pacific….don’t believe me…go do business in the region and wonder no more how many times you get asked and then see a sigh of relief when you say you are a Kiwi and not an Aussie.

 

– SMH

 


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  • peterwn

    Seems Fairfax journos need a bogey person in both countries – Gina Rinehart in Oz and Cam in NZ.

  • FredFrog

    “Uppity Kiwis feeling boastful about their dollar approaching parity with the mighty Aussie”

    They don’t get it. Yes, our dollar is rising…..but theirs is sinking too. There’s nothing “mighty” about the Aussie dollar right now.

    • david

      in fact the NZ dollar : US dollar is not much changed. It is just the aussie that is sinking.

  • Blue Tim

    Not all Aussies are as bigoted. I’ve dealt with a few in the last few years and it’s because they want a slice of the action here. Fairfax is becoming a laughing stock

  • rua kenana

    Yeah. When Key and his lot have finished selling us all off to the Chinese we’ll be so similar to Tibet and won’t life be so wonderful.

    • ProudChiwiSince1990

      If you think Tibet got the short end of the stick now, you might wanna look up what life was like for Tibetans prior to the commies took over

      • rua kenana

        Yeah, that gives us a good guide to how NZ will look after “the commies” take over. Like I said, won’t life be so wonderful?

      • Cadwallader

        You are absolutely right.The wailing about Tibet doesn’t come from the newly rich Tibetans. The country is open for business and proud of it. Another misinterpretation by Russell Norman.

    • Rick H

      Yeah, we could give Wussel one of our flags to compensate for the tibetan one he lost.

      • rua kenana

        Yeah, we do need a few more overseas-sourced thugs to try to suppress legitimate dissent in this country. These protesting rabble do need a lesson in how it’s done elsewhere. I guess we’ll be seeing more of this in the future.

    • Name one thing Key and his lot have sold to the Chinese.
      Just one please.

      • rua kenana

        Without splitting hairs, “Key and his lot” were obviously not the direct selling agents if that’s what you mean. They only had ultimate oversight of and encouragement of sales to overseas, including Chinese (coz they’re the the subject of the thread) buyers.
        To answer your request, for a start, try
        http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=10851202
        http://www.nzherald.co.nz/nz/news/article.cfm?c_id=1&objectid=11243530
        Similar others.
        Even where I live, between Albany and Silverdale, neighboring recent owners on two sides are mainland Chinese residents.
        I highlight that I have no problems with them. Just giving this info in answer to your specific request. My problem is with the actions of and motivation behind what “Key and his lot” are doing.
        By repute, at least some of which holds up under further investigation, a fair bit of the land between Albany and Silverdale has been bought by Chinese buyers, some of whom do appear to be mainland residents.
        You could probably find out similar and a lot more yourself if you wanted to research the matter. Have you done so, or are you not really interested in the answer to your own request, and were perhaps requesting for other reasons?

  • Hedgehog

    We should be looking to stabilize our dollar with Australia. We are to small to go it alone and by joining the Aussie dollar we gain long term stability. At the mo, there is parity, so strike while we can.

    • Platinum Fox

      No thanks. Check out the state of the countries in Europe who have adopted the Euro and suffered because their economies don’t move in sync with that of Germany.
      The past 12 months is a good example of a period when the NZ and Australian economies have been well out of sync.

  • Platinum Fox

    I spent most of my working life explaining to series of Australians that the NZ and Australian economies do not move in lock step. Every time we had achieved a level of understanding those individuals would move on to other roles and we’d have to start again with new people who often had no previous experience in dealing with anything external to Australia.

    A quick look at the currency situation over the past 12 months shows that the NZD is:

    1. slightly down against the TWI, but near the middle of its 12 month range.

    2. down 7% against the USD and near its 12 month low.

    3. near flat against the GBP and near the middle of its 12 month range; and

    4. up 3% on the AUD and near the top of its 12 month range.

    My conclusion, the present strengthening of the NZD against the AUD is more due to AUD weakness than NZD strength.

  • Aucky

    He displays a remarkable ignorance of the tourism industry. NZ always does well from Australia when their dollar weakens because Aussies opt for shorthaul holidays rather than Europe, Asia or the US. The money they save on airfares subsidises their weakened dollar for hotels, rental cars & meals. The Pacific islands and Bali will benefit as well.

    • Platinum Fox

      Can anyone tell me where in Australia there are ski fields that have reliable snow?
      I’m happy that Aussies tend not to travel in great numbers to the more eastern Pacific Islands due to the longer travel times. They are welcome to Bali and the GC.

      • Nic C

        As far as I know, Thredbo is the only ‘real’ ski field they have; think ‘Turoa on a bad day’ and that’s a spectacular one on Thredbo.
        Funny how he tries to encapsulate the entire NZ Skiing industry as consisting of the Remarks and that’s it. What a pee-naas.

      • Odd Ball

        The few Ski fields that are in OZ aren’t that great, also they are roughly twice as expensive to stay at, & tend to be populated by impatient jerks who have driven from either Sydney or Melbourne for the weekend.

  • colin herbertson

    Remember a couple years ago when it was all about us having to catch up to Australia? Was never going to happen, instead what we’re seeing is them taking an overdue reality check.They’ve been taking it all for granted for too long and now the mining bubble has burst,their uncompetitive auto industry has gone belly up.In fact their overrated,over priced economy is looking a bit like ours was 25 years ago.,Worst of all we’re doing better, they HATE being upstaged by little brother, hence belittling atricles like this complete with the obligatory dig at our accent [no sheep jokes though] .While i feel for the plight of the long suffering aussie farmer the problems they’re having was always just a matter of time.

    • Nige.

      Don’t forget how captain k.Rudd spent like a drunkin sailor (by handing 5 grand cash out to every family who had a child under 5) and then mzz “we are going to smash business” gilard tried to out do him in a “spend-off” to appear to be the more generous labor leader.

      • Rick H

        Isn’t that exactly what Alan and Mike did to NZ in the last weeks of their miserable tenure?
        Who with a brain would’ve paid that much for KiwiRail?
        Not Alan and Mike – they had no brain between them.

      • Excitedly awaiting Whodunnit

        As a former sailor i take offense with the comparrison. Drunken sailors stop spending when the money ran out – a concept most politicians dont understand.

        Tongue in cheek that is.

    • Aucky

      Goff was always going on about Kiwis fleeing in their droves to Oz and how we’d never catch up. Labour seems pretty quiet on that front these days. The problem for Aussie is that they’ve never been game to tackle the unions and it’s killing them now. The auto industry, mining, airlines should have been sorted twenty years ago.

      • Cadwallader

        I have a second home in Perth WA. I visit 3 or 4 times per annum. What amazes me are the socialist “gummint knows best” attitudes of apparently successful Aussies. I migrated from OZ many years ago. I shall never live there again due largely to leftie conservatism and taxation.Lucky country? No, not at all.

        • Bluemanning

          Same here, came over in the 70s glad I did.

      • JRyan

        Exactly correct. Sort the unions out and the country will prosper. They are so self serving, never a thought for the hard road of owning a business.

  • TSD

    Ahh, the sweet sweet sounds of Jealousy. Sorry but Noosa is not much to write home about. They do have the Blue Mountains but in NCEA speak that would translate to “they tried but not achieved” as far as anything spectacular is concerned. There is a rock somewhere in the middle of the nationwide desert (GAFA) that’s a couple of hundred feet tall though…

    I must admit, I love the Northern parts, Darwin and the surrounds is fantastic, strangely they’re the bits that Aussie doesn’t seem to like.

  • Tony Norriss

    Don’t mean to sound a smart-arse, but I was predicting several years ago that the China-fueled commodity boom was going to end, and this would hurt Australia. The reason is that China has been building ghost cities:

    eg: https://www.google.co.nz/search?q=china+ghost+cities&rlz=1C1AVSX_enNZ395NZ395&es_sm=93&tbm=isch&tbo=u&source=univ&sa=X&ei=6SWqVKvOAoONmwXe6YHIDQ&ved=0CCQQsAQ&biw=1536&bih=758

    I thought back then that China would eventually get sick of building cities that no-one lives in. When that happened, they would have no need for the volume of commodities they had been using.

    • AF

      I’m seeing conflicting reports the supposed ghost cities are not necessarily ghost cities. I’m not sure who to believe on this….but it is fascinating nonetheless.

      • Cadwallader

        No they are no more “ghost cities” than England’s “new towns” we’re in the 1950s. Unlike AKL the Chinese seem to be impressively addressing a housing shortage in a pragmatic manner. There is nothing ghostly about the need for additional housing.

  • Murray Smith

    Any more iron ore and they’d be cast in shackles and sent to Australia, bye crickey.

  • JKV

    We lived and worked in Australia for several years. They have a real problem and it’s called the unions. I simply could not believe how much they have a finger in the pie with every aspect of Australian life – construction, hospitality you name it. They just don’t get it. Poor old Tony Abbott is trying to bring some competitiveness back into the economy and the people are howling in response. It really is like taking sweets off children. So glad we are back in New Zealand.

  • Cadwallader

    I have a home in Palmy and another in Perth WA. Give me Palmy any day.

  • Whenever I am in a bar being a bore I am an Australian, people seem to accept it.

  • Watcher

    Your comment re the Aussies being hated in the South Pacific is probably a bit harsh.
    But in saying that, just in the last few weeks we have been Up in the islands and punting for further business, a common comment was that hey would rather deal with Kiwis than Aussies.
    We have developed a can do reputation, and more than that we actually deliver on our promises, with great results, at a fair price.
    I have travelled around the pacific and SE Asia in our quest for business and New Zealand has a high trust ratio in general.
    Edit..general comprehension

    • I.M Bach

      Some Australians are even hated in Australia.

      • Watcher

        Hard to argue with that.

  • andrewo

    The difference between minerals, milk & meat: The metals boom was based on capital projects which persist long after their completion, whereas food is consumed.

    • parorchestia

      The other important difference is that dairy farms can always be converted to a more profitable activity if that ever becomes an issue. But what other use can you put to a mine?
      And Australia’s internal tourism industry is huge but is subject to rapid and extensive downturns if the internal economy turns sour. Our tourism is based on overseas visitors, so is more resilient.

  • Watcher

    If I may make a further point re the Islands.
    An awful lot of the monies available are via the world bank, so out of necessity any business person that wants to get a slice had better do a shed load of homework on what, where and how.
    In general most of the Island nations depend on aid monies, and to be fair they want best bang for buck.
    Most Kiwi companies understand this.
    Not so sure about the Aussies.

  • Well he does have some fair points, Tourism is a much bigger percentage of our economy than theirs and the Dairy industry is far too large a part of our economy that we are vulnerable to swings in price. But the same can be said about their mineral industry, and people will always need milk products.

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