Canberra’s own lame duck
The federal government’s lobbying of US politicians to pass the Trans-Pacific Partnership (TPP) trade deal this week may look a little hollow when the Americans see what is happening Down Under. No less than two committees in the new Federal Parliament have quietly established inquiries into the TPP which seem set to take the Australian approval time frame beyond the life of the Obama Administration. Prime minister Malcolm Turnbull and foreign minister Julie Bishop chewed the ears of their US interlocutors this week urging them to sneak the controversial TPP through the so-called lame duck Congress session between the November presidential election and the January end of Obama’s regime. But back in Canberra the Joint Standing Committee on Treaties (JSCOT) has started an inquiry which will pick up from the previous process that had been terminated by the early federal election. It has no clear reporting date but starts hearings next week.
More significantly the Senate’s Committee on Foreign Affairs, Defence and Trade has started a separate inquiry with new submissions which won’t get under way until November. And its reporting date of 7 February next year is well after the US lame duck Congress window. The government tried unsuccessfully to stop this committee reference by Senators Sarah Hanson-Young and Nick Xenophon. Labor previously used the tactic of a separate committee on the China and Korea trade deals to give it more control over the legislative agenda given that that the JSCOT is controlled by the government. With the anti-trade Greens, One Nation and NXT parties holding more than 20 per cent of the new Senate seats, this exercise may well be a test of the new mood towards trade liberalisation. Read the Parliamentary Library’s useful trade update here. At the very least the Senate move underlines how the government will again need Labor to pass any trade deals. But the Labor base will go feral at any suggestion of extending patent protection for biologic drugs, a change which US Republicans are demanding from Obama. Curiously this week the new Labor trade spokesman Jason Clare made his first entrée into this territory by suggesting he was actually open to a renegotiation of the TPP. By contrast the minister Steve Ciobo is avoiding any reference to changes knowing what dynamite that would be. After being helpfully told by Turnbull how to manage their own lame duck legislative process, US players might well see all this as a black swan arriving in Canberra. Meanwhile, for his usual forensic TPP analysis, don’t miss Oriental Economist editor Richard Katz in Foreign Affairs.
Australia’s indigestion over Chinese investment may be easing but not without some after effects. Investment minister Steve Ciobo paid a house call to Hong Kong to salve the wounds of powerful tycoon Li Ka-shing’s Cheung Kong Infrastructure after the company’s bid to buy control of NSW power company Ausgrid was rejected. Ciobo is now hinting at a new list of critical infrastructure which would have tougher investment threshold and capital structure rules for foreigners but not treat Chinese state owned enterprises differently. While the NSW government counts the cost of the Ausgrid sale rejection, the Victorian government has opened a window on the future with the lease of the Port of Melbourne to a consortium with only a 20% indirect participation by China Investment Corporation. But the apparent attempt to hide the CIC share shows how combustible this issue remains.
Japan stocks up
Julie Bishop put the idea of combining inward foreign investment stocks and annual export flows to determine the country’s hierarchy of economic partners on the agenda well before the mood towards China soured. The point then was to underline that the US was more important than China. But economist and Japanese corporate adviser Manuel Panagiotopoulos has now put some real numerical heft behind this weighting game in an interesting study which tries to assess how important Japan is to Australia. His weighted index of trade, foreign direct investment and portfolio investment involves both risk and value adjustment of these economic parameters and Japan emerges as much as three times more important than China. This study (soon to be published here by Australia Japan Foundation) is neatly timed for the Australia Japan Business Cooperation Committee New Challenges-New Ideas conference next month where the idea of the more comprehensive Japanese engagement will be on the agenda.
Real cost of immigration
Australia’s relatively high proportion of foreign born residents (at least by OECD peer group standards) is often seen as both a driver of economic growth and a valuable part of its soft power. But maintaining public support for the organised immigration system is imposing growing costs on the national budget according to two studies that approach the issue from very different perspectives. Save the Children and UNICEF have calculated that the cost of the turning asylum seekers back to offshore detention centres has been $9.6 billion since 2013. That’s about $400,000 per asylum seeker a year. Meanwhile the Productivity Commission has criticised two additions to the half century-old immigration policy of recruiting new citizens with needed labour skills. It says family reunion programs are not properly recouping the real cost of providing services to elderly relatives joining immigrant children. And it says Special Investor Visas which provide easy entry for people with capital are being misused and not bringing in people with useful skills. Offshore detention, family reunion and investor visas have all been used at different times to make mainstream immigration more acceptable to the broader population. Malcolm Turnbull has been talking up the need to shore up public support for immigration in New York this week. This will only intensify with the Essential poll showing a sharp rise in opposition to Muslim immigration. But the fact refugee activists and the econocrats are questioning the immigration furniture from a budget perspective shows how much the idea of an immigration consensus is under broad challenge (as was noted here last month).
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