Another Tony fanboy blogsplat.

Have to agree with most of this Henry.
There are things we can and should do!
One is to entirely wean ourselves off of foreign investment, given it invariably means a comparative rise in foreign debt.
We already have nearly two and a half trillions of that, and the interest we have to find is becoming problematic?
Instead, we should try social credit, (internalised national debt) but retain ownership of every new enterprise, which then becomes an asset, that offsets the debit side of the ledger.
Debt is not a problem if it creates income earning entities, that then draw down debt.
Power stations, rapid rail, oil/gas wells.
Foreigners want to invest here for virtually the same reason Britain colonised Indochina and elsewhere, to rip out riches.
If money is in short supply, a couple of strokes on a computer keyboard and quantitative easing, could literally double the locally available money supply virtually overnight.
Better we create our own debt internal burden with the printing presses, and use our own income earning capacity to repay ourselves, than to lose our wealth to debt laden, carpet bagging, foreign speculators?
You know, the ones that cruelled Ireland's Celtic tiger or Spain's burgeoning economies.
We didn't create any part of the GFC, nor should we be made the economic captives of it!
Look, we have enough common wealth to literally make every man woman and child living here virtual millionaires.
Yet all the we seem to do is lock it away, or invite others to come here and take it from us.
The recent closures of Nissan and Mitsubishi, and the impending closure of ford, bleak testimony to the economic madness, of allowing foreign corporations to replace Australian iconic industry!
Time to grow up, stand on our own two feet as a nation; and embrace change we can all believe in and get behind.
Rhrosty.

So we have a problem which “Only focused action by a fully informed and highly competent government” can solve. It would be nice to know what that fully informed and highly competent government could actually do. I hope this article has a Part 2 in which this is outlined; otherwise it’s just a Jeremiad.

Actually, the stats aren't that bad (yet?). Full-time employment, total employment and hours worked are trending upwards, though growth has slowed. Business bankruptcy levels are low by historical standards. Trend retail employment peaked in March 2008, but in recent months has been climbing quite strongly (3.1% growth in the past year). A decline in the exchange rate of the magnitude suggested would do much to restore competitiveness, assuming any ensuing price rises does not ignite inflation.

Rhosty

If we go into recession, the main cause will be a decline in foreign investment. I’d agree that in the long term it would be nice to have greater self-sufficiency in financing investment, but to achieve this will require a major increase in our national savings, which requires a reduction in the share of our income we spend on consumption, which in the short term would make any recession even worse. Savings and investment are a structural issue to be addressed over the medium to long term. If we are approaching recession, reducing foreign investment is the opposite of what we need.

Rhosty, I believe the first thing we should do is use our resources to provide affordable energy for ourselves, because it stands to reason that if one has more money to spend, 1. They usually do just that, and 2. It would stimulate the economy.

The other point I agree with you on is that of investing in our own assets.

I have long held the view that our super should be government managed (huge gamble I know) and used to provide infrastructure for our nation, to create jobs and collect tolls for us.

Putting super in the hands of greedy investment agents has been a huge mistake, especially when we look around at the mega buildings many of these giants are housed in, at our expense, as we must remember, their salaries, their running expenses and their rents, even their returns to their share holders are all made from our super, before we get our cut.

One can only imagine where we could have been, had the now trillions in super been kept in house.

Rhian, To avoid a recession all we need do is export more and import less.
[We have to our immediate north, possible hydrocarbon reserves to rival or even eclipse the known Middle East reserves.]
When foreign investment is little more than an exponential increase in already record burgeoning foreign debt.
More of it will not assist us avoid a recession, but rather hurl us into one, courtesy of rising service payments, worsening terms of trade and reducing export incomes, much of which benefits foreign corporations and countries ahead of us.
In the early days of oil exploration, all that early prospectors had to go on, were visible oil soaks or oil slicks that would lead to very shallow deposits.
The sheer number of mystery oil slicks, their scope and range around the Great Barrier reef, very strongly suggests a very large reserve or reserves of easily recovered oil and gas.
Australian sweet light crude leaves the ground as a virtually sulphur free almost ready to use diesel; requiring only a little insitu chill filtering to make it ready for the truck train, or harvester etc.
If we have the reserves some industry analysts reportedly believe are there, we should explore and exploit them.
In the first instance, to reduce or end our current 85%+ reliance on fully imported foreign oil.
We'll never ever know what we have if we never ever look, but simply continue to say, its just a possible resource.
So was our massive mountainous iron ore deposits, before Lang Hancock finally got someone to listen to him.
Unfortunately for us and our economy, it happened to be foreign speculators, rather than any one of a number of Australian/state Govts Lang approached.
If we really need "foreign capital", then we retain the right to sell self terminating thirty year bonds.
The current state of our economy and the returns to investors, would likely see us sell all we need, to raise all the capital we need, without including the foreign speculators, who have so harmed other economies, and indeed, arguably created the GFC?
Rhrosty.

“To avoid a recession all we need do is export more and import less.”
- Rhosty

“For every complex problem there is an answer that is clear, simple, and wrong.”
- Mencken

Yes, we have lots of hydrocarbon reserves, but it costs tens of billions of dollars to develop them. Australian governments simply don’t have that sort of money to spare – that’s why we need foreign investment.

If it costs more to develop the resources than we can get by selling them, we’ll be worse off. If costs are rising while commodity prices are in decline, as most analysts suggest, we could lose some of those billions if we invest unwisely. Woodside and its JV partners recently pulled back from developing the vast Browse reserves because, they said, the economics didn’t stack up.

Foreign investment doesn’t reduce export earnings (overwhelmingly it does the opposite), but it does also come with a service burden. It does not directly affect the terms of trade. Typically, the relationship is the other way – strong export prices raise the terms of trade and attract investors.

You appear to be suggesting that, rather than letting Shell or Chevron invest in oil and gas exploration and development, Australian governments should borrow the money to do these things themselves. This is the worst of all possible worlds. Governments (ultimately, you and me) would carry all the massive exploration and development risk. They don’t have the engineering, geological, technical, market development, project management, logistics and supply chain, commercial or a host of other necessary skills. And it would deliver no benefit to the balance of payments (in fact it would almost certainly be detrimental, because there is no chance government can do these things at lower cost than the private sector).