Why do foreigners own Australian land?

The proponents of Foreign Investment into Australia often cite the fact that Australia needs foreign investment to grow its economy. Their argument rarely goes further in its analytical framework than a historical reference to how Australia developed over the last 150 years. These proponents should take another look at their case. It has large flaws of logic. In the 1800s up until the 1970s, Australia was on a Gold based monetary system, as was the world. Hence, when foreign investors brought Gold (money) to Australia to invest, they grew the money supply and volume of investable funds. Their investment increased jobs, economic growth, and prosperity. In the 1970s and 80s, Australia changed its financial and monetary system (as did the Western world) so that it no longer relied on a hard money gold standard to set the money supply. When this change occurred, Australias money supply (and investable funds) were controlled by the Reserve Bank of Australia. From that point on, foreign investors who come to Australia must exchange their currency for Australian currency. This means that in effect, increasing or decreasing foreign investment effects the Australian dollar exchange rate, not the quantity of funds available for investment in Australia. Again, the RBA sets the money supply and the quantity of investable funds. This remains the case and foreign investors do not have a substantial impact on the availability of investable funds, and therefore economic growth within Australia. Proponents of the We need foreign investment mantra need to rethink their argument and ensure it is based on logic, not thinking that is based on a multi-decades old, now defunct gold backed financial system. What Australia does need is foreign investment and technology that adds productive capacity, technological innovation, and solidifies demand for our goods. This is what helps Australia grow now. Foreign investment without the increase in capacity only increases the value of the Australian dollar which negatively effects all hard working Australians and Australian companies trying to export their wares to overseas customers. So, does Australia need more foreign investment? Well, if foreign investment increases the value of the aussie dollar and foreign divestment decreases the value of the aussie dollar, then clearly, Australia has far too much foreign investment now. The current high value of the A$ and associated foreign investment is largely driven by increasing levels of government and corporate debt (borrowed from foreigners) and foreign investors looking for safe havens away from the central bank monetary madness in the northern hemisphere. Unfortunately, this is the wrong kind of foreign investment because it is not being invested in productive capacity. A large part of this investment is what is referred to as hot money flows as foreigners flee their own central banks who are determined to devalue their own currency to gain an export advantage. So what should Australia be doing. Firstly, we should encourage foreigners to enter into contractual arrangements for Australians to provide them with the products and services they need for their economies. Mineral Resources, Energy, Livestock, Manufactured Goods, Farm Produce, Education services are all areas that Australians and Australian companies are perfectly capable of providing if they have access to contracts and investable funds through the banking system. I also see room for foreigners to enter into joint venture arrangements with Australians and Australian companies so that foreigners can have some level of security over their commercial arrangements and give a leg up to their Australian partners. Joint ventures provide security of demand for Australian investors and security of supply for foreign investors. I dont see joint ventures as being majority owned by foreigners, but depending on the size, Im flexible. We should also welcome foreigners and foreign investment if they have a licensed technology or patented product that they would like to bring to Australian consumers. It is hard to see how foreign owned Australian land adds to the productive capacity of the Australian economy. While some may say that foreigners will buy land and build infrastructure and buildings that add to productive capacity. I would point out that the funds to build these buildings are already available in Australia. The fact that we allow foreigners to buy land simply increases the value of the A$, without adding anything that an Australian could do if they had a contract to sell goods and a bank willing to lend them money. Could we please have a well thought out explanation as to the benefits to Australia, of foreigners owning Australian land, Im waiting.

Robert Davies