Article – Regulations prevent agricultural output from supplying markets opened by trade negotiations

29 January 2015
Alan Moran
Catallaxy Files
“I can feel a dam coming on” was the refrain made famous by the Modest Member.  A new dam, new road, additional water rights, were among the baubles seemingly available from governments to be scattered among the voters when favours were needed.  Their urban counterparts were job subsidies, new training schemes to counter the high regulated youth wage, and even more darkly, trade restraints and subsidies to manufacturing.
Although few of these expenditures actually added more value than they cost, at least in the case of the majority, they added some value.  All that has changed.  Starting with the Hawke Government campaigning against the Tasmanian Franklin dam in 1982, governments have seen the route to the voters’ support as being a promise to stop some productive activity.

  • Dams building embargoes justified on wilderness grounds have been extended to cover all such ventures.
  • The Victorian ALP differentiated its product by campaigning against a freeway, while both it and its Coalition opponent promised to stop fracking for gas, an issue that has the NSW Government seeking to hide from and is rattling the Queensland Government.
  • Governments have found merit in hobbling productivity by among other measures:
    • limiting the size of commercial fishing vessels,
    • accepting Greenpeace’s latest war on the economy by targeting mythical illegally logged timber,
    • preventing land clearance in the cause of global warming,
    • finding ever new “rare and endangered” species to curtail agriculture and mining,
    • preventing the adoption of new technology in the form of GM crops,
    • interventions preventing  trade in the face of confected animal cruelty allegations as with beef to Indonesia and prior to that live sheep,
    • reducing irrigation water allocations to enable environmental flows to the ocean

Two centuries of steady growth in agricultural output from Australia came to a halt with the turn of the present century.  Karen Schneider of ABARES has logged the sad story and published it in the latest Agricultural Outlook conference.
value of agric production
Over the next forty years, ABARES sees a steady climb in the growth of food demand as indicated below.
global food demand
Plausibly, ABARES estimates that 71 per cent of the growth in world food demand will come from Asia, with China and India accounting for the bulk of this.   Beef to China figures particularly prominently.
So, we have the anomalous position of the Commonwealth signing free trade agreements with a range of countries, which offer prospects of a burgeoning demand for agricultural products.  Australia is well placed to expand the output of these commodities and yet state and federal governments are conspiring to reduce the capabilities of domestic producers to respond to the opportunities.
Courtesy of Catallaxy Files