South Australia needs a plan to deal with crisis in globalization
War and coronavirus have triggered massive change that requires new thinking.
The events in Ukraine and the economic after shocks of the COVID-19 crisis are a wake up call to South Australia, and indeed the nation. They have both shown the potential vulnerability of international supply chains and the world economy, according to Jonathan Pietzsch candidate for MacKillop and State President of the SA Nationals.
“Globalisation, which has driven the world economy this century, is going through profound change. As that happens, political leaders need to think afresh about the national interest and the national economy. That means having a plan to provide long term support to industries where Australia has long excelled, especially our primary industries: agriculture and mining.”
“These are basic, commonsense issues so why aren’t Labor or the Liberals focusing on this instead of things such as swimming pools and basketball courts? Only the Nationals appear to be aware of the problems.”
Australia has enjoyed a comparative advantage in rural industries for over 100 years. The skills and knowledge needed to deal effectively in international markets are beyond question, even when there is harsh protectionism or harmful actions such as recent Chinese sanctions. Australian producers are resilient and adaptable.
But as globalisation fractures, it is critical to ensure that governments assist in ensuring that South Australian industries are given support in the areas where they rely on global supply chains, this ties in with the Nationals push for an increase in Regionalisation and Regional Capacity.
1. Fertilizers. Most nitrogen-based fertilizer in Australia is imported, with the biggest suppliers being Russia and Belarus. This will soon change with two facilities being set up to produce urea that will hopefully come online in the next couple of years – one in WA and one in SA. That must be a priority, especially as it is a necessary component in the diesel fuel that trucks use.
2. Diesel fuel reserves. Australia has 16 days worth of refined diesel on hand at any point in time and only 68 days of crude oil, well below the 90 days that we are supposed to have on hand as a member of the IEA. With refinery capacity having dropped sharply, 90 percent of our fuel is imported as the finished product. Without diesel, our trucks cannot run and farm machinery like tractors and headers cannot operate. This would put food delivery and prices under immense pressure. Both Liberal and Labor should have a strong focus on these issues; it is a matter of national economic security.
3. Fuel refineries should be reconsidered to be a matter of national security, especially with fuel prices likely to soar.
4. Machinery manufacture. Australia has given up on its manufacturing capacity, which means that a significant proportion of agricultural equipment is imported. Because of the stress in the supply chains it is now usual to have to wait a year to complete a purchase. There should be a plan to develop targeted manufacturing in areas that support Australia’s established comparative advantages. Relying on overseas suppliers in these increasingly chaotic international markets is becoming too risky.
5. Defence. Only through having a strong, local manufacturing ability with the suitable highly trained workforce, can we hope to withstand what may be the consequences of possible warfare against our country or military.
6. Finance. Australia’s superannuation pool of over $3 trillion provides an opportunity to ensure that Australians own Australian rural industries, rather than overseas investors. At the moment there are few options relating to agriculture on the local stock market. That should change.
Mr Pietzsch says that South Australia needs a strategic plan to develop the national interest in a global economy that is going through a radical transformation. “Only the Nationals are talking about that, and we are the ones who benefit from over a century of experience in dealing with international challenges.”
CSAV Toconao. Credit: Flinders Ports