As the flood waters continue to move down the Darling River system, the proportion of NSW covered by drought declarations has actually increased slightly. Australia is such a big country that flood and drought easily coexist.
As the bush fire season continues in the south, more catastrophic code red warnings have been issued. I expressed my reservations about the new warning system when first used (here one and two) simply because I couldn't understand what it really added. Now former NSW Fire Chief Phil Koperberg has expressed similar views, suggesting that the new fire danger rating of "catastrophic" is inappropriate. Sadly, it appears that a South Australian women and her three daughters were killed in a road crash returning home after leaving because of a code red warning.
Saturday Morning Musings - difficulties with whales looked at some of the structural and legal issues in this debate. I said in part:
All this means that while oppositions may pontificate, all Australian Governments are likely to continue to temporise to some degree, no matter what the strength of public opinion within Australia.
The post drew carefully worded comments from what appears to be a pro-whaling perspective. On Saturday 9 January, the issue drew an editorial from the Melbourne Age: Rudd may soon have to sue Japan over whales, roared the old thunderer. In the meantime, the initially strong statements from Government and opposition were followed be a degree of back-tracking in the face of official Japanese reaction.
I am not sure that I full understand the underpinnings of Japanese or Norwegian support for whaling beyond cultural and historical traditions in combination with dislike of being told what to do. The political dynamics involved suggest that sooner or later the Australian Government will be forced into trying to take legal action. If so, it is likely to be a fascinating case.
In NSW, disputes over mining royalties in the Hunter Valley has led to calls for a revival of the New England New State Movement. This is an interesting one in historical terms because the 1967 self government referendum was lost on the Hunter Valley vote.
Staying in NSW, the sometimes sclerotic decision processes of the NSW Government continue to reap rewards.
Back in January 2007, I wondered about the value of the proposed Tillegra dam in the Hunter. It seemed to be very much a political decision. The Sydney rail metro project, another rushed decision, continues to draw fire.
Herald economics writer Jessica Irvine's review of the performance of the NSW state economy, something that the NSW Government is trying to present in positive terms, is quite scathing and in many ways rightly so. The whole state is now so wrapped in red tape, rules and processes, that it is sometimes surprising that anything happens.
However, there is a deeper underlying problem in that the NSW state economy itself is actually a statistical construct grouping economic data on political boundaries whose connection with underlying economic structures has diminished with time. There are a number of regional economies in NSW whose performance needs to be looked at separately.
To me, one of the most fascinating changes underway across Australia at the present time is the rise in Chinese investment.
The country has always relied on overseas investment. During the first period in Australia's history, this came mainly from Britain. Then in the post Second World War period came a US wave, followed by a Japanese wave.
Each wave reflects changing global conditions.
In the first wave, the capital surpluses in the British Isles generated by the industrial revolution and rapidly increasing global trade needed an outlet. In the US case, we had the very rapid growth economic following the ending of the Second World War. Japanese investment was similarly linked to the rise of Japan as a global economic power. Now we have China.
According to the Herald (and here), the Shanghai company Bright Food Group , one of the world's largest food companies, has pitched a surprise $1.5 billion proposal to buy CSR's sugar and renewable energy assets. In an early attempt to win over Australian sugar cane growers, Bright Food has offered growers equity as well as the opportunity of a direct pipeline into the China's sugar and food markets and fresh investment in local milling and refining infrastructure.
In historical terms, this is a bellwether bid. CSR stands for the Colonial Sugar Company. Once ranked 122 in the world on the Fortune index of largest companies, CSR began as a sugar company. Its history is inextricably entwined with the history of Australia and indeed of the Pacific.
I have absolutely no objection to the Bright bid in principle. Indeed, CSR's history as a conglomerate has seen the sugar interest placed very much second. I am just interested in what it says about the rate and direction of change.
According to Zhang Bin, an economist at China's main government think tank, the Chinese Academy of Social Sciences, China had made a strategic mistake by investing most of its foreign exchange holdings in US government bonds rather than Australian assets.
"Ten years ago China should have been purchasing more Australian dollar assets because we needed to hedge against our resource imports," Mr Zhang said.
I think that could well be right, although the sheer size of the international Chinese cash surplus ($A2,152 billion) kind of dwarfs the Australian economy! You could buy an awful lot of Australia for that money.
In practice, and has happened in the British Empire in the nineteenth and early twentieth century, surplus funds went into a whole variety of investment types (direct and indirect) in a whole variety of countries, not just the Empire.
One of the things that makes me cautious about the current macroeconomics debate on global economic imbalances is that it is so focused on US over-consumption, Chinese over-savings. It seems to ignore the investment element. But that's the subject for another post!