Ausgrid - and Security !

The New South Wales government made a brave decision to lease the poles and wires that distribute electricity in this state to the highest bidder to freeup billions of urgently needed upfront dollars to provide the vital rail and road networks and other public works we so desperately need.

The negotiations have been long and tedious and two front runners have emerged.  One is a Chinese company tightly connected to the Communist government and the other is a private enterprise outfit based in Hong Kong.   Suddenly, the Federal government has nixed this ten billion dollar deal on the grounds that it infringes national security.

A lot of people agree with that sentiment, but it seems to run counter to what is happening in other areas of infrastructure which are now in foreign hands, much of which is of a Chinese character.  For instance, the entire South Australian electricity supply is leased to CKI which is the Kong Kong based applicant just knocked back for the NSW poles and wires.

Many of our ports are foreign run and we welcome investment in this country.  There was a time when the money flow came predominantly from Britain but after the end of the second world war Americas was the richest country in the world and it was feared that America was "buying "Australia. We have become sensitive to foreign ownership of farmland and now it is money from all over the world that keeps our economy humming along.

Perhaps there is a degree of confusion between "ownership "and "leasing "of infrastructure.   The NSW poles and wires will never leave Australian ownership and for a number of nominated years they will be leased by the successful applicant who will be responsible for maintenance.  Obviously that company expects to make a profit on the deal.

There is every expectation that the Australian work force presently maintaining this poles and wires operation will continue to do so.   There will obviously be top management changes but the management of poles and wires will still be within the reach and overview of the Australian government.   Some may wonder if this security concern is over rated.

We now live in a very inter connected world.  The very presence of nuclear weapons has kept the major powers from waging direct war for nearly a century and there is every prospect that this situation will continue.  Foreign investment is now viewed as coming from a "friendly "country or from a nation that we view as a potential threat to our future.  China has been emerging as an Asian giant with military aspirations but is also one of our foremost trading partners.   If we ever find ourselves at war with China it will undoubtedly be allied with another similar power.

In the event of a military clash with China there seems little doubt that Chinese hackers could quickly damage our economy.   Perhaps the greatest protection against economic intrusion could be the risk to existing Chinese investment suffering loss in such an event.    There is an old saying that if you owe the bank a hundred dollars the bankers have you in their pocket, but if you owe the bank a few
 million dollars - you have them in your pocket !

Chinese investment in Australia is a double edged coin .   We would do well to think this through carefully before making a final decision !