By Denis Bright  

Australia’s two most resource rich states of WA and Queensland are setting new priorities in budgetary management, capital works intervention and even engagement with China. These commitments to state based economic and quasi-foreign policy initiatives must inevitably interact with federal protocols affecting our national sovereignty through the combined effects of strategic policies and the long-standing Australia-US Free State Agreement (AUSFTA) since 2005.

The resource rich states have poured billions into productive capital works. This is particularly the case in Queensland. Here increases in coal and gas export royalties have assisted in raising the profile of capital works in recent state budgets with a projected $10.462 billion increase in coal, gas and other mineral royalties in 2023-24.

Capital works are now running at 24 per cent of record budget outlays of $84.261 billion, an increase of 11.9 per cent over the previous year in overall spending. This spending included a $1.617 billion allocation for cost-of-living relief particularly in electricity tariff adjustments, free access to kindergartens for 4-year-old children up to 15 hours per week and FairPlay Vouchers to assist children to participate in sport and recreation. 

Queensland’s capital works spending of $20.321 billion in 2023-24 includes an additional $1.1 billion for social housing with new superlatives in delivering alternative energy, pumped hydro, regional electricity transmission, protection of endangered ecosystems and record allocations for spending in communities with large numbers of First Nations Residents. Capital works in an outer metropolitan city like Ipswich exceeds $1.1 billion.

In both states, leaders are aware that the good times will not last if global security conditions deteriorate. The resource rich states are quite dependent on growth in trade and investment with China.

Former Premier Mark McGowan of WA was the leader of a delegation to China in April 2023. Premier Roger Cook visited China in March 2023 to attend the China International Fair for Investment and Trade (CIFIT). This followed visits by senior ministers earlier in 2023. Senior personnel in Tourism Western Australia, the Chamber of Commerce, the Minerals Council of Australia and the Future Health Research and Innovation Fund have also participated in state-based diplomatic initiatives with China.

Although the Queensland Government supports similar engagements, its public pronouncements on this issue are more cautious. Premier Palaszczuk has just visited the China International Import Expo (CIIE) and furthering business contacts in several sectors.  

Commercial-in-confidence processes are always at play as negotiations are not telegraphed for delivery on mainstream news programmes.  

Only media monitoring can identify some of the trendlines in these commercial relationships with China for discussion purposes in the context of current security constraints. Some readers have access to media monitoring subscription services at their workplaces and can develop a more precise angle on just what’s happening. My resources do not extend to forms of paid media monitoring. Google Bard reveals just some possibilities:

• Queensland co-operates with the China Investment Corporation (CIC) through its Queensland Investment Corporation (QIC): full details are not included on its official web site.
• The China Evergrande Group is interested in investing in Queensland’s tourism and property sectors.
• The China Railway Group (CREC) is interested in investing in Queensland’s infrastructure projects, such as roads, railways, and ports.
• The China State Grid Corporation (CSG) is interested in investing in Queensland’s renewable energy projects, such as solar and wind farms.

In Queensland, Deputy Premier Dr. Steven Miles was totally on the right track in anticipating federal infrastructure reviews as reported in The Guardian (7 November 2023). This criticism of the infrastructure review could still accommodate significant fine-tuning of some infrastructure programmes from the Morrison Government which do not pass any strict productivity tests. Some aspects of The Inland Railway are a good place to commence this review.

The proposed terminus is initially a freight terminal at Bromelton near Beaudesert which is still one hundred kilometres from the Port of Brisbane. The connecting freight terminal at Acacia Ridge on the outskirts of Brisbane is currently linked by a single dual gauge rail connection to the Port of Brisbane.

Upgrades of this track could see freight cars rattling through southside federal electorates. Terminating work on the Inland Railway at Gowrie near Toowoomba might be a better option and this would involve significant capital works on improving existing QR rail connections to Toowoomba for both freight and passengers which would also provide upgraded access to Brisbane Airport for passengers from west of Brisbane.  

Security concerns have also resurfaced about closer ties between Australia and China relating to investment protocols.  

The US Trade Representative (USTR) as an executive arm of each US President routinely monitors Chinese investment in Australia as well as Australian investment in China for potential breaches in the Australia-US Free Trade Agreement of 2005. In Australia, the USTR controls its global operations from 600 17^th Street in Washington. The USTR is an executive office of each US President and of course monitors developments in the long-standing Australia-US Free Trade Agreement.

All this monitoring of trade and investment trendlines seems to overlook the problem of systematic tax avoidance by major multinational companies, particularly from the USA and Britain. The quasi-military company Cubic Defense and Cubic Transport has a deep involvement in digital public transport fare collections and is usually on the no taxation lists released by the ATO to ABC News.

Cubic Defense is not listed on this year’s press release for ABC News this taxation issue. However, Cubic Transportation Systems has a tax bill of $24.884 million for 2021-22 which will of course be open to review like all taxation bills. Future assessments will of course cover payments of reputed payment of $378 million to Cubic Transportation for the introduction of the Smart Ticketing Systems.

Any pressure from the Albanese Government on Queensland to curtail its infrastructure programme and commercial ties with China could of course provoke a Queensland First Election Campaign before the next state election on 26 October 2024.

There is also some evidence that the Albanese Government came under pressure from the Biden Administration to lessen its economic and investment ties with China after being elected to government in May 2022. Google Bard has used media monitoring to canvas these possibilities:  

In June 2022, Australian Foreign Minister Penny Wong met with US Secretary of State Antony Blinken in Washington, DC. The two ministers discussed a range of issues, including China. Blinken reportedly told Wong that the US was concerned about China’s growing influence in the Indo-Pacific region and that Australia should take steps to distance itself from China economically.

In July 2022, the Albanese Government announced that it would be reviewing Australia’s Foreign Investment Review Board (FIRB) guidelines. The FIRB is responsible for assessing foreign investment proposals in Australia to ensure that they are not contrary to the national interest. The review is seen as an attempt to tighten Australia’s foreign investment rules, particularly in relation to investments from China.

In August 2022, the Albanese Government announced that it would be joining the Indo-Pacific Economic Framework (IPEF), a new US-led trade initiative that is seen as a counterweight to China’s Belt and Road Initiative. The IPEF is designed to promote regional economic cooperation and to strengthen supply chains.

These moves suggest that the Albanese Government is taking a more cautious approach to its relationship with China than its predecessor, the Morrison Government. This is likely due in part to pressure from the Biden Administration, which is keen to enlist allies in its efforts to counter China’s growing influence.

Hopefully, Australia’s two resource rich states will keep batting for our own national interests and for more transparency in relation future strategic controls on our commercial relations with China within the prevailing Australia-China Free Trade Agreement.

It may be significant that both Nauru and Tuvalu have diplomatic relations with Taiwan. There is a similar situation in the Marshall Island and Palau which have been in the thick of the US strategic offensive in Asia for generations including atmospheric tests of hydrogen bombs during the Cold War era.

it is too early to say whether Australia’s decision to divert some of its trade and investment ties with China will have a significant impact on the Australian economy. The jury is surely still out on whether the diversion of trade and investment away from China is contributing to a projected slowdown in Australia’s economic growth: