The Institute of Public Affairs think tank says Australia must cut red tape for global investment to remain competitive with the USA on coal exports and job creation.
We have already seen that Trump’s election has had an impact on Australian trade, and many are concerned that Trump will declare war on our biggest economic partner (China). But in a controversial move, the free market think tank has advocated that Australia follow the lead of US President-Elect Donald Trump, encouraging foreign investment into Australian businesses and jobs.
“Australia must follow President-Elect Donald Trump’s plan to cut red tape; otherwise, we will be rendered uncompetitive and unable to attract global investment. While America is looking to cut red tape to make business investment and job creation easier, the regulatory burden in Australia continues to climb.”
(Daniel Wild, Research Fellow, Institute of Public Affairs)
Trump has already put forward a number of proposals to cut red tape in the USA, largely in the area of coal mining:
When Wall St is up, the ASX is up, so some commentators are suggesting this could be a good thing for Australia.Trump’s new plan involves substantially liberalising the economy, including cutting business taxes and income taxes. This is predicted to make America much more competitive with foreign investors within a short timeframe.
Australia may suffer under uncompetitive restrictions
In contrast to the USA, red tape in Australia continues to pile up even higher than before. According to the Institute of Public Affairs, red tape costs the Australian economy $176 billion each year, or 11% of our GDP.
As our own coal mining boom dies down, would it even be possible for Australia to follow in Trump’s footsteps in encouraging foreign investment in the energy industry? Over the long-term, Australia may suffer if America becomes the hottest “place to be” for foreign investment.
The Institute of Public Affairs reminds us that Australia is in direct competition with the United States for coal exports. Trump’s plan to lift restrictions on coal production “risks putting Australia at a competitive disadvantage unless we act swiftly”, says Mr Wild.
Australia may benefit from Trump-phobia
Other commentators say the Australian property market may now see an increase in foreign investors, who may now see America as a risky proposition. In spite of increasing LVR restrictions from banks and the government’s crack-down on foreign investors buying existing dwellings, over the long-term, Australia could attract investors thinking twice about the USA.
In particular, Chinese investors may see more promise in Australia than the USA. Trump has previously stated he will increase tariffs on goods imported from China to 45%, and tighten trade agreements.