Borrowing $1 billion a week, the worst financial crisis since the Great Depression, the worst natural disaster in Australian history and now a Communist Government seeking to plough $30 billion into the nation’s resources dowry.

Did Nambour High equip Kevin Rudd and Wayne Swan to deal with all this at once?

The political sensitivities around foreign government purchases of strategic Australian assets is perhaps best illustrated by this story in today’s Herald Sun, which implies that the worst of Victoria’s bushfires started in a paddock near Kilmore housing a single power pole.

And who is responsible for that pole? SP Ausnet, the ASX-listed company controlled by the Singapore Government, which just happens to own more business assets in Australia than our own national government.

Whilst home grown Aussie arsonists will face the full force of the community backlash, you wouldn’t want to be the Singapore Government if a Royal Commissioner rips into SP Ausnet’s maintenance or fire mitigation practices.

On a related front, if Chinalco’s mooted $30 billion injection into Rio Tinto succeeds, the Chinese Government will join Singapore in owning more Australian business assets than our own government, as this list demonstrates.

Whilst the likes of Alan Kohler have come out early swinging against the Chinalco deal, it would be more appropriate to wait for the detail.

China has the world’s biggest pool of foreign reserves and will be our biggest export customer into the foreseeable future. Most of our resources stocks are up strongly today and many of them need capital.

Like Ben Chifley’s famous speech turning to America after the fall of Singapore, this Chinalco proposal presents a major pivot point in Australia’s economic history.

The Americans have completely stuffed it and a $30 billion injection in a capital constrained world is not to be sneezed at.

This is especially so when the Chinese have $US2 trillion in foreign reserves and the Australian public sector is likely to have a collective borrowing requirement of more than $200 billion over the coming five years.

The Chinese have the cash, we need to borrow and we have the resources they want. Why not make a small switch from US treasuries to Federal Government bonds a condition of the deal?

One thing is for sure in all of this. The boneheaded Poms who dominate the Rio Tinto board and trashed a great empire should be axed.

With Britain on the rocks, the Rudd Government should use this opportunity to return to the ideas pushed by Ralph Willis at the time of the original Rio Tinto/CRA dual listed company construction in 1995.

Why not insist that Rio Tinto shift its head office from London to Melbourne, have its primary listing on the ASX, have an Australian chairman and a majority of Australian-based directors?

Transurban CEO and former BHP Billiton finance director Chris Lynch would be the perfect replacement for the discredited Rio CEO Tom Albanese and they should bring back the likes of Leigh Clifford, John Ralph and Leon Davis to join the Rio Tinto board through a stabilisation process.

If the Chinese are prepared to pay another big price, then who cares if they get a couple of board seats as long as the ridiculous current situation is changed which sees Rio run out of London by a reckless American CEO and a cabal of incompetent knights, lords and British establishment types.

*Listen to the toffy Rio chairman Paul Skinner defend his shabby treatment of Australia at last year’s Australian AGM in Brisbane.

Peter Fray

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