FEDERAL Treasurer Scott Morrison has delayed any potential sale of the Kidman & Co cattle empire to Chinese interests until after the federal election to assess the transaction’s national interest merits.
Yesterday it was revealed Australian Rural Capital (ARC) was providing a 20 per cent local stake in a Chinese-led joint-venture deal to buy the massive pastoral business which covers 2.5 per cent of the nation’s agricultural land for $370 million.
Shanghai Pengxin would indirectly control 80pc of the business that currently covers about 11m hectares in Queensland, SA, NT and WA.
The offer needs Foreign Investment Review Board (FIRB) approval and ultimately Mr Morrison’s consent.
He told media in Canberra today he’d signed an order last Friday which prohibits the Kidman transaction from proceeding for a period of 90 days from the gazetted date.
This week it was revealed a double dissolution federal election was likely to be held on July 2 meaning any final call of Kidman is likely to occur after polling day.
Mr Morrison said the order provided further time for him to consider the national interest implications “of this complex and sensitive acquisition”.
“My obligation is to make careful and detailed assessments of foreign investment proposals against the national interest and that is exactly what I intend to do on the Kidman matter as I did on the previous consideration of that transaction,” he said.
“National interest considerations of proposed transactions should not and will not, on my watch, be rushed, on important matters such as this.”
Last year, the Coalition government initially knocked the back the Kidman & Co sale to Chinese interests after citing national security issues linked to the Anna Creek Station, being situated near the Woomera defence facility.
It’s understood the latest bid for Kidman & Co has excluded Anna Creek Station.
Mr Morrison said today he’d also instructed Treasury to put in place an independent and external review of the Kidman & Co sale and its tender process.
“I want to be absolutely confident when I finally consider this matter that Australians have had every opportunity to be participating in that process,” he said.
“I will continue to work through that process – I will not be rushed into this.
“I will make a careful consideration on these matters – that’s exactly what I do.
“This is a very big transaction and it’s important we do the right thing by the national interest and that’s what I intend to do.”
Mr Morrison’s delay sets up an almost identical scenario - with potential foreign investors in Australian agriculture waiting anxiously on federal politicians to decide their fate around an election cycle - as occurred with the $3.4 billion bid for GrainCorp by US food giant, Archer Daniels Midland.
That bid was heavily opposed by the Nationals when in opposition due to concerns about the loss of supply chain ownership and costs being forced back onto farmers; especially giving strategic control of ports to a foreign owned entity.
Former Coalition Treasurer Joe Hockey eventually blocked the deal shortly after coming to government in late 2013, with Shadow Treasurer Chris Bowen saying the final decision was a decision “all about politics, nothing about economics”.
“This is a decision in the Nationals' interest, not the national interest,” he said at the time.
But ADM also had to endure extended delays after making an application to the FIRB about six months before the election with three Treasurers including Mr Bowe, three Prime Ministers and the government and opposition changing sides before the final call was made.
Shadow Agriculture Minister Joel Fitzgibbon said he had no knowledge of any delays in approving the ADM bid leading into the 2013 election and could not comment.
But he said the current Treasurer’s decision today to delay the Kidman & Co approval was all about buying time.
“They have had six months or more to assess this application or variations of it and this external review is simply about pushing it beyond the election,” he said.
“The truth is under this government we’ve got the worst of all words in this policy area.
“The government is sending all the wrong signals to potential foreign investors which we desperately need in agriculture and further undermining public confidence with their dithering and mixed messages.
“This latest move is clearly and simply about pushing the issue beyond the election.”
Speaking to Sydney radio host John Laws today, Federal Agriculture and Water Resources Minister Barnaby Joyce said he’d heard “loud and clear” public concerns expressed about the Kidman & Co matter but “as we speak it’s not approved”.
“What we have to find out and prove is that it is not to the detriment of the Australian people,” the Nationals leader said of the national interest assessment test and the Treasurer’s ultimate decision.
Mr Joyce said he was not completely opposed to foreign investment but had fought hard to increase formal scrutiny of agricultural transactions like Cubbie Station which had led to tighter FIRB thresholds being introduced by this government.
He said previously the FIRB scrutiny trigger was $252m on foreign acquisitions of Australian farm land which was lowered to $15m assessed cumulatively and now $55m for agribusinesses, while purchases by foreign State owned enterprises remained at $1.
Mr Joyce said he’d been “absolutely castigated” in the media and other places and called a “red neck” or “boxed as a crazy xenophobe” amid warnings his firm views would frighten-off foreign investors.
But he said foreign investors were now “lined up out the door” and a “logical line in the sand” existed, for assessing the national interest on foreign investment transactions and like with the ADM issue, “we do actually say the word no”.
“There has to be a line in the sand, we just can’t sell off the whole State,” he said while accusing Labor of having no appetite to address public concerns.
Prime Minister Malcolm Turnbull rejected criticism of the delay saying the government was looking at the Kidman and Co transaction “very, very carefully” with an important role for foreign investment “right across the board in Australia”.
“Where foreign investment is not contrary to the national interest, then under our laws it’s able to proceed but we review these things very carefully through the FIRB and our goal is to ensure always that Australia’s national interest is advanced,” he said.
“It will be the Treasurer’s decision but that’s got to be done very carefully and focused on what is going to contribute to our economic plan to drive jobs and growth.
“It’s very important that foreign investors, upon whom we depend for many of the jobs in Australia see Australia as the safe place to invest in and a place where their applications will be considered carefully and methodically, in accordance with the law.”
A spokesperson for Mr Joyce said the minister had made clear his preference for Australians to own our great agricultural assets and he continued to highlight the tremendous opportunities for Australian investors to boost their participation in the growth of Australian agriculture.
“Under Labor’s policy of a $1 billion threshold before any foreign investment in Australian agriculture would require FIRB scrutiny, the Australian government would not have had any say over the foreign investment bid for Kidman & Co,” a statement said.
In January, Fairfax Media revealed Australian owned family enterprise Linfox was interested in bidding for Kidman & Co with the touted $300 to $350 million price tag within the logistics company’s $3b annual turnover.
In February, the Treasurer welcomed the reopening of the sale process by Kidman & Co to accommodate bids by Australian parties.
At the time, he said the national interest test included: the impact of the proposal on the Australian economy and community; national security; consistency with other government policies including tax; competition; and the character of the investor.”
