Treasurer: Kidman sale contrary to national interest

Treasurer: Kidman sale contrary to national interest

Agribusiness
Treasurer Scott Morrison.

Treasurer Scott Morrison.

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Treasurer Scott Morrison has made a shock announcement on the Kidman & Co sale to foreign investors saying his preliminary view is it's against the national interest.

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FEDERAL Treasurer Scott Morrison has announced his preliminary view of the proposal to sell the Kidman and Co cattle empire to a joint venture comprising 80 per cent Chinese interests is contrary to the national interest.

Earlier this month, it was revealed Australian Rural Capital was providing a 20 per cent local stake in a joint-venture deal valued at $370 million that the Kidman board had approved.

That led to the Treasurer announcing he’d asked Treasury to investigate any national interest concerns with the transaction that was up to 90 days.

However, Mr Morrison faced media today in Canberra to say as part of his long and careful deliberations regarding the Kidman & Co acquisition he’d informed the investor that his preliminary view of the proposal was “contrary to the national interest”.

“Australia welcomes foreign investment, however we must be confident that this investment is not contrary to the national interest,” he said.

“Australians must have confidence in how we regulate foreign investment and the decisions we make to ensure continued support for foreign investment that is critical to our economy in providing jobs and growth.

“And this is always a relevant consideration.”

Mr Morrison said on April 15 he exercised his statutory discretion to extend the period in which he had to review the foreign investment application, “in order to provide me with sufficient time to consider this complex case”.

“Without this extension I would have been required to make a decision that week,” he said.

“This additional time has assisted me with forming my preliminary view and I stress, ‘preliminary view.”

Mr Morrison said the Kidman land portfolio was the largest private land holding in Australia holding approximately 1.3 per cent of Australia's total land area and 2.5 per cent of Australia's agricultural land.

He said even after the excision of Anna Creek and The Peake properties, Kidman would still be Australia's largest private land owner and hold over 1pc of Australia's total land area, and 2pc of Australia's agricultural land.

“Given the size and significance of the Kidman portfolio I am concerned that the acquisition of an 80pc interest in S Kidman & Co Limited by Dakang Australia Holdings Ltd – which I’ll refer to as Dakang - may be contrary to the national interest,” he said.

“I have today made my concerns known to the applicant and provided them with a natural justice period in which they may respond and consider how they wish to proceed.

“The applicant shall have until (next) Tuesday May 3 - budget day - to respond.”

Mr Morrison said he had concerns that the form in which the Kidman portfolio had been offered as a single aggregated asset which had rendered it difficult for Australian bidders to be able to make a competitive bid.

He said the size of the asset made it difficult for any single Australian group to acquire the entire operation.

Mr Morrison said the review examined market integrity issues of the sale process and was conducted by Professor Graeme Samuel AC and tasked with providing advice on whether the competitive bid process offered fair opportunity for Australian bidders to participate.

He said the review contained sensitive commercial in confidence material which precludes its release.

“While the review found the sale process followed a satisfactory commercial practice that offered opportunity to Australian parties to make an offer, the review also found there remains significant domestic interest in Kidman,” he said.

Mr Morrison said he outlined his concerns in his announcement and decision on Kidman on November 19 last year when the proposed sale was knocked back on national security grounds.

He said he noted then that the size and significance of the total portfolio of Kidman properties in the proposed form, as a single composite property asset, was not in the national interest.

“I am not yet satisfied these concerns have been addressed by the revised proposal that has been submitted to me,” he said.

“The size and significance of the portfolio, combined with the impact the decision may have on broader Australian support for foreign investment in Australian agriculture, must also be taken into account in this case.

“The Turnbull government welcomes foreign investment where it is consistent with our national interests.

“However, we must always ensure it is on our own terms.

“There are not too many jurisdictions anywhere in the world where foreign acquisition of large land holdings of this nature, would be permitted.”

Nationals leader Barnaby Joyce is not opposed to foreign investment in farming but believes it should not be against the national interest.

Nationals leader Barnaby Joyce is not opposed to foreign investment in farming but believes it should not be against the national interest.

Federal Agriculture and Water Resources Minister Barnaby Joyce said the Treasurer’s decision was welcomed, as it was “very important” that Australia had foreign investment sales that were in Australia’s national interest, “or not to the detriment of our national interest”.

“I understand the concerns that so many people hold (about foreign investment) and that we don’t have proper control over this process,” he said.

“(But) this is an example of where we do have oversight and we do exercise that oversight in saying both yes and in saying no and in this instance the answer is no.

“I know that I’ll now have a plethora of people charging out and saying what a terrible person I am for saying that but I’ll take it on the chin.”

Mr Joyce said Australia remained the most liberal country on earth in terms of the purchase of agricultural assets, “the most liberal by far”.

“The Australian people hold more than $2 trillion in superannuation and about 0.3pc of that is in agricultural assets,” he said.

“This is a great time for people to contact their superannuation funds and ask why they don’t hold a greater stake in our agricultural sector - an investment that is obviously attractive to overseas interests.”

Mr Morrison said as Treasurer he’d approved many significant foreign investment proposals and considered each on its merits “as I have done on this occasion”.

He said foreign investment had underpinned the nation’s development and needed to continue to attract strong inflows of foreign capital that the economy required.

“Without foreign capital and investment, Australia's output, employment and standard of living would all be lower,” he said.

“Foreign investment rules facilitate such investment while giving assurance to the community that the investment is being made in a way which ensures that Australia's national interest is protected

“We will continue to welcome and support foreign investment that is not contrary to our national interest.”

Mr Morrison said when he announced the 90 day statutory extension period that extended beyond the election date, he made no statement on when he’d be making a further decision.

“That was just simply a 90 day period and I’ve acted within that 90 day period – there are further stages in this process, to go,” he said.

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