At last, the Foreign Investment Review Board (FIRB) has displayed a backbone, ruling against the sale of Australia’s largest cattle station to Chinese buyers. From The AFR:
S. Kidman & Co has a herd of 200,000 cattle in Australia, spanning 101,411 square kilometres and spread across 11 cattle stations in South Australia, Western Australia, the Northern Territory and Queensland…
Chinese investment firm Genius Link Asset Management had been believed to have been ahead after rival company Shanghai Pengxin made a $350 million bid for the company…
The decision was made in accordance with recommendations from the Foreign Investment Review Board, Mr Morrison said…
“Given the size and significance of the total portfolio of Kidman properties along with the national security issues around access to the WPA, I have determined, after taking advice from FIRB, that it would be contrary to Australia’s national interest for a foreign person to acquire S. Kidman and Co. in its current form,” Mr Morrison said.
Good to see. The key problem with Australia’s foreign investment framework is that it to often confuses the transfer of ownership of assets to foreigners, whereby no real investment (capital deepening) takes place, with genuine foreign investment.
The former (which is the dominant source) is akin to “selling the family jewels”, and should be discouraged, whereas the latter actually adds to the nation’s productive capacity, and should be encouraged.
Another concern with the spate of Chinese investment in Australian agriculture is that they are seeking to vertically integrate the whole food production process in Australia: purchasing our farms as well as the whole distribution and logistics production line. When combined with the recently signed FTA, which will allow China to import temporary labour to work on its farms, there is the real prospect that Australians will be cut-out completely from the whole food export business, and in turn cut-out from the economic benefits.
Maverick Queensland MP, Bob Katter, is particularly wary, as explained in an interview on Chanel 7’s Sunday Night a few months back:
“It’s not ‘investing’, they’re not opening mines or building dams or anything of that nature, they’re just buying the asset that is there. So it’s not investment, it’s selling your country off.”
“They control the retail market in China. We sell for $2.50 a kilogram, our cattle, it sells in China for $30 or $40 a kilogram. So if you are the person in China getting the $30 or $40 dollar per kilogram then, Australia looks very attractive”.
“But if you’re the poor old farmer in Australia only getting $2.50 you’re going to go broke.”
“The future must belong to a total Chinese ownership of all rural Australia. That’s the economics of what I am talking about”…
“The only reason why you are going to bring Chinese workers into Australia is because you are going to pay them a hell of a lot less and get a hell of a lot more. Work that out for yourself”…
“Bloody Australians have a bit of pride and a bit of back-bone. We are not going to stand aside and have our workers work for nothing. We are not going to stand aside and have our country owned by foreigners. And us becoming modern day serfs working for the foreign landlord… working increasingly for nothing”…
It’s time for Australia’s politicians to stop conflating foreign ownership with foreign investment. By all means encourage genuine investment that adds to the productive capacity of the economy, resulting in increased economic activity and jobs.
But where foreign “investment” merely involves the transfer of ownership, and no real economic transformation, Australia should push back. Because it’s selling-off the farm and our children’s future.
