Hockey blocks GrainCorp sale
Treasurer Joe Hockey has blocked the takeover of grain handler GrainCorp by US multi-national ADM, attracting the condemnation of Labor.PT4M9S http://www.canberratimes.com.au/action/externalEmbeddedPlayer?id=d-2yfy5 620 349 November 29, 2013
- Federal politics: Full coverage
- Hockey rejects GrainCorp takeover
- Malcolm Maiden: Blocked bid purely political
Just one letter and a tiny apostrophe were all that were missing from Joe Hockey's reasoning when he scotched the bid by the American giant, Archer-Daniels-Midland to swallow up Australia's top listed agri-business, GrainCorp (GNC).
Whereas the Treasurer explained the 100 per cent take-over was not in the “national” interest, the more pressing concern for the Coalition under threat of massive internal hemorrhaging over the issue, was that the acquisition was not in the Nationals' interests. And therefore not in the government's political interests.
Treasurer Joe Hockey announces his rejection of the GrainCorp bid on Friday. Photo: Peter Braig
It may have escaped the attention of many city voters in recent months, but the ADM move has been huge news in the bush. Tension within the Coalition has been extreme – a delicate situation for any Liberal-Nationals government, but particularly so for one as young and as chest-beatingly pro-business in its rhetoric.
Tony Abbott famously declared Australia was under new management on election night and was now open for business.
But the decision before the economically rationalist Treasurer was fraught with danger.
Nationals leader, Warren Truss, and his likely successor, Barnaby Joyce had made no secret of their strong opposition to the take-over. Privately, the Nats were incandescent, threatening all kinds of mayhem if the sale was approved.
Truss of course is also Deputy Prime Minister, so his public indications carried a lot of influence. They also raised a few eyebrows because Hockey was being told in no uncertain terms that the junior Coalition partner would not support the approval of ADM's bid.
The American agricultural giant's $3.4 billion bid was generous and came with the promise of hundreds of millions of dollars in infrastructure upgrades.
But growers worried that at just 4 per cent of ADM's total worth, GrainCorp would lack the clout within the multinational to see their interests protected. And they worried that they would wind up paying for those upgrades anyway in higher handling fees and perhaps lower returns.
Weighing heavily on Hockey and the entire government though was the signal a rejection would transmit.
Just a day after floating the alternatives for Qantas of greater foreign ownership, or partial nationalisation, the ADM application sends a potentially confusing message to international investors.
Business attracted by Australia's stability, its triple-A credit ratings, and its pro-business rhetoric, will now have to weigh those symbolic aspects against the reality of a government that has just knocked back a solid bid for a company and a sector that is badly in need of capital investment.
Politically, Hockey has chosen the path of least resistance. That doesn't automatically make it wrong, but it lifts the onus on the new government to explain in a detailed way why this particular bit of foreign investment is against the national interest, when other foreign investment is not.
Government, as the Prime Minister has noted, is about making the tough decisions.
This one appears to have been taken on the easy side of the ledger.
The Nationals are happy because once again their particular brand of protected capitalism – sometimes called agrarian socialism – has prevailed.
Hockey said he would not be bullied by anyone in making his final call on the GrainCorp bid.
Many in the business community may now be wondering what happened and what it might say about the character of the Abbott Coalition government.
Former treasurer Wayne Swan tweeted: “No more sanctimonious Hockey lectures about Australia being open for business or strong economic management, weak populist decision”.
Inevitably Hockey was damned if he did and damned if he didn't.