logo logo

Kevin Rudd ’risks foreign investment’

The Australian | August 30, 2013

Kevin Rudd ’risks foreign investment’

by: Annabel Hepworth and Scott Murdoch

BUSINESS has warned that Kevin Rudd’s populist rhetoric on foreign ownership could undermine Australia’s ability to secure free-trade agreements with key Asian trading partners and risks foreign investment that is crucial as the economy slows.

As the Prime Minister stood by his crackdown on foreign investment in agriculture, the peak business body criticised both parties’ position on foreign investment, saying Australia should have the "open for business" sign up.

Former Reserve Bank board member Warwick McKibbin decried the "terrible, terrible" message being sent offshore when foreign investment was vital.

In China, there was concern foreign investment rule changes could hold up the free-trade agreement between Australia and China that has been under negotiation for nearly nine years, while resource employers declared the "borderline-xenophobic remarks from a government pandering to ill-informed union backers" would quickly travel to international investors and have a "profound" impact on Australia’s global standing.

At Langhorne Creek, south of Adelaide, Robbie Potts, whose family has owned Bleasdale wines and vineyards since its establishment in 1850, said he saw little problem in selling a 10 per cent stake to Hong Kong-owned Monita Estate in May.

"It’s going to open up a few more opportunities for us in China," Mr Potts said.

He said the family had been looking for someone to inject more capital, but found Monita’s Hong Kong-based owner, Charles Poon, could also provide valuable business connections.

The comments supporting foreign ownership came after Wednesday night’s final leadership debate, in which Tony Abbott effectively confirmed the Coalition’s plan to lower the threshold for Foreign Investment Review Board examination of foreign purchases of agricultural land from $248 million to $15m.

Mr Rudd moved to outflank this, saying he was "not quite as free market" on the topic and made clear he opposed an "open slather" approach to foreign investment.

Professor McKibbin, from Australian National University, said the wrong message was being sent offshore when "we need foreign investment to come into this country to sustain our lifestyle".

"I just don’t understand why you would commit what is essentially economic vandalism just to try and win an election, from any side of politics actually," he said. "There is a big principle here. And that is the access to global capital that we don’t want to tamper with."

The Business Council of Australia said the nation needed foreign investment in an environment where GDP was slowing and business investment was forecast to decline.

"At this stage, proposals being put forward from both major parties will take us in exactly the opposite direction," BCA spokesman Scott Thompson said. "If we’re serious about being part of the Asian Century, then we have to get serious about foreign investment."

Former BCA president Graham Bradley said there was already a well-developed foreign investment review process and there was little need to throw this overboard, "particularly at this time when we are trying to integrate our economy with Asia to the benefit of all". "There are many examples of foreign investors in the Australian agriculture sector who have brought new capital and innovation to the benefit of the Australian economy in recent years," he said.

"If Australia is to realise its potential to be a more significant food producer in our region, foreign capital will play a critical role in achieving its potential."

The Australian Chamber of Commerce and Industry said an election was not the best time for a sensible debate on foreign ownership rules.

Australian Mines and Metals Association chief executive Steve Knott said: "This new rhetoric on foreign investment adds to the earlier demonisation of skilled migrants in our country and borders on xenophobia. These messages about Australia are not well received by the international investment community."

Guandong Investment Company president Wang Changhai said businesses in China were keen for the FTA to be finalised and feared Foreign Investment Review Board changes could hamper that process.

"As investors we would like the FTA to be achieved as soon as possible, otherwise businesses in both countries have no certainty for the future, concerning what policy changes might occur," Mr Wang said.

China is now Australia’s top trading partner with trade between the two nations worth nearly $US130 billion ($145.59bn) a year. There have been almost 20 rounds of talks since the FTA was proposed by the Howard government.

Kevin Rudd said finalising the long-awaited deal would be a priority for a re-elected Labor government while Julie Bishop said the Coalition would sign the agreement within 12 months if it won the election.

An Australian business figure in Beijing, New Wave Capital founder David Garnier, said changes to foreign investment rules would send a bad signal to China, while investment lawyer Li Feng said both parties had moved to politicise the trade relationship with China, and this could prove damaging.

Australia New Zealand Chamber of Commerce in Japan chairwoman Melanie Brock said the Coalition’s moves to reduce FIRB thresholds to $15m could complicate negotiations for the Japan-Australia free trade agreement.

Additional reporting: Mark Schliebs, Rick Wallace

 source: The Australian