Australian Treasurer Joe Hockey this morning said no to US based Archer Daniels Midland takeover of Graincorp, east coast Australia’s biggest grain handler and exporter.
Hockey told a press conference in Sydney the decision was his to make as the Foreign Investment Review Board could not decide if the takeover was in the national interest.
Hockey decided it was not.
The treasurer made it clear that of the 131 deals that had come across his desk since he took office, this Graincorp takeover is the first one he has said “no” to.
Coming the day after the news broke that the Treasurer was considering investing in – what you might call “un-privatising” – Australia’s national carrier Qantas it seems a strange departure for a Government that said Australia was “open for business”.
But if you put a line through Graincorp and Qantas you can see the Abbott Government are Australian nationalists first and foremost.
There are already calls that the Treasurer is weak and has bowed to the National party. There are also already calls that this is against the free market credentials that the Liberals presented to the Australian public and global investors.
But if the global financial crisis has taught us any lessons it is that unfettered free markets come at a cost and sometimes the national interest and those of its citizens are for governments and regulators to intervene in markets to protect the greater good.
It’s exactly what RBA Governor Glenn Stevens recently did to knock the Australian dollar off its perch in 95-97 cent region and it’s clear it is what he will do again if required.
Equally more than a decade ago Peter Costello said no to Shell’s takeover of Woodside because it was not in the national interest.
But this new approach is an unexpected one from the Government and raises other questions about potential Government intervention in industry and across the economy
- Will the Car industry be seen as a national requirement and so be supported when the Government said it was going to cut funding and support?
- Will our vast pool of Superannuation savings see Trustees mandated to invest in Australian infrastructure?
- Will the financial system inquiry have any other result than to reinforce the existing system of the major banks and the four pillars?
So while many observers have suggested that the Abbott Government has got its training wheels on and NSW Premier Barry O’farrell has told them to stop acting like they are in opposition it just might be that there is a clear plan being executed.
Australia is open for business but on the Government’s terms, not the market’s.