Australia’s rejection of Chinese-led bid for cattle-station business only hurts its own interests

Alex Malley says by blocking a Chinese-led consortium’s attempt to buy the country’s largest landholding, the government is undermining its stated goal to welcome foreign investment

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Farmers attend a weekly livestock sale near the town of Carcoar in New South Wales, Australia. Photo: Reuters

Published: 10:35am, 6 May 2016Updated: 5:11pm, 6 May 2016

The ink is barely dry on the China-Australia Free Trade Agreement, yet the Australian government may already be undermining the positive sentiment this game-changing agreement created. Australia’s Treasurer Scott Morrison made a “preliminary decision” last week to block the sale of Australia’s largest private landholding, S. Kidman & Co, to a Chinese-led consortium.

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Last November, the government blocked the consortium’s original offer, citing concerns about the scale of the landholding, which covers 101,411 square kilometres and comprises 10 cattle stations. In particular, the proximity of the largest cattle station to a military testing range was listed as a reason to stop the sale. To address the government’s concerns, the company carved the cattle station of concern out of the broader sale package.

Australian Prime Minister Malcolm Turnbull visits Beijing’s Ancient Observatory. Turnbull led Australia’s largest ever business delegation to China last month. Photo: AP

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China-based Dakang Australia Holdings and Australian company Australian Rural Capital adjusted their purchase bid and appear to have addressed all the major issues, yet Morrison has again moved to block the sale. And now the consortium has officially withdrawn its bid, at least for the time being.

Two weeks after Australia’s Prime Minister, Malcolm Turnbull, led Australia’s largest ever business delegation to China, this decision seems to be at odds with Canberra’s commitment to foreign investment, particularly from China.

The greater principle at play is that foreign investment is very much needed in Australia

While many will understand concerns over a foreign company becoming the largest private landholder in Australia, the greater principle at play is that foreign investment is very much welcomed – and needed – in Australia. It’s why the free trade agreement has such a focus on facilitating investment flows.

Investors require certainty. They look for clarity around well-established criteria against which bids will be judged. They need to have confidence that, if you abide by the rules and follow the process, your investment will be approved.