July 11th 2009

  Buy Issue 2807

Articles from this issue:

EDITORIAL: Boat people: Labor's policy backfires

CANBERRA OBSERVED: Malcolm Turnbull's reckless gamble

COVER STORY: Behind the turmoil in Iran

ECONOMIC AFFAIRS: Economic crisis parallels the Great Depression

NATIONAL AFFAIRS: Limit foreign ownership of key industries: NCC

INTERNATIONAL TRADE: Promised benefits from free trade fail to materialise

NATIONAL AFFAIRS: Rudd's emission trading scheme hits roadblock

SRI LANKA: Defeated, friendless Tamils face annihilation

MEN'S HEALTH: Male suicide - the silent epidemic

ENVIRONMENTALISM: Green doctrine spells death to humanity

CIVILISATION: The battle we are still fighting

Tasmania's sources of renewable energy (letter)

Justin Madden, a man for all seasons? (letter)

Euthanasia I (letter)

Euthanasia II (letter)

AS THE WORLD TURNS: Europe's political realignment / Marginalisation of fatherhood


Books promotion page

Limit foreign ownership of key industries: NCC

News Weekly, July 11, 2009
Following the attempted move by the Chinese Government-owned corporation Chinalco to take a large share in the mining company Rio Tinto, the National Civic Council (NCC) has called for the federal parliament to restrict foreign ownership of strategic Australian industries.

Although the Chinalco investment did not proceed, the issue remains very pressing, with Chinese Government-owned companies seeking a controlling interest in several other Australian companies.

NCC national vice-president Patrick J. Byrne, in a written submission, stated that foreign investment rules should be tightened regarding investment in Australian companies by foreign government-owned sovereign wealth funds (SWFs), and by foreign government-owned businesses.

New rules should include:

• Declaring a wider range of strategic industries in which foreign investment is limited or prohibited.

• In the most important strategic industries, acquisitions should be prohibited.

• In other important industries, foreign ownership by commercial companies should be restricted to 49 per cent.

• In important industries where SWFs and foreign government-owned corporations are seeking a stake, investment should be limited to, say, 14 per cent in non-voting shares.

• Investment in the resource sector should be as joint ventures in new projects, not hostile takeovers of existing companies.

• Careful examination should be made of operating agreements in any agreement to assess what degree of control of the company would be gained by the foreign investor over the longer term.

• Anti-avoidance legislation is needed to ensure the intentions of the rules are not undermined by such devices as the transfer of ownership to offshore holdings.

• The Treasurer needs to be given the power of divestiture to break up foreign ownership of a company when it is deemed that such foreign ownership is not in the national interest.

• The Treasurer should have the power to prohibit/limit foreign investment in the case of creeping acquisitions leading to overly concentrated ownership by one company.

• For serious breaches of the foreign ownership rules, forfeiture of ownership should be an option open to the Treasurer.

In evidence given to a Senate inquiry into foreign ownership, NCC president Peter Westmore nominated Australia's strategic industries as oil and gas, iron ore, coal, uranium, banking and the media.

Mr Byrne, in his submission to the Senate committee, wrote that Chinese state-owned corporations presented a real problem because of the aggressive nature of Chinese mercantilist capitalism, and the strategic shift this is causing.

He said: "Both the rapid growth of our foreign debt (now over $600 billion) and the heavy dependence on foreign investment in mining and other industries threaten to make Australia vulnerable to a major economic downturn. In current circumstances, they put Australia's economic sovereignty at risk."

He said that if the foreign financial markets lost confidence in the Australian dollar, this could trigger a run on our dollar and a flight of capital.

As Joseph Stiglitz, one of the world's best-known economists, has warned, in such crises countries like Australia would be expected to repay their debts. This is because they have "the capacity to repay: they could presumably raise taxes and cut expenditures enough to generate the required revenue. The value of the country's assets exceeds by a wide margin the value of what is owed. But the cost to the country can be enormous, beyond what its citizens are willing to pay."

Part of that repayment process could involve allowing sales of more Australian assets to foreign buyers - including China.

Warren E. Buffett, the famous American investor and economic commentator, has warned in Fortune magazine that the world faces a new form of strategic dominance. He cautioned that any country that excessively depended on foreign borrowing would become a nation of wage-earners rather than property-owners. Such a nation risks losing its sovereignty, being "colonised by purchase rather than conquest".

At the same time as our foreign debt has been mounting, Australia has also been heavily relying on foreign investment to develop the resource industries that are supplying the new global powers like China and India.

Under Beijing's "Go Abroad" policy - aimed at securing access to important raw materials, advanced technology and brand names - Australia has suddenly become a major target for Chinese investment.


Chinese Government-controlled investments in Australia have jumped from a trickle three years ago to $6.8 billion in 2007, and have been estimated to potentially reach $30 billion in 2008. The proposed 2009 investment in Rio Tinto was $30 billion alone.

Mr Byrne said that, while no single current investment proposal in Australia poses any threat to our sovereignty, a flood of major investments over time could see the Chinese regime become a major player in Australia, with profound political and strategic ramifications.

As Robert Gottliebsen has noted, "In a decade or two [China] may emerge as our 'protector' because they need to safeguard their raw material supply-lines and because the US appears to be in decline."

All you need to know about
the wider impact of transgenderism on society.
TRANSGENDER: one shade of grey, 353pp, $39.99

Join email list

Join e-newsletter list

Your cart has 0 items

Subscribe to NewsWeekly

Research Papers

Trending articles

COVER STORY Coronavirus: China must answer hard questions

NATIONAL AFFAIRS Cardinal Pell's appeal in the High Court this week

CLIMATE POLITICS Business joins Big Brother in climate-change chorus

COVER STORY Beyond the Great Divide

COVER STORY Murray River full; reservoirs low; farms for sale ...

ILLICIT DRUGS Cannabis marketed to children in Colorado

EDITORIAL Holden, China, covid19: Time for industry reset

© Copyright NewsWeekly.com.au 2017
Last Modified:
April 4, 2018, 6:45 pm