FOREIGN INVESTMENT: by Peter WestmoreNews Weekly
Cubbie Station sale exposes weak foreign ownership rules
, September 29, 2012
The decision by the federal Treasurer, Wayne Swan, to approve the sale of Australia’s largest rural property, Queensland’s Cubbie Station, with the largest water entitlement, to a consortium led by a Chinese government-owned corporation, has highlighted the weakness of Australia’s foreign investment rules.
Cubbie Station went into receivership some years ago, and the receivers are selling it on instructions from its lenders, including the National Australia Bank.
Senator Barnaby Joyce, who courageously criticised the move, has been criticised by free marketeers in the Coalition who are indifferent to foreign ownership of Australia, and by Wayne Swan himself, who denounced Senator Joyce as “xenophobic”.
One wonders whether the Treasurer would describe China’s refusal to permit foreign ownership of its national assets in the same terms: or is there one rule for China, and another rule for Australia?
Senator Joyce said, “Shandong Ruyi, who would take 80 per cent ownership of Cubbie, was formed as a Chinese state-owned entity in 1972…. State-owned entities are both a major shareholder and owners of subsidiaries of the company.
“The big issue is that, under this deal, a company with clear connections to another nation’s government will own Australia’s biggest farm by value, biggest water licence, with enough water to fill Sydney Harbour, and our largest irrigation farm.”
Senator Joyce warned that the purchase would introduce more complexity to the Murray-Darling plan under which water will be demanded from the Lower Balonne River. “People are rightly asking if Cubbie has not been asked to give water back to the environment, will that mean a massive economic burden on the small businesses and real estate prices in the upstream town of St George, or the downstream environmental requirements?”
Senator Joyce said that the Treasurer could have imposed conditions to sell water, but he settled for a condition that they abide by local laws and regulations.
Senator Joyce highlighted the fact that the sale of Cubbie Station could have proceeded in a number of different ways. “Cubbie Station could be bought and split up into smaller properties. Cubbie Station is not one property at one location.
“There is a farm that is part of the government-constructed irrigation scheme at St George. It is over 120 km from the Cubbie homestead. Even further away is another Cubbie property called the Anchorage. At Cubbie Station itself the 45,000 acres of irrigation could be broken into three lots.”
Senator Joyce said that, as the shadow water minister, he realised the complexities of water usage and allocations.
He continued: “There are the immense sensitivities between upstream and downstream users, there are the immense sensitivities that lie between the states, there are sensitivities over who is extracting what and whether someone is extracting too much, and there are sensitivities between the environment and agriculture.
“Now on top of that we will include diplomatic issues to make it even more complicated.”
Responding to Mr Swan’s claims of xenophobia, Senator Joyce said, “The Chinese have interests in other farms in my area and I couldn’t give a toss about it. Good luck to them, but this is something entirely different.
“Cubbie Station wins the bet on Australia’s largest irrigation properties and it is certainly one of our more contentious. And this transaction is not going to help settle that contention one little bit.”
Senator Joyce said that foreign investment and foreign ownership should not be confused. “You go on to an undeveloped block and develop it for Australia, that is something good for the nation. You go onto an already developed block, and that is just a transfer of ownership.”
Senator Joyce was also scathing about the way in which the Foreign Investment Review Board (FIRB) had been used to vindicate the sale.
“I had no ability to determine the timing of the FIRB approval decision. Mr Swan announced the decision late on a Friday evening when he easily could have announced a 90-day extension to give time for public debate.”
The Queensland Nationals senator also said he was stunned by the silence of South Australian Labor Senator Penny Wong, SA Labor Premier Jay Weatherill and the Greens, who in the past had railed against the evils of upstream water-users. “Their silence is deafening,” he said.
Senator Joyce also raised questions about the process conducted by the receiver in regard to due process with alternate bids, after one interested party claimed that it was the most un-Australian bidding process he has ever seen.
The ABC also reported that the receivers had had expressions of interest from up to a dozen other prospective buyers; but after the Treasurer’s statement, one potential buyer was told it was “too late”, although sale contracts had not been signed.
The sale of Cubbie Station should have been deferred until all these issues were settled.