A prominent economist says politics, rather than economics or security issues were likely behind Treasurer Joe Hockey’s move to block GrainCorp’s takeover.
Federal Treasurer Joe Hockey’s decision to block a proposed $3.4 billion foreign takeover of GrainCorp was likely based more on politics than economics or security concerns, a prominent economist says.
Mr Hockey on Friday announced he had denied US food giant Archer Daniels Midland’s (ADM) bid to acquire 100 per cent of GrainCorp on national interest grounds.
“For me to reject this proposal, I had to determine that the acquisition of GrainCorp by ADM is contrary to the national interest,” he said.
“Based on all the available information, I have now made that decision.”
But AMP chief economist Dr Shane Oliver said the decision likely came down more to a sense of national pride surrounding Australian assets among voters than it did economic or food security concerns.
“At the end of the day, a lot of these things come back to the politics of perception, that we’ve got to keep it Australian owned,” he said.
“That is politics. It’s not economics and it’s not military security either,” he said.
The treasurer listed GrainCorp’s ownership of more than 280 up-country storage sites and seven of the 10 grain port terminals in New South Wales, Queensland and Victoria, and the fact it handled 85 per cent of east coast bulk grain exports a reason for his decision.
But, Mr Oliver said, the government would still have had the power to act, if necessary, on security issues relating to the port or grain stocks regardless of whether the assets were foreign or locally owned.
“That grain is still being produced in Australia and, ultimately, if there is a war, the federal government can intervene to make sure it stays in Australia.”
Still, he said, Mr Hockey’s decision was unlikely to discourage foreign investment in Australia.
“History tells us these decisions are few and far between,” he said.
“I doubt that it’s going to stop foreign investors from looking at other Australian companies in the future.”