OK Nats, We See that Muscle

By Michelle Grattan on Fri, 29-11-2013

Joe Hockey decided to end the agony early. He had given himself until December 17 to pronounce on the $3.4 billion Archer Daniels Midland bid for agri-giant GrainCorp. But more delay would only deepen the divisions – especially with Senate committee hearings scheduled for Monday and Tuesday next week.
The Treasurer’s decision to reject the American company’s bid avoids what could have been a huge backlash from the Nationals but does compromise the Tony Abbott election night message that Australia is “open of business’’. In reply, Hockey points out that more than 130 bids have been looked at by the Government and this is the only one rejected.
The Liberal “dries’’ won’t be happy. But politically, that is less dangerous for the Government than having the Nationals (and some rural Liberals) go feral. Hockey uses the rationale that approval would have risked jeopardising more general community support for foreign investment, which is so vital for the Australian economy.
Hockey’s situation was made slightly easier by the fact that the Foreign Investment Review Board was divided. If it had unitedly urged the bid be approved, it would have been tricky to say no – the politics of that would have looked blatant.
ADM had upped the pressure recently, with an offer of an extra $200 million for capital investment and a promise of a three year price cap on charges for growers. The Nationals treated this sweetener with disdain; Deputy Prime Minister Warren Truss said yesterday it would not convince the farmers.
It had been thought earlier that Hockey would probably approve the bid with conditions, a position one would think he’d have preferred. But he indicated that satisfactory conditions could not be worked out. Anyway, as the weeks have gone on, it has become clear that the Nationals would not buy that sort of half way house. While the decision was Hockey’s alone, he was obviously sensitive to the context.
GrainCorp is not an icon to the ordinary Australia but it has come to have that sort of status for the Nats.
Qantas is an Australian business icon – and now it is in the middle of a foreign ownership debate. It needs financial help and among the options are allowing majority foreign investment or for the Government to purchase a share. The latter is not something that fits easily with Coalition ideology. The former would not be electorally popular. It’s another awkward issue on the Hockey’s plate although that decision will not, when it comes around, rest just with him.