The Treasurer, Joe Hockey, has blocked the takeover of GrainCorp by the American company Archer Daniels Midland.
Hockey used the power given to him alone as Treasurer to reject the foreign investment application. ADM was seeking to increase its current shareholding of 19.85% to 100%. Hockey said he would permit ADM to hold 24.9%.
Whilst many see the decision as unexpected, Hockey’s announcement heads off a political conflict with The Nationals in the coalition. In his announcement, Hockey said a “significant consideration” was that “this proposal has attracted a high level of concern from stakeholders and the broader community. I therefore judged that allowing it to proceed could risk undermining public support for the foreign investment regime and ongoing foreign investment more generally. This would not be in our national interest.”
It seems clear that the government has avoided a clash with sections of its core supporters but the decision conflicts with Prime Minister Tony Abbott’s claim that “Australia is open for business”. Free marketeers and economic rationalists in the government will be alarmed at what the decision says about the future direction of the Abbott government. [Read more…]