Property

Opinion: Government should reimburse Kidman bidders

James Nason, 25/05/2016

IT IS hard to imagine that the process of selling S. Kidman and Co could have been any more disjointed or disrupted, had that been the Federal Government’s actual aim from the outset of the recent sale saga.

For almost an entire year investors who entered into the bidding process in good faith, along with owners of the iconic cattle company, were strung along on the understanding that the best bid would result in a sale.

Kidman SpringsEarly interest from foreign parties in the Kidman holdings was clear, and widely reported by media.

At that early stage the Federal Government could have – and should have – made its concerns about national interest and the sale of the large landholding to foreign parties clear.

But instead, interested parties were advised that the Foreign Investment Review Board and the Federal Government had been closely consulted prior to the sale process and were told from the outset that no major issues with a sale to a foreign party were foreseen.

It is understood that the Chinese bidders that saw the bids through to the sudden shock rejection last month accrued costs of more than $1 million in expenses, time and resources thrown at the sale process.

The advice these parties received from the government was at best, misguided, and at worst, misleading.

The botched handling has left Australia’s standing as a credible place to do business in tatters and has done untold damage to other deals, now thrown into doubt. What foreign investor is going to seriously enter into another lengthy purchase process when they have no clarity over what the words “national interest” means?

That the Federal Government left its final rejection until so late in the process clearly suggests the decision was politically motivated to avoid a backlash from anti-foreign ownership elements during the currently election campaign.

While Kidman & Co has been widely described as Australia’s largest private land owner, technically speaking the vast majority of its holdings are under pastoral leasehold title, not freehold.

Compare Australia’s handling of this issue with the reception Australian Edgar Collins has received in China, where he has built a significant (ie $500m plus) foreign-owned dairy operation with Australian, Indonesian and US backing.

Mr Collins told Beef Central during a recent visit to China that the Chinese Government could not have been more supportive or encouraging of the large foreign-owned investment.

Mr Collins and his co-investors in China operate on 40-year leases, and have no stated concerns about security of their investments or the tenure of the land on which they operate.

Regardless of where individuals stand on the position of foreign ownership of Australian agricultural land, they should agree on one thing: that the federal government has a moral obligation to reimburse the costs incurred by the foreign bidders involved.

 

 

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Comments

  1. Michael Vail, 26/05/2016

    Well said, Sam Trethewey!

  2. Michael Vail, 26/05/2016

    The point I ‘tended to agree on’, was not John Gray’s, but James Nason’s.

    Just to clarify.

  3. Sam Trethewey, 26/05/2016

    James, spot on!
    The xenophobic and sometimes racist remarks from poorly educated Australians on the sale of Kidman was embarrassing. It showed a blatant unawareness of “their own” rural Australia, the flow of capital and even Kidmans background. ScoMo made a decision based on appeasing them through the polls, not economic merit. The argument against the sale of Kidman was half-baked at best.
    It sends a shocking message to foreign investors, especially “Asian” ones. Not sure about the function of a refund…. but you have a point. If it was any other transaction, most would pursue the same.

  4. Lindsay Lyall, 26/05/2016

    Let’s face it, the Kidman land is fragile, and the Chinese will NEVER own it as they don’t have an u der standing of the land In my opinion they will leave it like the Vestys did to north west Australia, where the land was left so baron, the Western Australian government had to replant 1000s square miles of land to make it productive again. Vestys also paid $20 tax in 20 years. Something to think about

  5. Edgar Burnett, 26/05/2016

    The Government would do any Australians (especially those of the younger generation) interested in buying the Kidman properties a favor by directing Kidman’s shareholders to break the group up into individual properties for sale.
    When the money men of AMP put the Stanbroke group up for sale a few years ago, the final result was that they did their shareholders out of quite a lot of money and the group was finally broken up anyway for a total value well in excess of the initial sale value. Just ask the little Aussie battlers who ended up with the properties.
    As far as the Chinese wanting a good source of good quality protein, well they are quite free to operate in the market place for this protein. If the properties are sold to foreign interests, how much income from this protein are Australians missing out on?
    Also for those Australians wanting to borrow to buy assets in Australia, presently they are charged the highest Interest Rate in the Western World due to the RB of Australia’s policy. In fairness to them, the RBOA should drop their rates in line with the rest of the Western World.
    This action would assist exporters as well in the form of a lower A$. Businesses that operate with borrowed money, that export, and that operate in Australia are suffering 3 hits – Interest Rates that are too high, an A$ that is too high, and operating costs that are too high on world standards. Also the Aussie Manufacturers would benefit as well because imports would be dearer and hence they would not be competing as much with cheap imports.

  6. Michael Vail, 25/05/2016

    I tend to agree (with James Nason’s views), to a point; but EY may not have had a discussion directly with the Federal Treasurer, and I understand that even if the FIRB has given its blessing, with no obvious hurdles in sight, the Treasurer has the final say, apparently in the ‘ national interest’, whatever that means …

    To remove any doubt, especially in a situation like this, maybe bidders or the Vendor, could seek a ‘Private Binding Ruling’, in writing; such as Taxpayers can from the Australian Taxation Office or ATO.

    Would certainly put some certainty around a sale process, and arguably remove the politics.

    If a sale was subsequently rejected by the Treasurer, then there would be a promise to sue upon.

    The decision had to be political, and that is the system. If you do not like it, change the system!

    But xenophobia must be removed from the decision-making process. It is OK for the British, Americans, Bruneians, Singaporeans, and Europeans to invest here, and since white settlement began; why not the Chinese?

    Remember this, the Chinese do not want to own the land. Use Joint Venture Partnerships as the vehicle of choice. It is an option anyway.

    All the Chinese want is a good source of protein from a country where the quality of food has a very high reputation as clean and green and maybe organic.

    At least that is the opinion in China.

    Food for thought …

  7. John Gray, 25/05/2016

    What a load of garbage that is wrote above!!!!!!!!!!
    The Federal government does not owe a penny to anyone over the non sale of Kidman & Co. The foreigners bidding for Kidman & co knew the risks,END OF STORY!!!!!!!!!!!!!.
    If they didn’t like the outcome,they can always take their bat & ball and go back to where ever they came from.
    There’s a fare chance the article above was penned by some wingeing,wyning realestate agent that missed out on their fist full of hundred dollar notes,which basically is all they are interested in.

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