The trade minister, Steve Ciobo, has tried to explain to a Chinese audience why the Turnbull government blocked the sale of Ausgrid to Chinese bidders.
He has also hinted that Australia could change its guidelines on foreign investment in critical infrastructure, saying the policy will ensure Australia’s approach to foreign investment does not discriminate between nation states.
Speaking in Hong Kong on Monday at the Credit Lyonnais Securities Asia forum, Ciobo said Australia’s government treated foreign investment seriously and it was “extremely rare” to reject bids from foreign entities.
“It’s important to keep things in perspective,” he told the audience.
“Over the past 15 years, we have averaged around 1,000 business investment applications a year to our Foreign Investment Review Board [FIRB]. In that time, we’ve had the grand total of five rejections. Just five, out of 15,000.
“In the handful of cases where FIRB has intervened, these cases involved transactions of national significance and highly complex issues, where specific concerns unique to a particular asset have arisen. These transactions were at the pointy end of the nexus of national sovereignty and security.”
Chinese investors reacted angrily after the treasurer, Scott Morrison, rejected the final two bids for Ausgrid last month.
The final bidders were China’s largest state-owned company, the State Grid Corporation of China, and the privately owned, Hong Kong-listed Cheung Kong Infrastructure (CKI), controlled by the billionaire Li Ka-shing.
Morrison had cited national security concerns over the two proposals.
His decision was criticised by the NSW premier, Mike Baird, who had been trying to sell a 99-year lease on 50.4% of Ausgrid – the state’s major electricity distributor – as part of his poles and wires privatisation program, and to raise $10bn from the sale.
“My frustration is that this should have been determined much earlier,” Baird said.
Bob Carr, a former NSW premier, also criticised Morrison’s decision to reject the sale, saying it was inspired by a “witches brew of economic nationalism, xenophobia unleashed by the federal election”, rather than national security concerns.
Carr is currently the director of the Australia-China Relations Institute at the University of Technology in Sydney.
But Ciobo told the Chinese audience on Monday that Australians thought very highly of CKI because it had invested billions of dollars in Australia over the last two decades.
“The very fact that CKI is held in high repute underscores that the Ausgrid decision pertains to the asset itself, not to the potential owners,” Ciobo said.
“There’s something very particular about Ausgrid. As the treasurer has stated, Ausgrid’s footprint includes critical power and communications services that Ausgrid provides to business and government. The national security concerns relate to the transaction structure and the nature of the assets – not to any particular investor.”
Ciobo said the Turnbull government would have more to say on its policy framework with respect to “foreign involvement” in critical infrastructure.
“The policy will ensure that Australia’s approach to foreign investment is non-discriminatory between nation states, proportionate to the risks involved, supportive of continued foreign investment and Australia’s reputation as a foreign investment destination, and be consistent with our free trade agreement undertakings,” he said.
