Nick Xenophon says Australia needs to think seriously about its national interest before it allows the sale of the NSW electricity distributor Ausgrid to China’s biggest state-owned company.
He has written to the treasurer, Scott Morrison, asking if the Turnbull government has sought advice from Asio and Defence about the sale.
He says the NSW electricity network is nationally significant, given the structure of the national electricity market, and the sale of the network to a foreign state-owned company should raise national security concerns.
The NSW Baird government is planning to sell 50.4% of Ausgrid as part of its poles and wires privatisation program.
It hopes to raise more than $10bn from the sale.
But the field of potential buyers has thinned to just two – the State Grid Corporation of China, which is China’s biggest state-owned company, and the privately owned, Hong Kong-listed Cheung Kong Infrastructure, controlled by billionaire Li Ka-shing.
Federal independent MP Bob Katter has flagged a private member’s bill to stop the sale of Ausgrid to State Grid.
“Assets such as Ausgrid provide the ability to secure income for future generations,” Katter said in a statement announcing his bill.
State Grid already owns an extensive gas and power network in NSW and Victoria, and pipelines in Queensland and South Australia.
Xenophon’s letter says if State Grid is also allowed to own a huge stake in Ausgrid it raises serious questions about market dominance.
“State Grid is China’s biggest state-owned company. Any sale to a foreign government-owned company should raise significant national interest concerns on this basis alone,” he writes.
“[But] State Grid already owns an extensive gas network in NSW, meaning that should it acquire Ausgrid it would control much, if not all, of the electricity and gas supply for Sydney.
“That itself raises issues in relation to competition policy, market dominance and the potential impact on consumers.”
“Can you please advise whether advice has been sought from Asio and Defence in relation to any concerns that they may have about this proposed transaction,” he writes.
The bid process for Ausgrid closes on 25 July, and the Foreign Investment Review Board and Morrison will have to approve the sale.
Xenophon asks Morrison if he will consider reports alleging a poor human rights record at State Grid while considering its bid. He also asks if Morrison will consider a number of clear and enforceable conditions if Ausgrid is privatised, to try to protect the national interest.
He says measures designed to limit control of an Australian asset by a foreign company or foreign country, such as the requirement that they appoint an Australian chairman or hold certain data in Australia, are “tokenistic” and do little to limit control.
He also says he intends to reintroduce a bill to amend the Foreign Acquisitions and Takeovers Act to strengthen the national interest test and make foreign investment decisions more transparent.
In April, Morrison blocked the sale of Australia’s largest landholder, S Kidman & Co, to a majority Chinese-owned consortium because it “may be contrary to the national interest”.
The sale of the company’s assets, which comprise 2.5% of Australia’s agricultural land or 1.3% of Australia’s land mass, would be worth $370.7m.
But Morrison said: “Given the size and significance of the Kidman portfolio I am concerned that the acquisition of an 80% interest in S Kidman & Co Limited by Dakang Australia Holdings Pty Ltd (Dakang) may be contrary to the national interest.”
A month later Andrew Adcock, the national marketing manager of Ruralco, a rural property agent, said Morrison’s intervention was only a political stunt and he expected a Chinese-consortium to buy the Kidman portfolio after the election.
“The Chinese will ultimately be the buyers, I would suggest,” Adcock told the ABC.
Australian Associated Press contributed to this report
