The Australian government in the form of its recently appointed treasurer Scott Morrison has rejected bids for a controlling interest in the Ausgrid electricity network from two Chinese investors – Hong Kong billionaire Li Ka-shing and government owned State Grid Corp.
Mr Morrison made a preliminary decision to reject the bids, amid growing opposition to selling infrastructure assets to overseas investors, saying that it would be contrary to national security to allow the sale to proceed in its current form. He said, on 11 August, that the bidders have been given a week to respond.
“I’ve informed the Ausgrid bidders of my preliminary view that their foreign investment proposals are contrary to the national interest,” Morrison said at a news conference in Brisbane. “That will require a final decision to be made once I have received those responses.” In particular, during the review process national security issues were identified in critical power and communications services that Ausgrid provides to businesses and governments, said Mr Morrison.”
The move is a sign that protectionism is on the rise in Australia, where Morrison earlier this year blocked the sale of the nation’s largest cattle rancher, S Kidman & Co, which owns vast tracts of land, to a Chinese-led group, saying it could be against the national interest. If government-owned State Grid’s A$10 billion bid is ultimately blocked, Australia will becomes the latest state to risk straining ties with its most important trading partner.
Mr Morrison insisted to reporters that the government remained positively disposed to foreign investment despite the decision to block the transaction. The stake is being offered by the state government under a 99-year lease.
State Grid Corporation, and Cheung Kong Infrastructure controlled by tycoon Li Ka-shing, have each submitted bids of more than A$10bn ($7.47bn) for a 50.4 % stake in the New South Wales electricity group Ausgrid. No local bidders took part in a privatisation process.
Chinese investment in the US, Europe and Australia has hit record levels, underlining Beijing’s growing importance as a driver of global growth and source of inward investment. But it has reached a level where it is prompting scrutiny from regulators.
The New South Wales government is confident that another buyer will be found in time for the next state budget to record the proceeds of the transaction. But given the lack of local bidders, the sale process is likely to be delayed and raise less cash.
Australia’s business lobby and some politicians are becoming increasingly concerned that foreign investment has become a political football, which risks damaging the economy.
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