Scott Morrison says sale of 2.5% of Australia’s agricultural land ‘may be contrary to national interest’

This article is more than 4 years old

This article is more than 4 years old

Australia’s treasurer, Scott Morrison, has 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”.

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The sale of the company’s assets, which comprises 2.5% of Australia’s agricultural land or 1.3% of Australia’s land mass, was worth $370.7m.



“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,” Morrison said.



“I have today made my concerns known to the applicant and provided them with a natural justice period in which they may respond and consider how they wish to proceed.”



The Kidman company had agreed to sell the company to China’s Dakang Australia Holdings and the locally listed Australian Rural Capital Ltd, with Dakang taking 80% of the land and ARC taking the remaining 20%.



The applicants have until Tuesday 3 May to respond.



“I have concerns that the form in which the Kidman portfolio has been offered as a single aggregated asset, has rendered it difficult for Australian bidders to be able to make a competitive bid,” Morrison said.

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“The size of the asset makes it difficult for any single Australian group to acquire the entire operation.”



Last week, Morrison issued an interim order delaying the transaction for 90 days “to consider the national interest implications of this complex and sensitive acquisition”.

The delay had meant the treasurer would decide just weeks after the anticipated double-dissolution federal election on 2 July.

At that time, Morrison established an independent and external review of the Kidman sale and tender process “because I want to be absolutely confident when I finally consider this matter that Australians have had every opportunity to be participating in that process”.

In making the announcement on Friday, the treasurer brought forward the decision. He said he already received the review of the sale by Graeme Samuel and there were “no further stages” in the process so he acted within the 90 day period.

The initial bid by Dakang was rejected on national security grounds in November last year.

At that time, Morrison said Kidman’s 10 cattle stations included properties across regional South Australia, Western Australia, the Northern Territory and Queensland covering 101,411 sq km and managing a long-term average herd of 185,000 cattle.

Morrison said about half of the Anna Creek pastoral lease was in South Australia’s Woomera prohibited area (WPA), a military weapons testing range.

It was “not unusual for governments to restrict access to sensitive areas on national security grounds”.

Kidman reopened bids to gauge interest among Australian buyers and carved out the 2.3m hectares of the Anna Creek cattle station, which is near a defence weapons-testing range, to allay the original security concerns.

The proposed sale was shaping up as a serious election issue, including in South Australia, where the Coalition is facing a threat from independent Nick Xenophon, who was campaigning against the sale.

Xenophon – who has established his own party, NXT – had threatened that his potential support for one of the major parties could “absolutely’’ be contingent on blocking the Kidman deal.

After the decision, he was cautious in his support for the decision.

“The government needs to assure us that this is the final decision and not an ‘interim let’s-get-through-the election decision’,” Xenophon said.

“This highlights the needs for a complete overhaul of foreign investment laws with a clearer national interest test so something like this would not be up for sale in the first place and to make it easier for domestic bidders including superannuation funds to invest in Australian agriculture.”

But it conflicting with a key government message, which is expected to feature strongly in the budget on Tuesday, that investment is critical for driving jobs and economic growth. Morrison said foreign investment was welcome “on our own terms”.

“The Turnbull government welcomes foreign investment where it is consistent with our national interests,” Morrison said.

“However, we must always ensure it is on our own terms. There are not too many jurisdictions anywhere in the world where foreign acquisition of large holdings would be permitted.”

Kidman and Co, Dakang and ARC have been contacted for comment.