Treasurer Joe Hockey’s approval for Saputo to acquire Warrnambool Cheese and Butter caught commentators off-guard, with scribes arguing it was either too quick or hypocritical. Given the slow and steady approach the Abbott government has taken in its first few months in charge, it does seem strange that the green light was given in such a rush.
Elsewhere, a speech from Tony Abbott’s lead economic advisor has stirred one jotter to suggest he is “trapped in a time warp”, while another pushes for the prime minister to make some tough choices on reform.
First to the fight for WCB, the Herald Sun’s Terry McCrann, who has been a vocal advocate for the creation of an Australian-owned dairy market leader, argues that Hockey has pressed the ‘go’ button in haste.
While McCrann believes approval should have been given to Saputo in time, the speed of the decision has given it an unfair advantage over rival bidder Murray Goulburn, which likely has to wait at least three months to find out whether it will receive Competition Tribunal approval.
“What Hockey should have done, was to preserve a level playing field between Saputo and MG. To let, the ‘best bid win’… Indeed, an understanding by him of the national interest, OBLIGED him to preserve such a level playing field, by exercising his right to take a further three months to consider the Saputo bid... That would also have co-ordinated with the preference of his prime minister Tony Abbott for a local company to take over WCB.”
The Australian’s Richard Gluyas agrees that the tick was given quickly, leaving the Australian suitors for WCB a little aggrieved.
“A red light for Saputo from Hockey was clearly out of the question, given that WCB accounts for only 7 per cent of the nation's milk supply. But at the very least, [MG boss Gary] Helou – and perhaps the third WCB bidder, Bega Cheese – would have been hoping for a ruling that slowed the Canadian group's progress, or the inclusion of a few thought-provoking conditions.”
Gluyas adds that the news may be a sign Abbott and Hockey are serious about their ‘open for business’ pledge, but Fairfax’s Malcolm Maiden isn’t so sure. Yes, it sent a signal, but will Archer Daniels Midland, which is waiting for news on its $3.4 billion GrainCorp bid, receive a similar one?
“[Hockey] could have extracted an undertaking from Saputo to keep the Australian company's head office in Warrnambool, or Victoria. He could have made Saputo promise to sell cheese into Asia from Australia ahead of its current export source, Argentina. He could have delayed his decision, as Murray Goulburn wanted. Instead, he cleared Saputo unconditionally. Any unexplained decision on GrainCorp that is less open – one that cuts GrainCorp's eastern seaboard ports out, for example – will be a sign of the Nationals' influence.”
The Australian’s Andrew White continues on a similar line, calling for clarification from the treasurer on one key issue.
“Hockey has made repeated references to both the call for foreign capital – Australia needs $50bn a year in net new foreign investment every year to sustain its current way of life, he told the Centre for Independent Studies last week – and the exceptions by previous treasurers. He could do worse than develop a consistent definition for national interest.”
The same idea is pursued by The Australian Financial Review’s Michael Smith, who worries about the true nature of Australia’s ‘open for business’ status. Given the progress of other deals, has Archer Daniels Midland been hard done by?
“The frustration for ADM is that it feels it has done everything it can to address growers’ concerns. On top of that, a string of foreign takeovers of Australian agribusinesses have sailed through in the past with little opposition. ADM was caught out by the timing of the election. Ideally, it would have secured agreement from GrainCorp’s board earlier and pushed things through before politics got in the way.”
For now, most analysts and commentators are confident the ADM deal will go through, but Shell’s failed bid for Woodside and Singapore Exchange’s blocked pursuit of the Australian Securities Exchange provide pause for thought.
Also in politics, the first public speech of Abbott’s chief economic advisor, Maurice Newman, leads Fairfax’s Adele Ferguson to assert that his views are from a bygone era and she fears how much influence he will have on the Abbott government.
Meanwhile, the AFR’s Chanticleer columnist, Tony Boyd, wonders whether the speech, “which could easily be misinterpreted”, was basically what Abbott would say if he were free of the constraints of being prime minister. If so, that is a little worrying.
Elsewhere, the AFR’s economics editor Alan Mitchell contends that Abbott needs a strong reform agenda to pursue or he risks facing a backlash down the road. He could start with tax reform, car industry reform and pharmaceutical sector changes, Mitchell says. It won’t be easy to pursue something of real value long-term, but the best decisions are rarely simple.
In company news, Business Spectator’s Stephen Bartholomeusz delves into the recent controversy swirling around David Jones, arguing the campaign to reappoint Paul Zahra is misguided, while Fairfax’s Michael Pascoe highlights the remarkable success of James Packer’s “PR blitzgrieg” in New South Wales that has both sides of government in his pocket.
Finally, the AFR’s China correspondent, Angus Grigg, looks at the opportunity for economic reform in the country and finds that a crackdown on corruption may provide the political capital required to make the necessary adjustments.