ONE of the most senior figures of the Howard government and a leading figure of the Liberal Party's conservative wing, Peter Reith, has accused Prime Minister Tony Abbott of orchestrating the veto of a $3.4 billion US bid for GrainCorp, which he described as the latest of several botched decisions.
Mr Reith called on the new government to show more leadership and resist the push for government subsidies and assistance for business, and raised concerns that the GrainCorp decision, which was supposed to have been made by Treasurer Joe Hockey, makes a bailout of Qantas Airways more likely.
"Hockey says it should be the subject of a national debate. Australia does not need a debate; we need a government that makes it clear it will not be wasting any more taxpayer money with subsidies for business and that its priority, as promised, is to return the budget to surplus ASAP," he said.
"I never thought that the Abbott government would be the first Australian government to knock back an application to Foreign Investment Review Board from the business community of our close ally the United States.
"This decision had Tony Abbott's finger prints all over it. And Tony was not alone; he was being supported by Nationals Barnaby Joyce and Warren Truss."
The comments, made in an article for the ABC website to be published Tuesday, reveal the deep anxiety in parts of the Liberal Party that Mr Abbott's government is too timid to stand up to vested political and business interests, The Australian Financial Review reports.
Former treasurer Peter Costello criticised the decision on Sunday. On Monday former Victorian Premier Jeff Kennett said it had condemned Australia to be a "tenth-order country" and "we are still back in the 18th century".
"Governments have failed this country for 30 years," he said.
"We just keep taking every short-term option and it's just another reflection of just how public institutions have totally failed the Australian public."
GrainCorp chief executive Alison Watkins resigned from the company on Monday after being head-hunted to run Coca-Cola Amatil, three days after the bid was rejected.
The decision to prohibit the full purchase of GrainCorp by US food giant Archer Daniels Midland (ADM) – a deal that was approved by the Australian Competition and Consumer Commission (ACCC) – is expected to lead to the closure of up to 100 silos and storage sites across Australia.
Lacking a CEO, capital or profit growth, GrainCorp plans a sweeping rationalisation of its logistics network.
On Monday the company said the failed bid meant there would be obstacles to tapping the capital needed to upgrade its network and fund expansion. ADM had promised $200 million extra for badly needed improvements to rail lines to get wheat to ports for sale overseas.
Former Liberal Prime Minister Malcolm Fraser backed the decision, saying it was "just plain stupid" to sell control of the distribution network for agricultural produce to a foreign competitor.
Ron Greentree, one of Australia's largest wheat farmers and a supporter of the deal, predicted between 125 and 150 storage sites would be closed.
"I can't believe the growers have been so naive," he said. "I am still in shock. It is just such a huge back setback for the industry. I can't believe we are being so narrow minded. The cost to us growers is going to be astronomical."
Economist Andy Stoeckel said ownership wasn't the issue because the same competitive challenges cited by Mr Hockey could arise if GrainCorp had the financial resources to take over ADM, but there would be no national interest review in that case.
"What is it about our laws and institutions that created this situation?" he said. "The focus should go off ownership and onto the use of the assets. If those assets can potentially be misused by a foreign entity they can potentially be misused by an Australian entity."
Mr Fraser compared the decision to the sale of Australian Meat Holdings to US group Con Agra when it held a large share of the Australian meat export market. He said just as Con Agra would have the best interest of US farmers at heart, GrainCorp would be similar.
"I don't believe that Australian major agricultural industries should have their means of distribution and their means of gaining access to markets overseas in the hands of our major competitors," he said.
"It's a question of whether you want the Australian industry to be in charge of its own affairs or whether you want to make the industry a colony of the American industry."
Mr Kennett said it was one of a long line of short-sighted decisions by both parties that left the nation's agriculture and food-processing sectors short of the capital and know-how they needed to keep up with global competition.
"I thought we may have been entering a new age of enlightenment. But quite clearly we are grabbing onto the fears and the inhibitions of the small thinkers of the past, which will continually condemn Australia to being a tenth-order country," he said. "We never have been bold enough to step out and create [policies and industries] for the future.
"It's not just this government that has failed us. The last one failed us miserably and left us with a debt noose around our necks. This government has come into office and I had hoped they were going to reach out to the future, and with this decision they have reached back to the past."
He said if Australia put half the resources and activity from the car industry into science and agricultural policy, encouraging people to grow food manufacturing , as well as a proper water policy, there would be "generational change".
Mr Kennett said the neglect of agriculture policy left Australian producers 25 years behind the leadership of rivals such as New Zealand and Israel in meeting the demands of the international market. Israeli grape suppliers could meet precise shape, size and packaging specifications, while Australia was losing food manufacturing plants to New Zealand because "their costs of production are half the cost of what we charge here".
"So our only chance now of having a strong future in agriculture is to attract foreign companies to invest here. They cannot remove the land, and they are probably going to do some of the things that we should have done in the past 25 years," he said.
Mr Reith wrote that when Peter Costello, treasurer in the Howard government, vetoed Shell's takeover of Woodside, the government had shown it could stand up to the Nationals on ending monopoly wheat marketing.
"Many are watching its every move to see what sort of government it will become" and even before getting into government Abbott had already made a number of decisions he shouldn't have made," Mr Reith wrote.