Reith slams Abbott over GrainCorp

03 Dec, 2013 03:06 AM
Prime Minister Tony Abbott and his government has received both praise and criticism since Treasurer Joe Hockey rejected ADM's takeover bid for GrainCorp on Friday.
This decision had Tony Abbott's finger prints all over it
Prime Minister Tony Abbott and his government has received both praise and criticism since Treasurer Joe Hockey rejected ADM's takeover bid for GrainCorp on Friday.

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.

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3/12/2013 5:31:47 AM

" If those assets can potentially be misused by a foreign entity they can potentially be misused by an Australian entity" Something those against the deal (or most other foreign transactions) just don't get. Being "Australian" is nice however the same asset being "American", "Canadian", "Chinese", or whatever would make no difference at all in the vast majority of cases.
3/12/2013 6:04:27 AM

Mr Rrith has a lot to learn about what it is like to have a large company with so much power .GRAINCORP.needs to step up and show us what they are made off .... EARN your large salaries, get out there and get into IT..
3/12/2013 8:00:47 AM

The mad monk should watch over his shoulder, Malcom Turnball is waiting.
3/12/2013 8:14:35 AM

Reith is a has-been and is trying everything he can to keep his face on TV and in the news. He achieved bugger all in Government and shows his total lack of understanding of the real world of Agriculture and to get into bed with the same views as Paul Howes he should be ashamed of himself. Go home Peter and take Paul Howes with you . You deserve each other!!!
3/12/2013 8:16:42 AM

Reith is certainly showing his colours here and needs to take the boat trip back the other way and stay there because he certainly does not have the future good of Australia at heart. Otherwise he should realise that he has had his day and needs to wander off into the sunset and keep quiet. Maybe sour grapes from his time spent with Tony Abbott while in Government under Howard.
3/12/2013 9:10:57 AM

Peter Reith may be described as a conservative, but he is an "economic rationalist". True conservatives have no problem with government intervention in areas of national economic or strategic interest such as this take over of the major distribution network by a potentially non-impartial foreign company. What should be happening now is that the government should be underwriting the raising of commercial finance linked to performance indicators and independent auditing to get the organisation operating effectively again.
3/12/2013 10:54:34 AM

You are a 'has-been', peter. If you and Howard hadn't contrived to get rid of the single desk we wouldn't be having this melee now. If you are ever in need of help I'll be happy to do for you what you did for us - nothing. jaydinsouth would do well to learn that power corrupts & absolute power corrupts absolutely. If it's Aust owned it is Aust controlled. When these huge multinats pay for something they can & will demand to control it.
3/12/2013 12:36:38 PM

ADM has made its money out of US Graingrowers who receive considerable largesse from the US Govt - Reith, Costello and Kennett should take a good hard look at the "level playing field" and have a long rethink about the parlous state Aust agric is in and their inaction to stop the rot.
3/12/2013 12:43:49 PM

Reith, I guess this a free country and you are entitled to your opinion. But please wake up to simple differences between allies during war and competitors on the filed of play or business. Our grain farmers are locked into fierce combat with our US allies' grain farmers. The US plays by their own set of rules by giving favors to their own farmers and agri-business's which are prejudicial against our farmers. When you were in Govt, you gave no similar favors to your own farmers and even took away from them their wish to combine into one team to compete. So get lost, you failed us.
Bushie Bill
3/12/2013 1:00:08 PM

You are totally out of your tree, Enough, and reflect badly on your peer group. Not even the combined crazy super Boof's Barney and Bob would be stupid or crass enough to suggest government financial underwriting. And your definition of a Conservative is truly laughable. I hope you get what you deserve. After all, it would be poetic justice, wouldn't it?
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