Trahaison des clercs

Whatever your views on the merits of the SGX/ASX deal—I’m sceptical of the durable value, but there is a rash of global consolidation in that industry—do you agree with me that it is madness to install a tribunal of bureaucrats at the door to the Australian investmentmarket exacting an obscure toll on foreign firms such as SGX, keen to invest in our growth?.

“The SGX has been in talks with Australia’s Foreign Investment Review Board for months but is not expected to lodge its formal submission for several weeks, allowing for changes in its deal with the ASX to be incorporated. Once reviewed, the regulator will make a recommendation on the SGX/ASX proposal to Wayne Swan, Australia’s treasurer, who can veto any deal.” Extract from FT.com – SGX unveils concessions on ASX deal

We’ll never know what terms the FIRB imposes because they never answer to the public for their public trust. We don’t know even their objectives.**

Do we believe that these bureaucrats can somehow see the future? If not, why do we allow them to stipulate the terms of entry to our investment/services market? We’d be horrified if a committee of clerks at the ports decided who was, or might become under their tutelage, a proper person to buy or sell our shoes or ships or sealing-wax. Is an investment transaction—the key to buying and selling perhaps half of all internationally traded services—so different?

Can any Treasurer or his advisors pretend, as FIRB does, to bind the future behaviour of firms entering our market? Don’t we have laws, Courts and executive agencies that control actual behaviour in accordance with objective standards of evidence? Equally for domestic and foreign investors?

What costs do these investment “bouncers” impose on Australian equity owners? Since they do not report their stipulations how can we measure their impact? Where is the evidence that FIRB does anything to add to our welfare?

** The elliptical document that counts as FIRB’s interpretation of their delegated powers under the 1975 Foreign Acquisitions and Takeovers Act—a law from the Whitlam-era that pre-dates the globalized, competitive Australian economy—offers no clarity on the “national interest” test. They are bound neither by statute nor by common law principles of fairness nor even by their own precedents. It’s a disgrace to principles of transparent governance of markets.

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