Nationalism and foreign investment policy

If they can’t trust Aus­trali­a’s tax, cus­toms and cor­po­rate reg­u­la­tors to pre­vent Chi­nal­co from some­how sneak­ing ille­gal cut-price iron ore tankers off to its com­peti­tors in Chi­na, then Chi­nese com­pa­nies will ramp up their invest­ments in oth­er coun­tries.” Extract from John Gar­naut in The Age

The fact is that we can trust our com­pe­ti­tion and fis­cal reg­u­la­to­ry agen­cies to man­age for­eign-domi­ciled investors just as we trust them to man­age Aus­tralian investors. That allows us to offer nation­al-treat­ment to investors, pre-estab­lish­ment and after estab­lish­ment. It would be tan­ta­mount to say­ing “investors who can com­ply with Aus­tralian reg­u­la­to­ry stan­dards don’t need to stand in the FIR­B’s queue for three or six months or more wait­ing for an obscure review of their inten­tions (as if the bureau­crats would know) and our ‘nation­al inter­est’ (dit­to for the Treasurer).

Such a pol­i­cy would cre­ate a sig­nif­i­cant com­pet­i­tive edge for the Aus­tralian reg­u­la­to­ry frame­work in the world of for­eign-invest­ment. It would be a far-from-unreg­u­lat­ed regime for investors but it would be the same regime for both domes­tic and for­eign firms. Here is an extract from some remarks I made at an Insti­tute of Pub­lic Affairs con­fer­ence on for­eign invest­ment pol­i­cy last year.

It’s good to do busi­ness in Aus­tralia because we have well-devel­oped laws and effi­cient, review­able, insti­tu­tions that mon­i­tor fair com­mer­cial prac­tice, direc­tors’ respon­si­bil­i­ties, and trans­fer pric­ing and ensure that all Aus­tralians share in the eco­nom­ic ben­e­fits of growth.

They include a bunch of famil­iar acronyms ASIC, the ACCC, APRA and the ASX. Sev­er­al oth­ers, less famil­iar, also sup­port our com­par­a­tive­ly trans­par­ent and well-ordered com­mer­cial land­scape: The Aus­tralian Account­ing Stan­dards Board, the Finan­cial Report­ing Coun­cil, and the Aus­tralian Trans­ac­tion Reports and Analy­sis Cen­tre.

Why then do we have the Trea­sur­er stand­ing at the door to our invest­ment mar­ket mak­ing deci­sions on indi­vid­ual com­mer­cial rela­tion­ships and on who may, or may not, have a seat on an Aus­tralian com­pa­ny’s board?

Could you imag­ine our biggest cus­tomers ask­ing the Trea­sur­er whether he will allow them to import from Aus­tralia?

Nev­er. But this is pre­cise­ly what is going on with the pre-estab­lish­ment bar­ri­ers we main­tain to FDI.”

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