HOST:
We've got the Assistant Treasurer on the line. David Bradbury, are you there?
BRADBURY:
Good morning John.
HOST:
Good morning David, how are you?
BRADBURY:
I'm well thanks, how are you?
HOST:
Pretty good thank you. Why don't we just lease this land to the Chinese and Japanese consortium. Why do we sell it?
BRADBURY:
Well, that is a matter for the administrator. And let's be clear about this, Cubbie Station, the Cubbie Group, have been in voluntary administration for the last three years, since 2009, and where there is a business that is in distress of this nature, then obviously the administrators have legal obligations and they act both with the interests of creditors, but also shareholders and the broader public interest at heart in trying to manage the future of the company. In this case, the company happens to own this very significant property. Now, they have been out there seeking expressions of interest, trying to find a buyer for this site for some three years. There hasn't been a buyer come forward and it's in that context that this latest application under the foreign investment review regime has come forward. And we should note that just because foreign investment approval has been given doesn't mean that the transaction will go ahead, but the transaction can't go ahead until such time as there is such an approval, so that's a process that's now in the hands of the administrator and it's a commercial matter between the administrator and the potential purchaser.
HOST:
Okay, so you're telling me it won't necessarily go ahead.
BRADBURY:
Well, that will be ultimately a commercial matter for the administrator. But can I make this point John. That in your intro you rightly pointed out that Shandong RuYi is one of the parties involved in this transaction. It's also important to remember that they are a part of a consortium and they comprise a series of private investors, so let's be clear about that, it's not state owned enterprises. A lot of the commentary here has been about the Chinese government. That's not true. The other element of this…
HOST:
Excuse me. When you say that's not true, are you telling me that this company is not controlled by the Chinese government?
BRADBURY:
No, it's not. It's a collection of private investors. Some, for example, we are talking about some Japanese investors as well, Itochu, which is one of the companies there which is also a very significant Japanese trading company. But can I make the point that 20 per cent of the consortium is comprised of Lempriere, which is an Australian agricultural company that has a very rich and strong history in Australian agriculture and under the terms of the approval that has been granted, they would not only need to retain that 20 per cent interest, but they would be the ones that would be managing the operations of Cubbie.
HOST:
Yeah, but Australia wouldn't have a controlling interest.
BRADBURY:
No, that's true, but part of the undertakings that are given is that Shandong RuYi will reduce its shareholding to 51 per cent over the next couple of years. But you're right, that's not a controlling interest. But the point remains here, that I think it's entirely legitimate for many people to be saying "well, wouldn't it be great if we could keep Cubbie in Australian hands". But the point is this, that there has been the opportunity for Australian investors to come forward and this suggestion from Barnaby Joyce that somehow the Government should buy the site, move in and carve it up into separate pieces and sell it off. Well, let's just put to one side the fact that where else do you see government getting involved in failed business ventures where we go in and we purchase a company and try and work a company out of its insolvency or its financial difficulties. We don't do that.
HOST:
Well, Bob Hawke did it.
BRADBURY:
In respect of which?
HOST:
I can't remember. It was a union controlled trading company. And he got involved. And you bailed out Mitsubishi didn't you?
BRADBURY:
We wouldn't step in to take an ownership interest. Think about something like Darrell Lea that's out there at the moment. That's a very good Australian company. I think most Australians would say we want to keep Darrell Lea afloat but would people seriously be suggesting that the government should get involved in owning it in order to work it out of its financial difficulties? But can I make the point about Cubbie, that there is this suggestion from Barnaby Joyce that we carve it up into a series of properties so that Australian investors could buy it. Well, if Australian investors were out there wanting to buy it, why haven't they come together as a consortium in the way in which these other private interests, both Australian and foreign, have come together under the banner of this particular transaction and the suggestion that by carving it up that somehow that would naturally mean that it would end up being purchased by Australian investors as opposed to other international investors is just wrong.
HOST:
Yeah, you talk about Darrell Lea. That's a pretty unhealthy analogy. There's a lot of difference between chocolates and water. We can't live without water, we can live without chocolates. So, I think that's a silly analogy. But never mind.
BRADBURY:
I grant the point of distinction that you make, but let's be very clear about this. That water entitlements are a matter for the respective authorities, state and federal, that are in the business of granting those entitlements and they have the ability to continue to adjust policy settings and that's something that has occurred in the past and will occur in the future. If a future government decides to start to take away water entitlements, they can do that regardless of who owns the property. But of course, because of the Constitution, if you rip away any persons' entitlements, whether they are Australian or foreign, you rip away their entitlements under the law, then you have to provide just compensation. And that's often the way in which water buyback arrangements are put in place.
HOST:
Yeah, look I understand that foreign investment is a good thing, there's no arguing that, and we certainly need and should encourage foreign investment. But the thing that is disturbing a lot of people is the fact that China is a Communist nation, where private enterprise is controlled by the government, like it or not. Shouldn't we be concerned by the Chinese government's investment, in particular, because that's what it is?
BRADBURY:
I have to refute the suggestion that this is Chinese government investment, because it's not John.
HOST:
But any investment that involves China is ultimately going to be controlled by the government. They control everything.
BRADBURY:
That's not true because there are pockets of private capital and private enterprise that occur throughout China and it's an interesting concept because they hold themselves out in many respects to continue to be the communist, command-planned economy. But the modern China does have many pockets of private entrepreneurial capital and many of those private investors are investing around the globe, not just in China. So it is important to recognise that there is no state owned entity or state owned enterprise involvement in this transaction. It is not true to suggest that is the case. They are private interests and it has been screened under foreign investment review processes because it's above the relevant threshold. But I would just remind your listeners that we have a policy in place that means that wherever state owned enterprises are involved in a transaction, regardless of the dollar figure, that triggers the foreign investment review processes. So we do accept and recognise that it's important to maintain a different approach and to distinguish between state-owned investment versus private investment but this particular case, there is no suggestion here of state owned enterprise involvement. If there is, then I would ask whoever is making that claim to come forward and give us some indication of why they think that's the case and what the connection is.
HOST:
Wayne Swan said the deal will save Australian jobs. I can't quite work out how that works.
BRADBURY:
Well, it's pretty simple John. If Cubbie Station can't work its way out of voluntary administration, the whole operation shuts down and you lose the 170 jobs and all of the economic stimulus it provides in that community and in surrounding communities. This is a point, it's not only Wayne Swan making this point, Bruce Scott, the local member, member of the Liberal National Party, now he is incidentally the man that Barnaby Joyce is trying to take his seat. Bruce Scott, a man who's represented that community for a number of decades, he has made the point that he supports any effort to continue the operations of the farm. In fact, he has said the most important thing is that it continues as an operating farm creating jobs locally. The Deputy Premier of Queensland, not a Labor man either, he also has expressed a very strong view that if you don't have an injection of capital, wherever that comes from, and in this case its partly overseas, partly from an Australian company, but if you don't have that injection of foreign capital or capital in this case, the farm's not going to operate. You can have it in Australian hands, that's cold comfort to the 170 workers that will lose their job and I think in the end that is a consideration that has weighed very heavily on the minds of those at the Foreign Investment Review Board and indeed the Treasurer in making this very difficult decision.
HOST:
Ok, David I appreciate your time. I've just run out of some. But I do thank you for giving us some of your time and some of your knowledge in relation to the sale of Cubbie, which has disturbed a lot of people. I imagine you have put many minds at rest.
BRADBURY:
Thanks very much John.