Australia needs to break away from its cold-war mentality towards Chinese investment after foreign investment fears again reared their ugly head, an Australian scholar has warned.
Australian Treasurer Scott Morrison is coming under increasing pressure to block the sale of AusGrid to either State Grid Corp of China and Cheung Kong Infrastructure Holdings Ltd after strategic and security experts claimed it would be "enormously challenging to protect the security of the grid" without risk of exploitation by foreign intelligence services.
Australia-China Relations Institute (ACRI) deputy director Professor James Laurenceson told Xinhua on Monday that while there is a minority opinion that would like to see less Chinese investment into Australia, it is not the opinion of the public who feel China is the country's best friend in Asia.
"We need to get away from the idea that Australia and China are somehow cold-war foes. China today is not 1930s Japan," Laurenceson said.
"The people I've talked to in cyber security say ownership and cyber-hacking are two separate issues. If you want to hack a network, you do not need to pay (11 billion Australian dollars) for the privilege of taking half ownership of that asset."
New South Wales (NSW) state has been recycling state-owned assets to pay for much needed transport infrastructure and capital works, with the 50.4 percent sale of state owned electricity infrastructure company AusGrid expected to fetch north of 11 billion Australian dollars (8,37 billion U.S. dollars). The NSW government would remain a 49.6 percent shareholder of the asset which would come under a 99-year lease.
Both State Grid Corp of China and Cheung Kong Infrastructure Holdings Ltd still require approval from the Foreign Investment Review Board (FIRB), and thus Australian Treasurer Scott Morrison.
In a bid to appease the newly elected protectionist bloc in Australia's upper house -- a group the ruling government needs to help push its controversial domestic agenda -- that jumped onto the analysts remarks, Morrison said national security would be his "prime consideration" in AusGrid's sale.
"I take every foreign investment decision on its merits, case by case, and I try to do what is the right thing for Australia," Morrison told local radio broadcaster 2GB on Monday, conceding it is not an easy decision given Australia is reliant of foreign investment.
"But above and beyond all of that national security outranks everything."
Scrutiny over direct foreign investment into Australia has been intensified following the partial lease of the Port of Darwin to China's Landbridge that flamed the internal political debate surrounding direct foreign investment into Australia in November.
Australia's Prime Minister Malcolm Turnbull was publicly derided by U.S. President Barack Obama over the issue, causing Morrison rushed to the cameras claiming foreign investment rules would be reviewed. Australia houses a rotating deployment of U.S. Marines in Darwin.
On the same day, Morrison declared Australia's largest cattle ranch, S. Kidman & Co, could not be sold to a foreign bidder, citing Australia's national interest. The two bidders at the pointy end of negotiations were both Chinese who see the potential of Australia's agriculture industry and were prepared to pay upwards of 350 million Australian dollars (266.31 million U.S. dollars) for the ranch.
Morrison again knocked back the Kidman sale in April to a consortium of Australian Rural Capital and China's Dakang in April, claiming it was against the national interest despite properties near the sensitive Woomera defence testing range being taken out, though other agricultural assets since have been sold to Chinese investors without worry.
The FIRB has also previously approved investments by State Grid Corp for major holdings of Australian electricity in Victoria and South Australia as well as gas transmission and distribution in NSW, Victoria and the Australia Capital Territory (ACT).
It makes a potential knock-back of investment by either State Grid Corp or CKI purely a political stunt to appease the protectionist bloc, a local analyst has said, leaving NSW state in a precarious position with an unfunded capital works program.
NSW Treasurer Gladys Berejiklian did not immediately respond to Xinhua's request for comment.
