In September 2009, economics officials from the US embassy sat down with the then-head of Australia's Foreign Investment Review Board (FIRB), Patrick Colmer.
The record of this meeting is one of the gems in the WikiLeaks diplomatic cables. Colmer confirmed to the embassy that the Government had changed the foreign investment guidelines in order to address ''growing concerns'' about Chinese investment in Australia.
New guidelines introduced in the second half of 2009 relaxed the mandatory review threshold to make small private investments easier. But, the US embassy reported back to the State Department, by excluding state-owned businesses from the relaxation, the policy was specifically designed to ''pose new disincentives for larger-scale Chinese Investments''.
This, of course, was contrary to everything the Government was saying at the time.
The Trade Minister, Treasurer, and Foreign Minister had lined up to claim the changes had nothing to do with China (perhaps they could have let the FIRB know).
So we shouldn't take on face value the comments made by Craig Emerson in The Australian on Monday, arguing that his Government is eager to attract more Chinese investment.
After the post-Rudd reshuffle, Emerson is now Minister for Trade and Competitiveness. But the FIRB reports to the Treasurer, not the Competitiveness Minister (whatever the hell that is). Furthermore, the Treasurer has a veto over the FIRB's decisions: he can, and does, ban investments even when the FIRB has recommended they be approved.
In other words, if Emerson wants to open Australia up to Chinese investment he won't have to convince readers of The Australian, but Wayne Swan, who sets the rules.
Well, ''rules'' is a generous word. The foreign investment guidelines are infamously inscrutable: Stephen Kirchner of the Centre for Independent Studies had to submit an FOI just to obtain a copy of a speech that merely suggested how the FIRB would treat investments. As Kirchner wrote in February 2010, ''Foreign investors cannot be expected to understand a policy that the government itself cannot properly articulate.''
The foreign investment mess is a deliberate creation of government. If Emerson is able to elbow his way into the FIRB, convince his colleagues that investment — from China or anywhere else — is to be greeted not resisted, and then clean up the mess, that would be a great thing.
But don't hold your breath. Emerson told ABC radio on Monday he was ''not so much in the camp of easing'' foreign investment regulations.
So while talking about how you want foreigners to put their money in Australia is lovely, allowing them to do so would be better.
There is no reason to believe that foreign investment is a threat to Australia's food or resource security, our sovereignty, or contrary to our national interest. Even when that investment is made by firms which are state owned.
Investors in Australia have to obey Australian law. And we have a great deal of law, covering everything from competition to environmental standards, all which treats investors equally, regardless of their nationality. That really should be all there is to it.
Every other part of this debate quickly descends into absurd hypotheticals about World War III, outright xenophobia, or trite meaninglessness. People who talk about ''protecting food security'' should be forced to explain how limiting access to foreign capital would do anything but harm the agriculture sector.
Yes, foreigners may not prioritise Australia's ''national interest'' when making business decisions. But so what? Neither will Australians. The great thing about market capitalism is that they don't have to. As Adam Smith said, ''It is not from the benevolence of the butcher, the brewer, or the baker that we expect our dinner, but from their regard to their own interest''. The pressures of competition will make sure resources are put to their most productive use.
And (it seems strange to have to write this) limiting foreign investment means the Australian economy gets less money. Australian businesses that have to sell up will have fewer potential buyers, lowering the final sale price.
But to be fair, the Government's doublethink on foreign investment is miles better than the outright hostility of the Coalition.
The Opposition wants agriculture to be considered as ''sensitive'' a sector as defence and the media — and face even greater investment restrictions as a result. This has been an over-riding obsession of the Nationals, and they seem to have been given carte blanche to write the Coalition's agricultural policy.
For all the contradictions of the Government on foreign investment, the Opposition's policy would be far, far worse — seriously shutting Australian agriculture off from Asian capital.
Few other areas of public policy are as governed by the whims of politicians as foreign investment approvals. If Craig Emerson would personally like to liberalise it: brilliant. But he'll have to look at the obstacles within his own Government to do so.
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