Joe Hockey is being prodded by Labor to follow his free market instincts over the controversial foreign takeover bid for agri-giant GrainCorp, while the Nationals continue their assault on the proposal and most Liberal “dries” stay out of the action.

Shadow treasurer Chris Bowen today gave in principle support to the bid by American company Archer Daniels Midland (ADM), saying foreign investment was good for agriculture and good for the economy.

“If the Treasurer chooses to knock [the bid] back he would need to have a very good reason indeed, and would need to be very clear about that reason,” Bowen said.

Hockey has said he will decide on the $3.4 billion bid by December 17. In formal terms, the decision is his alone.

In a dramatic upping of the stakes, on Sunday Nationals leader Warren Truss declared that if the sale proceeded, “international companies will control our ports and our handling facilities. … If we want to export grain to other parts of the world, grow our industry, that decision will ultimately be made in a foreign boardroom rather than in Australia.”

Bowen said that the “spectacle of a deputy prime minister trying to publicly bounce the Treasurer into a particular decision on national TV was extraordinary, and clearly underlines deep divisions in the government on this issue”.

The strongest opposition to foreign investment in the Australian parliament was actually coming from within the government, Bowen said. “The Coalition government is sending troubling and poor signals to foreign investors.”

At the weekend Labor trade spokeswoman Penny Wong pointed to “an awkward clash and a tension between National Party protectionism and [Trade Minister] Andrew Robb and Joe Hockey’s neo-liberal bravado.” She suggested the bid could properly be approved with conditions.

Nationals federal president Christine Ferguson today warned that GrainCorp was a defining issue for the party and for Coalition relations.

Ferguson said the Nationals had different policies from the Liberals on some issues. “Most of our members are very keen that they stand firm on this.

“Hopefully Hockey will see the dangers of letting the sale go through,” she told The Conversation. “It’s a big issue. Most grain farmers are behind our position.”

She suggested that maybe there should be some cross negotiation involving this issue and paid parental leave, about which the Nationals have doubts.

Although the issue is very serious for the Coalition, Nationals sources play down weekend speculation it might cause resignations from the frontbench if Hockey approves the bid.

Liberals who support the takeover have been reluctant to buy into the public debate.

But Victorian Liberal Dan Tehan, a one time diplomat and former adviser to then Nationals leader and trade minister Mark Vaile, today called for a “very balanced discussion about the pros and cons” of it.

Tehan, a strong backer of foreign investment in general, said that among the arguments in favour of the bid were that GrainCorp had said it needed capital, and ADM ownership would give growers increased access to overseas markets at a reduced cost in transportation and logistics.

Tehan met ADM today. “They made it very clear this is the biggest investment that they will have made in an overseas market and that you don’t invest that amount of money without being serious about ensuring the investment will bring benefits to that market.”

Some Liberal sources expect the issue to be raised in the party room when Parliament begins, although the decision does not go to cabinet, the party room or parliament.

Meanwhile on another sensitive issue facing the government, the car industry is increasing its public pressure for assistance.

The Federal Chamber of Automotive Industries released a report commissioned from the Allen Consulting Group which said that automotive manufacturing in Australia got about $500 million annually in government funding. For this investment the economy was $21.5 billion larger (based on an economic welfare net present value calculation) for having the industry.

“Government assistance to automotive manufacturing is around $18 per person – a very low figure by international standards. The $21.5 billion return equates to $934 per person,” the report said.

The author

Michelle Grattan

Professorial Fellow at University of Canberra

This article was republished with permission from The Conversation