Article – Past, present and future in Gina Rinehart’s land plan

10 October 2016
Terry McCrann
Herald Sun

AUSTRALIA’S richest woman Gina Rinehart has brought together two of the greatest names in the nation’s history and in its development. She has very neatly unified past, present and future.
 
In spending around a quarter of a billion dollars to buy control of a slice of Australia, big enough to actually be seen with the naked eye from the moon, she’s also got Treasurer Scott Morrison out of a rather uncomfortable position.

More importantly, Rinehart’s deal provides Morrison with something of a template for handling a critical part of what is going to be our most dominant, most challenging and most complex relationship with any country over the next half-century at least.
 
If only we had ‘half-a-dozen Rineharts’, able and prepared to do the same thing. Obviously, we don’t: we’ll need to promote ‘synthetic Rineharts’ to do what she’s done, from among the ranks of mainstream institutional investors instead.
 
On Sunday, Rinehart’s central company Hancock Prospecting announced the $365 million purchase of the S Kidman & Co pastoral group, which has an average carrying capacity of 185,000 cattle over 101,000sq km of leases stretching across three states (Queensland, South and Western Australia) and the Territory. That’s an area equal to about 1½ Tasmanias, or around 40 per cent of Victoria.
 
Rinehart’s Hancock will own two-thirds of and control the corporate buying vehicle, the other one-third will be owned by a Chinese partner — splitting the cost roughly $243 million/$122 million.
 
Hancock and Kidman: these are two names that resonate through Australia’s development history.
 
Kidman encapsulates the sprawling pastoral empires — the ‘sheep’s back’ — on which Australia was built through the second half of the 19th century and running through the first half of the 20th century.
 
Hancock — her father Lang — personifies like no other the discovery and development of the huge resources projects, initially in WA in the Pilbara but spreading into Queensland, in the second half of the 20th century and which now are the foundation of our contemporary and future prosperity.
 
Those projects — the Pilbara iron ore mines, the Queensland coal — were built entirely on Japanese demand and Japanese money, but today that has been completely swamped by the extraordinary appetite of its mainland rival China.
 
In using minerals-generated wealth to buy control of — and keep under Australian control — one of the great pastoral companies, Rinehart has imprinted her unifying vision on the next stage of our economic history. She has blended past and present to build new dynamic foundations for the future.
 
For the last two decades China has poured tens of billions of dollars into buying our coal and iron ore. We have quite literally been shipping off huge lumps of WA and Queensland to the north.
 
A much wealthier Middle Kingdom then started to buy our food. That mid-20th century fantasy of persuading the Chinese to put (Australian) sugar in their tea, played out in the 21st century reality of Confucian mothers buying our milk instead, not for tea, but in baby formula form. Most recently, the Chinese have been coming to buy the land on which it’s all produced (and the air above our two major capital cities — apartments — but that’s another story).
 
Just as China’s purchases of Pilbara ore went from zero to half a billion tonnes a year in the space of less than a generation, we haven’t even begun to understand how big its new appetite for Aussie land that stays put is going to be.
 
And so, we equally hadn’t even begun to understand the awkward — actually, the extremely serious — questions that would pose. Do we kick back or bend over?
The Rinehart deal shows how we can best handle it. Broadly, not to rebuff it; heck, that would be like King Canute ordering a full-on tsunami not to keep coming up the beach. But equally, not to just let China buy what it wants as we did with coal and iron ore.
 
But to embrace and control and, even more hopefully, channel it.
 
Earlier this year Morrison rejected an all-Chinese bid to buy Kidman. The latest deal is a resounding endorsement of that decision. It should also, very importantly, bury any resentment over the rejection. Most importantly, it points to a win-win future.
The latest proposal would keep majority ownership and control in Australian hands. Better to establish that principle upfront. It’d be a lot tougher to lay down that principle if Morrison has given carte blanche to total or even just majority ownership to such a major deal, scooping up so much of our land.
 
Contrary to extreme open-door free-marketers, these things actually matter. Especially when we have such a lopsided relationship with one country, and a relationship which is just going to get more lopsided as we stumble, inevitably with little sense of strategic direction, through the 21st century.

Rinehart acted in her own perceived best interest. She has also acted in the national interest, both in the deal itself and the policy guidance it provided. She deserves considerable credit.
 
It’s worth recalling how last year, according to the ATO, this company of hers, Hancock Prospecting, paid $466 million in company tax, at almost spot on the 30 per cent tax rate. A very large number of Australians are riding on her back.

Gina Rinehart’s Hancock will control the corporate buying vehicle.
Courtesy of the Herald Sun

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