Treasurer Scott Morrison announced today that, after receiving advice from the Foreign Investment Review Board, he did not believe the $280 million acquisition by Moon Lake and its owner, Chinese billionaire Lu Xianfeng, was contrary to the national interest
The controversial decision follows strong opposition by many Tasmanians of the sale to Chinese interests in the face of two competing local offers for VDL from former Tasmanian businesswoman and Kathmandu clothing empire founder Jan Cameron, and Rob Woolley’s TasFoods company.
VDL welcomed the approval and said it would be business as usual for customers, suppliers and employees, but federal MP Andrew Wilkie said he was disappointed at the sale of such a strategic agricultural asset to a foreign interest.
Mr Morrison said VDL, which owns 25 dairy farms and 17,000 hectares of land including the vast Woolnorth Station on Tasmania’s remote northwest tip, had always been owned by foreigners since its creation by Royal Charter in 1825.
The federal government has imposed tax conditions on Moon Lake Investments’ purchase of the giant dairy and milk business from New Zealand’s New Plymouth District Council, in line with its new crackdown on foreign companies earning profits in Australia, announced yesterday.
Mr Morrison said government approval for Moon Lake’s purchase of VDL is the first to be conditional on it complying with Australian taxation law, requiring it to advise the Australian Taxation Office if it enters into any transactions with nonresidents or overseas companies to which the transfer pricing or anti-avoidance measures of the tax law may potentially apply.
A breach of these conditions — which cover the sale of food and other products overseas — could result in prosecution, fines and, potentially, divestment of the asset, Mr Morrison said.
Moon Lake has also given guarantees that all current 140 VDL employees will be offered ongoing employment and that it intends to invest another $100 million to further develop VDL’s land, including another nine dairy farms, adding to the Tasmanian economy and doubling employment.
Mr Lu said he was comfortable with the tax conditions imposed by the Treasurer and would now move promptly to complete the purchase of VDL.
He said Moon Lake was committed to investing in VDL to grow the business and boost employment, with increases in milk production and farm productivity initially coming from investment in irrigation and the development of new dairy farms on Woolnorth land currently used for breeding dairy heifers.
Mr Lu, who owns the Kresta window blind company in Australia as well as the $1.5 billion Ningbo Xianfeng New Material company he founded and listed on China’s Shenzhen Stock Exchange, said there would be no immediate changes to the current board and management of VDL, but over time he may appoint more Tasmanian directors.
VDL chief executive David Beca said the dairy business was looking forward to an exciting new era under Moon Lake.
“We are all looking forward to working with the new owners to further develop the
potential of the dairy assets at Woolnorth and to further enhance the VDL brand in national
and international markets,” Mr Beca said.
“We will be working to develop the business cases for more immediate investment in the
existing dairy farms including irrigation, with investment in new dairy farms on existing
pasture to follow this.
“For VDL, its customers and suppliers and our own employees it will be very much business
as usual during the transition to new ownership.”
Mr Wilkie, the independent MP, has been a strong supporter of the alternative Tasmanian bids to buy VDL, and said the sale ignored the value to Australia of strategic assets.
“First we saw the lease of the Darwin defence port to a foreign interest and now the government is talking about backflipping and allowing the sale of the Kidman cattle empire to another foreign interest,” Mr Wilkie said.
“Today’s news (about VDL) just confirms that the government either doesn’t understand or doesn’t care about the importance of Australian ownership of strategic assets.
“Shipping out bulk low value commodities, whether it be milk or woodchips, isn’t the answer to Tasmania’s economic challenges; if you want to add value and grow the economy, then a prestigious place of origin VDL food brand, especially one with associated tourism components, would have been a much better option.”
The Chinese company has also told the government the 100 million litres of milk produced annually on its VDL farms will continue to be processed in Tasmania — Fonterra now has the contract — and that it will not disrupt current fresh milk supplies.
Cultural heritage, Tasmanian devil and landclearing protection guarantees have also been given.
“Given these considerations, I am satisfied that the Moon Lake proposal to purchase (VDL) is not contrary to the national interest,” Mr Morrison said.
“It will ensure increased employment and investment in an important industry sector in Tasmania, while the safeguards we have put in place will ensure they pay their tax.
“Australia continues to welcome and support foreign investment that is not contrary to our national interests. Ongoing foreign investment remains a key part of growing Australia’s output and employment and, through this, our standard of living.”
A spokesman for Moon Lake Investments welcomed the decision and said it would be making a statement shortly.
