Greens have an irrational fear of foreign money

Over the past decade, the Greens have rebadged themselves as a polished and sophisticated third party. But their spat over the potential sale of the Australian Securities Exchange is a revealing one.

On Tuesday, Bob Brown announced his party has deep reservations about allowing the ASX to merge with the Singapore stock exchange. Brown says the merger may not be in the national interest, and Australia needs to protest the lack of Singaporean democracy and the execution of Australian citizen Nguyen Tuong Van in 2005.

The Greens leader is no doubt heartfelt about Singapore, which definitely has human rights problems. The death penalty is one. Its mandatory military service is another.

But his outrage about the ASX-Singapore merger is all too convenient. If you were to take Brown at his word, you’d have to assume he has been apoplectic over Optus’s prominence in Australia (Optus is owned by Singapore Telecommunications), and furious about American investment – last year, 52 people were executed in the US.

Instead, Brown’s symbolic stand on the ASX seems motivated by quite another thing entirely: a general opposition to foreign investment in Australia. Economist Wolfgang Kasper called this ”capital xenophobia” – the irrational fear of foreigners’ money.

Bob Brown would say the ASX is special, as Australia’s primary stock exchange, a privilege granted by government. But the government has already licensed another exchange. Chi-X will start trading in early 2011.

Foreign companies owning assets and operating businesses in Australia have to operate under Australian law, even if those companies are partly owned by foreign governments. That should be the end of the story.

The ASX sale may not go through. But it’s not the only foreign investment the Greens oppose. They want to limit foreign ownership of land and water to ”avoid exploitation”. As Greens Senator Christine Milne said in her July blog: ”Our children will never forgive us if we become tenant farmers in our own country.”

For years the Greens have stoked fears international investors might buy farms, claiming they threaten ”food security”. Perhaps, but only if you believe global trade is going to suddenly collapse and foreign investors flee the country, burning their crops as they go.

Despite their urbane and worldly image, and their compassion for the poor in developing countries, the Greens are oddly hostile to the world actually coming to Australia. They want to keep Australian stuff in Australian hands, paid for with Australian money.

The Greens seem to be motivated by a peculiar form of nationalism – it’s downbeat, stripped of any patriotism or even pride of country, and one which imagines the ideal Australia to be small, self-sufficient, and somewhat isolated.

Take, for instance, their attitude to immigration. They want Australia to accept more refugees, which is good. But they also want to reduce the total number of migrants coming into Australia by further limiting skilled migrant places. The world should keep its money and stay where it is.

Australia has one of the most restrictive foreign investment regimes in the OECD. The Financial Times described our system as a ”protectionist relic”.

The Australian and Singapore stock exchange merger will have to go through the Foreign Investment Review Board, which could easily recommend the government reject it.

Then it has to get past the Treasurer, who can knock it back if he determines the investment wouldn’t be good for the ”national interest”. (Read: ”for any reason whatsoever”.)

The economic consultancy ITS Global suggests we forgo $5.5 billion of investment every year because of this strict regime. That’s money which could have created jobs, and been used for innovation and training. And even been taxed.

Joe Hockey has also been asking Wayne Swan to explain why Australia should let the Singapore exchange buy the ASX.

Admittedly, this has not been Hockey’s best week. Yet on foreign investment, the Coalition and the Greens line up disconcertingly often. During the election campaign, Tony Abbott called on the government to monitor – with a view to limiting – foreign investment in farmland.

These announcements make the Coalition look like populists abandoning their lofty free-market principles.

But for the Greens, opposition to foreign ownership and immigration seems to be a key plank of their political philosophy.