OUTGOING Reserve Bank governor Glenn Stevens believes Australia needs to attract more foreign investment to build new businesses, while being cautious about existing assets.
Mr Stevens, who steps down next month, has weighed into the debate about foreign capital, saying there needs to be consideration about what type of investment Australia wants.
“Foreign capital that builds new assets — like some of the capital that funded the mining boom — that’s one thing. Foreign capital that buys up the existing assets, I’m not saying that we should be closed to that, but that’s not creating new capital for the country,” he told The Australian.
“That’s just altering the allocation of who owns the capital that’s here now.”
Mr Stevens noted that Australians had mixed feelings about foreign investment.
“We get nervous when foreigners buy land or other assets, but I’ve never met a businessperson yet who doesn’t think that foreign investment as a general thing is good,” he said.
“That’s why I say that maybe some more clarity about what we mean by foreign investment, what kinds of foreign investment are better than others, what kind helps us grow our capital stock and our country and how to manage all of these things, that’s probably a constructive debate we might hope to have.”
Last week, Treasurer Scott Morrison blocked two Chinese bids for NSW electricity company Ausgrid citing national security concerns, but Mr Stephens said his comments were not related to that decision.
But he warned the flow of foreign cash into infrastructure, commercial property, shares and other assets was pushing up the value of the Australian dollar, countering the RBA’s rate cuts.
“Australia wants to be open to foreign capital. That’s our national philosophy. I think in that discussion it would be helpful to think about the kind of foreign capital we want,” Mr Stevens said.
The Indian Telegraph Sydney Australia