When Tony Abbott stepped up to claim victory for the Coalition in September, he declared Australia was “under new management and once more open for business”.

One hundred days on, we look at the open for business promise across major sectors including foreign investment, infrastructure, manufacturing and retail.

Very few applications have been rejected by Australia’s Foreign Investment Review Board (FIRB), which is why the recent spurning of Archer Daniels Midland’s proposal to purchase GrainCorp stands out.

Treasurer Joe Hockey said the takeover could reduce competition and impede growers’ ability to access distribution networks, but in an apparent contrast this was followed by the removal of conditions on Yanzhou Mining Company, a Chinese state owned enterprise, thereby allowing it to fully own Yancoal’s Australian coal mines.

Mr Hockey said “since the conditions were imposed, significant challenges have emerged for the Australian coal industry, including slowing demand, declining coal prices and a number of mine closures”. The Yancoal decision is in the context of intense foreign ownership in Australia’s mining and resource industry, relative to other sectors.

Given almost all applications are successful, the FIRB process appears not to have impeded foreign investment, and this is likely to continue despite the GrainCorp decision. Foreign investors may say they are put off investing in Australia due to the slowness of decisions and bureaucracy, but this could be regarded as opportunistic in terms of market negotiations. The long period for review by the FIRB of up to four months plus extensions apparently has not deterred most investments which are large scale and long term.

It’s also unlikely the present government would seek to legislate stricter criteria, despite foreshadowing this before the election. Whether the rules present a barrier to foreign investors and lead to lower levels than otherwise would have to be considered in the context of the many factors which affect the decision to invest in Australia. These include costs (including the long-term strength of the Australian dollar) compared to other countries, geographical distance or local market size.

Foreign or local ownership is not all or nothing, but a continuum within a complex web of domestic and foreign ownership across companies. Foreign ownership is most intense in Australia in the resource industries, where mining involves much higher rates of foreign ownership and investment than most other industries.

Foreign direct investment (FDI) as a percentage of GDP in Australia lies in the average to upper range of comparable countries. This is a crude indication of how supportive of foreign investment we are, although many factors determine the percentage.

FDI measures investments worth more than 10% of total investment in the company. Australia’s share of FDI in GDP averaged 4.1% over the five years to 2011, the most recent figures available (World Bank data). This puts Australia almost halfway down the list of all countries ranked according to their percent share of FDI in GDP.

Australia ranks above the world average share of FDI in GDP of 2.9%, and above the average share of 2.4% for the 31 high-income countries in the OECD to which it belongs. Australia is also about halfway down the rankings for the East Asia and Pacific region, and its share of FDI in GDP is above the average of 3.5% for that region.

The national interest test

Agenda-led interests have always been present in Australia’s approach to foreign investment, that may be inevitable. However this begs the question as to what is in the national interest. It’s hard to test the impact of foreign investment on economic growth, productivity, infrastructure development, employment and welfare generally. This is why it remains a question for debate in the academic literature.

Foreign investment may be better considered in the context of Australia’s approach to industrial policy historically, which may be seen as arbitrary and lacking a long term perspective. It may not matter whether the investment is domestic or foreign, but that policy and regulation reflect the right industry priorities. These should nurture desirable types of technological investment regardless of the source of investment. It is of note that Australia has higher rates of private including foreign ownership in infrastructure than many other countries.

Australia has historically favoured the particular countries with traditional colonial or neo-colonial ties. It needs to ensure that proposals are considered on their merits. Proposals where foreign governments have a stake in the investment should also be considered on an equal basis. The national interest would be served by promoting ties and networks in our region.

Political pressures

While the GrainCorp application might have succeeded under the previous government, it is a stretch to see this as the start of a pattern under the Coalition.

In the case of infrastructural or other strategic national assets such as land or involving natural resource or environmental considerations, more scrutiny may be warranted as in the national interest. Such considerations should apply regardless of the source of the investment.

Any regulatory approach should apply a level playing field, applying equally to local or foreign investment from any country. At this end subsidies and taxes currently vary for industries and companies on an ad hoc basis, rather than due to cost benefit evaluation which takes account of public interest.