THE Nationals, burnt by attacking the Chinese bid for Cubbie Station, are putting the heat on their Tasmanian Liberal colleagues to respond to the potential investment by the Chinese government-owned sovereign wealth fund in that state's dairy industry.
The trouble is, the Liberals are much more favourable to foreign investment than the Nationals.
Nationals Senate leader Barnaby Joyce, who broke Coalition ranks to denounce the government's approval for the Cubbie bid, said yesterday: ''I am not fully aware of what's happening in Tasmania, but I'm sure the Tasmanian politicians are - so you should contact them.''
The China Investment Corporation is negotiating to seek a stake in Australia's largest dairy-farming operation, the Van Diemen's Land Company.
Tasmanian Liberal senator David Bushby, chairman of the free-market Society of Modest Members group of Coalition MPs, said that obviously such investment would have to meet the national-interest criteria under the Foreign Investment Review Board, but subject to that, it would be ''good for Tasmania and Australia''.
The Tasmanian dairy industry had a lot of untapped potential, he said; ''To access it needs investment, no matter where it comes from''. But he conceded some Tasmanians would have concerns about Chinese investment and about perceptions of ''selling off the farm''.
Fellow Tasmanian senator Richard Colbeck said if there was a successful application, ''it might help to develop new markets for the dairying industry''.
But Greens leader Christine Milne said everything changed in 2007-08 as a result of the global food crisis. It made no sense to hand over tracts of agricultural land, or water, to China, Saudi Arabia or Qatar forever, to outsource food production separate from the market.
Treasurer Wayne Swan said he had not seen any proposal, but if there were, national-interest criteria would be applied as with Cubbie. This contrasted with the ''xenophobic statements'' on foreign investment that had come from the Coalition and Senator Joyce, he said.
The negotiations with Van Diemen's Land Company mark a tentative return to Australia for the fund, following regulatory frustrations that came to a head in 2009. Fund chairman Lou Jiwei was furious the review board had asked it to submit a series of applications relating to a 1/7 stake it acquired in Hong Kong and Singapore commodities firm Noble after it completed the deal.
Then-PM Kevin Rudd attempted to placate Mr Lou by giving him his mobile phone number, according to a source briefed by Mr Lou, who said he refused to call the number.
Since then the fund has set its sights elsewhere in the world, especially on Canada, where it has taken a 17 per cent stake in mining conglomerate Teck Resources, a deal hailed in both countries.
CIC is known for being led and staffed by internationally experienced deal-makers and managers, in contrast with most state-owned enterprises. Its policy of making passive investments rather than taking management control means it is insulated from cost blow-outs, delays and labour relations that have mired several Chinese SOE investments in Australia.