Australian Industry Development Corporation

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Australian Industry Development Corporation

The Australian Industry Development Corporation (AIDC) was an investment company and

investment bank and was partially privatised by the Hawke government in 1989. Most of its operations were spun off into AIDC Ltd, which listed on the Australian Securities Exchange (ASX), and its assets were progressively sold down by the Keating and Howard governments
in the 1990s.

Creation

In 1967, during the

economic nationalist concerned about foreign ownership, believed that Australia's existing banks had failed to properly support the resources sector, forcing companies to turn to overseas lenders and ultimately leading to foreign control over Australia's natural resources. McEwen and his protectionist Department of Trade and Industry came into conflict with the more economically liberal Treasury Department, with cabinet eventually approving a competing proposal put forward by treasurer William McMahon for a smaller-scale Resources Development Bank (RDB). [1]

In February 1969, McEwen wrote to Harold Holt's successor John Gorton proposing that his original IDC proposal be revived. Gorton, an economic nationalist like McEwen, agreed to his suggestion and the pair put forward a joint cabinet proposal in January 1970 for an IDC that would borrow funds overseas and on-lend them to companies in the resources and manufacturing industries.[2] It was distinguished from the RDB in that it would not be solely a lending institution but would take equity stakes and become an active investor in projects. Cabinet approved the proposal only after several weeks of debate, with a number of ministers regarding it as "socialistic".[3]

Operations

In 1979,

merchant banking operation". It reported gross profit of $10.4 million for the previous year (equivalent to $55.3 million in 2022) and total assets of $403.6 million (equivalent to $2.1 billion in 2022).[4] However, in 1980 a House of Representatives committee led by Liberal MP Kevin Cairns found that the AIDC had lost $25 million (equivalent to $133 million in 2022) between 1970 and 1979.[5]

In the early 1980s the AIDC reportedly played a "leading role" in securing funding for the $1.1 billion (equivalent to $4.9 billion in 2022) expansion of the North West Shelf Venture.[6] It also acquired stakes in Richard Pratt's box manufacturing company Visy, Alcan's Kurri Kurri aluminium smelter, and the Kewarra Beach Resort in Cairns. Following the Black Monday stock crash of 1987, the AIDC was left with a number of bad loans, but unlike traditional banks had no buffer of household mortgages to fall back on.[7]

AIDC Ltd obtained a 10 percent stake in telecommunications provider Optus in 1992. In the following year, the company reportedly had "significant exposure to the commercial property sector" and had lost significant sums from the failure of investments, including Perth-based property developers Tower Corp and Dayton group, plastics group Sabco and hardware retailer McEwans Holdings.[8]

Privatisation

In mid-1989, the Hawke government partially privatised the AIDC, with its loan and investment operations spun off into AIDC Ltd, a publicly listed company. The initial public offer was for 19 percent of the new entity, with the AIDC holding the remaining share capital.[9][10] In 1993, the Keating government announced it would sell down the government's stake to 51 percent.[8]

The

Australian Submarine Corporation be retained by the government.[11]

See also

References

  1. ^ Hancock 2002, p. 266.
  2. ^ Hancock 2002, p. 267.
  3. ^ Hancock 2002, p. 268.
  4. Canberra Times
    . 11 October 1979.
  5. ^ "Committee slams 'poor performance' of AIDC". The Canberra Times. 27 January 1980.
  6. ^ "AIDC now has Perth office". The Canberra Times. 12 February 1981.
  7. ^ a b Stretton, Rowena (8 March 1996). "Inside the AIDC". Australian Financial Review. Retrieved 19 March 2023.
  8. ^ a b "Which way is the AIDC heading?". Australian Financial Review. 5 March 1993. Retrieved 19 March 2023.
  9. ^ Davis, Ian (23 February 1990). "AIDC shares pays interim 6c dividend". The Canberra Times.
  10. ^ "AIDC set for solid first year". The Canberra Times. 30 June 1990.
  11. ^ "Senate go-ahead for sale of AIDC". Australian Financial Review. 27 May 1997. Retrieved 19 March 2023.

Sources

  • Hancock, Ian (2002). John Gorton: He Did It His Way. Hodder.
    ISBN 0-7336-1439-6
    .
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