Australia has the right to stop foreigners buying agricultural land, Nationals leader Barnaby Joyce insists.
The federal government has blocked the sale of S Kidman and Co property portfolio, which covers about one per cent of Australia's land mass, to a Chinese majority consortium.
"We remain the most liberal nation on earth for investment by foreigners, yet people get the temerity to say because this government dares block one we're going to absolutely throw the teddy out of the cot on this one. Well I'm afraid they're just going to have to do that," Mr Joyce told ABC radio on Monday.
South Australian Premier Jay Weatherill said the decision to block the sale was driven by xenophobia.
"I don't think we'd be having this discussion if it was an American or a UK investor," he told The Adelaide Advertiser.
"I don't understand why this would not just be looked at in purely objective terms to see whether it creates jobs and opportunities for SA."
Treasurer Scott Morrison told the paper he examined all aspects of the sale on its merits.
Opposition trade spokeswoman Penny Wong said the government was sending inconsistent messages to foreign investors.
"My concern is first with a process which says to foreign investors our process for deciding these things is politicised, incoherent and is chaotic," she told ABC radio.
Senator Wong also believes there's a discriminatory policy towards Australia's Asian free-trade partners, who face more onerous foreign investment scrutiny than the United States.
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