It’s hard to know whom to dislike more in the fallout from Wayne Swan’s non-decision to block the Singapore-ASX takeover: the economic nationalists keen to re-establish investment protectionism, or the screen jockeys muttering about Australia “withering on the vine” as a result.

The one bloke who’ll be happier even than investment xenophobe Barnaby Joyce is Joe Hockey. Swan’s supposedly interim knockback of the takeover lets the Coalition off the hook in a big way — conditional approval by the government of the deal would have required legislation to overturn the restriction on foreign ownership of the ASX, and that would’ve put the Coalition in a tricky position.

There’s undoubtedly support for a strongly pro-investment foreign investment regime within Liberal ranks, but the Nationals regard it as one step short of economic invasion (except, of course, when mates sell agricultural properties to foreign companies). For the economic nationalists, it’s die-in-a-ditch stuff; for those supporting free investment flows, it’s not. Who do you think would have carried the day? The options for the Coalition were either a very visible split, or opposing the legislation, yet again showing the party of free markets and liberalism sticking up for regulation and restriction.

All is not lost for the takeover proponents, however. They can now sell a “How Not To” guidebook on foreign investment, given the ASX managed to botch virtually every single aspect of its campaign for political approval. If Magnus Bocker really was “shocked” about Swan’s decision, as he claimed yesterday, he’s quite extraordinarily badly informed.

But while the xenophobes crack open a bottle of home-grown sparkling to celebrate, the same long-standing problems in our foreign investment regulatory framework remain. Australia’s regulation of foreign investment is a black box process: you lodge an application, the Foreign Investment Review Board assesses it, consults on it, develops recommendations on it, all in secret, and then hands it to the Treasurer, who has the final say anyway.

The process is mostly opaque to the applicant, and wholly opaque to everyone else.

But it’s not just the process. The rationale for assessment, which is the “national interest”, is also opaque. What’s the national interest? Well, that’s never defined, because defining it might circumscribe your capacity to rule out future applications.

That’s not to say there aren’t lots of definitions in the assessment process. The government has overhauled the FIRB guidelines twice since August 2009. “National interest” specifically includes “sovereignty and security interests”, competition issues, economic impacts, other government policies and the character of the investor. Ironically for a process that is entirely obscure, the guidelines include whether an investor “operates on a transparent basis”.

But these are guidelines for a vacuum — they don’t serve to indicate what is or isn’t in the national interest, because no politician wants to be circumscribed in that way. As we know from WikiLeaks, the guidelines can be a cover for other concerns: the 2009 overhaul was explicitly aimed at Chinese investment in the resources sector.

The government has acted to substantially lift the thresholds at which the FIRB process applies. The 2009 changes more than doubled the threshold at which FIRB notification was required. Those thresholds are indexed, and are now, for non-real estate acquisition, $231 million for non-US foreign investors and for sensitive sectors like the media, and just over $1 billion for US investors.

Even so, once the threshold is crossed, you’re into a limbo where politics, as much as any consideration of “the national interest”, determines bids, in a way that no one except Cabinet can ever be sure about.

At least under the types of protectionist measures that traditionally propped up our manufacturing industries, there was absolute certainty: tariffs provided a clear economic barrier to importers, and subsidies padded the revenues of local manufacturers. The protectionism of our foreign investment regulatory framework lacks even that small positive.

It provides no certainty, either for those seeking to invest in Australia, or for the rest of us, about the basis on which major foreign investment applications will be considered. Rather, it’s a device of convenience for politicians.