FarmOnline.com | 10 Jul, 2011
Opposition gets busy on foreign acquisitions
COLIN BETTLES
THE Federal Opposition will establish a working group to investigate options for sharpening rules governing the sale of Australian agricultural land and agribusinesses, to foreign entities.
The Opposition says government policy must ensure foreign farmland acquisitions are undertaken in Australia’s national interest while maintaining food security into the future.
But it also says continuing foreign investment is integral to Australia’s economic future.
The working group will by Chaired by Nationals Leader, Warren Truss, and aims to examine the adequacy of current policy settings, in delivering foreign investment outcomes.
It will take public submissions and plans to meet with concerned communities, businesses and other stakeholders - aiming to table a report in the next few months.
The move was made following revelations Chinese mining giant, Shenhua Watermark Coal had engaged in a two year spending spree, in 2009 and 2010, investing $213 million in 43 farms outside Gunnedah in northern NSW for mining exploration.
Currently the Foreign Investment Review Board (FIRB) only investigates investments totalling more than $231 million with many purchases, like Shenhau’s spending rampage, with reports farmers were paid up to ten times previous sale prices, slipping through the cracks.
Shadow Agriculture Minister, John Cobb, will also sit on the working group and said the farm-land buy-up was more evidence the Gillard Government had been “asleep on the job” and that Australia’s foreign investment rules were outdated.
In March, the parliament passed a motion Mr Cobb raised, asking the ABS and ABARES to collect critical information and analyse the extent and impact of foreign ownership in Australian agriculture.
Mr Cobb said in most cases, the $231m threshold would never activate a review of land purchases as the price would be too high for some agribusinesses.
“To let a Chinese government controlled company take control of some of our richest food growing areas, let alone without triggering consideration by the FIRB, is too greater risk for our nation,” Mr Cobb said.
The foreign ownership issue was thrust into the spotlight earlier this year when QLD Senator Barnaby Joyce released figures showing there had been a substantial increase in foreign ownership of Australian agriculture assets, under the current government.
The Senator’s figures showed foreign investment in Australia under the Coalition had averaged only $274 million per year but since Labor took over in 2007 it had averaged $2.7 billion per year.
In response, Federal Agriculture Minister, Joe Ludwig, and Assistant Treasurer, Bill Shorten, developed an information gathering process through ABS and ABARES to address emerging community concerns.
A survey has already been sent to about 160,000 farm businesses with a report due in September.
At the time, Mr Shorten said the key question was whether foreign ownership issues really existed and a gap was actually developing between anxiety and reality.
Independent South Australian Senator, Nick Xenophon, said he was encouraged by the major political parties expressing concern over the foreign acquisition of Australian agricultural assets, despite rejecting issues he raised in a Senate Committee report tabled last month.
Senator Xenophon said he hoped both major parties would now give more thought to the Private Senator’s Bill he raised with the Greens.
The Bill proposes amendments the Foreign Acquisitions and Takeovers Act, requiring any foreign investment interest in Australian agricultural land greater than $5 million to be subject to an application to the Foreign Investment Review Board and introduces a national interest test.
The Bill also requires all foreign purchases to be detailed in a register, enabling Australians to see who owns and is buying prime agricultural land.
“Australians have been absolute mugs on this issue; we should be selling the milk not the cow, the food and not the farm,” Senator Xenophon said.
Senator Xenophon said it was vital the Government had the data it needed to ensure Australia’s future food security.
“If foreign governments are smart enough to be trying to buy up prime Australian agricultural land to feed their people in the coming years, shouldn’t the Australian Government be smart enough to ask whether these purchases are in our national interest?” he said.
The Australian Greens also called on the Federal government to alter the FIRB’s powers to include scrutiny of foreign owners of water licenses, which currently is not done, and the government to publish a list of those owners.
“Australians don’t want foreign companies buying up prime agricultural land so they can be turned into mining sites and they do not want water allocation rights acquired by parties not interested in protecting future flows,” said the Greens’ water and Murray Darling Basin spokesperson, Senator Sarah Hanson-Young.
Senator Joyce said prime agricultural land should be off limits because it was “irreplaceable”.
He said the $231m FIRB threshold should be lowered but did not commit to a number.
He said “once prime agricultural land is gone that's it, you can't get it back”.
Speaking about the Senate inquiry’s rejection of Senator Xenophon’s proposed amendments, Tasmanian Senator, Richard Colbeck, said a coordinated approach to entire foreign farmland ownership issue would be more beneficial, as it “appears the whole thing is being been done on an ad-hoc basis”.
He said the work being done by the ABS and ABARES to gauge the level of actual foreign ownership would provide a more accurate picture of the issue and determine if any provisions needed changing.
He said it was overly simplistic to only look at the proposed 5 hectare threshold and compare the NZ approach, which Senator Xenophon cited in a dissenting report.
“We’ve had a long history of foreign investment in Australian agriculture,” he said.
“Initially it was the British, there was a lot of investment from North American super funds in the forestry industry and the Japanese have historically had a lot of investment, particularly in beef.
“It was one of the things that really set our beef industry up and gave us access to one of our strongest markets.
“It’s a matter of - do we have the actual capital here in Australia to develop what we need to develop?
“We’ve relied on foreign investment for development because we don’t have the money, cash resources here in Australia to do it.
“This Bill was a bit simplistic in the way it was done.”
Treasury told the Senate inquiry that the Bill, raised in November last year, could potentially put off potential foreign investment.
The tabled report said “Some submitters to this inquiry discussed the benefits of Foreign Direct Investment (FDI) and its importance to the agricultural sector and the economy more generally. These submitters raised concern that greater legislative restrictions on FDI could send out the wrong signal and potentially deter investors.”
Senator Xenophon said “Right now, Australian policy on foreign investment in agricultural land is built on a foundation of quicksand”.
