Foreign farm buys above $15m will need FIRB approval

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Photo: Aussie Kanck
The Australian | 11 February 2015

Foreign farm buys above $15m will need FIRB approval

by David Uren

Tony Abbott says the national interest requires lowering the threshold for foreign investment in agricultural land, but industry is concerned the move will scare off needed capital in the rural sector.

Announcing the policy change at a rural property outside Can­berra, the Prime Minister, alongside Joe Hockey and Agriculture Minister Barnaby Joyce, said all ­foreign property purchases above $15 million would require approval of the Foreign Investment Review Board from March 1. Until now, purchases of farms have been treated like any other business, with a threshold of $252m.

“It has got to be investment that serves our national interest. It can’t just serve the investors’ interest,” Mr Abbott said.

The Treasurer foreshadowed that yesterday’s announcement would be followed in a few weeks by a more far-reaching tightening of the foreign investment guidelines affecting residential real ­estate and businesses in the agricultural industry.

“An issue in our metropolitan areas is that there is seemingly an increase in unlawful acquisitions of existing residential real estate by foreign persons,” he said.

Mr Hockey said the new threshold on foreign investment in agriculture would be cumulative, so someone with a $14m investment would have to seek approval before trying to purchase an ­additional $1m property.

The head of real estate business CBRE’s agribusiness operations, Danny Thomas, said most global institutions had a minimum level of investment in a country, such as $25m, but would want to build up a portfolio of $100m in order to just­ify having a country manager.

“To have a cumulative threshold like that is a real handbrake on having them interested in coming and investing here.”

He said Australian agriculture was in great need of capital and would have been favourably placed to attract it following the fall in the currency, good prices for produce such as cattle and widespread rains in northern Australia.

However, National Farmers Federation president Brent Findlay welcomed the tighter rules. “Our concern is around closed supply chains when an investor comes in and all the product that’s produced from those farms are not marketed within Australia or don’t have the opportunity to go into the Australian market.”

Labor is opposing the move, saying the lower threshold will be a “red-tape nightmare” for potential investors, driving investors to other countries.

Mr Abbott also announced a register of foreign investment in agricultural land would be compiled by the Australian Taxation Office. All transactions involving foreign interests will have to be ­notified to the ATO, which will also work with state titles offices to compile a complete register. A similar approach is likely to be used in a crackdown on foreign investment in residential real estate.
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