Farmland investment rules tightened

11 Feb, 2015 11:00 AM
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The community must have confidence this investment is coming in on our terms and for our benefit

THE screening threshold on foreign purchases of Australian agricultural land will be reduced from $252 million to $15 million from March 1 to " improve scrutiny" and a foreign ownership register of agricultural land is finally set to go ahead.

In a joint press release, Prime Minister Tony Abbott, Agriculture Minister Barnaby Joyce and Treasurer Joe Hockey said better scrutiny and reporting of foreign purchases of agricultural land were part of the Coalition's commitment to the Australian people at the September 2013 election.

"The government will continue to welcome foreign investment, but the community must have confidence that this investment is coming in on our terms and for our nation’s benefit," the statement said.

“We need to develop the architecture for successful and sustained agricultural investment”

The new $15 million screening threshold will apply to the cumulative value of agricultural land owned by the foreign investor, including the purposed purchase.

A much-anticipated foreign ownership register of agricultural land will also be developed to provide a clearer picture of foreign investment levels in Australia’s agricultural sector.

From July 1 the Australian Tax Office (ATO) will start collecting information on all new foreign investment in agricultural land regardless of value, and will also commence a stocktake of existing agricultural land ownership by foreign interests. The ATO register will also use land title transfer information from State and Territory governments.

"These measures are a significant step in protecting Australia’s national interests and in giving the community greater confidence in our foreign investment regime," the statement said.

Close, but no cigar: Milne

Greens Leader Christine Milne said changes to foreign investment were a step in the right direction, but fell short of protecting Australia's future food security.

"It's critical we make sure that Australia's agricultural land and water are seen as key national assets not to be sold off recklessly,” Senator Milne said.

“As global warming and extreme weather events disrupt food production worldwide, land grabbing and outsourcing food production by major importers of Australian food is undermining trade rules and threatening our food security.

"We need an outright ban on the sale of agricultural land and water licenses to wholly-owned subsidiaries of foreign governments, and we need a much more stringent national interest test."

The Greens want to drastically reduce the threshold for the national interest test to $5 million, but said the new $15 million threshold was a start.

A statement released by the Labor today said while the Party supports moves to increase transparency in Australia’s foreign investment regime, lower thresholds on agricultural land would be a red-tape nightmare for potential investors.

The new rules "risk driving investors elsewhere at a time Australian agriculture is hungry for capital," the statement said.

"It is inconceivable that Australia will be able to scale up production to expand our food exports and fully tap into the growing consumer markets of Asia without additional foreign investment."

A social licence

Foreign direct investment (FDI) needs “a social licence and a sense of mutual interest” to be beneficial to Australian agriculture, National Farmers’ Federation (NFF) chief executive Simon Talbot said last week.

NFF president Brent Finlay said today's announcement of the register was a welcome next step in progressing NFF's policy agenda.

“Foreign investment in Australian agriculture is welcome; it is essential for our continued growth and future prosperity. We are open for business," Mr Finlay said.

“However, proper scrutiny of investment proposals and a transparent register form the necessary architecture for successful and sustained investment, and ensure that investment is in Australia’s best interest.”

Mr Finlay said there were still some key issues to iron out – such as foreign investment in infrastructure, agricultural supply chains and water.

“We want to see foreign investment that serves Australian interests, and we commend the government on taking this step forward.”

“Foreign investment has brought definite benefits to Australian agriculture”

The government is also now considering the recommendations of the Parliamentary Committee inquiry led by MP Kelly O’Dwyer regarding foreign investment in residential real estate and will announce details of these reforms in coming weeks.

A survey commissioned by ­accounting firm Bentleys and conducted by Empirica Research last August found 60 per cent of ­farmers still believe there should be less foreign investment in Australian farms.

While tougher FDI regulations are popular with the public, the NFF has cautioned the government will need to find “the right formula” to make the proposed system work.

"The government must ensure the ATO is properly resourced to deliver the long-promised register," Mr Finlay said.

"While work will commence in July to collect information, a clear timeframe for when this information will be publicly accessible is a must."

Last year Mr Joyce rejected accusations he had undergone a political metamorphosis on foreign direct investment (FDI) since being appointed Agriculture Minister in the Abbott cabinet.

Shadow Agriculture Minister Joel Fitzgibbon said he welcomed Mr Joyce's new-found support of foreign investment, but said it was in “very stark contrast” to the New England MP’s mantra when he was in the Senate representing the Queensland LNP.

Mr Fitzgibbon said he didn’t believe Mr Joyce was being xenophobic in venting opposition to foreign investments like Cubbie Station or the potential sale of GrainCorp to US multinational Archer Daniels Midland. But he does believe his political counterpart’s views on the issue are “populist”.

“I think Barnaby Joyce senses people in rural Australia are sensitive about foreign ownership of agricultural land and in the past he’s chosen to take political capital from those concerns,” he said.

Register a long time coming

The agricultural sector has been waiting on an FDI register for some time. After establishing a departmental working group on FDI in June 2012, the Labor government announced in October 2012 it would implement a national foreign ownership register “to improve transparency of foreign ownership in agricultural land without imposing unnecessary burdens on investors”, and the Coalition reiterated this promise at the September 2013 federal election.

The register was also recommended in a Senate report tabled in June 2013, which said foreign investment was encouraged in Australian agriculture.

Mr Joyce has repeatedly defended delays in the register's implementation. He was quick to reassure critics in June 2014 that development of a foreign ownership register for agricultural land was still on the agenda, saying the Department of Agriculture was working on the information technology and reporting framework that could underpin the register.

FarmOnline

Katie McRobert

is the national editor of FarmOnline
Date: Newest first | Oldest first

READER COMMENTS

Jon
11/02/2015 12:13:51 PM

Good move, at long last, by the Australian Federal government. There is a significant and massive difference between foreign ownership and foreign investment. The interests of Australia, Australians and Australia's natural resources should never be undermined by foreign investment and the interests of foreign investors.
Rob Moore
11/02/2015 2:52:10 PM

It is one thing to simply enforce reporting BUT if the FIRB is as gutless and weak as they showed over the Primo to JBS joke.....then why bother. In fact the ADM grain knoc back was the first in history. Typical politicians - being seen to do something but not putting the drive train in for a useful result.
Awake
11/02/2015 3:25:36 PM

What's to stop the Chinese hybrid companies, with the help of the Chinese government, from using "quantitative easing" currency to buy the entire land mass of Australia. Then what?
Hick from the sticks
11/02/2015 4:10:04 PM

Come on, what are they going to do? Roll it up and take it away? Ridiculous debate over a non issue.
Awake
11/02/2015 4:58:59 PM

To:" Hick from the sticks". They won't roll it up and take it away. They will simply sit tight until such time as it becomes viable through population growth driven food demand, which could be many years if not decades.
Jock Munro
11/02/2015 5:49:56 PM

The first three entries are spot on-at least the Government has moved in the right direction. We must now keep the pressure on - politicians have become severely chastened on this issue and hopefully they will continue to listen and act in the interests of Australians.
Tillytomtit
11/02/2015 6:06:28 PM

There is no need to make war with Australia which will risk damaging our infrastructure; just hand over some cash and come right in! A lot of foreign owners operate fully integrated systems, without any gain to most Australians. Our assets should be leased, not sold unless we are able to buy in their countries. It is time our government changed the rules. Many farmers are selling as they want to retire. Our govt could assist younger farmers buy into or expand their current holdings; at least this would give the govt some tax revenue. Once sold, especially to foreign governments, it's gone!!
jaydin
12/02/2015 7:47:27 AM

To farmers who complain about foreign ownership: I take it you're happy to have less competition for your land hence lower prices/value? Oh, you're not? Naturally like handouts, prefer to have your cake and eat it too ...
wtf
12/02/2015 7:55:05 AM

Well done to all involved. A first step into providing a solution for a generation shut out by flawed policies and doctrines such as the free market, which never seem to be evaluated for their impact. Keep opening doors for younger people and growing a country rather than turning us into a welfare state.
Awake
12/02/2015 8:49:55 AM

As long as we have a closed labour market delivering unsustainable salary costs with many people taking home millions of dollars per year through arbitrary outcomes, no export industries are safe for the long haul.
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Based on this article, I feel obliged to congratulate AWI on the magnificent job they do with