FDI register lacks definition

10 Nov, 2014 03:00 AM
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The longer you leave the gate open the more of the herd are going to get through

DIFFICULTY defining land and agribusiness titles is delaying implementation of Australia's proposed foreign direct investment (FDI) register.

The long-awaited register’s schedule was tackled last week when Treasury officials faced a grilling before the Senate Economics Legislation Committee.

Despite the change of government, the public record of foreign agricultural investments promised over two years ago by the Labor leadership to help increase transparency remains in limbo.

However, Agriculture Minister Barnaby Joyce said late last month it hadn't “dropped off the agenda”.

He said the Coalition didn’t want to duplicate what the States were already doing and wanted to ensure “there’s one seamless register”.

“In the meantime we are making sure the trade agreements that we have been signed with Japan, with Korea and with China will abide by those policy settings of $15 million for individuals, $53 million for agribusiness and $1 for State-owned enterprises,” he said of Foreign Investment Review Board scrutiny thresholds.

Taking advantage of delays

Queensland LNP Senator Matthew Canavan fears the protracted delay is motivating foreign investors to take advantage of the current rules, before the policy change is formally implemented.

"We need to bring down the threshold for farmland as a matter of urgency,” he said to Fairfax Media.

“It was an election commitment and there doesn't seem to be any convincing reason on why it is taking so long.

"People know it is going to come down and because of that there is a rush to get through before that happens.

“The longer you leave the gate open the more of the herd are going to get through."

Coalition divisions

Labor Shadow Trade and Investment Minister Penny Wong drilled Treasury officials and Finance Minister Mathias Cormann last week about the register, along with Senator Canavan.

Senator Wong said the hearing revealed that more than 12 months after the 2013 election the Abbott government had no timetable for implementing its key election promise.

She said a confrontation between Senator Canavan and Senator Cormann during the estimates hearing exposed Coalition divisions on the “government’s ill-considered commitment to impose new layers of red tape on investment in agriculture in Australia”.

Treasury Foreign Investment and Trade Policy Division general manager Rob Donelly confirmed his department was working with State governments and the Department of Agriculture to progress the initiative.

He said currently no legislation was being drafted, “but we are working with the States to try and get access to the information that will be required to compile a register”.

“Once that is available, we will put our plan to government in terms of legislation to amend the threshold,” he said.

Ag definitions a sticking point

Treasury Foreign Investment and Trade Policy Division chief adviser Deidre Gerathy said States were being consulted on implementing the register and reducing the threshold levels.

Ms Gerathy said the consultation process started in June, but may have also started earlier.

“The process has largely been by email correspondence, telephone and other conversations like that,” she said.

“The State consultation is really in relation to the land and title registration.

“But we are also trying to find out from the States what definitions they may have about agricultural land ... the ultimate aim is to find out which is the least regulatory burdened way to progress these measures.”

Ms Gerathy said a definition of rural land already existed in the Foreign Acquisitions and Takeovers Act 1975, based on the definition of primary production in the Tax Act.

Senator Canavan asked if that definition would be used to set the new $15 million threshold.

Ms Gerathy said Treasury would need to consider whether that starting definition met all of the policy objectives.

“That definition of rural land is one that we are certainly looking at,” she said.

Ms Gerathy also said there was no definition in the legislation, or related legislation, of agribusiness, adding the two definitions are “quite linked”.

“The definition of 'rural land' is based on the definition in the Tax Act, which is not land, per se; it is whether you are carrying on a business of primary production,” she said.

“Effectively, the definition of 'rural land' - and therefore the definition of land that is not rural land - is based on carrying on a business of primary production.

“In relation to the $15 million threshold, the proposal is also for it to be a cumulative threshold.

“That is something else that would need to be explored in terms of implementation and how that would actually work.”

Mr Donelly agreed with Senator Wong’s description that if a Chinese investor bought an $8 million property and then another $8 million property, the rule changes would be intended to “catch” the second purchase.

Ms Gerathy said foreign investors would need to work out and check whether they had reached the accumulative threshold or not.

Senator Canavan said in the Foreign Acquisitions and Takeovers Act, Australian rural land means ‘land situated in Australia that is used wholly and exclusively for carrying on a business of primary production’.

Ms Gerathy said land that was not wholly and exclusively carrying on a business of primary production was not considered rural land.

“There is a definition there and that is our starting position in thinking about this measure,” she said.

“The issue is how we find out which foreign owners own which piece of agricultural land - that is why we are working with the States.”

'Orderly and methodical' timing

Asked when the process would be completed, Senator Cormann said, “Ultimately these are matters that go to cabinet deliberations and timing of cabinet deliberations”.

“They will be finalised as soon as possible,” he said.

“The government's position is to ensure that we implement this commitment in an orderly and methodical fashion,” he said.

“At this stage we are focused on conducting necessary consultations with the States.

“We will implement the commitment - the same as we have implemented previous commitments over the last 12 months - in the most efficient way possible.

“That is what distinguishes this government from the previous government, where the constant chaos and dysfunction caused constant issues domestically and in terms of our relations internationally.

“We are working in a very considered fashion to give effect to all the commitments that we made in the lead-up to the last election, including this one.”

FarmOnline
Colin Bettles

Colin Bettles

is the national political writer for Fairfax Agricultural Media
Date: Newest first | Oldest first

READER COMMENTS

Jock Munro
11/11/2014 4:56:22 AM

The Liberals do not want to know and they would sell off everything if they could. Labor are every bit as dangerous.

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In a sovereign country with its own currency there is no need for foreign capital. The need for
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I'm sure u are familiar with the term "divide and conquer" Sen Wang, the major role of gov't is
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In the meantime,somewhere on Brisbane Ave........more of the same! "Those pests from the