FIRB 'screen' locks out investors

What factors could they consider to distinguish foreign farm purchases that are good from bad?

NEW foreign investment rules for agricultural land purchases will choke farm sales in red tape, says DAVID LEYONHJELM.


I'VE met plenty of farmers my age who are thinking about and planning for the end of their farming days.

Some have succession plans with family members. But many don’t, and their plan is to sell. They’re not sentimental but they have a strong connection with their land, and they know its worth.

They also need to sell at a fair price. They’ve got debts to repay before funding their retirement. After a lifetime of investing in the farm, their superannuation nest egg doesn’t compare with those who have been ‘pay-as-you-go’ employees all their life.

The potential outcome of one who has decided it’s time to sell goes as follows.

“April comes along. Then May. All other bidders fade away...”

The property is listed with an agent and there is the usual marketing campaign, but buyers are thin on the ground. The best offer is from an unenthusiastic neighbour - a couple of million, which everyone knows is too low.

Just as hope begins to fade, a potential buyer comes in for an inspection. The buyer knows his way around a farm — he owns a couple of them already. He’s thorough and impressed with what he sees. He speaks with an accent which you recognise as South African. As he leaves he mentions a price twice the size of the neighbour’s offer, close to the owner’s own valuation. He’ll be in touch.

But then the first of March comes along, and our South African bid gets stuck in bureaucracy.

Barnaby Joyce, Tony Abbott and Joe Hockey have announced that, from the first of March, this bid needs to be ‘screened’. The reason is that if the purchase went through, the value of the agricultural land owned by the South African would add up to $15 million.

April comes along. Then May. All other bidders fade away.

June comes, and still no word from the bureaucrats responsible for the ‘screening’.

Then in July, the South African runs out of patience. He needs to get on with business and withdraws his offer.

Barnaby Joyce and his colleagues say ‘job done’. To them, such a result means ‘investment is coming in on our terms and for our nation’s benefit’.

The farmer seeking to sell his farm knows it hasn’t done him any favours. But he also struggles to see how the result is for our nation’s benefit.

He cannot even imagine what the bureaucrats have been doing. What factors could they possibly consider to distinguish foreign farm purchases that are good from foreign farm purchases that are bad? How can these factors be sensibly considered anyway? After all, the relevant bureaucrats are economists in the Treasury Department in Canberra.

If investment must be ‘on our terms’, what exactly are those terms? A lot of ageing Australian farmers will be hoping somebody knows.

And I suspect it won’t help to ask Barnaby.

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FarmOnline
David Leyonhjelm

David Leyonhjelm

has worked in agribusiness for 30 years and is a Senator for NSW representing the Liberal Democrats.
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READER COMMENTS

hunter
17/04/2015 9:00:17 PM

As with any regulation you are deciding who (the neighbour buying or old bloke selling) to favour. Increase restrictions on foreign ownership and you favour the buyer, loosen them and you favour the seller. From my selfish perspective I'm happy with tighter foreign ownership restrictions, but the price of land around me is too high already... I can't borrow even at 6% and make it pay at the asking price (and I know I make more profit per acre on my enterprise than most in my district).
seethelight
5/04/2015 8:02:47 PM

If the responses to David's article were a genuine reflection of farmer's views, then I despair.Its simple.The farmer owns his land.He should be able to sell to whomever he desires.That Barnaby Joyce and other grandstanding politicians want to prevent the farmer maximising his opportunities just reveals the thieving nature of the political classes.
LC
27/03/2015 5:56:45 PM

Good point JP.
jp
26/03/2015 12:17:45 PM

David, to be fair you're one of the better cross-benchers in the Senate, but please focus on real freedoms and reforms that matter to your constituency. I fear all you’ll achieve in the name of “liberty” is introduction of the Greens’ social engineering lunacy, and giving non-reciprocated favours to China which will only help and encourage the very anti-freedom Chinese Communist Party.
Percy
24/03/2015 5:35:36 PM

The main criteria is whether any purchaser is likely to become an Australian citizen and contibute to our economy or whether they are a citizen of a foreign country where no person can own their own land (nor can we buy any). In this case they are buying for their nation and thus are part of an invasion of Australia.
leon tanner
24/03/2015 7:23:00 AM

If you are a genuine libertarian David, why have you not ever done as much about labor freedom, the biggest set of freedoms we are denied in this Nation? Why make such a priority of lesser restraints, if they genuinely exist, like marriage equality? Why do you not attack peoples lack of freedom to offer their labor and services free of regulations which make Australia the grave yard of primary production, processing and services in the World. Until you reset your priorities you are wasting the money Australians pay you every day regardless of your lack of financial contribution.
Swacker
23/03/2015 9:27:07 AM

The simple Truth of the matter is that there a lot more multi-millionaires Internationally than in Australia They have proved they can outbid Aussies both young and and old at least 2 to 3 times the amount of locals. This exists in commercial, industrial, residential and agricultural. Australians will not be able to compete in this environment. Austrlalians have to learn to get rich on things other than real estate.
Sally Moore
18/03/2015 11:50:58 PM

Thank you Senator for this article. It goes to show that there are two ways to look at a problem - glass half full......or empty.
andy
17/03/2015 9:06:04 PM

Donny, that would be the UK.
chromedome
13/03/2015 1:50:13 PM

why am I still reading the senator for donkey vote rantings. run away and get some paper cuts from long senate papers.
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Agribuzz with David LeyonhjelmCommentary, news and analysis with agribusiness consultant David Leyonhjelm. Email David at reclaimfreedom@gmail.com

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