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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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

Cocky
25/02/2015 4:44:30 AM

Screwing young Aussies (Enthusiastic Neighbours) out of an opportunity to purchase any real estate within our highly regulated economy and allowing unregulated foreign money in unabated, seems mildly un Australian to me. But then I guess that just makes me racist.
jaydin
25/02/2015 5:56:20 AM

Enthusiastic article, and likely an element of truth to it, however it fails to mention that there is a decent chance that the farmer was one of the ones down at the pub lamenting how much land is being sold to foreigners and we should do more to protect our own interests, not realising he was contributing to this issue himself.
charles ponzi
25/02/2015 6:10:40 AM

David I had hoped u would do a story on racist berries? I propose to fix your red tape dilemma, ban overseas buyers grabbing our land and shutting our youth out, there done. As something of interest, did u know aldoux Huxley, Cs Lewis and jfk DIED the same day, curious isn't it.
Donny
25/02/2015 7:01:57 AM

Its simply the Law of the Jungle at work. We rabbit-like Aussies are too weak and soft and are letting tiger-like foreigners do what they like because we are scared of them. So we let them take our land and anything else that they want to take and fawn all over them because they are bringing "investment" to Australia. Tell me the names of any other countries where we could walk in / wade in and buy whatever real estate we liked whilst being encouraged and cheered on by the Government of that nation.
Jason
25/02/2015 8:19:12 AM

David I would like to see proof in black and white that foreign investors are paying more than domestic buyers!! In my experience chinese(for example) are buying business that are in financial trouble.they are doing there homework
Recalcitrant
25/02/2015 8:33:04 AM

"As he leaves he mentions a price twice the size of the neighbour’s offer, close to the owner’s own valuation." So the seller and South African buyer are both probably fools. It doesn't just apply to International buyers - the same story holds true for cashed-up general practitioners who purchased land from family farmers during lean times and are now looking to find a retired investment banker with money to spend.
Hydatid
25/02/2015 10:07:04 AM

That's right....Keep these foreigners out! But who is a foreigner? Is it a 7th generation?, permanent resident?, dual citizen?, someone from Melbourne?....what about if that nice young Aussie couple borrowed money from a foreigner (silent majority investor)? how about all you folks in debt to RaboBank? I can see the headlines now "bloody Dutch takeover".
Bushie Bill
25/02/2015 12:06:00 PM

There are four words very appropriate to the naysayers. The words are fearful hateful ignorant xenophobes. RARA will forever be at the bottom of the Australian social structure while such people exist the industry.
stockman
25/02/2015 4:36:27 PM

I thought Australia was supposed to be a wealthy country,but apparently not.Overseas buyers come here and pay more for farms than we can.Even the Kiwis can outbid us on farming land in Australia.
Qlander
26/02/2015 5:32:28 AM

Nice story- But a genuine farmer, who gets impatient and pulls the plug after 2 months....really? I'm now in my 4 month of rescheduled settlement dates, just buying my sister inlaw out of my brothers estate. That's the speed of the accountants, lawyers and OSR /stamp duty. If he thinks 2 months is a long time he wasn't a farmer, and if he pull out he wasn't fairdinkum. More likely he had a think, did some sums, and realised he was offering way over the odds for an Australian farm. The neighbour would know the real earning capacity.
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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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