WHY should foreign investment be a threat to Australia's food or resource security, our sovereignty, or contrary to our national interest? Even when that investment is made by firms which are state owned?
And why does the federal Opposition insist that investing in farm land be subject to Foreign Investment Review Board (FIRB) scrutiny at much lower levels than investments in other assets? What has changed to justify subjecting investments in farm land to such scrutiny now, when there has been no such scrutiny for the past 200 years?
There are no coherent answers to these questions. Most of the debate on the subject is adolescent nonsense, quickly descending into absurd hypotheticals about World War III, starvation and similar cataclysms, or treacherous foreigners.
Those who talk about 'protecting food security' seem to be oblivious to how limiting access to foreign capital would do anything but harm the agriculture sector.
They also conveniently forget that investors in Australia have to obey Australian laws, of which there are a great many covering everything from competition to environmental standards. Moreover, the law treats investors equally, regardless of their nationality.
But it’s true that foreigners may not put Australia's 'national interest' at the top when making business decisions. But guess what? Neither do Australians. I’d suggest there has never been a farmer who decided to grow wheat instead of cotton, or produce prime lambs instead of wool, because it is in the national interest. The great thing about free market capitalism is that they don't have to.
As Adam Smith said, "It is not from the benevolence of the butcher, the brewer, or the baker that we expect our dinner, but from their regard to their own interest". They do what’s best for them, and the pressures of competition make sure resources are put to their most productive use.
Limiting foreign investment means the Australian economy receives less money. Australian farmers wanting to exit will have fewer potential buyers, lowering the sale price. Furthermore, agriculture needs capital to remain productive and competitive, particularly in the absence of cheap labour. Shutting Australian agriculture off from foreign capital means less investment in productive capacity.
What the Opposition wants is for agriculture to be viewed as a "sensitive" sector like defence and the media – and face greater investment restrictions as a result. Its policy process appears to be driven by the Nationals, who have long had policies that run contrary to the interests of their constituents.
The problem is that few areas of public policy are as governed by the whims of politicians as foreign investment approvals. The “national interest” can be anything they want it to be, including stopping a foreign investor from buying a farm in a marginal electorate.
If the FIRB is given control of foreign investments in agriculture, investors can expect to be required to divulge more information about their proposals and intentions, to see their proposals publicly disclosed and subject to public comment, and to face monitoring for compliance of undertakings and representations. That’s assuming their investment is not blocked by the Treasurer because it is considered contrary to the national interest.
Inevitably there will be a national register of foreign-owned land along with questions on foreign ownership included in the agriculture census conducted by the ABS (Queensland already maintains such a register). Then, when foreign ownership increases from 10 per cent to 12pc, adolescent politicians and their media acolytes will present it as a 20pc increase and tell us it is contrary to the national interest.
Foreign investment in agriculture is as necessary as foreign investment in mining and hotels. Agriculture, mining and tourism are the only industries in which Australia has a natural competitive advantage. Proposals to discourage investment reveal a lack of faith in markets rather than a mature policy position.
If the Opposition really thinks it needs a policy on foreign investment in agriculture, how about a law prohibiting foreign owners from detaching their farms from Australia and towing them back to their own countries? It’s symbolically powerful and no more adolescent than their current suggestions.
David Leyonhjelm is an agribusiness consultant with Baron Strategic Services. He may be contacted at email@example.com