EVERYWHERE I turn, agriculture and agribusiness leaders are expressing exasperation and dismay over the Abbott government’s new foreign investment rules.
Their first question is: what will the new low screening thresholds achieve?
Sending bucket-loads more of foreign investment applications to an already under-resourced Foreign Investment Review Board (FIRB) will do nothing but cause blockages in an already over-burdened system.
By the way, the FIRB is just that. It's a board. It was established mainly as an attempt to build public confidence in foreign investment. Its part-time, modestly remunerated members rely on Treasury officials to assess applications and recommend whether proposals should be approved or denied. Rarely do they overturn Treasury recommendations. Indeed, any applications likely to be controversial or contestable are hijacked by the Commonwealth Treasurer well before FIRB members take their seats at the decision-making table. Indeed, this highlights the silliness of Tony Abbott’s populist, threshold reduction policy – the Treasurer can direct any matter to the FIRB he likes, regardless of its monetary value.
Last year the ANZ Bank and Port Jackson Partners produced a report entitled Greener Pastures. The authors suggested that to fully capitalise on the Asia-led “Dining Boom”, Australia’s agriculture and agribusiness sectors will need around $600 billion of investment in our economic infrastructure by 2050.
As an island continent with a small population, Australia has a limited savings capacity. That’s why we have always been heavily dependent on foreign investment. Icons like the Sydney Harbour Bridge and the Snowy River Scheme were built with foreign capital and indeed, foreign labour.
So we are a country which must remain welcoming of foreign investment. Sure, we must be discerning, making sure that every proposal is in the national interest. We must also work at ensuring Australians have both an understanding of and confidence in our foreign investment regime.
That’s why the former Labor government proposed a foreign investment register, which will allow people to check – with the click of a mouse – exactly who was investing in what and how much they are paying.
Rather than building community confidence, the Abbott government is undermining it. It is doing so by exploiting community apprehension about foreign investment and in doing so, it’s sending all the wrong signals to potential investors. Worse, it’s placing barriers in the way of foreign investment by massively reducing the FIRB screening threshold, although only for some.
Reducing the screening threshold for agricultural land to $15 million and for agribusiness to a figure $55 million, will send a flood of applications to the FIRB. Sadly, the government has allocated no additional resources to an already under-resourced FIRB process. In other words we are about to see a big blockages in the system.
Make no mistake, competition for global capital is intense and Australia must be inviting of it. The alternative is economic stagnation and higher levels of unemployment. Yet Tony Abbott is putting the "closed" sign out. Off to the next shop the investor dollars will go - maybe to South America or elsewhere in Asia.
It's a very worrying development and the sooner the agriculture sectors leaders who have been saying this privately become more vocal the better.
The future of agriculture depends on it.