THE screening threshold on foreign purchases of Australian agricultural land will be reduced from $252 million to $15 million from March 1 to " improve scrutiny" and a foreign ownership register of agricultural land is finally set to go ahead.
In a joint press release, Prime Minister Tony Abbott, Agriculture Minister Barnaby Joyce and Treasurer Joe Hockey said better scrutiny and reporting of foreign purchases of agricultural land were part of the Coalition's commitment to the Australian people at the September 2013 election.
"The government will continue to welcome foreign investment, but the community must have confidence that this investment is coming in on our terms and for our nation’s benefit," the statement said.
“We need to develop the architecture for successful and sustained agricultural investment”
The new $15 million screening threshold will apply to the cumulative value of agricultural land owned by the foreign investor, including the purposed purchase.
A much-anticipated foreign ownership register of agricultural land will also be developed to provide a clearer picture of foreign investment levels in Australia’s agricultural sector.
From July 1 the Australian Tax Office (ATO) will start collecting information on all new foreign investment in agricultural land regardless of value, and will also commence a stocktake of existing agricultural land ownership by foreign interests. The ATO register will also use land title transfer information from State and Territory governments.
"These measures are a significant step in protecting Australia’s national interests and in giving the community greater confidence in our foreign investment regime," the statement said.
Close, but no cigar: Milne
Greens Leader Christine Milne said changes to foreign investment were a step in the right direction, but fell short of protecting Australia's future food security.
"It's critical we make sure that Australia's agricultural land and water are seen as key national assets not to be sold off recklessly,” Senator Milne said.
“As global warming and extreme weather events disrupt food production worldwide, land grabbing and outsourcing food production by major importers of Australian food is undermining trade rules and threatening our food security.
"We need an outright ban on the sale of agricultural land and water licenses to wholly-owned subsidiaries of foreign governments, and we need a much more stringent national interest test."
The Greens want to drastically reduce the threshold for the national interest test to $5 million, but said the new $15 million threshold was a start.
A statement released by the Labor today said while the Party supports moves to increase transparency in Australia’s foreign investment regime, lower thresholds on agricultural land would be a red-tape nightmare for potential investors.
The new rules "risk driving investors elsewhere at a time Australian agriculture is hungry for capital," the statement said.
"It is inconceivable that Australia will be able to scale up production to expand our food exports and fully tap into the growing consumer markets of Asia without additional foreign investment."
A social licence
Foreign direct investment (FDI) needs “a social licence and a sense of mutual interest” to be beneficial to Australian agriculture, National Farmers’ Federation (NFF) chief executive Simon Talbot said last week.
NFF president Brent Finlay said today's announcement of the register was a welcome next step in progressing NFF's policy agenda.
“Foreign investment in Australian agriculture is welcome; it is essential for our continued growth and future prosperity. We are open for business," Mr Finlay said.
“However, proper scrutiny of investment proposals and a transparent register form the necessary architecture for successful and sustained investment, and ensure that investment is in Australia’s best interest.”
Mr Finlay said there were still some key issues to iron out – such as foreign investment in infrastructure, agricultural supply chains and water.
“We want to see foreign investment that serves Australian interests, and we commend the government on taking this step forward.”
“Foreign investment has brought definite benefits to Australian agriculture”
The government is also now considering the recommendations of the Parliamentary Committee inquiry led by MP Kelly O’Dwyer regarding foreign investment in residential real estate and will announce details of these reforms in coming weeks.
A survey commissioned by accounting firm Bentleys and conducted by Empirica Research last August found 60 per cent of farmers still believe there should be less foreign investment in Australian farms.
While tougher FDI regulations are popular with the public, the NFF has cautioned the government will need to find “the right formula” to make the proposed system work.
"The government must ensure the ATO is properly resourced to deliver the long-promised register," Mr Finlay said.
"While work will commence in July to collect information, a clear timeframe for when this information will be publicly accessible is a must."
Last year Mr Joyce rejected accusations he had undergone a political metamorphosis on foreign direct investment (FDI) since being appointed Agriculture Minister in the Abbott cabinet.
Shadow Agriculture Minister Joel Fitzgibbon said he welcomed Mr Joyce's new-found support of foreign investment, but said it was in “very stark contrast” to the New England MP’s mantra when he was in the Senate representing the Queensland LNP.
Mr Fitzgibbon said he didn’t believe Mr Joyce was being xenophobic in venting opposition to foreign investments like Cubbie Station or the potential sale of GrainCorp to US multinational Archer Daniels Midland. But he does believe his political counterpart’s views on the issue are “populist”.
“I think Barnaby Joyce senses people in rural Australia are sensitive about foreign ownership of agricultural land and in the past he’s chosen to take political capital from those concerns,” he said.
Register a long time coming
The agricultural sector has been waiting on an FDI register for some time. After establishing a departmental working group on FDI in June 2012, the Labor government announced in October 2012 it would implement a national foreign ownership register “to improve transparency of foreign ownership in agricultural land without imposing unnecessary burdens on investors”, and the Coalition reiterated this promise at the September 2013 federal election.
The register was also recommended in a Senate report tabled in June 2013, which said foreign investment was encouraged in Australian agriculture.
Mr Joyce has repeatedly defended delays in the register's implementation. He was quick to reassure critics in June 2014 that development of a foreign ownership register for agricultural land was still on the agenda, saying the Department of Agriculture was working on the information technology and reporting framework that could underpin the register.