A NEW definition of what constitutes 'agribusiness' will form part of the Coalition's suite of existing and new policies about foreign investment in Australian agriculture, which will come into effect from December 1, 2015.
Prime Minister Tony Abbott and Treasurer Joe Hockey made a joint announcement about the legislative plan over the weekend.
“Foreign investment is integral to Australia’s economy and we welcome all investment that is not contrary to our national interest,” they said.
A cumulative threshold of $15 million for agricultural land purchases by foreign investors, that must be scrutinised and approved by the Foreign Investment Review Board (FIRB), came into effect on March 1, 2015. The previous level for such investors was $252m.
The anticipated threshold of $55m for agribusiness purchases by foreign investors that require FIRB scrutiny and approval will also be implemented, also a significant reduction on the previous level of $252m.
What was previously lacking in this area of legislation was a definition of agribusiness, in order to include “first-stage processors beyond the farmgate” as foreign investment, according to a government statement on the new measures.
The new $55m threshold will apply to this new, broader definition of agribusiness in Australia.
A register of all foreign ownership of agricultural land, which will paint a clearer picture of the level of foreign ownership in Australia, was included in the suite of policies. This register was a plan of the Gillard government, announced in 2012.
Agriculture Minister Barnaby Joyce and Deputy Prime Minister Warren Truss welcomed the announcement.
“We now have a clear case of policy differentiation. The Labor party wants to increase the FIRB limit for agricultural land and businesses to more than $1 billion,” Mr Joyce said.
“This would mean that a foreign buyer could buy a billion dollars of land on the north of town one day, the south of town the next and the east and west of town on the next two days, and the Labor Party believes this does not warrant a single question.
“It is undeniable that the absolute essence of the nation is the land we stand on and therefore we must be cautious when it comes to our stewardship of it,” Mr Joyce said.
According to Mr Truss, the Australian public will now have reliable information about the real levels of foreign ownership of agriculture land and agribusiness.
“Until now, only Queensland has had a foreign ownership register and the information in that register has not been very user-friendly,” Mr Truss said.
“We welcome foreign investment, but it must be investment that benefits the nation.
“Our modern world-leading farm production industries have always needed and supported foreign investment, as we have had insufficient investment capital in Australia and most local investors are unwilling to take the long-term view essential in the sector.
“The strengthening of the Foreign Investment Review Board will ensure proper scrutiny of applications for foreign purchases.
“There are plenty of stories of the existing rules being ignored or being circumvented through scams, front companies and contrived arrangements.”
Strong penalties for rule breakers
According to the Prime Minister and Treasurer's joint statement, the Australian Tax Office will use its data-matching systems to identify possible breaches and the Commonwealth will pursue those foreign investors who break the rules.
Criminal penalties will apply for foreign buyers found to be in breach of foreign investment rules. They will be set at $127,000 for individuals, or three years' jail.
Company fines will jump to $637,500. Developers and others who knowingly assist foreign investors to break the rules could be slugged $42,500 for individuals, and $212,500 for companies.
Divestment orders will be supplemented by civil pecuniary penalties and infringement notices for less serious breaches.
The government also plans to ensure people who break the rules do not profit, with the introduction of a civil penalty to capture any capital gain made on divestment of a property.
Third parties who knowingly assist a foreign investor to breach the rules will also now be subject to civil and criminal penalties, including fines of $42,500 for individuals and $212,500 for companies.
Australian taxpayers will no longer foot the bill for screening foreign investment applications. Fees will be levied on all foreign investment applications.
For residential properties valued at $1m or less, foreign investors will pay a fee of $5000. Higher fees will apply to more expensive residential properties as well as business, agriculture and commercial real estate applications.
The government plans to introduce legislation into parliament in the spring sittings to ensure the reforms commence on December 1, 2015.