The first report of the Agricultural Land Register was released 7 September 2016. The guesswork has been taken out of the discussion and we now know that the total foreign ownership of Australian agricultural land as at 30 June 2016 stood at 13.6%.
The report shows that Australia has not been overrun by Chinese investment. Over half of the foreign ownership remains in the hands of United Kingdom investors with 7.2% - perhaps a testament to Australia’s history. China on the other hand ranked 5th with 2.8%. Putting that in overall context, Chinese ownership represents about 0.4% of total Australian agricultural land.
It is also important to recognise that the definition of “foreign” for the Register is that used by the Foreign Investment Review Board and captures a broader range of investors than just offshore persons. An Australian company with a 20% interest held by a foreign entity is “foreign” for these purposes.
A significant amount of effort was required by landowners and bureaucrats alike to put the register together. Despite clunky forms and initial delays, the first report finally allows for some real facts to be brought into the foreign investment debate. Overall, it appears that the register has been a good exercise that hopefully will adjust the media and public perception of foreign investment.
Government leadership on foreign investment is still required. The Prime Minister and Senior Ministers have made clear statements that foreign investment is welcome and that foreign investment is integral to Australia’s economy and contributed to growth, productivity and created jobs.
The Treasurer, Scott Morrison, outlined in an earlier release what has been the Australian Government’s foreign investment policy position for many years:
“Foreign investment has underpinned the development of our nation and we must continue to attract the strong inflows of foreign capital that our economy requires. Without foreign capital and investment, Australia's output, employment and standard of living would all be lower.
Foreign investment rules facilitate such investment while giving assurance to the community that the investment is being made in a way which ensures that Australia's national interest is protected.”
We agree that maintaining a robust foreign investment regime is critical to striking a balance between investment and community concern. This balance is important to maintain as an overly protectionist approach driven by scaremongering and incomplete facts is dangerous for Australia. On the one hand, FIRB needs to maintain a practical commercial approach to investment which to a degree it has lost of late, and on the other hand, information sources such as the Agricultural Land Register must be used to inform the debate.
The Government has made understanding foreign investment in the agriculture sector a priority. The lowering of the FIRB thresholds to a cumulative $15 million (and $0 thereafter) has assisted in FIRB gaining knowledge in the sector that it had lost. When the threshold was at $252 million, almost every farm purchase escaped scrutiny. As a result, public confidence was lost and the ill-informed spread fear about foreign investment. Now with the combination of more appropriate scrutiny and the understanding supplied by the Register, there is more confidence that the system will strike the balance required between investment that is not contrary to the national interest and the public’s view of the national interest.
There remains one lingering issue with the Government’s approach to investment in the agricultural sector. The extremely high fees that are imposed on agricultural land acquisitions. There is a striking imbalance between the top fee of $101,500 kicking in at $1 billion for commercial investment and the same $101,500 imposed at the low level of $10 million for a farm. This continues to be a major disincentive to much needed investment in the sector. With the Government actively trying to attract investment, this imbalance needs to be addressed.