Rudd hypocrisy on foreign-owned land

ScreenHunter_06 May. 06 09.27

By Leith van Onselen

You have gotta love the hypocrisy of Australia’s politicians.

Back in 2008-09, as the Global Financial Crisis beckoned, then Prime Minister Kevin Rudd relaxed the foreign ownership rules on Australian property, allowing foreigners to purchase pre-existing homes without restriction. When combined with the slashing of interest rates by the Reserve Bank to near record lows, and the huge fiscal stimulus thrown at first home buyers, this extra demand caused a massive blow-off in Australian house prices, which surged by over 20% in the five quarters to June 2010, before stricter foreign ownership controls were reintroduced after intense public pressure.

Now Prime Minister Rudd is arguing for a crackdown on foreign ownership of Australian land. From The Australian:

KEVIN Rudd has fuelled the debate over foreign ownership in a pitch to regional Australia that includes dramatic tightening of restrictions on overseas investors buying agricultural land…

Mr Rudd’s pitch on foreign investment came as he seeks to win crucial seats in Queensland, where preferences from Bob Katter’s anti-foreign investment party are likely to play a crucial role in deciding key seats.

The Prime Minister said he was “a bit anxious about simply an open-slather approach” to the purchase by foreign companies of agricultural land…

“I think when it comes to rural land, we need to adopt a more cautious approach,” Mr Rudd said…

There has been an outbreak of populism on foreign investment in the election as Labor talks tough on foreign control to outflank the Nationals and the anti-foreigner sentiments of Katter’s Australian Party.

Agriculture Minister Joel Fitzgibbon has promised to tackle foreign ownership of agricultural land by conducting a stocktake of foreign ownership and introducing a register of foreign owned farm land by July, starting with existing properties.

The shift in the Prime Minister’s rhetoric on foreign investment comes after pressure from the Nationals forced a shift in Coalition policy to increase the FIRB’s scrutiny of overseas bids…

“I’m not quite as free market as Tony on this stuff,” the Prime Minister said.

So, it was fine for foreigners to bid-up the price of pre-existing homes in 2008-09, pushing home ownership further out of reach of younger Australians, but it is not fine for foreigners to buy-up Australia’s abundant rural land.

Go figure.

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  1. GunnamattaMEMBER

    This is the guy who ‘tightened up’ on the FIRB process for residential real estate.

    Well anyone chatting with real estate agents in the burbs of Melbourne will quickly discover that many of them will tell you straight out they are the biggest buying sector at the moment – ahead of the SMSF crowd and other sundry specufestors.

    Not that the Tories will do any better

      • He only wants to tighten up the farms, not city investment where most people live. Vote Bob Cater in Family First, it’s only guys like this that will get the price of land down. I don’t see any other party that has stated directly that they would do this.

  2. The problem is that they are letting too many of them in the front door. Take a look at the suburbs of Chatswood, Epping, Hurstville in Sydney. Also, Chinatown appears to encompass 50%+ of the CBD. Now consider that all these recent arrivals have purchased for both themselves and laundered in money for purchase on behald of their entire family tree and you get to see how ridiculous thingshave gotten.

    The only potential solution is to limit the number of properties each individual owna but they will NEVER do that. Any supposed limitation on foreign ownership will be bypassed.

    • This “yellow peril” thingy is getting a bit tiresome, although I get your point about laundered in money.

      No amount of regulation will stop laundered in money from coming through, but we shouldn’t be welcoming them with open arms with the subclass 888 visa. This curiously numbered visa is the opposite extreme end of servility to Chinese money.

  3. You have gotta love the hypocrisy of majority of Australia’s politicians home owning public.

    Fixed that. Politicians are a mere reflection of the larger society.

  4. As a well known property speculator Rudd only cares about his own property interests. Foreign people buying existing homes helped him make more money on property speculations.

    Now, hi is probably looking into good entry point for rural land speculation so foreign ownership ban will help him to get lower price. In few years after creating rural portfolio (if still in power), he will relax rules and let foreign people buy and push prices up. Don’t be surprised if he soon buys large properties in rural areas.

    No conflict of interest there.

    • Listen to Rudd’s interview on Triple J Hack
      Go straight to minute 11:25 when he is asked about negative gearing. He evades answering the question and talks about Labor’s rental affordability scheme which in fact supports property investors. The reporter repeats the question again and does not get a straight answer which obviously means that there is no way that Labor will do anything about it (not that Liberals are any different).

  5. There are a couple of macro issues and this is not political as all sides are totally stupid and/or irrational on this subject

    1. So we restrict ownership of rural land and perhaps? residential. Now how do we finance our over-consumption and CAD ? We are able to borrow to finance this chronic deficit because we have been willing to sell any and all assets. We’ve sold 80% (86% according to Op8) of our mines already so we don’t have too much to go. So mostly what we have to sell, in terms of resources, that foreign buyers might want is rural land. If we are going to stop that then we need to tighten the hell out of everything else starting with interest rates and the fiscal deficit! (Don’t start me about the stupidity of having so little control over capital flows and currency value that a necessary rise in interest rates sends the A$ rocketing.)

    2. My rural friends need warning! If the only foreign investment we stop is in rural land then everything else in the nation is likely to boom and rural land would be stuck in some non-investable hell hole ensuring an automatic long-term poverty backwater for many rural landholders.

    That we do need capital controls is absolutely certain but short term interest-rate-chasing hot money would be a damned side better place to start and work outwards from there when we assess how we are going.

    Certainly someone needs to apply more thought to this whole question than has so far been the case with this simplistic jingoistic BS!

  6. Ronin8317MEMBER

    Like the High Seppd Train and moving the naval base from Sydney to Brisbane, the attack on foreign ownership is another of Rudd’s infamous “policy on the fly”. This is the biggest reason why the ALP dumped him in the first place. A leopard doesn’t change its spots..

  7. For what it’s worth these is an anecdotal issue I have been told.
    I have a work colleague who is from china, has been an Aust Citizen for 15 years.
    He told me that his kids who go to uni work part time as interpreters and guides and drivers for a group here in Perth that hosts “tour” groups of Chinese nationals to purchase property in Perth. From the way he described it me this is how it works.

    They arrive in groups of 12 or so at a time, they are collected at the airport and checked into hotels. They are then driven to multiple properties in perth over a week or so and have the interpreters liase with the real-estate agents to make offers on the properties they like. He said his daughter has become a favorite with several Chinese couples because of her fluent Chinese and gets requested. One couple have been to Perth 4 times this year so far and so far “purchased” 7 properties. He said his daughter explained it that through her they make a verbal offer then the next day a written offer gets handed to the agent from some 3rd party typically a local company/trust or relative as the actual buyer of record. He said some of the couples actually speak excellent English but won’t speak English to the agents and still work through the “interpreter”. Its not uncommon for several of the groups to arrive at the same house at the same time, apparently they get listings from a mandarin website put up by local agents to spruik property to Chinese people. Its common they get in bidding wars as well. He told me one case of a property in leeming where 3 couples wanted it. Original asking price was 690k. At the end it “sold” for 935k. It seems to me the local agents must know they are not Australian residents as they collect passport details of the people making the offer. There’s nothing illegal about this as the actual purchase is made by a local entity who is allowed to purchase property here. In fact there was an article in the West Paper couple days ago, quoting agents taking about this practice quite openly it seems.

  8. Rudd’s lurching wildly around as the PM-ship slips from his grasp. This announcement is not about consistency, it’s about him trying everything to get back some semblence of the voting public.

    • Yes, in my mind I see Rudd like a man drowning at sea, waving his arms around wildly, hoping against all hope to catch someone’s attention or grab hold of something that will save his life. Sadly, it’s a pointless pursuit. Game’s up. However, Abbott being Abbott, a game-changing gaffe is not completely out of the question.

      • Rudd is unhinged. Anyone who cannot see that this PM is a hive of deeply flawed personality disorders has to be afflicted themselves. He is utterly fake.

      • Judging from the election worm graph on the right hand side of the screen quite a few people are not suffering from perception issues when it comes to Mr Rudd.

  9. Few months ago, I sold my property to a Chinese Investors (Melbourne eastern suburbs). Recently I drive by the property and saw a For Sale sign (Auction)! So I made few calls, and found that the investors wants to sell the property since he needs the cash to pay for his debt in China, as their economy is constantly slowing down, and the creditors are calling. It was quite interesting the price range, -10% than I sold it to him. LOL. Even these Chinese investors are starting to take hits. Although the quite wealthy Chinese investors can handle the down turn, but one wonders for how long can they hold on!!

  10. I have to say, that woman in the photo annoys the hell out of me. Every time we start talking about foreign property ownership, like clockwork she’s out again checking out those damn apartments!