Coalition to tighten foreign agricultural investment

By Leith van Onselen

From The ABC comes news that the Federal Government will tighten monitoring and compliance around foreign investment in Australian agricultural land:

Prime Minister Tony Abbott said… foreign investment must be in Australia’s national interest.

…from March 1, the Commonwealth will lower the threshold for scrutiny of farmland sales by the Foreign Investment Review Board (FIRB) to a cumulative $15 million.

Currently, the Foreign Investment Review Board is required to scrutinise farmland sales to foreign private entities of more than $240 million…

Mr Abbott said from the middle of the year, the Australian Taxation Office (ATO) “will be conducting a stocktake in conjunction with the states’ and territories’ titles offices to provide, over time, an ever more complete register of foreign agricultural land holdings in Australia”…

The National Farmers’ Federation chief executive Simon Talbot greeted the announcement with “cautious optimism”…

“When is the register going to be publicly available? What sort of forensic accounting or scrutiny is going to be applied to both existing purchases plus future purchases? Because what’s signed at the front end might be very different to the back end of a particular deal,” he said.

This is great news and should add some much needed transparency around this issue, much like the planned reforms on foreign real estate investment.

One of the great blunders of Australia’s foreign investment scheme is that it confuses transfer of ownership to foreigners, whereby no real investment (capital deepening) takes place, with foreign investment.

The former is akin to “selling the family jewels”, and should be discouraged, whereas the latter actually adds to the nation’s productive capacity, and should be encouraged.

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Comments

    • In theory, yes.

      In practice, it is LOLworthy – FIRB already is too underresourced to monitor anything, now they will be even more swamped. Good times.

  1. An element of the “Abbottalypse” which is good for Australia.

    Of course the best outcome would be for Abbott to be replaced with a credible leader which can create a narrative and effectively communicate it to the community. Such a change would being confidence which we really need right not.

    • Does such a politician of such capabilities currently exist. They seem to be very rare – like the mythical sitings of a Unicorn.

  2. It will be interesting to see how this works in practice with Mr Robb trumpeting FTAs where no questions are asked for investments up to a billion dollars.

    What exactly does Mr Robb think we should be selling no questions asked for up to a billion dollars?

    Perhaps to make the objective of foreign investment clearer they should rename the incompetent FIRB to something a bit more accurate.

    Productive Foreign Investment Approval and Audit Authority.

    PFIAA

    Then it would be implicit that the only Foreign Investment that is welcomed is productive investment.

    That would immediately rule out banks seeking foreign investment for residential mortgage lending and government seeking foreign investment in govt bonds.

    Both are dud unproductive forms of foreign investment.

    If foreigners wish to productively invest in residential property they can invest in new construction directly or via RMBS.

    Government should never borrow off shore.

    It just encourages them to spend money they could not convince locals to contribute and creates a foreign claim on our future national income.

    • “What exactly does Mr Robb think we should be selling no questions asked for up to a billion dollars?”

      I’m led to believe we have a surplus in “wholesale wankery” so we could sell that.

    • With the FTAs the liberals signed with the USA, China, Korea (I think?) the horse has already bolted. It’s PR, nothing more.

    • Easy the Orchard Tavern is named after Orchard Street which was named after an Orchard.

      I am sure there a few apple cores lying around that could found a claim that it remains agricultural land.

    • Nor

      You do put your finger on a possible problem there. There is a danger that if we quarantine farmland from foreign buying and not much else then we could get a situation where farms become of far less value than other forms of investment. It would make it more difficult to sell the farm, say on retirement, and buy a house. On the other hand of course younger people can more afford to buy.
      Just one of those conundrums i suppose and I don’t have the answer that’s for sure.
      Anyway the main ingredient as far as farming goes here is the value of the A$

      • The solution to that problem is to restrict foreign investment in residential property to new builds.

        That way farmers can sell their farm on retirement to a local and use the proceeds (which may be less than if they sold to a foreign buyer) to purchase a home at lower cost due to the abundant foreign investment in new housing stock.

        Of course it is unlikely that foreign investors will be interested in investing in an illiquid asset like housing if the market is efficient and ponzi speculation on capital gains is not encouraged.

        High prices for farms and for houses have a common cause.

        Flogging assets and IOUs rather than goods and services off shore.

  3. “foreign investment must be in Australia’s national interest”
    I read this as a rhetorical statement.

    Any comments on the foreign LVT? 25%pa should be a good start.

    • “foreign investment must be in Australia’s national interest”

      Indeed the Foreign Takeovers Act uses this phrase repeatedly as the criterion used in every type of foreign investment decision, and names the Treasurer as having sole discretion to determine same.

  4. Nationals seizing the moment (wounded Libs) to get a policy up that their constituency cares about?

    • That would be a first.

      Though it should be an issue that everyone cares about.

      Except of course the ticket clippers who make a buck off the ownership transfer transactions.

  5. Mr Talbot’s caution is sensible.

    These “restrictions” aren’t worth a pinch of shite unless proof of compliant residency status is required to register the transfer of title and a comprehensive independent and transparent audit of land titles for FIRB compliance conducted asap.

    • Put the onus on sellers.

      Anyone who doesn’t do the diligence via their conveyancer, ends up in Jail as a traitor.

      Abolish the arm of the FIRB that “administers” this part of their remit.

      Save the tax payers cash, privatise the function.

      The sellers can put the administrative costs on the buyer.

      Easy

  6. LOLZ

    WHAT’S THAT SKIP?
    A FLYING PIG? HO, SKIP. NO THAT’S A FLYING HOCKEY AND A GAGGLE OF THE HAPLESS FIRB SOLDIER BIRDS.

    YOU KNOW THE ONES
    THAT DO FKCING NOTHING.

    • Thank you for taking the time to type out a suitably mocking response that this story deserved. Saved me from having to think of something.

      • Sometimes I like to actually value add my comments.

        And this is all a joke.

        Cough cough $1 chinese shelf corporations whaaaaaaat?

  7. Only scrutinise $15m or more? So what, like ~5% of farm sales at the most? Literally the biggest leases and largest producers, not the majority of mid-large grain producing properties are over $15m