Sharman Stone (Murray, Liberal Party) Share this | Hansard source

I take great pleasure in speaking on the Foreign Acquisitions and Takeovers Legislation Amendment Bill 2015, which is being considered together with the Foreign Acquisitions and Takeovers Fees Imposition Bill 2015 and the Register of Foreign Ownership of Agricultural Land Bill 2015. On the issue of the importance of foreign investment for Australia, our Treasurer, Joe Hockey, said:

The Government is committed to strengthening Australia’s economy.

The Government welcomes foreign investment—

I add that, since 1788, Australian has been dependent on foreign investment to help build our infrastructure and to grow our economy, whether it is in agribusiness or manufacturing.

Mr Hockey continued:

It provides additional capital for economic growth, creates employment opportunities, improves consumer choice and promotes healthy competition. It can also help deliver improved competitiveness and productivity by introducing new technology; providing much needed infrastructure; allowing access to global supply chains and markets; and enhancing Australia’s skills base. Without foreign investment, production, employment and income would all be lower.

The total stock of foreign investment in Australia at the end of 2014 was almost $2.8 trillion, up from about $1.2 trillion a decade ago. Around $690 billion of this is foreign direct investment.

Foreign investment has always been essential for our economic development. We are also part of the global economy and increasingly it is a case of joint venturing and working with other corporations, or even smaller businesses—often standing hand-in-hand in the other partner's markets with some insider status—to grow our exports.

These three bills strengthen Australia's foreign investment framework, ensuring that ongoing foreign investment is in line with our national interest. We have always believed that to be the case, but we need to always do a check. We need to ensure that all of our foreign investment is in our national interest—and, where it is not, that our compliance regimes and our sanctions are appropriate.

Our national interest includes considerations of our national security, of fair competition, of other government policies—including tax regimes—of the impact on the economy and the community, and of the investor's character. We do not want to be the investment destination of choice for shonks. The bills will streamline the system for foreign investors. It is important, given that there is great competition globally for the investment dollar, for us to present a streamlined, reduced-red-tape regime where the investor's interests are quickly ascertained and where they can move quickly into an investment—if that is appropriate for our nation. We also want to make it easier to identify opportunities for investment for those who are interested, but it is in our nation's interest to document trends carefully—what is being bought and by whom—so we can keep track at all times of what is going on in our nation.

The Foreign Acquisitions and Takeovers Legislation Amendment Bill 2015 makes substantial changes to the Foreign Acquisitions and Takeovers Act 1975. It modernises the rules and it strengthens enforcement within the foreign investment system. In particular, the bill introduces civil penalties, as well as increasing criminal penalties, for any who break the rules. It also improves the compliance enforcement regime for foreign investment—the rules relating to residential real estate—by transferring such regulation to the Australian Taxation Office. The bill also enables closer scrutiny of investment in Australian agriculture by lowering the screening threshold—in other words, at a lower level of investment we will now be able to document and track what investments are taking place and to consider those in terms of our national interest.

The Foreign Acquisitions and Takeovers Fees Imposition Bill 2015 establishes fees on all foreign investment applications. Obviously we do not want the taxpayer to be funding an investor's costs of participating in our economy. These measures will improve the transparency of foreign investment in Australia and, as I said, will reduce the cost burden on the Australian taxpayer.

The third bill, the Register of Foreign Ownership of Agricultural Land Bill 2015, the register bill, complements the changes by establishing a register, operated by the ATO, of foreign ownership of agricultural land. This is particularly of importance and of great interest to me as a rural member, the member for Murray. We have numbers of properties, particularly dairy farms, that have been bought by New Zealanders and by Chinese interests. While we welcome those new interests in the electorate of Murray—in particular, the New Zealanders who bought dairy farms and injected a lot of new technology and intellectual innovation—at the same time it was important and it is important that we know how many properties are being purchased, where they are and when they might be sold on, and if it is to another foreign investor.

This register will require the registration of existing foreign ownership holdings, as well as recording all future acquisitions and disposals of agricultural land in Australia. I think this is important so that we do not have people like the previous member, who was most anxious about who owns land—he had all sorts of theories about who did—and the quantities of property bought. With this register, there will not be speculation. We can simply check with the register and have the information at hand, accurate and contemporary.

The changes build on the current regime, where foreign investment proposals are considered by the Treasurer through the Foreign Investment Review Board, or FIRB. If the proposal is not contrary to the national interest, it will be approved. This already happens in most cases. In 2013-14 there were 24,102 foreign investment proposals approved compared to half that number, 12,731, in 2012-13. Again, it is important that we know those statistics, that we know of the doubling of foreign investment proposals and what sorts of proposals were made and approved. It is in the national interest that we track this.

If the foreign investment is considered a significant action—that is, it is an action that would be above any threshold tests and would lead to acquiring an interest in securities, assets or land resulting in a change of control, the Treasurer can then take one of three actions: he or she can decide not to object—and this happens in most cases already; he or she can allow the foreign investment action to proceed provided that the foreign investor complies with certain named conditions; or he or she can decide that taking this significant action would be contrary to the national interest and can make an order prohibiting the proposed significant action. Again, I applaud the fact that the government of the day—in this case, in particular the Treasurer—retains control of investments, particularly when considering whether or not the investment is in the nation's interests.

When considering a non-residential proposal, the Treasurer takes into account the impact of the proposed investment on Australia's national security, the economy, the community and competition. The character of the investor is also an important matter. In particular, while assessing an application for an interest in residential land, the Treasurer's overarching consideration is whether the proposed acquisition would in fact add to Australia's housing stock, which would be a good outcome for the nation. Australia has always been pressed to find sufficient housing. We have rules about stand-alone housing stock, and we are concerned to keep a close eye on the whole housing market.

There is great interest in the community about this, particularly in relation to whether or not foreign investment in residential real estate impacts significantly on the price of real estate. The government is taking action to restore confidence in Australia's foreign investment framework. In the case of residential real estate, the current foreign investment system aims to channel foreign investment into new homes, in particular, for Australians to purchase or rent. The government's changes will ensure that this aim is fulfilled and that the current rules that limit foreign investment in established dwellings are properly enforced. There is enhanced compliance and enforcement in relation to that. The government has provided $47.5 million over four years to the ATO to improve compliance and to strengthen the enforcement of the rules. The ATO has the capacity to cover more than 600 million transactions annually through its data-matching programs. The ATO matches its own taxpayer data with a variety of third-party sources, including the Foreign Investment Review Board, Immigration, AUSTRAC, banking data and state and territory land titles data. I think these are all very important initiatives.

From 1 March 2015, the coalition acted to lower the screening threshold for agricultural land from $252 million to some $15 million—that is a cumulative $15 million. I applaud very much this lowering of the threshold in examining agricultural land purchases. Of course there are exemptions applying to non-government investors from the United States, New Zealand and Chile, where the threshold will be $1,094 million.

In The Australian newspaper on 20 September last year, the rural reporter Sue Neales wrote an article about the dairy investment conference organised by Austrade and Dairy Australia, commenting on investment in Australia's dairy industry. She said:

AUSTRALIA'S $4 billion dairy industry is the new flavour of the month among foreign investors, with global pension funds, food companies and wealthy individuals turning their focus from New Zealand's fertile dairy plains towards Victoria and Tasmania … The changed focus was evident at the packed … conference … with Chinese companies, major investment banks and fund managers focused on agribusiness.

There are many investors interested in investment in Australian agriculture:

Pension funds and private equity companies from the EU, Scandinavia and the US—

and Chinese investors—

are also moving to buy directly or invest indirectly in farmland in Australia, believing it to be greatly undervalued compared to similar dairy farms in New Zealand.

The article says:

… China's Ningbo Dairy Group … vice-president Harry Wang said … "Our goal is to export our milk back to China and help the industry here too … There is huge potential in Australia but you have problems with too many dairy farmers being too old, young people not wanting to work on your farms and your farms being too small; I think that is why your quality is good but your production levels are slipping."

…   …   …

There is also resentment towards NZ's changed laws relating to foreign investment, which now require any purchase of a farm greater than five hectares by a foreigner or foreign entity to get the approval of the government's Overseas Investment Office.

So you can see there is enormous interest in Australian agribusiness. It is moving well beyond the traditional European interests, and in my electorate of Murray we have seen that investment. It has not always worked out well for the investors, particularly when they were caught by the drought or the very high dollar when it came to their exports, but as a whole this adds very much to the information and to the diversity of our production systems.

These bills also introduce a $55 million threshold based on the value of the investment for investments in agribusiness. The threshold will also capture certain downstream activities with links to primary production. Agribusiness is defined to include some downstream manufacturing in meat, poultry, seafood, dairy, fruit and vegetable processing, sugar, grain, oil and fat manufacturing. There are exemptions from this threshold for non-government investors from the United States, New Zealand and Chile, for whom a threshold of $1,094 million applies, and from Singapore and Thailand, where the threshold is $50 million.

This is a new dimension. It has caused some worry for some in food manufacturing in my electorate, who worry that red tape is then going to reduce prospects for their investors and perhaps cool their interest. We have to assure those manufacturers that, with the capturing of agribusiness in these bills, it will not be more complicated and we will not frighten away investment. In fact, under this new regime it will be more transparent and streamlined for them and, if they are looking for investment in their manufacturing, it will be more possible for them to attract international investment. There has been a lot of industry consultation throughout the policy development process and the drafting of this legislation, including releasing exposure drafts of the relevant bills.

In conclusion, it is most important that we do not stifle foreign investment in this country. It is a highly competitive market. Different countries compete to have foreign investment. We at the same time, of course, want to have a very good system of registering who is buying where and ensuring that it is always in the national interest. I commend these bills to the House, and I say there has been very good work done by numbers who have worked hard to make them come to fruition.

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