Matt Thistlethwaite (Kingsford Smith, Australian Labor Party, Shadow Parliamentary Secretary for Foreign Affairs) Share this | Hansard source

In June of this year, Sydney's median house price hit $1 million. This represents a 23 per cent increase on the previous year and the quickest rise in house prices since the late 1980s. Housing affordability is a massive issue in my community and not a week that goes by where I do not get a phone call, an email or a comment from, in particular, parents who are deeply concerned and worried about housing affordability; and the ability of their children and grandchildren to be able to afford to live in the community that they have grown up in and that their family resides in.

Housing affordability is a big issue. It is an issue that this government appears to have ignored. In this bill they are attempting to paper over the heart of the issue and look like they are doing something and taking action. When you look at the details of this bill and read the fine print in the explanatory memorandum, it is actually not what they are doing at all; it is just a papier-mache exercise.

There isn't much about this government that isn't inconsistent. As we have seen in the last 24 hours, it doesn't matter what it is: whether it is the promise not to cut education, health, the pension, ABC or SBS—or indeed not to cut down a first-term Prime Minister—this government cannot be trusted to do what is in the best interests of the Australian people.

One of the key figures in the events of the last 24 hours—and perhaps even one of the key reasons for the events of the last 24 hours—the Treasurer, has been infamous for some of his offensive comments about economic management and, in particular, his offensive comments to working people. In the context of housing affordability, the Treasurer put his foot in it some months ago when he said that those who cannot afford to get a foothold in particularly the Sydney property market should just go out and get another job—a better-paying job.

If you are a nurse, a teacher, a childcare worker or a builder working in my electorate, it is not that easy. You cannot just walk into the boss and say, 'You should pay me more, because I'm living in an expensive area' or 'You should give me a promotion, because I'm living in an expensive area.' It is a clear insight into just how out of touch this government is when it comes to housing affordability. This particular bill is a bandaid solution trying to look like they are doing something on the issue. The Foreign Acquisitions and Takeovers Legislation Amendment Bill 2015 is a classic example of that.

This package introduces fees on foreign investment applications, which will ensure all Australian taxpayers no longer fund the administration of the system while providing additional resourcing to the Treasury and the ATO to improve service delivery for investors. Labor does support this element of the bill. If temporary or nonresidents do not follow rules then any allegations of this need to be thoroughly investigated and, if there is found to be a breach, individuals prosecuted. But we are also conscious of the fact that this is not the silver bullet to housing affordability. This is not going to cure the issue of housing affordability as the Treasurer and those opposite have said in this debate. Finding and forcing the sale of one Point Piper mansion is not going to do much for a young family in Botany, Maroubra or Randwick who are struggling to afford to buy a new home.

That is exactly what we are talking about in respect of this bill. It purely relates to the application of the system and the fines that are associated with the system when someone is found to have breached the rules and also the administration of the system. There is no doubt that foreign investment has had a positive impact on housing supply in Australia. If Mr Hockey seriously believes that, by eliminating foreign investment in the Australian market, property price rises will ease, I think he has another think coming. It is not simply about foreign investment. When you look at the existing supply of housing, particularly in my area, it is not foreign investors that are competing for the existing supply of housing. In fact foreign investors are prohibited from investing in existing property. They may only invest in new housing stock. The philosophy behind that is to grow the housing stock but also to support the construction industry, and by all accounts that has worked well.

The important point from this element of the three bills that are being debated here today is that every dollar that is secured by this fee that applicants will have to pay must be ploughed back into the administration and enforcement of the regime. I was fortunate to sit on the economics committee review into the foreign investment regime in residential property in Australia, and the evidence that came before the committee was that the system has been lax, that the Foreign Investment Review Board and Australian Taxation Office have not been diligent in enforcing the rules. So the money that is raised from this scheme must be ploughed back into those agencies so they are given the resources to ensure that they are enforcing the rules.

Another element of this bill is the foreign investment in agriculture and agribusiness through the Register of Foreign Ownership of Agricultural Land Bill 2015—the register bill. Investments in agriculture in particular in Australia are vital to achieving our potential and maximising our nation's future prosperity and productivity, and investment in agriculture and agricultural land is very important for the productivity and liveability of rural and regional communities. The problem that we have with this particular element of these three pieces of legislation is the government's differentiated thresholds that have been applied to different countries, serving to hold the industry back.

Let's not beat around the bush here. This is purely political. The differing thresholds are purely a National Party stunt. The differing thresholds are that the government has reduced the investment screening threshold for agricultural land to $15 million for investors from China, Korea and Japan. Anyone or any business from those nations that wishes to invest in agricultural land at the $15 million threshold will need to go through a Foreign Investment Review Board process. But, if you are from Singapore or Thailand, the threshold, amazingly, increases to $50 million. If you are an investor from the United States, New Zealand or Chile, the investment jumps to $1,094 million. So there is this clear discrimination in the thresholds that apply to China, Korea and Japan; Singapore and Thailand; and the United States, Chile and New Zealand.

I have a friend who works in China who contacted me recently regarding the debate about the FTA and encouraging Chinese foreign investment in Australia. He said to me: 'I cannot work out what's going on with the Australian government. On one hand you're negotiating a free trade agreement with China and attempting to open up and encourage greater flow of goods and services between our two nations, but on the other hand you're increasing the barriers and making it harder for Chinese businesses to invest in agricultural land. It doesn't make sense.' That is exactly the view that we have expressed in respect of this bill: it does not make sense. The discriminatory nature of those thresholds does not make sense and will put a brake on important foreign investment, which drives jobs growth, productivity and growth within rural and regional communities.

Furthermore, the new $15 million threshold on investment in agricultural land even applies where an existing investor seeks to make improvements to their property. Buying a small adjoining parcel of land, perhaps to facilitate significant investment in improved farm infrastructure, triggers a Foreign Investment Review Board review if it takes the cumulative value of the investment above $15 million. So the new rules are not just a deterrent to new investment; they also create disincentives for existing investors to improve their operations, and that is very important for productivity. If you are talking about improving the productivity of the land that you may be farming or operating on, providing space for new machinery or new operations is very important. This legislation, if it is passed, will provide a disincentive to that. The government is also proposing to reduce the screening threshold for investments in agribusiness to $55 million and to define agribusiness to include around half of Australia's food manufacturing industry. Again discriminatory rules apply, with investors being treated differently depending on their country of origin.

The final piece of legislation is the Foreign Acquisitions and Takeovers Legislation Amendment Bill 2015. This bill makes substantial changes to the Foreign Acquisitions and Takeovers Act 1975 to modernise the rules and strengthen the enforcement of foreign investment in the system. The bill introduces civil penalties and additional and stricter criminal penalties to ensure foreign investors and intermediaries do not profit from breaking the rules. The bill enables the transfer to the Australian Taxation Office of responsibility for regulating foreign investment in residential real estate, which will further enable stronger enforcement and better compliance with the existing rules. The bill also enables the lowering of screening thresholds for investments in Australian agriculture to ensure significant investments in this sector are scrutinised.

The government has made a massive song and dance about the efforts to cut red tape, most notably through their red tape repeal day bills, which turned out to be little more than a massive exercise in proper punctuation. In some cases these involved little more than changing the word 'facsimile' to 'fax' or changing the spelling of the word 'email' and claiming them as massive reductions in red tape for businesses throughout the country. In this year's budget the government also announced $735 million in new application fees for foreign investors; so, in some respects, it is actually increasing red tape for many foreign investors. It is making Australia a less attractive investment destination while making it harder for the agriculture and agribusiness sector to raise capital. They are the concerns that Labor has about this particular piece of legislation. It is no surprise that, in respect of these new barriers to entry and red tape on foreign investment, the government has been criticised by many organisations including the Business Council of Australia, the National Farmers' Federation, the Australian Food and Grocery Council, the Queensland Farmers Federation and the Chamber of Commerce and Industry of Western Australia.

Once again, with this bill we are seeing little more than bluster and no action from the government when it comes to really tackling the issue of housing affordability. By contrast, Labor is attempting to listen to the community. That is why we have not ruled out changes as part of the taxation review.

In conclusion, in many respects some of this bill is nothing more than a ruse. Whilst I do support elements of the bill—in particular, those provisions that relate to covering the costs of the operation of the foreign investment review scheme—it is important that the funds raised from that increasing cost are ploughed back in, particularly into research by the Foreign Investment Review Board and by the Australian Taxation Office, and into giving both of those organisations the necessary resources to police the scheme and, where appropriate, to undertake prosecutions.

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