Jason Clare (Blaxland, Australian Labor Party, Shadow Minister for Communications) Share this | Hansard source

by leave—I thank the Minister for the statement he has made to the House on foreign investment and also thank him for the invitation to attend the Northern Australia Investment Forum, a very important and, by all observations, a very successful forum—so thank you again for the invitation to attend.

Foreign investment is very important to Australia. In many ways, our country is built on it. A lot of the farms that helped Australia ride on the sheep's back were developed with foreign investment through companies like the Australian Agricultural Company, which was founded with investment from the UK and still exists today. The same is true of the resource sector. Companies like BHP are about three-quarters foreign owned. A lot of our manufacturing industry, which still employs almost a million people, wouldn't exist without foreign investment—particularly from the US, the UK, Japan, the Netherlands and China. As the minister has just pointed out, they are the top five sources of foreign investment.

Foreign investment creates jobs—jobs that would not exist if that money wasn't injected into our economy. As former Minister for Trade and Investment Andrew Robb said in the second of these statements to the House two years ago, every billion dollars of foreign investment creates 1,000 more jobs here in Australia. So a billion dollars of investment, 1,000 more jobs in Australia. If you pull that money out, it means higher unemployment. It is as simple as that. A lot of people think that you can just get rid of foreign investment and replace it with local funds, local money. It might seem like an easy thing to do, but the answer is you can't do that. The bottom line is we need more money to build businesses and roads and railways and ports and airports—the infrastructure we need—than we have local funds available to pay for those things. In 2016, that gap was about $44 billion. Foreign investment fills that $44 billion gap; it provides that extra money that we need and boosts economic growth as a result, creating more jobs. Without it, fewer things get built and there are fewer jobs, and potentially Australian businesses could go under.

Foreign investment doesn't just bring more money into the country, though, and create more jobs. For a lot of Aussie businesses, it can also bring them skills, new expertise, and those companies from overseas that invest here can bring with them IP that can help a company grow. Bigger businesses, more jobs and more economic growth also mean more company tax is paid by that Australian company here in Australia and more income tax is paid by the people who work there, and that helps to pay for the things that are so important—things like better schools and hospitals. It helps to pay the salaries of police officers, nurses and teachers.

That doesn't mean, though, that foreign investment is popular. It's not. The minister made this point at the conclusion of his remarks. There are a lot of people in the community who aren't convinced about the merits of foreign investment. You'll often hear conversations in the pub or the club about foreign investment—whether money should be coming in from overseas to invest in certain things. The minister has pointed out some of the things that the government has done. I think the key message that I'd give in my contribution today is that those things are important, but there's still more work that we need to do here.

My colleague Andrew Leigh, the shadow Assistant Treasurer, recently released another book, Choosing Openness. In the book, he says, 'There may be no other issue on which economists and the general public disagree more.' On that point, I think he's right. Members of parliament who have this conversation with our constituents would often see that. Some types of foreign investment are more popular than others. Australians are generally supportive of foreign investment in our manufacturing industry and in finance. They're pretty evenly split when it comes to resources, ports and airports, but you'll find they're pretty strongly opposed to foreign investment in Australian farms and in residential property. I suspect that nothing is going to change the views of people who are deadset against foreign investment, but information here is important so at least Australians who are worried about this know exactly what's going on.

When it comes to farmland, I think the agricultural land register is useful in this regard. It shows that, as of 30 June this year, 13.6 per cent of Australian farmland is foreign owned—less, I suspect, than most Australians would have thought. It also shows that Britain is the largest foreign investor in Australian agricultural land, with 2.6 per cent, and Chinese companies own 2.5 per cent—again, I think less than most people would think. I'd argue, though, that the land register could go further. Tony Marr, the CEO of the Farmers' Federation, has said:

This report is a good, blunt overview of the landmass, but in terms of either control or influence or impact on the supply chain or sector itself, we need more data and numbers to give us a better and fuller picture.

When we were last in government, we proposed a foreign ownership register that would allow every Australian to see who has purchased what, where, and for how much—something the coalition promised to match. However, that hasn't eventuated. I share the concerns of my colleague the shadow minister for agriculture that that promise hasn't been kept. So I use this opportunity to encourage the government to have a look at this and to continue to develop this register, to make it more comprehensive, and to keep the promise that they made to make it as transparent as possible.

I also look forward to the development of a water register, which is expected to be completed, I think, towards the end of this financial year. The aim of that register, I understand, is to increase transparency about the level of foreign ownership of water entitlements. Again, providing this sort of information and facts to the general community can only be helpful in this debate.

The way foreign investment in housing works is that foreign investors can invest only in new buildings. The logic behind this is that it helps to add to the number of homes that are available rather than competing with Australians for existing housing. Nevertheless, a lot of Australians—most Australians—think that foreign investment in housing is putting the price of housing up. There are things that we can do here, and the minister has pointed to some of them. Labor has led the fight on a lot of reforms when it comes to housing affordability—things to make it easier for people to buy their first home. That includes changes to negative gearing, changes to capital gains tax concessions and limiting direct borrowing by self-managed super funds to purchase investment properties. If the purpose of allowing foreign investors to invest in new property is to add to supply and increase the number of homes available for people to live in, then it's important that people are actually living in them. That's the point. But it's not always the case. There are plenty of properties that are owned by foreign investors where the lights are off every night. They're not being rented out. So the policy intent created by this parliament to create more stock—more homes for Australians—is being negated by the fact that people can't live in them. It is something we need to fix. In April this year we proposed a uniform vacant property tax across all major cities. I'm glad to see in the budget that the government followed Labor's lead and introduced a vacant property tax on foreign investors—the purpose being to create an incentive to make sure that Australians can get access to these new properties, that there are more homes for Australians to live in.

I note that in August the Chinese State Council issued a new direction on outbound investment. This included formal restrictions on foreign investment in real estate. This has been done to direct foreign investment into other types of infrastructure, but I think as well because of concerns by the state council about the flight of capital by Chinese investors. I guess we'll have to wait and see what the real impact of this will be on the Australian real estate market. However, I note that the Reserve Bank has already indicated that this has led to a decline in Chinese investment in Australian housing.

Community concerns also get stoked when foreign investment review processes don't work the way they should. We saw that two years ago with the Darwin Port decision. We saw the same thing last year with the Ausgrid debacle. Companies were originally given the green light by federal government agencies to bid to buy a New South Wales electricity provider. Only after the New South Wales government selected a preferred tenderer were they told that they were ineligible to bid. That's bad process. It's not good process when a company gets told by federal government agencies it can bid, and then after they win they're told they can't bid. It's amateur-hour stuff. It costs companies a lot of money to bid for assets like this—I know from my own experience in the private sector that the bidding process isn't cheap. It also leads to loss of face. The companies in question should have known a lot earlier in the process that they would not be able to buy this asset.

Since then, the government has set up the critical infrastructure unit and made changes to the Foreign Investment Review Board. I'm hopeful here that bad process, like we've seen with the Ausgrid decision, won't happen again. I have had the opportunity to receive some briefings from the critical infrastructure unit as well as from people at the Foreign Investment Review Board. I'm hopeful here that the changes that have been made will help to make sure we don't have a repeat of that.

Another way to address community concerns is to make sure that multinational companies pay their fair share of tax. The minister pointed to some changes in that area. The fact is it's not always the case that multinational companies pay their fair share of tax. When we were last in government, we passed laws that meant corporate tax entities with a reported total income of $100 million or more had their tax data publicly released. That information is released in December of every year. The last data released, in December of last year, revealed that 36 per cent of large companies pay no tax at all, including a number of multinationals. There are a lot of examples of big companies that make a lot of money in Australia but pay little or no tax. In 2012 we introduced laws to stop cross-border transfer pricing, which is used by multinationals to reduce the tax they pay in Australia. We've seen from a recent Federal Court decision how vital those changes to the law were in making sure that multinational companies can't use transfer pricing to avoid their tax obligations in Australia.

We've also announced a number of other policies to increase the scrutiny of tax paid by companies here and overseas and helped to make sure that they pay their fair share of tax in Australia. They include tightening debt reduction loopholes used by multinational companies to reduce their tax, which should deliver an extra $4.6 billion in tax revenue over a decade; requiring multinationals operating in Australia to publicly disclose in which countries they pay tax, how much and how many people they employ; establishing a public register of beneficial owners of companies and trusts based in Australia; requiring bidders for government procurement contracts to disclose what countries they pay tax in; and offering whistleblowers protection and rewards for information regarding companies and individuals that evade tax.

It's not just tax avoidance, though, that helps to erode public confidence in foreign investment. When big companies misuse the industrial relations system to cut wages and working conditions, it can also have the same result. It makes people angry and it makes people second-guess foreign investment. Unfortunately, we've seen recent evidence of that with sham employment agreements that cut wages and working conditions. The government hasn't done anything yet to fix this, but we will. If we're elected, we'll change the law to make clear that workers who vote on an enterprise agreement must be broadly representative of the workers who may ultimately be covered by the agreement. We will also change the law so that workers and their unions can apply to the Fair Work Commission to renegotiate sham enterprise agreements.

I again welcome the minister's statement and thank him for these regular statements. I think presenting information to the House and through the House to the Australian people on an annual basis is an important part of addressing the community concerns that we both share. We both agree on the importance of foreign investment. It is critical, and always has been, to Australia, and it will always be in the future. There's a lot more work we need to do to make sure that we continue to attract the investment we so desperately need in Australia to build the country we want to build, and there's a lot more work we need to do to help build community support for it.

Federation Chamber adjourned at 18:25

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