John Cobb (Calare, National Party, Shadow Minister for Agriculture and Food Security) Share this | Link to this | Hansard source

I rise today to speak on an issue of major concern in Australia and in Australian agriculture, that of foreign ownership of agribusiness and agricultural land. The debate very much centres on the fact that, in recent times, deregulation and other issues have meant that what used to be foreign investment—which has been very good for Australian agriculture both in land and in agribusiness—has become foreign takeover of agriculture and agribusiness in particular.

While currently we export the majority of produce from broadacre agriculture, we are very much dependent on domestic production for much—in fact, most—of our food. For example, 98 per cent of fresh fruit and vegetables bought and eaten by Australian consumers are grown in our country. The fact that the world population will grow from around 6½ billion to nine billion by 2050 gives a different outlook on it. If you understand that other countries are already preparing for tighter food supply by strategically buying into agricultural supply chains around the world; and if you take into account the fact that the new giants of the economic world, India and China, and the sleeping giant, Brazil—which is no longer asleep—now have money to invest around the world, you start to realise that, over the past five years or so, food security has become an international issue. Global companies as well as nations themselves are very aware of the need to secure their supply lines. Today, countries that once did not have money for foreign investment now do. If you couple that with a tenfold increase in reported foreign investment in the agricultural sectors over the last three years or so since Labor have been government, you begin to see the nature of the problem.

As I said, foreign investment has been good for agriculture. In fact, it has been great for building the industry that we now have. However, in recent times, Labor have continued to cut spending on agriculture, cutting R&D, biosecurity and other programs, giving Australian investors less confidence than they once had to invest in their own industry. In this environment, there has been a marked change in activity by foreign companies—from investment in agriculture to ownership and control of supply lines. Look at Viterra and Cargill in the grain industry, Swift in the meat industry and National Foods in the dairy industry. There has been Singaporean investment in the timber industry. There is the proposed takeover of the rice industry in the member for Riverina’s electorate, in which it basically rests.

Many farming industries—for example, dairy, with the buyout of cooperatives—have found out that the short-term financial gain to individual members is outweighed by long-term impacts such as reduced farm-gate prices through loss of market power and/or loss of competition. While the decision comes down to individual companies and their investors or grower shareholders, farmers should recognise that, once they lose majority control, the focus of these operations will shift to the interests of the overseas shareholders.

With these factors as outlined, it is evident that we need to look at our food security in a way we have not done before. The current rules for foreign investment are outdated and do not address the issue of food security. The $231 million trigger for a review by the Foreign Investment Review Board for agricultural investments is almost never triggered because, obviously, there are almost no farms in Australia that make that much. If we do not put in place sensible safeguards, it will be difficult for governments to manage foreign ownership to ensure that our food security interests are looked after in the future. Even when it comes to agribusiness, the $231 million trigger is, most often, not activated.

That is why the coalition has tabled a notice of motion outlining a comprehensive policy approach to the issue. The notice of motion will task the Australian Bureau of Statistics and the Australian Bureau of Resource Economics to gather and clarify information on foreign investment in agribusiness and agricultural land and then task the Productivity Commission with a review to recommend safeguards for national food security interests by evaluating not only individual investment but also the cumulative impact of foreign ownership—in other words, what do you put together to create a trigger mechanism of $231 million or whatever might be appropriate? A parliamentary committee could then consider the recommendations.

The government has been asleep at the wheel on this issue. Now the Gillard government has released plans for yet another review of foreign ownership. But what the government—and, I believe, the minister—is not looking at is the agribusiness side of this. Agricultural land is the land that pulls at the heartstrings of Australians. Australians do not want to see the farm being sold off. In actual fact, agribusiness is the much bigger issue at this time. You cannot take the farm overseas, or the water that it uses, but you can take the productivity overseas. We need better information on the levels of foreign ownership of agribusiness and agricultural land. We need a national test for food security on foreign investments examined by the Foreign Investment Review Board. We need to be aware that the level of investment examined by the review board nearly always allows agriculture to fall under the level. The board needs to be able to look at the cumulative impact, as I said earlier.

It does not really matter whether or not you are in agribusiness or in agriculture. Think about the reason agribusiness is so important in this issue. Picture yourself as a foreign investor from a land that is probably nowhere near as tough as Australia is about what agriculture cannot do—what a farmer cannot do. If you come from China, India or Brazil and you have money to spend, are you going to buy 1,000, 2,000 or 3,000 farms to ensure your supply line, having to deal with the myriad regulations that Australia puts on farmers—what you can clear, what you can do with water, what you can do with chemicals and all those things we do in a very exacting degree? Are you going to live with that and try to run those 1,000, 2,000 or 3,000 farms? Almost certainly you will not. You will go and buy the agribusiness, like SunRice in the case of the rice industry and like the abattoirs who do the killing for meat, or like the grain trader. You will go and buy the trader, the processor or the wholesaler, because you still have your supply lines and you do not have to run the farm.

Agribusiness is the real issue here. Yes, they can buy agriculture, and there is a limit to what we would want to see in foreign hands, but the much bigger issue here is the extent to which the businesses who actually process, who actually trade and who actually export are in foreign hands. As I said earlier, we have moved from foreign investment to the foreign takeover of Australian agribusiness. As time goes on this will become a bigger issue, because they do not only buy. Potentially, once a global company or a company with a national bent that wants to protect either its global supply lines or its national supply lines buys one of our companies with a history of selling around the world, it has bought not only the supply line but potentially the customers. If the company wants to switch the supply from an Australian farm to another farm somewhere around the world, it can do it. So it does not only affect what we own; it affects our ability to sell.

Andrew Leigh (Fraser, Australian Labor Party) Share this | Link to this | Hansard source

An iron law of populism is that, while Australian businesspeople investing abroad are portrayed as job-creating entrepreneurs, foreign investors in our country are depicted as rapacious robber barons. And so it is with the latest campaign against foreign investment. As sometimes happens, the campaign started in the tabloids. Under headlines such as ‘Chinese buying up our farms’, ‘It’s time to stop selling off the farm’, and ‘It’s time to save our farms from foreign investors’, News Ltd tabloids have recently embarked upon a fear campaign against foreign investment in Australian agriculture. With anecdotes taking the place of statistics, foreign investment has been described by the tabloids as ‘a dramatic global land grab’, fed by ‘a looming global food shortage’.

Most ironic about the recent tabloid campaign against foreign ownership in agriculture is the fact that the newspapers responsible are themselves owned by US citizen Rupert Murdoch. Indeed, if a campaign were to be waged against foreign ownership in the media industry, you would expect these newspapers to be among the first to describe it as economic populism. It is funny what happens when the pitchfork is in the other hand.

Now, the opposition appears to have decided to jump on the populist bandwagon. After a few months in which members of the frontbench have questioned the need for a floating exchange rate, an independent Reserve Bank and a migration policy that does not discriminate by religion, it is perhaps no surprise that the opposition is tempted to campaign against foreigners buying our farms—not surprising, but odd all the same. After all, Australia’s agricultural sector has benefited substantially from foreign investment. In 1855, British investors helped kick-start our local sugar production industry when they established CSR, originally Colonial Sugar Refinery. In 1877, American firm Schweppes opened its first Australian factory—as did Kraft and Kellogg’s in the 1920s. Japanese investment in Australia’s beef cattle sector has been important since the 1970s. Today, the largest foreign investors in Australia are still Britain and the United States.

As a resource rich nation, Australia has traditionally looked abroad to fill the investment gap. On one estimate, one in eight workers is employed by a foreign owned firm. If we were to ban all foreign investment tomorrow, wages would fall and unemployment would rise. An Australia without foreign investment would also risk missing out on the latest overseas know-how. From technology adoption to business practices, foreign firms can often help spur innovation by changing the way that things are done.

In moving this motion, the member for Calare expresses concern over the risks to Australia of ‘foreign investment’. Yet he has previously spoken in favour of greater investment in Australian agriculture. On the floor of this parliament, he has repeatedly called for more investment in the forestry sector, more investment in farm productivity, more investment in agricultural research, more investment in new plant varieties, more investment in rural telecommunications and more investment in rural infrastructure. What he seems to fail to realise is that investment is not a magic pudding. Restricting foreign investment in agriculture will result in less investment in agriculture, and that is bad news for people who are employed by a foreign owned firm or who might have otherwise been employed by a foreign owned firm that is deterred from coming here.

Of course, while Australian investors are playing a role in our economy, our agribusinesses are creating jobs in other countries too. In countries like New Zealand, Papua New Guinea and Singapore, Australian firms are helping to show local companies a new way of doing business. In the process, Australia’s overseas investors are helping to raise living standards in those countries.

As the mover of the motion presumably knows, Australia has long had restrictions on foreign investment. Formalised by the Whitlam government in 1975, the national interest test applies to a wide range of investment classes across the economy. The Foreign Investment Review Board, or FIRB, must approve foreign investment that exceeds 15 per cent where the firm is worth $231 million or more. In the case of real estate, nonresidents cannot buy existing properties and FIRB must sign off any time a temporary resident wishes to buy property. Importantly, FIRB has had a veto right over any investment by a foreign government, including farms. In addition, banks, media outlets, airports, Qantas and Telstra are subject to special rules. FIRB can reject applications outright or provide an approval subject to particular conditions.

In thinking about how strict our foreign investment review processes should be, it is useful to look at how other developed countries operate. While any such comparison is obviously limited, work by the OECD’s Takeshi Koyama and Stephen Golub suggests that Australia’s foreign investment review regime is at least as stringent as, perhaps more so than, the approach that prevails in the typical developed country. For decades Australia’s economic policymakers have recognised that our nation’s prosperity relies on being enmeshed with the world. Since the time of white settlement, immigration and trade have been a part of Australia’s social fabric. Australia has been engaged with our region and the globe and this engagement has helped to shape our society—a nation in which one-quarter of the population are born overseas and exports make up one-fifth of the economy. Integral to an outward-looking Australia must be an appreciation that well-regulated foreign investment brings significant benefits to Australia.

Lastly, I cannot help mentioning the issue of food security. It is one of those slippery phrases that people seem to invoke when they do not want to say precisely what they mean. Since I have not seen anyone, including the shadow minister for agriculture and food security, being clear about this, let me hazard a guess at two possible explanations. One possibility is that when people say that we need to ensure food security they mean we need to ensure that if Australia were cut off from the rest of the world we would not starve. Given that Australia continued to trade with other countries even during the depths of World War II, this is a bit like worrying about whether Dubbo has a plan to protect against tidal waves. But, in case anyone is wondering, the answer is yes. Australia sells more food to the rest of the world than it buys from the rest of the world. So if we were to be cut off from the rest of the world we would not starve.

The other possibility is that food security means we need to make sure that agricultural prices do not go up and down. It is certainly true that in recent years food prices have been unusually volatile. For example, since 2007 some world food commodity prices have doubled, halved and doubled again. Economists are not sure why, but possible explanations include climate change, increasing meat consumption throughout the world, biofuel subsidies and a reduction in food stockpiles. In some developing countries there is a real concern that changing food prices will push people into starvation. For Australia the effects are more modest, but you can still see them in the data. For example, in 2006 food prices grew about four per cent faster than the prices of other goods. In 2010 the reverse was true: food prices grew about one per cent slower than the prices for other goods.

People sometimes make the mistake of thinking that if we imported no food this volatility in food prices would disappear. That is wrong. Australian food prices also move when world prices change because Australian farmers sell into the world market. So, to insulate ourselves from volatility in world food prices, we not only need to stop importing food; we need to stop exporting food. I do not hear anyone calling for that. My fear is that, for at least some people, food security is merely code for a return to protectionism, which would be a great mistake. By all means, let Australia produce the foodstuffs that suit our land and our skills. But it does entrepreneurs and workers no favours to encourage Australian agriculture to expand into areas that do not suit our geography and our talents.

There are plenty of challenges facing Australian agriculture. But, while Labor are focusing on water reform in the Murray-Darling Basin and addressing climate change, the coalition’s plan is to defer water buybacks and pretend that climate change does not exist. At the same time, the shadow agriculture minister is moving a private member’s motion aimed at reducing investment in Australian agriculture. It might feel good to pander to populism, but let us not pretend that it is helping farmers.

Dick Adams (Lyons, Australian Labor Party) Share this | Link to this | Hansard source

The opposition are in disarray: they bring motions to the parliament which they claim to be important but cannot organise speakers to speak on those motions. That shows the level of support they have in thinking about a vision for the future of agriculture in Australia, as my honourable friend the previous speaker has said. I hope the member for Calare has discovered who the responsible minister is that he is directing the motion to, because when I looked at his motion that seemed to be something else that he did not understand.

I am aware there are some community concerns, as you would be, Mr Deputy Speaker Sidebottom, regarding foreign investment in Australian agricultural land and businesses. Australia has well-established arrangements under which foreign investments are examined. This is not something that just happens. The Foreign Acquisitions and Takeovers Act 1975 empowers the Treasurer to examine all significant investment proposals in Australian businesses by foreign interests to ensure they are not contrary to the Australian national interest. Based on those examinations, the Treasurer can reject or impose conditions on proposals that are considered to be contrary to Australia’s national interests. That is as it should be. All foreign governments, their agencies or state owned enterprises must notify the Foreign Investment Review Board and receive an approval before making a direct investment in Australia, whether it is for $1 or $1 billion. The government has already made important improvements in the foreign investment framework that are very much in the national interest.

When you look at the supply chain in agricultural industries you will see that there is a lot of foreign money in that supply chain. As you would be aware, Mr Deputy Speaker, National Foods had some difficulties with its suppliers in the milk industry in Tasmania a year or so ago. A Japanese company with Japanese capital took over that company, and they are going through other changes. I wish them well in that and I hope they continue to invest in our milk industry, in processing, in Tasmania because we need that capital. You cannot expand without capital in your supply chain.

I do not know if Mr Cobb is saying that we do not need any foreign investment in any of our industries. Go and have a look at the car industry. Go and have a look at our mining industry. We raise capital from all over the world; that is how our systems work. So it is difficult to see where Mr Cobb is coming from, other than just trying to make a political point, I suppose, around National Party branch meetings and stirring up some of their members out in the bush to say that the country is going to be overrun by foreign money.

Luke Simpkins (Cowan, Liberal Party) Share this | Link to this | Hansard source

Mr Simpkins interjecting

Dick Adams (Lyons, Australian Labor Party) Share this | Link to this | Hansard source

Are you one of those who go around doing that?

Luke Simpkins (Cowan, Liberal Party) Share this | Link to this | Hansard source

Mr Simpkins interjecting

Sid Sidebottom (Braddon, Australian Labor Party) Share this | Link to this | Hansard source

Order! I remind members that you speak to the chair.

Dick Adams (Lyons, Australian Labor Party) Share this | Link to this | Hansard source

He used to be the editor of a newspaper running the same line, churning it out without any vision, without looking to the future. I think we all realise on the government side that there are national interest principles to improve transparency around how the national interest test is applied and an easy-to-read version of the policy to further improve the transparency of the regime. I think that is important.

Of course there will be concern. As I said when I started these words, of course there is concern. People do not want overseas capital coming in and buying great tracts of Australia. They need to know about that. We need to have a process that allows them to see that. That will occur under this Labor government. It did not occur under governments where the National Party held ministerial positions or the deputy prime ministership. I guess that is why they are getting a bit toey and why they have to try to justify their existence with motions like this one.

The Australian government, like previous governments, is committed to a case-by-case approach to considering foreign investment proposals to maximise investment flows while protecting our core interests. Using the capital in the interests of the nation is what it is about, and we need to make sure that we do that. I was looking only recently in Tasmania at the irrigation schemes coming on board with state and federal money to help enhance our rural sector and to help us go in new directions and find new ways. But, in that sense, it takes opportunities to borrow money. I was looking at what the Tasmanian Institute of Agricultural Research had to say. It said that in Tasmania we grow around $1 billion of our current food, fibre and poppies. It says that for the industry to expand it will require financial resources.

Of course it will. There are only two ways that that can occur. That is either by debt into the industry or equity through investment, houses and corporate agriculture. Some of that might be foreign money that comes into the agricultural sector like it comes into the processing sector or the mining industry. So to expand we will need money. We need money to do that. Those points are very good. Those points, when we talk about looking at a case-by-case approach to considering foreign investment proposals, are what it is all about. Investment flows need to be looked at and so does protecting our core interests.

Given the longstanding success of the foreign investment screening regime, we on this side of the House see no reason to change it by placing blanket bans or restrictions on particular types of investment. The government welcomes foreign investment. It has helped build the Australian economy and will continue to enhance the wellbeing of Australians by supporting economic growth and prosperity, as it has done in the honourable member for Riverina’s seat. I do not know who owns some of the production and supply chains within his electorate. It might be interesting for him to tell us. I am sure he is well aware of who they are. That economic growth and prosperity will continue with investment. We need to make sure that we look at it, that the general public can have a good understanding of how it operates and that we have transparency around that so that we do not have hysteria whipped up by the National Party for their own political interests.

Thousands of rural and regional communities around Australia whose economies rely on agriculture and food production benefit greatly by foreign investment. I do not think we would want to see international sources of support for the bush discouraged or threatened. At times we need to have foreign capital to assist our industries to grow. As I said, in Tasmania we are certainly looking for new investment. We just lost McCain’s at a processing plant in the Smithton area. We are looking for the ways in which we will process our food into the future. We need to be sensible about this and go forward in a proper manner. (Time expired)

Michael McCormack (Riverina, National Party) Share this | Link to this | Hansard source

I thank the member for Lyons for filling the breach in place of the member for Forrest, who was in the main chamber speaking about an issue very important to the coalition’s heart—the youth allowance and the Social Security Amendment (Income Support for Regional Students) Bill 2010 [2011]which has been most unfairly dealt with by this Labor government, who do not have a great appreciation or respect for regional areas. Given the fact that she cannot be in two places at once, I am stepping in for the member for Forrest to give her speech on this motion about foreign ownership of land. The member for Forrest says that, in seconding this motion, she does not automatically oppose foreign ownership of agricultural land in Australia but she does oppose the foreign acquisition of Australian rural land in secret or by stealth.

Her office has tried on numerous occasions to compile information on foreign ownership of agricultural land in Australia and has been continually told that that there is no comprehensive source of this information. The other problem that it has encountered is that agricultural land is not separately reported by the Foreign Investment Review Board, which classifies agriculture, forestry and fishing into one category. The member for Forrest notes with interest the 2010 announcement that the Australian Bureau of Statistics, in conjunction with the Australian Bureau of Agricultural and Resource Economics, ABARE, would survey the foreign ownership of agricultural land. As the ABS identifies in its explanatory document:

Currently there is very little information available on the level of foreign ownership of agricultural businesses, land and water rights within Australia. Therefore the ABS proposes to collect data on the following:

• Direct foreign ownership of agricultural businesses in Australia
• Direct foreign ownership of agricultural land in Australia
• Direct foreign ownership of water rights (used for agricultural purposes) in Australia

This proposal is to be commended.

Under the current regime, a foreign purchase of agricultural land or business has to exceed a $231 million threshold before the Foreign Investment Review Board must be notified. The current debate on foreign ownership requires accurate data on foreign ownership of rural land and agribusiness. At a Senate Select Committee on Agricultural and Related Industries hearing last year, the Foreign Investment Review Board confirmed that it is possible that a foreign entity could go down to the Murrumbidgee River today and buy every property and not even trigger the interest of their board. That is a reflection on this parliament.

The world population is expected to grow from around six billion today to over nine billion by 2050, with Australia alone set to increase its population by between 35 and 40 million by 2056. With this population growth, cities and urban development will continue to take up more and more of the prime agricultural land. This is of particular concern to the member for Forrest, as a food producer. Given the future challenges of feeding the world, it is vitally important for Australia to have accurate records of who is buying and acquiring our food-producing agricultural land and precious water resources.

This motion is necessary to guide the foreign affairs and trade negotiations of Australia’s future. One of the threats faced by our agricultural sector, if we get this policy wrong, is that of a worsening of an already uneven playing field in world trade. We must avoid situations where foreign owned farms are being granted access into markets that are denied to Australian producers or where Australian farmers and investors are being priced out of the market.

We must also be aware of the closed loop—where a foreign entity or quasi government owned entity buys up tracts of food-producing land and water and restricts the sale or provision of that produce to their own market. There has been a change in focus from foreign investment to foreign ownership and, as a result, many farming industries—for example, dairy with the buy-out of cooperatives—have found that the short-term financial gain to individual members is outweighed by long-term impacts such as reduced farm gate prices though loss of market power.

The Daily Telegraph reported in November last year that foreign investors have snapped up $10 billion of Australia’s prime agricultural land and rural enterprises ‘and no-one is keeping watch’. It also stated:

Australia, with its rich and fertile land and sophisticated farming techniques, is a target for some of the world’s biggest agricultural enterprises.

This is further reasoning that it is time to consider greater supervision of rural land and water sales to overseas interests. In conclusion, I repeat that this motion is not about banning foreign ownership; it is about protecting Australia’s sovereignty and food security by including our agricultural and water resources on the radar of the Foreign Investment Review Board.

Steve Georganas (Hindmarsh, Australian Labor Party) Share this | Link to this | Hansard source

Order! The time allotted for this debate has expired. The debate is adjourned and the resumption of the debate will be made an order of the day for the next sitting.