Mathias Cormann (WA, Liberal Party, Shadow Assistant Treasurer) Share this | Hansard source

The coalition does not support the Foreign Acquisitions Amendment (Agricultural Land) Bill 2010 introduced by Senators Xenophon and Milne. I say at the outset that, with the exception of the gratuitous attacks on the opposition, I agree with much of what Senator Bishop has just said. Foreign investment is very important for Australia—it has been in the past and will continue to be in the future.

In terms of our economic development and our capacity to maximise our economic opportunities into the future, we are a large country with a lot of opportunities, we are sparsely populated and a lot of the important parts of our economy are capital intensive. Without being able to attract foreign investment we would not be able to properly develop all of the economic opportunities at our disposal. So I agree with much of what Senator Bishop has said. Where I disagree with him is that when public concerns are raised—and clearly in this whole area of foreign investment in agricultural land there is a level of public concern—to characterise an attempt to be responsive to those concerns as populism is, in my view, quite arrogant. One does not have to agree and one does not have to do what is asked by those sections of the community that express concern, but one should take those concerns seriously and one should constructively and positively engage in debate and not just dismiss any attempt to address those concerns as populism.

The coalition is not unsympathetic to the underlying issues that this bill has raised. Foreign investment in agricultural land—in fact, foreign investment in general—is a legitimate issue of public policy debate. I say again: foreign investment is important. It has been important in our past and it will be in the future. The current legislative and regulatory framework is adequate to ensure that any national interest considerations are properly taken into account—and that is where I also agree with Senator Bishop.

The report by the Senate Economics Legislation Committee—which was chaired by a former colleague Senator Annette Hurley and a great senator from Western Australia as deputy chair, Senator Alan Eggleston, whom I know Senator Bishop holds in very high regard—goes in some detail through all of the policy issues that are raised by this bill. Like Senator Bishop, I do commend this report to all senators as they are considering these issues.

The coalition takes these issues so seriously that we have established a working group to investigate options to strengthen the rules governing the sale of Australian agricultural land and agribusinesses to foreign entities. The working group is chaired by the Leader of the Nationals, the Hon. Warren Truss. Other members are senior shadow ministers Julie Bishop, Joe Hockey, John Cobb, Barnaby Joyce and Sophie Mirabella. The working group is currently in the process of examining the adequacy of policy settings and delivering positive outcomes for Australia from foreign investment. The coalition believes that foreign investment is integral to Australia's economic future; however, our policy in this area must ensure that foreign acquisition of farming land is undertaken in Australia's national interest and that the food security of our nation is maintained into the future.

The coalition, as I have mentioned, will not support this legislation. We will continue to go through our internal policy process, and we will not support any initiative like this until we have finalised those processes. The coalition, in November 2010, called on the government to commission the Australian Bureau of Statistics to compile data on the foreign ownership of agricultural land, because one of the issues that has come up in this debate is that there is a complete inadequacy of information and data in this area. According to figures released by the ABS on 9 September, as at 31 December 2010, 99 per cent of agricultural businesses in Australia were entirely Australian owned, 89 per cent of agricultural land was entirely Australian owned and 91 per cent of water entitlements for agricultural purposes were entirely Australian owned.

It is important, as Senator Bishop observed, to have all of the facts before us as we are considering the issues around foreign acquisitions and foreign investment in agricultural land and other assets. All states showed high rates of Australian ownership of agricultural businesses, ranging from 99 per cent in Queensland to 96 per cent in Tasmania. So the problem is perhaps not as extensive as Senator Xenophon and Senator Milne might want us to believe. The state with the highest proportion of land held entirely by Australian owned businesses was Victoria, with 99 per cent of its 12 million hectares being Australian owned, while the Northern Territory had the lowest proportion, with 76 per cent of its 59 million hectares being Australian owned. According to the ABS, the survey results are broadly comparable with levels of foreign ownership collected in the agricultural census of 1983-84. So it would seem that, despite perceptions to the contrary, there has not been much movement in the level of foreign investment over the last 30 years.

Again, it would seem that the issues are perhaps not as acute as Senators Xenophon and Milne might want us to believe. However, it is true to say that the statistics are probably only part of the story. In particular, even if 99 per cent of agribusinesses are wholly Australian owned, it would be good to know if the one per cent that are partly or wholly foreign owned are the largest agribusinesses, what their share is by volume, not just by number, and whether this foreign ownership is concentrated in any particular type or part of agriculture. Hence, more data is needed.

The coalition has called for more work to be done on establishing a public register of foreign ownership of agricultural land and agribusinesses. We are interested in getting more data on the public record about foreign ownership of land. This process must involve the states, who are responsible for land titles. This all goes to making sure that we make decisions on the facts and the figures in front of us, rather than merely on emotion. We cannot entirely ignore emotion—we cannot ignore any level of concern—but we need to respond to it properly. It should be noted that Queensland has had such a register for around 30 years. The opposition has called on the government to task the Productivity Commission with reviewing this whole issue. In particular, the Productivity Commission should consider whether the government needs to lower the threshold for notification to the Foreign Investment Review Board of rural land and agribusiness acquisitions and whether anything needs to be done to safeguard the nation's food security. These are matters that are covered in the bill, but we have concerns about the thresholds proposed and the codification of the national interest.

The bill seeks to impose a low spatial threshold of five hectares. The Senate Economics Legislation Committee report, which we have talked about, questioned the appropriateness of a spatial threshold. That the Treasurer could be called upon to make a determination of national interest on an area as small as five hectares would be unwieldy, to say the least. While it is good to see that Senators Xenophon and Milne have sought to remedy this, it does not go to our position on the bill. The proper level of threshold does require further consideration.

There is a proposal in this bill to codify the national interest test by defining issues that the Treasurer must consider. We take the view that this would actually constrain the Treasurer's discretion. Codification of this sort could also lead to an increase in litigation on matters of foreign investment. The Foreign Investment Review Board has recently begun publishing broad guidelines on some of the considerations used in determining national interest. But these remain non-prescriptive, providing guidance to applicants without constraining the necessary and appropriate discretion granted to the Treasurer under the Foreign Acquisitions and Takeover Act 1975.

We think that the coalition's policy, through the working group and through the notice of motion that we have previously submitted, puts forward a more considered and comprehensive policy approach and will provide a better outcome. Senator Xenophon says he has the country's interests at heart, but there are some major areas which are not covered by this bill. For example, it does not address the impact of foreign ownership of agribusinesses, which we believe is a greater problem than the purchase of agricultural land. It does not provide the much-needed extra information, which is currently severely lacking, to make sure we can make informed decisions.

Land transfers are of course the responsibility of the states. Changes in this bill would require a major revamp of the state's databases at a cost of hundreds of millions of dollars—that is a preliminary estimate. The states would of course resist these changes and expect the Commonwealth to pay up. There would be significant ongoing costs to assess every acquisition of over five hectares with some level of foreign ownership. It would require a large increase in the bureaucracy to make these assessments. If these costs were passed on to the market through fees they would add significantly to the cost of purchase.

It is true that, in these sorts of debate, we have to tread very carefully. While we have to recognise and be responsive to public concern, we also have to make sure that we have a responsible debate that is based on facts. There are significant national interest issues at stake. There is absolutely no way that we would ever be part of any push that would seek to limit foreign investment to the extent that is proposed in this legislation. Senator Bishop raised some valid points in relation to international commitments. In its report, the economics committee raised some serious concerns that this bill might be inconsistent with some of Australia's international trade agreements. I am refer in particular to evidence given by Mr Mahony, who expressed this concern:

One thing is that, while I am not an international trade lawyer, it seems to me that there are questions about whether or not this kind of legislation is at least in the spirit of our international obligations and relationships, particularly our evolving investment protocol with New Zealand.

That is kind of a technical matter. The import of that is not just a technical or legal one, which I am not that concerned about. Obviously my concern is with the effect on innovation in the region and the effect on agriculture and the Australian economy generally—its capacity to innovate.

There are various other concerns, of course. In answers to questions on notice, Treasury expanded on some of the requirements under Australia's free trade agreements. Australia has free trade agreements with ASEAN, New Zealand, Singapore, Thailand, the United States and Chile. Australia has made commitments relating to national treatment and its screening thresholds in relation to the business acquisitions in its free trade agreements with Singapore, Thailand, the United States, Chile and, when enforced, the recently signed investment protocol with New Zealand.

We also have OECD obligations. Again, Treasury expanded on how the changes proposed in this bill could impact on our obligations with the Organisation for Economic Cooperation and Development. As a member of the OECD, Australia is bound by the OECD Codes of Liberalisation of Capital Movements. The code seeks to promote open markets by providing a balanced framework for the gradual liberalisation of investment.

All these issues serve to bring the committee to the view that this bill may actually be in breach of national treatment obligations as part of Australia's free trade agreements. While there are some legitimate issues yet to be considered, we have to be very careful not to go beyond certain bounds. Ultimately, continuation of strong foreign investment in the Australian economy is in our national interest, subject to the appropriate national interest safeguards. There are well-established processes to assess the national interest. Let us consider very carefully how those processes can be improved, but let us not go beyond the line of what is responsible, and this bill is crossing the line.

I have touched on some of the provisions that we do not think meet the right-balance test, and there are others. This is not a piece of legislation that the coalition is in a position to support. In fact, we oppose it. In that sense, we share the views expressed by government senators who have participated in the debate so far. With those few words, I thank the Senate for its attention.