Jenny McAllister (NSW, Australian Labor Party) Share this | Hansard source

I rise to express my concern about elements of the three bills presently under consideration—the Foreign Acquisitions and Takeovers Legislation Amendment Bill 2015, the Foreign Acquisitions and Takeovers Fees Imposition Bill 2015 and the Register of Foreign Ownership of Agricultural Land Bill 2015. I am particularly concerned about measures that may compromise foreign investment in our agriculture sector. These have been raised already in debate. Different senators plainly bring different views to this question. But I am concerned about the proposal to trigger FIRB reviews for investment in agricultural land and in agribusiness, which, as Senator Back acknowledged, is not a particularly large volume of activity at the moment.

Every serious review of Australia's economy in recent times identifies agriculture and food production as areas where we have enormous competitive advantages. Last year, the BCA released their terrific report about Australia's comparative advantage, which identified agriculture and food manufacturing as sectors where we are capable of winning on a global scale. In that report they are very clear about the response we need to make to this opportunity. They say that we need to take action to lift trade and investment and to foster business risk-taking to ensure this growth sector can attract capital for major projects and achieve the economies of scale so that transitioning sectors can make investments in productivity and restructuring. My concern is that the measures before us in this legislation risk that inflow of capital, which has been so clearly identified as critical to the success of this sector.

I want to spend some time talking about the way that the different thresholds will apply to different investors, depending on their country of origin. As other contributors have pointed out, there really is no obvious policy reason for the thresholds to be different. A review of an investment in agricultural land for, say, investors from China, Japan and Korea, our northern trading partners, would be triggered for an investment of just $15 million. For investors from Singapore and Thailand, a review would be triggered at $50 million. For investors from the US, New Zealand and Chile, a review would not be triggered until the investment exceeded $1 billion. For investments in agribusiness, again, for the US, New Zealand and Chile, there is no review until an investment is more than $1 billion, whereas for all other countries a review would be triggered at just $55 million.

The consequence of this is that the review thresholds for American investors are 70 times higher than for investors from our northern trading partners. It is hard for me to understand how this is in Australia's economic interests. My concern is that it will have the effect of deterring investment from China, Japan and Korea into our agriculture and agribusiness sectors. I am concerned that they will be deterred by the prospect of red tape. I am concerned that they will perceive these measures as sending a message that investment from individuals or businesses from those countries is not wanted. It is unclear to me why we would send those messages—why we would even contemplate a deterrence of this kind.

China already has enormous demand for Australian food. They have over $3 trillion in foreign currency reserves. China is potentially an enormously important source of investment in Australian agriculture and in food production and processing, and we should not be turning that away.

I want to talk a little about the significance of the agriculture and food sectors and their potential importance to our economy. We are part-way through a massive growth in the world market for food. We need to make sure that we are positioned to take advantage of these opportunities. China is already a huge market for Australian food, and it will grow substantially in the coming years. In 2012-13, China was the second-largest export destination for Australian food, accounting for 10 per cent by value of total Australian food exports. It is estimated that in the last 12 months China may have already become the largest export destination for Australian food. We know that there are already 250 million people in China who were designated as middle class, and we expect that to grow substantially. As more Chinese enter the middle class the demand for high-quality and value-added Australian food, such as wine, meat, infant formula, seafood and dairy products can only grow.

We are going to need significant investment in order to capture as much value as possible from the global food market. Senator Wong referred to these figures: the National Farmers' Federation has estimated that Australian agriculture will require investment of between $1.2 trillion and $1.5 trillion over the next 35 years to increase the capacity needed to meet these rising demands. It is inconceivable that we could domestically source the capital for this level of growth. We will need to source that capital from overseas. We need it both for investment in agricultural land and operations and for investment in agribusiness and food processing.

Unfortunately, in particular for agricultural land, this legislation sets a very low threshold beyond which an FIRB review of an investment in land would be triggered. In their submission, the Cattle Council of Australia raised concerns about the $15 million threshold.

I think my greater concern is around agribusiness and food processing. We will certainly have a place in the global food market in the future. But the real question is: what place do we want to have in the value chain? We know that we can export raw product, but the real question in terms of Australian jobs, quality jobs for people in rural and regional Australia, is whether or not we add value to it here in factories and processing centres.

Currently, the food manufacturing sector in Australia employs more than 299,000 Australians. It makes a contribution to rural and regional economies—a very significant contribution. Almost half of the people employed in this sector live in rural and regional Australia. Often the manufacturing plant is the anchor tenant for a lot of rural towns. The food processing sector accounted for $55.9 billion in international trade in 2013-14, and it represents more than a quarter of the manufacturing industry in this country.

The government's own brochures and own messages seek to encourage investment in Australian agribusiness. They include in their website a whole lot of examples about Japanese investment in wheat processing for noodles, British investment in milk processing, and Chinese investment in sugar processing. But my great concern is that some of the measures in this bill will seek to discourage investments of exactly this kind, which have the potential to do so much good for small towns all around Australia.

I am concerned about the relatively low threshold—at $55 million for a FIRB review—for investment in agribusiness, but I share the concerns of the Australian Food and Grocery Council about the very, very broad definition of agribusiness that is being used, such that it would capture about half of Australia's food manufacturing industry. Their submission indicated that the codes that are used in the draft legislation would include the manufacturing of baby food, baked beans and canned spaghetti, chutney, relish, jam and sauce. Their research also indicates double-digit export growth in some of these product categories. Why would we hobble investment in activities of this kind? And, of course, their submission is most concerned about the failure to articulate any real public policy objective around these questions. It said:

Given the lack of a clear public policy objective, the significant increase in red tape and regulatory cost, and its application to more than half of Australia's food manufacturing sector, the AFGC opposes the imposition of these changes on food processing.

As Senator Wong indicated in her remarks, Labor intends to propose amendments in the committee stage to ameliorate the worst elements of these bills. I simply wish to conclude by saying that I think this is a very strange position for a government to take that speaks of agility, of being outward looking, of being adaptive and being nimble, and we have heard these words many, many times in the chamber. It is a very strange position for this government to be presenting measures which are not supported by many significant stakeholders from private enterprise, which are not underwritten by any coherent public policy rationale and which are not consistent with a successful export oriented agricultural sector.

I really urge those opposite to reconsider their position and to think about what is in our national interest in terms of diversifying our economy and equipping ourselves for a place in the global food chain in the 21st century. I urge them to think about supporting the Labor amendments to this bill which will be brought through in the committee stage.