Christopher Back (WA, Liberal Party) Share this | Link to this | Hansard source

In five weeks time, on 23 October, a group of us will meet at Denham, near Shark Bay, in Western Australia to celebrate the 400th anniversary of the first known European landing on Australian soil—that being Dirk Hartog in 1616. We do not know whether Hartog made an investment, but we do know that he left a pewter plate that is now in the museum in Amsterdam. I have just learnt from my good colleague Senator Scullion that the Macassar community of Indonesia are known to have traded with our Arnhem Land Aboriginals well back into history. Again, we do not really know whether they made a foreign investment, but we do know that 172 years after Hartog, in 1788, Governor Phillip, on board the HMS Sirius, came into Port Botany and then Sydney Cove, and from there commenced foreign investment in Australian agricultural land. And what a wonderful investment it has been and continues to be. Much of the wealth and wellbeing of our country today has been dependent on agricultural investment. For how long did Australia live and grow on the sheep's back, from the wool industry?

It was in 2010-11 that then senators Heffernan, Mary Jo Fisher and I, in a rural and regional affairs committee, urged the then government for the first time ever to start recording foreign investment in Australian agricultural land. That led, by 2012, to the Gillard government trying to commence that process. I remember initially having Foreign Investment Review Board personnel—I think Treasury personnel, tax office personnel—come to visit us, and we needed to define what agricultural land is. For example, I remember asking them, 'Have you included leased land?' and they looked at me blankly and said, 'Why would we include leased land in agricultural land?' I have a couple of statistics that will interest you: in Western Australia there is about 80 million hectares of freehold land and 800 million hectares of leasehold land. As we know—and as you, as a Queenslander, well know, Mr Acting Deputy President O'Sullivan—right across the north of the country, most of the land is leasehold. In the Northern Territory only 46,000 hectares is freehold, whereas 15 million hectares is leasehold. That was the first issue they had to deal with.

The second was that we asked them, 'What if land now used for agriculture was purchased by an overseas buyer for the purpose of something other than agriculture—for example, mining?' That had not been addressed either. The last one was: 'What would happen if, let's say, a Chinese sovereign wealth fund operating through a Hong Kong bank engaged the services of two fine Australians, Cash and Back, and Cash-Back Enterprises was the Australian entity? How would you then establish any foreign ownership? I just use those two names hypothetically, of course. I am very pleased to say that, as we all now know, there was an overhaul of the Foreign Acquisitions and Takeovers Act 1975 in 2015, and we now have an accurate set of figures based on hectares rather than on value of land, which gives us an idea of who owns land in this country.

I want to put into perspective, for anyone who might be interested, what the proportion of overall overseas investment into Australia is in agriculture. In 2011-12 it represented only 2.1 per cent—$3.6 billion of the $170 billion was in agriculture. I am indebted to the library, who, in only the last few minutes, have given me the figure for 2014-15, and that figure has only jumped up from 2.1 per cent to 2.7 per cent, being $5.3 billion of $194 billion. You would be interested to know that, in fact, that most significant investors in this recent time in agricultural land in Australia have been the Canadians, including the Canadian teachers' superannuation funds. It remains a mystery and a disappointment to me that most of our superannuation funds—which are moving now to $2 trillion of funds—have not seen their way clear to invest in Australian agricultural land. We know that the UK and the US are not all that far behind them.

So who has got what in this country? We have this xenophobic view about the Chinese, but I can tell you that, of the top 10 foreign countries that invest in agricultural land in this country, first is Britain at 60 per cent and second is the United States at 16½ per cent. The Netherlands—maybe somebody listened to Dirk Hartog back in 1616!—are third at 6½ per cent. They are followed by Singapore. Fifth of the top 10 overseas investment countries is China at 1.46 thousand hectares, or 3.25 per cent. I want to put those figures, if I may, into perspective.

Do we have a concern? We have relied on foreign investment in agriculture in this country for an aeon. I am going to conclude with the experience in Esperance, where the Esperance Land and Development Company, amongst others, were the significant American investors in opening up what has become probably one of our most successful agricultural areas. I want to make this point, and I want to make a recommendation to this parliament and to government: in the past all of the investors—the British, American, whoever—have only ever wanted to invest in our supply chain and for the product to remain within the Australian supply chain, whether it has been grain or milk, or wool or horticultural products. There is a risk. What happens if a sovereign wealth fund from overseas—China is an inclusion; Qatar is another; the Qataris own more land in Western Australia than they own in Qatar—own Australian agricultural land, they grow grain, they take the grain offshore and they do not sell it?

What if they actually philanthropically put it through the mills and produce flour, which they give to their poor citizens? There is no price so therefore there is no transfer price and therefore there is no tax payable back to the Australian government.

My plea is this: it is well within the right of a sovereign wealth fund from overseas to grow produce in our country, use our land, use our water, use our expertise and our supply chain logistics. I also have to say that, in that case, the Australian taxpayer does have a right to a return. My solution simply is up-front in advance to say to other countries: 'If you engage in that activity, which is fine, we will impose the equivalent of a royalty'—which, as Senator Cash and I know only too well, is what we do in the minerals industry—so that the day that grain goes across the wharf onto a ship and on its way to that country, a royalty equivalent to the value of grain in the market that day is payable back to Australia. I think that would satisfy a lot of people who have concerns.

Let me finish with Esperance, because it gives you a fine example of the capacity of overseas investors, technological expertise and money. The Americans came into Esperance—light country, trace element deficiencies et cetera—in the early 1950s and they brought their own expertise and they failed. They came back in the sixties through the agency of Chase Manhattan Bank. Their entity was American factors, Amfac, and they established Esperance Land and Development Company. In an agreement with the Western Australian government, they would develop 100,000 acres a year of which 50,000 remained with ELD and 50,000 were broken up into 2,000-acre, what were called, conditional purchase blocks. An enormous number of young eastern and Western Australian farmers got their start in agriculture in Esperance as a result of that. ELD, because of the company philosophy, gave a lot of the work—the fencing, the dam construction, the original early clearing work—to the CP block owners, who were living in machinery sheds on the property, and in fact it was the work they did for ELD that gave them the cash flow very often to continue.

ELD became an outstanding success—eight stations, a flock of 250,000 sheep and 50,000 Hereford cattle, the biggest Hereford herd in the world. Over time they sold out, they left and what did they take with them? Did they take the soil? Did they take the fence lines? Did they take the water points? In fact, Benno Schmidt, the chairman of the company, left probably the finest Aboriginal art collection ever assembled as a gift to the people of Australia. I have got to say to you: foreign investment, the value of it—Esperance would have to be its finest example.