Katy Gallagher (ACT, Australian Labor Party) Share this | Link to this | Hansard source

The Register of Foreign Ownership of Agricultural Land Amendment (Water) Bill 2016 amends the Register of Foreign Ownership of Agricultural Land Act 2015 to establish a Register of Foreign Ownership of Water Entitlements, creating a national foreign-owned water register to be administered by the Commissioner of Taxation. The bill is enabling legislation to allow for the collection of information and publication of statistics about foreign holdings of registrable water entitlements and long-term contractual water rights, and Labor supports the bill.

It is clear to all Australians that water is precious. It is valuable, and it should be conserved, harnessed and treated with the utmost respect. It is therefore common sense that we as a nation should know and understand who owns our water, who has the right to use it, trade it and sell it. We know that many Australians are anxious about foreign ownership, not only for residential and rural land but also for water resources. Labor believe it is critical to engendering the confidence, trust and support of our community in our foreign investment regime that the utmost transparency is given to understanding the level and value of both land and water resource holdings by foreign interests. This is not to say that Labor are opposed to foreign investment. We are certainly not. We understand the many benefits of foreign investment: jobs, growth, access to new markets and additional export opportunities, just to name a few. But we also understand that it is a vital part of the social contract that Australians have all the facts in front of them. That way there is no room for urban myths, for mischievous claims or for outright lies to be peddled by those who want to sow the seeds of distrust and disharmony in the community.

The Turnbull government agreed to establish a register of foreign owned water entitlements in a deal with the Greens to pass the Foreign Acquisitions and Takeovers Legislation Amendment Bill in 2015. That bill lowered the Foreign Investment Review Board's threshold for foreign land acquisitions from $252 million to $15 million and for foreign agribusiness proposals to $55 million. The Register of Foreign Ownership of Agricultural Land Act includes a sunset provision moved by the Greens party which means that the act will lapse on 1 December 2016 if legislation providing for a register of foreign ownership of water entitlements does not commence before that time. In effect, the bill before us today is tangible proof of the Greens' lack of trust in the government that they would deliver on their deal to lower the Foreign Investment Review Board's threshold for foreign land acquisitions in exchange for a water register.

It is also important to acknowledge that it was Labor who initially proposed the Register of Foreign Ownership of Agricultural Land back in 2012. Labor's plan was to allow every Australian, with the click of a mouse, to see who owns what, where and what they paid for it. Going into the 2013 election, the then Abbott-led opposition promised to do the same. Unfortunately, what subsequently transpired as a land register has drawn substantial criticism, including from the National Farmers Federation former chief executive, who said that assessing foreign farm ownership on land area does not really reveal much more than would be expected.

As my colleague the member for Hunter pointed out when speaking on this bill in the other place, while the current land register provides a picture of square meterage held, we still do not have a picture of the value of the land held by foreign interests. The current land register, which commenced on 1 December 2015, requires foreign persons to notify the Commissioner of Taxation of all the agricultural land held as at 1 July 2015. They are also required to notify if they start or cease to hold agricultural land. The register is divided into two parts, the first containing the details of the identity of the foreign person and the land holdings. The second part contains statistics derived from the individual listings in the first part of the registry, which prevents the identification of any individuals. These statistical details are then published on the commission's website. The minister must also table in parliament the commissioner's annual report on the operation of the act, including statistics derived from the register. In short, we get an aggregate picture of the land holdings but no detail. Labor rightly questions whether this is the level of detail that Australians should be satisfied with on such a sensitive issue as foreign investment in land holdings. The government claims that there are privacy concerns which prevent further transparency. We are not satisfied that we have been given a full explanation as to why the land register is so inadequate in giving a robust picture of who owns our land.

Item 27 of the bill amends the register of foreign ownership act to insert new parts 3A and 3B. The effect of the amendments is that the water register will operate in a similar way to the existing land register. So, again, we get an aggregate picture but no detail. The explanatory memorandum points out that an estimated 767 foreign persons will be affected by the provisions in the bill. It is also anticipated that there will be a degree of overlap between persons who have agricultural holdings and water entitlements. There were 806 agricultural businesses with some level of foreign ownership as at 30 June 2013, and it is estimated that 604 foreign persons who hold agricultural holdings will need to register water entitlements. The EM also says that the bill's definition of a registrable water entitlement is broad, stating that it will impact not only on the agricultural sector but also on mining; irrigation; irrigation infrastructure operators; manufacturing; and energy, electricity and waste services.

It is also important to note that a contractual water right—item 6—will only be required to be notified if that right is likely to exceed five years. Affected foreign persons who, at the end of 30 November 2017, hold or will hold a registrable water entitlement or a contractual water right that is likely to exceed five years must give notice to the commissioner during the notification period, which commences on 1 July 2017 and ends on the later of 30 November 2017 or the 30th day after the day that the person starts to hold that entitlement or right.

While these dates are important, if technical, aspects of the bill, senators should note that the Bills Digest highlights the problems the ATO experienced in developing online registration forms for the preceding land register. Given the recent technical problems this government has overseen, such as the Census debacle, we can only hope that the commencement date of 1 July next year will give sufficient time for the relevant technical modifications to the existing register to be made to incorporate the additional water entitlement information. As the member for Hunter pointed out in his speech in the other place, the water register will be a good thing if it is effectively executed.

As I said at the beginning, Labor support this bill, but we do not believe the current level of transparency for both the land register and the proposed water register are sufficient. We believe they are underdone. Properly designed registers will help build public confidence in foreign capital, and more transparency is crucial to this task. Unfortunately, Labor believe that yet again this government has put forward policy that lacks transparency and delivers platitudes based on: 'Trust us.'

Janet Rice (Victoria, Australian Greens) Share this | Link to this | Hansard source

I rise today to speak to the Register of Foreign Ownership of Agricultural Land Amendment (Water) Bill 2016. The bill before us today would fulfil a longstanding commitment of the Greens to create a register of water holdings by foreign nationals. Indeed, this is the second stage of our foreign agricultural reform package, following last year's passage of legislation to develop a Register of Foreign Ownership of Agricultural Land and to lower the Foreign Investment Review Board's threshold of agricultural sales to foreign investors. As part of that package, the government agreed to the development of a foreign water holdings register. It is because of the hard work of Senator Siewert and Senator Whish-Wilson, and before them Senator Milne, that we are here today debating this bill.

A register of foreign water holdings will increase the transparency of our relatively new water markets so that the public has access to information about who, where and how much water is held by foreign citizens. Since the beginning of the water reform period in the 1990s, we have seen water trading have some limited successes in incentivising water efficiency and returning environmental flows—despite the best efforts of some on the government benches, including Minister Barnaby Joyce and his cheerleaders. Potential abuses of power in water entitlements and allocations, particularly in times of drought and water scarcity, have been identified, so the concern amongst both policy experts and farmers is real. One of the first steps in dealing with these problems is to make information on market concentration and ownership structures better available to the public. Building broad awareness of the risks, opportunities, dangers and the current state of the concentration of water ownership by foreign investors would lay the groundwork for future tackling of problems with our water markets.

This brings us to the bill before the Senate today. From 1 July 2017, foreign persons will be required to register their legal interests in registrable water entitlements and contractual water rights with the Australian Taxation Office. A stocktake period will be conducted between 1 July 2017 and 30 November 2017. A foreign person who holds a registrable water entitlement or a contractual water right on 1 July 2017 will have until 30 November to register that entitlement or right with the ATO. A person who holds a registrable water entitlement or a contractual water right on 1 July 2017 but disposes of it before 30 November will not need to register that interest. Following the stocktake period, foreign persons will be required to register their registrable water entitlements and contractual water rights, or changes to their holdings, 30 days after the end of each financial year.

With this information, the ATO will publish an annual register of the proportion of Australian water entitlements held by foreign persons,    the level of foreign interests in water by country of origin, the level of foreign interests in water ownership and lease, and the use of water rights held by foreign persons. Most importantly, our discussions with the government have indicated that the government's intention is to record holdings within surface and groundwater basins as defined by water planning instruments, including water resource plans, in each of the water-trading jurisdictions. This register would then produce the level of foreign ownership by water system. For example, in the Murray-Darling Basin there are 20 surface water resource plan areas, 22 groundwater resource plan areas and six combined groundwater and surface water resource plan areas. Foreign persons registering in respect of water holdings in the Murray-Darling Basin would be expected to register against the relevant surface, groundwater or combined water resource plan areas.

There are still some privacy implications for investors that will affect how detailed the data is going to be, but we have it on good faith from the government that they will attempt to maximise the degree of information without imposing onerous costs or breaching privacy law. Although the Greens were pleased with the first release of the land register, we were disappointed with the lack of granularity and detail that is in the foreign land register. We believe that what is being promised for the water register will be a significant improvement on the situation with the land register. By building on both the successes and the limitations of the agricultural land register, this bill will be a win for accountability and transparency in our water markets.

This debate needs to be held in the context of the changes that are happening to our climate and the knock-on effect of these changes on the hydrological cycles in our major river systems. I am still hopeful that the world is going to see sense on climate change and that we will take the required action to prevent dangerous and irreversible climate change. It is difficult to still feel optimistic, given the positions put by our current government and some of the crossbenchers here, but I am hopeful that we will act. But if we do not meet our global climate targets—and again, with the current positions held by governments here and the incoming Trump presidency, it is not looking promising—Australia is going to continue to shift to being an even more water-scarce country.

At this stage of the year in 2016, we are generally feeling a bit more relaxed about water flow, because across much of the country, and particularly across the Murray-Darling Basin, we had an exceptionally wet winter. But what global warming means is that those dry years that we have struggled through in the last 15 years are going to come around more and more frequently, and the years like the one that we have just had will become very rare indeed.

The South Eastern Australian Climate Initiative, which was a joint project of CSIRO, the Commonwealth, the Victorian state government and the Murray-Darling Basin Authority, found in their phase 2 study that two degrees of warming—and we are currently heading for three or four degrees of warming—would result in approximately a six per cent decline in rainfall and a 20 per cent reduction in run-off in the Murray-Darling Basin. To take the Murray-Darling Basin as an example of the impact of climate change on water markets, it is hard to see how we are going to equitably manage a 20 per cent decrease in run-off in a system that is already proving impossible for the current government to manage. In the basin today there is massive competition between flows sufficient to support struggling estuarine and river mouth ecosystems and the demands of the communities upriver, the irrigators and farming communities. It does not even bear thinking about the impact of four degrees of warming and beyond on these conflicts.

Worse, under conditions of water stress and drought, when water is scarce and farmers are desperate, there is always the potential for the formation of large oligopolies and exploitative behaviour by water traders. Market concentration is a very real threat. The flow-on of this concentration into food, fodder and fibre prices could have very large impacts for our rural communities. So it is through measures such as the one in this bill that we are going to be able to ensure that our water-trading system remains as equitable, transparent and fair as possible.

I want to clarify here that, although the Greens remain cautious about the role of foreign investment in Australia's water, we are equally cautious about domestic investments.

Debate interrupted.

Stephen Parry (President) Share this | Link to this | Hansard source

Senator Rice, you will be in continuation. We now move to general business.