Those anxieties have been evident in calls, for example, for a comprehensive publicly-accessible national land register and populist treatment of agribusiness statistics such as
- 1.6% ($2.33bn) of foreign direct investment approvals in 2009/10 were in agriculture, forestry and fishing.
- half of the 23 licensed wheat exporters in Australia are foreign owned and since 2008 (with deregulation of wheat export arrangements) there has been an increased foreign investment interest in grain bulk handlers and exporters, e.g. Viterra (Canadian) acquiring ABB Grain and Cargill (US) now owning AWB Ltd.
- since 2000 (with deregulation of the diary industry) about half of Australian milk production is processed by foreign owned firms (e.g. Fonterra (NZ), Lion (Japan), and Parmalat (France)).
- three foreign owned milling groups make up almost 60% of Australia's raw sugar production (the foreign companies involved in sugar refining are Finasure (Belgium), Wilmar (Malaysia, Singapore) and COFCO (China, state owned).
- around 40% of Australian red meat production is processed by foreign owned firms (based on throughput)
The regime under which foreign interests can invest in Australian businesses and acquire Australian real estate involves the Foreign Acquisitions and Takeovers Act 1975 (Cth) and Foreign Acquisitions and Takeovers Regulations 1989 (Cth), Australia’s Foreign Investment Policy (AFIP) and the Foreign Investment Review Board . The AFIP indicates that 'direct investment' in an enterprise or real estate by a 'foreign government investor' is subject to review by the FIRB. That investor might be a sovereign wealth fund or a state-owned enterprise, with direct investment representing 'investment of an interest of 10 per cent or more', subject to consideration of a stake under 10% where the foreign government investor is "building a strategic stake in the target, or can use that investment to influence or control the target".
Examination by the FIRB centres on whether the proposed investment "will be contrary to the national interest", a notion that is not statutorily defined and instead reflects assessment in relation to
- national security;
- impact on the economy and community;
- Australian government policies such as tax; and
- the character of the investor.
In relation to agribusiness investment, the Committee calls for action to ensure that foreign investments in Australian agriculture are
- genuinely commercial,
- compete fairly with Australian agribusinesses and
- do not distort the capital market or trade in agricultural products.
The report comments that
The most promising development from the government to address the information gaps in foreign investment in agricultural assets was the commitment to, following consultation with stakeholders, establish a national register of foreign ownership of agricultural land. The committee strongly supports its establishment, based on the overwhelming evidence received through submissions and witnesses.It goes on to state
In November 2012, a discussion paper for public consultation was released by the Treasury [noted in a post here]. The paper sought submissions on the following issues:
- The scope of the register in terms of information collected and the definition of relevant terms such as agricultural land;
- The use of a threshold to exclude small transactions;
- The need for an initial stocktake of foreign investment;
- The monitoring of divestments as well as investments;
- Australia's international obligations;
- Compliance issues, including the timeframe for registration; and
- Public access to the information.
Submissions under the Treasury consultation process have closed. Treasury received 33 submissions and all but 6 (which remain confidential) are available on the Treasury website. The committee notes that these submitters indicated broad support for a register and that more information about levels of foreign investment would be beneficial. However, some submitters were also concerned about cost, administrative burden, privacy issues and potential disincentives to foreign investment. There were also varying views on the extent to which the information should be collected and made public.
The committee strongly supports the development of the register for foreign ownership of agricultural land. The committee also believes that the register should be as streamlined as possible to avoid unnecessary costs and administrative burdens. Where appropriate, it should protect personal privacy and commercial confidentiality.
However, the committee also believes that if established properly, the register will not cause a disincentive to legitimate and commercially orientated foreign investment. Consistent with the issues outlined above regarding the agricultural survey and in later chapters regarding the definition of 'rural land' in the FATA, and the importance of transparent management of water entitlements, the committee recommends that the register incorporate the following recommendations.
Finally, the committee is mindful of the significant lack of information regarding foreign investment in agriculture (discussed in this chapter). The committee also considers that in addition to improving the knowledge of current circumstances, modelling of future circumstances is needed to inform the public debate. To this end, the committee considers that it is essential that the public is provided with modelling that shows the possible costs to the agricultural industry should current arrangements (including current regulation and barriers to domestic investment) regarding foreign investment in Australian agriculture remain unchanged.In response the Committee makes several recommendations -
R6 The committee recommends that when establishing the agricultural land register, the government conduct an initial stocktake of foreign ownership of agricultural land, agribusiness and water entitlements. In addition to numbers of businesses, land size and volume of water entitlements, the value of foreign investment acquisitions should be captured. The initial stocktake should be comprehensive, as far as possible consistent across states, and take into account complex company structures including foreign trusts, "shell companies", ownership of agricultural assets by foreign mining companies, and debt structuring and ultimate liability.
Furthermore, on the basis of this initial stocktake, the government should commission independent modelling of the level of foreign investment in Australian agriculture in 20 years' time if current trends and regulatory arrangements are assumed to remain. The modelling should also include estimated costs to the industry over the same period based on current constraints to domestic capital investment in Australian agriculture. Finally, the modelling should have regard to the future opportunities provided by the growing global food task over this period.
R7 The committee recommends that the ongoing information collected in the register include the information that the committee recommended be included as part of the stocktake of foreign ownership (as per recommendation 6).
R8 The committee recommends that the register include divestments as well as investments. This will ensure that the information from the register remains current and can reflect changes over time.
R9 The committee recommends that participation in the register be a legal requirement for foreign investors and that appropriate mechanisms for compliance apply in cases where such participation is avoided.
R10 The committee recommends that the register not use the current definition of 'rural land' in the FATA. Instead the definition adopted should be that which results from the update of 'rural land' as per recommendation 25. This would maintain consistency with the regulatory framework for foreign investment in Australian agriculture.
R11 The committee recommends that there be no minimum threshold for reporting and that all foreign investment should be captured in the agricultural land register. However, this data should be collected in a manner that can clearly delineate foreign investments in terms of value and business size. 3
Although the committee is mindful of privacy and the need for business transactions to be protected by certain levels of commercial confidentiality, it also considers that the information collected be as accessible to public and parliamentary scrutiny as possible. In general, the committee considers that the public debate on this issue will benefit greatly with the availability of significantly more information about the levels and nature of foreign investment in agriculture.
R12 The committee recommends that the register's data be held in a manner that is centralised and can provide comprehensive information about all foreign ownership that is recorded.
R13 The committee recommends that levels and trends of foreign ownership of land, agribusiness and water entitlements should be published annually by the national register for foreign ownership of agricultural land. Aggregate level data about the respective value and level of interest of foreign government investors and private foreign companies should be included. The data should also be made available in categories such as state, sub-industry (ANZSIC levels), water catchment areas, and local shires.
R14 The committee recommends that country of origin of all foreign government investors and specific foreign government investments should be published annually by the national register for foreign ownership of agricultural land.
R15 The committee recommends that, in order to prevent possible disincentives for foreign investment, the country of origin details for private foreign companies should be published by the national register for foreign ownership of agricultural land at aggregate levels only. However, country of origin details for specific private foreign investments should be made available to parliamentarians, parliamentary committees, and any relevant government agency upon request.