But as a sparsely populated nation with vast opportunities for development, Australia has always faced the risk that lack of capital to invest could hold us back.

 

That's why foreign investment has been, and looks set to remain, instrumental to building our economy. Without British investment, our agricultural sector would have been under-developed. Without Japanese and American investment, Australia would have a much less robust mining and resources sector.

 

That's why the Coalition unambiguously welcomes and supports foreign investment.

Nevertheless, like most nations in the world, Australia has always recognised that foreign investment should be subject to government scrutiny to ensure it is in our national interest.

 

In the past few years, there has been a community debate about the existing rules as they apply to agriculture and agribusiness. In part, this has been prompted by a surge in foreign investment in agriculture, which has recently risen almost tenfold compared to its level in the early 2000s, to around $2 1/2 billion a year.

 

In 2012, the Australian Bureau of Agriculture and Resource Economics and Sciences concluded that foreign businesses control 60 per cent of sugar milling, 40 per cent of red meat processing and 50 per cent of milk processing. While some of these investments were reviewed and approved by Australia's Foreign Investment Review Board, others did not require FIRB scrutiny because they were below the threshold for scrutiny. Many communities have expressed concern the current foreign investment regime could be improved, especially for agricultural land.

 

In response, the Coalition set up a working group last year to look into the issue of foreign investment in Australia's farming land and agribusinesses.

 

One of the identified weaknesses of the current foreign investment regime is that Australia doesn't keep track of foreign acquisitions of land. The Australian Bureau of Statistics has estimated that foreign ownership of land represents about 11 per cent of agricultural land holdings. However, this is only an estimate, it doesn't take account of the value of the land, and it's only a snapshot at a particular point in time.

 

Inadequate record keeping by government has made it harder to address legitimate concerns about foreign investment in Australia's agriculture sector. To keep track of foreign land transactions through a register would differ little from what already happens in many other nations. Countries including China, India, Brazil, the US and New Zealand all have foreign investment regimes that allow for oversight and greater transparency in relation to land purchases.

 

Another concern has been the threshold for FIRB scrutiny. Unless the buyer is a foreign government or a state-owned enterprise, an Australian business has to be worth more than $244 million before it is considered by the board. Very few agricultural properties are worth this much nor is there anything to stop a purchase being split into several parts to keep each piece below the threshold for FIRB scrutiny.

 

This is a significant issue in terms of maintaining public confidence that foreign investment in Australian agriculture is occurring in the national interest, especially as we grapple with the challenge of ensuring our food security while seizing the opportunity to develop Australia as the food-bowl of Asia in the decades ahead.

 

The Coalition has released a policy discussion paper based on the deliberations of the working group. As the paper makes clear, the Coalition continues to believe strongly in the value of foreign investment, we support the FIRB and we believe in our existing free trade agreements.

 

However, we need to ensure that foreign investment in our agriculture sector is always in Australia's national interest, and that Australians can have confidence that this is so.

 

Our discussion paper seeks comment from the community and industry on changes to the foreign investment regime, including developing and implementing a national register of foreign ownership of real property.

 

Australians can have confidence the Coalition's foreign investment policy will ensure continued foreign investment that is in the national interest.

 

6 August 2012

 

Source: The Daily Telegraph