Critics making hay on foreign farm ownership

Articles and op-ed

Published in The Australian

11 August 2012

Politicians should inform, not spread fear in the hope of harvesting a few votes

EVERY couple of decades, a national debate erupts about foreign ownership of Australian farmland. Its defining feature is the generation and dissemination of misinformation over the extent of foreign investment in agriculture and its impact on national food security. In a democracy, this is understandable, although unfortunate. But the role of politicians should be to inform, not to misinform and spread fear in the hope of harvesting a few votes.

The story being relayed in the bush is that Chinese government enterprises are running around Australia buying up family farms so they can work them with cheap Chinese labour, knock out Australian competitors and send the produce back to China to feed its massive population. Australia, so the story goes, will not be able to feed its own people. None of this is backed up by facts.

Yet the Coalition has responded with a proposal to reduce the threshold at which the Foreign Investment Review Board screens private foreign investments in agricultural land, from $244 million to $15m.

Let's consider the facts, the Coalition's policy and the government's approach to this issue.

According to the Australian Bureau of Statistics, in 1984 just 5.9 per cent of Australian agricultural land was foreign-owned.

Using the same methodology, that had risen to an estimated 6 per cent by 2010 an increase of 0.1 percentage points over a quarter century.

As the Australian Farm Institute points out, foreign investors have come, bought land, tried to make a go of it and in many cases sold it to Australians or to other foreign investors. A churn of this sort doesn't amount to rising levels of foreign ownership.

No proposal exists for China to import low-wage workers to replace Australian farmers. Indeed, it cannot be done under law. Even in the hypothetical situation of so-called 457 temporary work visas, which can be used only if there are no Australian workers available, any foreign workers would have to be paid Australian wages.

A joint agricultural study sponsored by the two governments is looking at the possibility of producing more food for the world market not for funnelling back to China.

Australia already exports 60 per cent of its agricultural produce. If we were able to expand total production it would be good for Australian farmers, regional development and the world. Why would we shun such an opportunity? At the heart of the fears about Chinese ownership of agricultural land is a concern that state-owned The National Farmers Federation has not joined the Coalition in advocating a lowering of the threshold enterprises would not act commercially, but in the interests of their home government.

But the FIRB's national interest test, set out four years ago by the Labor government, already considers whether investments are commercial in nature.

The Coalition does not propose changing the national interest test.

Rather, in response to the Coalition's stated concern about the operation of state-owned enterprises, it proposes to lower the screening threshold for private foreign investments in agricultural land. The threshold for direct investments from state-owned enterprises is already set at zero.

But how does lowering the threshold for private foreign investment deal with Coalition concerns about state-owned enterprises? It's as if the Coalition just felt it needed to do something, no matter how irrational.

There would be serious consequences for our farmers from the application of such a policy.

Through trade and investment agreements with Australia, the US and New Zealand have been granted an increase in the private foreign investment general screening threshold, from $244m to $1062m.

Against this background, Korea, China and Japan would not accept a lowering of the threshold for private foreign investment in negotiations for trade agreements with Australia.

The US already has a trade agreement with Korea that came into effect earlier this year. It provides for the elimination over time of the 40 per cent tariff on American beef This gives US beef producers a decisive competitive advantage against Australia, such that over time we would be shut out of the lucrative Korean beef market New Zealand has a free trade agreement with China, which is giving Kiwi farmers a big advantage over ours.

China wants an increase in the Australian screening threshold, not a reduction.

And any prospect of better access to the Japanese market for our farmers would be lost through the application of the Coalition's threshold-reduction program.

This is why the National Farmers Federation has not joined the Coalition in advocating a lowering of the threshold.

It has done its homework; the Coalition has not. -The government has said it will examine the feasibility of a national land register so that everyone is better informed.

But locking our farmers out of lucrative Asian markets by lowering the FIRB's private investment screening threshold is a curious way of demonstrating support for them.

China has many alternatives for its investable surpluses.

The government's approach is welcoming, measured and responsible.

The Coalition's approach is illogical and against the interests of Australian farmers and the wider community.

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