Speech on Bill – Foreign Acquisitions and Takeovers
I speak today on the package of legislation regarding foreign investment in Australia, with particular emphasis on the register of foreign ownership of agricultural land, and to also address other aspects of this package. It has been Family First policy for many years now that there be state and federal registers of foreign owned agricultural land. In this area, perception and reality are often very different. The reality is, at times, distant from the talk at the pub or at country field days. The best way to marry the reality and the talk is, of course, through transparency. For that reason I support a register.
To be fair to the major parties, it appears that there is some level of bipartisanship on the foreign ownership register aspect. I note that former Prime Minister Rudd, late in the 2013 campaign, committed the Labor Party to establish such a register if re-elected to government. The register has also been longstanding policy for the coalition. Whilst we would have liked to see this register implemented sooner, we accept that there are political realities and challenges to work through before we get to voting on this legislation relatively late in the electoral cycle, but better late than never.
At a state level, for years Family First members of the Legislative Council in South Australia, particularly the Hon. Robert Brokenshire MLC, have been running freedom of information requests and speaking with the state Labor government about having such a register. For South Australia, the state that gave the world the innovation of a Torrens title system of land registration, it has come as a shock to us that our own land titles office is a long way short of being able to develop a register, or to even to provide, under FOI, data on the levels of ownership. They could not even provide data based on the country listed as the address of the owner of each title.
We have also communicated with the Commonwealth about whether the Foreign Investment Review Board had any data, and similarly we were surprised to find how little they could tell us about the FIRB’s work. They could not, at that time, for instance, tell us how many times a Chinese state owned corporation had sought approval or how many requests they had approved or rejected. They could not tell us and, as we know, every single purchase requires this, no matter what the price might be.
The dearth of quality data at state and federal levels pointed to the need to improve the data collection and matching, and that is a key part of what the government is delivering in this package. I note that the Australian Taxation Office will be brought in to improve data collection and reporting. That is an eminently sensible approach, and the scope to further integrate with other agencies such as immigration also makes sense. Despite the current dearth of reliable data on foreign ownership—and I emphasise that my and my party’s interest here is not to limit foreign investment but to provide long-overdue transparency in the information age—Australia does have a model for evidence based policy in this area, and it comes from the state of Queensland. Queensland’s register of foreign ownership was developed during the Bjelke-Petersen years when there was concern about the amount of Korean and Japanese acquisitions, particularly on the Gold Coast. For many years Queensland has provided the transparency that has been needed in these debates. The latest Queensland data from 30 June shows that China has been the greatest purchaser of land in Queensland for the last three reporting years by increasing amounts: $323 million, $463 million and $872 million in those three years.
Yet, when it comes to the land area owned, it is citizens or corporations from the UK that hold by far the most, and it has been increasing over the last three years, at 2.2 million hectares. The Brits also hold by far the most land parcels—individual titles—than any other nation, though China’s share has been growing. That, you can reasonably infer, is far larger agricultural land ownership than China holds. The next largest landholders are citizens or corporations from the United States, with 548,000 hectares. Both the British and American landholding levels have been growing in Queensland. The top six in recent years have been rounded out by Switzerland, Denmark and the Netherlands—understandable, given the limits on their land size and strengthening their food security—and also Germany. The new entrant in the top six in the latest reporting year was China, with 237,490 hectares. This is all very good. Shire council areas with the largest foreign ownership levels are mostly in south-western Queensland: the Bulloo, Barcoo and Diamantina shires.
For those who found that informative, I am sure they would welcome a national register that can provide similar data quality and transparency. The first national data to consider is that, at last count over two years ago, the ABS found that 98.9 per cent of Australian agribusinesses were Australian owned, with 87.5 per cent of Australian agricultural land wholly Australian owned, and that was only slightly down on the figure three years earlier. What we do know from the FIRB data, Foreign Investment Review Board data, going back to the most recent available reporting year—that is, 2012-13—is that Queensland mirrors national trends. The United States and the United Kingdom are the top two on a regular basis, with China, Singapore and Canada being major purchasers. These nations’ acquisition levels fluctuate year on year, though China’s acquisition rate has been steadily rising.
It is important to note that, in general, these purchases are by private citizens or corporations, so they do not represent the foreign policy of a nation buying Australian land. There is an important difference, however, with some countries like China and some of the geographically small Gulf states where there are significant state owned corporations acquiring land. A Qatari state owned corporation, for instance, has been buying land in South Australia for some time and is injecting valuable foreign capital to expand South Australian farming operations. Scrutiny and transparency of farming acquisitions in Australia are not bad things. I am deputy chair of the Select Committee on the Murray-Darling Basin Plan. Among many other things we are hearing across the Basin is concern about speculators and superannuation funds and others without any relationship to farming buying water which is no longer attached to the land. Just as with an agricultural land register in this package, the Basin would be well served by having a transparent register of water transactions and major market players.
The ABS data I mentioned earlier included a measure of foreign ownership of water entitlements, which was 9.2 per cent in 2010 but rose to 14.2 per cent in 2013. A number of witnesses to the Basin inquiry so far have called for an Australian water exchange, just like a stock exchange. Family First has been sympathetic to such an idea for some time. It is better to have transparency than to directly regulate market behaviour. Every transaction and every litre of water owned by speculators should be on an Australian water exchange website for all to see. Governments, as we know, are hopeless at market regulation, but I have no concern about market transparency where it results in evidence based policy making. Having a Basin-wide water register could well address the talk about speculators, water barons, superannuation funds and the like. I flag the possibility of a Basin water register as something I hope the government has in the back of its mind when it watches how the implementation of this package, if passed, works out. If a foreign ownership register works with land, it can work with water.
I want to highlight how critical it is not to stymie Australian economic growth by making it hard to raise capital from overseas. Remember the Queensland and Foreign Investment Review Board data that I cited earlier. Significant investment comes from foreign nationals in countries that are close allies of Australia, the United States, the UK and Canada. Chinese investment in Australia is, of course, welcome. I have been encouraging those from China who approach me to connect with South Australia to look at investing with us. There are wealthy Chinese individuals and corporations with no association or direction from their government wanting to invest in secure markets like Australia.
The South Australian state government is encouraging Chinese investment, taking groups of South Australian businesses to China to encourage investment. We have to be comfortable that this package will not hinder the foreign investment that Australia needs. Australia has always needed foreign investment and will continue to need it for some time as our domestic capital is either inadequate or locked up in, for instance, superannuation funds that are reticent to invest in Australia or particularly invest in the rural sector. How can we blame farmers seeking capital overseas when Australian investment houses are not interested? I do have misgivings about the way that food manufacturers are caught within the scope of agribusinesses as defined in this package. I am concerned about the potential for disincentives in raising capital from foreign sources. South Australia has some significant food manufacturers who will be caught by the agribusiness definition in this package.
I am going to err on the side of supporting transparency in this bill, but I put the government on notice that should foreign capital be impeded, particularly in my home state of South Australia, or should the Foreign Investment Review Board block sensible investment in food manufacturing, then I will revise the scope of what is considered to be an agribusiness in this package.
I want to conclude my contribution on the question of foreign investment in housing. Colleagues who have been listening to my speeches in this place will know what I am about to say about housing. The problem is on the supply side, not the demand side, when it comes to housing affordability. This bill seeks to address one of the demand drivers, in the form of investment, often blamed on the Chinese, in existing housing stock in Sydney and Melbourne. The Queensland data indicates there have been growing levels of Chinese investment. However, these sorts of reforms are dealing with the symptoms of the housing affordability disease, not the illness. If state and territory governments stopped profiteering and price gouging by restricting the amount of land available and provided more land on the urban fringes for first home buyers, then the rise in house prices would be stemmed. Affordability would improve.
For 100 years, Australians could buy a house on just one income, as the price of house and land was three times average incomes. Since the start of this century, however, that has risen to nine times average incomes. As a former national home builder, I can tell you this has nothing to do with the cost of building a house. On pure dollar terms it costs the same today as it did decades ago to build a house. I keep saying about car manufacturing in South Australia, ‘Why can’t we build cars as efficiently as we build houses?’ There is no reason for our manufacturing sector to be failing, but there are characteristics of the labour market in the housing sector that are very different to car manufacturing.
I digress slightly, but the point is that it is the price of land, not housing materials, that has gone off the charts. Why? Constrained supply. We have state governments, like the one in my home state of South Australia, wanting to legislate an urban growth boundary and forcing so-called transit oriented development. They are so wedded to this urban planning ideology that they cannot see how they have contradicted themselves by embracing—as do I—the introduction of driverless cars. The driverless car revolution will render transit oriented development a byword of closed-minded thinking. Why use planning laws to force people to live in a one-bedroom apartment with no car parking space near a train station when, in the foreseeable future, people can call upon a driverless car, like a taxi, to show up at their doorstep? It will take them to their destination without them watching the road at all—they will probably be catching up on their favourite TV show on the way.
It is good that state Labor have embraced innovation in this way; it is commendable. It is a shame, though, that they remained wedded to the disproven beliefs of urban development, which does not improve public transport use, does not reduce pollution, does not free up farming land, does not save water, does not save electricity, and does not reduce road congestion. Every argument made in favour of urban consolidation and urban densification does not stand up to scrutiny. And there will now be a $3,000 fee for foreign purchasers to buy existing residential land—a new regulation to gouge the foreign purchaser to help pay for a stronger Foreign Investment Review Board, and provide a bit of profit on the side, I have to note.
This might make some people feel better, but lowering the entry point into the housing markets on the urban fringes will do far, far more to address the unaffordability of housing. Very few Australians living in the metropolitan area started in the city centre. They bought on the fringes and slowly moved inwards as their circumstances improved. The same should be true of the modern generation. Population is not static; it is growing. So it is only natural to expect that the urban fringe will expand outwards. Housing affordability is a crisis forcing families to have both parents working to meet massive mortgage repayments. It is hurting families and children, and I will keep highlighting this until we see some movement from state governments on this issue.
My point is that these measures on tackling foreign purchasers of real estate will, I think, fail to stack up to scrutiny soon after they are implemented. Sometimes, however, you have to let the folly run its course before people are willing to accept the facts. I am confident that, the more we equip the nation with the facts on foreign investment and demand for housing land, the clearer it will become that the supply side is where the housing affordability crisis will be resolved.