National disgrace: Our great land sale
Chris McCormack News Weekly, April 18, 2020
To what extent have foreign buyers made inroads into purchasing Australia’s prime agricultural land? Head of the NSW Farmers’ Federation Water Taskforce Xavier Martin shed light on this at the NCC National Conference on February 8. Citing data from the Farm Weekly newspaper, Martin revealed that only 1-2 per cent of Australia’s land mass is “Grade A”, or highly productive land. Between 2016 and 2018, foreign land ownership grew nearly 1 per cent overall. However, it was the areas of highly productive land in Victoria and Western Australia that were being targeted by foreign interests. The percentages of those areas under foreign ownership grew 8.4 per cent and 35.5 per cent respectively in that period.
The entirety of the productive wheat/sheep belt is less than 10 per cent of Australia’s landmass. 13.6 per cent of Australia’s productive land is in foreign hands.
Total foreign land ownership in Australia spanned 52,602,000 hectares in 2018, an area equating to more than eight times the area of Tasmania. Twenty-seven per cent of the Northern Territory’s agricultural land is foreign owned, 24.5 per cent of Tasmania’s, and 16.4 per cent of WA’s.
Queensland has the largest area of productive land held by foreign interests, nearly 16 million hectares, or more than two Tasmanias. Foreign “investment” in agriculture grew from $2.5 billion in 2015-16 to $4.6 billion in 2016-17, then to $7 billion in 2017-18, with the increased purchases of land centred on the most productive areas of Australia.
Martin lamented that low and no-tax entities were utilising overseas tax havens such as the Cayman Islands, Ireland, Netherlands and the Bahamas to pay no tax. This allows these largely non-tax paying entities to undermine the competitiveness of Australian farmers by outbidding locals when vying to purchase water licences, plant and land.
Australian farmers need to earn roughly $1.30 in order to spend $1, whereas these foreign investors need to only earn around $1.01 to spend one dollar. These entities let the real estate agents, adjoining neighbours and mortgagees know that they can afford to pay 10 to 25 per cent premiums above productive values in order to aggregate their land acquisitions.
These entities can run at a loss, as they directly offset their losses against profits elsewhere in the entity. They avoid most state and federal taxes, including capital-gains tax, stamp duty and withholding tax. Martin described it as “a cunning plan to outsmart Australians”.
These foreign entities can be owned by Canadian pension funds, Chinese investment groups or the Qatari Government, to name but a few.
The Federal Government in 2019 reduced mandatory notification to the Foreign Investment Review Board (FIRB) for agricultural assets for sale in one transaction from $252 million to $15 million, while notification for agribusinesses for sale (such as bulk handlers) is $57 million.
FIRB chairman David Irvine said the assessment process was permissive, meaning a foreign “investment” would be approved unless it was considered a threat to Australia’s economy, community, national security, competition or taxation. Martin maintains that the reduced tax revenue from these entities operating outside our tax system is clearly one such threat, among others.
One result of this foreign buyout is the depopulation of rural Australia. “Empty homes dot our landscape.” And these foreign entities “effectively clear our communities out” by buying up large tracts of land and adopting contractors while avoiding contributing to local communities, Martin said.
Often, they adopt low production models. In the Upper Namoi region of NSW, he said that in a 50-kilometre stretch, he would only see three or four homes out of 30 with anyone living in them. He also mentioned a Chinese-owned tract of land in eastern Australia that had aggregated 44 properties to this point.
Last year a NSW mixed-cropping and logistics enterprise, BFB, majority owned by U.S. private equity firm Proterra, accepted a bid of $208 million from Canadian pension fund PSP even though an Agrinova consortium of local farmers offered $270 million. It was more profitable for Proterra to accept the bid that was $62 million lower because of the protective tax structures under which it operates. Local farmers are clearly not competing on a level playing field.
The Federal Government must raise the rate of withholding tax on all profits sent offshore from its current level of 0-10 per cent with our major trading partners, to above the onshore tax rate, just as Ireland has done, where the withholding tax rate is 5 per cent higher than its onshore tax rate. Queensland Senator Gerard Rennick is campaigning for a similar approach here. This would penalise profits that are sent offshore.
Also, the Government must instruct the FIRB to stop rubber-stamping foreign acquisitions of land when the sale would clearly threaten Australia’s economy, community, national security, competition or taxation.
#ForeignOwnership #FoodSecurity #BetterPolicy #BetterFamilies #BetterNation