'The complexity that now exists in the regulations is mind-boggling."
Foreign investment in the farm to be a key issue for new government
by Matthew Cranston
Foreign investment in agricultural land is set to be a key issue following the confirmation of a new government, with the business and legal communities calling for a simplification of the policy under which there are six different monetary thresholds for prospective investors to overcome.
With Prime Minister Malcolm Turnbull relying on support from politicians such as Bob Katter, who are circumspect about foreign investment, changes may become significantly more difficult to implement.
A foreign investor now faces one of six different thresholds for investment in the sector – nil, $15 million, $50 million, $55 million, $252 million and $1.094 billion – all depending on where that investor is from, who they are and what exactly what they are buying.
Johnson Winter & Slattery partner Marcus Clark, who has acted on numerous high-profile investments for foreign investors and represents various Australian and foreign farm owners, said the political barrier to desperately-needed changes would be difficult to break down.
'I am the first to admit that the previous policies were daft – a foreign investor could literally go out there and buy a farm for $250 million one day, and another farm for $250 million the next day without needing any approval," Mr Clark said.
"This just fed a narrative that the government had lost control of what was going on in the sector. And people who said that were right.
'But the complexity that now exists in the regulations is mind-boggling."
Mr Clark said the sensible compromise was to fix the threshold at $55 million, which is the general threshold for sensitive commercial land.
"If that threshold is good enough for mines, telecommunications facilities and bio-hazard storage, to name a few examples, then it should be good enough for farms," he said.
"The only concession I would make is to apply a cumulative test so that purchases over the course of a year are aggregated against a single threshold. I think you have to do this because many foreign investors are pursuing aggregation opportunities and the government should monitor how large portfolios are developed."
But to see changes the politics will have to be delicately navigated. The Greens supported Senator Nick Xenophon's earlier private member's bill which would have required a five-hectare threshold for foreign investors.
The Labor Party has voted in opposition to the the Greens on this issue, but the Liberals have not been able to avoid being dragged along with the National Party's views on restricting foreign investment, resulting in actual changes to the law and convincing Treasurer Scott Morrison to reject foreign investment applications such as that of China-based Daking's attempt to buy Australia's largest landholder, S. Kidman & Co.
"Clearly, the Liberals are in an uncomfortable position on this issue where they are deferring to the Nationals on illiberal policy settings," Mr Clark said.
"We need to have a sensible debate on the impact corporate farming and foreign investment may have on Australia's family farming tradition and the social and economic fabric in rural Australia. However, as part of that debate it is important for people to realise that the National Party is conflicted and cannot always be relied on as the farmer's friend."