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Rural and Regional Affairs and Transport References Committee
Foreign Investment Review Board national interest test
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Rural and Regional Affairs and Transport References Committee
Gallacher, Sen Alex
Nash, Sen Fiona
Back, Sen Chris
Fawcett, Sen David
Edwards, Sen Sean
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Rural and Regional Affairs and Transport References Committee
(Senate-Friday, 10 August 2012)
- Senator BACK
Content WindowRural and Regional Affairs and Transport References Committee - 10/08/2012 - Foreign Investment Review Board national interest test
BAIRD, Ms Helen, Director, Rural Environment and Agriculture Statistics, Australian Bureau of Statistics
BRADBURY, Mr Peter, Acting Assistant Statistician, International and Government Finance Accounts Branch, Macroeconomic Statistics Division, Australian Bureau of Statistics
HOCKMAN, Mr Bruce, First Assistant Statistician, Business, Industry and Environment Statistics Division, Australian Bureau of Statistics
Committee met at 09:29
CHAIR: I declare open this public meeting of the Senate Rural and Regional Affairs and Transport References Committee. The committee is hearing evidence on its inquiry into the Foreign Investment Review Board and the National Interest test among other things.
I welcome you all here today. It is a public hearing. A Hansard transcript of the hearing is being made. Before the committee starts taking evidence I remind all witnesses that in giving evidence to the committee they are protected by parliamentary privilege. It is unlawful for anyone to threaten or disadvantage a witness on account of evidence given to a committee, and such action may be treated by the Senate as a contempt. It is also a contempt to give false or misleading evidence. The committee prefers all evidence to be given in public but, under the Senate's resolutions, witnesses have the right to request to be heard in private session. It is important that witnesses give the committee evidence to give evidence in camera.
If a witness objects to answering a question the witness should state the ground upon which the objection is taken. The committee will determine whether it will insist on an answer having regard to the ground which is claimed. If the committee determines to insists on an answer, a witness may request that the evidence be given in camera. Such a request may of course be made at any other time.
Finally, on behalf of the committee I would like to thank all those who have sent representatives here today. I welcome representatives from the Australian Bureau of Statistics. I remind senators that the Senate has resolved that an officer of the department of the Commonwealth or of a state shall not be asked to give opinions on matters of policy and shall be reasonable opportunity to refer questions of the officer to superior officers or to a minister. This resolution prohibits only questions asking for opinions on matters of policy; it does not preclude questions asking for explanations of policy or factual questions about how and when policies where adopted. Officers are also reminded that any claim it would be contrary to the public interest to answer a question must be made by a minister and shall be accompanied by a statement setting out the basis of the claim.
Mr Hockman : Thank you, Senator. I would like to make an opening statement. In late 2010 the ABS was asked to undertake a statistical collection to inform the level of foreign ownership in agricultural businesses, land and water entitlements. The collection, called the 'Agricultural Land and Water Ownership Survey', the ALWOS, was conducted in 2011 with information provided as at 31 December 2010. I apologise that, being bureaucrats, we use those acronyms quite a lot.
CHAIR: Probably just read your opening statement; we don't have room for apologies!
Mr Hockman : The survey provided information on the level of foreign ownership of agricultural businesses and agricultural land and water entitlements for agricultural purposes in Australia. The definition of 'foreign' that we used was the same as that used in other international investment statistics produced by the ABS, to aid comparability, and the ranges of ownership investment were also chosen to be coherent with other current statistics. The list of businesses identified for the survey was the same scope and characteristics as that used for the agricultural production surveys undertaken by the ABS, again to ensure that the statistics were comparable with other information readily available about agricultural activity in Australia.
At the same time as the ABS was conducting the ALWOS, ABARES was commissioned to provide a report which discussed more broadly the place of foreign investment in Australian agriculture and agribusiness. The results from the ALWOS survey were published on the ABS website on 9 September 2011 and showed that 99 per cent of all businesses undertaking agricultural activity, 89 per cent of all agricultural land and 91 per cent of water entitlements for agricultural purpose were entirely Australian owned.
Since the ALWOS data was released, there has been continued interest in foreign ownership in Australian agriculture in the community and through media coverage. As a result, the ABS submitted a new policy proposal early in 2012 to undertake further collections to provide comparable information over time regarding foreign investment in Australian agriculture. The NPP was successful, and the Australian government have provided the ABS with funding to conduct two stand-alone surveys with respect to 30 June 2013 and 2018, and two supplementary surveys, following the agricultural censuses', which are to be undertaken with respect to 2015-16 and 2020-21.
The proposal included the provision of data over the 10-year period on foreign ownership levels of agricultural businesses, agricultural land, water entitlement for agricultural purposes and the value of agricultural production. The ABS is currently consulting with key government and non-government bodies to determine the highest priority information requirements for the 2013 survey.
CHAIR: Thanks. We are aware of most of that. Can I go briefly to that figure: 89 per cent of businesses. In your survey there were 11,000 questionnaires?
Mr Hockman : There were 11,000 questionnaires—99 per cent of businesses.
CHAIR: They were sent to the minimum turnover you had of an ABN that was agriculture related?
Mr Hockman : Yes, or you had to have indicated in registering for your ABN that you had either primary or secondary agricultural activity.
CHAIR: So the 42 farms that were bought around the Shenhua mine were not in the register, were they?
Mr Hockman : We cannot talk about specifics, but if those businesses had an ABN—
CHAIR: If the business is a mining business, it would not have been included—put it that way.
Mr Hockman : If they were under the $5,000—
CHAIR: No. Shenhua is 68 per cent owned by a provincial government. It is a mining company that bought 42 farms. That company would not have been included in your survey, because it is a miner—it does not have an ABN that relates to agriculture.
Mr Hockman : No. However, if they were—
CHAIR: No, that is the answer—that is all I want: 'No, it wasn't included'. Can I then ask for an explanation. Last week in Melbourne there was a grains talk-fest where everyone drank wine and talked a lot. The CEO of Cargill—lovely lady that she is—was asked a question: 'Does Cargill, which is a wholly foreign owned family company, invest in agricultural land in Australia?' She said no. I rang her up and said, 'That's not right; you do.' We took evidence from your group in the old parliament, and they said they did not have the resources, time et cetera to get it exactly right—they certainly didn't get it right, but I will come to that in a minute. Why wouldn't BFB Brabham, which is a Temora company, be included as a foreign owner? We have had them in, you realise.
Ms Baird : Senator, we cannot speak about individual companies—
CHAIR: Oh, I know—it's a great way to get out of it.
Ms Baird : The act under which we are constituted ensures that we respect the privacy and the confidentiality of—
CHAIR: Yeah, yeah: all of the above. But why can the CEO of Cargill say, when questioned about it, 'No, we don't buy land in Australia, which would fit your survey'? Because, when we brought them in, having worked out who they were—that is, Brabham's—they are 85 per cent owned by Blackriver Investments. She then said, 'Oh, but that's a hedge company; that's not us'. It is a wholly owned subsidiary of Cargill, but for the purposes of the statistics, it is not included—it is not considered to be a foreign purchase, even though it is. How do we get around that?
Ms Baird : A very good question.
CHAIR: It is what you call a stake-through-the-heart question!
Ms Baird : The survey that we undertook requested that the businesses identified who are operating agricultural land, or who owned agricultural land, identify the level of foreign ownership—
CHAIR: Yes, I understand that. But this is clearly a foreign owned company. So, would you agree that your survey was fundamentally flawed?
Mr Hockman : No, we would not, Senator.
CHAIR: I wouldn't expect you to, so can I then say: all right, you did not include trusts.
Ms Baird : If a trust had identified that their main source of income was from agriculture, or that they operated an agricultural property, they were included.
CHAIR: Yeah, but you did not include trusts. You had to have an ABN that gave you are rural registration at $5,000. What is the minimum turnover required before you can declare a tax deduction on a farm?
Ms Baird : The $5,000 is not a turnover figure; it is a sizing variable that we use to identify the level of activity—
CHAIR: Yeah, yeah; but $5,000 was the figure that you used—which is two goats and a jam tree or something. What is the minimum figure you require to be able to declare a tax deduction if you do a fence repair on a farm?
Ms Baird : I am sorry, Senator—
CHAIR: Do any of you know?
Mr Hockman : I believe, from reading Senate transcripts, that it is $20,000 to $50,000.
CHAIR: It is $20,000 to $50,000. So these people do not even qualify, if they repair a fence, to claim a tax deduction. So, in the 89 per cent of businesses—this is going over old ground, but you are new to the scene today—the weight of the $5,000 turnover compared with the weight of one business entity with a $200 million turnover business, is what?
Mr Hockman : It would actually depend on the location, even the state, in which it is located. But quantatively, the weight of that $5,000 enterprise is very much lower than the weight given to the $200 million—
CHAIR: You said 89 per cent of businesses are—
Mr Hockman : Ninety-nine per cent of businesses; 89 per cent of land area.
CHAIR: Whatever it is. The survey went to 11,000 businesses, at random, based on an ABN trigger point, right?
Mr Hockman : Yes.
CHAIR: In the model to get it to 90 per cent, what was the weight you gave the $5,000 turnover versus the $200 million?
Mr Hockman : Randomised sampling is also a stratified sampling, so the randomisation happens within a stratum and we determine—
CHAIR: Talk English. We talk bureaucratic crap.
Mr Hockman : We divide the Australian population up—in this case, the population of interest is agricultural enterprises. In this case, we were stratifying at the state level. We are trying to get a representative sample, so what we do is we take more smaller businesses than larger businesses. The larger businesses get counted with their full weight and the smaller businesses are interpreted as representing a number of similar businesses—and they are similar because of location and size.
CHAIR: But for the purposes of the statistics, you say 89 per cent of businesses. I have a $5,000 turnover business. Fiona Nash has a $200 million one. For the purposes of the statistics—cut out all the bureaucratic stuff—what was the weight of me versus Senator Nash?
Mr Hockman : Likely to be several hundredths of the weight of Senator Nash's.
CHAIR: Could you provide us with the model?
Mr Hockman : We will have to take that on notice.
CHAIR: Not 'likely to be'—was. If you do not know the answer, please tell this Senate committee that you do not know the answer.
Mr Hockman : I do not know the answer to that specific question now; I can get you—
CHAIR: That is all I need to know. Okay, thank you very much.
Mr Hockman : I can get you the answer, Senator.
CHAIR: Thank you very much. With respect to the view of the ABS, we have a company now, according to the BFB model, which is a sovereign entity overseas, which is taking on an equity partner in Australia. The equity partner is going to have just under 50 per cent. So the foreign sovereign entity is going to have 51 per cent control. And, as you may be aware, passive investments of sovereign entities avoid tax. You are aware of that, I guess?
Mr Hockman : Yes.
CHAIR: So, to simplify the fact that we don't know, and you don't know, what the real score on ownership is—I might pre-empt this by asking whether you understand that the foreign takeovers act describes 'agricultural land' as being for full-time purposes of agriculture, and all other land is urban.
Mr Hockman : Yes, Senator.
CHAIR: So the desert country is urban land. You understand that, don't you?
Mr Hockman : I was not aware of the urban land dimension of that.
CHAIR: This is all cuckoo stuff. But I can assure you that in theory—which is why John Phillips said this is all out of date; and God bless him, he has retired since—under the Foreign Takeovers Act, if you want buy a bit of country out in the Tanami Desert, because it is not agricultural land you actually have to apply to the Foreign Investment Review Board, but if you want to buy 200,000 acres in the Riverina, you do not. It makes a lot of sense, doesn't it?
Anyway, that is just some of the nonsense we have to deal with and, as I said to the committee, we are not interested in the politics of this; we are only interested in getting down to the bloody facts—pardon my language. Getting back to my proposition, if I am a smart foreign investor—and, bear in mind, you haven't looked at trusts and at the fancy footwork that companies do bringing money into the country to get a serious tax concession going out; I am aware of that. I won't burden you with it, as it is a matter for the tax office—and I 49 per cent fund my equity partner in Australia with a loan, so I own 51 per cent and I fund someone else for 49 per cent of it, and I have tax concessions on interest which would be a passive investment, the 49 per cent loan to the equity partner, how does that fit in with your description of who owns that?
Mr Hockman : In our description, if the Australian partner had registered it as a primary or secondary agricultural business and they then reported to us that they had a foreign partner, we counted that parcel of land as foreign owned.
CHAIR: As you know from the evidence, if you have read the transcript—you must be bored to have to do that, but, anyway—there is a mandatory reporting requirement if you have a sovereign investor in your deal. As you know, according to FIRB—I wish Mr Di Giorgio well—they have a phone line you can ring in for compliance. They told us they had a meeting with a group of lawyers in Sydney only a few months ago and are intending to have a meeting with a group of lawyers in Melbourne. If you do not comply, there is no penalty because you will never know.
I am sick of hearing about this threshold but there are political positions that have got to be taken. If I get pulled up by the highway patrol, which I do every now and then—I had to go to court recently to hang on to my licence. I do not mind owning up to that—they put your number into the computer in their car and tell you your driver's record. It does not matter where you are. If you go to the doctor and give him your Medicare card, he can tell you every PBS pill you bought in your life. If you go to the tax office and give them your ABN, they can tell you your business. All sales are registered on a lands title somewhere. Why can we not press a button and see every sale?
Mr Hockman : We cannot currently do that in Australia.
CHAIR: No, we cannot.
Mr Hockman : We do not have that facility. If we were in the Netherlands, we could.
CHAIR: Why would you bother though? I am grateful for your patience. You must appreciate our frustration that a company that is 85 per cent funded by a fully owned subsidiary described as a hedge company in a function down there is not considered to be a foreign company. I think Cargill do a wonderful job in Australia. But for the purposes of the aggregation of a policy and statistics so we know where Australia is going, that does not make any sense.
Senator GALLACHER: I am getting across the answer to the question on notice to Senator Colbeck around the different categories of value. Have you got that answer there?
Mr Hockman : Yes we do.
Senator GALLACHER: Do I read that to say that 54 per cent of all large businesses were in the scope of the survey you conducted and that 96 per cent of those responded to the survey? Is that what it is telling you?
Ms Baird : That is correct. Fifty four per cent of large businesses were included in the sample of the survey and 96 per cent of those responded to the survey.
Senator GALLACHER: And 13 per cent of medium businesses and seven per cent of small businesses responded?
Ms Baird : And six per cent of micro businesses responded. That is correct.
Senator GALLACHER: Is it 5,000 to 125,000?
Ms Baird : Six per cent of those businesses which had an estimated value of agricultural operations between 5,000 and 125,000 were included in the sample for the survey. That is correct.
Senator GALLACHER: And 93 per cent of those responded?
Ms Baird : That is correct.
Senator GALLACHER: would you know how many were at the value of 5,000 rather than the 125,000 or is that just a range?
Ms Baird : I do not have it off the top of my head.
Senator GALLACHER: So it is not determined in the survey whether you are on 5,000 or 125,000?
Ms Baird : Our list of businesses that we maintain to form the businesses of interest that we would survey and draw the sample from will have a dollar figure on each of those businesses for the estimated value of agricultural operations, so some will be at 5,000 lower end. The majority will not be at 5,000; they will be greater than that and somewhere in the range between 5,000 and 125,000.
CHAIR: It is turnover not profit that we are talking about, isn't it?
Ms Baird : It is neither turnover nor profit.
Senator NASH: Could we clarify this 5,000 figure?
Ms Baird : The estimated value of agricultural operations is a modelled value which allows us to provide a size for a business which helps in the stratification or the grouping of the businesses on our frame so that we can sample like businesses which will be representative of each other.
CHAIR: What does the top 5,000 represent?
Ms Baird : I am getting to that. The 5,000 is a three-year average of the potential production from a property. For example, if a property is running cattle then there is the value which is attributed to each head of cattle within that state and the production of cattle and then that value is applied to the number of cattle on the property.
CHAIR: In other words it is theoretical. It is not real.
Ms Baird : It is a modelled number. You are right; it is not real.
CHAIR: In reality, it is garbage.
Ms Baird : It is a statistical construct. It helps us to group businesses.
CHAIR: Yes, but that is bureaucratic code for 'how do we get out of this?' Can I give you a little tip? We are all likeable rogues out in the bush. You have got to be to survive.
Mr Hockman : I have read that, Senator, in previous evidence.
CHAIR: The 5,000 is not turnover and is not profit. It is some sort of mystical figure. How would you identify me with an ABN number for taxation purposes for agriculture if it is a mystical figure? I might have been growing illegal marijuana or something. How do you pick me out?
Ms Baird : You would be identified from your ABN registration where you had either identified that agriculture was your main activity or you had identified that you were operating an agricultural property.
CHAIR: How could possibly anyone that has to pay their tucker bill have as their main activity agriculture and use this theoretical $5,000 which is not turnover and not profit? We have not got an answer of what it is. This is bamboozling for ordinary humans.
Ms Baird : We do not only include those who have a primary activity in agriculture. It may be, for example, a mining company which also has some agricultural activity and we wish to collect that agricultural activity as well.
CHAIR: The classic example is Shenhua, which has bought 42 farms, is a miner and is not in your statistics. They bought the farms to get rid of the farmers as a political nuisance. If you are a toy farmer and you are on a bonus from Coles or you are someone out in the bush and you have a property at Bowral or somewhere and you want to qualify for the taxation then you simply go to the Goulburn sale, buy a few sheep or cattle at the beginning of the sale, sell them at the finish at the sale and you have got your turnover.
Senator GALLACHER: Despite the questions about the estimated value of agricultural operations, in accordance with your instructions, I presume you have done a statistical analysis of the survey and have come out with very high responses and those responses give us the conclusions you have reached.
Ms Baird : That is correct.
Senator GALLACHER: I am happy with that.
Senator BACK: As one who has also once been a bureaucrat, I understand the frustration that you suffer in appearing before this committee. The ABS has been detailed to come up with some answers. You have been given some specific restrictions or guidelines. I do not have a question for you although I do have one on notice. Now that you and your colleagues have had the experience of appearing before this committee and being participants, willingly or unwillingly, in the wider debate—
CHAIR: Deep down we love you.
Senator BACK: —during the last 12 months, you are well aware of what the Australian community is seeking. As I understand it, the Australian community at the moment is seeking to understand what is the proportion of foreign investment in agricultural businesses and in agricultural land in this country. Until we come to that understanding, I think we are going to continue to have ill directed and ill informed debate on this particular question.
The plea or the challenge I make to you is to not give you any constrictions other than to help us understand the essence of the question: what is the proportion of foreign ownership of agricultural businesses and agricultural land? To help that process, we can give you some guidance. Clearly anybody would understand that $5,000, whether it is profit or turnover or whatever, is irrelevant in an agricultural enterprise. As Senator Heffernan has quite rightly said, if somebody wishes to get around a set of guidelines as silly as that they could buy a line of cattle and sell them at the end of a sale and they would achieve it.
My appeal to you is to use your expertise and your resources without the limits that have been put on you and go away and come back and give us that guidance. Whatever the figure is, if it is $30,000 or $40,000, seek that advice from those who are able to give it to you. Whether it is a corporate entity that is a trust or a partnership or whether it is privately held or whether it is a company structure, give us that advice. If you come back to us and cannot tell us what is the proportion owned in a trust structure or a partnership or whatever then tell us that.
We will hear next from a witness who will very strongly indicate the value of foreign investment in Australian agriculture. Probably, if we did not have foreign investment in Australia since 1788 we would still be living in tents around Sydney Cove. We all understand that. It is frustrating. Whether it is minority or majority or whether it is for the purposes of mining rather than agriculture, in my state most of the pastoral industry in many areas of WA is now owned and controlled by miners who themselves actually do engage or oversee some agricultural pastoral production just to comply with the Pastoral Lands Board requirements. But we want to know that. It is not unreasonable for the Australian community to want to know that.
If the topic is too enormous then please come back and tell us because I do not think it helps anybody to actually see a figure of 98 per cent in agricultural businesses or 89 per cent in agricultural land and then just have it shot down. It does not help you. It makes you look like fools and you are not fools. At the same time, all it does is continue to invite an overall argument, which is not progressing because until we do understand the proportion of foreign ownership or control of our agricultural businesses and our agricultural land then we are not going to be able to intelligently advance the discussion. My plea to you is to have the shackles removed and use the knowledge you have.
We have had an inquiry here with people sitting in front of you representing three of four different agencies of government and all of them operating in their own silo. One got the impression that each had enough knowledge of what the other was engaged in to probably be able to find out the answers but because of the restrictions that were upon them they could not share that information. That to me is not helpful. Transparency is what we want and we will not go forward in this whole debate until we really do have some figures that are defensible and arguable and then, I believe, we could proceed. My question is really one on notice.
Mr Hockman : I note your comments about unrestrained inquiry into these issues. There is obviously always a constraint, which is the resources we have to inquire into those things, which is why we used a sample rather than a census.
CHAIR: We understand that.
Mr Hockman : This committee's report will actually inform our decisions around how we prioritise the next editions of ALWOS, and conversations that we are having with both government and nongovernment entities likewise so that we get, at least with the resources we have, answers to the most significant questions.
Senator FAWCETT: One of the things that would probably aid the committee in terms of putting this report out is to hear from you what the information is that you would need to be able to access in order to provide that kind of accurate statistical summary. We have heard various witnesses talk about the different systems in the states around titles and the various levels of FIRB, for example, that the federal government runs. Could you tell us what information you would need ready access to and whether there are privacy issues that prevent that being transferred between departments? If you could provide the committee on notice what you need to give the answer and, if there are barriers, identify those barriers so that one of the outcomes of the report can be recommendations—whether it is to the federal government, COAG or flows down the states—of sensible, coordinated actions across departments and across levels of government that actually enable somebody like yourselves to obtain that information that would be very useful.
Mr Hockman : All right.
CHAIR: We appreciate the difficult position and we appreciate the evidence we took in the old parliament from your representatives there and the time frame, lack of resources et cetera. One of the concerns that this committee has is protecting our revenue base, and there is some generosity in the provisions we make to foreign capital. We do know there is an exemption—because we have here the letter here from the tax office on passive investments and interest earned. We did strike a company that has an interest-free arrangement from a government. We did not understand that and we put the question to the tax office as to what the capital gains tax treatment of that would be—and they did not know the answer either—of a foreign company with a that has a government interest-free loan facility where the asset reverts to the government in 30 years time. I asked what the capital gains tax treatment was. God knows what the income tax treatment is.
I know Treasury is concerned about the leakage of revenue. We are anxious to help inform the debate, as Senator Back said, in a way that is not political. At the present time our politicians—without colouring the politicians—rely on the likes of that survey as gospel when in fact it is very limited gospel.
Senator NASH: Can I just echo Senator Back's comments, because I think he has been very succinct about how we are all feeling on this committee. The reason that we are trying to gain the detail—and we all get a bit grumpy on occasion—is that the 89 per cent figure is particularly being used as an 'all hail' figure. What we are trying to determine in this committee is whether or not that is substantively based. We completely understand that you have been tasked to do something—and this is no indictment on your work whatsoever—but it is becoming very clear that the principles and what this survey is based on are not necessarily giving us the clear the picture that we need in taking everything into account. It really seems that it has not taken everything into account.
You very kindly answered a question on notice for me, which asked whether you could provide to the committee the turnover of the businesses that fell into one per cent that were not Australian owned. You took it on notice and then you came back to us saying that due to confidentiality you could not provide that. Would it be possible for you to take on notice—and I understand the confidentiality restrictions whereby you cannot provide individual turnover—to give us in that one per cent the total number of businesses and the total turnover?
Mr Hockman : We can certainly look at that. We will take it on notice again.
Senator NASH: If you could go back and look at that again that would be appreciated. I understand as an individual you may well not want to but I thought perhaps you could do that collectively with the data—obviously with no names and there would not be anything individual in that.
I am not sure that we got a clear picture last time when the Chair asked back in November about the agricultural businesses which own land or water but are not in the business of agriculture. I think at the time we were told that they may have been in the scope of the survey. Are you in a position now to say whether they were or they were not?
Ms Baird : Certainly, Senator. They were in the scope of the survey. Where the land was operated but not owned by a business which we surveyed we sought to understand who owned that land and then to understand their ownership characteristics and the level of foreign ownership in that business which owned the land.
Senator NASH: Can you just explain that for me a bit more? In what sorts of circumstances—in lay terms for the committee—would you be looking at a business that owned land or water but was not actually in the business of agriculture? How does that look for you in the ABS? What actually is it?
Ms Baird : We understand the land and the water entitlement to be assets of a business. Whether or not that business chooses to use that asset or to lease it to someone else to use is the subject of that business's operations.
Senator NASH: Okay. So what you are saying is that you do follow that along. So somebody might own land and water and not operate it themselves—they might lease it out—and there might be some foreign entity involvement in all of that and you do follow that right through.
Ms Baird : We look at the business which is operating the land. If they did not own the land we seek to find out who owns the land that they are operating. We then find out the foreign ownership level of each of the operating business and the owning business of the asset.
CHAIR: You ask them to volunteer that, do you?
Ms Baird : Yes, through surveying.
Senator NASH: What is the percentage of information you get back that will clarify that? Are they required to give you that information or can they just not give you that information?
Mr Hockman : Under the Census and Statistics Act they are required to give us that information. We operate in two ways. We do not just take those answers at face value. If we have other evidence from stories or from perhaps some Senate questions or whatever and a company denies that they own foreign land but there is other evidence available to us that they would, we would go back in our intensive follow-up processes and our telephone follow-up and at least put that proposition to them. In the end, we are reliant on the integrity of the respondent.
Senator NASH: It is tricky, isn't it?
CHAIR: It is playing continuous catch-up with the present system.
Senator NASH: Absolutely. You also answered a question on notice for me regarding the deciles of the properties. You said that the median area of agricultural land reported was 211 hectares. Could I ask you—again on notice—to look at that. I take the point that small areas of land are often highly financial productive and other larger ones are not necessarily. Could you put a total turnover figure against each of those deciles?
Ms Baird : We can take that on notice and see what we can do.
Senator NASH: If you could, that would be appreciated. I am sure there will not be any confidentiality issues there because it will just be a collective figure. You obviously have those having noted earlier that you have the dollar figure against each of the businesses. I understand that it is some work for the ABS to do that, but I think it is very important that we get a sense of the value of each of those decile ranges, when we are looking at 211 as the median, and the value of turnover, if you like. I would like a real figure and not one of these modelled somethings for each of those deciles. That would be very useful.
Senator GALLACHER: Your final statement on the summaries of key Australian reports, says that, according to the ABS, these levels of foreign ownership for agricultural businesses and land are broadly comparable to that found in the 1983-84 agricultural census and water entitlements were not measured. What is the difference between what you have done now and what you did in 1983-84? I understand you might have to take that on notice. You are saying that the conclusions are about the same, and I am interested in whether the methodology of calculation was the same. How was the agricultural census worked out compared to what you have done now? I am happy for you to take it on notice.
Ms Baird : Certainly, Senator. I would make the comment that the frameworks under which each of the surveys—a census being a very large survey, I guess—were undertaken was different. So the list of businesses of interest was constituted differently than the one with respect to 2010. The methodology also for understanding the area of land, for example, was more on an equity basis than as a single asset then attributable to a level of ownership within ranges.
Senator GALLACHER: I think the committee would probably benefit from having a written answer there. Is threshold of 1983-84 and we are 30 years on—what is going on?
CHAIR: I felt sorry for the ABS people down at the old parliament—
Senator Nash interjecting—
CHAIR: We all thought it was very humorous; it was so ridiculous. That included everyone on the panel. To say that nothing has changed, as Senator Gallacher just pointed out, between two well-apart surveys clearly in not in fact true. The landscape is altering. As the ABS very generously point out down at the old parliament, the new player on the block, without any doubt, is how you deal with sovereign investors; how you make sure they do not distort the capital market, if they are not looking for a return on their money; how you make sure they do not distort the commodity market if they do not deal in the commodity and they deal direct; and how we protect our revenue base if, as per the letter from the tax office that we have got here, they grow something here for humanitarian purposes to return to their homeland and it is not taxable. So if you have got a starving population, for example, you can send as much tucker from here home and not pay any tax on it. How do we protect our revenue base? These are the real questions we want to get to. In fairness to the ABS, given the resources you have, you are totally excused. I do not want to get anyone into trouble, but I have never seen such political claptrap come out of the survey when in fact the real answer is that we do not know what is going on.
Senator NASH: Do you get a list of businesses trading in Australia that is provided by the ATO?
Mr Hockman : Yes. The Australian Business Register is based on ABN registrations and we get quarterly updates to that register.
Senator NASH: Is there any information on that provided by the ATO in terms of breakdown of foreign entities or non-foreign entities?
Mr Hockman : No. We then use other survey instruments, like our international investment survey to—
Senator NASH: That is fine; I just wanted to know whether it was provided. Last time we were talking about the agricultural survey and we were asking if a question could be added with regard to foreign ownership and you kindly took on notice the question about what the cost would be to add that additional question to the agricultural survey. The reply was $1.285 million. We are talking about adding a question to a survey. Can you perhaps explain for the committee why it is in excess of a million dollars to add a question to a survey?
Ms Baird : In order to provide the information we believe would be required there would be, in all likelihood, a small suite of questions which would be added to a survey which is then dispatched to in excess of 150,000 businesses. The likelihood then is that we would need to follow that up with a secondary data collection to understand the details required. So the question in the census would likely only be a trigger question for further follow-up.
Senator NASH: So the actual inclusion of the question itself is just merely typing another page but what you are saying is that the work to follow it up to actually get the information relating to those questions is going to cost more than a million dollars. That just seems extraordinary. I am quite sure it is correct, if that is what you are telling us. Would you mind taking on notice for us to give us a breakdown of why it would cost more than a million dollars to ask that question in the survey? I hear what you are saying but I am very interested in why it would cost that amount of money.
Senator EDWARDS: Chair, I am out here in Adelaide.
CHAIR: G'day mate, how are things out on Mars?
Senator EDWARDS: It is all good here and, as I say, you are lucky that I am here and not with you. I have just got one question for Mr Hockman. Given the comments made by yourself as Chair and Senator Back and Senator Nash—I will not repeat any of what I have, because it is all on the same theme—has there been any meeting of the department, minuted or otherwise, reviewing the fair amount of criticism, now in two forums, in which the department has appeared. Are you reviewing how this survey was conducted, for the benefit of future surveys?
Mr Hockman : Yes, we are reviewing that. As I remarked earlier we also will be watching with interest the report of this committee for information on that. We are talking to Treasury, to Agriculture, Fisheries and Forestry and to Foreign Affairs and some of the non-government sector too about their data requirements, and just about the first question we ask is related to the data gaps from the first of these surveys.
Senator EDWARDS: Given the compelling argument, which has been carried on around Australia, with some people calling some people xenophobic and other people calling people economically unrealistic—it is somewhat out of hand currently—nobody apart from us, and in this forum, is really saying, 'Well, hang on, we haven't even got the figures right.' We have got a big responsibility to get this right, otherwise this whole discussion that is being had around Australia is going to get out of hand. Do you agree?
Mr Hockman : I probably do not agree with the assertion that the figures are not right. We commented earlier there is a great deal of the interest—
Senator EDWARDS: On Senator Gallacher's point, it is hard to believe that things have not changed since 1983-84.
Mr Hockman : I do not believe we have said that things have not changed since 1983-84—others have.
Senator EDWARDS: If I was a prosecutor and I kept getting the same answer to the question I would probably change my line of questioning. It is up for review and you are looking at it, so if you were tasked to do the job again, to actually go back, probably what they should do is send you off to some really slick accountants and law firms in Sydney, Melbourne, Adelaide and Brisbane and say, 'What do you do if you want to hide a foreign company in Australian land ownership?' and they would be able to tell us.
CHAIR: Correct. Thank you, Senator Edwards, and I am grateful to ABS. We would be, as a committee, greatly helped if we could co-opt from the government some legal thinking. Clearly you are saying we have got to make a contribution, if we are to go about it the right way. FIRB have said the same thing. The chairman has said the Foreign Takeovers Act needs updating. As you have just pointed out—very diplomatically, I might say—there have been some changes in what Senator Gallacher talked about, but other people are interpreting it the same way. Clearly the phenomenon of the sovereign issue and keeping the distortions that can occur in the market out of the market are things that we are really concerned with. I guess, sadly, we have got to let you go. I could ask a lot more questions, but we are most grateful for your cooperation. Mr Bradbury, would you like to put something on the record just for the hell of it?
Mr Bradbury : No, I am only here to assist my colleagues.
CHAIR: Thank you very much.