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Monday, 20 August 2018
Page: 7760

Mr CLARE (Blaxland) (15:40): I thank the minister for his statement to the House. Like all of these statements, it's an important reminder of the importance of foreign investment. But, as important as foreign investment is, it's also important in debates like this that we remind ourselves that it doesn't mean that it's overwhelmingly popular. It's not. As my friend Andrew Leigh said just last year:

… there may be no other issue on which economists and the general public disagree more.

This can be seen, very obviously, through the 2017 Lowy Institute poll which found that 40 per cent of Australians thought that foreign investment was a critical threat—40 per cent! Given how important foreign investment is—and the minister has articulated that very well today—this is a worrying result. And it's something which is not unique to Australia; it's something that we see in many parts of the world.

Since the minister last updated the parliament in December last year, the clouds of protectionism around the world have only gotten darker. We've been fortunate to avoid the tariffs on steel and aluminium imposed by the Trump administration, but most of the rest of the world has not. As we speak, the United States and China have both increased tariffs on goods they sell to each other, and they're threatening a lot more. The news late last week that the Chinese vice minister of commerce, Wang Shouwen, will travel to Washington this week for talks with US Treasury under secretary, David Malpass, is good news, and it comes not a moment too soon. Hopefully, it will help to reduce tension and bring both countries back from the brink. This is a very important moment for Australia and for the world. If China and the United States don't sort this out, and if they do everything that they've threatened to do to each other and more, they won't just hurt themselves; it will cost jobs here in Australia as well and in many other countries around the world.

It's not just about tariffs. A big part of the United States's beef with China is about foreign investment—about restrictions on US companies wanting to invest in China and vice versa. Over the last few months, the Trump administration has floated the idea of banning companies that have 25 per cent Chinese ownership from buying US tech companies. None of this happens in a vacuum. I made the point earlier that foreign investment isn't universally popular. In the United States, similar surveys to the ones I pointed to in Australia have made that point very clear. The American Security Project did a survey in 2016 that showed 67 per cent of people think it has a negative impact. On Friday I met with the UK Minister for Investment, Graham Stuart, and I know the minister did the same. There are similar challenges confronting the UK. According to a 2014 survey conducted by the Pew Research Center, more than 50 per cent of people in the UK think that foreign companies buying domestic companies have a negative effect.

Given how important trade and foreign investment are to countries like ours, these are challenges that we can't afford to ignore. We're a country that is built on foreign investment. Many of the farms that helped us ride on the sheep's back for so many years were developed with money from the UK. The same is true of the big resource projects that underpin much of our economy today. Fifty-five per cent of our exports come from mining, oil and gas, and a lot of that can only happen because of foreign investment. Without it, projects just wouldn't happen, people who work on those projects wouldn't have a job and the government wouldn't be collecting as much tax to then invest in things like schools and hospitals.

A good example of that is the Ichthys LNG Project. I met with the president and CEO of INPEX just before question time. Gas production there has just started, and he reminded me that that project has seen $40 billion of foreign investment in Australia—a lot of that in Darwin. Once it is up and running it will deliver on average about $1.9 billion in extra company tax revenue every year over the next 40 years. It's an important reminder of the importance of foreign investment and what it means in terms of creating jobs for people here at home and creating extra revenue to invest in the things that the Australian people need. It's the same story in manufacturing; it's the same story in telecommunications and many other parts of our economy. As Andrew Robb said when he was the Minister for Trade and Investment, every billion dollars of foreign investment creates 1,000 jobs here in Australia.

There are a lot of people listening to this debate thinking: 'That's fine, but why can't we get that money here at home? We've got a lot of money in superannuation funds—don't we have enough money to fund everything that we want to do here at home?' We do have a lot of money in superannuation, but the fact is that a lot of those funds are invested overseas as well. The fact is that we don't have enough funds here in Australia to do everything that we want to do: to build the businesses that people want to create or to build the roads, the railways, the ports or the other infrastructure that we need. Work has been done on this recently. In 2016, it showed that the gap between the amount of funds we needed to build the infrastructure we wanted and the amount of funds available is $44 billion. That's a gap between the money that we needed and the money that was available just here at home. So without bringing in that money from overseas, in that year alone, 2016, a lot of things wouldn't have been built. A lot of companies wouldn't have got the funds they needed to grow and, if we use the measure that the former minister applied of $1 billion meaning 1,000 jobs, 40,000 Australians wouldn't have got a job that year.

We need foreign investment. Much of this comes from three places: the United States, Europe and Asia. The US is far and away number one. It currently invests almost a trillion dollars in Australia. The UK ranks second. Belgium ranks third. I note the minister's comments that the potential free trade agreements that are currently being developed with the EU, and in the future with the UK, will hopefully unlock more and more opportunities. Japan is currently ranked fourth, Hong Kong fifth and China ninth. Again, as the minister's noted, there's been a big increase in Chinese investment over the last five years. The Lowy Institute poll released in June this year shows an important parallel trend to this. As Chinese investment has increased, you can also track an increase in community concern. In 2009, 50 per cent of respondents to the Lowy poll said they thought the government was allowing too much investment from China. In June, that number was 72 per cent, up dramatically from 56 per cent the year before. Again, given how important foreign investment is in creating businesses, in growing businesses, in creating jobs for Australians, and given the fact that China is our biggest and most important trading partner, this is a challenge we can't ignore. It is something that we have to work on and manage very carefully. We've got to talk up the benefits of foreign investment, but we also can't ignore community concerns, because if we do they fester, they get worse and it makes it harder to do the things that we think are so important to create the country we want to build.

In 2018 the Lowy poll highlighted the areas of foreign investment where Australians are most concerned. They won't be a surprise to people who've focused on this debate. One is agriculture; another is residential real estate; and the third is critical infrastructure. If someone's dead against foreign investment, they're unlikely to change their mind through any statistics that we offer in this debate today. But information is important, so at least people who are worried about this know a little bit more about what's going on. In that respect, the Agriculture Land Register is very important. We're still waiting for an update this year on the register, but the last update that came out in September last year showed that, as at 30 June 2017, 13.6 per cent of Australian farmland is foreign-owned. I suspect that is less than many people who worry about this issue might have thought. It also shows that UK companies own 2.6 per cent of total agricultural land and Chinese companies own 2.5 per cent. Again, I suspect that is less than many people would have thought, given all the focus on foreign investment in agricultural land.

The register's a very useful tool, but I'd argue that it could go further. As I said in this debate last year, Labor thinks that the register should set out for everyone to see not just the percentage of land owned by overseas companies but who has purchased it, where and how much they paid for it. It's a policy position of the opposition. It's also something that the government have said that they will do, but we're still waiting.

We're also still waiting for the long-promised national register of foreign investment in water entitlements. This was supposed to be released by the end of the last financial year, but again we're still waiting.

In February, the government did announce a significant change to the way that agricultural land is sold. The changes mean that now, before agricultural land can be sold to foreign investors, it must first be offered for sale to potential Australian buyers. It's a bit like labour market testing except that it is for land. Under our labour-market-testing rules, employers have to first advertise the job here in Australia before they can offer it to workers overseas. This policy, announced by the government in February this year, applies similar rules to land.

The disappointing thing is that, while the government are putting in place commonsense rules for land, they're removing them for people. In a raft of trade agreements over the last few years, they've removed the requirement for employers to advertise jobs here in Australia before they bring in workers from South Korea, China, Japan, Brunei, Canada, Malaysia, Mexico, Peru and Vietnam. I've said in this place a number of times that this is the sort of stuff that really makes people angry and can reduce their faith in trade and investment and what we're trying to do here.

It's not protectionist to say that, before you bring in a worker from overseas, you should first have to see if there's an Australian who can do the job. It's just common sense. Land is important, but so are jobs. If the government thinks that it's good enough that land has to be advertised before it can be sold to an overseas investor, the same rules should apply to jobs. Before you bring in a plumber or a carpenter from overseas, you should first have to advertise the job here. It's not much to ask, but this government is removing that requirement in every trade deal it signs.

On residential property, I note that we've seen a big drop in investment by Chinese buyers over the last 12 months. A year ago, the Chinese State Council put in place formal restrictions on outbound investment in real estate. There have also been changes here at home in terms of tax changes introduced by state governments and tighter lending rules. Twelve months on, we've seen a big drop in demand. According to FIRB data that was released in May, Chinese investment in real estate has halved, and total foreign investment in real estate has fallen by two-thirds.

What's not clear, though, is what the impact of the vacant property tax has been on foreign investors. I said last year that our current rules only allow foreign investors to purchase new property, new houses and apartments, and the logic behind this is that it helps to create more supply—it helps to create more homes and more apartments—and foreign investors aren't just competing with locals for existing places and therefore pushing up the price. But this only works if properties that are built are rented out and aren't left vacant. Unfortunately, there have been a lot of examples of this, and that's why the vacant property tax has been put into place. Unfortunately, the minister didn't give us a clear idea today about what the impact of that tax has been. Perhaps he might do that at another time.

On critical infrastructure, there are two big decisions that the government faces in the next few months, one on Huawei and the 5G network and the other on the sale of the APA Group. I hope that all the decisions, with the advice of the Foreign Investment Review Board, will be taken in the national interest. I made the point last year that this wasn't the case with the sale of Darwin Port. That process was poorly managed, as was the potential sale of Ausgrid. That became a debacle—a debacle that can't be repeated, because, when things like what happened there happen, it undermines the confidence that foreign investors have to invest in our country.

In the Ausgrid case, a number of companies were told that they had the green light from the federal government to bid for that asset, and it was only after the New South Wales government announced the preferred tenderer that the company was told by the federal government that it was ineligible to bid. I'm sure the reason for that was solid, but the process was flawed, and it just makes us look like amateurs. It undermines the confidence that foreign investors have to invest here in Australia. I know that since then the government has made some important changes. The minister made the point that changes have been made to the Foreign Investment Review Board and that the Critical Infrastructure Centre has been set up. Hopefully, those changes will ensure that the decisions that the government has to make in the next few months are made professionally, properly and in the national interest and that companies aren't misled along the way like they were with the Ausgrid decision.

Finally, I note the minister talked about the importance of regulatory certainty to encourage foreign investment, and that's undoubtedly true, but it's a little ironic that he mentioned the importance of regulatory certainty given what happened this morning and what's likely to happen later this week. This morning, the Prime Minister backflipped on his much flaunted National Energy Guarantee, and, later this week, he's expected to dump the centre piece of his economic plan that the minister talked about—the tax cuts for companies with an annual turnover of more than $50 million. It doesn't provide regulatory certainty, and it certainly doesn't demonstrate the government's economic plan in action, as the minister described. This is policy on the run. It's all designed just to save the Prime Minister's job.

This Prime Minister looks like a dead man walking. In question time we saw what looked like a scene out of Weekend at Bernies. You could almost smell the formaldehyde wafting across this side of the chamber.

The DEPUTY SPEAKER ( Mr Andrews ): The honourable member is straying away from the substance of the ministerial statement.

Mr CLARE: I'm emphasising the importance of regulatory certainty. When there are backflips, like we saw this morning, it reduces the certainty that investors need if they're going to invest here in Australia. Energy policy is a big part of that. The Prime Minister once said that he wouldn't lead a party that isn't as committed to climate change as he is, but that leather jacket Prime Minister's long gone. What we've got now is a cadaver in a Canali suit.

The DEPUTY SPEAKER: The member should heed my warning.

Mr CLARE: And that's a disappointment for all of us, but it reduces certainty that's needed for investors to invest here in Australia. Unfortunately, all of that happening in the media today just takes away from the attention that the minister has so justifiably wanted on this important investment statement. I thank the minister for his statement, albeit potentially his last one to the House.