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Wednesday, 11 November 2015
Page: 8339

Senator WONG (South AustraliaLeader of the Opposition in the Senate) (16:42): I rise to speak on the government's package of bills dealing with Australia's foreign investment framework. This is a package of three bills: the Foreign Acquisitions and Takeovers Legislation Amendment Bill 2015, the Foreign Acquisitions and Takeovers Fees Imposition Bill 2015 and the Register of Foreign Ownership of Agricultural Land Bill 2015.

These bills modernise the legislative framework that underpins Australia's foreign investment regime. That is a framework laid out in the Foreign Acquisitions and Takeovers Act 1975. The Foreign Acquisitions and Takeovers Act regulates foreign investment and provides the basis for investments to be assessed to ensure they are not contrary to Australia's national interests.

The first of the bills before the Senate, the Foreign Acquisitions and Takeovers Legislation Amendment Bill 2015, which I will describe as the amendment bill, makes extensive amendments to this act. Most of these amendments modernise the act to ensure it reflects contemporary practice and provides a clear framework for regulating foreign investment. The opposition supports these aspects of the amendment bill because they will provide greater certainty around the operation of Australia's foreign investment regulations and policies. However, the bill also implements government policies that Labor opposes, because they would impose layers of red tape on proposed investments in Australia's agricultural, agribusiness and food-manufacturing industries. Labor will seek to amend these aspects of the amendment bill to ensure Australia remains an attractive destination for the investment we need to build our economy. First, let me deal, briefly, with the other two bills in this package.

The Foreign Acquisitions and Takeovers Fees Imposition Bill 2015 imposes fees on investors lodging applications with the Foreign Investment Review Board. The government's rationale for imposing substantial new application fees on investors is cost recovery. The opposition will support the fees imposition bill; however, we do wish to point out that the imposition of these fees does increase the costs of investing in Australia. Foreign investors and their Australian business partners already face substantial costs in complying with Australia's regulatory regimes, and government always needs to balance cost recovery against the impact that higher costs will have on Australia's attractiveness as a destination for foreign investment.

The third bill in this package, the Register of Foreign Ownership of Agricultural Land Bill 2015, establishes a register of foreign ownership of agricultural land to be operated by the Australian Taxation Office. Foreign persons will be required to register information about their existing landholdings and subsequent acquisitions and disposals of agricultural land. Labor supports the register of foreign ownership bill. We do so because it will provide for greater transparency around levels of foreign ownership of Australian agricultural land. I note that today Minister Colbeck, in question time—and I look forward to him correcting the record—misled the Senate about Labor's position. Perhaps ministers on that side ought be a little more careful about making sure that, when they say things in this parliament, they are in fact true. However, what we would say in respect of the register is that the government should ensure that it achieves the goal of transparency without imposing unnecessary costs or unintended consequences on investors, particularly on collective investment vehicles.

I want to turn now to have a discussion about the importance of investment. Investment plays a central role in any economy—investment in new plant, equipment and buildings, investment in new technology, investment in infrastructure like roads, ports or communications networks, and investment in starting up new businesses and expanding existing businesses. Investment is critical for an innovative, dynamic, growing economy which can provide good jobs and decent living standards. Investment has to be funded by savings, either by domestic savings or by savings sourced from other countries. Since European arrival, Australia has always relied on foreign as well as domestic savings to fund its investment needs and to build its economy. This has been overwhelmingly positive. It has only been by tapping into foreign sources of capital that we have been able to build the modern Australian economy of today. We will need to continue to attract foreign investment if we are to build the economy of tomorrow—an Australian economy that will provide the jobs, sustain the living standards and ensure the prosperity of future generations of Australians. There are strong links between cross-border investment and trade, and I have said previously that trade and investment are two sides of the same coin. Australia will have tremendous trade opportunities in coming years from our proximity to and our presence in the Asian region. To take advantage of these new export markets, Australia will need to scale up production at home—and, to scale up production, we will need investment, including foreign investment. That is why we need to be very careful about introducing policies which impose barriers against foreign investment.

This is especially the case in the agriculture and food-processing sectors because they are going to need large-scale investment in coming years. Agriculture and food are two sectors of our economy that stand to gain the most from the opportunities of international trade and international investment. The National Farmers' Federation has estimated that, for Australian agriculture to reach the capacity which will be needed to meet rising demand, it will require investment of between $1.2 trillion and $1.5 trillion over the next 35 years—that is $1.2 trillion to $1.5 trillion over the next 35 years. That is a very significant requirement and it will require a substantial contribution from foreign capital. It is inconceivable, regardless of the extent of our domestic savings—and I am from a party that introduced compulsory superannuation, which obviously added substantially to the Australian savings pool—that this level of investment can be funded entirely from domestic sources.

Unfortunately, the Abbott-Turnbull government has adopted a retrograde stance on investment in agriculture. The rot started early this term with the proposed acquisition of GrainCorp by ADM. The government took a highly political approach to this proposed $3.4 billion investment. Certainty about Australia's foreign investment policy and transparency in communicating reasons for decisions are important for investor confidence. The government's capricious handling of the proposed ADM investment damaged Australia's reputation as an investment destination. Since then, the Abbott-Turnbull government—

Senator Heffernan: They're the biggest tax dodgers on the planet.

Senator WONG: Since then, the Abbott-Turnbull government—

Senator Canavan: I thought they were serious about tax avoidance.

The ACTING DEPUTY PRESIDENT ( Senator Bernardi ): Order!

Senator WONG: I look forward to Senator Canavan and Senator Heffernan making their contributions, and I look forward to Senator McGrath perhaps telling us what he really thinks about the policy.

Senator Heffernan: I have a point of order, Mr Acting Deputy President. If Senator Wong could just define investment between corporate and sovereign—

The ACTING DEPUTY PRESIDENT: Senator Heffernan, that is not a point of order.

Senator Heffernan: Penny, sovereign law hasn't caught up with—

The ACTING DEPUTY PRESIDENT: No, Senator Heffernan, resume your seat. There are two points in this. Firstly, spurious points of order should not be taken. Secondly, you should refer to senators, even when interjecting upon them, by their appropriate titles.

Senator WONG: Since then, the Abbott-Turnbull government has been busily imposing new regulatory barriers, new layers of red tape and new costs on foreign investment in Australian agriculture and agribusiness. The government has already implemented new barriers on investment in agricultural land by way of policy, and now it is seeking to impose further restrictions on investment in agribusiness through provisions contained in the first of the bills we are debating today, the Foreign Acquisitions and Takeovers Legislation Amendment Bill, and through associated regulations which have been issued in exposure draft form. These changes introduce a complex regime of differential and discriminatory thresholds for Foreign Investment Review Board screening of proposed inward investments in Australia.

Let us first take agricultural land. The government has reduced the investment screening threshold for agricultural land to $15 million for investors from China, Korea and Japan but not for investors from the United States or New Zealand. Furthermore, the new $15 million threshold on investment in agricultural land even applies where an existing investor seeks to make improvements to their property. So, buying a small adjoining parcel of land, perhaps to facilitate significant investment in improved farm infrastructure, triggers a FIRB review if it takes the cumulative value of the investment above $15 million. What is the public policy rationale for that?

The new rules are not just a deterrent to new investors. They also create disincentives for existing investors to improve their operations. The red tape and restrictions on investment do not stop at agricultural land. The government is also proposing a whole new foreign investment regime for what it calls agribusiness. It wants to introduce a FIRB screening threshold of $55 million for investments in agribusiness. Through the amendment bill and the associated regulations, the government is seeking to define agribusiness so broadly that it would include all of Australia's agriculture, forestry and fishing industries and about half of the food product manufacturing sector. The definition of agribusiness will include abattoirs, seafood processors, dairy product manufacturers, fruit and vegetable processing, oil and fat manufacturing and cake, pastry and biscuit makers.

Adding to the complexity, if just a quarter of a business is engaged in agribusiness the whole business is caught by the new test. Can you imagine if a Labor government sought to introduce such ridiculous propositions into this chamber? These new screening thresholds and red tape come on top of the new FIRB application fees I have already mentioned—fees that will collect some $735 in revenue over four years, making Australia one of the few countries in the world to impose a tax on inward investment. These policies will make it harder for Australia to attract an investment. They will make it harder for farmers and food manufacturers to raise capital, and they will put downward pressure on the values of farm assets. Australia has always required foreign capital to build our economy. If we are serious about growing our food exports to the growing markets of our regions we will need foreign as well as domestic investment in our agricultural sector and in agribusiness. Placing hurdles in the way of this investment only jeopardises the growth of our primary production industries and jeopardises Australian jobs.

The government's changes in respect of agricultural land and agribusiness have been the subject of widespread criticism from the business community. The new barriers to foreign investment have been criticised by the Business Council of Australia, the Australian Food and Grocery Council, the Queensland Farmers Federation, the Western Australian Chamber of Commerce and Industry and a range of other business and farm groups. The Queensland Farmers Federation—I hope Senator Canavan is listening—has said that the $15 million threshold for agricultural land puts barriers in the way of foreign investment and sends the wrong message to overseas investors who see value in investing in Australian agriculture. QFF's CEO went on to say:

Foreign investment is a crucial part of the investment landscape and vital to growth and productivity. Our sector has relied on it. We must resist basic calls that tread too close to fear without evidence, as this sends a negative message that the process for investment in Australian agriculture is too complicated and risky.

Mr Brent Finlay, from the NFF, has said that the $15 million threshold could 'choke' foreign investment in the farm sector. And the Western Australian Chamber of Commerce and Industry has said:

Reducing the Foreign Investment Review Board screening threshold for private investors from $252 million to $15 million will make it more difficult for the sector to access much needed capital for expansion, by introducing an additional layer of regulation, another step in approval process, and additional costs for foreign investors embarking on projects.

The government's changes to the FIRB screening thresholds will make Australia less attractive as a destination for foreign investment. At the very time when our agriculture and food processing industries are looking to expand to take advantage of export opportunities, the government is introducing restrictions that make it harder for these industries to secure new investment.

Labor supports a more open investment regime, and we foreshadow that we will move amendments to the bill in the committee stage to remove the most egregious of these new measures. And a future Labor government will consider further reductions to barriers to inward investment. Labor's amendments to the bill would remove the government's proposed requirements for FIRB screening of investments in agribusiness worth more than $55 million. There is no policy rationale for imposing these barriers to investment in agribusiness. The government's legislation creates the truly bizarre position that the threshold for foreign investment in genuinely sensitive sectors like uranium extraction and defence industries would be nearly five times higher than for food manufacturing. What is the rationale for that? How is it possible that we regard investment in agribusiness, in food processing and in abattoirs as somehow more sensitive to the national interest than investment in uranium extraction or our defence industries? A foreign investor buying a stake in a uranium mine in Australia faces a screening threshold of $252 million. A foreign investor looking to buy a stake in a food manufacturing plant faces a screening threshold of $55 million. This threshold of $55 million will apply to investment in a very large number of businesses in this country, because, as I said earlier, the government is defining agribusiness so broadly that it will cover around half of all food processors and manufacturers in Australia.

The Australian Food and Grocery Council has rejected the government's proposals. In its submission to the inquiry of the Senate Standing Committee on Economics into these bills, the council warned that they would have a 'chilling effect' on foreign investment. The submission went on to say:

This is particularly relevant to high-growth, often mid-tier food manufacturers seeking access to foreign investment to fund rapid expansion, including to meet export growth potential.

The council said that the government's barriers to investment in agribusiness will discourage investment, are not based on a clear public policy objective, are not an appropriate response to competition concerns, are inconsistent with the government's efforts to attract foreign investment and undermine efforts to build stronger economic relationships through trade agreements. That is a comprehensive critique of this government's proposals.

Labor has listened to industry. We are seeking to encourage foreign investment, not to deter it. Accordingly, our amendments would remove the separate treatment of agribusiness in this bill and will ensure that agribusiness is treated in the same way as other non-sensitive sectors of the economy when it comes to foreign investment, rather than being singled out for restrictive new barriers and onerous layers of red tape.

In the committee stage, we will also move amendments dealing with agricultural land. Our amendments would increase the FIRB screening threshold for investment in agricultural land from $15 million on a cumulative basis, which has been proposed by the government, to $50 million on a non-cumulative basis. This is the level required under the FTAs former Prime Minister Howard negotiated with Singapore and Thailand. Increasing the threshold to this level would reduce the discriminatory treatment of our North Asian trading partners under the government's policy. The government have not explained why they believe John Howard got it wrong and why the threshold had to be radically cut from that which he and Mr Vaile agreed to.

Labor remains to be convinced that there is a sound policy basis for separate treatment of agricultural land. Accordingly, a Labor government would consider whether to retain the carve-outs in respect of agricultural land introduced by this government. In the meantime, our amendments would set the threshold at $50 million, consistent with the approach taken by the former Howard government in the free trade agreements it negotiated with Singapore and Thailand.

Labor's amendments have been supported by the Business Council of Australia and by the Australian Food and Grocery Council because our position favours investment. It is not too late for those in the government who know better to come to their senses and to join Labor in a pro-investment stance. It is an open secret in Canberra that the former Prime Minister pushed through these new investment restrictions despite opposition from his trade and investment minister and his Treasurer. The challenge for the Liberal Party under the new leader, Mr Turnbull, is whether it will stand up for an open economy by supporting Labor's amendments to this bill or whether it will simply rubber-stamp the anti-investment barriers concocted by Mr Abbott and Mr Joyce. Will the Liberal Party in this place vote for an open, outward-looking investment regime, or are they simply going to tap the mat and take the protectionist path, voting for more red tape and more barriers against people investing in this country, building businesses and creating jobs? The government's position has no public policy rationale.

Senator Heffernan: Mr Acting Deputy President—

The ACTING DEPUTY PRESIDENT ( Senator Bernardi ): Senator Heffernan, you are not on my call sheet. Was it something relevant?

Senator Heffernan: I just want to make some corrections.

The ACTING DEPUTY PRESIDENT: No, Senator Heffernan, I am not going to give you the call. I am going to go back to my call sheet.

Senator Heffernan interjecting

The ACTING DEPUTY PRESIDENT: Order! Resume your seat, Senator Heffernan.