The current torrent of Chinese investment is set to become a political dilemma for the Abbott Government as it tries to find a balance between reconciling a concerned electorate with a business constituency that is happy to trade in asset transfers from any source regardless of the long-term interests of the nation.
In recent months the Government has begun to note the concerns of the Australian public, particularly in the areas of agricultural land and metropolitan housing. But the actual problem is set to get much bigger.
A recent Sunday Night program produced by the Seven Network quoted James Cook University’s Zhang-Yue Zhou’s estimate that China had at its disposal up to $3 trillion to be used in overseas acquisitions, especially prime agricultural land in order to secure long-term food security for its 1.37 billion citizens and technology transfer to Chinese farmers.
The university’s professor of business studies says China’s need for more agricultural land is certain to grow, particularly now that it has relaxed its one-child policy.
This vast amount of money is going to countries like Canada and Australia, according to Professor Zhang-Yue Zhou, where recent free trade agreements with China have helped to accelerate investor interest. A lower Australian dollar is making prospective investments from China even more attractive.
The Sunday Night program cited a statistic that nearly 50 million hectares of agricultural land had some level of foreign ownership – an area twice the size of Victoria.
As a rule the Australian electorate has a reasonably sophisticated understanding of the importance of foreign investment through Australia’s history.
However, judging by the talkback interest in the topic, Australians do get concerned when strategic Australian companies are sold off to overseas interests and respond with concern about reports that Chinese investors are buying swathes of prime agricultural land.
There is also recognition that Chinese investment is creating distortions in the housing market as well as in some rural areas.
Disturbingly, up until very recently there had not been any comprehensive data on foreign ownership of agricultural land in Australia.
The triennial ABS Agricultural Land and Water Ownership Survey provided a rough estimate, but was deficient and the Coalition at the last election, led by the Nationals, pledged a comprehensive assessment of agricultural land in Australia.
On July 1 the Abbott Government introduced a National Land Register, which is to be administered by the Tax Office, and which will now record all foreign purchases as well as undertake a stock-take of current ownership.
Federal Member for Kennedy Bob Katter, who is a vocal supporter of Australian farmers, told Sunday Night that people should be wary of claims of “investors”.
“It’s not ‘investing’. They’re not opening mines or building dams or anything of that nature; they’re just buying the asset that is there. So it’s not investment, it’s selling your country off,” Mr Katter told the program.
In the bush farmers are seeing spectacular prices being paid by foreign companies, including subsidiaries of Chinese state-owned enterprises, buying up prime land and profitable dairies, abattoirs, and other production facilities.
The real fear is that Chinese interests, in particular, want to establish vertically integrated supply chains in ports such as Townsville, which would mean Australians would be locked out of profits, and jobs and product, which would all flow back to China.
Investment houses, banks and real estate agents are more than happy with the transfer of property and agricultural businesses to foreign owners because of the lucrative fees and commissions such purchases produce.
Earlier this year the Abbott Government announced that it would tighten the rules governing purchases of agricultural land, including improving the scrutiny of foreign purchases of agricultural land, and reduce the screening threshold from $252 million to $15 million. The new $15 million screening threshold will apply to the cumulative value of agricultural land owned by the foreign investor, including the proposed purchase.
But the screening is done by the Foreign Investment Review Board, a body that rarely if ever has come across a foreign takeover it did not like.
The great irony of the foreign land-grab is that, while the Australian Government wrings its hands over whether or not to push back harder against the Chinese land boom, other countries (particularly China) maintain strict and complex rules on foreign purchases of its own assets that can be summed up in three words: not for sale.