The chasm between the Australian people and the elites of the nation’s big business sector could not be greater on the issue of foreign ownership of national assets, particularly farmland.
The Kidman properties, in black above,
cover 100,000 square kilometres.
On the one hand business people are salivating at the prospect of earning hundreds of millions of dollars in commissions from sales of agricultural land to foreign buyers. Business applauds this “investment” in Australia, which for the most part is in reality a straightforward exchange of an asset from an Australian owner to foreign interests.
In the case of many recent purchases, these foreign interests comprise Chinese state-owned enterprises, which to express it another way, are wholly owned enterprises of the People’s Republic of China.
On the other hand, the majority of everyday Australians watch with increasing concern the boom in foreign acquisitions of large tracts of Australian farmland.
Just as in the cities they see how Chinese buyers have fuelled a real-estate boom that has denied or at least delayed many young Australians the opportunity of owning their own home, these same Australians see the weekly sales of large and often landmark properties as forming a clear pattern.
They see the depreciated Australian dollar as creating a once in a lifetime opportunity for foreign buyers to scoop up large tracts of Australian farmland at bargain-basement prices. And the pattern in recent months has been an avalanche of sales.
In one of his first decisions as Treasurer Scott Morrison has sided (at least initially) with the Australian people and against big business, much to the annoyance of commentators in the financial press, the Labor Party, and influential former Liberals such as ex-Howard government minister Peter Reith.
Trade Minister Andrew Robb is also a keen seller of Australian farm holdings to foreign entities, arguing that Australian superannuation funds, driven by short-term earnings, do not have the patience or interest in buying large rural properties.
The catalyst for them most recent concerns over foreign investment has been the proposed sale of 10 S. Kidman & Co properties that comprise just over 100,000 square kilometres of cattle properties in outback South Australia, the Northern Territory, Western Australia and Queensland.
As Agriculture Minister Barnaby Joyce has recently described it, the combined Kidman properties are the size of Kentucky or Tennessee – or, in a European context, larger than Hungary, Austria or the Czech Republic.
Treasurer Morrison has decided to block the sale on the grounds of national security (one South Australian property is adjacent to the Woomera former weapon testing range) but also on the size of the properties (Kidman comprises one-40th of Australia’s agricultural land).
In justifying his position, Mr Morrison said: “Foreign investment has always been important in Australian economic development, [and] that will remain the case going forward right across the Australian economy. [But] it is also important Australia has a robust process in ensuring the national interest in all of those investments.”
Mr Morrison shows a keener sense of public opinion than did his predecessor, Joe Hockey, who is almost certain to have waved through the sale. However, it is likely that Elders, which is looking after the Kidman sale, will come back with a revised proposal, which would see the properties sold off in smaller parcels rather than as a job lot.
At the same time that the Government engaged the handbrake on the Kidman sale, it passed legislation that formalises a new agricultural land foreign ownership register and the lowering of the general screening threshold for Foreign Investment Review Board (FIRB) scrutiny of proposed foreign purchases of agricultural land by private investors from $252 million to $15 million.
These measures were announced earlier in the year and on a Coalition election commitment, but this has not stopped the Labor Party slamming the new lower threshold levels.
Mr Joyce has been one of the key ministers pushing for the new lower thresholds.
However, the reality is that the Government should in fact go further and ensure the national interest test by the FIRB is made stronger.
Compare the total amount of farmland in the United States in foreign hands with the amount of Australian farmland in foreign hands: just 2 per cent in the U.S., compared with Australia’s 12.4 per cent (and growing fast).
That means that the Kidman holdings is roughly equivalent to the total amount of foreign holdings of farmland in the United States, where there are serious restrictions or even prohibitions in some states on foreign land ownership.
Mr Morrison’s political instincts are spot on and hopefully he will not be cowed by the criticisms of commentators driven by base financial considerations rather than the long-term future of the nation they have the privilege to live in.