In her address to the National Farmers' Federation Congress in Canberra on Tuesday, Julia Gillard delivered a small but alluring gift to the assembled audience - an announcement that the federal government will introduce a register of foreign ownership of farmland, with the details to be worked out after consultations and the canvassing of a discussion paper. Bestowing small favours to special interest groups is all in a day's work for a party or political leader. However, this announcement rated more than the usual number of column centimetres in the print media, illustrating the extent to which the debate over the foreign ownership of agricultural land has intensified in recent months.
The renewed debate about whether to introduce tighter controls and restrictions on farm land sales to foreigners is being driven in large part by the saga of Cubbie Station, a cotton farm near Dirranbandi in Queensland said to be the largest irrigation property in the southern hemisphere. As a result of drought, the heavily indebted operation went into receivership in 2010. After a long search to identify a buyer, Cubbie Station was finally sold in August to a clothing and textile consortium controlled by Chinese and Japanese interests. Though approved by the Foreign Investment Review Board and endorsed by the federal government and the opposition, a number of politicians and commentators, among them Barnaby Joyce, found fault with the sale.
Senator Joyce, the federal opposition's spokesman for regional development, local government and water, maintains that it is not in the national interest to have Australia's biggest farm by value and its biggest irrigator (with licences allowing it to collect 460,000 megalitres of water from the Culgoa River - enough reputedly to fill Sydney Harbour) majority-owned by a ''quasi-state owned enterprise'' whose chairman and president were appointed by the Chinese Communist Party. He argues the purchase will introduce more complexity to the Murray-Darling Plan, and that in all likelihood it will ensure that farms and businesses downstream from Cubbie remain under ''a massive economic burden''.
We'll never know if Senator Joyce's preferred option of the Commonwealth buying Cubbie and splitting it into smaller properties (or imposing new conditions on the sale of water) was ever seriously contemplated. However, credible reports that two other Australian offers to buy Cubbie were on the table (and that they were more generous than the $240 million put up by the Chinese-led consortium) have fuelled suspicions that the FIRB, in effect, sold the national interest down the river.
Supporters of the sale are correct in pointing out that Australia has always been - and will continue to be - reliant on foreign capital, and that the nation cannot afford to distinguish between capital inflows from America or Europe and those from China. It is certainly true that Cubbie's new owners will, if needs be, invest in new plant and equipment to maximise the productive potential of their new asset - even if they cannot control rainfall, on which farming is so dependent in Australia.
However, aspersions that opponents of the sale are not just ignorant economically but motivated by xenophobia as well are probably wide of the mark. It is the growing extent to which food companies, agribusinesses and now farmland are passing out of Australian control at a time when the world is increasingly populous and hungry that has become a bone of contention for would-be protectionists; not the fact that these assets are being bought by either American, Asian or European interests.
Fears of the loss of control over productive food assets may be overstated; Ms Gillard said the extent of foreign ownership of farmland had not changed much in three decades. Moreover, no one can physically relocate these assets, and Australians will continue to benefit from their exploitation, regardless of ownership. Nevertheless, when Chinese state-owned enterprises closely linked to the Chinese Communist Party government work their overseas assets with labour imported from China, fears about their operational strategy in Australia are bound to arise.
Provided they satisfy security considerations and adhere to the usual economic guidelines, Chinese companies have had no difficulty in securing FIRB approval to buy Australian assets, whether mineral or agricultural. That is as it should be. However, given the sensitivity with which Australians regard their farms and agricultural assets, it makes good sense to introduce a register of foreign ownership. Greater transparency on the operations of the FIRB would help that cause too.
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