A Senate Committee has recommended that a register of all foreign-owned agricultural land in Australia be made public.
The Coalition Government introduced a requirement in July last year that all foreign investors must register their interests in Australian agricultural land with the Australian Taxation Office.
The move delivered on an Coalition election commitment to increase scrutinty and transparency around foreign investment in Australian agriculture in July last year.
At the time Minister for Agriculture Barnaby Joyce said the data would be made public from 2016.
However, in recent comments to the ABC, the Australian Taxation Office said confidentiality provisions in the Tax act prevent it from providing detailed breakdowns that identify taxpayers’ interests in agricultural land.
Instead, it said it can release summaries of the register occasionally, with its first planned summary due for release to the Government in July.
The Senate Economics References Committee has been conducting an inquiry since November last year into the Foreign Investment Review Framework (FIRB).
The inquiry was triggered by public concern about the transparency of several recent foreign investment decisions.
In particular these included the decision by the Northern Territory Government to grant a 99-year lease over the Port of Darwin to China’s Landbridge Group and the decision by Treasurer Scott Morrison to block the sale of S Kidman and Co on national interest grounds.
The committee handed down its report and recommendations on Friday.
It recommends the Australian Government establish a publicly-available Agricultural Land Register for all foreign-owned agricultural land, to increase public confidence in Australia’s foreign investment review processes.
The committee said it noted the ATO’s position that it cannot publish detailed breakdowns of foreign interests in agricultural land if doing so would identify a tax payer or make their details public.
However, the committee also noted that the Government had committed itself to the creation of the Agricultural Land Register in order to introduce a greater degree of transparency and scrutiny into Australia’s foreign investment review framework in relation to agricultural land.
“While the committee recognises that there are privacy limitations on the type of information that the ATO can publish, greater scrutiny and transparency in relation to the foreign investment review framework can only be achieved if the Agricultural Land Register is made public,” the report said.
“Furthermore, the usefulness of the Agricultural Land Register to increasing public confidence in the foreign investment review process is dependent on as much information as possible being made available to the Australian public and to foreign investors.”
The committee also recommended that Federal Treasury publish guidance about the foreign investment review assessment process, including information on the steps and features of the process, and the rationale behind the Treasurer’s decisions regarding foreign investment, both positive and negative.
This transparency was needed to inform the public and instil public and investor confidence in the review process.
The Committee highlighted the Port of Darwin lease and the S. Kidman and Co sale as examples of the “serious concerns” about a lack of transparency and clarity in relation to Australia’s existing foreign investment review framework and the processes that underpin it.
A common theme of feedback from a wide range of stakeholders was that existing foreign investment review processes were subjective, lacked adequate focus on security or other key considerations, and was open to interpretation.
This created a disincentive to foreign investors and also undermined public confidence in foreign investment in Australia.
The committee said it welcomed Treasurer Scott Morrison’s recentl agreement with the States and Territories to subject critical infrastructure assets to FIRB review.
The need for this reform was overdue, the committee said, particularly in light of recent “contentious” events such as the lease of the Port of Darwin to Chinese interests for 99 years.
Questions remain unanswered regarding that review process and the terms of the lease.
“As a case in point, it is not clear to the committee why $506 million was received for the lease while $390 million was referred to in the lease documentation,” the report said.
“While the committee has put this question to the Northern Territory Government, it is yet to receive a response.
“Furthermore, it is not clear to the committee how the Australian Defence Force will retain access to the port beyond the maximum 25 year period specified in the Deed of License.
“Since the Port of Darwin was leased to Landbridge for a period of 99 years, this is a significant disparity.”
Several witnesses, including Consolidated Pastoral Company chief executive officer Troy Setter, observed that one of the chief weaknesses of the current foreign investment assessment process is the lack of information given to stakeholders about the criteria that will be applied or the weighting given to them.
“To this end, the committee recommends that Treasury, in consultation with other departments and in cooperation with FIRB, identify and make public some of the elements or key features of the assessment process, in order to introduce greater transparency and openness into Australia’s foreign investment review framework,” the report said.
“The committee takes the view that providing more public information about the assessment process will go some way to explaining to potential investors and the Australian people the government’s rationale for a differentiated system of investment thresholds, including differences that are a direct result of Australia’s FTA obligations.”
A primary aim of the foreign investment review framework was to assure the Australian public that foreign investment is not only subject to ongoing and effective monitoring but that it will also produce significant national benefits.
“The committee takes the view that much of the public concern regarding foreign investment in Australia would be alleviated if there was some transparency in relation to the decision making process. However, little has been done to instil public confidence in the process.
“However, little has been done to instil public confidence in the process. This has made the task of ascertaining public preference, which should be central to determining whether Australia’s national interest are being met, difficult if not impossible.
“For these reasons, the committee recognises the need to build public confidence in the foreign investment process and recommends that the Treasurer provide public information on foreign investment decisions regardless of whether they are positive or negative.”
The committee said FIRB’s New Zealand counterpart, the Overseas Investment Office, publishes both positive decisions and negative decisions regarding foreign investment.
Providing its reasoning for approvals or rejections helped to instil public confidence in the process in New Zealand.
“The committee recommends that a similar process be introduced in Australia.
To this end, the committee recommends that the Treasury publish information regarding both positive and negative decisions regarding foreign investment review decisions.
“Drawing on the New Zealand example, the Treasury should publish a clear and comprehensive explanation of the national interest rationale behind the Treasurer’s decision not to object to a foreign investment proposal; to block a proposed investment; or to allow an investment to go ahead provided that certain specified conditions are met.
“If conditions are attached to a proposal, then the published decision should outline the nature of these conditions and how the will benefit the national interest.”