Disproportionately high taxes on foreign investment in Queensland are forcing agribusiness investors to turn away from the Sunshine State and redirect investments to southern States instead.
Tim McGavin, managing director of the Brisbane-based food and agriculture investment fund Laguna Bay, and rural property specialist Danny Thomas, senior director of LAWD, shared the same frank message at last week’s Global Food Forum hosted by The Australian in Brisbane.
The Queensland Government applies a “foreign surcharge” of 3 percent on freehold land owned by foreign companies or trustees of foreign trusts (more information here), which is in addition to the State’s 2 percent land tax.
Beef Central understands other States also apply foreign surcharges but do not apply them to agricultural investments.
From July 1 this year the Queensland Government also added a 1 percent increase in the Additional Foreign Acquirer Duty (AFAD) from 7 to 8 per cent.
“Kicking own goals”
The forum was told that the surcharge was introduced with foreign investors buying city houses in mind, but had inadvertently caught foreign investors buying rural properties at the same time.
Tim McGavin
“We are just kicking own goals here,” Tim McGavin said.
“A lot of these things are put in with the best of intentions but there are some really adverse consequences.
“The Queensland Government is putting a land tax on foreign investors here which is ruling us out of the state.”
So what can you do about that, moderator Sue Neales from The Australian asked?
“Well, you go elsewhere,” Mr McGavin replied.
“Costing a lot of investment in this State”
Danny Thomas agreed, describing the situation as “a real shame”.
“Queensland has some of the best natural assets in the country, it is actually a State that requires more of the institutional capital to maximise its natural resources.
Danny Thomas
“With this $100 billion target (for annual value of Australian agricultural production by 2030), it is one of the States that should be a driving force of that.
“I just find it a little bit of confusing, we have guys from Government going over and saying come and invest in Queensland, and then they have this land tax.
“We would like to see people have a really good hard look at that, and think about what the cost-benefit is, because it is costing us a lot of investment in this State.”
Mr McGavin agreed that low margins and rates of return meant a 1-2 percent land tax could mean the difference between profit and loss.
“It is scaring capital away”.
He cited one example of an investment to develop a commercial variety of canola used to make sustainable aviation fuel that had been intended for Queensland which “is now going south”.
“So all of this rhetoric about the transition (to renewable energy sources), someone is going to make a lot of money out of that and it probably won’t be Queensland because the capital will go where it is wanted.”
Taxing foreign investors I agree entirely, as a starter. The long held “Australia for Australians” concept that foreigners can maybe lease land but not buy it” is merit-worthy. There’s a bigger picture also. I do not agree that multiculturalism has been a success, but then I have worked in the divisiveness, hatred and arrogance which ‘lurks’ under the surface. of various tribes against each other and us. I have personally been exposed to the sometimes almost ‘entire class’ cheating at TAFE and Uni where the objective to get self, parents, family, village, sponsors over here. In some cases failure could mean death or ostracisation back home. That fact is known to lecturers who are demanded to pass failures ‘or I’ll suicide” and so on….and some Uni’s have complied.. TAFE also. “what if your cheating causes damage ” I don’t care I just want the paper” was one class cheating explanation. (see also 4 Corners “Degrees of Deception”) I raise this as it’s a part of ‘using’ Australia not contributing to it. If paying very high prices for land, to get a profit which cannot later be returned from sensible buyers, the land has to be intensively flogged and become a bed for chemicals or deprive livestock of natural environment by feedlot operation (which Aussies also do). During the China-wine dispute I found at least 42 wineries here were owned by China. Moxey, which sucks the Lachlan down, at least 49%, Ravensworth (e.g.) packed to the gills…It’s not that Australians cannot raise the money to buy and operate valuation, production property but that the prime cost against overseas wealth and purpose makes profitability, even making interest payments, daunting where possible. Overpriced property across all sectors is ruining Australian culture and we older folk see it glaring out. The young are raised in illusion and delusion…crime, homelessness, quasi marriages, drug addiction, gender bending, are some of the alternatives to what really were ‘the good old days” . Let’s give them a chance with Australian and its Goverment support, training and investment …and union support instead of deterrents .If Qld deters foreign ownership, I congratulate it.
Super funds get so so many tax breaks.
Families should be involved in farming not mega funds – so if they pay some tax via government rents – so what.
Some crocodile tears in this article.
Definitely agree with Scottie. As commented in the article “ someone is going to make a lot of money “ well best you pay upfront as it’s the only guarantee for Queensland citizens will benefit.
Potential profit of 1-2% for the investment funds, creative accounting or incompetent management if it is to be believed. How about a fair go for the family farmers who are the backbone of our country