Australia has announced new foreign investment rules meant to give “adequate opportunity for Australians to invest in Australian land.”
From now on, would-be foreign buyers of agricultural assets will have to demonstrate that their purchase is the outcome of an “open and transparent” sale process giving first dibs to domestic bidders.
In practice, Treasurer Scott Morrison explained, this will require sellers to market and advertise their property for a minimum of 30 days on “channels that Australian bidders could reasonably access,” such as real estate listing sites or major newspapers. Overseas buyers will also have to show that there was “equal opportunity for bids or offers to be made” for the property while still available for sale.
The government of Prime Minister Michael Turnbull “has acted to ensure Australians will get every opportunity to purchase agricultural land holdings by introducing tough new rules that mandate vendors to advertise and market agricultural land to Australians first,” Morrison said.
Purchases of farmland holdings by private entities will only need to meet the new rules when their cumulative value falls above A$15 million ($12 million; €9.6 million), the threshold from which screening of transactions by the Foreign Investment Review Board applies. The requirements will not apply when overseas buyers only acquire a minority stake (with more than 50 percent purchased by domestic entities).
The tightening of regulations builds on previous measures by the Turnbull government to increase scrutiny of foreign investment in agriculture and infrastructure, including a reduction of the FIRB screening threshold from A$252 million to A$15 million and the creation of an agricultural land register, both in 2015.
“This is just a political stunt that sends all the wrong messages to investors”
Joel Fitzgibbon, Labor federal agriculture spokesman
The laws are particularly tough on government-linked investors, which must ask permission from Canberra for even the smallest transactions (for such entities, the screening threshold has been set at $0). “We welcome foreign investment in Australian agricultural land where it is not contrary to the national interest,” Morrison said.
Exemptions apply to buyers emanating from countries that have signed trade agreements with Australia: private investors from Chile, New Zealand and the US need not apply for approval, while Thai investors are required to do so only for transactions valued at more than A$50 million.
Similarly, the threshold does not apply to certain acquisitions of agricultural land by owners or operators of wind or solar power stations, if the purchase is made for that sole purpose.
The move comes less than two years after Scott Morrison blocked the sale of S Kidman & Co, one of Australia’s largest beef producers and the owner of farmland covering 101,000 square kilometers, to a Chinese-led consortium, amid mounting pressure to curb overseas investment in agriculture and infrastructure.
That asset was later sold to a consortium owned 67 percent by Hancock Prospecting — a company of Australian oil magnate Gina Rinehart — and 33 percent by Shanghai CRED Real Estate Stock for A$386.5 million.
“I have concerns that the form in which the Kidman portfolio has been offered as a single aggregated asset, has rendered it difficult for Australian bidders to be able to make a competitive bid. The size of the asset makes it difficult for any single Australian group to acquire the entire operation,” Morrison said at the time.
The rules announced today were not welcomed unanimously.
“This is just a political stunt that sends all the wrong messages to investors,” said Joel Fitzgibbon, federal agriculture spokesman for Labor, the main opposition party.
“A farmer selling his or her land will always seek the highest bidder. Therefore, they will advertise or seek interest both domestically and overseas. This makes no change whatsoever.”