Australia’s foreign investment rules on agriculture will revert to previous arrangements on January 1, 2021, when temporary measures introduced during the coronavirus pandemic are superseded by new regulations.
Treasurer Josh Frydenberg announced that new restrictions on foreign investment would be tightened and made permanent in a range of sensitive sectors, but agriculture has not been classified as one of these and so will escape the new regime.
In rules announced in March, the government mandated that the Foreign Investment Review Board would examine all proposed foreign investments into the country, regardless of the sector, size of investment or nature of investor.
The tighter restrictions came with an extended review timeline, which the government warned in March would be up to six months.
These will be replaced by the new, revised restrictions, ensuring that the FIRB review system around agriculture will revert to its previous threshold levels. The federal government will publish the draft legislation in July, after which will follow a six-week consultation period before it is introduced to parliament.
For non-government investors, these thresholds stand at A$1.192 billion ($731 million; €660 million) for investors from countries with which Australia has a free-trade agreement (including the US, New Zealand, Japan, China, Canada, Singapore, Mexico, Chile and Vietnam) and A$60 million for investors from all other countries.
For agricultural land, the same A$1.192 billion threshold applied for non-government investors from FTA countries, while a A$15 million threshold applied for all other investors.
A $0 threshold will continue to apply to any entity classed as a foreign government investor, which includes public pension funds and sovereign wealth funds, as was the case before the temporary rules were put in place.
The government is also considering a new register of foreign ownership that would expand on existing registers for agricultural land, water and residential properties. As a minimum, foreign persons will be required to register any interests they acquire in Australian land, Australian water entitlements or contractual water rights.
Foreign Investment Review Board chairman David Irvine said: “The Foreign Investment Review Board fully supports the changes to the foreign investment review framework announced today by the treasurer, having been closely engaged in their development over a long period.
“This is a significant package of reforms that will put Australia’s foreign investment review framework on a stronger and more sustainable footing. The package appropriately addresses increasing risks to the national interest whilst ensuring Australia remains welcoming and open to foreign investment.”
Treasury described the changes as the “most comprehensive reforms to Australia’s foreign investment review framework since the introduction of the Foreign Acquisitions and Takeovers Act 1975.”
There remain fears that an under-resourced FIRB could hamper agriculture’s ability to attract foreign capital for the rest of 2020, but certainty around the removal of restrictions at the beginning of 2021 will help ease concerns.
Colliers International head of agribusiness transactions Rawdon Briggs said in May: “I implore the federal government not to reduce our sector’s capital investment while we navigate the covid-19 macroeconomic reality. I totally agree with the FIRB process – I just don’t agree with the timeline.”