Foreign acquisitions of Australian farms and agricultural
companies are the target of a new Bill before Parliament.
Senators Xenophon and Milne yesterday tabled a private
members' bill, the Foreign Acquisitions Amendment
(Agricultural Land) Bill 2010.
If passed, this Bill would:
require Federal Treasurer approval for the acquisition of an
interest in farms of more than 5 hectares;
require the Treasurer to consult a statutory checklist of
"national interest" issues before approving such an
require the Treasurer to publish details of all agricultural
What acquisitions does the Bill apply to?
In broad terms, the acquisition of agricultural land by a
foreign person currently only requires notification to the
Treasurer if the purchase price exceeds $A231 million.
The Bill proposes to change that monetary threshold with a
spatial one. An acquisition of an interest in agricultural land of
more than 5 hectares would have to be notified. Once notified, an
acquisition could be blocked by the Treasurer if it was contrary to
the national interest.
The Bill covers more than just the acquisition of farm real
estate. It would apply to acquisitions of "interests" in
agricultural land, including:
leases of more than 5 years;
The Bill would also apply to acquisitions of shares in a company
or units in a trust in which agricultural land accounts for more
than 50% of its assets.
What is "agricultural land"?
Under the Bill, agricultural land would be defined as land
"used predominantly for carrying on a business of primary
production". This brings in the definition of "business
of primary production" in the Income Tax Assessment Act, which
How would the Treasurer determine the "national
At present, there is no statutory definition of "national
interest". Current Government policy sets out a number of
non-binding factors which the Treasurer typically takes into
consideration when evaluating an application.
This Bill would prescribe a list of factors which the Treasurer
would have to take into account when judging a proposed acquisition
of agricultural land. These factors are considerably more detailed
and expansive than the current policy.
The current policy says that, as well as competition and tax
issues, the Treasurer currently considers the impact of an
investment on the economy and the community. The Bill expands the
economy/community policy to a detailed list of factors,
any benefit to Australia or Australians or any part or group
creation or retention of jobs in Australia;
the introduction of new technology or business skills;
the effect on Australian exports;
any increased processing of primary products in Australia;
aggregation and vertical integration;
head office arrangements.
What information would be made public?
Foreign takeover applications are currently handled on a
The Bill would require details of all agricultural land
applications to be published on a government website.
This website would be updated weekly, with details of the
progress of each application.
Coincidentally, on the day before the Bill was introduced into
Parliament, the Government announced a cross-agency research
project to gather information about the extent of foreign ownership
in the agricultural sector.
Traditionally, private members' Bills have rarely been
passed by the Australian Parliament. However, in the current
environment, that no longer necessarily holds true.
The passage of the Bill in its current form could have two
significant flow-on effects.
At present, applications for approval of foreign takeovers are
often submitted confidentially, so that the approval process does
not delay the takeover when it is finally announced to the market.
Requiring the publication of applications would force potential
bidders for agricultural land corporations to delay making those
On a wider front, it is not difficult to see that the
introduction of a statutory national interest test for agricultural
land would add weight to existing calls for a similar test for
other types of acquisitions and takeovers. A statutory test could
expose the Treasurer to the possibility of judicial review of his
decisions. It could also provide another avenue for opponents of a
takeover to challenge it.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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