In issue 2 of Cultivate, we discussed proposed changes
to the approval process for Foreign Direct Investment (FDI) in
Australia's agricultural sector, such as a lower threshold for
compulsory notification and approval, and the introduction of a
national register to identify foreign ownership of agricultural
land. There is still a lot of debate regarding such reforms –
but are we any closer to their implementation?
Currently, state-owned enterprises such as sovereign wealth
funds must notify and gain approval from the Foreign Investment
Review Board (FIRB) for the acquisition of all types of
agricultural land in Australia, regardless of how the land is being
used. They must also notify and gain approval from the FIRB for all
agribusiness proposals. Other foreign investors must only notify
the FIRB if they intend to buy land actively used for farming
– and they only need approval if the value of the
'business' (the land and the farming operation) exceeds
On October 21, 2014, the Australian Government released a Green
Paper on agricultural competitiveness, with a number of proposals
affecting agribusiness in Australia. The paper proposes lowering
the threshold for notification and approval of foreign acquisitions
to A$15 million for agricultural land and A$53 million for
agricultural businesses. This is not a new proposal, but the Green
Paper suggests the government is serious.
The deadline for comments on the Green Paper is December 2014,
after which the Government proposes to issue a White Paper. For
this reason, and because the changes will require formal
legislation, the new thresholds are unlikely to come into force
before the middle of 2015. Even so, recently signed free-trade
agreements with Japan and Korea take into account the new
thresholds, signalling that the Government remains committed to
pushing these changes to FDI in Australia through.
National land register
In October 2013, the Australian Minister for Agriculture,
Barnaby Joyce, announced plans for the Foreign Ownership Register
for Agricultural Land, which will increase transparency and provide
accurate information on ownership of agricultural land to policy
makers and the wider community. However, Joyce's recent
emphasis on the importance of 'doing this properly' and
'developing detailed planning' suggests that it may be some
time before the register is implemented.
Similarly, plans for a property owners' register to record
foreign ownership of residential real estate (reflecting community
concerns about the high level of foreign acquisitions of domestic
residential property) are likely to be some time before being
brought into operation.
Implications for foreign investors
Neither the changes to the notification and approval thresholds
nor the introduction of a new national land register are likely to
affect agribusiness FDI proposals in Australia substantially.
They do not affect current policy settings which are intended to
welcome and facilitate FDI in the sector (as long as FDIs do not
spark national interest considerations similar to those in the 2013
Graincorp case, which raised significant concerns about foreign
control of the Australian grains industry).
Once the new FDI threshold comes into force, there will of
course be additional regulatory clearance processes facing foreign
investors, but these processes are unlikely to be particularly
costly or time-consuming, and clearance will probably be achievable
within 30 days of filing.
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