tag:theconversation.com,2011:/uk/topics/foreign-ownership-2656/articlesForeign ownership – The Conversation2023-01-12T19:34:31Ztag:theconversation.com,2011:article/1973832023-01-12T19:34:31Z2023-01-12T19:34:31ZCanada’s ban on foreign homebuyers is unlikely to affect housing affordability<figure><img src="https://images.theconversation.com/files/503906/original/file-20230110-5012-e6jept.jpg?ixlib=rb-1.1.0&rect=545%2C427%2C5051%2C3297&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">A new act in Canada bans non-citizens, non-permanent residents and foreign commercial enterprises from buying Canadian residential properties.</span> <span class="attribution"><span class="source">(Shutterstock)</span></span></figcaption></figure><iframe style="width: 100%; height: 100px; border: none; position: relative; z-index: 1;" allowtransparency="" allow="clipboard-read; clipboard-write" src="https://narrations.ad-auris.com/widget/the-conversation-canada/canada-s-ban-on-foreign-homebuyers-is-unlikely-to-affect-housing-affordability" width="100%" height="400"></iframe>
<p>As of Jan. 1, 2023, foreign buyers are banned from buying homes in Canada for two years under the <a href="https://laws-lois.justice.gc.ca/eng/acts/P-25.2/page-1.html">Prohibition on the Purchase of Residential Property by Non-Canadians Act</a>. The ban was passed in June 2022, but only came into effect this month.</p>
<p>Under the act, non-citizens, non-permanent residents and foreign commercial enterprises are banned from buying Canadian residential properties. The act also has a $10,000 fine for anyone who knowingly assists a non-Canadian and is convicted of violating it.</p>
<p>The law does not include recreational properties or larger buildings with multiple units. It exempts individuals with temporary work permits, refugee claimants and international students if they meet certain criteria. </p>
<p>It also excludes homes outside of the <a href="https://www12.statcan.gc.ca/census-recensement/2021/ref/dict/az/Definition-eng.cfm?ID=geo009">Census Metropolitan Areas (CMA) or Census Agglomerations (CA)</a>. A CMA has a total population of at least 100,000, of which 50,000 or more live in the core area. A CA has a core population of at least 10,000.</p>
<h2>The housing crisis</h2>
<p>The two-year ban is part of the federal government’s effort to ease Canadians’ struggle to afford homes. According to the <a href="https://stats.crea.ca/en-CA/">Canadian Real Estate Association</a>, the average home price in Canada was above $800,000 in 2022, compared to $500,000 in 2015. </p>
<p>Meanwhile, <a href="https://www150.statcan.gc.ca/n1/pub/11-627-m/11-627-m2022040-eng.htm">median after-tax household income</a> in 2020 was $73,000, up from $66,500 in 2015 — a meagre annual growth of two per cent compared to the seven per cent annual growth in average house prices. Canadians were eyeing houses with prices more than 10 times their incomes.</p>
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<img alt="" src="https://images.theconversation.com/files/503902/original/file-20230110-26-qebcyc.JPG?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/503902/original/file-20230110-26-qebcyc.JPG?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=400&fit=crop&dpr=1 600w, https://images.theconversation.com/files/503902/original/file-20230110-26-qebcyc.JPG?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=400&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/503902/original/file-20230110-26-qebcyc.JPG?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=400&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/503902/original/file-20230110-26-qebcyc.JPG?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=503&fit=crop&dpr=1 754w, https://images.theconversation.com/files/503902/original/file-20230110-26-qebcyc.JPG?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=503&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/503902/original/file-20230110-26-qebcyc.JPG?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=503&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
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<span class="caption">Houses for sale in a new subdivision in Airdrie, Alta., in January 2022.</span>
<span class="attribution"><span class="source">THE CANADIAN PRESS/Jeff McIntosh</span></span>
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</figure>
<p>In a <a href="https://www.gensqueeze.ca/straddling_the_gap_2022_housing_affordability">recent report published by his think tank</a>, Paul Kershaw, a policy professor at the University of British Columbia, found that average home prices would need to fall $341,000 — half of the 2021 value — to make them affordable for a typical young person at current interest rates. Either that or full-time earnings would need to increase to $108,000 per year — 100 per cent more than current levels.</p>
<h2>Who’s the culprit?</h2>
<p>Some believe that foreign investors and speculative activities have fuelled Canada’s surging housing prices and spurred the affordability crisis.</p>
<p>“Homes should not be commodities,” Housing Minister Ahmed Hussen said in a <a href="https://www.cmhc-schl.gc.ca/en/media-newsroom/news-releases/2022/housing-market-remains-available-canadians">December 2022 news release</a>. He continued: </p>
<blockquote>
<p>“Through this legislation, we’re taking action to ensure that housing is owned by Canadians, for the benefit of everyone who lives in this country. We will continue to do whatever we can to ensure that all residents of this country have a home that is affordable and that meets their needs.”</p>
</blockquote>
<p>How many foreign homeowners are there in Canada? Data that tracks foreign buyers and owners in Canada are scarce and patchy. The <a href="https://www150.statcan.gc.ca/t1/tbl1/en/tv.action?pid=4610002701">Canadian Housing Statistics Program</a> shows that non-residents only own about two to six per cent of Canadian residential properties in 2020.</p>
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<img alt="A middle-aged South Asian man in a suit and tie gestures while speaking" src="https://images.theconversation.com/files/503897/original/file-20230110-13-l4i24f.JPG?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/503897/original/file-20230110-13-l4i24f.JPG?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=395&fit=crop&dpr=1 600w, https://images.theconversation.com/files/503897/original/file-20230110-13-l4i24f.JPG?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=395&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/503897/original/file-20230110-13-l4i24f.JPG?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=395&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/503897/original/file-20230110-13-l4i24f.JPG?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=496&fit=crop&dpr=1 754w, https://images.theconversation.com/files/503897/original/file-20230110-13-l4i24f.JPG?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=496&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/503897/original/file-20230110-13-l4i24f.JPG?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=496&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
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<span class="caption">Housing Minister Ahmed Hussen rises during Question Period in November 2022 in Ottawa.</span>
<span class="attribution"><span class="source">THE CANADIAN PRESS/Adrian Wyld</span></span>
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</figure>
<p>The number of foreign participants is scantly relative to the volume of transactions in the market. Foreigners’ contributions to the housing crisis are puny and paltry in comparison with everyone else’s, many of whom have eagerly traded up for bigger homes or down for smaller ones and benefited from the lucrative market.</p>
<h2>Is the policy justified?</h2>
<p>The law is more of a political gesture than an effective tool. The fact that foreign owners represent a tiny segment of the market suggests the new law is unlikely to exert much impact on making homes more affordable to Canadians.</p>
<p>This gesture, however, does send a signal to Canadians that the government is willing to impose heavy-handed policies to address the housing crisis. The gesture, together with rising interest rates, will cool down the red-hot housing market in the short run.</p>
<p>When a policy aims to push one group into a corner, it is likely to create new challenges elsewhere. Foreigners, for example, can still buy recreational properties in less populated areas. It would be interesting to see if and how the policy might stir up challenges in these exempted areas.</p>
<p>More importantly, the ban is a form of restriction on foreign direct investment in domestic assets and the flow of foreign capital into the housing market. The question is: are we using the policy’s minute impact to justify protectionism?</p>
<h2>Encouraging home ownership</h2>
<p>The <a href="https://theconversation.com/housing-is-both-a-human-right-and-a-profitable-asset-and-thats-the-problem-172846">housing crisis is a tricky issue</a>. There is no single policy that could address the affordability issue without introducing other challenges. In fact, most policies would essentially lead one to rethink about what “affordability” actually means. </p>
<p>For one, any housing policies need to achieve a balancing act between two notions of affordability. One notion is based on prices; the other, which tends to receive less attention in the conversation about housing affordability, is about maintaining home ownership status.</p>
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<strong>
Read more:
<a href="https://theconversation.com/canadas-housing-crisis-needs-answers-but-first-we-need-to-ask-the-right-questions-162745">Canada's housing crisis needs answers — but first we need to ask the right questions</a>
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<p>Take the <a href="https://theconversation.com/the-bank-of-canada-just-hiked-interest-rates-for-the-sixth-time-is-it-too-late-193371">recent interest rate hikes</a> as an example. On the one hand, increasing interest rates have lowered house prices to become slightly more affordable to home buyers. On the other hand, the same interest rate hikes have burdened existing homeowners with a heavier mortgage expense alongside other costs in their daily budgets.</p>
<p>Buying a home, and being a homeowner, is not like buying a piece of fine art, which often stays with the owner with little maintenance. Instead, home ownership — a crucial piece of the affordability puzzle — requires people to maintain their cash flow. If we consider affordability from this broader view, it is not surprising to see that the ban is unlikely to affect housing affordability.</p><img src="https://counter.theconversation.com/content/197383/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Diana Mok does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>Since foreign owners only represent a tiny segment of the housing market, it’s unlikely that Canada’s new ban on foreign homebuyers will make homes more affordable for Canadians.Diana Mok, Associate Professor of Real Estate Finance and Economics, Western UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1503812020-11-20T08:16:14Z2020-11-20T08:16:14Z‘Courageous’ investment means innovation stays in NZ, not sold off overseas<figure><img src="https://images.theconversation.com/files/370484/original/file-20201120-23-t9422z.jpg?ixlib=rb-1.1.0&rect=981%2C324%2C3939%2C2729&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">
</span> <span class="attribution"><span class="source">Shutterstock/ChameleonsEye</span></span></figcaption></figure><p>New Zealand is in an <a href="https://www.newshub.co.nz/home/money/2020/09/in-the-eye-of-the-storm-quarterly-gdp-falls-to-record-12-2-percent-new-zealand-officially-in-recession.html">economic recession</a> and the government is trying to spend its way through it with <a href="https://www.beehive.govt.nz/release/infrastructure-investment-create-jobs-kick-start-covid-rebuild">direct investment</a> to boost the economy and jobs.</p>
<p>At the same time, the Reserve Bank of New Zealand (RNBZ) <a href="https://www.rnz.co.nz/news/business/430290/funding-for-lending-reserve-bank-set-to-reveal-policy-to-save-economy">plans</a> to lend retail banks money at low interest rates in the hope they are — as the reserve bank governor, Adrian Orr, put it — “<a href="https://www.nzherald.co.nz/business/covid-19-coronavirus-reserve-bank-urges-banks-to-consider-social-responsibility-in-business-lending/VBH5ZQFKTKVERGR5P2DY2ITLTA/">courageous</a>” in their lending choices.</p>
<p>But as the money does not need to be used for any particular type of venture, there are concerns it will inflame the <a href="https://www.rnz.co.nz/news/political/430836/government-under-pressure-across-political-spectrum-over-inflated-house-prices">already overheated property market</a>.</p>
<p>Part of the problem is New Zealanders do not have many investment options. There is little to be “courageous” about. </p>
<p>This lack of investment options is partly due to the average New Zealander’s model of successful innovation.</p>
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<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/with-house-prices-soaring-again-the-government-must-get-ahead-of-the-market-and-become-a-customer-of-first-resort-149446">With house prices soaring again the government must get ahead of the market and become a 'customer of first resort'</a>
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<p>Most of the big successful New Zealand innovation stories <a href="https://www.stuff.co.nz/technology/98190457/apple-buys-nzs-powerb-proxi">we see in the media</a> are about people who sold their innovation to an overseas – typically American – company. This success allows the innovator to buy their “<a href="https://www.newshub.co.nz/business/are-kiwi-entrepreneurs-putting-lifestyle-ahead-of-ambition-2015042309">three Bs</a>”: the Beamer, the boat and the bach.</p>
<p>But is this a true measure of successful innovation? Or could we do better to create more investment options and allow for more “courageous” investment?</p>
<h2>Investment in local industry</h2>
<p>Innovation involves creating and capturing value from new things – whether products, services or processes.</p>
<p>The New Zealand model of successful innovation is narrowly about creation, perhaps setting up and then selling a start-up. This model is shaped by <a href="https://researchcommons.waikato.ac.nz/handle/10289/8365" title="Beyond ‘the Beamer, the boat and the bach’? A content analysis-based case study of New Zealand innovative firms">skill shortages, funding issues and risk aversion</a>, which limit innovative growth. </p>
<p>Big ideas struggle to grow in New Zealand. The model is about innovators capturing short-term value for their creations.</p>
<p>What might be truly beneficial to New Zealand is if innovations stayed here and more risks were taken locally.</p>
<p>If more investment was directed at commercialisation of local innovations they could be used <a href="https://researchcommons.waikato.ac.nz/handle/10289/8365" title="Beyond ‘the Beamer, the boat and the bach’? A content analysis-based case study of New Zealand innovative firms">to create and grow local industries</a>. The resulting products or services could then be exported or licensed internationally to bring more wealth into New Zealand.</p>
<p>This would create more investment opportunities, as well as jobs and local know-how. In turn, wealth could be created and distributed across communities for a sustained period.</p>
<p>It’s worth pointing out that innovation is self-perpetuating. Once an innovative industry is developed in an area, this can generate further innovation in that area, because of skill development and the localisation of these skills. <a href="https://www.researchgate.net/publication/228601562_How_Silicon_Valley_came_to_be">Silicon Valley</a> exemplifies this.</p>
<h2>Learn from the Māori perspective</h2>
<p>We need not look far to find an alternative model of successful innovation.</p>
<p>Talk to Māori communities and you hear that successful innovation is something that is <a href="https://www.callaghaninnovation.govt.nz/blog/what-m%C4%81ori-innovation-snare-sun-and-then-some">implemented locally and creates value throughout the community</a>.</p>
<p>During community consultation to develop <a href="http://www.tematarau.co.nz/">Te Matarau a Māui</a> – a regional Māori economic development strategy for the greater Wellington region – we were told time and again that the common strategic goal of “play to win” was too narrow. </p>
<p>A Māori perspective on innovation doesn’t focus on winners and losers, but on a vibrant blossoming innovation ecosystem. Innovation from this perspective is tied up with cultural knowledge and community identity. </p>
<p>This kind of innovation model leads to better distributed and long-term wealth creation, since value is embedded within and spread throughout the community. </p>
<p>Yet the tools, such as the <a href="https://eship.ox.ac.uk/business-model-canvas-explained/">Business Model Canvas</a>, that we use to explore business ideas are based on hyper-individualistic, win-at-all-costs businesses.</p>
<p>New Zealand needs entrepreneurship and innovation tools that <a href="https://www.dropbox.com/s/27fykw3u012dooc/RURUKU%20Update%2008.mp4?dl=0">embed a richer perspective on success</a>, more in line with the aspirations of the <a href="https://www.treasury.govt.nz/sites/default/files/2019-05/b19-wellbeing-budget.pdf">wellbeing economy</a> and the Māori communities that developed Te Matarau a Māui. </p>
<h2>A look to the future</h2>
<p>We are not saying individual innovators should not be rewarded for their innovations. They should be. Nor are we saying that there aren’t success stories that involve local commercialisation. There are.</p>
<p>Moreover, we are not suggesting New Zealanders do not look outwards. They absolutely should.</p>
<p>But perhaps New Zealanders could shift their understanding of a success story for innovation, because we could have more innovation stories that involve further growth and benefit the well-being of communities.</p>
<p>Such a shift cannot happen until there is money to undertake the necessary risk to produce Kiwi innovations locally. International intellectual property portfolios should be developed in important markets, but we should invest in local capabilities to maintain operations in New Zealand. This would feed the New Zealand economy.</p>
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<em>
<strong>
Read more:
<a href="https://theconversation.com/new-data-privacy-rules-are-coming-in-nz-businesses-and-other-organisations-will-have-to-lift-their-games-149425">New data privacy rules are coming in NZ — businesses and other organisations will have to lift their games</a>
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<p>More provocatively, keeping innovations local would create more business opportunities that New Zealanders could invest in, aside from real estate. Perhaps this could help to cool down the property market. </p>
<p>So in light of <a href="http://www.legislation.govt.nz/act/public/1989/0157/latest/DLM1606600.html">RBNZ’s role</a> to “promote the prosperity and well-being of New Zealanders”, contribute to a “sustainable and productive economy” and <a href="https://www.rbnz.govt.nz/-/media/ReserveBank/Files/Monetary%20policy/About%20monetary%20policy/Remit-for-the-Monetary-Policy-Committee-April-2019.pdf">support</a> “maximum sustainable employment”, perhaps it should think about tying its lending scheme to making sure local innovation stays local. Otherwise, we might be letting a good crisis go to waste.</p><img src="https://counter.theconversation.com/content/150381/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Jesse Pirini sits on the Advisory Board for Te Matarau a Māui - The regional Māori Economic Development Strategy for the Wellington Region. </span></em></p><p class="fine-print"><em><span>Jessica C Lai does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>Innovation means creating and capturing value from new things. And it’s better for the Kiwi economy if investment in that innovation grows local industries and creates jobs.Jessica C Lai, Associate Professor in Commercial Law, Te Herenga Waka — Victoria University of WellingtonJesse Pirini, Lecturer in Management, Te Herenga Waka — Victoria University of WellingtonLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/702042016-12-09T02:43:27Z2016-12-09T02:43:27ZKidman sale finally gets green light<figure><img src="https://images.theconversation.com/files/149364/original/image-20161209-31364-lru16q.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Scott Morrison rejected earlier foreign-controlled bids for the S Kidman & Co. pastoral empire on national interest grounds.</span> <span class="attribution"><span class="source">AAP/Lukas Coch</span></span></figcaption></figure><p>The sale of the vast Kidman pastoral empire to the joint venture Outback Beef – led by Gina Rinehart’s Hancock with the Chinese-owned Shanghai CRED having a one-third interest – has passed the foreign investment hurdle.</p>
<p>Treasurer Scott Morrison has approved the deal after he rejected earlier foreign-controlled bids on national interest grounds. The bids, in two tranches, included three that were totally or majority Chinese, and one European bid.</p>
<p>The joint venture’s final bid was A$386.5 million. It had been marginally upped after a group of Australian families put in a last-minute counter bid.</p>
<p>The huge Anna Creek station with an associated property, The Peake, is being carved out and acquired by the local Williams family, who have adjoining land. The Woomera defence area overlaps part of Anna Creek, and national security was one factor in Morrison’s initial rejection of a sale.</p>
<p>Morrison said his earlier security concerns had been mitigated by the excision of Anna Creek.</p>
<p>He said the sale actually lifts local ownership of the original land area from about two-thirds to nearly three-quarters. This is because of the Anna Creek sale to locals. Kidman has had a significant level of UK ownership. The A$386.5 million includes the proceeds from selling Anna Creek and The Peake.</p>
<p>Morrison said the Australian-owned Hancock would control the board, as well as the day-to-day operation of the business. Kidman would remain an Australian incorporated company headquartered in South Australia.</p>
<p>The new owner has promised significant investment in the business, planning to increase the cattle herd by 20,000 over the coming 18 months. It has said it will invest up to A$19 million in capital improvements to boost efficiency and carrying capacity, creating 35 new full-time permanent jobs while also employing new contractors and short-term specialists.</p>
<p>Kidman is Australia’s largest private land owner with about 1.3% of the country’s total land area and 2.5% of its agricultural land – virtually all of it leasehold. It has 19 properties operated as 12 enterprises, including 10 cattle stations, a bull breeding stud farm and a feedlot.</p>
<p>The properties are in SA, Western Australia, the Northern Territory and Queensland. They cover more than 101,000km² and carry a long-term average herd of 185,000.</p>
<p>The divestment of the two stations will reduce the area to 77,700km².</p>
<p>Greg Campbell, managing director of S. Kidman and Co, said: “We’re relieved to have got to a point of conclusion after a long and difficult sales process”. Welcoming Hancock leading the joint venture, he said: “Mrs Gina Rinehart is a prominent Australian and we appreciate her desires to further invest and grow the business”.</p><img src="https://counter.theconversation.com/content/70204/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Michelle Grattan does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>The sale of the vast Kidman pastoral empire to the joint venture Outback Beef has passed the foreign investment hurdle.Michelle Grattan, Professorial Fellow, University of CanberraLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/651552016-09-21T05:49:30Z2016-09-21T05:49:30ZFactCheck: Is 30% of Northern Territory farmland and 22% of Tasmanian farmland foreign-owned?<blockquote>
<p>There is no story of modesty here as the government is trying to frame it; 30% of the Northern Territory’s farmland is now foreign-owned, 22% of Tassie; that’s extraordinary. <strong>– Katter’s Australian Party federal MP Bob Katter, <a href="http://www.theaustralian.com.au/news/inquirer/farmland-foreign-ownership-register-gives-size-not-value/news-story/069ab738d196d20637f20f37b41fd0dc">interview</a>, September 10, 2016.</strong></p>
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<p>Foreign ownership of Australian agricultural land is not new. Foreign cattle barons <a href="http://www.theland.com.au/story/3377060/vestey-still-a-big-ag-player/">owned large areas</a> of land in the Australian outback throughout much of the 20th century. </p>
<p>However, foreign investors’ interest in large tracts of farmland, and the federal treasurer’s decision to <a href="https://theconversation.com/morrisons-ruling-on-kidman-and-co-sale-redefines-the-national-interest-test-58413">block the sale</a> of the <a href="http://www.kidman.com.au/">S. Kidman and Co cattle properties</a> to a Chinese buyer, have helped fuel public debate on the issue. </p>
<p>When the Australian Taxation Office (ATO) released a new <a href="https://firb.gov.au/files/2016/08/Register_of_foreign_ownership_of_agricultural_land.pdf">Agricultural Land Register</a> in early September, federal MP <a href="http://www.bobkatter.com.au/">Bob Katter</a> said that 30% of Northern Territory farmland and 22% of Tasmanian farmland is now foreign-owned. </p>
<p>Is that right? </p>
<h2>Checking the source</h2>
<p>The Conversation asked a spokesperson for Bob Katter for sources to support his assertion but did not hear back before deadline.</p>
<p>Nevertheless, it’s clear Katter was referring to the Australian Taxation Office’s new <a href="https://firb.gov.au/files/2016/08/Register_of_foreign_ownership_of_agricultural_land.pdf">Register of Foreign Ownership of Agricultural Land</a>.</p>
<p>The register lists investors who are <a href="https://www.legislation.gov.au/Details/C2015A00151">legally required</a> to report their interests in Australian agricultural land - whether that interest is freehold (meaning owned outright) or leasehold (meaning the land is rented).</p>
<p>Under rules announced in early 2015, investors must now notify the tax office within 30 days if they:</p>
<ul>
<li>Are a foreign person starting to hold agricultural land</li>
<li>Are a foreign person ceasing to hold agricultural land</li>
<li>Become a foreign person while holding agricultural land </li>
<li>Cease to be a foreign person while holding agricultural land</li>
<li>Are a foreign person holding land that becomes agricultural land or</li>
<li>Are a foreign person holding land that ceases to be agricultural land</li>
</ul>
<p>To build the register, the ATO collects investors’ names, contact details, country of incorporation and Australian Business Number or equivalent identifier. For individual investors, the ATO recorded their nationality, and passport and visa details. It also collects the land title details.</p>
<p>The ATO report covers registrations made between July 1, 2015 and June 30, 2016.</p>
<h2>What does the report show?</h2>
<p>The report shows that the largest amount of foreign agricultural land is held by investors from the United Kingdom, in control of 27.5 million hectares. Investors from the the United States (7.7 million hectares) hold the second largest amount of land, followed by the Netherlands (3.0 million hectares). Chinese investors hold the fifth largest amount of land, with about 1.5 million hectares.</p>
<figure class="align-center ">
<img alt="" src="https://images.theconversation.com/files/138562/original/image-20160921-12468-1wprtdj.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/138562/original/image-20160921-12468-1wprtdj.png?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=2176&fit=crop&dpr=1 600w, https://images.theconversation.com/files/138562/original/image-20160921-12468-1wprtdj.png?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=2176&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/138562/original/image-20160921-12468-1wprtdj.png?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=2176&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/138562/original/image-20160921-12468-1wprtdj.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=2734&fit=crop&dpr=1 754w, https://images.theconversation.com/files/138562/original/image-20160921-12468-1wprtdj.png?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=2734&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/138562/original/image-20160921-12468-1wprtdj.png?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=2734&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption"></span>
<span class="attribution"><a class="source" href="http://firb.gov.au/about/publication/register-of-foreign-ownership-of-agricultural-land/">The Conversation/Foreign Investment Review Board</a>, <a class="license" href="http://creativecommons.org/licenses/by-nd/4.0/">CC BY-ND</a></span>
</figcaption>
</figure>
<h2>Leasing vs owning</h2>
<p>Bob Katter correctly quoted the percentages from the report, but his wording wasn’t quite accurate. He didn’t differentiate between foreign-owned and foreign-leased land. </p>
<p>To be fair, though, it’s not unusual for land to be leased for long periods of time – even as much as 99 years. So in practice, the difference between owning and leasing may be moot. The register doesn’t specify the length of the leases, saying only that:</p>
<blockquote>
<p>An interest in agricultural land includes a freehold interest or the right to occupy land under a lease (including a sublease or licence) where the term of the lease or licence (including any extension or renewal) is reasonably likely to exceed five years.</p>
</blockquote>
<p>What we do know is that the register shows that 30.1% of agricultural land in the Northern Territory and 21.8% of agricultural land in Tasmania is held by foreign interests.</p>
<p>As detailed in the chart below, the register shows that almost all of the foreign-held agricultural land in the Northern Territory is leased (but the register doesn’t say exactly how long the leases are). </p>
<p>In Tasmania, the numbers are very different. The register shows that of the farmland there that is held by foreigners, about 88% of it is freehold – meaning it is owned by a foreign interest.</p>
<iframe src="https://datawrapper.dwcdn.net/1VHox/1/" frameborder="0" allowtransparency="true" allowfullscreen="allowfullscreen" webkitallowfullscreen="webkitallowfullscreen" mozallowfullscreen="mozallowfullscreen" oallowfullscreen="oallowfullscreen" msallowfullscreen="msallowfullscreen" width="100%" height="380"></iframe>
<p>Much of the land identified in the report, particularly in the Northern Territory, is likely to be Crown leasehold. This means ultimate ownership rights remain with the Australian government, and lessees are required to manage the land in line with Australian property, agricultural and environmental laws.</p>
<h2>How does this compare to the past?</h2>
<p>We don’t know for sure, because the ATO register is the first of its kind.</p>
<p>The main previous source of official data on this issue was the Australian Bureau of Statistics’ (ABS) <a href="http://www.abs.gov.au/AUSSTATS/abs@.nsf/Lookup/7127.0Main+Features1Jun%202013?OpenDocument">Agricultural Land and Water Ownership Survey</a>, run in 2010 and 2013.</p>
<p>The <a href="http://www.abs.gov.au/AUSSTATS/abs@.nsf/DetailsPage/7127.0Jun%202013?OpenDocument#Data">2013 ABS survey</a> found 12.4% of Australian agricultural land had some level of foreign ownership, <a href="http://www.abs.gov.au/AUSSTATS/abs@.nsf/Latestproducts/7127.0Media%20Release1Jun%202013?opendocument&tabname=Summary&prodno=7127.0&issue=Jun%202013&num=&view=">saying</a> that:</p>
<blockquote>
<p>Of the 400 million hectares of agricultural land in Australia, nearly 50 million hectares had some level of foreign ownership; this is up by around 5 million hectares, an increase of 11% on the 2010 result.</p>
</blockquote>
<p>The ABS <a href="http://www.abs.gov.au/AUSSTATS/subscriber.nsf/log?openagent&71270do001_201306.xls&7127.0&Data%20Cubes&1E31DDCBBEDDE426CA257CFB00159A51&0&Jun%202013&19.06.2014&Latest">reported</a> 31.7% of Northern Territory farmland as foreign-owned in 2013. Unfortunately, the Tasmanian data from the 2013 survey was not published.</p>
<p>If we compare the ATO and ABS data, it appears that the percentage of foreign-held agricultural land in Australia increased slightly between 2013 and 2016. It also appears that the percentage of foreign-held farmland in the Northern Territory fell slightly.</p>
<p>But care must be taken when comparing the results from the ATO register and the ABS survey. The ABS survey presents estimates based on a sample of agricultural businesses listed in the ABS business register, and must be used with care because of <a href="http://www.abs.gov.au/AUSSTATS/abs@.nsf/Lookup/7127.0Explanatory%20Notes1Jun%202013?OpenDocument">potential sampling errors</a>.</p>
<p>It’s likely that the ATO register reflects a more complete record of foreign ownership and leasing than the earlier ABS data. </p>
<h2>What don’t we know about foreign control of agricultural land?</h2>
<p><a href="http://firb.gov.au/about/publication/register-of-foreign-ownership-of-agricultural-land/">Not all the information</a> collected by the ATO has been made public.</p>
<p>The publicly available report doesn’t show <em>who</em> owns the land – it doesn’t show what proportion of the foreign-held land is owned or leased by foreign governments or foreign government investors such as state-owned enterprises. </p>
<p>The register’s <a href="https://www.legislation.gov.au/Details/C2015A00151">guiding legislation</a> states that any publicly reported statistics must not identify investors, which limits what information the ATO can release for public perusal.</p>
<h2>Verdict</h2>
<p>Bob Katter got his figures right but his wording was not entirely accurate. It would have been more accurate for him to say that 30% of the Northern Territory’s farmland and about 22% of Tasmania’s farmland is now foreign-held – not foreign-“owned”.</p>
<p>In the Northern Territory, most of the foreign-held land is leased; in Tasmania most of that foreign-held land is owned outright by the foreign entity.</p>
<p>However, the register doesn’t include the length of land leases. For those tracts of land held under very long leases, the practical difference between owning and leasing may not be meaningful. <strong>– Erin Smith and Bill Pritchard.</strong></p>
<hr>
<h2>Review</h2>
<p>This is a sound FactCheck. I have independently confirmed all data and calculations used in the analysis. The authors are correct in confirming Katter’s claim, with the caveat that the term foreign “held” rather than “owned” should have been used.</p>
<p>Some further – and significant – qualifications of the ATO data can also be drawn out:</p>
<ol>
<li><p>While Tasmania and NT have relatively similar overall levels, their sectoral patterns are qualitatively different. As the <a href="https://firb.gov.au/files/2016/08/Register_of_foreign_ownership_of_agricultural_land.pdf">ATO data</a> show, most foreign-owned land in NT is for livestock production, while in Tasmania nearly all is in the forestry sector. </p></li>
<li><p>The legal differences between ownership and leasing are very slight in terms of assessing control and legal compliance matters. While the authors claim that leaseholders are required to meet “all Australian property, agricultural and environmental laws”, this is equally true of freeholders as well.</p></li>
<li><p>The ATO report appears not to adjust for the share of a property held by a foreign interest. For example, it does not differentiate between a farm that is 20% foreign-owned and one that is 100% foreign-owned. It is possible that some or even much of the “foreign held” land is actually a minority share in a joint-venture with Australian partners.</p></li>
<li><p>Significantly, the report only identifies the “place of incorporation” of the investor, rather than the nationality of the ultimate owner. Much of the British and American interests may well be held by legal persons of third countries, who have incorporated businesses (or bought shares in property trusts) in these jurisdictions. The dominance of the US and UK might therefore reflect a practice of incorporating agribusinesses in these countries, rather than ultimate ownership residing there. <strong>– Jeffrey Wilson</strong></p></li>
</ol>
<hr>
<p><div class="callout"> Have you ever seen a “fact” worth checking? The Conversation’s FactCheck asks academic experts to test claims and see how true they are. We then ask a second academic to review an anonymous copy of the article. You can request a check at checkit@theconversation.edu.au. Please include the statement you would like us to check, the date it was made, and a link if possible.</div></p>
<hr>
<hr><img src="https://counter.theconversation.com/content/65155/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Erin Smith's PhD research was supported by an Australian Research Council Linkage Grant.</span></em></p><p class="fine-print"><em><span>Bill Pritchard receives funding from the Australian Research Council, and has previously received funding from the Rural Industries Research and Development Corporation.
</span></em></p><p class="fine-print"><em><span>Jeffrey Wilson receives funding from the Australian Research Council for research into the politics of the Australia-China economic relationship (DP150100217). He is also a Research Fellow of the Perth USAsia Centre.</span></em></p>Katter’s Australian Party federal MP Bob Katter said 30% of the Northern Territory’s farmland and 22% of Tasmania’s farmland is foreign-owned. Is that true?Erin Smith, Post-doctoral Research Fellow, University of the Sunshine CoastBill Pritchard, Professor in Human Geography, University of SydneyLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/647942016-09-13T05:46:05Z2016-09-13T05:46:05ZAustralia’s housing affordability problem explained in five historical steps<figure><img src="https://images.theconversation.com/files/136851/original/image-20160907-25257-11fzxgh.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Whose land are domestic and foreign real estate investors trading?</span> <span class="attribution"><span class="source">AAP/Lukas Coch</span></span></figcaption></figure><p>There is much debate about which groups of people have played the greatest role in creating the increasingly unaffordable housing markets in Australian cities. <a href="http://www.news.com.au/finance/real-estate/is-it-generational-warfare-or-generation-notshare/news-story/5dcaca8e9fa97a520433406e255643ee">Baby boomers</a> and <a href="http://www.news.com.au/finance/real-estate/buying/housing-affordability-are-foreign-investors-to-blame-for-australias-high-property-prices/news-story/710ba2cff1932f0fb3f81ce83a07946b">foreign investors</a> are two popular targets.</p>
<p>But in my new book, <a href="http://www.rowmaninternational.com/books/the-geopolitics-of-real-estate">The Geopolitics of Real Estate</a>, I show it is a mistake to blame particular domestic or foreign investor groups for affordability problems over a short timeline.</p>
<p>One way to think about housing affordability is to reverse-engineer the problem back to the birth of Australia’s property-owning democracy. History shows the problem was created in five key steps.</p>
<h2>Step 1: Aboriginal peoples were dispossessed of their land</h2>
<p>When you open up the timeline for an analysis of housing affordability, the question quickly becomes: whose land are domestic and foreign real estate investors trading?</p>
<p>Go back a couple of centuries and you arrive at what RMIT academic <a href="http://plt.sagepub.com/content/13/4/387.abstract">Libby Porter</a> calls the original dispossession: the point when the land was stolen from Aboriginal peoples.</p>
<p>But Aboriginal land dispossession is not only a series of historical events that occurred in the past. Such acts established the <a href="http://www.innersydneyvoice.org.au/pub/a-conflict-over-how-land-is-imagined-and-used/">social and legal conditions</a> that allow land and real estate to be traded today.</p>
<p>This throws statements by domestic real estate investors about invading foreigners into sharp relief.</p>
<h2>Step 2: foreigners and capital were moved onto the land</h2>
<p>The early British colonial settlements set trade and migration as their objectives.</p>
<p>In the early 19th century, <a href="http://catalogue.nla.gov.au/Record/2321840">Edward Wakefield</a>, a leading force in South Australia’s colonisation, argued land should be sold rather than given away. This would incentivise the new landowners to pay the emigration costs associated with transporting immigrants to supply labour for the colony.</p>
<p>Wakefield argued the immigrants would sell their labour and, with their incomes, would buy land. He called this <a href="http://catalogue.nla.gov.au/Record/2321840">systematic colonisation</a>, and later championed these ideas in New Zealand and Canada. </p>
<p>These ideas about globalising the scale at which foreigners could be moved through local colonial land opened up new ways of thinking about the global market for land and sources of labour.</p>
<p>Contemporary governments continue to use the movement of people and capital through their land and real estate markets to underwrite their economies and labour markets.</p>
<h2>Step 3: a property-owning democracy was built</h2>
<p>A property-owning democracy is a society in which between 65% and 85% of households own or are purchasing the home they live in.</p>
<p>After the second world war the Australian government set about building a property-owning democracy. To build it required two interrelated tasks.</p>
<ul>
<li><p>The first involved claiming, measuring, quantifying and distributing the land ready for the sale of real estate.</p></li>
<li><p>The second involved creating a way of thinking about real estate that would function within the property-owning democracy.</p></li>
</ul>
<p>After the war the government increasingly regulated the movement of people and their money across Australian borders. It introduced a raft of economic and social policies that were firmly aimed at shaping how Australians thought about real estate – the <a href="https://www.amazon.com/great-Australian-nightmare-critique-home-ownership/dp/0855855061">Great Australian Dream</a>.</p>
<p>Post-war housing and economic policies, ideas about nationhood and citizenship, and the responsibility to be a suburban consumer of a home and household goods were worked deeply into the minds of baby boomers.</p>
<h2>Step 4: land and real estate was constituted as private property</h2>
<p>What emerged in the second half of the 20th century was a suite of crises in land and real estate.</p>
<p>Aboriginal land rights <a href="https://theconversation.com/friday-essay-the-untold-story-behind-the-1966-wave-hill-walk-off-62890">rose to the surface</a> as the settler politics of claiming and defending the land and real estate was called into question.</p>
<p>As the populations grew and the effects of the property-owning democracy took hold in major Australian cities, a crisis in housing affordability emerged.</p>
<p>When compared with the experience of their parents, by the early 21st century it was harder for the children of the baby boomers to buy into urban real estate markets. As the baby boomers were busy buying real estate in the second half of the 20th century, a land revolution was under way in China.</p>
<p>The collectivisation of land had effectively removed the land from the private property market in China in the mid-20th century. It was radically reinserted a few decades later.</p>
<p>The geopolitical rise of China at the end of the 20th century changed the way people and money circulated around the world.</p>
<h2>Step 5: global movements of people and capital followed the geopolitics</h2>
<p>Strong private property land and real estate ideals emerged from the other side of the Cultural Revolution. The commodification of land and real estate became a key tactic for building wealth in China.</p>
<p>The surplus Chinese capital broke free of the national border by the end of the century. The newly enfranchised middle class and super-rich Chinese were looking for foreign real estate opportunities.</p>
<p>At the turn of the century, the baby boomer real estate dream was becoming harder to realise for their children. But the Chinese local and foreign real estate dreams were still in their infancy.</p>
<p><a href="http://www.rowmaninternational.com/books/the-geopolitics-of-real-estate">The history</a> of foreign investment in land and real estate shows the global movement of people and capital is closely linked to the prevailing <a href="https://theconversation.com/the-geopolitics-of-real-estate-how-russia-learned-the-political-value-of-property-55793">geopolitics</a>.</p><img src="https://counter.theconversation.com/content/64794/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Dallas Rogers receives funding from Western Sydney University for the Global Real Estate Project. </span></em></p>The history of foreign investment in land and real estate shows the global movement of people and capital is closely linked to the prevailing geopolitics.Dallas Rogers, Lecturer in Urban Studies, Western Sydney UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/577412016-04-18T20:10:34Z2016-04-18T20:10:34ZAustralians may not be motivated by racism when it comes to Chinese investment<p>Do Australian attitudes towards Chinese investment reflect racism? It’s a question I’ve often been asked but it’s a tough one to answer.</p>
<p>According to the <a href="http://www.lowyinstitute.org/lowyinstitutepollinteractive/foreign-investment/">2014 Lowy Poll</a> 56% of Australians think that the government is allowing too much investment from China. </p>
<p>Yet Australian Bureau of Statistics <a href="http://www.abs.gov.au/AUSSTATS/abs@.nsf/DetailsPage/5352.02014?OpenDocument">data shows</a> that in 2014 China only accounted for 4.4% of the total stock of foreign direct investment in Australia. The US share was more than five times that of China. </p>
<p>When it comes to particular sectors of the economy such as real estate, the percentage of Australians who take the view that the government is allowing too much investment from China <a href="http://www.lowyinstitute.org/lowyinstitutepollinteractive/foreign-investment/">rises</a> to 70%. The first year that Chinese investment in the sector began to outpace that from other countries was 2013-14 <a href="https://firb.gov.au/files/2015/11/FIRB-AR-2013-14.pdf">according to data</a> from the Foreign Investment Review Board, which screens foreign real estate purchases. </p>
<p>One explanation for the attitudes of Australians to Chinese investment is racism but it’s not that simple. </p>
<p>Polls like the one from Lowy in 2014 ask questions like “Do you think the Australian government is allowing too much investment from China?” which really doesn’t tell us much, about racism or anything else. </p>
<p>It could be that Australians aren’t fond of foreign ownership regardless of where the money comes from. Or even if they do care about where it comes from, maybe they are more worried about other attributes of foreign investment. </p>
<p>For example, the public might not really mind a local company being acquired by a Chinese investor as long as Australians are left to manage the day-to-day operations. Indeed, research by KPMG and Sydney University <a href="http://demystifyingchina.com.au/reports/demystifying-chinese-investment-in-australia-april-2016.pdf">found evidence</a> that more and more Chinese investors are now adopting such localisation strategies. </p>
<p>The 2014 Lowy Poll <a href="http://www.lowyinstitute.org/files/2014_lowy_institute_poll.pdf">found that</a> Australians hold a particular sensitivity towards foreign investment in certain assets. Only 37% of Australians are in favour of foreign investment in ports and airports, compared with 58% in manufacturing. </p>
<p>In recent years foreign investors have acquired all or part of the lease to operate a number of Australian ports including Brisbane (2010), Newcastle (2014) and Darwin (2015). The lease to Australia’s busiest port, the Port of Melbourne, <a href="http://www.abc.net.au/news/2016-03-10/port-of-melbourne-privatisation-bill-passes-parliament/7238286">is expected to be sold</a> later this year. </p>
<p>A <a href="http://www.australiachinarelations.org/sites/default/files/Laurenceson%20Bretherton%20Burke%20and%20Wei_2016_Chinese%20investment%20in%20Australian%20critical%20infrastructure%20%283%29.pdf">new study</a> I was involved in may shed some light on the issue. The specific question the research was trying to answer was what determined public preferences on foreign investment in critical Australian infrastructure assets such as maritime ports?</p>
<p>We asked a representative sample of 1,000 Australians to review hypothetical foreign investment scenarios and choose those they preferred the most and the least. These investment scenarios included eight different investment attributes ranging from the share of foreign ownership an investment would bring, to which country the investment was from, to whether the foreign company making the investment was government or privately-owned, and so on. </p>
<p>By varying the levels of attributes in each investment scenario – one might feature an investment from China while another might feature an investment from the US – we could estimate what preferences were at play. </p>
<p>The greatest concerns were found to be around foreign ownership and control, not country-of-origin. That’s good news: if racism was the driver we’d expect to see country-of-origin dominate. </p>
<p>What bothered Australians the most was the foreign ownership share that an investment would bring. A lower share was preferred to a higher one. Next was the length of the lease that a foreign investor would hold. Shorter leases were preferred to longer ones. </p>
<p>That said, consideration of country-of-origin did rank third in participant’s preferences. Five countries were considered: China, India, Japan, the United Arab Emirates (UAE) and the US. Investment from the US was most preferred while investment from China was the least preferred. </p>
<p>But before interpreting that as evidence of racism still being a factor, keep three things in mind.</p>
<p>First, Japanese investment was also statistically preferred to Chinese investment, while Indian investment was not. What links US and Japanese investment on the one hand and Chinese and Indian investment on the other is plainly not race.</p>
<p>Rather, what China and India have in common is that they are both relative newcomers to Australia as sources of foreign investment. In that sense, what we are seeing now with respect to Chinese investment may not be so different to <a href="http://www.blackincbooks.com/books/takeover">public opposition</a> to US investment in the 1960s and Japanese investment in the 1980s. </p>
<p>Second, the research suggests that Australians are more concerned with the size of the share of foreign ownership rather than the country-of-origin. Modelling showed, if all other attributes such as the lease length and so on were the same, the public would actually prefer a Chinese investment with an ownership share of 64% to one from the US that led to 100% foreign ownership. </p>
<p>Finally, even to the extent that the public do prefer investment from China less than from other countries, race is only one factor that might be at play. For example, the Australian public may have greater reservations about Chinese investment if they believe that the Chinese Communist Party holds undue influence over Chinese companies.</p>
<p>In other words, the objection to investment from China could be political rather than racial. More research is needed to discern the relative importance of the various factors that might lead to investment from China being less preferred. </p>
<p>Still, the next time I’m asked whether Australians are racist in their attitudes towards Chinese investment, I’ll more confidently answer that race is not their main concern.</p><img src="https://counter.theconversation.com/content/57741/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>James Laurenceson does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>A survey has found that the percentage of foreign ownership is more worrying to Australians than the country-of-origin of the investment.James Laurenceson, Deputy Director and Professor, Australia-China Relations Institute (ACRI), University of Technology SydneyLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/375172015-02-12T22:32:07Z2015-02-12T22:32:07ZLand ownership just the start in foreign investment debate<p>Prime Minister Tony Abbott <a href="http://www.pm.gov.au/media/2015-02-11/government-tightens-rules-foreign-purchases-agricultural-land">has announced</a> long-promised changes to the rules for foreign land purchases and ownership in Australia. There are two key changes. First, the Foreign Investment Review Board (FIRB) threshold will be reduced from A$252 million to A$15 million and be applied to cumulative purchases. Second, the Australian Taxation Office (ATO) will be tasked with creating a “stocktake” of foreign-owned agricultural land, which may lead to a national register.</p>
<p>Media reports of this week’s announcement have largely focused on the merits of lowering the FIRB’s screening threshold. But the foreign-owned land stocktake and register should be equally scrutinised.</p>
<p>Spearheaded by high-profile land (and water) sales to non-Australians, such as <a href="http://www.abc.net.au/news/2012-10-12/sale-of-cubbie-station-confirmed/4310256">Cubbie Station</a>, the issue of foreign investment in agriculture has generated much discussion in recent years. Central to this sensitive issue is that no one knows exactly how much agricultural land foreign companies and governments own. And while there is uncertainty, the public debate seems locked to a dualism between “we are selling the family farm” and “overseas capital can only benefit agriculture”.</p>
<p><a href="http://theconversation.com/lost-in-the-paddock-australia-flying-blind-on-farm-ownership-23836">Last year,</a> my colleague and I called for better national data sets that clearly document who owns agricultural land and at what rate it is changing hands. A land register documenting foreign ownership of agricultural land would likely address this data deficiency, but only partially. </p>
<p>Details of what the ATO will produce are yet to be delivered. But, it seems the ATO will start to record new foreign land purchases from 1 July 2015 (irrespective of value). This may then be matched with the development of a national foreign-owned land register that draws on the land titles registers kept by state and territory governments.</p>
<h2>It’s not just about land</h2>
<p>So far, media reports indicate the register will be focused on land. But what about investment in agricultural businesses separate from direct investment in land? In the most recent <a href="http://www.abs.gov.au/AUSSTATS/abs@.nsf/allprimarymainfeatures/32E9BB779DABA3C1CA257905001453BC?opendocument">Agricultural Land and Water Ownership survey</a>, the Australian Bureau of Statistics reported that almost 90% of farmland was fully Australian owned and just under 99% of farm businesses were fully Australian owned.</p>
<p>Although that survey was <a href="http://parlinfo.aph.gov.au/parlInfo/search/display/display.w3p;query=Id%3A%22committees%2Fcommsen%2Ff49f61d7-23de-4f6f-b807-735c752ebcfa%2F0002%22">widely criticised</a>, the distinction remains important if efforts to document foreign land ownership are to prove as useful as possible. This is because although land ownership and the ownership of farm operations may or may not align, each is shaped by the other.</p>
<p>So, a register of foreign-owned land addresses only part of the huge data deficiencies related to foreign investment in the Australian farming sector. Despite the difficulties of untangling business structures, the ATO is perhaps best placed to align data collection and reporting on foreign ownership of both agricultural businesses and land.</p>
<h2>What about water?</h2>
<p>Australia’s water market and the legal separation of land and water titles further complicate the issue. It’s unclear whether a comparable register for foreign water ownership will be part of the ATO’s mandate.</p>
<p>Questions about who owns water access rights and at what rate they are changing hands are equally – or perhaps more – significant. This is especially in light of the Australian Bureau of Statistics’ results that showed agricultural water entitlements with some degree of foreign ownership increased by <a href="http://www.abs.gov.au/AUSSTATS/abs@.nsf/allprimarymainfeatures/32E9BB779DABA3C1CA257905001453BC?opendocument">55% between 2010 and 2013</a>. In contrast, Australian land with some degree of foreign ownership remained largely unchanged. </p>
<p>Like land, the state and territory governments manage their water registers, so similar integration between the state/territory systems and any national register would be required.</p>
<h2>It’s time to broaden the debate</h2>
<p>The debate about foreign ownership of agricultural land and the means used to document it need to be broadened.</p>
<p>Whether it’s ownership of land, water or agricultural businesses, non-Australian sources of capital are only part of the picture. The foreign ownership debate needs to evolve to – or be merged with – a broader debate about the future of the agricultural sector.</p>
<p>Too often the future of agriculture is reduced to a binary logic of <a href="http://theconversation.com/who-will-be-the-next-round-of-investors-in-australian-farming-23773">family farmers and corporate farms</a>. However, the reality is there are many different ways to organise agricultural business and production. </p>
<p>Foreign investment is only one of the drivers of change. Australian institutional investment or private equity partnerships and their relationships with land and water ownership are also shaping the agricultural sector and rural communities. How these alternative business models may be changing will slip through the gaps of any land register focused exclusively on foreign ownership.</p>
<p>More data will not resolve the issue of foreign ownership. It also won’t magically set the future direction of agriculture. But, good data sets that capture the full spectrum of agricultural business and asset ownership models can better inform these debates.</p>
<p>If the ATO stocktake of foreign-owned land becomes a formal register, the prime minister’s announcement is a positive step. But it doesn’t go far enough. It’s time to move beyond the foreign- versus Australian-owned dichotomy. Expanding a national foreign-owned land register to include other agricultural assets and ownership changes among domestic investors will enable more informed discussion on what Australians really value about economic development, land and water resources and food production.</p><img src="https://counter.theconversation.com/content/37517/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Erin Smith's PhD was supported by a Linkage Grant from The Australian Research Council ('Rural adjustment or structural transformation? Discovering the destinations of exiting farm families'). She also received funding from the New South Wales Rural Assistance Authority.</span></em></p>Prime Minister Tony Abbott has announced long-promised changes to the rules for foreign land purchases and ownership in Australia. There are two key changes. First, the Foreign Investment Review Board…Erin Smith, Post-doctoral Research Fellow, University of the Sunshine CoastLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/241992014-03-13T19:24:40Z2014-03-13T19:24:40ZWhat is the future for Leighton as Hochtief moves in?<p>With the move by Spanish controlled builder Hochtief/ACS to increase ownership of Leighton Holdings to 74%, management and control of a leading Australian company will go overseas. Already Leighton chief executive Hamish Tyrwhitt and chief financial officer Peter Gregg have confirmed they will step down.</p>
<p>The bid for Leighton may not attract the publicity and attention recently given to other businesses like Qantas, GrainCorp and SPC, but the economic significance is greater. </p>
<p>While construction remains the core activity, Leighton has interests across engineering, infrastructure, mining and resources, telecommunications, property, utilities and environmental services.</p>
<p>Qantas and Leighton share some key characteristics. They are both big direct employers, both have extensive international operations and major overseas shareholders. They also both dominate their local market (65% and around 15% respectively), but vigorously compete with other large firms (Virgin in the air and Lend Lease, Laing O’Rourke and others on the ground). </p>
<p>A less positive shared characteristic is a recent history of losses on major projects in Australia and management missteps in overseas expansion. Dubai-based Habtoor Leighton Group has lost money and market share since Leighton paid A$857 million for a 45% share of the company in 2007. In June 2013 it owed Leighton US$1.1 billion and work in hand halved over the previous 12 months to US$1 billion. There are also ongoing investigations by the Australian Federal Police into allegations of very substantial bribes paid to win pipeline contracts in Iraq.</p>
<h2>A giant by any definition</h2>
<p>The economic significance of Leighton is easy to miss because the company operates through a large number of subsidiaries, many not sharing the Leighton name. In part this is because it is the result of decades of mergers and takeovers, including Theiss (1983), Visionstream (1996), John Holland (2000) and Henry Walker Eltin (2006). John Holland also acquired Transfield Construction and Walker Constructions in 2002. </p>
<p>Through Nextgen, Leighton owns 30% of Australia’s third largest fibre optic network and its associated data centres, having sold the other 70% in June 2013. Leighton is the world’s largest contract miner, with the majority of its work in Australia, where it is one of three big contractors.</p>
<p>Outside the Middle East, the international operations are managed through the Indian subsidiary Leighton Welspun (60% owned) and Leighton Asia, formed in 2007 by merging Leighton Asia and Leighton International. The Malaysian-based Leighton Offshore provides a comprehensive range of services to the oil and gas industry, particularly offshore developments on the Northwest Shelf.</p>
<p>This giant, sprawling corporate reaches deeply into Australia’s economy and society. For starters, its 28,721 full-time equivalent Australian employees in 2012 was divided almost 50/50 between wage and salary earners, making Leighton (through its companies) the country’s largest employer of graduate engineers and construction project managers. The company’s policy of moving recruits through a number of divisions and a range of projects has developed the expertise required to take on very large complex projects, an important national resource.</p>
<p>However, as a collection of contracting businesses, most of the work done for Leighton Contractors, Theiss and John Holland (nearly A$16 billion of 2011-12 $19 billion in revenue) is actually done by subcontractors. Of that revenue $5 billion was paid to employees and $5 billion to subcontractors, $1.3 billion on plant and over $4 billion for materials. That supports a lot of workers in the trades and supply industries. For example, Leighton subsidiary Visionstream does design, construction and maintenance for communication networks in Australia and New Zealand, and its 1,200 employees are supported by a contractor workforce of over 2,500. </p>
<h2>Government projects dominate</h2>
<p>What Leighton is best known for is construction of infrastructure and buildings. Leighton is currently building hospitals in Sydney, Adelaide, Perth, Townsville and Hobart, the Northwest and Southwest rail projects in NSW, rail upgrades in Melbourne, Brisbane and Perth, and a multitude of road and other projects around Australia. The company is also a major player in public private partnerships (PPPs) and utilities such as power and water.</p>
<p>This truncated overview of Leighton’s operations is not to suggest that these projects cannot be done without Leighton - its competitors would be happy to take market share from it wherever and whenever they can. It is the case that many of these are significant projects, some of national importance, and Leighton is one of the few Australian companies with the size, the expertise and depth they require. </p>
<p>The fact that much of Leighton’s A$42 billion of work in hand is with Australian governments means this is not a simple takeover. There is a valid community interest in the completion and quality of these projects, and in the value for money received. Some of the PPP projects have contracts that run 20 or 30 years into the future.</p>
<p>Another important point is that under Hochtief as major shareholder Leighton was largely run as an independent Australian company, with a local board and managers who rebuffed Hochtief on a number of occasions. That will clearly not be the case under ACS, which has made it clear it wants a majority on the board and control.</p>
<p>ACS is heavily indebted and is an active asset trader, and credit rating agencies have reacted negatively to the proposed takeover. There are many great assets inside Leighton that could be sold off and some, probably many, will be. How those sales are structured and run should be a matter of public interest. For the remaining minority shareholders the prices gained in such sales and the potential for asset stripping within an international conglomerate like ACS will be an issue.</p>
<p>At this point in time the takeover looks like a great deal for ACS. Whether it will be great for the community, employees, suppliers, clients and other shareholders in Leighton remains to be seen.</p><img src="https://counter.theconversation.com/content/24199/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Gerard de Valence does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>With the move by Spanish controlled builder Hochtief/ACS to increase ownership of Leighton Holdings to 74%, management and control of a leading Australian company will go overseas. Already Leighton chief…Gerard de Valence, Senior Lecturer, University of Technology SydneyLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/237662014-03-03T23:39:40Z2014-03-03T23:39:40ZNothing short of a debt guarantee will save Qantas<figure><img src="https://images.theconversation.com/files/42954/original/jxkcprv3-1393841968.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Qantas: out of options?</span> <span class="attribution"><a class="source" href="http://www.flickr.com/photos/neuwieser/8093914769/sizes/l/">Neuwieser/Flickr</a>, <a class="license" href="http://creativecommons.org/licenses/by-nc-nd/4.0/">CC BY-NC-ND</a></span></figcaption></figure><p>Imagine that Virgin Australia was majority owned by a Chinese state-owned enterprise (SOE). Then, if the owners of Virgin tipped A$350 million of new equity into the company to sustain Virgin through a war over market share. How would the federal government react to that? Not very favourably I think.</p>
<p>We don’t need to imagine this scenario - Virgin is a state-owned enterprise. About 75% of Virgin shares are owned, in aggregate, by Air New Zealand, which is 53% owned by the NZ Government; Singapore Airlines, which is 54% owned by the Singaporean Government through its Temasek Holdings investment vehicle; and Etihad Airways, which is entirely owned by the government of the UAE.</p>
<p>Virgin could be owned by any of the world’s millions of global investors. Why is Virgin owned by three “flag carrier” airlines of three foreign governments? In part because those airlines will be the beneficiaries of a weakened Qantas shrinking its unprofitable international business. They will fill some of the void of Qantas shutting down international flights out of Australia. </p>
<p>Qantas announced last week it would no longer fly from Perth to Singapore – a case in point. It is also true that because of their government backing these airlines have deep enough pockets to finance Virgin through a long capacity war with Qantas. </p>
<p>Why does the Australian government tolerate this situation? Isn’t there a role for diplomacy here? We might expect the Australian government to quietly tell the governments of NZ, Singapore and the UAE that Australia is not happy with their government owned airlines waging this war with publicly owned Qantas, in Australia. </p>
<p>If Virgin were majority publicly owned, then that would be another thing – the matter should be resolved through competition in the airline markets and governments should not be involved. But Virgin is not publicly owned.</p>
<p>An alternative, or perhaps supplement, to quiet diplomacy would be a guarantee of Qantas’s bank and corporate bond debt by the federal government. Unfortunately, the federal cabinet has now ruled out a debt guarantee. </p>
<p>Qantas desperately wants this guarantee for two reasons. First, a debt guarantee makes Qantas’s commitment to defend its 65% market share more credible.</p>
<h2>Winning a game of chicken</h2>
<p>The lose-lose battle for market share that Qantas and Virgin are locked in is all about credibility. If both parties act rationally, then whichever party can demonstrate the most commitment to staying the course will win. In a game of chicken, in which two cars are speeding toward each other, whichever party can commit to not swerving (by throwing the steering wheel out the window) will win.</p>
<p>Virgin’s credibility comes from its demonstrated ability to raise hundreds of millions of dollars of new equity from its government backers. But a debt guarantee for Qantas would trump that. It would allow Qantas to raise billions of dollars of relatively cheap debt capital. It would force Virgin, if Virgin’s board is acting rationally, to back away from the battle for more market share.</p>
<p>The second reason that Qantas wants the debt guarantee is to do with its frequent flyer points business. The loyalty business, which is mostly about selling frequent flyer points, generated about A$1.2 billion in revenue for Qantas in the year to June 2013. </p>
<p>In the last six months, unlike the domestic or international businesses, the loyalty business made a considerable profit. In many ways that is money for jam for Qantas. Many of the points sold by Qantas and then attached to other products such as credit cards are never used. Even when they are redeemed, it is by putting passengers in seats that would otherwise be empty.</p>
<p>The fear that Qantas will slip into bankruptcy, just as Ansett Airlines did in March 2002, eats away at the perceived value of Qantas points and hence how much they can be sold for. </p>
<p>When Ansett went bankrupt its frequent flyer points holders became unsecured creditors of the firm and received nothing for their points. A debt guarantee would assuage the fear that Qantas frequent flyer points will become worthless and hence underwrite a valuable part of Qantas.</p>
<h2>The case for a guarantee with conditions</h2>
<p>The federal government wants Qantas to work its way through its problems, without resorting to government guarantees. The government does not want to create the precedent of providing a debt guarantee even if the good health of the firm or industry in question is manifestly in the public interest. But that precedent already exists. The deposits of banks are guaranteed.</p>
<p>Treasurer Joe Hockey has said a guarantee could amount to an unsecured loan of up to A$7 billion, but the government would not have to guarantee all of Qantas’s debt. </p>
<p>The guarantee could be linked to measured improvement in Qantas’s efficiency and also the amount of new equity capital provided to Virgin by its foreign government owners. </p>
<p>The survival of Qantas as a large, efficient, full service, domestic carrier is very much in the nation’s interest. The best way to guarantee the survival of Qantas is for Alan Joyce to radically improve the efficiency of the airline and for the federal government to guarantee Qantas debt. </p>
<p>There are no easy choices for the federal government in terms of providing support for Qantas. A debt guarantee was the cleanest and most easily justified way of providing that support. </p>
<p>If Virgin continues to press Qantas in the market share war, with the support of its three national backers, then the federal government may find it has painted itself into a corner.</p><img src="https://counter.theconversation.com/content/23766/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Sam Wylie does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>Imagine that Virgin Australia was majority owned by a Chinese state-owned enterprise (SOE). Then, if the owners of Virgin tipped A$350 million of new equity into the company to sustain Virgin through a…Sam Wylie, Principal Fellow, Melbourne Business SchoolLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/227452014-02-05T06:45:18Z2014-02-05T06:45:18ZAussie rules for overseas buyers won’t solve London’s housing bubble<figure><img src="https://images.theconversation.com/files/40681/original/d9k7h4bh-1391551463.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">House prices in Australia are still sky high.</span> <span class="attribution"><span class="source">markehr</span></span></figcaption></figure><p>London-based think tank Civitas has called for <a href="http://www.bbc.co.uk/news/business-26006214">restrictions on foreign buyers</a> as a solution to escalating house prices in the UK capital. They suggest the UK adopts a similar approach to that used in Australia.</p>
<p>No one would dispute the fact that something needs to be done, as London’s housing problem is increasingly obvious. In the past year, house values in the city went <a href="http://www.bbc.co.uk/news/business-25575964">up by 14.9%</a>, and it is harder than ever for Londoners to get on the property ladder. This is underpinned by rapid population increases not being met by supply.</p>
<p>Civitas points to international investment in the London housing market as a source of the price increase. It indicates that <a href="http://www.civitas.org.uk/pdf/FindingShelter.pdf">10 to 15% of new build purchases</a> in Greater London are made by foreigners, and that ratio is far greater in the city centre and among high end properties. With foreign investors exempt from capital gains tax, the concern is that London housing is being used as an investment rather than a place to live. This only fuels the price escalation. </p>
<p>The think tank’s remedy is to impose controls on foreign investment in residential real estate, following the Australian model.</p>
<p>However it is not clear that this approach would help house prices or availability in London. It is not clear that it even does that in Australia, nor that it was meant for that purpose.</p>
<h2>Adding to the stock</h2>
<p>Foreigners <a href="http://www.firb.gov.au/content/guidance/gn3.asp">cannot buy established residential real estate</a> in Australia. They can invest in new real estate “only if it adds to the housing stock”. This includes new dwellings, off-the-plan properties under construction, or vacant land for development. </p>
<p>All applications by foreigners must go to the <a href="http://www.firb.gov.au/content/default.asp">Foreign Investment Review Board</a> (FIRB), a body within the Australian Treasury. Applications are subject to an open-ended national interest test which typically includes national security, competition, impact on other government policies (including tax), impact on the economy and community, and the character of the investor. Where the proposal involves a foreign government, the Board can consider whether this would facilitate control by a foreign government. </p>
<p>FIRB approved 9768 applications for residential real estate in 2011/12, the most recent year for which data is available. But just 13 of all real estate purchases were rejected, <a href="http://www.firb.gov.au/content/Publications/AnnualReports/2011-2012/_downloads/FIRB-Annual-Report-2011-12_v4.pdf">0.1% of applications</a> – and that last figure includes commercial properties too. With overseas buyers having a 99.9% chance of approval, the system would appear to be having only a weak effect. That said, its role as a deterrent on foreign investment is unknown. </p>
<p>But what of the argument that foreign investors are more likely to have deep pockets which drive speculation, pushing up prices without increasing supply? Well, this is still possible under the existing system in Australia.</p>
<h2>Priced out</h2>
<p>The relative influence of foreign investment on house prices in Australia compared with local buyers is unknown, even if established real estate is not available. However, we do know that foreign investors make up <a href="http://business.nab.com.au/wp-content/uploads/2013/10/residential-property-survey-09-2013.pdf">about 12.5%</a> of “new property demand” in Australia, a figure comparable to London’s. </p>
<p>The available data on housing purchases is not broken down by investor’s country of origin. However, for total real estate purchases including commercial properties, the <a href="http://www.firb.gov.au/content/Publications/AnnualReports/2011-2012/index.asp">biggest four in value</a> by far are the USA, Singapore, China and the UK. Again, there is a similarity here: Singapore and China make up <a href="http://www.knightfrank.com/news/international-investors-spent-%C2%A32.2-billion-on-central-london-new-build-property-in-2012-01526.aspx">two of the top three nationalities</a> of overseas buyers of central London property (the other is Hong Kong). </p>
<p>Australia’s foreign ownership rules have failed to stop prices rising way above inflation in the big cities. Sydney, with nearly five million residents, saw <a href="http://www.abs.gov.au/ausstats/abs@.nsf/cat/6416.0">prices rise 11% last year</a> for established homes and 5% for new homes which tend to be further from the city centre. This also appears surprisingly comparable to London, although the spread of prices may be less, and the market is smaller.</p>
<p>Land is easier to come by in Sydney than in London, and <a href="https://theconversation.com/home-truths-are-planners-really-to-blame-for-our-housing-shortage-12723">planning thresholds are lower too</a>. But other factors are at work, such as the “<a href="http://lexicon.ft.com/term?term=dutch-disease">Dutch disease</a>” of high prices transmitted from the Australian mining boom, and the ongoing unique system of “negative gearing” which gives property tax advantages over other forms of investment.</p>
<p>So, foreign investment restrictions have not stopped house price increases in Sydney, but nor are the increases likely to be significantly due to foreign demand. In fact insofar as the foreign investment rules act as a deterrent, they also apply to foreign investment in residential construction and might just as well limit housing supply. This could also be the case if they were applied in the UK.</p>
<p>The Australian system does not explicitly include high prices in its criteria, although of course they could be considered. Although FIRB deliberations do not have to be released, it seems unlikely that rejection of a proposal has occurred on the basis that the offer is too high. </p>
<p>It is odd that the solution proposed in the UK is one that is toothless or even potentially restricts housing supply in Australia. New policy is certainly called for to address the London housing crisis, but there is nothing to suggest that the Australian approach as it stands is the solution. </p>
<hr>
<p><em>This is the third piece in our Housing 2020 series, exploring the major policy issues facing housing over the next five years. Click on the links below to read the other pieces.</em></p>
<p><a href="https://theconversation.com/your-home-as-an-atm-home-equity-a-risky-welfare-tool-22000">Your home as an ‘ATM’: home equity a risky welfare tool</a></p>
<p><a href="https://theconversation.com/explainer-why-negative-gearing-is-bad-policy-21882">Explainer: why negative gearing is bad policy</a></p><img src="https://counter.theconversation.com/content/22745/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Margaret McKenzie does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>London-based think tank Civitas has called for restrictions on foreign buyers as a solution to escalating house prices in the UK capital. They suggest the UK adopts a similar approach to that used in Australia…Margaret McKenzie, Lecturer, School of Accounting, Economics and Finance, Deakin UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/194332013-11-03T19:20:06Z2013-11-03T19:20:06ZWhy not let agriculture benefit from foreign investment?<figure><img src="https://images.theconversation.com/files/34100/original/55k2jsx2-1383110530.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Close to 90% of Australia's farmland remains locally owned.</span> <span class="attribution"><span class="source">Flickr: Cha222</span></span></figcaption></figure><p>Why do we clamour to keep foreign-owned car makers here, paying them billions of dollars to stay, while being wary of foreign investment in farms?</p>
<p>Around 0.1% of foreign investment last year was in agriculture, with mining receiving 30%, manufacturing close to 19% and the rest in various service industries. </p>
<p>We know that foreign investment creates jobs and brings new technology and production methods. We don’t want the mining boom to suddenly stop and neither do we want foreign investors to pull out of our struggling manufacturing sector. </p>
<p>There is no reason why we should wish anything less for our agricultural sector.</p>
<p>Recent interest in buying farmland has come from Chinese and Indonesian companies, whereas in the past, overseas investment in farmland has been mainly from US and British companies, which are still by far the main players in foreign-owned farmland in Australia.</p>
<h2>The amount of foreign ownership is small</h2>
<p>Of all the direct foreign investment in Australia, across all industries (direct investment is ownership of 10% or more in a business), around 24% is from the US, over 14% is from the UK and 11% is from Japan. China makes up 3%, Malaysia 1% and Indonesia less than 1%.</p>
<p>In 2010, the Australian Bureau of Statistics (ABS) carried out an audit of farmland ownership and farm business ownership. Solely Australian-owned agricultural land made up 86%, while 11.4% was either partly or in some cases, fully foreign owned. </p>
<p>The ABS estimates that 99% of farm businesses are entirely Australian owned, and much of the 1% that is not completely Australian owned is a mix of combined Australian and foreign interests.</p>
<h2>Do we need more monitoring?</h2>
<p>Currently, foreign investment in farms that is more than A$244 million is referred to the Government’s Foreign Investment Review Board (with the exception of New Zealand and US investors, who have a much higher limit at $1.062 billion). The Government is now considering lowering the limit to A$15 million. </p>
<p>In practice this may make little difference to whether or not they approve an overseas company buying Australian land. But lowering the limit may help to reduce public fear about foreigners buying land without scrutiny. </p>
<p>Also, there is the idea of creating a national register of land ownership. While keeping a national register of farms is not likely to be of any economic value, it may have some political value by reducing community concerns about the extent of foreign ownership. Transparency is always a good thing.</p>
<p>Perhaps what some people don’t realise is that all foreign <em>government</em> direct investment already automatically goes to the Australian government for approval, regardless of the amount of the investment. So all farmland purchases by China and government-owned businesses in other countries are already reviewed.</p>
<h2>Food security and profits</h2>
<p>Australia normally exports around two-thirds of total agricultural output each year. Even in a drought year we still export over half of what we produce. So Australia is in no danger of not being able to feed its people. Remember also that close to 90% of farmland remains Australian-owned, so there is no possibility of all food being sold overseas. </p>
<p>Even in the unlikely event that some time in the future food security does become an issue in Australia, the government reserves the right to review all future land purchases. There is also precedent in the gas industry in Western Australia where the government requires that a certain proportion (about 15%) be put aside for local use only.</p>
<p>Of more immediate concern would be the decline in food production if we reduced foreign investment in agriculture. Why prevent productive investment which creates jobs and export earnings? Foreign-owned businesses also have to pay the same 30% company tax as every other company in Australia.</p>
<h2>More jobs or less?</h2>
<p>The jobs created by foreign investment are not just on farms, but in agricultural supplies, transport, shipping and many other service industries. The National Farmers’ Federation estimates that there is a shortage of labour in agriculture of around 100,000 workers. This is across all skill levels, from experienced managers to unskilled labourers. </p>
<p>So the concern is not about foreign workers taking Australian jobs, but in getting enough workers from anywhere to work in agriculture. </p>
<p>Foreign investors are smart in that they normally hire experienced Australian managers and workers where possible. If they want to hire workers from overseas, they have to go through the same hoops as any other business in terms of visa approvals.</p>
<h2>Land care</h2>
<p>Like any investment, there is no incentive to destroy that which you’ve spent millions of dollars on. There is no reason for foreign owners to degrade land that they have invested in and thereby reduce future earnings from production or reduce resale value. </p>
<p>Also, cattle and sheep farms within Australia, no matter who owns them, must abide by the animal welfare laws within Australia, giving animals protection that might not be so readily available in some other countries.</p>
<p>Given the facts, we shouldn’t deny one industry the growth opportunities from foreign investment while encouraging it for others.</p><img src="https://counter.theconversation.com/content/19433/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Anne Garnett has received funding from the Australian Research Council, and the National Centre for Vocational Education Research.</span></em></p>Why do we clamour to keep foreign-owned car makers here, paying them billions of dollars to stay, while being wary of foreign investment in farms? Around 0.1% of foreign investment last year was in agriculture…Anne Garnett, Murdoch UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/182492013-09-19T20:43:03Z2013-09-19T20:43:03ZBeef, boats and elections: what’s in store for the Australia-Indonesia relationship<figure><img src="https://images.theconversation.com/files/31452/original/wcng5dyv-1379393967.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">The ban on live cattle exports to Indonesia caused a major rift in relations. Can new governments in both nations repair the damage?</span> <span class="attribution"><span class="source">AAP/Animals Australia</span></span></figcaption></figure><p>Somehow, the debate on Indonesia-Australia relations has got stuck on Bali, beef and boats.</p>
<p>While there is no point pretending that either beef or boats are about to disappear as issues any time soon, we need to broaden the discussion both to understand what is at stake in the obvious differences between the two nations and to move towards the possibility of resolving them.</p>
<p>On the positive side the current Indonesian Cabinet is highly educated and very familiar with Australia: six of the 24 Cabinet ministers have PhDs as does Vice President <a href="http://en.wikipedia.org/wiki/Boediono">Boediono</a>.</p>
<p>The Vice President studied at three Australian universities, UWA, Monash and ANU. Foreign minister <a href="http://en.wikipedia.org/wiki/Marty_Natalegawa">Marty Natalegawa</a> and Tourism minister Mari Pangestu both have ANU PhDs. Other ministers in Cabinet have spent long formative periods in USA and Europe. This is a highly educated, internationalised, Australia-literate Cabinet.</p>
<p>By contrast, there is no one in the Abbott Cabinet who can claim substantial knowledge of or experience in any part of Asia, let alone Indonesia. Not only is the Cabinet shamefully devoid of women, it is notably unrepresentative of Asian Australians.</p>
<p>Indonesia too is about to enter a presidential campaign period. Many observers have suggested that President Susilo Bambang Yudhoyono, in the last year of his second and final term of office is already a lame duck. The shape of Indonesia’s next government is hard to predict.</p>
<p>But as Australia saw in its own recent election campaign good sense often disappears quickly. In the Indonesian campaign, too, one should anticipate that nationalist fervour will rise – it is never far from the surface of Indonesian politics anyway.</p>
<p>Three Presidential candidates, most discussed in the Indonesian national media are: <a href="http://en.wikipedia.org/wiki/Aburizal_Bakrie">Abu Rizal Bakrie</a> (super rich and mired in New Order and post New Order controversies), <a href="http://en.wikipedia.org/wiki/Prabowo_Subianto">Prabowo</a> (Suharto’s son-in-law, who is banned from entering the US because of accusations of human rights violations), and <a href="http://en.wikipedia.org/wiki/Joko_Widodo">Jokowi</a> (Joko Widodo, the immensely popular governor of Jakarta).</p>
<p>Jokowi is a self-made millionaire who started as a small businessman in the furniture industry. As Mayor of Solo (2005–2012), Jokowi revitalised local businesses and the arts community. As Jakarta governor he has begun the work of fixing up the city’s decrepit transport system. Though less discussed, in both cities Jokowi has also worked to support and regulate the small traders. In Solo, he ran heavily on a brand of local cultural identity. How any of this will translate into his presidential campaign is hard to predict.</p>
<p>Bakrie, everyone suspects, will do more or less what suits his own business and political interests, and it would be easy for him to play the economic nationalist card from time to time. No-one expects him to have a consistent hand on the economic till.</p>
<p>Prabowo’s appeal is a lot like that of Thailand’s <a href="http://en.wikipedia.org/wiki/Thaksin_Shinawatra">Thaksin Shinawatra</a>. He has a huge rural popularity but no support amongst the educated elites. Notably, Prabowo’s hero is Kemal Ataturk of Turkey. We would expect him to jump on the nationalist bandwagon whenever it suits him – and it is quite likely to suit him a lot of the time.</p>
<p>In this context, Australia’s new agriculture minister Barnaby Joyce and his brand of economic nationalism is a perfect foil. One can see escalating nationalism in economic debate on both sides to the detriment of the kind of integration needed for long-term prosperity and stability in the region.</p>
<figure class="align-center ">
<img alt="" src="https://images.theconversation.com/files/31453/original/ty4sskv9-1379394798.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/31453/original/ty4sskv9-1379394798.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=419&fit=crop&dpr=1 600w, https://images.theconversation.com/files/31453/original/ty4sskv9-1379394798.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=419&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/31453/original/ty4sskv9-1379394798.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=419&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/31453/original/ty4sskv9-1379394798.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=526&fit=crop&dpr=1 754w, https://images.theconversation.com/files/31453/original/ty4sskv9-1379394798.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=526&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/31453/original/ty4sskv9-1379394798.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=526&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">Australia’s new agriculture minister Barnaby Joyce’s views on foreign ownership may create conflict with a new Indonesia government.</span>
<span class="attribution"><span class="source">AAP/Alan Porritt</span></span>
</figcaption>
</figure>
<p>Prabowo is worth looking at a little more closely. He is the son of one of Indonesia’s leading intellectuals and connected both through his own family and that of his ex-wife (Siti Hariyadi, Suharto’s daughter) to a massively influential business and political network. Prabowo is named after an uncle who was a hero of the anti-Dutch nationalist revolution.</p>
<p>Prabowo’s grandfather and father hold a legendary status in Indonesia’s intellectual history and the latter served in senior economic portfolios under Suharto. Despite his impeccable economic and political pedigree, there is enough credible evidence of human rights violations against Prabowo both in Timor and on anti-Suharto activists in Jakarta on the eve of regime change that he is banned from entering the US.</p>
<p>Since being discharged from the army under a cloud, Prabowo has worked closely with his brother Hashim in a variety of businesses. Hashim is a highly successful businessman with links into the US political and business community. Hashim has recently made substantial donations to Republican thinktanks (the best known is the <a href="http://csis.org/program/southeast-asia-program">Sumitro Chair</a> at the Center for Strategic and International Studies, named after their father), which could in part see some whitewash of Prabowo’s image in the US. There is little doubt that if he were to be elected, the travel ban to the US would be immediately lifted.</p>
<p>In considering Indonesia-Australia relations, we need to take into account the likely election of one of these three men and how the Coalition policy of turning back or buying back asylum seeker boats might provide a fertile ground for an ultra-nationalist discourse in an election campaign in Indonesia.</p>
<p>Pitted against the Indonesian need to provide food for its burgeoning population, the whipping up of a mass protest by Australian Cabinet minister Barnaby Joyce to protect Australian agricultural land provides fertile ground for nationalist electioneering in Indonesia.</p>
<p>During the Australian election campaign, Indonesia’s Australia-literate Cabinet was able to distinguish between election rhetoric for domestic consumption and what the real policies of a new government might shape up to be.</p>
<p>But is it likely or even possible that the Abbott Cabinet will have similar depth of knowledge of Indonesia to navigate its way through the complexities of Indonesian domestic politics to distinguish between rhetoric and reality? It certainly does not have on its frontbench the kind of knowledge of Indonesia that the Indonesian government has of Australia.</p>
<p>However, it is to the great credit of the Abbott government that in broad terms it has recognised the deficit in Australia’s knowledge of and embedding in the Asia-Pacific region. Its <a href="http://www.liberal.org.au/latest-news/2013/08/30/coalitions-policy-new-colombo-plan">New Colombo Plan</a> aims to devise a long-term solution to this problem by supporting a generation of undergraduate students to experience Asia as a rite of passage.</p>
<p>But the immediate challenge of contradictions between the rhetoric of our recent election and the imminent Indonesian election campaign remains an impediment to improvement in the relationship in the short-term.</p>
<p>Watch this space.</p><img src="https://counter.theconversation.com/content/18249/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Krishna Sen was a member of the new Colombo Plan steering group.</span></em></p>Somehow, the debate on Indonesia-Australia relations has got stuck on Bali, beef and boats. While there is no point pretending that either beef or boats are about to disappear as issues any time soon…Krishna Sen, Winthrop Professor & Dean of Faculty of Arts, The University of Western AustraliaLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/181472013-09-17T04:41:48Z2013-09-17T04:41:48ZIndonesians can buy our land but shouldn’t ship live cattle<figure><img src="https://images.theconversation.com/files/31388/original/t3cc7k8y-1379314396.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Indonesian ownership of Australian cattle is a step in the right direction for both countries, but welfare still needs work.</span> <span class="attribution"><span class="source">AAP Image/Alan Porritt</span></span></figcaption></figure><p>Australians should not be alarmed but pleased at the current Indonesian proposal to <a href="http://www.sbs.com.au/news/article/2013/09/13/aust-cattle-industry-welcomes-indonesian-plans">invest in cattle production</a> in the north of Australia. It demonstrates a renewed confidence in Australia’s ability to provide cattle for the Indonesian market, currently under-supplied following the quotas imposed on imports after the 2011 Indonesian slaughter expose. </p>
<p>It also shows the Indonesians have plenty of good business sense: to deny Australia, one of the largest beef exporters in the world and right on their doorstep, access to their markets would be financial suicide. The nearest alternative major exporters are thousands of miles away, in the horn of Africa. </p>
<p>Buying Australian properties when prices are depressed but demand for beef in Indonesia is growing is not just a smart financial move. It could also encourage the Australian government to restore relationships with its major trading partner and neighbour. </p>
<p>And Indonesia could claim increasing self-sufficiency in beef production, a goal that has been a growing focus since the export ban of 2011. The property purchase by the Indonesian government will only have a small impact on their imports of live cattle, but it could point the way to greater investment by Indonesian entrepreneurs. </p>
<p>The property is expected to use breeder cattle in Australia to produce young cows for shipping to Indonesian feedlots. Until a <a href="http://www.abc.net.au/news/2013-08-22/aaco-confirms-abattoir-will-be-built-near-darwin-donald-mcgauch/4905362">meatworks is built in the north</a>, it will need a live export trade. Most surveys suggest that the Australian public do not support live export. </p>
<p>The failure of animal welfare activists to stop it has shown how determined the government is to continue the trade, but with increased monitoring of the cattle. Just before the election, Kevin Rudd visited Indonesia to encourage the prime minister to accept more Australian cattle. </p>
<p>However, science is increasingly supporting the activists’ cause, demonstrating that livestock experience considerable stresses on the ships. </p>
<p>Ammonia is given off from the excreta of animals. It accumulates through the voyage, irritating the mouth, nose and lungs of the animals. </p>
<p>For a recently-published study, <a href="http://www.journalofanimalscience.org/content/91/9/4406.abstract">Dr Mat Pines and I</a> travelled to the Middle East on a ship loaded with sheep, measuring their behaviour in high and low ammonia sections of a ship. In the high-level sections, sheep ate, chewed the cud and lay down less. They displayed signs of stress. Follow-up studies confirmed ammonia reduces sheep’s feed intake and weight and also produced adverse reactions in cattle. </p>
<p>More recently, in the Centre for Animal Welfare and Ethics at the University of Queensland, veterinarian <a href="http://www.applied-ethology.org/hres/ISAE%202013%209789086867790isae2013-e.pdf">Eduardo Santurtun and coworkers</a> found ship movement increases stress in livestock. They found higher and more variable heart rates, and that sheep had to brace themselves against the sides of their enclosure to keep themselves upright. </p>
<p>Whatever we think about the slaughter practices in Indonesia and the government’s attempts to monitor and improve them, the fact remains that ship journeys are stressful for livestock. Animal welfare is sacrificed in the name of providing a fresh product for the Indonesian market. </p>
<p>Indonesians producing cattle in Australia would be bound to Australian standards, both in this country and during the ship journey. The <a href="https://theconversation.com/assessing-australias-regulation-of-live-animal-exports-16427">Export Supply Chain Assurance Scheme</a> the government introduced after the 2011 live export troubles aims to guarantee compliance with World Animal Health Organisation standards and the traceability of Australian cattle. </p>
<p>However, these standards, even if they are enforced, are not enough to guarantee the welfare of cattle born into the system. They must ensure basic animal rights are observed, such as stunning before slaughter and avoiding unnecessarily long journeys in stressful conditions. As the sea journey is inherently stressful, everything must be done to persuade the Indonesian people to eat beef that has been killed in Australia. </p>
<p>Barnaby Joyce, as the <a href="http://www.scribd.com/doc/168478869/Tony-Abbott-s-first-Ministry">new agriculture minister</a>, will try to <a href="http://www.theguardian.com/world/2013/sep/12/indonesian-beef-plan">stop Indonesia buying land</a>, but not because he is concerned about animal welfare during live export. </p>
<p>He argues that it is a food security issue, yet Australia has no problem meeting the food needs of its citizens. Even if overseas ownership spread rapidly, in the event of any threat to security, land owned by foreigners from hostile countries would quickly be nationalised. </p>
<p>In an unstable world, particularly as tension rises between Muslim and Christian countries, we need to welcome every opportunity to forge strong links with our Muslim neighbour. Australia has shown itself to be a modern country in embracing multiculturalism. Will it see the opportunities offered by welcoming its neighbours to help it utilise one of its most precious commodities – land? </p>
<p>In this era of globalisation, it seems inevitable that rapidly growing needy nations will buy into those nations with surpluses or desirable products. The Russians buy houses in the heart of London, the Chinese buy mines in Africa. </p>
<p>Why shouldn’t the Indonesians buy land in the north of Australia?</p><img src="https://counter.theconversation.com/content/18147/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Clive Phillips is on the Scientific Committee of Voiceless, is a Director of Minding Animals International and has received funds from Meat and Livestock Australia, Voiceless, Humane Slaughter Association, Humane Society International and RSPCA Australia for livestock research. .</span></em></p>Australians should not be alarmed but pleased at the current Indonesian proposal to invest in cattle production in the north of Australia. It demonstrates a renewed confidence in Australia’s ability to…Clive Phillips, Centre for Animal Welfare and Ethics, The University of QueenslandLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/96262012-09-17T05:05:53Z2012-09-17T05:05:53ZFarms and finance: Barnaby may not like Cubbie sale, but our agriculture is out for tender<figure><img src="https://images.theconversation.com/files/15523/original/m637yp87-1347847417.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">A river at Cubbie Station, southwest Queensland, in 2004.</span> <span class="attribution"><span class="source">AAP/Supplied</span></span></figcaption></figure><p>Until the <a href="http://www.theage.com.au/opinion/political-news/opposition-divided-over-station-sale-20120903-25amj.html">recent bid</a> from a Chinese-Japanese consortium Shandong RuYi for megafarm Cubbie Station, it appeared the property would limp along under locally-based administration. </p>
<p>But then the opportunity for the consortium to make a bid was approved by Treasurer Wayne Swan, who said he was convinced that a future sale was in the national interest after being given certain undertakings by the potential purchaser regarding the use of water, the employment of workers and the management of the station.</p>
<p>Should there be any fuss? After all, the government and opposition both welcome foreign investment in Australia. As recently as December last year Peter Costello joined Bob Hawke in a delegation to the Gulf States where both <a href="http://www.theaustralian.com.au/business/bob-hawke-in-gulf-trade-push/story-e6frg8zx-1225976841263">implored countries</a> such as Saudi Arabia and Kuwait to expand their investments in Australian food and agricultural industries.</p>
<p>But Nationals Senator Barnaby Joyce used the <a href="http://www.theaustralian.com.au/national-affairs/barnaby-joyce-rejects-xenophobia-tag/story-fn59niix-1226475218339">National Party federal conference</a> in Canberra this weekend to outline his passionate opposition to the sale, rebuffing claims that his view was based on xenophobia.</p>
<p>In an <a href="http://www.smh.com.au/opinion/political-news/coalition-trades-blows-over-cubbie-station-20120904-25cnj.html">immediate response</a> to Swan’s announcement, Joyce labelled the Cubbie decision a “bloody disgrace”. Any sale of a property of this size to foreigners will undermine Australia’s ability to determine the use of its own resources into the future, he argued. </p>
<h2>Finance farming</h2>
<p>While there’s an unhealthy mix of rural populism and anti-Chinese sentiment in some of the complaints about Cubbie, there is no doubt that foreign firms will continue to increase their stake in Australian agriculture. </p>
<p>Cubbie is simply part of a bigger picture. In what has been termed the “financialisation” of farming, sovereign wealth funds, investment houses, private equity consortia and others dealing in financial instruments such as credit default swaps, derivatives, bonds, securities and futures trading have been increasing their investments in agriculture, worldwide. </p>
<p>In some countries this is deemed to be a “land grab” while, for developed nations, this is termed “foreign direct investment” and is welcomed as capital necessary for economic development. </p>
<p>There has been a host of agri-food purchases in Australia during the past two years: </p>
<ul>
<li>more than 750,000 hectares of sheep and wheat land has <a href="http://sl.farmonline.com.au/news/nationalrural/agribusiness-and-general/general/land-the-perfect-investment-for-foreigners/2431007.aspx?storypage=0">been bought</a> by Hassad Foods of Qatar; </li>
<li>some 250,000 hectares of Victoria’s western district farmland was <a href="http://www.abc.net.au/rural/regions/content/201102/3127526.htm?site=westernvic">purchased</a> by the Alberta Pension Fund; </li>
<li>CSR Sugar <a href="http://www.theaustralian.com.au/business/csr-sugar-takeover-bid-by-wilmar-a-well-kept-secret/story-e6frg8zx-1225889995293">was sold</a> to Wilmar International of Singapore;</li>
<li>Tully Sugar <a href="http://www.theaustralian.com.au/national-affairs/great-tully-sugar-sell-off-proves-bittersweet/story-fn59niix-1226088463624">was sold</a> to China Oil and Fuel; </li>
<li>Australia’s major grain-trading company, AWB, <a href="http://www.abc.net.au/rural/news/content/201011/s3067639.htm">was acquired</a> by Canada’s Agrium company. </li>
</ul>
<p>Today, foreign companies control more than half of the Australian wheat export industry, some 60% of raw sugar production, and 40% of lamb and beef processing.</p>
<h2>Assets in agriculture</h2>
<p>Why would the finance industry be interested in farming?</p>
<p>After all, it is a risky business which has often provided small, if not negative, returns to investment. The answer lies in a combination of factors. When the dot com bubble burst at the turn of the century, followed by collapse of real estate prices after the GFC, the financial sector was looking for a safe haven for investors’ money. </p>
<p>Farmland prices had been rising for a decade on the back of strong demand for food from a growing world population, including millions of new middle class consumers in places such as China, India and Indonesia. </p>
<figure class="align-right ">
<img alt="" src="https://images.theconversation.com/files/15546/original/hd7d65rh-1347858046.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=237&fit=clip" srcset="https://images.theconversation.com/files/15546/original/hd7d65rh-1347858046.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=369&fit=crop&dpr=1 600w, https://images.theconversation.com/files/15546/original/hd7d65rh-1347858046.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=369&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/15546/original/hd7d65rh-1347858046.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=369&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/15546/original/hd7d65rh-1347858046.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=464&fit=crop&dpr=1 754w, https://images.theconversation.com/files/15546/original/hd7d65rh-1347858046.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=464&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/15546/original/hd7d65rh-1347858046.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=464&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">Nationals leader Barnaby Joyce has been critical of the government’s proposed sale of Cubbie Station to a Chinese-led consortium.</span>
<span class="attribution"><span class="source">AAP/Penny Bradfield</span></span>
</figcaption>
</figure>
<p>Legislation requiring an ethanol mix for vehicles provided a clear signal to the finance firms that their investments in biofuel production would be secure. Oil-rich but water-poor countries such as Saudi Arabia, Dubai, and Qatar are seeking to guarantee food for the future and have no hesitation in using billions of dollars in sovereign wealth funds to secure lands and water in food-producing regions around the world. </p>
<p>Deregulation of financial markets has also helped facilitate the quick movement of funds from less profitable markets to agriculture. And, of course, there have been opportunities for speculation. Facilitated, in part, by global financial deregulation, traders have been able to manipulate markets for commodities such as corn, wheat and rice, making considerable profits for their investors along the way.</p>
<p>Farmlands are, in this sense, just another “bundle of assets” that can be bought and sold to maximise shareholder profits. </p>
<p>Critics point out that farmland must be viewed as more than a tradable commodity and should be harnessed to provide global food security - not profits for speculators from wealthy nations. But the reality is that it is providing an opportunity for capital accumulation in an era of considerable financial turmoil.</p>
<h2>Selling the farm</h2>
<p>So, where does this leave Barnaby Joyce and others who have expressed disquiet over the purchase of Cubbie and other Australian properties? </p>
<p>Their protests are unlikely to halt the movement of funds from overseas financial institutions into Australian agri-food industries – especially since Joyce’s own Coalition comrades believe strongly in the virtues of free trade and the desirability (read: necessity) of increased foreign investment. </p>
<p>Will Barnaby resist the pleas by Abbott and Hockey to fall into line with his neoliberal-oriented colleagues and thus continue to rail against the “sale of the farm”?</p>
<p>Whether Joyce falls in step with his Coalition colleagues or not, one thing is for sure: “the farm” is out for tender.</p><img src="https://counter.theconversation.com/content/9626/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Geoffrey Lawrence receives funding from the Australian Research Council, the Norwegian Research Council and the National Research Foundation of Korea.
</span></em></p>Until the recent bid from a Chinese-Japanese consortium Shandong RuYi for megafarm Cubbie Station, it appeared the property would limp along under locally-based administration. But then the opportunity…Geoffrey Lawrence, Professor of Sociology, The University of QueenslandLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/94212012-09-10T04:33:00Z2012-09-10T04:33:00ZCubbie Station sale no threat to food security<figure><img src="https://images.theconversation.com/files/15207/original/3hwpgndk-1347229610.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Sensible Australian farmers don't object when foreign investors want to buy their problematic assets.</span> <span class="attribution"><span class="source">AAP Image/Cubbie Group</span></span></figcaption></figure><p>Controversy surrounding the recent sale of Cubbie Station in Queensland near the New South Wales border to (mainly) Chinese interests is not unexpected. Fears about foreign ownership in Australia are long-standing and deep-seated. </p>
<p>While objections to foreign investment and ownership take many forms, most pervasive is the idea that Australian governments cannot control foreign entities. Local citizens and businesses are supposed to be disadvantaged. This belief betrays lack of confidence in Australian institutions and ignores the fact substantial foreign investments come within the purview of the Foreign Investments Review Board.</p>
<p>Foreign domination may be the lot of poor countries but is scarcely the case in Australia. Arguably, foreign firms are subject to more surveillance in Australia than local businesses, whose interests are well defended by industry organisations and networks.</p>
<p>To usual fears about foreign investment is added the phenomenon of “rural exceptionalism” whereby agriculture is claimed to be a special case. Different rules are said to apply to agriculture and other rural activities, ostensibly because of concerns with food security. In the case of Cubbie, there is the variant “irrigator exceptionalism”, a product of Australian faith in the social and economic benefits of irrigation. Unusually, given past lax water management involving Cubbie, the proposed sale is supposed to frustrate environmental plans for the Murray-Darling Basin.</p>
<p>Luckily, food security is a non-issue for Australia. According to the just released Green Paper for the proposed <a href="http://www.daff.gov.au/nationalfoodplan/process-to-develop/green-paper">National Food Plan</a>, Australia produces enough food to feed around 60 million people. Over 90% of fresh produce consumed is domestically produced. Australia’s farm sector exports more than half its production. </p>
<p>Almost 90% of agricultural land is entirely Australian owned and half of the remainder is at least 50% Australian owned. Similarly, just over 90% of water entitlements are entirely Australian owned.</p>
<p>Australia has been an importer of capital since European settlement, with waves of investment by British, European, United States and Japanese investors for a range of industries. Without this investment and migration, Australia would not have developed as rapidly. In the past, foreign ownership was essentially private. This time the concern is with ownership of land by entities with closer connections to foreign governments. Put slightly differently, the excitement over foreign ownership of agricultural land is code for Chinese and Middle Eastern ownership.</p>
<p>Despite some opinion, governments do not have absolute control over businesses operating in those countries. These are the countries with substantial surpluses now available for investment. It is unrealistic that Australia can ignore investment opportunities from these countries. If problems were to arise subsequently, governments would be able to deal with them.</p>
<p>While Australian land has attracted foreign owners since European settlement, not all investors have made good judgements. That will be true in the future. Local knowledge counts in agricultural production. The assumption is that foreign owners will make substantial profits despite failures in the past. American investments of the 1960s in Esperance in Western Australia and Humpty Doo in the Northern Territory are cases in point. The land finished up back in local ownership. In the 1980s and 1990s, there was similar angst over Japanese ownership of real estate in Queensland tourist destinations. In the event, the Japanese had their fingers burnt. Australian sellers of the assets finished way in front.</p>
<p>The extraordinarily variable rainfall in the northern valleys of the Murray-Darling Basin makes prospects for Cubbie problematic, in any ownership. That is why Cubbie finished up in receivership around three years ago. The administrators could not find buyers, local or foreign, until the now-reviled offer came along.</p>
<p>One thing is certain. Sensible Australian farmers do not object when foreigners are interested in acquiring their assets and boosting their value. As with Cubbie, few are more appreciative of foreign demand for Australian agricultural land than receivers of failed Australian ventures and their lenders, doing their best to pick up the pieces after local recklessness. Managed Investment Schemes for almonds, olives and blue gums are other examples of recklessness leading to sales to foreign investors from the last couple of years.</p>
<p>Foreign ownership only applies to a minute proportion of Australian agriculture, and it is subject to supervision by the Foreign Investment Review Board. Foreign ownership of agricultural land is far less significant than foreign ownership in other parts of the economy.</p>
<p>Playing to the crowd in the argument over foreign investment in agricultural land has been recognised by commentators such as Peter Costello, in The Age of August 15, who observed that it was a manifestation of conflicts between “the rural populists and economic rationalists in the Coalition”. Internal disagreement over agricultural policy between fundamentalists and rationalists is a long-running theme on both sides of Australian politics, and society.</p><img src="https://counter.theconversation.com/content/9421/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Alistair Watson does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>Controversy surrounding the recent sale of Cubbie Station in Queensland near the New South Wales border to (mainly) Chinese interests is not unexpected. Fears about foreign ownership in Australia are long-standing…Alistair Watson, Adjunct Professor, Centre for Water Policy and Management, La Trobe UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/83402012-08-01T04:17:33Z2012-08-01T04:17:33ZDon’t blame foreign investment for rising house prices<figure><img src="https://images.theconversation.com/files/13705/original/6nk2q3tf-1343792624.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">There is little evidence to suggest that foreign investment is driving up the prices of Australian real estate.</span> <span class="attribution"><span class="source">AAP</span></span></figcaption></figure><p>One question that arises on the topic of real estate is the scale of foreign investment and ownership in Australia. It is understandable that the public has concerns about such investment, especially as precious little information is available.</p>
<p>An <a href="http://news.domain.com.au/domain/home-investor-centre/blogs/domain-investor-centre-blog/secret-government-business-20111230-1pf7c.html">interesting case</a> arose late last year as Chris Vedelago, The Sunday Age’s property reporter, used a Freedom of Information Act (FOI) request in an attempt to gain some insight into this issue. The target of the request was the <a href="http://www.firb.gov.au">Foreign Investment Review Board</a> (FIRB), a government agency tasked with tracking, reviewing and approving submissions for investments of all kinds in Australia.</p>
<p>The reason for the FOI request is that the FIRB is notoriously opaque (non-transparent) in ensuring detailed data on foreign investment are made available to the public. The <a href="http://www.firb.gov.au/content/publications.asp?NavID=5">annual reports</a> provide some basic aggregate statistics but do not release enough information, for instance, the number of temporary residents who have purchased residential real estate and those who have violated investment regulations. Unfortunately, the FOI request revealed little as the <a href="http://news.domain.com.au/domain/home-investor-centre/blogs/domain-investor-centre-blog/secret-government-business-part-ii-20120202-1quse.html">FIRB refused to budge</a>.</p>
<p>Vedelago noted this behavior to be <a href="http://news.domain.com.au/domain/the-foreign-real-estate-raider-alarming-fact-or-urban-fiction-20101023-16ynf.html">political in nature</a>, as discouraging disclosure of relevant details limits the backlash over the perception foreigners are <a href="http://www.theage.com.au/business/chinese-buyers-fuel-topend-property-boom-20090918-fvga.html">purchasing large amounts</a> of property, causing prices to rise and reducing the options of Australian citizens (though the majority who own property would benefit).</p>
<p>With Australia’s economy appearing relatively strong on the global stage, foreign investors may see the real estate market as attractive, especially given the rapid run-up in property values (approximately 130% adjusted for inflation and quality from 1996 to 2010). Foreign investors likely heed the comforting statements by mainstream commentators who claim housing prices are based upon underlying fundamentals, or intrinsic value.</p>
<p>From what little data the FIRB provides in its <a href="http://www.firb.gov.au/content/Publications/AnnualReports/2010-2011/_downloads/2010-11_FIRB_AR.pdf">latest annual report</a> (2010-11), a picture emerges that is at odds with the conception that a foreign horde is responsible for a flood of investment into the real estate market.</p>
<p>In financial year 2010-11, the FIRB considered a total of 10,865 applications, covering all industry sectors (agriculture, forestry and fishing; finance and insurance; manufacturing, mineral exploration and development; resource processing; services; tourism; and real estate). 4,606 (42%) were approved unconditionally, 5,687 (52%) approved with conditions, with the rest rejected, withdrawn or exempt.</p>
<p>The real estate sector was the primary target of investment, with 9,771 (96%) of all applications. While clearly dominating the number of applications, real estate investment comprised only $42 (23%) out of $177 billion of investment across all sectors. This is due to the relatively small nature of investment in real estate, compared to the larger scale of business investment. For instance, mineral exploration & development garnered the most investment at $55 billion, albeit with a tiny number of applications at 222 (2%). Next was the service sector at $48 billion with 117 (1%) applications, followed by the real estate sector.</p>
<p>The overwhelming majority of real estate applications were for the residential sector rather than commercial sector, at 9,556 (98%) and 215 (2%), respectively. While the number of applications is overwhelmingly lopsided, both residential and commercial sectors received the same amount of investment at $21 billion. Within the residential sector, 3,885 (41%) applications were for existing properties and the rest for purposes of property development at 5,671 (59%).</p>
<p>Interestingly, Victoria was the target for most real estate applications, at 4,398 (45%), with New South Wales coming in at a distant second with 2,598 (27%). Given Victoria’s 2.2 million dwellings, with an estimated 40,000 new dwellings constructed last year, the number of applications amounts to 11% of all new dwellings, a fraction compared to the total dwelling stock.</p>
<p>Clearly, the vast majority of ownership within the real estate sector is domestic. The top country by investment in this sector is the UK at $4.6 billion, followed by China at $4.1 billion, and the US in third place with $3.4 billion. China headed the pack with the largest number of applications across all sectors, at 5,033 (47%) of the total.</p>
<p><a href="http://news.domain.com.au/domain/real-estate-news/apartment-prices-seem-like-a-bargain-to-wealthy-chinese-buyers-20120525-1za52.html">Chinese investors may perceive</a> Australia’s property market as a store of wealth, especially considering the relative stability of the Australian government and economy. The steadily growing Chinese economy has produced <a href="http://www.ml.com/media/114235.pdf">535,000 millionaires</a> as of 2010, outnumbering Australia’s 193,000. The growing ranks of these high net worth individuals could be a driver of foreign investment into Australia, though this cannot be confirmed without comprehensive data from the FIRB.</p>
<p>As noted, this has resulted in concerns about foreigners “interfering” in the health of the property market. The evidence, however, shows that foreign investment in real estate is relatively small. Apprehension of Chinese influence (the “yellow peril”) is unwarranted, as the US and UK are collectively responsible for double the amount of Chinese investment.</p>
<p>It is impossible to mount a case that foreign investment is a driver of increasing housing prices. This is no different to the National Housing Supply Council <a href="https://theconversation.com/beware-the-rent-seeking-organisation-dont-be-dudded-by-housing-data-8112">suggesting that homeless people</a> and caravan park residents are a cause of an undersupply, pushing up prices. The blame game in the US says that the <a href="http://www.foreignpolicy.com/articles/2012/01/17/how_china_s_boom_caused_the_financial_crisis?page=0,0">Chinese were partially responsible</a> for the housing and financial crises on the basis that the Chinese government’s purchases of US bonds kept interest rates artificially low, setting off the housing boom.</p>
<p>Blaming foreigners for astronomical prices is nothing but a scapegoat for the policies enacted by government on behalf of bankers and landowners that makes housing unaffordable. Those who are discontented with the current states of affairs should focus their attention on our own government rather than searching for foreign influences.</p><img src="https://counter.theconversation.com/content/8340/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Philip Soos does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>One question that arises on the topic of real estate is the scale of foreign investment and ownership in Australia. It is understandable that the public has concerns about such investment, especially as…Philip Soos, Deakin UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/58822012-03-27T03:34:50Z2012-03-27T03:34:50ZChallenges for investors amid Indonesia’s foreign ownership regulations<figure><img src="https://images.theconversation.com/files/8971/original/x254bz9k-1332717595.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Changes to foreign ownership laws in Indonesia will present further challenges for mining companies.</span> <span class="attribution"><span class="source">AAP</span></span></figcaption></figure><p>The <a href="http://www.smh.com.au/business/indonesia-revises-foreign-ownership-20120308-1unbo.html">recent announcement</a> that foreign mining companies in Indonesia would have to sell at least 49% of their shares to local interests raises questions about whether this indicates a change of direction for economic policy in Indonesia. And, if so what the impact might be on the economy and foreign investors.</p>
<p>As <a href="https://researchers.anu.edu.au/researchers/hill-hc">Hal Hill from ANU</a> observed recently, there is something of a tradition in Indonesia that when the economy is doing well – as Indonesia’s is right now – governments adopt more protectionist economic policies. This is undoubtedly the case here. </p>
<p>In recent weeks alone, the government has announced a series of measures that would limit foreign economic activities in the country and support local industry. </p>
<p>Foreigners, for instance, are slated to be banned from holding positions of authority in human resource management divisions of companies, on the grounds that they do not understand cultural issues associated with managing an Indonesian workforce.</p>
<p>Regulations have been announced or issued limiting the export of unprocessed minerals, in order to support local processors.</p>
<p>There is discussion about limiting the percentage of shares foreigners can hold in Indonesian banks, which currently stands at 99%.</p>
<p>These changes have not been unopposed. Indeed, they have already claimed political scalps. Last year, two key economics ministers – Sri Mulyani, the Finance Minister and Mari Pangestu, Minister for Trade – lost their jobs. Pangestu in particular had been associated with free trade, and had carriage of the China-ASEAN free-trade agreement, which entered force fully for Indonesia on 1 January, 2010.</p>
<p>But, as some in Australia have suggested, is this simply Indonesian economic nationalism raising “its ugly head”?</p>
<p>Defenders of the policy initiatives would say there is nothing “ugly” about looking after local interests before foreign ones, or about ensuring that the state gets a reasonable share of the return from foreign investment, including in mining.</p>
<p>More broadly, liberalism – in the economic sense – has long been a dirty word in many quarters in Indonesia, as it is suggestive of foreign economic exploitation. </p>
<p>For all that foreign capital may contribute to the nation’s economy, it occupies an uneasy position politically. And foreign investment is an all too easy target of popular opposition. Almost any demonstrations against government economic policy – such as the current ones protesting a possible price hike for fuel – will include criticism of the alleged role of foreign capital in the issue in dispute.</p>
<p>If the result of these changes in policy was to reduce the level of foreign investment, this would be an acceptable price to pay for greater local control of the economy for some activists, including some in or close to the government.</p>
<p>But the cost to the economy, and thus to the community, would be substantial. Indonesia is in dire need of investment, particularly investment in economic infrastructure. The dire state of such infrastructure constitutes probably the second biggest barrier to the further development of the economy, after corruption.</p>
<p>If foreign investment funds were withdrawn, and local funds were spent on acquiring shares in existing companies, rather than being invested in new ventures, this would hardly be in the Indonesian national economic interest.</p>
<p>But will these changes actually have a significant impact on foreign investment in the Indonesian economy, particularly in the mining sector?</p>
<p>The assertion that “the devil is in the detail” is no cliche in Indonesia: it is an ever-present fact of life. These regulations are no exception.Exactly how they will be implemented is yet to be explained.</p>
<p>Coordinating Minister for Economic Affairs, Hatta Rajasa, was undoubtedly right when he asserted that while foreign investors would be prepared to accept the changes, what they would not accept would be a divestment process that was not transparent and accountable.</p>
<p>The mining industry faces significant challenges in Indonesia. The decentralisation of economic and political decision-making has greatly empowered the provinces and the districts in the management of mining activities. This has led to an increased burden of taxation on those companies and greater demands for responsible management of the local environment.</p>
<p>Some mining companies will undoubtedly find these new regulations – assuming they are implemented – to be the last regulatory straw.</p>
<p>But for many such companies, the question will be: if not Indonesia, then where? Given the current state of the world economy, Indonesia still looks pretty attractive as an investment destination.</p><img src="https://counter.theconversation.com/content/5882/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Colin Brown is affiliated with the Australia Indonesia Business Council.</span></em></p>The recent announcement that foreign mining companies in Indonesia would have to sell at least 49% of their shares to local interests raises questions about whether this indicates a change of direction…Colin Brown, Adjunct Professor, Griffith Asia Institute, Griffith UniversityLicensed as Creative Commons – attribution, no derivatives.