Bills Digest no. 31,
2016–17
PDF version [626KB]
Paula Pyburne
Law and Bills Digest Section
7 November 2016
Contents
Purpose of the Bill
Structure of the Bill
Background
Government response
Request that water be included
Consultation process
Committee consideration
Selection of Bills Committee
Senate Standing Committee for the
Scrutiny of Bills
Policy position of non-government
parties/independents
Position of major interest groups
Industry water use
Overlap with state registers
Investor confusion
Financial implications
Statement of Compatibility with Human
Rights
Parliamentary Joint Committee on
Human Rights
Key issues and provisions
Preliminary matters
About the Land Register
Establishing the Water Register
Foreign persons
Relevant water entitlements
Constitutional validity
Requirement to give information
Stocktaking from 1 July 2017
From 1 December 2017
Sunset clause
Concluding comments
Date introduced: 12 October 2016
House: House of
Representatives
Portfolio: Treasury
Commencement: On Royal Assent.
Links: The links to the Bill, its Explanatory Memorandum and second reading speech can be found on the Bill’s home page, or through the Australian Parliament website.
When Bills have been passed and have received Royal Assent, they become Acts, which can be found at the Federal Register of Legislation website.
All hyperlinks in this Bills Digest are correct as at November 2016.
Purpose of
the Bill
The purpose of the Register of Foreign Ownership of
Agricultural Land Amendment (Water) Bill 2016 (the Bill) is to amend the Register of Foreign
Ownership of Agricultural Land Act 2015 (Register
of Foreign Ownership Act) to establish a Register of Foreign Ownership
of Water Entitlements (called the Water Register) to be administered by the
Commissioner of Taxation (the Commissioner).
Structure
of the Bill
The Bill has two Parts:
Background
In 2014 a sharp rise in housing prices in Sydney and
Melbourne, along with suggestions that perhaps 40 per cent of new homes were
being purchased by overseas buyers, was reported.[1]
In addition to the apprehension about the rise in residential real estate
prices were two other concerns. First, there were claims that ‘... tough visa
restrictions, which limit temporary residents to owning just their family home,
were being flouted’.[2]
Second, was the suggestion that wealthy Chinese investors were ‘sidestepping Foreign
Investment Review Board (FIRB) regulations to buy established property’.[3]
The ongoing issues about residential real estate fed into
the commentary during the second half of 2014 about the Government’s efforts to
enter into free-trade agreements with South Korea, Japan and China. As part of
the relevant negotiations, the Australian government ‘... sought and got a $15
million limit on investment in agricultural farms and properties, and a $53
million limit on investment in agribusinesses before they have to go the
Foreign Investment Review Board’.[4]
However, it was reported that as part of the free trade agreement negotiations
with China, the limit on investment may be as high as $1 billion before
approval would need to be sought from the FIRB.[5]
It was unsurprising then that farmers expressed concerns in relation to the
level of foreign investment in agriculture[6]
or that the FIRB system was described as being ‘... like Swiss cheese with new
inconsistency being created at random by free-trade agreements and new rules
dealing with agriculture investment’.[7]
Government
response
In February 2015, the Prime Minister, the Treasurer and
the Minister for Agriculture jointly announced that the Government intended to
tighten the rules on foreign purchases of agricultural land.[8]
That being the case, the Government circulated a consultation paper intended to
canvass opinions about ways to strengthen Australia's foreign investment
framework, particularly around residential real estate and agriculture.[9]
Following that consultation process, on 2 May 2015 the Government
announced, amongst other things, that there would be increased scrutiny around
foreign investment in agriculture and increased transparency on the levels of
foreign ownership in Australia through a comprehensive land register.[10]
Accordingly, on 20 August 2015 the Government introduced a
suite of Bills being:
- Foreign Acquisitions and Takeovers Legislation Amendment Bill 2015[11]
- Foreign Acquisitions and Takeovers Fees Imposition Bill 2015[12] and
- Register
of Foreign Ownership of Agricultural Land Bill 2015—which established a
Register of Foreign Ownership of Agricultural Land (called the Land Register)
to be administered by the Commissioner of Taxation.[13]
Speaking in relation to the Register of Foreign Ownership
of Agricultural Land Bill 2015, Senator Day explained that the lack of reliable
data as to the amount of foreign ownership of agricultural land had been
identified as a significant problem:
We have also communicated with the Commonwealth about whether
the Foreign Investment Review Board had any data, and similarly we were
surprised to find how little they could tell us about the FIRB's work. They
could not, at that time, for instance, tell us how many times a Chinese state
owned corporation had sought approval or how many requests they had approved or
rejected. They could not tell us and, as we know, every single purchase
requires this, no matter what the price might be.
The dearth of quality data at state and federal levels
pointed to the need to improve the data collection and matching, and that is a
key part of what the government is delivering in this package.[14]
Request
that water be included
The same dearth of quality data applies in respect to
water access entitlements. The only official source of national data on foreign
investment in water resources is the Australian Bureau of Statistics’ Agricultural
Land and Water Ownership Survey[15]
which was last updated in June 2013.
All the states and territories collect data on the
entitlements and rights they confer on a person or business. However, this data
does not capture information on the status of the holder as a foreign person.
There is also inconsistent data on private or third-party arrangements where
the rights conferred by the states and territories are subsequently leased or
provided to another person through a contractual arrangement.[16]
The three 2015 Bills were referred to the Senate Economics
Committee for inquiry and report.[17]
The majority of Senators on the Committee recommended that the Bills be passed.[18]
The minority report of the Labor Senators supported the
Register Bill but expressed concerns about the contents of the other Bills in
the suite of Bills.[19]
Notably, no Australian Greens Senator was a participant in
that particular inquiry.
However, during the second reading
debates on the Bills in the Senate, Senator Siewert stated:
The Greens believe that for Australia to make informed and
strategic decisions about our agricultural land and water resources we must
accurately track and consider each bid by foreign investors, particularly sovereign
nations. The Greens support the creation of a review of foreign ownership of
agricultural land to constantly track overseas purchases. We support the moves
of the government to introduce a register for agricultural land. However, we
see no reason why the government cannot commit here and now to also introducing
a register for water holdings.[20]
In the same vein, Senator Whish-Wilson stated:
Water is often more valuable than the land. In this instance,
the two go together. We have had discussions with the government about getting
up an amendment to include agricultural water and a holding in agricultural
water.[21]
It would appear that the relevant
amendment could not be drafted during the debate. It was subsequently
reported that the Greens pledged to support the legislation on the condition that
the Government started work on creating a register of foreign ownership of
water entitlements.[22]
The Register of Foreign
Ownership Act (when enacted) included a sunset
provision which operates so that the Act will cease to have effect at
the end of 1 December 2016 if an Act, or the provisions of an Act,
providing for a register of foreign ownership of water entitlements, do not
commence before that time.[23]
This Bill is a response to that provision.
Consultation
process
In February 2016 the Government sought comments on a
consultation paper on a National
Register of Foreign Ownership of Water Access Entitlements.[24]
Twelve submissions
were received in response.[25]
The submissions indicated a general support for the introduction of the Water
Register. However, many expressed concerns about the possible compliance burden
on investors.[26]
In August 2016 the Government then released exposure
drafts of the proposed legislation and explanatory
material.[27] Although the Explanatory Memorandum to the Bill states that 11 written
submissions were received, those submissions had not been uploaded onto the
Treasury website at the time of writing this Bills Digest.[28] In addition to public
consultation about the exposure draft, Treasury, the Department of Agriculture
and Water Resources and the Australian Taxation Office held meetings with the
National Farmers Federation, Minerals Council, New South Wales Law Society, Law
Council and representatives from the irrigation industry.[29]
Committee
consideration
Selection
of Bills Committee
At its meeting on 13 October 2016, the Senate Selection of
Bills Committee determined that the Bill would not be referred for inquiry and
report.[30]
Senate
Standing Committee for the Scrutiny of Bills
At the time of writing this Bills Digest, the Senate
Standing Committee for Scrutiny of Bills had made no comment about the Bill.
Policy
position of non-government parties/independents
As noted above, the Greens support the establishment of a
register of foreign water holdings.
It has been reported that, at the time of the enactment of
the Register of Foreign Ownership Act, the Nationals had also been
pushing for greater scrutiny of these water licences.[31]
At the time of writing this Bills Digest no comments had
been made in relation to the Bill by representatives of non-government parties
or independents.
Position of
major interest groups
When the proposal to create a water register was announced
in November 2015, an investor in water entitlement trading company H20X, Matt
Davis, was reported as saying that ‘... the creation of a water investment
register would be helpful and “give clarity around ownership to the broader
market”’.[32]
The National Farmers Federation expressed its view that a national foreign
ownership register for both land and water is critical to respond to the
community concerns around investment in Australian agriculture.[33]
This has, in fact, been their position for a number of years.[34]
The Australian Water Brokers Association stated (as part of the Treasury
consultation) that it was in favour of a centralised registry system which
would ‘reduce compliance costs and complexity’.[35]
Industry
water use
The Minerals Council of Australia (MCA) was particularly
concerned that the minerals sector, which it considers is a relatively small
user of water, would be captured by the legislation on the grounds that ‘minerals
industry water use differs to that of agriculture’.[36]
It stated:
A water register aligned with the requirements of the
agricultural land register would impose the same reporting obligations and
penalties for non-compliance. Water access arrangements are likely to be traded
or modified more frequently than the purchasing of agricultural land. The MCA
questions what mechanism would be used to inform a potentially foreign owned
purchaser of their reporting obligation and avoid incurring penalties for
non-compliance. Furthermore, it is unclear what the obligation on the company
would be in circumstances where a company which already holds a water access
entitlement is sold (or part sold above the trigger threshold) to foreign
owners.[37]
Overlap
with state registers
The New South Wales Irrigators’ Council acknowledged the
benefits of aligning the national foreign ownership register of water access
entitlements with the existing agricultural land register. However, it is
concerned that ‘... the establishment of a Commonwealth administered register
could potentially duplicate existing state registers and hence increase the
complexity and costs for its administration’.[38]
The Law Society of New South Wales stated that the main
disadvantage arising from the Bill ‘... is that there is potential for
duplicating existing state-based reporting requirements, which increases
business compliance costs’.[39]
Investor
confusion
According to the Queensland Department of Natural
Resources and Mines:
... the Australian Government should be mindful that the
monitoring of foreign ownership [of water access entitlements] may be regarded
as being inconsistent. For example, land owned by a foreign person for a
purpose other than agriculture is not tracked at the national level (but it is
in Queensland), yet water that is held by a foreigner to be used for any
purpose will be monitored at a national level. This differential targeting by
the proposed foreign ownership of water register and the existing registers for
foreign agricultural land and foreign residential land creates the potential for
investor confusion.[40]
Financial
implications
According to the Explanatory Memorandum to the Bill its
financial impact will be nil.[41]
Statement of Compatibility with Human Rights
As required under Part 3 of the Human Rights
(Parliamentary Scrutiny) Act 2011 (Cth), the Government has assessed
the Bill’s compatibility with the human rights and freedoms recognised or
declared in the international instruments listed in section 3 of that Act. The
Government considers that the Bill is compatible.[42]
Parliamentary
Joint Committee on Human Rights
At the time of writing this Bills Digest, the Parliamentary
Joint Committee on Human Rights had made no comment about the Bill.
Key issues
and provisions
Preliminary
matters
The Bill renames the existing Register of Foreign
Ownership of Agricultural Land Act as the Register of Foreign Ownership
of Water or Agricultural Land Act.[43]
Item 3 of the Bill amends the simplified outline of the Act to explain
that the Commissioner is required to keep two registers—being the Land Register
and the Water Register.
About the
Land Register
The Land Register was established so that, with effect from
the Act’s commencement on 1 December 2015, foreign persons were required to
notify the Commissioner of all the agricultural land they held as at 1 July
2015. In addition they are required to notify the Commissioner if they start or
cease to hold agricultural land.[44]
The Land Register is maintained in two parts. The first
part is called the basic part and it contains all the details of the identity
of the foreign person and the land holdings. The other part, called the
statistical part, contains statistics derived from the information in the basic
part. The statistical part must not identify, or be reasonably capable of being
used to identify, a person.[45]
The Commissioner is required to publish the statistical part of the register on
its website.[46]
In addition, the Commissioner must give the Minister, for
presentation to the Parliament, a report about the operation of the Act and include
statistics derived by the Commissioner from information in the basic part of
the Register. That report is to be given as soon as practicable after 30 June each
year.[47]
Item 27 of the Bill amends the Register of
Foreign Ownership Act to insert proposed Part 3A—Register of Foreign
Ownership of Water Entitlements and proposed Part 3B—Requirements to
give information about foreign holdings of water entitlements. These new
Parts are in similar terms to existing Part 2 and Part 3 of the Register of
Foreign Ownership Act. The effect of the amendments is that the Water
Register will operate in much the same way as the existing Land Register with
the primary difference being the date from which the Commissioner must be
notified and the nature of the rights to be notified.
Establishing
the Water Register
Under proposed Part 3A, the Commissioner must keep
a Register of Foreign Ownership of Water Entitlements which contains
information about foreign persons’ holdings of certain water entitlements and
contractual water rights.[48]
Foreign
persons
Section 4 of the Register of Foreign Ownership Land Act
provides that the term foreign person has the same meaning as in
the FATA. The FATA defines a foreign person very
broadly as including:
- an
individual not ordinarily resident in Australia[49]
- a
corporation in which an individual who is not ordinarily resident in Australia,
a foreign corporation or a foreign government[50]
holds a substantial interest—that is, at least a 20
per cent interest in the entity[51]
- a
corporation in which two or more persons (each of whom is an individual not
ordinarily resident in Australia), a foreign corporation or a foreign
government, hold an aggregate substantial interest
- the
trustee of a trust in which an individual not ordinarily resident in Australia,
a foreign corporation or a foreign government holds a substantial interest
- the
trustee of a trust in which two or more persons (each of whom is an individual
not ordinarily resident in Australia), a foreign corporation or a foreign
government, hold an aggregate substantial interest—that is a
combined interest of at least 40 per cent in the entity[52]
- a
foreign government or
- any
other person, or any other person that meets the conditions, prescribed by the
regulations.[53]
According to the Explanatory Memorandum ‘it is estimated
that 767 foreign persons will be affected ...’ by the provisions in the Bill.[54]
In addition, it is expected that there will be overlap between persons who have
agricultural land holdings and water entitlements. The number of agricultural
businesses with some level of foreign ownership at 30 June 2013 was 806. It is
estimated that 604 foreign persons who hold agricultural land would also need
to register water entitlements.[55]
Relevant
water entitlements
The complex nature of water entitlements in Australia is
explained in Treasury’s National
Register of Foreign Ownership of Water Access Entitlements[56]
consultation paper as follows:
Primary responsibility for water resource management resides
with the states and territories and approaches differ between jurisdictions and
regions.
The nature of water rights is complex and differs across
Australia. Water rights can have different characteristics and can be tied to
land or not recorded in existing water registers and water planning systems
(for example, certain mining arrangements).
A water access right is a state or territory statutory right
to hold and/or take water from a water resource. It includes stock and domestic
rights, riparian rights, water access entitlements and water allocations. Of
these, water access rights, which include water access entitlements and water
allocations are tradable and may be separated from land.
Water access entitlements, which are statutory rights to a
perpetual share of a water resource, separate from land, have not been fully
established in all regions and in all states and territories. A water access
entitlement may be defined for groundwater or surface water which can be
regulated water (if the flow of water is controlled by regulating structures
such as dams or weirs) or unregulated.[57]
Other types of tradable water rights are irrigation rights
and water delivery rights.[58]
Item 12 of the Bill inserts proposed section 5A
into the Register of Foreign Ownership Act, to define a registrable
water entitlement as any of the following:
- an
irrigation right (within the meaning of the Water Act 2007[59])
that relates to a water resource in Australia
- a
right (including an Australian water access entitlement[60])
conferred by or under a law of a state or territory to either hold or take water
from a water resource in Australia, or both.[61]
However, a registrable water entitlement
does not include stock and domestic rights, riparian rights, water allocations
or a right of a kind specified in the rules.[62]
A contractual water right is a contractual
right to all or part of another person’s registrable water entitlement, their water
allocation or a right of a kind specified in the rules.[63]
Submitters to the Treasury consultation paper had
differing views about what water entitlements should be recorded on the Water
Register.
AgForce recommended that the rights to be recorded on the
Water Register should be perpetual or ongoing ownership or long-term lease of
entitlements to exclusive access to a share of the water resources rather than
on annual allocations or short-term temporary trades. The capturing of
entitlements regardless of size (volume or value) would enable comprehensive
coverage.[64]
In comparison the Australian Water Brokers Association was
of the opinion that all water allocation ownership above certain thresholds
should be included in the Water Register. It recommended as a guide ‘... the
cumulative acquisition of greater than 10GL [gigalitres] of allocation in any
given season by a foreign entity’.[65]
As it stands, the Bill’s definition of registrable
water entitlement is broad. It will impact not only the agricultural
sector but also mining; irrigation infrastructure operators; manufacturing; and
energy, electricity and waste services. However, there is capacity to limit
(but not expand) its breadth by the making of rules.
However, a contractual water right will only
be required to be notified if that right is reasonably likely to exceed five
years. (See discussion about notification requirements below).
Constitutional
validity
As with the Land Register, the Water Register is to be
kept in two separate parts—being the basic part and the statistical part. The
basic part must contain all the information obtained by the Commissioner under proposed
Part 3B.[66]
The statistical part must contain statistics derived by the Commissioner from
information in the basic part of the Water Register and any corrections or
updates to those statistics.[67]
It is to be published on the Commissioner's website,[68]
but must not identify, or be reasonably capable of being used to identify, a
person.[69]
Section 51(xi) of the Constitution
empowers the Parliament to make laws for the peace, order, and good government
of the Commonwealth with respect to statistics. It is primarily this section of
the Constitution that provides the legislative basis for the Bill.
According to the Explanatory Memorandum:
Nevertheless, section 11 of the Act (including as amended by
the Water Register Bill) provides for the continued operation of the Act or
provisions of the Act in the event of a successful constitutional challenge. It
sets out the various constitutional heads of power upon which the Act can draw
if its operation is expressly confined to persons under those constitutional
powers. This gives the Act (including as amended by the Water Register Bill)
the widest possible operation consistent with Commonwealth constitutional
legislative power.[70]
Requirement
to give information
Stocktaking
from 1 July 2017
Proposed Part 3B of the Register of Foreign
Ownership Act, inserted by item 27 of the Bill applies to foreign
persons who at the end of 30 November 2017 hold, or will hold, a registrable
water entitlement or a contractual water right that is reasonably likely to
exceed five years. The Bill requires such a person to give notice of the
holding to the Commissioner in the approved form. The notice must be given
during the period that starts on 1 July 2017 and ends on the later of 30
November 2017 and the 30th day after the day that the person starts to hold
that entitlement or right.[71]
The Law Council of Australia noted that there were
significant problems arising from the implementation of the Land Register:
For example, the forms developed for use with the
Agricultural Land Register by the ATO have been shown to be inadequate and will
need to be corrected, and liaison between the ATO and FIRB appears ... to require
improvement. Lessons learned from implementation of the Agricultural Land
Register can then be applied efficiently to implementation of the [Water
Register].[72]
The Law Society of New South Wales echoed this sentiment,
stating that for the Land Register:
... the ATO developed an online registration form which was
designed to capture land information based on a landholder holding one lot. In
practice, most rural land holdings comprise multiple lots which rendered the
online system impractical to use. The ATO then had to design a spreadsheet for
use by most landholders.
The ATO was then required to redesign the spreadsheet as
there was some uncertainty regarding what land details were required because
there are variations between the States as to the terminology around land title
information. Anecdotally, the ATO is still returning forms seeking information
that is not applicable to the land in question.[73]
The requirement that notification commence from 1 July
2017 will give the Commissioner time to ensure that the relevant technical
modifications to the machinery supporting the Register can be made.
From 1
December 2017
The Bill requires a person to give notice to the Commissioner
if certain events relating to a registrable water entitlement or a contractual
water right occur during a financial year.[74]
First, a foreign person must notify the Commissioner once
he, or she, starts to hold:
- a
registrable water entitlement or
- a
contractual water right where the term of the contract is reasonably likely to
exceed five years.[75]
- Similarly, a person must notify the Commissioner if he, or
she, becomes a foreign person when holding:
- a
registrable water entitlement or
- a
contractual water right where the term of the contract is reasonably likely to
exceed five years.[76]
This requirement does not apply to a person who became a foreign
person during the relevant financial year, but also ceased to be a foreign person
during that year.[77]
The Explanatory Memorandum provides the following example:
UJBB is a management trust which holds agricultural land and
rights to water which meet the definition of registrable water entitlement.
There are four shareholders in UJBB each with a 25 per cent shareholding.
During the 2020-21 financial year one of UJBB’s shareholders
sells his shares to a foreign person, making UJBB a foreign person.
However, before the end of the financial year, the foreign
person divests her shareholding which is bought by an Australian investor. As
UJBB no longer meets the definition of foreign person at the end of the
financial year, it does not need to notify the Commissioner of its registrable
water entitlements.[78]
The second type of event is linked, in the case of
contractual water rights, to the registration trigger time. Item 9
of the Bill repeals and replaces the definition of registration trigger
time in the Register of Foreign Ownership Act, to distinguish
between the time for notifying an occupation of land under a lease or licence and
the time for notifying a contractual water right. Relevant to this Bills
Digest, the registration trigger time in relation to a
contractual water right held by a person means the latest of:
- the
time the person started to hold the right
- the
time the person became a foreign person
- the
start of 1 December 2017.[79]
The events where the Commissioner must be notified are:
- a
foreign person ceases to hold:
– a
registrable water entitlement or
– contractual
water right where the term of the contract after the registration trigger time
is reasonably likely to exceed five years[80]
- a
person ceases to be a foreign person while holding:
– a
registrable water entitlement or
– contractual
water right where the term of the contract after the registration trigger time
is reasonably likely to exceed five years[81]
and
- there
is a change in the volume of water, or to the share of a water resource,
referred to in certain rights held by a foreign person. Those rights are:
– a
registrable water entitlement or
– a
contractual water right (where the term of the contract after the registration
trigger time is reasonably likely to exceed five years).[82]
If any of those events occurs the Commissioner is to be
given notice in the approved form before the end of 30 days after the end of
the financial year.[83]
The rules may provide for exceptions to the notice requirement.[84]
Sunset
clause
As stated above, existing section 34A of the Register
of Foreign Ownership Act contains a sunset provision which operates so that the Act will cease to have
effect at the end of 1 December 2016 if an Act, or the provisions of an Act,
providing for a register of foreign ownership of water entitlements, do not
commence before that time.
Item 33 of the Bill repeals that section. Item
34 of the Bill contains transitional provisions so that if the amendments
to the Register of Foreign Ownership Act included in the Bill commence
after 1 December 2016 then the Land Register, notifiable events in relation to
agricultural land and the timeframes to notify the Commissioner of notifiable
events in relation to agricultural land continue to have effect between
1 December 2016 and the time when the amendments commence.[85]
However, the 30 day period in which changes to foreign persons’ holdings of
agricultural land are to be notified to the Commissioner will be paused during
the period between 1 December 2016 and the commencement of the amendments made
by the Bill.[86]
Concluding comments
The Bill provides for a Water Register to be established.
Foreign persons (or their agents) are required to notify the Commissioner if
they hold certain water entitlements. The information will be used by the
Commissioner to provide the Minister with periodic reports, at least annually,
for presentation to Parliament. Those reports will contain a statistical
analysis of foreign ownership of water entitlements but will not identify the
holders of those entitlements.
[1]. C
Joye, ‘Sharp
rise in foreign investors and June prices’, Australian Financial Review,
1 July 2014, p. 37; S Cauchi, ‘Foreigners
grab housing’, The Age, 1 July 2014, p. 23; R Wallace, ‘$5.5bn
spree sparks call on foreigners’ property grab’, The Australian, 1
July 2014, p. 6; N Mauby, ‘Foreign
buyer surge: property investment up’, Herald Sun, 11 July 2014, p.
24.
[2]. L
Van Den Broeke, ‘Foreign
buyer probe: investors flout rules’, Herald Sun, 18 July 2014, p.
21; L Macken, ‘Cashed-up
Chinese find the sweet spot’, Sydney Morning Herald, 23 August 2014,
p. 16.
[3]. R
Wallace and A Hepworth, ‘1pc
of foreign home sales examined’, The Weekend Australian, 26 July
2014, p. 6; R Wallace and S Danckert, ‘Chinese
buyers “safeguarding wealth”’, The Australian, 14 August 2014, p. 6.
[4]. A
Robb (Minister for Trade and Investment), Interview
with Alan Jones: radio 2GB, transcript, 28 October 2014.
[5]. P
Wen, J Massola and G Hutchens, ‘Two
sticking points to China free-trade deal’, The Canberra Times, 8
November 2014, p. 7. The finalised China-Australia Free Trade Agreement
(ChAFTA) includes such a provision. As explained by the Department of Foreign
Affairs and Trade (DFAT): ‘ChAFTA promotes further growth of
Chinese investment into Australia, in particular by liberalising the screening
threshold at which private Chinese investments in non-sensitive sectors are
considered by the Foreign Investment Review Board (FIRB), increasing it from
$252 million to $1,094 million. Under ChAFTA, the Government will continue
to screen Chinese investments at lower thresholds for agricultural land and
agribusiness, and in sensitive sectors including media, telecommunications and
defence-related industries.’, DFAT, Investment, China-Australia Free
Trade Agreement fact sheet, DFAT, 2016.
[6]. M
Cranston, ‘Farmers
still not sold on overseas investors’, Australian Financial Review,
25 August 2014, p. 36.
[7]. G
Earl, ‘”Swiss
cheese” FIRB needs overhaul’, Australian Financial Review, 29 August
2014, p. 5.
[8]. T
Abbott (Prime Minister), J Hockey (Treasurer) and B Joyce (Minister for
Agriculture), Government
tightens rules on foreign purchases of agricultural land, joint media
release, 11 February 2015.
[9]. The
Treasury, ‘Strengthening
Australia's foreign investment framework’, The Treasury website, 25
February 2015.
[10]. T
Abbott (Prime Minister) and J Hockey (Treasurer), Government
strengthens the foreign investment framework, joint media release,
2 May 2015.
[11]. Parliament
of Australia, ‘Foreign Acquisitions and Takeovers Legislation Amendment Bill 2015
homepage’, Australian Parliament website.
[12]. Parliament
of Australia, ‘Foreign Acquisitions and Takeovers Fees Imposition Bill 2015
homepage’, Australian Parliament website.
[13]. Parliament
of Australia, ‘Register
of Foreign Ownership of Agricultural Land Bill 2015 homepage’, Australian
Parliament website.
[14]. B
Day, ‘Second
reading speech: Foreign Acquisitions and Takeovers Legislation
Amendment Bill 2015, Foreign Acquisitions and Takeovers Fees Imposition Bill
2015, Register of Foreign Ownership of Agricultural Land Bill 2015’,
Senate, Debates, 11 November 2015, p. 8354.
[15]. Australian
Bureau of Statistics (ABS), Agricultural
land and water ownership, June 2013, cat. no. 7127.0, ABS, Canberra,
June 2014.
[16]. Explanatory
Memorandum, Register of Foreign Ownership of Agricultural Land Amendment
(Water) Bill 2016, p. 5.
[17]. Details
of the terms of reference, submissions to the Senate Committee and the final
report are available on the inquiry homepage.
[18]. Senate
Standing Committee on Economics Legislation, Foreign Acquisitions and Takeovers Legislation Amendment Bill 2015 and
related Bills [Provisions], The Senate, Canberra,
14 October 2015, recommendation 1, p. 30.
[19]. Ibid.,
p. 31.
[20]. R
Siewert, ‘Second
reading speech: Foreign Acquisitions and Takeovers Legislation
Amendment Bill 2015, Foreign Acquisitions and Takeovers Fees Imposition Bill
2015, Register of Foreign Ownership of Agricultural Land Bill 2015’, Senate, Debates, 11 November 2015, p. 8366.
[21]. P
Whish-Wilson, ‘Second
reading speech: Foreign Acquisitions and Takeovers Legislation Amendment Bill
2015, Foreign Acquisitions and Takeovers Fees Imposition Bill 2015, Register of
Foreign Ownership of Agricultural Land Bill 2015’, Senate, Debates,
11 November 2015,
p. 8344.
[22]. D
Hurst, ‘Foreign
ownership of water licences faces scrutiny as Coalition agrees to set up
register’, The Guardian, (online edition), 23 November 2015.
[23]. Register
of Foreign Ownership Act, section 34A.
[24]. The
Treasury, National
register of foreign ownership of water entitlements, Consultation
paper, The Treasury, Canberra, February 2016.
[25]. Submissions
to The Treasury, Consultation into national register of foreign ownership of
water access entitlements, The Treasury, Canberra, March 2016.
[26]. For
example, Minerals Council of Australia, Submission to the Treasury, Consultation into
national register of foreign ownership of water access entitlements, 23
March 2016; A Miller, ‘Tepid
response to water register’, Stock &Land,
(online edition), 22 February 2016.
[27]. The
Treasury, ‘Register
of foreign ownership of water entitlements’, The Treasury website, 24
August 2016.
[28]. Explanatory
Memorandum, Register of Foreign Ownership of Agricultural Land Amendment
(Water) Bill 2016, p. 52.
[29]. Ibid.
[30]. Senate
Standing Committee for Selection of Bills, Report,
7, 2016, The Senate, Canberra, 13 October 2016, p. 4.
[31]. Hurst,
‘Foreign ownership of water licences faces scrutiny as coalition agrees to set
up register’, op. cit.
[32]. P
Riordan, A Grigg and M Cranston, ‘Greens,
Nats set roadblock for Chinese’, Australian Financial Review, 24
November 2015, p. 1.
[33]. National
Farmers Federation, Submission
to the Treasury, Consultation into national register of foreign
ownership of water access entitlements, 18 March 2016, p. 1.
[34]. A
Vidot, ‘NFF
calls for register of all farmland and water sales to foreigners’, ABC
Rural, 23 April 2012.
[35]. Australian
Water Brokers Association Inc., Submission
to The Treasury, Consultation into national register of foreign
ownership of water access entitlements, March 2016, p. 3.
[36]. Minerals
Council of Australia, Submission to The Treasury, Consultation into national
register of foreign ownership of water access entitlements, op. cit.
[37]. Ibid.
[38]. New
South Wales Irrigators’ Council, Submission
to The Treasury, Consultation into national register of foreign
ownership of water access entitlements, 23 March 2016, p. 4.
[39]. Law
Society of New South Wales, Submission
to the Treasury, Consultation into national register of foreign
ownership of water access entitlements, 14 March 2016, p. 1.
[40]. Queensland
Government Department of Natural Resources and Mines, Submission
to The Treasury, Consultation into national register of foreign
ownership of water access entitlements, 2016, p. 1.
[41]. Explanatory
Memorandum, Register of Foreign Ownership of Agricultural Land Amendment
(Water) Bill 2016, p. 3.
[42]. The
Statement of Compatibility with Human Rights can be found at pages 27–33 of the
Explanatory
Memorandum to the Bill.
[43]. Items
1 and 2 of the Bill amend the long title and short title of the Register
of Foreign Ownership of Agricultural Land Act.
[44]. Register
of Foreign Ownership Act, section 3.
[45]. Register
of Foreign Ownership Act, section 14.
[46]. Register
of Foreign Ownership Act, section 17.
[47]. Register
of Foreign Ownership Act, section 34.
[48]. Register
of Foreign Ownership of Water or Agricultural Land Act, proposed sections
30A and 30B.
[49]. Foreign
Acquisitions and Takeovers Act, section 5 provides that a person is ordinarily
resident in Australia if the person is in Australia for
200 days or more in any 12 month period.
[50]. Foreign
Acquisitions and Takeovers Act, section 4 provides that an
entity will be a foreign government if it is a body politic of a
foreign country, or part of a foreign country.
[51]. Foreign
Acquisitions and Takeovers Act, section 4 provides that a person holds a substantial
interest in an entity if the person holds an interest of at least 20
per cent in the entity.
[52]. Foreign
Acquisitions and Takeovers Act, section 4 provides that two or more persons
hold an aggregate substantial interest in an entity
if they hold an aggregate interest of at least 40 per cent in the entity.
[53]. Section
18 of the Foreign Acquisitions
and Takeovers Regulation 2015 sets out conditions under which
a general partner of a limited partnership and certain foreign government
investors will be a ‘foreign person’.
[54]. Explanatory
Memorandum, Register of Foreign Ownership of Agricultural Land Amendment
(Water) Bill 2016, p. 45.
[55]. Ibid.,
p. 46.
[56]. The
Treasury, National register of foreign ownership of water entitlements,
op. cit.
[57]. Ibid.,
p. 5.
[58]. Ibid.
[59]. Section
4 of the Water Act defines an irrigation right as a right
that a person has against an irrigation infrastructure operator to receive
water; and that is not a water access right or a water delivery right.
[60]. Item
4 of the Bill inserts the definition of Australian water access
entitlement which means a perpetual or ongoing entitlement, by or under
a law of a state or territory, to exclusive access to a share of the water
resources of an area in the state or territory.
[61]. Item
11 of the Bill inserts the definition of water resource which
means surface water or groundwater; or a watercourse, lake, wetland or aquifer
(whether or not it currently has water in it). The meaning of the terms in this
definition is equivalent to those in the Water Act.
[62]. Register
of Foreign Ownership of Water or Agricultural Land Act, proposed subsection
5A(2) inserted by item 12 of the Bill.
[63]. Item
6 of the Bill inserts the definition of contractual water right
into section 4 of the Register of Foreign Ownership of Water or Agricultural
Land Act. Section 35 of the Register of Foreign Ownership Act
provides for the Minister to make rules prescribing matters as required or
permitted by the Register of Foreign Ownership Act or which are
necessary or convenient to be prescribed in order to give effect to the Act.
Accordingly, the
Register of Foreign Ownership of Agricultural Land Rule 2015 was made on 23
November 2015.
[64]. AgForce,
Submission
to The Treasury, Consultation into national register of foreign
ownership of water access entitlements, 18 March 2016.
[65]. Australian
Water Brokers Association Inc., Submission
to The Treasury, Consultation into national register of foreign
ownership of water access entitlements, March 2016.
[66]. Register
of Foreign Ownership of Water or Agricultural Land Act, proposed subsection
30C(2).
[67]. Register
of Foreign Ownership of Water or Agricultural Land Act, proposed subsection
30C(3).
[68]. Register
of Foreign Ownership of Water or Agricultural Land Act, proposed section
30F.
[69]. Register
of Foreign Ownership of Water or Agricultural Land Act, proposed subsection
30C(4).
[70]. Explanatory
Memorandum, Register of Foreign Ownership of Agricultural Land Amendment
(Water) Bill 2016, op. cit., p. 25.
[71]. Register
of Foreign Ownership of Water or Agricultural Land Act, proposed section
30H.
[72]. Law
Council of Australia, Submission
to The Treasury, Consultation into national register of foreign
ownership of water access entitlements, 24 March 2016, p. 2.
[73]. Law
Society of New South Wales, Submission
to The Treasury, Consultation into national register of foreign ownership of
water access entitlements, 14 March 2016.
[74]. Register
of Foreign Ownership of Water or Agricultural Land Act, proposed subsection
30K(1).
[75]. Register
of Foreign Ownership of Water or Agricultural Land Act, proposed section
30L.
[76]. Register
of Foreign Ownership of Water or Agricultural Land Act, proposed section
30N.
[77]. Register
of Foreign Ownership of Water or Agricultural Land Act, proposed subsection
30K(3).
[78]. Explanatory
Memorandum, Register of Foreign Ownership of Agricultural Land Amendment
(Water) Bill 2016, op. cit., p. 21.
[79]. Register
of Foreign Ownership of Water or Agricultural Land Act, proposed definition
of registration trigger time to be inserted in section 4 by item
9 of the Bill.
[80]. Register
of Foreign Ownership of Water or Agricultural Land Act, proposed section
30M.
[81]. Register
of Foreign Ownership of Water or Agricultural Land Act, proposed section
30P.
[82]. Register
of Foreign Ownership of Water or Agricultural Land Act, proposed section
30Q.
[83]. Register
of Foreign Ownership of Water or Agricultural Land Act, proposed subsection
30K(1).
[84]. Register
of Foreign Ownership of Water or Agricultural Land Act, proposed section
30U. This provision is in equivalent terms to section 30 of the Register
of Foreign Ownership Act, which provides that rules may be made to exempt a
person from the requirement to give notice about foreign holdings of
agricultural land.
[85]. Explanatory
Memorandum, Register of Foreign Ownership of Agricultural Land Amendment
(Water) Bill 2016, op. cit., p. 26.
[86]. Subitem
34(2) of the Bill.
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