List of Recommendations
1.16 The committee recommends that the government
further strengthen Australia's tax regulations in order to protect against the
erosion of Australia's tax revenue. In particular, the government should
develop more rigorous approaches to prevent tax revenue leakage that may occur
due to the business structures and practices used by foreign investors in
other relevant tax mechanisms.
1.17 The committee also recommends that the
government continue to work towards international reforms to address tax
revenue leakage, including issues relating to transfer pricing. The committee
notes the current progress by the government, the OECD and the G20 in this area
and urges the government to continue pursuing international taxation reforms
through these organisations.
2.25 The committee recommends that the government
establish an Independent Commission of Audit into Agribusiness, or similar
body, to develop a comprehensive policy approach to Australian agriculture.
Furthermore, the government should use this inquiry's interim report and final
report, and the submission from Mr Farley (referred to above) as the basis for
consultations with industry stakeholders aimed at establishing the terms of
reference and general structure of the commission (including relevant
commissioners and powers for information gathering).
2.47 The committee recommends that, given the
future challenges arising from the global food task and the changing approaches
to the regulation of foreign investment that have occurred in countries
comparable to Australia, the government should commission an independent and
wide-ranging review of Australia's foreign investment regulatory framework. In
particular, the review should examine the ways that the government can ensure
that foreign investments in Australian agriculture:
made on a genuinely commercial basis;
not distort the capital market;
not distort the trade in agricultural products; and
fairly with domestic Australian farmers and agribusinesses.
2.48 The review should take into account the issues
raised, and the recommendations made, in this report and the committee's
interim report of November 2012.
2.49 The review should be used as a reference point
for the government's strengthening of the national interest test, improvement
of relevant compliance regimes, and the other policy and legislative changes
recommended in this report.
3.44 The committee recommends that the ABS does not
conduct future ABS agricultural surveys on foreign investment. The committee
considers that the national register for foreign ownership of agricultural land
should be the primary mechanism for collecting and publishing information about
foreign investment in Australian agriculture (as per the recommendations
3.60 The committee recommends that when establishing
the agricultural land register, the government conduct an initial stocktake of
foreign ownership of agricultural land, agribusiness and water entitlements. In
addition to numbers of businesses, land size and volume of water entitlements,
the value of foreign investment acquisitions should be captured. The initial
stocktake should be comprehensive, as far as possible consistent across states,
and take into account complex company structures including foreign trusts,
"shell companies", ownership of agricultural assets by foreign mining
companies, and debt structuring and ultimate liability.
3.61 Furthermore, on the basis of this initial
stocktake, the government should commission independent modelling of the level
of foreign investment in Australian agriculture in 20 years' time if current
trends and regulatory arrangements are assumed to remain. The modelling should
also include estimated costs to the industry over the same period based on
current constraints to domestic capital investment in Australian agriculture.
Finally, the modelling should have regard to the future opportunities provided
by the growing global food task over this period.
3.62 The committee recommends that the ongoing
information collected in the register include the information that the
committee recommended be included as part of the stocktake of foreign ownership
(as per recommendation 6).
3.63 The committee recommends that the register
include divestments as well as investments. This will ensure that the
information from the register remains current and can reflect changes over
3.64 The committee recommends that participation in
the register be a legal requirement for foreign investors and that appropriate
mechanisms for compliance apply in cases where such participation is avoided.
3.65 The committee recommends that the register not
use the current definition of 'rural land' in the FATA. Instead the definition
adopted should be that which results from the update of 'rural land' as per
recommendation 25. This would maintain consistency with the regulatory
framework for foreign investment in Australian agriculture.
3.66 The committee recommends that there be no
minimum threshold for reporting and that all foreign investment should be
captured in the agricultural land register. However, this data should be
collected in a manner that can clearly delineate foreign investments in terms
of value and business size.
3.68 The committee recommends that the register's
data be held in a manner that is centralised and can provide comprehensive
information about all foreign ownership that is recorded.
3.69 The committee recommends that levels and
trends of foreign ownership of land, agribusiness and water entitlements should
be published annually by the national register for foreign ownership of
agricultural land. Aggregate level data about the respective value and level of
interest of foreign government investors and private foreign companies should
be included. The data should also be made available in categories such as
state, sub‑industry (ANZSIC levels), water catchment areas, and local
3.70 The committee recommends that country of
origin of all foreign government investors and specific foreign government
investments should be published annually by the national register for foreign
ownership of agricultural land.
3.71 The committee recommends that, in order to prevent
possible disincentives for foreign investment, the country of origin details
for private foreign companies should be published by the national register for
foreign ownership of agricultural land at aggregate levels only. However,
country of origin details for specific private foreign investments should be
made available to parliamentarians, parliamentary committees, and any relevant
government agency upon request.
4.64 The committee recommends that, in line with
recommendation 4, the government develop a stronger, more rigorous and more
transparent system for examining cases of foreign investment in Australia,
including Australian agriculture. Particular focus should be made on
structures (including management relationships in joint Australian/foreign
relationship between a foreign government's acquisitions strategy (such as food
security) and the commercial operation of their subsidiary businesses in
of setting clear and auditable ongoing undertakings that are in the 'national
4.65 The committee recommends that the government
amend the FATA to create more effective compliance mechanisms for companies
that do not rigorously and continually adhere to the undertakings and
conditions of FIRB approval. In addition, the government should develop further
mechanisms to improve compliance with FIRB policy and decisions. Any new
compliance regime should provide the Treasurer and relevant officials with a
wide variety of compliance tools, in addition to forced divestiture, so that
compliance matters can be resolved more efficiently and in proportion to the
severity of any breaches.
4.66 The committee recommends that the government
increase the transparency and public awareness of the national interest test so
that it has the following two clear aims:
precise and unambiguous instructions to prospective foreign investors about
their obligations to FIRB and the Treasurer, and how the national interest test
is conducted; and
the confidence of the public, FIRB stakeholders and the Parliament that the
national interest test is being rigorously and fairly applied and takes in to
account all relevant factors including impacts on rural communities and the
4.67 This recommendation relates to water
entitlement buybacks conducted under the government's Restoring the Balance
Program and the Sustainable Rural Water Use and Infrastructure Program as
part of the water recovery process under the Murray-Darling Basin Plan. The
committee recommends that any such water buybacks that are from companies that
have had acquisitions subject to FIRB review (including Cubbie Station) should
be forwarded to the Australian National Audit Office (ANAO) for review. The
ANAO should publicly report on whether water buybacks in such cases represent
value-for-money for Australian taxpayers. The committee accepts that any review
by the ANAO would occur after a water buyback has occurred.
5.31 The committee recommends that the threshold
for private foreign investment in agricultural land be lowered to $15 million.
5.32 The committee also recommends that once cumulative
purchases of $15 million of private investment in agricultural land has
been reached by a private business or associated entities, any further
investment by that business or entity be required to receive FIRB approval
regardless of value.
5.33 The committee recommends that FIRB reviews any
proposed foreign acquisition of an agribusiness where investment exceeds 15 per
cent or more in an agribusiness valued at $248 million (indexed annually) or
exceeds $54 million.
5.34 The committee recommends that the zero trigger
required for approval by FIRB for any purchase of agricultural land or an
agribusiness by a state owned enterprise will continue to apply.
5.35 The committee recommends that Australia's
Foreign Investment Policy (AFIP) be amended to clearly define the
"interests of local economies" and the "interests of local
communities". Furthermore, there should be a greater requirement for FIRB
to take into ccount these local interests in the assessment of foreign
purchases of agricultural assets.
5.51 The committee recommends that the government
update the definitions of 'Australian rural land' and 'Australian urban land'
in the FATA with the aim of more accurately reflecting the common
understandings of these terms.
6.14 The committee recommends that the Australian
government commission an extensive and independent review of possible
incentives and barriers for long‑term capital investment in major
Australian agricultural developments by Australian investors, including
superannuation funds and other domestic investors with long-term horizons. The
review should make a comparative analysis with the incentives for foreign
investors to invest in major Australian agricultural developments.
6.15 Based on the findings of the review, the
Australian government should develop, publish and implement policies to
encourage long-term domestic capital investment in Australian agriculture. The
policies should specifically identify opportunities for Australian
superannuation funds and other domestic investors with long-term horizons and
where appropriate, the policies should be coordinated with relevant state
governments and agencies.
6.18 The committee recommends that, as part of the
review and policies established under recommendation 26, and with appropriate
consultation with the banking industry, the agricultural sector and other
interest parties, the government should consider appropriate avenues for improving
access for Australian agricultural businesses to domestic finance from
6.25 The committee recommends that the Australian
government encourage the Western Australian and Northern Territory governments
to consider possibilities for establishing a water market (including tradable
water entitlements) for irrigation developments, including the Ord, in
Australia's north. The information about foreign ownership of any water
entitlements established under this regime should be included in the national
foreign ownership register for agricultural land.
6.34 The committee recommends that the
commonwealth, state and territory governments work together to consider
appropriate policy options for consulting with FIRB in cases of proposals for
significant foreign acquisitions from respective governments bodies.
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