Second Reading – Foreign Acquisitions
Mr PITT (Hinkler) (12:33): I rise to speak on the Foreign Acquisitions and Takeovers Legislation Amendment Bill 2015. This is a very important bill for people in regional Australia. These reforms will ensure Australia’s foreign investment framework is modern, simple and effective. It will add integrity to the system so that everyone plays by the rules. It will also grant new compliance powers to the Australian Taxation Office and the Foreign Investment Review Board. I note that in a press conference just some hours ago, the Australian Taxation Office stated very, very firmly that they will be targeting the third-party facilitators that are being used to break Australian laws, and they will do that through the new penalty systems introduced as part of these bills.
There are new penalties for a foreign person who makes an acquisition without approval. There is an increased criminal penalty for an individual, a natural person, of 750 penalty units, which is equivalent to $135,000 or three years in prison. For a company, it will be 3,750 penalty units, which is equivalent to $675,000. The civil penalty for individuals is 250 penalty units or $45,000; for a company, 1,250 penalty units and $225,000. A foreign person who fails to comply with the condition of approval will get the same penalty levels as the previous one. It is important to note that without strong penalties and a strong enforcement framework this legislation will not work.
Foreign ownership, not foreign investment, is an issue of great importance to the people of my electorate, but not only for the people of Hinkler. I have travelled across our great nation, particularly throughout Queensland, whether it be the people in Flynn or the people in Capricornia, whether they are in Betoota or Birdsville, this is an issue of concern to them. It is something which has been of concern for a very long period of time. In fact, for the Nationals this has been an issue for many years, as I am sure the Minister for Agriculture, who is at the desk this morning, would agree with me. We have been fighting for this for a long time.
Clearly, now that it is affecting the people of Toorak and the good people of Sydney Harbour, it has certainly created a lot more interest. So I thought I would take the time to see how far back in time this has been an issue for. I was fortunate enough this morning to sit through a presentation from the National Archives. I was not aware how important a role they play, so imagine my surprise when I searched Hansard and found this issue went all the way back to the constitutional debate of 1901. I identified one speech in particular, by Senator Guthrie of the Nationalist Party on 13 June 1923 in the address-in-reply to the Governor-General’s speech. For those people who might be listening to this broadcast, the Nationalist Party is not the National Party. The Nationalist Party went on to become the United Australia Party, the precursor and the basis for the modern-day Liberal Party—as I am sure you are aware, Acting Deputy Speaker Goodenough, as a man who knows his history.
Even in June of 1923, there was discussion about the amount of suitable land that was available and its ownership by Australians or otherwise. Also in the same speech, if I could have some indulgence, was talk of a north-south railway. Well, that is something we will deliver. The Deputy Prime Minister has announced those things just this week—the additional money to ensure that we can put the link through, to finalise the great inland railway for the delivery of cargo. And I am sure the Minister for Agriculture will be interested in this: they spoke about water. One of the precursors of the great Liberal Party spoke about the need for water from the Great Artesian Basin and its protection, and the need to open up the rich and fertile lands of the Murrumbidgee, the Murray and Darling—things that are just as important now as they were almost a hundred years ago.
This bill is about getting the balance right. We need to ensure we get the balance right between foreign investment and foreign ownership. In my view, our fears of the unknown are always worse than the reality. Foreign investment in Australian real estate, according to the FIRB report of 2013-14, was just under $40 billion for commercial real estate and around $34 billion for residential real estate, totalling $74½ billion for the year. So acquisitions are not that unusual and under this legislation they will continue, but we have ensured that there is a framework to get the balance right.
I will speak briefly about some of the acquisitions that have occurred in my electorate’s recent history. These acquisitions were of great concern at the time, but many of these companies have gone on to become great local citizens, great corporate citizens of my electorate. That includes Bundaberg Sugar. Bundaberg Sugar is one of the largest landholders in the country, one of the largest agricultural landowners in this country. They provide employment, sugar milling services and railways. They grow all sorts of agricultural products and they have been around for over 125 years. But even they have a history of acquisitions and takeover—from their takeover by a company called Tate & Lyle through to their current ownership by Societe Financiere des Sucres—but they have stayed in business, employing local people, providing local jobs and ensuring the local economy continues to grow.
I will declare that I was an employee of Bundaberg Sugar for many years. In fact I went through an acquisition in the north—an organisation called South Johnstone Mill, a private grower owned cooperative. I really felt for the people of South Johnstone. It was a terrible process for them. But South Johnstone went on to be acquired by Bundaberg Sugar and has since been acquired by Maryborough Sugar—so this is not something which is unusual. This is something which continues to go on, but it is of great concern to the community.
Taxation and financial regulation can be a minefield. It is a complicated beast. It can sometimes be difficult to navigate and understand. I will give a really simple example of how we are protecting the nation. Previously foreign purchases of agricultural land were only subject to the national interest test and close scrutiny if they were worth more than $252 million. On 1 March this year, we reduced that screening threshold to $15 million. That means that any agricultural land purchases worth more than $15 million are now subject to close scrutiny. I know that this will create some difficulties for companies like Bundaberg Sugar, especially since the $15 million is a cumulative amount. They clearly have assets above that, so the test will be triggered when they purchase additional land in the local area.
Foreign investors will be required to register information about their existing holdings and subsequent acquisitions of agricultural land. Up until now only the state of Queensland has held such a register. This government is getting on with practical measures not only to assuage people’s fears but to ensure we have the detailed information that is required to make assessments.
This suite of bills does more than just protect agricultural land; it also relates to company holdings of residential and commercial real estate. From 1 December this year there will be stricter civil and criminal penalties that ensure foreign investors do not benefit from breaking the rules. The Treasurer today announced that there are 500 Foreign Investment Review Board investigations underway into $1 billion worth of illegal real estate holdings by foreign nationals. That is an enormous number of investigations. It is a significant achievement in such a short period of time and I congratulate the FIRB. They are getting on with this and ensuring that the new framework will be enforced.
Fees on foreign investment applications will give Treasury and the ATO additional resources and ensure that Australian taxpayers are no longer funding the administration of the system. These fees are expected to raise $735 million in revenue over the forward estimates. Effective from 1 December 2015, these fees include $10,000 for vacant commercial land, $25,000 for commercial real estate, $10,000 for new business proposals and internal reorganisations, $25,000 for business acquisitions where the value of the investment is less than $1 billion, and $100,000 for business acquisitions where the value of the investment is greater than $1 billion. For a $1 billion investment I do not believe $100,000 is unreasonable. If you were to look at the process Adani have gone through over the last five years, you would see that they have invested millions and millions of dollars in a mine which is not yet approved—a mine which would have created thousands of jobs, not only in Central Queensland but across the entire east coast.
As I have said, this is a matter of significant concern in the community. Whether I am at a market or a business drop-in, whether it is through emails, letters or phone calls, this is something that has constantly been raised with me over the two years I have been here. People are concerned about foreign ownership. This legislation strikes a balance—and it is this government that has taken action. We will get the balance right. We will continue to do what is right by the Australian people and I commend the bills to the House.