Tony Zappia (Makin, Australian Labor Party) Share this | Hansard source

I speak in support of the amendment moved by Labor to the motion for the second reading of the Foreign Investment Reform (Protecting Australia’s National Security) Bill 2020. As other speakers have already pointed out, this is a matter of considerable public interest out there in the community, and it's a matter that is often raised with me. It's also a matter about which there are widespread misperceptions, often causing unnecessary anxiety. But, notwithstanding any misperceptions, this is indeed important legislation because foreign investment always has been and continues to be a national security issue. That is why a Foreign Investment Review Board was established—I believe around 45 years ago.

What has very likely prompted this legislation, however, is public concern, particularly in recent years, about the level of investment originating from China—a matter that both the member for Clark and the member for Kennedy referred to in their speeches—and also the rise of China's influence in world affairs in recent times. Ironically, as we debate this legislation, Chinese investment in Australia has fallen from a peak of $15.8 billion in 2016 to $2.5 billion in 2019. I suspect that since then, although figures are not available, it has declined even further. Notwithstanding all that, I believe the legislation still addresses some of the matters that public concerns have been raised about.

The government, through this legislation, now wants to introduce a new national security test, strengthen the Treasurer's and tax commissioner's enforcement powers, expand information sharing between government departments, establish a new foreign investment register and establish a new fee structure for assessments. Whilst that all sounds good, I suspect that it is more about perception and spin than actual substance.

Foreign investment has indeed boosted the Australian economy over the years and enabled Australia to grow and prosper. That is, I believe, an undeniable fact. It has, however, also transferred major decision-making from Australia to overseas boardrooms and transferred substantial profits overseas, something which the member for Lyne alluded to in his comments and which I agree with. But, when control of a major gateway to Australia, such as the Port of Darwin, is handed over to a company linked to a foreign government, the Australian government has failed to provide the Australian people with the national security expected of it and has failed in its own national interest.

Not surprisingly, there was huge community backlash on that decision. The decision to lease the Port of Darwin for 99 years for $500 million was widely criticised, both within Australia and abroad. I believe it was a bad decision that made Australia a laughing-stock. The government did not need these new laws to have blocked the Port of Darwin lease, albeit the government will argue that that was a decision made by the Northern Territory government.

The Port of Darwin lease was not the only investment that raised eyebrows. Other investments in agricultural land, housing, commercial property, and information and communications technology all gave rise to public concerns. When it suited the Morrison government to do so it was always able to block investments, although, having said that, I note that over recent years, out of the 108,990 applications that have come before the Foreign Investment Review Board, only 10 have been rejected. It seems a very small number. I accept that many others were withdrawn, but, nevertheless, most investments get through. The government was able to block investment when it wanted to.

The Productivity Commission, in a research paper released earlier this year, stated that the term 'national interest' is undefined and ambiguous. It also stated:

This ambiguity gives Treasurers broad discretion to define the 'national interest' as they see fit …

I think that statement sums up the situation we have had for years. The Treasurer of the day has always had the ability to call in an application if the Treasurer saw fit to do so. The ambiguity gave the Treasurer considerable flexibility in determining whether the national interest was in any way being undermined. Therefore, the ability to reject a matter has always been there. That is why I believe this legislation is more about spin than substance.

According to that same research paper from the Productivity Commission, there is around $3.5 trillion of foreign investment in Australia and Australian investment overseas amounts to $2.5 trillion. That's a considerable amount. Other speakers questioned earlier today why more of that money isn't being invested in Australia rather than being sent overseas. That's a fair question. Perhaps there should be more incentives to invest that money here.

In 2018 the largest foreign investors in Australia were the USA, Japan, the UK, the Netherlands and, fifthly, China. China was well behind the USA in 2018 and even in the preceding years. Despite all the commentary about the level of China's investment in Australia, the fact remains that China sits well behind several other countries that have invested in Australia over the years. That includes investment in agricultural land, which again is a matter that was referred to by other speakers this morning. Foreign investment in agricultural land in 2018 was 13.4 per cent, and China's investment accounted for 2.3 per cent.

My concern—and I believe it's a concern shared by many other people across the country—is that those figures may not be comprehensive, because foreign ownership is very difficult to track and because in past years there was very little interest in doing so. When investment comes from an overseas country one wonders who is behind that investment and how far you need to go to track the source of the investment to find out who owns what. Even with those figures, it's clear that many other countries have been investing more in Australia than China has over past years.

That brings me to the matter of the register itself. This legislation proposes to introduce a register, and it is something that I would support. I believe it's long overdue and I believe that Australians have the right to know who is investing in Australia and, in particular, from which overseas country. Yet the proposed register will not be a public document because of, supposedly, sensitivities and privacy considerations. I'm not quite sure which sensitivities and privacy considerations should override the public interest and deny the Australian public the right to know just who is investing in Australia. If an overseas entity wants to invest in Australia that's fine, but why shouldn't they disclose exactly who they are and what they're investing in; and why shouldn't the Australian public have the right to know that? Indeed, that is one of the concerns about foreign investment and why this legislation is even before us, including the very notion of having a public register.

I also note with interest—and the member for Lyne alluded to this matter in his remarks only a few moments ago—that we have a register with respect to water ownership in this country. The member for Lyne quite rightly pointed out that about 10.4 per cent of the water in this country is owned by foreign entities. Of that, most of it, 9.4 per cent, is in the Murray-Darling Basin. My concern, similar to the member for Lyne's, is twofold. Firstly, a substantial amount of that water is owned by foreign entities at a time that many of the landholders in the Murray-Darling Basin are not getting their full water quotas. The issue there is simply this: because they can't get their full water quotas, they in turn go to the water market to buy additional water in times of need. If water is being owned by overseas entities throughout the Murray-Darling Basin purely for speculative purposes and being held in order to push the price of water up, then it disadvantages our growers, and I believe that that ought to be stopped. Secondly, I believe that if water is to be owned, regardless of whether it's by foreign entities or by people here in Australia, it ought to be tied to landownership. In other words, the water is there to support the growing of our agricultural products and should not be used by speculators as a mechanism to simply profit from whilst our farmers struggle to make ends meet. For both those reasons, I not only believe that the register is important but also believe we need to ensure that our farmers get priority over the water and get it at affordable prices.

There are other matters in this legislation that I won't go into detail on, but I note the comments with respect to much of the legislation being provided in the form of regulations. I can understand why that will be, but, because of that, it will be interesting to see how this legislation works. Labor's suggestion that there be a review of the legislation is indeed appropriate, so that we can see, after the legislation and the regulations are in place, just what other changes may be necessary or if, indeed, the legislation is meeting the objectives it needs to meet. Likewise, with respect to the fees associated with the legislation and the fees for foreign investment, those are matters that I know have caused some concern from representers and may need to be reviewed.

The last matter I will touch on, briefly, is the issue of the calling powers, which allow the minister in future to call in and review applications that have been made for foreign investments even after they have gone through. Regrettably, those powers are not retrospective and, I understand, will start from January 2021. I don't have any problems with that particular proposition, but I suspect that because of the new regulations and this new legislation it's unlikely that foreign investment will get through if it doesn't meet the standards and criteria that we are debating right here and now and that would be acceptable to the Australian public at large. So I can't see that those powers would be particularly used in the future. Nevertheless, they do give the minister of the day that additional authority and it is something that could well be used. Indeed, if that authority had been in place, perhaps the Port of Darwin—and other investments that have proven to be controversial—could have been reversed but, as it is, they can't be. With those comments, I support the amendments moved by Labor and I support the intent of this legislation.

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