Bill Heffernan (NSW, Liberal Party) Share this | Hansard source

I present the report of the Rural and Regional Affairs and Transport References Committee on its inquiry into the Foreign Investment Review Board natural interest test, together with the Hansard record of proceedings and documents presented to the committee.

Ordered that the report be printed.

I move:

That the Senate take note of the report.

This is a report that the Senate Rural and Regional Affairs and Transport References Committee has completed over the duration of a couple of years. During that time, there has been a change of attitude and an awareness across the government of a lot of the findings of this committee. The committee has made a series of recommendations—there are 29 in the final report and six in the interim report—which cover a range of issues that certainly identify that the Foreign Acquisitions and Takeovers Act is a creature of the past. It has not kept up with modern communications and transport of the financial world. This report emphasises the absolutely critical importance of foreign investment and capital coming into Australia—in the case of agriculture, it is obviously a need for patient capital—but at the same time it emphasises the need for long-term foreign investment in Australia to be on a level playing field and that the present legislative and international tax conventions have not kept up with the modern transportability of capital and revenue.

The committee notes the current progress of the government, the OECD and G20 in this area and urges the government to continue pursuing international reforms. Amongst the key findings of the committee, the committee especially notes information gaps under five headings. There is a clear information gap in foreign acquisition. There is no national register. Obviously, land titles are registered on state databases. We think there is a need, with modern technology, to join the databases. It has been an ongoing argument as to what the threshold ought to be in defining sovereign investment and also corporate foreign investment, and how many million dollars it should be. This report has made a recommendation along those lines. But, in reality, if we set up the right titles registers, which will take a bit of doing, and connect them, then we ought to be able to, if we want to know everything over five million or anything over 10 million, say, press a button and there it is.

The present arrangement is certainly antiquated, and the Foreign Acquisitions and Takeovers Act is completely out of date. The committee was advised of that by the former chairman of FIRB. The new chairman, Mr Brian Wilson, has adopted a new attitude to the need to rejuvenate and make some recommendations to update the Foreign Acquisitions and Takeovers Act. He has a positive view of encouraging foreign investment into Australia, while at the same time protecting Australia's sovereignty, because the challenge for the G20 nations, and the challenge to not having to redefine sovereignty, is to capture the revenue base. At the present time, there is something like $3 trillion annually, globally of tax avoidance through the incapacity of countries in the G20 to monitor and audit transfer pricing without any other tax avoidance measures.

This is a positive report for Australia's future. It emphasises that:

The committee considers that foreign investment can make a major contribution to future agricultural developments in Australia, including the Ord irrigation area.

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However, the committee also considers that to maximise the benefits of such developments there are challenges to be overcome such as: limited access to long-term capital investment; restrictions from land tenure arrangements; and the trade and transparency of water entitlements.

In regard to the transparency issue, at the present time Australia has no idea of what is happening in Australia. What Australia should do is get the right database. Certainly the ABS, in its evidence to the committee, demonstrated that they do not have the capacity to know what is going on. In fact, the Foreign Acquisitions and Takeovers Act is so antiquated that, although it defines agricultural land, all land other than defined agricultural land in Australia is defined as urban land. Under the Foreign Acquisitions and Takeovers Act, in theory, you have to go to FIRB if you want to buy five acres in the Simpson Desert because it is defined as urban land. Yet you can buy half the Riverina, as long as you do not hit $248 million in one sale, and not bother reporting it to anyone.

That is the stupidity of legislation—the Foreign Acquisitions and Takeovers Act—which was written in the seventies, just after telegrams started to look a bit out of date. We need to move into the 21st century. Part of moving into the 21st century is having a database, regulations and rules that capture the revenue base. Only this week we have had a bit of an adventure with Archer Daniels Midland, which was an interesting excursion into the world of transparency of corporate dealings, tax avoidance, price fixing and God knows what.

It is fair to say that this report challenges the thinking of a lot of Australians. It has been well put together, and I would like to congratulate everyone on the committee for the work they have done. I would certainly like to congratulate the professional staff, including Dr Curran and Stephen Palethorpe and their offsiders. Later this afternoon we are going to have a quiet farewell drink for Dr Curran as he is moving on to much higher and more important career decisions. It is a great pleasure to be able to present a document which I could not speak to fully today in two or three minutes. It absolutely encompasses the challenges of the future, and, I have to say, very importantly, it should be read by people before it is editorialised or commented upon.

It is quite a challenge to the western world, as G20 now knows, to have solid foreign investment on a level playing field, which would include investment from the new player in the field, which ABS identified to the committee early on, the day President Obama was here down in the Old Parliament. That is the advent of foreign sovereign investment. We met some serious challenges there, and there are serious tax avoidance measures under the present legislation for sovereign investment. We want to provide encouragement, especially if we are going to develop Northern Australia, and people decide that agriculture is not about retiring to the coast, resting on your laurels and thinking of the past. We want to make sure it happens in a market that is fully commercial, that there is not a distortion of the capital market through capital coming in for a second purpose of a safe haven, rather than a commercial return, that we do not distort the capital market, that we do not distort the commodity market and that we capture the revenue base.

With those few words, I would like to thank everybody, and I would like to thank the chamber for the opportunity to present this report. It is sowing the seeds for the future of a strong Australia which can compete internationally and, at the same time, not have to redefine sovereignty as we know it. If we do not find out what is happening now, model it out for 20 or 30 years, and then say to ourselves as a nation, 'Is that where we want to be if we continue to do what we're doing now and don't make any changes? Is that where we want to finish up, and would that be in the national interest?' That is absolutely what, as a nation, we have got to do. We have to make sure we think beyond the next election and beyond tomorrow morning's headline. We have to think where we are going to be in 30 or 40 years time. If you look back 30 or 40 years we have come a long way. I offer my sincere thanks to the chamber and to the committee.