Federal election 2016: foreign firms ‘can game’ FIRB rules

Scott Morrison’s warning against ‘throwing the doors open’ has drawn concern about sending the wrong signals.

Treasurer Scott Morrison at the Forrestfield Airport Link project site in Perth.

Scott Morrison has warned that a Labor plan to liberalise foreign investment rules would be “just throwing the doors open” to overseas companies, earning a caution from business about the signals being sent by the Treasurer to the marketplace.

Responding to Labor’s plan to lift the threshold triggering Foreign Investment Review Board scrutiny of overseas investment in agriculture, Mr Morrison said he believed it would allow overseas companies to game the new system.

He suggested foreign interests would buy multiple parcels of agricultural land at prices just below Labor’s proposed new threshold of $50 million to avoid scrutiny and defended the lower, $15m, threshold introduced by the Coalition.

“Labor is just throwing the doors open,” Mr Morrison told Adelaide radio 5AA. “Foreign investment, as we all know, is incredibly important to the development of our economy, but it’s always got to be on our terms, in our interest.

“It means that you can go around, buy up parcels of $49m worth of agricultural land bit by bit by bit, and you never have the knock on the door of the FIRB.”

When Tony Abbott was elected prime minister in 2013, he declared the country was “open for business”. Opposition trade spokeswoman Penny Wong yesterday warned that Mr Morrison was ­discouraging potential foreign ­investors.

“The last Liberal treasurer, Joe Hockey, told Holden to go away — and they listened,” Senator Wong told The Australian. “The current Liberal Treasurer, Scott Morrison, is telling potential foreign investors to stay away — and they’ll listen, too.”

Labor’s plan also would lift the threshold for overseas investment in agribusinesses from $55m to $1 billion, bringing it into line with the FIRB’s treatment of other, non-sensitive sectors.

Agriculture Minister Barnaby Joyce has branded the policy a “sellout of Australia”.

Bryan Clark, the director of Trade Policy at the Australian Chamber of Commerce and Industry, said the $15m threshold supported by the Coalition was “curious” and argued there was nothing to stop investors buying multiple parcels of land at $14m to avoid FIRB scrutiny. He also said the Liberal Party previously had negotiated a $50m threshold for investment in agricultural land in the free-trade deals it concluded with Singapore and Thailand.

“What’s in many ways positive about what the Labor Party has proposed in this respect is reducing the number of categories and bringing them into line with what we’ve negotiated with Singapore and Thailand,” he said.

“We need to encourage foreign investment. And we don’t want to be sending the wrong messages to the marketplace.”

Mr Clark also welcomed Senator Wong’s comments to The Australian yesterday in which she said a Labor government would not reopen negotiations for the China free-trade deal despite a revived union campaign against it.

“Business welcomes shadow trade minister Penny Wong’s firm and forthright rejection of union attempts to reopen ChAFTA discussions,” he said.