Farm ownership: We need fairer land, water investment rules

Urgent action is needed to ensure the competition for Australian land and water is played on a level field, writes Xavier Martin.

Cotton farms are among the diverse range of Australian enterprises eyed off by big foreign companies. Picture: Xavier Martin

Many farmers in NSW who have read the series of The Weekly Times articles regarding the unfair acquisition of Australian land and water agree something is terribly wrong.

Having already experienced the impact on family farms in their area, they would also agree that we must provide a more level playing field for investment in our industry.

This is not about simplifying all the issues around foreign investment in agriculture - this is about the effect of avoiding Australian taxes and on the ground current experience of rural Australians seeking to grow or start a family farm business in an unfair investment environment.

I have heard many stories of farmers simply not being able to compete with multiple Low and No Tax Entities and multibillion-dollar trust funds that have significant tax advantages. The LNTE capital structures are almost always based in or utilise tax havens such as the Cayman Islands, Ireland, Netherlands, Singapore and the Bahamas.

Other investors, as the The Weekly Times correctly identifies, use the unfair tax advantage within Canadian and US pension funds to the same debilitating effect

Currently the wheat and sheep belt of Australia is experiencing depopulation of towns, villages and family farms. Empty homes dot the landscape. On more than one occasion, an LNTE actually acquires all the productive lands and water in a zone or part-valley, inducing gross dysfunction and displacing the community by stealth.

A significant cause of this is the aggressive business models of these Low and No Tax entities.

There is a clear need for fair rules that allow Australians, young and old to acquire land and water assets on an equal footing with other investors. After auctions losing bidders have said to me: “My dollar costs more than theirs!”

As the gatekeeper for offshore investors in Australia, the Foreign Investment Review Board describes its assessment process as ‘permissive’, meaning a foreign investment would be approved unless it was considered a threat to Australia’s economy, community, national security, competition, or taxation.

The FIRB agricultural guidelines also has an exception to the open and transparent sale requirement that states, “Proposals where the target entity is already a foreign person, or the target land is already held by a foreign person, and there is no change in control.” This is more enabling of a foreign investors tax advantage.

The NSW Farmers Association policy requires that there be increased public transparency and accountability and that as a minimum the FIRB test should include assessment of social, environmental and economic impacts in line with community expectations.

• Xavier Martin is NSW Farmers vice president