JONES:
The budget has been very well received, people feel a sense of confidence that the Abbott Government has done a hell of a job in difficult circumstances, and now it’s clear that Bill Shorten is entering Ed Milliband territory. It isn’t all plain sailing nonetheless. Nothing, and I repeat nothing, I think I am right in saying that nothing so inflames my listeners, and I get this wherever I go in Australia, nothing so inflames them, nothing to them demonstrates the extent to which Government is out of touch more than this business of foreign ownership. In fact, as you know, the inability of politicians to know the difference between ownership and investment. Now if you just take a Sydney story, I get these every day, and yesterday an article came in the mail showing me a cutting from the Mossman Daily of May 7 and quote: “A Mossman real estate company has hired a new buyers agent to deal solely with enquiries from China saying that the nation’s interest in property is a long term trend. The agent said a surge of interest in real estate across Sydney could in part be contributed to increased interest from offshore buyers”. Now I thought the buying of established homes was illegal. Quote: “of the 19 $50 million plus sales in Sydney in 2014, 11 were more than $20 million, eight were reported as overseas buyers,” said Ray White Commercial Head of Research, Vanessa Rayner. I thought that was illegal. But another property group is quoted as hiring a Chinese resident to quote “be solely responsible for assisting with enquiries from China”. And this bloke, Mr Zhang, said he’ll be able to bridge the gap between the two cultures. He said Chinese buyers want quality homes, usually more modern or renovated, they appreciate high technology features and they definitely want water views – it’s still about the pursuit of a quality life. I repeat, that is illegal. But at least I suppose they can’t take the home with them. This week we did a rule of thumb on what’s happening knowing that I was going to speak to Kelly O’Dwyer, and I’ll come to who she is and what she’s about in a moment. This is terrifying. April this year two massive properties, magnificent agricultural properties near Rockhampton, sold to a Canadian superannuation fund for $13 million. In February this year, a Chinese outfit bought two massive cattle properties near St George in Queensland for more than $40 million. A Hong Kong company bought three McWilliam family vineyards for $15.7 million. An unidentified foreign purchaser bought the Yarra Valley vineyard in Victoria in November last year. Prima Meats were bought by some Brazilian meat processor. June last year, an unnamed Chinese buyer purchased a 12,000 hectare, magnificent Goondiwindi property which I’ve been to for $30 million. April last year an Indonesian company, the great giant livestock company, bought the 170,000 hectare Willaroo cattle station near Katherine. In February last year, a Chinese textile company bought two magnificent Victorian merino properties, glorious properties, Dunkeld and Minya, near Warrnambool, for $37 million. United Dairy Power, Australia’s largest privately owned milk processing company, was bought by a Hong Kong outfit for $70 million. An unnamed dairy conglomerate, 49 per cent owned by the Chinese, bought the Government of China by the way, bought 50 Victorian dairy farms last year for $400 million. Van Dieman’s Land Company negotiated to sell 25 Tasmanian dairy farms to Chinese interests. Landmark Hardcourts, another Tasmanian outfit, negotiated to sell 12 of its dairy farms to – Chinese interests. The Canadian company Saputo bought Warrnambool Cheese and Butter, for almost $400 million. A Chinese dairy outfit, another one, bought three Gippsland dairy farms – that was in February last year. Another unnamed Chinese company bought Elizabeth Downs, a 205,000 hectare property in the Northern Territory for 12 million. Shandong Rue bought the magnificent sheep property, magnificent Larrandell near Ballarat, for $14 million. Then of course in January 2014 Cubbie Station was sold to a consortium, majority owned by China, $240 million. PrimeAg, and Australian outfit, sold 60 per cent of its land and water portfolio in 2013, sold to the US pension fund, two magnificent cattle stations in the Northern Territory in 2013 sold to an Indonesian company for $35 million. Ms Gillard stopped live cattle exports, the Indonesians said bugger this, we’ll buy the farm, we’ll make sure we get the cattle we want, we’ll buy the farm. In November 2012, the Qatar Government bought five central Western NSW properties for almost $30 million. In June, the same Government, Qatar, purchased 10 magnificent Victorian farms for $37 million. In January 2012, Raven Hill, one of WA’s biggest dairy farms, was sold to unnamed Chinese interests. In 2012 PrimeAg, a big Australian outfit, sold six dairy farms to the US pension fund. As far back as 2009, the Qatar Government spent $500 million buying farms in four states comprising 250,000 hectares, some of them in the magnificent Western Districts of Victoria – that rotten crowd SheWa Watermark Coal bought half the Liverpool plains, the glorious Liverpool Plains, because they want to mine the joint. A Swedish company bought 15 farms in 2011 for $47 million. Then you’ve got sugar mills being sold to Singapore. In 2011 a Chinese Government owned company brought the Tully sugar mill, a Korean company owns 250,000 hectares of land where I was at the weekend, grazing and cropping land west of Burke, where does it stop? Where does it stop? That’s just a snapshot. That is just a snapshot. Chinese buyers spent $5.9 billion on established homes last financial year. That’s illegal. The Foreign Investment Review Board doesn’t prosecute one single person. The Qatar Government spends $500 million over 3 years buying magnificent Australian property. Our paddock becomes their paddock, to put the food on their plate. And our dairy farms, 250,000 acres in one hit, in another one they purchased, Qatar, Victorian dairy farms near where Malcolm Fraser used to live, covering 40,000 hectares for $37 million.
Kelly O’Dwyer is a very good, highly intelligent woman. A Victorian MP and she has chaired a Parliamentary Inquiry into the foreign investment, I don’t know about investment, or ownership, I might add we’ll go very quietly here, I am quite worried, she’s due to give birth on Monday. Good morning mother.
O’DWYER:
Good morning Alan.
JONES:
How’s the baby?
O’DWYER:
Pretty good, pretty good.
JONES:
Don’t you get too excited here now.
O’DWYER:
I told the baby the baby wasn’t allowed to come until I’d spoken with you.
JONES:
Laughter – don’t get too anxious here. Can we first establish the difference between foreign investment and ownership.
O’DWYER:
Well look, I’m happy for you to give whatever term you’d like but we’ve got some clear concerns as you have articulated very well in your introduction that people no longer have confidence in the foreign investment framework. Part of the reason for that Alan is because during the entire period of the Rudd-Gillard-Rudd Government there was not one court enforced prosecution or divestment of illegally purchased property – not one during the entire six year period. They basically went soft and clearly gave an indication to the Foreign Investment Review Board that they weren’t interested in taking enforcement action. Now that compares very directly to the previous Coalition Government that did make divestments, that did sell up properties on people and did make court enforcement actions a reality. Now we realised, in this Government, that we need to be very clear that the rules that are in place are going to be enforced, and that those rules that aren’t strong enough need to be strengthened.
So the first thing that the Treasurer and the Prime Minister announced the other day was the fact that we are going to increase the criminal penalties for those who breach the rules and that includes higher fines and higher terms of imprisonment, that we are going to introduce new civil penalties to make sure that those people who breach the rules don’t profit from their illegal purchase.
Alan, we’ve got a ridiculous situation right at the moment where if someone was to be a purchaser of multiple properties and they are a non-resident foreign investor, and you’re right to say a non-resident foreign investor cannot purchase existing homes under our current rules, and if we were to find out about it, and we were to sell up the property on them, at the moment they’re able to keep any windfall gain that they make from the sale of that property. That is clearly ridiculous, and we are changing the rules to make sure that they cannot profit, that we will keep any capital gain or, the higher of the 25 per cent of the purchase price, or 25 per cent of the market value of the property.
But we know that there are third parties who are trying to encourage people into breaching the rules and, under the existing rules right now, they haven’t been captured. We know they need to be captured so we’re bringing in new criminal and civil penalties for third parties who knowingly assist someone to breach the rules.
JONES:
That’s fantastic right. Let’s go to the next step because I want to just raise something with you, but you’ve also imposed a stack of fees that will please everybody, so a $5,000, this is from December 1, $5,000 fee will apply to foreign investment in residential properties and presumably that means owning it, but you can only own it, and you are going to prosecute people if they improperly buy it, but a $5000 fee for residential properties with a value of $1 million or less, more than a million, a $10,000 fee. I’m right on that aren’t I?
O’DWYER:
That’s correct.
JONES:
Now, on agribusiness, do you regard agribusiness in your terminology different from the land for agriculture?
O’DWYER:
We have determined a difference. So rural land is going to be on exactly the same terms as residential land in terms of the fees that are imposed, and agribusiness—so somebody who is involved potentially in some manufacturing that might be downstream manufacturing associated with primary production, whether it’s in dairy or meat processing...
JONES:
It’s $25,000 bucks.
O’DWYER:
…it’s $25,000 for those applications.
JONES:
The problem here that I’ve got, is that I don’t understand why the Government has done this. There’s a threshold at which the Foreign Investment Review board will scrutinise the investment. Now I suppose, and that’s only $15 million – now my father was a dairy farmer, I know a bit about this scene backwards, I mean no dairy farm is going to sell for $15 million. Now are you saying that, if a Chinese outfit bought eight dairy farms for $1.6 each, then, or say $2 million each, that would go over the $15 million and cumulatively that would have to get Foreign Investment Review Board approval?
O’DWYER:
So a couple of things. The first is we have lowered the threshold from $252 million down to $15 million cumulative—that was as a result of our change. The Labor Party actually wanted it to be a billion dollars—they wanted to lift it up, not bring it down so that’s point number one. Point number two is that if it is the same owner of the property, you know the owner of different properties that you are talking about in your example, and we were to add that together, and it would come to beyond $15 million, it would be screened. Absolutely correct.
JONES:
But the Foreign Investment Review Board hasn’t rejected anybody!
O’DWYER:
But let me also make this point, if it is a Government owned enterprise, or a sovereign wealth fund, it doesn’t even need to hit $15 million, it will be screened straight away. If foreign investors have previously made purchases, then any of those previous purchases would be added together to make up that $15 million cumulative total. So it adds up over time, so they might have bought something a number of years ago, and it adds up...
JONES:
I understand that but I want to ask you a question. Most of these people, Qatar and everybody, they’ll meet all this criteria and they’ll stump up the $25,000, the $5,000, and it goes beyond a million, and then some of these fees are $100,000, and that’s good, we’ll get money in the kick, at what point do you say, or how much of Australia, can foreigners buy up? How much of the farm is for sale? This is what people are just bewildered. See at the moment, the reason Kelly and you know this, they’re after dairy farms, there’s a growing middle class now in Asia. They’re mad about Australian dairy produce. Whether it’s powdered milk, or buttermilk, or whatever it is. They’re mad about it—they’ll pay anything for it. There’s a market so they’re saying, we’ll go in and we’ll buy the farms. Foreign investors—we’ll pay the fees—Foreign Investment Review Board gives us approval—we’ll tick all the boxes—so at what point do we say, there is a limit to how much Australian, the Australian farm, will be sold to foreigners.
O’DWYER:
Well, Alan, before we can answer that question, we need to know how much is sold.
JONES:
That’s the register—you promised that in the election.
O’DWYER:
And this is the key point we make. We are bringing in a land register, both for residential property and for agricultural land.
JONES:
It’s taking you a long time...
O’DWYER:
Well it starts from the 1st of July 2015, it starts this year for agricultural land. The Australian Taxation Office is bringing together that data. Agricultural land is the first one that’s going to be done. We are consulting with the states and territories to get their agreement to access their titles register to make sure we can also have that for residential property, and we’re making sure that the ATO also play a role in compliance and enforcement.
JONES:
Righto, you’re going to put it into the hands of the ATO. We’ve got to go but, we’ll come back after you’ve had the baby and taken your leave and all the rest of it because you’re quite across all of this. Australians want to know at what point do we say, you can’t buy anymore of the farm. Can you ponder that question? Good luck on Monday. Thank you for your time today.
O’DWYER:
Thanks Alan.
JONES:
That’s Kelly O’Dwyer, about to become a Mum on Monday, we wish her well.