HOST:
Well the Chinese are apparently the biggest owners of property on Queensland's Gold Coast. The Gold Coast Bulletin says the Japanese have dropped to second place followed by the Kiwis and the Russians. We want foreign investment capital in Australian business, but why is land such a touchy issue? The Australian newspaper today, they've got an analysis showing foreigners dominate key Australian food processing businesses, and apparently control 10 per cent of productive farmland. Yesterday The Australian Bureau of Agricultural and Resource Economics, a research bureau within the Federal Department released a long awaited paper on foreign investment in Australia's agricultural sector. It's the first time that these figures have been researched and put together. I spoke with Senator Mark Arbib, the Federal Assistant Treasurer, just before coming to air today and asked why is this such a hot issue always?
MINISTER ARBIB:
Yeah look there has been a lot of community concern, there's been a big debate about foreign ownership of businesses and land and what ABARES has shown us is it's confirmed the research by the ABS that about 99 per cent of agricultural businesses are Australian owned, entirely Australian owned. 89 per cent of agricultural land is Australian owned and 91 per cent of our water entitlements for agriculture are Australian owned –
HOST:
Senator, forgive me for –
MINISTER ARBIB:
(inaudible) – a lot of confidence out of that, as it's very similar to what the case was in 1983-84.
HOST:
Ok, that's different to what The Australian has reported today. I saw their report saying that the, that 10 per cent of productive farmland is owned overseas. Am I missing something?
MINISTER ARBIB:
Yeah, The Australian have, in terms of the figures, also included in companies that are part Australian owned and part foreign owned. So what I'm talking about here is, we're talking about land and businesses that are 100 per cent foreign owned and that being the case, really, 99 per cent of businesses in Australia, are entirely Australian owned and I think that's good news.
HOST:
Ok, who are the major overseas investors in Australian land and property then?
MINISTER ARBIB:
When you look at foreign investment coming into the country, over 50 per cent of foreign investment is coming in from the United Kingdom and from the United States. Well over 50 per cent, and we're talking about in the agricultural sector, we're talking about the big agri-businesses, some of the biggest company names across the globe. They're the organisations that are involved in our agriculture. But that's always been the case when you go back through Australia's history we've always had direct foreign investment from different parts of the world and what the ABARES report has said to us and its been pretty clear is that foreign investment in agriculture has lead to increased food production, it's led to increased productivity, it's led to jobs, it's led to income for farmers and it's led to Australia being very food secure. I think that's good news.
HOST:
How does it equate to food security Mark? Because you get the clear impression from the farm sector and some in the up and coming parties that this decreases food security for Australia. Others have control over, or influence in our productive farmland and our productive agri-businesses and that doesn't equate to food security.
MINISTER ARBIB:
I don't think that's the case. I was listening to Jock Laurie, who's the president of the National Farmers Federation, and he said food security is not an issue, Australia is food secure. In fact Australia is an exporter of food, we produce more than twice the amount of food that we consume so we do very well and what we've seen over the last 30 years in our agricultural sector has been an expansion in productivity of our farm sector, of our farmers and that's assisted through foreign investment and our productivity has lifted something like 3 per cent each year over the last 30 years. That means we're producing a lot more food and that food is a lot greater than our own needs and we export it. Which means the incomes for our farmers, the incomes going into the wages of our workers in the farm sector, I mean that's going up. At the same time, the price of food is driven down by the foreign investment that's coming in. The opposite is the case if you restrict foreign investment if you try and put in place higher hurdles then you will drive up the price of food and you'll threaten jobs.
HOST:
If you've just tuned in my guest is Assistant Federal Treasurer Senator Mark Arbib talking about the Australian Bureau of Agriculture Research and Economics Report which looked at foreign investment in Australia's agriculture, its farming sector. It's been awaited a long time, I think this is the first time they've actually done it? Mark?
MINISTER ARBIB:
Yeah look there has always been some sort of research, but this is the most detailed research that's been undertaken. And what we've also said is that it's important that we have a better understanding going into the future of the levels of foreign investment in land and in businesses, and what the government announced yesterday is that we will now do this study every two years through the Australian Bureau of Statistics, which is a big improvement. And that means that policy makers at the national level, at the state level, will have better information to make future decisions. And it's also good for the public, it means they understand what the levels are of foreign investment, and if we see big spikes, if we see big surges, obviously governments in the future can take different policy positions.
HOST:
Is there a cap on how much a foreign investor can, either sovereign or own as a company? Is there a cap on who can own what at all?
MINISTER ARBIB:
No. What we do though is, what we do as a government, is we have in place thresholds for foreign investment, which lead to screening and scrutiny by the Foreign Investment Review Board, and also by the government, and that's $230 million –
HOST:
It's not been seen as particularly effective in the past, has it, the Foreign Investment Review Board?
MINISTER ARBIB:
Well it hasn't been, I have not seen, apart from some of the Coalition Senators, I haven't seen a huge number of complaints about the Foreign Investment Review Board. It's independent, it does its job, and it vets, it vets serious investments. The other thing though which is critical here is that all investment coming in from foreign governments or foreign owned enterprises is screened. We screen all investments no matter what the amount coming in from foreign governments, and I think that's pretty important, and it answers a lot of the concerns that farmers have, and also concerns that have been raised by Coalition Senators and MPs.
HOST:
In which State or States are they mainly investing? We assume its sort of Queensland and WA, because of the nature of these places.
MINISTER ARBIB:
Well look in terms of the report goes into agriculture, and I think there's certainly a great deal of foreign investment in Queensland and WA, but it's across the country. I mean Northern Territory has large tracts of land that have been invested in by foreign investors and so does New South Wales and Victoria. Foreign investment is an important part of our economy and it's an important part of agriculture. What the report's saying it's not a bad thing, it's saying it's actually helping us be more food secure, it's helping us to increase production.
HOST:
Now in my mind the issue is not so much foreign ownership of land. But when you get foreign ownership of land combined with the overseas owning or foreign owned of food processors as well. In other words, what you start to get is a vertical integration of the whole food supply and production chain. So the land, they control the farm, but then they also start to control the processors, and you do know, I think The Australian today pointed out that they own about 10 per cent, or in fact they, no, they dominate key Australian food processing businesses like milk and moor, and that does change the equation in my mind. How does the Federal Government see it?
MINISTER ARBIB:
Well that's why we've got the ACCC, and one of the points that ABARES notes is that the ACCC is there to look at those competition issues and vet businesses that start, I guess, having monopolistic tendencies. And I think that's what you're pointing to, and they do a fantastic job the ACCC, and we need to ensure that they're at the frontline here. But again, if we've got more –
HOST:
An underwhelming track record Mark though, aren't they, an underwhelming track record [laughs] –
MINISTER ARBIB:
– the Labor Federal Government has worked pretty closely to give the ACCC more powers in that area. I mean we fully appreciate the importance of competition in driving down prices. We've given the ACCC more power than any government has, and that's something we're going to continue to work with their new chief. But importantly here, what the report says that we don't have high levels of land ownership by foreign companies. Yes there are high levels in some sectors, in some sectors of processing, but at the same time as that, that's leading to jobs in this country. I mean while that processing is taking place here, it's leading to Australian jobs, this is Australian expertise. These foreign companies, agribusinesses, can't do without the Australian expertise; our farmers are some of the most efficient on the globe, and they are benefiting both ways –
HOST:
What's left of them.
MINISTER ARBIB:
– they're getting new technology, but at the same time they're getting wages, and it also ensures equity in their land.
HOST:
Alright. Do you agree that vertical integration of the food chain is an issue?
MINISTER ARBIB:
What I've said to you is that's one of the reasons why the ACCC is there, to look at those competition issues, and to make sure we've got a competitive marketplace. If you are saying, and I think that what you're trying to say is that, sorry, what you're pointing to is, you know, monopolistic tendencies of some of the global agricultural businesses –
HOST:
Yes.
MINISTER ARBIB:
– If you are seeing those sort of trends arising that's when you want the ACCC to step in and ensure that there is a competitive market place because when you lose competition then prices start going up. But that is not what the ABARES report has found. It's found that the foreign investment coming is actually leading to a drop in the cost of food production here.
HOST:
Forgive my ignorance but did it look at ownership of land that has mining resources on it, mineral resources on it?
MINISTER ARBIB:
Look, it wasn't part of the actual report but it did note, it did note, that there had been land taken up by companies looking at mining. And that is something that is very critical to communities across the country and I know that's a debate, a big debate, that's going on in Queensland at the moment in regional Queensland. The most important thing there is that any purchase by foreign companies in terms of land for mining, not only do you have the Federal safeguard you've also got state safeguard and again anyone who's looking to purchase agricultural land for mining needs to go through pretty stringent processes at the state and local government level to get permission to do that.
HOST:
See I think there's a reflection in the mineral area the same as having farming and agriculture previously that there was a great hope that the last decade Queensland's had a mining and resources boom, but that hasn't translated to jobs for Queenslanders because the big companies weren't skilling up Australian people. They were just simply importing on special visas, with the acquiescence of the Federal Government, you know skilled labour from overseas.
MINISTER ARBIB:
Yeah, this is probably one of the most important points for the Labor Federal Government and when you go back to the last budget you look at the amount of money now that is going in to training, its exactly for that reason. You know we've got great demand for our resources, we've got great demand for our farming exports and we want to make sure that Australians are getting those jobs. That is why we're spending a huge amount of money in the training sector, in the apprenticeship sector –
HOST:
– but you shouldn't have to do that should you? That's the problem Mark, you're having to fill in this gap that the businesses should be doing, that those foreign controlled companies should be doing, they should be footing the bill for it.
MINISTER ARBIB:
I think we're making up for a lot of the shortfall from the Howard Government in terms of education and training. During their period of time, the Howard Government, actual money going into the education system, investment was actually going backwards and we were the only country in the OECD that that was the case. We've had to make up for a massive shortfall there. But it's also improving the training system to make sure it's more tailored towards the modern workplace. We need to ensure that young Australians when they are at school when they get to year 10, 11 and 12 that the vocational training is there so that they can start moving in to apprenticeships early. We want to speed up the apprenticeship process, make sure that the work you're doing is certified and also get more apprentices. I mean what better start of life for a young boy or girl than moving into an apprenticeship in the agricultural sector or in the mining sector it provides a huge amount of security and that's something that the Federal Government, the Labor Federal Government is working towards.
HOST:
My guest is Senator Mark Arbib, Assistant Federal Treasurer, my name's Steve Austin and this is 612 ABC Brisbane. So Mark as far as the Federal Government's concerned, the level of foreign investment in farm, of ownership of Australian farmland and how that spreads to other businesses, as far as the Federal Government's concerned there's no story here, nothing to be concerned about that nothing is ringing alarms bells at all for the Federal Government?
MINISTER ARBIB:
Well there was a great deal of argument and concern about it over a year ago, the Government put in place a review from the ABARES and also the ABS, and these are our statistical research experts, these are the people who do it every day and they're independent and they've come back with a report which says to us that, rather than hindering the country foreign investment is actually helping the country and that we need it to drive down food prices, to keep high levels of employment and that we should keep working in the same direction. If we try and wind back investment then the opposite will happen and you will get increased food prices. At the same time as that though we want to make sure that, and I think I've said this, that all future policy making decisions are much more transparent in the area and informed and that's why we're going to do much more research and make sure that's public so people understand what's actually happening in the space of foreign investment.
HOST:
I really appreciate your time this morning, you've been very generous thank you very much.
MINISTER ARBIB:
Thank you Steve.