Tony Abbott loved to tell everyone Australia was “open for business” under his watch. Imagine the would-be customer’s confusion, then, on entering corner-store Australia to be confronted by a sign reading: “Do not offer credit as refusal may offend.”
That is the contradictory trade and investment policy Abbott has bequeathed to his successor Malcolm Turnbull.
The government has finalised free-trade agreements with north Asian trading partners to give our exporters access to new markets.
Yet, at the same time, it has been just as busily erecting new barriers against foreign direct investment in our economy.
These barriers target agriculture and agribusiness — the very industries that need capital to scale up so they can take advantage of export opportunities in our region.
Compounding the absurdity, the government is also singling out investors from China, Japan and Korea for the most restrictive layers of red tape for investing in Australia.
The Senate is debating government legislation imposing these rules.
The legislation will require Foreign Investment Review Board screening of investments in agricultural land worth more than $15 million.
This $15m threshold will apply cumulatively, meaning it will include the value of an investor’s existing farm holdings as well as the proposed new investment.
Cattle and grain producer Wellard — which has built a major export business over the past 35 years — points out this means it will have to lodge an FIRB application every time it buys a $10,000 paddock next to one of its existing properties.
The legislation also imposes a $55m threshold on investments in agribusiness — and it defines agribusiness so broadly the rules will affect half Australia’s food manufacturing industry.
These barriers come after this year’s budget decision imposing $735m in FIRB application fees on investors — making us one of the few countries to impose a tax on inward investment.
The changes will make Australia less attractive as an investment destination. They will make it harder for farmers and food manufacturers to raise capital. And they will put downward pressure on the values of farm assets.
This is the kind of economic incoherence we came to expect under Abbott.
It is disappointing to see Turnbull persisting.
And it is extraordinary to see the Liberals pursuing policies that have been criticised so roundly by the business community.
The investment screening thresholds have been criticised by the Business Council of Australia, the Food and Grocery Council, the Cattle Council of Australia, the Queensland Farmers Federation, the WA Chamber of Commerce and Industry, the Australian Lot Feeders Association, the Financial Markets Association, Wellard, Graincorp and Ridley Corporation.
Australia has always needed to tap into foreign capital to supplement domestic savings and fund the investment needed to grow our economy.
We will move in the Senate to amend the legislation to remove the requirements for FIRB screening of investments in agribusiness worth more than $55m.
There is no policy rationale for imposing these barriers to investment in agribusiness.
They would create the bizarre position where the screening threshold for genuinely sensitive sectors like uranium extraction or defence industries would be nearly five times higher than for food manufacturing.
Labor’s amendments will also increase the threshold for agricultural land to a non-cumulative $50m, the level provided for under Howard-era free-trade agreements.
If Turnbull wants a real break with the Abbott legacy, he should vote for an open foreign investment regime.
Will the Liberals support Labor’s amendments — or vote with the protectionists from the Nationals and the Greens to impose barriers against investment?
This opinion piece was originally published in The Australian on Monday, 23 November 2015