A land registry is the way forward in the foreign ownership debate

A land registry is the way forward in the foreign ownership debate
Oded Reuveni EtzioniDecember 8, 2020

As we look to what's ahead for 2012, Property Observer is republishing some of our most noteworthy stories of 2011.

 

The recently published Foreign Ownership of Primary Production Land in NSW by PRDnationwide is a unique study that identifies major foreign companies and individuals who own large tracts of land in NSW. Overall, 464,957 hectares of land were identified as having some form of foreign ownership, which raised questions about the true extent of foreign owned primary production land in NSW and indeed Australia. The report provides an overview of countries that invest in NSW, and identifies Korea as one of the dominant investors in both agriculture and mining.

It also highlights the Chinese ownership of prime agricultural land in the Gunnedah Region that has received media attention in recent months. Much of the criticism from the public, the media and several politicians is that national interests, i.e. control over food and mining resources, are being eroded, and foreigners without loyalty to Australia could use this control to expatriate our natural resources.  This highlights the fear that we as humans have of the unknown. The absence of a foreign ownership registry allows commentators to take advantage of this void to portray the situation as a total takeover of the country by foreigners.

According to the latest data by the ABS, as at December 31, 2010, total agricultural land in Australia totalled 398 million hectares. Of this total, 353 million hectares, or 89% of agricultural land were entirely Australian owned, while 45 million hectares had some level of foreign ownership. In NSW, the total estimated foreign ownership of land equalled 1,535,366 hectares, representing 2.73% of the total agricultural land in the state.

Under current legislation much of the control over the produce from the land is at the discretion of the producer, who is able to ship it out of the country. Furthermore, ABS figures show that the size of land used for farming in Australia has been diminishing over the years, further strengthening the assertion that agricultural land is a scarce resource that must be guarded.   Additionally, recent actions by mining companies prove that there are few barriers to prevent primary production land being turned into a mining operation.

The positive side of foreign ownership is its contribution to the Australian agricultural sector. In addition to agents’ commissions and the creation of jobs, the investment also allows for the injection of capital into unviable or borderline farming operations. Moreover, there are a number of transactional contributions to the state coffers. Our investigation into the dynamics of foreign ownership revealed that in many cases, the foreign company is not interested in the long term ownership of the land, and will subsequently offload their agricultural portfolio if favour of other assets in Australia or overseas. One example is John Swire and Sons, who have been selling off their Australian mixed farming portfolio over the past 12 months, with the purchasers often being Australian farmers. Another illustration is the purchase of AWB by the Canadian company Agrium Inc., which later on sold it (albeit to the American company Cargill Inc.).

In our view, control over the foreign ownership of land can only be attained by a clear identification of the extent of ownership and use of the land. One way to do this is through the establishment of a foreign owners’ registry. Once this has been done, legislators will be able to identify trends in the use of land, and establish a set of criteria to limit any actions that could be adversarial to the long term interests of Australia.

The ownership of land is likely to remain in the news for the near term, with mining and agricultural companies intensifying their operations around the country. However, the ability of government to track these transactions and have better understanding of the extent of foreign-owned land will depend on the effectiveness of systems set up to track the ownership, and the subsequent legislation to control the expatriation of minerals and food products.

Oded Reuveni Etzioni is a research analyst at PRDnationwide

Photograph by Mick Stanic

Editor's Picks

Six Degrees and Beulah lead the way for next era of sustainable homes and design
Abadeen & PERIFA to bring Woolloomooloo Wharf-inspired waterfront precinct to Putney
Coronation tops out Mason & Main, Merrylands second stage
From rooftop running tracks to piano bars: Melbourne's best apartments with significant resident amenities
‘Reverse sea changers’ return to city life as West End penthouse fetches $5.25 million