Be wary of how investors use rural land: Turnbull

During a tour of the besieged agricultural districts of the Liverpool Plains, Gunnedah and Armidale in the north of NSW last week, Wentworth MP and opposition spokesman for broadband Malcolm Turnbull has suggested Australians need not worry too much about foreign ownership of farmland.

But Turnbull says they certainly should worry about how rural land is being used.

"The more important question is not the national identity of who owns the land but what they are doing with it," he says.

"Now, if land is being used in a way that undermines the productivity of that land, that puts at risk the water resources, then it's really the use of the land that is the issue."

The rich agricultural district of the Liverpool Plains is currently being challenged by the twin issues of foreign companies and coal mining, with the trigger point being Shenhua Watermark Coal, a subsidiary of the world's biggest coal company, Shenhua Energy, seeking approval for a coalmine that would eventually produce $40 billion tonnes worth of thermal coal for Chinese power stations.

Shenhua Watermark has bought land in the Liverpool Plains for up to $8000 per hectare. The company has bought significant farmland from 34 vendors ranging in price between $1.1 million to $18.3 million between June 2009 and December last year, totalling $160 million. There were also several properties bought in the town of Gunnedah for between $190,000 and $550,000.

The company paid an upfront $300 million to the NSW government for a minerals exploration licence covering 19,500 hectares.

The company has promised to confine its activities to hill areas and not to mine within 150 metres of the productive "black soil" farming country.

Turnbull says Australia's understanding of its groundwater resources is embarrassingly inadequate. He says Australia must gather more science on its underground aquifers, or run the risk of destroying them for good.

"The problem is we have not done nearly enough research on it, and interfering with ground water resources without really understanding them is like jumping into a pool of water head first without knowing how deep it is," he told ABC radio rural reporter Catherine Clifford.

"It's very, very dangerous, and you've got to be prudent, and you've got to be careful, and you've got to do your homework first."

Turnbull says foreign companies have owned agricultural land in Australia since European settlement.

But he says when the activity on that land threatens Australia's long-term economic future something has to be done.

In 2007 the federal MP for New England, Tony Windsor, sought a meeting with Federal Water Minister Penny Wong, after the apparent collapse of a Commonwealth commitment to fund a groundwater study of the Liverpool Plains.

Former environment minister Malcolm Turnbull promised stakeholders before the 2007 election was called he would provide almost $5 million for an independent study into the effects of coal mining on ground water aquifers.

Windsor says Turnbull then failed to give a direction to his department after the election.

"Malcolm Turnbull said it was a commitment of government and not an election promise," Windsor says.

"He's subsequently written to the National Water Commission during the campaign saying he'd like to come forward with a proposal, not endorsing the proposal the Liverpool Plains land management people had put before him."

The Liverpool Plains, 450 kilometres north east of Sydney, is considered by many to be the best farming country in the world.

Its fertile black soils have a high water holding capacity with reliable summer and winter rainfall.

Over the past four decades there have only been four occasions where it twice-yearly crop productions have failed.

Its grows a diverse range of crops such as wheat, sorghum, oats, soybeans, barley, corn, sunflowers and cotton.

It has a beef industry. It also produces chickpeas, soybeans, mungbeans, canola, olives, turkeys, chickens, pigs, lamb and wool.

It has been estimated that the Liverpool Plains contribute $332 million to the GDP annually.

The Liverpool Plains also boast an estimated 300 billion tonnes of coal.