Does it matter who owns this country?
In February this year, Kelvin Thompson, Federal Member for Wills asked this question in an address to the Fabian Society (yes they're still going strong) and complained that no one really knows who owns what, and gave this example:
If someone asked you whether Mildura Fruit Company was an Australian company you would probably say yes. It packs and sells fruit in the Mildura region. As of 22 December 2011 it had six directors, five of them born in Australia and one born in New Zealand. It is 100% owned by Sunbeam Foods Group Limited, which is based in Mildura and has the same directors as Mildura Fruit Company. So it looks very Australian.
Now this is not easy to trace via company searches, but in fact Food Holdings Pty Ltd, which is trading as Manassen Foods Group, owns 100% of Sunbeam Foods, which owns 100% of Mildura Fruit Company. On 30 November 2011, the Menassen Foods Group was acquired by Bright Foods Group Holdings Pty Ltd. The shareholders of Bright Foods Group Holdings Pty Ltd are Bright Food (Australia) Co. Ltd and Geoffrey Erby.
Now Bright Food (Australia) Co. Ltd sounds Australian enough but it is in fact a Chinese company based in Hong Kong. Its ultimate owner is Bright Food (Group) Co Ltd, which is 50% owned by the Shanghai Municipal Government, and the remaining 50% by other Shanghai Government owned companies.
Mr Thompson DOES think it matters, and thinks there should be up-to-date State by State registers of the ownership of all land, food and water companies. The Australian Bureau of Statistics (ABS) carried out a survey recently but Thompson complains that it didn't come close to detecting foreign ownerships as elaborately (and perhaps not even deliberately) concealed as that described above.
And the Foreign Investment Review Board (FIRB), which is supposed to oversee foreign investment turns out on investigation to be a bit of a Clayton's paper tiger. Aviation, the media and telecommunications areas are the only areas where there appears to be some sort of automatic political oversight. Any changes in these politically sensitive areas are referred to the FIRB, we hear about them in the media, and ultimately politicians make political decisions based on what they think is in the national interest.
The government says it is keen to encourage foreign investment, with the over-arching concern that they should be in the 'national interest'. No definitions are offered of course, how could there be, and the limits to the controls are so large as to make this concern almost meaningless. For example, a foreign person only needs to apply for permission to buy commercial real estate if it is valued at more than $53m, unless you are a US citizen when the threshold is $1062M. The limits for rural land are higher; a foreign person only needs approval to buy an interest in a primary production business where the total assets of the business exceed $244M, or $1062M in the case of US citizens. No explanation is given for the over four times anomaly favouring US citizens, and this aspect must surely be of real concern. The limits before approval is needed to purchase rural land are $244 million (or $1062 for US investors) so an overseas investor could acquire any number of farms for $240M without any approval or disclosure being required.
Thompson points out that most other countries have much stricter laws about ownership and disclosure. All foreign purchase of farmland in the US has to be registered and in some of the farm states like Missouri, Iowa and Indiana, foreign ownership is forbidden. The same applies in some Canadian provinces, and China prohibits private foreign ownership of farmland completely. Even in New Zealand all foreign purchases over 5 hectares in area must be approved by the government. Thompson asks rhetorically whether it is being racist, xenophobic or One Nation to query the level of foreign ownership in Australia, which he claims has doubled in the last 25 years from 5.8% to 11.3% and further, claims that 45 million hectares of agricultural land already has some level of foreign ownership. He asks whether all the above countries are racist and xenophobic or whether they are rather displaying an intelligent and far-sighted understanding of their own best interests?
And it isn't just in Australia. In 2010 over 123 million acres of land in Africa were the subject of foreign purchase, lease or investment; it has been described as a new form of colonialism in Third World countries unable to resist as easily as we could.
Thompson points out that in the Northern Territory, over 14 million hectares, an area larger than the State of Victoria, is overseas owned. Over 30% of Western Australia's water entitlements for agriculture are overseas owned. And in December 2011, Westfarmers sold its Premier Coal business to a Chinese company, leaving all coal mines supplying the WA electricity grid in foreign hands. Sounds alarming, but does it matter?
Ever since the terra nullius assumption of the first English settlement was made in Sydney, Australia has always had a high level of foreign ownership. My own father worked all his working life for Vesteys, the English pastoral company who still have very large land holdings in the Northern Territory. So it isn't new, and given lack of information, I wonder about the composition of this foreign ownership. Is it acceptable if it's the Brits or those favoured Americans, but a remnant White Australia streak shows if it is the Chinese?
Thompson sees foreign ownership as one of the shortcomings of globalisation;
'Our problems have gone global--global warming, global terrorism, global financial crisis, global poverty, global diseases. Australia will be less vulnerable to these problems if we retain as much self-sufficiency and self-reliance as we can. Moreover we have an obligation to our children and to future generations to leave them the same opportunities as we have enjoyed. If we sell off fundamental assets like land, food, water and energy we compromise their chances. It is short sighted and diminishes our control over our own destiny.'
But does it matter who owns what, as long as they employ
Australians, treat their employees well, obey the laws of the land
and pay all their taxes? Does it diminish control over our own
destiny as Thompson claims, or is this simply appealing to the
xenophobic prejudice that Alex Njoo wrote about in The
The Mildura Fruit Company pays Australian taxes and employs Australian workers and (whether deliberately or not) keeps quiet about its ultimate ownership. On the other hand big (originally Australian) companies often play the nationalistic card, QANTAS, the flying kangaroo, still calls Australia home (for the moment), BHP is the Big Australian (when it suits them) and they certainly aren't 100% Australian owned. At the moment under the Qantas Sale Act, foreign investment in the airline is capped at 49 per cent, total ownership by foreign airlines is limited to 35 per cent, and a single foreign investor can buy no more than 25 per cent. Qantas is currently making a case that this law, which sounds like a lot of ad hoc decision making to me, should be loosened so they can remain competitive and the Opposition has flagged the they would probably be in favour of allowing Qantas to be majority foreign owned if they win government. These big companies ask for our loyalty because they are 'Australian' yet this is patently not true. And you wouldn't trust any of them not to move out of Australia completely (like James Hardie) if it suited their directors and shareholders; just keep your eye on Qantas! People my age remember those years when Qantas WAS an Australian company and had a monopoly and held us to ransom with high fares until foreign competition forced them down. Australian companies will screw you as quick as any foreigners, and it doesn't make me feel any better if it's being done by Australians.
There is no point getting annoyed about all this but we also shouldn't be sentimental about companies that claim to be Australian; one should recognise the nature of the capitalist beast, their interests are always first and foremost those of their directors and shareholders. The logical imperative of a global world market is that one's only loyalty should be self-interest, and one should therefore only buy something made in Australia if it is better or cheaper.
Then there are those foreign owned car companies that most people regard benignly, and who get large taxpayer subsidies, the argument being that they employ large numbers of voters in key electorates, and we don't want the skills leaving the country, and now Alcoa is currently seeking help. But is it different if it concerns food, water and energy? Does foreign ownership 'diminish our control over our own destiny?' The question implies that all that Mildura fruit might go to China, or that a Chinese owned farm might send all the rice they produce to China and there wouldn't be enough for us.
I'm a bit like Lady Astor, wife of a British Prime Minister, who was famous for putting her foot in it. When asked why she didn't think before she spoke, she replied that she didn't know what she thought until she'd said it! Substitute writing for speaking and this applies to me, I wasn't sure what I thought about foreign ownership before I started writing this, so I took a simplistic poll and asked everyone I met what they thought. Most people said they felt a bit uneasy about foreigners 'owning' Australia and while most went on to qualify that they weren't racist, most also agreed that Chinese involvement was a hidden factor in their feelings, that they weren't as concerned about US investment. When challenged to justify this, the term 'food security' often came up. That is, all the food might go to China and not enough would be left for us. When it was pointed out that at the moment we export large amounts of wheat and rice to the profit of Australian growers (or are they Australian?), what was the difference, most people could only mumble about climate change.
Presumably their presumption was that rising temperatures and a dryer climate with less regular rainfall, and reduced water for irrigation, and a higher population would lead to greatly reduced yields, with the implication that any food going overseas would automatically mean less, and perhaps not even enough, for us. And while everyone agreed that this feeling was riddled with uncertainties and assumptions, it was the only apologetic explanation people could find for their views, and there is no doubt that there will be massive, as yet unknown consequences, particularly in agriculture, because of the way our climate is changing.
I can't see that owning electricity or water companies needs concern us as long as they comply with our laws and pay their taxes; they could hardly send power or water away so it became unavailable to us. On the other hand the ability of China to stop buying our minerals is ever present, even for quite normal business cycle reasons, and it is probably also true that the more companies the Chinese own in Australia, the more moral and political persuasion would come into play, over foreign policy questions as well as business ones; the Middle Kingdom is not subtle about these things. I've written before about Australia being caught in the middle of tensions between China and the US and the need for us to become more independent of the United States; read The China-US syndrome. It would seem sensible to me that the limits should be reconsidered and the bias in favour of Americans should be eliminated immediately so it can be seen that we have no hidden prejudices and treat all those unlucky enough not to be born here quite equally.
The other question I suppose is to ask whether such foreign investment is necessary in an economic sense. Would lack of venture capital locally prevent desirable developments happening unless there are foreigners willing to invest? Are they prepared to accept lower rates of return? I'd like to see some evidence, and unfortunately that doesn't appear to be available given the general lack of real knowledge about who owns what.
The suggestion has been made that one answer might be to lease land to foreigners rather than sell it to them. There are plenty of examples; much of London is leasehold, all of Canberra is leasehold and governments are doing it with developers in their PPP arrangements for freeways and so on. But in the case of agricultural land I can't see what difference this would make, particularly if the lease period were 99 years. They may not 'own' the land, which would ultimately revert to the seller's great grandchildren at the end of the lease period, but experience has shown that leasehold land is treated as freehold for most purposes and can be sold as easily as freehold, so what the advantages of a leasehold system might be are unclear.
There is talk about the Federal government holding an enquiry into the whole question of agricultural land being sold to Chinese companies. God help us, will we never learn to avoid these racist overtones? The terms of reference should be revised to cover the whole spectrum of land sold to foreigners, not just the Chinese. Singling out Chinese buyers for scrutiny and at the same time allowing Americans much higher limits in their purchases without scrutiny is a sure fire way of souring relations with China, our major trading partner; it would inflame that Chinese sense of paranoia already alive and over sensitive because of the way China was treated by the European colonial powers in the 20th century? We have to be totally even handed in these things if we value our future relations with China.
In the absence of real information I'm left unsure what I think, but if the facts were uncovered and made available it would certainly be a debate we should have. However we must avoid going off half cocked, we need the facts not gold rush emotion, so we can decide what is truly in our best national interest.
I don't know which political genius wrote the terms of reference for the Financial Investment Review Board, but fortunately it's so loose that if at any time the best interests of the country were really thought to be threatened, a pragmatic view of that particular investment could always be taken 'in the flexible national interest'.…… as long as we know about it of course.
Facts which have come to light throw doubt on the almost hysterical concern that is developing over Chinese investment in Australia. China ranks way down the list in overseas investment. In order the USA is the highest investor with 27%, the United Kingdom is next with 23%, Japan has 6%, and Singapore, the Netherlands and Switzerland each have 2%.
Posted 1st August 2012