A consensus is emerging that a reasonable compromise between those who have no objections to foreign investment in agriculture and those who oppose it, in whole or part, is to create a register of foreign ownership.
Such "transparency", it is suggested, will allay fears and allow everyone to argue from an informed position rather than relying on limited ABS data, Queensland's existing register or, as is often the case, assertions based on no facts at all.
The government, with the support of the National Farmers Federation, has agreed to establish a national register of foreign farm purchases. The Opposition is not against the idea.
The assumption that accurate information about foreign land ownership will lead to a more rational and measured debate is curious. I am struggling to think of any other situation where consideration of an emotive issue has been improved by objective data.
It is easy to envisage the register being used to reinforce existing points of view. If the level of foreign ownership were to increase from 8 per cent to 10 per cent, for example, a politician somewhere will inevitably convince a journalist to generate a story with the headline “Foreign ownership increases 25 per cent”.
Those who have no concerns about foreign investment would undoubtedly point to both figures and say, “See, nothing to worry about”.
In fact, simply recording how much land is foreign owned will contribute nothing meaningful to the debate. Even knowing whether the amount is increasing or decreasing will make nobody better equipped to debate whether there is a problem, or even what the problem might be. For the register to be genuinely useful it needs to record a lot more information.
To begin with, it should show the number of employees working on each foreign-owned farm. Clearly we do not want anyone employing immigrants on slave wages, which would be illegal in any case. But the more employees there are, the better for the Australian economy. It might also be advisable for the register to record the wages paid to employees. Domestic farmers would not want foreign-owned farms driving up the cost of labour.
A useful register would record how much the farm spends on inputs such as chemicals, fertilisers and machinery, and whether these are purchased from local suppliers or imported direct from overseas sources. Ideally, foreign-owned farms would buy their inputs locally although we have to be a bit cautious there as some Australian-owned farms directly import their own fertiliser and machinery.
It would also record whether the farm sold its produce or livestock to local buyers at prevailing market prices or shipped them off to a parent or affiliate buyer overseas, at a different price. Selling overseas at a low price in order to reduce local profit (and thus avoid tax) is known as transfer pricing. It is illegal. The Australian Tax Office is well aware of the potential for this and is all over any business it suspects of doing it.
Selling it for above market price would increase local profits and lead to the payment of more taxes.
The register should record whether the farm generated a profit on which it paid tax, and any dividends paid to foreign shareholders. This would allow a comparison between domestic and foreign owners and their contribution to tax revenue.