Australia and its Overseas Owners

It is a common perception, largely media-driven, that the Chinese are slowly but surely planting their flag across Australia, particularly in the agricultural sector where foreign ownership of Australian land has come under scrutiny in recent years. While Chinese investors and companies are indeed acquiring Australian agricultural land (AAL) at a steady pace, their ownership percentage has been revealed as a comparative side act with the release of The Register of Foreign Ownership of Agricultural Land compiled by the Australian Tax Office.

The results have shown that the United Kingdom leads the ownership percentage with a 7.2% ownership of total Australian agricultural land. Notably, this equates to 52.7% of foreign-owned agricultural land, meaning that of the 13.6% total foreign-owned agricultural land, the UK contributes to over half of the sum. Coming in second is the USA with a 2% hold in AAL, the Netherlands at 0.8%, Singapore at 0.5%, and finally China with an 0.38% ownership of AAL. Ironically, one of the more pressing drivers of the development of the register was concerns over China’s increasing stake in Australian land.

That said, the ranking order would have been significantly different had treasurer Scott Morrison not blocked the sale of Australia’s largest cattle business, S. Kidman and Co., who’s land mass totals 2.5% AAL. The proposed sale for $370 million was to Dakang Australia, who’s largest shareholder is China’s Shanghai Pengxin Group and would have therefore moved China to the 2nd ranking in the Register.

At rank 5, concerns over China’s takeover may seem misplaced. However, reasoning behind the hype may be deduced from the notion that while they may not be owners of as much physical land as the four countries before them, China’s acquisitions could be better placed in the smaller but more lucrative properties of the south as opposed to the large lands of the Top End used for grazing.

While the Register’s stocktake was done between the 1st of July 2015 and February 29th 2016, there have been notable acquisitions this year. Included in the Register is the $280 million sale of the Van Diemen’s Land Company, Australia’s largest dairy farm to Chinese firm Moon Lake Investments. Furthermore, Westchester Group of Australia (US-owned) paid $35 million in April for three properties totalling 5000ha and 7500 mega litres of water licences at Goondiwindi, on the QLD-NSW border. China’s Union Agriculture also has been active recently, paying $11 million for the 5260ha Kyabra Station at Tamworth to add to its NSW portfolio. These are just some examples of the acquisitions of AAL that continue to occur, with an increase over the last two years of foreign ownership that had 11% of agricultural land being foreign owned in 2014 compared to the 13.6% in 2016.

Complaints of foreign ownership have derived largely from a combination of a misunderstanding of the situation and a resulting rise in patriotism. As stated by Victorian Farmers Federation vice president David Jochinke, “sometimes we get tripped up on the word ‘foreign’… and it really detracts from the real game of agriculture and what agriculture needs.” In fact, foreign investment is essentially a necessary factor in almost any economy as noted by Alan Bowman, chairman of Australian superannuation fund Prime Super, maintaining that “generally speaking to grow this country we need to external investment in every field.”

Misunderstood by opposition to foreign investment is the fact that it contributes to the growth of the economy, productivity and creates jobs. Whether a supporter or opposed to foreign investment in agricultural land, it is safe to say Australia will never again see a country that is 100% Australian owned and simply from an economic standpoint, it can be summed up by Scott Morrison’s comment that “we cannot afford to risk our economic future by engaging in protectionism.”