I often think we let ownership of Silver Fern Farms go to foreigners too quickly.
Australia now has new rules specifically for regulating the sale of agricultural land and agri-business.
Last year, the S. Kidman and Co property portfolio, Australia’s largest private landholding, went up for sale. That was 100,000 square kilometres, roughly. It went across four states. One of the farms, Anna Creek, is the world’s largest cattle farm.
Treasurer Scott Morrison blocked the 100% sale, saying: “… it would be contrary to Australia’s national interest for a foreign person to acquire S. Kidman and Co in its current form.” The size was of concern, and the form of the transaction was as well.
Despite a whole new consortium deal in which a Chinese-owned firm had 80% and an Australian firm had 20%, in April 2016 the Australian Treasurer still blocked it. Perhaps the decision had something to do with the July Federal election, who knows.
Some uncertainties came out of it. For example, the Treasurer got the ACCC in to make sure Australian bidders had a real chance. In future that will leave open to political judgement when the locals were simply outbid, or poorly structured, or simply didn’t get themselves together in time.
The Treasurer also stated in his decision how important it was that the Australian public maintained confidence in government regulation of foreign investment, and in foreign investment full stop. That’s new.
So now the Australian Federal Government has come up with some much clearer rules about how much agricultural land, and agricultural business, foreigners can actually buy. Their Foreign Investment Review Board now has much clearer triggers for both.
The national interest test that Australia uses is deliberately vague. This gives the Australian government flexibility to block sales or impose conditions. The Kidman example highlights that clearly.
It’s also illogical that the FIRB rules don’t apply to state or territory assets like ports or airports. There should be equal accountability between public and private asset vendors.
But the rules are much clearer. New Zealand could take lessons. We need a complete overhaul of how all kinds of agricultural land and agribusiness are considered to be sold to foreigners of any kind. We need to favour locals over foreigners.
Both Christchurch and Auckland Councils will be under renewed pressure to sell assets. Dairy farms will come under pressure to sell due to the long dairy commodity bust. More foreign-owned dairy factories will set up in our fields and literally cream it.
New Zealand needs a stronger set of rules to stop our best land and agribusiness being sold off to foreigners.