Investors question land plan

04 Nov, 2013 08:30 AM
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9
 

THE Australian head of Qatar's sovereign wealth fund-backed Hassad is calling for an urgent rethink on the ­federal government's policy on foreign land purchases, suggesting the new criteria will hurt land prices.

The Coalition has proposed that Foreign Investment Review Board (FIRB) tests include a lower threshold for rural acquisitions of $15 million down from the existing $248 million.

Hassad Australia's John Corbett said that policy had not been thought through and would damage values, The Australian Financial Review reports.

"When you start to talk about reducing the level at which transactions go to FIRB to $15 million, you are creating a whole new paradigm for the market," Mr Corbett told a BDO Agribusiness event in Brisbane.

"If you start reducing it to $15 million you are starting to take out a whole raft of investors in the market with potentially some significant consequences on prices as people try and sell large properties," he said.

"I think it is something that has not been well thought through."

The difficulty for Hassad is that it is unable to participate in rural property auctions and it cannot participate in a tender because both those require unconditional contracts.

Hassad cannot give unconditional contracts because all of its purchases would have to be approved by FIRB.

"The effects are that the property sells for a lower price than expected because there are fewer participants and then banks say 'well we have to get all the other properties valued in the region'."What denotes 'foreign' ownership

Rural division head for valuation company Herron Todd White, Tim Lane, said the real guesswork would be how an entity would be deemed foreign or not. He said Australian management companies could buy the land for an Australian-domiciled company whose investors are foreign.

He suspects that if foreign ­companies cannot participate in ­auctions and tenders then a particular segment of the market would feel some change.

"In recent times there has not been a lot of evidence of domestic players in the large-scale farms, so if the foreign buyers were not there than that would have an impact on that end of the market," Mr Lane said.

"However, the impact on value would be difficult to determine," he said.

BDO executive director Cameron MacMillan said attracting much needed capital to Australian agriculture could be hindered by such a policy.

"More onerous FIRB approval ­hurdles on agricultural property may push capital away from agriculture at a time when there are enormous ­requirements for global capital in this industry. Australian agriculture requires this capital to take advantage of the opportunities currently available so as to secure its position as an attractive supplier of premium agriculture products," Mr MacMillan said.

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READER COMMENTS

Bushie Bill
4/11/2013 8:37:02 AM

Ah! The penny drops! And to think that the Coalition is so dumb, particularly it's agrarian socialist faction, that it is totally without the ability to assess even the most obvious of knock-on effects. Poor fellow, my country.
looking after home
4/11/2013 9:59:25 AM

We cannot buy land in their countries why allow them to take our land and manage for their own food in competition with our farmers. We keep on hearing the same old same old mantra - we need foreign investment and our own people and knowledge are locked out. Politicians just do not learn or take their call from other countries. Stand up for Australia's long term interest and the people you are supposed to represent. Time to wake up Australia!!!
Bushie Bill
4/11/2013 1:57:15 PM

Foreign investment doesn't lock out our own people and knowledge, lah. It provides them with an opportunity for jobs that would otherwise not exist. Do you have even a rudimentary understanding of how the Australian and international economies work? Fortress Australia is dead. Long may it stay that way.
Ted O'Brien.
4/11/2013 4:00:42 PM

In the short run it certainly will. Then the government might wake up to the fact that the reason that Australians don't have the money to buy this land at its proper value is the insane policy they call Unilateral Trade Reform that has been maintained in the face of failure now for nearly 30 years. Once they wake up to this and adopt sane policies then the values will rise to their proper, uncorrupted level. BB, you wouldn't know a proper job if it hit you on the head. You and your Marxist mates never could see the work for the jobs.
James
4/11/2013 4:42:20 PM

lah, Australian agriculture faces a $500billion capital deficit (1/3rd of Australia's GDP), foreign investment is the only way of meeting this deficit and securing Australian agricultural jobs into the future.
Bushie Bill
5/11/2013 5:50:14 PM

You are talking voodoo economics, Ted, and your understanding of the topic is abysmal. You have not moved on from the Black Jack Mac strangled mangled perverse period when privileged pampered farmers mercilessly ripped off Australian taxpayers and consumers. Those days have gone forever, thanks to Hawke and Keating, and later Howard. You will be waiting a long time for any move away from the current age of agricultural prosperity, perhaps as long as Jock will be waiting for the return of the single desk. Good luck to you both, although no amount of luck will allow a rip-off era to return.
avagoyamugs
5/11/2013 6:09:01 PM

Let's play a game called "Spot the no hoper who can't survive without foreign investment to prop up their sorry broke arse because they spend all day sitting in front of a computer screen whinging about how everyone else is ripping them off instead of getting out and doing something productive like normal people do." Oh look, there's two already.
Bushie Bill
6/11/2013 7:50:45 AM

Avagoyamugs is a good philosophy, but when it is accompanied by endless mindless whingeing and blame allocation to everyone else for personal failures it is not a good philosophy. It. Is simply another broke arse farmer with his hand out demanding special consideration from the hard working tax paying long suffering citizens.
DM
8/11/2013 1:36:04 PM

This isn’t about foreign investment; this is about bailouts for banks, policy-makers and incumbent producers. Sub-prime land values have created formidable barriers to entry, and threaten long-term intellectual capital development. Jobs alone cannot facilitate innovations that require long-term control of capital; and associated sociocultural dynamics will erode attempts to attract and retain talent from future generations. Want your own future? Stop rewarding incompetence with foreign buy-outs and let the banks and debt junkies take their medicine, before things get worse.

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COMMENTS

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Thank you for the chance to debate the Single Desk issue Bushie. World wheat prices are higher
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Australian grower prices for wheat are not so hot today when you look at Chicago wheat trading
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Deregul8, Chicago wheat ranging $US 230-350/t depending on category. So tell us all the growers