Jurisdiction - Australia
Australia – Foreign Investment In Agriculture.
5 August, 2013





  • The Senate Standing Committee on Rural and Regional Affairs and Transport issued its final report in respect of its examination of FIRB's national interest test.
  • 29 recommendations were made, including:


  •  to provide clearer guidance on the application of the national interest test;
  • the establishment of a register for foreign ownership of agricultural land; and
  • to reduce the FIRB threshold for private foreign investments in agricultural land to $15 million for individual and cumulative purchases.
  • It remains to be seen if some or all of these recommendations will be implemented after the upcoming federal election.


The Senate Standing Committee on Rural and Regional Affairs and Transport, chaired by Bill Heffernan, recently tabled their final report on Foreign Investment and the National Interest.


The Australian Parliament had asked the Committee in July 2011 to report into the application of the national interest test (particularly in relation to agricultural land and agribusiness), the role of sovereign funds in acquiring Australian assets and the rules and decision making process by the Foreign Investment Review Board (FIRB).


The Committee made a total of 29 recommendations, with the report being largely written by Coalition Senators in Opposition. With the next federal election due to be held later this year, the implementation of any of these recommendations is unlikely to occur until after the election and may be affected by the election outcome.


Clearer guidance in applying the national interest test


The test for approving a foreign investment in Australia is whether it is "contrary to the national interest" (ss 18 and 19 of the Foreign Acquisitions and Takeovers Act 1975 (FATA)). There is no definition of "national interest" in FATA. FIRB policy states that the Government determines national interest concerns on a case-by-case basis, having regard to factors including national security, competition, the impact on the economy and community, other government policies, and the type of investor.


The Committee expressed deep concern about "the lack of a systematic approach by FIRB to the conduct of the national interest test". It recommended that the transparency and public awareness of the national interest test be increased so that it:


(1) provides precise and unambiguous instructions to prospective foreign investors about their obligations to FIRB and the Treasurer, and how the national interest test is conducted; and

(2) builds confidence in the public, FIRB stakeholders and the Parliament that the national interest test is being rigorously and fairly applied and takes into account all relevant factors including impacts on rural communities and the agricultural industry.


Establishing an agricultural register The Committee strongly supported the Labor Government's plans (confirmed in October 2012) to develop a register for foreign ownership of agricultural land, as there is currently a significant lack of detailed and accurate information regarding foreign investment in the Australian agricultural sector. This position was also endorsed in Labor's response to the Committee's views on this issue.


The Committee recommended that the register should include the following features:


  • an initial stocktake of foreign ownership of agricultural land, agribusinesses and water entitlements, which is subsequently updated on an ongoing basis;
  • divestments as well as investments; 
  • no minimum threshold for reporting;
  • participation in the register be a legal requirement with appropriate mechanisms in place for noncompliance;
  • the levels and trends of foreign ownership of land, agribusiness and water entitlements be published annually; and
  • to protect privacy, country of origin details for private foreign companies be included in the register at aggregate levels only. Parliamentarians, parliamentary committees, and any relevant government agency may, however, obtain these details upon request.


In Labor's response to the Committee's report, it recommended that care be taken to avoid disclosing private or commercially sensitive information or breaching Australia's international obligations.


Reducing the FIRB threshold for private investments in agriculture


The Committee considered that the current investment threshold of $248 million for triggering a FIRB review of proposed private foreign investments in the agricultural industry was far too high given that the current threshold only covers a very small number of agricultural acquisitions.


It recommended that:


  • the threshold for notification of private foreign investments in agricultural land be lowered to $15 million;
  • once cumulative purchases of $15 million of private investment in agricultural land has been reached by a private business or associated entities, any further investment by that business or entity must be notified regardless of value;
  • FIRB reviews any proposed foreign acquisition of an agribusiness where investment exceeds 15% or more in an agribusiness valued at $248 million (indexed annually) or exceeds $54 million; and
  • the zero trigger required for notification of any purchase of agricultural land or an agribusiness by a state-owned enterprise continue to apply.


Other recommendations


The Committee's other recommendations included:


  • amending FATA to provide more effective compliance mechanisms in relation to undertakings given by foreign investors and conditions of FIRB approval. Any new compliance regime should provide the Treasurer and relevant officials with a wide variety of compliance tools, in addition to forced divestiture, so that compliance matters can be resolved more efficiently and in proportion to the severity of any breaches;
  • updating the definitions of "Australian rural land" and "Australian urban land" in FATA to more accurately reflect the common understanding of these terms (the updated definitions would also apply to the register for foreign ownership of agricultural land to ensure consistency); 
  • strengthening Australia's tax regulations in order to prevent tax leakage that may occur due to business structures and practices used by foreign investors in relation to transfer pricing, capital gains, passive income, thin capitalisation and other tax mechanisms; and
  • establishing an Independent Commission of Audit into Agribusiness, or similar body, to develop a comprehensive policy approach to Australian agriculture.


For further information, please contact:


Tiffany Barton, Partner, Ashurst

[email protected]


Fred Tai, Ashurst

[email protected]


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