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Australia Grapples With Foreign Land Sales

A farmer crosses his wheat crop at a farm in Condobolin, 285 miles (489 km) west of Sydney, July 5, 2011.
SYDNEY — In Australia, conservative politicians want to tighten the controls on foreign investors buying farms and businesses. The calls for more scrutiny on sales to foreigners come as a Chinese property conglomerate bids for a 15,000-hectare farming project in the Australian outback.

The Foreign Investment Review Board makes recommendations to the government on whether deals should be accepted or rejected based on what it considers to be the national interest.

Opposition leader Tony Abbott says he does not want to restrict foreign investment, but believes that sales should be more thoroughly examined.

"The important thing is getting foreign investment under the right conditions and the right conditions are when it is unambiguously in Australia's national interest and this is about persuading the public that the foreign investment we get is serving Australia's purposes as well as the purposes of the foreign investor," Abbott said.

Chinese plans

The Shanghai Zhongfu Group is bidding for a huge farming enterprise in Western Australia state, with plans to develop agriculture business in the sub-tropical region, but is facing opposition from politicians increasingly concerned about foreign investment in Australian farms.

"I don't come at this from a perspective that foreign investment is bad," said John Forrest, a conservative lawmaker in Canberra's federal parliament, who believes that foreign investors should face greater scrutiny. "But we want to know that they're going to employ Australians, they're not going to send in a rush of their own nationalities and they're going to contribute to the local economy. These are important national interest questions and I want to see criteria set down that they're declared [to the conditions]."

China, the world's most populous country, does not grow enough food to feed its 1.4 billion people. It has expressed an interest in some of Australia’s most important agricultural assets.

Alan Moran, the director of the deregulation unit at the Institute of Public Affairs, a non-profit Melbourne-based think-tank, says Chinese interest in Australian farms will cause some alarm.

"People [in Australia] are quite comfortable with Americans and British and New Zealanders and all that sort of stuff, but China is the new guy on the block and, if anything, the strategic alliances we have probably, I don't say they’re targeted at China, but China is somewhat different and seemed to be, if anything, a future antagonist to Australiam" said Moran.


Last year, Australia and China set up a joint study on how to attract Chinese investment into under-developed regions across the Australian continent. A deal is expected to be finalized later this year.

But Mark McGovern, a senior lecturer with the Queensland University of Technology Business School, says that food security in Australia could be undermined by sales of key assets to foreigners.

"I think the idea of the nation being able to feed itself is central to most national identities around the world," he said. "It is central to the Treaty of Rome in Europe, the U.S. obviously adheres to it and the Chinese are concerned about feeding their own population and Australians should be too. So we need to say how well are we feeding our people and how much can we export and look at it from that more balanced point of view rather than simply saying every item sold offshore must be good."

However, the government says that, far from "buying up the family farm", the amount of foreign-owned agricultural land in Australia had grown only marginally since the 1980s.

The most recent figures show that about 11 percent of Australian agricultural land was owned by foreign investors at the end of 2010.

Overblown concerns?

Jason Li, a business adviser who specializes in partnerships between Chinese and Australian companies, says concerns in Australia about Chinese investors are overblown.

"There is so much noise about Chinese investment in Australia, but when you line up China in the list of countries, the total amount of Chinese foreign investment in Australia, last year, I think it is less than one percent of the total volume," said Li. "From the U.K. and the U.S. it is something like 40-something percent. So we are really talking about a very small figure at the moment."

The Australian government is keen to encourage more foreign investment in its under-developed north, as it looks to open the region for farming to tap booming demand for food from Asia, especially China.