A Productivity Commission draft report has found that Australian farm businesses are subject to a “vast and complex array of regulations”. The report won’t be pleasant reading for any of the major political parties: it criticises bans on genetically modified crops and foreign shipping, which are generally supported by the ALP. But there are also criticisms of policies supported by the Coalition; such as effects test in competition law, tighter restrictions on foreign investment, and several monopoly marketing regulations.
The Coalition will need contortions to deal with the report’s finding that the tightening of foreign investment rules for farms is not warranted. While foreign investment is usually reviewed for businesses worth over $252m, the Coalition has mandated that review is required for farm land and businesses worth more than $15m.
The PC skewers the main arguments for this stricter rule, confirming yet again that foreign ownership of farm land won’t endanger Australia’s food security or sovereign control and won’t cut employment opportunities for locals. The PC also argues existing land use rules apply equally to foreign owners as local owners, so the argument that foreign owners will ‘misuse’ land is a furphy, and many farm businesses were started as a result of foreign investment.
So the benefits of tighter regulation are minimal; and the PC unsurprisingly confirms that costs of tighter foreign investment rules may be substantial, although precise costs are difficult to estimate.
But these criticisms of the Coalition’s foreign investment policy should provide no joy to the ALP, as they (along with the Greens and others on the Left) have been extraordinarily critical of foreign investors in the debate over company tax. If the ALP argues investment in farm land is to be promoted, why not promote investment in all industries through a company tax reduction?
We can only hope politicians actually study the arguments in the PC report and don’t take the easy way of arguing the report is brilliant where it helps their position and woeful when it opposes their preferred view of the world.
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