A couple of weeks ago an entourage of political figures graced the Yass Valley with their presence. The purpose of the visit was to announce federal government screening of foreign purchases of agricultural land over $15 million. The policy having begun this month.
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Government Asset sales, never the sexiest of topics, is having a bit of a moment here.
Listening to the Prime Minister discuss his reasoning for the policy, he claimed that foreign investment, although crucial to Australia’s growth, needs to be investment that serves our national interests, not just the investors.
With this, three things came to mind.
Firstly, I was shocked by the substantial reduction from the existing $252 million threshold that must be met before such proposals must be examined by the Foreign Investment Review Board (FIRB).
Secondly, I had to consider the implications of such a move; how much of our agricultural land has been sold off to foreign investors?
Thirdly, the irony of the government that wants to preserve Australia’s ownership of agricultural land is the same that is ferociously fighting for the partial privatisation of the electricity distribution network - the "poles and wires" that represent the critical core of the power grid.
This proposal has already radically polarised the public between those who see benefits in "asset recycling" and those who fear profiteering by new private owners.
If the coalition wins the March election, the state government plans to sell a 49 per cent, 99-year stake in the poles and wires companies.
In essence, the “poles and wires” leasing plan is the Liberals' promise to improve infrastructure with the proceeds.
By contrast, Unions are attempting to block the partial sale because of the notion that private owners would press to cut jobs and conditions which workers in the electricity industry relish.
The proceeds from the sale is estimated to be $20 billion, which would then be put back into big-ticket projects.
The question seems to be, do you bite off one hand to save the other?
Bringing the issue closer to home, the question as to why the Yass Valley Council does not just simply sell their land assets to solve budgeting issues has been a recurring question with discussions about ‘Fit for the Future’. The simple answer is, by selling off these investments they will be gaining ‘quick cash’ without long term profit.
The rationale for the NSW government limiting "the potential for any private buyer to raise prices to maximise profits"; a private buyer would likely try to please company shareholders by an increase in price, but what gain would there be to please consumers?
Pressure can be exerted on a government that they elect, but what power of sway do consumers have on private business that can potentially be a monopoly on the market?
For foreign investment of agricultural land there seems to be uncertainty in exactly how much agricultural land foreign companies and governments own, and a dual distinction between the sale of ‘family land’ and the benefit of ‘overseas capital’.
The big question is, will the privatisation of NSW assets lead to the similar issues for agricultural land sales?
