Of mountains and mole hills: Is an agricultural land register worth the cost?

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4 December 2012

The views expressed in this paper are the authors’, not those of Corrs Chambers Westgarth. 

Australia is capital hungry. As a small country, we need foreign investment to grow our agribusiness sector and capitalise on the opportunities presented by our growing region.

Proposals to ‘improve transparency of foreign ownership’ by closely tracking foreign agricultural investments are unwarranted, expensive and an unnecessary clog on productivity. There are better ways to address community concerns about foreign investment in agricultural landholdings.

Australia is capital hungry.  As a small country, we need foreign investment to grow our agribusiness sector and capitalise on the opportunities presented by our growing region. 
Proposals to ‘improve transparency of foreign ownership’ by closely tracking foreign agricultural investments are unwarranted, expensive and an unnecessary clog on productivity. There are better ways to address community concerns about foreign investment in agricultural landholdings.

"Men trip not on mountains, they trip on molehills”

(Chinese proverb)

The Commonwealth Government first floated the idea of improving data quality about land ownership in its Green Paper on Australia’s National Food Plan released in July this year (see Corrs in Brief - Green Paper on Australia's National Food Plan).  

This was followed by the government’s October announcement that it intends to forge ahead with a national foreign ownership register for agricultural land.  A consultation paper on its establishment was released last month.  

The register aims to collect information on foreign ownership to improve transparency and better inform public debate and policy making.  But nothing in the paper acknowledges the Syphian task that building such a register for agricultural land represents, let alone a sensible cost benefit analysis. 

Given the coalition’s support for a register, it seems inevitable some register will be implemented.  However, the extent to which obtaining data will alter entrenched opinions on foreign investment in agricultural land is questionable.  It is difficult to believe marginally better data will make any difference to the quality of the debate.

What do we currently know about foreign ownership of agricultural land?

The ABS Agricultural Land and Water Ownership Survey, December 2010 has the most recent official statistics on agricultural land ownership. This survey estimated that at the end of 2010, 88.6% of agricultural land was entirely Australian owned and a further 5.9% majority Australian owned.  While statistically significant these figures were estimates rather than definitive figures.  

How would a national register be implemented?

Queensland is the only state that has a register to monitor foreign ownership of land, under the Foreign Ownership of Land Register Act 1988 (Qld).  The Act requires notification for all land, not just agricultural land, however if consistency across different land uses is assumed, the level of foreign ownership is extremely low, at 2.6% of all land in Queensland as at 30 June 2011.

Consistent with the Queensland Act, the national register is proposed to be a post-acquisition recording system so it will be entirely separate from the foreign investment approval process administered by the Foreign Investment Review Board. 

Since states are responsible for registering land ownership the only realistic way to establish a “national” register is to add it to existing state-based land registers.  This is no simple task, such a move would require developing new administrative systems (even in Queensland) to overlay existing systems including:

  • notification systems for land use; and
  • systems to monitor obligations to update the register eg on a change of control where no transfer occurs.  In Queensland there is no prescribed form for such a notification and in our experience many practitioners are unaware of this requirement.

As yet another rail gauge debate, any register will need to address state property law administration differences, including:

  • registration of long-term leases, which while interests in land for the purposes of the Foreign Acquisitions and Takeovers Act 1975 (FATA), are not registered in Victoria, one of our largest States; and
  • differences between states in requirements for registration of water rights.

Should we do a stocktake?

If the register is to have any comparative benefit at all, some form of base case must be established.  However, this would entail a significant upfront cost and it is not clear whether the commitment and funding exists.

Some other tricky issues

Some of the key issues on which the consultation paper seeks views include:

  • the definition of agricultural land – whether the definition of agricultural land should be limited to land used exclusively for primary production (as is the case under FATA) or whether it should be land which is used predominantly or even partly for an agricultural business or should a zoning of agricultural use be the trigger;
  • types of interests – what types of interests should be registered, should leases (the Queensland system requires notification only if the lease is over 25 years), licences, easements (such as those granted for wind turbines on farm land) and/or water access rights be included; and
  • appropriate thresholds – should smaller transactions be excluded, and if so, at what level.

Putting it into context

As discussed in our article Food Glorious Food, foreign investment has been a significant force in the development of the Australian economy, including in agriculture and agribusiness eg the beef and cotton industry.  It continues to contribute to investment, boosting employment and incomes.

While there have been questions about the accuracy of the current available data on foreign ownership of agricultural land in Australia, creating a national foreign ownership register is an expensive sop to community concerns.  The government needs to move away from costly distractions and instead focus on helping the community understand that Australian agriculture must attract foreign investment if it is to successfully develop into anything like an important source of food for Asia. This is particularly the case when, according to ABARES, between 1984 and 2010 the area of land used for agriculture in Australia declined by almost 20%.

Next steps

The government is seeking submissions on the consultation paper by Friday 1 February 2013.  Corrs will be preparing a submission in response to the consultation paper – please let your Corrs contact know if you have any comments in relation to the consultation process or would like us to submit any feedback in response to the consultation paper on your behalf. 




The content of this publication is for reference purposes only. It is current at the date of publication. This content does not constitute legal advice and should not be relied upon as such. Legal advice about your specific circumstances should always be obtained before taking any action based on this publication.


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