Friday, September 13, 2013

Indonesian Plan to Buy 1 million Hectares of Australian Land

The news that Indonesia plans to buy 1 million hectares of Australian grazing land reveals as nonsense claims that Australia’s decision to suspend live animal exports led to retaliation by Indonesia. As the report makes clear the import restrictions imposed by Indonesia on Australian cattle were also applied to other countries and to other food products, and were done in the name of Indonesian food self-sufficiency. 

Indonesia is absolutely entitled to have a food self-sufficiency policy. That is their right. But so too is Australia. One million hectares of Australian farmland is 4 times the size of the ACT and is too big in my view, and the Foreign Investment Review Board should reject it.

From an animal welfare point of view, from an economic point of view, and from a national sovereignty point of view, we should not agree to this. Far better to set up an abattoir in northern Australia, grow beef cattle there, process them there, and export chilled beef as New Zealand does.

The animal welfare shortcomings of the live animal export trade have been well documented and are well known, so I will focus on the economic and national sovereignty issues.

Economic Issues:

ACIL Tasman, an Australian agricultural and economic consultancy, has found that the domestic processing of livestock contributes more to regional economic activity and employment than live animal exports. The profitability of northern cattle producers could be significantly improved if they had access to a northern cattle processing facility. They also found that a privately financed and operated northern cattle processing facility could be economically viable and would not require significant ongoing government financial contributions.

ACIL Tasman determined that processing up to 400,000 cattle per annum domestically would:

·         contribute an additional $204 million per annum to the regional economy;

·         create an additional 1,300 jobs in the region;

·         enable some northern Australian cattle producers to increase their earnings before interest and tax by up to 245% by selling heavier animals than the 350 kg limit currently imposed by the Indonesian Government.

I believe a value added Australian meat processing industry would provide jobs for farmers, stock hands, truck drivers and more.

National Sovereignty Issues:

Foreign ownership of Australian agriculture has exploded since the Global Financial Crisis, with overseas buyers seeking approval from the Foreign Investment Review Board (FIRB) to buy agriculture, forestry and fishing assets worth an average of $2.5 billion per annum. This is 250 times higher than the value of applications in 2005-06, when applications totalled just $10 million.

The FIRB approves over 99% of applications. As a result the amount of Australian land in foreign ownership has doubled in the past 25 years. 45 million hectares of Australia’s agricultural land has some level of foreign ownership. It is not just land. More than half the milk produced in Australia is now processed by foreign-owned firms. Half the wheat export industry is controlled by foreign companies. 60% of raw sugar production is done by foreign milling groups, and 40% of Australia’s beef and lamb is processed by foreign firms. In Queensland foreign land ownership has quadrupled in the past 5 years to 4.4 million hectares. In the Northern Territory, over 14 million hectares, an area larger than the State of Victoria, is overseas owned. Over 30% of Western Australia’s water entitlements for agriculture are overseas owned.

People who express concern about this are likely to be greeted with dark mutterings about Hansonism, One Nation, racism, xenophobia etc. And yet ownership of existing dwellings by foreign non-residents is banned as “not in Australia’s national interest.” Is this racist or xenophobic? Or are land, food, water and energy less important than housing?

And you can’t buy land in China, you can’t buy land in Japan, and best of luck in the United States, New Zealand, Ireland, Brazil and many others. Are these countries racist and xenophobic? Or are they displaying an intelligent and far-sighted understanding of their own best interests?

What Should We Do?

In the Indonesian case, the land buy up should not be approved. If the Indonesian Government wants to invest in a northern Australian abattoir, that might well be helpful. In any event, the establishment of a northern Australian abattoir should be supported by policy makers.

More broadly, it’s high time we had a Commonwealth foreign ownership register for agricultural land. This will improve the transparency of foreign ownership. Present ABS research depends on self-declaration by the companies. Its validity cannot be examined or tested.
We have an obligation to our children and to future generations to leave them the same opportunities as we have enjoyed. If we sell off fundamental assets like land we compromise their chances. It is short-sighted and diminishes our control over our own destiny.

1 comment:

  1. This is so true, exactly what I have been telling people. Why is Australian public standing for this ? A company in Indonesia can only obtain HGB which is a 30 year lease. Why is Australia selling them freehold land. Australia is selling it's future for a quick short time one off gain.