Abbott will make it a bit harder to foreigners to buy farms

The Coalition will propose a much tougher line against foreign takeovers of Australian farms in a discussion paper to be unveiled within weeks.

Detailing for the approach for first time opposition leader Tony Abbott said the present threshold below which takeovers were waved through was far too high.

“At the moment there’s only consideration of agricultural land or agribusiness purchases over about $240 million,” he told Sky News. “That is a very high threshold. There are a few agribusinesses worth that much, but there is almost no parcel of land worth that much. Effectively agricultural purchases are exempted, as things stand, from Foreign Investment Review Board scrutiny.”

The new stance is a win for the National Party members of parliament who have argued for a threshold as low as $10 million which also takes into account cumulative purchases.

Asked at a Senate hearing in February whether a foreign investor who acquired ten $30 million farms in a year would breach the threshold, Foreign Investment Review Board chairman John Phillips said it would not, adding the exemption as “an anomaly”.

New Zealand restrictions are based on how much land a foreign buyer would end up owning rather the the size of purchase...

Mr Abbott said the scrutiny was needed “not because we want to knock back lots and lots and lots of investments, but because the public needs to be confident that these investments are in fact genuinely in Australia’s national interest”.

The Coalition would also set up a national register of foreign land holdings modelled on Queensland’s.

National senators Barnaby Joyce and Fiona Nash and Liberal senator Bill Heffernan have been pushing for tighter rules while Liberals including South Australia’s Jamie Briggs have been arguing against restricting foreign investment.

Trade minister Craig Emerson has warned the Coalition’s proposed changes put free trade deals at risk. Australia’s agreement with the United States allows US investors to buy land parcels worth up to $1 billion before facing scrutiny.

In today's Sydney Morning Herald and Age


Related Posts

. First the minerals boom, next the food boom. The RBA rings in the changes

. What the hell were we allowing the foreign equity fund owners of Myer et al to do?

Read more >>

"How do you sleep at night?" How minister Ludwig coped

Centrelink telephone operators answered calls to the department of agriculture and letters of complaint to minister Joe Ludwig went unanswered in frenzied attempts to deal with an outpouring of public concern in the wake of the Four Corners program on live animal exports aired on May 30.

Freedom of Information documents released to The Age suggest each one of the 500 complaints sent to the department or minister in the four days after the program wanted live exports banned or suspended.

“People working at the department must find it hard to face their children at the end of the working day,” said one website comment sent within minutes of the program going to air. “Do you pretend you work elsewhere? Do you say it’s not your fault?”

A letter received by the minister two days after the program said the writer had had trouble sleeping.

Another read: “I grew up on sheep and cattle stations, and was killing my own meat the age of 14, but I have no stomach for the collection of various tortures I have witnessed inflicted upon the species bred by us, to sustain us. You want to hope there is no animal-sympathetic entity to which we will all, one day, become accountable.”

The documents show the department adopted a triage system of responding to complaints, deciding not to respond to the 80 per cent of messages it dismissed as “standard campaign mail”.

Where the text of one email was identical to another only the “originator” received a response. Hundreds of others did not.

Letters from people identified as special - “MPs, industry associations, famous/important people etc.”... were given red carpet treatment, receiving individually-tailored replies.

Other members of the public received identical replies regardless of the content of their complaints.

The first draft opened by saying the government “shares community concerns”. The final draft was strengthened to say anyone who had seen footage “would have been shocked”.

Within a day of the program going to air the department diverted its inquiry line to Centrelink, where call centre staff answered as if they were from the department and used a preprepared script to tell callers their concerns would be noted.

The documents released to The Age provide no indication of the way in which the concerns were noted. The department released to The Age a representative sample of 20 of the 500 letters of complaint.

Asked whether it was right not to reply to form letters but to use form letters and Centrelink call centre operators in its own replies to members of the public the minister’s office told The Age he took community views seriously and had worked hard to ensure they were properly responded to.

Published in today's SMH and Age

How do you sleep at night?

What we said

“I truly do wonder how you sleep at night knowing that you work for a government that allows millions of innocent animals to be tied down and tortured before being slaughtered.”

Tuesday May 31


“All of the people working at the department of agriculture, fisheries and forestry must find it hard to face their children at the end of the working day. Do you pretend you work elsewhere? Do you say it’s not your fault?”

Monday May 30


“Minister I trust your dept’s website is under gridlock as a result of your inaction over the last 10 years. To see the suffering that those animals went through on 4 corners using Aust government approved (and probably funded) installations is beyond belief.”

Tuesday May 31

“I am sick to my very core on what I have seen on the program. As a developed society with values on cruelty to animals we can not let these practises continue.”

Tuesday May 31


“I grew up on sheep and cattle stations and was killing my own meat the age of 14, but I have no stomach for the collection of various tortures I have witnessed inflicted upon the species bred by us, to sustain us. You want to hope there is no animal-sympathetic entity to which we will all, one day, become accountable.”

Tuesday May 31

Correspondence to the department of agriculture, fisheries and forestry released to The Age under freedom of information act.

Related Posts

. Today's front page. Not as worrying as it looks

. Treasurer takes on the People for Ethical Treatment of Animals

Read more >>

Today's front page. Not as worrying as it looks

As opposed to...

Read more >>

Ahead of Woolworths & Coles at the Senate Inquiry today...

From 9.30 am Watch Here

Shane Wright, economics editor of the West Australian poses this question:

Does WA need a dairy industry?

Now before you start mailing in dry cow pats in anger, I am not advocating it’s time for the State’s remaining dairy farmers to walk off the land and take up jobs driving trains for Fortescue Metals or BHP Billiton (although financially they may be better off doing just that).

But with a Senate inquiry looking into the milk price war now being waged by the nation’s major retailers the heavy focus has been on the poor plight of dairy farmers with precious little attention given as to whether we should have them in the first place.

This would be the same industry that got a $2 billion assistance package in 2000 to end taxpayer-funded subsidies for drinking milk which was paid for via an 11 cent a litre levy on all milk for the best part of nine years (it was only ended by the Rudd Government).

Dairy farmers in WA quickly become an endangered species post-deregulation, evidence that they were only being kept afloat by the subsidies with only the most efficient and financially viable still alive.

Now those remaining farmers have raised concerns that the Coles $1 a litre pricing policy will drive them out of business leaving the people of Perth only sipping UHT milk.

Much has been made of claims that some parts of the country won’t have fresh drinking milk if the price war continues.

The situation in France, where every monsieur, mademoiselle and madam drinks UHT milk, was highlighted as an example of what is about to hit the milk drinking public of Australia.

By any measure the high percentage of UHT milk use in France is high at about 96 percent of total consumption.

But some witnesses to the milk inquiry (and some of the senators) tried to draw a link between the French experience with the supermarket structure of Australia. Pity that claim doesn’t stand up to any examination...

France is the second largest milk producer in the European Union (and one of the 10 largest in the world). The place is awash with milk.

The use of UHT appears more a cultural issue - little history of milk as a beverage, not a heavy focus on breakfast cereals – than a supermarket power issue. The fact France has high per capita consumption levels of cheese and butter suggest locals like dairy, just not as a drinking product.

Across the Channel in Britain UHT use is less than nine percent. And Britain is the third largest milk producer in the EU.

There’s no suggestion that competition among the supermarket chains in France and Britain has led to this huge discrepancy in UHT usage.

But somehow that argument is supposed to fly in Australia.

I don’t think so.

Often through the inquiry and public commentary on the issue Coles is made as the evil-doer, forcing its competitors into matching its pricing structure.

Consider the submission made by Woolworths.

The company has made much of its concerns that farmers will be driven to the wall.

In reality, it appears Woolworths is frightened that its differential pricing arrangements are the only thing in danger of disappearing.

Woolworths, before the price war, was offering its HomeBrand line of milk at around the $1.14 a litre mark.

But it also has its Woolworths brand which was on the market at about $1.47 a litre.

For that extra 33 cents a litre there is a small amount of extra fat (creaminess) in the milk but also a great wad of extra profit margin for our friends at Woolworths.

Instead of trying to argue to customers that for that extra 33 cents a litre customers who bought Woolworths brand over HomeBrand were getting a better product, the company surrendered to the threat posed by Coles and slashed its prices down to the $1 a litre mark.

Indeed, the company only cut the one litre cartons of Woolworths brand to $1 from $1.47. For two litre containers prices fell to $2.29 from $2.67 and for three litre containers the price is now $3.29 rather than $3.96 previously.

"We have publicly expressed our concern that this rapid price drop is unsustainable for the Australian dairy industry," the company’s government relations manager Nathalie Samia wrote.

But there was no gun being held at the heads of Woolworth officials (or those at other major retailers including at IGA) forcing them to slash prices in line with Coles. If they so believed in the unsustainability of $1 a litre milk then Woolies wouldn’t or shouldn’t be offering it.

It was a choice made by those companies that they had to compete with Coles.

That is largely in part because Woolworths, Aldi, IGA and others know that consumers see very little difference in milk.

Milk is, largely, a bulk commodity just like iron ore and coal (although I wouldn’t put splash of iron ore on my Corn Flakes in the morning).

Some, like the West’s Rob Broadfield, will argue long and loud that cheap milk turns a potential cup of coffee heaven into something approaching a mug of bitumen but most of us don’t have the same refined taste buds as Mr Broadfield.

All we want is some white stuff for the morning cereal, a bit to put in the coffee, and maybe if we’re feeling the heat a milkshake for a mid-arvo pick-me-up.

And we actually want it at the lowest price possible.

Unfortunately for WA dairy farmers, it’s clear milk drinkers are more impressed by low prices than much more expensive branded varieties.

Consumers already have a choice when they walk into a Coles or Woolies or an IGA – and they’re voting for the cheap unbranded stuff.

That means for dairy farmers and their processors the focus has to be on product differentiation, convincing shoppers that their higher priced milk is worth purchasing.

On that front they have failed so far.

But it’s much easier to criticise big bad Coles than have a look at your own marketing efforts.

Dairy farming has to be one of the toughest farming gigs going around.

It’s constant, it’s hard, the returns are low and you’re effectively selling something that by its very nature is the same as just about anyone else’s.

And the land dairy farmers are using now may be more productively used for other agricultural pursuits.

Perhaps the question is whether West Australians want, and are prepared to pay for, a dairy industry.

This is an argument not as simple as a supermarket chain selling cut-price milk. This is an argument over how an industry goes about selling itself.

Related Posts

. Melbourne - where the milk is surprisingly expensive

. Eggs, bacon, milk - breakfast gets cheaper

Read more >>

First the minerals boom, next the food boom. The RBA rings in the changes

Reserve Bank governor Glenn Stevens has raised the prospect of a global food shortage, saying just as China is driving demand for steel it will soon be driving demand for livestock and grain.

Speaking this morning to the Australian Business in Europe Forum in London he said there was already a clear trend towards higher protein consumption in China with major implications for global demand and prices.

"These price rises will be unwelcome for very poor countries whose populations spend much of their meagre incomes on food," he said. "For practical purposes they amount to a supply shock for the advanced countries – someone else’s demand has pushed up the price at which markets are prepared to supply commodities."

"New capacity is being planned in many resource commodities. In Australia, where iron ore shipments are running a little over 1 million tonnes a day, projected capacity expansion will likely take that to about 2 million tonnes within four or five years."

"In the case of foodstuffs, much of the growth in supply will need to come from productivity gains or greater farming intensity. The experts seem to think that such productivity gains are possible but not given... In fact the rates of productivity growth will need to be higher than those actually observed in recent years."

Earlier Reserve Bank assistant governor Philip Lowe told the Australian Industry Group in Sydney some manufacturers may be left behind as Australia increasingly moves towards producing services.

Although made worse by the high dollar manufacturing had been declining in importance since the 1970s.

"It used to be 20 per cent of employment,. it's now down to around 9. There's a long term trend. For the economy as a whole though, income growth is strong, employment is strong and the structure of the economy is evolving."

"This is likely to be with us for quite some time. It presents tremendous opportunities. If we seize them we will do very well, even though at the individual level some firms will not do that well. But for the country as a whole, for the average living standard of 21 million of us, we will do very well."

Published in today's SMH and Age

Philip Lowe Structure of the Australian Economy 9 March 2011

Glenn Stevens The State of Things - 10 March 2011


Related Posts

. Ouch! Commodity prices jab still higher

. We're earning more without doing more - Reserve

. The barely spoken fear - our boom won't end

Read more >>

Ouch! Commodity prices jab still higher.

The RBA's very latest, impressive graph:

ABAREs' latest forecasts:

Australia will rake in a record $251 billion from commodity exports next financial year and the mining boom will roll on until at least the middle of this decade, the government's resources forecaster says.

Despite a summer plagued by natural disasters, an upbeat economic report yesterday raised official forecasts for the nation's top mining and energy exports, and said farmers would enjoy healthy income rises this year and next.

Buoyed by surging prices for wheat, cotton and sugar, farming export earnings would rise 9 per cent to $31.2 billion in 2010-11, before reaching $32.5 billion in 2011-12, the Australian Bureau of Agricultural and Resource Economics and Sciences said.

Minerals and energy exports were on track to hit $186 billion this financial year before leaping 16 per cent to $215 billion the following year as resource companies ramped up supply.

In a sign of the massive windfall for the economy, it said commodity exports would total $221 billion in the year to June, an annual increase of 29 per cent, before hitting a fresh high of $251 billion in 2011-12.

The executive director of the bureau, Philip Glyde, said he expected export earnings to stay near these record levels until 2015-16, and the strong performance would keep the dollar near parity with the US dollar for the next two years.

"More records will continue to be broken in the minerals and energy export sector," Mr Glyde said. "Continued strong demand for mineral resources, particularly from Asia, is expected to keep the Australian dollar relatively high."

Queensland floods and tropical cyclone Yasi had wiped up to $2.5 billion off coal exports and $2.3 billion off agricultural production, but this failed to hold back the longer-term growth in commodities.

"While the floods and cyclone impacts were devastating, they weren't sufficiently large to knock down the recovery of the [farm] sector from 10 years of drought," Mr Glyde said.

From next year, the bureau expects key export prices to fall gradually as extra supply comes to market.

The separately published Reserve Bank commodity price index rose a further 2.2 per cent in February after a 5.3 per cent rise in January to be up 48 per cent over the year. The index measures the prices of Australia's top 20 commodity exports in so-called "special drawing rights", a measure created by the International Monetary Fund to abstract from exchange rate movements. In Australian dollar terms the index is up 32 per cent over the year.

The Reserve left interest rates steady at its meeting yesterday. Its statement said Australia's terms of trade were at their highest level since the early 1950s with national income growing strongly.

Among households, "in contrast, there continues to be caution in spending and borrowing and a higher rate of saving out of current income".

The Reserve said the effects of natural disasters had cut output but production should recover and there will be a mild boost to the economy from rebuilding.

Retail sales remained weak in January, recording zero growth in trend terms for the fifth month in a row.

Published in today's SMH and Age


Related Posts

. The barely spoken fear - our boom won't end

. The paradox of mining

. Could our mining executives have been having a lend of us?

Read more >>

Eggs, bacon, milk - breakfast gets cheaper

Craig James trawls the CPI so you don't have to:

"There are 90 expenditure groupings in the CPI (or as the ABS says “groupings of like items”). So it’s not surprising that some of the more interesting changes get lost.

• What is interesting in the latest CPI is that a raft of food products became cheaper over the past year. In part it reflects the drought as well as Government changes such as the removal of the milk levy that was used to fund the Dairy Industry Adjustment program. But the changes are notable – such as the largest annual fall in bacon and ham prices in 29 years; the biggest fall in diary prices in 37 years and the smallest increase in tobacco prices in 12 years.

• The tough advertising conditions over the past year produced gains for consumers with the smallest lift in newspaper & magazine prices in over a decade. In fact newspaper and magazine prices actually fell for the first time on record in the December quarter, down 0.3 per cent. But with business conditions lifting together with demand for advertising, the good conditions for readers may not last.

• On the other side of the coin, the price of furniture has continued to soar despite a stronger Aussie dollar. In fact furniture has recorded the biggest annual increase in over 18 years. Tools are also far costlier – rising at the fastest pace in 11 years. If ever there was a case for shopping around and comparing prices then it certainly applies for these goods.

• It is interesting how insensitive education fees are to economic conditions. Over the past nine years, secondary education fees have risen on average by 6.9 per cent – far higher than the 2.9 per cent average lift in the overall CPI. Clearly it gets down to supply and demand. Population is rising at the fastest rate in 40 years and class sizes are drifting higher, causing parents to compete hard for the best schools...



What do the figures show?

�� Dairy and related products – down 1.0 per cent over the year – biggest fall since inception in the CPI in 1973(37 years).

�� Bread and cereal products – up 1.4 per cent over the year – smallest rise in 5 years.

�� Bacon & ham – down 4.2 per cent over the year – biggest fall since inception in the CPI in 1981 (28 years).

�� Soft drink – up 1.6 per cent over the year – smallest gain in 4½ years.

�� Eggs – down 1.3 per cent on a year ago – second biggest fall in almost 4 years.

�� Tobacco – up 2.5 per cent on a year ago – smallest rise in 12 years.

�� Electricity – up 15.7 per cent on a year ago – biggest gain in 26 years (September 1983).

�� Newspapers & magazines – up 0.7 per cent on a year ago – smallest rise in 10½ years.

…but…

�� Furniture – up 5.7 per cent on a year ago – biggest increase in 18½ years (June 1991).

�� Tools – up 6.8 per cent on a year ago – biggest increase in 11 years.

�� Optical services – up 2.8 per cent on a year ago – biggest rise in 8 years.



Related posts:

. Melbourne - where the milk is surprisingly expensive

. "Where d'ya get it?" In Sydney, where the toilet paper's cheap

Read more >>

Reserve Bank prepares for "summer holiday"

From today's Board Minutes (apologies Cliff):

"Members also took account of the fact that a Board meeting was not typically scheduled in January, given that local markets tended to be relatively thin over the summer break and statistical and survey data, as well as liaison information, were less timely. Overall, members judged that the two-month break between meetings was one consideration in favour of a substantial reduction in interest rates at this meeting."

But gloom isn't taking a holiday...

Australia's export outlook has dramatically worsened with the official forecaster now predicting only a fraction of the growth it expected 3 months ago. The news came as the Treasurer lifted the supply of government bonds in order to quell concern about the working of interest rate markets and amid talk of a "borrowing strike" by consumers.

The Bureau of Agricultural and Resource Economics reported that resource exports, which it had expected to climb 53 per cent this financial year should now climb by a lower 37 per cent. It warned of "downside risks" to the forecast.

The Bureau now expects iron ore export earnings to grow by 52 per cent, down from a previously forecast 91 per cent, a drop of $8 billion.

Income from exporting liquefied natural gas should now climb by 15 per cent instead of 50 per cent. Exports of copper and alumina, previously expected to grow, are now likely to slide.

"The main adverse effect of the global financial crisis has been the sharply lower world prices for minerals and energy commodities,” said Executive Director Phillip Glyde.

The Bureau expects China's economy to continue to grow strongly next year at 8 per cent, down from 10 per cent. But it says if that does not happen it sees a "considerable downside risk".

While farm prices were not as sensitive to the global crisis as resource prices, they are likely to be hit instead by improved crop yields. The Bureau has wound back its forecast for farm earnings growth from 9 per cent to 7 per cent.

Treasurer Wayne Swan late yesterday directed the Treasury's Office of Financial Management to issue a further $5 billion of government bonds and signaled further releases "as necessary over coming months to maintain the liquidity and efficiency of the market".

Australian government bonds are the benchmark used to set interest rates and have been in short supply. In May the government injected $5 billion into the market, taking the total to $55 billion. The new issue will take the total to $60 billion.

All of this borrowing is offset by government investment elsewhere, much of it lending to state and territory governments.

Australian consumers cut borrowing in October, taking out 2.1 per cent less in personal loans. By contrast, new borrowing for housing climbed 2.4 per cent. Both have fallen sharply over the past year.

"Borrowers are on an extended strike," said ComSec economist Savanth Sebastian. "New lending commitments have fallen in seven out of the last eight months are are down more than 20 per cent in the last year.

New business loans fell 3 per cent in October, to be down 24 per cent over the year. But offsetting this was was an increase in the use of previously granted lines of credit. Usage of commercial revolving credit limits hit 62.3 per cent – a 12 year high.

Read more >>

Parliament disolved.

Parliament is no more.

At 12 noon yesterday Malcolm Hazell, the secretary to Governor-General, stood in front of the white marble columns and read a short proclamation dissolving the House to enable an election to be held on November 24.

A small crowd politely applauded.

While nowhere near as dramatic at the 1975 proclamation, read out to a largely furious crowd on the steps of the old Parliament House by the then Governor General’s official secretary David Smith, the 2007 procalmation was not without drama...

MPs who are not restanding stopped getting paid from midday.

Phoned for comment later in the afternoon one of them said she had been “at the club since one past midday”.

And Ministers can no longer give directions.

The Treasurer, the Minister for Trade and the Minister for Agriculture were engaged in a last-minute race agianst time.

At 12.02pm they issued a press release and a direction to the Productivity Commission asking for an “accelerated report” on the state of Australia’s pigmeat industry.

Under massive pressure from imports that are being let in at a fraction of the price it costs to produce pork in Australia and hit by soaring grain prices, many of Australia’s pig farmers fear they won’t survive.

They blame the Coalition for letting in pork and bacon from countries such as Denmark where it is highly subsidised. They also know those countries are plauged with post weaning multisystemic wasting syndrome, a deadly sickness that hasn’t yet reached Australian pigs, but could if they accidentially eat imported meat.

Many pig farmers who traditionally vote for the National Party have found they’re loyalty stretched to its limit.

Yesterday’s eleventh-hour pre-disolution announcement might just bring them back.

Read more >>

The Treasurer takes on the People for Ethical Treatment of Animals: "I am not trying to shut down free speech"

Treasurer Peter Costello is to amend the law to make it easier to take legal action against an animal rights group calling for a boycott of stores selling Australian wool.

People for Ethical Treatment of Animals (PETA) is currently being sued by Australian Wool Innovation Ltd under sections 45D and 45E of the Trade Practices Act on the ground that it has organized an illegal secondary boycott.

The amendment announced by the Treasurer yesterday will enable the Australian Competition and Consumer Commission to bring its own action against PETA and seek damages...

Addressing the Pastoralists And Graziers Association of Western Australia Mr Costello identified PETA which he said had been joined by the tennis legend Martina Navratilova and the popstar “Pink” as the main target of the leglislation.

"We're going to amend the law so the ACCC can bring legal action on behalf of all Australian farmers, on behalf of those who are tying to boycott their wool, and boycott their wool on these spurious grounds," he said.

Navratilova and Pink have both campaigned against mulesing – the removal of skin from the rear of Marino sheep to prevent flystrike – and called for a consumer boycott of American and British stores that sell Australian wool. After a visit to Australia early this year Pink withdrew her support from the campaign.

Mr Costello said that he was not trying to shut down free speech. “Martina Navratilova and Pink will still be able to attack Australian wool as they do, ignorantly – it is just that people who organise boycotts that cost farmers money, won’t be able to continue with their boycotts,” he said.

The leader of the Greens Bob Brown warned the proposed change could turn the ACCC into a new McCarthy Committee and pledged to oppose it in the Senate.

“The Treasurer is proposing to give the ACCC the power to intervene on behalf of corporate Australia in disputes with community groups. In the past, community pressure has highlighted the death of dolphins in the tuna industry and the destruction of old growth logging. Under the Treasurer's plan it would be the deep pockets of the taxpayer and the imprimatur of the ACCC that was deployed against community groups rather than the current situation in which companies have to fund their own actions,” he said.

Section 45D makes it illegal for two people to act together to hinder or prevent a third person from supplying goods or services to, or acquiring goods or services from, a fourth person. In theory it could apply to health-related boycotts such as those dealing with the sale of cigarettes or the promotion of breast milk substitutes.

But legal experts contacted by the Canberra Times said to date the Australian courts had interpreted the section narrowly. Political campaigns had not been held to prevent or hinder trade. On its face, the Treasurer’s proposed amendment did not change that.

“The amendment he has come up with has nothing to do with whether or not conduct is illegal. For him to suggest that he is now arming the ACCC with the ability to take action against people who organize consumer boycotts, he hasn’t made any change to the law of section 45D at all,” said one practitioner who asked not be named.

The case Federal Court mounted by Australian Wool Innovation Ltd and 102 individual woolgrowers against PETA is set down for trial in the Federal Court at the end of this year.

Read more >>