We can learn a lot from New Zealand as they give priority to their own wealth creators and long-term national interests. New Zealand dairy farmers recently won a case in their Supreme Court to stop the sale of eight dairy farms to China.
The case was won on the basis that the long-term economic value of these farms would be lost to the New Zealand economy if foreign interests bought them. New Zealand has several issues in their favour. Their government must be notified of, and approve, any sale of land more than five hectares. The Maori Treaty signed with the British allowed the sale of land to the Crown but protected the people from the acquisition by other foreign powers.
In Australia foreign sales are not noted unless they exceed $244m or, in the case of the USA, $1001m.
Recently Cargill, a privately owned US family company, has bought the prized Billabong station near Wagga Wagga through its hedge fund, the Black River Asset Management Group (an unlisted Cargill family company). They paid around $9m for the property. Given that Cargill already dominates beyond the farm gate in our beef and wheat exports, the wealth created from these assets do not stay in Australia. If this were an Australian company the ACCC would be limiting its dominance in the local marketplace.
Under the rules of withholding tax in Australia, foreign buyers who borrow offshore, or use offshore consultants as expenses, to purchase and run business here, pay only 10 per cent withholding tax on expenses offshore. This means profits from these assets are not circulated within the Australian economy as they go offshore before profits are declared and tax paid on profits. Unlike public companies, private companies are not easily scrutinised and millions of dollars of profits are siphoned off Australian shores before tax.
In the meantime our governments give subsidies to foreign companies to set up business in competition with local manufacturers (OLAM Singapore almond processing) or sell our assets and intellectual property to foreign interests (Victorian Dairy Research Centre to China) leaving local bidders out.
Our interest rates are among the highest in the world and we have a ‘for sale’ sign on. We need to learn how to manage our wealth-creating assets for our long-term benefit, not just for the benefit of foreign interests. We have much to learn.
Lynne Wilkinson is CEO of Ausbuy, a not-for-profit organisation representing Australian-owned companies supplying goods and services to consumers and businesses since 1991.