A DEAL between the Coalition and the Greens that will increase scrutiny of Chinese investment was slammed as discriminatory by Chinese investors, authorities and the Labor opposition, who say it will slow economic growth and impose new red tape on much needed investment.
The agreement in the Senate to require all investments in farm land above $15 million from Chinese and some other Asian companies to seek Treasury approval provoked calls for retaliatory trade measures from Beijing. An official in China's Ministry of Commerce said it was "serious discrimination against China".
In return for the rule, which is designed to appease Nationals MPs, the government agreed to a Greens plan for a national register of foreign ownership of water entitlements and promised to review how foreign investment in water is approved.
The laws could upset Chinese investors such as Lanny Xu, the chief executive of investment firm Ironfish, who said the move was discriminatory and Australia was giving mixed signals to China about foreign investment. Agribusiness groups feared the tough rule could hurt economic activity.
Head of water assets fund manager Blue Sky Water Partners Kim Morison said the water register was political, and merely formatting information already readily available.
"This will play to the politics," he said. "Water entitlements are a crucial asset in Australia but foreign owners can't take it with them because the water is only being used for Australian agriculture."
Most investments in farmland, including those from China, South Korea and Japan, will have to be scrutinised by the Foreign Investment Review Board where the value is $15 million - down from $252 million.
Some countries will be exempt due to Australia's trade agreements. Singapore and Thailand will have a threshold of $50 million while investors from the United States, New Zealand and Chile have a threshold of $1 billion.
The law will bring in new scrutiny over foreign investment in agribusiness.
At present, foreign investment approval is required for investors looking to buy 15 per cent or more in any business valued at over $252 million, including agribusinesses.
The law will introduce a new lower threshold specifically for FIRB to scrutinise agribusiness transactions above $55 million, but US, New Zealand and Chilean investors will be exempt and only require approval if they are picking up a substantial interest in an agribusiness valued above $1 billion.
Labor said the laws were driven by protectionists in the National Party and the Greens and would "rightly alarm business".
"It is extraordinarily hypocritical for the government to be claiming Australia is 'open for business' while it is doing everything it can to impose new red tape and barriers on the investment Australia needs," Labor senator Penny Wong said.
The move is a compromise for the Greens, who wanted even lower thresholds at $5 million. They pushed the government to introduce a sunset clause to force it to introduce a water register by the end of next year.
An investor in water entitlement trading company H20X, Matt Davis, said the creation of a water investment register would be helpful and "give clarity around ownership to the broader market".
China Ministry of Commerce researcher Mei Xinyu said China should impose retaliatory trade measures on Australia.
"We should put higher tariffs on Australian agricultural products and we should also apply stricter customs checks," he said from Beijing. "We should protest loudly over this matter as it is serious discrimination against China."
Colliers International head of agribusiness Rawdon Briggs said the changes would slow business but not prevent it from happening.
The government passed two other foreign investment bills last week, and wants the new thresholds in place by December 1.
