PC deems water list adequate
The Productivity Commission says reporting of foreign ownership of Australian water is sufficient.
A review has found there is no need for major changes to the way Australia records foreign ownership of water.
Since 2017, any foreign entity that acquires a water asset has been required to notify the Australian Taxation Office (ATO).
Currently, 11 per cent of Australia's water is owned by overseas interests. The highest proportion of foreign-owned water is held in Queensland and Western Australia.
Canada holds the most of any overseas owners followed by China, USA and the UK.
Water can be owned in this way due to reforms over the last few decades, which have supported the development of markets for water.
Water entitlements are now tradable assets, meaning they can attract capital from both domestic and foreign sources and are susceptible to speculation.
The Productivity Commission’s new draft report on Australia water markets shows few Australians are aware of the Register of Foreign Ownership of Water Entitlements, but it found that the information it provided is sufficient.
The commission has made three recommendations;
State and territory governments should link their water registers to the foreign register of water entitlements, and inform foreign entitlement holders to register with the ATO
Future ATO reports should identify farm landholders among water registrants
The ATO should do more to explain the mandatory need for the foreign register and various terms linked to its use
The commissioners pointed out that the public perception of foreign ownership of water does not match the views of mining and farming industries, which are responsible for most water ownership.
“The Australian community generally perceives the risks and threats associated with foreign investment more prominently than the benefits,” the report says.
“In contrast, the commission has observed that the agricultural and mining sectors, which are the predominant holders of water entitlements, have few concerns about foreign investment in water entitlements and generally support it.”
The commission found that so few water market participants ever referred to the register that “maybe not a great deal” would change if the register did not exist.
“The commission considers it unlikely that, in the absence of the register, the Australian Government would significantly tighten its policies for foreign investment or water markets in response to pressure from community members,” it said.
However, if the register did not exist, the commission found that the government “might make small adverse changes”.
“Indeed, establishment of the register may have pre-empted a more stringent policy approach,” it said.
“Inquiry participants involved in the register's creation noted that it was viewed as a light touch policy measure that would deter calls for a more restrictive alternative,” the commission found.
Non-compliance with the register was found to be “likely inadvertent”, with little impact on the register's reporting.
Adding more reporting data to the register could breach tax law confidentiality provisions “and may not be geographically consistent”, the report says.
“These constraints aside, publishing more detailed information would increase the administrative costs associated with the register. These costs would not be justified by the benefits.
“The current level of information published in the statistical report, with figures published at the national, state and Murray Darling Basin levels, is sufficient to support confidence in Australia's foreign investment regime.”
A final report is due in December.