Australia is "moving from the Mining Boom to the Dining Boom". It's a great line and every man and his dog is using it. But how many understand it? Certainly not Malcolm Turnbull, Scott Morrison or Barnaby Joyce.
One bloke who does understand it is Angus Taylor MP. He's the Assistant Minister to the Prime Minister. Angus was a key author of the "Greener Pastures" report; ANZ-Port Jackson study which concluded that to reach the offering of the Dining Boom, "Leadership and commitment from all stakeholders will be critical in unlocking the full potential of Australian agriculture".
The 2012 report also suggested that to reach our aspirations in agriculture, Australia will need $600 billion of capital investment, and another $400 billion will be needed to support demographic driven farm turnover out to 2050.
To put this in context -- the agriculture sector in Australia would need investment of just over $26 billion per annum on top of existing levels of investment (recently around $16 billion) in order to meet the investment levels needed to achieve the "dining boom" type production targets to satisfy both demand and the cost of acquiring land and farm assets between now and 2050.
In other words, just over two and a half times the most recent annual level of investment in agriculture. To put this further in context -- aggregate investment in mining was $632 billion in the 10 years to June 2014, while investment in agriculture was just $141 billion.
For agriculture to achieve its investment goal of $42 billion per annum for the next 38 years, it would need to have aggregate investment over the next 10 years of $420 billion -- three times the level of investment achieved in the 10 years to June 2014.
So where will this money come from?
There are many, including me, who lament the fact that a greater share of our superannuation savings does not make its way to Australia's agriculture and agri-business pursuits. But ultimately, those who manage our savings must put return first. In any case, given the size of the investment challenge, it could never be enough.
So where are the BHPs, the Glencores and the Rio Tintos of the agriculture sector who are going to drive this "Dining Boom? Where will the investment in Australian agriculture come from?
According to the Foreign Investment Review Board, around $167 billion of foreign investment was proposed for Australia in 2013/14. Of that, only $3.4 billion was invested in agriculture, forestry and fishing.
By comparison, $22.4 billion was invested in mineral exploration and development, which is only half the total annual investment agriculture would need to meet our aspirations.
So how do we lift foreign investment in agriculture from the current paltry 2 percent of all foreign investment. First of all government must provide the strategic planning and guidance.
That in itself will lay the welcome mat out for potential foreign investors. These investors will in turn have the capacity and confidence to assess and understand the Government's priorities and its plans to align private and public sector aspirations.
Business needs to know the host government is committed to providing the natural resources, the workforce, the infrastructure and the business environment it needs to secure the rate of return it hopes for. But none of that will be any good if we are not sending the right signals to emerging and non-traditional sources of foreign investment, particularly the nation-states of Asia.
This is why I'm concerned about the current Government's changes to the rules governing foreign investment screening and the Treasurer's decision on S. Kidman & Co.
Foreign investment screening is important, it helps to build and maintain public confidence in the foreign investment regime. But applying lower and discriminatory thresholds, assessing applications on a cumulative basis, and dramatically increasing application fees, as this Government has done, will not encourage investment. Indeed, in a world in which competition for global capital is intense, it's no way to run foreign investment policy and for some the S.Kidman & Co decision will be the final straw.
Furthermore, by hiding behind the secrecy of "national interest" the Government is undermining the public confidence in the screening process. The Australian public don't fully understand the decision because no explanation for it has been forthcoming. Leading to the conclusion that the process has been politicised and that has raised the spectre of "sovereign risk" -- the term big investors fear most.
Governments need to show strong leadership in this important debate so that the public can have confidence in and support foreign investment in agriculture. It was for this reason the former Labor Government initiated a plan to establish a foreign investment register for agricultural land. Having matched Labor's commitment, the Turnbull Government has failed to deliver on its promise.
Without strong leadership in the agricultural sector, sadly, the "Dining Boom" period is at risk of becoming no more than "dining gloom".Suggest a correction