Communist Party of Australia (Marxist-Leninist)
Preamble
In
responding to the invitation to the public to offer submissions to the Productivity
Commission’s Inquiry into the Register of Foreign-Owned Water Entitlements, the
CPA (M-L) acknowledges that the following matters are outside the scope of the
inquiry:
1. Whether or not there
should have been the commodification of water that led to the existence of a
market in tradeable water entitlements;
2. Whether or not that market
should have been opened to non-consumptive speculators in general, and foreign
entities in particular.
To
ensure that our submission to this inquiry can not be interpreted as an
acceptance of the water market and of foreign investment in it, we emphatically
state:
1. Our Party is totally
opposed to the commodification of water that led to the existence of a market
in tradeable water entitlements;
2. Our Party is totally opposed
to the opening of that market to non-consumptive speculators in general, and
foreign entities in particular.
Response to inquiry
The
Treasurer has established the following three points as the scope of the
inquiry.
To:
·
assess
whether the information provided in the Report delivers on the policy
objectives of the scheme of increasing transparency of foreign ownership of
water entitlements;
·
identify
the direct and indirect costs and benefits associated with maintaining the
Register and producing the Report; and
·
identify
the direct and indirect costs borne by foreign owners of water entitlements to
ensure compliance with the Act.
Point 1
The
Register fails to increase transparency of foreign ownership of water
entitlements in several significant ways:
1. Access to information in
the Water Register is currently restricted to certain Commonwealth Government
Ministers and their departments. There are proposals for access to be extended
to officers in other jurisdictions and other countries. However, one of the
purposes of the Register is to promote more informed public debate. This
requires all information in the Register to be accessible to Australian researchers
and the Australian public. The scope of the Report should be enlarged to
reflect this.
2. The Australian Tax Office
(ATO) which manages the Register defines “foreign persons” for the purposes of
the Register according to three criteria. One relates to the per centage of
interest in an entitlement of a foreign corporation or foreign government. This
is set at 20 per cent or more. This differs from the ATO’s standard of 10 per
cent used to compile foreign direct investment statistics. Any foreign water entitlement holder with
less than 20 per cent investment in an entitlement is not captured in the data.
This is not conducive to greater transparency and must be changed.
3. The confidentiality
provisions of the ATO in respect of its data prevent the identification of
individual investors. This is also contrary to informed public debate,
particularly in respect of a foreign investor’s social license to operate here
with the consent of the Australian community.
For example, the largest known foreign water entitlement holder is the
Canadian Public Sector Pension Investment Board (PSP). Towards the end of last
year, it became one of the top shareholders of the controversial US security
contractor, Palantir Technologies, after its recent IPO. PSP’s massive purchase
of water entitlements for the growing of almonds (for export in the main), is
controversial in its own right, and that controversy is now compounded by its
investment in Palantir. PSP is known because of media interest in its purchase
of water entitlements, but who are the other foreign owners, and what is their
track record in terms of social and environmental responsibility? Australians
need to be able to access this information.
Point 2
We
have no comment on this point beyond stating that the direct and indirect costs
associated with maintaining the Register and producing the Report must not be
used to restrict the information that foreign water entitlement holders are
required to provide to the ATO, nor must they be used to restrict the
information on foreign water entitlement holders that can be accessed by the
Australian public.
Point 3
Not
only must all direct and indirect costs be borne by foreign owners of water
entitlements to ensure compliance with the Act, but there must be an immediate
change to their exemption from paying capital gains tax on the profits they
make out of those entitlements. According to the ATO:
“Water entitlements are generally separate from the
underlying land and not taxable Australian real property. This means that a
foreign resident would disregard any capital gain from the sale of a water
entitlement. In contrast, Australian resident entities are required to account
for gains or losses on their worldwide assets, which includes assets in
Australia like water entitlements.”
It
is simply unacceptable that Australian farmers must compete with giant
multinational corporations who are given tax breaks that cannot be enjoyed by
Australians.
It
is hard to see why the Treasurer’s inquiry should focus on the costs to foreign
investors of compliance to a Register administered by the Treasurer’s own ATO,
when that ATO is exempting foreign holders of water entitlements from capital
gains tax on profits from trade in those entitlements.
Nick
G.
Chairperson
Communist
Party of Australia (Marxist-Leninist)
March
6, 2021
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