Australian government to drastically lower foreign investment thresholds as bargaining chip against China

Australian Farmland

Coalition tensions are growing, with the Nationals expected to insist on a lowering of foreign investment thresholds as Liberals push for them to be used as a bargaining chip with China.

The Nationals partyroom meeting next Thursday is expected to endorse the lowering of the threshold for purchases of farmland from $248 million to $15m, before a Foreign Investment Review Board investigation is triggered. They will also continue to maintain their opposition to the foreign acquisition of GrainCorp.

The Nationals are expected to insist that any FTA deals struck open up agricultural opportunities for Australian primary producers and that the government avoids “carve outs” of contentious issues just to get a deal.

However, sources have told The Weekend Australian the Liberals are ultimately inclined to be “much more flexible” on the FIRB threshold issue.

The differences set up a potential flashpoint between the Coalition partners asTony Abbott pursues his free trade ambitions.

At the East Asia summit in Brunei this week, the Prime Ministerset a “working target” of 12 months to sign free trade agreements with Australia’s three biggest export markets — China, Japan and South Korea.

Victorian Liberal MP Dan Tehan said yesterday the government should consider putting the thresholds on the table during free trade negotiations with the Chinese, who want the $1 billion foreign investment threshold that was given to the US in its FTA with Australia.

“If the Chinese want us to lift those thresholds, then absolutely that should be part of the negotiation,” Mr Tehan said.

Mr Tehan, a former senior adviser to Howard government trade minister Mark Vaile, said this might give Australia negotiating leverage as it thrashed out the trade deal.

NSW Nationals senator John Williams made it clear the party would insist on the threshold reductions when it met next week.

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