Register of foreign-owned water entitlements

• There is no compelling case for major changes to the Register of Foreign Ownership of Water Entitlements (the Register). It plays a small, yet useful, role and apart from a few tweaks should continue for now, provided its costs remain low.
• Foreign investment provides capital for businesses to grow, introduces new technologies, practices and technical expertise and enables Australians to enjoy higher standards of living than they otherwise would.
  • There is support for foreign investment within the agricultural and mining industries, but a sizeable share of the broader community has some unease with foreign investment, and it can be conflated with other water market concerns, such as water market manipulation.
• The Register requires foreign persons to notify the ATO if they acquire a specified water asset or if there are changes to their foreign status or water entitlement holdings.
  • It shows that foreign ownership of Australian water assets is low, at around 11 per cent.
• The transparency provided by the Register helps maintain community confidence in Australia’s approach to foreign investment. It gives ministers, government agencies and other interested parties an authoritative source of information on foreign ownership of water entitlements in Australia. There is no other source for this information.
• The information provided by the Register is sufficient for its limited purpose.
  • The high‑level summary of Register data contained in the statistical reports provides the appropriate transparency. These reports are generally clear and easy to use.
  • Compliance and enforcement activities are proportionate to the minimal risks associated with non‑compliance.
• There is not a compelling case to provide more granular information on foreign ownership, such as at the water source or catchment level. Such information could be used to identify registrants, violating confidentiality provisions, and potentially damage Australia’s attractiveness as a destination for foreign investment.
• There is no alternative approach to the current Register that would provide the appropriate transparency at a lower cost.
• There is scope for some tweaks to the current Register.
  • The statistical reports should include data on the proportion of foreign owners of water entitlements that also hold agricultural land. This would be of low cost and improve the effectiveness of the Register.
  • The statistical reports should clarify a number of misperceptions, by clearly stating that registration is compulsory, and that foreign ownership need not entail foreign control.
  • The States and Territories should link to the Register from their water information portals.

Media requests

02 6240 3330 / media@pc.gov.au

Providing transparency over foreign-owned water

A draft report released by the Productivity Commission has found that the Register of foreign‑owned water provides the community with an authoritative source of information on the level and use of foreign water entitlements and should be retained.

The Register of Foreign Ownership of Water Entitlements (the Register) was established in 2017 to provide transparency. The Register requires foreign persons to notify the Australian Taxation Office if they purchase water assets or if there are changes to their foreign status or water entitlement holdings.

The Productivity Commission is required to evaluate the effectiveness of the Register under section 34A of the Register of Foreign Ownership of Water or Agricultural Land Act 2015 (Cth).

Foreign investment plays an important role in Australia’s economy but a sizeable share of the community feels some unease towards it, including foreign investment in water entitlements. While the Register has a narrow function, it provides transparency and helps in dispelling myths and misinformation.

The Register cannot, and is not intended to, respond to broader concerns with water markets, such as price manipulation and anti-competitive conduct. Such problems should be dealt with through competition or water market policies.

The Commission has identified a number of small changes that would further improve the Register’s performance. The tweaks recommended by the Commission would make information in the report more accessible for the community and increase awareness of the Register.

The Productivity Commission’s report on the Register of Foreign-owned Water Entitlements can be found at www.pc.gov.au

Media requests

02 6240 3330 / media@pc.gov.au

• Preliminaries: Cover, Copyright, Opportunity for further comment, Terms of reference, Contents and Abbreviations
• Overview
  • Key points
  • 1 The Register
  • 2 The inquiry’s focus
  • 3 The Register is a resource for fact checking
  • 4 Pre-empting a problem
  • 5 The Register cannot address all concerns …
  • 6 … but its design is appropriate for its narrow use
  • 7 Costs associated with the Register are low
  • 8 There are no better alternatives
  • 9 Can the Register be improved?
• Draft findings and recommendations
• Chapter 1 About the inquiry
• Chapter 2 Setting the scene
  • 2.1 How the Register of Foreign Ownership of Water Entitlements operates
  • 2.2 What does the Register show about foreign ownership of water in Australia?
  • 2.3 Australia’s foreign investment policy landscape
  • 2.4 Key features of Australian water markets
• Chapter 3 Rationales for the Register
  • 3.1 What is the purpose of the Register?
  • 3.2 How does the community feel about foreign investment in water?
  • 3.3 Maintaining public confidence in foreign investment in water markets
  • 3.4 The Register cannot address all concerns
  • 3.5 Information for policymakers
• Chapter 4 How is the Register performing?
  • 4.1 Filling an information gap
  • 4.2 Access to Register information
  • 4.3 Clarity and timeliness of the statistical reports
  • 4.4 Register administration and compliance
  • 4.5 Regulatory compliance burdens
• Chapter 5 Reconsidering the Register
  • 5.1 Is a Register still needed?
  • 5.2 Are there better alternatives?
  • 5.3 Can the Register be improved?
• Appendix A Consultation
• References