Register of foreign-owned water entitlements

I, Josh Frydenberg, Treasurer, pursuant to Parts 2 and 3 of the Productivity Commission Act 1998, hereby request that the Productivity Commission undertake an inquiry into the effectiveness of the Register of Foreign Ownership of Water Entitlements.

Background

The Register of Foreign Ownership of Water or Agricultural Land Act 2015 (the Act) provides for the collection of information, and publication of statistics, about foreign interests in agricultural land and certain water entitlements and rights. The Act requires the Commissioner of Taxation to keep two registers: the Register of Foreign Ownership of Agricultural Land, and the Register of Foreign Ownership of Water Entitlements. These registers were established to provide greater transparency over the level of foreign ownership of Australia's water and agricultural land entitlements. The Act also requires the Commissioner of Taxation to prepare an annual report outlining statistics from the registers.

Under section 34A of the Act, the Productivity Commission (the Commission) is required to undertake an assessment of the effectiveness of the scheme insofar as the scheme relates to the Register of Foreign Ownership of Water Entitlements and requirements to give information about foreign holdings of water entitlements, including the costs and benefits of that scheme. This inquiry is that assessment.

Scope of the inquiry

In accordance with section 34A of the Act, following a referral for the Commission to undertake this inquiry, the Commission is to report on the matter of the effectiveness of the scheme outlined in Parts 3A and 3B of the Act, which describe the Register of Foreign Ownership of Water Entitlements, and the requirements to give information about foreign holdings of water entitlements. This report is to include an assessment of the costs and benefits of the scheme.

In undertaking this inquiry, the Commission should:

• 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.

Process

The Commission should consult with key interest groups and affected parties, invite public submissions and release a draft report to the public.

The Commission should consult with Commonwealth, state and territory governments and stakeholders from the mining, irrigation infrastructure, urban water supply and agriculture sectors.

The Commission should complete this inquiry by 7 December 2021 as required by section 34A of the Act.

The Hon Josh Frydenberg MP
Treasurer

[Received 4 December 2020]