Tougher foreign investor rules pass Senate

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'Bizarre' foreign investment rules: Labor

Federal Labor has taken a swipe at the government's 'bizarre' foreign investment rules.

New rules boosting scrutiny of foreign investment in farms have passed the Senate after the Turnbull government struck a deal with the Greens.

The deal clears the way for laws making the Foreign Investment Review Board screen investments in agricultural land worth more than $15 million, down from a threshold of $252 million.

In return for its support the Greens secured a new register of foreign ownership of water entitlements within two years.

The Greens' demands sunset the bill to expire on December 2016, if the register is not enacted.

The Senate spent several hours debating the threshold, with independent senators Jacqui Lambie, Glenn Lazarus and John Madigan wanting it lowered to zero.

Fellow independent Nick Xenophon wants it to sit at $5 million.

Finance Minister Mathias Cormann said the cumulative $15 million threshold was based on public consultations.

"Some people say the threshold should be higher, some say it should be lower," he told the parliament on Monday.

"That is what we believe is appropriate in the context of agricultural land."

The lowered threshold was a 2013 election commitment and has been in place since March.

Opposition Senate leader Penny Wong accused the government of an "extraordinary and bizarre" move by reducing the threshold to five times less than in industries like uranium extraction and defence.

That imposed restrictive investment barriers, she said.

The bill also boosts criminal penalties for foreign investors profiting from breaking investment rules and transfers the responsibility for residential investment to the Australian Taxation Office.

The Greens deal means it will have to go back to the House of Representatives for the tick of approval.