The Foreign Ideas Review Board: Syston Openness [MT111]

David Noel
Ben Franklin Centre for Theoretical Research
PO Box 27, Subiaco, WA 6008, Australia.

Sydney, Tuesday: Professor Will Blockett, Chairman of Australia's Foreign Ideas Review Board, today defended the FIRB's decision to ban the import and use of the new, high-efficiency electric motors in Australia.

"This is technology which we do not need", Professor Blockett said. "Australian industry already has a large electric motor manufacturing sector which would be harmed by these imports. And, even if arrangements were made for our manufacturers in this area to produce these motors themselves, there would be a significant outflow of funds overseas to cover the cost of licensing fees to the developers."

Not Quite True

All right, I admit it -- that was not a real news item, it was a spoof. Of course Australia does not actually have a Foreign Ideas Review Board, and is not in the habit of banning technology from outside. The whole idea is ridiculous.

And yet . . . Australia does have a FIRB, the Foreign Investment Review Board. It can act to ban the import of funds from overseas, and frequently does. And, for some reason, nobody says that that is ridiculous. Why?

Fig. 111.1. From the 'West Australian', 1992 March 3

Well, of course, the the two things are quite different, aren't they? Foreign investment in Australia is monitored because, so the reasoning goes, it is important that foreigners don't get Control of too many things in Australia, particularly things involving land. And if these foreigners are here, riding their capital on our economy and exporting the profits back to their own countries, at the very least we need to know about it. Consider the newspaper item reproduced in Fig. 111.1.

All very reasonable? I think not. We could, perhaps, ask first what the proposed legislation is about, and then ask what it is for. What is the legislation about? Why, it is for setting up a Register on which will be written the names of Foreign owners of land in WA and how much that land is worth. What is it for? Why, it is so that We (presumably Syston=people of WA) shall be able to consult such a register and, presumably, make use of the information contained therein.

Nailing the Foreign Devils

Suppose we step back from the whole matter and look at it more remotely. There are these people in one of the states of a quite large country, who want to write down the names of people of a certain class who are recorded as owning land in that state. Right?

The first thing we can look at, but not the most important, is whether it is practicable. And when you look at the nitty-gritty of it, it can be easily seen that it is not. True, it is quite feasible to pass legislation that such a thing shall be done, with provisions and mechanisms to 'ensure' this. But it is quite another thing to try and apply such legislation, when out of the woodwork come all the real cases which any actual legislation cannot hope to cover, cannot hope to comprehend.

First, how to define 'Foreign'. In theoretical terms, WA State legislation would normally view this label as applying to entities -- systons -- based outside the State. This is the case with business names legislation, for example, where a business name may be registered in WA but owned by a company registered in Sydney. In WA law, that company is classed as a 'foreign' company, and must nominate an agent resident within the State to act for the company.

Of course, the obvious intent of the Foreign Register legislation above is to list owners who are foreign vis-a-vis Australia. There are two main classes of owners who may appear on land title documents, 'real persons' or individuals, and 'corporate persons' such as companies or incorporated associations. We can conveniently forget about more hazy systons, such as local authorities from other states, private US universities, associations incorporated by Royal Charter of the reigning British sovereign, and international development agencies.

Let's first talk about companies. Australia has recently moved toward central, nationwide registration of companies, but still the majority of existing 'Australian' companies were incorporated under older state or territory legislations, sometimes differing markedly from each other. Even so, all companies registered within Australia and still operating now have an Australian Company Number or ACN. So it should be easy to pick the companies who are Foreign, they are the ones who don't have an ACN.

No such luck. What the Foreign Register legislation is intended to catch, is the companies who are foreign-owned. In practice, overseas-based companies who are active within WA will routinely register an Australian company and operate within that here. And in the past, many out-of-state Australian companies would have done the same.

So on the title deeds of the land are the names of a company or companies, or of individuals, or a combination of both. There is no way of determining easily whether these companies are, one or more steps back, foreign-owned. Nor is there any consideration given to the proportion of a company which is foreign-owned, or indeed any way of defining it. Consider an example. The Tasmanian Sprocket Co. Pty Ltd was registered as a Tasmanian company in 1948, and has sold sprockets in WA for many years. It owns a warehouse in WA which it bought in 1960, and which it used to have as its registered address, as a foreign company, for trading within WA. That is the address which appears on the title deeds.

Over the years, Tasmanian Sprocket prospered and grew, changed its name to Sprocket-Washer International, and in 1969 opened offices in New Zealand as well as Australia. Old Mr Robin Clash, who built up the original company, sent his son Kevin Clash to build up the New Zealand business, and there Kevin met a pretty young Kiwi girl who he married and settled down with.

In 1975, old Mr Robin died, and Kevin inherited. In 1983 he floated the company on the Australian Stock Exchange, gave 10% of the shares to his wife, kept 45% himself, and sold the rest. As SWI prospered and grew even further, the shares were traded on the New York Stock Exchange also, and the majority of the publicly-held 45% came to be owned by a large US insurance company. Purely by chance, the majority stakeholder in this US company was someone who had been born in Australia, but had been taken back to the US by his American/ Australian parents and normally used a US passport.

When the World Ends

But back to WA. There is a local saying: "Oh to be in WA when the world ends -- everything happens here two years after everywhere else". Certainly a lot of what happens elsewhere, places where Australian Rules football is not played, goes unremarked by the local people.

The company still owns the WA warehouse, and the original name of Tasmanian Sprocket Co Pty Ltd still appears on the title deeds, and on the rates notices sent by the local council. Nobody cared that the name on the bottom of the rates cheque was Sprocket-Washer International, nor did they notice that it became General Industrial Facilities after the Indonesian/Korean merger.

Is the company involved a foreign company under the terms of the proposed legislation? You tell me.

An Individual Matter

All right, that is a sorry enough mess, now to look at individuals. Who is a Foreign Person in terms of WA or Australian law?

Presumably anyone who was born in Australia, or who has acquired a certificate of Australian citizenship, is not a Foreign Person. On the face of it, it might be thought that anyone outside these categories is a Foreigner in Australia.

If so, these dreaded Foreigners are thick upon the ground in WA. Huge numbers of settlers came to Australia from Britain in the days before there was formal Australian citizenship; these include Sir Charles Court, one of WA's best-known former Premiers, who was brought out as a young child from the UK. Large numbers settled here from former parts of the British Empire, especially India, South Africa, and Malaya.

Some of these settlers will have formally acquired Australian citizenship, but many will have not, they will have had no reason to bother. A most unfortunate current case concerns a man who was brought out to Australia as a very young child from Britain with his parents; when he was in his late teens, his parents returned to Britain, and against his wishes (he was still legally a minor) took the boy with them.

Now this man has been struggling for several years to obtain permanent residency in Australia, struggling against the persistent refusal of the Australian immigration authorities to allow this. Australia is where he was brought up, where all his friends are -- if he had older brothers or sisters who could not have been involuntarily removed from the country when he was, they may have remained here too. If he had married at 17, he probably would not have had to leave either.

Australia has huge numbers of New Zealanders living here, there is currently no restriction on movement of labour between the two countries. All these people are theoretically foreigners. Australia also has many perfectly legal migrants who are not yet eligible to acquire citizenship, and many more who are eligible but have not bothered. If your father died in Greece when your mother was 75, and you brought her out here to look after her, is there any point in pursuing citizenship for her now when she has trouble moving around, has little understanding of English, and has no intention of moving very far from your house for the rest of her life?

Current conveyancing procedures have no mechanism at all for examining the citizenship status of people whose names are to be placed on title deeds, and therefore no formulas for deciding the proportion of various real and corporate 'joint tenants' or 'tenants in common' which must be Australian, nor mechanisms for reviewing subsequent changes in status. How about the other direction, property owned by Australians who live elsewhere? The Tasmanian Sprocket example given above was a made-up one, but there are real examples of individuals who could run foul of the anti-foreigner legislation proposed for WA.

Bill Wyllie, often described as an expatriate Australian living permanently in Hong Kong, was the principal shareholder in a large local company, Universal Waldeck Ltd. At some stage he sold part of his holding to a colleague in Hong Kong, making the colleague the largest shareholder. Did property owned in WA by Universal Waldeck thus become foreign-owned?

Rupert Murdoch, the major newspaper proprietor, had considerable newspaper holdings in the United States, where he spent most time. Several years ago he took out American citizenship. Are his newspaper companies in Australia now foreign owned? If he had settled in Britain, and normally used a British passport, while retaining his Australian one, would this have altered the position? Would it have been different if he had gone to New Zealand? Or if one of his major institutional investors moved their head office from London to Melbourne?

The point is this. These real and imaginary examples suggest that attempts to enforce the sort of foreigner-biased legislation envisaged would be totally impractical, would provide nothing more than a lucrative field for lawyers to argue legal points on. But, even if this was not the case, what about the second question? What is the legislation intended to do?

But I WAS in Rome, and DID as the Romans Did . . ?

Comments on the proposed legislation by the WA Government have included assurances to the effect that any action by them would stop short of expropriating the foreign-owned properties. Big deal!

So the intention of the legislation is not to steal properties back from foreigners. What, then, just harass them a bit for being foreigners?

On applying linear thinking to the situation, it is difficult to see any purposes for the legislation other than ones to allow discrimination against particular landowners for reasons quite unconnected with the land itself. The interesting thing is that both the WA and Australian governments have legislation and officially-based codes of practice which are supposed to oppose discrimination on the grounds of race.

In practice, foreign challenges based on either the letter or the spirit of such legislation or codes are routinely circumvented by governments. In a recent case, a Japanese-based company actually challenged the WA Government over the percentage of foreign ownership allowed for the Perth Casino. They got nowhere.

Again in standard logical terms, what reasons can be found to treat some business people or others carrying on normal activities in WA differently to others? With respect to land, in particular, what are foreigners going to do bad about it? Dig it up and take it away to Japan? The mining companies are strongly supported for this!

The obvious question to ask is why there should be any restrictions on foreign-owner operations in Australia other than those applying to anyone else -- these are people who are in Rome, and are doing as the Romans do. The normal response is an assertion that "foreign control of local assets is not considered in the best interests of Australia".

Taking the Matrix View

Let us again look further at the situation from the viewpoint of Matrix Thinking. We will not be concerned with aspects such as justice, fairness, or legality, but rather with trying to understand the situation as a whole. If we can do that, we may get an indication of how it could be improved.

The WA situation is not unique, parallels can be found everywhere around the world, now and in the past. All these situations are normal expressions of SIOS (MT104), the tendency of a syston to over-exert its natural immune functions which it uses to maintain its integrity, its skin.

An MT summary of WA's proposed foreign-ownership legislation might be to say that it is a tangle of SIOS and Liechdorrino Delusion, lurching wildly off in an unspecified direction. This cryptic phrase will hopefully be clarified by MT112 and MT113.

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