Laguna Bay’s Tim McGavin: ‘Regulatory risk in Australia is greatly underestimated’

Tim McGavin, managing director and founder of Queensland-based asset manager Laguna Bay, described his frustration with regulatory uncertainty and rising costs imposed by government on investors in the agricultural sector.

Panel presentation at AustralianSpeaking at the Global Food Forum in Brisbane, McGavin said that “regulatory risk in Australia is greatly underestimated”.

“We score own goals all the time – a lot of it is done with the best of intentions but it has really negative consequences,” he said.

In particular, McGavin referred to the new land tax for foreign investors recently introduced by the Queensland government, which he said “now locks us out of the state” despite our being based in Brisbane.

Asked directly how he and his company would respond to the new land tax, McGavin replied, “Well, go somewhere else.”

McGavin described growing a test variety of canola on one of his farms in Queensland to be used to produce sustainable aviation fuel.

“It’s happening in Queensland, it’s going to go south – so all this rhetoric about transformation, someone’s going to make a lot of money out of it and it’s probably not going to happen in Queensland because the capital is going to go where it wants to go.”

He also lamented the significantly higher fees charged by the Foreign Investment Review Board for transactions by foreign investors, as well as the requirement to post property sales for 30 days, which makes it more difficult to buy assets off the market.

“It’s all well and good when you have the same thing going on in a bull market,” McGavin said. “But when the runoff ends and you’ve lost four or five buyers, that’s a long way down. Especially when you have yields like they are, because you have negative real yields on most farm assets today.”

In a separate interview at the conference, Queensland Agriculture Minister Mark Furner defended the introduction of a land tax for foreign investors.

“I would be surprised if we were losing out on investment, given that we still pay less tax than New South Wales or Victoria,” he said, before pointing to drought relief legislation that could make the state a more attractive place to invest than other jurisdictions.