Despite the tough talk about foreign ownership, the government continues to allow foreign entities to buy up too much Australian land and critical infrastructure. While there is a lot of spotlight on larger deals, the government isn’t that concerned about the amount of small residential properties that are being lost to foreign ownership.
This pushes up the price of local house prices while other countries won’t even let us own property in their country. There is a difference between foreign investment and foreign ownership. Foreign investment, fine. But foreign ownership, absolutely not.
Transcript
And you have the call Senator Roberts.
[Senator Malcolm Roberts]
Thank you, Chair. Thank you all for being here today. Since the Foreign Investment Review Board lowered the dollar threshold for projects to be considered to zero, how many projects have been rejected because of unsuitability by the treasurer?
[Tom Hamilton First Assistant Secretary, Foreign Investment Division]
Senator, excuse me, Tom Hamilton First Assistant Secretary, Foreign Investment Division. I don’t have a specific response to a question in relation to the timeframe that you’ve asked. As you know, a very small number of rejections over the period of operation of the FADA itself. We work every carefully to facilitate investment into the country and we, you know, we’ve been very careful through the whole period of the $0 threshold to ensure that we are allowing investment works in the national interest.
[Malcolm Roberts]
So I understand it’s only investigated if the project is raised by someone, is that right?
[Tom Hamilton]
No, that’s not right Senator. So if- every investment that comes through under the foreign investment framework is assessed carefully by Treasury and its consult partners on a case by case basis, you referred to the $0 threshold, which is a temporary measure during the course of 2020. During that period, we looked at every proposal that came forward before the treasury in accordance with the operation of that threshold.
[Malcolm Roberts]
So can you get me the numbers?
[Tom Hamilton]
I can give you the numbers for, for the numbers that were considered. Let me start my numbers here. All right, so for the period of, in total in 2020, there were 2,943 proposals. Of those, 1,732 were not $0 threshold. So the balance were that the cases that came forward as a result of the operation of that new threshold.
[Malcolm Roberts]
And none were rejected?
[Tom Hamilton]
I don’t have that number Senator.
[Malcolm Roberts]
Could you get me that number please?
[Tom Hamilton]
We’ll take that notice Senator.
[Malcolm Roberts]
Thank you. When will the Commonwealth Government act to stop foreign purchases or leases of significant local real estate gems, including Keswick Island in the Whitsundays in Queensland, as foreign purchases continue to buy up local real estate, rural mining, and tourist properties?
[Minister Simon Birmingham]
Senator, a number of different waves in relation to foreign investment reform over the time, our time in government, to seek to make sure that the perspective that has long been Australia’s policy in relation to foreign investment, which is that it ought to occur, where it’s in national interest is one that is effectively applied under our foreign investment laws. You know, foreign investment is important to a country like Australia. It has continued to support economic growth, jobs growth and ultimately achieving wages and living standards above a level, certainly well above global averages and global standards commensurate with a small country in population terms able to achieve large economic outcomes, thanks to domestic growth and foreign investment activity. And so it remains important but it has to be in the national interest. And that’s why we have taken successive steps, particularly in areas of national security to make sure that we have the right safeguards there to make those decisions. Just make an observation in terms of your first question about numbers rejected as well that it’s not unusual through the screening process for applications to be withdrawn at different junctures depending upon the types of question scrutiny or otherwise perhaps that applicants find themselves facing. So numbers rejected should not be seen as the only measure of effectiveness in relation to the FIRB, the mere fact that we have the regime in place would stop some from even bothering to make an application quite clearly. And then even the process itself will occasionally deter some as they get a sense of the type of conditions or the type of rejections that or the potential for rejection that may ensue.
[Malcolm Roberts]
That’s a fair comment. I’m also interested then in the number of rejections, sorry the number that have withdrawn their applications.
[Tom Hamilton]
I mean, Senator I’ll take that on notice. I mean, one thing that we bear in mind is being very careful not to release information that might relate to the business dealings of the applicants. But we’ll take that question on notice.
[Malcolm Roberts]
Minister, I don’t think there’d be too many Australians who would argue with you that we need investment. However, there would be a lot of Australians who are upset about the control in foreign hands, and we’ve got Keswick Island, a beautiful gem in the Whitsundays, and it’s now been leased by the Queensland Government to a Chinese firm. And that is now acting like tin pot dictators over that island and trashing the barrier reef and the state government’s doing nothing. Now that’s not your responsibility to the state government as the lessee but lessor, rather, but these are the kinds of incidents that leave a bad taste in people’s mouth when we’ve got Chinese coming in here or anyone foreign and restricting what Australians can do and can’t do. And in fact, hurting our own environment. They are the things that annoy people.
[Simon Birmingham]
Look, I without personally knowing the circumstances around Keswick Island, so I’d be reluctant to comment directly on that, but as a general observation Senator Roberts you’re right, there’s a social licence aspect that goes to areas like foreign investment. It’s why making sure the Third Regime operates in the national interest has been so important to our government to seek to maintain that support for our own investment. And particularly as we face changed security risks and environments across our region to respond to that in the way in which we have structured those arrangements but indeed other things beyond our control, such as the way in which properties are operated, obviously can also undermine areas of confidence. And so all governments in that sense, have a responsibility to make sure that not only do we have effective screening but also that the laws and standards that we expect in this country, be they in relation to payment of wages and industrial conditions, be they in relation to payment of taxes, be they in relation to protection of the environment, apply equally to whoever you are. Absolutely.
[Malcolm Roberts]
And compliance with our laws. Is there any opportunity for us to contact someone in FIRB to discuss this particular issue? Do you have a review process?
[Witness]
Senator we are always happy for people to contact and give information. And I would just add to what the Minister has said that character of investors is part of the national interest tests that we look at as well. So we’re very happy for people to contact and provide information.
[Malcolm Roberts]
Okay, thank you. We will do that. Are there any more rule changes being considered to take into account the widespread purchases of Australian properties by overseas interests pushing up prices and making it harder for younger Australians to purchase a home?
[Witness]
So certainly in relation to foreign investment, as you know, the most recent and significant set of reforms came to effect from the 1st of January. The government has commenced a review of the legislation as set out in the legislation itself. That review is due for completion at the end of this year. We have made it clear in talking to stakeholders that we’re willing to, you know, hear from interested parties around the operation of the act.
[Malcolm Roberts]
Okay so then you’re just doing a review at the moment.
[Witness]
Yeah, that’s right.
[Malcolm Roberts]
No formal consideration of further changes yet.
[Witness]
Well, Senator the changes just took effect from 1 January. And so we’re actually quickly commencing our review process, which was part of what was passed in the legislation. And we’ve got until the end of this year to complete the review of the changes that were just made. So that’s why we’re sort of saying we’re very happy to hear from people because there are quite extensive legislative changes that were implemented as of 1 January.
[Malcolm Roberts]
That’s right. And we’re happy with some of them, but we’ll see how they’re implemented because it comes down to not just the legislation, but how it’s implemented. And that seems to be an area that’s wanting, especially when we see water and land and properties and essential services like electricity in foreign hands.
[Chair]
Senator Roberts, we want move rather soon.
[Malcolm Roberts]
Can I have the last question?
[Chair]
Yes.
[Malcolm Roberts]
Is it not time to consider stopping sales of Australian assets to overseas interests? Many countries do not allow foreign ownership of their land. Investment in Australia is fine and may include long-term leases but we need to sell stop selling off our country. Is there any consideration being given to at least stopping sales of land to those, citizens of those countries that don’t allow Australians to own land in their countries.
[Witness]
I think Senator, as the minister has said the positive impact of foreign investment is very, very obvious.
[Malcolm Roberts]
I don’t dispute that. I agree with that.
[Simon Birmingham]
But I think Senator Roberts, it’s particularly important given the way you frame the question there to understand the extensive restrictions that exist in relation to foreign investment in residential property. The tightened screening restrictions were put in place in relation to foreign investment in agricultural lands as well. And in terms of your question about how other countries treat us, I guess we have under our foreign investment arrangements an overall approach that sets the threshold for any country in the world and their eligibility to purchase, which usually entails more frequent screening and lower thresholds for screening. And then we have the thresholds and arrangements that are put in place under reciprocal arrangements, essentially as negotiated through our free trade agreements that do seek to provide a, usually then a slightly higher threshold for screening to apply because of the level of reciprocity that’s usually been negotiated.
[Witness]
And if I can add to what the minister said, which is all correct, the thresholds do vary. For foreign government investors, $0 threshold continues to apply. And there are some, much stricter thresholds in relation to agricultural land as well. And not withstanding the threshold, every time an investor comes to us, we look at that case very carefully.
[Malcolm Roberts]
Well perhaps, I said, I wouldn’t ask any more questions. So that was my last but perhaps I could just give you one area to consider in the future. Many foreign companies do not have to pay tax in this country, company tax. We know that, that gives them a hell of an unfair advantage over Australian companies. Maybe we should be generating more Australian investment by making sure we track tax foreigners properly. So thank you.
