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Australian Houses for Australians – Ban Foreign Ownership!

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The government says less than 1% of houses are bought by foreigners. I don’t believe them. State governments say it’s at least double that, real estate agents say it’s 10%!

I have been asking for detailed data on how they get to that number for 9 months now without answers. 

The government is hiding the true extent of foreign ownership from Australians while we’re in the middle of a housing crisis.

Transcript

Senator ROBERTS: My question is to the Minister representing the Treasurer, Senator Gallagher. Overwhelmingly, Australians don’t believe foreigners should be allowed to own residential property in our country. I first asked at Senate estimates in November last year how many potential foreign buyers the ATO is detecting through its data-matching program? The government failed to answer. In February, Senator Bragg asked and was given no answer. In June estimates, I asked again and did not get an answer. Answers to my questions on notice for how many potential foreign buyers are detected are now overdue, again. Minister, why is your government hiding from the Australian people the data on potential foreign buyers of residential property? And when will you actually answer the question I’ve been asking for nine months?

Senator GALLAGHER: I recall you asking these questions, Senator Roberts, and I understood they were answered at the time by officials when I was sitting at the desk. If there have been follow-up questions you have asked notice that have not been answered, I can certainly follow that up. I think the evidence we gave during Senate estimates was that foreign investment plays an important role in bolstering Australia’s housing stock and creating additional jobs in the construction industry. But it is monitored very closely for good reason. It is tightly regulated, with foreign persons generally requiring foreign investment approval before acquiring an interest in residential land, regardless of its value, with a few exceptions. Foreign investors make up a very small proportion of the total Australian residential property market, accounting for approximately 0.93 per cent of new and established dwelling purchase transactions in 2022-23. Out of 479,257 transactions, based on ATO data from 2022-23 only 4,463 transactions were by foreign investors. It is a very small component—less than one per cent—of new and established dwelling purchase transactions in the 2022-23 financial year. I think senators have raised this through estimates as something they are interested in—raising concerns about foreign investors squeezing out local residents from being able to purchase housing. But the evidence would show that it’s a very small component of the residential property market in the transactions that are being monitored, as was explained in estimates by the ATO. (Time expired)

The PRESIDENT: Senator Roberts, first supplementary?

Senator ROBERTS: The New South Wales state government reported more than twice the number of overseas purchases of property that the Foreign Investment Review Board recorded in 2021. The board claims foreigners buy less than one per cent of residential property—and you just confirmed that. Yet in the first quarter NAB property survey, real estate agents say they’re selling 10 per cent of Australian housing to foreigners. Minister, if you have confidence in the Foreign Investment Review Board, why won’t you hand over the data?

Senator GALLAGHER: Again, I’m not sure which part of the data hasn’t been answered. I was sitting at estimates when you were given figures, Senator Roberts, so I’m not sure which data is the data you’re seeking. The ATO data I just read out—and I can provide this in writing to you—shows that it is 0.93 per cent for the 2022-23 financial year, and that it has come down, as I understand it, from a peak in 2015-16. The ATO do residential real estate compliance investigations—so they follow this up and check that people are compliant with the requirements of foreign ownership of residential property. They identified 428 properties for compliance, they did 410 investigations and found 145 properties in breach, and 55 of those resulted in— (Time expired)

The PRESIDENT: Senator Roberts, second supplementary?

Senator ROBERTS: Minister, you want foreign investment, yet foreign ownership is against Australians’ interests. Minister, this country is in a housing crisis. When will you ban foreign ownership of residential real estate and put Australians in Australian houses first?

Senator GALLAGHER: We’re not going to do that, Senator Roberts. The numbers show we need good strong rules around it, and there are strong rules around it. We need compliance with those rules, and there are good compliance processes. It’s less than one per cent, and this country has benefited from foreign investment. We benefit in terms of our economy and in terms of jobs—

Senator Whish-Wilson interjecting—

The PRESIDENT: Senator Whish-Wilson, order! Please continue, Minister.

Senator GALLAGHER: So it isn’t something we are seeking to ban. It would help if some of our housing programs, which are currently stalled in the Senate, were given approval by the Senate because then we could build more supply, which is the actual issue. I know there wants to be a lot of distractions about who’s to blame, and it’s easy to blame foreign ownership. The statistics don’t support that. I say to the Senate that there are a couple of bills that are stuck in this chamber that would help people into home-ownership and help increase the supply of housing in this country, and I say: let’s get on with that job

Questions on notice from 17 June 2024. Still unanswered and overdue as of 21 August 2024

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Foreign Buyers Snatching Houses Away From Australians in a Housing Crisis

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The government’s lies about how many foreigners are buying houses during a housing crisis are coming back to haunt them.

Firstly, the government claims ‘foreign buyers are barely making a dent in the market’. The truth? 11% of new houses in Australia were bought by foreigners (Q4 2023). Secondly, ‘foreign buyers only go for luxury homes’. Reality: the average price of a home bought by foreigners is almost the exact same as the average house price across capital cities. That means foreign buyers are directly outbidding average Australians for an average house. Thirdly, despite saying the don’t make an impact on the housing crisis, the government is now implementing small fines for vacant homes.

Why does the government go through all of this deflection and lying when they could just take One Nation’s policy: BAN Foreign Ownership completely.

That’s just the problems with foreign ownership of housing! Never mind the next topic I asked about: letting a foreign company takeover Australia’s military warship builder…

Does this government understand anything about putting Australians first?

Transcript

Senator ROBERTS: I’d like to table the transcript of a broadcast by Ben Fordham. Reporting from radio station 2GB indicates that foreign buyers bought 11 per cent of all new housing stock in this country. How are you letting this many foreign buyers snap up houses out of the hands of Australian homebuyers?

Ms Kelley: As we’ve talked about previously, our latest statistics show that foreign investors purchased around 5,360 houses in the 2022-23 financial year.

Senator ROBERTS: It’s been claimed by some that foreign buyers don’t make a material impact on the average Aussie because they’re only buying trophy homes—$30 million mansions down at Point Piper and so on. Looking at the $5.3 billion for 4,700 properties purchased by foreigners, according to these figures, that’s an average price of $1.1 million. The combined capital cities average median house price is $1 million. Those foreign buyers are actually directly competing in the middle of the market, aren’t they?

Ms Kelley: I should note again that the level of foreign investment in residential real estate is under one per cent of the total purchases that occur in Australia. In terms of residential properties with values under $1 million, that accounted for about 78 per cent of the purchases.

Senator ROBERTS: Minister, your government is increasing the fines and fees for foreign buyers of Australian houses. You’re acknowledging that it needs to be controlled. Why don’t you just stop fiddling around and ban foreign ownership of Australian houses altogether, like we’ve advocated, like the Canadians are now doing and like the Kiwis are now doing?

Senator Gallagher: We welcome foreign investment in our country. It plays an important role across our economy. But those changes we have announced to foreign investment, both for the application fees and double vacancy fees, are about ensuring foreign investment aligns with our agenda to lift housing supply. It’s aligning it with the other work we’ve been talking about this morning in Homes for Australia.

Senator ROBERTS: Working families who are returning home at night to sleep in their car won’t be encouraged by that. But let’s move on. How does the Foreign Investment Review Board treat defence-related companies in its approvals? If a company is producing a defence-related product, how is it treated?

Ms Kelley: The foreign investment review framework takes a case-by-case risk based approach. On 1 May the Treasurer announced a range of reforms to the framework. Under that framework we were very clear about the areas we would scrutinise more strongly. The government has made some decisions around those areas, and we are now actively implementing them.

Senator ROBERTS: It doesn’t sound like being a part of the defence industry enlivens a specific criterion in your approval process.

Mr Tinning: Yes. If it’s a national security business, which includes defence industries, then it’s subject to a zero-dollar threshold under our framework. So all foreign investment approvals—

Senator ROBERTS: So shipbuilding would be part of that, if they’re building defence vessels?

Mr Tinning: Correct. That’s right.

Senator ROBERTS: Do the current rules ever allow you to approve the sale of a sovereign defence industry asset to a foreign buyer?

Ms Kelley: That would depend.

Mr Tinning: As Ms Kelley said, it’s on a case-by-case basis, so we would need to see a specific application.

Senator ROBERTS: Why would we ever allow that?

Ms Kelley: As the minister has said, foreign investment is essential to our domestic economy and has been for decades. What the framework does is—we assess every foreign investment application in terms of our national interest and in terms of national security.

Senator ROBERTS: I understand that the potential sale of Austal to a South Korean bidder, Hanwha, had pretty much fallen off the radar. Then Minister Marles reignited it by saying, ‘I don’t see why there’d be any concerns.’ Does the defence minister’s view factor into your assessment at all—that the sale of Austal, the company that builds Australia’s warships, wouldn’t be a problem?

Ms Kelley: We take into account a range of factors when foreign investments are assessed, and the national security aspects are very important. We liaise across government for views on the issues associated with a foreign investment application and then the advice is then put forward to the Treasurer for a final decision.

Senator ROBERTS: Minister, why would the defence minister say that the sale of Austal, the company that builds Australia’s warships, wouldn’t be a problem? He’s the defence minister and he’s looking at selling a maker of some of our warships.

Senator Gallagher: I haven’t seen those comments, but the defence minister would be very well briefed on all matters relating to that.

Senator ROBERTS: I’ll come back to the Treasury after the opposition asks questions.

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It’s Time to Tax Multinationals

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Transcript

Why? That’s one question that I want to ask repeatedly in this speech. I see the government’s changes as a welcome step, but it’s a tiny, tiny step and we need many, many more. It could be one of my footprints, Senator Ayres! We see the government’s previous tax changes. They weren’t cuts; they were changes. As a result of those changes, we will see the government increase revenue by about $38 billion over the next four years—so much for tax cuts. They’re tax changes that will lead to an increase in tax for mums and dads. 

Why are politicians scared of tax reform, and why do they place the burden on families and individuals to pay tax and let multinationals off the hook? Why are politicians scared of tax reform, but they continue tinkering with the system to affect mums and dads, who end up by paying, by far, the lion’s share of tax in this country? Why did Senator Sharma, in a very good speech, say that he wants to end bracket creep and the Liberals want end to bracket creep, yet, three weeks earlier, they voted against ending bracket creep with my amendment? They want enduring bracket creep. Why do the Labor Party say they want to end bracket creep—I remember Senator Gallagher said at the time, ‘We want to end bracket creep’—but vote against it? My amendment to abolish bracket creep once and for all was defeated. 

Why is taxation not transparent? I’ll tell you why. It’s so that governments can continue to steal money from families to pay for their uncosted bribes. The Senate and the House of Representatives have turned into auction blocks using taxpayers’ money to buy votes. That’s what they’ve turned into. That’s how the governments of this country work, the uniparty of Labor and the Liberals. Why is the uniparty looking for new ways to tax people? Cars and utes—the foundations for tradies—are now going to be taxed. Clothing is going to be taxed under the Labor Party. Food will be taxed with a new biosecurity levy. Inflation was caused by the Labor and Liberal uniparty during the COVID response—the COVID mismanagement. State premiers were largely Labor, and the federal Prime Minister was Liberal-National. Inflation is a tax, especially on the poor and those with low incomes. Inflation is a huge tax burden. Greenwashing requires corporations to buy carbon dioxide credits. How do they pass the costs on? They pass them on in the form of higher prices. 

Why do they require diversity, equity and inclusion and ESG reporting, which are ridiculous and unfounded? No-one has provided the evidence for that policy. It’s a compliance tax. Where will the cost of that compliance tax go? Onto the things that mums and dads and families pay for. Whole departments have been created in corporations, and that adds to the prices families have to pay. Why more tinkering? Why more complexity and less productivity? Think about the behaviours this drives with regard to allocation of resources and the behaviour of executives and decision-makers. Why is it that every problem in this country comes out of this building, like housing and excessive immigration, which is putting inhuman catastrophic pressures on people now? People are living in tents, cars, caravans, out in the street and under bridges in Brisbane in one of the richest states in the world. This is happening in our regional cities right up and down the east coast of Queensland. It’s a long coast. The Murray-Darling Basin is a disaster. It’s climate fraud, a lie and a scam. It’s a hoax. Stealing farmers’ property rights—the Liberal-National government did that from 1997 to 2007. 

We’re still living with COVID mismanagement. I had a gentleman in my office today who is vaccine injured. It’s been stated by doctors We had to turn the lights off because of the glare. He couldn’t look straight at the windows. He had to look down. This was a vibrant healthy person now with COVID vaccine damage. He’s almost incapacitated. This was a lively human being now pulled up. 

We’re still living with the COVID mismanagement. There’s inflation from the money supply, as I mentioned. There’s inflation from crippling the supply chains during the COVID restrictions. Crippling our supply chains led to higher prices. 

Senator Bilyk: President, I raise a point of order on relevance. We’re here to speak about the Treasury Law Amendment (Making Multinationals Pay Their Fair Share—Integrity and Transparency) Bill 2023. Not once has the senator mentioned anything to do with that bill, and it’s been five minutes. I’m just wondering if you could draw to the attention— 

The ACTING DEPUTY PRESIDENT (Senator Polley): Thank you, Senator Bilyk. I will remind Senator Roberts of the topic, but as you and other senators know, it’s a broad-ranging debate. 

Senator ROBERTS: For those senators with poor hearing, let me say again: we support this bill. That’s what I opened with. We support this bill—I’ll repeat it. I said that. 

I’ve just laid down a litany of problems that are coming from this building in betrayal of the people in this country, my fellow Australians. I’m now getting to the point of that betrayal. The most destructive system in government under the uniparty for the last 70 years has been the taxation system. It focuses our brightest and best people, some of our lawyers and accountants, not on serving our country in competition with foreign companies overseas—the Koreans, the Japanese, the Taiwanese, the Chinese, the Europeans and the Americans—but on screwing the government and getting away from complex, ridiculous taxation systems. They’re focused not on competing with foreign owned corporations but on competing with our government. Think of the behaviours that are driven at the corporate level, the allocation of resources, the inefficiency of resources and the behaviour of executives. 

Taxation is highly complex. How many pages are there in our taxation act? It’s highly inefficient directly in terms of allocation of resources and indirectly in terms of the behaviours that are driven. It’s directly inefficient in terms of the way taxation is levied in this country. James Killaly was a former deputy commissioner of taxation in charge of large companies and foreign matters. He said in 1996 and 2010, ‘Ninety per cent of Australia’s large companies are foreign owned and, since 1953, have paid little or no tax.’ This bill does go a little way towards addressing that, but we need to address it full on. 

Why does that happen? Why are foreign companies getting let off the hook? I’ll tell you why. It’s because many of even our large Australian companies are part-owned and controlled by foreign corporations. The major predators are Vanguard, BlackRock, State Street and First State. They own 10 per cent of the four banks combined and they own the controlling interest. They tell the banks what to do—BlackRock, State Street, Vanguard, First State and others in that little cohort of multinational predatory organisations. We don’t have four main banks. We have one main bank that is hiding behind four logos. That’s what we have. They have the same policies, principles, strategies, products and services. 

Coles and Woolies, again, are part-owned by BlackRock, State Street and Vanguard. If you go right through our corporations in this country, the corporations we thought were Australian owned, they’re foreign owned and controlled, and where does the money go? The profit goes overseas. What did the Morrison government do, along with the state premiers? They loaded it up so that foreign multinationals that own the large companies in this country made a killing out of COVID at the expense of small companies and small businesses. 

On the other hand, look at Qatar and Norway. They have bountiful natural resources, just like us—not as much as we have, in fact, and yet they make so much more. Qatar made $78 billion out of its gas exports. We export more and we made a tiny fraction of that, around one per cent of that. 

So why are we doing this? What I’m saying and have been saying for many years, ever since I got into the Senate, is that we need comprehensive, proper and honest tax reform. Let’s have a look at the person who introduced GST into this country. Paul Keating was the Treasurer and, I think, Deputy Prime Minister under Bob Hawke. He came so close to introducing the GST, and, at the last minute, the Prime Minister at the time, Bob Hawke, fell over and lacked the courage to do so. Paul Keating was very upset with that. A few years later, John Hewson introduced the GST as part of Liberal Party policy, and who smashed him over it? Paul Keating, the man who introduced the concept of GST to this country. 

The ACTING DEPUTY PRESIDENT (Senator Polley): Senator Roberts, I will remind you to use people’s correct titles when referring to former prime ministers. 

Senator ROBERTS: He was the Treasurer at the time. What I’m saying is that the taxation system was mooted for change, and the person who introduced the GST actually smashed the GST, for purely political reasons. 

On another aspect of comprehensive tax reform, Treasurer Peter Costello—who has been admired as a Treasurer—found out that Senator Pauline Hanson, who at the time was a member of the lower house, was keen on the transaction tax. As a way of trying to destroy her, he destroyed the transaction tax, even though he had previously said publicly that it had a lot of merit. 

The point I’m getting to is: taxation has become a political football. It’s not an honest debate anymore; it’s about smashing a system. So what I propose is that, instead of proposing a system, we should look at basic principles. We should first of all agree that the taxation system is one of the most destructive systems in this country, if not the most destructive, which is my opinion of it. Once we get agreement on that, we should then put forward a set of principles that we can agree on.  

I’ve been putting some thought to principles. First of all, a fair, efficient and honest taxation system would enable us to receive far more income because the multinationals would be paying their fair share of tax. It should be fair and equitable to all people and to all economic entities, including Australian businesses, and with no exemptions for foreign companies, which are now largely exempt. Making foreign companies and speculators pay their fair share of tax would quickly end the budget deficit and overseas debt and fund future infrastructure without borrowing. The second principle: it should be in the national interest.  

The third principle—and this is very, very important for a country, and the reason why I went through the problems that are coming from this building: it should be incorruptible and impossible for politicians to fiddle with. A major source of political power is the ability of politicians to make legislation that punishes or advantages particular groups. This ability gives politicians from the uniparty enormous power over others because they can enact, for example, taxation provisions that assist their supporters or hurt their supporters’ competitors. An honest tax system removes this blatant abuse of power. 

The fourth principle: it should comply with and support our Constitution’s intent and written provisions—not contradict our Constitution but comply with it. The fifth principle: there should be simplicity in understanding, administration and accountability. It should be completely transparent, unlike the current taxation system, which is deliberately opaque. There should be an objective basis for levying tax. Instead of assessing tax on profit and loss that can be fiddled, use objective measures. These do exist and include, for example, market sale price or straight-out unit cost. 

The taxation system needs to be constructive, not punitive. It needs to be efficient to administer, with low administration costs, not the unwieldy behemoth that is administering, or mismanaging, tax at the moment. It should increase people’s purchasing power. A good taxation system, an efficient taxation system, will increase people’s purchasing power so people are economically far better off, because the burden will be shifted more towards multinationals. 

The next principle is: there should be minimal disruption to the economy, with no ability for politicians to manipulate the tax system across industry sectors or industry groups. The taxation system could be a wonderful way of getting aggregate economic data and detailed data. 

The next principle is arguably one of the most important: accountability. When properly designed, a tax system develops accountability in the government and in the people, through being a restraint on the cost of government. Taxes are necessary to pay for the cost of government, but what happens at the moment, because politicians from the uniparty can ratchet taxation up freely, is that they tend to abuse it and neglect their accountability to the people for managing costs. Politicians will have to manage within the country’s means. The next principle is: it should help people to become independent of government.  

What I want to do in wrapping up is say, again, to the senators who didn’t hear me in my opening comments: we support this bill. But it is far too little. Why is it too little? We have got plenty of money in this country for investment. We have got super funds holding enormous sacks of gold, from rivers of gold. I’m asking the government to change your ways. Put families before large, foreign multinationals—Blackrock, State Street, Vanguard, First State. Put national interest before large, foreign multinationals. Reclaim our national sovereignty, and put it before large, foreign multinationals. Put Australia and Australians first. 

I asked this question at the start: why? I ask this question now: why not? 

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Foreign-Owned Homes Vacant as Growing Numbers of Australians Are Made Homeless!

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Jim Chalmers has said the government has no idea how many homes bought by overseas investors are sitting vacant in Australia.

I asked in senate estimates how the government plans to fine foreign owners of empty houses if they can’t even find that out. It’s just a thought bubble so Labor can try to look good without actually doing anything.

Just ban foreign ownership altogether!

Transcript

Senator ROBERTS: Thank you for appearing today. My questions are on Treasury’s plans to find foreign investors who leave properties that they own vacant. How you going to enforce that? Even Treasurer Jim Chalmers said we have no idea how many are being left vacant. Are you going to send people around doorknocking to see if there are any empty homes? It sounds like headline grabbing to me. 

Ms R Kelley: As we’ve mentioned before, the Australian Taxation Office does have a compliance function that specifically deals with the vacancy issue. I have a colleague here from the ATO who can assist in answering the question, but they have a very well-established compliance program. They do look at the vacancy rate and they do enforce that when houses are left vacant for more than 183 days per year; they do actually follow up. I’m sure we can get some numbers, if you like, in terms of recent action by the ATO, but part of the government’s announcements around the increase in fees was also that increased resources were being given to the ATO to assist in strengthening that compliance approach. 

Senator ROBERTS: Thank you, Ms Kelley. 

Mr Thompson : That’s correct. I thought I might briefly explain how we enforce the existing vacancy fee rules. Obviously, these are amendments to the rates, but they don’t change our enforcement approach. People who are in scope—in the population in 2022-23 that was about 12,500—that we track are required to lodge a vacancy fee return every year. Some of those foreign investors declare to us that the property is vacant, in which case we levy them the vacancy fee. We also conduct compliance activities on the remainder of the population. For those foreign investors who don’t lodge a return, we deem a vacancy fee on them and they need to contact us if they think that we have deemed that fee incorrectly. 

Senator ROBERTS: How accurate is your register of foreign owners? Have you done any testing on it to make sure all the foreign owners are in fact registering? 

Mr Thompson : Yes. As we explained in some questions on notice following the last estimates, we get the full data set for the real property transaction registry. For example, in 2022-23 the number was around 2.4 million individual entries. We work through a range of data-matching techniques to get that down to a potential compliance pool in the thousands and then we publish our compliance numbers, and they’re generally in the hundreds. In that sense, we’re very confident about the in-scope population under the Foreign Acquisitions and Takeovers Act rule. 

I would make the point that there is sometime debate about the exact numbers, and I think that goes to the different definitions that different regimes use. For example, we’re aware that the rule of the Foreign Acquisitions and Takeovers Act is slightly different from state and territory land tax acts. There’s also a NAB survey that is run every so often, and that asks the question about overseas buyers, as opposed to foreigners. When people talk about the numbers—I’d say we’re very confident of the numbers under the Foreign Acquisitions and Takeovers Act definition, but that’s not to say that, if people are using different definitions, you might not come up with different numbers. 

Senator ROBERTS: That’s a question I’ll ask later, in another session. When it made its release, the government said it expects to collect $500 million a year in these extra changes—$170,000 per person. If the charge is $170,000, that’s less than 3,000 homes, and many of those 3,000 will probably still stay vacant because foreign buyers are rich and can probably afford to just pay the charge. Has Treasury conducted any modelling on how many of those 3,000 they expect to become occupied because of this thought bubble? You just mentioned 12,500 vacancies. 

Ms R Kelley: I think we need to clarify that the predicted revenue is based on the total application fees as well as the vacancy fees. 

Senator ROBERTS: How many houses do you expect to be trapped in this scheme? 

Ms R Kelley : It depends. Every year there are different numbers. In the last financial year, 3,542 houses were purchased by foreign investors, so they would definitely be captured. The people who are purchasing are captured. The application fees have been tripled. They range with the value of the property, and the application fee increases with the increase in the property value. Then you have the numbers that Mr Thompson was talking about in terms of the number of houses that are already purchased and registered and that the vacancy fees apply to. The calculation around the revenue are based on those sorts of numbers as well. It’s both factors. 

Senator ROBERTS: Minister, it makes it really simple, doesn’t it? Why not ban all foreign ownership of housing? That would solve the housing crisis. 

Senator Gallagher: I am not sure it would when we look at the numbers involved in the evidence that’s just been given, and that is not the government’s position. 

Senator ROBERTS: Why isn’t it the government position? There are Australians in caravans, tents and cars. 

Senator Gallagher: Again, there are a number of reasons why there is pressure in the housing market at the moment, whether you be renting, homeless or seeking to buy your first home. Not all of that can be attributed, as I think you would like to argue, to foreign ownership. 

Senator ROBERTS: I am not saying ‘all,’ but I am saying massive immigration is driving up housing prices. 

Senator Gallagher: That, again, is a different issue to the subject of foreign ownership. You’ve been given the numbers today. 

Senator ROBERTS: We’re concerned about Australians residents and citizens in tents, caravans, cars, under bridges— 

Senator Gallagher: That is why we have all the effort on the housing side to generate supply. 

Senator ROBERTS: Thank you, Chair. 

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When will the ATO stop foreign buyers?

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I highlighted the dilemma facing Aussies who are getting squeezed out of the property market by cashed up foreign buyers.

I was told that purchasers of new properties by foreign investors are monitored through the Australian Tax Office but they were not prevented from purchasing the property.

I told the ATO that this was not good enough and asked when the government would stop selling off the farm to the detriment of Aussies at a time when there is a grave housing shortage in Australia.

Click Here for Transcript | Part 1

Senator Roberts: Thank you for being here this morning. The Foreign Investment Review Board makes recommendations to the government about approving certain large investments in projects in Australia. One concern of Australians is the seemingly large number of Australian residential homes and residential land that is being purchased by foreign investors, to the exclusion of Australian homebuyers—are you aware of that?

Mr Writer: We are certainly aware that there are publicly reported concerns about the acquisition of property by foreign investors, yes.

Senator Roberts: Anecdotal evidence is of land banking, where properties are purchased by foreign interests and then held vacant, in the middle of a housing crisis where thousands of Australians are left homeless.

From 1 July 2020 to 30 June 2021, one year, there were 5,310 residential real estate purchase transactions by foreign buyers, with a total value of $4.2 billion. Eighty-six per cent of those were for new dwellings and vacant land. Minister, why does there appear to be no governance or restriction on overseas ownership of residential property in Australia?

Senator Gallagher: There is, and I’m sure officials can take you through it.

Mr Writer: There are restrictions. Generally speaking, foreign investors, in relation to residential real estate, cannot purchase existing properties. There is only one real exception, which is for temporary residents who need somewhere to live. Generally, they will only receive approval for the acquisition of newly built properties, not existing properties. That’s designed to encourage the construction of new residential properties in Australia.

Senator Roberts: So foreigners can’t buy existing property, but they can build new property?

Mr Writer: That’s correct.

Senator Roberts: Who gives the approval?

Mr Writer: In general, the residential real estate proposals are considered by the ATO under delegation from the Treasurer.

Senator Roberts: The Australian Taxation Office as designated by the treasurer?

Mr Writer: Yes.

Senator Roberts: Given that many countries do not allow foreign ownership of their residential properties, why does Australia allow foreign investment in residential property with little or no restriction?

Senator Gallagher: We’ve just gone through that there are restrictions. The other thing I would point to is the changes that we’ve put in place to double the penalties applicable to breaches of the foreign investment rules applicable to residential properties, which we implemented on 1 January. We’ve doubled the foreign investment application fees from 29 July 2022. Fees now start at $13,200 for acquisitions of residential property valued at $1 million or less and $26,400 for acquisitions of $2 million or less. The settings under the approval process are designed to increase supply, which is essentially the big challenge we’ve got in the housing market at the moment—we need more supply of housing, and that’s why the settings are targeted to increase that.

Senator Canavan:  Can I ask a quick follow-up, Senator Roberts? I believe our foreign investors can buy established dwellings with approval from the FIRB. Is that correct?

Mr Writer: With approval from the ATO, yes.

Senator Canavan:  How many approvals have you provided over the past year?

Mr Writer: I’d need to go to the ATO about that question, but what I can say is that in 2020-21 the total number of purchases of residential dwellings in Australia was 588,176. Of those, 4,355 concerned foreign investors.

Senator Canavan:  Sorry, 355 in total?

Dr Kennedy: Yes, 4,355.

Senator Canavan:  Sorry, 4,355.

Mr Writer: Yes. It’s still less than one per cent of the total.

Senator Canavan:  Yes. It’s still quite a lot. That’s of established dwellings?

Mr Writer: No, that’s of all residential dwelling purchases.

Senator Canavan:  Okay, so it includes, potentially, new ones. So you can’t tell me how many approvals.  How many times did you reject somebody who wanted to buy an established dwelling?

Mr Writer: I’d have to take that on notice. The ATO will be here later this afternoon and may be able to answer that.

Senator Canavan:  I thought it was FIRB that does that rejection.

Mr Writer: In relation to residential property, no. The ATO manages that.

Senator Canavan:  Finally, the new penalties the minister mentioned—how many times has a foreigner been penalised for illegally purchasing an established residential dwelling over the past year?

Mr Writer: I couldn’t answer that. The ATO would need to respond to that.

Senator Canavan:  Does it happen? Was there one?

Mr Writer: The ATO certainly took action, I think, last year, and were successful in obtaining a penalty against a foreign investor, yes.

Senator Canavan:  The issue seems to be—notwithstanding your figures—anecdotally, that the foreigners are always turning up at auctions and buying established dwellings. It doesn’t seem to me that hard to get around our rules, to just get someone else to buy it in their name. Does that happen? How do we know? What sort of efforts do you put into making sure people aren’t trying to avoid these restrictions?

Ms Kelley: Again, the ATO is responsible for the compliance in that regard. I would also note that Australian citizens and temporary residents are able to purchase as well, regardless of their background.

Senator Canavan:   Of course, but they could also do so on behalf of others. Is that illegal? Would it be illegal to do so on behalf of someone—

Mr Writer: That would be a scheme to avoid the application of the act. Yes, it would be.

Senator Canavan:   I’m just asking. I know you’re saying the ATO is enforcing it, but presumably you’re the policy area.

Mr Writer: We are.

Senator Canavan:  So how confident are you? You don’t seem to understand the details of the prosecutions that go on. How confident are you that this restriction is actually being implemented?

Mr Writer: We rely on the ATO to do this. It administers and enforces the law in accordance with the Foreign Acquisitions and Takeovers Act and the relevant policies that the successive governments have put in place around this area of activity.

Senator Gallagher: And I think the numbers that were read out before give you an indication that that—

Senator Canavan:  That doesn’t go to my question, because it doesn’t capture people doing it illegally.

Senator Gallagher: No, but you were saying anecdotally, basically, that foreigners are out buying up all the houses, and I think—

Senator Canavan:  You can’t even tell me how many people you prosecuted.

Senator Gallagher: It’s not about prosecution.

Senator Canavan:  If you were taking this issue seriously, you’d know that, Minister.

Senator Gallagher: That doesn’t relate to prosecution, and we can deal with that through the ATO.

Senator Canavan:  My question did.

Senator Gallagher: That deals to the scale.

Senator Canavan:  Clearly people are not obeying the law.

Senator Gallagher: And that question has been answered, and obviously your anecdotal information is incorrect.

Senator Canavan:  No, it’s not, because you don’t even have any evidence about how many prosecutions you’ve made.

Chair: Order!

Senator Canavan:  You’re obviously not taking it seriously.

Chair: Order! I’d like to return to Senator Roberts, who I believe has the call. Senator Roberts.

Senator Roberts: I thank Senator Canavan for his questions. Minister, doesn’t it mean, though, with the current housing crisis, that the ability for foreigners to buy or to construct a new house crowds Australians out of the market or certainly raises the prices?

Senator Gallagher: Again, no, I wouldn’t accept that. Again, it goes to the numbers that Mr Writer has outlined. But the fact is that the settings are targeted, essentially without exemptions, to new housing supply. It’s focused on generating that new housing supply to be available for people to live in, and part of what we have to deal with in the housing market at the moment is a shortage of supply.

Senator Roberts: According to Mr Writer’s figures, 4,355 were bought by foreigners, out of 5,186. That’s almost 80 per cent.

Senator Gallagher: No. You’ve got that wrong.

Mr Writer: It’s 588,000.

Senator Roberts: I’m sorry. That’s my mistake.

Ms Kelley: It’s 0.74 per cent, to be precise.

Senator Roberts: Quite often, though, foreigners will lock up their houses rather than rent them out. So they’re vacant. They’re not available to Australians.

Mr Writer: I don’t think we can confirm that kind of statement.

Senator Roberts: That’s widely known. You won’t confirm it, because you haven’t got the exact numbers.  I understand that and I appreciate that.

Mr Writer: I don’t think we have any actual evidence of that fact.

Ms Kelley: Part of the ATO’s responsibility is also around the amount of time a property is vacant and ensuring that it’s not left vacant as well. That is part of the compliance regime.

Senator Roberts: That’s the ATO’s responsibility, is it?

Ms Kelley: Yes.

Senator Roberts: So you’re just responsible for the policy?

Ms Kelley: In terms of residential real estate, Treasury has a policy responsibility. The ATO implements the policy.

Senator Roberts: Minister, wouldn’t the widening of the mandate of the FIRB to include residential purchases go a long way to slowing down the sale of residential properties to foreign speculators?

Senator Gallagher: If FIRB were assessing them?

Senator Roberts: If FIRB were extending their authority over all residential property.

Senator Gallagher: It would slow it down—is that what you’re saying?

Senator Roberts: Yes.

Senator Gallagher: I’m not sure how those two things go together. Essentially, we’ve got Treasury with the policy side of the work and the ATO then enforces those arrangements, so I’m not sure how FIRB extending reach into residential property would slow down the sale. As you’ve heard, it’s 0.75 per cent of residential sales.

Senator Roberts: So FIRB would have authority as to whether or not to approve or recommend—they don’t approve anything. They make recommendations.

Senator Gallagher: The ATO currently does. We have an approving entity that does that work—

Senator Roberts: Which basically has no teeth.

Senator Gallagher: I don’t accept that, but, by all means, put those questions to the ATO.

Senator Roberts: Isn’t it time, though, for the government to start buying back the farm and limiting sales of Australian land to Australian purchasers only, like China and several other countries do?

Senator Gallagher: No. That’s not the policy of the government. We have in place an arrangement that allows, under specific circumstances, foreign investors to purchase residential properties in this country. We’ve got those settings—they’re here; we can answer questions about them—but they are the arrangements that are in place.

Senator Roberts: I understand they’re here, but I’m saying why not change them so that only Australians can buy Australian land, not just Australian residential real estate but Australian land?

Senator Gallagher: That’s not the government’s policy. We are an open-facing economy. We are a country that has relied on foreign investment. We believe there need to be suitable controls in place to manage that, and those settings are the ones that we’ve been talking about this morning. That remains the government’s policy.

Chair: Last question, Senator Roberts.

Senator Roberts: This is not a radical thought, Minister, as many other countries protect their sovereignty by not selling their land to foreign interests. Why is it that Australians can’t buy land in those countries but foreigners from those countries can buy land in our country?

Senator Gallagher: I’m not sure of the countries that you are referring to.

Senator Roberts: China’s one of them. There are a number of countries.

Senator Gallagher: We’re here, and we do have arrangements in place, through FIRB and through the arrangements with the ATO, to put restrictions and limits on the sale of housing or, in FIRB’s case, on foreign investment matters. They are looked at and assessed against the national interest.

Senator Roberts: It’s a one-way street for foreigners. Australians can’t buy property in their countries, but they can buy it in our country.

Click Here for Transcript | Part 2

Acting Chair: Senator Roberts.

Senator Roberts: Thank you for being here tonight. My questions are in two streams: registration information for the Australian Taxation Office and foreign investment in real estate. I’ll get on with the first one.

Senator Gallagher: Senator Roberts, FIRB are no longer here.

Senator Roberts: No, it’s to the ATO. You referred me to the ATO this morning.

Senator Gallagher: That’s right; I did. That was a long time ago.

Senator Roberts: A very long time ago. I understand the registration information for the ATO was displaying incorrectly on the business and company registers. It displays a record named ‘ultimate holding for all company’. This was updated in early March. Can you please explain when this error was brought to your attention and what part you had in correcting that?

Mr Jordan: Is this on the Australian Business Register for the ABN?

Senator Roberts: I think that’s where it was, yes.

Mr Allen: I’m not aware of that issue, but I can take it on notice and come back to you.

Senator Roberts: Okay. Could you also answer these questions then please? How did that information come to be displayed on the registers in this way?

Mr Allen: Again, I’ll take that on notice.

Senator Roberts: Yes. And also take on notice what information the ATO supplied to the business registry service or ASIC that caused the registration to be displayed in this way. Can you take that on notice?

Mr Allen: Yes.

Senator Roberts: Was it an error from ASIC or the business registry service or the ATO that caused the information to be displayed in this way?

Mr Allen: I’ll take it on notice.

Senator Roberts: How did BlackRock come to be displayed as the owner of ‘ultimate holding for all company’?

Mr Allen: I’ll take it on notice.

Senator Roberts: Thank you. Can you please take on notice to provide a full chronology of this incident, including data and correspondence—who it was sent to, who it was received from and what was addressed in it?

I’m raising it because it suggests that there may be other errors for entries that are not as high profile that are still there. What routine audit of this database do you have in place to detect such errors? After this embarrassment, have you gone looking for more?

Mr Allen: I’ll take that on notice.

Senator Roberts: Thank you. That’s all on that thread. Now I’ll get on to housing. Minister, why does there appear to be little governance or restriction on overseas ownership of existing residential property and newly constructed residential property?

Senator Gallagher: I think we answered this earlier today. Weren’t the issues that were to be referred to the ATO over essentially the approval for foreign investors to buy—

Senator Roberts: I want to put it in context that the ATO understands. Many countries do not allow foreign ownership of their residential property. Why does Australia allow foreign investment in residential property with minimal restriction?

Senator Gallagher: Is that to the ATO?

Senator Roberts: It’s to you, Minister.

Senator Gallagher: As I think I went through this morning, there are restrictions in place. It is something the government—

Senator Roberts: On older properties, but not on newly constructed or first residencies; isn’t that correct?

Senator Gallagher: No. For foreign investors it is targeted at new properties, unless you get an exemption. That’s my understanding. We don’t have that group of officials here—they’ve gone—

Mr Jordan: We have a deputy commissioner of international here.

Senator Gallagher: but that was the evidence this morning.

Mr Jordan: He’s responsible for the registers that we maintain. He will try to answer any questions.

Senator Roberts: So you’re purely a registry?

Mr Thompson: No. As was touched on this morning, in the residential property space the foreign investment regime essentially seeks to promote the growth and development of housing stock. The way it does that is by restricting foreign investment to new builds, development of existing builds or vacant land. There’s only one circumstance in which approval for an established dwelling would be granted under that regime, and that’s for temporary residence. Those properties will need to be divested when that person ceases to be a temporary resident.

Senator Roberts: Established properties cannot be purchased by foreigners?

Mr Thompson: The scenario where an established property would gain approval to be purchased by a foreigner is where they’re a temporary resident.

Senator Gallagher: It’s also when it’s their primary residence, isn’t it?

Mr Thompson: They will be required to live in that—

Senator Roberts: But, other than that, they can’t purchase existing residential properties?

Mr Thompson: That’s correct.

Senator Roberts: Can they build a new property?

Mr Thompson: Broadly speaking, there are three classes of properties that a foreign resident might get approval to purchase. One would be vacant land. One would be redevelopment of an existing property—so you could perhaps subdivide and convert a single dwelling into two dwellings. One would be a new build, yes.

Senator Roberts: Thank you. Doesn’t it still mean that the system is fairly unregulated, since people can come in and develop?

Mr Thompson: There’ll be conditions around our approval, so there’ll be a time period. If you were to seek approval to develop an existing property, there would be time periods around that approval being granted, if it’s not an open-ended approval.

Senator Roberts: Do you know how many properties are being developed or redeveloped every year with foreign ownership?

Mr Thompson: I don’t have that level of detail. We have a register of foreign ownership of residential land that we publish every year. That actually breaks down transactions between vacant land, established dwellings and new dwellings. That would probably be the most disaggregated split I can provide.

Senator Roberts: I’m being asked to wind up. Minister, wouldn’t the widening of the mandate of ATO to include all residential purchases by foreign purchasers go a long way to slowing down the sale of residential properties to foreign speculators?

Senator Gallagher: They do.

Mr Jordan: I think we do. Some are not allowed—

Senator Roberts: Do you register all?

Mr Jordan: and some are allowed, depending on their circumstances. All purchases asked by foreigners to be made are looked at and regulated.

Mr Thompson: I know there was conversation this morning. It is a requirement to seek approval to purchase properties if you’re a foreign resident. We do undertake compliance activity. We do, in some cases, force a divestment of properties. There was a reference made to a civil matter in 2022 where the court imposed penalties of $250,000 on an individual for purchasing four properties without approval.

Senator Roberts: How many existing residential properties have been bought by foreign purchasers in each year over the last five years?

Senator Gallagher: We’d probably take that on notice.

Mr Thompson: Yes. We can take that on notice.

Senator Gallagher: We certainly had some figures that we gave you for the 2020-21 year. But if you want us to go back five years, we’ll take that on notice.

Senator Roberts: What monitoring is in place to keep track of foreign purchases of existing residential properties?

Acting Chair: Can I ask you to see if you can put questions on notice? We need to wind up.

Mr Thompson: I have four years.

Senator Roberts: That’d be good. I can put most questions on notice. How many residential properties, new or existing, are sitting vacant after purchase by foreign purchasers? Do you track things like that?

Mr Thompson: There is a regime that is known as the ‘vacancy theme’. Under that regime, foreign owners are required to notify us if the property is vacant. If they fail to notify us in a given period we deem the property to be vacant and there is a vacancy fee charged for that.

Senator Roberts: Thank you. I will put the rest of my questions on notice.

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Questioning the Foreign Investment Review Board (FIRB) over CuDeco

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This round of questioning occurred in the October/November Hearings of Budget Estimates, focusing on large concerns I had brought to my attention over the sale of CuDeco. FIRB provides recommendations to the Government in relation to the risk of certain foreign investments.

Transcript

Senator ROBERTS: Thank you for appearing today. My questions are with regard to the sale of assets of the delisted stock exchange minor CuDeco Limited. The receivers have claimed on 12 June 2020 that approval had been recommended by FIRB for this. Would FIRB confirm whether or not it recommended that Copper Resources Australia may purchase CuDeco assets, including its major copper mine, on or shortly before that date of 12 June?

Mr Hamilton: Certainly, we’ve been following media articles in relation to CuDeco, which, as you know, entered voluntary administration in July 2019 and, as you said, was delisted from the ASX in February 2020. As you know, we don’t comment on the specifics of individual cases, but we do understand that ASIC has looked into this matter. Questions about some of the concerns that have been raised in the public around allegations of phoenixing by CuDeco should be directed to ASIC.

Senator ROBERTS: Are you aware that this copper mine is reputedly one of the largest in the world—or the copper reserves, sorry?

Mr Hamilton: Senator, I was not aware of that myself.

Senator ROBERTS: Was FIRB aware that Copper Resources Australia was only incorporated on 20 May 2020?

Mr Hamilton: Senator, again, I’m not aware of these details. But, as I said, we would be limited in what we would wish to talk about in a public forum in relation to these entities.

Senator ROBERTS: I’ll just ask the other questions, because they raise important points, and whatever you can answer, you can answer, and whatever you can’t, tell me. Was FIRB aware that Copper Resources Australia is basically a shell company with no significant assets and lacks the funds to buy the firm, and that it had no mining experience or funds of its own to complete such a purchase?

Ms Kelley: I think that’s the matter that we said ASIC was looking into.

Senator ROBERTS: Was there a recommendation made by FIRB?

Mr Hamilton: Personally I’m not aware of that, but we would not comment on that in any case, as we’ve said.

Senator ROBERTS: Is FIRB aware that a change of beneficial ownership form 484 was submitted on 14 July 2020, shortly after the approval was given, assigning the beneficial ownership to Chinese controlled company Dragon Field International Ltd?

Mr Hamilton: I refer you to my previous answer.

Senator ROBERTS: Was FIRB aware that it has been suggested that collusion of the Chinese directors and their actions brought the company into liquidation through fraudulent conduct intended to make the company fail and make it a cheap buy?

Mr Hamilton: I refer you to my previous answer.

Senator ROBERTS: Is FIRB aware that the bid of $30 million from Copper Resources Australia promises to be paid to only non-Australian creditors when an Australian bid of $60 million—double the price—to purchase was declined by the receiver?

Mr Hamilton: Again I refer you to what I said previously.

Senator ROBERTS: Is FIRB aware that, if this purchase is allowed to proceed, Chinese interests will allegedly acquire more than $100 million of Australian assets for less than $30 million, leaving Australian investors and creditors unpaid, with reportedly the plant valued as scrap metal?

Mr Hamilton: Again I refer you to my previous answer.

Senator ROBERTS: Can you explain how this recommendation—if you made that recommendation—could be in Australia’s best interest?

Ms Kelley: We’ve noted in previous hearings that we’re very happy to discuss these sorts of matters in a private hearing. The legislation has particular constraints on us around sharing protected information, but we have previously discussed particulars of certain matters in private hearings with senators. We’re happy to consider making that offer. There is another committee looking at foreign investment. We’ve appeared before them and we anticipate we will appear before them again.

Senator ROBERTS: Could you tell me when that would be?

Ms Kelley: I’m not sure when the next one is, but I think we are scheduled to appear.

Senator ROBERTS: Can my office get a briefing from you at all? Ms Kelley: We can certainly put that to the Treasurer’s office.

Senator ROBERTS: So you’ll get back to my office?

Ms Kelley: We’ll talk to the Treasurer’s office about that.

Senator ROBERTS: And then get back, thank you.

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