4 May 2015

Interview with Jon Faine, 774 ABC Melbourne


SUBJECTS: Government’s Foreign Investment Announcement

FAINE: The aforementioned Kelly O’Dwyer is the member of Federal Parliament for the blue ribbon Liberal seat of Higgins, in Melbourne’s leafy inner-eastern suburbs. She’s also the Chair of the House of Representatives Economics Committee and held an inquiry into Australian foreign investment policy. Ms O’Dwyer good morning to you.

O’DWYER: Good morning Jon, I’m no longer the Chair though, I’m the Parliamentary Secretary to the Treasurer.

FAINE: Indeed thank you for the correction. Your report’s recommendations, it seems, are to be accepted and acted upon…

O’DWYER: That’s correct.

FAINE: The main ones. Take us through them quickly.

O’DWYER: The main ones are stronger enforcement of the existing rules – which is going to be enhanced by transferring responsibility for foreign investment in residential real estate applications from the Foreign Investment Review Board, that had done a very poor job of enforcement, to the Australian Taxation Office. We’re putting in place stronger criminal penalties for those who breach the rules, including higher fines and higher terms of imprisonment. We’re bringing into effect new civil penalties to ensure that those who breach the rules do not profit from their illegal purchase and new applications fees so that we have a user pay system instead of the Australian Taxpayer funding the system that exists at the moment.

FAINE: The application fees, by definition, apply to foreign investors and are they set at a level where they are effectively acting as a de facto tax?

O’DWYER: No they’re not. These application fees are fees in order to be screened through the Foreign Investment Review Board process. They’re fees that will also go into ensure that we have the right team in place in the Australian Taxation Office, a team that starts as of today. We’ve already got 30 people in the ATO ready to act on audit and compliance activities today, and what they’ll be doing is they will not only be looking prospectively at purchases that do happen, but they will be looking at purchases that have happened to check whether or not they are in compliance with our foreign investment framework, which means it is going to be comprehensive. They are using their data matching sources, they’ve got very sophisticated data matching equipment. They’re going to start data matching now with Border and Immigration and also AUSTRAC which tracks all of the money that comes in and out of Australia. Our message is to those people who breach the law – you will be caught if you do not come forward. You will be caught because we are putting in place the systems that mean we are serious about making sure that the laws are complied with.

FAINE: State Government in the Budget tomorrow are announcing a new Stamp Duty rate for foreign investors. It’s said to raise somewhere around $300 million a year for the State Government. Is that consistent with what you’ve recommended? Do you agree with it?

O’DWYER: We have put in place an administrative fee, they’re talking about new taxes. It would be very interesting to know whether or not they have done any analysis whatsoever on what impact this might have. Whether there has been any consultation. We went through an extensive period of consultation before bringing into place our new rules and that’s something that we believe is important – to make sure that there are no unintended consequences.

FAINE: Do you support the differential, the Stamp Duty difference, for foreign investors as a way of levelling the playing field – well is it levelling the playing field?

O’DWYER: The question’s not so much for me Jon but the question is actually more for the Federal Labor Party because they’ve got two completely different positions. The Federal Labor Party said that the administrative fee that we were putting in place was going to have a dramatic impact on foreign investment into Australia. We heard that from Chris Bowen, we heard that from Penny Wong and we heard that from the Deputy Chair of the Economics Committee, Ed Husic. They said that that would have an impact – just the modest administrative fee we were putting in place. That’s completely in conflict with what the Treasurer Tim Pallas has done, so I’d like to know what their position is…

FAINE: I’m happy to ask them but you haven’t answered my question of what you think.

O’DWYER: I think that the Labor Party can defend their own position.

FAINE: But do you think this is a fair thing or not?

O’DWYER: I would ask the question as to whether in fact they’ve had proper legal advice as to whether it is going to be in conflict with our international obligations and I’d want to know the answer to some of those questions before giving you a perspective.

FAINE: So you won’t answer my question because you want to get some advice?

O’DWYER: No, I simply would want to know the answer to those questions before giving you a point of view. I’m not going to give you point of view on the fly Jon.

FAINE: I guess you can say whether it’s right or wrong that people who are non-resident pay more than people who are residents of Australia. That’s a simple in principle, well yes I think it’s right or no I don’t, I mean if you don’t want to answer it I understand, I just thought I’d clarify, there’s no reason you can’t.

O’DWYER: I’ve explained my position to you Jon.

FAINE: Ok. I’ll move on and thank you indeed. Kelly O’Dwyer. Parliamentary Secretary to the Treasurer.