FAINE:
Kelly O’Dwyer good morning to you.
MINISTER O’DWYER:
Good morning Jon.
FAINE:
A $5 million house in Hawthorn, what was wrong with the process by which the Chinese gentleman who bought it – by which he acquired it?
MINISTER O’DWYER:
He was one of seven people who are being forced to sell their properties because they have not complied with the foreign investment framework.
FAINE:
In what way?
MINISTER O’DWYER:
We’ve got very clear rules that you are not able to, as a non-resident foreigner, purchase existing or established homes. That’s a very clear rule and if you are in breach of those rules you cannot own the property and the Government can force its sale. We have been very serious about forcing the sale of those properties. Currently there have been 19 properties that we have sold in breach of our foreign investment framework – that’s since we have come to office. That compares with zero during the previous government. We have also strengthened the laws. It is not just $5 million properties that we are talking about here, we are talking about properties from the value of about $152,000 right up to $39 million.
FAINE:
When you say you’ve sold them, as I understand it you’re forcing them to sell them?
MINISTER O’DWYER:
That’s correct. We force the sale of those properties. We order the sale, we divest those people of their properties which have not been purchased in compliance with our foreign investment framework.
FAINE:
So is this the tip of the iceberg stuff or do you think you’re across all the improperly obtained property?
MINISTER O’DWYER:
We certainly know that there is a lot more work to do which is why we have changed the compliance from the Foreign Investment Review Board in investigating those activities to the Australian Taxation Office and we have given them additional powers. They are able to now do sophisticated data matching with Border and Immigration and their data, and AUSTRAC data, with the Foreign Investment Review Board data and we’re getting a much more complete picture about who is compliant with our laws and who isn’t, and we are putting together a national register so we can have an evidence based discussion about who owns what in Australia rather than one by anecdote.
FAINE:
Ok. I understand there is a booming business in getting around this by using Australian trustees and nominees to do your buying for you.
MINISTER O’DWYER:
Well you can’t do it. It’s simply not compliant with the law…
FAINE:
… Well it’s happening.
MINISTER O’DWYER:
…and we are saying to people very clearly if you are in breach of those laws the Government…
FAINE:
…the law doesn’t keep up with the avoidance as we’ve seen with tax for instance.
MINISTER O’DWYER:
No, they are not compliant with the law if that is what they are doing and we will come after them. The penalties are much more severe as a result of the legislation that we are putting through the Parliament, criminal penalties…
FAINE:
… So an accountant or lawyer buys property on behalf of someone else, there are interlocking partnerships or directorships or loans or trustee arrangements. There’s lots of ways of structuring it. There’s no way you can keep track of all of those.
MINISTER O’DWYER:
If the beneficial owner is a non-resident foreign investor and they’ve purchased an established property, they are in breach of the laws…
FAINE:
But the point is that there is no way you can investigate every purchase…
MINISTER O’DWYER:
I’ll tell you one of the ways that we can do that and under the previous government there was no law for third parties who knowingly induced people to breach the foreign investment framework. There was no penalty at all for those people whether they be migration agents, lawyers or any other sort of agent. We are introducing penalties for those people now so they will have both criminal and civil penalties which will apply to them. We are putting them on notice that the Australian Taxation Office will be coming to your offices and looking at your books to see whether or not you are compliant. With our data matching at the moment we are able to build up a very good picture of where there are strange activities going on so we put them on notice. We are serious about this, if you have got laws you need to enforce them and we have also strengthened those laws to make sure that people who are breaching our framework won’t be able to do that.
FAINE:
Alright. Let’s see whether or not that actually does in fact happen. Thank you for your time this morning. Kelly O’Dwyer, Assistant Treasurer, Minister for Small Business and the Member of Parliament for the seat of Higgins.