18 March 2016

Critical asset sales to fall within foreign review net

The Turnbull Government has further bolstered Australia’s foreign investment rules after securing State and Territory support to amend the Foreign Acquisitions and Takeovers Regulation, so that for the first time the Foreign Investment Review Board (FIRB) shall assess the sale of critical state-owned infrastructure assets to private foreign investors.

“The Turnbull Government is committed to strengthening our foreign investment framework. While we welcome foreign investment in Australia it is imperative that critical infrastructure sales are scrutinised to ensure any potential national security risks can be addressed,” Treasurer Morrison said.

“These new measures reflect the Turnbull Government’s policy to be open, transparent and sovereign in foreign investment decisions.

“From 31 March this year, the FIRB will formally review critical infrastructure assets sold by State and Territory governments. While governments can, and do, work cooperatively with the Commonwealth when selling such assets, the proposed change will formalise the process and ensure future sales of critical infrastructure to privately owned investors are properly scrutinised.

“Under current rules, which have not been amended by previous governments, FIRB assessment of critical infrastructure was only required when assets were sold to state-owned enterprises.

“Foreign investment is an important source of capital to build the infrastructure that Australia needs and the Government recognizes that this investment can provide access to funds to restore and enhance ageing infrastructure networks and assets. But the Government recognizes this investment should occur on our terms, must be appropriately scrutinized and not be contrary to the national interest.

“Critical infrastructure assets now subject to formal review when sold will include: public infrastructure (an airport or airport site; a port; infrastructure for public transport; electricity, gas, water and sewerage systems); existing and proposed roads, railways, inter-modal transfer facilities that are part of the National Land Transport Network or are designated by a State or Territory government as significant or controlled by the Government; telecommunications infrastructure; and nuclear facilities.

“These changes add to the strengthened framework the Government has already enacted, including:

  • Formal requirements on foreign investment applications to ensure multinational companies investing in Australia pay tax here on what they earn;
  • Greater compliance powers for the Australian Taxation Office and strict new penalties for those caught breaking the rules;
  • A new agricultural land foreign ownership register and reduction of the screening threshold for proposed foreign purchases of agricultural land by private investors to $15 million;
  • FIRB screening of direct interests in agribusinesses valued at $55 million or more;
  • The appointment of Mr David Irvine (a former Director General of both the Australian Security Intelligence Organisation and the Australian Secret Intelligence Service) to the FIRB, bolstering the Board’s ability to advise on national security issues;
  • Forced sales of 27 properties, worth more than $76 million, illegally acquired by foreign nationals.

“The Government is delivering on its commitment to strengthen the foreign investment system. The Australian community can be confident that, under the Turnbull Government, foreign investment proposals will not be contrary to the national interest.

“I thank the States and Territories for their co-operation in the formulation of this strengthened framework and look forward to closely working with my colleagues on these issues in the future,” Treasurer Morrison said.