Chris Hayes (Fowler, Australian Labor Party) Share this | Hansard source

The member for Herbert is right: we are very much living in a globalised world. As a consequence of that, part of the challenge is how we structure foreign investment in this country to the point that it does not jeopardise our sovereignty or the deployment of internal wealth to the detriment of Australian citizens. For some time now, I think governments of both political persuasions have been tempted to work towards ensuring that there is opportunity for foreign investment in this country. The influx of capital is something that goes very much to increasing the supply of jobs and is a catalyst for construction and most other services that we come to rely upon.

In this highly globalised world we need to seize the opportunity of foreign investment but also safeguard our national interest when it comes to the increased trade and investment across international borders. It is important that we strike a balance—and get it right—between welcoming foreign investment and ensuring that we are not compromising our national interest. Reducing red tape and ensuring greater certainty for investors are aspects of that equation, and we certainly see those covered in the bills before us today.

The three bills before the House, the Foreign Acquisitions and Takeovers Legislation Amendment Bill 2015, the Foreign Acquisitions and Takeovers Fees Imposition Bill 2015 and the Register of Foreign Ownership of Agricultural Land Bill 2015, make changes to Australia's foreign investment framework and update and modernise the system to cater for increased levels of foreign investment in Australia. The Foreign Acquisitions and Takeovers Legislation Amendment Bill 2015 makes necessary amendments to the Foreign Acquisitions and Takeovers Act to modernise the rules and to strengthen the enforcement capabilities in our foreign investment system. The Foreign Acquisitions and Takeovers Fees Imposition Bill 2015 introduces fees on foreign investment applications to ensure that Australian taxpayers are not footing the bill when it comes to the processing and administrative side of foreign investment applications.

The Register of Foreign Ownership of Agriculture Land Bill 2015—and I note that the minister is at the table—establishes the register of foreign investment ownership for agricultural lands to be operated by the ATO, so that we have greater transparency regarding the level of foreign ownership of agricultural lands in this country. That is certainly not something that is being demanded by people I represent but, when I read the papers, I see that there is a broad range of people who believe it is absolutely essential that we have at least a registry of foreign ownership of agricultural lands to ensure and preserve the sovereignty of agricultural land ownership in this country.

As I stated earlier, one of the main aims of this package of bills is to strengthen Australia's foreign investment framework. One of the methods by which that will be achieved will be through the introduction of fees on various foreign investment applications. These fees will ensure that the Australian taxpayer will no longer be footing the bill for the cost of processing, the cost of administration and, indeed the cost of enforcement of matters associated with foreign investment. Some of these fees include $5,000 for purchasing an established residential agricultural dwelling worth $1 million or less. Higher fees will apply for purchases of more expensive properties, commercial real estate and business applications.

These new fees on foreign investment applications will go very much towards lending greater resources to Treasury and, in particular, to the Australian Taxation Office to improve the service delivery for investors. It is estimated there will be in the vicinity of $735 million of increased revenue over the forward estimates and that will be hypothecated in respect to the Australian tax office for the specific purpose of administration, process and enforcement.

It is also important that this is not just seen as a raising of critical revenue but it is actually seen as the money that will in fact be hypothecated towards administration and enforcement of the new rules applying to foreign investors. Therefore, those activities will no longer be considered a tax burden against Australian taxpayers. Nevertheless, we do have to be careful not to see this as changing the foreign investment system in this country. It is certainly not the panacea, in my opinion, for reducing house prices or increasing housing affordability in various parts of Australia. The peak housing bodies, including the Property Council of Australia, have seriously questioned the effect these new fees could have on housing affordability. They have even suggested the prospect of having a negative impact on the supply and therefore on housing affordability generally, leading to increased housing prices.

There is much good that will come from foreign investment, as I said at the outset, particularly in areas of real estate and as it applies then to construction, increasing the supply of new dwellings—housing, home units et cetera. I understand that governments, federal as well as state, are under pressure and have been for some time in respect to the sustainability of property prices in Sydney and Melbourne. But there are certainly serious questions as to whether scaring off foreign investors would make it easier for a first-home buyer to purchase in the market in Sydney. My view is that this is not going to have an impact on that.

If you think about the recent tabloid coverage of the forced sale of the Point Piper mansion which was purchased by foreign investor, I do not think that is going to have any impact on people in my electorate when they are lining up to buy their first property. I do not think that is going to have an impact on the average home buyer in Sydney or Melbourne.

The bills before us also introduce charges to deal with noncompliance in foreign investment, introducing civil penalties and additional and more stricter criminal penalties to ensure that foreign investors and their intermediaries do not profit inappropriately from breaking our laws. Currently the maximum penalty that can be applied under the act is a fine of $90,000 or a two-year imprisonment or, in some cases, both. But the criminal penalties will be increased to $135,000 for an individual, supplemented by civil pecuniary penalties for less serious breaches of the real estate law.

Since these charges are relatively new, it is only right that we are allowing foreign investors the ability to self-report noncompliance. In those instances, they will face significantly reduced penalties and that process is quarantined for a limited period of time. The new compliance penalties will match the damage that the noncompliance poses to Australia. Clearly the penalties will be in line with the severity of the offence but they will ensure that those who commit and break the rules certainly do not profit from their activities. The charges also affect third parties that are often involved in foreign investment including real estate agents, conveyancers and migration agents. The third parties will now be subject to civil and criminal penalties in cases where they knowingly assist a breach of the rule which allows profits to be improperly made as a consequence of their action.

It is important that the ATO plays a more effective role through the new investment and compliance powers. It is an important aspect of this suite of bills in strengthening our foreign investment system. The ATO has the capacity to cover more than six million transactions each year through a sophisticated data-matching program. The additional revenue gained through these new fees proposed in the bill will help the ATO improve compliance and enforcement of the foreign acquisition rules themselves.

The act enables officers from the ATO to exercise broad-ranging investigative powers in addition to the Treasurer being able to require a person to give information and to produce documents on request in respect of those investigations. Transferring to the Australian Taxation Office responsibility for regulating foreign investment in residential real estate will enable stronger enforcement and better compliance with the rules.

One of the more contentious aspects of the bills before us is in the area of increased scrutiny and transparency for foreign investment in agriculture. The government propose a lowering of the screening threshold for foreign purchases of agricultural land from $252 million to $15 million. Clearly, they are less worried about the acquisitions taking place now in agricultural land than what was previously reflected in various well-reported articles in broadsheets, particularly last year.

Lowering the screening thresholds for investment in Australia's infrastructure, in particular the proposal to apply different thresholds for investment from different countries of origin, is of concern. We are concerned that the government is saying some countries are more entitled to invest in Australia than others. In this country, we should be moving to proper rules and enforcement regimes to encourage investment in this country as a whole.

This is additional red tape that may negatively impact on our relationship with our trading partners. Before coming to office, the government promised to reduce red tape. As a matter of fact, they have a bill before the parliament at the moment purporting to do just that. If they want to be honest about it, this suite of legislation actually imposes additional regulation, which is fine. But for some other areas of foreign investment, it will probably impose greater regulation than is necessary, particularly where we are going to have disproportionate rules applying to various countries in terms of their entitlement to invest in Australia.

As a whole, these reforms are supported by the opposition. We do so on the basis that it is streamlining compliance and enforcement regimes. It will be more understandable for foreign investors moving to invest in this country, and we are removing the burden from taxpayers in terms of financing the administration, compliance and costs associated with foreign investment.

On this side of politics, we understand and support foreign investment. We know that it is the catalyst to help this country grow, and the changes that will take effect as a result of this legislation will assist to attract a greater degree of foreign investment under a more sustainable international framework, and certainly a more understandable framework at that.

See this speech in context