Jim Chalmers (Rankin, Australian Labor Party, Shadow Parliamentary Secretary to the Leader of the Opposition) Share this | Link to this | Hansard source

I rise to speak on the report of the Standing Committee on Economics entitled Report on foreign investment in residential real estate.I want to begin by thanking all of the committee staff who did their characteristically good job in supporting the work of the committee. I also want to thank all of the witnesses who made themselves available so that colleagues on the economics committee could get to the bottom of what is a very sensitive topic and what is a very sensitive area of public policy, because there are perceptions in the community about foreign investment in real estate which in many instances dwarf the reality of the incidence of foreign investment in real estate. At times, unfortunately, those perceptions are fed in a not particularly constructive way by small sections of the media and, as a consequence, the downside of foreign investment in residential real estate is often emphasised or exaggerated at the cost of a proper, robust debate about an important issue.

Of course there are some downsides to the foreign investment regime as it applies to foreign investment in real estate , an d we should be very conscious of those an d do what we can to close down any loopholes or fix any problems , but it is my view that the benefits of foreign investment in residential real estate are underappreciated. It is clear that foreign investment in real estate boosts housing stock, not just for foreigners but for the broader Australian community. It is also very clear that one of the thing s that is often said about foreign investment in real estate is that it competes with first home buyers and that it also pushes up prices. That is not particularly true. There is a lot of evidence that foreign buyers are not competing in the same specific markets as those of many Australian first home buyers.

When it comes to the report, I support the bulk of the recommendation s, especially those which go to beefing up compliance activity , tougher penalties , better data collection and closer collaboration between different levels of government an d also between agencies within a level of government , particularly federally. There are issues that need to be addressed in the foreign investment regime , and some of the recommendation s are a step in the right direction.

We have not issued a dissenting report , though we do have concerns and, in some cases , substantial concerns with some of the recommendation s . The member for Chifley , who is also the deputy chair of the committee , has gone through some of those concern s, an d so I do not intend to repeat them here in my own brief remarks. What I would like to do is to focus briefly on attacks made by the chair of the committee on the people of the Foreign Investment Review Board , particularly it s chair , Brian Wilson. Unfortunately , t he chair of the committee has been attacking Brian Wilson throughout the process, whether it be through the media or whether it be at various speaking opportunities around the country. My view is that you can say what you want about the resourcing of the FIRB or the laws and regulation s which it operates un der, but it is disgraceful to slur a fine Australian who is a key part of the economic architecture of this country and who was very helpful to the committee ' s deliberations as well. It says a lot about the chair of the committee that she treats someone of the calibre of Brian Wilson as another opportunity to grab attent ion for herself for the purpose of her own political advancement. I have far more confidence in the chair of the FIRB than I have in the chair of the economics committee. I suspect anyone who has dealt with them both would have a similar view. Her behaviour throughout this process has left a lot to be desired. She has constantly gone for the cheap headline, a sneaky leak or a character assessment over proper efforts to get to the bottom of a difficult issue in a way that benefits the nation.

The member for Higgins, the chair of the committee, ought to know that the chair of the Foreign Investment Review Board does not determine the resourcing of that body and does not determine the Treasury resourcing. So to blame him for any holes in the foreign investment regime is petty ; it is pathetic. What makes it worse is the silence of the Treasurer during all of this slurring of the FIRB chair. The FIRB is a responsibility of the Treasurer , yet , while the member for Higgins goes around the country bagging a fine pers on, the Treasurer remains mute. What kind of treasurer leaves one of the key people in his own portfolio undefended like that? It is important that not only the Treasurer's silence but also the member for Higgins's behaviour is put on the parliamentary record.

As I said before, we acknowledge the gaps in the FIRB framework, and we can either support or at least live with many of the recommendations of the report. We have also outlined where our concerns are. What we cannot cop are the gutless and attention-seeking attacks on the Foreign Investment Review Board's people, and the equally gutless failure of the Treasurer of the nation to speak up on their behalf.

Matt Thistlethwaite (Kingsford Smith, Australian Labor Party, Shadow Parliamentary Secretary for Foreign Affairs) Share this | Link to this | Hansard source

I was pleased to participate in this very important inquiry of the economics committee. Housing affordability is a very serious issue affecting families and first-home buyers in my community. I cannot count the number of times that I have heard concerns from parents about their kids being unable to afford to buy a property in our community to live in, and about their kids being forced to move away from family, friends and those important social networks that really define who we are as human beings and how we live our lives. That is why I became involved in this inquiry. That is why I was pleased to not only hear of the experiences of Australians in respect of this issue but also—importantly—to hear from some experts who have spent a degree of time analysing this issue, and who have made some very good recommendations to the committee in respect of the issue of foreign investment in our property market. I would also like to thank constituents and members of the Kingsford Smith community who contacted me and gave me their views regarding this important issue. Throughout this inquiry, I have tried to take up all of those issues, raised by the constituents that contacted me, with the various witnesses and authorities that appeared before the committee during the inquiry.

There are many factors that affect housing affordability in Australia. They range from cultural issues—the Australian aspiration for a quarter-acre block with a backyard is something that is peculiar to our nation, and does affect the way we live and the sorts of properties that we purchase—to state infrastructure levies, which can have an effect on supply; and even to the way our cities have developed, and the fact that most of us live on the coastline—all of these things feed into housing prices in Australia. We have had a dramatic increase in housing prices in Australia over recent decades, which has created a lot of passion within our community and, unfortunately, a lot of misunderstanding about the way the system works. I think it is worth highlighting the evidence presented during the inquiry about the way the system actually works—because most Australians would not have an appreciation for the way our foreign investment system works with respect to purchasers of domestic residential housing.

Firstly, the evidence found that foreign investment is not distorting the market for first-home buyers in Australia. Generally, the evidence given to the committee indicated that first-home buyers do not compete with foreign investors; first-home buyers tend to buy established homes, particularly in the unit market. They tend to buy established homes at the lower end of the market, for understandable reasons. We need to understand and comprehend the foreign investment market and how that works, and indeed the restrictions on foreign investment in real estate in Australia. Under our current regime, foreign buyers are prohibited from purchasing existing residential property in Australia. They may only purchase 'off the plan', if you like, or new development. The aim of that policy is to encourage the construction industry in Australia to grow, to create jobs through investment, and for us to increase our housing stock. Generally, this system has worked. The committee does not recommend a change to that system.

There has been pressure on the housing market, but it is generally not related to that system. It is purely an issue of supply and demand and supply being delayed in catching up with demand, which has been quite hot in Australia over recent decades. The foreign investors may add pressure, the committee found, to the new development market, to new developments of housing stock, and in some cases in high-end developments and high-end purchases. The evidence of this is particularly acute around educational institutions such as universities. In my community, the University of New South Wales is a big attracter of foreign students, so naturally there is pressure from foreign investors on new housing developments around that area.

What is important, the committee found, is ensuring that the system works well and ensuring that the system is being enforced. There was evidence presented before the committee that that may not be the case. The recommendations deal with that in terms of strengthening the civil penalty regime for breaches of foreign investment framework, criminal penalties for third parties who knowingly assist foreigners to breach the framework and strengthening the divestment regime for temporary residents found to have purchased established properties against the rules. They are all recommendations that I support.

In terms of information, ensuring, on the national land titles register, greater coordination between the Department of Immigration and FIRB with respect to temporary residents departing Australia is a recommendation that I also support. Recommendation 10—that the government amend the Foreign Acquisitions and Takeovers Act to provide that residential properties sold off the plan and marketed solely for sale overseas—is something that I definitely support. I was contacted by constituents who advised me that residential developments in our community had been solely advertised, in their view, to overseas markets, and Australians were prohibited from even getting a look in. That is a question that I put to the FIRB: was there any evidence of that occurring in Australia? The answer that came back from the FIRB was that that is not occurring. It would be a breach of the rules. So recommendation 10—to ensure that that is enforced—is something that I support.

Recommendation 3 is for a modest administrative fee to apply to the current screening of all foreign purchases of residential real estate by temporary residents. This is something that we believe caution should be applied to. It needs to be assessed in terms of outcomes. Firstly, there are no fees for reviews by the Foreign Investment Review Board into takeovers, company acquisitions, share buys or indeed purchases of land, particularly agricultural land, as it stands at the moment. So this would be a new fee for the operation of FIRB. That is something that I think needs to be looked at in the broader foreign investment landscape, because it could be argued that such a fee would be protectionist. It would be increasing barriers to foreign investment in Australia. The other issue is: we need to look at whether or not other jurisdictions throughout the world apply similar fees. We do not want to be pricing ourselves out of the market. It is well and good when the property market is hot and there is a demand, but what happens if that demand falls off? Are we providing a disincentive for people to invest in our property market and construction in Australia, at a disadvantage to other nations?

Finally, I thank the committee secretariat and all those who made submissions to the committee. It was a very worthwhile undertaking. I pay tribute to those involved in the inquiry.

Debate adjourned.