Andrew Leigh (Fenner, Australian Labor Party, Shadow Assistant Treasurer) Share this | Link to this | Hansard source

Foreign investment over the last two centuries has been important to Australia's economic prosperity. In the 19th century, foreign investment helped to build our wool industry. In 1855, CSR's investment helped to build the sugar industry. In 1877, we saw the United States firm Schweppes set up in Australia, followed by Kraft and Kellogg's. Indeed, Kraft's purchase of Vegemite in 1935 probably helped make that product the success story that it is.

There have, of course, been periodic controversies over foreign investment: the role of the Vestey family; the controversy over the withdrawal of foreign investment from Adelaide, with the former Treasurer, the then member for North Sydney, goading Holden to 'put up or pack up'. We have seen, under this government, a somewhat schizophrenic attitude to foreign investment. They continue to occasionally speak up about the benefits of foreign investment. But then, when Archer Daniels Midland made their bid for GrainCorp, for the first time a major United States foreign investment bid was blocked by then Treasurer Hockey. Australia's rules around foreign investment, compared to the OECD, are relatively restrictive. One index of foreign investment compiled by the OECD ranks Australia as the fifth most restrictive jurisdiction within the OECD for foreign investment.

This bill streamlines fees for foreign investment and Labor will be supporting the bill. It modifies a series of fee increases due to indexation, it creates new fee tier structures and there is some simplification of existing fee tier structures. The government claims that these changes will better align fees payable with consideration paid for the relevant acquisition. The government also claims that differing fees for different transaction categories have created complexities and caused delay in ascertaining the correct fee. For example, some acquisitions, such as agricultural land, are subject to multiple-tiered fees while others, such as business acquisitions or the acquisition of a mining or production tenement, are subject to flatter fee tiers.

The government notes in the explanatory memorandum that a number of low-value transactions are subject to fees disproportionate to the value of the transaction. The explanatory memorandum to the bill further states that amendments to streamline and simplify the commercial fee framework will not apply to the framework for residential property. But there are amendments that increase residential property fees, said to fund the implementation of the Critical Infrastructure Centre. Overall, the changes are broadly revenue neutral, with the cost to revenue of around $400,000 over the forward estimates.

While Labor supports this bill as it is somewhat of a simplification of foreign investment fees, we note that the government's history in this area has been one of increasing complexity. I spoke in this place on 16 September 2015 about the Foreign Acquisitions and Takeovers Legislation Amendment Bill, a bill which, as Senator Wong pointed out, had an exposure draft and regulations accounting for more than 170 pages and a 105-page explanatory guide. Indeed, one of the Minister for Trade's own investment specialists said:

… the new fees have fuelled the narrative around Australia being a high-cost destination to invest in.

The Office of Best Practice Regulation noted of that bill that the new red-tape burden that was being imposed by the government had been imposed without proper assessment of the regulatory burden. That is why those changes were criticised by the Business Council of Australia, the National Farmers' Federation, the Food and Grocery Council, the Queensland Farmers Federation and the Chamber of Commerce and Industry of Western Australian.

The government still maintains a plethora of screening thresholds—some 22 different screening thresholds, differing according to value and type of investment and the nationality of the investor—and 33 different levels and categories of application fees. This bill simplifies those application fees somewhat, but it does not simplify the differences in screening thresholds, which see, for example, a half a million dollar investment requiring scrutiny if it is to come in under one nationality but not under another. That level of inconsistency across our foreign investment laws does little to provide the reassurance that Australians seek that foreign investment is in the national interest. Australia has traditionally been a net importer of capital. It is what has allowed us over much of the past two and quarter centuries to consistently do more investment in Australia than our national savings would allow. Were foreign investment to dry up, Australians would have to consume less or invest less, and neither are those are choices that a capital-hungry nation seems eager to make.

If we are to have a better debate around foreign investment, it is important that we have greater transparency. The Deputy Prime Minister promised a transparent register of agricultural land but has delivered instead a collection of statistics on agricultural land. The government's plethora of screening thresholds and their willingness to turn away a United States foreign investment bid in GrainCorp have indeed raised concerns.

While we on this side of the House do support this modest simplification measure, we believe that there is more that can be done to ensure that the protections around foreign investments on issues of national security and other matters of national interest are protected and that there is not an unnecessary regulatory burden. Unnecessary regulatory burden does nothing to support Australian interests and does too much to increase the cost of investment for foreigners. As we increase the cost of those investments through unnecessary red tape, invariably we decrease the quantity of investment in Australia. Foreign investment has the potential to significantly boost Australian living standards and it is through that prism that Labor supports this bill.

Luke Howarth (Petrie, Liberal Party) Share this | Link to this | Hansard source

We live in the best country in the world and, as a nation, we are very blessed and we are generous. Australians are welcoming and our country is rich in opportunity. It comes as no surprise, then, that we attract significant foreign investment. I spoke last week on foreign resident capital gains withholding payments and I emphasised that the very things that make this country so great are the same things this government is working to protect: improved health care so that we live happy, healthier lives and can be confident that the health system has the back of Australians and their families; increased funding for schools so that every Australian child gets the best educational start possible; investment in infrastructure to connect communities with opportunity and ensure safe and efficient movement whether by road, rail or runway; a comprehensive solution and a budget repair so that Labor's big fat debt accumulated through decade of deficits does not weigh on the smallest of shoulders—our children and the generations to come; and hope, purpose and productivity as a result of our commitment to boosting jobs, driving growth, backing workers and the businesses of course that employ them.

I am pleased to speak on the Foreign Acquisitions and Takeovers Fees Imposition Amendment (Fee Streamlining and Other Measures) Bill 2017. The coalition government recognises that foreign investment can advance Australia's position as long as it is consistent with our national interest. Foreign investment has the potential to strengthen Australia's economy, create new jobs and unlock innovation, and it affords reciprocal investment, importantly—opportunities for Australians wishing to invest offshore. But the coalition government will always put Australians and their families first. Foreign investment demands an attentive eye and a firm hand because—well, let's call a spade a spade—on the ground in my electorate of Petrie foreign investment is unpopular. I think of the Kidman cattle station that was recently for sale. I had many emails and people contacting my electorate office in relation to the Kidman cattle station sale saying that they wanted it to remain in Australian hands. I passed that on to the Treasurer and other people, as a good local member should do. In the end, it was sold to an Australian with the majority share and partly overseas owned. But this is just one example.

If I look over my time in parliament, I have had constituents contact me about a dairy farm in Tasmania that was sold. It turns out that it was being sold to Chinese investors but that it had been previously owned by New Zealanders for several decades. When I spoke to the Tasmanian members on our side of the House in the last parliament about that issue, they said that the investors were actually investing in new equipment and upgrading machinery, and that it would create a lot more jobs that were so desperately needed in Tasmania. So there are always two sides to the story. The Darwin port is another example of what state governments and territories can do in relation to foreign investment. When the Darwin port was leased that was also extremely unpopular in my electorate. Go further back and you can look at Cubbie Station that was sold under previous governments.

There are those opposite, like the member for Fenner and others, who say that they support foreign investment. It also does not help when you have unions, like the CFMEU, before the last election running campaigns against the Australia-China Free Trade Agreement. They called into my electorate and others saying how bad this would be for the nation. So those opposite should not come into this place and say that this is great and then turn a blind eye to what their financial backers are doing in relation to sound policy to produce jobs locally. But I do stick up for my electorate and I do pass on this.

The coalition government is reforming Australia's foreign investment framework to better balance much-needed investment with appropriate safeguards, including stronger enforcement, stricter penalties and increased scrutiny. This foreign acquisitions and takeovers fees imposition amendment bill builds on the coalition government's commitment to Australians. It supports good investment and implements a more efficient and streamlined foreign investment fee framework, amending the Foreign Acquisitions and Takeovers Fees Imposition Act and reducing red tape.

The amended fee framework will simplify the regulatory burden on business and support efficiency, reducing the number of fee tiers for some categories and implementing a standard fee for low-, medium- and high-value acquisitions. Changes to Australia's foreign investment framework are not made with the intention to either encourage or discourage any particular investment category. Instead, they are made to ensure fees payable for the privilege of investing in our nation are applied more consistently on a like-for-like basis right across the board.

These changes are timely. They stem from listening and reflect community concern about a lack of compliance and enforcement of the foreign investment framework. As I said earlier, concerns about who is investing, what and where have been increasing, particularly with regard to foreign investment in residential real estate and its impact on the affordability of housing for Australians. Our foreign investment policy for residential real estate is designed to increase Australia's housing stock. The federal government has acted in guarding the overall integrity of that framework. For example, changes to the foreign resident capital gains withholding payments provisions bolster affordability, including limiting foreign ownership in new developments and charging foreign owners who leave their residential properties vacant. This has the positive effect of boosting available rental stock without compromising affordable ownership or driving up market prices.

The foreign resident capital gains withholding payments provisions are one way we are safeguarding affordable housing and supporting Australians to achieve their goals. The provisions include an annual charge that will be imposed on foreign owners of residential properties if the property is not occupied or available to rent for at least six months in each year. This discourages foreign investors from buying Australian homes and letting them sit vacant. The charge provides an incentive for the foreign owner to make their property available on the rental market if they do not intend to live there, increasing homes available to Australians who wish to rent.

Foreign investment is understandably an issue of concern to Australians. Without appropriate regulation and oversight it has the potential to negatively impact our lives and our livelihoods. I am very proud to be part of this Australian government that is protecting Australians and their families by protecting the interests of our nation, Australia. Our commitment to this can be seen across a range of portfolios, and our integrity is demonstrated in the consistency of intent that underpins reform.

We are cracking down on multinational tax avoidance by way of some of the strictest laws and practices in the world. Increased compliance and the introduction of new laws cracking down on unscrupulous behaviour will ensure multinational companies also pay their fair share. It is what we ask of each other, and we certainly expect no less when it comes to multinationals that benefit from access to the Australian market. We are keeping the Australian dream alive by ensuring that foreign investors who wish to acquire Australian residential property comply with our stringent capital gains tax rules, as outlined earlier.

With this bill the coalition government are reducing complexity, achieving more equitable fee outcomes and minimising the regulatory burden for stakeholders. Above all, we are protecting the interests of Australians and our nation, taking a strategic and considered approach to guard the future of Australians to come.

Keith Pitt (Hinkler, National Party, Assistant Minister for Trade, Tourism and Investment) Share this | Link to this | Hansard source

Firstly, I thank those members who have contributed to this debate.

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

Both of them!

Keith Pitt (Hinkler, National Party, Assistant Minister for Trade, Tourism and Investment) Share this | Link to this | Hansard source

Absolutely—both of them. This bill amends the Foreign Acquisitions and Takeovers Fees Imposition Amendment (Fee Streamlining and Other Measures) Bill 2017 to implement a streamlined and simplified foreign investment fee framework. This bill gives effect, in part, to regulatory reforms that the government is undertaking to ensure Australia's foreign investment framework is robust and operates efficiently. The amended fee framework will reduce complexity, achieve more equitable fee outcomes and minimise the regulatory burden on stakeholders. The streamlining changes are broadly revenue neutral, ensuring that foreign investors continue to meet the costs of funding the system.

The fee framework will reduce the number of fee tiers for some categories and implement a standard fee for low-, medium- and high-value acquisitions. The new fee structure will also legislate more existing discretionary fee waiver arrangements to provide a more transparent and consistent approach. The changes to the framework are not intended to encourage or discourage any specific investment category and, instead, aim to ensure fees payable for different investment categories are applied on a more consistent basis for like transactions. The bill will also introduce a 10 per cent fee increase for residential property applications to fund the establishment of the Critical Infrastructure Centre. I commend the bill to the House.

Question agreed to.

Bill read a second time.