Penny Wong (SA, Australian Labor Party, Minister for Finance and Deregulation) Share this | Link to this | Hansard source

I present government responses to committee reports as listed on today’s Order of Business. In accordance with the usual practice, I seek leave to incorporate the documents in Hansard.

Leave granted.

The documents read as follows—

Australian Government Response to the Senate Econom ics References Committee Report

"Foreign Investment by State-owned entities"

June 2011

Introduction

Foreign investment has been an important component of Australia's growth in the past and will continue to make a positive contribution to Australia's economic growth and prosperity in the future. This is because Australia's domestic savings are not sufficient to meet the demands of domestic business for investment funds. Foreign capital represents the necessary call on overseas resources that fill this gap. It contributes to our capacity to develop and improve living standards.

Foreign investment also brings additional benefits, including:

While foreign investment enters Australia in a variety of guises, the last few years have seen an increase in investments being made through sovereign wealth funds and state-owned enterprises (SOEs). This has sparked public and media interest.

The Government has investigated whether significant changes were required to Australia's foreign investment regime to appropriately deal with increasing flows of investments from SOEs and sovereign wealth funds. Our assessment was that Australia's existing regime was already well-placed to deal with any national interest concerns arising from such investments.

Nevertheless, the Government recognised that it has a role in assisting SOEs to better understand our foreign investment regime, as well as helping the Australian public understand the Govern­ment's approach to foreign investment from sovereign entities.

That is why in February 2008 the Government first published principles that are used when evaluating the national interest implications of foreign government related investments. These were updated and expanded in June 2010 when, as part of the release of the Government's Foreign Investment Policy, the Government explained the national interest considerations for all investment proposals to buy Australian businesses or companies. For foreign governments and related entities, these considerations emphasise independence and commerciality.

The Government appreciates that more work can be done to improve communication of our foreign investment policies. In that regard, we welcome the Senate Economics References Committee report on 'Foreign Investment by State-Owned Entities'.

The Australian Government has carefully considered the recommendations of the Committee's report and we have provided our response below.

MAJORITY REPORT

Recommendation 1 – The committee recommends that FIRB develop a more effective communication strategy to improve public understanding of the risks and benefits of foreign investment to Australia. This strategy should also provide additional information about how foreign investment decisions are made and provide information about the emergence of sovereign wealth funds and state-owned entities internationally.

The Australian Government agrees with this recommendation.

The Australian Government has asked the Foreign Investment Review Board (FIRB) to review and improve communication of Australia's Foreign Investment Policy. The first task that FIRB undertook was to draft an easy-to-read version of the Foreign Investment Policy for prospective investors. The Government released that new Policy on 30 June 2010.

This new Policy has been made available in other languages including Chinese, Japanese and Bahasa.

The Government has also asked FIRB to engage directly with embassies in Australia – as it has done from time to time – to explain how the Policy is applied. FIRB has also rolled out a new stakeholder awareness program to educate and disseminate information to individuals and organisations affected directly and indirectly by the Government's Foreign Investment Policy.

Recommendation 2 – The committee recommends that the Minister require FIRB to be more assiduous in producing a timely annual report.

The Australian Government agrees with this recommendation and has requested FIRB to prioritise the timely release of its annual report. The Government recognises the importance to the Australian public of releasing information on foreign investment applications and trends.

It has been the usual practice of FIRB to produce its annual report early in the following year. This allows time for all data to be compiled and rigorously checked for accuracy before it is released.

Recommendation 3 – The committee recommends that the government tighten the FATA legislation to deal with complex acquisitions where takeovers of smaller strategic assets may be masked by an application which, in total, does not represent more than 15 per cent, and therefore does not trigger review. The committee would like FIRB to give adequate consideration to the interaction between the various components of an acquisition.

The Government agrees in principle with this recommendation.

Related foreign investors cannot avoid screening by each buying small stakes (below 15 per cent) in an Australian company and using the total investment to wield control. This is because the existing 'associates' provision in the Foreign Acquisitions and Takeovers Act 1975 (the FATA) is already broad enough to ensure such activities are caught by the regime.

However, the Government was concerned that investors could use complex financial instruments to avoid the intended operation of the FATA. For that reason, the Government introduced the ForeignAcquisitions and Takeovers Amendment Act 2010 to remedy this matter.

This Act clarifies that convertible notes and similar instruments will be treated in a similar fashion to shareholdings for the purposes of the foreign investment regime. The Act has retrospective effect from 12 February 2009.

MINORITY REPORT

Recommendation 1 – A foreign government shall not use any corporate vehicle which they control to be allowed to purchase any strategic assets within Australia.

Further, for a non-state-owned entity, a related entity test will be applied so that different corporate entities with the same ultimate majority controlling influence represented by equity, debt or other mechanisms will be deemed as the one entity for assessment as to whether it will result in more than 10 per cent of control of any strategic asset market in Australia.

The Australian Government does not support this recommendation.

The Government is committed to a case-by-case examination of all foreign investment proposals. This approach ensures that Australia can maximise investment flows while protecting Australia's national interest.

The Government recognises that sovereign wealth funds and SOEs are increasingly a part of the global financial system. The Government notes that Australia has its own sovereign wealth fund. Reflecting this trend, the Government supports the efforts of the International Monetary Fund and the International Forum of Sovereign Wealth Funds to develop a set of voluntary, best-practice principles to maintain the free flow of cross border investment.

The Government applies a rigorous national interest test to allSOE investments. This is designed to examine whether SOE investments are transparent and commercial in manner and that investment and sales decisions are driven by market forces. Blanket bans on certain types of investment could risk unnecessary job losses and provoke retaliation against Australian investors overseas.

As outlined above, the 'associates' provision in the FATA prevents related foreign investors from avoiding screening by each buying stakes below 15 per cent in an Australian company and using the total investment to wield control.

Recommendation 2 – The Foreign Investment Board will be required to, as a point of consideration in its decision, assess whether Australia has reciprocal rights of investment in the proposer's country.

The Government notes this recommendation.

The Australian Government does not consider it appropriate to penalise foreign investors for the investment policies of their home country government. This would be inconsistent with Australia's international obligations, including with the Organisation for Economic Co-operation and Development (OECD), the World Trade Organization (WTO) and Australia's free trade agreement (FTA) commitments.

The role of the FATA is to provide for screening of incoming investment, it has no role in outwards investment. Assessment of the national interest could include such considerations but in general, reciprocity is not a useful guide to Australia's national interest.

However, the Australian Government will continue to advocate for foreign governments that have restrictive investment policies to liberalise their regimes for the benefit of Australian investors. We do this in a variety of ways, including through FTA negotiations, as FTAs cover a variety of issues including the investment regimes of each negotiating party.

Recommendation 3 – The Government must look to enact effective laws to prevent creeping acquisitions of Australian businesses and assets owned by state-owned entities.

The Government notes this recommendation.

The Australian Government already has laws in place to monitor 'creeping acquisitions' of Australian companies and businesses by foreign investors.

The FATA allows the Government to review any increase in ownership beyond 15 per cent of an Australian company or business valued above $231 million.

For investments by SOEs and other entities with links to foreign governments, the Foreign Investment Policy allows the Government to review any direct investments in Australian companies or businesses regardless of the value of the company or business. This includes investments that increase an existing stake.

Recommendation 4 – The Foreign Investment Review Board needs to provide clear criteria of what the 'national interest' test is and that abbreviated versions of FIRB advice to the Minister be tabled in both houses of Parliament.

Further, that the Government defines what it means by 'community interest' and 'common standards of business behaviour' and subject major investment proposals to rigorous public scrutiny to ensure that they meet genuine common standards of business behaviour.

The Government notes this recommendation.

In June 2010, the Australian Government published its Foreign Investment Policy, which explains the factors we consider when evaluating the national interest.

Specifically, the Government considers national security concerns, competition issues, the impact of the investment on Australia's revenue base and other policies, the impact of the investment on the Australian company, our economy and the broader community and the character of the investor. For foreign govern­ments and their related entities, the Government also looks for evidence of a commercial basis for the investment.

The Government takes seriously the commercial-in-confidence nature of the investment proposals that it receives. It is not appropriate for the Government to release potentially market sensitive information on behalf of investors. This would undermine investor confidence and risk Australia's standing as a desirable investment destination.

The Government will continue, however, to release a statement whenever it determines that a foreign investment proposal raises national interest concerns.

Recommendation 5 – That the human rights records of the country of state-owned entity seeking to invest in Australia be a key factor during consideration by the Foreign Investment Review Board. Similarly, that all foreign non-state-owned entities be subject to consideration of their other investment activities and whether these conflict with Australia's ethical positions.

The Government notes this recommendation.

The Australian Government does not consider it appropriate to hold investors accountable for actions taken by its home country government, except in limited circumstances where Australia maintains formal sanctions against that country.

However, if there is evidence that the investor itself has breached human rights or undertaken other unethical behaviour, such actions will be considered when determining if the investment would be contrary to Australia's national interest. This has always been the case.

Parliamentary Joint Standing Committee on Migration

Negotiating the Maze: Review of arrangements for overseas skills recognition, upgrading and licensing

Government response - June 2011

Please note that since the release of The Joint Standing Committee report, the Department of Immigration and Multicultural Affairs (DIMA) has been renamed the Department of Immigration and Citizenship (DIAC). Where recom­menda­tions require input from DIMA, responses have been provided by DIAC. Similarly, the Departments of Employment and Workplace Relations (DEWR) and Education, Science and Training (DEST) are following machinery of government changes now the Department of Education, Employment and Workplace Relations (DEEWR).

Recommendations and Responses

1 Overview

Recommendation 1

The Committee recommends that, as part of its long term research on migration outcomes, the Department of Immigration and Multicultural Affairs collect enhanced data on migrant utilisation of overseas qualifications and other indicators of the effectiveness of overseas skills recognition processes.

Government response

Accepted

The degree to which migrants utilise their overseas qualifications in the Australian labour market and the speed at which they do so are of critical importance, especially in the context of current skill shortages. The government also agrees that the monitoring of this process should continue and be enhanced.

Information on these issues has been collected by the Department of Immigration and Citizen­ship (DIAC) through the Longitudinal Surveys of Immigrants to Australia (LSIAs) and more recently the Continuous Survey of Australia’s Migrants (CSAM). These surveys measure the rate at which skilled migration principal applicants who have had their qualifications assessed are finding jobs related to their qualifications. This information is valuable in analysing the effectiveness of the skilled selection and assessment processes.

Response to recommendation 19 provided further, data from CSAM that suggests migrants who go through the skill recognition process have good skilled outcomes.

DIAC will continue to give careful con­sideration to incorporating other indicators of the effectiveness of overseas skills recognition processes in the CSAM including monitoring the experiences of migrants in negotiating the skill recognition processes. The information gathered in this way would then be used to help assess the effectiveness of the skill recognition processes and to improve them where necessary.

Recommendation 2

The Committee recommends that the fee charged for assessing Australian qualifications for the purpose of independent overseas student and skilled Australian sponsored visas (subclasses 880, 881 and 882) be waived, where that qualification is sufficient in and of itself to allow the applicant to qualify for their profession or trade.

Government response

Not accepted

One of the threshold criteria for the grant of a skilled migration visa is that the applicant has applied for an assessment of their skills for the skilled occupation they nominated in their application by a relevant assessing authority. This is a legislative requirement regardless of whether the applicant has obtained their qualifications in Australia or at an educational institution overseas. While the assessing authorities charge fees for skills assessment on a not-for-profit basis, the fees charged are at the discretion of the individual assessing authorities.

The Department of Education, Employment and Workplace Relations (DEEWR) undertakes to monitor each assessing authority annually, including looking at the fees they charge, the Government does not have a regulatory role in relation to fees charged for skills assessments and cannot direct the assessing authorities to charge differentially for skills assessments.

2 Policy coordination issues

Recommendation 3

The Committee recommends that the industry outreach officer network collect information on skills recognition barriers from an employer perspective, including feedback on delays, bridging requirements, work experience and other skills issues, and that the Department of Immigration and Multicultural Affairs incorporate this information into further policy development.

Government response

Accepted

DIAC has 13 Industry Outreach Officers (IOOs) working across 19 Industry groups on full time and part time placements.

The IOOs work with peak industry bodies to promote skilled entry mechanisms to employers. The IOOs meet with members and officers of the associations as part of their information delivery program.

The roles of the IOOs include reporting on difficulties that members have with the immigration arrangements. The feedback covers all aspects of the immigration requirements and may include difficulties with qualification assessments. The peak industry bodies and associations are also encouraged to bring these concerns to the Department’s attention directly.

The details of concerns and difficulties are discussed with the relevant assessing bodies or with the appropriate government agency.

Recommendation 4

The Committee recommends that the Department of Immigration and Multicultural Affairs and other stakeholders use the skills expos to provide clearer and more detailed information on overseas skills recognition processes to users, particularly licensing and registration requirements.

Government response

Accepted

Australia Needs Skills (ANS) expos form part of the overall promotional strategy for skilled migration undertaken by DIAC.

ANS expos are held overseas to facilitate opportunities for potential skilled migrants to meet with Australian employers including state and territory governments, with a focus on sponsorship opportunities.

ANS expos are highly targeted to attract skills in critical shortage. DIAC invites the attendance of relevant assessing authorities (eg Engineers Australia, the Nursing and Midwifery Council of Australia, CPA Australia and Vetassess). These bodies provide invaluable information on the skills recognition process to expo attendees.

DIAC is working in close consultation with state and territory governments to ensure the future expo program continues to be effective in targeting skills in need.

Recommendation 5

The Committee recommends that the Department of Immigration and Multicultural Affairs establish a mechanism to better capture information from the Migrant Resource Centres on the barriers faced by migrants in seeking skills recognition.

Government response

Accepted

DIAC has a close relationship with a range of settlement service providers, including Integrated Humanitarian Settlement Strategy contractors, Migrant Resource Centres and other settlement grant recipients. DIAC is in regular contact with these service providers to discuss ways of improving the settlement outcomes of newly arrived humanitarian entrants and family stream migrants. DIAC is happy to share any information on the barriers to getting skills recognition with DEEWR and other government agencies involved in assessing skills recognition.

Recommendation 6

The Committee recommends that the Department of Employment and Workplace Relations (DEWR) work more closely with assessing authorities, industry groups and other stakeholders to ensure the Migration Occupations in Demand List (MODL) reflects, as precisely as possible, occupations and specialisations in demand at any particular time. To facilitate this, DEWR should develop a process to more regularly review the MODL - on a three monthly basis, at a minimum - and improve feedback on its accuracy and currency.

Government response

Not Applicable

On 8 February 2010, and following a formal review which included extensive stakeholder consultation, the Government announced the immediate revocation of the Migration Occupations in Demand List (MODL).

The Government also announced a review of the General Skilled Migration (GSM) points test to evaluate its effectiveness and ensure it selects migrants with skills the nation needs in the future. The review resulted in the development of a new points test to come into effect from 1 July 2011. The employer-sponsored temporary and permanent migration arrangements continue to provide a framework for meeting skill shortages which cannot be met through domestic employment and training.

Recommendation 7

The Committee recommends that the Department of Education, Science and Training accelerate the process of expanding and updating the Country Education Profiles and develop a process to periodically review and formally receive feedback on the accuracy and currency of that information.

Government response

Partially accepted

Country Education Profiles (CEPs) are an online product which are updated regularly as we receive information from other official government sources. The production schedule for new CEPs is determined by analysing factors such as source countries for international students, and stakeholder enquiries. Key internal and external stakeholders involved in international education provide input into the process to assist with determination of the priorities.

In addition to producing CEP updates, Australian Education International (AEI) also offers a free email advice service to educational institutions and professional bodies that subscribe to the CEPs Online.

All CEPs were reviewed prior to being published online in October 2005. In particular, the Lists of Institutions for all CEPs were updated as a priority, as these are critical to the assessment process by third parties.

3 Overseas skills recognition framework

Recommendation 8

The Committee recommends that the Department of Education, Science and Training implement a change of title for Australian Education International-National Office of Overseas Skills Recognition (AEINOOSR), with it to be referred to in future as Australian Education International (AEI). AEI should continue to perform the full range of functions currently undertaken by AEI-NOOSR.

Government response

Not accepted

AEI-NOOSR has a positioning brand within the network of assessment authorities, education institutions and other stakeholders. Changing the name would require extensive consultation and communication and a phased implementation. It may also cause potential confusion with the broader AEI grouping, which undertakes a range of functions far wider than those associated with skilled migration.

Recommendation 9

The Committee recommends that the Department of Education, Science and Training:

(a) take over the management of the Vocational Education Training and Assessment Services contract from the Department of Immigration and Multicultural Affairs (DIMA);

(b) improve its oversight, coordination and monitoring of assessing authorities;

(c) enhance its liaison and support role of assessing authorities; and

(d) improve its communication flows with assessing authorities, particularly concerning notice of policy changes by DIMA and the Department of Employment and Workplace Relations that may affect assessment processes.

Government response

Partially accepted

(a) This part of the recommendation has largely been overtaken by events. There have been significant changes in the skilled stream of the migration program since the report was published. This has included substantial changes to the skills assessing regime administered by VETASSESS, which followed detailed discussions with DIAC. DIAC’s formal contract with VETASSESS ceased on 30 June 2006. DIAC and DEEWR continue to cooperate closely in the administration of assessing bodies, including VETASSESS.

After extensive consultations and com­munications with assessing authorities in 2006, DEEWR implemented the new guidelines for monitoring professional assessing authorities in December 2006.

(b) Underpinning the consultation process was the importance of liaison with and support to assessing authorities. The new monitoring approach has formalised the liaison and support role by including an annual conference and ongoing contact by Departmental officers with assessing authorities.

(c) DEEWR is conscious of the need to keep assessing authorities for which it is responsible well informed about developments in policy that affect assessment processes. To this end, DEEWR has developed a regular newsletter that is sent to assessing authorities every two months. DEEWR also convenes an annual conference to inform assessing authorities of changes in policy impacting on their work. Attendees and presenters include assessing authorities and key Government departments, including DIAC. The new monitoring and support initiatives have been predicated on the need to improve further communication flows with assessing authorities.

(d) Considerable work has taken place to improve communication with assessing authorities. As an example, in the lead up to the change to the Points Test to be implemented from 1 July 2011, DIAC officers have visited or teleconferenced with all assessing authorities and held a conference to discuss the policy changes.

Recommendation 10

The Committee recommends that the Department of Immigration and Multicultural Affairs regularly update and continually monitor the content of the new Australian Skills Recognition Information website to ensure that it meets the varied needs of the different groups requiring overseas skills recognition, particularly with regard to ensuring the information is user-friendly to people from non-English-speaking backgrounds.

Government response

Accepted

The ASRI website has been designed to be user-friendly for all people including those from non-English-speaking backgrounds. While the majority of users of the website are potential skilled migrants who are required to have good English language skills to be accepted for migration, people with lower English skills are assisted to use the ASRI website through a summary of its purpose and function in seven major community languages – Arabic, Chinese, Dari, Hindi, Indonesian, Korean and Vietnamese. These are the top languages in common across the Skill and Family Streams and the Humanitarian Programme. These translated summaries allow non-English speakers to identify whether the ASRI website could be of use to them and then engage the assistance of an interpreter if necessary to find information relevant to them. It would not be practical to provide translation of all material on the website as the site comprises many thousands of pages of content.

Professional user testing of the ASRI website involved 22 test subjects, specifically including two recently arrived humanitarian migrants from Africa, formerly holding skilled occupations. Both, with some assistance, were able to successfully navigate the website and locate information pertaining to skills recognition for their occupations.

DIAC receives regular feedback from users and stakeholders through the feedback mechanism on the ASRI website. DIAC will continue to monitor user friendliness through normal processes. The vast majority of feedback takes the form of advice of change of contact details for the organisations listed on the website. There has been no feedback at this time relating specifically to the issue of its user friendliness to people from non English speaking backgrounds.

Recommendation 11

The Committee recommends that the Department of Immigration and Multicultural Affairs add a ‘frequently asked questions’ section to the Australian Skills Recognition Information website.

Government response

Accepted in Principle

The vast majority of ASRI feedback emails received are notification of change of contact details for the organisations listed on the website. No direct questions have been posted as feedback regarding skills recognition processes; however, DIAC will continue to monitor and gather feedback data and if the need for a set of FAQs becomes apparent, a ‘frequently asked questions’ section will be added to the website.

Recommendation 12

The Committee recommends that the Department of Immigration and Multicultural Affairs ensure the Australian Skills Recognition Information website provides an overview of the various organisations involved in administering, monitoring and delivering overseas skills recognition services, both nationally and at the state and territory level, to clarify the governance arrangements and different roles and responsibilities of these bodies. This information should also include links to contact details and relevant performance reporting and accountability documents on skills recognition processes.

Government response

Accepted

The ASRI website already meets this recommendation, citing the pre-migration skills assessment bodies, state and territory licensing and registration authorities, training contacts, and professional associations for all occupations listed. The purpose of ASRI is chiefly to provide contact information for all these organisations so that people seeking recognition of overseas