The BGA Australia Team, led by Managing Director Michael “Mick” McNeill, wrote an update on Australia’s new foreign investment framework.

Context

  • The Albanese Labor government has announced reforms to Australia’s foreign investment framework to fast-track low-risk approvals while protecting the national interest in critical sectors. The new “stronger, risk-based approach” will dedicate more resources to screening foreign investment in critical sectors, enhance the Tax Office’s capacity to ensure that foreign investors meet tax obligations and drive faster decisions for low-risk investors.
  • Ahead of the May 14 budget and an election to be held within 12 months, the government is determined to show middle Australia and an increasingly skeptical corporate sector that it has a plan to stimulate stronger economic growth and productivity. Trusted investors will receive accelerated approvals, and extra safeguards will be established for higher-risk proposals such as — presumably — Chinese entities seeking to invest in critical sectors.

Significance

  • Treasurer Jim Chalmers alluded to the growing intersection between economic security and national security, using rhetoric similar to that surrounding the release of the government’s Future Made in Australia policy (see BGA Australia’s April 12 memo | password: APR12#MadeinAustralia). “National security threats are increasing due to intensifying geopolitical competition, and risks to Australia’s national interests from foreign investment have evolved at the same time as competition for global capital is becoming more intense,” he said.
  • Canberra has released an updated foreign investment policy document that outlines the new “stronger, risk‑based approach,” including information on which sectors will attract more enhanced, effective and efficient screening. The government will dedicate more resources to screening foreign investment in critical infrastructure, minerals and technology. The changes will not apply to existing applications.Chalmers said the government is seeking to ensure that foreign investment settings are aligned with other regulatory frameworks, such as the Security of Critical Infrastructure Act.
  • Chalmers said the reforms would “enhance the Tax Office’s capacity to assess and ensure that foreign investors pay their fair share of tax,” though he acknowledged Australia’s reliance on foreign investment, which since 2006 has remained above the Organization for Economic Cooperation and Development’s average. The Treasury will publish more details and public guidance on foreign investment and tax integrity in the coming months.

Implications

  • The government will streamline the approval regime “for known investors that are making investments in nonsensitive sectors and that have a good compliance record.” Chalmers said investors would start to “feel the effect” of this from July 1. The Treasury will adopt a new target, processing 50 percent of cases within the initial 30-day statutory timeframe starting January 1, 2025. The government will encourage early applications by providing a fee refund for foreign investment applications that were unsuccessful in a competitive bid process. Draft regulations will be released to make it easier for institutional investors to manage their portfolios.
  • Chalmers delivered a speech May 1 at the Lowy Institute, a think tank in Sydney, on “economic security and the Australian opportunity in a world of churn and change.” He said Australian politics often “assumed an artificial distinction between our prosperity and our security” and “that in facing the most challenging strategic environment since World War II, economic resilience is an essential component of assuring our national security.” Chalmers said the May 14 budget “will have a big emphasis on attracting and deploying investment from the private sector.” The previous day, Trade Minister Don Farrell co-chaired the 17th Joint Ministerial Economic Commission virtually from Adelaide with Chinese Minister of Commerce Wang Wentao.

We will continue to keep you updated on developments in Australia as they occur. If you have any questions or comments, please contact BGA Australia Managing Director Michael “Mick” McNeill at mmcneill@bowergroupasia.com.

Best regards,

BGA Australia Team

A small ginko leaf

Managing Director

Mick is a highly-experienced government relations expert and trusted advisor on consensus building, conflict resolution and legislative developments. He has played an integral role in helping parties achieve desired outcomes in areas of national security, health policy, foreign policy and reputational crisis management, as well as media relations, communications campaigns, immigration and human rights. Mick has two decades’ experience working with government as a media analyst, political adviser and NGO advocacy manager. After a stint serving as an adviser to an Australian senator, Mick took on the role of the locally engaged senior political specialist at the U.S. Embassy in ... Read More