THE HON JOSH FRYDENBERG MP
5 June 2020
MAJOR REFORMS TO AUSTRALIA’S FOREIGN INVESTMENT FRAMEWORK
The Morrison Government is today announcing the most significant reforms to the Foreign Acquisitions and Takeovers Act 1975 since its introduction.
These reforms will ensure that our foreign investment framework keeps pace with emerging risks and global developments, including similar changes to foreign investment regimes in comparable countries.
Foreign investment drives economic growth, creates skilled jobs, improves access to overseas markets and enhances productivity. Without foreign investment, production, employment and income would all be lower. Australian firms with foreign direct investment support 1 in 10 jobs in Australia. They also make a significant contribution to the one in five jobs that are trade-related.
The comprehensive changes being announced today deal with national security risks, strengthening compliance measures, streamlining approval processes and administrative enhancements.
Importantly, these reforms preserve the underlying principles of our system: that Australia welcomes foreign investment for the significant benefits it provides but also ensures that investments are not contrary to the national interest. Australia’s foreign investment framework will remain non-discriminatory and applications will continue to be assessed on a case by case basis.
Key elements of the reform package include:
- A new national security test for foreign investors who will be required to seek approval to start or acquire a direct interest in a ‘sensitive national security business’ – regardless of the value of the investment.
- A time-bound ‘call in’ power enabling the Treasurer to review acquisitions that raise national security risks outside of proposed acquisitions relating to a ‘sensitive national security business’.
- A national security last resort power that provides the ability to impose or vary conditions and in extraordinary circumstances order disposal on national security grounds.
- Stronger and more flexible enforcement options including the expansion of infringement notices and higher civil and criminal penalties.
- Measures to streamline approval for passive investors and investments into non-sensitive businesses.
The Government will release exposure draft legislation for consultation in July, with the reforms scheduled to commence on 1 January 2021.
Additional details about the reforms will be available on the Treasury website.