Australia: Foreign investment back on the agenda

Clayton Utz Insights

Key Points:

Perhaps the more radical proposal is to lower the thresholds for approval of private foreign investment in agribusiness.

Foreign investment in Australia would face significant new hurdles if proposals just tabled by a Parliamentary committee were adopted.

The proposals are aimed primarily at foreign investment in the agricultural sector, but would also affect investment in other areas. They are contained in a report by the Senate Rural and Regional Affairs and Transport References Committee, which was tabled on 26 June.


The Committee recommends a two-pronged strategy in relation to foreign investment in agribusiness:

  • better systems to capture information about where investors are coming from and where they're investing;
  • greater restrictions on foreign investment in the rural sector.

Perhaps the more radical proposal is to lower the thresholds for approval of private foreign investment in agribusiness. For agricultural land, the threshold would be $15 million (cf. the current threshold of $248 million). For agribusinesses, the Committee appears to propose that, in addition to reviewing acquisitions of more than 15% in agribusinesses valued at $248 million or more, the Foreign Investment Review Board (FIRB) should review agribusiness investments of more than $54 million.

The Committee also recommends that "once cumulative purchases of $15 million of private investment in agricultural land has been reached by a private business or associated entities, any further investment by that business or entity be required to receive FIRB approval regardless of value". This appears to suggest that a foreign investor will require FIRB approval once its total purchases of agricultural land exceed $15 million, regardless of whether those purchases relate to a single discrete area or multiple properties around Australia.

The definition of "rural land"

Australia's foreign investment regime divides land purchases into "rural land" and "urban land". Foreign investment in "urban land" is more strictly regulated than investment in "rural land".

Somewhat bizarrely, "urban land" includes most of the Australian landmass, including mines. That is because it is defined as meaning any land that is not used for primary production.

The Committee recommends that these definitions be amended "with the aim of more accurately reflecting the common understandings of these terms". Exactly what changes the Committee has in mind are unknown.

General foreign investment tests

At present, foreign investments which are notified to FIRB can be rejected if they are contrary to the "national interest".

For obvious reasons, there is no statutory definition of the "national interest". However, the Government's published policy on foreign investment indicates that it, in the case of agricultural investments, the "national interest" includes employment and prosperity in local and regional communities.

The Committee recommends that the transparency and public awareness of the "national interest" test should be increased, with two objectives:

  • providing precise and unambiguous instructions to prospective foreign investors about their obligations to FIRB and the Treasurer, and how the national interest test is conducted; and
  • building the confidence of the public, FIRB stakeholders and the Parliament that the national interest test is being rigorously and fairly applied and takes into account all relevant factors including impacts on rural communities and the agriculture industry.

It also recommends that the policy be amended "to clearly define the 'interests of local economies' and the 'interests of local communities'. Furthermore, there should be a greater requirement for FIRB to take into account these local interests in the assessment of foreign purchases of agricultural assets".

Again, the Committee does not provide much detail about exactly what changes it thinks should be made. The reality is that any attempt to provide clear definitions in this area will produce only one outcome: proposed foreign investors will inevitably be caught up in time-consuming controversies triggered by complaints that their proposed investments do not fall within the strict definition of the national interest, the interests of local communities or the interests of local economies.

Compliance with the Act

Although the Government has the power to prohibit foreign investments on national interest grounds, it can also allow investments that would be contrary to the national interest, provided that the investor gives undertakings that would address the national interest concerns.

If an investor fails to comply with those undertakings, the Government can force it to divest the investment. The Committee notes that divestment is rarely ordered, and recommends that there should be also be other, less blunt, enforcement mechanisms available to the Government to address non-compliance.

Foreign investment evaluation processes

In what appears to be a vote of no confidence in the current approval procedures, the Committee recommends that the Government develop a stronger, more rigorous and more transparent system for examining foreign investment proposals, with a particular focus on "forensically examining":

  • company structures (including management relationships in joint Australian/foreign ventures);
  • the relationship between a foreign government's acquisitions strategy (such as food security) and the commercial operation of their subsidiary businesses in Australia; and
  • ways of setting clear and auditable ongoing undertakings that are in the national interest.


It is noticeable there is a major disconnect between the Committee's recommendations and the contents of the report: many of the recommendations mentioned above are not discussed, explained or expanded on in the report itself. As a result, it is unlikely that the recommendations will be enacted into law in their current form.

However, it should be noted that the report's main authors come from the two parties which are generally expected to form the next Government later this year. As a result, it is likely that complaints from the agricultural sector about foreign investment will find a ready audience in Government after the election.

Clayton Utz communications are intended to provide commentary and general information. They should not be relied upon as legal advice. Formal legal advice should be sought in particular transactions or on matters of interest arising from this bulletin. Persons listed may not be admitted in all states and territories.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Mondaq Advice Centre (MACs)
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.