Most Read Contributor in Australia, September 2016
In the last few years, public interest in foreign investment in
Australia has been heightened by the substantial, and ever growing,
investment in the agricultural sector. With a Coalition victory in
the Federal election, it is now relatively certain that a
tightening of the foreign investment regulatory environment will
As readers may recall, a report dealing with Australia's
foreign investment framework was issued by The Senate Rural and
Regional Affairs and Transport References Committee
(Committee) in June 2013
(Report). The Committee's investigations were
predominantly focussed on Australia's approach to foreign
investment in agriculture.
The Report's recommendations, if implemented, could result
in the most significant changes to Australia's foreign
investment policy since the Foreign Acquisitions and Takeovers
Act 1975 (Cth) (FATA) was enacted.
The Committee acknowledged the significant role foreign
investment has played and is to play in Australia's development
but did find that FATA "was significantly deficient in
effectively managing a number of key challenges facing Australian
Some of the key recommendations made by the Committee
the establishment of an agricultural land register
(Register) to monitor both divestments and
investments. An initial stocktake would be undertaken and there
would be no minimum threshold for reporting on the Register
an increase in rigor and transparency of the examination
process for foreign investment applications, including a forensic
company structures; and
the relationship between a foreign government's acquisition
strategy (such as food security) and commercial operations
the amendment of FATA to create more effective compliance
mechanisms and tools (in addition to forced sales) so that
compliance matters can be resolved more efficiently and in
proportion to the severity of a breach
increase the transparency and public awareness of the national
interest test so as to provide unambiguous instruction to foreign
investors regarding their obligations and also give the public
confidence that the test is being rigorously and fairly
reducing the threshold for private foreign investment in
agricultural land to $15 million and including a requirement for
FIRB approval once cumulative purchases of $15 million have been
requiring FIRB approval to be obtained where an investment of
greater than 15% in an agribusiness valued at more than $248
million or exceeding $54 million
giving greater consideration to the effect on local economies,
particularly rural communities, when assessing foreign purchases of
The Committee also recommended that the government establish an
independent Commission of Audit into Agribusiness, or similar body,
to develop a comprehensive policy approach to Australian
agriculture. The Committee suggests that this review could further
investigate changes to the Foreign Investment Policy national
interest test and improve foreign investment compliance
The Report was prepared by the Coalition members of the
Committee and included a dissenting report by then Labour
With a Coalition Federal Government as of 7 September 2013, we
would expect to see the recommendations made in the Report to be
implemented in the near future.
If the recommendations made in the Report are implemented, the
result will be increased restriction, or at least increased
compliance requirements, for foreign investors.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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