Detailed News

Victoria

Event Recap - FIRB Update

14 September 2017

On Tuesday 14 September at MinterEllison in Melbourne, ACBC Victoria welcomed Mr Adam McKissack from the Australian Treasury’s Foreign Investment Division for an overview of Australia’s foreign investment review regime. The session provided a useful opportunity to discuss the changing nature of foreign investment in Australia and how Australia’s foreign investment review regime has been operating over the past few years, especially after a major legislative update in late 2015.

Mr McKissack’s key message is that Australia welcomes foreign investment and continues to adopt a tailored approach in its review process by considering major or more sensitive proposals on a ‘case-by-case’ basis, rather than using an approach that prohibits foreign investment in specific sectors (blacklists) or only allow it in certain sectors (whitelists).

He also provided an update on the nature of foreign investment into Australia, such as the strong growth into areas like residential real estate (though slowing) and diversification into non-mining areas like agriculture, health and high technology. China is also now the biggest source of FIRB applications, despite having only a relatively small stock of foreign direct investment in Australia (at 5.7 per cent, compared to the United States with the largest share of almost 27 per cent). China is expected to remain a strong source of foreign investment, especially as the China-Australia Free Trade Agreement matures. 

Due to the changing nature of foreign investment in Australia and Australia’s own economic developments, the foreign investment regime has recently considered many significant proposals in the areas of critical infrastructure, agriculture and residential real estate. Mr McKissack noted that the Australian Government needed to ensure FIRB applications were assessed against a national interest test which includes the following:

  • The impact on the economy and the community
  • National security (Critical Infrastructure Centre process)
  • Competition
  • Consistency with Australian Government policies (including tax)
  • The character of the investor

Participants were introduced to key aspects of the FIRB process, noting that the chief decision maker is the Australian Treasurer, who in turn is supported by independent advice from FIRB and Treasury as the responsible government department. The meeting also discussed the appointment of the new FIRB Chairperson, Mr David Irvine, who has extensive experience working in China as Australia’s Ambassador and in national security agencies.

Mr McKissack also spoke about the new Critical Infrastructure Centre and the role it will play in providing expert information to the Treasurer on FIRB applications in the areas of telecommunications, electricity, water and ports. While this new centre has been established to take a more forward-looking approach to identifying and addressing the risks to Australia’s critical infrastructure, it does not change the way FIRB applications are lodged and FIRB remains the single entry point for applicants.

Most importantly participants were encouraged to approach FIRB early, preferably before an application is lodged. Having early discussions will assist potential applicants to gain a better understanding of the FIRB process, how it applies to their business proposal and will also assist FIRB to learn more about the applicants. FIRB will keep all information discussed strictly confidential.

The briefing concluded with a lively question and answer session and discussed some of the insights of the foreign investment climate in mainland China and Hong Kong, which is expected to remain strong but perhaps focussed on areas considered integral to the development of the Chinese economy or are seen as providing stable returns, such as infrastructure, renewable energy, health services or high-tech industries.

More information on changes to the foreign investment framework announced in the 2017-18 Budget and additional technical amendments which took effect from 1 July 2017 can be found here.

FIRB website: https://firb.gov.au

FIRB contact information: +61 2 6263 3795 or firbenquiries@treasury.gov.au

The Australian Embassy in China also has a Treasury office that can help with general FIRB enquiries. The contact is Mr David Woods (david.woods@treasury.gov.au or +86 10 5140 4289).