An Independent Queensland Regional & Rural
Foreign Investment Review Board (FIRB)
Policy Summary - All Sectors
1. The Government's foreign investment policy is framed and administered with a view to encouraging foreign investment and ensuring that such investment is consistent with the needs of Australia.
2. The Government recognises the substantial contribution foreign investment makes to the development of Australia's industries and resources. Capital from other countries supplements domestic savings and provides scope for higher rates of economic and employment growth. Foreign direct investment also provides access to new technology, management skills and overseas markets.
3. The types of proposals by foreign interests to invest in Australia that require prior approval and should be notified to the Government are as follows:
4. In brief terms a foreign interest is defined as:
Examination by Sector
5. The Foreign Acquisitions and Takeovers Act 1975 applies to most examinable proposals and provides penalties for non-compliance.
Rural Properties, Agriculture, Forestry, Fishing, Resource Processing, Oil & Gas, Mining, Manufacturing, Non-Bank Financial Institutions, Insurance, Share Broking, Tourism (Hotels and Resorts), Most Other Services.
6. In relation to investments by foreign interests in these sectors, all proposals above certain thresholds need prior approval and therefore need to be notified. Notification thresholds are: over $3 million for purchases of rural properties; over $5 million for acquisitions of substantial interests in other existing businesses; $10 million or more for the establishment of new businesses; and $20 million or more for offshore takeovers. All tourism proposals that incorporate an accommodation facility, irrespective of value, need to be notified.
7. The Government normally raises no objections to proposals above the notification thresholds where the relevant total assets/total investment is below $50 million.
8. The Government examines in more detail proposals to acquire existing businesses (with total assets of $50 million or more) or establish new businesses (with a total investment of $50 million or more) and raises no objections to those proposals unless they are contrary to the national interest. Offshore takeovers do not generally raise national interest issues.
9. Approvals of proposals may be made subject to the parties meeting certain conditions. In practice, such conditions relate almost entirely to the time period for real estate development or to environment protection requirements.
10. Proposed acquisitions of residential real estate are exempt from examination in the case of Australian citizens living abroad and foreign nationals who are the holders of permanent resident visas or are holders, or entitled to hold, a 'special category visa'.
11. Proposed acquisitions of real estate for development (within 12 months) are normally approved unless they are considered contrary to the national interest.
12. Foreign interests are normally given approval to buy vacant residential land (on condition that continuous construction of a dwelling is commenced within 12 months) and to buy home units, townhouses, etc 'off-the-plan', under construction or newly constructed but never occupied (the 'off-the-plan' criteria only apply to new development projects or extensively refurbished commercial structures which have been converted to residential), on condition that no more than half of the units in any one development is sold to foreign interests.
13. Proposed acquisitions of residential property (both vacant land and existing dwellings) which are within the bounds of a resort that the Treasurer has designated as an 'Integrated Tourism Resort' are exempt from examination.
14. Proposed acquisitions of developed residential real estate by certain categories of foreign nationals temporarily resident in Australia for more than 12 months purchasing a residence for use as their principal place of residence while in Australia (and not for rental purposes) are normally approved. This category includes long-stay retirees.
15. All other proposals by foreign interests to acquire developed residential real estate are examinable and are not normally approved, except in the case of foreign companies, with an established substantial business in Australia, buying for named senior executives resident in Australia for periods longer than 12 months, provided the accommodation is sold when no longer required for this purpose. Whether a company is eligible, and the number of properties that may be acquired under this category will depend upon the extent of the foreign company's operations and assets in Australia. Unless there are special circumstances, foreign companies normally will not be permitted to buy more than two houses under this category. Foreign companies would not be eligible under this category where the property would represent a significant proportion of its assets in Australia.
16. Proposed acquisitions of developed non-residential commercial real estate are normally approved unless they are contrary to the national interest.
17. Hotels and motels operating under one title are normally approved (unless considered contrary to the national interest) under the tourism sector policy, other accommodation facilities such as guest houses, holiday flats, strata titled hotels and motels are examined under policy applying to residential real estate sector.
18. Foreign investment in the banking sector needs to be consistent with the Banking Act 1959, the Banks (Shareholdings) Act 1972 and banking policy, including prudential requirements. Any proposed foreign takeover or acquisition of an Australian bank will be considered on its merits on a case by case basis.
19. The Government will permit the issue of new banking authorities to foreign owned banks where the Reserve Bank is satisfied the bank and its home supervisor are of sufficient standing, and where the bank agrees to comply with Reserve Bank prudential supervision and arrangements.
20. Foreign airlines operating into Australia can generally expect approval to acquire up to 25 per cent of the equity in a domestic carrier individually or up to 40 per cent in aggregate provided the proposal is not considered contrary to the national interest. In special circumstances the Government is prepared to consider foreign equity proposals in excess of these guidelines provided the proposal is not contrary to the national interest. All other foreign investors (including those which do not operate an airline service to Australia) may acquire up to 100 per cent of a domestic carrier or establish a new aviation business unless judged contrary to the national interest.
21. Foreign airlines can generally expect approval to acquire up to 25 per cent of the equity in an Australian international carrier (other than Qantas) individually or up to 35 per cent in aggregate provided the proposal is not considered contrary to the national interest. In the case of Qantas, total foreign ownership is restricted to a maximum of 49 per cent in aggregate, with individual holdings limited to 25 per cent and aggregate ownership by foreign airlines limited to 35 per cent. In addition, a number of national interest criteria must be satisfied, relating to the nationality of Board members and operational location of the enterprise.
22. Foreign investment proposals for acquisitions of interests in Australian airports are subject to case by case examination in accordance with the standard notification requirements. In relation to the airports to be offered for sale by the Commonwealth, the Airports Act 1996 stipulates a 49 per cent foreign ownership limit, a 5 per cent airline ownership limit and cross ownership limits between Sydney airport (together with Sydney West) and Melbourne, Brisbane and Perth airports.
23. The Ship Registration Act 1981 requires that, for a ship to be registered in Australia, it must be majority Australian-owned (ie., owned by an Australian citizen, a body corporate established by or under law of the Commonwealth or of a State or Territory of Australia), unless the ship is designated chartered by an Australian operator.
24. All non-portfolio proposals to invest in the media sector irrespective of size are subject to prior approval under the Government's foreign investment policy. Proposals involving portfolio Shareholdings of 5 per cent or more must also be submitted for examination.
25. Whilst proposals for a foreign person to acquire an interest in or establish a new broadcasting service would be subject to a case by case examination under foreign investment policy, the following criteria also must be satisfied. A broadcasting regulatory regime, enacted through the Broadcasting Services Act 1992 (BSA), stipulates that:
26. There are no foreign ownership and control limits on commercial radio or on other broadcasting services under the BSA.
27. Foreign investment in mass circulation national, metropolitan, suburban and provincial newspapers is restricted. All proposals by foreign interests to acquire an interest of 5 per cent or more or to establish a newspaper in Australia are subject to case-by-case examination. The maximum permitted foreign interest direct investment involvement in national and metropolitan newspapers by a single shareholder is 25 per cent and unrelated foreign interests are allowed to have (non-portfolio) shareholdings of up to five per cent ie., a maximum of 30 per cent. Aggregate foreign interest direct involvement in provincial and suburban newspapers is limited to less than 50 per cent for non-portfolio shareholdings.
28. Telstra Corporation Ltd (Telstra) is predominantly owned by the Commonwealth of Australia. In October 1997, the Government partially privatised Telstra through the sale of one third of its equity to institutional and individual investors. Aggregate foreign ownership in Telstra is restricted to 35 per cent of that one third equity and individual foreign investors are only allowed to acquire a holding of no more than 5 per cent of that one third equity.
29. Prior approval is required for foreign involvement in the establishment of new entrants to the telecommunications sector or investment in existing businesses in the telecommunications sector. Proposals above the notification thresholds will be dealt with on a case by case basis and will be normally approved unless judged contrary to the national interest.
Written and Authorised by Selwyn Johnston, Cairns FNQ 4870