On Tuesday 15 September, the Perth USAsia Centre hosted David Irvine AO
, Chairman of the Foreign Investment Review Board (FIRB), for a private roundtable at the University of Western Australia. The roundtable afforded an opportunity for members of the Perth USAsia Centre community to engage with Mr Irvine, and other FIRB colleagues, regarding current and future dynamics in Australia’s investment relationships with foreign partners.
The FIRB is a Commonwealth non-statutory body, established in 1976 to advise the Treasurer and Government on the implementation and administration of the Foreign Acquisitions and Takeovers Act
(as amended) and supporting legislation. While the FIRB is an advisory rather than decision-making body, it performs a number of critical functions
in Australia’s foreign investment regime:
- Examining proposed investments which are governed by foreign investment policy, and making recommendations to the Treasurer on these proposals
- Monitor and ensure compliance with foreign investment policy
- Foster community awareness in Australia and abroad regarding foreign investment policy
- Provide guidance to foreign investors regarding the application of policy
In this way, the FIRB performs a combination of administrative, advisory and engagement functions within Australia’s foreign investment regime. Decisions on specific investment proposals are made by the Treasurer or related Treasury portfolio ministers.
The role and principal business of the FIRB has evolved over time, as Australia’s investment relationships have changed. At the time of its establishment, the principal foreign investors in Australia were traditional sources (such as the UK, Europe and the US), with an emerging role for Japan.
Throughout the last three decades, a number of other investment partners from the Indo-Pacific region have become prominent, including Korea, Southeast Asia and China. The sectoral composition of investment has also evolved, from a focus on natural resources (mining and agriculture) to a more diverse portfolio including the real estate, services, infrastructure and technology industries.
Mr Irvine outlined three issues which are particular important for the contemporary work of the FIRB. These include:
- Agricultural land. In the farm sector, there is an imperative to balance the need for foreign investment with environmental, social and competition concerns. A recent agricultural land register, and standards around land sales offering processes, will help build community confidence in foreign investment in agriculture.
- Residential real estate. The dual economic and social functions of housing requires careful management. While foreign buyer play only a minor role as a structural driver of the real estate market, FIRB monitoring and compliance activities ensure foreign investment in residential housing is consistent with national interest standards.
- Critical infrastructure. The role of infrastructure – including both physical and digital connections – are becoming more prominent in 21st century economies. Critical infrastructure also poses new security risks, as networked technologies expose systems to cyber-attack. A recently established Critical Infrastructure Centre now offers dedicated and specific advice on foreign investment in infrastructure projects.
Across these diverse issues and sectors, Mr Irvine identified the role of digital and communications technology as a major new regulatory issue for the FIRB. Where foreign investment once sought access to physical assets, the changing nature of economies has made intangible assets (such as intellectual property and data) increasingly valuable. It has also raised a range of new challenges, including personal data protection and privacy, intellectual property theft, cyber-security and hacking, cyber-crime and the security of network-connected physical infrastructure.
Unfortunately, there are no ‘one-size-fits-all’ solutions to these new challenges. The FIRB therefore assesses investment proposals on a case-by-case basis, offering advice to government in accordance with five principles outlined in Australia’s Foreign Investment Policy.
These principles relate to economic impact, community impact, competition policy, national security, taxation, and the character of investors. To assist potential investors, the FIRB offers a range of guidance and resources
that help in understanding how these principles apply to their specific enterprises.