GENERAL APPROACH

Foreign investment is considered ‘crucial’ for Australia. The country has traditionally maintained an open attitude to FDI, strengthened since the mid-1980s, and in fact it has benefited from it for a long time. However, its attitude to FDI is only somewhat open. Despite the liberalisation of the regime for investment since the mid-1980s, today the OECD FDI Regulatory Restrictiveness Index, which scores countries on a scale of how open (0) to closed (1) they are to FDI, shows that the country is double the OECD average, at 0.266 compared to 0.127. In addition, a growing section of the population is critical of foreigners acquiring Australian firms and assets.

Australia has developed a system of case-by-case evaluation of foreign investment proposals to acquire a ‘substantial interest’ or a ‘controlling’ interest in an Australian corporation above a certain size or value, or an interest in Australia ‘urban land ’. The goal of the system is to determine whether the investment may be contrary to the ‘national interest’ of Australia; those FDI proposals that are contrary to the ‘national interest’ of the country are disallowed. What ‘national interest’ actually means is not defined, and so it is necessary to consider the concept in each individual FDI proposal. This provides the government with considerable power in approving or disallowing FDI proposals.

Similarly to other countries, the system was introduced at a time when there were concerns about ‘Australia being sold offto the Japanese ’. This concern was overblown, but there is now the spectre of China, the ninth most important source of FDI in Australia, 2102 ‘ buying up the farm’.

The system in Australian system is rather convoluted. It is composed of the Foreign Acquisitions and Takeovers Act 1975 (FATA), reformed in 2015, the Foreign Acquisitions and Takeovers Fees Imposition Act 2015 and the Register of Foreign Ownership of Water or Agricultural Land Act 2015, as well as their associated regulations, especially the Foreign Acquisitions and Takeovers Regulation 2015 (FATR).

These pieces of legislation are complemented by some Acts that aim to govern potential FDI in specific areas of the economy.