Main provisions of the bill
The national interest test
The current criterion used by the Treasurer to make decisions about
applications is outlined in the Treasurer's Foreign Investment Policy.
The Foreign Investment Review Board
(FIRB) provides advice to the Treasurer on foreign investment proposals using
these guidelines. Upon this advice, the Treasurer or his delegate, usually the
Assistant Treasurer, can then block proposals or apply conditions to the way
the proposals are implemented in order to protect the national interest.
'Foreign investment decisions' may then be published as a press release on the
In a media release, the Treasurer outlined that while the FIRB plays an
important advisory role in determining whether a proposal is consistent with
the national interest, it is ultimately a matter for the Treasurer.
There is currently no definition of "national interest" in the Foreign
Acquisitions and Takeovers Act 1975 (FATA). This has been the case under
successive governments since foreign investment was initially regulated in
The bill seeks to make the national interest test a legislative
requirement, rather than a guide.
The national interest test is proposed in item 5 of the bill in new section
21C. It takes the existing guidelines and adds additional criteria to be
It requires the Treasurer to have regard to the following in determining
whether the acquisition of an interest in agricultural land is contrary to the
- national security issues, including Australia's ability to
protect its strategic and security issues;
- the impact on competition and global market outcomes;
- any impact on tax revenues; and
- any impact on, or benefit to the Australian economy and community
- job opportunities and retention of labour;
- the introduction of new technology or business skills;
- increased export receipts for Australian exporters;
- greater efficiency or productivity, or enhanced domestic
- additional investment for development purposes;
- an increase in Australia's capacity to process Australian primary
- whether Australia's economic interests are safeguarded and
promoted (including the examination of issues of aggregation and vertical
- mitigating factors to assess whether an investment will allow for
Australian oversight and involvement, such as an Australian based head office
or whether Australian directors will be appointed; and
- the character of the investor (including business experience and
acumen relevant to the acquisition, financial commitment to the acquisition and
Item 5 also extends the Treasurer's authority to direct a foreign person
to dispose of an interest if the Treasurer is satisfied that the agricultural
land was acquired contrary to the national interest.
Changing the investment threshold that triggers review
Currently, a potential foreign acquisition interest that exceeds 15 per
cent, provided the firm is worth $231 million or more, will trigger a review by
All foreign governments and their related entities are required to apply to the
Treasurer before making a direct investment in Australia, regardless of the
value of the acquisition.
The bill proposes to change the current monetary threshold to a spatial
threshold, where any foreign acquisition interest of agricultural land greater
than five hectares would be subject to application to the Treasurer, and if the
Treasurer deemed the proposed acquisition was contrary to the national
interest, he or she could prohibit the acquisition.
This provision is modelled on the New Zealand Overseas Investment Act
2005, and is designed to 'enable more foreign investment to come to the
attention of the Treasurer so that they can make informed policy decisions
about whether or not to approve an application'.
The term "interests" in Australian agricultural land extends
the reach of the bill beyond the purchase of farm real estate. Item 3 of the
bill inserts new section 12D and defines the meaning of an "interest"
in Australian agricultural land greater than five hectares to include:
- a legal or equitable interest;
- an interest by way of shares in a company that owns agricultural
land (where the share entitles the holder to access, manage, oversee, or make a
profit from the land);
interest as a lessee or licensee of agricultural land that is
likely to exceed five years;
interest by way of a profit sharing arrangement;
- an interest in a share of an agricultural land corporation;
- an interest in a land trust estate; and
- an interest in a share of a corporation with connections to a
The bill also seeks to protect against potential piecemeal purchases by
foreign investors, whereby multiple acquisitions that do not exceed the
threshold allow an investor to acquire large areas of land over a period of
The bill addresses these 'creeping acquisitions' by expanding the definition of
an interest in agricultural land to include joint purchases; a person who has
previously acquired an interest; or a person who is increasing the amount of an
Publication of proposed acquisitions
Currently, foreign investment proposals are handled on a
commercial-in-confidence basis. Some detail of a particular case may be
available under a Freedom of Information (FOI) request, provided this does not
contravene privacy law or business commercial confidences.
The bill proposes that the Treasurer is required to publish on the
Treasury website all applications of interest in Australian agricultural land,
and for the status of the applications to be updated each week as they proceed.
The information must include:
- details identifying the person intending to enter into the
- the country of residence or place of business of the person;
- the amount of the proposed investment;
- the sector of the agricultural industry to which the interest in
land relates; and
- any other information as prescribed by regulations. 
The bill inserts several new definitions. The term 'Australian
agricultural land' creates a new category distinguished from rural land and
urban land. It is defined as 'land situated in Australia that is used
predominantly for carrying on a business of primary production'.
The term 'business of primary production' is derived from the Income Tax
Assessment Act 1997 and includes animal husbandry and farming,
horticulture, fishing, forestry, viticulture, and dairy farming.
Section 5 of the Act, 'Interpretation of the FATA', refers to
'Australian rural land' which carries the same definition 'Australian
Agricultural Land' in the bill. The FATA does not include vacant land in the
definition (even if zoned as rural), hobby farms, rural residential blocks or
land used for stock agistment or mining.
The definitions of 'Australian agricultural land corporation' and
'Australian agricultural land trust estate' in the bill are included in
sections 13E and 13F of the bill. These terms define a trust estate,
corporation or holding company (including its subsidiaries) where the value of
its eligible land assets exceeds 50 per cent of its total assets.
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