Referral of inquiry
On 25 November 2015, the Senate referred the following matter to the Senate
Economics References Committee (committee) for inquiry and report by 4 February
An examination of the foreign
investment review framework, including the powers and processes of the Foreign
Investment Review Board, in relation to Australian assets of strategic or
national significance being subject to lease or purchase by foreign owned
interests, and whether there ought to be any legislative or regulatory changes
to that framework to ensure Australia’s national interest is being adequately
considered, with particular reference to:
the decision by the Northern Territory Government to grant a
99-year-lease over the Port of Darwin to Landbridge Group;
the planned lease by the New South Wales Government of TransGrid;
the decision by the Treasurer to block the sale of S Kidman and Co on
national interest grounds; and
any other related matters.
On 4 February 2016, the committee tabled an interim report and sought an
extension from the Senate to produce a final report by 8 April 2016.
Conduct of inquiry
In accordance with its usual processes, the committee advertised the
inquiry on its website, and wrote to relevant organisations and individuals in
order to invite submissions.
The committee received 25 public submissions and conducted two public
hearings. The first was held on 15 December 2015 in Canberra, while the second
hearing was conducted in Sydney on 10 March 2016. Public submissions to the
inquiry are at Appendix 1. Additional information, including questions taken on
notice, is at Appendix 2. The names of witnesses who appeared at the
committee's hearings are listed at Appendix 3.
During the hearing on 15 December 2015, the committee heard evidence on
the decision by the Northern Territory Government to grant a 99-year lease
over the Port of Darwin to the Landbridge Group. During its second hearing in
Sydney on 10 March 2016, the committee heard evidence on the remaining terms of
reference, with a specific focus on the overall effectiveness of the assessment
process undertaken by the Foreign Investment Review Board (FIRB) in respect of
its capacity to determine the risks and benefits of foreign investment in
critical infrastructure, the agricultural sector and agribusinesses.
The committee acknowledges the organisations and individuals that have
made contributions to the inquiry through submission and appearance at the
This report should be read in conjunction with the committee's interim
report, which was tabled in the Senate on 4 February 2016.
References to the Committee Hansard are to the proof Hansard – page
numbers may vary between the proof and the official transcript.
Purpose of report
In addition to addressing the inquiry's remaining terms of reference,
this report focusses on the issues and concerns raised in the committee's
interim report. To that end, this report examines some of the key concerns that
came to the fore during the committee's hearing into the Port of Darwin lease
process, especially in relation to effectiveness of the processes that underlie
Australia's foreign investment review framework.
In particular, the report examines whether the current foreign
investment process, in which the national interest test is left deliberately
broad and unlegislated, provides a sufficiently robust framework to support the
Government's decision-making process in respect of the likely effects of
foreign investment proposals on Australia's economic development and national
security. This relates, in particular, to the transparency, comprehensiveness, timeliness
and overall effectiveness of the review process itself.
The report also considers whether the 2015 changes to the legislative
and regulatory framework that underpins the FIRB process, principally in
relation to the lowering of investment thresholds for agricultural land and
agribusinesses, are likely to limit foreign investment in those sectors. The
report also considers whether these changes are likely to reduce the overall
openness, transparency and effectiveness of the investment review process
One of the concerns raised by the committee in its interim report was
that of the exemption of state and territory-owned assets, regardless of their
strategic or national interest significance, from FIRB scrutiny under the
regulations. Following the tabling of the report, on 18 March 2016, the
Treasurer, the Hon. Scott Morrison MP, announced that the Commonwealth
Government has secured an agreement with the states and territories regarding
FIRB review. From 31 March 2016, under the terms of the agreement, all sales or
leases of state and territory critical infrastructure assets, such as the Port
of Darwin or Transgrid, will become subject to a formal FIRB review process. This
reform will be incorporated into the Foreign Acquisitions and Takeovers
Structure of report
Chapter 2 of this report provides an overview of the legislative and
regulatory framework that underpins Australia's foreign investment review
process, and also includes a comparison with two broadly comparable
jurisdictions, New Zealand and the United States.
Chapter 3 examines the evidence for and against the effectiveness of the
current FIRB assessment process in respect of sales or leases of Australia's
critical infrastructure assets.
Chapter 4 examines the evidence regarding the Government's recent
changes to the thresholds for foreign investment in agricultural land and
agribusinesses, especially in relation to the effects that these changes might
have on the levels of foreign investment in those sectors. In addition, the
chapter examines the Government's decision to introduce an Agricultural Land
Registry. It also considers the evidence concerning the effects of these
changes on the transparency, efficiency and effectiveness of the foreign
investment review process.
Chapter 5 provides the committee's view and recommendations.
Navigation: Previous Page | Contents | Next Page