Dr CHALMERS (Rankin) (12:42): As other speakers have mentioned, the Foreign Acquisitions and Takeovers Legislation Amendment Bill 2015, along with its associated bills, introduces fees payable for foreign investment applications, lowers the screening thresholds for certain investments in Australian agriculture, introduces civil and criminal penalties for breaches of the foreign investment framework, and transfers to the Australian Taxation Office the responsibility for administering certain aspects of the foreign investment regime. Labor will be supporting these bills through the House today, but we do have some significant reservations about aspects of the package. We plan to await the Senate report on the bill before we determine our final position on those aspects.
Foreign investment would not have a bigger supporter in this chamber than me. I am a huge supporter of foreign investment because it is a vehicle through which we create jobs and growth in our community. I have always been a huge supporter of foreign investment, subject always of course to appropriate safeguards and screening to ensure it is in the national interest. But as a principle I think foreign investment is crucial for a country like ours. My side of the parliament has always understood that foreign investment plays an important part in driving economic growth. It is a simple fact that Australia's pool of domestic savings is not deep enough or substantial enough to drive the kind of investment we need to ensure a vibrant, job-creating economy.
We do not have, in Australia, sufficient capital to maintain the sort of employment opportunities and living standards that Australians have a right to expect and that Australians deserve. Labor knows that we will not improve living standards for working people in this country by pulling down the shutters on the world. On the Labor side we have a really strong track record of encouraging trade and investment. Prime Ministers Hawke, Keating, Rudd and Gillard and trade ministers like John Dawkins, Peter Cook, Simon Crean and my own predecessor, Craig Emerson, have all played important roles in dismantling protectionist barriers.
Between 2008 and 2013, the years of the last Labor government, there was an investment boom in Australia. Foreign direct investment was up 40 per cent over that period. In a former role that I had in this place, I was very proud to be involved in the maintenance and improvement of the foreign investment framework in this country and particularly proud to see that boom in foreign investment go up 40 per cent over the life of the Rudd and Gillard governments. It helped boost supply in Australia. It was certainly a factor in our continued growth while the rest of the world went backwards and shed tens of millions of jobs during the great recession.
Now, as domestic demand in Australia slows, foreign direct investment in Australia will continue to play that crucial role in encouraging growth. In one sector, for example—one that the minister at the table would be aware of—the National Farmers' Federation has estimated that for Australian agriculture to reach the capacity needed to meet rising international demand it will require investment of between $1.2 trillion and $1.5 trillion over the next 35 years. We need to meet this demand by encouraging foreign investment in an open and transparent manner while making sure that big investments are in our national interest. Labor will support today—and will always support—policy that encourages growth of foreign investment in Australia while ensuring that safeguards remain in place to ensure that that investment is in the national interest as well.
This legislation, in summary, is a bit of a mixed bag. We have concerns about the bills before the House. There are some measures, of course, which will legitimately strengthen our foreign investment safeguards, but I think it is also true that there is the risk that some other aspects of these bills will throw up unwanted barriers to attracting foreign investment into our country. For example, we will be supporting the introduction of a register of foreign ownership of agricultural land because we believe that foreign investment works best when it is open and when it is transparent. But we have real concerns about the changes to the foreign investment screening thresholds for agricultural land, which we believe have the potential to discriminate against investors based only on their nationality. To prove that point, consider that we will have a bewildering situation where the threshold for investment review in agricultural land will be set at $15 million for investors from China, Korea and Japan, while at exactly the same time it is $50 million for investors from Singapore and Thailand and it is over $1 billion dollars if you are from New Zealand, Chile or the United States. This means the screening threshold for Chile is around 73 times higher than the screening threshold for Japan.
On top of all of that, from December this year we will see the FIRB screening threshold for agribusiness investment capped at $55 million. This was an issue that was raised with the trade minister in this place earlier this week. There was a total inability to explain why we would want this dog's breakfast of different levels of screening thresholds depending on the nationality of the investor. The government has yet to provide any economic or foreign policy rationale for this complicated system of investment screening thresholds for different countries and different types of businesses. What is worse, these new barriers to investment would apply even where existing investors seek to make improvements to their property. They are not just a potential deterrent to new investors but also a disincentive for people who are already investing who want to improve their operations.
It should come as no surprise that this rushed mismatch of red tape and barriers to trade have been criticised by a variety of Australian industry associations including the Business Council of Australia, the National Farmers' Federation, the Australian Food and Grocery Council, the Queensland Farmers Federation in my home state and the Chamber of Commerce and Industry of Western Australian. But what could be worse is the potential reaction of foreign investors who will be met with this chaotic framework of red tape and fees which will make Australia a less attractive destination for investment.
There is cause for concern in this bill. As I have said, our final position will be made after all the evidence has been considered by the Senate committee—that is only reasonable. We have got a Senate process that will get under way, and it is our prerogative to weigh up all the evidence before that committee before we land on a final destination. In the meantime, we call on the Minister for Trade and Investment to explain to the parliament and to the Australian people how these retrograde changes to our FIRB screening thresholds will do anything other than deter future foreign investment in Australia?
The other main set of measures in this package of bills relates to foreign direct investment in real estate. Labor will be supporting the government's proposal that foreign investors cover the cost, the impost, of having their application for investment reviewed by FIRB rather than burdening the taxpayers with this cost. We believe that the fee will be very modest, compared to the investments being considered, and we do not think that it will act as a real disincentive for investment in Australia. But we say very clearly today that the revenue raised from this measure should be directed back into improving oversight mechanisms and service delivery for investors, not used just as a cash cow to sure up the government's budget mess where we have seen the budget deficit double from one budget to the next.
I was pleased to be on the House Economics Committee's inquiry which recommended the fees on foreign real estate investment contained in the legislation today. As I said throughout the proceedings of that committee—as I say now in the chamber—there were perceptions in the community about foreign investment in real estate which in many instances dwarf the reality of the incidence of foreign investment in real estate. We need to be really careful when we are discussing this area not to get carried away with tabloid overreaction to some of these issues. We need to approach it in a sober and clear-headed way to make sure that any measures we are taking in this place are consistent with the reality of what is happening on the ground and not just the hearsay and the anecdotal claims made by some from time to time.
I think the committee, with members from both sides of the House, did a good job in getting to the bottom of a lot of the facts of these issues rather than the hysteria.
This government spends a lot of time talking about foreign direct investment in real estate. It makes it out to be the sole enemy of housing affordability in Australia. We got a bit of that, again, this morning from the Treasurer. Too often forgotten in this conversation are the benefits of foreign investment in Australia when it comes to the housing market. There was clear evidence through the economics committee process, that I described earlier, that foreign investment has the capacity to boost housing stock not just for foreigners but for the broader Australian community. Where that happens we should celebrate it. It is also clear that foreign buyers are, generally, not competing in the same markets as most first home buyers throughout Middle Australia.
The member for North Sydney has made a big deal, including again this morning, of forcing the sale of a handful of homes, including a Point Piper mansion, as this big solution to the housing affordability crisis in this country—'Let's concentrate it in Sydney and Melbourne'—but that is an indication of how out of touch the government is when it comes to housing. People in my community and across the country do not necessarily want to buy or have the means to buy some Point Piper multimillion-dollar mansion. They just want family homes to be affordable for everyday Australians.
The government did promise to address housing affordability before the election. They do not have a real plan. This is just something to say so they look like they are acting on housing affordability. In reality, they are not. In fact, they have taken backward steps, as the economics committee is now dealing with issues around housing affordability. We have heard witness after witness talk about backward steps from the government, which include abolishing the National Housing Supply Council and the National Rental Affordability Scheme and the changes it has made there. These policies were making a real difference to the affordability of housing for a large number of Australians from all parts of the community.
While we will be supporting in the House, today, the measures in the legislation around foreign direct investment in real estate we do not believe that is a sufficient total response to the housing-affordability crisis. The new Prime Minister and new cabinet, when it is announced, need to put some thinking into housing affordability and have a policy and a plan—not just some piecemeal approach for one or two mansions in Point Piper and forced divestments.
We have some reservations and will come to a final decision after the Senate committee reports. Our guiding motivation is to have a foreign-investment framework that encourages the much-needed investment in our country while ensuring that there are safeguards to ensure all foreign investment is in this country's best interest. We are not sure that the government's proposed discriminatory-screening thresholds and new red-tape barriers will support that objective. We also do not believe the government's proposed fees for FDI in real estate will solve the housing-affordability crisis.
Being open to business is about more than repeating that phrase endlessly at a press conference. I sincerely hope that the government—with a new Prime Minister and a new cabinet—will share Labor's enthusiasm for getting Australia's foreign-investment framework right and will not implement the measures in these bills that have the potential to deter foreign investment.
