House of Representatives

Foreign Investment Reform (Protecting Australia's National Security) Bill 2020

Second Reading Speech

Mr SUKKAR (Deakin - Assistant Treasurer and Minister for Housing)

I move:

That this bill be now read a second time.

Today the Morrison government is introducing a package of bills to ensure that Australia's foreign investment review framework is equipped to keep pace with the emerging risks and global developments, while remaining welcoming and open to foreign investment.

Foreign investment is important for Australia's long term economic success, stability and prosperity. It creates jobs, improves productivity and connects Australian businesses to global markets. Australia remains one of the world's most attractive investment destinations. Our stable democracy, rule of law, highly skilled and educated workforces and world-class industrial capabilities mean choosing to invest in Australia benefits both investors and Australians.

Australia's foreign investment regulatory framework has always sought to strike a balance between welcoming foreign investment and ensuring that all investment is consistent with Australia's laws and, of course, our national interests. However, in recent times the risks to Australia's national interest, particularly national security, have increased as a result of a range of factors - including rapid technological change and changes in the international security environment.

The government's foreign investment reform package deals with national security risks, strengthens compliance measures, streamlines approval processes and enhances administrative arrangements. Importantly, the reforms preserve the underlying principles of our system - that Australia welcomes foreign investment for the significant benefits it provides but also wants to ensure that individual investments are not contrary to the national interest, including national security.

As part of this reform package, this bill amends the Foreign Acquisitions and Takeovers Act 1975to give effect to the most significant reforms since this act was first introduced.

Key measures in the bill include:

a new national security test requiring mandatory notification for investments in a sensitive national security business or land, and allowing investments not otherwise notified to be 'called in' for review if they raise any national security concerns;
a new last resort power giving the Treasurer a further opportunity to review actions for which approvals have been given if exceptional circumstances arise, and to impose conditions or issue a disposal order where there are no other remedies for the identified national security risk;
stronger compliance and enforcement powers through increased penalties, directions powers and new monitoring and investigative powers, in line with those of other regulators;
integrity amendments that close potential gaps in the screening regime; and finally
a new register of foreign owned assets amalgamating the existing registers which record foreign interests acquired in Australian land; water entitlements and contractual water rights; and expanded to include business acquisitions that require foreign investment approval.

In drafting this legislation the government undertook an extensive consultation process. This included the release of exposure draft legislation for public comment, more than 20 targeted stakeholder sessions reaching over 200 organisations such as peak bodies, state and territory governments, representatives from foreign private and government investors, and legal and financial advisers. Treasury, in addition, also held two public information sessions with over 120 subscribers.

Full details of the measures are contained in the explanatory memorandum.

Debate adjourned.