The Business Council of Australia (BCA) welcomes Treasury’s review of ineffective conditions and the broader effort to streamline foreign investment approvals. Foreign investment supports Australia’s capital stock, productivity and living standards. Approval conditions should enable investment by addressing identified risks at the lowest necessary cost.
The existing framework relies too heavily on conditional approval. This creates a growing stock of obligations that can outlast their purpose as regulation, technology and business practices change. Removing ineffective conditions from existing approvals should be accompanied by more disciplined use of conditions in future decisions.
Treasury should remove conditions that duplicate legislation, sectoral regulation, licences, certifications or other government assurance arrangements. These include relevant Australian Taxation Office (ATO) obligations and assurance processes, the Hosting Certification Framework (HCF), and requirements under the Security of Critical Infrastructure Act 2018 (SOCI Act).
Where another framework adequately addresses the identified risk, a separate foreign investment condition is not needed.
Reporting, independent assurance and governance obligations should reflect the transaction’s risk and the investor’s demonstrated compliance history. Tax conditions should target specific revenue risks, with no use of the approval process to secure revenue outcomes beyond those available through the normal operation of Australian tax law. Repeat investors should receive consistent conditions for comparable transactions, with material differences explained by a transaction-specific risk assessment.
The review should deliver practical relief through coordinated removal or amendment of legacy conditions, recognition of information already provided to government, and an accessible process for investors. Retained conditions should have a clear purpose, proportionate compliance requirements and an appropriate review or expiry mechanism.
Key recommendations
Recommendation 1.
Apply a disciplined necessity test to retained and future conditions. Identify the transaction-specific risk, explain why existing regulatory arrangements are insufficient, and approve investments without conditions where those arrangements adequately manage the risk.
Recommendation 2.
Remove conditions that duplicate legislation, sectoral regulation, licences, certifications or government assurance frameworks, including relevant ATO, HCF and SOCI Act requirements. Retain only the additional obligation needed to address an identified gap.
Recommendation 3.
Update or remove conditions overtaken by regulatory, technological or business changes. Establish review triggers for expanded regulatory coverage and improved compliance records, with review dates and expiry provisions suited to the risk.
Recommendation 4.
Reduce recurring reporting, independent audit and governance obligations that are disproportionate to the identified risk or the investor’s demonstrated compliance history. Recognise existing assurance arrangements and provide a clear pathway to lighter obligations for trusted, low-risk investors.
Recommendation 5.
Confine tax conditions to specific revenue or tax integrity risks connected to the approved transaction. Prevent broad information gathering unrelated to those risks and the use of approval conditions to secure better revenue outcomes than the ordinary operation of Australian tax law would deliver.
Recommendation 6.
Apply a “tell government once” approach. Reuse information and assurance already provided to the relevant regulator, consolidate overlapping reporting, and request additional material only where FIRB and consulting agencies can explain its relevance to the condition and the risk.
Recommendation 7.
Apply consistent conditions to repeat applicants and comparable transactions. Explain material departures through a transaction-specific risk assessment and facilitate alignment of earlier approvals where the same risk assessment supports it.
Recommendation 8.
Establish an ongoing process for removal and amendment of legacy conditions. Minimise investor administration and fees, communicate when changes take effect, and report aggregate progress against the review timetable. More broadly, Treasury should see the review of ineffective conditions as an opportunity to fundamentally rethink the role of conditionality in foreign investment approvals.