The Business Council of Australia welcomes the opportunity to make a submission to the Senate Economics Legislation Committee on the Foreign Investment Reform (Protecting Australia's National Security) Bill 2020 and Foreign Acquisitions and Takeovers Fees Imposition Amendment Bill 2020 [Provisions]. This submission reflects member views on the proposed changes and broader aspects of the investment screening framework.
The Business Council recognises the need to strengthen the foreign investment framework where there are risks to national security. The challenge is to achieve this while remaining globally competitive and able to attract foreign investment. It is a balancing act which is compounded by the unprecedent global downturn induced by the COVID-19 economic shock. Parliament needs to carefully consider the extent to which the system manages risks without unintentionally constraining growth and jobs.
Our key recommendations include:
- Better targeting the regime to areas of highest risk where the imposition of harsher penalties and enforcement powers are proportionate to the problem. Providing a broad discretion for the Treasurer to apply these powers across the economy will come at a high cost and could ultimately be self-defeating as Foreign Investment Review Board (FIRB) processes become clogged with routine transactions;
- Clearly defining risk through a prescribed list approach to ‘national security’ list (i.e. what’s covered) approach, allowing for this to be updated over time;
- Vastly expanding the streamlining measures for non-sensitive cases by introducing a registration process, rather than substantive approval process, for non-sensitive transactions, and removing some transactions from the regulatory net altogether;
- Limiting the time available for the Treasurer’s exercise of the ‘call-in power’ to three years and narrowing the scope of a ‘national security concern’ for the exercise of the ‘call-in’ power;
- Introducing improved safeguards around the ‘last resort’ power;
- Retaining 30-day processing times;
- A restructure of fees so they are proportionate to the cost of administering the regulatory system.