The Australian government has unveiled reforms aimed at strengthening and streamlining the country’s foreign investment framework.
The reforms, which adopt a risk-based approach, will categorise proposals as “high risk” or “low risk,” with the former subject to enhanced scrutiny and the latter eligible for faster processing.
Sectors considered particularly sensitive, such as critical infrastructure, critical minerals, investments near sensitive government or defence facilities, and those involving sensitive data, will face greater scrutiny.
The screening process will also focus more on the tax implications of proposed investments, with heightened scrutiny for structures that could lead to tax avoidance.
To streamline lower-risk investments, the government will require less information from repeat investors with a strong compliance record.
It aims to process 50 per cent of applications within the initial 30-day statutory timeframe by 2025.
These reforms are intended to balance facilitating foreign investment with protecting Australia’s national interests and will be implemented primarily through policy and process updates rather than legislative changes.
The Property Council of Australia has welcomed the risk-based reforms but emphasised the need for supportive tax settings to encourage foreign investment.
Matthew Kandelaars, Property Council Group Executive Policy and Advocacy, highlighted the importance of foreign investment in shaping Australia’s cities and driving productivity.
Kandelaars stated: “In a fiercely competitive global environment for capital, it makes sense to encourage and simplify the frameworks for foreign investment flowing into our economy.”
He emphasised the need for Australia to position itself as an attractive destination for global institutional investors.
The reforms are seen as critical for supporting city-shaping investment and the burgeoning build-to-rent sector, which is essential for meeting national housing goals.
Kandelaars noted the importance of executing the changes well, particularly regarding the managed investment trust withholding tax rate for build-to-rent, which could leverage institutional capital to meet housing goals.
If successful, the reforms could create 150,000 rentals and 10,000 affordable rentals by 2033, significantly contributing to the housing market and economic growth.