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Adjournment Debate: Foreign Investment
This afternoon I want to draw the attention of the House, again, to an important issue that a number of residents in my electorate of Deakin have taken the time over many months, indeed years, to bring to my attention and that is the foreign investment in established residential real estate. Given the feeling in my electorate with respect to this issue, I recently took the opportunity to host a forum in which we sought to provide a platform for residents to voice their concerns on this very important topic. I was very fortunate to be joined in the evening by the Parliamentary Secretary to the Treasurer, Kelly O’Dwyer, who was able to provide very valuable, first-hand information to attendees with respect to the proactive steps the government is seeking to take in this area.
One point we made—which is always very important to raise in the context of this discussion—is that we do recognise the important role that foreign investment has played in the Australian economy since the beginning of this nation. When it comes to residential real estate, though, foreign investment can either be an important tool in terms of increasing Australia’s housing stock, or it can have the impact of raising residential real estate prices.
There has been, for some time, increasing community concern around the issue of, particularly, a lack of compliance with the rules by foreign investors as well as a lack of enforcement of the rules by government. This is feedback I received before the election, and it is certainly feedback I received afterwards. The problem, regrettably, was exacerbated after six years of Labor, who really made no serious attempt throughout their time to deal with this issue. As with so many other issues they just kicked the can down the road.
Let us go back to first principles. Under current legislation, foreign residents are prohibited from investing in established residential premises. For temporary residents living in Australia, they are permitted to own a single established residence but must divest of that property within three months of ceasing to be a temporary resident. Notwithstanding these longstanding rules, during the entire time of the Rudd-Gillard-Rudd governments, not one court prosecution was undertaken by the Foreign Investment Review Board, nor was there a single divestment ordered for the illegal acquisition of a property. So, due to the inaction of Labor, the feeling has been that foreign residents have had free reign to access our established residential property market because we have not been policing the existing rules. There is no point having a rule on the statute books if we do not police it.
Another concern, which has been raised in this House before, is the complete lack of information gathering by the former government on the levels of foreign investment that were actually occurring. When we came to government we could not get a single answer on the holdings of foreign residents in all forms of property and real estate in this country.
The coalition, while recognising the importance of foreign investment, is determined that foreign investment, at all times, is in our national interest—and there is nothing wrong with us saying that. As the parliamentary secretary and I were able to inform Deakin residents at our forum, the government has been undertaking consultation with a view to creating a specialised compliance and enforcement area within the ATO to identify and investigate breaches of the foreign investment rules, and to enhance data sharing arrangements between Treasury, the ATO and all other government agencies that may have information that is useful.
We have also examined the introduction of application fees for foreign investors who are seeking to purchase property. There will be a fee of up to $5,000 for properties valued under $1 million, a fee of up to $10,000 for properties valued equal to or greater than $1 million, then rising by $10,000 increments for each million dollars in property value. Those fees will go towards the new compliance office within the ATO and will ensure that the Foreign Investment Review Board will finally have the resources to police our rules to ensure that we can dampen the increases in property prices. This is no silver bullet, but this is something that we are determined to change, and we are listening and acting.