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Australian Parliamentary Joint Committee on Human Rights |
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Purpose
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This instrument amends the monetary threshold above which certain
investments in Australia by foreign persons may require notification
to the
Treasurer for approval
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Portfolio
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Treasury
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Authorising legislation
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Disallowance
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15 sitting days after tabling (tabled in the House of Representatives and
the Senate on 12 May 2020). Notice of motion to disallow
must be given by 12
August 2020 in the House of Representatives and the
Senate[2]
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Right
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Equality and non-discrimination
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Status
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Concluded examination
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1.307 The committee requested responses from the minister in relation to the instrument in Report 5 of 2020[3] and Report 7 of 2020.[4]
1.308 This instrument provides for a nil monetary threshold for actions taken by foreign persons in relation to entities, businesses and agricultural lands, and prescribes all kinds of land other than agricultural land as being land without a threshold value. This has the effect that all proposed foreign investments in relation to these actions and investments in Australia must be notified to the Treasurer for prior approval. The instrument repeals and replaces Part 4 of the Foreign Acquisitions and Takeovers Regulations 2015, which previously set out a number of different monetary thresholds in relation to which a proposed investment had to be notified to the Treasurer. The lowest previous monetary threshold was $15 million, in relation to agricultural land being acquired by a foreign person.[5]
1.309 By reducing to nil the monetary threshold for notification to the Treasurer regarding proposed foreign investments in Australia, which only applies to proposed investments by foreign persons,[6] this measure may engage and limit the right to equality and non-discrimination.[7] This measure may indirectly discriminate against persons based on their nationality, as it only applies to persons not ordinarily resident in Australia.
1.310 The initial analysis considered that further information was required as to the compatibility of this measure with the right to equality and non-discrimination. The full initial analysis is set out in Report 5 of 2020.
1.311 On 18 May 2020 the Treasurer provided a response, which the committee considered in Report 7 of 2020. The committee requested further information as to the compatibility of the measure with the right to equality and non-discrimination, in particular:
• whether the changes made by this instrument apply to the purchase of any land at any value, including residential land, and if so, how is the measure rationally connected to the stated objective of protecting vulnerable businesses;
• what safeguards are in place to ensure that foreign persons are not disproportionately affected by this measure;
• what the application fees are that apply to foreign persons seeking to purchase property (including residential property) that apply as a result of the changes made by this instrument;
• what the timeframe is by which the Treasurer will make decisions regarding investments by foreign persons; and
• why these changes are made on an ongoing basis (noting that it has been stated to be in response to the COVID-19 pandemic).
1.312 The committee noted that the measure may engage and limit the right to equality and non-discrimination. This right may be subject to permissible limitations if it is shown to be reasonable, necessary and proportionate. The committee sought the advice of the Treasurer as to the compatibility of this measure with the right to equality and non-discrimination. In seeking this further information, the committee was mindful that the Treasurer was required to act with great urgency and immediacy to safeguard the national interest by protecting assets more vulnerable to foreign acquisition by reason of the Coronavirus pandemic and that these assets may include residential property. The committee noted the legal advice with respect to these changes being made on an ongoing basis and noted that the government intended these measures to be temporary.
1.313 The Treasurer further advised:
The 2020 Regulations do not change the monetary thresholds that apply to the acquisition of residential land or vacant commercial land. The monetary thresholds for acquisitions of these land types were nil prior to the making of the 2020 Regulations. Therefore, foreign persons seeking to acquire residential land or commercial land have generally had to seek approval regardless of the value of the proposed acquisition. This has been the policy of successive Australian Governments.
The 2020 Regulations only affect the monetary thresholds that apply to acquisitions of agricultural land, developed commercial land and developed commercial land considered to be sensitive, as well as interests in businesses and entities. For your ease of reference Annexure A[9] sets out the thresholds as they applied before the 2020 Regulations were made. You will see that the change in thresholds relates only to the above-mentioned acquisitions.
Secondly, the Committee asked what the application fees are that apply to foreign persons seeking to purchase property as a result of changes made by the 2020 Regulations. Fees are payable for every notice or application submitted under the Foreign Acquisitions and Takeovers Act 1975 and Foreign Acquisitions and Takeovers Regulation 2015. The 2020 Regulations did not change the fee payable. Rather, some investors, who previously were not, but will now be, required to seek foreign investor approval, will be required to pay the applicable fee. The fees reflect the value of the acquisition, so investors of lower value acquisitions will pay a lower fee. The current schedule of fees is at Annexure B.[10]
As a result of the changes, a partial fee waiver is in place for foreign investors who are foreign non-government investors purchasing developed commercial land. The waiver provides that these investors pay a fee of $2,000 rather than $26,200 which would normally be payable under the standard schedule of fees. This aligns the fee paid by foreign non-government investors with the fee paid by government investors. The monetary threshold that applies to foreign government investors for acquisitions in developed commercial land, being nil, has not changed.
Thirdly, the Committee asked what the timeframe is by which the Treasurer will make decisions regarding investments by foreign persons. Under the Foreign Acquisitions and Takeovers Act 1975, the Treasurer has 30 days to consider an application. If I do not make a decision in this timeframe the application is deemed to have been approved. There are avenues to extend the timeframe in consultation with the applicant. My department remains committed [to] meeting urgent commercial deadlines wherever possible.
Fourthly, the Committee asked what safeguards are in place to ensure that foreign persons are not disproportionately affected by this measure. As mentioned in my previous letter dated 15 May 2020, the 2020 Regulations apply to agreements entered into on or after my announcement. In this way, investors were able to enter into agreements understanding how Australia's foreign investment framework would apply to them. This approach also preserves the operation of agreements that were in place at the time of the announcement.
Finally, the Committee asked why these changes are made on an ongoing basis, rather than including a sunset date. The continuing uncertainty around the Coronavirus, its ongoing impact on the economy and foreign investment into Australia, and the need to have these measures in place protecting the national interest are the considerations underpinning this decision.
On 5 June 2020, I announced significant reforms to Australia's foreign investment review framework. Announcing the reforms, I said the intention is for a seamless transition from the temporary Coronavirus measures, which include the Regulations, to the reforms measures, which are scheduled to commence on 1 January 2021. While certain aspects of the temporary measures will be replaced by the reform measures, other aspects will return to pre-Coronavirus settings. As part of the development of the new framework, consideration will be given to the most appropriate way to reverse the effect of the Regulations and, where necessary, replace them with the provisions of the new framework. However, given the current uncertainties about the duration of the Coronavirus pandemic, I consider it is currently too early to specify an end-date for the application of the 2020 Regulations.
1.314 The Treasurer has clarified that the changes made by these regulations do not apply to the acquisition of residential land or vacant commercial land, but only to acquisitions of agricultural land, developed commercial land and developed commercial land considered to be sensitive, as well as interests in businesses and entities. The Treasurer had initially advised that given the nature of the activity regulated by the Foreign Acquisitions and Takeovers Act 1975, the extent of any incompatibility with the right to equality and non-discrimination is likely to be small, and is outweighed by the national interest and the objective of protecting vulnerable Australian businesses subjected to the pressure on the Australian economy due to the COVID-19 pandemic. The objective of protecting vulnerable Australian businesses from the intense pressure placed on them during the COVID-19 pandemic would appear to be capable of constituting a legitimate objective for the purposes of international human rights law, and noting the context in which these regulations apply, the measure appears to be rationally connected to this objective (that is, effective to achieve the objective).
1.315 The Treasurer has also advised that the regulations did not change the application fee payable by foreign persons seeking to purchase property, but that a partial fee waiver is in place for foreign investors who are foreign non-government investors purchasing developed commercial land. The Treasurer noted that the changes made by the regulations apply prospectively, and preserve the operation of agreements that were in place at the time of the announcement. The Treasurer has advised that these measures were made on an ongoing basis given the continuing uncertainty around the coronavirus and its ongoing impact on the economy and foreign investment. The Treasurer also advised that significant reforms to Australia's foreign investment review framework are scheduled to commence on 1 January 2021, and certain aspects of the temporary measures will be replaced by these reform measures and other aspects will return to pre-coronavirus settings.
1.316 Noting that the changes made by these regulations only apply to the acquisition of agricultural land, certain commercial land and interests in businesses and entities, that there are fee-waivers in place, and the reasons given as to why the measures are not time-limited (and noting the intention to soon replace these measures), any limitation on the right to equality and non-discrimination would appear to permissible as a matter of international human rights law.
1.317 The committee thanks the Treasurer for this further response. The committee notes that the regulations amend the monetary threshold above which certain investments in Australia by foreign persons may require notification to the Treasurer for approval to nil. The committee considers this measure is designed to achieve the legitimate objective of safeguarding the national interest by protecting vulnerable businesses as COVID-19 puts intense pressure on the Australian economy and Australian businesses.
1.318 Noting that the changes only apply to the acquisitions of agricultural land, certain commercial land and interests in businesses and entities, that there are
fee-waivers in place, and the reasons given as to why the measures are not
time-limited (and noting the intention to soon replace these measures), the committee considers any limitation on the right to equality and non-discrimination would appear to permissible as a matter of international human rights law.
1.319 The committee has concluded its examination of the regulations.
[1] This entry can be cited as: Parliamentary Joint Committee on Human Rights, Foreign Acquisitions and Takeovers Amendment (Threshold Test) Regulations 2020 [F2020L00435], Report 9 of 2020; [2020] AUPJCHR 119.
[3] Parliamentary Joint Committee on Human Rights, Report 5 of 2020 (29 April 2020), pp. 42-44.
[4] Parliamentary Joint Committee on Human Rights, Report 7 of 2020 (17 June 2020), pp. 2-6.
[5] Foreign Acquisitions and Takeovers Regulations 2015, subsection 52(4).
[6] ‘Foreign person’ is defined in section 5 of the Foreign Acquisitions and Takeovers Act 1975 to include an individual not ordinarily resident in Australia.
[7] Articles 2 and 26 of the International Covenant on Civil and Political Rights. The prohibited grounds of discrimination are race, colour, sex, language, religion, political or other opinion, national or social origin, property, birth or other status. Under 'other status' the following have been held to qualify as prohibited grounds: age, nationality, marital status, disability, place of residence within a country and sexual orientation. The prohibited grounds of discrimination are often described as 'personal attributes'.
[8] The Treasurer's further response to the committee's inquiries was received on 26 June 2020. This is an extract of the response. The response is available in full on the committee's website at: https://www.aph.gov.au/Parliamentary_Business/Committees/Joint/Human_Rights/Scrutiny_reports.
[9] Annexure A can be accessed at: https://www.aph.gov.au/Parliamentary_Business/Committees/Joint/Human_Rights/Scrutiny_reports (under Human rights scrutiny report 9 of 2020, 'Responses from legislation proponents').
[10] Annexure B can be accessed at https://www.aph.gov.au/Parliamentary_Business/Committees/Joint/Human_Rights/Scrutiny_reports, (under Human rights scrutiny report 9 of 2020, 'Responses from legislation proponents').
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URL: http://www.austlii.edu.au/au/other/AUPJCHR/2020/119.html