A report on foreign investment in Australian residential real estate, handed down today, has revealed the Foreign Investment Review Board has taken no court action for violations since 2006.
MP Kelly O’Dwyer, chair of the House Economics Committee, which compiled the report for treasurer Joe Hockey, accused the FIRB of “a significant failure of leadership” but did not identify specific instances of where the laws around foreign investment in Australian property had been broken. The report concluded that the existing laws were sound, but O’Dwyer believes enforcement was lax.
“It defies belief that there has been universal compliance with the foreign investment framework outlined above since 2007,” the report states.
It included 12 recommendations for strengthening the rules around foreign investment and found there is no “accurate or timely data that tracks foreign investment” and that “noone really knows how much foreign investment there is in residential real estate, nor where that investment comes from”.
The report, which took on a partisan tone, was criticised by the committee’s Labor deputy chair, Ed Husic.
It found that:
No divestment orders were issued, which means no government sale of illegally acquired property was made, during Labor’s term in office. This compares with 17 divestment orders between 2003 to 2007 when foreign investment in residential real estate was at much lower levels. FIRB was also unable to provide basic data on voluntary divestments.
O’Dwyer said it is a “systems failure” and the FIRB needs to be repaired and given extra resources be allocated, including harsher civil and criminal penalties for all involved in knowingly breaching the foreign investment rules.
“The ability to sanction people who have breached the foreign investment framework more easily is critical,” the report said.
“Hence the need to bring in a civil penalty regime for breaches of the foreign investment framework; along with the need to capture those people, who have previously stood outside the framework but materially impact the integrity of our foreign investment regime.”
The report also recommends that monetary value of fines directly relate to the property in question and that a national register of land and title transfers that record citizenship and residency status be established.
Opposition MP Ed Husic said there was no “clear-cut evidence of widespread non-compliance” arguing that the Australian National Audit Office should review compliance and ensure the FIRB was adequately resourced.
“The Coalition weren’t interested in common sense. They were just making a mad dash for cash… The thing that upsets me more than anything else is that they’re just levering off anti anti-foreign investment sentiment to justify what they’re doing here and I think it’s wrong,” he said.
The full report is here.
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