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Thursday, 31 May 1984
Page: 2319

(Question No. 864)

Senator Peter Rae asked the Minister for Industry and Commerce, upon notice, on 2 May 1984:

Does the Minister for Industry and Commerce agree that Australian industry will continue to need foreign investment to assist it to restructure; if so, will the Minister consult the Treasurer with a view to easing the stringent foreign investment guide-lines which currently are restricting industry's access to foreign capital.

Senator Button —The answer to the honourable senator's question is as follows:

Yes, foreign investment does have a role to play in any restructuring of industry but I do not agree that the present foreign investment guidelines are restricting industry's access to foreign capital. In fact, the Government has already assisted firms to borrow overseas more readily by removing foreign exchange controls.

The Government announced in December 1983 that it had decided to continue the broad thrust of foreign investment policy first elaborated by the previous Labor Government in 1975 and, with some amendments in the light of changing circumstances, maintained by the previous Government.

Foreign investment policy will continue to be based on twin pillars: Firstly, a recognition of the significant contribution that foreign capital can make to the development of Australia's industries and resources by providing scope for higher rates of growth in economic activity and employment than would otherwise be the case. Secondly, Australians must be given adequate opportunities to participate in the development of our industries and resources in order to balance the economic benefits of foreign investment with the community's concerns that the degree of foreign ownership and control of Australia's economy should be kept within acceptable bounds.

Foreign investment has made great contributions to Australia's manufacturing industries in the past by allowing greater economic growth and employment than would have been possible from domestic sources alone. I would expect foreign investment to make a continuing contribution in future during the necessary restructuring of manufacturing which the Government's policies will bring about.

I should point out that foreign investment policy relates only to direct foreign investment and does not seek to regulate foreign borrowings by forms. This Government has already made foreign borrowings easier for manufacturers by removing foreign exchange controls and has removed the pressures on domestic liquidity that such borrowings exerted in the past by floating the exchange rate .

In relation to foreign investment in the manufacturing sector, the Government's foreign investment policy has no specific minimum Australian equity requirements . Proposals to acquire existing businesses are required to demonstrate sufficient economic benefits to offset any reduction in Australian ownership and control involved. The foreign investment policy is widely understood and accepted by the community at large and the business sector. This is borne out by the smooth functioning of the Government's examination process. Since the Labor Government came to office on 5 March 1983 to 31 March 1984, 190 proposals in the manufacturing sector were decided by the Government. The majority of these were approved: 132 were approved without conditions, 48 were approved subject to conditions and 10 were rejected, two of which were subsequently approved after amendment to remove inconsistencies with policy.

This Government will continue to ensure that foreign investment proposals, which are judged to be in the national interest, are approved including investments which promote desirable industry rationalisation.