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Wednesday, 4 May 1994
Page: 194


Senator MARGETTS —I direct my question to the Minister representing the Treasurer. I refer the minister to a report in the West Australian dated 5 March 1994, concerning increases in home prices in the Perth metropolitan area, which claimed that the median price of established Perth homes had increased by 11 per cent in the previous 12 months, and also to an advertisement in the same newspaper, on the same date, seeking houses, home units and development sites for a `real estate selling trip to Asia.' Is the minister aware that the Australian real estate agents are actively selling Australian domestic real estate in the Asian region? Does the government consider that the inflationary impact of this speculation is detrimental to the Australian economy and to the welfare of Australians aspiring to home ownership? Given the extensive nature of foreign speculation in Australian real estate, as evidenced in the 1992-93 annual report of the Foreign Investment Review Board, will the government undertake an investigation into the impact of this speculation on the Australian economy, the welfare of Australians and the ability of the Foreign Investment Review Board to monitor this speculation?


Senator COOK —Of course the Australian government is aware of community sensitivity on possible speculative activity by foreign investors and the lack of direct economic benefits. Because of that, we operate a very restrictive policy which prohibits foreign purchases of established housing. This policy came into existence in September 1987. It is not new; it has been around for over seven years.

  It works on the basis that only temporary residents—that is, students, people here on work visas, et cetera—and foreign companies buying for their senior executives can buy established houses for their own use whilst they are in Australia. However, the government does permit foreign interests to invest in the residential real estate sector for development purposes. They can therefore buy vacant land on the condition that the construction of a dwelling is commenced within 12 months, and that condition stops land banking as a practice.


Senator Margetts —That is not what the ad says.


Senator COOK —They can also buy home units, townhouses, et cetera off the plan, under construction or newly constructed but never occupied, subject to no more than half the units in any one development being sold to foreign interests. Such investment does add to the housing stock and does bring clear economic benefits through increased activity in the building sector.

  For the interest of the Senate and Senator Margetts, who has asked this question, the statistics from the 1992-93 Foreign Investment Review Board annual report indicate for Australia that foreign purchase of established housing totalled $280 million for temporary residents, whilst foreign investment in residential real estate for development was much higher at $1.940 billion which, as I have said, is a massive increase in the stock and availability of public housing in Australia.

  While I was giving that answer, I heard Senator Margetts say by way of an interjection, `That is not what the ad says.' In answering this question, I have concentrated on saying what the rules are applied by the government and the Foreign Investment Review Board. If people advertise under false pretences, that is a matter for other concerns. It is not to be taken that an ad appearing in a newspaper changes the guidelines under which we allow this foreign investment. They are the clear guidelines and, as honourable senators can see, they are sensitive to community concerns but, as well, recognise the need to improve the broad stock of housing, unit or townhouse availability in Australia.