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Foreign investment in Australia



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TREASURER

EMBARGO

NO.

nf i j n

STATEMENT BY THE TREASURER, THE HON JOHN HOWARD, MP

FOREIGN INVESTMENT IN AUSTRALIA ■

The num ber o f f o r e i g n i n v e s t m e n t p r o p o s a l s d u r in g t h e M arch q u a r t e r 1981

re m a in e d a t a h ig h l e v e l . . T h e re w ere 298 p r o p o s a l s ; t h i s was s l i g h t l y

fe w e r th a n t h e num ber d e c id e d i n t h e p r e v i o u s q u a r t e r a n d e i g h t p e r c e n t

h i g h e r th a n t h e q u a r t e r l y a v e r a g e f i g u r e f o r 1 9 7 9 -8 0 . . .

The t o t a l e x p e c te d i n v e s t m e n t fo re s h a d o w e d i n f o r e i g n in v e s t m e n t

p r o p o s a l s t h a t w e re a p p ro v e d i n th e M arch q u a r t e r was $885 m i l l i o n ;

t h i s c o m p a res w ith t h e q u a r t e r l y a v e r a g e f o r e x p e n d i t u r e on p r o p o s a l s

d e c id e d i n 1979-80 o f $ 1 ,4 5 2 m i l l i o n . The e x p e c te d e x p e n d i t u r e

a s s o c i a t e d w ith a p p ro v e d p r o p o s a l s f o r a c q u i s i t i o n s o f b u s i n e s s e s

o p e r a t i n g i n A u s t r a l i a was $491 m i l l i o n , w h ile t h e e x p e c te d e x p e n d it u r e

a s s o c i a t e d w ith new b u s i n e s s p r o p o s a l s was $393 m i l l i o n .

T h e re h a s b e e n some m is u n d e r s ta n d in g r e c e n t l y o f some a s p e c t s o f t h e

FIRB c a s e s t a t i s t i c s . The f o r e i g n in v e s tm e n t p r o p o s a l s c l a s s i f i e d a s ;

" A c q u i s i t i o n s " i n t h e a t t a c h e d t a b l e s c o v e r a r a n g e o f t r a n s a c t i o n s , ·

' A :

i n c l u d i n g p r o p o s a l s f o r c o r p o r a t e r e - o r g a n i s a t i o n s , f o r a c q u i s i t i o n s o f

r e a l e s t a t e f o r n o n - b u s i n e s s u s e and f o r m in e r a l e x p l o r a t i o n farm -j-ins,

a s w e l l a s a c q u i s i t i o n s o f a l l o r p a r t o f A u s t r a l i a n b u s i n e s s e s .

2

A c c o r d in g ly , a lt h o u g h a ro u n d 97 p e r c e n t o f a l l p r o p o s a l s a p p ro v e d i n .

t h e M arch q u a r t e r w e re c l a s s i f i e d a s a c q u i s i t i o n s , i n o n ly a ro u n d i

24 p e r c e n t o f t h e s e c a s e s was th e a c q u i s i t i o n o f a k i n d t h a t l e d t o a

l o s s o f A u s t r a l i a n c o n t r o l o f t h e b u s i n e s s c o n c e r n e d .

M o re o v e r, w h ile a c q u i s i t i o n s a c c o u n t f o r t h e v a s t m a j o r i t y o f f o r e i g n

in v e s tm e n t p r o p o s a l s , t h e am o u n ts p a id by f o r e i g n i n t e r e s t s f o r t h e s e

a c q u i s i t i o n s h a v e n o t r e p r e s e n t e d a s i m i l a r l y h ig h p r o p o r t i o n o f t h e !

t o t a l v a lu e o f a l l f o r e i g n in v e s tm e n t p r o p o s a l s . I n t h e M arch q u a r t e r ,

f o r e x a m p le , th e c o n s i d e r a t i o n in v o lv e d i n a c q u i s i t i o n s r e p r e s e n t e d o n ly

26 p e r c e n t o f t h e t o t a l e x p e c te d in v e s t m e n t a s s o c i a t e d w ith a l l

a p p ro v e d f o r e i g n in v e s tm e n t p r o p o s a l s . The r e m a in in g in v e s tm e n t was

t h a t a s s o c i a t e d w i t h new b u s i n e s s p r o p o s a l s (4 4 p e r c e n t ) a n d t h a t .

e x p e c te d t o b e u n d e r ta k e n on t h e b u s i n e s s e s p ro p o s e d t o b e a c q u i r e d

(3 0 p e r c e n t ) . .

E x p e r ie n c e h a s shown t h a t t h e s t a t i s t i c s o f f o r e i g n in v e s t m e n t p r o p o s a l s

may be s u b j e c t t o f l u c t u a t i o n from q u a r t e r t o q u a r t e r an d may be

s i g n i f i c a n t l y i n f l u e n c e d by a p p r o v a l s g iv e n t o p a r t i c u l a r l y l a r g e

p r o j e c t s . The s t a t i s t i c s a r e n o t , m o re o v e r, a r e c o r d o f t h e e x p e n d i t u r e

t h a t i s e x p e c te d t o o c c u r i n a p a r t i c u l a r q u a r t e r ; a b e t t e r i n d i c a t o r

o f a c t u a l e x p e n d i t u r e i s g iv e n by t h e d a t a r e l a t i n g t o f o r e i g n

in v e s tm e n t i n f l o w s . P r e l i m i n a r y d a t a f o r t h e M arch q u a r t e r 1981

i n d i c a t e t h a t i n f l o w o f f o r e i g n i n v e s tm e n t i n e n t e r p r i s e s was a t a ' <

r e c o r d l e v e l .

3

The s t a t i s t i c s r e g a r d i n g f o r e i g n in v e s tm e n t p r o p o s a l s a r e a r e c o r d o f

t h e i n t e n t i o n s o f f o r e i g n i n t e r e s t s , a s i n d i c a t e d i n t h e i r s u b m is s io n s '

t o t h e G o v ern m en t, r e g a r d i n g in v e s tm e n t i n A u s t r a l i a a t t h e tim e

a p p r o v a l i s g r a n t e d . As s u c h , a num ber o f q u a l i f i c a t i o n s m u st be

a t t a c h e d t o t h e s t a t i s t i c s . I n p a r t i c u l a r , t h e p r o p o s e d a c t i o n s and

e x p e n d i t u r e s o f f o r e i g n i n v e s t o r s may n o t a lw a y s be r e a l i s e d .

The am ount o f e x p e n d i t u r e u l t i m a t e l y r e a l i s e d i n r e s p e c t o f p a r t i c u l a r

p r o p o s a l s may be s p r e a d o v e r s e v e r a l y e a r s a n d , i n r e s p e c t o f m in e r a l

d e v e lo p m e n t, may be d e p e n d e n t upon s u c c e s s f u l e x p l o r a t i o n a n d th e

c o m p le tio n o f f e a s i b i l i t y s t u d i e s . M o re o v e r, some o f t h e e x p e c te d

in v e s tm e n t r e p r e s e n t s t h e c o n t r i b u t i o n s by A u s t r a l i a n s t o p r o j e c t s i n

w h ic h th e y a r e i n p a r t n e r s h i p w ith f o r e i g n i n t e r e s t s .

W h ile c a u t i o n s h o u ld , t h e r e f o r e , be e x e r c i s e d i n u s i n g t h e s e s t a t i s t i c s

a s a m e a su re o f t h e o v e r a l l l e v e l o f c u r r e n t f o r e i g n i n v e s t m e n t a c t i v i t y

i n A u s t r a l i a , th e y p r o v id e a r e a s o n a b l e i n d i c a t i o n o f t h e t r e n d o v e r

tim e o f t h e u n d e r l y i n g d e g r e e o f i n t e r e s t by f o r e i g n i n v e s t o r s i n t h e

A u s t r a l i a n econom y. The M arch q u a r t e r r e s u l t s , v iew e d i n c o n j u n c t i o n

w ith t h o s e f o r t h e p r e v i o u s few q u a r t e r s an d s u b j e c t t o t h e l i m i t a t i o n s

o u t l i n e d a b o v e , i n d i c a t e t h a t f o r e i g n i n v e s t o r i n t e r e s t i n A u s t r a l i a i s

c o n t i n u i n g a t a h i g h l e v e l . . .

4

D e t a i l s o f t h e M arch q u a r t e r 1981 s t a t i s t i c s a r e i n t h e a t t a c h e d ;

t a b l e s . T a b le 1 show s t h e num ber o f p r o p o s a l s d e a l t w ith i n t h e M arch

q u a r t e r , t h e num bers a p p ro v e d , r e j e c t e d a n d n o t r e q u i r i n g a p p r o v a l and

t h e am ount o f i n v e s t m e n t fo re s h a d o w e d i n t h e s e p r o p o s a l s .

T a b le s 2 an d 3 p r o v id e d e t a i l s o f p r o p o s a l s c o n s id e r e d by th e G overnm ent

s i n c e t h e F o r e ig n I n v e s tm e n t Review B oard was e s t a b l i s h e d . ;

CANBERRA ACT

18 J u n e 1981

TABLE 1

FOREIGN INVESTMENT PROPOSALS , 1 JANUARY 1981 TO 31 MARCH 1981

TYPE OF PROPOSAL NUMBER AVERAGE

PROCESSING . TIME ( d a y s)

PAYMENTS FOR ASSETS

($m)

EXPECTED NEW INVESTMENT

($m)

TOTAL EXPECTED INVESTMENT(a)

($m)

A pproved w i t h o u t c o n d i t i o n s :

A c q u i s i t i o n s (b ) 160 25 1 3 3 .5 2 7 .3 1 6 0 .8

New b u s i n e s s e s 4 26 - 2 8 .0 2 8 .0

C o n d i t i o n a l l y a p p ro v e d :

A c q u i s i t i o n s ( b ) . 121 29 9 2 .2 2 3 8 .3 3 3 0 .5

New b u s i n e s s e s 4 32 3 6 5 .2 3 6 5 .2

TOTAL APPROVED ( a ) 289 27 2 2 5 .7 6 5 8 .8 8 8 4 .5

R e j e c t e d : A c q u i s i t i o n s ( b ) 9 35 2 0 .7 2 .4 2 3 .1

New b u s i n e s s e s — — ' — .■ — —

TOTAL DECIDED ( a ) 298 27 2 4 6 .4 6 6 1 .1 9 0 7 .5

N ot r e q u i r i n g a p p r o v a l

u n d e r A ct o r p o l i c y 98

W ithdraw n 15

( a ) A ll am o u n ts a r e ro u n d e d a n d d i s c r e p a n c i e s may o c c u r b e tw e e n sums o f t h e com ponent ite m s a n d t o t a l s .

(b ) P r o p o s a l s f a l l i n g w i t h i n t h e a m b it o f t h e F o r e ig n T a k e o v e rs A ct a n d p r o p o s a l s f o r t h e a c q u i s i t i o n

o f r e a l e s t a t e t h a t w ere d e a l t w i t h u n d e r t h e r e a l e s t a t e p o l i c y . *

TABLE 2

FOREIGN INVESTMENT PROPOSALS, 1 APRIL 1976 TO 31 MARCH 1981 NUMBER OF PROPOSALS PER QUARTER

TYPE OF PROPOSAL . 1 9 7 b -7 7 (a )

(QUARTERLY AVERAGE)

1977-78 (QUARTERLY AVERAGE)

1978-79 ( QUARTERLY AVERAGE)

SEPTEMBER DECEMBER 1979 1979

MARCH 1980

JUNE 1980

SEPTEMBER 1980 DECEMBER 1980

MARCH 1981

A pproved w ith o u t c o n d i t i o n s : A c q u i s it io n s (b) 135 187 145 181 183 174 207 156 195 160

New b u s in e s s e s 3 4 3 3 3 3 3 1 4 4

C o n d i t io n a ll y a p p ro v e d : A c q u i s it io n s ( b ) 84 74 63 60 60 89 94 99 101 121

New b u s in e s s e s 6 5 9 4 9 4 9 2 3 4

TOTAL APPROVED ( c ) 228 269 ' 220 248 255 270 313 258 303 289

R e je c te d : A c q u i s it io n s ( b ) 1 1 1 2 1 3 6 ' 11 12 9

New b u s in e s s e s 1 1 — 1 1 5 1 1 1 -

TOTAL DECIDED ( c ) 230 271 221 251 257 ' 278 320 270 316 298

Not r e q u i r i n g a p p ro v a l

u n d e r A ct o r p o l ic y 50 57 42 64 100 102 94 93 133 98

( a ) A p r il 1976 t o Ju n e 1977

(b ) P r o p o s a ls f a l l i n g w ith in t h e a m b it o f th e F o re ig n T a k e o v ers Act and p r o p o s a ls f o r t h e a c q u i s i t i o n o f r e a l e s t a t e t h a t w ere d e a l t

w ith u n d e r th e r e a l e s t a t e p o l i c y .

( c ) A ll am ounts a r e ro u n d ed and d i s c r e p a n c i e s may o c c u r betw een sums o f t h e com ponent ite m s and t o t a l s .

TABLE 3

FOREIGN INVESTMENT PROPOSALS, 1 APRIL 1976 TO 31 MARCH 1981 EXPECTED INVESTMENT ASSOCIATED WITH PROPOSALS DECIDED PER QUARTER ($ MILLION)

TYPE OF PROPOSAL 1 9 7 6 -7 7 (a )

(QUARTERLY AVERAGE)

1977-78 (QUARTERLY AVERAGE)

1978— 7 9 (QUARTERLY AVERAGE)

SEPTEMBER DECEMBER 1979 1979

MARCH 1980

JUNE 1980

SEPTEMBER DECEMBER 1980 1980

MARCH 1981

Approved w ith o u t c o n d i t i o n s : A c q u i s it io n s (b) 106 175 270 458 551 210 181 16 5 527 161

New b u s in e s s e s 362 21 7 16 _ - 15 2 6 10 81 28

C o n d i t io n a ll y a p p ro v e d : A c q u i s it io n s ( b ) 164 119 244 170 205 216 389 449 674 331

New b u s in e s s e s 88 433 360 422 2 ,1 0 4 30 834 5 405 365

TOTAL APPROVED ( c ) 721 748 880 1 ,067 2 ,8 7 4 458 1 ,4 1 0 628 1 ,6 8 7 885

R e je c te d : A c q u i s it io n s ( b ) 1 1 13 1 1 3 60 67 109 23

New b u s in e s s e s 10 2 75 — - 23 400 , - 300 - '

TOTAL DECIDED ( c ) 732 750 968 1,068 2 ,8 7 5 484 1 ,869 695 2 ,0 9 5 908

( a ) A p r il 1976 t o June 1977

(b ) P r o p o s a ls f a l l i n g w ith in t h e a m b it o f t h e F o re ig n T a k e o v ers Act and p r o p o s a ls f o r t h e a c q u i s i t i o n o f r e a l e s t a t e t h a t w ere d e a l t

w ith u n d e r th e r e a l e s t a t e p o l i c y .

( c ) A ll am ounts a r e ro u n d ed and d i s c r e p a n c i e s may o c c u r b etw een sums o f t h e com ponent ite m s and t o t a l s .