Australia is always open for business, whether it is Scott Morrison or anyone else in power
The political reshuffle in Canberra has created confusion and uncertainty in the overseas investor community. There is concern that the Scott Morrison government may take a tougher approach, given some of the rhetoric about foreign investment.
All of this is against a global backdrop of rising nationalism and protectionism. With an Australian federal election to be called by May next year, if not sooner, what should foreign investors be thinking about? Perhaps history provides a clue.
In 1976, the conservative Liberal Party government created the independent Foreign Investment Review Board. This board was given a clear goal: to approve investments that deliver “net economic benefits to Australia”. By 1983, the review board had rejected only 2.7 per cent of applications over the preceding five years.
Crucially, from 1986, the review board deemed investments approved, unless it could show they would be a net drag on the economy.
By 1987, the outcome of the left-leaning policies of Bob Hawke and Paul Keating meant rejections dropped to 2.2 per cent. So much for Liberal coalition governments having a monopoly on pro-investment policies.
Between 1987 and 1995, Commonwealth Bank, Qantas and Telstra were privatised. Foreign Investment Review Board rejections dropped to 2.0 per cent.
Australia, unlike many countries, allows foreign investment and ownership of agricultural land. Kidman Station is almost twice the size of China’s Greater Bay Area. The Malcolm Turnbull government allowed the sale of Kidman to a consortium that is one-third owned by Chinese developer Shanghai CRED.
In the last five years, there have been only 11 rejections out of 130,599 applications (excluding withdrawn applications), or 0.008 per cent. The last three rejections have been against companies from the US, Singapore, Hong Kong and China.
Scott Morrison named new Australian Prime Minister
Australia remains one of the most open economies in the world. The new prime minister, Scott Morrison, is on record as saying he welcomes all foreign investment that does not compromise Australia’s national interest.
History demonstrates that both major political parties have maintained an openness to foreign direct investment. Foreign investment remains a key component of growth that both political parties will continue to rely on.
Andrew Macintosh, chairman, Australian Chamber of Commerce in Hong Kong; adjunct faculty, Macquarie Graduate School of Management