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“Investors not welcome” is the message delivered by the government’s recent doubling of foreign investor fees, according to the Property Council of Australia (PCA).
The new regulation will see application fees to the Foreign Investment Review Board (FIRB) rise by 100 per cent effective from 29 July — a change resoundingly condemned by the council’s chief executive Ken Morrison.
“The Property Council supports moves to tackle the challenge of housing affordability and supply but increasing costs on and deterring investment in the creation of new housing works against this goal,” Mr Morrison said.
While the fees vary, on residential purchases, foreign investors will now pay $13,200 for acquisitions of $1 million or less, rising to a maximum of $1,045,000 for acquisitions of more than $40 million. Formerly these application costs ranged from $6,600 to $522,500.
The original fees were already considered high by the Property Council, and Mr Morrison said that the forthcoming hike made Australia seem hostile to outside investment.
“We should be welcoming foreign investment with open arms, not sending the opposite message by doubling these fees which are already much larger than our competitors and apply to far more transactions,” he said.
And he warned that such practices risked the inflow of funds that keep the country’s industry strong.
“Australia needs foreign investment to power our economy, including investment in our modern office buildings, industrial parks, shopping centres, tourism facilities, student accommodation and much-needed new housing.
“The new Albanese government has rightly put a high value on Australia’s external relations in its first months in office, but this move to double foreign investor application fees sends the wrong message to the world,” Mr Morrison said.
The body also criticised the government for searching for revenue streams in administrative costs.
“It is extremely poor practice to use a processing fee as a tax revenue source to fund other programs, a point the Productivity Commission has been critical of in the past and which we made to the now government during the election campaign when this was announced without consultation,” PCA said.
The move comes not long after FIRB handed down its first fine on a foreign investor for breaching the country’s investment rules, penalising a non-resident property buyer $250,000 for purchases he made in outer Melbourne.
New compliance and enforcement powers that came into effect in January 2021 dramatically increased the penalties and action FIRB is able to take against those who breach the Foreign Acquisitions and Takeover Act 1975, allowing the body to impose a penalty of up to 25 per cent of the value of the property or recapture the investor’s capital gains, whichever is greater.
ABOUT THE AUTHOR
Juliet Helmke
Based in Sydney, Juliet Helmke has a broad range of reporting and editorial experience across the areas of business, technology, entertainment and the arts. She was formerly Senior Editor at The New York Observer.
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