This Bills Digest replaces an earlier version dated 27 February 2024.

Purpose of the Bill

This Bills Digest relates to two Bills comprising:

• Foreign Acquisitions and Takeovers Fees Imposition Amendment Bill 2024 (the Fees Imposition Bill)
• Treasury Laws Amendment (Foreign Investment) Bill 2024 (the Foreign Investment Bill).

The purpose of the Fees Imposition Bill is to amend the Foreign Acquisitions and Takeovers Fees Imposition Act 2015 and the Foreign Acquisitions and Takeovers Fees Imposition Regulations 2020 to increase fees imposed on foreign investors for acquiring established residential dwellings in Australia and for leaving their properties vacant.[1]

The purpose of the Foreign Investment Bill is to amend the International Tax Agreements Act 1953 to retrospectively clarify the relationship between foreign investment fees and other similar state and territory taxes with Australia’s double tax agreements with other countries.[2]

Fees Imposition Bill

Background

Australia’s foreign investment policy in relation to residential dwellings

There is a widespread perception that Australia is facing a housing crisis – with many young Australians being ‘priced out’ of homeownership or affordable rentals – and this crisis is exacerbated by foreign investors driving up housing prices.[3] For example, in 2023 a poll conducted by researchers from the University of Technology Sydney found:

• 73% of those surveyed believe ‘foreign buyers from China drive up Australian housing prices’
• 68% say ‘Chinese investors have negatively affected the rental market for residential real estate in Australia’.[4]

The Australian Government’s foreign investment policy is to channel foreign investment into new residential dwellings (for example, off-the-plan apartments) as opposed to established dwellings (for example, previously occupied homes).[5] Foreign investment applications are therefore considered in light of the overarching principle that the proposed investment should increase Australia’s housing stock (by creating at least one new additional dwelling).[6]

The Government argues this approach creates additional jobs in the construction industry, increases government revenues, stimulates economic growth, and ensures foreign investment adds to the available housing stock, all of which could potentially ease housing affordability issues for Australians.[7]

Consequently, foreign persons are generally prohibited from purchasing established residential dwellings in Australia.[8] The main exception to that prohibition relates to foreign persons who are temporary residents of Australia (for example, international students). In other words, a temporary resident is generally permitted to purchase one established dwelling to use as their principal place of residence, but not for investment purposes (for example, rent out the dwelling as an investment property).[9]

Furthermore, the temporary resident must sell the dwelling within six months from when it ceases to be their principal place of residence, or when they cease to be a temporary resident (for example, leaving Australia after competing their studies).[10]

Although foreign persons are generally prohibited from purchasing established dwellings, they are permitted to purchase newly constructed dwellings and vacant land (if they intend to build).[11] As noted, the Australian Government’s policy is designed to leverage foreign investment to expand the country’s housing supply and generate employment opportunities for the construction sector.[12]

Foreign investment fees

A foreign person who proposes to acquire an interest in residential land needs foreign investment approval before doing so – regardless of its value.[13] In practice, this means a foreign person who wishes to purchase residential dwellings or vacant land in Australia must obtain approval from the Australian Government’s Foreign Investment Review Board (FIRB).[14] A foreign investor attempting to purchase property without securing FIRB approval could face severe penalties.[15]

In 2015, the Foreign Acquisitions and Takeovers Fees Imposition Act 2015 commenced. The law specifies that foreign investors must pay application fees (also known as ‘foreign investment fees’) when applying for FIRB approval.[16]

The amount of fees is based on the value of the property being acquired, with different tiers of fees corresponding to various property values (see Table 1). Currently there is a maximum fee cap, which is $1,119,100.[17]

Table 1: Foreign investment fees for acquisition of residential land, 1 July 2023 to 30 June 2024 rates[18]

Sources: Australian Tax Office (ATO), ‘Fees for foreign residential investors’. FIRB, Guidance Note 10: Fees for Foreign Investment Applications, version 3, (10 August 2023).

FIRB approval can come in the form of ‘no objection notification’ or ‘exemption certificate’.[19] For the acquisition of previously occupied homes, temporary residents may apply for FIRB approval through either a no objection notification (when seeking approval for a specified property), or through an exemption certificate (when an exact property has not yet been identified).[20] For example, a foreign person purchasing an established dwelling that is valued at $1 million would need to pay a foreign investment application fee of $14,100 to obtain FIRB approval.

For the acquisition of newly constructed dwellings, a foreign person may pay additional charges on top of the application fees listed in Table 1. This is because a property developer intending to sell new dwellings to foreign investors would need to secure an exemption certificate from the FIRB. From 1 July 2023 to 30 June 2024, the cost of obtaining a ‘new or near-new dwelling exemption certificate’ is $60,600.[21] This cost is often passed on by the property developer to foreign investors as additional charges.[22]

After obtaining the exemption certificate, the property developer is then required to report to FIRB the sales of new or near-new dwellings every 6 months. A separate fee per sale will also be payable for each dwelling (for example, an apartment in a complex) sold to a foreign person under the certificate.[23]

Vacancy fees

All foreign-owned dwellings (established or new) are subject to an annual vacancy fee (also known as vacancy penalty) if the dwelling is unoccupied or not genuinely available for rent for at least 6 months within a 12-month period.[24]

Foreign investors that purchase a dwelling and then deliberately leave it vacant are engaging in a practice called ‘land banking’. Although land banking appears counterintuitive at first, especially when considering the loss of potential rental income, foreign investors may choose to do so for several reasons:

• Capital appreciation: Investors may anticipate that a property will increase in value, possibly due to upcoming infrastructure development or zoning changes around the property. In a market with rapidly rising house prices, the capital appreciation can far exceed the potential rental income that would have been earned. Furthermore, some investors prefer to leave their property vacant because they believe having tenants in a property could lower the property value due to ‘wear and tear’.
• Airbnb: Investors may occasionally list their property on Airbnb to generate some income without committing to long-term leases. This allows the investors to keep the property available for sale at opportune times. In some popular tourist areas, a property occasionally rented out to Airbnb travellers (as opposed to long-term tenants) can generate significant income. If the property is not genuinely available as a rental property for a continuous period of 30 days or more, it is considered residentially unoccupied for the purposes of vacancy fees.[25]
• Holiday home: Some wealthy foreign investors may choose to leave their Australian holiday homes unoccupied for convenience reasons. They may want to avoid the hassles of tenancy management.

Land banking can have significant implications for Australia’s rental market because it reduces the supply of available dwellings for long-term leases. As such, in 2017 the Foreign Acquisitions and Takeovers Fees Imposition Amendment (Vacancy Fees) Act 2017 was legislated to impose vacancy fees on foreign owners that leave their properties vacant. The legislation was designed to promote better use of housing stock by ensuring properties owned by foreign investors are occupied or made available for rent, thereby alleviating the housing shortage in Australia.[26]

The vacancy penalty amount is generally equivalent to the foreign investment fees initially paid during the property’s acquisition (see Table 1 above).[27] For example, if a foreign investor purchases a property for $1 million and leaves it unoccupied, they would need to pay an initial application fee of $14,100 and then a vacancy penalty of $14,100 per annum.

Other fees and charges

In addition to the foreign investment fees and vacancy fees charged by the federal government, a foreign investor purchasing residential dwellings in Australia may also need to pay state-based surcharge purchaser duty (also known ‘foreign citizen stamp duty surcharge’) and surcharge land tax (also known as ‘foreign owner land tax surcharge’).

Sources of foreign investment and their proportion in total property sales

For 2022–23, a total of 6,576 foreign investment proposals in residential real estate were approved by FIRB.[28] The total value of the approved proposals was $7.9 billion.[29] A significant proportion of foreign investment in Australia’s residential real estate is from Chinese investors (see Table 2).

Foreign acquisitions of residential properties in Australia generally account for less than 1% of total property sales. This figure is highlighted in a May 2023 article by the Australian Financial Review, which suggests ‘overseas investors are buying less property than you think’.[30]

A 2014 paper by the Reserve Bank of Australia observes:

Foreign purchases appear to be most concentrated in new rather than established dwellings, in higher- rather than lower-priced dwellings, in medium- and high-density dwellings rather than detached dwellings, and in inner-city areas of Sydney and Melbourne rather than other locations.[31]

Drawing on more recent data, researchers from the University of Technology Sydney argue that, while investments from Chinese buyers are concentrated in specific segments of Australia’s housing market (for example, new dwellings in certain Sydney suburbs), the perception that they significantly inflate house prices nationwide might be overstated.[32]

Table 2: Top 10 sources of foreign investment in Australia’s residential real estate, ranked by number of approved proposals

Source: FIRB, ‘Quarterly Report on Foreign Investment - 1 July to 30 September 2023’, 7 and 9.

Key issues and provisions of the Fees Imposition Bill

Key provisions

Schedule 2 of the Bill proposes to amend the Foreign Acquisitions and Takeovers Fees Imposition Regulations 2020 (the Regulations) to:

• triple the existing fees for acquiring established residential dwellings (see Table 3)
• double the vacancy fees for all foreign-owned dwellings purchased on or after 9 May 2017 (see Table 4).

The Explanatory Memorandum of the Bill notes that the combined effect of these fee changes is:

a six-fold increase in vacancy fees for future purchases of established dwellings as the vacancy fees are calculated based on the foreign investment fees for the purchase of the dwelling.[33] [emphasis added]

Foreign investment fees for purchases of newly constructed dwellings and vacant residential land are not changed.

Schedule 1 of the Bill proposes to increase the maximum fee to $7,000,000 (up from $1,119,100) that can be imposed by the Regulations. The new $7,000,000 fee cap is commensurable with the six-fold increase in vacancy fees for established dwellings.[34]

Julie Collins, the Minister for Housing, characterises the proposed higher fees as ‘part of the Albanese Government’s broad and ambitious agenda to improve housing affordability and supply’.[35]

Table 3: Current and proposed foreign investment fees, 1 July 2023 to 30 June 2024 rates

Sources: ATO, ‘Fees for foreign residential investors’; FIRB, ‘Guidance Note 10: Fees for Foreign Investment Applications’; Item 7 of Schedule 2 of the Fees Imposition Bill.

Table 4: Current and proposed vacancy fees, 1 July 2023 to 30 June 2024 rates

Sources: ATO, ‘Fees for foreign residential investors’; FIRB, ‘Guidance Note 10: Fees for Foreign Investment Applications’; Items 7, 35 and 37 to 39 of Schedule 2 of the Fees Imposition Bill. McInnes Wilson Lawyers, ‘FIRB Update: Significant Changes to Application and Vacancy Fees For Residential Dwellings’.

Policy issue 1 – Would the proposed increase in fees encourage foreign buyers to invest in new housing developments?

In her second reading speech for the Bill, Julie Collins (Minister for Housing) argues:

The higher [foreign investment] fees for established dwelling applications will encourage foreign buyers to invest in new housing developments.[36]

As noted, foreign investment fees for the acquisition of new dwellings and vacant residential land are not changed by the Bill. Therefore, the tripling of fees for established dwellings is expected to dissuade some temporary residents from buying such properties and steer them towards investing in new dwellings instead. This approach is in line with the Government’s strategy to direct foreign investment into the creation of new housing developments, which should lead to an increase in Australia’s housing supply and create additional jobs in the construction sector.[37]

According to FIRB data for the fiscal year 2021–22, there were 4,228 residential real estate transactions involving some level of foreign ownership. Notably, approximately 2,888 of these transactions (or 68.3%) were for new dwellings and vacant land.[38]

This distribution indicates that the majority of residential foreign investment was not in established dwellings to begin with. As such, while the proposed fee increase will likely redirect some investment towards new dwellings and vacant land, its overall effect on housing market dynamics and on increasing housing stock may be limited.

Policy issue 2 – Would the proposed increase in fees deter foreign buyers from investing in Australia’s real estate sector?

The Australian Government welcomes foreign investment.[39] However, Tim Reardon, Chief Economist at Housing Industry Association, believes the proposed higher fees outlined in the Bill will act as a deterrent to foreign investment and send the wrong signal to potential foreign buyers. Specifically, he claims:

In order to address the acute shortage of housing stock, governments need to attract more foreign investment, not increase taxes on them.

There are two very common misunderstandings about the shortages of housing in Australia. One is that there is a large volume of vacant homes, the second is that foreign investors are the cause of the housing shortage …

… since 2015 a range of punitive taxes have been imposed on foreign investors by state and federal governments. The consequence of this is that these investors have withdrawn from the Australian market and this is a key reason why the volume of apartments commencing construction is now almost half of what it was in 2016. If governments tax something, there will be less of that item.[40]

Since 1 December 2015, the Australian Government has implemented foreign investment application fees for overseas investors seeking approval from the FIRB.[41] The FIRB acknowledges that, since the 2015–16 financial year, there has been a decline in foreign investor interest in Australia’s residential real estate market (see Table 5).[42]

The FIRB argues this decline is attributed, in part, to the imposition of these foreign investment fees.[43] Additional factors potentially contributing to this trend include more stringent controls on capital outflows in the investors’ home countries and increased stamp duty charges for foreign investors at the state and territory level.[44]

Table 5: Approved foreign investment proposals in Australia’s residential real estate, number of proposals and total value

Source: Treasury, Annual report 2022–23, 224; FIRB, Annual report 2020–21, 24; FIRB, Annual report 2019–20, 27; FIRB, Annual report 2018–19, 23. FIRB, Annual report 2016–17, 27.

Notes: 2020–21 data was revised by Treasury to account for the temporary changes to Australia’s foreign investment regulation during the COVID-19 pandemic. Before republishing this data or comparing between years, please thoroughly review the methodological and data caveats outlined in Appendix B of the FIRB, Annual report 2020–21.

Given this trend, it stands to reason that any further increases in these fees could further diminish foreign investor demand for Australia’s residential property sector.

On the other hand, Real Estate Institute of Australia president Leanne Pilkington believes the proposed increase in fees should not deter foreign investors. She argues:

People buying from overseas are buying for very good reasons … Sometime their kids are studying here; they might need safe haven for their money. The fact it is going to cost them more is not going to change their buying habits in the majority of cases.[45]

In other words, foreign investment in Australia’s residential real estate is not solely dictated by the financial implications of property ownership. For instance, foreign investment may be influenced by the Australian Government’s immigration programs, such as the investor visa categories of the Business Innovation and Investment (Permanent) visa (subclass 888).

Policy issue 3 – Would the proposed increase in vacancy fees encourage foreign investors to rent out their properties?

The Bill proposes to double the vacancy fees imposed on all foreign-owned residential dwellings (new and established dwellings) purchased on or after 9 May 2017. Julie Collins (Minister for Housing) has said:

The increased vacancy fees will encourage foreign investors to make their unoccupied properties available to renters, providing more homes for Australians who need them.[46]

The effectiveness of vacancy fees in addressing rental shortages is a matter of ongoing public debate. The matter is complicated by the fact that it is unclear how many of Australia’s vacant residential properties are foreign owned.

According to Treasurer Jim Chalmers, the Australian Government raises about $5 million annually in foreign investor vacancy fees.[47] In 2021–22, the average transaction value of residential real estate purchases by foreign persons was approximately $922,422.[48]

Currently a vacant foreign owned property valued between $75,000 and $1 million would attract a penalty of $14,100 per annum (see Table 3). Based on the average transaction value of foreign owned properties, approximately 355 foreign-owned properties could be liable to pay vacancy fees (that is, 355 x $14,100 ≈ $5 million). This underscores the relatively minor extent to which vacancy fees are applied within the broader issue of Australia’s housing under-utilisation.

It is unclear whether these affected foreign investors would adjust their behaviour in response to the proposed higher vacancy fees. As discussed, there exists a segment of affluent foreign investors who may opt to keep their Australian holiday homes vacant primarily for convenience reasons. These affluent investors may be indifferent to fee increases.

Furthermore, while the six-fold increase in vacancy fees for future purchases of established dwellings sends a strong price signal to foreign investors, its applicability is limited. This is because, broadly, only temporary residents are permitted to buy established dwellings under the condition that these properties serve as their principal place of residence.

It is logical to assume most temporary residents would not leave their property vacant, as doing so would contravene the terms under which they are allowed to buy the property in the first place. There could be exceptional cases, such as an international student purchasing an established property in Canberra but then relocating to Sydney to continue their studies, resulting in the Canberra property being left temporarily vacant (note a temporary resident must sell their dwelling within six months from when it ceases to be their principal place of residence).

Despite these exceptions, the proposed vacancy fee increase should predominantly affect foreign investors purchasing new properties for land banking purposes. The targeted nature of these fee increases means their effect is mainly confined to discouraging speculative investments, rather than addressing the full spectrum of causes behind property vacancy.

Committee consideration

The Senate Standing Committee for the Scrutiny of Bills (the Committee) has considered the Bills and raised concerns about the maximum fee cap increase in the Fees Imposition Bill and the retrospective application of elements of the Foreign Investment Bill (discussed below).[52]

As noted, Schedule 1 of the Imposition Bill proposes to increase the maximum fee that can be imposed by the Foreign Acquisitions and Takeovers Fees Imposition Regulations 2020 (the Regulations) from $1,119,100 to $7,000,000.

The Committee highlights the importance of including significant matters, such as raising tax rates, in primary legislation rather than delegated legislation, unless there is a strong justification for otherwise. Furthermore, the Committee notes the Bill’s proposed maximum fee is notably very high at $7,000,000, and this could be regarded as ‘insufficient guidance’ or an overly broad discretion for the Executive in setting tax rates under the Regulations. However, the Committee acknowledged that the Regulations ‘provide for the various set rates and formulas to determine fee amounts’ and are amended by the Bill ‘to provide additional guidance as to how fees are to be worked out’.[53]

Consequently, the Committee drew this matter to the attention of senators and left to the Senate as a whole the appropriateness of setting amounts of tax in delegated legislation, limited by a high cap of $7,000,000.[54]

Policy position of non-government parties

Coalition

The Bills have received bipartisan support. Michael Sukkar, Shadow Minister for Housing, has said:

I’m rising to signal our support for the Foreign Acquisitions and Takeovers Fees Imposition Amendment Bill 2024 and the Treasury Laws Amendment (Foreign Investment) Bill 2024. The [Fees Imposition] bill, in particular, is a two-schedule bill to triple the fees for acquiring established residential dwellings and to double vacancy fees in the foreign investment framework. The increase in fees is self-evidently designed to target vacant housing supply and to support housing in this country.[55]

While the Coalition largely supports the proposed legislation, Mr Sukkar argues the measures fall short of addressing Australia’s housing affordability crisis, particularly in the context of ongoing immigration to Australia:

… these measures don’t even come close to addressing so many of the issues that we are seeing in the housing market and, in particular, the impact on Australian housing that has emanated from the mismanaged immigration program of this government …

This bill, while we'll support it, is the absolute definition of fiddling while Rome burns.[56]

Furthermore, Mr Sukkar raised concerns that the imposition of vacancy fees is not effectively enforced by the Government:

How on earth will you determine whether a property that's been bought by a non-resident of Australia is being kept vacant or not? What coordination is there between the federal government and state governments to ensure that happens? When state governments investigate whether a property is vacant it’s typically through utilities. Examining water and electricity consumption is how you determine whether a property is vacant. What is being done to enforce these rules? Does this bill just require very honest, well-intentioned foreign owners to put their hand up and say: ‘Sorry; I kept the property vacant this year. Let me send a cheque over to the tax office’? Is that really what this bill is relying on—the honesty and good grace of foreign owners of vacant properties in admitting the property is vacant? Clearly, the minister has not given any thought to these things.[57]

The Government has committed to provide an additional $3.5 million to enhance the ATO’s compliance regime to ensure foreign investors comply with fee, notification, and other regulatory requirements.[58]

Independents

The positions of other parties and Independents could not be identified at the time of writing.

Position of major interest groups

The Bill has elicited a varied reaction from stakeholders. The Australian Financial Review reports that many experts have claimed the proposed higher fees are unlikely to boost rental housing stock.[59] For example, AMP Chief Economist Dr Shane Oliver argues the measure is a ‘populist policy’ that fails to address the real causes of Australia’s housing crisis:

It’s something that is populist policy … Foreigners are not the cause of the problem. We went through the pandemic and there were no foreigners buying property and prices still took off. If we can get to 1.2 million [new] homes we’ll be on the way to solving the problem.[60]

Mike Zorbas, chief executive of the Property Council of Australia (a peak body representing Australia’s property sector), also raised concerns that the decision to increase foreign investment fees could discourage offshore investors.[61]

Maiy Azize, a spokesperson for affordable housing campaign Everybody’s Home, has said:

This [foreign investment fees change] is a step in the right direction, but it won’t solve the housing crisis. Right now, domestic investors are the ones pushing up the cost of housing and profiting from tax handouts – and an empty home is an empty home regardless of who owns it.

If the government is serious about making homes more affordable, it would end the tax handouts that are used by a significant number of investors. This means abolishing negative gearing and capital gains tax. The billions we raise can go into desperately needed social housing.[62]

Lawyers from Allens Linklaters question whether the proposed increase in foreign investment fees will affect foreign-owned property developers:

It is not uncommon for foreign-owned property developers to purchase, with prior FIRB approval, residential land containing established dwellings for the purpose of redeveloping the land into new housing (including but not limited to [build-to-rent] housing), aged care facilities, student accommodation or disability accommodation. In many of these cases, the redevelopment increases housing stock and/or accommodation.

It is not clear if the Government's proposal to increase application fees for established dwelling purchases will apply to such property developers. We consider that it should not. The high residential and agricultural land fee tiers already act as disincentives for property developers. Where property developers proceed with paying high application fees, the fees may well be passed onto purchasers, thereby affecting property prices.[63] [emphasis added]

Foreign Investment Bill

Background

In February 2023 the NSW Government informed the Commonwealth that NSW surcharge purchaser duty and surcharge land tax provisions were inconsistent with a number of double tax agreements (DTAs) entered into by the Australian Government with other countries.[64]

The purpose of the DTAs that Australia has with other countries is to prevent individuals and companies being taxed twice on the same taxable event in two different countries. Specifically, the DTAs typically include non-discrimination provisions that ensure foreign residents from the relevant countries are not subjected to more taxation in Australia than Australian residents.

This has caused some uncertainty to arise in respect of the interaction with taxes that are not covered taxes under the DTAs, such as foreign investment fees and some state and territory property taxes.[65]

The ‘Foreign Investment – raising fees for established dwellings’ (193–194) measure in the 2023–24 Mid-Year Economic and Fiscal Outlook (MYEFO) specifically proposed a retrospective measure to clarify potential tax inconsistencies.

What the Foreign Investment Bill does

Consistent with the MYEFO announcement, the Foreign Investment Bill amends the International Tax Agreements Act 1953 (ITA Act) to retrospectively clarify existing uncertainty associated with the interaction between certain taxes, such as Commonwealth foreign investment fees and similar state and territory property taxes, and the DTAs Australia has entered into with other countries.

The Foreign Investment Bill does this by amending the ITA Act so that where a provision of a DTA is inconsistent with a Commonwealth, state or territory law that imposes a tax other than income tax (including the Medicare levy or fringe benefits tax) the DTA will not operate to the extent of that inconsistency.[66] The effect of this will be to ensure that the relevant Commonwealth, state or territory property-related fees and taxes payable by foreign investors will continue to apply as intended.

Financial implications

The two Bills implement the ‘Foreign Investment – raising fees for established dwellings’ measure outlined in the 2023–24 MYEFO.[67] The measure is expected to increase revenue receipts by $525.0 million over the five years from 2022–23.[68]

Statement of Compatibility with Human Rights

As required under Part 3 of the Human Rights (Parliamentary Scrutiny) Act 2011 (Cth), the Government has assessed the Bill’s compatibility with the human rights and freedoms recognised or declared in the international instruments listed in section 3 of that Act. The Government considers that the Bill is compatible.[69]

Commencement and retrospective application

The Fees Imposition Bill commences on either 1 April 2024 or the day after that Bill receives Royal Assent, whichever occurs later.

The Foreign Investment Bill will commence on Royal Assent. Item 2 provides that:

• the changes will apply to the targeted taxes payable on or after 1 January 2018 and
• targeted taxes payable in relation to tax periods (however described) that end on or after 1 January 2018.

The retrospective amendment seeks to provide certainty for affected taxpayers by broadly aligning with the 6-year statute of limitation periods under state and territory legislation imposing the relevant property taxes.

Committee consideration

As referred to above, the Senate Standing Committee for the Scrutiny of Bills (the Committee) has raised concerns about the retrospective application of the Foreign Investment Bill.^[70] The Committee commented:

Retrospective application challenges a basic principle of the rule of law that laws should only operate prospectively. The committee therefore has long-standing scrutiny concerns in relation to provisions which have the effect of applying retrospectively. These concerns are particularly heightened if the legislation will, or might, have a detrimental effect on individuals.[71]

Accordingly, the Committee has asked the Treasurer to provide detailed advice as to:

• whether any persons are likely to be detrimentally affected by the retrospective application of the legislation and, if so, to what extent their interests are likely to be affected; and
• why it is considered necessary and appropriate for the amendment to operate retrospectively.[72]

At the time of publishing this Digest, the Treasurer’s response had been received by the Committee, but not yet published.[73] 

Concluding comments

The Fees Imposition Bill proposes to increase foreign investment fees and vacancy fees with the aim of ensuring that foreign investment in housing is consistent with the Government’s agenda to boost Australia’s housing supply.

Although the Bills have received bipartisan support, some stakeholders have expressed concerns the proposed higher fees will discourage offshore investors and deter foreign investment in Australia’s new housing developments. Furthermore, some economists criticise the fee hike as a ‘populist policy’ and claim the legislation fails to tackle the root causes of Australia’s housing affordability issues, especially given foreign purchases make up less than 1% of total property sales in Australia.