Chapter 2
Individual 2013–14 Annual Reports
2.1
On this occasion, the committee has decided to examine in more detail the
following annual report tabled by 30 April 2015 or before the tabling of this Report
on Annual Reports on 8 September 2015:
2.2
For the Treasury portfolio:
- Foreign
Investment Review Board.
Report under the Treasury portfolio
Foreign Investment Review Board—annual report 2013–14
Reporting requirements
2.3
The committee notes that the annual report of the Foreign Investment
Review Board (FIRB or Board) is not statutorily mandated, but prepared in
accordance with the Board's responsibility to advise the government on foreign
investment matters.
2.4
The Board is a non-statutory body responsible for advising the Treasurer
and the government on Australia's Foreign Investment Policy (the Policy) and
its administration. It examines foreign investment proposals submitted under
the Foreign Acquisitions and Takeovers Act 1975 (the Act) and under the
Policy (the latter being the second element of Australia's foreign investment
screening regime). The Board is supported by the Department of the Treasury
through its Foreign Investment and Trade Policy Division, which provides
secretariat and administrative services.[1]
Operational matters
2.5
The FIRB reported an increase in total expenses for 2013–14 of $328,048 compared
to the previous period of $257,501. Most of the Board's expenses were expended
on the remuneration of Board members (about 90 per cent) determined by the
Remuneration Tribunal, with the remainder expended on travel, car hire and
incidentals.[2]
The total expenses for the Division over the same reporting period were
$3.9 million, which is a decrease from the preceding reporting period's
total of $4.0 million. Expenses were mainly comprised of employee salary
(including superannuation and accruing leave entitlements) and administrative
costs, and with an average of 28 staff employed over the course of 2013–14.[3]
2.6
In 2013‒14,
the Board reported 24,102 applications for foreign investment proposals were
approved from a total of 25,005 applications. Three applications were rejected,
719 withdrawn and 181 were exempt from being subject to the Policy or the Act.[4]
2.7
Among the more high profile foreign investment applications examined by
the FIRB was Archer Daniels Midland Company's proposed acquisition of GrainCorp
Limited, which was rejected on 29 November 2013 on the basis it would
be contrary to the national interest.[5]
2.8
Similarly, the FIRB reported that foreign investment in agriculture and
residential real estate—sectors
that have attracted significant public and political interest—had come under
close scrutiny. The Board contributed to these issues through its participation
in the House of Representatives Standing Committee on Economics' Inquiry into
Foreign Investment and Residential Real Estate.[6]
2.9
Of the 24,105 applications decided during the reporting period (those
approved or rejected, but not exempt or withdrawn), 23,205 were decided within
the Division under the Treasurer's authorisation and 900 were decided by
another Treasury minister. Over 99 per cent of application proposals were
decided within 30 days. For proposals which took more than 30 days, the
reason was attributed to a lack of sufficient information or to significant
complexity or sensitivity.[7]
2.10
During 2013–14,
the real estate sector remained the largest industry by value of approved
proposed investment at $74.59 billion, followed by the services sector at
$53.44 billion. Other major sectors included: mineral exploration and
development, with approved proposed investment of $22.41 billion and manufacturing,
with approved proposed investment of $10.47 billion.[8]
2.11
The reporting period was marked by a significant reduction in mining
investments (down by $23.12 billion) and an increase in investments into the
services sector (up by $27.5 billion).[9]
The number of approved proposals in the mining sector decreased from 289 to 248
proposals.[10]
In contrast, the number of approvals for the services sector increased from 154
to 195 and proposed investment increased from $26 billion to $53 billion.[11]
The value of investment for 2013–14
also increased from 2012–13
for services; agriculture, forestry and fishing; manufacturing; tourism
and real estate.[12]
2.12
In 2013‒14,
China became the largest source of approved proposed foreign investment in
Australia, with $27,650 million in value (17 per cent of the total
value),[13]
of which most were in residential real estate. The United States, previously
the largest source of approved proposed foreign investment, came in at second
with $17,457 million in investment. Other major sources of proposed
investment were Canada ($15,442 million), Malaysia ($7,232 million)
and Singapore ($7,062 million), with the latter two replacing Switzerland
and the United Kingdom in the top five sources of investment.[14]
Senator Sean Edwards
Chair
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