Proposed fourfold increases of foreign investment application fees would be an outrageous impost on safe institutional investment into commercial property and discourage the very investment Australia requires to support our economic recovery.
The exposure draft of the Foreign Investment Review Board (FIRB) fee structure released today represents dramatic increases of up to fourfold for larger transactions with fees based purely on the size of the assets, not on the complexity involved with their assessment.
An investment with complex national security aspects will be charged the same level of fees for a relatively straightforward commercial property investment by a well-known and reputable institutional investor.
Property Council of Australia Chief Executive, Ken Morrison, has warned that the draft fee regime will hit the commercial property sector hard, since it attracts large amounts of capital to invest in existing and new projects, with the overwhelming majority sourced from institutional investors with no security issues.
“This draft fee regime treats commercial property like it is a national security asset like ports and telecommunications infrastructure.
“Australian office buildings, shopping centres, industrial parks, retirement villages, tourism assets and other commercial property are vanilla investments from a security perspective, and they attract the highest quality institutional investment from around the world.
“These pension funds, life companies and other pooled saving vehicles represent the highest quality institutional capital around the globe.
“Why would we make it less attractive for them to invest in Australia, particularly when we will need this investment to kickstart new job-generating projects?
“If the government is going to overhaul foreign investment rules to deal with national security issues, it doesn’t make sense to deter the world’s safest, highest quality investments into uncontentious commercial property assets,” Mr Morrison said.
The Productivity Commission has described fees of this kind as taxes on new investment rather than fees for service given they are out of proportion to the actual costs involved with administering the scheme.
“The Property Council is urging the Federal Government to urgently revise this proposal to ensure the cost of extra security assessment is born by transactions which do require this extra focus.
“The last thing our economy needs is to make it unnecessarily harder for get job-creating, economy-boosting investment proposals to get the green light,” Mr Morrison said.