End to COVID-19 foreign investment rule prompts call for broader reform

End to COVID-19 foreign investment rule prompts call for broader reform

An emergency measure to prevent the cheap takeover of Australian assets by foreign buyers will end this week, prompting calls from Labor to overhaul the foreign investment review system to make it more independent of government intervention.

The value threshold at which a foreign investment decision is vetted by the Foreign Investment Review Board (FIRB) was cut to zero by Treasurer Josh Frydenberg in late March.

At the time, Mr Frydenberg said the measure was necessary to “safeguard the national interest” due to the financial pressures facing Australian businesses. There were concerns within the business community that cashed-up foreign investors could buy distressed Australian firms or assets.

Before the change, there were varying thresholds at which FIRB would vet a foreign investment move. These thresholds ranged from zero for the purchase of an Australian media company to almost $1.2 billion for a firm from Chile, the USA or New Zealand buying a “non-sensitive” local business.