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The Australian Government’s Department of Treasury has released its second quarterly report for the period 1 October 2022 to 31 December 2022. The report contains some interesting trends regarding the source of foreign capital flows, Treasury’s downward trending processing timelines for FIRB applications, the increasing prevalence of conditions being attached to FIRB approvals and FIRB’s continuing focus on compliance.


Treasury began publishing a quarterly report (in addition to the FIRB Annual Report) in response to Treasury’s 2021 foreign investment reform evaluation. The evaluation found that regular performance reporting would improve the transparency of foreign investment regulation in Australia. The quarterly reports outline the key performance data for the operation of Australia’s foreign investment regulatory framework.

In this article, we examine the key themes from the second quarterly report (for the period 1 October 2022 to 31 December 2022) and compare them to the trends in the first quarterly report (for the period 1 July 2022 to 30 September 2022), which can be found here.

The next quarterly report will be published in May 2023.


Foreign capital inflows – US capital is still king

The US continues to be the dominant foreign investor for commercial investment proposals, investing A$16.7b into Australia in the October 2022 quarter. The next largest source country is China (A$6.7b), up two places and A$5b from the July 2022 quarter, followed by Singapore (A$5.2b). The largest commercial sector receiving foreign investment was Australian commercial real estate (A$19.3b) followed by manufacturing, electricity and gas (A$12.9b) and finance and insurance (A$12.9b).

Interestingly, there were 748 less investment proposals in the October 2022 quarter (when compared to the July 2022 quarter). The reduction in investment proposals may be attributable to several factors, including the ongoing impacts of removing the temporary zero-dollar screening thresholds for all investment categories that applied in response to the COVID-19 pandemic as well as global headwinds and rising interest rates slowing down some investors’ appetite to execute deals.

An improvement in FIRB application processing timelines: long may this continue

The statutory deadline for FIRB applications is generally 30 days (which commences once the FIRB application fee has been paid). However, the Treasurer may extend the 30-day time frame by up to a further 90 days. Treasury’s median timeline for assessing approved commercial investment proposals reduced in the October 2022 quarter from 44 days to 38 days – a welcome downward trend compared to 2021-22 and 2020-21. Whilst prompt processing timelines for FIRB applications is not always the experience of foreign investors, particularly for more complicated or sensitive investment proposals, it is a positive development that processing times are reducing.

It is important that efficient and timely processing times are maintained for FIRB applications noting the critical role that foreign capital plays in the Australian economy. It is also relevant to note that foreign investors should be entitled to receive a prompt hearing of any FIRB application in circumstances where the FIRB application fees doubled once again in July 2022.

FIRB approval conditions: a trend on the rise

It is increasingly common for the Treasurer to impose conditions on an investment proposal, with conditions being attached to 38% of approvals in the October 2022 quarter. Foreign investors should engage with FIRB early in the investment process about any likely conditions that may be imposed, so that these can be ventilated and agreed early on to prevent holding up an investment timeline, which can cause angst for all parties involved. Transaction documents for M&A deals are also increasingly addressing common FIRB approval conditions, which enables the parties to pre-agree specific FIRB conditions which are deemed to be acceptable – thereby enhancing certainty around a FIRB condition precedent.

Compliance is a continuing key focus area

From 1 January 2021, the Foreign Acquisitions and Takeovers Act 1975 (Cth) has required all foreign investors who receive a no objection notification or an exemption certificate to notify the Treasurer of certain events or actions taken (such as acquiring an interest in land or a business or starting or ceasing a business).

Since then, compliance-focused nudge campaigns have been conducted to educate and remind foreign investors of their reporting responsibilities. In the October 2022 quarter, Treasury conducted three nudge campaigns, the first targeting 88 foreign investors and their agents, reminding them of their statutory reporting obligations, and the second and third targeting 22 foreign persons to ensure they were adhering to their condition mandated reporting obligations.

Treasury’s 2021-22 Annual Report provides that these campaigns have demonstrated an immediate increase in statutory reporting with the Foreign Investment Division receiving over 1,200 statutory notification of action reports, in the first full financial year for this obligation.

In parallel, Treasury’s foreign investment audit program also currently consists of 12 regulator risk-based audits and an annual audit prepared by an independent auditor. Treasury is currently undertaking 10 regulator audits, all focused on testing compliance with data conditions imposed in a no objection notification or specified in an exemption certificate. Treasury also received 25% more referrals (from members of public or other sources) of alleged non-compliance with Australia’s foreign investments laws in the October 2022 quarter compared to the July 2022 quarter.

Treasury’s increased focus on compliance in light of its enhanced statutory powers, and the greater prevalence of reporting obligations being imposed on foreign investors who obtain FIRB approval, serves as a reminder to investors of the importance of understanding and complying with notification requirements. In these circumstances, foreign investors need to ensure appropriate internal control procedures are put in place to comply with all such reporting obligations on a timely basis.

Key contacts

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Matthew FitzGerald

Partner – Joint Global Head of Practice, Corporate, Brisbane

Matthew FitzGerald
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Nini Lu

Solicitor, Brisbane

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