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The Australian Government (Government) has announced changes to Australia’s foreign investment framework. These reforms are expected to form part of the Government’s 2024–25 Budget, to be released on 14 May 2024, and align with the proposals set to be included in the Government’s ‘Future Made in Australia’ policy.

In brief

  1. Increased resources and scrutiny of foreign investment in sensitive sectors: the Government will dedicate additional resources to screening and monitoring "higher risk" Foreign Investment Review Board (FIRB) applications that are closely tied to sectors where Australia's key national interests lie. It will also focus on aligning foreign investment settings with other regulatory frameworks to better deal with emerging risks (which may include changes to the Security of Critical Infrastructure Act 2018 (Cth) (SOCI Act)).
  2. Streamlined approval process for lower risk foreign investments: a streamlined approval process will be available for known investors investing in non-sensitive sectors that have a good compliance record. The Government will also target to process 50% of FIRB applications within 30 days from 1 January 2025.
  3. Reforms to incentivise investment and improve transparency: in addition to streamlining the FIRB approval process, the reforms include incentives to attract foreign capital into Australia. These include reforms such as fee refunds for applications for foreign investors that were unsuccessful in a competitive bid process and allowing foreign investors to purchase established build-to-rent properties.

The Government has also released an updated Foreign Investment Policy outlining its vision for the overhauled framework.

A 'Two-Track' Approach: High-risk vs low-risk investment

The Government’s reform of the FIRB framework seeks to better differentiate between low-risk and high-risk investments. It aims to streamline the processing of lower risk investments. This should, according to Treasurer Jim Chalmers, allow FIRB to “devote much more time, energy and resources to screening some of the investment proposals that … [may not be] consistent with our national interests, or our national economic goals”.

This reflects a continued trend in Australia, and globally, towards placing economic security at the forefront of assessing foreign investment applications. 

Increased resources and scrutiny of foreign investment in sensitive sectors

Amid escalating geopolitical competition and evolving national security risks from foreign investment, the trade-off between attracting foreign capital and protecting national security is at the heart of the Government’s risk-based approach to foreign investment assessment. 

In response to these challenges, the Government will increase scrutiny on high-risk foreign investments to protect national interests, while fast-tracking low-risk investments to quickly attract much needed foreign capital.

The Government is therefore dedicating more resources to screening foreign investment:

  • in critical infrastructure;
  • in critical minerals;
  • in critical technology;
  • which involves holding or having access to sensitive data sets; or
  • which is in close proximity to Australian government facilities.

These increased resources will be paired with work across Government departments to align foreign investment settings with other regulatory frameworks, to better deal with emerging risks to economic and national security. This will include work to:

  • potentially amend the SOCI Act;
  • enhance energy network security;
  • better manage and monitor investments close to defence sites; and
  • review the strategies for critical minerals and critical technologies more broadly.

The Government will also focus on monitoring compliance with conditions imposed on investment in relation to these critical assets. It intends to bolster the foreign investment compliance team to better monitor and enforce conditions, including increasing Treasury’s capacity to undertake on-site visits. The Treasurer has also flagged that this enhanced compliance team will also support the use of the Treasurer’s ‘call-in’ power to review investments that come to pose a national security concern in time. 

Streamlined approval process for lower risk foreign investments

A streamlined approval process will be available for known investors that:

  • make investments in non-sensitive sectors; and
  • that have a good compliance record with conditions imposed by Treasury.

While the Government stresses that each FIRB application will be assessed on a case-by-case basis, the following types of investment proposals provide an indication of where faster approvals may occur:




  • Investors with a strong track record of compliance with the foreign investment framework and other Australian laws.
  • Repeat investors who are well known to Treasury, investing alone and not in a consortium with unknown investors.
  • Investors who are genuinely passive in nature and can demonstrate no control or influence over an asset.


  • Investments in non-sensitive sectors, such as manufacturing, professional services, commercial real estate, new housing and mining of non-critical minerals.
  • Investments not near sensitive Australian Government facilities.


  • Transactions where the ownership structure is clear, including a clear articulation of who will ultimately control the asset, land or entity once the proposed transaction is complete.
  • Transactions where the transaction structure is less complex and “not convoluted”.

The administrative burden on repeat investors will also be reduced, where ownership information has not changed since their previous FIRB application. 

In an effort to expedite assessments, Treasury will also implement a new performance target of processing 50% of investment proposals within the statutory 30-day decision period, effective from 1 January 2025. For reference purposes, the median processing times for commercial investment proposals was 37 days and 4 days for residential real estate investment proposals for the quarter ending 30 September 2023.

This will be supported by Treasury being more transparent and informing foreign investors when they can expect longer assessment timeframes – for example, when it involves a complex acquisition structure or high tax risks. 

Factors that are likely to be high risk from a tax perspective include:

  • internal reorganisations or other intragroup transactions which may be perceived to be initial steps of a broader arrangement resulting in avoidance of Australian tax; 
  • pre-sale structuring of Australian assets that present risks to tax revenue on disposal by private equity or other investors;
  • the use of related party financing arrangements to reduce Australian income tax or avoid withholding tax; and
  • facilitation of migration of assets (for example, intellectual property) to offshore related parties in jurisdictions with effective low taxation. 

Foreign investors may also refer to the updated FIRB policy, which sets out sensitive sectors and national interest factors that may attract more intense scrutiny.


In addition to streamlining the processing of low-risk foreign investments, the Government will introduce several incentives to attract foreign investment into Australia – acting as the ‘carrot’ to the increased scrutiny ‘stick’. These will include: 

  • providing a fee refund for foreign investment applications where the foreign investor was unsuccessful in a competitive bid process;
  • allowing foreign investors to purchase established build-to-rent properties to build demand and incentivise construction of new projects;
  • releasing draft regulations to exempt interfunding transactions1 from foreign investment approval processes, to make it easier for institutional investors to manage their portfolios;
  • removing unnecessary regulatory duplication in the assessment of competition issues under the proposed merger reforms; and
  • clarifying that Pacific Australia Labour Mobility (PALM) scheme employers can buy established residential properties for their PALM employees to support Australia’s agricultural workforce.

Implications of proposed reforms

Increased scrutiny on sensitive sectors – the status quo?

The Government’s reforms reflect Australia’s continued laser focus on national security, and the global trend in developed economies toward improving economic security in the face of continued geostrategic competition. 

The increased focus on foreign investment in sensitive sectors should be seen as a confirmation, rather than an extension or overhaul, of existing FIRB policy and practice. In our experience, increased scrutiny from FIRB and its consultation partners on investment proposals in sensitive sectors, such as those involving critical infrastructure or critical minerals, has been evident for some time. This often results in longer processing times and more conditions on approvals. As the Treasurer has indicated that these changes will not need to be legislated, the reinforcement of this focus from a policy perspective will act to strengthen or formalise the existing FIRB framework. This will therefore be something for foreign investors to be aware of as part of a FIRB application relating to a sensitive sector. 

The Fast-Track Lane

The proposals to streamline low-risk investments, together with increased incentives to facilitate foreign investments, are a welcome reform. 

Australia’s foreign investment regime has become complex and costly for investors to navigate. Reducing transaction risk and cost for repeat investors from ‘friendly’ jurisdictions, such as passive institutional investors from North America, are sensible and welcome changes, particularly as we need to incentivise jurisdiction agnostic foreign capital.

Nevertheless, it remains to be seen how effective this streamlining will be in reducing processing timeframes in practice, particularly for repeat private capital investors. FIRB often takes a conservative view of risk in transactions, which may mean repeat investors (who are not ‘passive’ and have ‘control or influence’ over an asset) will still face significant scrutiny, even if they otherwise have a strong compliance record and are from ‘friendly’ jurisdictions.

The interaction between these changes and the Government’s proposed merger reforms (refer to our Insight here) remains to be seen. Therefore, heightened competition concerns are unlikely to result in faster processing times for large transactions – even from investors in ‘friendly’ jurisdictions.

The incentives included in these reforms may help counterbalance some of these potential issues. In particular, the fee refund for applications involved in unsuccessful competitive bids and availability to purchase established build-to-rent properties will help facilitate foreign capital into Australia and the non-sensitive manufacturing, professional services, commercial real estate sectors and new housing (where it is particularly needed).

What next?

The Treasurer will deliver the Budget on 14 May 2024, where further details of these policy changes will be detailed.

Investors will likely first feel the impact of these changes to Australia’s foreign investment framework from 1 July 2024.

We have also just launched our Australian Foreign Direct Investment Guide. Click on the below link to explore it.

  1. Interfunding transactions are transactions between investment entities (such as unit trusts) that are managed by the same responsible entity or a related responsible entity.

Australian Foreign Direct Investment

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