Business Council of Australia calls for sweeping review to break foreign investment ‘drought’

The Business Council of Australia says a sweeping review is needed to unlock a new wave of foreign investment. It warns that red tape and regulation are driving capital overseas.

BCA chief executive Bran Black said the country was mired in an “investment drought” that threatened jobs and economic growth.

In recent years, Australia has become a net exporter of capital, meaning there is more money leaving our shores than coming in.

One factor is the proactive approach taken by countries such as the US, which uses lucrative tax incentives to attract investment.

In a pre-budget submission, the peak business group is calling on the Federal Government to launch a full-blown review of foreign investment settings in an attempt to turn the tide.

It suggested Labor take the lead from the UK Government’s 2023 Harrington review, which examined what could be done to attract foreign investment in key sectors.

The BCA said an Australian review could focus on the barriers to foreign investment, the need for specific strategies in priority areas – such as critical minerals – and the Foreign Investment Review Board’s (FIRB) fees and processes.

While the FIRB – which makes recommendations to the Treasurer about foreign investment – was reviewed in 2021, the BCA said a more comprehensive look at the overall approach to luring overseas dollars was well overdue.

“Australia is currently facing an investment drought, and if we don’t urgently fix the problem, then what is at stake is Australian jobs and the economic growth, which our economy needs so badly,” Mr Black said.

“We cannot afford to be left behind, and we can’t stand by and let economic investment and opportunities flow into other countries.”

Mr Black said miners, energy producers and developers all pointed to “cumbersome” red tape and regulation as a barrier to foreign investment that was driving dollars overseas.

The regulatory regime in the LNG industry has caused concern for Japanese and South Korean companies that are investing billions of dollars in major gas export projects.

Last month, the West Australian revealed Santos and its Japanese and Korean partners in the $5.8 billion Santos project had written to Resources Minister Madeleine King expressing alarm about the “dire” state of the offshore gas approvals process.

Speaking at last week’s Seven West Leadership Matters breakfast in Perth, Mr Dutton referenced the letter and claimed Government policy was forcing foreign investors to look to other markets.

“Australia has a proud history of being a destination for choice – a choice for foreign investment and doing business,” Mr Dutton said.

“But now, as we know and as you’re experiencing, the boards of global companies are looking to invest, or they are investing in broader Asia and Africa.”