Senator the Hon. Mathias Cormann
Minister for Finance
Leader of the Government in the Senate
Senator for Western Australia
Date: Friday, 5 June 2020
PETER STEFANOVIC: Australia’s foreign investment laws will receive the biggest shake up in forty-five years as the Government applies tough new national security tests to overseas investors. Buyers will be required to notify the Foreign Investment Review Board if they propose to acquire an interest, regardless of the value. The Treasurer will hold expanded powers to impose conditions or force assets to sold if national security risks emerge post approval. It will apply to all bids for sensitive assets including telecommunications, energy and technology companies. Well joining me now live is the Finance Minister Mathias Cormann. Minister, good morning to you. Thanks for joining us.
MATHIAS CORMANN: Good morning.
PETER STEFANOVIC: I know that the Treasurer is going to be announcing the details on this a little bit later on the day. Just from what you can tell me, how different is it to what was already in place.
MATHIAS CORMANN: It is the most significant reform to our foreign investment review arrangements since 1975. It really is an update of a regime that has served Australia well, in the context of global trends and emerging risks. Foreign investment is incredibly important for Australia. We rely on foreign investment to grow our economy to its full potential. That is why it is so important that the public can have confidence in the integrity of our foreign investment review arrangements to ensure that all of the foreign investment is in our national interest, is not contrary to our national interest and that appropriate scrutiny is applied in this context in particular in relation to national security sensitive assets.
PETER STEFANOVIC: Port of Darwin comes to mind. Is it aimed at China?
MATHIAS CORMANN: It is not aimed at any particular country. We maintain an open and transparent foreign investment regime. We welcome foreign investment from any country. But we do want to ensure that where there are sensitive national security related issues that arise, that there is an appropriate level of scrutiny applied to protect our national interest.
PETER STEFANOVIC: When it comes to that Port of Darwin and that ninety-nine year lease, would that have still gone ahead had these extra laws been in place?
MATHIAS CORMANN: I am not going to retrospectively pursue a process over a transaction that happened some time ago. The Treasurer moving forward will have relevant powers to ensure that wherever national security related issues are raised, and in relation to ports that is one category of assets that does raise sensitivities, there will be scrutiny regardless of the value of the acquisition.
PETER STEFANOVIC: Okay, so what happens if it is determined that a foreign owned company hasn’t complied? What do you do then?
MATHIAS CORMANN: The Treasurer will be announcing all the details later today as you have said. But, what is being proposed here is an enhanced capacity for the Treasurer to take action. To take action including post an acquisition if and as national security risks emerge. These are last resort powers. This is not something that we expect to happen on a regular basis. But we do think that it is important to give ourselves the capacity to take action even after an acquisition has taken place in the context of national security issues that emerge.
PETER STEFANOVIC: Okay, just onto the HomeBuilder scheme that was announced yesterday Minister. Critics have said that too many people are cut out. Are you open to reducing that threshold?
MATHIAS CORMANN: No. We have announced a very important measure. It is designed to support about 27,000 projects. Our estimate is that this will support about 20,000 new builds and about 7,000 home renovations. It is calibrated in order to ensure that the support is targeted at those most needing that support.
PETER STEFANOVIC: I am not being accusatory or anything like this, I am just trying to work out what the logic behind some of those numbers. So basically you have got a couple that are earning $200,000 combined, and they will basically have to take out a loan of $150,000. That is going to take them a long time to pay back. So how did you come to those numbers?
MATHIAS CORMANN: This happens in Australia every single day. People take out loans in order to fund renovations. People take out loans to buy new homes. A substantial renovation is something that is defined in our GST legislation. We are working with that legislation. The ABS data will show you that a new build on average costs about $320,000 on average. A substantial renovation is roughly half that amount. We want it to be more than just a new kitchen or a paint job. It has to be something substantial. The whole objective here was to support the residential construction sector, which in any normal year, certainly prior to COVID taking place, the expectation was about 170,000 new builds would take place across Australia. These are things that in the ordinary course of events happen all the time. People take out loans all the time. This is just providing additional support in recognition of the fact that as a result of COVID, there has been a significant drop in demand. We want to bring demand forward to support jobs in that sector.
PETER STEFANOVIC: Okay. Just on the JobKeeper, Minister. Is it your expectation that businesses whose turnovers recover sooner will lose JobKeeper supplements earlier?
MATHIAS CORMANN: I am not going to speculate about decisions that may or may not be made subject to the recommendations out of the Treasury review which we are yet to receive, subject to reviewing, for another month or so, economic data about how businesses are recovering, how businesses are able to take on the responsibilities of paying their employees wages out of their income. We are in a much stronger position today than we had feared when we put this scheme in place towards the end of March. But we will be reviewing the data, reviewing the information, reviewing the advice and make decisions at a time when all of that is in front of us. I know that the media and others are always keen to encourage us to speculate in the absence of that relevant information. But that is just not something that we can responsibly do.
PETER STEFANOVIC: But like you said then, you acknowledge that the economy is bouncing back faster or quicker than you thought it might have. So doesn’t it stand to reason that businesses that are recovering quicker wouldn’t need JobKeeper?
MATHIAS CORMANN: What stands to reason is that we are two months into a six-month program. That we said that at the halfway mark we would be conducting a review. That is going to take place. We will be receiving the review findings and the recommendations from Treasury later this month. By then, there will be further economic data. At the moment, lots of people are speculating about what may or may not be the circumstance. But we will have a clearer picture in a few weeks’ time. By 23 July, we will be making relevant decisions and relevant announcements at that point in time. In the intervening period, everything that is being said about what may or may not happen is just speculation.
PETER STEFANOVIC: But you don’t rule it out. You don’t rule it out that business may …
MATHIAS CORMANN: I am not going to start playing the rule in, rule out game. What I am saying to you is we are two months into a six-month program. As we have said right from the outset, there is a review halfway through. We will consider the findings of that review, the recommendations out of that review. We will consider how the economic data that comes through shows us how things are developing in the broader economic context and across specific sectors. We will make sensible judgements accordingly. To make judgements in the absence of relevant information, in the absence of more data out of the economy, in the absence of recommendations and review findings from Treasury would be highly irresponsible.
PETER STEFANOVIC: Are you pumped up for that Senate inquiry next week?
MATHIAS CORMANN: I always love appearing in front of Senate committees. It is fantastic.
PETER STEFANOVIC: Okay. Finance Minister Mathias Cormann, appreciate your time. Thanks for joining us.
MATHIAS CORMANN: Always good to talk to you.