The federal government will add $455 million to its coffers after Treasurer Jim Chalmers moved swiftly to double foreign investment application fees.
Labor’s election promise will become reality from this Friday. Foreign purchasers buying a residential property worth $1 million will be slugged an application fee of $13,200, up from $6,600. The same will apply to foreign buyers acquiring agricultural assets worth $2 million, and commercial assets worth $50 million.
Maximum fees for major transactions involving corporates will double to $1.045 million.
The latest data from the Foreign Investment Review Board showed approvals for foreign investment into Australian residential real estate fell by 37.8% over 2020-21, while commercial real estate dominated foreign investment into Australia over the period, with investment approvals more than doubling to $82 billion.
Labor’s move will generate an additional $455 million in budget revenue over the four-year forward estimates.
“Australia welcomes foreign investment that is in Australia’s interests,” Chalmers said.
“We welcome foreign investment in Australia because it plays a crucial role in Australia’s economic success and will continue to be important into the future.
“Foreign investment application fees ensure the cost of administering the foreign investment framework is not borne by Australians, and penalties encourage compliance with our rules.
“Decisions like this are made necessary by the state of the budget we have inherited from our predecessors.”
Chalmers said last week he would deliver a “confronting” statement on the economy and budget outlook this Thursday, warning of revisions to the Morrison government’s pre-election forecasts on economic growth, inflation and interest rates that will mean bigger real wages cuts than previously expected.
“That combination of inflation and rising interest rates and slowing growth, and food and energy insecurity, combined with the amount of debt that countries have racked up is a cause for concern in the global community,” he said.
According to the Australian Bureau of Statistics, real wages fell 2.1% in the 2021 financial year and will likely fall by more than 1% this financial year. Inflation was recorded at 5.2% in the March quarter – the June quarter figure is imminent – and is expected to hit 7% by December.
Announcing the changes to foreign investment application fees, Chalmers said Australia “continues to be an attractive place for investment”.
“We have a lot to offer global investors including strong institutions, transparent regulations and a highly”‘skilled workforce. Foreign investment fees will continue to make up only a small proportion of total foreign direct investment.”