Mark Brandon-Baker

Open for Business and Welcoming of Foreign Investment

Mark Brandon-Baker

16 September 2019

Capital Markets Mergers & Acquisitions

The recent re-election of the Morrison Government in Australia will ensure Australia remains open for business and welcoming of foreign investment. The current low growth environment which left the Reserve Bank to reduce official interest rates to record lows will be weighing heavily on the Government as it seeks to maintain its projected budget surplus in 2019-2020 and beyond. The downward pressure on the Australian dollar (now at 10 year lows) will presumably also stimulate international interest in acquisition of Australian assets.

The Government will consider investments on a case by case basis and in the ‘National Interest’. The broad ‘National Interest’ power of the Treasurer to refuse an investment means investment cases must be well targeted and the benefits of the Australian economy and community articulated and understood.

Recently, we have seen an increase in conditions being imposed to manage risks, rather than refusals, again signaling the Australian Government’s preference to approve foreign investment. Investors should be aware however that the Federal Government under current Treasurer, Josh Frydenberg, will be undertaking greater monitoring of conditions and imposing sanctions on investors that do not comply.

National security infrastructure and critical infrastructure will continue to be sensitive sectors for investment approval. In addition to these investment categories, there is heightened sensitivity around possible impacts on electricity supply / prices and the protection of Australia’s personal data. Given current drought conditions and political and media attention around water supply in Australia, any proposed acquisition of significant agriculture land and water entitlements could also be difficult.

TG Endeavour can assist to ensure these risks are minimised and the benefits of the Australian economy are well understood both within Government and the general community. Our experience is that the earlier we can be engaged in the investment process, the better the outcome.