Australia’s longstanding bipartisan support for foreign investment is under threat as the Abbott government launches a deliberate attack on Chinese buyers of residential property.
Today, it was Chinese billionaire Xu Jiayin who was splashed all over page one of the AFR and The Daily Telegraph for, last October, paying $39 million in an illegal sale for a Point Piper mansion just near the residence of Communications Minister Malcolm Turnbull.
Tomorrow, it could be New York-based US citizen Rupert Murdoch who faces scrutiny over any proposed residential purchases he’d like to make in Australia.
Treasurer Joe Hockey and Foreign Investment Review Board chairman Brian Wilson (a Kiwi who made his fortune working for US investment banks) appear to have deliberately placed today’s splash to send a wider message to foreign investors more generally.
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This follows last week’s announcement of new taxes and a clamp down on foreign property purchases, which was driven by backbench concern.
Parliamentary secretary to the Treasurer Kelly O’Dwyer’s committee had originally proposed a $1500 slug on foreign buyers of residential property. Crikey understands that Hockey wanted to pitch it at $2500, but it finished at $5000 in order to satisfy backbench concern.
However, the attack on China’s 15th richest man — who the AFR reckons could be forced into a fire-sale of his Point Piper property within 90 days — is completely at odds with this joint press release put out by Tony Abbott, Trade Minister Andrew Robb and Scott Morrison last October. It opened as follows:
“The Government will expand and improve the Significant Investor Visa (SIV) programme as part of its broader competitiveness agenda. At present, SIVs are available for applicants having an eligible investment in Australia of A$5 million, for a minimum of four years. The Government will reform the programme to encourage more high net worth individuals to make Australia home and to leverage and better direct additional foreign investment.”
Rather than being forced to surrender his property rights in Point Piper by a supposedly pro-business government, surely Xu just needs to demonstrate that more than $5 million of his estimated $7.6 billion fortune has been invested in Australia.
It won’t become public until 2pm tomorrow when the full agenda is released here, but City of Melbourne councillors will next Tuesday vote on the following motion:
That the Future Melbourne committee:
A. Notes with concern the Federal Government’s proposal to introduce a new $200 million tax on foreign buyers of property;
B. Supports the concept of a level playing field for property investment which treats all owners and prospective bidders in the same manner;
C. Resolves to write to the Federal Government and relevant representatives in the Senate expressing support for the existing regulatory system on foreign property investment which has enjoyed Bipartisan support for many years; and
D. Calls on the Federal Government to fund any increased activity by the Foreign Investment Review board from its own resources rather than through a new tax on one class of buyer.
As the Melbourne economy transitions away from its historical manufacturing base, inward Asian investment in property — including offshore purchases of new and existing dwellings — has been an important driver of economic activity and engagement with the region.
This is particularly evident in the education sector where Melbourne has joined London, Paris and New York as elite members of the “big four” globally when it comes to hosting international students.
Melbourne University’s Parkville campus last year had 11,000 international students — the most of any single campus in the world — and this is forecast to hit 20,000 by 2020.
Melbourne is benefiting strongly from an open and welcoming approach to foreign investment in all asset classes.
The Property Council of Australia has made clear its opposition to the government’s proposed new system and council looks set to formally adopt a similar position next Tuesday.
Meanwhile, in other interesting property developments in Melbourne, the AFR had a very interesting story buried away on page 34 of today’s paper when it revealed that prominent private school Haileybury College is spending $52 million buying a site opposite the Flagstaff Gardens on the fringe of the Melbourne CBD.
This is an exciting development as the City of Melbourne had population growth of 11.5% in 2014, the fastest growth of any council in Australia, but most inner-city schools are now bursting at the seams.
This record growth is partly being driven by a burgeoning international education sector — 42% of City of Melbourne residents are students — along with the permissive regime that former Victorian planning minister Matthew Guy ran on residential skyscrapers over the past four years.
Throw in The Economist’s determination that Melbourne has been the world’s most liveable city over the past four years and you have an incredible wave of energy and population growth pulsating through the inner-city economy.
*Cr Stephen Mayne is deputy chair of the planning committee at the City of Melbourne councillor and was not paid for this item.