A strategic analysis of the Australian foreign investment regime and the prospect of reform

Author: 
Rebecca Mendelsohn, Alan Fels
JEL codes: 
Abstract: 
Australia’s foreign investment regime arguably has four primary objectives: to facilitate the flow of inbound foreign investment; to screen that investment for the potential to damage the Australian national interest; to reassure the Australian people that foreign investment is consistent with the national interest; and to educate foreign investors about Australian laws, regulations, and community standards. This paper uses a strategic framework developed by Harvard’s Kennedy School of Government to assess whether Australia’s foreign investment regime is sufficiently delivering on its four main objectives. We ask if the regime could offer even greater public value to the Australian people were changes to be made to its structure and operation. We conclude that the foreign investment regime is very far from dysfunctional. Indeed, economic indicators suggest that it is doing a reasonably good job of fulfilling its objectives. We argue, however, that more public value may accrue from bringing the regime into line with accepted principles of good governance. We also propose that additional value may be generated by creating a specialist body to educate foreign investors and provide them with ongoing assistance in adjusting to the Australian environment. As an alternative, we suggest that these latter responsibilities could readily be assigned to the Department of Foreign Affairs and Trade consistent with its existing mandate.
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