Treasurer Jim Chalmers wants stronger foreign investment rules. What does that mean?

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In a world of rising geopolitical tensions, Australia is tightening up its foreign investment laws in lockstep with many other Western nations.

Australia’s wealth and economic growth has been underpinned by foreign investment. For centuries, it has created businesses and jobs, and led to the transfer of new technology, skills and innovation.

Australia is not alone in tightening its foreign investment laws. Countries including Germany, Canada, the United States, Britain and Singapore have been erecting more and more barriers to foreign investment in the name of national security. Last month, Canada’s government said it would tighten scrutiny on foreign investments in its artificial intelligence and space technology sectors, and even in its video game industry. The Canadian government said the latter was at risk from “hostile state-sponsored or state-influenced actors” that might use the games to spread disinformation.

Germany is another nation that has restricted investment in critical sectors from semiconductors to artificial intelligence. This month, there was a proposal to give CFIUS greater powers to subpoena information from foreign companies proposing acquisitions or investment.In legal and security circles, it has been remarked upon that there appears to be an increasing co-ordination among the Five Eyes group of nations over decisions on foreign investment that is aimed at ensuring the security of global supply chains. The Five Eyes is an intelligence alliance of Australia, New Zealand, the US, Canada and the UK.

Australia’s Foreign Investment Review Board , which advises the treasurer on foreign investment proposals, doesn’t disclose how it makes its decisions or what conditions it imposes on transactions.

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