..and now for something completely different

We constantly hear in the media and from the politicians in Canberra that the purchasing of residential properties by overseas buyers is harmful to the ordinary Australian and something to be stopped.

This reached fever pitch with a federal Liberal politician actually convening a series of public hearings on the subject and now a treasurer’s direction to a wealthy Chinese investor that his company must divest itself of a $39,000,000 Sydney mansion.

There seems to be a complete lack of understanding by our political leaders of how important to many industries, including more importantly the management rights industry, the introduction and use of foreign capital can be in owning apartments used in our tourism industry.

The overriding principle of the Foreign Investment Review Board and the treasurer, whom it advises, is that foreign investment into real estate should only be stopped when it is not in the best interest of Australians.

Just as an aside, I find it puzzling to understand how a wealthy Chinese businessman, who wishes to have his company bring money in to Australia and invest it responsibly, can be told he cannot have the use of a mansion in Sydney for which he has spent an enormous amount of money, as being in the best interests of Australia. It certainly cannot be argued that he is interfering with ordinary Australians being able to afford a residence.

For many years now I have been opening up the question with politicians as to why our tourism industry is being hampered by the FIRB rules preventing overseas investors from acquiring second hand, serviced managed apartments that form part of the accommodation infrastructure of our tourism industry. Under the Howard government, I was close to having the assistant minister to the treasurer producing an exemption to the FIRB rules to allow such investments to occur if they were subject to onsite management. Unfortunately, that was six months before the election and the rest is history!

Going back to the prevailing issue of the treasurer deciding what is in the best interests of Australia, it is already well documented by the government that the investment of foreign capital for commerce is in our best interests. Unfortunately, the way in which FIRB views all real estate, means it is simply broken in to “urban” and “non-urban” with the rules applying according to the two categories. The simplistic thinking of Canberra is that, any real estate that has the components of a residence, is urban real estate, which must be protected for private home ownership by Australians. This completely denies the fact that serviced apartments, occupied by tourists and managed onsite as part of the management rights and tourism industries form a valid area for the injection of foreign capital for commercial purposes.

There is no consistency in how the federal government applies itself to our industry and to tourism in general.

In 1998 the federal government imposed its Managed Investment regime. It introduced ASIC to the area of persons investing money to buy serviced apartments under management, with the purchase of a serviced apartment treated to be the equivalent of an investment requiring prospectuses and financial services licencing (Managed Investments Act). When you compare that supposition with that of FIRB, which on the other hand, treats such properties as “residences to be reserved for Australian ownership”, the nonsense becomes rather obvious.

Is it not time then for the management rights industry and the leaders in our tourism sector to start asking the right questions and demanding the necessary action for Australia’s “best interests” to be properly recognised, as needing the investment of foreign capital, through foreign ownership, in to our serviced apartment infrastructure, whether or not it consists of second hand titled property?

I am happy to assist anyone who may be interested in applying a definition of a “serviced apartment accommodation” for foreign ownership, that could easily be adopted by the treasurer in the FIRB guidelines to allow such investment, to the benefit of our management rights industry and to expand our tourism industry, in the best interests of Australia!

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