4 May 2015
Transcript - #2015030, 2015

In the role of: Parliamentary Secretary to the Treasurer [23 December 2014 - 20 September 2015]

Interview with Ross Greenwood, Money News, 2GB

SUBJECTS: Government’s Foreign Investment Announcement

GREENWOOD:

Kelly O’Dwyer, many thanks for your time.

O’DWYER:

Great to be with you again Ross.

GREENWOOD:

You and I have talked in the past, especially when your report was handed down, about the need for stricter penalties – not only for those people who do seek to buy properties illegally in Australia but also for those people who helped to facilitate it. What will happen?

O’DWYER:

We’re doing a couple of things. First we’re increasing the criminal penalties. You’d be aware that there are criminal penalties that currently exist at the moment. The current penalty fees for an individual are around $85,000 and around two years imprisonment. We’re seeking to increase that to $127,500 or three years imprisonment and for a company, $637,500 which is quite significant. But on top of that, we recognise that not always is it appropriate to put in place criminal penalties. Sometimes we should in fact try and have a deterrent through a civil penalty regime. And what I mean by that is that is being able to have infringements notices that we can slap straight away on individuals who have done the wrong thing.

GREENWOOD:

So these are the individual property investors themselves if they are seeking to come here. The truth is that you’re never going to get them really ‘cos they are going to be overseas and not going to be here in Australia.

O’DWYER:

No, there are a number of people who come here and purchase property here and for whom it is actually in their financial interest, under the existing regime, to invest in property even though that is contrary to our framework. We are putting in place civil penalties that say you can’t profit from this anymore. We will divest you of your property and then instead of you being able to keep the capital gain, we are going to keep the capital gain made on that divestment of the property or the higher of 25 per cent of purchase price or 25 per cent of the market value of the property. We will find people and I’ll tell you why we will find them Ross – instead of leaving this up to the Foreign Investment Review Board and the process that we have had in place in the past, we are transferring those responsibilities now to a crack unit in the Australian Taxation Office as of today. We have got 30 people working on this right now, which means we have got people looking at compliance, audit and enforcement activity. Not only for sales that are going to be happening over the coming weeks and months, but also to look back at some of those sales that have occurred and whether or not they are compliant with our foreign investment framework.

GREENWOOD:

Ok let’s look at this bloke, Xu Jaiyin, right. Now this is the fella who’s got this Evergrande Real Estate Group in China, also the company called Golden Fast Foods, he bought the home – the incredible Point Piper home – Villa del Mare, which was sold last year accordingly in contravention with our foreign investment laws. The Treasurer Joe Hockey forced him to divest of that. It was a $39 million Point Piper mansion – one of the finest in Australia. In his particular case, what sort of potential action could he face under the current rules or would he in fact face under the new rules that you are now creating?

O’DWYER:

We can’t retrospectively apply the rules, we are going to apply the rules prospectively. So when the legislation goes through those rules will be current as of 1 December 2015. The rules that he would be subject to are the current rules which are the criminal penalties which I mentioned to you before – penalties of around $85,000 or two years imprisonment.

GREENWOOD:

So you’d be seeking and pursuing those actions against that individual?

O’DWYER:

I won’t specify what the Treasurer will consider but he has immediately ordered the sale of that property and that property is to be sold.

GREENWOOD:

But that individual is surely not a resident in Australia. So if you were to try to seek restitution against the individual he’s already clearly blown dough on a $39 million sale that he’s being forced to sell. Then on top of that is there any likelihood if there was a two year jail sentence, you’d be able to put him here in the slammer in Australia.

O’DWYER:

We have these rules, these rules can be enforced. It is a matter of determining which ones are sensible to pursue. Fines obviously are very sensible to pursue in circumstances where that makes sense. I’m not going to give you a commentary on what the Treasurer may or may not consider pursuing in this specific set of circumstances.

GREENWOOD:

Is the situation of 100 other cases accurate or not?

O’DWYER:

There are more than 100 investigations that are currently on foot at the moment.

GREENWOOD:

Will any of those lead to jail sentences do you believe?

O’DWYER:

Never before have there been jail sentences imposed but certainly there may be appropriate circumstances in which there would be jail sentences imposed, particularly for those people who might have set up arrangements such that they are deliberately trying to contravene the law and do it on more than one occasion and do it in circumstances where they are trying to net significant profits at the expense of the Australian people.

GREENWOOD:

Ok. Final one as well is that many foreign buyers pickup Significant Investor Visas, in other words they put the money into the appropriate investments here in Australia, they get the visa and as a result they are free as birds to go and buy whatever property they’d like under those circumstances.

O’DWYER:

That’s not quite right Ross. They are able to, as a temporary resident, purchase one existing home, under the foreign investment framework, for the period of time that they are a temporary resident and they need to sell that property which is their principle place of residence three months after the expiry of their visa. They are entitled to do what any other temporary resident is entitled to do. They certainly can’t put these funds directly into purchasing established homes, they’re not able to do that under the Significant Investor Visa. There are particular classes of investments that are applicable and that is currently being reviewed at the moment by the Minister for Trade.

GREENWOOD:

To one final one for you, Senator David Leyonhjelm has indicated that maybe there should be a price tag of $50,000 on migrants who wish to come to Australia. He’s also even suggested introducing a lottery system like the United States. Do any of these things have merit given the level of foreign investment and also question marks over the Significant Investor Visa system we have here in Australia and whether in fact we should put some further hurdles for people to jump over if they wish to become Australian residents?

O’DWYER:

I certainly don’t think that Australia has ever been in the business of selling citizenship and nor do I think we should be in the business of selling citizenship. I think it’s appropriate for us to consider the right skills base that we need in Australia and that skill base changes from time-to-time. The visa requirements are currently being reviewed by the Productivity Commission which is where you’ve got the information that you’ve referred to. That has been done at the request of Senator David Leyonhjelm whose vote was critical in putting in place the appropriate arrangements for us to get Operation Sovereign Borders up and running. The Productivity Commission though is independent of Government. It will look at this issue in total. It will provide recommendations to Government but it won’t be a report of Government and we’ll see what it comes up with.

GREENWOOD:

There you go. Kelly O’Dwyer is the Parliamentary Secretary assisting the Treasurer.