HomeReportsBureau of Economic and Business Affairs2019 Investment Climate Statements...Australia

# 					2019 Investment Climate Statements: Australia			

 In this section										/

													Executive Summary											

                -  Executive Summary 
                -  1. Openness To, and Restrictions Upon, Foreign Investment   
                -  2. Bilateral Investment Agreements and Taxation Treaties   
                -  3. Legal Regime   
                -  4. Industrial Policies   
                -  5. Protection of Property Rights   
                -  6. Financial Sector   
                -  7. State-Owned Enterprises   
                -  8. Responsible Business Conduct   
                -  9. Corruption   
                -  10. Political and Security Environment   
                -  11. Labor Policies and Practices   
                -  12. OPIC and Other Investment Insurance Programs   
                -  13. Foreign Direct Investment and Foreign Portfolio Investment Statistics   
                -  14. Contact for More Information   

## Executive Summary

Australia is generally welcoming to foreign investment as such investment is widely considered to be an essential contributor to Australia’s economic growth and productivity.  The United States is the dominant source of foreign direct investment (FDI) in Australia. According to the U.S. Bureau of Economic Analysis, the stock of U.S. FDI totaled USD168 billion in January 2018.

Australia runs an annual current-account deficit and, therefore, is dependent on foreign investment, both FDI and portfolio investment.  Mining and resources attracts, by far, the largest share of FDI from the United States. Real estate investment is the second largest recipient of FDI from the United States, although remains much smaller than mining investment in absolute terms.  The Australia-United States Free Trade Agreement establishes higher thresholds for screening U.S. investment for most classes of direct investment.

While welcoming toward FDI, Australia does apply a “national interest” test to qualifying types of investment through its Foreign Investment Review Board review process.  Various changes to the foreign investment rules have been made in recent years, primarily aimed at strengthening national security. The Security of Critical Infrastructure Act 2018 was introduced in July 2018, providing information-collection powers to the Critical Infrastructure Centre and requiring the establishment of a register of critical infrastructure assets.  This will facilitate the Centre playing a greater role in advising the Treasurer on particular cases of foreign investment where national security concerns are present. The related Telecommunications Sector Security Reforms came into force in September 2018 to manage national security concerns surrounding investment in the telecommunications sector.

In response to a perceived lack of fairness, the Australian government has tightened anti-tax avoidance legislation targeting multi-national corporations with operations in multiple tax jurisdictions.  While some laws have been complementary to international efforts to address tax avoidance schemes and the use of low-tax countries or tax havens, Australia has also gone further than the international community in some areas.  This trend will likely continue in 2019 as both of the main political parties are considering options to further strengthen anti-avoidance measures focused on multi-national corporations.

Australia has a strong legal system grounded in procedural fairness, judicial precedent, and the independence of the judiciary.  Property rights are well established and enforceable. The establishment of government regulations typically requires consultation with impacted stakeholders and requires approval by a central regulatory oversight body before progressing to the legislative phase.  Anti-bribery and anti-corruption laws exist and Australia performs well in measures of transparency. Finally, Australia’s business environment is generally conducive to foreign companies operating in the country, and it ranks 18th overall in the World Bank’s Ease of Doing Business Index.

*Table 1*

							1. Openness To, and Restrictions Upon, Foreign Investment					

**Policies Towards Foreign Direct Investment**

Australia is generally welcoming to foreign direct investment (FDI), with foreign investment widely considered to be an essential contributor to Australia’s economic growth.  Other than certain required review and approval procedures for certain types of foreign investment described below, there are no laws that discriminate against foreign investors. 

A number of investment promotion agencies operate in Australia.  The Australian Trade Commission (often referred to as Austrade) is the Commonwealth Government’s national “gateway” agency to support investment into Australia.  Austrade provides coordinated government assistance to promote, attract and facilitate FDI, supports Australian companies to grow their business in international markets, and delivers advice to the Australian Government on its trade, tourism, international education and training, and investment policy agendas.  Austrade operates through a number of international offices, with U.S. offices primarily focused on attracting foreign direct investment into Australia and promoting the Australian education sector in the United States. Austrade in the United States operates from offices in Boston, Chicago, Houston, New York, San Francisco, and Washington, DC.  In addition, state investment promotion agencies also support international investment at the state level and in key sectors. 

**Limits on Foreign Control and Right to Private Ownership and Establishment**

Within Australia, foreign and domestic private entities may establish and own business enterprises, and may engage in all forms of remunerative activity in accordance with national legislative and regulatory practices.  See Section 4: Legal Regime – Laws and Regulations on Foreign Direct Investment below for information on Australia’s investment screening mechanism for inbound foreign investment.

Other than the screening process described in Section 4, there are few limits or restrictions on foreign investment in Australia.  Foreign purchases of agricultural land greater than AUD15 million (USD11 million) is subject to screening. This threshold applies to the cumulative value of agricultural land owned by the foreign investor, including the proposed purchase. However, the agricultural land screening threshold does not affect investments made under the Australia-United States Free Trade Agreement (AUSFTA).  The current threshold remains AUD 1.154 billion (USD808 million) for U.S. non-government investors. Investments made by U.S. non-government investors are subject to inclusion on the foreign ownership register of agricultural land and to Australian Tax Office (ATO) information gathering activities on new foreign investment. 

**Other Investment Policy Reviews**

Australia has not conducted an investment policy review in the last three years through either the OECD or UNCTAD system.  The last WTO review of Australia’s trade policies and practices took place in April 2015, and can be found at https://www.wto.org/english/tratop_e/tpr_e/tp412_e.htm  .  Australia is not scheduled for a WTO trade policy review in 2019. 

The Australian Trade Commission compiles an annual “Why Australia Benchmark Report” that presents comparative data on investing in Australia in the areas of Growth, Innovation, Talent, Location and Business.  The report also compares Australia’s investment credentials with other countries and provides a general snapshot on Australia’s investment climate. See http://www.austrade.gov.au/International/Invest/Resources/Benchmark-Report  .

**Business Facilitation**

Business registration in Australia is relatively straightforward and is facilitated through a number of Government websites.  The Commonwealth Department of Industry, Innovation and Science’s business.gov.au web site provides an online resource and is intended as a “whole-of-government” service providing essential information on planning, starting, and growing a business.  Foreign entities intending to conduct business in Australia as a foreign company must be registered with the Australian Securities and Investments Commission (ASIC). As Australia’s corporate, markets and financial services regulator, the ASIC website provides information and guides on starting and managing a business or company.

In registering a business, individuals and entities are required to register as a company with ASIC, which then gives the company an Australian Company Number, registers the company, and issues a Certificate of Registration.  According to the World Bank “Starting a Business” indicator, registering a business in Australia takes 2.5 days, and Australia ranks 7th globally on this indicator. 

**Outward Investment**

Australia generally looks positively towards outward investment as a ways to grow its economy.  There are no restrictions on domestic investors. Austrade, the Export Finance and Insurance Corporation (Efic), and various other government agencies offer assistance to Australian businesses looking to invest abroad, and some sector-specific export and investment programs exist.

							2. Bilateral Investment Agreements and Taxation Treaties					

Australia is a party to bilateral investment treaties with Argentina, China, Czech Republic, Egypt, Hong Kong, Hungary, India, Indonesia, Laos, Lithuania, Mexico, Pakistan, Papua New Guinea, Peru, Philippines, Poland, Romania, Sri Lanka, Turkey, Uruguay and Vietnam.

In addition to the AUSFTA free trade agreement (FTA) with the United States, Australia has bilateral FTAs in force with Chile, China, Japan, Korea, Malaysia, Singapore, and Thailand, and a multilateral FTA with New Zealand and the countries of the Association of Southeast Asian States (ASEAN), all of which contain chapters on investment.  Australia signed the Comprehensive and Progressive Agreement for Trans Pacific Partnership (CPTPP) in March 2018, and it entered into force in December 2018. Australia has signed, but not yet ratified, bilateral FTAs with Hong Kong, Indonesia, and Peru, and the multilateral Pacific trade and economic agreement known as“PACER Plus”.

Australia is currently engaged in bilateral FTA negotiations with the EU and India, and in the following plurilateral FTA negotiations: the Regional Comprehensive Economic Partnership (RCEP, consisting of the ASEAN + Six group of nations); the Gulf Cooperation Council (GCC); and the Pacific Alliance (comprising Chile, Peru, Mexico and Colombia. 

The U.S.-Australia Convention for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with Respect to Taxes has been in place since 1982, with amendments made in 2001.  In addition to the United States, Australia has income tax treaties with 44 other countries and Taiwan.

In 2014, Australia signed an Intergovernmental Agreement with the United States to implement the Foreign Account Tax Compliance Act (FATCA) and improve tax cooperation. Under FATCA, Australian financial institutions are required to submit information on accounts held by U.S. citizens.  The Intergovernmental Agreement allows financial institutions to report the information via the Australian Tax Office under the existing Australia–US tax treaty arrangements.

The Australian government has moved aggressively in efforts to fight tax avoidance schemes by multinational corporations.  Australia ratified the Multilateral Convention to Implement Tax Treaty Related Measures to Prevent Base Erosion and Profit Shifting in September 2018, and it entered into force on January 1, 2019.  Australia has used this instrument to modify its tax treaties with several countries, but not with the United States. Australia has actively participated in the OECD Base Erosion Profit Shifting (BEPS) recommendations but has also moved further than the BEPS recommendations.  Multinational anti-avoidance legislation targets companies that do business in Australia without establishing a permanent establishment, and Australia’s diverted profits tax legislation targets tax schemes that recognize income in lower tax jurisdictions. Australia has implemented the OECD’s hybrid mismatch rules (as of January 2019) and limits interest deductions through a Safe Harbor Debt Limit of 60 percent (further legislation dealing with thin capitalization is before parliament at the time of writing.).

							3. Legal Regime					

**Transparency of the Regulatory System**

The Australian Government utilizes transparent policies and effective laws to foster national competition and is consultative in its policy making process.  The government generally allows for public comment of draft legislation and publishes legislation once it enters into force.

Regulations drafted by Australian Government agencies must be accompanied by a Regulation Impact Statement when submitted to the final decision maker (which may be the Cabinet, a Minister, or another decision maker appointed by legislation.)  All Regulation Impact Statements must first be approved by the Office of Best Practice Regulation (OBPR) which sits within the Department of Prime Minister and Cabinet, prior to being provided to the relevant decision maker. They are required to demonstrate the need for regulation, the alternative options available (including non-regulatory options), feedback from stakeholders, and a full cost-benefit analysis.  Regulations are subsequently required to be reviewed periodically. All Regulation Impact Statements, second reading speeches, explanatory memoranda, and associated legislation are made publicly available on Government websites. Australia’s state and territory governments have similar processes when making new regulations.

The Australian Government has tended to prefer self-regulatory options where industry can demonstrate that the size of the risks are manageable and that there are mechanisms for industry to agree on, and comply with, self-regulatory options that will resolve the identified problem.  This manifests in various ways across industries, including voluntary codes of conduct and similar agreements between industry players.

The Australian Government has recognized the impost of regulations and has undertaken a range of initiatives to reduce red tape.  This has included specific red tape reduction targets for government agencies, and various deregulatory groups within government agencies.

Australian accounting, legal, and regulatory procedures are transparent and consistent with international standards.  Accounting standards are formulated by the Australian Accounting Standards Board (AASB), an Australian Government agency under the Australian Securities and Investments Commission Act 2001.  Under that Act, the statutory functions of the AASB are to develop a conceptual framework for the purpose of evaluating proposed standards; make accounting standards under section 334 of the Corporations Act 2001, and advance and promote the main objects of Part 12 of the ASIC Act, which include reducing the cost of capital, enabling Australian entities to compete effectively overseas and maintaining investor confidence in the Australian economy.  The Australian Government conducts regular reviews of proposed measures and legislative changes and holds public hearings into such matters. 

Australian government financing arrangements are transparent and well governed.  Legislation governing the type of financial arrangements the government and its agencies may enter into is publicly available and adhered to.  Updates on the Government’s financial position are regularly posted on the Department of Finance and the Treasury websites. Issuance of government debt is managed by the Australian Office of Financial Management, which holds regular tenders for the sale of government debt and the outcomes of these tenders are publicly available.  The Australian government also publishes and adheres to strict procurement guidelines. Australia completed negotiations to join the WTO Agreement on Government Procurement in February 2019. 

**International Regulatory Considerations**

Australia is a member of the WTO and the Asia-Pacific Economic Cooperation (APEC), and became the first Association of Southeast Nations (ASEAN) Dialogue Partner in 1974.  While not a regional economic block, Australia’s free trade agreement with New Zealand provides for a high level of integration between the two economies with the ultimate goal of a single economic market.

Australia is a signatory to the WTO Trade Facilitation Agreement (TFA) and performs at, or close to, the frontier for all eleven OECD Trade Facilitation Indicators.  For the eight indicators where it is not located at the frontier, it has significantly improved on six between 2015 and 2017. While no new legislation has been required to progress Australia’s implementation of the TFA, Australia has created a National Committee on Trade Facilitation to oversee development of new trade facilitation initiatives.  Two important initiatives to date have been the creation of an Authorized Economic Operator scheme to allow approved companies to streamline imports through Australian Customs, and the creation of a “single window” portal for traders seeking information on importation and permit requirements.

**Legal System and Judicial Independence**

The Australian legal system is firmly grounded on the principles of equal treatment before the law, procedural fairness, judicial precedent, and the independence of the judiciary.  Strong safeguards exist to ensure that people are not treated arbitrarily or unfairly by governments or officials. Property and contractual rights are enforced through the Australian court system, which is based on English Common Law.

**Laws and Regulations on Foreign Direct Investment**

Information regarding investing in Australia can be found in Austrade’s “Guide to Investing” at http://www.austrade.gov.au/International/Invest/Investor-guide  .  The guide is designed to help international investors and businesses navigate investing and operating in Australia.  It is an online guide to the regulations, considerations and assistance relevant to investing in, establishing and running a business in Australia, with direct links to relevant regulators and government agencies that relate to Australian Government regulation and available assistance.

Foreign investment in Australia is regulated by the Foreign Acquisitions and Takeovers Act 1975 and Australia’s Foreign Investment Policy.  The Foreign Investment Review Board (FIRB), a division of Australia’s Treasury, is a non-statutory body established to advise the Treasurer and the Commonwealth Government on Australia’s foreign investment policy and its administration.  The FIRB screens potential foreign investments in Australia above threshold values, and based on advice from the FIRB, the Treasurer may deny or place conditions on the approval of particular investments above that threshold on national interest grounds.  Following a number of recent investments made by foreign companies in key sectors of Australia’s economy, the laws and regulations governing foreign direct investment have been subject to a wide ranging and ongoing review.

The Australian Government has a “national interest” consideration in reviewing foreign investment applications.  Further information on foreign investment screening, including screening thresholds for certain sectors and countries, can be found at the FIRB’s website: https://firb.gov.au/  .  Under the AUSFTA agreement, all U.S. greenfield investments are exempt from FIRB screening. U.S. investors require prior approval if acquiring a substantial interest in a primary production business valued above AUD 1.154 billion (USD808 million). 

Australia has recently taken steps to increase the analysis of national security implications of foreign investment in certain sectors.  In January 2017, the Government established the Critical Infrastructure Centre (CIC) to better manage the risks to Australia’s critical infrastructure assets.  A key role of the CIC is to advise the FIRB on risks associated with foreign investment in infrastructure assets, particularly telecommunications, electricity, water, and port assets.  While the CIC’s role in the foreign investment process signals the Government’s focus on these assets, its role is limited to providing advice to the Government and the approval framework itself was not changed when the CIC was established.   Further changes to investments in electricity assets and agricultural land were announced in early 2018. Under these changes, electricity infrastructure is formally viewed as “critical infrastructure”, and foreign purchases will face additional scrutiny and conditions, while agricultural land is now required to be “marketed widely” to Australian buyers before being sold to a foreign buyer. 

There have been very few instances of foreign investment applications being rejected by the Treasurer.  Of the 11,855 applications considered between July 1, 2017 and June 30, 2018 (the 2018 Australian financial year), only two were rejected. [Note: Both related to residential real estate investment.  End note.] In November 2018, the Treasurer rejected the buyout of APA, a major gas pipeline owner in Australia, by the Hong Kong-based CKI Group, citing concerns that the purchase would create “undue concentration of foreign ownership by a single company group in our most significant gas transmission business.”  Analysis justifying rejections is typically not published.

**Competition and Anti-Trust Laws**

The Australian Competition and Consumer Commission (ACCC) enforces the Competition and Consumer Act 2010 and a range of additional legislation, promotes competition, fair trading and regulates national infrastructure for the benefit of all Australians.  The ACCC plays a key role in assessing mergers to determine whether they will lead to a substantial lessening of competition in any market. ACCC also engages in consumer protection enforcement and has recently been given expanded responsibilities to monitor digital industries and the “sharing economy.”

**Expropriation and Compensation**

Private property can be expropriated for public purposes in accordance with Australia’s constitution and established principles of international law.  Property owners are entitled to compensation based on “just terms” for expropriated property. There is little history of expropriation in Australia.

**Dispute Settlement**

*ICSID Convention and New York Convention*

Australia is a member of the International Centre for the Settlement of Investment Disputes (ICSID Convention) and the New York Convention of 1958 on the Recognition and Enforcement of Foreign Arbitral Awards.  The International Arbitration Act 1974 governs international arbitration and the enforcement of awards.

*Investor-State Dispute Settlement*

Investor-State Dispute Settlement (ISDS) is included in seven of Australia’s nine FTAs and 18 of its 21 BITs.  AUSFTA establishes a dispute settlement mechanism for investment disputes arising under the Agreement. However, AUSFTA does not contain an investor-state dispute settlement (ISDS) mechanism that would allow individual investors to bring a case against the Australian government.  Regardless of the presence or absence of ISDS mechanisms, there is no history of extrajudicial action against foreign investors in Australia.

*International Commercial Arbitration and Foreign Courts*

Australia has an established legal and court system for the conduct or supervision of litigation and arbitration, as well as alternate dispute resolutions.  Australia is a leader in the development and provision of non-court dispute resolution mechanisms. It is a signatory to all the major international dispute resolution conventions and has organizations that provide international dispute resolution processes.

**Bankruptcy Regulations**

Bankruptcy is a legal status conferred under the Bankruptcy Act 1966 and operates in all of Australia’s States and Territories.  Only individuals can be made bankrupt, not businesses or companies. Where there is a partnership or person trading under a business name, it is the individual or individuals who make up that firm that are made bankrupt.  Companies cannot become bankrupt under the Bankruptcy Act though similar provisions (called “administration and winding up”) exist under the Corporations Act 2001. Bankruptcy is not a criminal offense in Australia.

Creditor rights are established under the Bankruptcy Act 1966, the Corporations Act 2001, and the more recent Insolvency Law Reform Act 2016.  The latter legislation commenced in two tranches over 2017 and aims to increase the efficiency of insolvency administrations, improve communications between parties, increase the corporate regulator’s oversight of the insolvency market, and “improve overall consumer confidence in the professionalism and competence of insolvency practitioners.”  Under the combined legislation, creditors have the right to: request information during the administration process; give direction to a liquidator or trustee; appoint a liquidator to review the current appointee’s remuneration; and remove a liquidator and appoint a replacement.

							4. Industrial Policies					

**Investment Incentives**

The Commonwealth government and state and territory governments provide a range of measures to assist investors with setting up and running a business and undertaking investment.  Types of assistance available vary by location, industry, and the nature of the business activity. Austrade provides coordinated government assistance to attracting FDI and is intended to serve as the national point-of-contact for investment inquiries.  State and territory governments similarly offer a suite of financial and non-financial incentives. Australian and State and Territory Governments provide selected grants to businesses for establishing or expanding a business, or for specific activities such as research.  The Commonwealth Government also provides incentives for companies engaging in research and development (R&D), and delivers a tax offset for expenditure on eligible R&D activities undertaken during the year. R&D activities conducted overseas are also eligible under certain circumstances, and the program is jointly administered by AusIndustry (Government agency) and the Australian Taxation Office (ATO). The Australian Government typically does not offer guarantees on, or jointly finance projects with, foreign investors.

**Foreign Trade Zones/Free Ports/Trade Facilitation**

Australia does not have any free trade zones or free ports.

**Performance and Data Localization Requirements**

As a general rule, foreign firms establishing themselves in Australia are not subject to local employment or forced localization requirements, performance requirements and incentives, including to senior management and board of directors.  Proprietary companies must have at least one director resident in Australia, while public companies are required to have a minimum of two resident directors. See Section 12 below for further information on rules pertaining to the hiring of foreign labor.

Under the Telecommunications (Interception and Access) Amendment (Data Retention) Bill 2015, telecommunications service providers are required to retain and secure, for two years, telecommunications data (not including content); to protect retained data through encryption; and to prevent unauthorized interference and access.  The Bill limits the range of agencies that are able to access telecommunications data and stored communications, establishes a “journalist information warrants regime.” Australia’s Personally Controlled Electronic Health Records Act prohibits the transfer of health data out of Australia in some situations. 

Australia has a strong framework for the protection of intellectual property (IP), including software source code.  Foreign providers are not required to provide source code to the Government in exchange for operating in Australia. A current government enquiry is investigating the competition impacts of digital platforms, including the market implications of the algorithms used by these platforms and options for mandating the disclosure of these algorithms to regulators.  

The Government introduced legislation to Parliament in 2018 that would require encrypted messaging services to provide decrypted communications to the Government for selected national security purposes (the Telecommunications and Other Legislation Amendment (Assistance and Access) Act 2018).  Parts of this legislation were passed by parliament in December 2018, and the remaining aspects of it are subject to review by a parliamentary committee at the time of writing. Companies relying on secure encryption technologies have expressed concern about the impacts of this legislation on the security of the products, and the lack of sufficient judicial oversight in reviewing government requests for access to encrypted data.

Companies are generally not restricted in terms of how they store or transmit data within their operations.  The exception to this is the Personally Controlled Electronic Health Records Act (2012) which does require that certain personal health information is stored in Australia.  The Privacy Act (1988) and associated legislation places restrictions on the communication of personal information between and within entities, however, the requirements placed on international companies, and the transmission of data outside of Australia, are not treated differently under this legislation.  Finally, Australia’s data retention laws require telecommunications companies and internet service providers to retain customer metadata for a period of two years. The Australian Attorney-General’s Department is the responsible agency for most legislation relating to data and storage requirements.

							5. Protection of Property Rights					

**Real Property**

Strong legal frameworks protect property rights in Australia and operate to police corruption.  Mortgages are commercially available, and foreigners are allowed to buy real property subject to certain registration and approval requirements.  Property lending may be securitized, and Australia has one of the most highly developed securitization sectors in the world. Beyond the private sector property market, securitization products are being developed to assist local and state government financing.  Australia has no legislation specifically relating to securitization, although issuers are governed by a range of other financial sector legislation and disclosure requirements.

**Intellectual Property Rights**

Australia generally provides strong intellectual property rights (IPR) protection and enforcement through legislation that, among other things, criminalizes copyright piracy and trademark counterfeiting.  Australia is not listed in USTR’s Special 301 report or on USTR’s notorious market report. 

Enforcement of counterfeit goods is overseen by the Australian Department of Home Affairs through the Notice of Objection Scheme, which allows the Australian Border Force to seize goods suspected of being counterfeit.  Penalties for sale or importation of counterfeit goods include fines and up to five years imprisonment. The Australia Border Force reported seizing 190,000 individual items of counterfeit and pirated goods, worth approximately AUD 16.9 million (USD 11.8 million), during the fiscal year ending June 30, 2016, the last available year for which this data is provided. 

IP Australia is the responsible agency for administering Australia’s responsibilities and treaties under the World Intellectual Property Organization (WIPO).  Australia is a member of a range of international treaties developed through WIPO. Australia does not have specific legislation relating to trade secrets, however common law governs information protected through such means as confidentiality agreements or other means of illegally obtaining confidential or proprietary information.

Australia was an active participant in the Anti-Counterfeiting Trade Agreement (ACTA) negotiations and signed ACTA in October 2011.  It has not yet ratified the agreement. ACTA would establish an international framework to assist Parties in their efforts to effectively combat the infringement of intellectual property rights, in particular the proliferation of counterfeiting and piracy.

Under the AUSFTA, Australia must notify the holder of a pharmaceutical patent of a request for marketing approval by a third party for a product claimed by that patent.  U.S. and Australian pharmaceutical companies have raised concerns that unnecessary delays in this notification process restrict their options for action against third parties that would infringe their patents if granted marketing approval by the Australian Therapeutic Goods Administration.

The Australian Parliament introduced two amendments to the Copyright Act in 2018.  In June 2018, the Australian Parliament passed the Copyright Amendment (Service Providers) Bill 2017.  This amendment extends safe harbor provisions in the Act to the disability, education, library, archive, and cultural sectors, protecting organizations in these sectors from legal liability where they can demonstrate that they have taken reasonable steps to deal with copyright infringement by users of their online platforms.  However, the legislation specifically excludes online platforms such as Google and Facebook from safe harbor provisions. Prior to this extension, the safe harbor provisions, set out in Division 2AA of Part V of the Copyright Act, applied only to carriage service providers. Carriage service providers were broadly defined as telecommunications network providers, but do not include online platforms such as Google and Facebook.  Having passed the amendment, the Australian Government has indicated it will not revisit legislation to extend the safe harbor provisions to cover service providers in the near future. In November 2018, the Australian Parliament passed the Copyright Amendment (Online Infringement) Bill 2018. This legislation reduces the threshold for capturing overseas online locations under the Copyright Act and makes it easier for individuals to seek injunctions against material distributed online, including against online search engines making that material publicly available.  The legislation allows the Communications Minister to exempt certain search engines or classes of search engines.

For additional information about national laws and points of contact at local IP offices, please see WIPO’s country profiles at http://www.wipo.int/directory/en/  .

							6. Financial Sector					

**Capital Markets and Portfolio Investment**

The Australian Government takes a favorable stance towards foreign portfolio investment with no restrictions on inward flows of debt or equity.  Indeed, access to foreign capital markets is crucial to the Australian economy given its relatively small domestic fixed income markets. Australian capital markets are generally efficient and are able to provide financing options to businesses.  While the Australian equity market is one of the largest and most liquid in the world, non-financial firms do face a number of barriers in accessing the corporate bond market. Large firms are more likely to use public equity and smaller firms more likely to use retained earnings and debt from banks and intermediaries.  Australia’s corporate bond market is relatively small, driving many Australian companies to issue debt instruments in the U.S. market. Foreign investors are able to get credit from domestic institutions on market terms.

**Money and Banking System**

Australia’s banking system is robust, highly evolved, and international in focus.  Bank profitability is strong and has been supported by further improvements in asset performance.

Total assets of the four largest banks is USD 2.6 trillion, 21 percent of the market value of all listed Australian companies.  According to Australia’s central bank, the Reserve Bank of Australia or RBA, the ratio of non-performing assets to total loans was just under 1 percent at the end of 2017, having remained at around that level for the last four years after falling from highs of nearly 2 percent following the Global Financial Crisis.  The RBA is responsible for monitoring and reporting on the stability of the financial sector, while the Australian Prudential Regulatory Authority (APRA) monitors individual institutions. Foreign banks are allowed to operate as a branch or a subsidiary in Australia. Australia has generally taken an open approach to allowing foreign companies to operate in the financial sector, largely to ensure sufficient competition in an otherwise small domestic market.

The RBA is responsible for monitoring and regulating payments systems in Australia.  It has recently overseen the creation of the New Payments Platform that came on line in early 2018, allowing fast processing of low value transactions.

**Foreign Exchange and Remittances**

*Foreign Exchange*

The Commonwealth Government formulates exchange control policies with the advice of the Reserve Bank of Australia (RBA) and the Treasury.  The RBA, charged with protecting the national currency, has the authority to implement exchange controls, although there are currently none in place.

The Australian dollar is a fully convertible and floating currency.  The Commonwealth Government does not maintain currency controls or limit remittances.  Such payments are processed through standard commercial channels, without governmental interference or delay.

*Remittance Policies*

Australia does not limit investment remittances. 

**Sovereign Wealth Funds**

Australia’s sovereign wealth fund, the Future Fund, is a financial asset investment fund owned by the Australian Government.  The Fund’s objective is to enhance the ability of future Australian Governments to discharge unfunded superannuation (pension) liabilities expected after 2020, when an ageing population is likely to place significant pressures on Government finances.  As a founding member of the International Forum of Sovereign Wealth Fund (IFSWF), the Future Fund’s structure, governance and investment approach is in full alignment with the Generally Accepted Principles and Practices for Sovereign Wealth Funds (the “Santiago principles”).

In addition to the Future Fund, the Australian government has a number of “nation-building funds”, the DisabilityCare Fund, and the Medical Research Future Fund.  The Building Australia Fund enhances the Commonwealth’s ability to make payments towards the creation or development of transport, communications, energy, and water infrastructure and in relation to eligible national broadband matters.  The Education Investment Fund makes payments towards the creation or development of higher education infrastructure, research infrastructure, vocational education and training infrastructure, and eligible education infrastructure. The DisablityCare Australia Fund aims to reimburse States, Territories and the Commonwealth for expenditure incurred in relation to the National Disability Insurance Scheme Act 2013 and to fund implementation of that Act in its initial period of operation.  The Medical Research Future Fund provides grants of financial assistance to support medical research and medical innovation.

As of December 31, 2018, the value of the Future Fund totaled AUD 147 billion (USD 103 billion).  The value of the Education Investment Fund totaled AUD 3.9 billion (USD 2.7 billion); the Building Australia Fund totaled AUD 3.9 billion (USD 2.7 billion); the DisabilityCare Australia Fund totaled AUD 14.4 billion (USD 10.1 billion), and the Medical Research Future Fund totaled AUD 9.4 billion (USD 6.6 billion).

							7. State-Owned Enterprises					

In Australia, the term used for a Commonwealth Government State-Owned Enterprise (SOE) is “government business enterprise” (GBE).  According to the Department of Finance, there are nine GBEs: two corporate Commonwealth entities and seven Commonwealth companies.  (See https://www.finance.gov.au/resource-management/governance/gbe/  )  Private enterprises are generally allowed to compete with public enterprises under the same terms and conditions with respect to markets, credit, and other business operations, such as licenses and supplies.  Public enterprises are not generally accorded material advantages in Australia. Remaining GBEs do not exercise power in a manner that discriminates against or unfairly burdens foreign investors or foreign-owned enterprises. 

**Privatization Program**

Australia does not have a formal and explicit national privatization program.  Individual state and territory governments may have their own privatization programs.  Foreign investors are welcome to participate in any privatization programs subject to the rules and approvals governing foreign investment.

							8. Responsible Business Conduct					

There is general business awareness and promotion of responsible business conduct (RBC) in Australia.  The Commonwealth Government states that companies operating in Australia and Australian companies operating overseas are expected to act in accordance with the principles set out in the OECD Guidelines for Multinational Enterprises and to perform to the standards they suggest.  In seeking to promote the OECD Guidelines, the Commonwealth Government maintains a National Contact Point (NCP), the current NCP being currently the General Manager of the Foreign Investment and Trade Policy Division at the Commonwealth Treasury, who is able to draw on expertise from other government agencies through an informal inter-governmental network.  An ANCP Web site links to the “OECD Due Diligence Guidance for Responsible Supply Chains of Minerals from Conflict-Affected and High-Risk Areas” noting that the objective is to help companies respect human rights and avoid contributing to conflict through their mineral sourcing practices. The Commonwealth Government’s export credit agency, Efic, also promotes the OECD Guidelines as the key set of recommendations on responsible business conduct addressed by governments to multinational enterprises operating in or from adhering countries.

Australia began implementing the principles of the Extractive Industries Transparency Initiative (EITI) in 2016. 

							9. Corruption					

Australia maintains a comprehensive system of laws and regulations designed to counter corruption.  In addition, the government procurement system is generally transparent and well regulated. Corruption has not been a factor cited by U.S. businesses as a disincentive to investing in Australia, nor to exporting goods and services to Australia.  Non-governmental organizations interested in monitoring the global development or anti-corruption measures, including Transparency International, operate freely in Australia, and Australia is perceived internationally as having low corruption levels.

Australia is an active participant in international efforts to end the bribery of foreign officials.  Legislation exists to give effect to the anti-bribery convention stemming from the OECD 1996 Ministerial Commitment to Criminalize Transnational Bribery.  Legislation explicitly disallows tax deductions for bribes of foreign officials. At the Commonwealth level, enforcement of anti-corruption laws and regulations is the responsibility of the Attorney General’s Department.

The Attorney-General’s Department plays an active role in combating corruption through developing domestic policy on anti-corruption and engagement in a range of international anti-corruption forums.  These include the G20 Anti-Corruption Working Group, APEC Anti-Corruption and Transparency Working Group, and the United Nations Convention against Corruption Working Groups. Australia is a member of the OECD Working Group on Bribery and a party to the key international conventions concerned with combating foreign bribery, including the OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions (Anti-Bribery Convention).

Under Australian law, it is an offense to bribe a foreign public official, even if a bribe may be seen to be customary, necessary or required.  The maximum penalty for an individual is 10 years imprisonment and/or a fine of AUD 2.1 million (approximately USD 1.5 million). For a corporate entity, the maximum penalty is the greatest of: 1) AUD 21 million  (approximately USD 14.7 million); 2) three times the value of the benefits obtained; or 3) 10 percent of the previous 12-month turnover of the company concerned.

A number of national and state-level agencies exist to combat corruption of public officials and ensure transparency and probity in government systems.  The Australian Commission for Law Enforcement Integrity (ACLEI) has the mandate to prevent, detect and investigate serious and systemic corruption issues in the Australian Crime Commission, the Australian Customs and Border Protection Service, the Australian Federal Police, the Australian Transaction Reports and Analysis Center, the CrimTrac Agency, and prescribed aspects of the Department of Agriculture.

Various independent commissions exist at the state level to investigate instances of corruption. Details of these bodies are provided below.  

*UN Anticorruption Convention, OECD Convention on Combatting Bribery*

Australia has signed and ratified the United Nations Convention against Corruption, and is a signatory to the OECD Anti-Bribery Convention.

*Resources to Report Corruption*

Western Australia – Corruption and Crime Commission86 St Georges TerracePerth, Western AustraliaTel. (08) 9215 4888https://www.ccc.wa.gov.au/  

Queensland – Corruption and Crime CommissionLevel 2, North Tower Green Square515 St Pauls TerraceFortitude Valley, QueenslandTel. (07) 3360 6060https://www.ccc.qld.gov.au/  

Victoria – Independent Broad-based Anti-corruption CommissionLevel 1, North Tower, 459 Collins StreetMelbourne, VictoriaTel. 1300 735 135https://ibac.vic.gov.au  

New South Wales – Independent Commission against CorruptionLevel 7, 255 Elizabeth StreetSydney NSW 2000Australia02 8281 5999https://www.icac.nsw.gov.au/  

South Australia – Independent Commission against Corruption NSWLevel 1, 55 Currie StreetAdelaide, South AustraliaTel. 08 8463 5173https://icac.sa.gov.au  

							10. Political and Security Environment					

Political protests (e.g., rallies, demonstrations, marches, public conflicts between competing interests) form an integral, though generally minor, part of Australian cultural life.  Such protests rarely degenerate into violence.

							11. Labor Policies and Practices					

Australia’s strong economy has seen unemployment fall to relatively low levels, albeit remaining above levels associated with full employment.  As of March 2019 the employment rate in Australia is at 5.0 percent. Average weekly earnings for full time workers in Australia were AUD 1,670 (approximately USD 1,170) as of November 2018.  The minimum wage is set annually and is significantly higher than that of the United States (approximately twice the U.S. minimum wage). Overall wage growth has been low in recent years, growing only slightly above the rate of inflation.

The Australian Government and its state counterparts are active in assessing and forecasting labor skills gaps across industries.  Tertiary education is subsidized by both levels of governments and these subsidies are based in part on an assessment of the skills needed by industry.  These assessments also inform immigration policy through the various working visas and associated skilled occupation lists. Occupations on these lists are updated annually based on assessment of the skills most needed by industry.

Immigration has always been an important source for skilled labor in Australia.  The Department of Home Affairs publishes an annual list of occupations with skill shortages to be used by potential applicants seeking to work in Australia.  The visas available to applicants, and length of stay allowed for, differ by occupation. The main working visa is the Temporary Skills Shortage visa (subclass 482) which replaced the former subclass 457 visa in March 2018.  Applicants must have a nominated occupation when they apply which is applicable to their circumstances, and applications are subject to local labor market testing rules. These rules preference the hiring of Australian labor over foreign workers so long as local workers can be found to fill the advertised job.

In March 2018, the Government announced a one-year trial of a new visa category aimed to provide companies access to highly skilled international professionals.  This visa is eligible to listed companies, companies with turnover greater than AUD4 million (USD 2.76 million), or recognized startup companies, paying the foreign worker AUD180,000 (USD 124,398) or more. 

Most Australian workplaces are governed by a system created by the Fair Work Act 2009.  Enterprise bargaining takes place through collective agreements made at an enterprise level covering terms and conditions of employment.  Such agreements are widely used in Australia. A Fair Work Ombudsman assists employees, employers, contractors and the community to understand and comply with the system.  The Fair Work Act 2009 establishes a set of clear rules and obligations about how this process is to occur, including rules about bargaining, the content of enterprise agreements, and how an agreement is made and approved.  Unfair dismissal laws also exist to protect workers who have been unfairly fired from a job. Australia is a founding member of the International Labour Organization and has ratified 58 of the ILO’s conventions.

Chapter 18 of the AUSFTA agreement deals with labor market issues.  The chapter sets out the responsibilities of each party, including the commitment of each country to uphold its obligations as a member of the International Labor Organization (ILO) and the associated ILO Declaration on Fundamental Principles and Rights at Work and its Follow-up (1998).

There were 158 industrial disputes nationwide in 2017.  This was a slight increase on the 154 disputes recorded in 2017, although there was a 26 percent reduction in the number of working days lost due to these disputes.

							12. OPIC and Other Investment Insurance Programs					

The Overseas Private Investment Corporation excludes Australia, as it is not a developing country.  The U.S. Export-Import Bank (EXIM) can provide financing and other services for major resource sector and energy projects in Australia which support U.S. jobs and exports.

							13. Foreign Direct Investment and Foreign Portfolio Investment Statistics					

*Table 2: Key Macroeconomic Data, U.S. FDI in Host Country/Economy*

**Australian Bureau of Statistics, based on most recently available data.  Year-end foreign investment data is published in May of the following year.*

*Table 3: Sources and Destination of FDI*

*Table 4: Sources of Portfolio Investment*

							14. Contact for More Information					

Deputy Economic Counsellor Steven DyokasU.S. Embassy21 Moonah Place, Yarralumla, ACT61 2 6214 5810DyokasSM@state.gov

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### On This Page

                    -  Executive Summary 
                    -  1. Openness To, and Restrictions Upon, Foreign Investment   
                    -  2. Bilateral Investment Agreements and Taxation Treaties   
                    -  3. Legal Regime   
                    -  4. Industrial Policies   
                    -  5. Protection of Property Rights   
                    -  6. Financial Sector   
                    -  7. State-Owned Enterprises   
                    -  8. Responsible Business Conduct   
                    -  9. Corruption   
                    -  10. Political and Security Environment   
                    -  11. Labor Policies and Practices   
                    -  12. OPIC and Other Investment Insurance Programs   
                    -  13. Foreign Direct Investment and Foreign Portfolio Investment Statistics   
                    -  14. Contact for More Information   

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