House of Representatives
28 September 2022
In 1951, Frank McEncroe, a boilermaker from Bendigo, invented the Chiko Roll. He'd been impressed by chicken rolls that were sold at Richmond games, but he decided that it wasn't an item that you could hold in one hand. And the genius of the Chiko Roll, Deputy Speaker Chesters, as you'll know so well, is that it is an item which is so deep fried that you can hold it in one hand without it collapsing. It doesn't, in fact, contain any chicken, so his initial name of the 'chicken roll' was changed to the 'Chiko Roll'. It's largely cabbage, barley and a little bit of beef, but it is also the genesis of the foreign investment scheme in Australia.
The remarkable story told by David Uren in his book Takeover on foreign investment goes to 1972, when some 40 million Chiko Rolls were being sold annually in Australia and the US conglomerate IT&T made a bid to buy the company. The notion of an iconic Aussie product such as the Chiko Roll being sold to the Americans caused a backlash in the press and in parliament. As one commentator noted:
The cabinet meeting over the Chiko Roll … was the beginning of the regulation of foreign investment in Australia.
Foreign investment remains critical to Australia's prosperity. Our sugar production industry was kickstarted in 1855 by Colonial Sugar Refinery, now known as CSR. When Schweppes opened a bottling facility in 1877, that was a spur to Australian manufacturing. When Kodak set up its first film plant in 1908, when Heinz began canning baked beans in 1935 and when 3M started producing in 1951, those foreign investments provided not only capital but know-how to the Australian economy. Australia benefits from defence firms such as Lockheed Martin, from investments in quantum computing and from investments in important infrastructure projects. Indeed, infrastructure expenditure in Australia would be smaller if it were not for foreign investment.
This bill deals with both immigration and foreign investment, and it's apt that it does so, because there's a tie between the two. To the extent that migration impacts on wages, it does so as a result of lowering the ratio of capital to labour. Conversely, when we take in foreign investment, we increase the ratio of capital to labour. The capital-to-labour ratio really matters. It's one of the reasons why wages in Australia, at the end of the 1800s, were among the highest in the world. So, for those of us who care about sustaining well-paid jobs in Australia, foreign investment plays a part in that. And foreign investment and migration can go together, ensuring that the ratio of capital to labour remains unchanged. If we didn't have foreign investments, then production, employment and household income in Australia would all be lower.
Australia recorded some $37 billion in foreign direct investment inflows in 2021, and the total stock of FDI in Australia at the end of last year was $1.1 trillion. In the first quarter of this year, there was the largest inflow of foreign direct investment on record—some $59 billion. Quarters go up and down, and so we shouldn't expect this to be sustained, but it is a marker of the scale of foreign investment in Australia and the attractiveness of Australia as a foreign investment destination.
By stock, the largest investors in Australia are, in order, the United States, Japan, the United Kingdom, Canada, the Netherlands and China. It is a reflection of our stable democracy, rule of law, highly skilled workforce, proximity to fast-growing markets, abundant natural resources and the historic strength of our economy that we've remained an attractive destination for foreign investment. But it's important we maintain that balance and we maintain community confidence in foreign investment while protecting Australia's interests.
This bill delivers on the government's 2022 election commitment in doubling foreign investment fees and the financial penalties that relate to foreign ownership of residential property in Australia. It does so in order to ensure that there is strong public support in our foreign investment approach. Increases to penalties will contribute to funding the government's housing affordability policies, an issue which I know is of importance to members on both sides of the House. The previous debate dealt extensively with homeownership. The debate on the matter of public importance raised today in the House by the crossbench went to homeownership. So using these increased penalties to boost housing affordability policies will be a measure that will be warmly welcomed by many members and the community. The indexation of fee amounts needs to remain consistent and coherent and will do so as a result of this measure. The government expects the measure to remove ambiguity about the operation of the fee caps and otherwise to have minimal impact on the amount of fees payable by foreign investments.
I commend the work that the Treasurer and the Assistant Treasurer have done in bringing these measures forward. They are important, and they sit hand in glove with the strong commitment of this side of the House to ongoing foreign investment and to the benefits that foreign investment can bring to the Australian economy.
I'd also make brief remarks about the Pacific Australia Labour Mobility scheme, which helps both to meet workforce shortages in Australia and to provide skills to countries in our region. That program has been evaluated and been noted to be highly successful in helping to give back to our local community. Work done by Stephen Howes and others at the Australian National University has highlighted the important role of its predecessors, the Seasonal Worker Program and the Pacific Labour Scheme, in ensuring that we provide good, well-paying jobs to people from the Pacific Islands and that those jobs allow them to remit money back to their home communities but also, importantly, that they go home with additional skills and expertise, able to start new businesses or be even more productive employees in their home countries. The current funding for program delivery supports around 27,000 workers to enter Australia under the scheme. It is a good scheme, and I'm pleased to see this measure supporting it in the bill. I commend the bill to the House.