The Australian Government has announced plans to impose fees on foreign nationals applying to buy homes, commercial properties, businesses and farms, and fines on those who break the rules.
The announcement coincidentally came yesterday, the same day KPMG released a report revealing bank bosses in New Zealand are joining Winston Peters and the troop of New Zealanders concerned foreign investors are inflating asset prices here.
The Australian Government has put an Opinion Paper out for consultation, that details its proposed reforms.
Prime Minster Tony Abbott said, “The Government is consulting on the introduction of an application fee on all foreign investment proposals.
“The application fees will fund increased enforcement activity and ensure that the cost of administering the foreign investment framework is not borne by the Australian taxpayer.”
It’s proposing to charge those applying to buy houses up to A$5,000 for properties valued under A$1 million, A$10,000 for those over a A$1 million, A$20,000 for those over A$2 million, and A$30,000 for those over A$3 million and so on.
Business, commercial real estate and agribusiness investments would be subject to fees between A$10,000 and A$100,000 depending on the size and sector.
The Australian Government’s also proposing to implement new ways to crack down on foreign investors breaking the rules.
Abbott said, “The Government intends to establish a small, specialised compliance and enforcement area within the Australian Taxation Office to identify and investigate breaches.”
Two weeks ago, Abbott announced that from March 1, foreign investors will have to get approval to acquire an interest in rural land where the cumulative value of the land, including the proposed purchase, is A$15 million or more.
From July 1, a foreign ownership register will also start collecting information on foreigners with interests in agricultural land.
Hint hint, nudge nudge, John Key
New Zealand’s Labour Party housing spokesperson Phil Twyford said Prime Minister John Key might want to have a “quiet word” with Abbott about his announcement when he visits New Zealand this week.
"Contrast that with John Key's government, which denies offshore speculators are a problem, despite KPMG warning today that bankers believe foreign buyers are inflating property prices and putting the economy at risk.
"The bankers think they are a problem. The Australian Government clearly thinks they are a problem. The National Government is increasingly isolated on this issue,” said Twyford.
According to the Sydney Morning Herald, Chinese investors are forecast to spend A$20 billion on offshore property this year, up 21% on 2014.
KPMG reported bank executives it surveyed in its annual Financial Institutions Performance Survey are “seeing significant deals done at ridiculous prices across all asset classes”.
Bank executives expressed concerns about what would happen if overseas investors suddenly withdraw all the funds they’d invested in New Zealand.
9 Comments
If the Chineese have all this money burning a hole their pocket surely we can help them invest in things that will make a more meaningfull contribution to the ecconomy and provide them with a safer long term investment. EG
A new compedative cement plant.
Compedative building material supply buisnesses.
A new port at Clifford bay to serve the South island Cook Straight traffic
The down town rail loop and harbour crossing at a lower and far more sensible price
(Note having a compedative cement plant would make all these project less expensive)
They could build us lots of house or appartment buildings (with reasonably sized appartments not shoe boxes) They have grossly over supplied their own market so they must have a lot of spare capicity looking for something to do.
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Ideally yes but:
We will never get honest cement prices with the present duopoly We are paying 5 times what they do in Singapore for perfectly good cement, so the present set up is costing us all a fortune. It is a pretty non labour intensive process, just energy and machinery. If the Chinese were able to do it at an honest price they could still do well and NZ in general would be far better off. Holcium is an overseas company anyway.
Same story for building materials.
Clifford Bay. NZ has had the opportunity. I'll wager that a ship load of Chinese workers and equipment could knock the project over far cheaper than NZ, especially if they had a cement plant in NZ. If they can do it cheaper then they can make a fair profit and we will still be better off. Besides which, I suspect that the whole project is stalled because of Picton's vested interests
Ditto the inner city loop and harbour crossing. The cost estimates for these projects are outrageous. $2.4-$3B for the rail loop c.f. $220M for the much longer (4x) and harder Manapouri tail-race tunnel. $3-$4B for the 1+ km harbour crossing c.f $9B for the Danish/Swedish, Oresund Bridge/Tunnel which includes a road rail crossing of an 8 km bridge, a 4 km tunnel and an artificial island in the sea.
Housing - again we have had all the opportunists in the world but we are just not cutting the mustard. NZ companies would be free to compete.
Key's main priorities and loyalty belong to 1. Banker Mates 2. His fellow Politicians (that own lots of property in NZ) 3. Chinese buddies (funding national) 4. Boomers who love National and like their entitlements which are well earned.
Nothing to see move along, Australia is different we just have land supply issues?
[quote from ABC news 25th February at 6:31 mark]
this now getting serious - intel available to the government - which is not available in the public domain
....
Property in the main centres is being targetted by foreigners keen to get money out of their homeland through property - it is that issue which has finally prompted the Australian Government to act with the new proposals
"late"-breaking news that one.
we've been calling it , for what, 18 months now?
thats one reason i looked around and came back to this site.
the worst ads were tidied up, but people here are calling the markets, other sites seem way behind the news and caught up politics and written theories (vs what is actually happening in the markets)
Apart from jumping on the Winston Peters bandwagon, how else do we get the "right hand" of this government (looking after rampant immigration) to talk and coordinate with the "left hand" of government (responsible for Housing, transport, health, etc) to achieve a balanced ("right size") growth of this economy? This unbalanced growth (led by unchecked immigration and inflated property values) has to STOP!!
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