Foreign investors will face a tough new national security test designed to protect Australia’s critical assets from falling into the wrong hands.
The coalition government has proposed an overhaul of foreign investment laws, which could further inflame tensions with China.
Prime Minister Scott Morrison said there was no reason for the move to anger Beijing.
“Our world has been changing for some time and so has been the nature of foreign investment,” he told reporters in Canberra on Friday.
He said Australia would always design investment rules in the national interest.
Treasurer Josh Frydenberg said the United States, United Kingdom, Japan, New Zealand had all reformed their foreign investment rules.
“The world over, governments are seeing foreign investment being used for strategic objectives not purely commercial ones,” he said.
The new test would apply to foreign bids for technology, telecommunications and energy companies, as well as small-scale defence and services firms.
No minimum dollar threshold will be needed to trigger the national security test.
The treasurer will have expanded powers to force the sale of assets or impose conditions after a deal is reached if national security is at risk.
Currently, private foreign investments under $275 million – or $1.2 billion for countries that have free trade agreements with Australia – are not screened.
Mr Frydenberg said the reforms represent the most significant changes to Australia’s foreign investment rules since they were introduced in 1975.
“It is vital that the government have the ability to call in an investment before, during or after acquisition for review if it raises national security concerns,” he said.
“Australia has an enviable track record when it comes to welcoming foreign investment from around the world. These reforms will not change that.”
He said key countries had been given a heads up about the reforms but didn’t name which ones.
More than $13 billion of foreign investment in Australia last financial year came from China.
The US with $58 billion was the biggest source of investment, ahead of Canada, Singapore, Japan with China in fifth place.
The Foreign Investment Review Board has more than 1000 conditional approvals on their books.
About 80 per cent of approvals last year had conditions attached.
As part of the reforms, the government is also streamlining approvals for non-sensitive businesses.
Draft legislation will be released next month, with the government intending to make the changes law before the regime comes into place on January 1.