NO DATE
M/ 1.57 30 October 1973
FOREIGN INVESTMENT IN AUSTRALIA
The following is the text of a statement on foreign
investment in Australia, made by the Australian Prime Minister,
Mr Whitlam at the Austraiia-Japan Ministerial Committee
Meeting in Tokyo on 29 October 1973:
" The Australian Government recognises that foreign
S investment in Australia is a matter of special significance
for relations between our two countries. Australia is
endowed with mineral resources of world importance. The
proper development and prdent use of these resources is
basic to our economic progress and growth. They are also
of direct concern tc you as a large and long term importer
of raw materials. The policies that we pursue in the development
of our natural resources and the nature of the partnership that
is established between Australian and Japanese investment will
be a major factor in the future of our two countries and of our
region. As you are aware the policy of my government is to
adopt a more selective approach towards foreign investment in
Australia than hithertc. No longer is there a wholly uncritical
approach to foreign investmento We intend to ensure that
foreign capital inflows are associated with productive
investment which adds to Australia's real resources and brings
us benefito This does not mean. that we have no wish to see further
overseas capital flow into Australia.
In the past foreign investment has made a very great
contr. bution to the development of the Australian economy.
Within a generation A-ustralia has developed from a largely
agricultural and pastcra economy into a modern, increasingly
industrialised and diversified economy. _ i
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The resources and know-how that the flow of overseas
investment has brought have been of great value in this
development. We believe that overseas capital must continue to
play a significant role, in partnership with Australian capital,
in our future economic growth.
There is no general prohibition on foreign investment
in Australia. My government has the firm policy objective of
promoting Australian control of Australian resources and
industries. We also want to achieve the highest possible
level of Australian ownership of our resources and industries.
By the phrase " the highest possible level of Australian
ownership" we mean the highest Australian equity that can be
achieved in negotiations, project by project, that are fair
and reasonable to both parties and are within the capacity of
our own savings to support. However in some special energy
case, which I shall mention shortly, we do have a particular
objective of 100 per cent Australian ownership.
There will be no discrimination against Japanese
investment, Japanese investment will continue to be given
treatment as favourable as that extended anywhere else.
This policy is being applied in a pragmatic way and
all cases will be considered on their merits, This already
applies in our examination of proposals under the Companies
( Foreign Take-overs) Act. We aim to make our judgements taking
into account the full circumstances of each new project or
proposal, including such factors as the size and location of the
proposed project, the use made of advanced technology, marketing
arrangements, environmental aspects, labour relations and
Aboriginal interests.
There are certain industries where we regard
Australian ownership and control of particular importance.
These relate especially to sources of energy where growing
world shortages and other factors make this essential.
Uranium is one of these energy sources and we have an objective
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of full Australian ownership in development projects involving
uranium. We also regard this as a desirable objective in
oil, natural gas and black coal.
We recognise however that Australia's resources
of capital and technology are relatively limited, that the size
of the projects to be undertaken is often very great and that
we shall need to call upon overseas expertise, technology and
capital to contribute to the proper development of these
vital energy resources. Thus while we seek to require
equity in new projects involving these four minerals to be
in Australian hands. We do look for overseas participation
in some ways: through access to technology, loans and
especially long term contracts. The Australian Industry
Development Corporation A. I. ID. C. is a basic means by
which the government will seek to ensure Australian equity
and control and there are important areas in which A. I. D. C.
will be able to work both with overseas companies and
Australian investors. Proposed increases in the percentage
of foreign equity in existing projects which already have high
overseas equity may well be subject to particularly close
scrutiny. Our general object is to moderate such holdings in
these projects. For other minerals our approach is more flexible.
We desire partnership between Australian and foreign equity
capital. I want to make it quite clear that there is no
proscription of foreign equity participation in mining.
The nature of the partnership between Australian
and foreign equity capital that is appropriate in each case
will need to be assessed on its merits. In some circumstances
it may be acceptable for foreign investors to participate
significantly in decision-making in a project. The size of
the project, the amounts involved, and the type of mineral
are all factors to be taken into account. In pursuing our
objectives we shall be flexible and guided by the practical
needs of particular cases.
It is not our aim to have a different set of criteria
for overseas participation in mineral exploration from those
for participation in the development of proved mineral deposits.
In the uranium field in particular, and desirably
also in oil, we aim to adopt the same sort of approach in
exploration as I have already outlined for development of
these minerals. However, in order to maintain a desirable
level of exploration activity, we would, if necessary, accept
a lower level of Australian ownership in exploration.
Given the limited Australian capital resources
available and the higher risks usually involved in exploration,
there is, however, much to be said for concentrating Australian
equity at the production stage.
In some other sectors, successive governments have
for decades restricted foreign investment. These include
banking, civil aviation, radio and television and are no doubt
well known to the Japanese government. Moreover investment
from overseas for the establishment of new foreign-controlled.
life and general insurance companies is generally not favoured.
The go: ernment intends shortly to introduce
legislation to control the activities of major non-bank
financial institutions. Further overseas investment for
the establishment of non-bank financial institutions is not
favoured. In relation to foreign investment in real estate,
the Treasurer indicated in a statement issued on 20 March
1.973 that overseas interests should not enter into significant
commitments for real estate purcnases in Australia for the time
being and that the Reserve Bank would not normally grant
exchange control approvals for foreign investment in real estate.
The policy on this matter, which relates to rural as well as
urban land purchases, is under intensive study. In the
meantime any specific proposals will be examined on their
merits. Let me emphasise however that in the generality of
cases, for example in investment in manufactur. ing, our approach
is a pragmatic one and that proposals by Japanese firms will be
given equal weight to those by interests from other countries.
The Australian government believes that the policies
on foreign investment, while designed to ensure a more selective
approach than in the past, provide a framework which is flexible
enough to allow mutually acceptable and beneficial arrangements
through fair and reasonable negotiations. Our policies should
establish relations between Japan and Australia on a sounder
footing. If, there are any particular cases or questions that
you have in mind, we would be happy to discuss them, either in
the present meeting or subsequently.