Foreign Investment Reform (Protecting Australia’s National Security) Commencement Proclamation 2023

Overview

The Foreign Investment Reform (Protecting Australia’s National Security) Commencement Proclamation 2023 was enacted to address the problem of foreign investment potentially threatening Australia’s national security. This legislation, proclaimed by the Honourable David Hurley AC DSC (Retd), Governor-General of the Commonwealth of Australia, with the advice of the Federal Executive Council, fixes 1 July 2023 as the commencement date for Parts 2 and 3 of Schedule 3 of the Foreign Investment Reform (Protecting Australia’s National Security) Act 2020. The enactment follows the advice of the Federal Executive Council and is under the authority granted by item 6 of the table in subsection 2(1) of the principal Act. The primary policy objective of this proclamation is to ensure that foreign investments in sensitive areas are subject to heightened scrutiny and control, thereby protecting Australia's national security interests.

Scope and Application

The Foreign Investment Reform (Protecting Australia’s National Security) Commencement Proclamation 2023, signed by the Governor-General, General the Honourable David Hurley AC DSC (Retd), and issued under the authority of the Foreign Investment Reform (Protecting Australia’s National Security) Act 2020, sets the commencement date for Parts 2 and 3 of Schedule 3 of the Act from 1 July 2023. This legislative instrument applies to foreign investment transactions and entities that may pose a risk to Australia's national security. It specifically targets those entities and activities that fall within the jurisdiction of the Commonwealth, thereby extending its reach across all states and territories in Australia. The Act applies to both individuals and corporate entities, encompassing a broad range of industries that may be deemed sensitive or critical to national security. Certain exclusions and exemptions may apply as specified within the Act itself or through subordinate instruments, which may further delineate the scope and application of the legislation. This commencement proclamation is a pivotal step in ensuring that the legislative framework is effectively implemented to safeguard Australia's national security interests.

Key Provisions

The main operative sections of the Foreign Investment Reform (Protecting Australia’s National Security) Commencement Proclamation 2023 (F2023N00178) are found in Schedule 3, Parts 2 and 3. These sections pertain to the commencement of specific reforms aimed at protecting Australia’s national security from foreign investment risks. Section 1 of the Proclamation provides the authority for the commencement of these reforms, stating that they are to take effect on 1 July 2023. Section 2 further clarifies that these commencement provisions are issued under the authority of the Foreign Investment Reform (Protecting Australia’s National Security) Act 2020. The Act imposes several obligations and requirements on parties and entities it governs. Firstly, it mandates that any foreign investors must undergo a thorough assessment by the Treasurer to determine if their investment poses a risk to Australia's national security (Section 3). This includes disclosing information about the investor, the nature of the investment, and the potential impact on national security (Section 4). Additionally, foreign investors must adhere to any conditions set by the Treasurer to mitigate identified risks (Section 5). Entities such as businesses and individuals must also comply with these disclosure and assessment requirements, ensuring they are fully transparent about their operations and potential security implications (Section 6). There are specific consequences for non-compliance with the provisions of the Act. Section 7 outlines that failure to comply with the notification and assessment requirements can result in substantial penalties. The Act provides for both civil and criminal penalties for breaches, with the maximum penalties varying depending on the nature and severity of the breach. For instance, civil penalties may include fines up to a certain amount, while criminal penalties could result in imprisonment for up to five years (Section 8). Additionally, Section 9 stipulates that the Act empowers the Treasurer to take further actions, including the revocation of investment approvals or the imposition of other regulatory measures to ensure compliance and protect national security.