Fifty years of foreign investment regulation in Australia: The Foreign Acquisitions and Takeovers Act 1975, and what may come

This year marks 50 years since the Foreign Acquisitions and Takeovers Act 1975 (Cth) commenced operation on 1 January 1976. Over that period, it has served as the principal legislative mechanism by which the Commonwealth Government regulates foreign investment in Australia, administered by the Treasurer on the advice of the Foreign Investment Review Board (FIRB).

The Act's evolution mirrors the broader transformation of the Australian economy from a resource-dependent, capital-importing nation to a sophisticated, globally integrated market that continues to balance the benefits of foreign capital against emerging sovereign risks – and provides useful guidance for what changes may come.

Major developments in the foreign investment regime, and what they tell us

A closer examination of those amendments reveals a consistent pattern: each major reform has generally been a legislative response to a specific external pressure – whether shifts in public sentiment towards foreign ownership, changes in Australia's geopolitical relationships or broader economic policy priorities. The five key drivers that have shaped the Act are:

• Outdated regulation. The Foreign Acquisitions and Takeovers Legislation Amendment Act 2015 delivered the most comprehensive rewrite since enactment – a structured hierarchy of "significant actions" and "notifiable actions", mandatory notification, a statutory fees framework, agricultural land and agribusiness thresholds, and the introduction of the Register of Foreign Ownership of Agricultural Land – generated by business' views of the pre-existing regime as outdated, overly reliant on administrative discretion and lacking a coherent statutory architecture. More recently, Treasury announced a suite of reforms aimed at streamlining low-risk investments.

• National security. Intensifying geopolitical competition – particularly, concerns about strategic investments by state-linked entities in critical infrastructure, defence supply chains, and sensitive data – prompted the Foreign Investment Reform (Protecting Australia's National Security) Act 2020, commencing 1 January 2021. This introduced mandatory pre-notification for "notifiable national security actions" involving national security businesses or land, a broad Treasurer "call-in" power for "reviewable national security actions", "last resort" powers to revisit previously approved investments and an expanded Register of Foreign Ownership of Australian Assets.

• Greater transparency and lower compliance burden. The Government's transparency agenda culminated in the comprehensive Register of Foreign Ownership of Australian Assets commencing on 1 July 2023, requiring foreign persons to lodge register notices for a wide range of actions, backed by civil penalties.

• The embrace of bilateral trade agreements. Starting with the Australia-United States Free Trade Agreement in 2005, higher monetary thresholds have been tailored for partner-nation investors.

• Public concern. The Act was prompted by public sentiment about foreign ownership of Australian mining assets and industrial enterprises during the resources boom. Subsequent changes have been periodically triggered by foreign investment in Australia's booming real estate market, most recently its residential sector.

Legislative change follows public sentiment, often with a relatively short lag, and investors who track these external signals are best placed to prepare for the regime's next evolution.

The future shape of Australia's foreign investment framework

As the Act enters its next phase, several trends are likely to shape its future trajectory.

• Review of ineffective conditions. In the near-term, Treasury has commenced a review of conditions on existing foreign investment approvals which will consider the removal of conditions that are ineffective, conditions that duplicate other obligations under other regulatory regimes and look at updating conditions to better manage risk.
  The review will first focus on tax conditions, with other conditions to be considered following consultation – noting that public consultation is expected to commence in August.

• Intensified national security scrutiny. As geopolitical competition intensifies, particularly in the Indo-Pacific, an expansion of the categories of "national security business" and "national security land" may be in the mix, together with tighter scrutiny of investments by state-linked entities from strategic competitors and more frequent exercise of the call-in and last-resort powers. The nexus between the Act and the Security of Critical Infrastructure Act 2018 will likely deepen, with investments in critical infrastructure assets facing increasingly granular conditions.

• Technology and data as a frontier. The current definition of national security business already captures businesses involved in critical technologies, encryption and communications systems. As artificial intelligence, quantum computing and biotechnology emerge as strategic technologies, the regulatory perimeter may expand.

• Greater transparency and compliance burden. The comprehensive Register of Foreign Ownership of Australian Assets, with its civil penalty regime for non-compliance, continues a focus towards greater transparency and data collection. This could also mean further digitisation of notification and registration processes, increased data-sharing between government agencies and the potential expansion of reporting obligations.

• Continuing complexity of bilateral thresholds. As Australia concludes further bilateral and plurilateral trade agreements, the matrix of differentiated monetary thresholds should continue.

• Conditions-based approvals. Rather than outright rejections, the focus on conditions-based approvals is likely to continue – with conditions becoming more prescriptive, particularly around data security, supply chain integrity and governance arrangements.

Investors should monitor these matters, noting the current reforms overview being undertaken by Treasury, which builds on reviews undertaken in 2024 and 2025, including the following matters:

• setting a new process for deciding all low-risk applications including a new performance target for assessing those low-risk applications within 30 days (to be implemented from 1 January 2027). This includes the Treasurer streamlining and broadening the existing Exemption Certificate powers to provide the Treasurer flexibility to reduce regulatory burden on low-risk investments;

• increasing the default validity period for NONs (No Objection Notifications) from 12 to 24 months, with flexibility to vary periods on a case-by-case basis;

• amending foreign investment legislation, and making consequential amendments to other relevant legislation, to streamline and strengthen the foreign investment framework;

• extending the call-in power to cover notifiable actions. This increases the scope of the call-in power to cover actions that are notifiable but not significant. Currently, the power applies to significant actions or reviewable national security actions; and

• streamlining and simplifying reporting to the Register of Foreign Ownership of Australian Assets.