Treasurer Jim Chalmers has unveiled significant reforms to Australia's foreign investment policy.

During a speech at the Lowy Institute, the changes were framed as a strategic measure to better align foreign investments with national security and economic priorities, underpinned by a “risk-based” approach. 

The adjustments aim to scrutinise foreign investment proposals more rigorously, especially those potentially affecting Australia's strategic or economic security.

Chalmers highlighted the growing national security threats due to heightened geopolitical tensions. 

“Risks to Australia’s national interests from foreign investment have evolved at the same time as competition for global capital is becoming more intense,” he said. 

This has necessitated a meticulous review of investments in critical sectors such as infrastructure, technology, and data handling, he said. 

The government plans to enhance the Treasury's capabilities to monitor sensitive investments more closely. 

This includes increasing resources for the investment compliance team to enforce conditions on investments and conduct on-site visits. 

Additionally, the framework will be updated to address emerging risks.

While the focus on sensitive sectors intensifies, the government will also streamline processes for less sensitive investments. 

Proposals from known investors with robust compliance records, especially in non-sensitive areas, will benefit from faster processing times. This approach aims to reduce bureaucratic hurdles and attract more benign capital flows into the country.

In conjunction with foreign investment reforms, Chalmers also detailed the guardrails around the ‘Future Made in Australia’ policy, an interventionist effort to boost domestic industries through targeted support. 

The Future Made in Australia Act will introduce criteria for government support, focusing on industries that can enhance competitiveness, contribute to a net-zero emissions pathway, and strengthen economic resilience. 

“Our initial focus - on refining and processing critical minerals, producing renewable hydrogen, exploring production of green metals and low carbon liquid fuels, and supporting targeted manufacturing of clean energy technologies including value adding in the battery supply chain - reflects this rigour,” Chalmers said.