Australian Treasury Reports Faster Foreign Investment Application Processing; Finance and Insurance Sector Most Attractive for Foreign Investment

The Australian Treasury, which oversees FIRB, has released its second quarterly report for the 2024-25 financial year. Key highlights from the report include the following:

• Treasury reports material improvement in foreign investment application processing times. For the December 2024 quarter, Treasury said that the median processing time for approved commercial investment proposals shortened to 29 days, down from 34 days for the September 2024 quarter. Treasury also reported that 52% of approval investment proposals were processed in 30 days or less, in contrast to 47% for the prior quarter—which means that Treasury has seemingly achieved its aspirational target of assessing more than 50% of notifications within the statutory time period of 30 days.
  
  Treasury's figures also show that there has been a reduction in the percentage of applications with a long tail. Specifically, 11% of applications have taken between 61-90 days (down from 15%), and 10% have taken 91 days or more (down from 13%). In this context, it is worth noting, though, that there has been an increase in the number of applications withdrawn by applicants—potentially indicating that certain applications which have drifted for a long time have been withdrawn.
  
  As we have raised previously (see our March 2025 Alert), FIRB's figures do not provide details of approval times by sector or the investment type. Accordingly, it is not possible to determine whether the improved timelines relate to more complex or straightforward proposals. Anecdotally, national security business investment applications continue to take considerable time to move through the FIRB assessment process.
  
  
• Uptick in foreign investors filing voluntary notifications. A common question for market practitioners is whether certain circumstances support foreign investors filing voluntary notifications. In this context, it's interesting to note that during the December 2024 quarter, Treasury observed a three-fold uptick in voluntary notifications filed by foreign investors, particularly in relation to national security actions, with 11 approvals in the December quarter (one with conditions and 10 without conditions), up from three approvals in the September 2024 quarter.
  
  
• Foreign Investment Portal is up and running—with recent enhancements. Interaction with new merger notification regime. Since Treasury's last quarterly report, the new Foreign Investment Portal is up and running. After this initial phase of operation, Treasury has recently implemented a range of enhancements to the system, noting that the portal will also be utilized by the government for the Australian Competition and Consumer Commission's ("ACCC") new mandatory notification regime from 1 January 2026.
  
  The portal now requires investors to provide a degree of competition analysis even where a transaction does not require notification to ACCC. As a result of these new prompts, all proposals submitted through the portal will require some level of competition analysis, regardless of whether the actions are notifiable to ACCC.
  
  
• Material increase in foreign investment audits, referrals for potential non-compliance and matters under investigation. Treasury reported a 200% increase in foreign investment audits (identifying nine in progress at quarter's end, up from three in the previous quarter) as well as 13 ongoing investigations (as at quarter's end). Treasury issued one infringement notice (which relates to breaches of Australia's foreign investment law involving residential property), and there were no disposal orders issued in the December 2024 quarter.
  
  
• Strengthening of national security framework continues to capture investment proposals which would previously have not required notification. Treasury reported that approximately 10% of the 351 commercial proposals approved by Treasury related to national security actions (with 24 being mandatory and 11 voluntary). This continues the trend of the strengthened national security powers for Treasury introduced in 2021 and evidences that it has captured proposals that previously may not have required notification.
  
  Shifts in investment sources and sectoral trends, with the finance and insurance industry sector proving to be more attractive for foreign investment than commercial real estate. Although the United States remained Australia's largest source of foreign capital investment in the December 2024 quarter (approximately AU$14.2 billion), this was down almost 50% from the prior quarter. There was a significant increase in investment value from Saudi Arabia, up from approximately AU$100 million to approximately AU$8.9 billion in the prior quarter, while Canada bounced back as a strong investor into Australia.
  
  Investment into the Australian finance and insurance sector increased exponentially from over AU$3.2 billion to approximately AU$25.5 billion, despite the number of proposals remaining steady. In contrast, foreign investment into Australian commercial real estate (previously the most attractive industry sector) more than halved from approximately AU$24.1 billion to AU$10 billion. Recent changes affecting foreign investment in commercial real estate may flow through to the data in Treasury's next quarterly report.