Scathing remarks by Coalition MP Kelly O’Dwyer on the Foreign Investment Review Board’s (FIRB) handling of overseas property buyers could portend major changes to the regulatory environment that make realtors the target of punitive measures.
O'Dwyer, who is currently chairing a federal inquiry into the affordability of Australian housing and foreign ownership levels, told 2GB Money News that the FIRB had been "asleep at the wheel" on the issue of foreign property investment which is not in compliance with regulations, pointing out that not a single prosecution had been made since 2006.
According to O'Dwyer, FIRB had failed to properly regulate investment in domestic property by overseas buyers, despite the existence of clear regulations on the issue.
"The FIRB haven't been properly doing the job they were supposed to do in terms of the compliance and enforcement regime," said O'Dwyer.
The FIRB has stated before the committee that only eight of its staff members were responsible for reviewing thousands of purchases of residential property by foreign investors.
The committee that O'Dwyer currently chairs is set to provide a report and recommendations to Treasurer Joe Hockey in October. O'Dwyer said the committee would investigate increases the strength and scope of penalties for foreign investors who breach regulations, and that punitive measures for wrongdoers should actually "hurt."
O'Dwyer said the $85,000 fine currently in place for those who breach regulations is barely a slap on the wrist for super-affluent overseas investors, and that it is viewed by many as little more than the "cost of doing business."
Measures currently being investigated by the committee include a civil penalty regime that would apply to those who breach the law, and fines applied on a sliding scale based on the price of the property.
In addition to heightened punishments for foreign investors, O'Dwyer also mooted the possibility of applying penalties to realtors and other related professionals as well.
"At the moment the only penalty is on the purchaser, but we need to catch estate agents, lawyers and accountants involved in trying to contravene the foreign investment laws," she said.
O'Dwyer's revelation of the proposed change to foreign investment follows ANZ Australia chief executive Philip Chronican's assertion that Asian investors are not at fault for Australia's surging housing prices, and that limitations on the supply side are the true culprit.