8 years without a FIRB foreign prosecution

By Leith van Onselen

Following on from Houses & Holes’ quick post yesterday, ABC’s The Business last night aired a segment (above) featuring Liberal MP, Kelly O’Dwyer, slamming the inept failure of FIRB to police or prosecute foreign investors that flaunt Australia’s property investment rules, specifically:

  1. Rules precluding non-residents from purchasing pre-existing dwellings; and
  2. The requirement that a foreign temporary resident sells their home within three months of departing Australia.

O’Dwyer is particularly scathing of the fact that FIRB has failed to prosecute anyone in eight years, despite widespread anecdotal evidence of foreign purchases of pre-existing dwellings:

“I think there has been a failure of leadership at FIRB… I think FIRB has been asleep at the wheel. I think they need to be far more proactive in enforcing the law. I think because they haven’t been proactive in enforcing the law, that’s the reason why people have got less confidence in our foreign investment regime right now”.

Importantly, O’Dwyer also flagged stiff new penalties – not just for property investors that flout the rules but also those that aid and abet such actions, such as real estate agents and lawyers:

“[Currently] the onus is all on the purchaser – the person who is the foreign investor… But, we are looking at a penalty that would be a little more broad than that, which would also include anybody that seeks to aid an abet somebody that is trying to contravene the rules”.

Personally, I am becoming a fan of Ms O’Dwyer. While the devil will be in the detail, she clearly has foreign property rorts in her sites, and the decision to extend the penalty regime beyond the purchaser is a huge step forward. But it must also be backed-up with increased funding for FIRB. After all, what good is increasing penalties without boosting surveillance?

With any luck, the parliamentary review into foreign property buying, which is due to report next month, will also require that buyers of pre-existing housing in Australia provide proof of citizenship/residency, with real estate agents required to highlight the rules at the point-of-sale and conveyancers required to check-off and report breaches at settlement.

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Unconventional Economist


    • They are – they are the world’s best sham regulator, reporting to the Treasurer of the day, meeting all the Treasurer of the day’s expectations.

      • Strange Economics

        They are doing a great job! They’ve found a way to approve 10% extra into the market of cashed up buyers to raise property prices !

        Anyway who gave this job to the FIRB, who like doing foreign companies, and are far too proud to look at blocks of land.

        Assign it to the ATO and tax foreign buyers 10% purchase duty.

        See the other MB post today to see the wonderful chart of raising high paying demand in a fixed existing property market.

    • FIRB are a money laundering consultancy agency. Didn’t they go on a spruiking trip to China to drum up clients?

      • Exactly.

        FIRB is now seen as a lawless organisation, whose mission is to aid and abet the criminal laundering of money and has effectively turned Australia into a safe haven for Asia’s kleptocrats and criminals.

        This is now a dangerous threat to Australia’s long term trade relations with China. If you’re a miner, agriculturalist, biotech or any business that relies on Chinese trade, you should be very, very worried.

        The first step must be the sacking of the inept and irresponsible minister in charge of FIRB, Joe Hockey and the entire FIRB board. This will signal to the world that FIRB and Australia are serious.

        In their place must be a minister and board that not only talk tough but act tough by actively and energetically chasing down those who break or have broken the rules. A few highly publicised cases is not enough, it must be ongoing and merciless. Those caught must lose their Australian properties and have their residency/citizenship revoked forever.

        Those agents in Australia who aided and abetted these law breakers must have the full force of the law thrown against them and their licences revoked forever.

    • It is worth keeping in mind that most members of parliament operate twitter accounts that either they or their staffers monitor.

      It cannot hurt to tweet a link, to your comments on MB or elsewhere, to your local representative or minister.

      It is in effect an open letter to your representative.

      They may choose to ignore what you say but that tweet and the linked comment is a public record that you raised concerns with them. People who follow them can see the tweet and the link.

      Where do you find the link to your comment? It appears as the URL when you click on date and time of your comment.

      The URL for this comment is


      Cut and paste the link into a tweet along with the twitter username of your preferred politician and any suitable hash tags.

      A person reading your tweet can then use the link to go to your comment.

      Be constructive. The point is to persuade them and perhaps more importantly other people that you are making a genuine point that should be given consideration.

      The more people who make the same point the more likely it is that someone in some office somewhere will think twice before making some foolish decision they believe is politically costless.

      For example:


      Of course regular snail mail letters, personal visits, petitions, public protests and email remain options and yes if you are pessimist you may think nothing changes but I think it is worth at least trying something that you can do on the bus or on a lunch break.

  1. I must have always used an honest lawyer (of there is such thing) but each purchase they have requested copy of passport… So simple. If lawyer fails this obligation fine them and discredit them from practicing law…

      • Well not currently an obligation on the lawyer. But on me as the purchaser. But a diligent honest lawyer would let you know the risk of buying and potential penalty if your not an aus resident. If the lawyer didn’t make you aware of this risk and you were fined you might try and hold the lawyer responsible.

      • How about we just require the purchaser’s passport number be recorded on the transfer of title? Simple.

      • Absolutely. I was going to say in my original post your previous suggested should be adopted. I think we agree on this!

      • How about we just require the purchaser’s passport number be recorded on the transfer of title? Simple.

        Not everyone has a passport.

  2. Hat Tip to TheRedEconomist who picked up on this phone discussion on 2GB yesterday morning and linked to it over on the Hockey bubble posting…..

    ……..a chat with Kelly O’Dwyer vis FIRB and foreign investors in Australian real estate, with a further comment about her personal views on using super for a deposit by FHBs, followed by a brief discussion with John Symond on the same Super/FHB line.


    The interviewer gives

    I transcribed it in part – dont have time to do more.

    Great spot…..
    From the 21.30 mark

    Her points….
    not a prosecution since 2006…demonstrates they have been asleep at the wheel
    under Rudd/Gillard government not one prosecution, under Howard there was divestment orders

    Lack of data..

    needs to be much stronger civil penalties in place, applied by FIRB

    she has found the evidence FIRB provided to be pretty weak, in terms of their investment and compliance regime

    she does not think they have been making the best of the resources they have….

    He asks if she has evidence that foreign investors have been cheating the system:

    ‘The point I would make is this. If people feel that there is no penalty for non-compliance with our foreign investment regime, they are going to take the risk. Because the upside is so very very large. So, for instance, under the current laws at the moment, if they were to find that a non-resident foreign investor purchased multiple properties, contrary to our current laws that are in place, they do have the power to divest people of those properties. We know that that hasnt been happening. They can divest people of those properties under law, and even if they do divest people of those properties, at the moment someone can keep the windfall gain that they might make if that property increases in value. Now I think that is completely ridiculous.

    what about the fines?

    we have heard from many people that this is seen as just the cost of doing business

    what about those helping foreigners to get around the law?

    at the moment the only penalties that really apply are to the actual purchasers themselves………In fact what we think should be applicable is catching a number of those people who might also deliberately help people to contravene the rules. So you would be looking potentially at real estate agents, lawyers and also accountants who might be involved in trying to contravene the foreign investment framework.

    does she have any evidence foreign buyers have influenced property buyers?

    We have been getting contradictory evidence on this point. And it depends on who you talk to. We heard evidence from the RBA who believe there is some impact on the high end of the property market where they think that some of the foreign investment dollar is actually going. We also know though that quite a lot of the foreign investment dollars goes into the apartment market as well though where they are competing for investments in residential apartments. And we heard a bit of evidence from one of the economists who came to give evidence before us, that this apartment market now is really the market for first home buyers – First home buyers are no longer doing what they used to do traditionally – which is purchase existing homes but instead, because of the price point, they are looking to purchase less expensive property, an apartment, just to get themselves into the market

    You also expressed the view today that First home buyers should be given the chance to use their superannuation fund as part of the deposit…..

    I feel really sorry for the first home buyers who are trying to crack into the property market. To me it seems that a lot of people, in order to crack into the property market, need to have two incomes and need to save for quite a period of time to get a deposit together. Or they need some family assistance in order to get into the property market, which is very difficult for those people who dont have the means to do that. So why shouldnt young people have the ability to access their own cash, which is their superannuation, in order to purchase an asset that they are going to be able to live in? I think that we should be considering this. It is a personal view that I have expressed.

    out circa 30 mins…….

    back in circa 34.30

    presenter poses question of whether young home buyers using their superannuation simply pushes up prices, would there need to be a law to enable those people to get money back again…

    John Symon ‘Aussie John’

    poses question of Symon on whether he thinks FHBs should be able to use super….

    Well I am all for accessing superannuation towards a deposit for first home buyers on the strict rules that that money, as soon as they go to sell, that money has to go back to their super fund. Because we dont want to see them blowing that money because that super fund is there for later years, retirement and also act as a buffer for government, social security budgets. But I am all for accessing super, there are billions and billions and billions of dollars sitting there,and if it can help young people get into home ownership, well and good. I dont subscribe to the view it would blow housing to even higher heights because today first home buyers account for less than 50% of the level what their average involvement in housing has been over 15 or 20 years.

    ……sorry I dont have time right now to transcribe the rest, but it is worth a listen. Symond obviously is incapable of envisaging a world where house prices dont go up and where people buy and sell lots of house to make money.

    The presenter (I dont know him) seemed reasonably informed, but didnt touch O’Dwyer on the implications of some of what she was saying – ie would there be an audit of sales in the past, but worth a listen – the phone callers included a guy giving a reference to Macrobusiness and the presenter said he followed here sometimes.

    • Ultimately I dont think she is serious about ……

      Addressing the legal bona fides of international purchasers of Australian real estate

      Directing the funds purchasing existing Australian real estate towards new construction

      Auditing the legitimacy of at least 8 years of property transactions

      She has also not commented on the veracity of funds used to purchase Australian real estate – the preparedness to say that Australia will not be a launderer of corrupt gains (as identified by Robert Gottleibsen recently the reason why buyers are turning from the United States to Australia)

      I think she is going to try and take the political sting out of an issue which is rapidly becoming problematic for both sides of Australian politics.

      • I think she is going to try and take the political sting out of an issue which is rapidly becoming problematic for both sides of Australian politics.

        Sadly, I have to agree that this is one of the more likely explanations. The majors might allow this rhetoric some oxygen in seats where it is deemed advantageous/innocuous for the sitting member. In politics, sometimes it is best to merely be seen as doing something. While I agree this is an important issue that needs to be dealt with; there is also potential for a racial undertone that might resonate with some marginalised voters. The same voter block that flocked from Pauline Hanson to John Howard.

      • She has a window of opportunity due to Hockey’s poor personal performance. If he’d delivered a masterful budget sales job, she couldn’t have even raised the question.

        EDIT: A statement that the FIRB is currently not doing its job after a year in office is tantamount to a statement that Hockey is not doing his job, and he will know that.

        What she does with the window and how long it stays open are obviously open questions, though.

  3. Seriously, WTF does someone have to do to get sacked these days?

    “So you haven’t been doing your job for 8 years? No worries, just try a little harder.”

    Sack the lot of em!

    • I think the point being made above is they have been doing their job.

      The Laberal party executive has asked them to turn a blind eye and that is exactly what they have done.

      • Strange Economics

        Also they have reported that they have about 3 staff (part time) on the job.
        So the result is a website to register on. No checks. Just an honesty box (to report when you transfer your corrupt millions over).

        According to Chinese law you can only transfer $ 50k legally per year. So technically every buyer from China has broken the rules.

      • Maybe they all just happened to win big at local or otherwised located outside Chinese mainland casinos?

    • When many institutions fail people, what that could be? Bad policies, bad politicians, bad CEOs, bad personalities or just a bad system?

  4. The penalties have to be very harsh to really impact the risk-reward equation. I’d go as far as to say confiscation of illegally purchased property should be considered. Proceeds of sale could be given to FIRB as an incentive to do their job.

    • A lot of people are under the impression that the FIRB functions to protect Australian interests . This is incorrect – it’s role is to protect the Treasurer of the day.

      • Yes. I think that’s right.

        Everything in the country, including our land, is for sale. Unless there is a media blow up, then FIRB can be called in to obfuscate a bit until a dog on a surfboard makes the news.

    • Loss of real estate licence would be pretty harsh. What’s the point of having a licence-based compliance regime if you can’t lose your licence?

      “Speeding again??”

      “Sorry officer.”

      “No worries….have a good day.”

      • lol, so true.

        Loss of license (RE agent, lawyer, accountant, etc) is a bit lenient IMO. A criminal conviction is mandatory.

    • Disclaimer: IANAL.

      Obtaining financial advantage by deception and deliberately making false statements is a crime – fraud. The states have powers to claim property under the proceeds of crime. It may be a stretch but it may already be possible for this to happen.

      An 80k fine is a slap on the wrist in my neck of the woods. Not too far away from stamp duty costs.

      I’m still skeptical about O’Dwyer. She is a former Costello staffer and been in parliament for a few years now. She knows not to bite the hand that feeds her.

  5. Beware the sham fix of the sham regulator.

    Introducing “stiff new penalties” is a sham fix. An empty pretence.

    Without relevant comprehensive timely data the inquiry is worse than a waste of time.

    How many existing Australian dwellings are owned by foreign nationals?

    How many existing Australian dwellings have been bought by foreign nationals in the last 12mnths?

    Kelly doesn’t know. Noone knows because noone checks.

    • Yes, calls for new regulations are a stalling tactic, as the existing rules, if enforced, would be adequate. Her call to allow super to be used for a deposit show how insincere she is about affordability…

  6. reusachtigeMEMBER

    Foreign investors are good people just trying to make a buck. They’ve helped keep the values of local homes booming and this has been great for all investors. Why should they be prosecuted?

    • I am becoming a fan of Ms O’Dwyer

      Yeah she’s saying a few good things, but also some dumb things. I suppose that’s better than Hockey who is only saying dumb things.

      What’s interesting is she’s speaking out, and raising issues beyond established LNP policy. I long term play for the leadership perhaps? Certainly she couldn’t do worse that the current mob.

    • tend to agree, lots of talk and very little action will be the most likely result.

      We need a US style gun culture here, then those in power may squirm in their seats a little when the pop get agitated.

      • @dennis
        Great idea! If we import the US gun culture here, that would give our police an excuse to militarise, just like the US police forces have. Then we too could look forward to unarmed people being shot dead in the street on a regular basis!

  7. I may be naïve but surely there should be an integrity test associated with each purchase detailing sources of funds for any acquisition.

    Such a test could include copies of tax returns, details of sources of income and assets etc perhaps with liaison back to the individual’s original country of residence.

    Why should we accept money laundered from overseas and in particular any person of low moral integrity? We have enough of those in parliament as it is!!!!!

    • Isn’t it funny, earlier this year I applied for a preapproved loan from the same bank my salary goes into and some savings with another with a linked account to this bank account and they still insist that I provide statements and proof of where my money comes from…but why and how can these foreign buyers can buy with cash without being questioned about how the money has come about???

  8. this is so easy to fix, just make simple rule that all properties that are illegally bought by foreigners are not legaly theirs but belong to government instead.

    • Force sell them is better and fairer.

      I would also argue that we should work with the Chinese to recoup their losses from ill gotten finance, they are our most important trade partners.

      I would work with the Chinese government to repatriate the money. Simply seizing it – is akin to seizing Chinese assets – NOT COOL.

      • Swift forced sell, all gains back to Aussie gov, appropriate fine/admin fee (10%?), and the rest back to Chinese gov. Zero funds for the criminal.

      • @Leviathan

        After somebody did something illegal it’s hard to argue fairness for him. Using these properties to fund welfare seems to be fair to me. For each multimillion dollar illegally bought house we could build 10 unit public housing building.

      • Sounds like the definition of a perverse incentive to me. All parties to an illegal transaction should suffer some consequences.

    • Rules are only for honest people.

      We have plenty of Rules already & look what is going down.

      Political will is what is required .

      • Sorry mate, but absolutely nothing can or will be done about the thousands of homes already purchased with dirty money; anything done now will be like closing the barn door after the horse has already bolted.

      • Something can be done, but that something will be a little like taking tincture of mercury to clear up that dose of the clap – the cure could very easily be worse than the disease.

      • Wrong. If a purchase is found to be unapproved and illegal, the transaction can be voided and the property divested.

        It is arguable that the sale was never validly settled.

      • The argument holds merit but only in theory. Experience shows that the PHC will not allow this to pass.

        I want to share in your confidence but await with bated breath for the forced sales throughout Sydney and Melbourne.

  9. Forrest GumpMEMBER

    Consider this.
    An average person in China can NEVER have freehold title to land…EVER. It belongs to the state.

    When Mr Average purchases a home in China, he is only purchasing the rights to live within the building and to own the actual structure.

    At any time, the government has the right to evict and compensate the occupant off the land and relocate them elsewhere. (and they do)

    So given these considerations, what would the Mr Average do if he was faced with other possibilities such as sending his teenage son/daughter to Australia to study and by virtue of that receive a temp Residency visa. He can then arrange for his son/daughter to purchase property in Australia where he has freehold title to the land.

    This is whats happening here. The FIRB has been notified of international students purchasing properties of $500K +. Agents are happy to take the money, the seller is happy for a sale and Mr Average is delighted to have freehold title outside of a very shaky Chinese system.

    On one final consideration. When we build a house here in Oz, it is generally built albeit at the least cost, but to generally acceptable Australian Standards. The owner can generally be assured the house will be standing in 70 years time. This is the case in China. After 30-40 years the buildings are in a dilapidated condition where residents are “encouraged” to knock the department building down and rebuild…..at a cost….

    • Consider this.

      – As a land owner in Australia, you have little rights over your land. Look at the areas in the Dandenongs in Mel. I have a mate who did a lot of research into bushfire overlays in the area (his partner works in that space). No overlay. Now has an overlay. Can’t reno his house, can’t do this, can’t do that. Can’t clear your land in many places at all.
      – As a land owner in Oz a CSG company or other energy co can slap a PEL on your land and come and fk the utility of your land with endless access roads and fencing, ruining the continuity and utility of operations like grazing, with ZERO compensation (unless agreed by an amiable company)
      – you have taxes slapped on you with no recourse, like onsite sewerage management fees, with NO service provided in return
      – you have rate hikes of 5% for years to pay for things you never use, like the local pool (notwithstanding I completely agree with X subsidisation by ratepayers to a point) — renters don’t pay for this

      The list goes on

      • Father in law bought land to build a house there – shit happened, he didn’t get on it right away. When he put himself back together, lo and behold it was illegal to put residential property on blocks that size in that street.

        wrt bushfire overlays, panic about people dying in large numbers including retired newsreaders, will do that, I guess.

      • There are no land owners in Australia – only title holders. The Location of Title is contained in a DP, a Deposited Plan.

        You hold a piece of paper, nothing more. You may have enjoyment to land but that is different to ownership.

        Depending on legal argument all the land is either owned by the Crown or unlawfully occupied (sovereign tribal land); the former is enforced through violence (try not paying rates), the latter probably factual but unenforceable.

        Either way, you don’t own it and in all likelihood never will.

  10. its refreshing to see some change in the air, which i think reflects the fact that the bubble is becoming more and more of a publicly recognised issue – the fact that mainstream feel the need to come out in defence of the bubbe shows they are getting a bit nervous.

    … that said, Aus is five years behind NZ in sentiment, and NZ is currently doing sweet fa to address the real causes despite housing now being a major election issue. As we all know, there are a multitude of factors creating the bubble, and in NZ each party is proposing ONE as a solution (eg supply OR CGT OR foregin investors etc).

    .. so i think we are 20 years away from meaningful change. The only hope is still a crash the govt can’t control – although potentially a change in policy could be the straw that breaks the back

  11. “I am becoming a fan of Ms O’Dwyer” – LVO

    “Well I am all for accessing superannuation towards a deposit for first home buyers” – KO’D

    • On that topic she should merely be educated by reference to Xenophon’s recent mental fart which was so elegantly corrected both here and on idiottax.

      With so few pollies willing to engage on these issues I think we are better off bringing them into the fold and steering them to enlightenment rather than to knock them down the first time they come out with some populist clap trap that fails the sniff test.

      • yes – unless of course they are acknowledging an issue as a justification for bringing in something they can sell politically and know will exacerbate the issue.

      • No doubt they will go to the JWH playbook, and find a way to restrict sales in about a dozen cases p.a. while tens or hundreds of thousands of sales occur elsewhere.

    • KO’D reminds me of that young Mexican girl who became Chief of Police and attempted to take on organised crime.

      KO’d may be an appropriate name.

  12. This could blow up into very serious political tensions with China in the future and could threaten billions in trade. Time to sack Joe Hockey and the FIRB board and get serious. We have become the criminal joke and hideout of Asia.