America invests less despite FTA

11 August 2006, Australian Financial Review, By Tracy Sutherland

The relocation to the United States of the global media powerhouse News Corp has contributed to a $32 billion fall in American foreign investment into Australia in 2005.

According to annual foreign investment figures for the 2005 calendar year, which coincide with the first year of operation of the US-Australia free trade agreement, US foreign investment into Australia fell from $360 billion in 2004 to $325.3 billion the following year.

US foreign investment into Australia was tipped to soar under the FTA, which relaxed the Foreign Investment Review Board's controls over such approaches. The FTA removed the FIRB's power to block applications worth less than $800 million.

But according to the Australian Bureau of Statistics figures "significant restructures of enterprises impacted on components of Australia's international investment position". Government sources said this primarily reflected the decision by News Corp to relocate to the US and that the statistics were hard to interpret as a result.

Australian investment into the US increased by $12.5 billion over 2005. Overall, the level of foreign investment in Australia increased by $71.1 billion in 2005 to $1.2 trillion, with the US, the United Kingdom and Japan being the top three investor countries.

Invest Australia has reported a 30 per cent increase in inquiries from potential US investors seeking information on Australia since the FTA deal, but cautions that investment decisions are taken over years and not months.