Introduction to the Levels of Government in Australia Implications for Investors Contents

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Introduction to the levels of government in Australia Implications for investors Contents

Welcome 01

Why Australia 01

Three levels of law-making 02

Roles and responsibilities 03

Implications for foreign investors 08 Business structures 08

Foreign investment approvals and competition law 08

Taxation 09

Employment, discrimination and work health and safety laws 09

Land acquisition and use 10

Water use 10

Environmental protection 11

Local planning 11

Supply chain regulation 12

Research and development and intellectual property protection 12

How we can help 13

Disclaimer

This report has been prepared as a general overview. It is not intended to provide exhaustive coverage of the topic. The information is made available on the understanding that the Australian Trade Commission (Austrade) and The Australian Government are not providing professional advice.

While all care has been taken in the preparation of this report, the parties do not accept any responsibility for any losses suffered by persons relying on information contained in this report or arising from any error or omission in the report. Any reference to companies or investment activities is for illustrative purposes only and does not constitute an endorsement of those companies or any investment activity.

This report is subject to copyright. All or part of it can be reproduced for bona fida research or public policy with appropriate acknowledgement of the Australian Trade Commission. Requests and inquiries concerning reproduction should be addressed to Austrade, GPO Box 5301, Sydney NSW 2001 or by email to [email protected]. Welcome

This guide provides investors with a high-level overview of Australia’s governance system and how it relates to investment.

Australia is a representative parliamentary democracy with three levels of government.

This multilayer governance system affects a number of sectors and industries that foreign investors may seek to invest in, including natural resources, infrastructure, commercial real estate, tourism and manufacturing.

Foreign investors should have a strong understanding of the responsibilities of each level of government prior to investing in these sectors. Why Australia

Australia offers investors a powerful combination of solid economic performance, a highly skilled workforce, legal and political stability and close ties to the fast-growing markets of Asia.

It is the sixth-largest country in land area and the 13th largest economy in the world, entering its 25th year of uninterrupted annual economic growth. Australia has 10 per cent of the world’s biodiversity and an abundance of natural resources.

The population of 23 million is one of the world’s most multicultural, with 30 per cent of the workforce born overseas. While English is the national language, more than 300 languages are spoken in Australian cities. Australia’s highly skilled workforce is a reflection of the country’s high-quality education system, one of the best in the world.

Introduction to the levels of government in Australia | WELCOME 01 Three levels of law-making

Australia has three levels of government with defined law-making powers:

Federal Parliament State/Territory Parliaments Local Councils

›› The federal or national ›› Six state parliaments and ›› Over 560 local councils (also Parliament, in Canberra, Australian two self-governing territory called shires or municipalities). Capital Territory (ACT) parliaments – Northern Territory and ACT

The federal, state, Northern Territory and ACT governments all have three arms: 1 2 3 1. A legislature (or parliament) responsible for debating Legislature Executive Judiciary and voting on new laws to be introduced 2. An executive responsible for enacting and upholding the laws 3. A judiciary responsible for, among other things, enforcing such laws.

Members of federal and state/territory parliaments (and local governments) are chosen from and elected by the people. Voting is compulsory for Australian citizens from the age of 18.

02 THREE LEVELS OF LAW-MAKING | Introduction to the levels of government in Australia Roles and responsibilities

Each level of government Federal government law-making powers has its own responsibilities, which may overlap in The ACT and the Northern Territory ›› Taxation some cases. are self-governed under Acts passed ›› Banking by the Federal Parliament. ›› Insurance The division of powers between Sections 51 and 52 of the Australian › Marriage and divorce the federal and state governments › Constitution list the areas over which is set out in the Australian ›› Currency, weights and measures the federal Parliament can make Constitution. Each state also has ›› Post and telecommunications laws. These include: its own Constitution setting out its ›› Invalid and old age pensions. law-making powers. ›› International and interstate trade ›› Foreign affairs Section 51 also allows state ›› Quarantine parliaments to refer matters to the federal Parliament. ›› Defence ›› Immigration

International and Federal Parliament interstate trade Foreign aﬀairs

Quarantine Defence

Immigration Taxation

Banking Insurance

Marriage Currency, weights and divorce and measures

Post and tele- Invalid and old communications age pensions

Foreign Bankruptcy and corporations insolvency

Introduction to the levels of government in Australia | ROLES AND RESPONSIBILITIES 03 Banking Census and statistics State and territory governments’ law-making powers

State parliaments have residual Territories are any land within Although the federal government powers under the Australian Australia’s national border that is is the main taxation authority, state Constitution, meaning they can make not claimed by one of the states. governments also raise revenue by laws on any issue not allocated to Australia has 10 territories, two of means of various duties, levies and the federal Parliament under the which (Northern Territory and ACT) royalties (for example, payroll taxes, Constitution. are self-governing, having been mining royalties and property duties). granted similar law-making powers The federal government funds many State laws usually cover issues to those of the states under acts of state and territory activities and such as: federal Parliament. functions, often attaching conditions ›› Local governments to the use of the funds. There are eight Australian territories ›› Education and schools that are not self-governing but ›› Health are governed according to ›› Some aspects of the environment Commonwealth law, usually by an ›› Emergency services operation appointed administrator. In the ACT, (police, fire and ambulance). the local and territorial government functions are combined.

Local Education and State/Territory Parliaments governments schools

Health Environment

Emergency services operation Public transport

Electricity Roads and railways

Water and gas supply Housing

Child welfare Prisons

04 ROLES AND RESPONSIBILITIES | Introduction to the levels of government in Australia Local government law-making powers

Local governments are established The main task of local governments by state governments (and the is to regulate or manage services Northern Territory Government) and activities, adapted to the needs to look after matters relevant to of the community they serve. local communities. These include: Local councils are not mentioned in ›› Garbage collection and recycling the Australian Constitution, although ›› Provision and maintenance of each state has a Local Government public parks and sporting grounds Act that provides the rules for the creation and operation of councils. ›› Libraries While these Acts vary from state ›› Some local planning decisions. to state, they generally cover how councils are elected and their powers to make and enforce local laws, known as by-laws.

Garbage collection Local Councils and recycling Local roads

Footpaths and Street signs cycleways and lighting

Parking Libraries

Land and coast Pet registration care programs

Building Building approvals inspections

Water and Parks and sewage sporting ﬁelds

Swimming pools Childcare

Aged care Town planning

Introduction to the levels of government in Australia | ROLES AND RESPONSIBILITIES 05 Areas of overlap and cooperation

There is a well-established set of rules under Australian law setting out which governments have law-making powers at different levels. Certain Australian courts are also empowered to determine which layers of government are empowered to make laws.

For example, section 71 of the Australian Constitution empowers the High Court of Australia to resolve inconsistencies between the laws of the federal government and those of a state. Consequently, while Australia’s laws operate at different levels, this multilayer system is one which is ordered, well developed and relatively predictable.

However, on some matters the different levels of government may have overlapping or complementary laws that must be considered (see case study).

The Council of Australian Governments

To better facilitate the interaction between the different layers of government, the federal government established the Council of Australian Governments (COAG) in 1992. COAG includes the Prime Minister, state premiers, chief ministers and the President of the Australian Local Government Association (a representative body of Australia’s local governments). COAG meets twice a year to discuss intergovernmental matters.

COAG is also a forum through which ministers from various levels of government work together on matters of common concern. As a result of these intergovernmental discussions, uniform national laws have been made to tackle issues such as road transport, food standards and consumer rights.

Examples of overlapping and complementary areas of responsibilities include environmental protection (as detailed in the case study), planning and development, schools and tertiary education, labour relations, healthcare and hospitals, and economic infrastructure.

Visit coag.gov.au for more information.

06 ROLES AND RESPONSIBILITIES | Introduction to the levels of government in Australia Case study: How different levels of government collaborate on environment and planning laws

Each level of government is involved in environmental rule-making. Investors or developers of major projects should be engaged with and understand the roles of different government levels.

The federal government administers the Environment Protection and Biodiversity Conservation Act 1999 (EPBC Act), which covers certain obligations under international environmental treaties. The EPBC Act creates some assessment and approval processes regarding matters of national environmental significance.

The states and territories are involved in the bulk of environmental regulation and approval processes through their respective Acts. For instance, Victoria operates under laws such as the Environmental Protection Act 1970, which creates offences for certain behaviours related to the disposal of waste and degradation of the natural environment. Victoria also has a Planning and Environment Act 1987, which creates rules and an approvals process for establishing new developments.

Finally, local governments generally regulate, assess and approve the majority of developments within their local government boundaries. They also have some powers to enforce state-level offences.

Introduction to the levels of government in Australia | ROLES AND RESPONSIBILITIES 07 Implications for foreign investors

Foreign investors companies carry on a business Foreign acquisitions may also be together) are regulated by state subject to review at the federal level should have a strong laws, common law and the contracts under competition and consumer understanding of the which govern the partnership. law in circumstances where the responsibilities of each It is also important to consider acquisition could have the effect of level of government prior state or territorial laws (particularly substantially lessening competition those relating to stamp duty) when in the Australian market. These laws to investing in Australia. designing trust structures. are administered by the Australian Competition and Consumer Below are some of the key areas Visit asic.gov.au for Commission (ACCC). Additionally, where multiple layers of government more information. companies that operate in Australia will be relevant for foreign are subject to a federal competition investment processes. law regime (as well as some state Foreign laws) that strictly regulate the investment conduct and representations made Business by businesses. structures approvals and competition law Visit firb.gov.au and accc.gov.au A preliminary consideration for any for more information. foreign investor is determining what Australia supports foreign investment business structure they will use and has a long history of welcoming or buy into for their investment in investment that is in the national Australia. The federal government is interest. Through the Foreign the primary administrator of laws on Investment Review Board (FIRB), the Australian business structures. Australian Government reviews those The main corporate structure used foreign investment proposals that to establish operations in Australia meet certain criteria to ensure they are companies. Companies are support Australia’s interests. Around incorporated under the Corporations 900 business and commercial Act 2001, which is administered real estate cases are approved on by the Australian Securities & average each year. Only three of Investments Commission (ASIC). these proposals have been blocked There are two types of companies since 2001. in Australia – proprietary companies and public companies. Companies are owned by their shareholders and managed by directors.

There are other structures which investors may use, and which are regulated by state or territorial laws. For instance, partnerships (where two or more individuals or

08 IMPLICATIONS FOR FOREIGN INVESTORS | Introduction to the levels of government in Australia State and territory laws also Taxation Employment, impose obligations on employment discrimination matters such as long service All levels of government have leave entitlements and workplace revenue-raising powers. The federal and work health health and safety. In addition, some government is the main taxing and safety laws pre-existing industrial awards entity in Australia. It raises money and workplace agreements may by collecting taxes on incomes and apply. These are instruments Investors acquiring or investing in company profits, tax on goods and that have been created by an businesses that employ staff must services (GST) and through other industrial tribunal. charges such as fuel excise and be aware of Australia’s workplace customs duties. relations laws. The FWA and anti-discrimination laws in states and territories also The federal government has For more information visit the specifically prohibit termination of overarching responsibilities for Australian Taxation Office at employment for various reasons, workplace relations under the ato.gov.au. including temporary absence from federal Fair Work Act 2009 (FWA). work because of illness or injury; State and territory governments This legislation applies to the vast trade union membership or non- have a more limited authority to majority of Australian employers membership; race, colour, sex, sexual collect taxes. These governments and includes rules relating to preference or mental disability. can issue taxes and charges such unfair dismissal, protections from as stamp duties, payroll tax, motor ‘adverse action’ (essentially, adverse In recent years, Australian vehicle registrations, land tax and treatment because an employee or employment industrial relations gambling licences. contractor has a particular attribute laws have moved from a state/ or workplace entitlement), types territory-based system that operated In recent years, some industry of agreements, and obligations for separately in each jurisdiction, to the groups and governments have employers, employees and unions to current predominantly unified federal sought to abolish stamp duty on bargain in ‘good faith’. system. As a consequence, some certain transactions, for example, complex transitional arrangements on particular share dealings, loan Under the federal Superannuation remain, for example, phasing out security arrangements and business Guarantee (Administration) Act state/territory-based minimum wage asset transfers. Stamp duty differs 1992, employers are required to differences. As such, employers across states and territories and make compulsory superannuation must be careful to consider any as such, investors should seek contributions on behalf of transitional arrangements that may professional advice to confirm their employees to complying apply to their employees. they comply. superannuation funds. A failure by an employer to do so will attract a tax Visit the Fair Work Ombudsman Local governments receive grants or charge. at fairwork.gov.au for more from federal and state and territory information on fair work governments. They also raise their legislation. own revenues through local taxes such as rates (tax on the value of property), sewerage and water charges, dog licences and user fees for sporting facilities and libraries.

Introduction to the levels of government in Australia | IMPLICATIONS FOR FOREIGN INVESTORS 09 Crown land is often involved with Land acquisition mining and rural land acquisitions and use and can be the subject of Native Title claims. Native Title is the term There are four systems of land used to describe certain common ownership and title registration law rights held by Indigenous in Australia: Australians regarding traditional land and water. The federal government › Old System Title › regulates Native Title through the ›› Torrens Title Native Title Act 1993. ›› Crown Land Title Federal, state and territorial › Native Title. › government legislation also exists to The vast majority of commercial and protect items of Australian heritage residential land in Australia is held (natural, cultural and historic) such as under the Torrens Title system. sites and objects of significance.

Before foreign investors can For more information on land purchase or lease land in Australia, title, visit australia.gov.au/content/ they have to consider any approvals land-titles. that may be required from the FIRB For detailed information on land (discussed above). The FIRB has tenure and usage in northern specific rules and policies around Australia, visit austrade.gov.au/ whether or not a foreign person can landtenure. invest in Australian land (whether through acquisition or leasing). The process involves notifying the FIRB of the transaction details, Water use who may then allow or reject the The right to access water in Australia proposed investment. is a statutory right governed by A purchaser of real property in different legislative schemes in Australia may need to undertake each state and territory. In most a certain level of due diligence jurisdictions, water rights are distinct depending on the required use of from the land with which they are the land. States and territories have connected, thus representing items legislation which mandates that of tradeable rights separate from the vendor must disclose certain the land. pieces of information. For example, The federal government provides in Victoria the Sale of Land Act oversight in areas where waterways 1962 mandates that the vendor of cross state and territory boundaries. real property produce a Vendor’s The federal Water Act 2007 sets Statement which discloses things out a detailed regime for the use relating to title, encumbrances, rates and management of Australia’s and more. water resources, most significantly by requiring the development of a ‘Basin Plan’.

Visit environment.gov.au/water for more information.

10 IMPLICATIONS FOR FOREIGN INVESTORS | Introduction to the levels of government in Australia Local environmental plans designate Environmental Local planning zones for all land under local protection jurisdiction (for example, residential, State and territory governments commercial or industrial), and then and local governments primarily Australia has a robust legislative prescribe the types of development control the development and use framework for environmental that will be permitted or prohibited of land across Australia, through protection. Projects are assessed within each zone. Where development a combination of legislation and under the environmental laws and is permitted, the local environmental planning policies and instruments. regulations of the state or territory plans also determine the level of The regulatory framework differs in which they occur. Projects that consent required. between states/territories and impact on matters of national between local governments. Visit the Australian Local environmental significance are also Government Association at assessed by the federal government Local governments generally alga.asn.au for more information under the EPBC Act. In addition, regulate, assess and approve the on local planning. local governments can also have majority of developments within their environmental regulations that need local government boundaries, with to be considered, particularly for the following two exceptions: smaller-scale developments. 1. Projects of regional or Environmental regulation is mainly at state significance or major the state and territory level in Australia. developments and infrastructure Through state-based legislation and projects can fall within the environmental protection agencies, jurisdiction of the state each state or territory regulates government. In most states, and manages systems for pollution certain projects, categories of control, contamination, hazardous projects or development sites are materials, waste disposal and designated as state-significant biodiversity protection. projects by various planning instruments or by declaration of The federal government has proposed the relevant Minister for Planning. a One-Stop-Shop policy aimed at Projects that fall within these simplifying environmental approvals categories will be assessed by for business, while maintaining the relevant Planning Department high environmental standards. within the state government and The policy will accredit state and be approved by the relevant territory approval processes, allowing Minister for Planning. Different businesses to conduct a single assessment and approval environmental assessment and requirements will apply to approval process that satisfies both those projects assessed at the state and territory legislation and state level. national environmental law. 2. Matters of national environmental significance may require referral to In addition, specific tourism federal government departments developments over A$50 million that (for example, the Department of are subject to the EPBC Act can the Environment). apply to the Minister for Trade and Investment for Tourism Major Project Facilitation Status.

For more information on the One-Stop-Shop for environmental approvals, visit environment.gov.au/ epbc/one-stop-shop.

Introduction to the levels of government in Australia | IMPLICATIONS FOR FOREIGN INVESTORS 11 Additionally, Australia has a robust Supply chain Research and IP protection regime. Federal regulation development legislation provides for the registration and protection of IP The federal government has and intellectual such as trademarks, patents and created some laws relating to the property industrial designs. Copyright is production, management and supply also protected under federal law, of products along supply chains. protection without requiring registration. There These laws relate to import and is separate legislation providing export conditions, quarantine and Research and development protection for original circuit layouts laws for managing the country’s (R&D) is supported by Australian (that is, the representation of the biosecurity system. governments through some financial three-dimensional location of incentive schemes and support, as the electronic components of an These regulatory regimes rely on well as a robust intellectual property integrated circuit) and for unique cooperation between the federal (IP) protection regime. plant varieties. government and state and territory governments, as well as importers, The federal government operates Visit ipaustralia.gov.au for exporters, industry and consumer an R&D Tax Incentive program to information on IP Australia, the groups and the wider community. help businesses offset some of the listed federal government agency For example, in 2011, the federal costs of R&D. The program aims to within the Department of Industry, government introduced a new help more businesses do R&D and Innovation and Science. regulatory framework, the Exporter innovate. The scheme operates by Supply Chain Assurance System, means of a tax offset for certain to strengthen Australia’s live cattle eligible entities. export trade. The federal government also Within Australia, industry groups provides funding for research in contribute through planning, advanced manufacturing, services preparedness and response and technologies through its support activities in cooperation with of, for example, organisations such governments. Under Australian law, as the Commonwealth Scientific and all food production and processing Industrial Research Organisation must comply with the Australia New (CSIRO) and universities. Zealand Food Standards Code. The states and territories provide Visit foodstandards.gov.au for financial support for R&D through more information on the Food initiatives that focus on industries of Standards Code. importance in the particular location. For example, the South Australian Government has invested in BioSA, a biotechnology business incubator.

12 IMPLICATIONS FOR FOREIGN INVESTORS | Introduction to the levels of government in Australia How we can help

The Australian Trade Commission – JURISDICTION GOVERNMENT AGENCY WEBSITE Austrade – contributes to Australia’s / DIVISION NAME economic prosperity by helping Australian businesses, education Commonwealth Austrade austrade.gov.au/invest institutions, tourism operators, Australian Innovation, Trade business.act.gov.au governments and citizens as they: Capital Territory and Investment ›› develop international markets New South NSW Department industry.nsw.gov.au/invest-in-nsw ›› win productive foreign Wales of Industry direct investment Northern InvestNT investnt.com.au ›› promote international education Territory ›› seek consular and passport services. Queensland Trade & Investment tiq.qld.gov.au/invest Queensland (TIQ)

South Australia Department of State statedevelopment.sa.gov.au/ What we provide Development investment Tasmania Department of cg.tas.gov.au/home/investment_ Working in partnership with State Growth attraction Australian state and territory governments, Austrade provides Victoria Invest Victoria invest.vic.gov.au international investors with the Western Department of dsd.wa.gov.au/invest-in-wa information needed to establish Australia State Development or expand a business in Australia. Services for international investors include: ›› initial coordination of investment enquiries and assistance ›› information on the Australian business and regulatory environment ›› market intelligence and investment opportunities ›› identifying suitable investment locations and partners in Australia ›› advice on Australian government programs and approval processes.

Introduction to the levels of government in Australia | HOW WE CAN HELP 13 austrade.gov.au/invest