The Morrison government has announced a three-step reform to Australia’s foreign investment legislation in the interest of national security.

Under the new rules, the Treasurer will have a “last resort” power to rule investments in or out in “exceptional cases” where there’s a national security risk.

“Today’s reforms … are the most significant since the establishment of the Act in 1975,” Treasurer Josh Frydenberg said.

Among the changes, the Foreign Investment Review Board will subject investments in “sensitive sectors” to a new national security test.

These will likely include the telecommunications sector, energy, defence supply, and data collection and storage.

$50 million in funding will be given to enforcement agencies to ensure compliance.

However, the government will streamline the approval process for “passive” investments in non-sensitive sectors where there’s a partnership between private capital and a foreign government.

“Investment in Australia must be on our terms, on our rules, and in our interests,” said Prime Minister Scott Morrison.

The changes are to take effect on January 1, 2021.

Image: Nine News Australia