Tuesday, 2 February 2010
Foreign Acquisitions and Takeovers Amendment Bill 2009
I rise briefly to add some comments to those of my colleague Senator Xenophon and indicate that the Greens support the second reading amendment that Senator Xenophon has moved and which we have signed on to. It is basically the logical consequence of the additional comments of the dissenting report that I submitted last year with Senators Joyce and Xenophon on exactly the issues that we have been discussing this afternoon. Essentially, our support for the Foreign Acquisitions and Takeovers Amendment Bill 2009 is conditional on many of these really serious issues being addressed. The system in Australia of how we evaluate foreign investment by state owned entities and by sovereign wealth funds should not just be up for some tweaking. It really needs some serious review in terms of the way that we manage the assets that we have here and also our relationships with the various entities that might seek to take up an interest, controlling or otherwise, in some of the strategic resources that we have in Australia. There seems to have been bipartisan consensus for such a long period of time that we do not make anything here. We chop things down, dig things up and then we buy the value added products back from overseas. We really do need to take a very close look in that case. If that is to be the economic strategy that the major parties will pursue over such a long period of time, then we had better pay very close attention to the ownership and the kinds of relationships that we have with companies or government entities that would seek to take ownership of those same resources.
One example that Senator Milne brought to my attention this morning, when we were discussing this, was China’s approach to rare earths. These are, for example, strategic minerals which are enormously important for the future of the renewable energy sector or for batteries for electric vehicles. These fields are going to be huge in the 21st century. They involve strategic resources. I do not know if I would say Australia has an abundance of them, but we do have assets in these kinds of mineral reserves. We have no real filters in place to prevent them from being snapped up, whereas the Chinese government takes a completely different view of the ownership of or access to those kinds of resources. That is the sort of thing, on the one hand, that is lacking in Australia and that I think our dissenting report went some way towards addressing, but I think my colleagues have covered that in a fair bit of detail.
What I really want to go to is the issue of the human rights obligations of the entities with which we have commercial relationships here in Australia. The policy document that came out of Treasury on the government’s approach to foreign investment just says:
The Government’s approach to foreign investment policy is to encourage foreign investment consistent with community interests.
So there is something there in which presumably there would be a degree of community interest. So if a particular investment was inconsistent with community interests then that investment would be blocked. But of course there is no consideration given by the Foreign Investment Review Board to the human rights record of the nation or the entity that is seeking to invest in Australia.
For the purposes of assessing it against human rights standards, I figure that the second principle under the FIRB guidelines—that the investor is subject to and adheres to the law and observes common standards of business behaviour—would seem to be the obvious benchmark against which to judge that kind of performance. It does not mention human rights—it needs to—but there is something there obviously. It became quite evident during Senate committee hearings that the sorts of checks and balances that are implied in this principle are really insufficient to block investment by institutions that operate in partnership with some of the world’s worst human rights abusers.
Senators by now would be familiar with the fact that I have an interest in the case of Burma. I recently visited the Thai-Burma border and was left, in no uncertain terms, with a sense of how the exiled community and campaigners working on the border view trade with the Burma regime—that in any instance it is a lifeline to the vicious and unlawful regime that needs to be cut off. We need to use all opportunities possible to strangle the financial resources that are propping up that brutal dictatorship. That is just one example that I would like to draw the chamber’s attention to. I have done a little bit of investigation. I put those questions at an estimates hearing, at which I believe Senator Sherry was present, to help us get some answers from the officers at the table, or to at least get an idea that the answers were certainly not going to be forthcoming, because it is simply not something that they are asked to consider.
At the time that the dissenting report was published, there was consideration of the $505 million deal that would deliver the state owned China Nonferrous Metals Mining (Group) Co. Ltd a 51 per cent stake in the Australian company Lynas Corporation, which owns the Mount Weld rare-earth mine near Laverton in WA. This brings together the two concerns that I was raising. It is thought to contain one of the world’s largest supplies of high-grade rare earth. This is the same entity that also operates the largest nickel mine in Burma. They could not do that without active partnership with the Burmese military regime. That entity is seeking further acquisitions in Burma. Obviously they have no problems at all in collaborating with that regime, as the Chinese government does in a number of ways. This particular entity is seeking to take a controlling stake in a rare-earth project in Western Australia. This is an outfit that also has mining operations in countries including North Korea, Iran, Zambia, Mongolia and Thailand, in joint partnership with the authorities of those nations. So it is not that it is only investing in Burma, but that is obviously a very major interest that it has.
I put the question to the General Manager of the Foreign Investment and Trade Policy Division, Mr Patrick Colmer, during an estimates committee hearing. His answer was really interesting. He said:
The position, as I understand it from the basis of the information that we have, is that the Chinese company is operating in Burma. That in itself does not tell us anything except that it is operating in Burma. The fact that a company may be operating in Burma-I believe we have an embassy in Burma.
At that point he was becoming a little bit flustered, I think. He said:
It does not seem, of itself, to be a relevant consideration. If there is information about its operations in Burma or anywhere else that are relevant to the way that it operates in Australia, then that would be something that we may be interested in.
But, effectively, regarding its offshore operations, we do not care. We would not even ask the question. If you put the question to the officers at the table they could legitimately say: ‘I have no idea what these people get up to. We’re only interested in their acquisition of assets in Australia.’ But the fact that these people are effectively collaborating with a regime of violent and organised criminals is of no effective interest to the Foreign Investment Review Board, even though it has the principle that it adheres to the law and observes common standards of business behaviour. That is a rather warped understanding, in my view, of what common standards of business behaviour should include.
In his submission to the committee—he is going to get two mentions in the same debate—the businessman and human rights activist Ian Melrose, who was referred to by Senator Xenophon just now, refers to China’s human rights record. He said:
This is not a Government we should allow to own Australian strategic mining resources which will be for the benefit, not ours.
That is partly for the reasons that I outlined at the outset—that they take a much more strategic view of control of their resources than Australia does, in my view. He also argues—and I think this argument is absolutely spot-on:
... politicians and businessmen who say you should not mix human rights with trade are cowards and opportunists.
I realise this is not something that we will solve in this debate in the Senate, because this is a long-running issue, but we need to take a very good look at some of the people we are partnering with in this country. The fact is that there is $50 million worth of trade between Burma and Australia every year, which makes up an important fraction of the revenue stream of that regime. All of this is slipping under the radar.
I believe that we have just missed a quite important opportunity to put some of those filters in place. Whether that is FIRB or whether the government believes that those filters or safety nets should occur somewhere else or in some other institution is fine—we would be interested in that—but as it stands we are effectively blind to the operation of some of these entities and their behaviour overseas. I believe that does all of us a disservice in the Australian business community, where we expect high standards of ethics and corporate practice, and it certainly does a disservice to the people struggling under these regimes who have spent, as in the case of the Burmese people, decades trying to get out from underneath what is effectively a hostile occupation by a brutal dictatorship. I believe that anything at all that we can do in a trade and investment sense to help their cause is worth trying.