Senate debates

Tuesday, 1 December 2020


Australia's Foreign Relations (State and Territory Arrangements) Bill 2020, Australia's Foreign Relations (State and Territory Arrangements) (Consequential Amendments) Bill 2020; Second Reading

12:33 pm

Photo of Pauline HansonPauline Hanson (Queensland, Pauline Hanson's One Nation Party) Share this | Hansard source

Let me say that One Nation supports this bill, but I have a few things to say. For decades I have warned that the policies of both Labor and the coalition have left Australia dangerously exposed to the whims of a hostile communist Chinese government. I would encourage every Australian to look carefully at the origin of everything you buy now. Please try hard to buy Australian made and produced products. Think carefully about buying products made in China.

I support the intent of the legislation proposed by the government, but the government needs to put its own backyard in order first. The government wants to have a narrow debate about foreign relationships by confining the debate to agreements made by the states, territories, local governments and universities. I want a broader debate. Foreign relationships are also about trade and foreign investment. We cannot talk about foreign relationships without also talking about trade and foreign investment. The government hopes that this bill will distract us from its own agreements with other countries, but we cannot ignore what is happening today with our relationship with China.

China's position of 'my way or the highway' leaves us with a free trade agreement with China which is not worth the paper it is written on. Under this agreement, Chinese interests can spend over $1 billion in a single transaction without the government testing whether Chinese control of those assets or businesses is in the national interest. It has always been open to the federal government to recognise an Australian asset or business as being in the category of 'national security'. This recognition would trigger the national interest test for sales, from the first dollar, but the government didn't want to upset China. History instructs us that appeasement never works.

While the government is looking at everyone else, it can look at agreements made by federal agencies. It can start with the strategic partnership agreement with the Shanghai Institute of Applied Physics signed by the Australian Nuclear Science and Technology Organisation in 2019. What is the justification for working with the Chinese government on future energy sources, materials under extreme conditions and accelerator science when nuclear power reactors are prohibited under Australian law? The government needs to look at a host of issues related to China, including sustained cyberattacks on Australia. Are we so desperate for Chinese money that we want to graduate the students who are attempting to blackmail university lecturers into passing those who would otherwise fail? Is it not possible to talk about relationships with foreign countries without also talking about trade relationships and investment by those same foreign countries and their citizens in Australia?

Let's look at our trading relationship with China. China takes 40 per cent of our exports. We have no market other than China for 30 per cent of Australia's exports and no alternative market for 20 per cent of Australia's imports. We are hopelessly dependent on China. We all experienced that dependence when personal protective equipment, or PPE, was not available. Australia has had a golden trade period with China, but it seems it has come to an end. It has been reported that a dossier reporting grievances was handed over by the Chinese embassy in Canberra to news outlets. The purpose of this exercise was to pressure the Morrison government into reversing Australia's position on key policies, such as academic, visa cancellations, calling for an independent inquiry into COVID-19, banning Huawei from the 5G network and blocking 10 Chinese foreign investment deals.

The consequence of these grievances is that several categories of Australian commodities have been subject to rejection. The decision to delay and then reject 21 tonnes of live Australian lobsters was an act of bastardy, because they died on the hot tarmac of a Chinese airport. This year the Chinese government has directed power stations and steel mills to stop using Australian coal, and ports have been directed to stop unloading coal from 80 bulk carriers with $1 billion of Australian coal on board. Almost every week brings news of another commodity subjected to a new tariff or placed on a blacklist. China wants to damage our economy. The blacklisting of Australian commodities—including barley, beef, coal, wine and lobsters—means private businesses are being punished to send a message to the Australian government to stop saying and doing things the Chinese government does not like.

There is an easy way to get back the goodwill of China. We simply have to say sorry and then change our policies to make them consistent with China's foreign policy. We have been warned to keep out of the South China Sea dispute, despite Beijing being found to be in contravention of international law by building artificial islands within waters claimed by its neighbours. We can regain some favour with China if we stop participating in freedom of navigation operations in the South China Sea.

Putting so many trading eggs in the China basket was always a risk because China has a long history of using import and export restrictions as a means of gaining compliance with its foreign policy. While we have played our part in making China the factory to the world, we have allowed our own manufacturing industries to decline. This was a matter of policy for both major parties. It's a stain on both parties that we have not invested in manufacturing in Australia and provided globally competitive electricity prices. Instead of encouraging manufacturing jobs in this country, the government and Labor have subsidised foreign owned wind and solar companies which produce intermittent electricity. This is no use to manufacturing, which requires power 24 hours a day. Once manufacturing accounted for 40 per cent of the Australian economy. Forty per cent! Today it is six per cent. When long supply chains are disrupted, the just-in-time approach leaves Australia without essential goods. Countries with more manufacturing capacity than Australia were able to manage better through the COVID pandemic because they were able to change production from producing A to producing B. The Australian government has few options today because it has failed comprehensively to understand the way China thinks about itself.

This brings me to the connection between trade and foreign investment with China. It is common ground that China has been our largest trading partner. We have sold more in dollar terms to China than they have sold to us. Our recent prosperity has largely been due to China buying our iron ore, coal, natural gas and high-quality protein foods. In practice, our economic reliance on China means that we have been unable to say no to foreign investment from China, including massive investment in residential homes in our major cities. In the past decade or more, Australia has been the second-largest recipient of Chinese investment, second only to the United States. The problem with Chinese ownership of Australian assets is that Chinese companies borrow from the communist state and, consequently, every loan forms part of China's political and economic strategy. When China or any foreign country buys our assets and businesses for political or military purposes, we should think carefully whether it is also in Australia's interests. Still, the third-term Liberal government has actively approved or passively consented to 99.9 per cent of all Chinese investments in Australia.

The view that all foreign investment in Australia is good is the mindset of dinosaurs. The world has changed. Today, foreign investment can be used to hide another purpose: the sale of the Darwin Port is one such case. China provides no reciprocal arrangements in terms of foreign investment. There are a long list of industries that are off limits to foreign investment in China, as well as specific provinces and whole cities. In the limited areas where Australians can invest in China, the Australian investor must be the minority shareholder. The Chinese think we are stupid for allowing them to buy up in Australia when Australians cannot buy up in the same way in China.

Public servants in Treasury and in the Department of Foreign Affairs and Trade who advise government have let Australians down because the current trade war with China was foreseeable and therefore preventable. To put it plainly: our public servants are not up to the task of advising the government. They tell me they can do a trace and source the billions of dollars of Chinese investment in Australia, so they are confident the money is not borrowed from Chinese state banks. What a load of rubbish!

China is the largest owner of food-producing land in Queensland. Unlike Treasury officials, China understands it's not making any more land and it's been investing in Australian agribusinesses and food-producing land. Prior to the arrival of the Chinese virus, COVID-19, the dollar thresholds were so high that few sales of Australian businesses were tested against the national interest test. After representation from me, the government reduced the dollar thresholds to zero for the COVID period to prevent foreigners buying distressed Australian assets. With one permanent member of the Foreign Investment Review Board, FIRB, and a few part-time members, foreign buyers can be assured of a cursory consideration before approval is rubber stamped on their file by the FIRB. In the past decade, out of 10,000 proposed sales, less than a handful have been rejected.

The Security of Critical Infrastructure 2018 legislation details categories of Australian assets and businesses that are already in foreign hands, including electricity assets, pipelines and ports like Darwin Port, Brisbane port, Melbourne port and Newcastle port—the largest coal port in the word. This legislation, like the legislation in the government pipeline, is all too little and too late.

The ownership of our water entitlements by foreign countries should set off the smoke alarm in every household. The Liberals are wrong to believe that assets bought by foreigners cannot leave Australia. Has the government done the broader maths? I have. With 20 per cent of our water in foreign hands and migration increasing our population at the rate of a million people every four years, there must come a tipping point when our food security is at risk. In 2015 we signed a free trade agreement with China. We have kept our promises; China has not. Just days ago a tariff of up to 200 per cent on wine was imposed, making exports of Australian wine to China uneconomic and leaving some companies in deep trouble. The government now says it will take China to the World Trade Organisation, but any remedy will take years and years. It is virtue signalling at best, meaning it makes the government look like it's doing something without doing something. They have been spending too much time learning from Labor and the Greens. Australians are fed up with the decisions of elites and politicians managing our foreign affairs. The 2020 Lowy Institute Poll found that nine out of 10 Australians, or 94 per cent of participants, want the Australian government to find other markets to reduce our economic dependence on China. Is anyone in the government listening to the Australian people?

Clearly, our foreign policy and our foreign investment regime are not working for us in relation to China. Simply listing reasons would take another speech. Every time Australian assets or businesses are sold to a foreign company, foreign pension fund or multinational company there is a real danger the tax base of this country will be eroded and the tax burden will fall on the individual Australian workers. The Van Diemen's Land Company, with 25 dairies and 18,000 dairy cows, was sold to a Chinese businessman. One hundred per cent of the money was borrowed and none of the conditions of the sale have been met since 2016, yet the government has not acted to enforce the conditions of sale or issue a disposal notice; in fact, Treasury officials cannot remember a single disposal notice being issued since the introduction of the Foreign Acquisitions and Takeovers Act 1975. This is not surprising, because the Treasury does not follow up to see if the conditions of approval are met. Does anyone wonder why I am so frustrated with the government? The government lacks a spine to do what is right for Australia.

Where to from here? We need to permanently lower the dollar-value thresholds that trigger a review of proposed foreign ownership. We need an independent authority to make decisions which approve the acquisition and control of Australian assets and businesses—perhaps they can find some people with experience in business who have lived some of their life outside the Canberra bubble. Reforming the foreign investment regime is going to take a new government mindset. It is going to mean policymakers and government need to step out of the past and face the new reality of China. China uses trade and foreign investment to advance its foreign policy. We can never talk just about foreign relations without also talking about trade and foreign investment. In the interests of reform of the foreign investment regime, I propose an amendment to the Australia's Foreign Relations (State and Territory Arrangements) Bill 2020 which would see a 'benefits to Australia' test replace the 'contrary to the national interest' test in the Foreign Acquisitions and Takeovers Act 1975.

China is a non-market economy. They have been open and consistent about their use of trade and investment to further their political and economic aims. There is nothing wrong with that. It all goes wrong when we have weak politicians and poor advice from the public servants who think they can have their own cake and eat it too with China.


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