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
I rise to make a brief contribution to the debate on Australia's Foreign Relations (State and Territory Arrangements) Bill 2020 and Australia's Foreign Relations (State and Territory Arrangements) (Consequential Arrangements) Bill 2020 because I consider the merits of these bills to be fairly self-evident, and I think that's been reflected so far in the debate around the chamber. I want to place on the record my appreciation for the offer of bipartisan support for these bills that opposition senators have made. I think it is a very important signal that Australia sends at a time like this that we are all united in ensuring that the aims of these bills are reflected in our legislation, and that is that Australia's national interest will be set by Canberra on behalf of the nation and is not to be undermined by any subnational entity.
What these bills do is what most Australians think is already the case. When Australians were told that it wasn't the case that Canberra had control over Australia's foreign relations and its external affairs, it came as a surprise to many of them. They think that it is just common sense that the government here in Canberra should be in charge of Australia's international relations and they think it is bizarre that a state government, a territory government, a local council or, indeed, a university could in any way undermine Canberra's view of our national interest and detract from it.
Of course, these bills do not seek to prevent harmless or positive international engagement by subnational entities, as are most international engagements made by our state and territory governments, local councils and universities. But these bills ensure, though: firstly, that the federal government is at least aware of every instance of international engagement by these subnational entities; secondly, that the federal government retains the power to veto any agreement that it believes is not in our national interests; and, thirdly, that we have the opportunity to speak on the global stage with one voice. In the geopolitical environment that we are now operating in that is more crucial than ever, and so it's vitally important that members of this parliament stand together this week—hopefully today—to send that message.
Unfortunately, in recent years, our united international position has been undermined. It has been sadly undermined, in my view, by my home state of Victoria and the Andrews government, which unwisely, against advice and in contradiction to the premier's own party's platform at the federal level signed up to the belt-and-road agreement with the Chinese Communist Party. No other state, no other territory and no other leader in our country, Labor or Liberal, has sought to do that—in fact, they all made clear that they would not do so. And, despite the calls from many in this place, on a bipartisan basis, for the Andrews government to change direction on the BRI, that government has refused to do so. That is one of the reasons this bill is necessary. If a state refuses to consult, refuses to see sense, refuses to consider our national interest, then they must be forced to do so.
There has been one other group that has objected to their inclusion in this bill, and that is our higher education sector. In particular, I want to draw attention to a remarkable contribution to the debate by Vicki Thomson, the head of the Group of Eight, our elite universities. Writing an opinion piece for The Australian newspaper on 12 November, she said:
Australia's leading research-intensive universities, the Group of Eight, have been saying for months that national security threats are a lot like COVID-19—you can try to eliminate them and devastate your economy or you can focus on the areas of greatest risk, suppress them and learn to live with it by quickly picking up weak points and putting a stop to them.
Essentially, what our elite universities are saying, through Ms Thomson, is that we should learn to live with foreign interference, that we should tolerate a little bit of foreign interference and that it is an inappropriate public policy goal to seek to eliminate foreign interference in our democracy. There have been a few other more powerful examples of exactly why this bill is necessary and exactly why our universities must be included in it.
Sadly, many of our universities have demonstrated a lack of prudence in their international engagements and, in particular, their engagements with China. They have demonstrated an overreliance on international students from China and they have demonstrated an inability to manage the financial, reputational and standards risks that exposes them to. It is sadly necessary for the federal government to have oversight of those relationships, as has been clearly demonstrated by the university's contribution to this debate. This was one of those very unfortunate what appeared to be pithy lines that you come up with as a lobbyist trying to influence public policy debate. It's an awkward analogy that unfortunately reveals more than I think it intended to about the view of our universities.
To return to where I began, the merits of this legislation are self-evident. That is why I hope it will shortly pass this chamber with bipartisan support. Australians agree that Australia's national interest should be set from Canberra, that it should be set by the federal government and that there should be no capacity for any subnational entity to undermine it.
I rise to contribute to the debate on Australia's Foreign Relations (State and Territory Arrangements) Bill 2020 and Australia's Foreign Relations (State and Territory Arrangements) (Consequential Amendments) Bill 2020. I am glad to be presenting on this bill, because it is about time Australia stops taking its sovereignty for granted. Before I talk about the bill, in particular, what I would like to talk about is how exactly we've got here and the history of what has happened in Australia for the last 35 years. I feel like we've lost control of our economic sovereignty. I point out that this all really came about thanks to the neo-Liberal ideology of the Hawke-Keating government and some of what I would call quite bewildering decisions of the High Court of Australia, in particular the Franklin Dam decision, that have given greater powers to international treaties than our own state governments with regard to our natural resources. To me, that was the start of a slippery slope, with this idea that we should sign away our sovereign rights to a treaty. By all means, I'm happy to sign up to some of these things, if it's going to facilitate cooperation. In terms of actually giving up our sovereign rights over how we manage our resources, I have to say, I totally disagree.
Many of those on the Left look at Paul Keating as being the economic Jesus of Australia's economic success. I would totally disagree with that; I would call him the economic Judas of Australia's economy. The first reckless thing that he did was allow foreign banks into this country. In 1985, the four major banks had about $10 billion in foreign debt. By 2008 we had $800 billion in foreign debt. Nearly all of that credit was pumped into the housing markets in Sydney and Melbourne and that has inflated house prices to, in some places, 13 times average earnings. In the same year that Paul Keating put those levers in to inflate house prices, he also brought in a capital gains tax but then left housing out of it. All the uber-wealthy in Sydney and Melbourne have been making millions and millions of dollars on housing gains and don't pay a cent in tax. Meanwhile, the workers and the battlers who work hard for a living have to start paying income tax, in today's dollars, at least—it was a lot less then; there used to be an income tax threshold of around $5,000 and it has been lifted up to $18,200—of 19c on the dollar. These things have basically diminished our productive capacity because we have an RBA that has allowed foreign banks to lend to domestic banks and then to lend to the workers to pay heaps and heaps of money for a house even though they can't necessarily afford it.
But the diminishment of our economic sovereignty didn't stop there. There was then the reckless Button plan that basically reduced tariffs. I'm not in favour of tariffs either, but you have to be realistic about what other countries are doing. There is no point in us reducing tariffs if every other country in the world is still protecting their agriculture and manufacturing sectors. We have gone off on this neoliberal crusade that all markets are efficient and if we lower our tariffs we're going to become more productive. Well, no, we haven't actually become more productive. What we have done is destroy the great manufacturing state of Victoria, because all those manufacturing businesses that used to exist in Victoria have been unable to compete with the rest of the world. In the rest of the world they may have gone off fiscal tariffs, many of them would have boasted that they had, but they also then started using monetary tariffs through currency manipulation. Let me tell you: that is rampant. They started money printing to keep their currencies down, which has given them a competitive advantage. While we are all talking about fiscal tariffs and looking over here, in the background there are all these monetary tariffs that no-one really talks about or understands. That was also facilitated by the Hawke-Keating government.
While they went and destroyed our manufacturing base, they then unleashed the beast, what we call the higher education sector, through the Dawkins plan in 1990. That basically commoditised our children's' future. It is now all about making money for the sake of those inner urban elite academics. Vice-chancellors are now getting paid over a $1 million a year to teach a lot of neoliberal ideology. I know. I can remember sitting in the Abel Smith Lecture Theatre in 1988 and a bloke by the name of Ted Hawkins was teaching me about efficient market hypothesis and how, somehow, by the time the news was announced on the stock market, that good news would be fully factored into the price. I can remember thinking: 'That seems a lot like insider trading to me. It is not really what I could call efficient because I don't see how, if there's no leaking going on, the price would actually move at all to recognise that news.' But this is the sort of stuff we are taught—that all markets are efficient and that if we just let the market rip then everything will be okay. If that were the case around the rest of the world—that they let the market rip—it might be okay. But the reality is we need fair and efficient markets and we need a level playing field.
Our role as governors and politicians who represent the people is to protect the people. I happily stood up here in my maiden speech and came out of the closet and said I was a loud and proud protectionist. I am a loud and proud protectionist. I make no apologies for defending this great country, this country's great values, our children and our prosperity to make sure our children get the same opportunities that our forefathers gave to us. In order to do that, we need to control our economy. You cannot control your economy if you merely have control of the taxation system but don't have any control of your monetary system or your infrastructure system.
That brings me to the next point about that wonderful Hawke-Keating government: they privatised everything. They privatised Qantas, CSL and CBA. The Hawke-Keating government sold CSL for $200 million. We—the federal government and the taxpayer—now pay $3.4 billion for a nine-year contract. So it's almost $400 million a year, twice what we sold it for 25 years ago, to get our blood cleaned when it gets donated to the Red Cross. That was all set up by the Australian government and paid for by the Australian people. We just gave away the rights to that for next to nothing and now we pay twice as much as that every year. That was a great economic model, wasn't it? It was really well done!
We also privatised CBA. CBA was sold for $8 billion. That is about what it makes a year now. It certainly made more than that pre COVID; I am not sure what it is going to come in at this year. CBA has gone from two-thirds lending on business and one-third lending on housing to about 70 per cent housing and about 30 per cent business. So, when all those businesses are out there trying to look for cheap credit, it is hard for them to find cheap credit compared to the housing market, because it all goes into the housing market. That's another example of how we have undermined our economic sovereignty.
But perhaps the worst thing—well, apart from superannuation, and that's a whole other story, where $600 billion of superannuation is invested offshore; meanwhile, don't worry about investing in any infrastructure here, because those on the Left over there would rather create jobs in other countries by building infrastructure in other countries and investing in foreign companies than use that $600 billion to build infrastructure here—the worst thing that was every done by the Hawke-Keating government was giving independence to the RBA. The idea was that by giving independence to the RBA they would be able to make decisions outside the political spectrum, that they wouldn't fall for populism or anything like that. Well, here we are, 25 years later and interest rates are at 0.15 per cent. The RBA has destroyed the incomes of retirees, who have got nowhere to go except to invest in a highly volatile stock market, which they're supposed to believe conforms to the efficient market hypothesis. It's amazing what these ideologies will get away with, in the dreams they peddle.
But what's so annoying about the RBA is that they've been treated with this reverence—that they know what they're doing. And of course they haven't known what they were doing, because if they knew what they were doing then interest rates wouldn't be at 0.15 per cent. You see, they've only ever used qualitative easing—that is, manipulated interest rates—and this is the hypocrisy again, because supposedly we live in a free market, yet we've got a central bank that changes the price of money on the first Tuesday of every month. I mean, if that's not socialism-totalitarianism, I don't know what is, because if you can control the price of money every month then you're basically changing the price of every other good and service in the market. If that's not central planning 101, I don't know what is.
What they've totally neglected in all this is the use of quantitative easing as a constructive, productive tool. The best example of where they've been found wanting is Victoria's Belt and Road Initiative. And it's not just China; it's plenty of other countries. Other central banks have been investing in Australia's infrastructure. So, the RBA has sat there and allowed other central banks to print money, lend it to their corporations or their quasi-semi-government corporations, and then those corporations come here and buy our infrastructure with money printed on their printing presses. Everyone stood by and said, 'Well, it's all free markets,' but we should have had capital controls there, because all these other countries—Japan's another one; they've been printing since 1989—get this cheap money that they pay no interest on, and they come here and buy our infrastructure.
Another great example is the ECB. The ECB loves to issue corporate bonds at negative yield. They basically lend money to European corporations at a negative interest rate. They say, 'You don't even have to pay it back.' Then those European corporations can buy assets anywhere in the world, and they've been coming to Australia and we've been welcoming them with open arms, and then we wonder why all our domestic companies are closing down. Well, how can our domestic companies compete with foreign companies when those companies don't have a cost of capital? They're given free capital.
You want to talk about a free market, but I don't believe in free markets; I believe in profitable markets, so that our people can earn an income to put a roof over their heads and some food on the table and provide for their children. But these guys are coming into the country with free capital and they're buying up all our infrastructure and many of our manufacturing industries. I remember great companies when I was first at university. BTR Nylex, Adelaide Steamship and Elders IXL were some of the great Australian conglomerates that have basically gone the way of the dodo because we've not been smart with our capital management; we've just opened the doors up to foreigners and said: 'Come on in! We won't look at what your central banks are doing, and you can print all this money.'
I come back to the RBA here, because these people should have understood monetary policy. I don't expect everyone in the chamber or the people out there to understand monetary policy. But the RBA have been given the responsibility to control our currency, and they have failed shockingly in doing that. What's worse, we don't have a national bank. People often get confused between national banks and central banks. Central banks control the currency; national banks build infrastructure.
As we come out of COVID, we've got to ask ourselves how we're going to do that. The people I see on the street ask me, 'How are we going to come out of COVID?' We've got to go back to basics. If we ended up on a desert island, would you go to the bank? Would you go to a bank on a desert island? I don't think so. You would immediately look to control the means of production. You would want to find some water and food sources. Hopefully, if you were on a desert island, you could climb up some coconut trees and get some coconuts. You've got to be able to feed yourself. You've got to be able to stand on your own two feet. That's what true wealth is; that's what true economic sovereignty is. It's the ability to produce goods and services so that you can stand on your own two feet.
Let's get real here. Australia relies on a foreign military, foreign capital, foreign labour and foreign manufacturing. It's about time we started to stand on our own two feet again. In particular, we have to make sure our children can stand on their own two feet. It is much better to teach a man how to fish rather than to feed him fish. I've got to be honest: I think we've lost the art of the deal. My old man, in many respects, is much wealthier than me. He knows how to run a farm, he is an ex-butcher and he can do some fencing and all the stuff I used to be able to do, but I've lost touch after 30 years. The important thing is that we need to get our children back into those blue-collar trades. We need to get control of our infrastructure and our agricultural land so that we can make sure that our children get the same opportunities that our forefathers gave to us.
With that in mind, I will finish by saying that it is important that all levels of government sing from the same hymn sheet when it comes to foreign affairs and trade. This legislation reaffirms Australia's Constitution, in that the responsibility for foreign affairs lies with the federal government. I'm glad that this legislation is being put through. There are few matters more critical than a robust, coherent foreign policy that places our national interest at the fore. I commend this legislation to the Senate.
I rise to speak on Australia's Foreign Relations (State and Territory Arrangements) Bill 2020 and the related bill. This legislation is based upon the premise that Australia, at a Commonwealth level, should be responsible for foreign relations. Indeed, this is what our Constitution envisages. This is a reasonable and largely uncontroversial proposition and not one that Labor disagrees with. In fact, as a reminder to those in the chamber, it is the Labor Party, in its long and illustrious history, that has always supported the Commonwealth having power, and certainly to the placita of section 51.
Our foreign relations, the way in which we engage with our external partners and other countries, should be set from the top at a federal government level, so as to put forward and pursue strategic policy, diplomatic and economic objectives but also to do this in a way that is true to our values as a nation—that is, the values of a Western liberal democratic nation. Despite recent forays onto social media from those representing another country, we should be very proud of our history and very proud of what we stand for.
Throughout the past 100 years and what has been a century of turmoil, Australia has been and remains one of a handful of nations to retain liberal democratic institutions without serious challenges from the Left or from the Right. Although we tend to think of Australia as a new country, we are, in fact, one of the oldest democracies in the world, a tradition of democratic government stretching back to the 1850s, with state or then colonial-level governments. We should be proud of our inheritance of Westminster institutions and traditions and not apologetic about them. Any attempt to strengthen these, as this bill does, should be welcomed. However, this is not entirely the case, and I will get to where the Labor Party has some amendments to the legislation.
In the 20th century, the liberal democratic world won major set-piece engagements: the two world wars and the Cold War. It was Social Democrats who played a critical role here. But the period also saw constant relapses into authoritarianism. After the Soviet collapse, some writers in the West hailed these years as the end of history or the unipolar moment. This, commentators said, was the final triumph of the liberal democratic ideal. The number of functioning democracies rose rapidly, particularly in Latin America and East Asia, but also in Africa. It was only in other parts of the world, particularly in the Middle East, where there seemed to be a veering towards authoritarianism. Sadly, this has not remained true.
There has again been a tendency to retreat towards authoritarians and populism. The rise of belligerently undemocratic powers; the rise of ethnic nationalism and protectionism; the decline in the leadership of democracies; the need for cooperative global climate action; transnational criminality, such as human trafficking and undermining cybersecurity; and now the COVID-19 pandemic are all placing unprecedented strain on the rules based global order, which, for all its faults, has kept the peace and allowed seven decades of increasing prosperity for most, if not quite all, the people of the world. At this juncture we badly need a global cooperation capable of rising to these challenges. Frankly, we need rules and guidance as to how we as a nation can speak with one voice when pursuing our international aims. This is why a foreign relations bill, which sets out to place the national government at the helm of this, is a good idea in principle.
Australia is placed in the most dynamic region in the world, the Asia-Pacific. In recent years, it has been home to many successful stories of democratic triumph. Since the 1990s, South Korea, Taiwan and Indonesia have established and successfully maintained stable and increasingly prosperous democracies. And I say that these are all independent countries. It would have been a bold prophet who predicted in 1990 that Indonesia would become the most successful democracy in the ASEAN grouping, but that is now the fact. Even Myanmar, after decades of enforced isolation under the 'Burmese way to socialism', has shown it can hold successful democratic elections, although the army there still retains effective control. The experience of these countries shows entrenched authoritarian systems can evolve, without revolution or civil war, into stable, prosperous liberal democracies, and we can only hope that that becomes the way of all countries in the Indo-Pacific and in Asia. Unfortunately, it isn't uniform.
The most consequential strategic and economic question that Australia and the world will have to deal with in the coming years is how to maintain normalised relations with a rising and assertive China. This is important when discussing what we are here to consider today. This legislation, from its drafting to how it has been discussed in the media by the public and in this place, has often been framed around protecting Australia's democratic and private institutions from political influence by—and let's be frank—the Chinese Communist Party. No longer can China be seen through the prism of a benign actor more interested in its domestic matters. China is a great power and entitled to the respect that goes with great power status. I want to see a strong, stable, united, prosperous and peaceful China with a natural sphere of influence that should be resolving regional problems and not stoking them. But there is a broad consensus in Australian politics that the recent expansionist and irredentist tendencies in Chinese foreign policy must be confronted, along with serious human rights abuses within its borders. Not to do so would be an affront to our own values. I believe that, where there are human rights abuses, no matter where they occur, we are all the poorer, we are all the worse, for those human rights abuses.
While, yes, some in the public space could better moderate their language so as not to deliberately stoke tensions, the deterioration in China's relations with the West, including with Australia, is largely due to the CCP's neo-Stalinist domestic policies and belligerent and hegemonic behaviour in the international arena, particularly in our immediate region. An expert in international law and a former DFAT official, Malcolm Jorgensen, has noted:
China's rhetorical deference to international law masks the more subversive consequence of its actions: redrawing the boundaries between law and politics in a way that overturns foundational parts of the global order from within.
He goes on to say:
It is equally clear, however, that advocates for the rules-based order must take more seriously their own appeals to the foundational authority of international law. Seemingly legalistic challenges will ultimately transform into political challenges to a more secure and normatively desirable world.
Yes, our mutual beneficial bilateral relationship with China has always been predicated on the assumption that it would be a rational player in the field of trade, would abide by the rules set down by the World Trade Organization, and would act in the interests of the growth and prosperity of all in an increasingly interconnected region. That assumption held good to a large extent until the reformer's rule of Deng Xiaoping and his successors Jiang Zemin and Hu Jintao. But China, under the leadership of Xi Jinping, has shown a willingness to use trade, investment, tourism, foreign aid and diaspora communities as weapons in its drive to establish a regional hegemony in the Asia-Pacific and challenge the liberal democratic world order.
When addressing any of these legitimate concerns, we must reject arguments which can be construed as xenophobic and racist. We have to combat these evils wherever they may lurk, because they are evil. Doing this in a way which is not seen as an attack on the Chinese people, or on China's legitimate national interests, will not be easy, but is a necessary discipline. Under successive Labor governments we've promoted three vital pillars of Australian foreign policy: (1) support for the Western alliance, and in particular our alliance with the United States; (2) engagement with the countries of our region, most obviously China and Indonesia; and (3) support the United Nations' multilateral system.
Throughout the committee's inquiry we heard from many witnesses about the need for the legislation and as to how this legislation would achieve its stated aims. There were a variety of views on that. My colleagues Senator Wong and Senator Ayres yesterday evening, in their second reading debate speeches, went into detail about both the committee process and the amendments that Labor will be moving in order to improve the stated aims of this legislation. I just want to address a few concerns we have. It's Labor's view that the legislation should form part of the suite of existing legislation and guidelines that work to safeguard Australia's sovereignty. This would build domestic institutional resilience and regulate international engagement, including foreign investment legislation to counter foreign interference legislation, defence export controls, the Security of Critical Infrastructure Act, the Foreign Influence Transparency Scheme and the University Foreign Interference Taskforce. There is no doubt that more needs to be done in this regard.
In recent days we have seen an assertive Chinese Communist Party become more than assertive, and one might even say aggressive. On a platform ironically not allowed in his own country, and that is Twitter, a spokesperson of the CCP put out a fake photograph. The week before there was a list of 14 grievances. To try to comply with those 14 grievances would offend all the pillars of a democracy. It would offend our right to a free press, our right to the rule of law, the rights of minorities, our right to freedom of association, and, frankly, it would also offend the right to disagree with your government and the right to have an alternative view. Australia is a wonderful country and should be looked at as an exemplar in our region, not as a country that is being attacked.
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.
On the face of it this bill, the Australia's Foreign Relations (State and Territory Arrangements) Bill 2020, attempts to do something sensible. It seeks to give the federal government oversight of foreign arrangements made by state and territory governments, as well as those made by local governments and public universities, to ensure they do not contradict Australia's foreign policy or infringe on the national interest. Frankly, I'm not surprised the government has done this after its criticism of Victoria for signing an agreement under China's Belt and Road Initiative, which is well understood to be China's soft diplomacy approach to buying influence in the region, and also given the ongoing concern over the Darwin port agreement.
Most Australians would agree that we need to be able to run a yardstick over foreign agreements because we need to protect Australia's interests; however, this bill is incredibly unbalanced. It doesn't give the Commonwealth the final say over foreign investments and arrangements; it gives it the only say. It gives the minister broad powers to approve or veto foreign arrangements both before they are made and at any time after they are made. State and territory governments will be prohibited from either negotiating or entering core arrangements with foreign governments unless they notify the minister first. The minister has 30 days in which to grant or deny approval and, if no decision is made in that time, this can be taken as approval to proceed. However, approvals can also be revoked later and the minister is under no obligation whatsoever to at any time provide reasons for any decision.
Non-core arrangements, which are those made with provincial governments or state-controlled foreign universities, for instance, will be subjected to a notification scheme. This will capture arrangements made by LGAs and public universities. The minister must be notified of non-core arrangements in writing and must be provided with a copy of the proposed deal. The minister must then make a declaration about whether or not this non-core arrangement can proceed or whether it must be varied or terminated. The difference here is that the minister's approval is not required at the outset, as with core arrangements. But this still does not provide the certainty that state and territory entities need to make arrangements with confidence.
Clause 5(2) of the bill states that the foreign policy guiding the minister's decisions does not have to be written or publicly available, nor:
(d) has been formulated, decided upon, or approved by any particular member or body of the Commonwealth.
It could be a finger in the air, a vibe—whatever the minister likes. But, unfortunately, this provides no guidance to people trying to negotiate foreign agreements, however innocuous they may be. What can they rely on if there's nothing on the public record? Clause 58 of the bill states:
The Minister is not required to observe any requirements of procedural fairness …
'Not required to observe any requirements of procedural fairness'—hence, there is no requirement for the minister to provide reasons for his or her decision.
The fallout from all of this was summed up neatly by constitutional expert Professor George Williams, who told the inquiry:
It means that an agreement may be overturned, but the parties will have no idea why. They won't know whether they can make a new agreement, if it was just one term in the agreement, if it was many terms—they will be left uncertain as to how to respond.
According to the explanatory memorandum, excluding procedural fairness:
… recognises that the provision of reasons itself could adversely affect Australia's foreign relations, especially to the extent that the decision may disclose Australia's foreign policy or position in relation to particular issues, which may disadvantage Australia’s position in international forums or negotiations.
I understand why the government would need to keep its cards close to its chest. I appreciate that the approvals process will ensure that states, territories and their entities undertake due diligence before embracing foreign arrangements. But it is still not clear why the Commonwealth needs to take this blanket approach, an approach that allows it to keep its options open whilst undermining the ability of states and territories to act quickly and surely. Why isn't there a process for engagement and discussion? How will states know what to avoid when the bill doesn't provide for any consultation? And why can't the minister at least specify what aspects of arrangements are problematic, or provide reasons on a confidential basis?
The Commonwealth has all the power in this act, and the states and territories have very little right of reply, little certainty and practically no guidance. But they don't get the courtesy of an explanation, because the minister is under no obligation to provide one. States and territories which submitted to the inquiry all agreed with the broad intent of the bill, but they raised concerns about their ability to proceed with certainty. Even parts of the bill designed to make the process administratively simple, such as the 30-day approval turnaround for core arrangements, are problematic, as there's no fast-track process for urgent matters and no exemptions whatsoever for low-risk arrangements.
The arrangements that states and territories negotiate cover a range of areas—trade, education, tourism and research collaboration, for example—and they're not always the result of formal or premeditated processes. Many of the arrangements are a result of ministerial visits, trade missions and, as the Tasmanian government's submission puts it, even chance meetings at marketing events. They are often negotiated in a matter of days or weeks, not months. New South Wales gave the example of a 2017 trade mission to Japan, in which an MOU on teacher and student exchange was renegotiated and renewed in five days. It also negotiated a technology cooperation partnership with India during a three-day visit in 2018.
The Northern Territory government's submission to the inquiry said the bill deprives states and territories of the agility and procedural certainty they require to successfully negotiate international arrangements. It recommended a shorter and more active approval process for low-risk, high-value foreign investments. I think this is very much a fair recommendation given that the minister can subsequently overturn agreements that don't meet Australia's foreign policy objectives. The minister has indicated that the only exempt arrangements will be those that deal with an emergency while that emergency is happening or that deal with minor administrative logistics such as accommodation arrangements or conference dates.
Universities have also raised a number of concerns, including the significant uncertainty created by the minister's ability to revisit and vary arrangements in the future regardless of earlier decisions. They say it could deter international partners from making collaborative arrangements or funding commitments.
The Committee for the Scrutiny of Bills also expressed concern over what it called 'the unfettered discretionary power' of the minister, especially as it is coupled with a lack of procedural fairness and merits review and limitation of judicial review. We note that the government has amended the bill to provide definitional clarity of 'institutional autonomy' for foreign universities and to ensure a review of the act in three years to establish what improvements can be made. But these amendments do not go to the heart of the concerns raised by many submitters, and they don't address all of the recommendations put to it by even the government-led Senate inquiry. For instance, the government has not acted on the Senate report's recommendation to include hospitals in the bill to ensure arrangements are not made with foreign research hospitals engaged in unethical genetic or medical practices or organ harvesting. The government agreed with this in principle but said this would be considered in a legislative review.
Centre Alliance supports the intent of this bill but agrees with many submitters that it is heavy-handed. We commend Labor and the Greens for their amendments, which seek to put some balance in the bill. We don't agree with all of the proposed amendments—including the blanket exemption for universities, as they are an obvious target for foreign interference. However, I indicate that we will support those amendments that seek to redress some of the imbalances in the bill so that state and territory stakeholders can operate with more certainty and fairness when they seek to make foreign arrangements in their interests.
I rise to support the passage into law of the Australia's Foreign Relations (State and Territory Arrangements) Bill 2020 and related bill—a welcome and necessary step to ensuring Australia's sovereignty into the future. I have spoken here before about the importance of sovereignty; it's an old-fashioned word but it's still relevant. To me, sovereignty is the ability to act in our own interests as a nation. It means that the Australian people as a collective are the ultimate authority about what is good for Australia. So, when individual states, via their government or via institutions like their universities, start making arrangements that affect the interests of all Australians, we have a problem.
I was disappointed by the trite political hacks taken by the Leader of the Opposition in the Senate regarding this bill. Senator Wong, we know you are far better than this. You must realise that this bill shows that the Morrison government is indeed taking responsibility for Australia's foreign relations. The bill does exactly what you, Senator Wong, say is so important. This bill takes control by saying we need to act as a nation; we need to present a unified front; we need to stop those who would try to divide us; we need to block those who use seemingly innocuous agreements to exploit our openness so they can steal, incite and manipulate. The only way to do this is for the Commonwealth government to carefully consider the implications of all international agreements proposed by Australian governments. Only the Commonwealth government can identify the national interest and use its experts to advise the minister about the concordance of each prospective agreement with our national interests.
This bill provides an important plank in our government's broad-based efforts to protect Australia's sovereignty. Control of foreign policy is vital. It's a core Commonwealth responsibility, enumerated in section 51 of the Constitution. Commonwealth leadership provides consistency. It provides an assessment of Australian interest using information and perspectives that institutions like local universities or state government bodies simply do not have. Yet, to my amazement, Labor cannot see a public policy rationale for this bill. I say maintaining coherence in our foreign policy is an imperative, and so a rationale. If you want to know why this bill is needed, look no further than this.
This legislation will also shine sunlight on the agreements made with foreign countries. We know for a fact that the Andrews government's BRI agreement, Belt and Road Initiative agreement, was negotiated in secret. They did not want expert advice or national interests intruding on their plans. We also know that the BRI can be the Chinese Communist Party's way to interfere with their partners, apply economic coercion and give advantages to Chinese companies, as Senator Griff said, buying influence. These are aspects of the overall BRI picture that the Victorian government either did not realise or they knew, but thought they could outsmart the Chinese Communist Party. Either way, the Victorian BRI agreement highlights exactly why this bill before us today is necessary. We cannot accept the Victorian government's assurance that they will consider the national interest before committing to any activity. I simply say they cannot possibly do that because there is no way that the Victorian government understand the national interest. The Victorian government do not and cannot speak for all of us.
I cannot be anything but appalled by the Greens' excuse for opposing this bill. In their view, the universities are too busy to do due diligence on these agreements, so, in curious Green logic, we should not be making them inform the Commonwealth before they start negotiations. The Greens will just let these ill-equipped universities go on making agreements, and excuse them of any need to actually consider the implications of their actions. Theirs is a parallel universe: let universities run free with things they don't understand.
Two particular comments by those from this side of the house are worth reinforcing before we conclude this debate. My friend Senator Van, from Victoria, spoke about the need to maintain public confidence in our international relationships. He is spot on. I think the public would rightfully ask why we are not doing this already, given their expectation that Australia would have a consistent and interest-focused foreign policy. The remarks by Senator Fierravanti-Wells were also particularly perceptive.
We cannot follow business as usual in this changed world. The Defence Strategic Update, launched on 1 July this year, clearly explains how the strategic environment has deteriorated more rapidly than anyone expected. The Indo-Pacific region is now the centre of strategic competition. While we don't want this, it is happening and we must prepare. We need to make changes to the way we operate, and this bill addresses just one. We need to do this, not only in Defence but across all sectors of the economy and across the nation. We need to prepare ourselves to meet challenges to our interests in whatever shape they come and through whatever vector they may follow.
Countering foreign interference is just as important as physical defence when it comes to maintaining our sovereignty. That's why we need this bill. I give this bill and the amendments proposed by the government my wholehearted support. I also hope that it shows us all the importance of having a coordinated, strategic approach to protecting and promoting our sovereignty.
One last note: this approach should be articulated through a national security strategy. Such a strategy would explain our goals and ways to coordinate activities like this, and explain this bill in context. It would provide benchmarks for success. It would help guide and explain how the measures proposed in this legislation will act in concert with others to promote Australia's future. I support this bill.
Let me begin by thanking senators for their contributions to this important debate on Australia's Foreign Relations (State and Territory Arrangements) Bill 2020 and the related bill. The government recognises that, internationally, Australia's strength is greatest when we are united, consistent and speaking with one voice. This is the purpose that this bill serves. The bill will assist in ensuring a consistent approach to Australia's international relations and help to ensure that Australia is able to speak with one voice internationally.
The bill reflects the Commonwealth government's fundamental role in conducting Australia's foreign relations, negotiating treaties and representing our nation internationally. Importantly, in terms of addressing the question of speaking with one voice as government, particularly internationally, it remedies a gap in our existing system by implementing a formalised method by which states and territories must consult with the Commonwealth on their arrangements with foreign governments. The mechanism set out in the legislation will protect our national interest and address the consistency of our foreign policy across all levels of Australian government.
This bill is the next step in a number of measures the government has taken forward in recent years to protect our national security and our sovereignty. These measures are complementary, but they cover different issues. For example, the Foreign Investment Review Board regime, the FIRB, regulates significant foreign investments to ensure they are in the national interest. FIRB reforms announced earlier this year will strengthen this regime with a new test addressing national security concerns arising from individual investment proposals which would otherwise be below screening thresholds. It is this regime that applies to the acquisition or leasing of critical infrastructure, such as ports.
Separately, the Foreign Influence Transparency Scheme, FITS, is designed to provide the public with visibility of the nature and extent of foreign influence on Australia's government and politics. Individuals acting on behalf of foreign governments are therefore not dealt with under this bill. Those matters are covered by the FITS. Further, the investigation of foreign interference against Australia and our democratic institutions is also dealt with under our foreign interference and espionage laws, passed with cross-parliamentary support in 2018.
The coalition government has also made decisions and implemented reforms to protect our telecommunications sector and our cybersecurity. These reforms, together, protect Australia's interests in relation to issues that this bill is not intended to cover. This bill is not intended to regulate purely commercial arrangements by corporations, even where a corporation is wholly or partly state owned. Arrangements by or with corporations are only within scope where they are entered into pursuant to a foreign arrangement with a state or territory entity and if the minister has deemed that arrangement as likely to be, or inconsistent with, Australia's foreign policy, or as likely to adversely affect our foreign relations. Corporate arrangements are also in scope if entered into pursuant to a state or territory arrangement with a foreign government that was not notified to the minister. While each piece of legislation addresses distinct processes, these reforms, taken together, demonstrate the government's very clear and strong commitment to protecting and preserving Australia's interests and our liberal democratic values.
I thank the Senate Foreign Affairs, Defence and Trade Legislation Committee for their review of the bill and their recommendations. The government has made amendments to the bill to define when foreign universities do not have institutional autonomy and to require a statutory review of the legislation after three years of operation in response to a number of the committee's recommendations. The rules allow the government to respond to changing circumstances without the need to amend the act in order to minimise regulatory impact when necessary, including by exempting arrangements that are less likely to impact on foreign policy. The draft rules to be made under the bill have been published on the Department of Foreign Affairs and Trade website. These rules exempt core foreign arrangements that deal solely with the sharing of information or resources for the management of a declared emergency in Australia, foreign arrangements that deal solely with minor administrative or logistical matters, and minor variations of foreign arrangements that do not alter the substance of the arrangement.
I acknowledge the significant contribution that states, territories, local governments and universities make to Australia's international engagement, including through arrangements with foreign governments. The bill does not seek to prevent these arrangements, nor does it seek to interfere in states' and territories' business. What it does do is put in place a robust, proportionate process to assist states and territories in undertaking effective, appropriate and informed international engagement with foreign governments so that everyone can be confident that the arrangements they take forward are consistent with Australia's foreign policy. The vast majority of arrangements will remain unaffected by this bill, because they will be consistent with our foreign policy and in Australia's national interest. However, it is our view that if an arrangement is inconsistent with Australia's foreign policy or adverse to our foreign relations then it should not proceed. Only the Commonwealth is empowered to make these judgements.
The bill, through the public register, will allow greater visibility of these judgements and will enable states, territories, local governments and universities to work in partnership with the Commonwealth when they engage internationally. Following the bill's introduction, the Department of Foreign Affairs and Trade has conducted consultations with more than 60 stakeholders, including representatives from state and territory governments, local governments and Australian public universities. The Prime Minister, the Minister for Education and Training and I have also each engaged with stakeholders in respect of the bill. Detailed fact sheets for stakeholders have been published on the Department of Foreign Affairs and Trade website. The government has also established and funded a Foreign Arrangements Taskforce in the Department of Foreign Affairs and Trade. That task force will work closely with stakeholders on the implementation of the bill, including to ensure its efficient and effective administration.
I commend the bill to the Senate, and I recall that this is fundamentally about engagement and collaboration, with due diligence. It is vital that the Commonwealth has oversight of arrangements concluded at all levels of Australian government with all foreign countries.
My second reading amendment has been distributed in the chamber, as on sheet 1111. I move:
Omit all words after "That", insert:
", the bill be withdrawn; and
(a) The Senate notes that:
(i) the bill as drafted creates a significant new scheme with wide-ranging implications;
(ii) no public consultation process was undertaken on an exposure draft bill and there was no regulatory impact statement prepared prior to the introduction of the bill; and
(iii) stakeholders have raised a range of concerns about lack of consultation, the compliance burden and impact of this bill; and
(b) The Senate calls on the Government to undertake more extensive consultation with the wide range of stakeholders impacted by this proposed legislation".
The substance of this amendment deals, to some extent, with some of the concerns that we have raised in our second reading amendment, but, of course, the difference is: the Greens amendment is operative and would essentially close the second reading debate. We want the opportunity to have the committee stage to seek to amend the legislation. And, whilst we have concerns, which I and other senators detailed in the second reading debate, about the way in which this bill was rushed, the failure to consult and the demonstrable failure by the government and the minister to engage with the entities covered by it, the principle that is behind the bill is one that Labor supports. For that reason, we are not minded to support the Greens' second reading amendment, which would effectively dispose of the legislation. I appreciate that. Thank you.