Foreign Investment Reform Bill 2020

Published on Thu 3 December 2020 12:43pm

At a time when we reflect on matters of national security and broad public wellbeing, countries have an interest in ensuring that appropriate regard is given to how we own and control certain essential parts of our economy and our public service delivery world, and that has been true here in Australia.

Mr Wilson (1:14pm) – I’m glad to say something in the debate on the Foreign Investment Reform (Protecting Australia’s National Security) Bill 2020 and the Foreign Acquisitions and Takeovers Fees Imposition Amendment Bill 2020. As the member for Fisher observed, at a time of COVID-19, nations around the world are considering their circumstances. At a time when we reflect on matters of national security and broad public well-being, countries have an interest in ensuring that appropriate regard is given to how we own and control certain essential parts of our economy and our public service delivery world, and that has been true here in Australia. This bill, essentially, provides greater capacity to screen proposed foreign investments in Australia. There’s always been a regime in place—the Foreign Investment Review Board—that has facilitated that kind of screening. Typically, there are certain areas where consideration is particularly relevant. There are value thresholds that are set, and, if you fall below a particular value threshold, you may not be subject to screening. In the circumstances of a global pandemic, Australia, like other countries, is reconsidering how we apply that screen or that filter to proposed investments, so that we can be sure of protecting Australia’s national interest.

I would observe that this change, to some degree, runs against some of the things that have been done in recent bilateral or multilateral trade agreements. Foreign Investment Review Board settings are often part of trade agreements, and, in Australia’s case, because we are a virtually tariff-free jurisdiction, when it comes to settling trade agreements, we have to think about the kinds of things we can negotiate with. They include intellectual property rights. They can sometimes include—wrongly, in my view—temporary foreign labour access without proper labour market testing and so on. They can certainly go to the conditions in which investment is allowed, including the Foreign Investment Review Board settings. So there have been a number of trade agreements in which we’ve essentially said to other countries that part of what we’re prepared to offer them is different thresholds. Of course, when you come along with the change that’s being made in this bill, you basically take that back to zero. So, if there’s an appropriate national security concern, then it doesn’t matter how low the quantum of the investment is; it can still be called in and looked at.

Of course, while agreeing to the bill, we on this side note that there are aspects of the way the bill will work that are yet to be determined because the definition of ‘national security business’ and the definition of ‘national security land’ will be determined by regulation subordinate to this bill. But, certainly, it’s already the case that some of the countries with whom we’ve entered into trade agreements in recent times have noted with some concern the kinds of changes that are being made here. I think it was Mexico, one of the signatories to the Trans-Pacific Partnership 11, that expressed some concern back in October about what Australia was doing with respect to investment screening.

So it does beg the question, going forward, how that will change the investment landscape globally. As a person who has spoken many times about the dangers of investor-state dispute resolution mechanisms, I also say that it’s quite possible that investor-state dispute resolution mechanisms would be used to challenge the kind of thing that we’re proposing here. It’s not out of the question that a nation whose company is seeking to invest in Australia and is blocked on national security or national interest grounds may seek to challenge that in one of these tribunals, and that’s something that we should be concerned about.

It’s right that in a relatively short time, in six to twelve months, we should look to review what’s being done by this bill. It’s something that was first proposed in June. We’re putting it in place now, in December. There have been many concerns raised by stakeholders, investment experts and civil society groups about how exactly this will work. As I said earlier, some definitional aspects of it have yet to be established, so it’s right that we should have a good look at it shortly.

Broadly, the bill goes to the question of how we protect Australia’s national interest and national security. In that area—foreign investment, foreign ownership, sovereign capability and self-sufficiency—there are many bits and pieces, and this part just goes to how you screen and consider proposed foreign investment. As we do this, it’s worth all of us in this place reflecting, and certainly I think it’s worth the government reflecting, on some of the other key areas around national security and national interest control.

I don’t think there’s any doubt that this government was a bit late to the game in relation to critical commodities. We are blessed in Australia, in addition to having a lot of traditional resources, to be well represented when it comes to so-called new energy metals, the kinds of resources that are going to be necessary in the renewable energy transformation that is occurring around the world. We should have taken a comprehensive look at those resources much earlier—how important they are, where they are, who’s investing in them, what purposes they’re used for and so on. The definition of ‘critical commodity’ is something that is rare but vitally important.

The United States got going on this front earlier than Australia did, probably back in 2017. They landed their strategy. The Morrison government’s strategy wasn’t settled until last year. But some of the observations in the US strategic assessment were sobering. The US identified 31 critical minerals. I think 14 of the 31 were entirely imported. For close to half of those critical minerals, the United States is entirely reliant on imports. We have joined with the United States in looking at a couple of minerals in recent times where you could almost say the ship has sailed. There are a couple of key minerals for which China controls around 85 per cent to 90 per cent of global production. It would be healthier for the globe if critical minerals were not concentrated necessarily in that way. It would certainly be critical for Australia. So I think that’s something the government should look a bit more closely at in future.

When you think about areas of national security and national interest where that question of protecting Australian ownership has already disappeared, there’s none that sticks out more plainly and more worryingly than Australian shipping: 99 per cent, I think, of imports and exports to Australia go by ship. This isn’t surprising; we’re an island continent. Three decades ago, our national merchant fleet had 100 ships: 100 owned and flagged Australian vessels. That’s an issue the member for Maribyrnong has identified and argued about repeatedly over the last five years plus. It’s why Labor went to the last election with a proposal to create an Australian strategic fleet. We talk about Australian ownership and national security and our capacity to be masters of our own destination, but we’ve gone from having 100 ships in our merchant fleet, three decades ago, to having 10. That’s where we sit now, and with not a single Australian flagged and owned fuel tanker. That’s no basis on which to maintain your sovereign self-sufficiency and security position when you are an island continent, and yet that’s not just been allowed to happen; it’s been a positive policy of neglect that coalition governments, both this one and the previous one, have prosecuted.

Their almost laughable use of permanent temporary permits, which have meant that our shipping might, by some people’s estimation, become more efficient, have made us really vulnerable. And it’s not just the assets themselves, it’s not just the ships that we no longer own, that are no longer flagged here; it’s the maritime workforce that goes with that shipping.

One thing we’ve certainly discovered through COVID-19 is, if you want to take a fast and loose just-in-time inventory management approach to all the things that we rely on and all the things that come here by ship, you’re going to get caught out if there’s a global crisis. If there’s any kind of interference or separation as far as freight and logistics on a national basis, Australians are going to get hurt and they’re going to get hurt quite quickly. From a government that bang the national security drum—it’s one of their favourite instruments; they bang the national security drum a lot—they cannot be serious about our national security and turn a blind eye to the circumstances of Australian shipping. It is a scandal.

 Mr Katter interjecting—

Mr Wilson – The member for Kennedy is quite right. If you take the next step from shipping you go to our liquid fuel insecurity. When you don’t own and operate an Australian tanker and you’re relying on foreign shipping to get liquid fuel to you, you’ll be doubly worried when you consider that at various times we’ve only got 20-odd days of liquid fuel. That position has been in place for many years, and the government has been incredibly slow to do anything about it. We were supposed to get the final report of the review into liquid fuel security at the end of 2017. We still haven’t got that report. We’ve been out of compliance with our IEA requirements for some time. We’re the only country, I think, out of compliance. We’re supposed to be lodging a strategy shortly to be back in compliance by 2026. I will not hold my breath.

Things, in many ways, are getting worse before they get better. We’ve seen in my own home state of Western Australia the proposal to close the BP refinery. It’s not the case that that refinery is the only one that’s in trouble; other refineries are in trouble as well. That means we won’t be importing crude, potentially. We’ll have to rely on refined fuel, and that puts us at greater risk. So we support this bill, but there are many other areas of national security interest that the government should attend to and hasn’t done a great job of over the last seven years.

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