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Defence ticks Chinese lease of Darwin Port

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EXCLUSIVE JOE KELLY

9:04PM DECEMBER 28, 2021COMMENTS

A Defence review has found there are no national security grounds sufficient to recommend a government intervention to overturn the controversial 99-year lease of the Port of Darwin to Chinese company Landbridge.

The review is understood to have disappointed China hawks who were hoping the review would trigger a reversal of the ­decision and allow the government to unpick the lease arrangement, an outcome that would deepen tensions with Beijing at a critical moment of growing strategic uncertainty and great-power rivalry in the Indo-Pacific.

The Australian has confirmed that the national security committee of cabinet has considered the review it commissioned to ­re-examine the 2015 agreement under which Landbridge won the bid to operate the port in a deal worth $506m.

Given there was no formal recommendation from Defence for a national security intervention, the NSC has taken no action to this point. While the government is still reviewing the matter, the position of the Defence Department makes any decision to overturn the port lease more politically challenging.

Multiple sources informed The Australian that ­Defence had not given the government the justification to liquidate the Chinese holding over the asset in the strategically critical northern reaches of Australia, despite a historic ­deterioration in the bilateral relationship with Beijing and the emergence of new conflicts across the trade, geopolitical and security realms.

Defence Minister Peter Dutton has pushed the review and taken a stronger stand against China than his predecessors, ­recently warning that it would be “inconceivable” for Australia not to join the US if there was a conflict with Beijing over Taiwan.

Speaking in Darwin earlier this year, Scott Morrison said the lease of the Port of Darwin was “undertaken by the former Territory government and it was not a lease that was approved by the federal government – it was not”.

The Prime Minister said that as treasurer he made changes to ensure that future transactions would be subject to approval from the federal government given there was, at that time, no basis on which the lease could have been vetoed. He also gave an assurance that his government would only act in relation to the Port of Darwin “if there is advice from the Defence Department or our ­security agencies that change their view about the national ­security implications of any piece of critical infrastructure”.

“You could expect me as Prime Minister to take that advice very seriously and act accordingly,” Mr Morrison said.

Businessman and former Howard government minister Warwick Smith, who has unparalleled ties into China, warned that any decision to unpick the lease arrangement without the explicit endorsement of Defence would be seen by investors as a “totally and completely gratuitous step”.

Mr Smith told The Australian that, over the past 2½ years in his capacity as the chair of the international engagement committee of the Business Council of Australia, he had met with the heads of Defence, Home Affairs, ASIO and ASIS, and that none had identified the Port of Darwin as a “high-priority issue”.

“It was subject to Defence ­consideration at the time,” he said. “They went through it in ­detail. They found a lease … It was a reasonably good return for what was a basically low level piece of port area.

“My view is that defence have probably come to the right conclusion. National security concerns have changed over the last five years, and I appreciate that. But there’s not a lot to be gained by picking apart a port lease like this when there are other ­investments taking place in our country.

“It doesn’t gain on the security side. It unpicks a commercial ­arrangement that sends a negative signal. I don’t think it’s the wisest thing to do right now.”

Mr Dutton has this year talked up an expansion of the US military footprint in Australia through troop rotations in the Northern Territory, with the US having expressed its dissatisfaction to Australia over the Landbridge lease arrangement.

Former US president Barack Obama expressed frustration to then prime minister Malcolm Turnbull that America had not been kept in the loop.

However, both the Defence Department and the Australian Security Intelligence Organisation conducted assessments at the time, finding the lease did not present a threat to national security. Dennis Richardson, who was then the secretary of Defence, has stood by the decision and still ­argues it was the right call.

He says no compelling arguments were presented suggesting it was a mistake to lease the site to Landbridge.

But the outgoing head of the high profile think-tank the Australian Strategic and Policy Institute, Peter Jennings, disagrees.

Mr Jennings told The Australian there were other options available to the government in relation to the Port of Darwin in the event that it found itself hamstrung by the Defence review.

“I think that the government has given itself new powers by amending the critical infrastructure act at the very end of 2021 which it can use to force more transparency on the owners of critical infrastructure,” he said. “And that this is potentially something that could be used to put pressure on the Port of Darwin lease to the Chinese company Landbridge. As is the case with all Chinese companies, there is very little transparency about how Landbridge operates.”

Speaking in parliament this month, Mr Dutton said the bill would strengthen the Security of Critical Infrastructure Act 2018 by ensuring critical infrastructure was “protected and safeguarded from all hazards”.

“This obligation is designed to uplift core security practices of critical infrastructure assets by ensuring that entities take a holistic and proactive approach to identifying, preventing and mitigating risks,” Mr Dutton said.

The legislation also establishes a framework for all cyber security incidents affecting critical infrastructure assets to be reported to the Australian Signals Directorate. In addition, Mr Dutton said the bill would provide government “with last-resort powers to respond to a serious cyber incident that is having, has had or may have an impact on a critical infrastructure asset and there is a material risk to Australia’s ­national interests”.

“These new powers will ensure government is able to act effectively and decisively in responding to cyber attacks that go beyond the capability or capacity of industry to respond,” he said.

Before authorising a request to directly intervene, the Home ­Affairs Minister would need to obtain the agreement of both the Prime Minister and the Defence Minister. No indication has been given for when a final decision on the future of the Port of Darwin will be made.

Joe Kelly

Canberra Bureau Chief Canberra Joe Kelly is the Canberra Bureau Chief. He joined The Australian in 2008 and since 2010 has worked in the parliamentary press gallery. He has covered 4 federal elections and ten budgets. @joekellyoz