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Wednesday, 11 August 2004
Page: 26239

Senator NETTLE (10:16 PM) —As Senator Ridgeway said, we are proceeding with the Democrat amendments but they are the same amendments that the Greens have proposed. They are seeking to remove the impact of the US-Australia free trade agreement on diminishing the capacity of our Foreign Investment Review Board to review foreign investments in Australia.

The free trade agreement, as has already been outlined, will undermine the government's capacity to review and screen foreign investment in Australia. Under the agreement, US investment in Australia will be given national treatment, which means that United States investment must be treated in the same way as local investment. This is in article 11.3 of the agreement. Also, in article 11.9 of the agreement, it is clear that US investors cannot be required to use local products or local suppliers in the delivery of services. Some existing limits on foreign investment are retained for newspapers, broadcasting, Telstra, Qantas, the Commonwealth Serum Laboratories, urban leased airports and coastal shipping. However, these limits are subject to standstill provisions and cannot be increased, preventing future governments from addressing issues that might arise in the future.

The Foreign Acquisitions and Takeovers Act 1975 created the Foreign Investment Review Board, which is a crucial economic policy instrument of government. The Foreign Investment Review Board examines proposals by foreign interests to undertake direct investment, including company takeovers, in Australia. It makes recommendations to the government under its foreign investment policy. The government is able to veto investments that are not considered to be in the national interest. For example, the Foreign Investment Review Board advised the government to block Shell's takeover bid for Woodside Petroleum, the operator of the North-West Shelf oil and gas project, in April 2001.

The current threshold of foreign investments at which the Foreign Investment Review Board looks at assessments is $50 million. Annex 1 of the agreement provides that the Foreign Investment Review Board will only keep its power to review and screen investments of over $50 million in so-called sensitive areas—that is, military equipment, security systems and the uranium and nuclear industries. The threshold for Foreign Investment Review Board review and screening for all other investments in existing businesses will lift from $50 million to $800 million. That is a significant increase in the threshold. According to the United States government's own trade representatives, if these rules had been applied over the last three years, nearly 90 per cent of US investment in Australia would not have been reviewed. It is these changes that the government is seeking to enact in schedule 5 of the bill and that the amendment we are debating now seeks to remove from the trade agreement.

The way the changes are being made will not only allow the government to implement the new rules for US corporations under the agreement but also mean it can extend such changes to other countries. This is because the schedule allows the government to raise the thresholds not only for US corporations but also for corporations from any other country that the government chooses to list. Future agreements, such as the proposed free trade agreement with China, could lead to Chinese corporations being exempt from review by the Foreign Investment Review Board. It is a slippery slope that will eventually lead to all foreign investment effectively being excluded from the review and the reach of our Foreign Investment Review Board. This is a massive reduction in review powers and will mean that the government may no longer be aware and therefore able to intervene to ensure important industries are not placed in the hands of global corporations or US multinationals.

The Greens are not opposed to investment, whether from Australia or from any other country, but we are opposed to removing the capacity of current and future governments to keep track of investments and therefore to intervene when necessary in the national interest. We already have many industries and companies in Australia where decisions about productions, jobs, workers conditions, environmental safeguards and consumer protections are made in countries other than our own. For example, decisions are made in cities such as Los Angeles and New York.

The changes proposed by the government and supported by Labor in this trade agreement are paving the way for more decisions about Australian workers and their environmental conditions to be made in United States cities. The Greens are saying that it is right and appropriate that this government and future governments should have the capacity to review and screen all significant foreign investments. This is why we proposed the amendment that is the same as the one we are debating now. It is the role of the government to protect the national interest. The Greens will continue to do so. I have two questions for the minister and the first is: is the government also proposing to extend these changes to investors from other countries?