Victoria warned Chinese bid to build North East Link could be jeopardised by new federal laws
New federal powers to crack down on foreign interference and cancel Victoria’s controversial Belt and Road agreement could jeopardise the frontrunning bid to build the biggest road project in the state’s history.
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New federal powers to crack down on foreign interference could jeopardise the frontrunning bidder in the race to build the $15.8bn North East Link.
The Spark group’s bid to construct the tollway, linking the Eastern Freeway to the M80 in Greensborough, includes the local offshoot of the Communist Party’s top Belt and Road building company called China Construction Oceania.
This has prompted warnings from security experts and federal MPs that the biggest road project in the state’s history could be drawn into China’s controversial plan to create infrastructure in order to leverage soft diplomatic power.
The federal government is working on new laws to rip up Victoria’s Belt and Road agreement, which can also be used to terminate any construction deals linked to the agreement.
Daniel Andrews has spruiked the North East Link during trade missions to China, and the state’s Belt and Road deal commits Victoria to “increasing the participation of Chinese infrastructure companies in Victoria’s infrastructure construction program”.
It describes infrastructure as a “key area of jointly promoting the Belt and Road Initiative”.
Senator Eric Abetz, who chairs an inquiry into the new laws, said: “Given Labor’s thorough humiliation in pursuing the Chinese Communist Belt and Road Initiative, one trusts they won’t be silly enough to double down with China Construction Oceania for the North East Link.”
“If Labor won’t get itself off the sticky paper I’m sure there will be a very close federal analysis to ensure our national interest is fully protected and we would use whatever channels and means were available to put Australia first,” he said.
Despite its diplomatic power play, the federal government strongly backs the North East Link and has pledged $1.75 billion to help build it.
The Herald Sun understands the state government has not been made aware of that investment being impacted by any forthcoming legislation.
The Spark group’s rival for the main project contract is the ViaNova group, which includes another Chinese-owned company, John Holland.
There were warnings its bid would be non-compliant earlier this year due to a disagreement over the allocation of risk for cost overruns. However the Herald Sun understands this issue has been dealt with and the consortium is still in the running for the project.
A spokeswoman for John Holland talked up its “strong local heritage” and the fact it was established in Australia more than 70 years ago.
“Our owners have supported our growth into a company that now employs more than 5000 Australians and is delivering vital infrastructure in regional, suburban and metropolitan cities,” she said.
But Victoria’s biggest construction union and critic of John Holland, the CFMEU, hit out at the reliance on foreign-owned companies to get projects built.
“We are about to go into a major economic crisis, the government should be looking for ways to get local contractors to win these jobs,” state secretary John Setka said.
Despite concerns about the bidding process, which saw a third consortium drop out of the race last year, the Andrews government wants to sign contracts for the road by the end of this year and start construction late next year.
Chinese Communist Party interference expert Professor Clive Hamilton said if China Construction Oceania was part of the winning bid, “Beijing will see it as a victory for its Belt and Road strategy in Australia”.
“That is, to bypass the federal government and make allies in the states. The win would entrench this giant state-linked corporation in Victoria for years, giving Beijing more leverage over the Andrews government,” he said.
“The federal government should examine this deal closely and cancel it if it violates the new foreign relations powers.”
A federal government spokesman said: “We won’t comment on hypotheticals however the legislation gives the commonwealth the power to review and terminate private contracts and agreements that arise from the main arrangement.”
A state government spokeswoman said it was still evaluating bids from “two world-class consortia”.
“The government continues to consider the intersection between proposed commonwealth legislation and impacts on Victoria, as it always does,” she said.
The state government has previously floated publicly funding the project if no bidder is successful in the tender process, but has not said how it would pay for the massive bill.
The Department of Foreign Affairs and Trade told Senator Abetz’s inquiry that subsidiary arrangements to agreements inconsistent with Australia’s foreign policy could be terminated to prevent “the circumvention of the scheme”.
China Construction Oceania could not be reached for comment.
SECURITY WARNING FOR ARMY BARRACKS NEXT TO LINK
Security concerns have been raised about part of a Melbourne military base being turned over to the construction consortium which builds the North East Link.
The successful consortium will take control of 11ha at Simpson Barracks, including land next to the home of the Army’s elite cyber warfare unit, while a 40m ventilation tunnel is needed on the base to clear fumes from the new road tunnel.
With Chinese state-owned firms in the frame to build the project, Communist Party interference expert Professor Clive Hamilton sounded a warning to Australian authorities.
“Chinese companies have a record of trying to buy land and facilities adjacent to military bases. The US government has been alert to this. I hope our security agencies are paying attention,’ he said.
The proximity of the land to be acquired to the base of 138 Signal Squadron — described as the “front line of Army’s land defensive cyberspace capability” — has also raised eyebrows among some federal MPs.
North East Link project documents said the construction works would “result in a significant change” to the western side of the base.
“The barracks is a military campus that has developed as an inward-looking community with a degree of anonymity and privacy from its surroundings,” the documents said.
“Views from within much of the barracks site, and particularly towards the west, are not considered of importance in a heritage context.”
An independent environmental assessment of the project recommended Simpson Barracks be designated a “no-go zone” because of “potential significant environmental effects”, but that was rejected by the state government.
Major Paul Lambert, the commanding officer of 138 Signal Squadron, told an Army magazine his hand-picked team included law enforcement digital forensics experts and former defensive cyber operators in civilian industries.
“We are looking for malware, insider threats and people trying to get access to our systems or equipment,” Maj Lambert said.
“We are actively looking for adversaries on our networks and systems; we are a threat-focused and intelligence-lead unit.”
Asked if the North East Link posed security risks and what was being done to mitigate them, the Defence Force said it would be inappropriate to comment “on specific security arrangements in place at Simpson Barracks”.
Defence said it was working with the North East Link Authority to prepare for the construction of the project, and had the “the protective security policy framework in place which provides appropriate protective security measures”.
The federal government formally ticked off the project at the end of last year.
The Herald Sun understands it was designed in close consultation with the Defence Force, with all necessary approvals granted.
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