Morrison government tears up Victoria’s Belt and Road deal with China

The cancellation of Victoria’s Belt and Road agreement will not derail plans for the $15.8bn North East Link.

The cancellation of Victoria’s Belt and Road agreement will not derail plans for the biggest road project in the state’s history, despite China warning that Scott Morrison’s intervention will hurt Australia.

Chinese-owned construction companies feature in the final two consortia in the running to deliver the $15.8bn North East Link, including China’s top Belt and Road building giant.

But they have already sought foreign investment ­approval and assured the Andrews government their bids will not be affected by the PM’s cancellation of the deal which linked Victoria to the Communist Party’s trillion-dollar infrastructure initiative.

The Chinese government threatened retaliation after the agreement — signed by Daniel Andrews in 2018 to boost co-operation on infrastructure projects — was torn up on Wednesday night.

An artist’s impression of the North East Link.

The Herald Sun revealed last year the North East Link — connecting the Eastern Freeway and the M80 Ring Road — could be jeopardised by the commonwealth’s Belt and Road crackdown, especially if Victoria selected the bid featuring China Construction Oceania.

But an Andrews government spokeswoman said on Thursday the project timeline remained unaffected and it was on track to open in 2027.

“We expect to announce a preferred bidder by the middle of the year,” she said.

“Consortia are chosen based on value for money, builders’ track record and designs which offer the best solution for the North East Link. The Belt and Road (memorandum of understanding) has no impact on this process.”

ANDREWS GOVT TIGHT-LIPPED ON SCRAPPED DEAL

The Andrews government is remaining tight-lipped over the scrapping of its Belt and Road deal with China, with Employment Minister Jaala Pulford saying she “can only assume” the federal government gave the move full consideration.

When asked about the contentious decision to cancel Victoria’s BRI arrangements with China, Ms Pulford reiterated the state’s position that it was a matter for the Commonwealth.

“It’s a decision they’ve taken,” she said.

“As global trade moves through the challenge of the pandemic our effort is to support businesses to help them respond to the changing trends and desires in international markets.

“This is an area where Victoria for a long time has provided significant resources.

“Being able to participate in the global economy is incredibly important for Victoria businesses.”

Federal Labor MP Anthony Byrne, the deputy chair of the powerful parliamentary joint committee on intelligence and security, praised the federal government’s decision.

“It is right that the federal government asserted itself and made this decision on national security grounds,” Mr Byrne told the Herald Sun.

“I think what it does is it sets a guide post for the states to be very cautious about entering into financial arrangements that don’t benefit the national interest.”

Victorian Premier Daniel Andrews in China.

Meanwhile, Victorian Liberal leader Michael O’Brien said he was “absolutely delighted” that the “dodgy” belt and road deal was ditched.

“It was always a dud deal. It was bad for jobs, it was bad for security and it was bad for our sovereignty,” he said.

“Why this Andrews Labor Government felt they should go off and sign a deal with a foreign government is beyond me.

“Daniel Andrews likes to think he can strike the world stage. Frankly he should just stick to his knitting and fix the problems we have here in Victoria.

“The Chinese government saw him coming and they played him like a fool.”

Mr O’Brien wouldn’t be drawn on whether he believed the stance would have a negative impact on his popularity in heavily Chinese populated seats like Box Hill.

“I think there’s a point in politics when you’ve got to stand up and do the right thing. Some people will like you for it and some people won’t like you for it,” he said.

“Trade should be about equal partnerships and balance. Belt and Road has been one-way traffic. It’s been all China’s way.”

It comes as China lashed the Morrison government after Victoria’s controversial Belt and Road deal was binned.

The Andrews government has previously been critical of rhetoric and policy decisions that they believe have inflamed tensions with China.

Treasurer Tim Pallas last year told a parliamentary inquiry that “vilification” of the nation was irresponsible.

It has also pointed to Victorian business relationships with China as an example of what the Belt and Road agreement can achieve.

Foreign Affairs Minister Marise Payne officially cancelled the agreement on Wednesday evening, four months after the government created laws to scrap deals between the states and foreign powers.

Minister for Foreign Affairs Marise Payne. Picture: Martin Ollman

Senator Payne also ripped up two Victorian education agreements, struck with Iran in 2004 and Syria in 1999.

The Chinese embassy in Canberra blasted the “unreasonable and provocative move taken by the Australian side against China” and expressed its “strong displeasure and resolute opposition”.

“It further shows that the Australian government has no sincerity in improving China-Australia relations,” a spokesman said in a statement.

“It is bound to bring further damage to bilateral relations, and will only end up hurting itself.”

The embassy said the Belt and Road Initiative had provided “tangible benefits to the participating parties”.

“The BRI co-operation between China and the Victoria state is conducive to deepening economic and trade relations between the two sides, and will promote economic growth and the wellbeing of the people of Victoria,” the spokesman said.

Once the federal government introduced laws that gave them the power to intervene, state politicians have largely refused to be drawn on the issue.

When asked about the economic impact of removing the deal, Ms Pulford once again said these were issues for the Commonwealth.

“The federal government has made a decision (and) they’ve made it absolutely clear,” she said.

“I can only assume that the federal government, in doing so, gave consideration to the consequences of their actions.

“But the level of consideration they gave to that, that’s something you have to ask them.”

The Herald Sun has previously revealed how some Victorian Labor MPs were concerned about the deal, especially because it had not delivered an obvious boost for state projects and had not protected Victorian businesses from the Communist Party’s trade crackdown on Australia.

The long-awaited move is also expected to sharpen the rift between Scott Morrison and Daniel Andrews, who warned last year that tearing up the agreement would cost jobs.

The Prime Minister last year urged the Premier to abandon the deal linking Victoria to the Chinese Communist Party’s trillion-dollar soft-power infrastructure effort.

Mr Morrison in February suggested the agreement was a national security issue.

“If there are benefits, what are they and what was paid for them? I don’t have the answers to those questions,” he said.

Employment Minister Jaala Pulford says she ‘can only assume’ the federal government gave the move full consideration. Picture: Luis Ascui

The Victorian government was required to list two Belt and Road agreements — a memorandum of understanding signed in the days before the 2018 election and a framework agreement struck a year later — on a new federal register of foreign arrangements in March.

On Wednesday, Senator Payne said she had been notified of more than 1000 ­arrangements between the states and foreign governments, and she had decided to cancel four — Victoria’s two Belt and Road documents, plus agreements with Syria struck by the Kennett government and Iran under the Bracks government.

She said she considered those deals “to be inconsistent with Australia’s foreign policy or adverse to our foreign relations”.

“I will continue to consider foreign arrangements notified under the scheme,” Senator Payne said.

“I expect the overwhelming majority of them to remain unaffected.

“I look forward to ongoing collaboration with states, territories, universities and local governments in implementing the foreign arrangements scheme.”

The Chinese embassy has hit back after the move.

Senator Payne doubled down on Thursday morning, telling 3AW that Victoria’s Belt and Road agreement was “not in Australia’s national interest”.

She said that while such programs “may have a purpose for that other country”, there were concerns about the impact of such “unconditional” deals on Australia.

Senator Payne said the federal government had long opposed signing an overarching Belt and Road deal and would only engage with China’s initiative on a case-by-case basis.

She rejected the criticisms of the Chinese government, saying countries were entitled to act in their own national interest to protect their sovereignty.

Asked if the decision would hurt Australia, Senator Payne said she could not speak for the actions of China.

The Prime Minister last year urged the Premier to abandon the deal.

The Chinese government cited Mr Morrison’s laws to “torpedo” its agreement with Victoria as one if its key grievances with Australia last year, as the relationship hit its lowest point in decades.

Victorian Premier Daniel Andrews warned Prime Minister Scott Morrison to tread carefully last year. Picture: Mark Stewart

But Mr Morrison argued it was a “very important principle” for the commonwealth to set foreign policy and for “consistency when national governments deal with other national governments”.

Federal Opposition Leader Anthony Albanese has also said he would not sign up to Belt and Road.

Mr Andrews warned Mr Morrison to tread carefully last year, saying cancelling the agreement would make a “very challenging set of circumstances for farmers, for ­workers, for businesses, for every Victorian much, much harder”.

“Every one of us, regardless of what party we’re from and what views we have, should all be focused on getting more people into work and more product exported overseas, not less,” Mr Andrews said in December.

“That’s not leadership.”

Victoria’s Belt and Road co-operation was supposed to be expanded last year but progress was delayed by the coronavirus crisis.

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