Why the federal government won’t rush to rip up Victoria’s Belt and Road deal

Victorian Treasurer Tim Pallas said Victoria would be happy to help the Federal Government repair its relationship with China.

Prime Minister Scott Morrison. Picture: Sam Mooy/Getty Images.

Victoria’s Belt and Road agreement is likely to be one of the first torn up after the parliament passed new laws giving the federal government power to veto deals with foreign governments.

Foreign Minister Marise Payne will now be able to cancel deals between state, councils, universities and foreign governments that are not in keeping with national policies.

She will have the ability to quash deals made in the future and apply the laws retrospectively.

Senator Payne on Tuesday said the powers were important because they enabled the government to make sure deals did not “adversely affect” Australia.

“In an increasingly globalised world, states and territories and their entities are accordingly engaging more frequently at high levels with foreign governments and their entities, with tangible impacts on Australia’s foreign relations,” she said.

“This increased engagement, and the growing strategic complexity of the 21st century, brings greater risks, requiring more consultation and due diligence to ensure states and territories are aligned with the commonwealth’s foreign policy.

Foreign Affairs Minister Marise Payne said the powers were important because they enabled the government to make sure deals did not “adversely affect” Australia.

“This legislation is necessary to appropriately manage and protect Australia’s foreign relations and the consistency of our nation’s foreign policy.

“This legislation will ensure stronger connection between the commonwealth and states and territories on matters of foreign policy and foreign relations.”

A public register of all deals will also be made as part of the new laws.

Josh Frydenberg said decisions would be made on Victoria’s Belt and Road deal “in due course”.

“We never agreed with it in the first place and we still don’t agree with it,” the Treasurer said.

Trade Minister Simon Birmingham on Monday indicated the government would take at least three months to rip up any existing deals including Daniel Andrews’ agreement with China.

It comes as Victoria’s Treasurer has called on the Australian Government to “repair the relationship with China” as the Commonwealth is set to gain the power to rip up the state’s Belt and Road agreement.

Treasurer Tim Pallas on Tuesday said: “Our position is and remains, we want to have a positive working relationship with China and we’ve continued to pursue that position,” in response to the legislation passing in Canberra on Monday night.

He also said Victoria would be happy to advocate on the Federal Government's behalf to help repair the relationship between China and Canberra.

Victorian Treasurer Tim Pallas said Victoria would be happy to help the Federal Government repair its relationship with China.

“We’re willing and able to assist them in any way but basically, in that process, we ultimately represent Victoria interests, and, of course, Australian interests,” he said.

“We want to see a stabilized relationship with China, we think it’s important to the country, and we will respect the processes of the Australian parliament that now have passed and will work with the federal government.”

When asked whether the laws would impact any major infrastructure projects currently slatted for the state, Mr Pallas said no.

Federal Trade Minister Simon Birmingham on Monday indicated the government would take three months to assess deals with foreign powers before pulling the trigger.

“It should be submitted within that three-month period, like all other 130-plus agreements, and considered alongside them all in a fair way,” Senator Birmingham said.

He said the law would be applied “calmly, consistently, methodically and even-handedly”.

There has been widespread speculation Beijing would hit back at Australia with further trade tariffs once the bill passes, after the Chinese Embassy in China released a list of grievances with Australia last month, including the legislation.

But Senator Birmingham said the Chinese government should expect Australia to protect its own interests. 

“This is Australia just behaving as any other country, including China, would … making sure that agreements with the world are overseen by the national government, that they are in the nation’s interests and according to its foreign policy settings,” Senator Birmingham said.

Daniel Andrews at the weekend said it was up to the federal government what was done with the deal, arguing a “reset” on the China-Australia relations was needed.

The Premier said the two countries could once again have a “nuanced and mature” relationship that balanced diplomacy and trade.