The Andrews government has been seeking legal advice in recent months on whether its Belt and Road deal would fall foul of the new laws. Amid rising tension between Australia and China, the Commonwealth will now have the power to cancel or proactively block agreements reached by states, territories, local governments and public universities with foreign governments if they are deemed to compromise Australia’s foreign interests.

Professor Rory Medcalf, head of the National Security College at the Australian National University, will use a speech at Canberra’s National Press Club on Wednesday to warn of the “unsustainable absurdity” that state governments are underqualified for their level of international engagement – for example, Victoria and its Belt and Road deal.

Rory Medcalf, head of ANU's National Security College, will address the National Press Club on Wednesday.

Rory Medcalf, head of ANU’s National Security College, will address the National Press Club on Wednesday.Credit:Rohan Thomson

Professor Medcalf will tell the Press Club that beyond the new legislation, it is now incumbent on Prime Minister Scott Morrison’s government to adopt a security ethos that loops in states and territories, business and the broader community.

“There is no hiding from the fact that state and territory governments can be seen by foreign powers as weak links in the protection of Australian sovereignty or the nation’s ability to present a unified foreign and security policy to the world,” he will say.

“States and territories are where it gets real. They don’t deal with the abstractions of diplomatic talking points or strategic analysis, but the tangible day-to-day elements of national resilience and national vulnerability – critical infrastructure, front-line geography, and the daily decisions and livelihoods of Australian citizens.”

A former senior analyst with the Office of National Intelligence, Professor Medcalf suggests every state should establish a national security unit within the premier’s department, led by a team of five or six officials with high-level security clearances, giving them access to classified Commonwealth security information.

Victorian Premier Daniel Andrews has faced scrutiny from Canberra since signing the Belt and Road agreement in 2018.

Victorian Premier Daniel Andrews has faced scrutiny from Canberra since signing the Belt and Road agreement in 2018.Credit:Joe Armao

He believes such units would have better informed decisions such as Victoria’s engagement in China’s Belt and Road strategy, signed in 2018 as a memorandum of understanding, and the NSW government’s 2016 deal to sell electricity distributor Ausgrid to two Chinese and Hong-Kong-based companies, which was later overturned by the Commonwealth, citing national security concerns.

“If state governments can afford to maintain quasi-diplomatic trade offices with highly paid trade commissioners in foreign cities, they can afford to invest in co-contributing to the nation’s security too,” Professor Medcalf will say. “For its part, the Commonwealth needs to be willing to share security information and intelligence with the new state and territory units.”

Professor Medcalf’s comments reflect Foreign Minister Marise Payne’s sentiment after the Foreign Relations Bill passed on Tuesday, when she conveyed a keenness to work with states and territories on foreign agreements to advance Australia’s interests globally.


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

Professor Medcalf will also tell the Press Club that federal security and intelligence agencies have started briefing state governments on foreign interference and cyber attacks, as they do to corporate chief executives and university vice-chancellors.

“But the clearance issue means these sometimes need to be sanitised or expressed in general terms,” he will say.

“And, as we’ve seen from the Victorian Belt and Road controversy, not all the briefings are accepted, or taken as seriously as they should.”

Australia’s relations with China hit a new low last week after a Chinese government official tweeted a fabricated photo showing an Australian soldier with a knife to the throat of an Afghan child, prompting an angry response from Mr Morrison.

Victorian Treasurer Tim Pallas again defended the Belt and Road deal on Tuesday.

Victorian Treasurer Tim Pallas again defended the Belt and Road deal on Tuesday.Credit:Eddie Jim

Victorian Treasurer Mr Pallas acknowledged on Tuesday that it was possible his government’s Belt and Road deal could be scrapped within months, and he called on the Commonwealth to start patching up relations with China.

“All I would advocate for is that the Commonwealth continue to repair the relationship with China as best we can, because it’s about making sure that we have free and fair trade between us,” he said.

“We do not support restrictions on trade, we do not support the actions that China has recently taken. But we definitely want to get back to a position where we can work co-operatively between our nations.”

While Mr Pallas again defended the agreement, Victorian Farmers Federation president David Jochinke said he could not identify significant improvements for Victorian agriculture due to the Belt and Road Initiative.

“I’m not saying there aren’t any, but I can’t see how it’s benefited Victorian farmers above and beyond any other agriculture sector in any other state,” he said.

Victorian Rock Lobster Association president Markus Nolle – whose industry has been hit by Chinese export bans – went further, saying the benefit to the local industry had been “zero”.

“Clearly that agreement was signed in good faith. While it wasn’t prescriptive, it was done with mutual obligation and benefit in mind,” Mr Nolle said.

“We can’t think of a better time to open the dialogue through that agreement.”

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