The federal government is considering scrapping a 99-year lease of Darwin’s port to a Chinese company, the latest point of tension in an increasingly chilly relationship between Canberra and Beijing.
The lease, signed in 2015, is between the Northern Territory government and Landbridge Group, a Chinese company with ties to the Chinese Communist Party.
Back then it was criticised over national security implications, and drew a rebuke from former US president Barack Obama. Now, in a climate where national security concerns dominate the China relationship, the deal seems like a strange throwback to a simpler time — a time when ministers like Andrew Robb and Josh Frydenberg could pose for photos with CCP-aligned Chinese billionaires, and when the relationship with our biggest trading partner was dominated by economic optimism.
Why did it happen?
The Northern Territory’s Country Liberal government had always wanted to lease the Port of Darwin. For years its pleas to Canberra for investment needed to revitalise the port were ignored. It had also been in the midst of a typical Coalition privatisation blitz. So then-chief minister Adam Giles, determined to “get off the teat” of Canberra, settled on Landbridge, which offered a $506 million deal he couldn’t refuse.
Nearly straightaway that raised national security questions. The port is considered a major strategic asset. About 1000 US marines spend time in Darwin each year. The Americans were so antsy about this that Obama chided then-prime minister Malcolm Turnbull.
While the lease did not have to be approved by the Foreign Investment Review Board, the national security establishment maintained there was nothing wrong with the deal. Then-Defence secretary Dennis Richardson told a Senate committee the director of the Defence Intelligence Organisation had gathered people from the country’s intelligence agencies and confirmed there were no risks, and then-Defence force chief Mark Binskin said you could more easily spy by “sitting on a stool at the fish and chip shop on the wharf”.
Why did we start worrying?
Ever since the deal was signed, concerns about national security were raised, particularly from groups like the Australian Strategic Policy Institute, whose director, Peter Jennings, calls Defence’s decision to greenlight the deal a “dreadful policy error”.
The more that was learnt about Landbridge and its extensive interests in petroleum, construction and mining, the more concerns grew. It also has strong ties to the People’s Liberation Army, and created its own “people’s militia group”.
In 2013, Ye Cheng, the man behind Landbridge, who is described as China’s “invisible billionaire”, was named one of 10 outstanding individuals in Shandong province who concerned themselves with national defence construction. He reportedly has strong ties with the CCP — but that much is an inevitable part of becoming a billionaire in China’s boom years. Landbridge, meanwhile, used the port as security to get a $500 million loan from the Chinese government’s trade bank in 2017.
Concerns about Landbridge and the port are a natural outcome of the way our relationship with China has evolved. In 2015 we still viewed it as one primarily driven by mutual economic opportunity. Now it’s tempered by national security concerns, diplomatic spats, and fears about economic coercion.
Nobody better encapsulates that than former ASIO boss Duncan Lewis. In 2015 he was one of the national security heads who approved the deal. Four years later, he was warning about China’s insidious attempts to take over Australia’s political system.
The Landbridge connection
Even if Landbridge loses the port, it still has extensive business interests in Australia, which will only grow. A year before the Port of Darwin deal, it acquired Westside Corporation, a player in Queensland’s gas industry.
In 2018, well after its acquisition by Landbridge, Westside received a $6 million grant through the government’s gas acceleration program, handed out by former resources minister Matt Canavan. Its managing director, Oxford-educated Mike Hughes, has attended summits at Parliament House about developing northern Australia. It’s a member of APPEA, the gas lobby group, and will no doubt be a beneficiary of the Morrison government’s push for a gas-fired recovery.
Then of course, there’s Robb, the former trade minister and Liberal elder statesman who took an $880,000 a year job consulting for Landbridge the day after he left Parliament. He quit that job two years ago, right before the cut-off to be placed on the foreign influence register.
Despite the bluster around the Darwin port, Landbridge and Westside show the deep entanglement between Australian and Chinese corporate interests, especially in the resources sector.
What happens now?
Morrison hasn’t yet committed to scrapping the deal. Doing so would cost the government millions of taxpayer dollars — $30 million in compensation to Landbridge plus $690 million to buy the rest of the lease. It would also seriously dent a relationship with China that’s pretty much hit rock bottom already, risking further economic coercion and stern rebukes.
But the government seems happy to cop China’s ire. It was comfortable dealing with the blowback of scrapping Victoria’s Belt and Road Initiative with Beijing. Peter Dutton, who has got his Defence Department to prepare advice on the Darwin port deal, warns about the risk of war. Mike Pezzullo, secretary of the Home Affairs Department, warns even louder.
There’s every chance the port could become the latest costly flashpoint in a relationship that isn’t getting any easier.
It was always a ridiculous idea IMHO. Can you imagine the Chinese government leasing one of their ports to any foreign country. Yet another example of lack of planning and short-term thinking – why wouldn’t the Commonwealth government invest in an important port – and this in an island nation. As for Andrew Robb’s part in this, words really do fail me.
Hear hear it was a stupid idea at the time and its still a stupid idea. “The more that was learnt about Landbridge and its extensive interests in petroleum, construction and mining, the more concerns grew. It also has strong ties to the People’s Liberation Army, and created its own “people’s militia group”.” Due f*cking diligence anyone?? What a bunch of fickwits! They’d sell their own grandmothers for a bushel of whatever you get in bushels! Erasmus will be able to enlighten me I’m sure!
Yeah! I’m missing him as well.
The Foreign Investment Review Board did not have any legal requirement to forward the proposal to Defence for review and who do you think was the chair of the FIRB at the time of the sale to Landbridge?
If you guessed it, well done!
I would say that the sale of the Port of Darwin was less of an oversight and more along the lines of “Don’t look!
Let’s all be clear about something. The “Port of Darwin” is nothing more than a single Wharf. The “lease” is nothing more than an Operations Agreement to a private Chinese company. International companies frequently provide services to Government. This is nothing more than dog whistling to the xenophobic portion of the Australian population to win votes and deflect attention from this Morriscum Governments continued failures
It’s unclear exactly what the defence sensitivity is for Chinese ownership, too close to US and/or local military and/or logistics bases in the NT?
It’s not unusual for Chinese to buy into infrastructure, including docks, as witnessed across the globe.
Further, it’s hardly going to be the bridgehead for an invading force to launch a land war from northern Australia then heading overland through thousands of kms of some tropics then desert…….?
Let me be clear, that single wharf has morphed into a tank farm on the Tiwi Islands built without environmental assessment or government approval..
The “single wharf” also puts the Chinese military in the port of Darwin and on the same radio frquencies of both the military and domestic and international flights in Darwin and Tindale Airforce base as well.
Was this as thought out as having the Chinese warships tied up in the middle of Sydney harbour on the 30th anniversary of Tienanmen square?
Now that was a dog whistle, threatening about 42,000 Australian citizens who sought refuge in Australia as a result of Tienanmen square.
Tank farm on the Tiwi Islands? When? I heard about the wharf built on Melville Island without permission & ostensibly for the US military but we were told its for logging…….but this tank farm build by the Chinese? Can you provide ANY links to this?
Tank Farm? I think he is referring to the Fuel Facility at Port Melville run by Ausgroup (a Singapore Company). If not he needs to provide links.
The single Wharf in Darwin is unsuitable for military use in reality which is why Defence had no concerns. Australia can always Nationalise it in the event. Frequencies? They already have them.
Wow! Chinese warships at Port in Sydney. Unremarkable as Morriscum would say.
Tianenmen Square was over 32 years ago and as to 42,000 seeking “refuge”, no actual proof was ever required by the idiotic Australian Government and this was jumped on by anyone and everyone as a way to circumvent our draconian immigration system. I personally know people who lied like pigs in sh*t about being Tianenmen just to get a Visa.
Complete dog whistling as usual by Spud and his mates!
I remember when Port Melville was built- with no approval plans in place & quickly sprung its first fuel leak. Talk in town was that it was a defacto facility for American warships. So much underhand development linked to American military expansion in the region, this was a real possibility. We were told it was for timber at first….a huge part of Melville Island was cleared for plantation timber- first business went belly up. Not sure what the end result has been….
GINA RHINEHART. ADAM GILES. ZENITH AUSTRALIA (a Chinese company & business partners with Gina) JOIN THE DOTS.
The CLP- the NT’s version of the LNP- headed by Adam Giles-now employed by Gina Rhinehart. There is a stench in the air & its more than 30 endangered dead saw fish….
It was always a crap idea, driven almost solely by the desire of a single Trade Minister to tee up a cushy job with the new owners when he left office.
According to morrison yesterday, it was done by the Labor party, yet another lie.
A TOTAL lie, but we know that is all Morrison is capable of. The deal happened under the CLP (NT’S version of the LNP).
Adam Giles reportedly hand picked by Howard & parachuted into the NT especially……is the man.
And a single CLP chief minister, now employed by Gina Rhinehart….
In never understood how we valued the lease, or justified the economics. That mere $500M went into the NT’s consolidated revenue where it was spent, inside of six months. Where was the value in the transaction for the other 98.5 years?
SFA!
Good question. I haven’t seen the sums for the Darwin exercise. I don’t know if anyone in Australia did any. But my local member and, I separately and without any prior discussion, did the numbers when the Port of Newcastle was “leased” to a partnership involving Hastings Funds Management and a Chinese banking outfit, which was also reputed to have links with the People’s Liberation Army. Our calculations were based on the figures and projections provided in the documents prepared in advance of the lease. The results of our exercises were within a few dollars of each other.
We got something like $7 billion for the “lease” -wow. At least, according to Baird and Berejiklian, we did. I have my doubts about that, and one thing’s certain – Newcastle saw very little of whatever we did get. But here’s the thing – we threw away $1.243 trillion dollars in revenue and at least $270 billion profit, for a putative one-off $7billion payment – that calculation was made before the Port Authority raised its charges. Great bargain.
Sounds very typically Australian.
Leasing the port was always a terrible idea.
Reviewing that decision now is even stupider.
Honestly Scott, stop playing “Poke the Panda”. You’re not supposed to be behaving like a schoolboy. And China is not a helpless animal in a cage.
I drink tea from China. It’s good. So let’s not jeopordise my favourite brew over a normal commercial lease of a piece of infrastructure that was falling apart anyway. It’s not exactly a second Singapore. It did try to be, but we chewed gum, had long hair and spat on the street. The final straw was going on strike all the time, which international shipping tries to avoid like the plague, also it’s too shallow, full of Japanese unexploded bombs, and the tidal currents make it almost unusable. So, hey, if the Chinese want to rent it, why not? They might fill it full of dredge spoil from the S China Sea and call it a Chinese Island for ever which would be doing us a favour by getting rid of the bloody sandflies and mozzies, thank God. Good on ’em.
But on the other hand, I’m not too rapt on having the American army there, or their air force full of nuclear weapons. Did you know that US armed forces can dump their toxic waste anywhere, any time, with no come-backs, ever? Or that their personnel are not liable under local law. It’s really weird.
Agree. I am VERY uncomforted able with the American presence in Darwin. Young women are not safe either. The military have a habit of whisking away rapists so they never face court. Sexual assaults & American bases go hand in hand.
Yes. Just ask Okinawa!
Right around Australia. Every port they dock in has stories.