Why has the government let a Chinese-owned company hold on to its Darwin Port lease?

The federal government’s decision to let a Chinese company hold on to its 99-year lease for Darwin Port has reignited debate on Australian security, strategy and self-serving alliances.

The announcement to do nothing followed a formal departmental review into the circumstances of the 2015 deal between the then-Country Liberal Party (CLP) Northern Territory government and the Australian subsidiary of the Chinese-owned Landbridge Group. The government found that it was “not necessary to vary or cancel the lease”.

The decision also precedes an official state visit by Prime Minister Anthony Albanese to China next month and coincides with ongoing negotiations between the two countries to iron out trade blocks.

So what’s in the fine print of the lease? Why is the port such hot real estate? Has the national appetite for terminating the lease changed at all since the deal was done back in 2015? What number is Albanese’s in the long line of repeat reviews? And what can we glean from the one-page media release of findings? Crikey clarifies.

What were the original terms of the lease?

For the price of $506 million, a deal was first struck in 2015 between the CLP and the Shandong-based energy and infrastructure group. Landbridge was given complete operational control of Darwin Port and near complete (80%) ownership of the land at Darwin Port, commercial facilities at East Arm Wharf and the cruise ship terminal at Fort Hill Wharf.

The port is subject to a range of Commonwealth laws that Landbridge is bound by.

Why is the port of such strategic importance?

According to Landbridge, the port is the national launchpad — “northern gateway” — for Australian trade in Asia. It’s “strategically positioned” as an entry and exit point for cargo, naval vessels and commercial operations, and props up a large portfolio of offshore oil and gas projects in surrounding waters.  

The port is also in close proximity to joint US and Australian defence activities.

There is no argument from the federal government that the port is a “key piece of critical infrastructure” for Australia, but the consensus from multiple departments and agencies is that forfeiting management of that to a foreign-owned company — with reported links to the People’s Liberation Army of China — presents no national security issue.

That was the position back in 2015 when the lease was first signed into effect, and it remains unchanged.

Why then launch a review?

Despite consensus from key government departments — including Defence, Foreign Affairs, Trade, Home Affairs and Intelligence — politicians, foreign bigwigs and China hawks in the security establishment voiced concern or opposition to the foreign investment made by the CLP.

In 2015, then-prime minister Malcolm Turnbull backed the NT government in its negotiations, maintaining that the Defence Department had been consulted and he was confident they “did their homework”. He said he was not concerned that then-treasurer Scott Morrison had launched a subsequent review into foreign investment rules from which the Landbridge deal was exempt.

Post October deal, then-US president Barack Obama told Turnbull on the sidelines of the 2015 APEC summit to give him a “heads-up” and “let us know next time” Australia planned to auction off key strategic assets in such close proximity to US interests.

In the years since, multiple Defence Department reviews have been conducted. Then-Defence secretary Dennis Richardson ordered one after the contract was waived through, but it found nothing of substance to suggest the Chinese had plans to infringe on Australian national security and leverage the port lease as a spy base.

Former Defence Force chief Mark Binskin put it bluntly, declaring it would be much more cost-effective and straightforward for Chinese operatives to play spy games “sitting on a stool at the fish-and-chip shop on the wharf”.

Morrison ordered another Defence Department review of the lease in 2021, which reportedly found, yet again, that there was nothing to be concerned about.

In the interim years, government successfully tinkered and tightened the rules and regulations of the Foreign Investment Review Board (FIRB) to include state and territory commercial deals done with a foreign entity, and passed laws that gave federal government intervention powers on transactions that intersected with national security.

In 2022, Albanese used the port contract as a major campaign talking point in the lead-up to the May federal election, maintaining that “it should never have been sold to the Chinese” because of its strategic status. Should Labor assume government, he vowed to examine the lease and said he was prepared to call on federal foreign veto laws to void the contract — with the caveat that he’d “always take the advice of DFAT”.

Now who says what about the matter?

Albanese has not commented publicly on the decision. The announcement was made exclusively through a Department of the Prime Minister and Cabinet media release that concluded the government had accepted the advice of the review.

In a joint Liberal Party statement from shadow minister for Defence Andrew Hastie, shadow minister for Home Affairs James Paterson and Senate opposition leader Simon Birmingham, the trio did not condemn the government’s decision to keep the lease ongoing and unchanged, but requested an explanation from the PM about “why he is comfortable with his decision”.