Reconceiving the National Security Regulation of Foreign Investment in Australian Critical Infrastructure

Abstract

Australia's national security legislative frameworks for protecting critical infrastructure are underpinned by two different strategies: state domination and government-industry collaboration. At the pre-establishment stage, Australia's foreign investment review framework gives the federal Treasurer unchallengeable authority to reject proposed critical infrastructure investment on national security grounds. Post-establishment statutes establish partnerships between the Commonwealth and foreign investors in the critical infrastructure industry to address national security risks, supported by civil penalties for these corporate investors. This thesis explores shortcomings of the present paradigm and proposes legal changes that strike a better balance between addressing national security concerns and promoting Australia as a preferred destination for critical infrastructure investment. The thesis reconceptualises Australia's national security legislative frameworks. The primary objectives for these frameworks should be to provide a more conducive environment for foreign investment that is balanced with adequate protection of Australia's national security interests. The thesis suggests empowering foreign investors in the legislative frameworks by providing more access to judicial and administrative reviews of ministerial decisions. It also recommends giving the Foreign Investment Review Board an independent status to replace the disproportionate power the federal Treasurer currently holds over the national security review process. In the post-establishment statutes, the standards for national security obligations should be lifted and personal liability be introduced to complement corporate penalties in the legislation. The thesis proposes that the Australian Securities & Investments Commission be given the authority to enforce this personal liability. In proposing these changes, the analysis focuses on Chinese corporate investment in Australian critical infrastructure for context, given its contemporary relevance, potential dangers, and opportunities attendant to it. The thesis conducts a close textual evaluation of Australia's national security legislative frameworks with reference to primary materials and offers conceptual as well as doctrinal justifications for a corporate law mechanism that makes the post-establishment statutes more enforceable. Although primary focus is on Australian law, attention is also given to relevant legislation in Canada, China, the European Union, New Zealand, the United Kingdom, and the United States. This thesis makes several original contributions. Unlike the current national security legislative frameworks, emphasis is given to personal liability under Australian corporate law on national security grounds. This issue has yet to be addressed in the academic literature. The study is also one of the first to analyse the normative application of Australia's national security legislative frameworks since their major overhaul in 2021. The analysis contains a detailed analysis of the complex interactions between Chinese corporations, China's political economy, the Chinese Government, the Communist Party of China, and the global critical infrastructure industries. This contextual analysis is uniquely informed by primary and secondary Mandarin sources. Show more