Fed govt vetoes Victoria-China BRI deal

Marise Payne has cancelled two agreements related to Victoria's Belt and Road deal with China.
Marise Payne has cancelled two agreements related to Victoria's Belt and Road deal with China.

The federal government has cancelled Victoria's "Belt and Road Initiative" infrastructure agreement with China, saying it is inconsistent with Australia's foreign policy goals.

The Morrison government in December granted itself the ability under the Foreign Relations Act to torpedo deals between individual states and foreign powers, with states and territories obliged to audit any existing agreements.

The foreign minister can assess such arrangements to check if they align with Australia's foreign policy goals.

Foreign Minister Marise Payne on Wednesday evening said four agreements would be cancelled, two of which related to Victoria's Belt and Road deal.

The other two were related to scientific cooperation between Victoria and Syria, and educational cooperation between Victoria and Iran.

"I consider these four arrangements to be inconsistent with Australia's foreign policy or adverse to our foreign relations," Senator Payne said in a statement.

Victoria signed a memorandum of understanding in relation to the Chinese regional infrastructure initiative in 2018 and then signed a "framework agreement" with Beijing in 2019.

Areas of cooperation included increasing participation of Chinese companies in Victoria's infrastructure program and promoting cooperation of Victorian businesses in China.

It also allowed Victoria's engineering and design firms to bid for contracts for Belt and Road Initiative projects around the world.

Victorian Premier Daniel Andrews in December said cancelling the agreement would be a mistake, and would risk already-strained economic ties with China.

Mr Andrews said the deal promised to bring jobs and investment to Victoria and argued this should be a priority amid the COVID-19 pandemic.

A state government spokeswoman told AAP the Foreign Relations Act was a matter for the Commonwealth.

"The Victorian government will continue to work hard to deliver jobs, trade and economic opportunities for our state," she said in a statement on Wednesday.

Beijing has previously raised Canberra's foreign deal veto power as one of 14 grievances damaging to relations with Australia, and is likely to criticise Senator Payne's decision.

China has in the past 12 months launched a series of damaging trade strikes against Australia after Prime Minister Scott Morrison called for an independent inquiry into the origins of the coronavirus pandemic.

The Chinese government also remains furious with Australia over foreign interference and investment laws and the decision to ban Huawei from the country's 5G rollout.

Senior ministers have gone many months without contact from their Chinese counterparts.

The Belt and Road Initiative has also attracted criticism from some countries for creating unsustainable debt burdens for recipient states, in particular Pacific Island countries.

Australian Associated Press