Referral of the inquiry
On 25 November 2015, the Senate referred the following matter to the Senate
Economics References Committee (committee) for inquiry and report by 4 February
An examination of the foreign
investment review framework, including the powers and processes of the Foreign
Investment Review Board, in relation to Australian assets of strategic or
national significance being subject to lease or purchase by foreign owned
interests, and whether there ought to be any legislative or regulatory changes
to that framework to ensure Australia’s national interest is being adequately
considered, with particular reference to:
the decision by the Northern Territory Government to grant a
99-year-lease over the Port of Darwin to Landbridge Group;
the planned lease by the New South Wales Government of TransGrid;
the decision by the Treasurer to block the sale of S Kidman and Co on
national interest grounds; and
- any other related matters.
On 4 February 2016, the committee tabled an interim report. On 8 April
2016, the committee tabled its report. In that report, the committee recommended
an extension of the inquiry reporting date to 28 April 2016, in order to enable
the committee to examine issues raised by the New South Wales (NSW)
Government's decision to lease of 50.4 per cent of Ausgrid, one of the state's
largest electricity distribution networks.
Public submissions to the inquiry are at Appendix 1.
This report should be read in conjunction with the committee's interim
report, which was tabled in the Senate on 4 February 2016, and its substantive
report, which was tabled on 8 April 2016.
Purpose of the report
This supplementary report focusses on the NSW Government's decision to
lease 50.4 per cent of Ausgrid, one of the state's major electricity
distributors. It will examine this decision in relation to the issues raised by
the committee's inquiry into the capacity of the foreign investment review
framework to secure Australia's national interest. In particular, this supplementary
report examines key aspects of the Ausgrid lease process in light of the committee's
view, made clear in its substantive report, that the current foreign investment
review process lacks sufficient transparency and consistency.
Structure of the report
Chapter 2 provides an overview of the Ausgrid lease process in respect
of the NSW Government's Rebuilding NSW strategy. It also considers the
potential implications of a recent decision by the Australian Energy Regulator
(AER) to lower the distribution charges that electricity distributors are
entitled to charge consumers.
Chapter 3 examines the evidence for and against the lease of 50.4 per
cent of Ausgrid. In addition to providing an overview of the NSW Government's
case for the Ausgrid lease, Chapter 3 considers evidence presented to the
committee that critical infrastructure assets are potentially more vulnerable
to cyber-attack and disruption if they are sold or leased to foreign owned
entities, especially State-owned Enterprises (SOEs). Chapter 3 also relates the
conclusions contained in the committee's substantive report, especially that the
foreign investment review framework lacks consistency and transparency, to the
lease of Ausgrid and the sale of S. Kidman and Co.
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