Senate Considers Bill to Review State and Territory Arrangements With Foreign Entities

On 11 November, Australia’s Foreign Relations (State and Territory Arrangements) Bill 2020 (Cth) (‘the Bill’) was passed by the House of Representatives. On 12 November, the Bill was subsequently introduced to the Senate where it is currently being considered.

Purpose of the Bill

The purpose of the Bill is to provide a new legislative framework that will allow the Minister for Foreign Affairs ('the Minister') to assess arrangements that State or Territory governments and entities establish with foreign governments and entities. The Minister must give approval if the Minister is satisfied that the proposed arrangement:

1. would not adversely affect, or would be unlikely to adversely affect, Australia’s foreign relations; and 
2. would not be, or would be unlikely to be inconsistent with Australia’s foreign policy.

What kind of arrangements are covered by the Bill?

The Bill applies to all arrangements between State/Territory entities and foreign entities, regardless of whether they are legally binding or when the arrangement was established. The Explanatory Memorandum states that arrangements may include contracts, memoranda of understanding and other arrangements which represent a commitment between the two parties. Furthermore, attempts to vary or extend arrangements will be treated in the same manner as the arrangements themselves. 

Furthermore, in order to give proper consideration to all arrangements relevant to foreign policy, the Bill will not only include arrangements made by core State/Territory governments but also State/Territory related entities. This will include government departments, agencies and entities such as local councils and public universities. Similarly, the Bill will cover arrangements with all forms of foreign government including national, state and local governments as well as arrangements with foreign entities such as foreign provinces, self-governing territories, municipalities and their governments, agencies and foreign universities that do not have institutional autonomy.

The Explanatory Memorandum notes that the scope of the Bill is intentionally wide to provide comprehensive Commonwealth oversight over foreign arrangements. However, the Memorandum also states that a narrower subset of entities and arrangements are subject to additional processes of oversight in accordance to their degree of impact on Australia’s foreign relations.

Core and Non-Core Arrangements

The Bill differentiates between core and non-core arrangements. Core arrangements are between state and territory governments and foreign national governments. In the Second Reading Speech, the Attorney-General, Mr Christian Porter, stated these arrangements ‘are most likely to affect Australia's foreign policy and foreign relations’. For a core arrangement, approval from the Minister before commencing negotiations or entering into a core arrangement is mandatory. Absence of approval will provide grounds for the automatic invalidation or termination of the arrangement. 

In contrast, a non-core arrangement is an arrangement where either or both parties are not core entities. According to the Second Reading Speech, these include:

For a non-core arrangement, the state or territory entity is only required to provide notice to the Minister. The Minister’s powers will be primarily proscriptive in nature for non-core arrangements, allowing the Minister to make declarations regarding certain concerns and if necessary, enabling the Minister to prevent the negotiation or arrangement from proceeding.

Enforcement and Operation

Court injunctions are the primary enforcement mechanism of the Bill. Notably, the Bill provides a broad rule-making power which will enable the Minister to make rules such as exempting certain categories of entities from the scope of the Bill. The Bill also requires the Minister to maintain a publicly accessible register, which the Attorney-General stated will ‘allow for transparency under the scheme, and (...) provide the public with information relating to foreign arrangements notified to the minister and any decisions made by the minister in relation to those arrangements’.

Scrutiny of the Bill

The Senate Standing Committee for the Scrutiny of Bills has raised concerns over the broad discretionary powers proposed by the Bill.

Amongst the Committee’s concerns were:

• the broad scope of 'arrangements' covered,
• the fact that the minister's powers may be extended by a broad power to expand key definitions in the rules, and 
• the application of the Bill to entities not conventionally understood to be associated with government policy programs, such as universities.

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Australia’s Foreign Relations (State and Territory Arrangements) Bill 2020 (Cth) and explanatory documents available from TimeBase's LawOne Service