Australia ups scrutiny on infrastructure sales to foreigners

The sale of major Australian state-owned infrastructure to private foreign investors will face tougher scrutiny under new rules announced Friday, after a deal involving a Chinese company last year drew criticism.

The new rules will apply from March 31 and ensure that sales of critical infrastructure to private foreign investors will be subject to a formal review by Australia's foreign investment advisory body.

Under previous rules, the Foreign Investment Review Board (FIRB) was only required to assess the sale of such infrastructure to foreign state-owned enterprises.

The rules cover major assets such as airports, ports, public transport infrastructure, and electricity, gas, water and sewerage systems, while existing and proposed roads, railways, telecommunications infrastructure and nuclear facilities could also be reviewed by the body.

"While we welcome foreign investment in Australia it is imperative that critical infrastructure sales are scrutinised to ensure any potential national security risks can be addressed," Treasurer Scott Morrison said.

The new rules follow the granting in 2015 of a 99-year lease for the Port of Darwin to China's Landbridge Group.

United States President Barack Obama, whose Marines rotate through Darwin, reportedly chided Prime Minister Malcolm Turnbull over that deal, with the Australian Financial Review quoting him as saying: "Let us know next time".

Canberra defended the decision which had been made in consultation with Australia's Department of Defence, but a review of the rules followed.

"Foreign investment is an important source of capital to build the infrastructure that Australia needs and the government recognises that this investment can provide access to funds to restore and enhance ageing infrastructure networks and assets," Morrison said Friday.

"But the government recognises this investment should occur on our terms, must be appropriately scrutinised and not be contrary to the national interest."

Under pressure over the seemingly increasing foreign ownership of farmland, the government is already in the process of compiling a register of agricultural land owned by foreigners.

It has also lowered the threshold for screening proposed foreign purchases of agricultural land to Aus$15 million.