Australia’s foreign-investment gatekeeper needs defence expertise
A common misunderstanding is that governments need public support for big national security decisions. If a government waits for public backing, it will act only when the populace demands a response to a crisis – and that, by definition, will be too late. European reaction to Russian aggression has been a prime example. Governments knew they should be bolstering defences, even as voters didn’t.
So let’s not make the same mistake with the Foreign Investment Review Board (FIRB) and wait for it to make some damaging national-security mistake, one that causes public outrage, before we reform it.
Its composition needs attention now. Amid global wars and conflicts and our own region’s tensions, the importance of Australia’s defence industrial base is hardly in doubt. To protect it from ill-judged decisions on foreign investment, the government should appoint a board member with substantial practical experience in defence capability development, acquisition, sustainment and industrial mobilisation.
The aim would be to complement the board’s existing expertise, not turn it into another security agency.
Foreign direct investment is essential to Australia’s prosperity and security. International capital, technology and expertise help develop resources, expand industry and strengthen defence capabilities. But market-driven efficiency doesn’t always produce strategic resilience. A commercially sensible investment decision can leave Australia strategically weaker. A critical minerals project may get deferred if returns are better elsewhere. A defence manufacturer may close spare production capacity to reduce costs. And, in the particular case of foreign investment, a piece of critical infrastructure, such as a port, may be leased or sold to a foreign investor that happened to put in the highest bid.
Investors in critical infrastructure may not automatically be hostile, but expert due diligence is required to determine whether proposals, either individually or in aggregate, could diminish Australia’s ability to defend itself or withstand disruption. A foreign investor may deliver needed capital and expertise, or it may make commercially rational decisions to shift production outside of this country. Understanding those possibilities requires knowledge of the infrastructure itself, its vulnerabilities and the consequences of alternative investment decisions.
These competing considerations make FIRB’s expertise increasingly important. Its six members bring substantial experience in finance, corporate governance, innovation, energy, diplomacy, intelligence and public administration. The chair, Bruce Miller, is an expert in international affairs, having served as ambassador to Japan and in senior intelligence positions. But the board’s published membership identifies no specialist whose principal expertise is military capability or defence industry.
Such expertise is not interchangeable with intelligence or foreign policy experience. It includes practical knowledge of industrial dependencies, specialised technologies, production bottlenecks, maintenance requirements and the investments needed to sustain military capability.
This is not to say that the current investment-screening system is broken. Consider Australian rare-earths developer Northern Minerals. Its Browns Range project in Western Australia could become an important source of heavy rare earths used in advanced technologies and defence systems. Government intervention over shareholdings by China-based entities shows that Australia’s investment framework can identify national security concerns.
But, amid a rising volume of defence and security-related investment proposals, we must avoid the attitude of ‘if it ain’t broke, don’t fix it’. Improvements should be made where they can be.
Recent decisions involving Australian shipbuilder Austal raise related questions. In December 2025, following FIRB’s recommendation, Treasurer Jim Chalmers approved an increase in South Korean defence company Hanwha’s stake in Austal to 19.9 percent. This raised concerns in Tokyo, because Austal had been chosen as the Australian partner for the local construction phase for Australian frigates of the Japanese Upgraded Mogami design.
Such concerns may be overcome through strict regulatory conditions, as were imposed by Chalmers, and diplomatic reassurances. But investment-screening assessments must also understand whether future decisions about capital expenditure, production priorities, workforce development and technology access could affect Australia’s defence industrial capability.
Composition of boards gives stakeholders the confidence that all aspects of a proposal are given due consideration. Some may argue that the Department of Defence would be consulted in all defence-related situations anyway. But if agency consultation provided all required due diligence, there would be no need for any security-related board members at all.
Due diligence requires some independent analysis. While the 99-year lease of Darwin Port to Chinese company Landbridge in 2015 didn’t hit the then FIRB threshold (the review process was reformed immediately after this), the Department of Defence had no problem with the arrangement. Board expertise is needed to test such views. It is now bipartisan policy that the lease should never have happened, and the government is working out how to take control back from the Chinese company.
Australian Defence Magazine reports that the historic Williamstown Shipyard near the Port of Melbourne will be sold to a company at least partly owned by a Hong Kong investment group, no doubt because it has been the highest bidder. As recently as last decade, the yard was building warships and testing integration of their electronics on land. Who on the FIRB will have the technical understanding needed to test assertions that the sale has no implications for national defence?
Existing FIRB arrangements do recognise security risks, and reforms have strengthened scrutiny of high-risk investments. But let’s not wait for another Darwin Port moment. Following that lease in 2015, both David Irvine, the former head of the Australian Secret Intelligence Service and Australian Security Intelligence Organisation, and David Peever, who had chaired an important review of the Department of Defence, were appointed to the FIRB.
These were valuable additions, but the board needs specific defence knowledge.
Let’s ensure there is confidence that its members are capable of interrogating advice from the Department of Defence, identifying missing questions and weighing strategic consequences alongside economic benefits. A member with defence-capability expertise could do just that.
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