TREASURER Scott Morrison is rushing to review laws that allow states to sell strategic assets to foreign companies without federal scrutiny as the government comes under pressure over recent sales.
The revelation came as Mr Morrison announced he had knocked back bids by Chinese and foreign governments for S. Kidman and Co, amid continuing controversy over the lease of the Port of Darwin and before bids close on the NSW power sale on Monday.
Prime Minister Malcolm Turnbull defended the decision to lease the Darwin port to a military-linked, state-owned Chinese company on Thursday, saying he was satisfied concerns about defence issues, as reported by The Australian Financial Review, were "fully dealt with" by Defence.
Questions about whether the port lease had been subjected to proper scrutiny, however, have opened a fiery debate about Chinese investment in strategic assets which led to US President Barack Obama chiding Mr Turnbull for not keeping him "in the loop".
On Thursday Mr Morrison distanced the federal government from controversy over the Northern Territory government's 99-year lease of the Darwin port to state-owned company Landbridge, which has been linked to the People's Liberation Army.
"The Port of Darwin decision was a decision of the Northern Territory government. Not the Australian government," Mr Morrison said.
Powerful crossbench Senator Nick Xenophon issued draft terms for an urgent Senate inquiry into the deal, accusing the government of double standards after Mr Morrison blocked the S. Kidman and Co sale.
The deal was not formally reviewed by the Foreign Investment Review Board, as states and territories can sell land to foreign investors without the need for FIRB approval under certain conditions. Mr Morrison said talks over state and territory foreign investment decisions were under way.
"There are some consultations taking place at the moment with states and territories in relation to those matters. Remember, there are constitutional issues around the sovereignty around particular critical infrastructure assets which are held by states and territories so it's not something that the Commonwealth government can simply move on unilaterally and that's the process I'm engaged in," Mr Morrison said.
Mr Morrison's ruling blocks competitive bids from Chinese companies such as Genius Link Assets Management and Shanghai Pengxin on the grounds that the Kidman holdings include Australia's largest cattle station, Anna Creek, which is near the Woomera weapons testing range in outback South Australia.
Mr Turnbull defended the government's approach to the Darwin lease, saying it was canvassed in Australian newspapers and joked that Mr Obama should buy newspaper subscriptions.
Responding to accusations that the S. Kidman & Co decision was xenophobic, Mr Turnbull said there was "no issue of discrimination", and "plainly the Woomera prohibited area is called a prohibited area for a reason".
Mr Xenophon said the decision to block the Kidman sale while waving through Landbridge's Darwin lease "highlights the need for an urgent overhaul of foreign investment rules".
He issued proposed terms of reference for a Senate inquiry, saying it would examine consultation between layers of government and Defence, and work to establish standards for decisions over critical infrastructure.
"What doesn't make sense here is that an iconic cattle property is to be kept in Australian hands on national interest grounds, but a key strategic asset like the Port of Darwin is subject to a foreign takeover with barely a whimper from FIRB," Senator Xenophon said on Thursday.