The Morrison government has narrowed the coverage of its foreign veto bill in a bid to ease concerns of the university sector and the opposition about the potential reach of the planned new powers.

The changes mean Australian universities, which have been worried thousands of international research agreements could be subject to review, will likely not have to notify the government about deals with their counterparts in a range of countries such as the United Kingdom and the United States.

The powers will allow the foreign minister, Marise Payne, to review and potentially cancel a range of international agreements reached by state and territory governments, councils and public universities.

Victoria’s belt and road agreement with the Chinese government is believed to be one of the deals facing potential cancellation, a move that would have the potential to inflame current tensions in the relationship with Beijing.

According to a new definition that will be enshrined in law – rather than left to the foreign minister to set by regulation – universities will only have to tell the Australian government about agreements with foreign counterparts where the government of that country or region “is in a position to exercise substantial control over the university”.

The government’s amendments also include setting a three-year deadline for a review of how the new powers have been operating.

With Labor pushing for changes to deliver greater certainty but indicating it would not stand in the way of the new laws, the government now appears on track to pass the bill through both houses of parliament before the end of the year.

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The government’s move to put the definition of institutional autonomy into the bill itself is designed to address those concerns.

This definition is key to how far-reaching the powers will be. This is because universities will have to notify the government of any planned deals with foreign universities only if that foreign university does not have institutional autonomy.

The foreign affairs minister will still have the discretion to block such deals if they would adversely affect Australia’s foreign relations or would be inconsistent with Australia’s foreign policy.

The amendments proposed by the government explain that a foreign government is considered to be in a position to exercise substantial control over a university “if, and only if” certain tests are met.

This includes if members of the university’s governing body are required to be members of the ruling political party.

Another example is if academic staff are required to adhere to political principles or doctrines in their teaching, research, discussions, publications or public commentary.

The government has previously insisted the legislation is country-neutral, rather than being targeted specifically at China, and that it would not be spelling out which countries will and won’t be in the frame.

But based on the definition that is now being discussed, universities would likely not have to notify the government about agreements they make with a range of counterparts in western countries.

University administrators will likely be asked to discuss the issue with the Department of Foreign Affairs and Trade if they are uncertain whether or not a proposed deal needs to be notified.

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The government hopes the legislation passes the Coalition-controlled lower house this week and clears the Senate by the end of this year.

Labor had been calling for changes to address “the lack of clear definitions of critical terms, and broad discretion for interpretation that exposes tens of thousands of contracts to sovereign risk”.

In a statement earlier on Tuesday, the opposition’s foreign affairs spokesperson, Penny Wong, said the Labor party believed Australia “should speak with one voice internationally” but argued the bill was “announced in haste before it was ready”.

Wong said if the government did not make changes, Labor would pursue amendments, including requiring the minister to provide reasons for terminating arrangements made by states, local governments and universities.

She reaffirmed concerns she had previously raised with Guardian Australia about the lack of capacity for oversight or review of ministerial decisions.

Wong also foreshadowed a possible amendment to clarify the status of the 99-year lease of the Port of Darwin to a Chinese company.

But it is understood Labor is prepared to support the legislation even if its amendments are not accepted.

Scott Morrison announced the new measures in late August, arguing it was “vital that when it comes to Australia’s dealings with the rest of the world we speak with one voice and work to one plan”.

But the Senate’s foreign affairs, defence and trade legislation committee, chaired by the Liberal senator Eric Abetz, last week called on the government to make several changes including defining institutional autonomy in the bill itself.

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Labor members, led by Kimberley Kitching, added a dissenting report calling for the bill to be overhauled so that it added more oversight, reasons for decisions, and an annual report to parliament.

Universities have previously said say they were blindsided by the proposal, announced in August, and fear the law could have a chilling effect on international research collaboration.



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