Andrew Wallace (Fisher, Liberal Party) Share this | Hansard source

The Security of Critical Infrastructure Bill 2018, now before the House, will help to preserve Australia's national security by ensuring that the Australian government has the information and the powers it needs to protect the functioning and integrity of some of our critical infrastructure. Specifically, the bill would establish a register of critical infrastructure assets and require the owners of those assets to provide the Critical Infrastructure Centre with specific information about the asset's ownership and operation. This will allow the government to know who has access to, influence over, and control of our vital infrastructure.

Secondly, the bill grants the minister a power to direct owners or operators of these assets to mitigate against any identified national security risk which cannot be managed through existing mechanisms. In the last resort, it gives the minister the power to direct the owners to undertake, or refrain from, a particular action in order to avoid this national security risk.

Along with a number of my colleagues, I had the opportunity to see the importance of security around some of our critical infrastructure this month when I visited the Open Pool Australian Lightwater research reactor, or OPAL, in Lucas Heights with my colleagues from the Joint Standing Committee on Treaties. OPAL is one of the world's most effective, multipurpose research reactors. Without OPAL, it would be considerably more difficult for Australia to acquire the radioisotopes it needs to detect and treat cancers. Every Australian owes a debt of gratitude to the work that is being done by ANSTO. If ever we personally have—or a friend or family member has—been treated for cancer using radiotherapy we owe it to our researchers and scientists at OPAL.

Our capabilities in materials research and a wide range of industrial activities, including our ability to manufacture semiconductors for use in advanced electronics would be severely impacted if OPAL were not to function. Were the operation of OPAL to be disrupted, the consequences for Australia, whilst they wouldn't be catastrophic, would be very serious in terms of the lost productivity and the impact they would have to the health of all Australians. However, we can't forget what the opal reactor is. Though small and very safe, it is, fundamentally, a nuclear reactor, with many of the inherent dangers that may result from a malevolent interference. The reactor also uses low-enriched uranium fuel, containing just under 20 per cent uranium-235, and it generates a modest amount of nuclear waste, both of which must be kept out of the hands of anyone who would misuse them.

ANSTO describes itself as the custodian of Australia's landmark infrastructure. Despite being a civilian science and research facility, it takes its security responsibilities very seriously. As parliamentarians, we were not exempt from the strict security imposed on anyone who wishes to visit OPAL, and nor should we have been. The site is patrolled 24 hours a day by armed Australian Federal Police, who were a very visible presence during the time we were there. Indeed, whilst we were there we could hear AFP officers on the firing range, which makes up part of the large ANSTO campus. ANSTO is a statutory authority and it reports to this parliament. It maintains a risk and audit committee and its security processes have been subject to independent review and approval by the relevant Commonwealth bodies. In short, the Commonwealth has considerable control over the OPAL reactor, and, of course, its security.

However, not all of our critical infrastructure is so comprehensively owned, operated and secured by the Commonwealth. Foreign investment into Australia currently sits at $3.2 trillion. Most of this investment derives from close strategic and military allies like the United States, the United Kingdom and the European Union. However, our fastest growing source of overseas investment is China and Hong Kong. By the end of 2016, this investment had reached the total of $188 billion. This investment is very welcome, and China is one of our most important trading partners.

However, we must recognise that our national interests with a number of countries are not always aligned. In the area of infrastructure in particular, foreign investment has been particularly active. In September 2016, the Port of Melbourne was sold to a consortium of foreign and domestic investors for $9.7 billion. This complex group included directly and indirectly the Ontario Municipal Employees Retirement System, New York based Global Infrastructure Partners, the California Public Employees' Retirement System and the China Investment Corporation.

Indeed, the biggest coal export facility in the world, the Port of Newcastle, has been 50 per cent owned since 2014 by China Merchants Union, a majority Chinese government-owned enterprise. Similarly, the right to operate the Port of Darwin was sold to Chinese company Landbridge in 2015 for $506 million. Media reported last year that Landbridge were considering seeking a loan of $500 million from the Chinese government, with the port as security. Reports last month of a change in ownership structure proposed for Newcastle highlighted the potential lack of transparency involved in ownership by a foreign government.

When it comes to our liquid natural gas, an analysis by the Tax Justice Network last year revealed that overseas state owned corporations will own more than a 30 per cent stake in all Queensland production by 2020. The Chinese government, through its China National Offshore Oil Corporation and Sinopec, will own 17.3 per cent of production, while Malaysia's Petronas and South Korea's Kogas make up the rest. The same analysis found that five offshore LNG projects—Gorgon, Wheatstone, Pluto, Ichthys and Prelude—are 87 per cent foreign owned.

In electricity generation and retail, there is already substantial foreign ownership. Energy Australia, one of our trio of companies which together supplied nearly 70 per cent of retail customers in 2015, is owned by China Light and Power. In the ACT, 50 per cent of the power distribution company ActewAGL is owned by a joint venture of the Chinese company State Grid Corporation and Singapore Power International. State Grid Corporation also partly owns three of the five distributors in Victoria, as well as the largest stake in South Australia's energy transmitter, ElectraNet. The Hong Kong listed Cheung Kong Infrastructure likewise own a 51 per cent share in two of Victoria's distributors, and in South Australian Power Networks electricity distribution network.

Overseas investment in electricity generation is also growing. The recently completed Ararat Wind Farm, which will generate 240 megawatts for Victoria is owned by a consortium of UK, US and Canadian companies. Just in the past few weeks, German energy corporation Innogy has acquired two solar projects at Limondale and Hillston, which add to more than 450 megawatts in generation. French firm Neoen will be working on three renewable energy projects at Hornsdale and Dubbo, adding up to more than 250 megawatts, while Goldwind, a Chinese wind turbine manufacturer, will be developing a $400 million energy plant at White Rock to generate 175 megawatts. The list goes on: ESCO, ThyssenKrupp, Canadian Solar, Acciona, Engie—all are currently engaged in building hundreds of megawatts worth of new energy generation in Australia.

Most of this critical infrastructure does not have the obvious safety and security implications of a nuclear reactor. However, in each of the critical infrastructure categories listed in this bill—that is, ports, electricity, gas and water—malevolent interference from a foreign power could have very serious consequences. A safe, secure and clean water supply is vital for our citizens' health—without considering the substantial economic impact on the huge number of businesses that rely on water for their processes. For anyone who has watched the increasingly desperate situation playing out in Cape Town, the consequences of being unable to supply a city with enough water have been dramatically illustrated. Australia's water supply is highly concentrated in just three drainage divisions, making the risk even higher.

Our ports, on the other hand, facilitate more than a third of Australia's GDP, and are our major conduit for liquid fuels and for substantial parts of our civilian and military supply chains. Any important disruption to the operation of these ports would be devastating for our national economy.

When it comes to our electricity supply, the 2016 blackouts in South Australia—caused, unfortunately, by South Australia's own then Labor government rather than by any foreign power—resulted in costs of $367 million to local businesses, according to Business SA. There were 400,000 dosages of life-saving vaccines destroyed, while the health and wellbeing impact on those consumers left without power for days is hard to quantify.

Overseas, aggressive foreign powers have shown a strong interest in disrupting electricity supplies. Cyberattacks against the electricity grid of Ukraine in 2015 and 2016, for example, left more than 200,000 citizens without power. Electricity providers, like gas companies and water providers, also hold substantial quantities of data on their customers. Recent media reports regarding the activities of Cambridge Analytica in the US and UK, and reports of Russian interference in elections in the US and elsewhere, suggest the major compromising impact that a large-scale data breach by a hostile power could have on our economic and political life.

Gas is a vital Australian export asset. Australia is set to be the world's largest exporter of LNG by 2019, with the ABS estimating that these exports will be worth $36.3 billion in that year. It's also critical to a great many industrial and commercial processes: driving commercial boilers, which are used in manufacturing; food processing; dairy; and construction. Finally, LNG accounts for around 20 per cent of Australian electricity generation and for 40 per cent of the energy used by manufacturing. Any significant disruption to our domestic gas supply could cause blackouts, shut down factories and cost millions in lost export revenue.

Foreign investment in infrastructure across Australia is welcome. On the Sunshine Coast alone we already know of at least $6 billion worth of infrastructure upgrades that our community urgently needs. The Turnbull government has committed to spend a record $75 billion on infrastructure over the next 10 years, but more funds will always be needed. Foreign investment offers one of the best options for finding those funds and for delivering projects quickly and efficiently. Foreign investment also helps to increase our ties with other economies in our region and encourages greater prosperity for all of us.

However, as I have sought to outline today, this overseas investment comes with risks. We cannot ignore the fact that there are growing threats to Australia's national security from some of the very nations with which we trade. The world strategic situation is fast changing and competition between nations for exports and investment is ever increasing. We cannot guarantee that a state which is our friend today will not have powerful incentives to act against our national interest in the future.

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