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Wednesday, 28 March 2018
Page: 2353


Senator McALLISTER (New South WalesDeputy Opposition Whip in the Senate) (10:51): Whether in government or in opposition, Labor has consistently worked to ensure that our security agencies have the powers and resources they need to keep our community safe and that our laws are adapted to meet the changing security threats that we face. Consistent with its commitment to national security, Labor supports the Security of Critical Infrastructure Bill 2017 and the Security of Critical Infrastructure (Consequential and Transitional Provisions) Bill 2017.

We support these bills because we recognise the need to manage national security risks arising from the possibility of malicious foreign involvement in our critical infrastructure. Labor believe that these bills strike an appropriate balance. They impose only the necessary and relatively minor regulatory requirements needed to improve the management of the national security risks that threats to our critical infrastructure pose. The Security of Critical Infrastructure Bill provides a risk based regulatory framework to manage national security risks from foreign involvement in Australia's critical infrastructure. The bill focuses primarily on the risk of sabotage, espionage and coercion in Australia's highest risk, critical infrastructure sectors of electricity, gas, ports and water.

Labor recognises that foreign involvement in the economy, and in Australian infrastructure, plays an important and beneficial role in supporting economic growth, creating employment opportunities, improving consumer choice and promoting healthy competition while increasing Australia's competitiveness in global markets. However, with increased privatisation, outsourcing and offshoring of supply chain arrangements, and the shift in Australia's international investment profile, critical infrastructure is increasingly exposed to the risk of sabotage, espionage and coercion. This bill is an appropriate step to inhibit malicious conduct undertaken covertly which may have implications for Australian society.

Labor will always ensure that critical infrastructure assets, where they are partly owned by foreign entities, are still subject to control and direction by the Commonwealth. It is fundamental to the maintenance of the security, safety and prosperity of Australians that critical assets are required to provide relevant information to government and that, in times of emergency, they can be directed to ensure that the needs of Australian society are met. This was a sentiment shared by state and territory governments and industry and peak organisations who expressed support for the bill in submissions to the PJCIS.

The bill designates water, electricity, gas and ports above a certain threshold as critical assets. The bill defines a critical water asset under proposed section 5 as:

… a water or sewerage system or network that is used to ultimately deliver services to at least 100,000 water connections or 100,000 sewerage connections under the management of a water utility.

It is axiomatic that all Australians require a clean and reliable supply of water and that disruption to Australia's water supply or water treatment facilities could have major consequences for the health of citizens and the economy.

Similarly, the bill, in subclause 10(1)(a), establishes the test for criticality of an electricity asset as:

(a) a network, system, or interconnector, for the transmission or distribution of electricity to … service at least 100,000 customers …

Electricity generation is fundamental to the proper functioning of the economy and is a basic necessity for all Australians. It is clear that electricity assets which provide transmission and distribution services form a core part of the nation's critical infrastructure.

Clause 12 of the bill defines a critical gas asset as:

(a) a gas processing facility that has a capacity of at least 300 terajoules per day …

(b) a gas storage facility that has a maximum daily quantity of 75 terajoules per day …

(c) a network or system for the distribution of gas to ultimately service at least 100,000 customers or …

(d) a gas transmission pipeline that is critical to ensuring the security and reliability of a gas market …

It is self-evident that gas in Australia is an important energy source. It is an increasing export commodity and a required element for a wide range of industrial, commercial and residential uses. Gas is particularly important for gas-powered electricity generators, which account for 20 per cent of Australia's electricity, and manufacturing, which relies on gas for approximately 40 per cent of net energy. These are numbers that, as Australia transitions to a clean energy economy, we expect to grow. Accordingly, the protection of gas infrastructure as a critical asset will grow, not diminish, over time. By defining the level of criticality, the bill limits the regulatory burden to Australia's highest risk critical assets.

The bill will supplement the existing FIRB mechanism through which the Commonwealth can respond to risks. However, because the FIRB mechanism applies to foreign investment above certain thresholds at the time of the proposed transaction, it is not possible to use it as a mechanism to address risks in outsourcing or offshoring of assets owned by domestic entities or where sales fall outside of the FIRB's screening thresholds. Accordingly, the creation of the security of critical infrastructure framework will improve upon existing safeguards which protect critical assets.

In practice, the Security of Critical Infrastructure Bill will add to the work currently undertaken by the Critical Infrastructure Centre, which collaborates with asset owners, asset operators and state and territory regulators to identify risks, implement asset-specific mitigation strategies and develop sector-wide best-practice guidelines. The CIC engages with asset owners and operators through the Trusted Information Sharing Network, TISN, and directly as needed. This is a welcome addition to the regulatory architecture that protects and maintains assets critical to Australia's security and continuing economic and social wellbeing.

The PJCIS conducted an inquiry into this bill. We spoke to a range of stakeholders and other interested parties. The committee made nine recommendations, the majority of which relate to the implementation of the bill rather than its design or intentions. I note that in the government's response to the committee's report, which was tabled just now, the government has accepted all of the committee's recommendations and has circulated amendments and a supplementary explanatory memorandum in the chamber to give effect to these recommendations. Labor too supports the recommendations of the committee.

Regulatory schemes such as that proposed in the bill work best in the presence of an active and productive dialogue between government and the affected industry participants. Industry, government and the community all benefit when asset owners know in advance what is required of them and therefore can take the necessary steps without government needing to resort to regulatory intervention. The PJCIS report recommends sensible steps to ensure that such a dialogue is established in the implementation of this bill. It responds to evidence that was provided to the committee from industry stakeholders. I would like to take the opportunity to thank those stakeholders for their contribution to the committee's work. I commend these bills to the Senate.