On 23 January 2016, the Attorney General and Treasurer jointly announced the establishment of the Critical Infrastructure Centre (CIC), within the Attorney-General's Department. The CIC's role is to "manage the complex and evolving national security risks to Australia's critical infrastructure".

Key points

  • Previously, pursuant to an exemption in the Foreign Acquisitions and Takeovers Regulations 2015 (Regulations), acquisitions from State and Territory Governments were not subject to FIRB approval (other than acquisitions by foreign government investors). From 31 March 2016, the Regulations were amended to remove the exemption in respect of certain critical infrastructure. The establishment of the CIC continues the Government's reforms around the ownership and integrity of Australia's critical infrastructure assets which include:
    • public infrastructure (such as airports, ports, infrastructure for public transport, electricity, gas, water and sewerage systems);
    • existing and proposed roads, railways, inter-modal transfer facilities that are part of the National Land Transport Network or are designated by a State or Territory Government as significant or controlled by the Government;
    • telecommunications infrastructure; and
    • nuclear facilities.
  • The CIC will initially focus on assessing assets in the electricity, water and ports sectors. It appears probable that its scope will be expanded in the future.
  • Key functions of the CIC include:
    • identifying Australia's most critical infrastructure; and
    • developing co-ordinated, whole-of-government national security risk assessments and security advice to support government decision making on investment transactions
  • The CIC will work closely with the State and Territory Governments, regulators and private owners/operators.
  • Part of the CIC's role will be to support the Foreign Investment Review Board (FIRB) by facilitating more coordinated and timely national security advice to the Government.
  • A (confidential) critical assets ownership register pertaining to "high risk" sectors will be established.
  • A discussion paper outlining the challenges faced by the CIC and seeking views is expected to be published shortly.

Implications

  • Whilst there have been no amendments to the Foreign Acquisitions and Takeovers Act 1975, the Regulations or Australia's Foreign Investment Policy, it is expected that the establishment of the CIC will lead to a more coordinated and timely FIRB approval process for foreign investment in critical infrastructure.
  • The establishment of the CIC may also provide increased clarity around the application of the national interest considerations (in particular the national security considerations) and potential conditions/requirements that may be imposed on foreign investors in Australian critical infrastructure.
  • The role of the CIC in assessing critical infrastructure upfront, and in supporting FIRB, should assist in pre-empting the situations experienced on the Port of Darwin and Ausgrid privatisation processes in the future.