Mitch Fifield (Victoria, Liberal Party, Minister for Communications) Share this | Link to this | Hansard source

As foreshadowed, the government will be moving amendments to these bills. Again I thank the committee for their comprehensive and timely review of the bills. The government has accepted all nine recommendations made by the committee. The government will give effect to the committee's recommendations through these amendments: providing greater clarity and examples on how the legislation is intended to operate in an addendum to the explanatory memorandum, which has been tabled; considering fuel security issues as part of the next national energy security assessment; and, upon passage, providing detailed guidance and support for industry on their obligations under the legislation.

The amendments implementing the committee's recommendations will: amend the definition of 'direct interest holder' and introduce definitions of 'influence or control' and 'associates' to ensure that direct interest holders report on all entities who may be in a position to influence or control the asset or the direct interest holder; introduce an exemption from reporting for moneylenders where the moneylender arrangement does not put the lender, holding entity or subsidiary in a position to influence or control the asset; require that a person receives written notice if they are subject to an ASIO adverse security assessment as well as information on his or her right to apply for merits review in the Administrative Appeals Tribunal; and include a requirement for the Parliamentary Joint Committee on Intelligence and Security to review the bills within three years of the bills receiving royal assent. I have already tabled associated supplementary explanatory memorandums to provide details on these amendments.

The proposed amendments also address some minor technical issues, including refining the definition of 'critical water asset' to clarify that it applies to one or more systems managed by a utility where those systems ultimately service more than 100,000 connections, and ensuring the definition of 'protected information' applies to documents as well as information. I seek leave to move amendments (1) to (20) on sheet KE133 together.

Leave granted.

I move:

Security of Critical Infrastructure Bill 2017:

(1)Clause 5, page 5 (after line 14), after the definition of approved form, insert:

associate has the meaning given by section 8B.

(2) Clause 5, page 5 (after line 17), after the definition of commencing day, insert:

corporate entity means an entity other than an individual.

(3) Clause 5, page 5 (lines 22 to 25), omit the definition of critical water asset (not including the note), substitute:

critical water asset means one or more water or sewerage systems or networks that:

(a) are managed by a single water utility; and

(b) ultimately deliver services to at least 100,000 water connections or 100,000 sewerage connections.

(4) Clause 5, page 6 (after line 24), after the definition of grace period, insert:

holding entity has the meaning given by subsection 8C(2 ) .

influence or control has a meaning affected by section 8A.

interest in an asset means a legal or equitable interest in the asset.

(5) Clause 5, page 6 (after line 28), after the definition of international relations, insert:

moneylending agreement has the meaning given by subsection 8(3).

(6) Clause 5, page 7 (lines 14 to 22), omit the definition of protected information, substitute:

protected information means a document or information that:

(a) is obtained by a person in the course of exercising powers, or performing duties or functions, under this Act; or

(b) records or is the fact that an asset is declared under section 51 to be a critical infrastructure asset; or

(c) was a document or information to which paragraph (a) or (b) applied and is obtained by a person by way of an authorised disclosure under Division 3 of Part 4 or in accordance with section 46.

(7) Clause 5, page 8 (after line 34), after the definition of security regulated port, insert:

senior officer of a corporate entity means:

(a) for a body corporate—a director of the body corporate; or

(b) for a unit trust:

(i) the trustee of which is an individual—the trustee; and

(ii) the trustee of which is a body corporate—a director of the trustee; and

(iii) in any case—any other individual involved in the central management and control of the trust; or

(c) an individual who is, or an individual in a group of individuals who are, in a position to determine the investments or policy of the entity or a trustee of the entity; or

(d) an individual who makes, or participates in making, decisions that affect the whole, or a substantial part of, the business of the entity; or

(e) an individual who has the capacity to affect significantly the financial standing of the entity.

subsidiary has the meaning given by subsection 8C(1).

(8) Clause 6, page 9 (line 33) to page 10 (line 8), omit all the words from and including 'asset, including:' to the end of paragraph (1) (f), substitute 'asset;'.

(9) Clause 6, page 10 (lines 13 to 20), omit paragraph (1) (h), substitute:

(h) the name of each other entity that is in a position to directly or indirectly influence or control:

(i) the first entity; or

(ii) any entity covered by a previous application of this paragraph;

(ha) in relation to each entity (the higher entity) covered by paragraph (h):

(i) the information in paragraphs (b) to (d), and (e) if appropriate, as if a reference in those paragraphs to the first entity were a reference to the higher entity; and

(ii) information about the influence or control the higher entity is in a position to directly or indirectly exercise in relation to the first entity or any entity covered by paragraph (h);

(10) Clause 6, page 10 (after line 22), at the end of subclause (1), add:

Note 1: For example, if Holding Entity 1 holds a 10% interest in the first entity, and Holding Entity 2 holds a 10% interest in Holding Entity I, the information mentioned in paragraphs (1) (h) and (ha) relating to those holding entities, would be given to the Secretary.

Note 2: For the definition of influence or control, see section 8A.

Note 3: For interests held by trusts, partnerships, superannuation funds and unincorporated foreign companies, see section 53A.

(11) Clause 8, page 12 (lines 1 to 3), omit paragraph (1) (a), substitute:

(a) together with any associates of the entity, holds an interest of at least 10% in the asset (including if any of the interests are held jointly with one or more other entities); or

(12) Clause 8, page 12 (line 4), omit 'a lease of, or an interest in,', substitute 'an interest in'.

(13) Clause 8, page 12 (after line 6), at the end of subclause (1), add:

Note: For interests held by trusts, partnerships, superannuation funds and unincorporated foreign companies, see section 53A.

(14) Clause 8, page 12 (lines 7 to 17), omit subclause (2), substitute:

Exemption for moneylenders

(2) Subsection (1) does not apply to an interest in an asset held by an entity if:

(a) the entity holds the interest in the asset:

(i) solely by way of security for the purposes of a moneylending agreement; or

(ii) solely as a result of enforcing a security for the purposes of a moneylending agreement; and

(b) the holding of the interest does not put the entity in a position to directly or indirectly influence or control the asset; and

(c) if the entity is holding the interest solely by way of security—enforcing the security would not put the entity in a position to directly or indirectly influence or control the asset.

(3) A moneylending agreement is:

(a) an agreement entered into in good faith, on ordinary commercial terms and in the ordinary course of carrying on a business (a moneylending business)of lending money or otherwise providing financial accommodation, except an agreement dealing with any matter unrelated to the carrying on of that business; or

(b) if the entity:

(i) is carrying on a moneylending business; or

(ii) is a subsidiary or holding entity of a corporate entity that is carrying on a moneylending business;

an agreement to acquire an interest arising from a moneylending agreement (within the meaning of paragraph (a)).

(15) Page 12 (after line 17), after clause 8, insert:

8A Meaning of influence or control

(1) An entity is in a position to directly or indirectly influence or control an asset if:

(a) the entity is in a position to exercise voting or veto rights in relation to the body that governs the asset; or

(b) the entity is in a position to make decisions that materially impact on the running of, or strategic direction in relation to, the asset; or

(c) the entity has the ability to appoint:

(i) persons to the body that governs the asset; or

(ii) key personnel involved in running the asset; or

(d) the entity is in a position to influence or determine decisions relating to:

(i) the business plan, or any other management plan, for the asset; or

(ii) major expenditure relating to the asset; or

(iii) major contracts or transactions involving the asset; or

(iv) major loans involving the asset.

Note: For interests held by trusts, partnerships, superannuation funds and unincorporated foreign companies, see section 53A.

(2) An entity (the controlling entity) is in a position to directly or indirectly influence or control another entity (the controlled entity)if the controlling entity:

(a) is in a position to exercise voting or veto rights in relation to the controlled entity; or

(b) is in a position to make decisions that materially impact on the running of, or strategic direction of, the controlled entity; or

(c) has the ability to appoint persons to the board of the controlled entity; or

(d) is in a position to influence or determine decisions relating to:

(i) the business plan, or any other management plan, for the controlled entity; or

(ii) major expenditure relating to the controlled entity; or

(iii) major contracts or transactions involving the controlled entity; or

(iv) major loans involving the controlled entity; or

(e) together with any associates of the controlling entity, holds an interest of at least 10% in the controlled entity (including if any of the interests are held jointly with one or more other entities).

(3) This section does not limit when an entity is in a position to directly or indirectly influence or control an asset or other entity.

8B Meaning of associate

Each of the following persons is an associate of a person:

(a) any relative of the person;

(b) any person with whom the person is acting, or proposes to act, in concert in relation to an asset;

(c) any person with whom the person carries on a business in partnership;

(d) any corporate entity of which the person is a senior officer;

(e) if the person is a corporate entity:

(i) any holding entity of the corporate entity; or

(ii) any senior officer of the corporate entity;

(f) any corporate entity whose senior officers are accustomed or under an obligation (whether formal or informal) to act in accordance with the directions, instructions or wishes of:

(i) the person; or

(ii) if the person is a corporate entity—the senior officers of the person;

(g) a corporate entity if the person is accustomed or under an obligation (whether formal or informal) to act in accordance with the directions, instructions or wishes of:

(i) the corporate entity; or

(ii) the senior officers of the corporate entity;

(h) any body corporate in which the person holds an interest;

(i) if the person is a body corporate—a person who holds an interest in the body corporate;

(j) the trustee of a trust in which the person holds an interest;

(k) if the person is the trustee of a trust—a person who holds an interest in the trust;

(l) any other person or body prescribed by the rules.

8C Meanings of subsidiary and holding entity

Meaning of subsidiary

(1) A corporate entity (the lower entity)is a subsidiary of another corporate entity (the higher entity)if:

(a) the higher entity:

(i) is in a position to control more than half the voting power in the lower entity; or

(ii) holds more than half the issued securities in the lower entity (disregarding any securities that carry no right to participate beyond a specified amount in a distribution of either profits or capital); or

(b) the lower entity is a subsidiary of a corporate entity that is the higher entity's subsidiary (including because of one or more applications of this subsection).

Meaning of holding entity

(2) A corporate entity (the higher entity)is a holding entity of another corporate entity (the lower entity)if the lower entity is a subsidiary of the higher entity.

(16) Clause 12, page 15 (line 18), after 'quantity of', insert 'at least'.

(17) Clause 53, page 44 (lines 5 to 7), omit ', but the obligations that would be imposed on them are instead imposed on the partners, trustees or appointed officers', substitute ', but with some modifications'.

(18) Page 45 (before line 2), before clause 54, insert:

  53A How certain entities hold interests

For the purposes of this Act, a trust, partnership, superannuation fund or unincorporated foreign company (as the case requires) is taken to hold an interest in an asset or entity if:

(a) one or more trustees hold the interest on behalf of the beneficiaries of the trust; or

(b) one or more partners hold the interest on behalf of the partnership; or

(c) one or more trustees hold the interest on behalf of the beneficiaries of the superannuation fund; or

(d) one or more appointed officers hold the interest on behalf of the company.

Note: For the definition of appointed officer, see section 5.

(19) Heading to Division 4, page 49 (line 1), after 'Periodic reports', insert ', reviews'.

(20) Page 49 (after line 25), after clause 60, insert:

   60A Review of this Act

(1) The Parliamentary Joint Committee on Intelligence and Security must:

(a) review the operation, effectiveness and implications of this Act; and

(b) without limiting paragraph (a), consider whether it would be appropriate to have a unified scheme that covers all infrastructure assets (including telecommunication assets) that are critical to:

(i) the social or economic stability of Australia or its people; or

(ii) the defence of Australia; or

(iii) national security; and

(c) review the circumstances in which any declarations have been made under Part 6 of this Act (declarations of assets by the Minister); and

(d) report the Committee's comments and recommendations to each House of the Parliament.

(2) The Committee must begin the review before the end of 3 years after this Act receives the Royal Assent.

Jenny McAllister (NSW, Australian Labor Party) Share this | Link to this | Hansard source

Before proceeding to deal with the amendments, I wish to place on record a response to some of the remarks made by Senator McKim in the second reading debate. Senator McKim made a series of remarks about climate change and the impact of climate change on infrastructure. He went on to make a very unrealistic, unreasonable and inaccurate characterisation of the Labor Party's position in relation to these issues, and that characterisation cannot be allowed to stand unchallenged.

I remind Senator McKim and others in the chamber that, in 2007, it was the Labor opposition, under Kevin Rudd, and the states and territories who commissioned Professor Garnaut to undertake a very significant examination of the impact of climate change on the Australian economy and society. Professor Garnaut did an incredibly detailed piece of work—which I actually had the great fortune to be part of in a very, very small way—which, amongst other things, examined the impact of climate change on assets, including the infrastructure sectors that are the subject of this bill. Upon coming to government, the Labor Party and the then Prime Minister committed the Commonwealth to participate in the Garnaut climate change review, and the Labor Party then established an entire department dedicated to prosecuting both climate change emissions reduction and climate change adaptation. That department had an entire division that dealt with climate change adaptation and it did extensive work with the infrastructure sector, engaging with that sector on how to deal with the impacts of climate change on its assets.

It happens that I also subsequently worked in the private sector with a range of businesses in the infrastructure sector, nearly all of whom were actively engaged in assessing climate change risks to their businesses. In fact, I've spoken about this in this chamber on many occasions. Senator McKim's claim that it is only the Greens political party that has any interest in this issue and that it is the Greens political party that has led on this issue is laughable. It is inconsistent with the historical record, and I rise to place that on record in this chamber.

The opposition is pleased to support the amendments moved by Senator Fifield. They reflect the recommendations of the PJCIS. I note in particular the amendments in relation to the review function for the PJCIS. The amendments provide that the committee will review the operation, effectiveness and implications of the act within three years and examine whether or not it would be appropriate to have a unified scheme that covers all infrastructure assets, including telecommunication assets. Telecommunication assets are presently the subject of a separate regulatory regime, and the PJCIS asked government to consider whether or not at some point in the future these two regimes might sensibly be merged. The amendments before the chamber give effect to that recommendation and I commend them to the house.

Nick McKim (Tasmania, Australian Greens) Share this | Link to this | Hansard source

Senator McAllister often makes excellent, outstanding, thoughtful and intelligent contributions to this Senate, but the one she has just made does not fall into any of those categories. I'll check the Hansard, but I don't recall saying that the ALP hadn't participated in a debate around climate change. Clearly, the ALP has participated in that debate. It hasn't been some of their finest work, I might add.

Doug Cameron (NSW, Australian Labor Party, Shadow Minister for Human Services) Share this | Link to this | Hansard source

You can talk!

Nick McKim (Tasmania, Australian Greens) Share this | Link to this | Hansard source

They were dragged, kicking and screaming into action on a price on carbon by the Australian Greens, and both Senator Cameron and Senator McAllister know that full well. As I said, I'll check the Hansard, but the point that I recall making is that the ALP hasn't contributed to the debate around nationalising some infrastructure that is currently in private hands. If Senator McAllister or Senator Cameron or anyone else wants to correct me on that, I'm happy to be corrected, but I haven't noticed Labor out advocating for the nationalisation of transmission infrastructure, for example, as the Australian Greens have. That's the accusation that I recall making. I don't want to get into a tit for tat here, but I think you'll find that Senator McAllister has just engaged in what we should these days call a straw person argument and has torn down and trampled all over a straw person, because, in fact, the things she was objecting to that she claims I had said I actually didn't say. With regard to these amendments, I think it's an indication of maturity from the government to accept the recommendations of the joint standing committee, and these amendments will be supported by the Australian Greens.

Jenny McAllister (NSW, Australian Labor Party) Share this | Link to this | Hansard source

I thank Senator McKim for his recognition of the Labor Party's leadership in relation to climate change adaptation.

Question agreed to.

Mitch Fifield (Victoria, Liberal Party, Minister for Communications) Share this | Link to this | Hansard source

I move the government amendment on sheet GJ157:

Security of Critical Infrastructure (Consequential and Transitional Provisions) Bill 2018

(1) Schedule 1, page 3 (after line 10), after item 1, insert:

1A Section 38A (at the end of the heading)

Add 'or directions under the Security of Critical Infrastructure Act'.

1B After subsection 38A(1)

Insert:

(1A) This section also applies to an adverse security assessment in respect of a person (the assessed person) if the assessment is given for the purposes of section 32 of the Security of Critical Infrastructure Act 2018 (direction if risk of act or omission would be

prejudicial to security).

Question agreed to.

Bills, as amended, agreed to.

Bills reported with amendments; report adopted.