Jim Molan (NSW, Liberal Party) Share this | Link to this | Hansard source

I wish to speak in this adjournment debate to an issue of tremendous importance to Australian interests. Last week, the ACCC gave clearance to CKI, a Hong Kong based investment fund, to acquire APA Group. APA Group is one of the nation's most important energy infrastructure assets. It owns and operates Australia's largest network of gas pipelines, including the principal means of moving gas along the eastern seaboard. Its pipelines transport more than half of the gas used in Australia. Having gained ACCC approval, the proposal will now be examine by the Foreign Investment Review Board and put before Treasurer Frydenberg.

In this time of strategic uncertainty and increasing great power rivalries, we need to be extremely wary of foreign efforts to attain control over Australia's infrastructure assets. We have recently made significant changes to the rules surrounding foreign investments in vital infrastructure, including the establishment of the Critical Infrastructure Centre to scrutinise the national security implications of foreign investment proposals. This is an overdue change. For too long, we have had a single-minded focus on the economic dimensions of foreign investment proposals. We have deferred to the views of economists, who can be so fixated on balance sheets that they may not see other important factors involved in foreign investment proposals of this kind. This nation is far more than just an economy. We are a people, a culture, a way of life and a set of values. If we sacrifice every value, every bit of sovereignty and independence we have for the economy, then one day we might wake up and find that there is not much left. When it comes to foreign investment in critical infrastructure, we need to get beyond a focus on economics and consider other important factors in context. CKI's bid to acquire APA Group is part of a larger recent pattern of Chinese organisations seeking to gain control over Australia's critical energy infrastructure. We have already seen Chinese interests purchase stakes in Jemena, Electronet and AusNet. Should CKI be permitted to acquire APA Group, it would represent a significant increase in China's stake in our nation's energy sector.

Energy security is one of my principal concerns as a senator. As a consequence, I'm compelled to oppose CKI's efforts to purchase APA Group. My concerns are threefold: they relate to concentrations of ownership, the potential for espionage and the potential for sabotage. First, approval of the sale would see an unhealthy concentration of ownership that could impact prices, levels of service and future investment. Although the ACCC has given a green light to the proposal, it has done so because, rightly, the terms of its review were strictly focused on competition, which it deemed would not be affected. ACCC's chairman, Rod Sims, has often criticised APA Group's market power, revealing that concerns about ownership concentrations are certainly appropriate.

There are clear economic problems that can result from excessive ownership concentrations in a single asset, as we are seeing now in the energy sector. This is of particular relevance to gas because gas is likely to continue to grow in importance in the future, especially for the provision of baseload power. Approval of the deal would also lead to an alarming level of Chinese ownership of our national energy infrastructure. Should it proceed, Chinese interests would dominate electricity and gas transmission and distribution in most states. This is not an outcome that most Australians would welcome. The implications of permitting a single nation to exercise such a preponderant influence over Australia's energy assets are huge, especially when we consider China's demonstrated willingness to interfere in Australia's internal affairs.

Second, permitting the CKI proposal to proceed would carry clear risks in relation to espionage and the transmission of sensitive information overseas. In practice, it is nigh impossible to prevent the transmission of sensitive information and customer data to the owners of assets. Foreign owners can insert their preferred executives into management roles and control appointments and remuneration. Under such circumstances, it is effectively impossible to prevent sensitive information and data being transferred to overseas owners.

Third, permitting the acquisition to proceed would also increase our vulnerability to infrastructure sabotage. By deploying malware into the digital systems that control the networks, a hostile actor could wreak havoc. With the nature of 21st century digital systems, this could be done from outside Australia. We have already seen examples of this elsewhere in the world. In December 2015, Russia was able to disable part of the Ukraine's electricity grid through a cyberattack. A similar incident could disrupt our ability to transport gas along the eastern seaboard, interfering with the security of the nation's energy supply. In the worst case scenario, a cyberattack could even cause physical damage to the pipeline network.

It's because of these risks that CKI should not be permitted to acquire APA Group. We cannot be comforted that CKI is a private firm from Hong Kong. We have seen the steady accumulation of Communist Party influence over Hong Kong since the handover in 1997 and companies in Hong Kong are increasingly subject to the dictates of the party. Furthermore, CKI's considerable business activities on the Chinese mainland mean it is obliged to maintain a good relationship with the party. As a consequence, CKI is subject to the influence and coercive control of the Communist Party. Furthermore, under Beijing's National Intelligence Law 2017, any business is obliged to follow directions from China's intelligence agencies—and we already know that there is an active Chinese intelligence-gathering campaign targeting Australia.

In these strategically uncertain times, we should aspire to ensure Australian ownership of our nation's critical infrastructure assets. Australian ownership and control is the best way too ensure that we are not exposed to unacceptable security risks. There is no shortage of domestic capital that could be used to acquire APA Group, such as, in our superannuation funds. Australian super funds are projected to increase from $2.5 trillion today to more than $8 trillion in 20 years time. This represents an ample pool of domestic capital that could be invested in our nation's critical infrastructure. The model that could be followed is Australia's largest energy network, Ausgrid. In 2016, then Treasurer, Scott Morrison, advised by the Foreign Investment Review Board, rejected a Chinese bid to acquire Ausgrid. It is now owned by Australian superannuation funds.

Keeping critical infrastructure, such as APA Group, under Australian ownership would yield considerable benefits to the national interest. It would avoid the security risks inherent in foreign ownership. Furthermore, it would guarantee that the nation's critical assets remain in Australian hands for the ultimate benefit of the Australian people. The time where foreign investment in critical infrastructure can just sail through approval purely with reference to the economic merits of a proposal is at an end. We are living in a time of increasing strategic uncertainty and an unprecedented level of foreign interference in Australia's internal affairs. We need to take these circumstances into consideration when considering foreign investment decisions, particularly in critical infrastructure.

It is the government's obligation to ensure that Australia's interests are protected, and it's for that reason I consider it of utmost importance that CKI's bid to acquire APA Group should be rejected. It's imperative that we put Australia's national security interests first when evaluating the prospect of foreign investment in critical infrastructure.