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Transactions involving critical power, water and port infrastructure will now undergo an extra layer of scrutiny following the creation of a new body to assess sales of important assets for any national security risks which the transaction in question might raise.

Following last year’s veto of the sale of NSW-based power company Ausgrid to Chinese interests on the grounds of national security, the government has announced that a new Critical Infrastructure Centre would be established within the Attorney General’s department.

Set to become a focal point of the country's strategy for managing risks associated with national security from an infrastructure perspective, the new body will assess significant transaction proposals and advise the government about any national security implications associated with the transaction in question.

The Centre will also develop a register of assets which are considered to be critical which the government says will enable a consolidated view of infrastructure ownership in high-risk sectors across the country.

In a joint statement, Attorney General George Brandis and Treasurer Scott Morrison said national security risks associated with important assets were growing and evolving.

“With increased privatisation, supply chain arrangements being outsourced and offshored, and the shift in our international investment profile, Australia's national critical infrastructure is more exposed than ever to sabotage, espionage and coercion,” the statement read.

“We need to manage these risks by adopting a coordinated and strategic framework. This challenge is not something the Commonwealth can address alone.”

The moves follow controversy last year over Morrison’s rejection of the sale of NSW state power company Ausgrid to either Chinese state owned company State Grid or Hong Kong-based Cheung Kong Infrastructure on national security grounds.

Australia’s national security considerations have become more complicated in light of the growing risk of confrontation over territorial disputes in the South-East China Sea.

In such an event, some analysts fear that China could exploit any control which it exerts over critical assets to its own advantage.

Whilst the new centre will initially focus on electricity, water assets and ports, the government says it will consult with states and territories to think about any other sectors which demand attention.

The Centre will shortly release a discussion paper outlining the challenges which Australia faces in terms of national infrastructure security and will ask for feedback.

 
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