2 August 2020
South Australian Senator Rex Patrick has called on the Australian Government to undertake a comprehensive review of the involvement of Chinese owned, controlled or influenced companies in Australia’s electric power grid and to require the removal of Chinese-manufactured equipment that may pose an unacceptable risk to critical infrastructure and continuity of power supplies.
“The Australian Government needs to take strong action to ensure that Australia’s vital power supplies are absolutely secure from disruption by foreign powers”, Senator Patrick said.
“The recent actions of the US Government in seizing an imported Chinese built power transformer and then issuing an Executive Order to closely regulate and, if necessary, prohibit the importation and use of bulk-power system electric equipment supplied from foreign adversaries shows the importance of action to safeguard Australia’s power grid.”
“In May the US Government declared the supply of power supply equipment to be nothing less than ‘an unusual and extraordinary threat to the national security, foreign policy, and economy of the United States’.”
“The equipment seized in the US was sourced from a large Chinese manufacturer that also supplies power transformers to Australian power companies.”
“The reported discovery that power transformer equipment was deliberately modified to allow remote access to critical power supply functions, and the consequent strong action of the US Government, suggests Australia may also be exposed to similar risk of disruption by a hostile power, especially at a time of international crisis.”
“Chinese manufactured power equipment now plays a significant role in Australia’s electricity grid. China has supplanted Vietnam as the leading source of imported power transformers.”
“While the Australian Anti-Dumping Commission has not accepted claims that Chinese suppliers are dumping power transformers in the Australian market, the extent of Chinese investment in and control over significant parts of Australia’s electricity grid, especially by the Chinese Government controlled State Grid Corporation of China, has undoubtedly contributed to increased acquisition of Chinese manufactured equipment. Australian power transformer manufacturers have been disadvantaged and this can be expected to continue with potential risk to our national security.”
State Grid owns a 60% stake in Jemena in Victoria, a 41% stake in Electranet in South Australia, and a 19.9% stake in AusNet Services in Victoria. Hong Kong based conglomerate Cheung Kong Holdings owns a 51-per-cent share of SA Power Networks; as well as 51-per-cent holdings in CitiPower and Powercor in Victoria.
Senator Patrick said, “The Minister of Home Affairs should use the powers now available to him under Australia’s Critical Infrastructure Act 2018 to require a comprehensive security review of the use in Australia’s electricity grid of bulk-power system electric equipment manufactured in China, and if necessary, require its removal.”
“At the same time, the Australian Government needs to expedite proposed changes to Australia’s foreign investment laws which would require the divestment from Australia’s power grid of all involvement by companies owned, controlled or significantly influenced by the Chinese Government. Given the change in Hong Kong’s status, such a policy should extend to companies registered in Hong Kong.”
“It is quite inconsistent with Australia’s national security and economic well-being to have decisions relating to critical infrastructure being made or significantly influenced by company directors who are beholden to a foreign government that is adopting an increasingly hostile attitude towards Australia.”
“The Australian Government should act quickly to ensure that Australia’s power networks are not compromised and are free from malign foreign influence, rather than leave Australia’s national security at risk”, Senator Patrick said.