Data centres defined as critical Australian infrastructure

‘Emerging areas like data management’ could be classified as critical infrastructure, Australian federal treasurer Josh Frydenberg said during a speech on the rise of China.

Australia’s treasurer has signalled that data centres could be the latest asset type to be classified as critical infrastructure, with foreign investors subject to closer scrutiny when buying them.

Josh Frydenberg, speaking at The Australian Strategic Forum in Sydney this week, said: “Foreign investment in Australia is subject to a strict national interest test that takes into account a broad range of factors, including its implications for competition, taxation, the broader economy and national security.

“We are also paying particular attention to investments in critical infrastructure, be they the traditional areas of energy, water, transport or telecommunications, or emerging areas like data management.”

The current government set up the Critical Infrastructure Centre in 2017, when prime minister Scott Morrison was treasurer. It works alongside the Foreign Investment Review Board to develop national security risk assessments that aid decision-making.

The CIC was set up with more traditional assets like transport or energy in mind, but the expansion of its remit to include data centres comes as businesses hold increasingly large amounts of data about their customers.

Speaking primarily about the growth of China’s economy and its impact on Australia, Frydenberg said that between 2010-11 and 2017-18 more than A$268 billion of Chinese investments were given approval by FIRB, representing 19 percent of the total referred to it. This made China the fifth-largest foreign direct investor in Australia by value of total holdings behind the US, Japan, the UK and the Netherlands.

The first deal reviewed by the CIC was one with Chinese involvement: the proposed takeover of gas pipeline giant APA Group by Hong Kong-listed CK Group in 2018. That deal was eventually blocked by the Foreign Investment Review Board, with input from the CIC, because it was “contrary to the national interest”.

Frydenberg argued this week that the US, the UK, Japan and China itself were also tightening their approaches to foreign investment but argued that “Australia is stronger” because of foreign investment and that “trade and investment equals more jobs and it is consistent with our fundamental values of openness and enterprise”.