Expansion in scope of transactions subject to FIRB approval rules

Critical telecommunications asset

A critical telecommunications asset means:

• a telecommunications network that is owned or operated by a carrier and used to supply a carriage service; or
• a telecommunications network, or any other asset, that is owned or operated by a carriage service provider and used in connection with the supply of a carriage service.

Responsible entity: the carrier or carriage service provider (as applicable).

Critical broadcasting asset

One or more broadcasting transmission assets are a critical broadcasting asset if the assets:

• are owned or operated by the same entity and located on a site that is a critical transmission site;
• are owned or operated by the same entity, and located on at least 50 different sites, and not broadcasting transmission assets; or
• the broadcasting transmission assets are owned or operated by an entity that is critical to the transmission of a broadcasting service, being for this purpose: TX Australia Pty Ltd (ABN 98 086 979 339).

The explanatory statement to the SOCI Rules states that 'TX Australia is prescribed because it owns, operates, manages, engineers, maintains and markets transmission facilities in the five major mainland metropolitan cities of Australia. TX Australia provides television transmission for broadcasters, including for commercial metropolitan television networks Seven, Nine and Ten.'

Responsible entity: the entity which is the owner or operator.

Critical domain name system

An asset is a critical domain name system if it:

• is managed by an entity that is critical to the administration of an Australian domain name system, being each of:
  • .au Domain Administration Ltd (ABN 38 079 009 340); and
  • any entity that administers the ‘.au’ country code Top Level Domain; and
• is used in connection with the administration of an Australian domain name system.

Responsible entity: the relevant entity mentioned above.

Critical data storage or processing asset

An asset is a critical data storage or processing asset if:

• it is owned or operated by an entity that is a data storage or processing provider;
• it is used wholly or primarily to provide a data storage or processing service that is provided by the entity on a commercial basis to an end user that is:
  • a Commonwealth, State or Territory body; or
  • the responsible entity for a critical infrastructure asset and the service relates to business critical data; and
• the entity knows that the asset is used as described immediately above.

Responsible entity: the relevant entity mentioned above.

The term business critical data means: personal information (within the meaning of the Privacy Act 1988 (Cth)) that relates to at least 20,000 individuals, or information relating to any research and development in relation to a critical infrastructure asset, or information relating to any systems needed to operate a critical infrastructure asset, or information needed to operate a critical infrastructure asset, or information relating to risk management and business continuity (however described) in relation to a critical infrastructure asset.

The concept of 'critical data storage or processing asset' therefore captures data centres. FIRB's updated national security guidance note states that 'A foreign person must seek foreign investment approval prior to starting a business or acquiring a direct interest in a data centre or cloud provider that stores or processes data for the Commonwealth, a state or territory government, or an entity responsible for a critical infrastructure asset (as defined by the Security of Critical Infrastructure Act 2018).'

Critical banking asset

An asset is a critical banking asset if it is an asset where the following conditions are satisfied:

• the asset is owned or operated by an authorised deposit taking institution or related body corporate;
• such authorised deposit taking institution or related body corporate is critical to the security and reliability of the financial services and markets sector, being an institution or related body corporate which has assets over $50 billion; and
• the asset is used in connection with the carrying on of banking business.

The explanatory statement to the SOCI Rules states that the $50 billion threshold is 'intended to capture banking assets of large authorised deposit taking institutions and related body corporates that are critical to the security and reliability of the financial services and markets sector due to their size'.

Responsible entity: the authorised deposit taking institution or related body corporate (as applicable).

Critical superannuation asset

An asset is a critical superannuation asset if:

• it is owned or operated by a registrable superannuation entity that is critical to the security and reliability of the financial services and markets sector, being an entity that holds assets over $20 billion; and
• it is used in connection with the operation of a superannuation fund.

The explanatory statement to the SOCI Rules states that this $20 billion threshold 'is intended to capture those registrable superannuation entity (RSE) licensees that are critical to the security and reliability of the financial services and markets sector on a national level. A security incident that impacts the critical financial market infrastructure assets of a RSE licensee with total assets above $20 billion could have cascading effect across the Australian population and economy'.

Responsible entity: the registrable superannuation entity.

Critical insurance asset

An asset is a critical insurance asset if it is an asset where the following conditions are satisfied:

• the asset is owned or operated by an entity that carries on insurance business, life insurance business or health insurance business, or a related body corporate of any such entity, being an entity or related body corporate which has assets over $2 billion (in the case of an insurance business), or over $5 billion (in the case of a life insurance business) or over $500 million (in the case of a health insurance business);
• such entity or related body corporate is critical to the security and reliability of the financial services and markets sector; and
• the asset is used in connection with the carrying on of insurance business, life insurance business or health insurance business.

The explanatory statement to the SOCI Rules provides that the above-mentioned thresholds are intended to include insurance entities, life insurance entities and health insurance entities 'that, if rendered unavailable, would have a significant impact on the security and reliability of the financial services and markets sector'. In relation to insurance businesses the explanatory statement notes that 'These large insurers act as an important buffer for the Australian economy, softening the financial impact of events on public funds by drawing on private sector funding'. In relation to life insurance businesses, the explanatory statement notes that 'Life insurance acts as a saving mechanism for Australians and allows for significant volumes of long-term funding for financial markets and other sectors in need of investment, contributing to Australia’s overall economic growth and stability'. In relation to health insurance businesses, the explanatory statement states that 'This is intended to capture the large health insurers that provide health insurance to a large number of Australians'. 

Responsible entity: the relevant entity or related body corporate (as applicable) mentioned above.

Critical financial market infrastructure asset

An asset is a critical financial market infrastructure asset if it is any of the following assets:

• the asset:
  • is owned or operated by an Australian company that holds an Australian market licence, or an associated entity of such a company; and
  • is used in connection with the operation of a financial market that is critical to the security and reliability of the financial services and markets sector, being a financial market that is operated by an entity that holds a Tier 1 market licence under subsection 795B(1) of the Corporations Act 2001 (Cth) and has, for at least two consecutive quarters, a turnover that meets any of the following: 35% market share of traded cash market products; $4 billion average daily value of traded cash market products; $15 billion average daily notional value of futures market contract transactions; or $30 billion average daily notional value of transactions that are not cash market products or futures market contracts;
• the asset:
  • is owned or operated by an Australian company that holds an Australian CS facility licence, or an associated entity of such a company; and
  • is used in connection with the operation of a clearing and settlement facility that is critical to the security and reliability of the financial services and markets sector, being a clearing and settlement facility owned or operated by an Australian body corporate or an associated entity of an Australian body corporate that is required to comply with the financial stability standards determined by the Reserve Bank of Australia under section 827D of the Corporations Act 2001 (Cth);
• the asset:
  • is owned or operated by an Australian company that holds a benchmark administrator licence, or an associated entity of such a company; and
  • is used in connection with the administration of a significant financial benchmark that is critical to the security and reliability of the financial services and markets sector, being a significant financial benchmark declared under section 908AC(2) of the Corporations Act 2001 (Cth);
• the asset:
  • is owned or operated by an Australian company that holds an Australian derivative trade depository licence, or an associated entity of such a company; and
  • is used in connection with the operation of a derivative trade repository that is critical to the security and reliability of the financial services and markets sector, being a derivative trade repository that has at least $20 trillion average daily notional value of outstanding transactions for all asset classes for at least two consecutive quarters;
• the asset is used in connection with the operation of a payment system that is critical to the security and reliability of the financial services and markets sector, being each of the following payment systems:

The explanatory statement to the SOCI Rules states that 'Derivative trade repositories are a core component of the infrastructure supporting derivatives markets. An Australian derivative trade repository may be part of a network linking various entities, such as clearing and settlement facilities, dealers or financial custodians. Therefore, a disruption in a sufficiently sized Australian derivative trade repository could risk spreading to linked entities and have cascading impacts across the economy'.

Responsible entity: the relevant company or associated entity or 'responsible entity' (as applicable) mentioned above.

Critical water asset

An asset is a critical water asset if it is one or more water or sewerage systems or networks that:

• are managed by a single water utility; and
• ultimately deliver services to at least 100,000 water connections or 100,000 sewerage connections.

This is the same definition as the one in the SOCI Act prior to the latest changes.

Responsible entity: the water utility that holds the licence, approval or authorisation (however described), under a Commonwealth, State or Territory law, to provide the service to be delivered by the asset.

Critical electricity asset

An asset is a critical electricity asset if it is:

• a network, system, or interconnector, for the transmission or distribution of electricity to ultimately service at least 100,000 customers; or
• an electricity generation station that is critical to ensuring the security and reliability of electricity networks or electricity systems in a State or Territory if:
  • either:
    • the entity that owns or operates the electricity generation station is contracted to provide a system restart ancillary service in the State or Territory; or
    • the electricity generation station is an electricity generator, in the State or Territory, that has an installed capacity of at least 30 MW; and
  • it is connected to a wholesale electricity market.

An electricity generation station is taken to provide a system restart ancillary service if it can: start without an external power supply, and can connect, and provide energy, to an electricity network or an electricity system for the transmission or distribution of electricity. 

The new 30MW threshold for installed capacity is significantly lower than the previous thresholds. The explanatory statements to the SOCI Rules states that 'The intent of lowering the threshold to 30MW nationally is not to capture all electricity generation stations but to drive a broad uplift in sector resilience given the interconnected nature of the electricity network. 30MW captures the majority of generators connected to the wholesale electricity markets'.

Responsible entity: the entity that holds the licence, approval or authorisation (however described) to operate the asset to provide the service to be delivered by the asset.

Critical gas asset

An asset is a critical gas asset if it is any of the following:

• a gas processing facility that has a capacity of at least 300 terajoules per day;
• a gas storage facility that has a maximum daily quantity of at least 75 terajoules per day;
• a network or system for the distribution of gas to ultimately service at least 100,000 customers; or
• a gas transmission pipeline that is critical to ensuring the security and reliability of a gas market, being each of:
  • Tasmanian Gas Pipeline;
  • Carpentaria Gas Pipeline; and
  • any gas transmission pipeline in a gas market mentioned in an item in the following table:

The explanatory statements to the SOCI Rules states that 'The Tasmanian Gas Pipeline is critical as it provides the only link between Victoria and Tasmania', 'The Carpentaria Gas Pipeline is critical as it provides the only link between the Northern Territory gas fields and the east coast gas market' and 'The thresholds for each gas market capture those pipelines that are critical to ensuring the varying industrial, residential and export demands in each market are met. As a result, the thresholds ensure the Act only applies to gas transmission pipelines that are critical for transporting gas from processing plants to major demand centres for distribution networks or large gas users such as electricity generators and industrial users, and to certain facilities and hubs for export purposes'.

Apart from the addition of the Carpentaria Gas Pipeline, the definition of 'critical gas asset' is the same as the definition prior to the latest SOCI Act changes.

Responsible entity: the entity that holds the licence, approval or authorisation (however described) to operate the asset to provide the service to be delivered by the asset.

Critical energy market operator asset

An asset is a critical energy market operator asset if it:

• is owned or operated by Australian Energy Market Operator Limited, Power and Water Corporation, Regional Power Corporation, or Electricity Networks Corporation;
• is used in connection with the operation of an energy market or system; and
• is critical to ensuring the security and reliability of an energy market;

but does not include a critical electricity asset, critical gas asset or a critical liquid fuel asset.

FIRB's updated national security guidance note states that 'The focus is on assets that are essential to a market operator undertaking its statutory functions, for example managing market trading and ensuring the security and reliability of the physical infrastructure. Although Western Power’s [ie. Electricity Network Corporation's] primary function is as a transmission and distribution network operator, it has been included as it undertakes market operator functions within this meaning'.

Responsible entity: the relevant owner or operator mentioned above.

Critical liquid fuel asset

An asset is a critical liquid fuel asset if it is any of the following:

• a liquid fuel refinery that is critical to ensuring the security and reliability of a liquid fuel market, being the liquid fuel refineries at Corio (Victoria) and Lytton (Queensland);
• a liquid fuel pipeline that is critical to ensuring the security and reliability of a liquid fuel market, being each of the following liquid fuel pipelines: Sydney Metropolitan Pipeline, Gore Bay Pipeline, Westernport Altona Geelong Pipeline, Longford (Dutson) to Hastings Pipeline, Melbourne Airport Jet Fuel Pipelines, Jet Fuel Pipeline (Kurnell to Sydney Airport), Brisbane Airport Jet Fuel Pipeline, Perth Airport Jet Fuel Pipeline; or
• a liquid fuel storage facility that is critical to ensuring the security and reliability of a liquid fuel market, being a liquid fuel storage facility with a storage capacity of more than 50 megalitres of liquid fuel.

The explanatory statement to the SOCI Rules states that the above-named liquid fuel pipelines 'are critical to ensuring liquid fuel security across the country. Any disruption to these major pipelines would have significant flow on effects to other sectors reliant on liquid fuels whose protection is essential to Australia’s security'.

The explanatory statement also states that, in relation to a liquid fuel storage facility, 'The threshold of 50 megalitres is intended to capture the most significant and regionally important liquid fuel terminals, including liquid fuel import terminals, to build resilience to liquid fuel supply disruptions, thereby protecting consumers and the economy from fuel shortages'.

Responsible entity: the entity that operates the relevant refinery, pipeline or storage facility.

Critical hospital

A critical hospital is one that has a general intensive care unit.

Responsible entity:

• If the critical hospital is a public hospital – the local hospital network that operates the hospital.
• If the critical hospital is a private hospital – the entity that holds the licence, approval or authorisation (however described), under a State or Territory law to operate the hospital.

Critical education asset

A critical education asset means a university that is owned or operated by an entity that is registered in the Australian university category of the National Register of Higher Education Providers.

Responsible entity: the relevant entity mentioned above.

Critical food and grocery asset

An asset is a critical food and grocery asset if it is a network that:

• is used for the distribution or supply of food or groceries; and
• is owned or operated by an entity that is a:
  • critical supermarket retailer, being each of Aldi Pty Limited (ABN 68 086 493 950), Coles Group Limited (ABN 11 004 089 936) and Woolworths Group Limited (ABN 88 000 014 675);
  • critical food wholesaler (none are currently specified by the SOCI Rules); or
  • critical grocery wholesaler, being MetCash Trading Limited (ABN 61 000 031 569).

FIRB's updated national security guidance note states that 'The COVID-19 pandemic has placed food and grocery distribution and supply under significant pressure, revealing both the criticality and vulnerability of these networks', and that the above-named retailers and wholesalers 'collectively account for over 80 per cent market share, and if disrupted, could have a severe and widespread impact on the availability of food and grocery'.

Responsible entity: the relevant entity mentioned above.

Critical port

An asset is a critical port if it is land that forms part of any of the following security regulated ports: Broome Port, Port Adelaide, Port of Brisbane, Port of Cairns, Port of Christmas Island, Port of Dampier, Port of Darwin, Port of Eden, Port of Fremantle, Port of Geelong, Port of Gladstone, Port of Hay Point, Port of Hobart, Port of Melbourne, Port of Newcastle, Port of Port Botany, Port of Port Hedland, Port of Rockhampton, Port of Sydney Harbour, Port of Townsville.

This is the same definition as the one in the SOCI Act prior to the latest changes.

Responsible entity: the port operator of the critical port.

Critical freight infrastructure asset

An asset is a critical freight infrastructure asset if it is a road network, rail network or intermodal transfer facility that is critical to the transportation of goods between two States, a State and a Territory, two Territories, or two regional centres (being a city or a town with a population of 10,000 or more people).

Each of the following intermodal transfer facilities is considered to be 'critical'.

The explanatory statement to the SOCI Rules states that 'An intermodal facility is any site or facility along the supply chain that contributes to an intermodal movement by providing efficient transfer of goods from one mode of transport to another. Intermodal terminals play a significant role in facilitating the consolidation, storage and transfer of freight between rail and road at the beginning and end of each rail journey. Intermodal terminals provide connectivity to ports, regional networks and other capital cities and regional centres and are central to the stability and security of road and rail infrastructure'.

The SOCI Rules do not currently specify which road networks and rail networks are considered 'critical'.

Responsible entity: the Commonwealth, State or Territory government, or other body, that is responsible for the management of the relevant asset.

Critical freight services asset

An asset is a critical freight services asset if it is a network that is used by an entity carrying on a business that is critical to the transportation of goods by any or all of the following: road, rail, inland waters and sea, being a business in respect of which all of the following criteria are satisfied:

• the business has an annual revenue of at least $150 million;
• the business provides a service (a freight service) that is a road freight transport service, freight forwarding service, rail freight transport service or a water freight service;
• the freight service provided by the business involves the transport or storage of any of the following:
  • food and groceries, where transported to or from a critical supermarket retailer or a critical grocery wholesaler;
  • therapeutic goods registered on the Australian Register of Therapeutic Goods moved to or from premises storing such goods;
  • the supply of medicines listed under Schedules 2, 3, 4 or 8 of Part 4 of the current Poisons Standard, where transported to or from a premises at which the manufacture of the medicine is permitted under a law of a State or Territory;
  • liquid fuel, where transported to or from a critical liquid fuel asset;
  • essential goods and supplies required for water treatment facilities; or
  • any other good that is critical for the operation, maintenance or management of a critical infrastructure asset.

The explanatory statement to the SOCI Rules provides that the networks which satisfy all of the above criteria 'are critical to Australia’s trade and commerce and social stability as they are responsible for logistics and movement of valuable goods and products across the country. These assets assist businesses to transport products to consumers, and ensuring communities can access critical supplies, including food and groceries and essential medical goods'.

Responsible entity: the relevant entity mentioned above.

Critical public transport asset

A critical public transport asset means a public transport network or system that is managed by a single entity and is capable of handling at least five million passenger journeys per month, but does not include a critical aviation asset.

Responsible entity: the relevant entity mentioned above.

Critical aviation asset

A critical aviation asset means each of the following:

• an asset that is used in connection with the provision of an air service and is owned or operated by an aircraft operator; 
• an asset that is used in connection with the provision of an air service and is owned or operated by a regulated air cargo agent; or
• an asset that is used by an airport operator in connection with the operation of an airport.

Responsible entity: the relevant aircraft operator or regulated air cargo agent mentioned above.

Critical defence industry asset

A critical defence industry asset means an asset that is being, or will be, supplied by an entity to the Defence Department, or the Australian Defence Force, under a contract and consists of, or enables, a critical defence capability (which includes materiel, technology, a platform, a network, a system or a service that is required in connection with the defence of Australia or national security).

Responsible entity: the relevant entity mentioned above.