Compliance

Critical infrastructure reforms: Ramifications for RSE licensees

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This paper considers the impact of the critical infrastructure reforms on registrable superannuation entity (RSE) licensees both as infrastructure investors and as owners, or operators, of critical superannuation assets.

The Security Legislation Amendment (Critical Infrastructure Protection) Act 2022 (SLACIP Act) received Royal Assent on 1 April 2022. It made a second and final round of amendments to the Security of Critical Infrastructure Act 2018 (SOCI Act). The SOCI Act provides a framework for managing risks relating to critical infrastructure assets.

The twin purposes of this paper are to:

• Provide information about the obligations that RSE licensees may have under the SOCI Act, now that its scope has been greatly expanded.

• Set out the questions that a prudent trustee needs to ask to determine whether those obligations apply.

As the Security of Critical Infrastructure (Application) Rules (LIN 22/026) 2022 (Application Rules) were also made in April, now is an excellent time for RSE licensees to come to grips with the legislation and what it means for them and the members of their funds.

What obligations do RSE licensees have under the SOCI Act?

An RSE licensee will have obligations under the SOCI Act if it is:

• A 'direct interest holder' of a 'critical infrastructure asset'

• A 'responsible entity' of a 'critical infrastructure asset'.

These terms, and their application to RSE licensees, should first be explained.

What is a critical infrastructure asset?

Critical infrastructure asset has the meaning given by section 9 of the SOCI Act.

Under subsection 9(1), an asset is a critical infrastructure asset if it is:

• In one of the 22 specified categories of critical infrastructure assets e.g., a critical telecommunications asset

• An asset declared under section 51 to be a critical infrastructure asset

• An asset prescribed by the rules for the purposes of paragraph 9(1)(f).

However, an asset is not a critical infrastructure asset if, or to the extent to which, the asset is located outside Australia. There is a definition in the SOCI Act for each of the 22 specified categories of critical infrastructure assets. The rules may also prescribe that a specified asset within a category is not a critical infrastructure asset.

In Gilbert + Tobin's view, it would be prudent for an RSE licensee to review its portfolio holdings and determine whether each investment is in a critical infrastructure asset by tracking through the relevant definition and the rules. Where a critical infrastructure asset is identified, consideration can then be given to whether the RSE licensee is a direct interest holder, or a responsible entity, of the critical infrastructure asset.