Security trumps economics, or so the Ausgrid saga seems to have taught us.

But maybe this framing is all wrong. Security and economics might be better thought of as being directly connected. If this is so, Australia is in real danger of building a poorer, less secure future through a flawed premise.

The rejection of the two Chinese bids for Ausgrid was justified by Treasurer Scott Morrison on national security grounds. No one can say what exactly those grounds were, but many have assumed there are worries over cyber security and continuity of electrical supply.

At first glance this all seems a bit reminiscent of Monty Python (or at least Fawlty Towers). After a state government asset was tendered internationally, the federal government suddenly realised there were critical vulnerabilities that hostile countries could exploit. Moreover, there is no plan to fix them. These national security shortcomings (whatever they are precisely) will continue to exist indefinitely.

Ausgrid is only an electrical distribution system. There must be straightforward engineering solutions to these vulnerabilities, otherwise all such electrical distribution systems would have the same vulnerabilities, which seems highly unlikely. The rapidly developing technology of off-the-grid power generation could potentially address continuity issues, while any cyber security shortcomings seem able to be fixed (and urgently should be).

Please click here to read the full “Security shouldn’t trump economics on the Ausgrid sale” article in the Lowy Interpreter by Griffith Asia Institute Visiting Fellow Peter Layton.