National security will outrank other considerations in the potential sale of the country's biggest electricity distribution grid to a Chinese consortium, Scott Morrison says.
The treasurer is close to revealing a final decision on whether to allow the state-owned enterprise to buy a 99-year lease on more than half of Ausgrid, the NSW electricity infrastructure.
He's facing pressure from the likes of independent senator Nick Xenophon, who has written to Mr Morrison saying he doesn't think it's in the national interest.
"I take every foreign investment decision on its merits, case by case, and I try to do what is the right thing for Australia," Mr Morrison told 2GB radio on Monday.
He conceded it's not an easy decision - given the NSW government is hoping to use the proceeds to fund infrastructure.
"That's the job," he said, acknowledging foreign investment is a sensitive issue.
"It has to be managed carefully. Australia has relied on foreign investment ever since Captain Cook showed up pretty much for our prosperity."
Mr Morrison said Australia needed to ensure it had foreign investment.
"But above and beyond all of that national security outranks everything."
Senator Xenophon is against the potential decision and thinks it should prompt more transparency.
"It begs a bigger question that we need some sensible reforms similar to other countries, similar to New Zealand, for a more transparent foreign investment framework," he told ABC radio.
Liberal frontbencher Angus Taylor hit back at critics of foreign investment, claiming it is extremely important in Australia.
"If foreign investment stopped tomorrow your mortgage rates would go through the roof immediately," he told Sky News.
But the national interest test would include national security considerations, he said.
"We can't compromise national security."
Opposition Leader Bill Shorten warned the government shouldn't rush the decision, unlike with the Port of Darwin.
"For me, the matter of foreign investment comes down to Australian jobs, prices that consumers and families pay and of course, where relevant, national security," he told reporters in Melbourne.
"They can't dismiss concerns around jobs, around electricity prices, and around national security merely because Premier Baird wants to try to get an inflated price before the next election."
