Australia's spy chief has rung the alarm on state-backed espionage, naming China as a chief concern for its attempts to hack telecommunications and infrastructure.
However, ASIO director-general Mike Burgess said there were threats from even friendly nations given the "relentless hunger" for strategic advantage.
In a speech to corporate watchdog ASIC on Wednesday, Mike Burgess said Australia had entered a period of "strategic surprise and security fragility".
"Great power competition is driving unprecedented levels of espionage," he said of the US-China geostrategic contest for primacy."
An ASIO-Australian Institute of Criminology collaboration estimated the cost of espionage to the Australian economy at $12.5 billion in 2023-24.
Artificial intelligence is fuelling an increase in both espionage and, more concerningly to Mr Burgess, the potential for sabotage.
"You may have heard about the oddly named Salt Typhoon and Volt Typhoon hacking groups ... these groups are hackers working for Chinese government intelligence and their military," he said.
"Both groups were involved in the theft of sensitive information, but the real danger was the threat of sabotage - disruption to critical infrastructure.
"Salt Typhoon's intent was espionage – they penetrated the United States' telecommunications system to gain access to the nation's communications through a strategic spying operation.
"They have been probing our telecommunication networks here in Australia, too.
"Volt Typhoon's intent was disruptive.
"The hackers compromised American critical infrastructure networks to pre-position for potential sabotage. The penetrations gave China the ability to turn off telecommunications and other critical infrastructure.
"And yes, we have seen Chinese hackers probing our critical infrastructure as well.
"I do not think we – and I mean all of us – truly appreciate how disruptive, how devastating, this could be."
Mr Burgess said the recent Optus triple-zero outage would be a drop in the bucket compared to the most devastating hypotheticals.
"That's one phone network not working for less than one day," he said.
"Imagine the implications if a nation state took down all the networks? Or turned off the power during a heatwave? Or polluted our drinking water? Or crippled our financial system?"
"Foreign governments have elite teams investigating these possibilities right now."
Mr Burgess' remarks came after a speech last week, when he said there was a realistic chance a foreign government may attempt an assassination on Australian soil.
At the Lowy Lecture, he declined to name up the nations, with analysts suggesting they were China, Russia and Iran.
On Wednesday, Mr Burgess said corporate projects are increasingly in the crosshairs.
He offered examples including a state-backed hacker stealing commercial information after compromising the network of a "major Australian exporter", and another which stole blueprints to produce cheap knock-offs.
Mr Burgess tried to put a positive spin on his warning, saying, "While the threats facing Australia are significant, they are not insurmountable".
"The threats are foreseeable. The vulnerabilities are knowable. The risks are manageable," he said.
