The head of Australia's foreign intelligence and cyber security agency says it was a "foundational issue" to get the security settings right for the nation's 5G network and exclude high-risk vendors.
A global debate has been sparked over the role of Chinese technology company Huawei's expansion.
In August, the Australian government informed Huawei and ZTE they had been banned from providing 5G technology.
The company said it was an "extremely disappointing result for consumers" as Huawei is a world leader in 5G and had safely and securely operated in Australia for 15 years.
Japan is reportedly set to follow suit.
The United States has banned government purchases of Huawei gear and Britain won't be using any of its equipment on its next generation network.
As well, Huawei's chief financial officer Meng Wanzhou, the 46-year-old daughter of the company's founder, was detained in Canada on December 1, reportedly accused of trying to evade US trade curbs on Iran.
Australian Signals Directorate director-general Mike Burgess advised the government not to allow "high-risk vendors" within the 5G network.
He said the 5G network was not merely about delivering higher data rates for mobile phones.
It would support a range of communications, from remote surgery to driverless vehicles, electricity networks, water supply and banking.
"That will put 5G at the top of the nation's critical infrastructure list and therefore security is important," Mr Burgess told Sky News on Friday.
"If 5G network of the future isn't there, there is a good chance our power supply might be interrupted, water supply might be interrupted, the financial sector or elements of it may be impacted.
"And that's why it was important to get security right at the start - it's a foundational issue."
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