The29-year-old Frenchman, who was living with the victims at the hostel and had been in Australia on a temporary visa for about a year, is accused of carrying out the knife attack in Queensland.
The suspect did not have any known links to the dreaded ISIS group and appeared to have acted alone, Queensland Police Deputy Commissioner Steve Gollschewski said, adding that police were trying to determine whether the man had been motivated by extremism.
Mia Ayliffe-Chung was killed in the attack that took place in front of a crowd at Shelley's Backpackers in Home Hill, South of Townsville, after 11 PM last night. Adog from the hostel was also killed.
The suspect is in custody in a hospital and is yet to be charged over the knife attack in Queensland, media reported.
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"Investigators will also consider whether mental health or drug misuse factors are involved in this incident," he said.
Gollschewski said the accusedused the Arabic phrase "Allahu Akbar" both during the attack and his arrest.
"While this information will be factored into the investigation we are not ruling out any motivations at this stage, whether they be political or criminal," he said.
Police were treating the attack as a homicide, rather than a terrorism-related incident, Gollschewski said.