Kim Carr (Victoria, Australian Labor Party, Shadow Minister Assisting the Leader for Science) Share this | Link to this | Hansard source

Labor supports the Defence Trade Controls Amendment Bill 2015, which amends legislation enacted when we were in office. That legislation sought to meet Australia's international obligations as a member of the Wassenaar Arrangement, the Missile Technology Control Regime, the Australia Group and the Nuclear Suppliers Group. The act also gave legislative effect to the treaty between Australia and the United States on defence trade cooperation. The act restricted the non-physical export of military technology and technology that has potential military application. That can happen through the publishing of information, whether it be in print or electronically, and through so-called 'brokering'—that is, an Australian entity acting outside of Australian jurisdiction.

This export control system is an antiproliferation measure. It is intended to stop goods and technology that can be used in chemical, biological or nuclear weapons—or in other military applications—from being supplied to individuals, states or groups that may be of security concern. The act regulates the supply of information through a system of permits and ministerial permissions. The legislation applies to industry generally, not only to firms or institutions directly involved in defence work. It applies to universities and the research sector as well.

For some of the affected institutions, particularly universities, the act imposes a regulatory regime that has raised questions about whether the level of oversight is compatible with the freedom to conduct research. It is fair to say that the original act raised serious concerns for several universities in relation to the publication, and especially to the verbal supply, of information about civilian technologies that may have military application. These civilian technologies range from engineering products to biological information about diseases. A strengthened export control steering group, ably led by the Chief Scientist, was established to work through the universities' concerns about the legislation. The present bill, which is the result of wide consultation with stakeholders, is a response to the concerns that have been raised. The existing act provides for a transition period before its offence provisions take effect. That period ceases on 16 May this year, but this bill seeks to delay the application of the offence provisions for 12 months—so this is a very urgent piece of legislation. It does require immediate attention. For the universities, the delay by 12 months of the application of the offence provisions is extremely important. It gives those involved in the publication and the verbal supply of control technologies time to adjust to the regulatory regime. Organisations at the project level will be able to obtain broad permits to continue their work, valid for five years.

The existing act sets out a Defence and Strategic Goods List for items subject to export control. This bill, the Defence Trade Controls Amendment Bill, contains exemptions to the offence created by the act of supplying information. It exempts the oral supply of information about items on the Defence and Strategic Goods List where the supply of information does not provide access to Defence and Strategic Goods List technology and is not for use in a Weapons of Mass Destruction program or for any other military use. The bill also allows for applicants to obtain supply and brokering permits on behalf of projects, and for permits to be issued to project participants. It narrows the act's publication offence to publications of military DGSL technologies where no application approval has been given, or where the publication contravenes a condition of the approval. So the bill allows the minister to prohibit the publication of information about military technologies, or civilian technologies of potential military application, where that publication could prejudice the defence security or the international relations of Australia. It allows the Secretary of the defence department to issue interim publication notices where the Secretary considers the minister may have grounds to introduce a prohibition notice.

Further, the bill more precisely defines 'brokering', and stipulates that the broker must receive money or a non-cash benefit. The bill provides an exemption from the brokering offence if the broker is 'from or acting within' one of the four export controls regimes mentioned earlier—that is, the Wassenaar Arrangement, the Missile Technology Control Regime, the Australian Group, and the Nuclear Suppliers Group. Employees of ASIO and ASIS will also be exempt from the brokering offence. The bill also allows the minister to direct a person to seek a permit for the brokering of civilian technology with potential military application, so that such products can be regularised. In these circumstances, the minister, the Secretary of the department, or a delegate of the minister will be required to consider criteria prescribed in regulations, and to have regard to other appropriate matters, before deciding that an activity would prejudice Australia's security or international relations. The export control regime introduced by the act and amended by this bill is of vital importance to Australia.

The bill also provides for the continued review of the operations of the act; initially after two years and subsequently at intervals of not more than five years. I think that is a particularly important provision. The minister will be required to table copies of the review report in both houses of parliament. We must continue to support international regimes that counter the proliferation of weapons of mass destruction. We must continue to work collaboratively with other nations to ensure that those sorts of technologies are not misused, and that they do not create a heightened threat to the international community. The passage of this bill and the maintenance of the export control regime will enhance our reputation as a nation.

Scott Ludlam (WA, Australian Greens) Share this | Link to this | Hansard source

I rise to speak on this bill, the Defence Trade Controls Amendment Bill 2015—I listened to Senator Carr's contribution with interest, because there is an element of deja vu in debating this bill.

Firstly, I should say at the outset that the Greens support passage of this bill for reasons that would be fairly obvious to anybody who read or heard the things we said in October 2012 during the original debate of this bill. Senator Fierravanti-Wells, who is representing the government this morning, would be well aware. You were sitting on the opposition benches at that time, and Senator Carr was in government. Effectively, what we are doing today is cleaning up the messes that were well and truly understood on the day the bill was passed back in 2012 and all of the things that Senator Johnston, who was the shadow defence spokesperson at the time, mentioned in an entirely articulate critique of the bill at the time. And yet the opposition voted for the bill. Now we come back today. Here we are in March 2015, 2½ years later, to fix the mess that everybody understood we were making at the time.

There is obviously cross-party support for this important bill, so I do not propose to tie the chamber up for long. The idea that this chamber would have passed legislation with its eyes wide open that could criminalise and see researchers being thrown in jail for doing entirely legitimate work just because somebody in the defence community thought that eventually somebody could turn that into a weapon is absolutely absurd, and the safeguards that we are building back in today to prevent that from happening were entirely understood by, I think, all sides of this parliament back in 2012.

Before the bill passes I do want to take a couple of minutes to reflect on how we got here in the first place. The initial Defence Trade Controls Bill 2011 was really introduced for one purpose, and that was to give effect to the Australia United States Defence Trade Cooperation Treaty, which was signed by the Bush administration and the Howard government way back in 2007. That treaty was viewed with relief by some Australian defence industries and weapons manufacturers because it allowed them to evade a fairly restrictive export control scheme which they had previously critiqued pretty heavily. It was viewed with some suspicion by the Greens and other groups who are focused on peace and non-proliferation of weapons because it openly facilitated the weapons trade and it should never be made easier for armaments to be traded for the simple fact that there are always unintended consequences. We are seeing some of the aftereffects of that play out in Iraq at the moment.

So the concern that was expressed by many was the impact that the bill would have on Australia's research community, who were looking on somewhat aghast at the time as they were told by legislators that they faced the prospect of being thrown in jail simply for conducting research and publishing results on what had previously not been seen as hugely controversial subjects. One example which is particularly close to my heart is that of encryption. The United States government defence community and the technical community went through this hugely divisive debate in the US in the 1990s in the so-called Crypto Wars, when the United States government decided to classify strong cryptography—that is, encryption of privacy for communications between, for example, financial institutions, diplomats or anybody who has the need for strongly protected communications—as a weapon for the purposes of exports. So weak and degraded crypto protocols were exported to other countries around the world, which has later come back to bite the United States government because they end up as security vulnerabilities placed there deliberately in order to be able to be broken and accessed that then effectively compromised, for example, the global financial system, the banking system and the diplomatic community. It was exactly these kinds of things.

When the defence community sees things that could potentially be used as weapons—and that is just one example—and therefore classifies them as defence exports, you can inadvertently introduce vulnerabilities, weaknesses or cripple research. You would have to say that is an unintended consequence. That is not something we want to see a repeat of.

As I said, these issues were very well understood when they were examined by the foreign affairs, defence and trade committee back in 2012. That committee inquiry resulted in probably two of the strongest worded reports that I have ever seen published by that committee. In short, the committee sent the bill back to Defence and asked it to fix the errors that had been introduced and to actually talk to the Australian research community before the bill would be debated in parliament. What became really apparent at the time—this is something Senator Carr managed to avoid mentioning in his speech—was that the timing of the debate of the bill in the Senate was basically designed to make sure the government of the day had some kind of announceable to put up, because the then US secretaries of state and defence were scheduled to arrive in Australia for fairly high level talks. This point is acknowledged by Senator Johnston in his contribution at the time. What the hell was the rush? As it turned out, it was a photo opportunity: we were passing legislation the parliament knew to be flawed so that a press opportunity could be taken advantage of. So two and a half years later here we are, fixing the problems which were absolutely well understood at the time, and everything is again happening at the last minute. We are told if the bill does not pass during this sitting period, researchers will face very real consequences. I happen to believe that is not an idle threat. We do need to pass legislation quickly, but we also need to make sure we get it right.

An exposure draft of the current bill was only released a week or so before Christmas and I believe the Foreign Affairs, Defence and Trade Legislation Committee only signed off its final report into this bill about 40 minutes ago. Again, you would not say that was legislative best practice. Under the previous government we saw an abuse of parliamentary process which put researchers at significant risk, but I am pleased to say there are amendments, and I want to pay credit to the current government for recognising that the system could not stay as it was; that it was completely unconscionable. It is a shame that it has taken two and a half years to fix, but I give acknowledgement where it is due to the Labor Party and the government. They have brought forward amendments; they do not go 100 per cent of the way to assuaging the concerns that were raised at the time but nonetheless the most serious problems that were introduced into the bill—with eyes open, by a parliament that knew exactly what it was doing at the time—will finally be fixed when this bill passes into law. I am happy to commend the bill to the chamber.

David Fawcett (SA, Liberal Party) Share this | Link to this | Hansard source

I too rise to make some comments on the Defence Trade Controls Amendment Bill of 2015. I would like to talk little bit about the bill itself—some of the background, some of the issues and some of the future actions that are going to be required.

The Defence Trade Controls Amendment Bill will amend the Defence Trade Controls Act of 2012 which received royal assent in November 2012. As previous speakers have indicated, it includes measures to strengthen Australia's export controls to meet our obligations such as the Wassenaar arrangement, the Missile Technology Control Regime, the Australia Group and the Nuclear Suppliers Group. As has been noted, it gives effect to the Treaty Between the Government of Australia and the Government of the United States Concerning Defense Trade Cooperation, known as 'the treaty'. Those treaty provisions commenced operations in June 2013 and the treaty itself will not be amended in any substantive way by this bill. The act of 2012 introduced new export controls on the intangible supply of technology listed in the Defence and Strategic Goods List, the DSGL, and the prohibition of the publication of DSGL technology and regulation-brokering activities.

Broadly, this bill makes a number of amendments. There is quite a list; but one of the key ones that is important is that it provides an additional 12-month implementation period before the offence provisions and the record-keeping requirements commence operation. This has been one of the significant outcomes of the consultation process of the steering group and the pilots that have been in place over the last two years. It provides two new exceptions to the supply offence in the existing section 10 of the act, being firstly for the oral supply of DSGL technology where that supply is not the provision of access to DSGL technology and is not for use in a weapons of mass destruction program or for a military end use; secondly, for the supply of dual use or part 2 DSGL technology where the supply is preparatory to the publication of a part 2 technology. It also extends the exception to the offence of supplying DSGL technology, without permit, to or from certain members of the government, security and law-enforcement organisations; and, importantly, it provides for the reviewing of the operation of the act, except for part 3 and 4—which are the supply offence provisions—initiated by the minister two years after the commencement of section 10, and subsequent infills of no more than five years.

The background to this is important. In November 2011, the government introduced the Defence Trade Controls Bill into the parliament. The Senate Foreign Affairs, Defence and Trade Legislation Committee received this bill which was referred to us for report by April 2012. That reporting date was extended out to August 2012 because of the number of issues the committee found. I had the privilege of being a member of that committee—

I still do—as we looked at this bill.

One of the things the committee found was that the consultations undertaken by the Department of Defence in this case were inadequate, and that would be understating the extent of the consultations. As someone who served for over 23 years in Defence, I am ashamed to have to tell this chamber that the consultation was inadequate. This lack shows that many in Defence are put into roles—they might be working with an industry sector or an academic sector that they have never been a part of—and sometimes their concept of what will have an impact is not informed by their own life experience; and that is why consultation is so important. Consultation is important not only to transmit information but also to provide real opportunities to listen and understand what the practical impact of measures that the parliament legislates may have on industry or on academia.

Essentially the issue was handed back to Defence, which was told to go away to do more consultation, but in the meantime other measures, such as the steering group, the pilot programs and other things, were put in place. The committee strongly recommended the 24-month transition period, during which the offence provisions would be suspended and further consultation would occur. While in theory we could forward a bill and in theory we could talk about what it might look like, until the stakeholders had the opportunity, with the active support of Defence, to see how the provisions would work in practice, it was clear that a transition period was needed to put in place systems and processes. A couple of pilot studies in the academic space were particularly useful in achieving this. I am glad to see that the amendments support a transition period beyond the introduction of this particular amendment bill. The transition period was accompanied by a six-monthly examination of progress; the steering group had to report on progress to the committee, but at the same time the committee had the opportunity to engage with stakeholders, both in academia and industry, to understand their experience of the process—to ascertain whether they were happy with the progress, whether their concerns were listened to and to determine whether we were on track to meet our international obligations, our national security requirements and, importantly, whether we had embarked on something that did not diminish the ability of Australian industry and academia to research, develop IP, innovate and ideally to export.

These considerations have led a range of amendments, but other issues still exist and these need to be addressed today to make sure that we do not lapse back into passing inappropriate legislation and regulations that do not engage in a proactive way with stakeholders who will be affected by this legislation. There was a tight time frame for these amendments, and that has been acknowledged by each of the people who submitted to the committee's latest inquiry. Generally speaking, most of the 30 written submissions to DECO and the submissions to the committee were happy with the style and level of consultation—they felt it was appropriate. A number of people indicated that they were comfortable with the amendments in that they strike the right balance between protecting Australia's national security interests and allowing scientists to go about their work with other scientists and industry around the world, as UNSW commented. The University of Sydney made similar comments that these measures would significantly reduce the compliance burden for universities and their research support staff and deliver a regulatory framework that is much better targeted at activities which present real risks to national security. The resulting regulatory regime will be of greater overall benefit and more cost effective for government, industry and the public sector research community.

Those are positive things, and they demonstrate that the work of this Senate and its committees can deliver an outcome or a process that when followed gets better outcomes. But there are still a number of people who submitted that they had concerns—for example, in the areas around clarity of definitions in both the Defence and Strategic Goods List itself and the act—which, they put forward, could lead to some difficulty for researchers and industry knowing the scope of coverage of the permit regime and determining whether the activities were controlled or not.

There is also the issue of consistency with other jurisdictions. There was a concern expressed by people that the offences in the amended act would still be more restrictive than those in equivalent legislations in the UK and the US. I note that the majority of people who raised concerns in this area of definition still support the passage of the bill but have highlighted that it is not perfect and there are still concerns. The burden of implementation was another concern.

But what all these lead to is that, just as at the start of this process—when we found that the only way we could approve this bill and move forward was to have a transition process that was accompanied by meaningful engagement and consultation with a willingness to amend and improve regulations so that the impact on stakeholders was academically, intellectually and economically affordable—the implementation of these amendments means that we still need to have those ongoing consultations.

So, in the future, we have this 12-month implementation period—I think the offence provisions do need to be suspended for that period while people work through it. But importantly I want to note that we also had very strong and rigorous representation from the academic sector—Universities Australia and a number of individual universities have been very strong in engaging with the Chief Scientist and the steering group—and that has been welcome.

We have had submissions from a number of large industry groups. But I know, through my own experience, that a lot of the innovation and work done in Australia's defence sector is through SMEs, and it concerns me that the level of representation in consultations from the SME sector was so low, despite the fact that the committee specifically issued invitations and requests for information from a broad range of stakeholders. What that says to me is that a number of the smaller players in Australia's defence industry manufacturing sector are not necessarily fully across the scope and the implications of what this whole act and the amendments may mean. To my mind that makes it even more important that not only do we have this transition period where the offence provisions do not take effect but that the consultation needs to reach out in a very focused way, and not just to the academic sector, who have been very robustly engaged. It also needs to have a really targeted focus on the SMEs and a willingness, where problems are identified with the implementation, for the government—and I encourage the opposition to support this—to say: 'How do we need to make further amendments, if required, so that we embed this, meeting our obligations internationally and meeting out national security requirements, but in a way that still enables research and innovation in our technology sector to not only survive but to thrive in Australia?' There needs to be that willingness, so that we can create not only the technology we need for our defence sector but also the jobs, the research and the opportunities for young people to contribute to this important and growing sector within Australia.

So I do support these amendments to the act. Clearly, the government is putting forward this bill, and I support it. But I just want to make very clear that the implementation process, the consultation and the willingness to iteratively revisit this and make change must not stop now that this amendment bill has come forward, but it must be carried forward with a particular focus on SMEs. I support the amendments.

Concetta Fierravanti-Wells (NSW, Liberal Party, Parliamentary Secretary to the Minister for Social Services) Share this | Link to this | Hansard source

Can I start by thanking those who have made a contribution to this bill. The bill will enable Defence to focus its regulatory attention on higher risk activities with respect to the non-physical supply and transfer of Defence controlled goods while dealing more efficiently with lower risk activities.

The original act established a two-year transition period during which stakeholders had an opportunity to work with Defence to address concerns and provide feedback through the Strengthened Export Controls Steering Group. The work of the steering group has been critical to the development of these amendments and the government will seek to extend the steering group's appointments to cover the extended implemented period detailed in this bill. I thank those opposite for their support of this important legislation and I commend the bill to the Senate.

Question agreed to.

Bill read a second time.