Defence Trade Controls Amendment Bill 2015 Bills

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.