Failure to consult with university and research sectors
Evidence given at the committee's 2 and 21 March public hearings,
particularly by witnesses from Universities Australia and the University of
Sydney, demonstrated that Defence had failed to adequately consult with all
stakeholders on the bill. The substantial part of Defence's consultation
process with universities and other relevant research stakeholders began during
March 2012; four months after the bill had been introduced and only after the
committee recommended that Defence conduct the process.
Defence outlined its consultation process in answer to questions taken
on notice at the public hearings. The process included the release of an
exposure draft of the bill, a series of consultation workshops (from
information provided these workshops were aimed at industry), and release of
draft regulations for consultation. While Defence noted that it contacted Universities
Australia, it provided no information about the nature or extent of the contact
with other universities and research organisations.
The inadequacies of Defence's consultation process were first brought to
the committee's attention by Dr Pamela Kinnear from Universities Australia
during the 2 March 2012 public hearing:
I will finish my opening statement by making the point that
it is very unfortunate that we are having to address these issues at this point
in time. We do understand the stage that the legislation is at. We think the
situation could have been avoided through greater levels of engagement between
the government and the university sector, and possibly even internally to
government. We would like to point out that we do not understand how the
regulatory impact statement can have assessed that the impact on universities
will be small when in its own admission it did not have any data to support its
conclusion, and it did not consult with the university sector.
Defence disagreed with Universities Australia's assertions regarding
The committee notes, however, that when the exposure draft of the bill was
released for public consultation on 15 July 2011, the explanatory memorandum
included a Regulation Impact Statement which detailed the impact of the
legislation on academic institutions. In its advice to the committee, Defence
indicated that it received no response to its letter sent to Universities
Australia on 9 May 2011, prior to the exposure draft process. Given this lack
of response, it is difficult for the committee to understand how Defence reached
the conclusion in the Regulation Impact Statement that the bill would not have
a detrimental effect on academic institutions.
In the explanatory memorandum to the bill, Defence outlines the
consultation conducted with industry.
The Australian Industry Group Defence Council also discussed in their
submission the consultation process Defence had undertaken with their members.
Despite this consultation, companies such as Saab and Boeing raised concerns
with the committee and indicated that further detail was required from Defence,
particularly in relation to the regulations accompanying the bill.
On 20 June 2012, Defence provided answers to the committee's questions
taken on notice and written questions following the public hearings. As part of
this information, Defence advised the committee that its consultation process,
which started in March, would be concluded by the end of June 2012 and that
Defence would be able to advise the committee of an outcome at the end of July.
Also, as a result of the concerns about the effect of the bill on
research organisations raised by Universities Australia and the University of
Sydney, the committee invited a number of other research organisations to make
submissions to the committee's inquiry. The National Health and Medical
Research Council (NHMRC), the Australian Research Council, and the Department
of Industry, Innovation, Science, Research and Tertiary Education (DIISRTE)
responded. The Queensland Government also made a submission regarding the effect
the proposed legislation could have on universities and research organisations.
The NHMRC, the Australian Research Council and DIISRTE all referred to
the consultation process and each recommended that further consultation be
conducted. They made clear that they were willing to work with Defence to find
a solution to concerns about the bill's effect on research.
The NHMRC and DIISRTE noted in their submissions, dated 15 June and 2
July respectively, that Defence had provided two options papers. One contained three
options for amending the bill (of which option 3 was the submitters' preferred
option) and a second paper had four options. The submitters had concerns
regarding option four. For example, the NHMRC expressed strong reservations about
Option 4 as presented raises a number of questions and
concerns. As presented, and without clear advice and definitions,
implementation of Option 4 may result in a significant increase in regulatory
burden for researchers and institutions in comparison to Option 3, which
appears to largely address concerns raised by the research community.
Given the concerns raised by these submitters, the committee is
concerned that Defence's proposed timeline does not allow sufficient time for
the conclusion of consultation and the creation of a suitable solution for all
Consultation since 21 March 2012
The committee gained the impression that Defence was not well prepared
and was caught by surprise by the concerns raised in some submissions,
particularly the comments made by Universities Australia. Indeed, Defence found
itself in a position in March, four months after the legislation had been
introduced in Parliament, where it had to undertake extensive consultation
about some provisions in the bill, most notably those dealing with the
application of the legislation to intangible transfers. This aspect of the bill
remains one of the pressing concerns still requiring a resolution.
Unfortunately any conversation on this matter started very late. Indeed,
Universities Australia was of the view that the situation could have been
avoided through 'greater levels of engagement between the government and the
university sector and possibly internally to government'. For example, as noted
earlier, Universities Australia could not understand:
...how the regulatory impact statement can have assessed that
the impact on universities will be small when in its own admission it did not
have any data to support its conclusion, and it did not consult with the university
Sydney University supported this view. It noted that when preparing the
bill, Defence 'had no information available to it indicating the number of
activities in Australian universities likely to be affected'.
Furthermore, at the hearing on 21 March Dr Michael Biercuk informed the
committee that discussion with Defence about such matters had started 'about an
At the same hearing, Professor Mann told the committee that there was 'a job of
work to be done, not just an instrument, which we have not seen yet, which may
have lots of exemptions'. He was of the view that Defence had 'grossly
underestimated how many exemptions there would need to be'.
Even as late as 30 May, the NHMRC informed the committee that while the university
sector had been consulted, the Medical Research Institute (MRI) sector and the
public health sector had not. It also had strong reservations about the bill, noting
that the legislation 'may have ramifications not only for the university sector,
but also for other institutions that conduct health and medical research...' NHMRC
In order to ensure that the MRI sector will be consulted, my
Office will provide details of the draft Bill to (Association of Australian
Medical Research Institutes) AAMRI and provide contact details for AAMRI to the
Defence Bill secretariat. However, both the MRI and the public health sectors
should be included in the consultation process.
In this regard, the NHMRC suggested broad consultation once the bill had
been redrafted, which should 'include the peak body for MRIs and the health
sector'. At this late stage, the committee received a similar submission from
the Australian Research Council, which was of the view that the concerns raised
were 'sufficiently serious as to justify further consultation with universities
about the proposed controls, prior to their implementation'.
As noted earlier, Defence commenced consultation in earnest with the
Australian research sector about the proposed legislation during March 2012. The
consultation was continuing when on 21 June 2012, the committee received
information from Defence indicating that it had met with Universities Australia
and agreed to develop principles and options for further consultation and
discussion with the university and research sectors.
On 2 July, the Department of Industry, Innovation, Science, Research and
Tertiary Education (DIISRTE) stated that it was encouraged with the progress of
consultations between Defence and the higher education sector since March 2012.
It noted, however, that the consultations were continuing and Defence was
'still developing options for consultation with the sector'. Indeed, based on
the perspective of its portfolio agencies, DIISRTE identified another issue that
was 'yet to be addressed'—the treatment of statutory authorities, whose staff
have not been granted exemption from committing offences under the bill. DIISRTE
also noted that while Defence had dealt directly with Universities Australia
and the University of Sydney, it had not done so with the broader range of
universities. It suggested that universities 'may have different viewpoints and
it would be desirable to broaden the consultation process to include all
It noted that Defence was planning to do so.
Conclusion of consultation process
On 9 August, Professor Jill Trewhella, Deputy Vice-Chancellor (Research)
at the University of Sydney, advised the committee that
It is with considerable regret that I must inform the
Committee that at present the university sector is unable to support what we
understand to be Defence's preferred position relating to this Bill and its
In our view the current Option 4, which we understand to be
Defence's preferred position, is inconsistent with the regulatory principles
that we understood had been agreed by Defence early in the consultations.
Universities Australia shares the concerns of the University of Sydney,
Since March, Universities Australia has engaged in discussions
with the Department of Defence...with the intention of securing a workable
outcome. Despite early promise of progress and a commitment from the Department
to work collaboratively, we have been disappointed that there has not been the
opportunity for open or considered sectoral engagement on the issues, and to
date adequate responses to our concerns have not been provided.
The universities argue that their concerns have not been recognised by
Defence. A set of amendments to the bill to resolve the issues raised by the
universities, known as option 3, was proposed during consultations and supported
by the universities, research organisations, and DIISRTE.
The University of Sydney explains that option 3
...balances the competing demands of providing controls for
high-risk activities and ensuring protection for innovative research, education
and freedom of inquiry. It accomplishes this by targeting enforcement to a
relatively small class of high-risk activities which have limited overlap with
typical academic research (e.g. advanced "experimental development"
activities pertaining to Very Sensitive controlled goods). Exemptions for
basic, strategic basic and applied scientific research ensure that it is
possible to create a culture of compliance among the limited pool of
researchers engaged in activities that potentially carry security risks.
Defence propose a different set of amendments to the bill, known as
option 4. In June, Defence circulated a paper with both options 3 and 4 to
stakeholders. The universities, research organisations and DIISRTE have all raised
concerns with option 4.
Universities Australia explains that:
...from our perspective, it was evident that the proposed new
option [option 4] had numerous shortcomings that would not achieve the
objective sought. Universities Australia provided a formal response expressing
our concerns about the new option [option 4] and reiterating our preference for
the core elements of 'Option 3' to form the basis of any solution...Despite
some advantages provided by exempting supply of intangible technologies within
Australian borders, the sheer volume of international collaborative activity in
a digital age means that Option 4 would, in practice, be little different, in
practice, to the draft legislation currently before Parliament. More
importantly, it fails to address the Bill's own stated objective to apply to a
limited and small volume of high-end, specialist research. In doing so, it
risks constraining low risk research of high public value, with few obvious
benefits to national security.
Both the University of Sydney and Universities Australia raise concerns
with the way in which the consultation has been conducted by Defence. For
Significantly, on 10 July 2012 Defence advised Universities Australia
in writing that it intended to recommend amendments to the Bill to introduce
permit requirements for academic publications involving DSGL technologies.
Coming so late in the consultation process, Defence's reversal of its previous
verbal advice (made during the consultations) that it did not intend to control
publication of university research, raises profound questions of principle,
policy and process.
Universities Australia requested written advice from Defence
about its proposal to control publications as part of Option 4. To date, no
such advice has been forthcoming. This means that we have had no detailed
information on which to make an assessment of the practicalities of Defence's
On 9 August, Defence wrote to inform the committee it was 'unlikely that
Defence and the university and research sectors will reach agreement on a
preferred option and, as a result, consultation has moved towards the practical
implementation of the legislation'.
As noted above, the cause of the disagreement is that the university and
research sectors and DIISRTE prefer option 3, while Defence argues for option
Defence asked the committee to 'adopt'
option 4 and endorse the amendments that Defence proposes in support of this
option. Amongst other arguments, Defence lists the following reasons the
committee should endorse option 4:
It implements Australia's obligations under the Wassenaar
Arrangement to implement controls on intangible transfer of controlled
It is most consistent with the existing tangible export
control model and therefore provides a more simple and common approach. It also
reduces potential cost to businesses as they will not need to establish
separate compliance systems for tangible and intangible controls.
Defence lists the proposed amendments which could be made to the bill
To implement Option 4 and address other aspects that have
arisen during the course of consultation, if accepted by the Committee, the
Bill could be altered by:
making the Bill consistent with Australia's existing tangible
export controls by:
- removing controls on supplies of technology inside Australia;
- removing controls for Australians located overseas who supply
- applying controls to all supplies of technology from Australia to
anyone outside Australia;
including definitions for 'in the public domain' and 'basic
scientific research' in the Bill and Regulations;
removing controls on defence services; and
including an additional control on publishing information where
it will transfer controlled technology to the public domain.
Defence proposes to work with the university and research sectors to
assist them in implementing option 4, should the committee agree that bill be
amended in this way.
Defence will remain engaged with the Department of
Innovation, Industry, Science, Research and Tertiary Education and UA
[Universities Australia] on outreach activities and materials, so that we can
benefit from their knowledge of how to best communicate with the sector.
Planned measures include:
a simple user guide to help individuals to understand and
navigate the Defence and Strategic Goods List;
a sector-specific publication to assist the academic and research
sectors to understand what Australia's export control system means for them (similar
to the product developed previously for the mining industry);
tools and guidance to help academic and research institutions to
build internal compliance frameworks that are appropriate for their
sector-specific outreach sessions for key export compliance staff
(train the trainers); and
sector-specific outreach sessions with researchers to help them
understand their obligations and how the export control process works.
Universities Australia, and the other research organisations, remains
willing to work with Defence to find a solution. However, Universities
Australia notes that 'agreement can only be achieved through a transparent
consultation process in which all stakeholders from the research community and
other affected organisations are brought together'.
Universities Australia suggested that the Chief Scientist, Professor Ian Chubb,
could assist in resolving the consultation deadlock. It informed the committee
that Professor Chubb has accepted an invitation to convene a roundtable of key
Universities Australia supports a roundtable in that it is
...an initiative that is consistent with our calls during the
consultation process to move beyond the series of bilateral conversations that
had characterised the Department's approach. A roundtable would enable the key
stakeholders to hear the Department's proposal and reasoning and develop their
own response in light of perspectives that extend beyond narrow sectoral
The committee endorses the roundtable approach proposed by
Universities Australia and recommends that Defence participate in the
roundtable of key stakeholders convened by Universities Australia and chaired
by the Chief Scientist, Professor Ian Chubb. The committee also recommends that
the further consultation be conducted by Defence with key stakeholders, until
the issues raised can be resolved to the satisfaction of all parties. Further,
the committee recommends that consultation be conducted in an open and
transparent manner, and sufficient time allowed for key stakeholders to
consider the complex issues and respond.
The committee further recommends that, in designing the
implementation of the strengthened export controls, Defence create an advisory
group of key stakeholders which must have input into each part of the process.
Key stakeholders in the group should include, but not be limited to: DIISRTE,
the Department of Health and Ageing, NHMRC, Universities Australia, and the
Chief Scientist of Australia.
The regulations are an important part of the implementation of
the strengthened export controls. Defence has proposed that the regulations
will be amended in line with any amendments made to the bill. The committee
recommends that the regulations form an integral part of the consultation
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