Key issues and committee view
This chapter addresses issues raised in the submissions received by the
committee in relation to the ongoing implementation of the Act, including the
provisions of the amendment bill, and sets out the views and recommendations of
Adequacy of consultations
A large number of submissions received, particularly from the university
sector, were very positive about the consultation process undertaken during the
two-year transition period. Curtin University described the creation of the
Strengthened Export Controls Steering Group (the steering group) and the
two-year transition period as a 'very sensible approach' to the issues raised
with the Act, and the recent consultations on the amendment bill as 'rapid but
UNSW said the steering group had 'consulted extensively and very
professionally' with both research and industry stakeholders, and that the
Defence Export Controls Office (DECO) and the steering group had done a
'tremendous job' in finding workable solutions to difficult problems.
The University of Queensland welcomed the 'extensive and productive
relationship' it had developed with DECO and the Department of Industry and
Science through its work as one of the steering group's pilot organisations.
This view was not universal: the National Tertiary Education Union
(NTEU) expressed the view that while the attempt to consult had been genuine,
it was not wide-reaching, and the extent of engagement with affected university
staff had been inadequate.
Mr Brendan Jones was concerned that industry was under-represented in the
consultation process, with only three multi-national companies involved, and no
representatives of small dual-use enterprises on the steering group or in the
With regard to consultation on the amendment bill, the NTEU expressed
concern about both the length and timing of the government's consultations,
taking place 'during a period when many academic staff were not available'.
On the other hand, the Australian Academy of Science (AAS) pointed out that
while the timeframe was tight, the consultations on the bill were the
culmination of a lengthy discussion and piloting process. As such, it was
satisfied with the overall process.
Provisions of the amendment bill
Most submissions received by the committee expressed general support for
the amendment bill, observing that the bill was a vast improvement on the Act's
original provisions, and had 'largely addressed' the key concerns of
stakeholders. UNSW said that:
The amendments in the Bill 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.
The University of Sydney agreed:
we are confident that the measures proposed in the Bill will
significantly reduce the compliance burden for universities, their researchers
and support staff, and deliver a regulatory framework that is much better
targeted at activities that 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
Some submitters who attended DECO's consultations on the exposure draft
of the bill reported that they had heard widespread support for the bill.
Having said that, submitters identified a range of issues on which
concerns remained, or upon which further work needed to be done, including
possible further amendment of the legislation in future. The NTEU, for example,
asserted that 'there remain a number of critical flaws in the legislation', but
believed that these could be significantly addressed through 'minor amendments'
to the bill.
Supply and publication offences
The introduction in the bill of an exemption from the permit requirement
for oral supply of controlled technology was welcomed as a major relief to
researchers, going a long way to address their concerns that ordinary research
communication and collaboration would give rise to unintended offences under
the original provisions of the Act.
Representatives of the university sector drew attention to one potential
loophole in the amended supply provisions: where supply occurred from a person
within Australia to a person normally resident in Australia but temporarily
overseas (such as on a work or research trip), without the supplier's
knowledge. It was recommended that the offence should not apply in such a
situation, provided that the receiver did not on-supply the controlled
technology to any other person outside Australia.
Similarly, researchers welcomed the 'exception' approach to the
publication of controlled dual-use technology, whereby a permit would not
ordinarily be required, but the minister may prohibit specific publications
when warranted. While welcoming the introduction of such a risk-based approach,
the NTEU expressed concern about the scope of the ministerial discretion, which
extended to potential prejudice to Australia's 'security, defence or
international relations', and recommended that the ministerial power be
'clearly prescribed and appropriately constrained'.
The exemption from a permit requirement for 'pre-publication' supply of
dual-use technology was broadly welcomed, although Curtin University expressed
the view that while the attempt to remove the ambiguity associated with
pre-publication activities was welcome, this would remain difficult to monitor.
In submissions and public consultations, researchers queried the point at which
a communication or paper crossed the threshold for pre-publication. The
Computing Research and Education Association of Australasia (CoRE) also pointed
out that the legislation would not extend to research conducted in the hope of
publication, if publication did not in fact eventuate.
Some submitters noted ongoing concerns about the clarity of definitions
in both the Defence and Strategic Goods List (DSGL) and the Act, leading to
difficulty for researchers and industry in knowing the scope of coverage of the
permit regime, and determining whether their activities were controlled or not.
Curtin University expressed concern that 'basic research', an important
concept in the supply exemptions, was defined in the Defence and Strategic
Goods List (DSGL) but not in the Act itself, and should be.
Cryptographer Dr Vanessa Teague highlighted difficulties with the definition
and scope of controlled technology, including the description of cryptography
in the DSGL.
The NTEU said that:
certain phrases in the legislation are likely to be
interpreted in a variety of ways and thus without consistency. The
interpretation of phrases such as a 'broker' or 'arrange' through s5A and
'pre-publication' or 'preparatory to a publication' ss10(3) may be easily
misinterpreted and this deserves further review at a future point in time.
Mr Patrick Barry, an amateur astronomer and entrepreneur, expressed
strong concerns that ordinary activities undertaken by citizens such as himself
may fall under what he saw as broad 'catch-all' definitions within the Act.
Consistency with other
Recalling an issue raised in discussions about the original Act, CoRE
expressed concern that the offences in the amended act would still be more
restrictive than those in equivalent legislation in the United Kingdom and the
United States. CoRE believed that this would result in comparative disadvantage
to the research and technology sector in Australia, and an exodus of Australian
experts and innovators to work overseas.
CoRE did, however, support passage of the bill, provided that the
12-month extension of the transition period was included, giving time to
rectify this and other flaws in the offence provisions.
Coverage of government agencies
Two submitters raised issues in relation to the exception to the offence
of supplying DSGL technology without a permit, in cases of supply to or from
members of the Australian Public Service, Australian Defence Force, Australian
Federal Police, state and territory police, Australian Security Intelligence
Organisation (ASIO) or Australian Secret Intelligence Service (ASIS).
The NTEU objected to the extension of this exception (and also the
brokering offence exception) to ASIO and ASIS employees, considering the larger
indemnities from criminal liability extended to those agencies under recent
The Australian Nuclear Science and Technology Organisation (ANSTO)
expressed concern that it was not covered under the supply exemption, expressing
its view that staff of all agencies governed by the Public Governance,
Performance and Accountability Act 2013 should enjoy the same protections
from prosecution under the Act.
The burden of implementation
The cost and difficulty of complying with the provisions of the Act,
even as amended, continued to be of concern to submitters. Two small industry
submitters feared that the legislation would result in vastly increased costs
and delays for those working in affected sectors.
While Mr Jones expressed scepticism about the cost estimates provided in the explanatory
memorandum (EM) to the bill,
the NTEU welcomed the production of cost estimates in the EM as a basis for further
review of the legislation's impact in the research sector.
The NTEU was critical of some provisions of the bill with regard to procedural
fairness for permit applicants, which allowed for broad ministerial discretion
and a 90-day response time for ministerial decisions. The NTEU believed that
these should be tightened to protect applicants' need for timely and
transparent decision-making processes.
The University of Queensland requested that the government ensure adequate
future funding of DECO to meet the increased demands which would be placed on
it when the new permit provisions entered into effect.
The 12-month transition period
The overwhelming majority of submissions to the committee supported the
inclusion in the amendment bill of a 12-month further transition period before
the (amended) Act's offence provisions took effect.
Several submitters emphasised the importance of DECO's continued work
with stakeholders on developing educational materials, guidance and training to
ensure that researchers and other affected employees and organisations could
navigate the controls and comply with the legislative requirements. La Trobe University
said that there remained 'confusion in the university sector about what
constitutes "supply" especially in relation to controlled dual-use
technology and when a permit would be required', stressing that the training
and guidelines under development must be detailed enough to provide sufficient
clarity on these issues.
The University of Tasmania (UTas) said it understood that the pilot
studies undertaken at several universities had been instructive in highlighting
difficulties in implementing the control measures, but these had not yet been
made publicly available. UTas was one of many organisations which were not yet
ready to comply with the legislation, and believed that the 12-month window was
crucial to avoid institutions taking 'an overly risk averse approach' which
would compromise their own research output, and likely place an unnecessary
burden on DECO in the form of excessive permit applications.
Ongoing consultation mechanisms
Many submitters to the committee emphasised the importance of ongoing
consultation mechanisms. While there was obvious work to do on supporting
implementation and compliance with the new provisions, further consultation on
outstanding issues was also seen as very important, including by submitters who
supported the amendments proposed in the present bill. In this respect several
also drew attention to the provisions in the bill for longer-term legislative
review, and advocated the need for independent and inclusive mechanisms to
ensure that such review was meaningful.
Dr Teague stated that 'this review has made considerable improvements,
but...there is still much more work to do'.
The University of Sydney, which had been deeply involved in the steering group
process and strongly supported the amendment bill, nevertheless noted that 'the
issues are complex and it will be vital for [DECO] to continue working with
stakeholders on the detail over the coming months', highlighting a number of
areas needing 'more detail and clarity'.
Several submitters specifically recommended that future consultation be
conducted through the continued operation of the steering group, which had
built valuable relationships and a track record of success and was well placed
to carry on the necessary work during the 12-month transition period, and
potentially beyond that.
The University of Sydney said that:
Many important details will need to be finalised during the
Act's extended implementation period, and ongoing independent monitoring and
advice will be invaluable...
It will be critical that the [further legislative] review is
independent, and we recommend that the [steering group] and its working groups
are maintained to monitor implementation and conduct or oversee the first
review of the scheme's operation.
The University of Sydney recommended that the process could be further
strengthened by formalising the provision of expert scientific advice to DECO
and the minister within the consultation process.
When presenting the amendment bill in the House of Representatives, the
government stated that it would seek to extend the steering group's tenure to
cover the extended implementation period provided for in the bill.
The Department of Industry and Science also advised the committee of its
support for the work of the steering group to continue.
The committee concludes its two-year monitoring mandate on the Defence
Trade Controls Act 2012 on a much more positive note than it began. The
consultation and testing process that has taken place under the aegis of the
steering group over the last two years is largely a good news story. There are
undoubtedly issues which remain to be resolved, and implementation of the Act
will present significant ongoing challenges. However, the progress made to date
is real and is very welcome.
The committee commends the members of the steering group, pilot
organisations, and all those who have participated in and supported the
consultation process, for their diligence and constructive commitment in bringing
the process to this point.
The committee notes that Defence did not report to it, as requested in
the last progress report, on the consultation process planned for the amendment
bill, and that in the event, the process was launched suddenly and conducted within
a very constrained timeframe over the summer holiday period. To that extent, it
was less than ideal.
Nevertheless, it is apparent to the committee that the amendment bill
enjoys broad support, particularly within the academic and research community,
who believe it has resolved many of the issues which so troubled them in the
original Act. Even those who retained serious concerns about aspects of the
legislation were mostly supportive of the passage of the amendment bill,
observing that it improves upon the provisions of the Act, and will extend the
transition period to address ongoing issues. The committee is also well aware
that time is now of the essence, with the conclusion of the transition period
under the original Act looming in May 2015.
Bearing these things in mind, the committee also notes that there is
universal support for the extension of the transition period in the legislation
for another 12 months. The committee agrees that this further time window is
essential to enable DECO and stakeholders to make the necessary preparations
for compliance with the legislation, and is also an opportunity to continue
consultations on remaining issues of concern.
The committee is mindful that in comparison to the robust representation
from universities, it received little direct feedback from the industry sector.
Moreover, some of the concerns raised by individual and small business
submitters reflected a lack of detailed understanding of the scope and
operation of the legislation. The committee is of the view that small and
medium enterprises and dual-use businesses represent a subset of the affected
community which is particularly in need of proactive awareness-raising,
consultation and support as the transition period proceeds. The committee urges
DECO and the steering group to make a specific effort to ensure that this
less-engaged group of stakeholders is not left behind.
The committee recommends that the Defence Trade Controls Amendment Bill 2015
The committee welcomed advice from many that the steering group had
built valuable productive relationships between government and stakeholders,
and created a solid platform for the further work necessary over the coming
years. In this respect, the committee acknowledges the support expressed in
many submissions for the steering group to remain in place throughout the
12-month transition period and even beyond it, bearing in mind the provision that
the bill be reviewed two years after its full entry into effect, and every five
The committee endorses the importance of ongoing consultation between
government and stakeholders as implementation of the legislation rolls out, and
believes that at least in the initial stages, maintaining the steering group
infrastructure is the most sensible way to maximise the likelihood of
successful implementation of the Act.
The committee recommends that the Strengthened Export Controls Steering
Group be retained, for at least the duration of the 12-month transition period set
out in the amendment bill. The committee recommends that during this period the
steering group develop recommendations to government in regard to the most
appropriate mechanisms for ongoing consultation between stakeholders, and for
the periodic review of the legislation.
The committee acknowledges the feedback provided by stakeholders both
within and outside government that its initial scrutiny of the Act, and its
ensuing monitoring mandate during the two-year transition period, have played a
valuable role in ensuring the momentum and accountability of the consultation
process, and the confidence of stakeholders in it.
The committee is conscious that the work it has been monitoring is not
complete. The committee believes that there would be value in continuing its
own scrutiny during the 12-month extended transition period proposed in the
Moreover, the committee notes that the government has not yet responded
to the issues raised in its second progress report, particularly in relation to
DECO's approach to the licensing process. While the committee welcomes more
positive feedback received prior to this report on stakeholders' working
relationships with DECO, the committee believes that continued monitoring
during the crucial implementation phase is warranted.
During this period, the committee encourages Defence and the steering
group to give careful consideration to the remaining issues raised in this
report about the provisions of the Act. In particular, the committee notes
submitters' concern about the consequences of accidental supply of controlled
technology to a person temporarily overseas, and requests that Defence provide
further information to the committee on how it proposes to deal with this
The committee recommends that it continue to monitor the implementation
of the Defence Trade Controls Act 2012, as amended, during the further
12-month transition period set out in the amendment bill. The committee should
report to the Senate on an interim basis if required, and after the conclusion
of the 12-month period, on the further progress of the implementation of the
Act and related issues.
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