2013 2014 2015 THE PARLIAMENT OF THE COMMONWEALTH …

2013 – 2014–2015

THE PARLIAMENT OF THE COMMONWEALTH OF AUSTRALIA

HOUSE OF REPRESENTATIVES

DEFENCE TRADE CONTROLS AMENDMENT BILL 2015

EXPLANATORY MEMORANDUM

(Circulated by the authority of the

Minister for Defence the Hon Kevin Andrews MP)

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GENERAL OUTLINE

The Defence Trade Controls Amendment Bill 2015 will amend the Defence Trade Controls

Act 2012 (the Act) which received Royal Assent on 13 November 2012.

The Act includes measures to strengthen Australia’s export controls to meet our 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 gives effect to

the Treaty Between the Government of Australia and the Government of the United States of

America Concerning Defense Trade Cooperation (the Treaty). The Treaty provisions

commenced operation on 6 June 2013, and will not be amended in any substantive way by the

Bill.

The Act introduced new export controls on the intangible supply of technology listed in the

Defence and Strategic Goods List (DSGL), the prohibition of the publication of DSGL

technology, and the regulation of brokering activities.

Due to stakeholder concerns about the impact of the new export controls the commencement

of these controls were delayed by a transition period, during which offence provisions do not

apply. A Strengthened Export Controls Steering Group was established under section 74A of

the Act to test the legislation and to advise Government on legislative amendments during the

transition period.

During this transition phase the Department of Defence, in partnership with the Strengthened

Export Controls Steering Group and the Department of Industry, has conducted extensive

consultation on the potential impacts of the Act and proposed measures to reduce these

impacts. This consultation has informed the development of the amendments in the Bill.

In broad terms, the amendments:

a) provide an additional 12-month implementation period (from the day of Royal

Assent of the Act) before the offence provisions in sections 10, 13, 14, 15 and 18,

and the record-keeping requirements in subsections 58(1) & 58(2) commence

operation;

b) provide two new exceptions to the supply offence in section 10;

i. for the oral supply of Defence and Strategic Goods List (DSGL) technology,

where the 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;

and

ii. for the supply of dual-use (Part 2) DSGL technology where the supply is

preparatory to the publication of Part 2 DSGL technology.

c) extend the exception to the offence of supplying DSGL technology without a permit

to, or from, members of the Australian Public Service, Australian Defence Force,

Australian Federal Police, and State and Territory police to include employees of the

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Australian Security Intelligence Organisation (ASIO) and the Australian Secret

Intelligence Service (ASIS);

d) allow for applicants to apply for supply and brokering permits on behalf of projects,

and for permits to be issued to project participants;

e) narrow the publication offence to ‘publishing’ military (Part 1) DSGL technology

where no approval has been given or the publication is in contravention of a

condition of an approval;

f) allow the Minister to prohibit publication of military (Part 1) or dual-use (Part 2)

DGSL technology where the publication would prejudice the defence, security or

international relations of Australia;

g) allow the Secretary of Defence to issue an interim prohibition notice for the

publication of military (Part 1) or dual-use (Part 2) DGSL technology, where the

Secretary considers there may be grounds for the Minister to issue a prohibition

notice;

h) amend the brokering definition of ‘arranges’ to be an exhaustive definition and to

include that the broker must receive money or a non-cash benefit which includes

property or services in any form other than money;

i) narrow the scope of the brokering offence in section 15(1) of the Act to apply to the

brokering of goods or technology listed in Part 1 of the DSGL;

j) establish new offences for brokering dual-use (Part 2) DSGL goods or technology

(without a permit, or in contravention of a condition of a permit) where the broker

knows, or is reckless or negligent as to whether the goods or technology may be for

a WMD program or military end-use;

k) extend the exception for the brokering offence to, include employees of ASIO and

ASIS;

l) include two additional exceptions to the brokering offence in section 15(1) (except

where for a WMD program):

i. where either the brokered supply is from, or the broker conducts their

brokering from within, a State that is a member of the four main export control

regimes (the Wassenaar Arrangement, Missile Technology Control Regime,

Nuclear Suppliers Group, Australia Group) and that State is listed in a

legislative instrument; or

ii. the brokered supply is in connection with a contract specified in a legislative

instrument – these contracts may include government business.

m) allow the Minister to prohibit the brokering of military (Part 1) or dual-use (Part 2)

DGSL technology where the brokered supply would prejudice the defence, security

or international relations of Australia;

n) allow the Minister to direct a person to seek a permit for the brokering of dual-use

(Part 2) DSGL goods or technology;

o) require the Minister, delegate of the Minister, or the Secretary, to consider criteria

prescribed in the Regulation and to have regard to any other matters the decision

maker considers appropriate before making any decision under the Act that requires

the decision maker to consider whether an activity would prejudice Australia’s

security, defence or international relations; and

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p) provide for the review of the operation of the Act, except for Parts 3 and 4. The

review will occur initially two years after the commencement of section 10 and then

subsequently at intervals of not longer than five years. The Minister must table a

copy of the review report in each House of the Parliament.

Financial Impact Statement

The cost of implementing the strengthened export controls will be met from within existing

resources. As these amendments will reduce the regulatory and administrative burden on

stakeholders, including universities, research organisations and private sector companies, the

amendments are expected to reduce the previously anticipated compliance costs for

stakeholders.

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Regulation Impact Statement – Amendments to the Defence Trade

Controls Act 2012 to reduce regulatory burden

Introduction

Australia’s export control system aims to stop goods and technologies that can be used in

the development of chemical, biological or nuclear weapons, or military goods and

technologies, from being supplied to other states or groups that would be detrimental to

Australia’s national security or other interests, or in contravention of Australia’s

international counter-proliferation obligations and commitments.

As a member of the Wassenaar Arrangement, the Missile Technology Control Regime,

the Australia Group and the Nuclear Suppliers Group, Australia has committed to

regulate the export of items listed by these regimes.

This Regulation Impact Statement will refer to items listed by the above-mentioned

regimes as being ‘controlled’. These include military items, but also equipment and

technologies developed to meet legitimate commercial business needs that can also be

used either as military components or for the development or production of military

systems or weapons of mass destruction (WMD), these items are referred to as ‘dual-use’

items. Examples of dual-use items are, certain chemicals, toxins, electronic equipment,

marine and avionic equipment. One example of a ‘dual-use’ item is a magnetometer that

could be used for geophysical surveys or physics research but it is controlled because it

also has a military application as it can be used to detect submarines.

As a participating State in these regimes, Australia must seek, through our national

policies, to ensure that supplies of these controlled items do not contribute to the

development or enhancement of military or WMD capabilities.

The participating States of the Wassenaar Arrangement are:

Argentina, Australia, Austria, Belgium, Bulgaria, Canada, Croatia, Czech

Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary,

Ireland, Italy, Japan, Latvia, Lithuania, Luxembourg, Malta, Mexico, Netherlands,

New Zealand, Norway, Poland, Portugal, Republic of Korea, Romania, Russian

Federation, Slovakia, Slovenia, South Africa, Spain, Sweden, Switzerland,

Turkey, Ukraine, United Kingdom and United States.

The list of controlled items is available online at www.defence.gov.au/deco/DSGL.asp .

In accordance with these obligations, Australia already regulates the physical export of

controlled items, but these controls are not broad enough to meet the full extent of our

international obligations and counter proliferation; for example:

If an Australian organisation physically exports a controlled virus, export permission

is required, but if they email instructions on how to produce or enhance that virus, no

permission is required. Therefore, the Australian Government has no visibility or

control over the non-physical export of this information, including whether it is

potentially destined for diversion to a biological weapons program.

http://www.defence.gov.au/deco/DSGL.asp

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If an Australian, or a person located in Australia, were to arrange for controlled

weapons to be sent from one destination outside Australia to another destination

outside Australia, no brokering permit is required. Therefore, the Australian

Government has no visibility or control over this brokering activity, including

whether it is potentially destined for use in human rights abuses.

In 2003 and 2006, member states of the Wassenaar Arrangement agreed that, in addition

to regulating the physical export of controlled items, member states should also regulate

the brokering and non-physical export (i.e. by electronic means) of these controlled

items1.

The Defence Trade Controls Act 2012 (‘the Act’) is the means by which Australia is

implementing this obligation.

The Act was passed by Parliament and received Royal Assent on 13 November 2012.

The Act introduced:

1. Regulation of the intangible ‘supply’ of controlled technologies.

‘Supply’ is where a person inside Australia sends controlled technology to a person

outside Australia by non-physical means, such as sending a blueprint by email rather

than in hardcopy. It is the electronic equivalent of a physical export.

2. Regulation of the brokering of controlled goods or technologies.

Brokering is where a person does not handle the controlled items themselves, but

rather arranges for someone outside Australia to supply controlled goods or

technology to a third party, also outside of Australia.

3. Prohibition of the publication of controlled technology.

It was considered necessary to prohibit the publication of controlled technology,

because once that technology is released into the public domain, it can no longer be

effectively controlled.

What problems need to be solved?

Problem 1: Australia’s export controls do not address the non-physical export

(referred to in the Act as ‘supply’) of controlled technologies or the brokering of

controlled goods and technology.

Currently, a person can send, via non-physical means, controlled technology to someone

overseas and the Australian Government would have no visibility of this supply. Also,

the Australian Government has no visibility of brokering arrangements that would result

in the movement of controlled goods or technology from one place overseas to another

1 The Wassenaar Arrangement’s public documents on Elements for Effective Legislation on Arms

Brokering (2003) and Best Practice for Implementing Intangible Transfer of Technology controls (2006)

are available at http://www.wassenaar.org/guidelines/index.html

http://www.wassenaar.org/guidelines/index.html

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place overseas. Australia has agreed to regulate these activities through its membership

of the Wassenaar Arrangement.

Australians supply controlled technology overseas for various reasons. With many

Australian companies choosing to manufacture their sensitive goods overseas due to

more affordable manufacturing costs, Australian companies are sending their sensitive

technology overseas to facilitate the manufacturing process. Further, Defence projects to

acquire military materiel will involve international commercial collaborative

arrangements that will involve supply of controlled military technology. Australia’s

relatively small university and research sector relies heavily on international research

collaborations and will supply sensitive controlled technology in the course of that

collaboration. Multinational companies with business operations in many countries will

supply technology overseas as part of their normal business activities.

Leaving this activity unregulated would undermine Australia’s international reputation as

a credible contributor to global counter-proliferation efforts. Australian companies and

researchers would find it more difficult to gain access to sensitive controlled technology

from other countries because those countries would have diminished confidence in

Australia’s ability to regulate the further supply of that technology.

The Department of Defence does not consider that it would be possible to implement

export controls by non-regulatory means, because it is the permit-based regulatory system

that gives the Australian Government visibility and control over the legal movements of

these sensitive items. Australian companies and institutions are not in a position to know

whether an overseas recipient has direct or indirect links to proliferators, or whether there

is a risk of diversion to proliferators. Every year the Minister for Defence denies a small

number of exports because there is credible, often highly classified, evidence that such

goods or technologies are at significant risk of being supplied to states or groups of

proliferation concern. Such decisions are made based on all of the available information,

always balanced against the inherent benefits of enabling Australian individuals,

companies or institutions to earn export income.

Problem 2: The Act as written imposes a heavy regulatory burden on large numbers

of organisations, including defence industry, dual-use industries, universities, and

other research organisations.

These new forms of export controls are by their nature more challenging to regulate than

physical exports, and stakeholders raised significant concerns about the potential impact

of this regulation. Stakeholder concerns about the Act included:

1. the difficulty of regulating intangible means of supply (such as emails and other

electronic communications) compared with regulating physical exports across

Australia’s physical borders, without significantly impeding business and

international research collaboration.

2. the unintended capture of legitimate business and international research collaboration

in the brokering controls, because of the way the brokering controls are worded in the

Act, and the application of the brokering controls in the Act to both military and dual-

use controlled items.

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3. the impact of prohibiting publications that contain controlled material, particularly on

the university and research sectors, because the Act prohibits the publication of both

military and dual-use controlled technology, even though in some other countries

there are exclusions in place for dual-use publications.

Stakeholders who will be affected by the changes in the Act are:

Australia’s defence industry;

universities and other research organisations; and

industry sectors that export controlled dual-use items with military or WMD

applications (including sectors that deal with the following broad categories: nuclear

materials; materials, chemicals, microorganisms and toxins; materials processing;

electronics; computers; telecommunications and information security; sensors and

lasers; navigation and avionics; marine; and aerospace and propulsion).

Difficulty of regulating intangible means of supply:

Three sectors – defence industry, dual-use industry, and the university and research sector

– will be affected by regulating intangible supplies. Compared to the current regulation

where physical goods pass a border, it will be more difficult to regulate activities

occurring intangibly, instantly and often. Stakeholders are particularly concerned that

they would need to obtain permission to cover the verbal supply of controlled technology

(e.g. telephone conversations with colleagues located overseas).

To comply with the regulation of intangible supplies, organisations or individuals would

need to understand that their technology is controlled and apply for a permit. They would

need to keep records of the supplies that they make under the permit.

Throughout the transition period, stakeholders have voiced their concerns that if the Act

is not changed, it would create significant resource implications for these organisations

and business to submit applications for permits to the Defence Export Control Office.

Based on the way the Act is currently drafted the volume of applications is anticipated to

be high and could potentially result in delays for these businesses and organisations while

they wait for the permits to be processed and approved.

Unintended capture of legitimate business and international research collaboration

in the brokering controls:

Three sectors – defence industry, dual-use industry and the universities and research

sector – have expressed concerns about the brokering regulations which will apply to the

brokering of military and dual-use goods and technology. The sectors submit that the

brokering controls could impede defence industry primes and other multi-national

corporations’ dealings with their overseas parent companies and researchers undertaking

international research collaborations.

The Department of Defence will not impede legitimate multinational business or

international research collaboration by these controls. Areas where the regulation would

not need to apply include:

Brokering dual-use controlled items where there is no military or WMD end use.

Brokering for Government business.

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Brokering out of countries that have comparable export controls to Australia.

Where the only benefit gained is a research benefit.

To comply with the regulation of brokering, organisations or individuals would need to

understand that the goods or technology are controlled, register as a broker and apply for

permits to cover their brokering activities. They would also need to keep records of the

activities conducted under the permit.

The impact of prohibiting publications that contain controlled material:

One sector – the university and research sector – expressed concern about the details of

the publication controls. There were concerns expressed that universities and researchers

would need to seek approval to publish dual-use controlled technology, which would

disadvantage them in comparison to their US and UK counterparts. But while

universities and researchers would need to examine their publications dealing with

controlled technology, pilot program investigations confirmed that the incidence of

publication of controlled technology was low.

To comply with the regulation of publications, organisations or individuals would need to

understand that their published technology is controlled and apply for an approval for the

publication to proceed. If the approval was not granted, the controlled technology would

need to be removed from the publication.

Costs and benefits

Under the Act, the following sectors would need to develop additional compliance

mechanisms to deal with the regulation:

Supply permit

compliance

Publication

approvals

compliance

Brokering permit

compliance

Defence Industry Yes Yes Yes

Dual-use Industry Yes Yes Yes

Universities and

research institutions

Yes Yes Possible

Sectors would incur costs to implement compliance frameworks to comply with the

legislation and avoid penalties. These costs would include costs associated with increased

staffing, communication of compliance measures, legal oversight, training and education,

systems upgrade and in-kind contribution from existing staff.

Costs are difficult to quantify in advance of implementation, however, organisations that

have been participating in the pilot program have informed the estimate in this

Regulatory Impact Statement. The estimated costs vary across sectors as defence and

some dual-use industry already have compliance mechanisms in place to obtain permits

for physical exports, and there is also variance in cost according to the nature of the

organisation, its size, structure, and governance arrangements:

Defence and dual-use industry - $236k start up, $116k ongoing per year

University and research sector - $473k start up, $232k ongoing per year

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Steering Group’s investigation of the problems

Due to these significant concerns and the inability to implement export controls by non-

regulatory means, a transition period was established under the Act, during which offence

provisions do not apply. A Strengthened Export Controls Steering Group (the Steering

Group) was established in December 2012 to test the legislation and to advise

government on legislative amendments during the transition period.

The Steering Group is comprised of representatives from industry, research, and

government sectors and is chaired by Australia’s Chief Scientist, Professor Ian Chubb,

AC.

The Steering Group established a pilot program to test the regulatory impact of the Act

across different types of organisations, including universities, defence industry,

government research agencies, small to medium enterprises, cooperative research centres,

and medical research institutes.

From May to September 2013, the pilot program identified issues with the Act as written,

using examples from their own organisations. This was augmented by feedback from

broader stakeholders. It found that the regulation needed to:

More closely target those who are likely to be supplying controlled technology,

and explicitly exclude others. The Steering Group has asked the Department of

Defence to develop an online self-assessment tool, so that companies and institutions

can more easily determine whether their activities are subject to export controls.

Reduce the burden on those who are supplying controlled technology through

appropriate exclusions commensurate with international practice. For example,

exporters in the US, UK and EU have access to streamlined export licences for lower-

risk export activities.

Adopt a more balanced approach to managing publications. The US and UK both

have arrangements in place to ensure that academic imperatives to publish are not

unduly hampered by export controls. The Steering Group also investigated the

incidence of controlled technology in Australian publications, and found that it was

low - an assessment of 278 Australian publications considered most likely to contain

controlled technology based on their topics, found only 9 instances.

Reduce the scope of the brokering control to better reflect the policy intent and

avoid unintended capture. For example multinational companies considered that

their employees could be captured by the brokering controls during the course of their

business, contrary to the intent of the brokering control.

In September 2013 the Steering Group agreed to test a number of proposed solutions to

address these problems, through the pilot program. The results of this pilot program

testing justified that these risk-based solutions would achieve the aim of reducing

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regulatory burden without compromising national security. To build on the evidence

gathered through the pilot program, Professor Chubb also invited all Australian

universities to submit case studies for testing, and a Defence Industry Experts’ Group was

established to provide feedback from a defence industry perspective, including their

practical experience with export control implementation in Australia and internationally.

The Steering Group will make its final recommendations to the Minister for Defence and

the Minister for Industry and Science based on the outcomes of pilot testing and broader

stakeholder engagement, including public consultation.

Why is government action needed?

TO ADDRESS PROBLEM 1: Government action is required to ensure that Australia’s

export controls adequately address Australia’s international obligations to regulate the

non-physical supply of controlled technology and the brokering of controlled goods and

technology.

TO ADDRESS PROBLEM 2: Government needs to take steps to reduce the regulatory

burden on stakeholders, including defence industry, dual-use industries, universities, and

other research organisations that will be affected by the higher levels of regulation when

the Act comes into force.

Noting that these stakeholders represent significant industries within the Australian

economy it is important that the regulation balances the regulatory burden while meeting

Australia’s international obligations and national security interests. For example, current

figures estimate that the Australian university and research sector generates $25.2 billion2

in revenue and that Australian defence industry, consisting of several large defence

primes and many small and medium enterprises, generates approximately $6.5 billion in

revenue3.

Australia relies heavily on access to sensitive controlled goods and technologies

produced by other like-minded counterparts and allies, particularly the United States.

Such access is reliant on the US’s and others’ assessments that Australia will protect

these sensitive controlled goods and technologies, including through a robust export

control system. An international perception that Australia’s export controls are not

sufficiently robust could limit Australia’s access to such goods and technologies, and

have significant security and economic implications for Australia, as well as implications

for Australian research and industry. Therefore, it is important that adjustments to

Australia’s export control system remain consistent with the international norms practised

by our like-minded counterparts and are consistent with the government’s commitment to

counter-proliferation.

2 Department of Education, Finance 2012, Financial Reports of Higher Education Providers, December

2013, page 3, http://docs.education.gov.au/system/files/doc/other/finance2012.pdf 3 Australian Strategic Policy Institute, The Cost of Defence, ASPI Budget Brief 2013-2014, page 176,

https://www.aspi.org.au/publications/the-cost-of-defence-aspi-defence-budget-brief-2013-2014/ASPI-

CostDefence2013.pdf

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What policy options are being considered?

The Department of Defence has considered three options to address these issues:

Option 1 – Maintain the Act as currently written

The first option would be to maintain the Act as currently written. In practice, this would

mean that, at the end of the transition period the controls will take effect, stakeholders

would need to comply with the higher levels or regulation in the Act as it is currently

written.

This would impose an estimated $87.035 million per year in ongoing regulatory burden

on affected stakeholders. This is not considered a viable option as it does not address the

problem of the heavy regulatory burden.

Option 2 – Remove the new export controls from the Act

The second option would be to remove the export controls on intangible supply,

brokering and publications from the Act. In practice, this would mean that Australia’s

export controls would remain limited to physical exports, and stakeholders would not be

required to seek permission for the intangible supply, publication or brokering of

controlled technology.

This is not considered a viable option as it does not address the problem of Australia’s

obligations to regulate the non-physical supply of controlled technology and the

brokering of controlled goods and technology, consistent with international best practice.

It would also not be viable to introduce offences for intangible supplies, brokering and

publications without a permit scheme as this would mean that none of these activities

could occur. Under the permit arrangements, these activities can occur unless risks

associated with the specific items going to the specific end user are of sufficient concern

to warrant prohibition of the activity by the Minister for Defence. It is the permit-based

regulatory system that gives the Australian Government visibility and control over the

legal movements of these sensitive items. Australian companies and institutions are not

in a position to know whether an overseas recipient has direct or indirect links to

proliferators, or whether there is a risk of diversion to proliferators. Every year the

Minister for Defence denies a small number of exports because there is credible, often

highly classified, evidence that such goods or technologies are at significant risk of being

supplied to states or groups of proliferation concern.

Option 3 – Implement legislative and policy changes, consistent with international

practice

The third option aims to strike the appropriate balance between ensuring Australia is able

to comply with its counter-proliferation objectives and the promotion and advancement

of innovation and economic objectives. To facilitate this, the Department of Defence

would adopt a number of risk-based legislative amendments and policy changes to

streamline export controls and reduce regulation while maintaining national security and

complying with Australia’s internationally-agreed regime obligations.

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There is always a tension for responsible countries, between facilitating exports but

without damaging their own national security interests or contravening their international

security obligations. The Department of Defence has been working with stakeholders

through the Steering Group to achieve a balanced outcome that meets these imperatives

without compromising the counter-proliferation objectives of the Act.

It is widely recognised that export controls work best in an environment where

stakeholders are willing to comply because they understand the need for the regulation,

and are able to comply because the regulation is workable and strikes an appropriate

balance by weighing counter-proliferation objectives – which underpin national and

international security – with the promotion and advancement of innovation, research and

economic objectives.

These risk-based proposals have been developed and tested with stakeholders through the

Steering Group and pilot program process:

Remove controls on verbal supply of controlled technology (e.g. telephone

conversations, video conferences)

This would remove the higher regulatory burden on stakeholders by enabling them to

continue to verbally supply controlled technology. It would be impractical to regulate

verbal supply and would impose a high regulatory burden. Although stakeholders could

be discussing controlled technology, it is unlikely that they would be supplying the

technology with enough detail to reach the regulatory threshold.

Although the control on verbal supply would be removed, providing access to controlled

technology is still controlled if it occurs verbally; for example, one person verbally giving

another person the password to a database with controlled technology. It is likely that

controlled technology would be supplied by providing access to detailed records. Further

the supply of DSGL technology verbally for a military end-use or WMD program

remains controlled and a permit would be required for such a supply.

Exempt supply to, or from, Australian Public Service, Australian Defence Force,

Australian Federal Police and State and Territory Police, and the Australian

Intelligence Community

This would allow contractors directly supporting Australian Government business

(including defence contractors supporting military operations) to supply controlled

technology directly to, or receive controlled technology directly from, these Australian

Government representatives without needing to seek a permit.

Limit the requirement for brokering permits to controlled military items. Brokers

of controlled dual-use items will only be required to seek permits if approached by

the regulator or they are brokering for a WMD or military end use

It is proposed that the regulation of brokering activities through permits focus on

controlled military items, and exclude controlled dual-use items, unless the brokering is

for a WMD or military end-use. Additionally, the regulator could direct a broker to

obtain a permit if a dual-use brokering activity would prejudice Australia’s security or

international obligations.

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Exclude brokering from (as well as within) states that are listed members of the four

main export control regimes (Wassenaar Arrangement, Missile Technology Control

Regime, Nuclear Suppliers Group, Australia Group). Also exclude Australian

citizens who are brokering while located in these states.

Noting that member states of the export control regimes are required to have established

adequate export controls, there is scope for Australia to acknowledge these controls and

provide exceptions where brokering activities are occurring in, or are from, listed regime

partners.

Limit the requirement to seek approval for publications to controlled military

technology.

Noting that the pilot program demonstrated that the incidence of controlled technology in

Australian publications is low, there is scope to deregulate publications of dual-use

research and to manage the risk by using a prohibition power if a particular dual-use

publication is of concern. The publication of controlled military technology will be

regulated as this technology is more sensitive.

In addition to the above measures that would require legislative amendment, Defence has

worked with stakeholders through the Steering Group process to develop complementary

non-legislative changes:

Extending maximum licence duration from the current two years to five years or the

life of a project;

Introducing streamlined licences for lower-risk activities, commensurate with

international practice;

Introducing project-based licences to cover the range of identified activities within a

project.

This option would limit the application of the controls as follows:

Supply permit

compliance

Publication

approvals

compliance

Brokering permit

compliance

Defence Industry Yes Yes Yes

Dual-use Industry Yes No No

Universities and

research institutions

Yes No No

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Impact Analysis

Option 1:

Option 1 delivers the highest levels of controls to meet international export control

regime commitments and counter-proliferation objectives.

Option 1 does not address regulatory burden. If the Act remains unchanged, university

and research sector and dual-use industry stakeholders, will face higher levels of

compliance burden, resource costs, education costs, legal costs, training costs and system

upgrade expenses - potentially stifling innovation and adversely impacting trade and

economic prosperity.

Option 2:

The impact of this option is that Australia would not be complying with its

internationally-agreed regime obligations and the significant gaps (identified earlier)

would remain. In turn, this would mean that Australian companies and institutions could

increasingly be targeted by proliferators seeking to obtain military or WMD technology.

In effect, Australia would be defaulting on its international regime obligations, as well as

its autonomous commitment to counter-proliferation.

Australia would be demonstrably out of step with the US, UK, EU, Canada and other

like-minded regime partners that have already implemented export controls for intangible

supply and brokering. These countries have adopted risk-based approaches comparable

with those outlined at Option 3 below, and their export control systems have been a

valuable source of comparison and of lessons learned in the practical implementation of

such approaches.

Stakeholders recognise the importance of the new export controls, but are concerned that

the controls must strike the appropriate balance between managing national security and

international obligations, while ensuring that Australian industry and research remain

internationally competitive.

This option also risks jeopardising Australian access to sensitive technology from the US

and other countries, as such access is reliant on their assessment that Australia will

protect these sensitive technologies, including through a robust export control system.

This option would also jeopardise the Defense Trade Cooperation Treaty between

Australia and the US, as a consideration for that Treaty was that Australia was

implementing legislation to implement effective export controls on intangible supply and

brokering.

Option 3:

Option 3 will reduce the impact of the regulatory controls while meeting Australia’s

national security requirements and internationally-agreed obligations. The policy

measures have been carefully considered by the Department of Defence and the Steering

Group to ensure that the appropriate balance is achieved.

The problems of regulatory burden and not complying with Australia’s internationally-

agreed regime obligations have both been addressed by this option; most importantly:

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- Stakeholders will not need permits for verbal supplies of controlled technology,

except where they are verbally providing access to controlled technology (e.g. by

providing a password to a file containing controlled technology) or verbally

supplying controlled technology to a WMD program or military end-use;

- Stakeholders will not need to obtain permits for brokering dual-use controlled goods

or technology, except where the brokered activity is for a military or WMD end use

or they are approached by the regulator;

- Stakeholders will not need to obtain permits when the brokered activity from (as well

as within) lower-risk listed regime country; and

- Stakeholders would not need to seek approval to publish research containing dual-use

controlled technology.

What is the likely net benefit of each option?

The net benefit of the three options is based on indicative costing provided through the

pilot program.

It is important to note that this costing is speculative as the Act is still in a transition

period where its provisions have not come into force, which means that stakeholders are

unable to definitively state the costs involved in each proposal. Key assumptions

inherent in these include predicted labour costs, the availability of labour, the cost of

legal fees and foreseen operational expenses. The pilot program participants were asked

to measure costs that would be incurred in addition to current operating costs. Two pilots

responded to this request for costs and their feedback formed the basis of the costs

outlined in Annex A.

The Department of Defence welcomed feedback on this indicative costing through the

public consultation process which released the Early Assessment Regulation Impact

Statement. Of the 37 submissions received, three offered specific comment on the RIS to

note that the RIS did not detail the financial impact of the regulatory burden, in

particular, for individual researchers and smaller universities. The public consultation

submissions did not provide any further quantitative feedback on costing.

Option 1

The Department of Defence expect that this measure will create extensive compliance

costs. Costs will vary based on whether an organisation has compliance mechanisms to

deal with existing export controls on tangible exports, the nature of its business, and on

the size, structure and governance arrangements of the organisation. It is expected that

defence industry and some dual-use industry would already have export control

compliance mechanisms in place but most university and research organisations would

not.

17

Noting these differences, the proposed costs have been considered by sector.

Defence and Dual-Use Industry

Cost per

business

Total cost for all businesses

(600)

Average ongoing compliance cost per

year $116,047 $69,628,140

University and Research Organisations

Cost per

business


(75)


year $232,094 $17,407,028

More detailed breakdown of these costs can be found at Appendix A.

Benefits

Compared to other options, Option 1 delivers the strongest export controls by regulating

more activities.

Australia relies heavily on access to sensitive technologies produced by other like-

minded counterparts and allies, particularly the United States. Such access is reliant on

the United States’ and others’ assessments that Australia will protect these sensitive

technologies, including through a robust export control system. Option 1 would deliver

the highest international perception that Australia’s export controls are sufficiently robust

to regulate access to such goods and technologies.

Costs

Option 1 does not address regulatory burden. If the Act remains unchanged, all

stakeholders will face higher levels of compliance burden, resource costs, education

costs, legal costs, training costs and system upgrade expenses – potentially stifling

innovation and negatively impacting trade and economic prosperity.

Cost-benefit comparison

The costs of the regulatory burden of Option 1 outweigh the benefits of the increased

levels of export control. This conclusion is supported by the work that has been

conducted through the Steering Group process across industry, university and research

stakeholders.

18

Option 2

Cost per

business

Total cost for all

businesses


year $0 $0

Benefits

Option 2 would deliver the least regulatory burden for domestic stakeholders. Industry,

universities, and the research sectors would not need to adopt new compliance measures

to meet the increased levels of regulation inherent in the other options.

Costs

Australia’s credibility as a responsible contributor to international counter-proliferation

efforts would suffer, because we would continue to operate an export control system with

significant gaps, while other like-minded partners have addressed these gaps by

regulating the intangible supply and brokering of controlled goods and technologies. The

potential repercussions for our international reputation from failing to meet these

obligations would likely be exacerbated given Australia’s strong international leadership

in counter-proliferation matters, including as permanent chair of one of the main export

control regimes, the Australia Group.


The costs of this option cannot be measured in terms of regulatory burden. But there

would be significant impact in terms of Australia losing access to sensitive technologies

from the United States of America and elsewhere on the basis that such access is reliant

on their assessment that Australia will protect these sensitive technologies, including

through a robust export control system that includes controls on intangible technology

supplies and brokering. This option would thereby risk losing a portion of the

approximately $6.5 billion in revenue generated by Australian defence industry,

consisting of several large defence primes and many small and medium enterprises. It

would also create significant but unquantifiable difficulties for the defence-related

Australian university and research sector.

Option 3

As with Option 1, costs would also be affected by whether an organisation already has

compliance mechanisms to deal with existing export controls on tangible exports, the

nature of the organisation’s business, its size, structure, and governance arrangements. It

is anticipated that defence industry and dual-use industry would have export control

compliance mechanisms but university and research organisations would not.

19

Noting these differences, the proposed costs have been considered by sector.

Defence Industry

Cost per

business


(500)


year $98,844 $49,421,900

Dual-use Industry

Cost per

business


(100)


year $78,407 $7,840,650

University and Research Organisations

Cost per

business


(75)


year $196,688 $14,751,563

Detailed breakdown of these costs can be found at Appendix A.

Benefits

Option 3 reduces regulatory burden by introducing risk-based approaches to address

issues identified by stakeholders through the Steering Group process.

Although the level of regulation will be decreased through adopting a risk-based

approach, Australia would still meet its international export control regime obligations by

regulating the intangible supply of controlled technology and brokering of controlled

goods and technology.

Of the 37 public consultation comments received, seven submissions welcomed the

policy measures in the Amendment Bill as reducing regulatory burden, and one

university specifically supported Option 3 above Options 1 and 2.

The provision for regular legislative review two years after the Act commences

operation, and then in five-yearly cycles, will provide scope for stakeholders to advise the

financial impact of the regulation to enable further refinement of the regulation as

required.

Costs

The costs for this option are the best estimates available through the pilot program in

advance of implementation. Defence welcomed feedback on these estimates through the

public consultation process. Although one public submission indicated that the costing

data does not contain sufficient detail to provide reliable estimates of financial impact, no

additional data was provided. Once the regulation is implemented, analysis of actual

costs will be useful to determine how regulatory burden might be further reduced when

the legislation is reviewed after two years of operation.

20

During public consultation, one university commented that compliance costs for smaller

universities may be just as high as for larger universities that carry out more research.

Another public consultation submission noted that there should be more explicit

consideration of the implications for individuals and researchers because the legislation

imposes individual criminal culpability. Comment was also made that the level of costs

will be influenced by the scope of the final controls, and the level of Defence’s provision

of compliance support and education. Although these submissions did not provide

costing data to assist further cost analysis, once the regulation is implemented, Defence

will seek, on a voluntary basis, actual cost information to examine regulatory burden on

smaller universities and individuals and researchers when the legislation is reviewed after

two years of operation which is a requirement of the Amendment Bill.


Option 3 addresses the cost of regulatory burden. By amending the Act, stakeholders will

face more moderate levels of compliance burden, resource costs, education costs, legal

costs, training costs, and system upgrade expenses. This will assist to ensure that

innovation, research, trade and economic prosperity are not unduly stifled and

international export control regime obligations are met.

Regulatory Burden and Cost Offset (RBCO) Estimate Table

Average Annual Compliance Costs (from business as usual)*

Costs ($m) Business Community

Organisations

Individuals Total Cost

Total by

Sector

(35.43) N/A N/A (35.43)

Cost Offset Business Community

Organisations

Individuals Total Cost

Agency N/A N/A N/A N/A

Within

Portfolio

N/A N/A N/A N/A

Outside

Portfolio

N/A N/A N/A N/A

Total by

Sector

N/A N/A N/A N/A

Proposal is cost neutral – no

Proposal is deregulatory – yes

Balance of cost offsets $ N/A

Who has been consulted on the options and how did this happen?

In partnership with the Steering Group and the Department of Industry, the Department

of Defence has conducted extensive consultation on the potential impacts of the Act and

proposed measures to reduce these impacts throughout the transition period. These

consultations will continue after the Amendment Bill is tabled in Parliament to facilitate

implementation.

21

Throughout the process, outcomes of the Steering Group’s quarterly meetings and its six-

monthly reports to Government and the Senate have been published on the Steering

Group’s website at www.exportcontrols.govspace.gov.au to facilitate public access,

transparency and engagement. The Steering Group website also includes a stakeholder

engagement plan and calendar of stakeholder engagement activities undertaken to date in

2013 and 2014.

Public consultation on the draft legislation to inform the Steering Group and the

Department of Defence, included:

On 17 December 2014 Defence posted an announcement on the Defence Export

Control Office (DECO) website regarding the official dates of public

consultation, commencing on 17 December, with final submissions by the public

being accepted until 30 January 2015. This announcement on the DECO website

provided:

o the Bill;

o a tracked-changes version of the Defence Trade Controls Act 2012;

o the Explanatory Memorandum, including the Human Rights Compatibility

Statement;

o the Early Assessment Regulatory Impact Statement (RIS);

o a plain-English guide to the proposed changes to the Act; and

o the Public Consultation PowerPoint slides.

A Departmental media release was distributed on 17 December 2014.

Face-to-face public consultation sessions in the capital cities between

19–30 January 2015.

Tailored legal sessions in Sydney and Melbourne on 27 and 29 January 2015.

All existing DECO clients (approx. 4500 clients) were sent an email through the

export licensing system announcing the start of public consultation and providing

links to all relevant websites.

An email was sent to all points of contact obtained during the two-year transition

period of the Act (approx 1130 contacts).

An email was sent to peak bodies across the university and research sectors; industry

and SME sectors (Universities Australia, Australian Industry Group, Australian

Industry Defence Network, National Tertiary Education Union, Association of

Australian Medical Research Institutes, National Health and Medical Research

Council, Australian Research Council, Export Council of Australia, Australian

Institute of Marine Science, Communicable Disease Network Australia, Geoscience

Australia, Academy of Technological Sciences and Engineering, Australian Academy

of Science, Science and Technology Australia, Cooperative Research Centres

Association, Australian Information Industry Association, AusBiotech, Australian

Bureau of Agricultural and Resource Economics and Sciences, Royal Australian

Chemical Institute, Minerals Council of Australia, Defence Teaming Centre, Group

of Eight Australia, Innovative Research Universities and Regional Universities

Network).

Defence undertook a two-week road show, beginning on 19 January and concluding

on 30 January. These sessions were held in the capital cities of Brisbane; Darwin;

Perth; Canberra; Sydney; Adelaide; Melbourne and Hobart, and were hosted by the

following institutions, respectively: the University of Queensland; Charles Darwin

University; Curtin University; Australia National University; Sydney University; The

University of Southern Australia; Melbourne University and the University of

http://www.exportcontrols.govspace.gov.au/

22

Tasmania. These consultation sessions were open to all members of the public, with

specific outreach being made through stakeholder engagement, peak body

engagement and existing Defence export clientele, for university/research sector,

defence industry, dual-use industry and small and medium enterprise attendance, as

these are the stakeholders primarily impacted by the proposed legislation.

Given the complex nature of the legislation, there were also two legal sessions in

Sydney and Melbourne which provided additional granularity from a legal

perspective. These sessions were held in tandem with the more general sessions in

Sydney and Melbourne.

Results of public consultation

Overall attendance at each of the consultation sessions hovered around 20-30

participants, with the exception of Darwin where there were substantially fewer

participants. The sessions included a formal presentation on the Bill and work

undertaken by the Department of Defence, Steering Group and the Department of

Industry and Science during the transition period.

The formal briefing was followed by a period of questions and answer, which in almost

all sessions lasted for about an hour and a half. The primary focus of the questions

generated during the sessions was related to the need to ensure that an adequate

implementation period be established, so as not to create a difficult transition period for

stakeholders. This was a matter of particular concern noting the current offence

provisions in the Act will commence operation on 16 May 2015, unless otherwise

amended. Many attendees observed that the original legislation is unduly burdensome

for stakeholders, and unwieldy and impractical to implement from a regulatory

standpoint.

An additional area of comment at the sessions related to measures that, while not

legislative in nature, can be addressed by Defence through either the creation or

clarification of policy guidance. There was also noticeable concern in the face-to-face

sessions as to what sort of assistance, be it in outreach, education or the formulation of

tools, Defence could provide to stakeholders to aid in their implementation of the Bill.

When the public consultation finished on 30 January 2015, 37 submissions had been

received from across the university, research and industry sectors. The majority of the 37

submissions commended the consultative process conducted over the past two years and

largely welcomed the Bill’s measures to reduce regulatory burden. Several submissions

criticised the public consultation as being too short and for being conducted through

December and January when the academic community was largely on leave. A few

submissions opined that the legislation is misdirected and will disadvantage Australian

researchers in comparison to their counterparts in the United States of America and the

United Kingdom. The main themes of the consultation comments are set out below.

Although Government has provided for implementation by approving a six-month delay

to the commencement of the offence provisions from the date of Royal Assent for the

Bill, approximately ten university and research sector submissions asked for a 12-month

implementation period.

23

Three submissions requested the insertion of legislative declaratory statement to

acknowledge that academic and university researchers, in the exercise of their academic

integrity, will be able to intangibly share and publish research.

Several submissions requested broader exceptions to the supply offence for researchers to

cover various situations; including, when researchers are undertaking public benefit

research, when research collaborators travel overseas, for proprietary research that is not

published, and for dedicated teaching purposes. Submitters were also concerned that the

oral exception for the supply offence will not assist defence industry because the oral

supply exception will no longer be available for supplies that are for a military end-use.

A number of submissions requested the inclusion of a due diligence defence to the

supply, brokering and publication offences to protect researchers who exercise due

diligence by complying with organisational compliance programs but unwittingly commit

offences.

Concerns were raised in several submissions that the exception to the supply offence for

pre-publication activities related to dual-use technology is not clear, and it was suggested

that ‘pre-publication activity’ should be defined or further guidance on what constitutes

such an activity be provided.

A number of submissions also recommended that an ongoing advisory board with

representation from higher education, research, Government, industry and other key

stakeholders, be established to oversee the implementation of the new regulations.

Mechanisms for regular review of legislation and permanent stakeholder

consultation arrangements

Noting the challenging nature of this new regulation, a mechanism has been included to

provide for review of the operation of the Act at two years of commencement of the

strengthened export control provisions, and subsequently at intervals of not longer than

five years. This review process will involve continuing engagement with stakeholders

from higher education, research, industry, government and other key stakeholders.

Building on the work of the Steering Group, there is an opportunity to develop greater

stakeholder engagement at the strategic level. Mechanisms for permanent strategic

engagement between the Defence Export Control Office and its industry, research and

government stakeholders will be mutually beneficial and integrated with the legislative

review cycle.

What is the best option?

The Department of Defence endorses Option 3 as the preferred option. It is based on

significant stakeholder input through the Steering Group process, and reduces regulatory

burden without compromising Australia’s national security or contravening existing

international obligations and commitments.

Option 1 presents a solution where the costs of the regulatory burden outweigh the

benefits of the increased levels of export control. This conclusion is supported by the

work that has been conducted through the Steering Group process across industry,

university and research stakeholders.

24

Option 2 presents significant and unacceptable costs in terms of Australia losing access to

sensitive technologies from the United States of America and elsewhere on the basis that

such access is reliant on their assessment that Australia will protect these sensitive

technologies, including through a robust export control system that includes controls on

intangible technology supplies. Adopting this option risks losing a portion of the

approximately $6.5 billion in revenue generated by Australian defence industry. It would

also create significant but unquantifiable difficulties for the defence-related Australian

university and research sector.

Option 3 strikes an appropriate balance between the costs of regulatory burden that will

ensure from moderate levels of compliance costs, resource costs, education costs, legal

costs, training costs and system upgrade expenses with the benefits of ensuring that

innovation, trade and economic prosperity are not unduly stifled and international export

control regime obligations are met.

While Option 3 necessarily increases regulatory burden compared to Option 2 due to the

introduction of the new controls, it does so at a much lower level than Option 1 by

adopting risk-based approaches commensurate with international practice, and by

recognising the different risk profiles associated with military and dual-use controlled

items. Higher-risk activities would still require case-by-case assessment by the regulator,

but lower-risk activities would be streamlined, and this risk-based approach would also

flow through to the treatment of physical exports that are currently all considered on a

case-by-case basis, regardless of their risk profile.

How will the Department of Defence implement and evaluate the chosen option?

Once the legislation is settled, the Department of Defence will work with stakeholders to

help them prepare for the commencement of the offence provisions. The Government has

approved a six-month implementation period to run from Royal Assent of the

Amendment Bill to allow sufficient time for stakeholders to implement appropriate

compliance and licensing arrangements prior to the offence provisions coming into force.

During this period, Defence will provide assistance through face-to-face and online

training, detailed guidance, and compliance tools, including an online self-assessment

tool. Defence is developing these aids in collaboration with the Steering Group and its

pilot program to ensure that they meet stakeholders’ needs.

Throughout the transition process, organisations in the pilot program and broader

stakeholders are contributed evidence on the implementation requirements of the controls

including the institutional arrangements required to successfully implement the Act,

compliance and resourcing requirements. The pilot program also assisted with

implementation aspects, including the development of guidance, tools, training and

internal compliance frameworks.

Once the offence provisions come into force, Defence will continue to provide strong

stakeholder support through continuing face-to-face and online training, and ongoing

refinement of guidance and tools.

Defence will work with the Steering Group to establish permanent stakeholder

consultation arrangements to ensure that effective stakeholder engagement continues

beyond the Steering Group’s tenure.

25

Regular legislative review will provide a mechanism for stakeholders to provide feedback

on the operation of the Act and suggest ways in which the operation and administration

of the Act can continue to evolve and be refined over time.

After the legislation is passed, there will be an initial review of the legislation at the two year

mark and at five yearly intervals thereafter. This review will be conducted with close

interaction with the relevant stakeholders, including representatives from industry, university

and research sectors and relevant government agencies. The review will result in a report to

the defence and research ministers, to be tabled in Parliament, on the adequacy of the

regulation and whether any amendments to the Act, regulations or policy are recommended.

26

Appendix A

Option 1

Start up costs for FY14/15

Uni/Research sector costs per org Defence/Dual-use industry costs per org Resources $312,500 $156,250 Communications $50,000 $25,000 Legal $70,000 $35,000 Training $20,000 $10,000 Systems $20,000 $10,000 Total per org $472,500 $236,250

Total per sector (x 75 orgs)

$35,437,500 (x 600 orgs)

$141,750,000

Ongoing compliance costs for FY15/16 Resources $234,375 $117,188 Communications $25,000 $12,500 Legal $50,000 $25,000 Training $10,000 $5,000 Total $319,375 $159,688


$23,953,125 (x 600 orgs)

$95,812,800

Ongoing compliance costs for FY16/17 Resources $195,313 $97,656 Communications $5,000 $2,500 Legal $20,000 $10,000 Training $5,000 $2,500 Total $225,313 $112,656


$16,898,475 (x 600 orgs)

$67,593,600

Ongoing for following 7 years Resources $156,250 $78,125 Communications $5,000 $2,500 Legal $20,000 $10,000 Training $5,000 $2,500 Total $186,250 $93,125


$13,968,750 (x 600 orgs)

$55,875,000

27

Average Yearly compliance costs for Option 1: For university/research sector: $472,500 + 319,375 + 225,313 + 186,250x7 = $2,320,938 for 10 years per org Average ongoing compliance cost per year = $2,320,937/10 = $232,094 per org Total across sector (x by number of organisations) $2,320,937 x 75 orgs = $174,070,275 for 10 years for the sector For yearly average compliance cost, divide by 10: $17,407,028 per year for the sector For defence/dual-use sector: $236,250 + 159,688 + 112,656 + 93,125 x 7 = $1,160,469 for 10 years per org Average ongoing compliance cost per year = $1,160,469/10 = $116,047 per org Total across sector (x by number of businesses) $1,160,469 x 600 orgs = $696,281,400 for 10 years for the sector For yearly average compliance cost, divide by 10: $69,628,140 per year for the sector

Total average annual cost for Option 1: $17,407,028 + $69,628,140 = $87,035,168 per year for all sectors

Option 3 Option 3 requires three separate calculations as sectors would be subject to different levels of regulation (see table page 11).

Uni/Research sector costs per org

Dual-use industry

costs per org

Defence industry costs per org

Resources $312,500 $117,188 $156,250

Communications $20,000 $10,000 $10,000

Legal $10,000 $5,000 $5,000

Training $20,000 $10,000 $10,000

Systems $20,000 $10,000 $10,000

Total per org $382,500 $152,188 $191,250


(x 100 orgs)

$15,218,800

(x 500 orgs)

$28,687,500 $95,625,000

Ongoing compliance costs for FY15/16

Resources $234,375 $78,125 $117,188

Communications $10,000 $5,000 $5,000

Training $10,000 $5,000 $5,000

Total $254,375 $88,125 $127,188

Total per sector (x 75 orgs) (x 100 orgs) (x 500 orgs)

$23,953,125 $8,812,500 $63,594,800

28

Ongoing compliance costs for 16/17

Resources $156,250 $58,594 $78,125

Communications $5,000 $2,500 $2,500

Training $5,000 $2,500 $2,500

Total $166,250 $63,594 $83,125


$12,468,750 $6,359,400 $41,562,500

Ongoing compliance costs for following 7 years

Resources $78,125 $29,531 $39,062.50

Communications $5,000 $2,500 $2,500

Training $5,000 $2,500 $2,500

Total $88,125 $34,531 $44,063


$6,609,375 $3,453,100 $22,031,250

Average yearly compliance costs for Option 3 For university/research sector $382,500 + 254,375 + 166,250 + 88125x7 = $1,420,000 for 10 years per org Average ongoing compliance cost per year = $1,420,000/10 = $142,000 per org Total across sector (x by number of organisations) $1,420,000 x 75 orgs = $106,500,000 over 10 years for the sector For yearly average compliance cost, divide by 10: $10,650,000 per year for the sector For dual-use sector per year $152,188 + 88,125 + 63,594 +34531x7 = $545,624 for 10 years per org Average ongoing compliance cost per year = $545,624/10 = $54,562 per org Total across sector (x by number of businesses) $545,624 x 100 orgs = $54,562,400 for 10 years for the sector For yearly average compliance cost, divide by 10: $5,456,240 per year for the sector For defence industry sector per year: $191,250 + 127,188 + 83,125+44063x7 = $710,004 for 10 years per org Average ongoing compliance cost per year = $710,004/10 = $71,000 per org Total across sector (x by number of businesses) $710,004 x 500 orgs = $355,002,000 for 10 years for the sector For yearly average compliance cost, divide by 10: $35,500,200 per year for the sector Total average annual cost for Option 3: $10,650,000+ $5,456,240 + $35,500,200 = $51,606,440 per year for all sectors Total savings of Option 3 over Option 1: $87,035,168 - $51,606,440 = $35,428,728 ($35.43m)

29


Clause 1 – Short title

1. This provides for the citation of the Act as the Defence Trade Controls Amendment Act

2015.

Clause 2 – Commencement

2. Each provision of this Bill specified in column 1 of the table commences, or is taken to

have commenced, on the day or at the time specified in column 2 of the table. It also

provides that any other statement in column 2 of the table has effect according to its

terms.

3. Item 1 of the table provides that sections 1 to 3 and anything else in the Bill not covered

in the Table commences on the day on which the Act receives the Royal Assent.

4. Item 2 of the table provides that items 1 to 15 in the Schedule will commence on the day

the Act receives Royal Assent.

5. Item 3 of the table provides that items 16 to 22 in the Schedule commence immediately

after the commencement of section 10 of the Defence Trade Controls Act 2012.

6. Item 4 of the table provides that items 23 to 29 in the Schedule commence on the later of

either the day after the Act receives the Royal Assent or immediately after the

commencement of section 11 of the Defence Trade Controls Act 2012.

7. Item 5 of the table provides that items 30 to 44 in the Schedule commence immediately

after the commencement of section 14 of the Defence Trade Controls Act 2012.

8. Item 6 of the table provides that items 45 to 49 in the Schedule commence on the later of

either the day after the Act receives the Royal Assent or immediately after the

commencement of section 16 of the Defence Trade Controls Act 2012

9. Item 7 of the table provides that items 50 and 51 in the Schedule commence on the later

of either the day after the Act receives the Royal Assent or immediately after the

commencement of section 20 of the Defence Trade Controls Act 2012.

10. Item 8 of the table provides that items 52 to 77 in the Schedule commence on the day the

Act receives Royal Assent.

11. Subsection (2) provides that column 3 of the table contains additional information that is

not part of the Act.

Clause 3 – Schedule(s)

12. This provides that legislation specified in the schedule is amended or repealed as set out

in the applicable items in the Schedule and any other item in a Schedule has effect

according to its terms.

30

Schedule 1–Amendments

Defence Trade Controls Act 2012

Items 1 to 4 Subsection 2(1) (table items 3, 5, 7 and 10)

13. Items 1 to 4 delay the commencement of the offence provisions in sections 10, 13, 14,

15 and 18 and the record-keeping provisions in subsections 58(1) and (2) by 12 months.

The offence provisions will commence operation on the day after the period of 12

months beginning on the day the Act receives Royal Assent.

Item 5 Section 3

14. This repeals and replaces the simplified outline for the Act.

Item 6 Subsection 4(1) (definition of arranges)

15. This repeals and replaces the definition for arranges.

Item 7 Subsection 4(1)

16. This inserts additional definitions for terms ASIO and ASIS that appear in paragraphs

10(3)(b) and 15(2)(a).

Items 8 and 9 Subsection 4(1)

17. These items remove the terms Australian person and foreign person which are no longer

used in the Act.


18. This inserts additional definitions for the terms military end-use, non-cash benefit,

publish and Weapons of Mass Destruction program.

Items 11, 12, 13 and 14 Subsection 5A

19. The definition of ‘arranging’ has been amended to restrict its application to defined

circumstances. The amended definition of arranging includes when a broker acts as an

agent or intermediary and either receives ‘money or a non-cash benefit’ for doing so, or

acts for the purpose of advancing a political, religious or ideological cause. The

definition of non-cash benefit is defined in subsection 4(1) to mean ‘property or services

in any form other than money’.

20. To be ‘arranging’ a supply, a person would need to be acting as an agent for another

person, or as an intermediary between two or more other persons, and receiving some

form of benefit for so acting. The benefit would need to be either money or a non-cash

benefit, for example, weapons. A non-cash benefit would not include the ordinary

benefits of a research collaboration such as the advancement of a research project or

outcome.

31

21. A person could also be arranging a supply for the purpose of advancing a political,

religious or ideological cause; for example, a political activist who brokers the supply of

weapons to a militia group that is advancing their political cause.

Item 15 Before Division 1 of Part 2

22. This inserts a simplified outline for Part 2.

Item 16 Subparagraphs 10(1)(c)(i) and (ii)

23. This simplifies the language by removing the term ‘DSGL technology’.

Item 17 After the heading to subsection 10(2)

24. This adds a new exception to the supply offence so that the controls do not apply to the

oral supply of DSGL technology. However, the exception will not apply where the

supply is by way of the provision of access to DSGL technology or where the supply is

for a military end-use or for use in a Weapons of Mass Destruction program (WMD

program).

25. If a person is talking to an overseas colleague to supply them with DSGL technology,

the person will not need to apply for a permit unless they orally provide the overseas

colleague with a password to enable the colleague to access the DSGL technology on a

database.

26. Further, a permit will be required if a person is providing DSGL technology to an

individual or entity for use in a WMD program, or where DSGL technology is supplied

for use in relation to operations, exercises or activities conducted by an armed force or

armed group. The definition of WMD program and military end-use are set out in

subsection 4(1).

Item 18 Paragraph 10(3)(a)

27. This amendment extends the exception in paragraph 10(3)(a) to exclude supplies to a

member of the Australian Public Service, the Australian Defence Force or police (AFP

or State or Territory police) located outside Australia who receive the supply in the

course of their duties. Previously, the exception applied only to supplies by these

members.


28. This amendment extends the exception in paragraph 10(3)(a) to exclude supplies by or

to employees of ASIO or ASIS provided they send or receive the supply in the course of

their duties.

Item 20 Paragraph 10(3)(b)

29. This amendment clarifies that the exception in paragraph 10(3)(b) must occur in the

course of the member or employee’s duties.

32

Item 21 After subsection 10(3)

30. This amendment adds an exception to the offence for supply of dual-use (Part 2) DSGL

technology where the supply is preparatory to publication of that technology. This

exception will not be available where a publication prohibition notice has been issued

under either subsection 14B(1) or subsection 14C(1).

31. An activity will be ‘preparatory to the publication’ where the person has commenced

drafting a publication that contains dual-use (Part 2) DGSL technology, the author

intends to publish the publication, and the draft publication (or part of the draft

publication) is supplied by the author, or another person, to a person overseas to further

that publication. For example, activities such as sending a draft publication overseas to a

co-author, colleague or expert for comment, or sending a draft publication to a peer

reviewer or journal editor will not require a supply permit.


32. This amendment removes the geographical jurisdiction which is now included as a note

under subsection 10(1). Section 14.1 of the Criminal Code (standard geographical

jurisdiction) applies to an offence against subsection 10(1).


33. This amendment removes the requirement for a person to apply for a permit for the

supply to be to ‘another person’. This will enable people to apply for broader permits

that contemplate multiple end-users.

Item 24 Subsections 11(2) and (3)

34. These amendments make it possible for a person to apply for a permit to supply DSGL

technology for multiple supplies, supplies for a particular period of time and supplies for

a particular project. Subsection 11(2A) provides that one person may apply on behalf a

number of other people (project participants) for a permit. The application for a permit

under subsection 11(2A) will be able to specify multiple supplies and multiple project

participants.

35. The Minister is required to consider and decide whether or not to issue a permit for each

supply to each project participant specified in an application.


36. This amendment allows the Minister to issue a permit to project participants specified in

an application.


37. This amendment removes the reference to the requirement for the Minister to have

regard to criteria prescribed by the Regulations. Item 51 below inserts this requirement

as a stand-alone provision that will apply to any decision where the Minister, delegate of

the Minister, or Secretary, is required to decide whether an activity will prejudice the

security, defence or international relations of Australia.

33


38. This amendment will expand the activities able to be covered by a permit to cover

supplies for a particular period or a specific project.


39. This amendment allows the Minister to refuse to give a permit (and notice) to a project

participant.


40. This amendment increases the minimum specified period for new or varied conditions to

take effect to 14 days (it was previously 7 days).

Item 30 Section 14 (heading)

41. This amendment substitutes a new heading.


42. This amends the supply prohibition power in section 14(1) to require the Minister to

“reasonably believe” that the supply would prejudice Australia’s security, defence or

international relations before he or she can issue a prohibition notice.

Item 32 Section 14A

43. This repeals and replaces section 14A. The section has been amended by:

narrowing the scope of the offence to only apply to military (Part 1) DSGL

technology;

narrowing the scope of the offence for publishing military (Part 1) DSGL technology

by removing the dissemination of military (Part 1) DSGL technology;

providing that the Minister can approve, or revoke an approval, if the publication

would prejudice Australia’s security, defence or international relations; and

providing that an approval can be issued subject to conditions.

44. The publication offence will only apply where military (Part 1) DSGL technology is

published to the public or a section of the public, and no approval has been given or the

publication contravenes a condition of an approval.

45. The term ‘publish’ means to ‘publish on the internet or otherwise’ (section 4).

Publishing will be an offence when military (Part 1) DSGL technology is published by

placing it in the public domain and making it available to the public, even if access

requires payment such as a subscription fee to a journal. Publishing would include

publication of an article in a scientific journal or publication of conference proceedings

without any restriction on access.

46. The publication of dual-use (Part 2) DGSL technology is not an offence.

34

47. To understand the difference between publication under section 14A and supply under

section 10, where access to DSGL technology is restricted to a particular user or group,

the technology will not have been placed in the public domain. This will be a supply

rather than a publication and may require a supply permit under section 11.

48. A person can apply to the Minister for an approval to publish military (Part 1) DSGL

technology. The Minister may give approval if satisfied that the publication does not

prejudice the security, defence or international relations of Australia. If the Minister

refuses to approve the publication, he or she must give reasons for the refusal.

49. The Minister has the power to revoke an approval where satisfied that the approved

would prejudice the security, defence or international relations of Australia. If the

Minister revokes an approval, he or she must give reasons for the refusal.

50. Subsection 14A(12) states that an approval notice is not a legislative instrument. This

statement is declaratory in nature and does not provide a substantive exemption from the

Legislative Instruments Act 2003.

51. This amendment also adds a new section 14B to provide a power for the Minister to

prohibit the publication of military (Part 1) or dual-use (Part 2) DSGL technology where

the Minister reasonably believes that the publication would prejudice Australia’s

security, defence or international relations.

52. Before the Minister decides to issue a prohibition notice under section 14B or refuse an

approval under section 14A, Defence will consult with the affected person and more

broadly. For example, when the decision relates to university or research publications,

Defence will consult relevant subject matter experts (e.g. the Chief Executive Officer of

the National Health and Medical Research Council), and policy areas from relevant

Government agencies, including the agencies responsible for industry, science,

education and research. The views expressed in this consultation will be included in the

advice provided to the Minister. The Minister may also decide to consult directly with

relevant Ministers, including the Minister(s) responsible for industry, science, education

and research, before making a decision.

53. The Minister’s notice must specify the period that the notice will be in force which must

not be more than 12 months. Subsequent notice may be issued. Notices may be

revoked. Subsection 14B(7) states that a prohibition notice is not a legislative

instrument. This statement is declaratory in nature and does not provide a substantive

exemption from the Legislative Instruments Act 2003.

54. It is an offence for a person to publish in contravention of a notice issued under section

14B. The offence is punishable by imprisonment for 10 years, or 2500 penalty units, or

both.

55. This amendment also adds a new section 14C to provide a power for the Secretary to

issue a 90-day interim notice to prohibit the publication of military (Part 1) or dual-use

(Part 2) DSGL technology. The notice may be issued if the Secretary considers that

there may be grounds for the Minister to issue a notice under section 14B. This power

will provide Defence time to consult and brief the Minister in order to make a final

decision under section 14B.

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56. The notice comes into force when received and remains in force until a section 14B

notice is issued, or for 90 days, or it is revoked. Subsequent notice may be issued.

Subsection 14C(5) states that an interim notice is not a legislative instrument. This



57. It is an offence for a person to publish in contravention of a notice issued under section

14C. The offence is punishable by imprisonment for 10 years, or 2500 penalty units, or

both.

Item 33 Before subsection 15(1)

58. This inserts a new heading for subsection 15(1).

Item 34 Subparagraph 15(1)(a)(i)

59. This amendment narrows the offence in section 15(1)(a) to the brokering of military

(Part 1) DSGL goods without a permit or in contravention of a condition of a permit.

Item 35 Subparagraph 15(1)(a)(ii)

60. This amendment narrows the offence in section 15(1)(a) to the brokering of military

(Part 1) DSGL technology without a permit or in contravention of a condition of a

permit.

Item 36 After paragraph 15(1)(b)

61. This amendment adds a subsection to specify that the offence will apply when there is

no brokering prohibition notice in force under subsection 15A(1).

Item 37 After subsection 15(1)

62. This amendment adds a subsection that makes it an offence to broker the supply of dual-

use (Part 2) DSGL goods or technology, without a permission or in breach of a permit

condition, when the broker knows, or is reckless or negligent, as to whether the goods or

technology will or may be used for a military end-use. Military end-use is defined in

subsection 4(1). The offence is punishable by imprisonment for 10 years, or 2500

penalty units, or both.


63. This amendment extends the exception in subsection 15(2) to apply to both the offence

in subsection 15(1) and the offence in subsection 15(1A).


64. This amends the exception in paragraph 15(2)(a) to exclude brokering by employees of

ASIO or ASIS where the brokering is in the course of their duties.

36


65. This amendment extends the exception in subsection 15(3) to also apply to the offence in

subsection 15(1A).


66. This amends the subsection 15(4) exception which applies to the subsection 15(1) and

15(1A) brokering offences to include both brokering supplies from listed foreign

countries and for brokers located within listed foreign countries. The listed foreign

countries are those that are members of all four main export control regimes (the

Wassenaar Arrangement, Missile Technology Control Regime, Nuclear Suppliers

Group, Australia Group) and specified in a legislative instrument.

67. This amendment also adds subsections 15(4B) and 15(4C) that enable the Minister to

specify, by another legislative instrument, contracts that will be exempt from the

brokering offence – these contracts may include government business contracts.

68. Subsection 15(4D) adds an offence to broker the supply of dual-use (Part 2) DSGL

goods or technology, without a permission or in breach of a permit condition, when the

broker knows, or is reckless or negligent, as to whether the goods or technology will or

may be used for a WMD program. WMD program is defined in subsection 4(1). The

offence is punishable by imprisonment for 10 years, or 2500 penalty units, or both. No

exceptions apply to this offence.

Item 42 At the end of subsection 15(5)

69. This amendment ensures the geographical jurisdiction in subsection 15(5) applies to the

new offences in subsections 15(1A) and 15(4D).


70. This amendment adds definitions for the export control regimes - Australia Group,

Missile Technology Control Regime and Nuclear Suppliers Group.

Item 44 After section 15

71. This amendment adds a new section 15A to provide a power for the Minister to prohibit

the brokering of military (Part 1) and dual-use (Part 2) DSGL goods or technology

where the Minister reasonably believes that the brokering would prejudice Australia’s

security, defence or international relations.

72. The Minister’s notice must specify the period that the notice will be in force which must

not be more than 12 months. Subsequent notice may be issued. Notices may be

revoked. Subsection 15A(7) states that a prohibition notice is not a legislative

instrument. This statement is declaratory in nature and does not provide a substantive

exemption from the Legislative Instruments Act 2003.

37

73. It is an offence for a person to broker in contravention of a notice issued under section

15A. The offence is punishable by imprisonment for 10 years, or 2500 penalty units, or

both.

74. This amendment also adds a new section 15B to provide a power for the Minister to

direct a person not to broker dual-use (Part 2) DSGL goods or technology without a

permit.

75. Brokering of dual-use (Part 2) DSGL goods or technology will not require a brokering

permit unless the broker is ‘tapped on the shoulder’ which will take the form of being

served with section 15B notice that would require them to apply for permits in the

circumstances specified in the notice. Notices may be revoked.

76. Subsection 15B(4) states that a section 15B notice is not a legislative instrument. This



77. It is an offence for a person to broker in contravention of a notice issued under section

15B. The offence is punishable by imprisonment for 10 years, or 2500 penalty units, or

both.


78. This repeals and replaces the heading for Section 16.


79. This amendment will expand the activities able to be covered in an application to include

brokering supplies for a project.


80. This amendment removes the reference to the requirement that the Minister have regard

to criteria prescribed by the Regulations. Item 51 below inserts this requirement as a

stand-alone provision that will apply to any decisions where the Minister, delegate of the

Minister, or Secretary, needs to decide whether an activity will prejudice the security,

defence or international relations of Australia.


81. This amendment will expand the activities able to be covered by a permit to cover

specified supplies for a specified project.


82. This amendment increases the minimum specified period for new or varied conditions to

take effect to 14 days (it was previously 7 days).

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Item 50 At the end of section 20

83. This amendment adds a subsection to ensure that when a broker’s registration ceases to

be in force, any permits held by that broker will be deemed to be revoked.

Item 51 At the end of Part 2

84. This item adds a new section 25A to require the Minister, a delegate of the Minister, or

the Secretary, when deciding whether an activity will prejudice the security, defence or

international relations of Australia, to have regard to criteria prescribed by the

Regulations. The Minister, delegate of the Minister, or Secretary may also have regard

to other appropriate matters.

Item 52 Division 1 of Part 3

85. This repeals and replaces the simplified outline for Division 1 of Part 3.

Item 53 Section 37

86. This repeals and replaces the simplified outline for Division 1 of Part 4.

Item 54 subsection 40(3) (note)

87. This amendment removes the note at the end of subsection 40(3) as the inclusion of this

particular note is inconsistent with Commonwealth drafting practice. Section 14.1 of the

Criminal Code (standard geographical jurisdiction) applies to the offence in subsection

40(3).





43(3).





48(2).

Item 57 subsection 49 (note)

90. This amendment removes the note at the end of subsection 49 as the inclusion of this



49.

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Item 58 Before section 52






Item 61 Section 63

94. This inserts a subparagraph number.

Item 62 Paragraph 63(a)

95. This amendment includes a decision to refuse a permit to any person (including project

participants) as a reviewable decision.

Item 63 After paragraph 63(c)

96. This adds further decisions to the list of reviewable decisions.

Item 64 At the end of section 63

97. This adds a subparagraph to include a decision of the Secretary to issue a notice under

subsection 14C(1) as a reviewable decision.


98. This amendment repeals and substitutes a new subsection 64(1) to provide for internal

review of a decision made by a delegate of the Minister or a decision made by the

Secretary.



Item 67 Section 68(1)

100. This repeals and substitutes a new subsection 68(1) to provide that reasons for decisions

made personally by the Minister or Secretary must not disclose reasons where that

disclosure would prejudice Australia’s security, defence or international relations.


101. This repeals and substitutes the heading for section 72.

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102. This amendment includes additional notices to the list of matters that can be certified by

an evidential certificate.


103. This amendment provides that evidential certificate can also certify specified matters.


104. This amendment provides that the Secretary can certify that a notice under subsection

14C(1) was in force.


105. This amendment specifies that a certificate issued by the Secretary will also be prima

facie evidence of the matters stated in the certificate.


106. This amendment provides that publication approvals under subsection 14A(5) can now

be delegated. The amendment also adds the new decisions for revoking an approval to

publish military (Part 1) DSGL technology, prohibiting a publication of dual-use (Part 2)

DSGL technology and prohibiting brokering of DSGL goods or technology to the list of

decisions that can not be delegated by the Minister.

Item 74 Subsection 73(7) (table item 1)

107. This amendment alters the language used in Item 1 to reflect that supply permits may be

applied for on behalf of a number of project participants.

Item 75 Subsection 73(7) (after table item 1)

108. This amendment adds the decision to refuse an approval of publication to the table of

decisions in subsection 73(7). These decisions can not be made by a delegate if the

delegate is satisfied that the activity or approval would prejudice the security, defence or

international relations of Australia.

Item 76 Subsection 74 (2)

109. This amendment adds new decisions – for prohibiting publication under section 14C and

evidential certificates under section 72 – to the list of decisions that can not be delegated

by the Secretary.

Item 77 After section 74A

110. This amendment adds a new section that provides for reviews of the operation of the

Act, except for Parts 3 and 4. The reviews will occur initially, two years after the

commencement of section 10, and then subsequently, at intervals of not longer than five

41

years. The Minister must table a copy of each review report in both Houses of the

Parliament.

111. The terms of the reviews will be determined by the Minister and informed by

stakeholder feedback based on their experiences of working with the new export

controls.

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Statement of Compatibility with Human Rights

Prepared in accordance with Part 3 of the Human Rights (Parliamentary Scrutiny) Act 2011

Defence Trade Controls Amendment Bill 2015

This Bill is compatible with the human rights and freedoms recognised or declared in the

international instruments listed in section 3 of the Human Rights (Parliamentary Scrutiny) Act

2011.

Overview of the Bill

The Defence Trade Controls Amendment Bill 2015 will amend the Defence Trade Controls

Act 2012 (the Act) which received Royal Assent on 13 November 2012.

The Act introduced new export controls on the intangible supply and publication of

technology listed in the Defence and Strategic Goods List (DSGL) and brokering of DSGL

goods and technology.

In response to stakeholder concerns the Department of Defence is amending the Act to reduce

the potential impacts and regulatory burden while still meeting Australia’s national security

requirements and obligations under international counter-proliferation regimes.

The main proposed amendments include:

removing controls on the supply of Defence and Strategic Goods List (DSGL)

technology, where the 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;

extending the exception for the supply of controlled technology by, or to, APS, ADF, and

police to also include employees of ASIO and ASIS.

narrowing the scope of the publication offence to apply only to the publication of

technology on military (Part 1) of the DSGL, and including a Ministerial prohibition

power that can be exercised in specific instances where the publication of military (Part 1)

or dual-use (Part 2) DSGL technology would prejudice the security, defence or

international relations of Australia;

narrowing the scope of the brokering offence to apply to the brokering of military (Part 1)

DSGL goods and technology;

establishing new offences for brokering dual-use (Part 2) DSGL goods or technology

(without a permit, or in contravention of a condition of a permit) where the broker knows,

or is reckless or negligent as to whether the goods or technology may be for a WMD

program or military end-use;

including exceptions for brokering supplies from, or brokering activity within, states that

are considered to have comparable export controls to Australia and are members of all

four main counter-proliferation regimes; and for brokering in relation to specified

government business;

providing a power for the Minister to prohibit the brokering of military (Part 1) or dual-

use (Part 2) DGSL technology where the brokered supply would prejudice the defence,

security or international relations of Australia;

providing a power for the Minister to direct a person to seek a permit for brokering dual-

use (Part 2) DSGL goods or technology; and

43

requiring the Minister to consider criteria prescribed in the Defence Trade Controls

Regulations 2013 when deciding whether an activity would prejudice Australia’s security,

defence or international relations.

Further detail on the measures included in the Bill is included in the Explanatory

Memorandum.

Human rights implications

The Bill engages the following human rights:

The right to freedom of expression in Article 19(2) of the International Covenant

on Civil and Political rights (ICCPR); and

The presumption of innocence in Article 14(2) of the ICCPR.

The right to freedom of expression

The right to freedom of expression protects an individual’s right to express information and

ideas in any medium including through written and oral communications, the media, public

protest, broadcasting, artistic works and commercial advertising. The protection extends to all

information and ideas not just those that are favourable (subject to limitations).

The Bill includes amendments to the Act which limit the right to freedom of expression.

Specifically, Item 32 in Schedule 1 to the Bill inserts a new section 14A which restricts the

publication of military (Part 1) DSGL technology, to the public or section of the public

without approval. Item 32 also inserts a new section 14B which provides that the publication

of military (Part 1) or dual-use (Part 2) DGSL technology may be prohibited where the

Minister for Defence reasonably believes that the publication of that technology would

prejudice the security, defence or international relations of Australia. These provisions have

been included in the Bill to ensure that the sharing of sensitive technologies remains

controlled and that the current controls are not undermined by the publication of such

technology to the public generally. The publication of sensitive technology to the public, or a

section of the public would effectively result in existing export controls being redundant as

the technology would be available to members of the public. Public access to sensitive

technology has implications for national security and Australia’s international export and

counter-proliferation obligations. The new sections 14A and 14B ensure sensitive

technologies are properly controlled and provide a mechanism for consideration of all risks,

including risks to national security, associated with any publication.

The right to freedom of expression is not an absolute right and may be permissibly limited

(Article 19(3) ICCPR) by law for specific purposes including national security. The

limitations on the publication of DSGL technology are reasonable, necessary and

proportionate to achieving the objective of maintaining controls on sensitive DSGL

technology, which if published, may be a risk to national security. The limitation on

publication in the new section 14A only applies to sensitive military (Part 1) DSGL

technology and is not a blanket prohibition. The Minister may approve a publication where

the publication would not prejudice the security, defence or international relations of

Australia. Further, the Bill provides for internal and external review of a decision not to

approve a publication of military (Part 1) DSGL technology.

Publication of military (Part 1) or dual-use (Part 2) DSGL technology can only be prohibited

under the new section 14B in circumstances where the Minister reasonably believes that the

publication of that technology would prejudice the security, defence or international relations

of Australia. A prohibition decision is also subject to internal and external review.

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The presumption of innocence

The presumption of innocence provides that any person charged with a criminal offence shall

have the right to be presumed innocent until proved guilty according to law. It requires the

prosecution to prove a criminal charge and guarantees that no guilt can be presumed until that

charge has been proved beyond reasonable doubt.

The Bill includes a number of defences that reverse the onus of proof and limit the right to be

presumed innocent until proven guilty, as a person who fails to discharge the burden of proof,

may be convicted despite reasonable doubt as to their guilt. Reverse onus of proof offences

will not necessarily be inconsistent with the presumption of innocence provided that they are

reasonable in the circumstances and maintain a defendant’s right to a defence or to a fair

hearing.

Subsection 10(1) of the Bill provides an offence for supplying DSGL technology from

Australia to a place outside Australia without a permit, or in contravention of a condition of a

permit. Item 17 in Schedule 1 includes a new exception to the supply offence where the

supply is made orally and is not the provision of access to DSGL technology and is not for a

military end-use or for use in a Weapons of Mass Destruction program. The exception shifts

the evidential burden to the defendant. It is appropriate that a defendant seeking to rely upon

this exception prove that he or she made the supply orally, as the way in which the supply was

made is clearly, and may be solely, within the defendant’s personal knowledge. Further, the

purpose of the supply, to whom the oral supply is made, and the intended use of the DSGL

technology will also be clearly within the defendant’s personal knowledge.

Item 21 inserts an additional exception to the supply offence where dual-use (Part 2) DSGL

technology is being supplied and the supply is preparatory to the publication of the DSGL

technology (and the publication has not been prohibited). It is reasonable that a defendant

relying on this exception be required to provide evidence that a supply is preparatory to a

publication as this information will be solely within the knowledge of the defendant. It would

be more practical and less burdensome for the defendant to establish that the supply was

preparatory to publication than it would be for the prosecution to prove that the supply was

not preparatory to a publication.

Item 32 includes an exception to the new section 14A publication offence where the military

(Part 1) DSGL technology being published has been made lawfully available to the public or

section of the public. It is appropriate that a defendant seeking to rely upon this exception

have the evidentiary burden of establishing that the technology has already been made

available to the public lawfully, as the defendant will have particular knowledge of the

technology they have published and will be aware how the technology was made available to

the public previously.

Item 41 includes two exceptions to the brokering offences in section 15(1) and the proposed

new subsection 15(1A) (Item 34). The exceptions apply where either the brokered supply is

from, or the broker conducts their brokering from within, a state that is a member of all four

main export control regimes (the Wassenaar Arrangement, Missile Technology Control

Regime, Nuclear Suppliers Group, Australia Group) and that State is listed in a legislative

instrument. It is solely within the knowledge of a broker arranging the supply of military

(Part 1) DSGL goods or technology as to where the goods or technology were supplied from

or where she or he (the broker) was located when undertaking the brokering activity. It is

reasonable, and more practical in these circumstances, that the evidentiary burden lies with

the defendant rather than the prosecution needing to prove that the brokered supply was not

from, or the broker did not conduct their brokering from within, the specified state.

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Conclusion

The Bill engages the rights of freedom of expression and the presumption of innocence and

does so in order to enhance the export control regime which supports Australia’s defence,

security and international obligations. To the extent that the Bill may also limit human rights,

those limitations are reasonable, necessary and proportionate.

Kevin Andrews

Minister for Defence

Documents

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