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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)
DEFENCE TRADE CONTROLS AMENDMENT BILL 2015
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 Australias 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 Australias
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
Australias 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
Australias national security or other interests, or in contravention of Australias
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.
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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 Arrangements 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
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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. Australias
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 Australias 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
Australias 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
Australias 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:
Australias 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:
Defence Industry Supply permit Publication Brokering permit
Dual-use Industry compliance approvals compliance
Universities and compliance
research institutions Yes Yes Yes
Yes Yes Yes
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 Australias 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 Australias
export controls adequately address Australias 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
Australias 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 USs and others assessments that Australia will protect
these sensitive controlled goods and technologies, including through a robust export
control system. An international perception that Australias export controls are not
sufficiently robust could limit Australias 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
Australias export control system remain consistent with the international norms practised
by our like-minded counterparts and are consistent with the governments 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 Australias
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 Australias
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 Australias 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 Australias 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:
Defence Industry Supply permit Publication Brokering permit
Dual-use Industry compliance approvals compliance
Universities and compliance
research institutions Yes Yes Yes
Yes No No
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 Australias
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 Australias 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.
16
Noting these differences, the proposed costs have been considered by sector.
Defence and Dual-Use Industry Cost per Total cost for all businesses
business (600)
Average ongoing compliance cost per
year $116,047 $69,628,140
University and Research Organisations Cost per Total cost for all businesses
business (75)
Average ongoing compliance cost per
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 Australias 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.
17
Option 2 Cost per Total cost for all
business businesses
Average ongoing compliance cost per
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
Australias 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 Australias strong international leadership
in counter-proliferation matters, including as permanent chair of one of the main export
control regimes, the Australia Group.
Cost-benefit comparison
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 organisations 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.
18
Noting these differences, the proposed costs have been considered by sector.
Defence Industry Cost per Total cost for all businesses
business (500)
Average ongoing compliance cost per
year $98,844 $49,421,900
Dual-use Industry Cost per Total cost for all businesses
business (100)
Average ongoing compliance cost per
year $78,407 $7,840,650
University and Research Organisations Cost per Total cost for all businesses
business (75)
Average ongoing compliance cost per
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.
19
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 Defences 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.
Cost-benefit comparison
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 Individuals Total Cost
(35.43) Organisations (35.43)
Total by
Sector Business N/A N/A Total Cost
Cost Offset N/A N/A
N/A Community Individuals N/A
Agency N/A Organisations N/A
Within N/A N/A N/A
Portfolio N/A N/A
Outside N/A
Portfolio
Total by N/A N/A
Sector
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.
20
Throughout the process, outcomes of the Steering Groups quarterly meetings and its six-
monthly reports to Government and the Senate have been published on the Steering
Groups 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
21
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 Bills 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.
22
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 Australias 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.
23
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 Groups tenure.
24
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.
25
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
Total per sector (x 75 orgs)
$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
Total per sector (x 75 orgs)
$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
Total per sector (x 75 orgs)
$13,968,750 (x 600 orgs)
$55,875,000
26
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 Dual-use Defence
sector costs industry industry
per org costs per org costs per
org
Resources $312,500 $117,188
Communications $20,000 $10,000 $156,250
Legal $10,000 $5,000 $10,000
Training $20,000 $10,000 $5,000
Systems $20,000 $10,000 $10,000
Total per org $10,000
$382,500 $152,188
Total per sector (x 100 orgs) $191,250
(x 75 orgs)
(x 500 orgs)
$28,687,500 $15,218,800
$95,625,000
Ongoing compliance costs for FY15/16
Resources $234,375 $78,125 $117,188
$5,000
Communications $10,000 $5,000 $5,000
Training $10,000 $5,000 $127,188
(x 500 orgs)
Total $254,375 $88,125 $63,594,800
Total per sector (x 75 orgs) (x 100 orgs)
$23,953,125 $8,812,500
27
Ongoing compliance costs for 16/17
Resources $156,250 $58,594 $78,125
$2,500 $2,500
Communications $5,000 $2,500 $2,500
Training $5,000 $63,594 $83,125
(x 100 orgs) (x 500 orgs)
Total $166,250 $6,359,400 $41,562,500
Total per sector (x 75 orgs)
$12,468,750
Ongoing compliance costs for following 7 years
Resources $78,125 $29,531 $39,062.50
$2,500
Communications $5,000 $2,500 $2,500
Training $5,000 $2,500 $44,063
(x 500 orgs)
Total $88,125 $34,531 $22,031,250
Total per sector (x 75 orgs) (x 100 orgs)
$6,609,375 $3,453,100
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)
28
DEFENCE TRADE CONTROLS AMENDMENT BILL 2015
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.
29
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.
Item 10 Subsection 4(1)
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.
30
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.
Item 19 Paragraph 10(3)(a)
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 employees duties.
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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.
Item 22 Subsection 10(5)
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).
Item 23 Subsection 11(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.
Item 25 Subsection 11(4)
36. This amendment allows the Minister to issue a permit to project participants specified in
an application.
Item 26 Subsection 11(4)
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.
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Item 27 Subsection 11(5)
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.
Item 28 Subsection 11(6)
39. This amendment allows the Minister to refuse to give a permit (and notice) to a project
participant.
Item 29 Subsection 12(3)
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.
Item 31 Subsection 14(1)
42. This amends the supply prohibition power in section 14(1) to require the Minister to
"reasonably believe" that the supply would prejudice Australias 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 Australias 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.
33
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 Australias
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 Ministers 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
statement is declaratory in nature and does not provide a substantive exemption from the
Legislative Instruments Act 2003.
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.
Item 38 Subsection 15(2)
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).
Item 39 Paragraph 15(2)(a)
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.
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Item 40 Subsection 15(3)
65. This amendment extends the exception in subsection 15(3) to also apply to the offence in
subsection 15(1A).
Item 41 Subsection 15(4)
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).
Item 43 Subsection 15(6)
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 Australias
security, defence or international relations.
72. The Ministers 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.
36
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
statement is declaratory in nature and does not provide a substantive exemption from the
Legislative Instruments Act 2003.
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.
Item 45 Section 16 (heading)
78. This repeals and replaces the heading for Section 16.
Item 46 Subsection 16(2)
79. This amendment will expand the activities able to be covered in an application to include
brokering supplies for a project.
Item 47 Subsection 16(4)
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.
Item 48 Subsection 16(5)
81. This amendment will expand the activities able to be covered by a permit to cover
specified supplies for a specified project.
Item 49 Subsection 17(3)
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 brokers 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).
Item 55 subsection 43(3) (note)
88. This amendment removes the note at the end of subsection 43(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
43(3).
Item 56 subsection 48(2) (note)
89. This amendment removes the note at the end of subsection 48(2) 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
48(2).
Item 57 subsection 49 (note)
90. This amendment removes the note at the end of subsection 49 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
49.
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Item 58 Before section 52
91. This inserts a simplified outline for Part 5.
Item 59 Before section 58
92. This inserts a simplified outline for Part 6.
Item 60 Before section 63
93. This inserts a simplified outline for Part 7.
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.
Item 65 Subsection 64(1)
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 66 Before section 66
99. This inserts a simplified outline for Part 8.
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 Australias security, defence or international relations.
Item 68 Section 72 (heading)
101. This repeals and substitutes the heading for section 72.
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Item 69 Subsection 72(1)
102. This amendment includes additional notices to the list of matters that can be certified by
an evidential certificate.
Item 70 Subsection 72(1)
103. This amendment provides that evidential certificate can also certify specified matters.
Item 71 Subsection 72(1)
104. This amendment provides that the Secretary can certify that a notice under subsection
14C(1) was in force.
Item 72 Subsection 72(2)
105. This amendment specifies that a certificate issued by the Secretary will also be prima
facie evidence of the matters stated in the certificate.
Item 73 Subsection 73(2)
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
40
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 Australias 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
42
requiring the Minister to consider criteria prescribed in the Defence Trade Controls
Regulations 2013 when deciding whether an activity would prejudice Australias 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 individuals 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 Australias 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 defendants 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 defendants 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 defendants 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 Australias 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
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