Mr ENTSCH (9:41 PM) —I move:

That the bill be now read a second time.

The Broadcasting Services Amendment (Online Services) Bill 1999 will enact a regime which balances the need for the government to meet legitimate community concerns about the publication of illegal and offensive material online that is commensurate with the regulation of conventional media, while ensuring that the regulation does not place onerous or unjustifiable burdens on industry and inhibit the development of the online economy. Following the report of the Senate Select Committee on Information Technologies on the bill and further consultation with industry, the government made a number of amendments to the bill in the Senate to ensure that the intent of the bill is clear and its operation effective.

The main elements of the proposed framework are the following. A complaints mechanism will be established, under which any person can complain to the Australian Broadcasting Authority about offensive material online. Material that will trigger action by the ABA will be defined on the basis of current National Classification Board Guidelines for film as material refused classification and rated X, and material rated R that is not protected by adult verification procedures. The ABA will be given the powers to issue notices to Internet content hosts, ICHs, aimed at preventing access to prohibited material which is subject to a complaint if it is hosted in Australia. Where material is hosted overseas, the ABA will be able to direct Internet service providers to comply with provisions in an industry code of practice registered by the ABA or with an ABA standard or, where there is no code or standard, to take reasonable steps, which are to be technically and commercially feasible, to prevent access.

The framework will not apply to private or restricted distribution communications such as intranets or communications not in a stored form, nor to private emails, although industry codes of practice will be expected to cover emails that direct the recipient to highly offensive or illegal materials, and current provisions of the Crimes Act 1914 in relation to the offensive or harassing use of a carriage service will continue to apply. IPSs will be exempted from access prevention notices in relation to prohibited overseas hosted material where an offensive alternative arrangement is in place to prevent access by particular end users. Indemnities will be provided for service providers to protect them from litigation by customers affected by ABA notices.

There will be a graduated scale of sanctions against service providers breaching ABA notices or the legislation will apply. A community advisory body will be established to monitor material, operate a `hotline' to receive complaints about illegal material and pass this information to the ABA and police authorities, and to advise the public about options such as filtering software that are available to address concerns about online content. The Commonwealth will be responsible for regulating the activities of ISPs and ICHs and the Attorney-General will encourage the development of uniform state and territory offence provisions complementing the Commonwealth legislation, including section 85ZE of the Crimes Act, that create offences for the publication and transmission of prohibited material by users and content creators. The government will establish a review of the legislation in three years.

The use of online services is growing rapidly in Australia. There are now over 650 online service providers providing access to the Internet and other online services. The ABS estimates that more than 3.6 million Australians have accessed the Internet at some time. It is clear that the information accessed through this medium is increasingly influential in the community. Concerns have been expressed, both within the community and at government level, about the nature of the material that may be accessed by means of online services, specifically in relation to perceived ease of access to material that is either illegal, pornographic or unsuitable for children.

The bill amends the Broadcasting Services Act 1992 to provide for the regulation of ISPs and ICHs. Schedule 2 to the bill makes a consequential amendment to the Crimes Act. It will introduce a regulatory framework for ISPs and ICHs and forms part of a two-tiered approach to online content regulation in which it is anticipated that the states and territories will enact complementary legislation creating offences for the publication and transmission of objectionable material by end users. This regulatory framework will be complemented by non-legislative initiatives directed towards educating and advising the public about the management of Internet content.

For the Commonwealth's part in the national regulatory framework, the bill will ensure that ISPs and ICHs are not held liable for content of which they are not aware. Prohibited content that will trigger action by the ABA is defined in the bill on the basis of current National Classification Board guidelines for film, as material refused classification and rated X, and material rated R that is not protected by adult verification procedures.

The bill provides for a classification procedure for Internet content that is separate to that applying to conventional media in the Classification (Publications, Films and Computer Games) Act 1995. This is on the basis that the classification act may not encompass all forms of Internet content. The Classification Board will, however, be required to classify Internet content subject to complaint in a way that corresponds to the way in which a film would be classified under the classification act, that is, in relation to the classification criteria that apply in relation to RC, X and R rated classifications.

Internet content is defined as information that is stored and that is accessible to the public. Restricted access systems such as intranets and private communications such as ordinary email are excluded. Ephemeral content, such as chat rooms and real-time services such as streaming video and audio, are also excluded, except to the extent that they are stored or archived, given that it would not be possible to classify `live' material. However, this content will continue to be subject to section 85ZE of the Crimes Act that provides for an offence for the knowing or reckless use of a carriage service in a manner that would cause offence to a reasonable adult in all the circumstances. The bill amends the Crimes Act to put its application in this regard beyond doubt.

The cornerstone of the regulatory framework is the complaints mechanism in part 4 of the bill. This will allow the ABA to take timely action to investigate complaints from the public and notify ISPs to prevent access to prohibited content. The bill provides that complaints can be made by Australian residents about prohibited content carried or hosted by ISPs and ICHs and breaches of industry codes, industry standards and online provider rules, directly to the ABA. A process for direct complaints to the ABA recognises that material subject to a complaint will not generally be originated by the ISP or ICH and that it would be unreasonable to expect them to adjudicate complaints about material for which they are not responsible or make judgments about whether particular material is prohibited. It would provide certainty for the industry, in that their responsibilities in relation to complaints will be limited to complying with ABA notices to prevent access to content.

Complaints will not be able to be made about something that occurs before 1 January 2000. This is intended to afford ISPs and ICHs the opportunity to put arrangements in place to enable them to avoid contravening the regulatory regime proposed in the bill and to enable the ABA to ensure that it is in a position to deal with complaints. If in the course of an investigation the ABA is satisfied that Internet content hosted in Australia is prohibited content, the ABA will be required to give the relevant ICH a written notice directing the host not to host the prohibited content. This notice is called a final take-down notice and is intended to have ongoing effect.

The ABA's decision will be based on a classification of the Classification Board. If the ABA is satisfied that, if the Internet content were to be classified by the Classification Board, there is a substantial likelihood that the Internet content would be classified RC or X, the ABA will be required to give the relevant Internet content host an interim take-down notice directing the host not to host the Internet content until the ABA notifies the host of the Classification Board's classification of the Internet content and requests the Classification Board to clarify the Internet content.

If an industry code or ABA standard deals with procedures which Internet service providers will follow in dealing with overseas hosted Internet content notified by the ABA, the ABA must also notify the content to the Internet service providers. As a transitional default provision, the bill provides that, if there is no code or standard dealing with procedures in relation to a notified overseas host content, the ABA must give each Internet service provider known to the ABA a written notice directing the provider to take all reasonable steps to prevent end users from accessing the content. In determining whether particular steps are reasonable for this purpose, the ABA will be required to have regard to whether particular steps are technically and commercially feasible and to the regulatory policy of the bill. Particularly, regulation should be in a manner that enables public interest considerations to be addressed in a way that does not impose unnecessary financial or administrative burdens on ISPs and ICHs.

The government does not propose to mandate any particular technological solutions to blocking overseas sourced material. ISPs will be exempted from access prevention notices in relation to prohibited overseas hosted materials where an effective alternative arrangement is in place to prevent access by particular end users. Such arrangements might include services providing access for a cache of material intended as family friendly and secure networks operated on behalf of schools. These arrangements will need to be specified in the approved industry code or ABA standard or otherwise approved by the ABA.

Within this overarching complaints mechanism, to deal directly with prohibited content the bill takes a co-regulatory approach in which three interdependent levels of regulation apply. The government considers that this approach will best utilise industry expertise and the development of workable and practical codes of practice with which compliance is more likely, while ensuring that there is a legal framework to deal with any irresponsible industry behaviour. Therefore, the first level of regulation is self-regulatory, in which the industry will have the opportunity to develop its own procedures and codes of practice that are responsive to community concerns and that assist members of the community to manage their use and their children's use of the Internet.

At a second level, the ABA will be able to intervene by directing compliance with industry codes or, if necessary, determining standards in relation to matters that would be dealt with where codes of practice are not developed by the industry or are deficient or fail. At the third level, generic service provider rules will apply to the whole industry and will underpin compliance and enforcement of the regulatory framework, including the complaints mechanism.

In relation to industry codes of practice, ISPs and ICHs will each be expected to develop a single code dealing with matters specified in clause 60. The code specifically excludes matters that are covered by codes of practice developed under other relevant legislation, such as the Telecommunications Act. However, there is no impediment to these other matters being dealt with in a single document, as long as the document makes clear which module deals with the requirements of specified legislation and the regulatory body which has registered that module.

The bill intends that the next level of regulation—ABA standards—will come into play where an industry code is not in place, is deficient, has partially or wholly failed, or where the ABA has requested an industry body to develop a code and it has failed to do so. Standards must relate to the same criteria as specified in the bill for codes of practice. The intention is that an industry section has had an appropriate opportunity to develop its own practices in this regard through the development of a code before regulatory intervention by the ABA. Standards will be disallowable instruments, and the minister will be able to give the ABA directions as to the exercise of its standard making powers.

While the bill will commence upon royal assent, as a transitional measure the bill recognises that development of industry codes of practice—or ABA standards if a code is not developed by the industry—requires lead time. While some industry groups are well advanced in code development, these codes will need substantial modification to meet the requirements of the bill. This is particularly the case in relation to the requirement that a code be developed for procedures to be followed for notified overseas hosted content. It is therefore proposed to treat codes of procedures for overseas hosted content separately.

The bill requires the ABA to make reasonable efforts to ensure that either an industry code is registered by 1 January 2000 or, if a code is not registered, an ABA standard is in place by 31 March 2000. The later date for possible determination of an ABA standard is intended to reflect the co-regulatory intent of the bill in which industry is given the opportunity to develop its own procedures before any regulatory intervention by the ABA.

At the final level of regulation in the framework, the bill sets out the online service provider rules applying to all ISPs and ICHs. These will require compliance with ABA notices and directions. The ABA will be able to make additional service provider rules, but only in relation to a matter specified by regulation.

The bill includes a range of enforcement mechanisms and sanctions that are intended to allow flexibility in dealing with breaches, depending on the seriousness of the circumstances. Codes of practice developed by the industry can be expected to include compliance mechanisms, such as the withdrawal of industry association rights or privileges, and compliance incentives, such as the right to display compliance symbols administered by the relevant oversighting industry body. Such mechanisms will need to be approved by the ABA through the code registration process. At the second level, in relation to breaches of codes, standards and rules, the ABA will be able to give formal warnings to indicate its concerns before taking other action. This might be appropriate where a breach, for example, was inadvertent or there were other extenuating circumstances.

At the next level the ABA will be able to take intermediate action—for example, directing an ISP or ICH to comply with the code of practice. Failure to comply with this or failure to comply with a take-down notice arising from an ABA investigation could lead to more serious sanctions. Contravention of online service provider rules which require ISPs and ICHs to comply with ABA notices and directions will be a criminal offence, and a continuing offence for each day the contravention continues with penalties of $5,500 for an individual and $27,500 for a corporation. In cases of serious, flagrant or recurring breaches of online service provider rules, the ABA will be able to apply to the Federal Court for an order that an ISP cease providing a service or an ICH cease hosting content. This is intended as an extreme, last resort measure which, it could be expected, would be rarely if ever required.

Proposed Internet specific state and territory legislation will apply with ISPs and ICHs only to the extent that they act as content creators. Clause 91 will give effect to this principle. The minister will also have the power to exempt a state or territory law from the operation of this provision and to declare that a specified state or territory law has no effect to the extent to which the law has an effect on an ISP or an ICH. This is intended to allow the finetuning of the limitation of ISP and ICH liability under state and territory laws. However, the bill also ensures that, other than in respect to this limitation in relation to ICHs and ISPs, state and territory laws such as laws of general application, like crimes and censorship legislation operate concurrently with the bill. The amendment of the Commonwealth Crimes Act in schedule 2 of the bill also makes it clear that this is not intended to limit or exclude the concurrent operation of any law of any state or territory.

The government acknowledges that the unique characteristics and rapidly changing nature of the Internet presents specific difficulties in regulation of Internet content. It recognises that there are technical difficulties with blocking all illegal and offensive material that is hosted overseas but considers that, where it is technically feasible and cost effective to block material, this should be done. It is not acceptable to make no attempt at all on the basis that it may be difficult. Nor is it acceptable that community standards applicable to conventional media do not apply to the Internet. What is illegal or controlled offline should be illegal or controlled online.

Recognising these difficulties, the government approach does not rely on regulation alone. The government, along with the community advisory body and its hotline service will be encouraging parents and educators to become better aware of means and tools to manage use of online services by minors. It will also encourage the development of content labelling by Australian content creators and the development of labelling standards to encourage service providers to offer a choice for consumers to subscribe to services that allow access to a cache of permitted material only or services that are filtered by the service provider on the best efforts available. The government will also actively pursue collaborative arrangements internationally in relation to online content codes of practice and online labelling of content. The ABA and the community advisory body will also be encouraged to develop information sharing and other collaborative arrangements with their equivalent bodies overseas.

As part of this multifaceted approach, the bill will ensure that there are regulatory means to assist with the control of Internet content that is illegal or harmful to children. It does not attempt to place primary onus on ISPs or ICHs who are not responsible for content. It gives them certainty in relation to action to be taken when made aware of prohibited content and encourages the industry to develop its own procedures, responsive to the community.

The government is confident that the bill and its overall approach to assist individuals to manage their own and their children's use of the Internet strikes the right balance between ensuring industry development is not stifled by overzealous laws or inconsistent or unpredictable regimes which could result in Australia's economic marginalisation while also responding to the needs and interests of the community. I commend the bill to the House and present the explanatory memorandum.