Mr McCLELLAND (11:20 AM) —The opposition supports the Electronic Transactions Bill 1999 . The only criticism in the text of my speech will be that, if anything, it is perhaps a little too timid. The bill has three main purposes: to facilitate the use of electronic transactions, to promote business and community confidence in the use of electronic transactions, and to enable business and the community to use electronic communications in their dealings with the government—specifically, the Commonwealth government.

The bill arises from recommendations of the Electronic Commerce Expert Group, which was established by the Attorney-General and which reported to the federal government in March of last year. The ECEG recommended that the Commonwealth should enact legislation based on the United Nations Committee on International Trade Law's Model Law on Electronic Commerce of 1996. Those recommendations of the international body, with some modifications, have been adopted. Effectively, the international model has provided a template of model rules for countries to adopt, and Australia was closely involved in the development of that model law.

The bill is based on two principles: firstly, functional equivalence; and, secondly, technology neutrality. The term `functional equivalence' means that transactions conducted using paper documents and transactions conducted using electronic communications should be treated equally by the law and not given an advantage or disadvantage against each other. The second concept, that of technology neutrality, means that the law should not discriminate between different forms of technology—for example, by specifying technical requirements for the use of electronic communications that are based upon an understanding of the operation of a particular form of electronic communication technology.

The government has accepted the ECEG recommendation in that respect to depart from what a number of European countries have done by actually mentioning a specific form of technology. The ECEG committee recommended that to do so could lock in inefficient, outdated or outmoded forms of technology, and the opposition agrees that the approach taken by the government is appropriate.

The bill establishes the basic rule that a transaction is not invalid because it took place by means of an electronic communication. It contains specific provisions which state that a requirement or permission under a law of the Commonwealth for a person to provide information in writing, to sign a document, to produce a document or to retain information or a document can be satisfied by an electronic communication, subject to certain minimum criteria being satisfied.

The bill sets out rules to determine the time and place of dispatch and receipt of electronic communications, because that obviously could determine where a contract is made and what fair trading or consumer protection laws apply to that particular transaction. The bill also contains provisions that specify certain exemptions or allow for exemptions to be made by regulation from the application of the bill.

It is important to note that the provisions in the bill do not remove any legal obligations which may be imposed upon a person by other Commonwealth laws. Effectively, the sole purpose of the bill is to enable people to use electronic communications in the course of satisfying their legal obligations.

The bill has a two-step implementation process. Prior to 1 July 2001, the bill will apply only to laws of the Commonwealth specified in the regulations. After that date, it will apply broadly to all Commonwealth laws unless they have been specifically excluded from the application of the bill.

Contrary to the recommendations of the ECEG, the bill applies only to transactions under Commonwealth law, but the Commonwealth has obtained in-principle agreement from the states and territories that they will legislate in similar form. I understand that agreement was obtained earlier this year. Nonetheless, there are concerns that the state legislative framework could take some time to develop and that there could be some retardation of the use of electronic communications to facilitate commercial transactions while the state laws are being developed. The opposition notes that members of the ECEG have criticised the government's failure to show stronger national leadership on the issue, and it is important to note that the bill has not been set up as a national scheme law. As I have indicated, while the states have all agreed to introduce similar legislation based on the federal model, there is a risk that it may be departed from.

The government's reason for not adopting a national approach was concern regarding constitutional limitations. However, we believe the government could have been more adventurous in this area and we note, for instance, that the government was in fact more adventurous in respect of considering the year 2000 disclosure, where section 12 of the Year 2000 Information Disclosure Act 1999 invokes, amongst other heads of constitutional power, the corporations power, the trade and commerce power and the territories' power.

The opposition would have preferred the government to take a much stronger national approach in respect of this bill by: legislating to the maximum extent possible under alternative heads of power—perhaps also the telecommunications power was worth looking at; and seeking a referral of the relevant powers from the states or, alternatively, setting up a national uniform scheme in relation to these matters akin to, for instance, the Corporations Law. However, despite that limitation—and, as I say, perhaps a little timidity of approach—the opposition supports the bill because, clearly, it is in the national interest to enact such a scheme.

Before concluding, there are several matters which we would like to highlight. First, the legislation does not address the technically more difficult area of ensuring that businesses and consumers can verify with whom they are dealing—and, later in this debate, the member for Bonython will have some very specific and informed comments to make in that respect. Clearly, confidence in electronic communications depends on business and consumers having confidence in the people they are dealing with. Verification of identify is fundamental to this. However, Labor accepts that it is not easily addressed by legislation alone.

Subject to ensuring that reasonable access for law enforcement and national security agencies to any encrypted communication is available, the opposition believes that appropriate recognition of the role of that encryption technology is fundamental to addressing this verification issue. In this regard, we note that the National Office of the Information Economy released a discussion paper on 19 August 1998 on the establishment of a national authentication authority, and that authority, as proposed, would administer a national public encryption key authentication scheme. We note, on the other hand, a contrary argument in the discussion paper insofar as it is at odds with recommendations of the Attorney-General's Electronic Commerce Expert Group, which argued against a detailed legislative regime that specifies an operating framework or the use of particular technologies. The ECEG correctly noted that a framework that is too rigid could seriously impede Australia's ability to participate in international electronic commerce.

The Australian Labor Party generally prefers an approach which would allow those entering into a commercial transaction to determine the most effective means for that transaction to be verified. Governments should not be in the job of predicting what level of satisfaction the market will require or of how it goes about doing its business. However, the governments are entitled to ensure that the public interest in law enforcement and national security is protected. So we note that it is appropriate for those things to be developed. Whichever approach the government adopts, it needs to act quickly and in line with international practice. It also needs to provide appropriate sanctions against the use of encryption technology in the commission of crime, and such conduct should attract significant criminal penalties.

Secondly, the legislation fails to address issues of appropriate consumer law protection. By default, the legislation applies the consumer protection law that applies to the relevant jurisdiction. While we acknowledge that the law will define where the communication was sent and where it was received, because of the distance covered there, nonetheless, will be complex issues as to what particular jurisdiction will apply as far as consumer protection is concerned. Given that consumers and businesses will often not consider or appreciate the differences that exist across jurisdictional boundaries, the failure to address this issue will become important. It is perhaps disappointing that the government did not seek to use the bill as a means to help unify Australia's consumer protection laws, particularly in this area of electronic commerce.

I note in passing that I have seen several attempts where my younger daughters have attempted to engage in electronic commercial transactions on the Internet. Fortunately, they did not come off. I have often wondered what protections I would have as a parent if they did.

Thirdly, subclause 13(4) in the bill contains a blanket exemption for transactions involving the courts. This is despite the fact that the draft bill did apply but enabled the rules of the court to exempt specific matters. Labor believes that, at the very least, the proposal should be amended so that it is possible for the rules of the court to apply the provisions of the bill. We would ask the government to seriously examine this issue before the bill is debated in the Senate. We believe it would facilitate cheaper and speedier access to the courts, particularly as there frequently are strict time limits applying to the lodgment of documents.

Fourthly, the bill contains a blanket exemption in relation to dealings with Commonwealth entities in connection with applications for the grant of permission, a certificate or similar thing where the permission, certificate or thing is of a kind not capable of being granted to an Australian citizen. These are designed, as the explanatory memorandum says, to have applications made under the Migration Act and the Australian Citizenship Act.

We note the rationale for the government having that exclusion was the difficulty verifying some documents emanating from overseas. To verify the source and the authenticity of those documents could present a difficulty. We note, however, that the government has recently provided us with a proposed amendment to clause 11 of the bill. We think that the amendment is much more sophisticated in that, while there is the general exemption, there are exceptions from that exemption which will enable a number of transactions to take place by electronic means.

Finally, we note that paragraphs 9, 10 and 11 ensure that an electronic transaction can only be validly engaged in with a person who is neither a Commonwealth entity nor a person acting on behalf of the Commonwealth entity if that person consents to the use of electronic communication as a means for the purpose of the transaction. We support this approach. People or businesses that do not want to engage in electronic transactions should not be forced to do so. However, it will increasingly be the fact that their consumer and commercial interests will be enhanced if they do participate in the electronic framework.

In conclusion, this is increasingly an important area for Australians. The Bureau of Statistics showed that 650,000 Australians used the Internet to purchase goods for private use in the 12 months to May 1999. That was up from 409,000 in the 12-month period to May 1998. Every indication is that it is increasing at an exponential rate. Despite the defects in the scope of this bill, the Labor Party is prepared to support it. The development of the information economy is vital to Australia's economic prosperity, but we would encourage the government in future to be a little more adventurous and far-sighted in taking hold of this opportunity.

Debate interrupted.