Mr BARRESI (12:32 PM) —I am pleased to speak in the debate on the Electronic Transactions Bill 1999 as it is an example of the Commonwealth taking the lead and setting an example. By giving official and legal status to electronic transactions we are sending a message to the community that this method of doing business is with us to stay. We are saying you can have full confidence and trust in it as a means of conducting your business transactions. We are sending a message that it is safer and quicker to engage in electronic transactions rather than the traditional, time consuming, but often comfortable paper and face- to-face transactions. We are also conveying the message to the states that we expect them to honour their commitment to introduce complementary state legislation, as they indicated they would to the Attorney-General as recently as May this year.

In order to understand the reasoning behind this bill it is important to understand how electronic commerce and the entire Internet industry have changed dramatically over the last few years. There are any number of issues related to business and vast opportunities presented to business by the expansion of electronic commerce. I remember a few years ago the Microsoft ad for its Internet browser. Very simply, it posed the question, `Where do you want to go to today?' A couple of years later I am just starting to comprehend the depth of that question. The answer, of course, is anywhere your imagination can take you. Believe me, there are some people out there with an extremely vivid imagination and it has taken them places hitherto undreamed of.

The Internet is the prime example of globalisation. It has brought the world not just into our boardrooms but into our living rooms at home. It is television with which we can interact. Recently, I connected my home computer to the Internet and I have been amazed at how quickly one can become hooked. While helping my son surf the Net, he said to me, `Dad, the Internet is telling us to buy this product now. We'd better go and do it.' How times have changed. The old belief that if it is in the newspaper it must be true apparently has been supplanted by belief in the Net.

How big is the Internet today? It is a hard question, but we can say that it is nowhere near as big as it will be in 10 minutes time. One recent estimate put the contribution of e-commerce in the US economy last year at $455 million in revenue and 1.2 million jobs.

The Australian evidence is just as compelling. Small to medium enterprises have responded to the technology age, with 82 per cent of small businesses and 99 per cent of medium sized businesses using computers. Thirteen per cent of all small and medium enterprises are using the Net to sell products and services. Estimations are that will more than double in the next year.

Given the amount of activity in the sector, this bill is a timely contribution to the future of electronic commerce in Australia. That we are debating it here in the Main Committee, the chamber reserved for non-controversial legislation, is somewhat ironic, given the ever-growing and ever-changing nature of cyberspace. Recently, I challenged an audience to find a page in a newspaper or a magazine that does not contain the word Internet or list at least one web site address. Today, it is a difficult, if not impossible task.

Electronic commerce, as we term transactions conducted via computer hook-up, is a growing business and it is growing fast. Many have asked if this boom is for real. Kerry Packer thinks so. He recently launched his second major cyber venture and backed it with a lot of money. Merrill Lynch, the respected multinational broking firm, now allows its 5.4 million customers to do their dealings on the Net at a substantial discount. I somehow believe this is not an act of altruism on the part of Merrill Lynch, rather an acknowledgment that e-commerce cuts the cost of doing business rather substantially.

We now see on television ads promoting E-Trade Australia, which is encouraging us to use the Net to buy and sell stocks. IBM Business Solutions have weighed in heavily of late, advertising during prime time. Tuesday's Financial Review has an e-directory of online business players. At present, it is a full page of companies and web site addresses, and I predict that the Australian Financial Review will have to, in the very near future, discontinue this feature because there will be too many to list.

According to a recent survey, 23 per cent of small businesses are connected to the Internet, with 69 per cent planning their own home page. Australia today ranks eighth among 55 surveyed countries as an information based economy. We boast 27 computers for every 100 people. In our household, there are three computers—one for each child, and mum and dad have to wait their turn. Aside from business applications and retailing of goods, provision of financial services, banking and legal and medical services are all part of e-commerce. Amounts spent in these areas are already substantial.

The percentage of users buying goods and services on the web is expected to grow from 8.8 per cent in 1996 to 33.4 per cent in 2001. This explains why our retailing sector is increasingly worried about the future of patrons coming through doors. An interesting statistic from the United States shows that new car sales from showrooms in California are down 40 per cent because of online competition. People are buying their cars through the Net in California. Therefore, it is conceivable that, within 10 to 15 years, car dealerships as we know them will be a thing of the past. Why have such a valuable floor space taken up by thousands of dollars of automotive stock? The same will take place in other retailing businesses.

Simply put, the Internet presents endless possibilities for rapid delivery of services. While there is considerable angst in rural and regional Australia on a perceived loss of services such as banking, it may be that e-commerce will be able to breach this shortfall. That will be so particularly if those communities that are more comfortable with person-to-person dealings can embrace a perhaps colder but more efficient way of doing business.

I represent Deakin, an electorate that is becoming the IT and communications centre of Australia. I am keen to see the expansion of and further advancements in communications. There is a proposal in my electorate by one particular businessman to set up a virtual reality village, whereby all the services in the area will be accessible through the Net supported by the local city council.

These sorts of ideas will, in the next few years, start to overtake our own imagination. This legislation will help to give confidence, trust and credibility to industries to be able to embrace these ideas knowing that their transactions are secure.

New technologies have enormous potential to foster legitimate and new commercial activities. In the 1990s the Internet has become accessible to an ever-increasing number of individuals, corporations, governments and interest groups. It is a decentralised tool. Data can be accessed and distributed from just about anywhere in the world. It is used as a means of communication by individuals, groups and organisations, as a source of information and education, for entertainment and for business.

The potential for business to be transacted and goods and services to be sold and purchased over the net creates an enormous potential for commerce in markets worldwide. Efficiency gains from the use of electronic commerce can be enormous. For example, the costs of transacting business and defining, protecting and enforcing the property rights to goods and assets amount to a staggering 45 per cent of the United States national income.

This bill will aid the further development of the information economy of Australia by broadly removing the existing legal impediments that may prevent a person using electronic communications to satisfy obligations under Commonwealth law. It will give business and the community the option of using electronic communications when dealing with government agencies.

Using recommendations from the Electronic Commerce Expert Group, the legislation is based on the United Nations Commission on International Trade Law Model Law on Electronic Commerce of 1996. The model law contains a set of internationally acceptable rules designed to remove a number of legal obstacles to the use of electronic communications for the communication of legally significant information, thereby creating a more secure legal environment for electronic commerce.

The bill will allow electronic communications to satisfy existing legal requirements for writing, signature, document production and the retention of documents, subject to certain minimum requirements. It does not discriminate between different forms of technology. All governments in Australia are trying to maximise their opportunities in the information age and have given their in-principle support to writing legislation based on this bill.

It is appropriate at this time to also talk about the fact that electronic commerce can be subjected to criminal manipulation. There is a need for us to make sure that we present opportunities for electronic commerce through legislation but we must do so in a way which guards against endless possibilities of illegal activity, which includes such things as damaging or interfering with defence and other data processing and telecommunications systems; the electronic funds transfer crime—electronic money laundering to disguise the proceeds of crime or to avoid taxation of legitimately gained income; the use of telecommunication systems to further organise drug trafficking, gambling, prostitution, arms trafficking and other illegal activities; and, of course, the scourge of all of us, the spreading of viruses through the Internet and on the email.

The very features of the Internet which make it such an exciting medium—its enormous reach and anonymity for users—also create enormous potential for it to be used to aid existing forms of crime and to generate new crimes.

The Internet does, however, have potential uses as a crime prevention tool. As one leading criminologist said recently, although its potential is yet to be realised, the use of technology for general public relations, for the communication of basic information for crime prevention and for the exchange of information in furthering of criminal investigation, may be expected to increase dramatically in the years ahead. Already, photographs displayed on the Internet have led to the arrest of fugitives. The activities of pornographers and software pirates may be traced effectively using the information available on the Internet.

Australians are enthusiastic users of new technologies, and in no way are we immune from those perils. In terms of reducing risk to legitimate e-commerce, the developments of an effective encryption system is vital. Australian criminologists and lawyers are among the foremost analysts of telecommunications and technological crime in the world.

Cryptography is being used by the Australian government as a means to combat fraud in the conduct of electronic transactions. Encryption ensures confidentiality of data by transforming it into data which is unintelligible to third parties. Decryption converts the unintelligible data back into its normal intelligible form. The uses of cryptography, including encrypting communications and the creating of digital signatures, will help in safeguarding against such criminal activity. It is important that we create and maintain a climate that encourages technology innovation, supports legitimate electronic commerce, and ensures privacy and security for consumers who use the Internet.

This legislation is part of that wave of ensuring that we have provided safeguards to consumers not only, in the first instance, in their dealings with the Commonwealth, but also in having that confidence to go out and create new products, look at new service deliveries and know that their transactions have the full backing of law. The opposition has pointed to some shortfalls. I believe that anything that moves as fast as this particular industry is something with which we are going to be tested and which we will have difficulty in being able to keep up with. This legislation is the first part of that process. I look forward to state governments and other jurisdictions following suit and the public in general embracing electronic commerce as a new way of doing business.