Mr CADMAN (10:00 AM) —The Electronic Transactions Bill 1999 is a landmark bill and a very important one for the advance of trade, commerce and information flow in Australia. I think that everybody in the community would be aware of the use of the Internet and the prospect of communicating text one to another through computers using telephone lines.

Email has become a common factor and means of communication in government and business circles, and more and more it is being taken up by the community on a casual and social basis. Members of families keep contact with each other around the world by using the facility of email. Grandparents keep track of their grandchildren by email. The fastest growing organisation in my electorate is the group of seniors now finding that using electronic commerce and email is not complex, and with a bit of time it becomes a great joy. They get a sense of fulfilment from being able to browse the Internet or communicate easily with friends and contacts they have made around the world, or just in retaining contacts with family, passing messages one to another. An organisation in the hills district, run by George Kenton, started just a year ago with a handful of members and it now has over 400 members. It is massively expanding.

Today we are looking at the serious side and not the recreational side of the Internet and electronic communications. I am indebted to the Parliamentary Library for a paper it prepared some time ago on electronic commerce security issues. The definition of electronic commerce used by the Parliamentary Library is probably the best I have seen. It says:

The newer concept of electronic commerce (e-commerce) is the use of on-line networks to promote or sell products or services. It is also the process of using electronic methods and procedures with information technology as a tool, to conduct all forms of business activity.

That includes the payment of accounts, the establishment of companies and organisations and a whole range of other activities. People are now using e-commerce to operate their bank accounts.

One of the factors that come into consideration in relation to the use of electronic commerce is: how do you decide that the person conducting the transaction is the person they claim to be? If we have a piece of paper with a signature, that signature in an original form can be easily identified as a forgery or not. When paper or contracts are being transferred, we have an easy way of identifying whether the person is authentic who signed it or entered into the arrangement.

With electronic commerce, somebody can get onto a computer, claim to be somebody else and transact business falsely. Security of transactions worries a great number of people, whether they be individuals operating their private bank accounts or paying bills on a regular basis, or whether they are large corporations transferring information, using databases or seeking to plan programs and make business decisions. Security is a critical factor. The bill that we are looking at today is a bold first step by the federal government in securing the area, putting out some boundary posts, so that the Australian community can take advantage of federally applied rigour in the processes of e-commerce.

Let me give the House some understanding of what may be involved in security against the cracking of a bank account, for instance. Again the Parliamentary Library supplies information about how complex this can be:

Symmetric key lengths—

that is, the PIN that people use to get into their accounts—

determine the security level of the algorithm. If the key is 8 bits of information long, there are 2 to the power 8, or 256 possible combinations—

just for a normal PIN. The paper continues:

So, at most, only 256 attempts are needed to find the key. With a 56 bit key and a computer trying one million keys a second, it may take 2 285 years to find the correct key. For a 64 bit key, the computer needs to be up to 585 000 years, assuming no easier way to break the cipher than this brute force attack. However, specialised computers can substantially reduce the breaking time and cost involved. It appears that 56 bit keys are no longer safe . . .

That is, a PIN which is 56 bits long is no longer safe. In high security areas, such as military budgets, they will take a 64-bit key. People are even talking about the prospect of an 80-bit key, an 80-bit PIN, being needed for medium security. Such security is a worry that this bill tries to address.

When the Attorney recently spoke to a group of lawyers in my electorate on this matter, he supplied some information on the extent to which electronic commerce is being used. The Attorney said that the number of households with Internet access jumped more than 50 per cent in the 12 months ending February 1999. So the number of people gaining access to the Net in just one year has gone up half as many again. Nearly five million adults, which is over one-third of the adult population of Australia, have accessed the Internet in the 12-month period. About half a million of those adults are buying products online, making an estimated 1.9 million purchases. So the extent to which people are finding this a convenience is a factor which drives us to make sure there is a secure process in place.

The government recognises it has a national leadership role in this instance. In A strategic framework for the information economy—identifying priorities for action, which was released in January this year, it has outlined its approach to the whole process. Ten strategic priorities have been identified dealing with its use, such as the legal and regulatory framework; necessary technical infrastructure; online delivery of government services, on which I will say more shortly; the use of electronic commerce by business; and the development of international rules for electronic commerce—all of which are occupying the government's attention and time.

The Electronic Transactions Bill 1999 has been designed to ensure that our legal system provides the certainty needed for electronic commerce to flourish. As recommended by the expert group put in place by the Attorney-General in March 1998, it is based on the model law on electronic commerce prepared by the United Nations Commission on International Trade Law. Our role in advancing to this point—to this legislation—has been recognised. Last year, when Ira Magaziner, President Clinton's former special adviser on electronic commerce, was here, he praised Australia for its leading role in this area and for punching above its weight internationally.

The Electronic Transactions Bill is setting a framework in a timely fashion, which I believe will allow Australia to move ahead quite quickly. With the downturn of trade and economic activity in Asia, things have slowed and people are not advancing into electronic commerce there. I saw a report yesterday that said the Japanese government is concerned about the slow take-up of e-commerce in Japan and is saying now that it is starting to hold Japan back. If Australia can steam ahead during this period of downturn in Asia, we will in fact gain great advantage both in trade and economic capacity as we relate to those countries. We have lagged—through circumstances and through government policies in part—behind Asia in advancement. Their standard of living has risen more rapidly than ours, and their economies and their capacity has been greater than ours. But now we are starting to catch up, and this bill is a significant feature of moving ahead of our economic competitors.

The basic principles behind this bill are technological neutrality which ensures the law does not discriminate between different forms of technology. This is important because the same principles ought to apply to both a paper transaction and an electronic transaction, and that is the way this law is laid out. It is a comprehensible process, one that sticks with the tried principles of security and safety in transactions. For example, the law should not specify technical requirements based upon the operation of a particular form of technology, so the bill does not go into whether it is this form or that form, and try to predict what may be the use. The law also contains median neutrality, which means that paper based commerce and electronic commerce should be treated equally by the law and not given an advantage or disadvantage over each other. It is very important that it be neutral in that sense so that commerce and individuals can choose for themselves the most appropriate method of transaction.

During the consideration and preparation of this bill, the government received 73 submissions from business, government and professional organisations—very useful feedback—and was able to develop the legislation based on that input from a wide range of people.

In surveys conducted in recent years, both in Australia and overseas, there is an indication of the protection of personal privacy as the key factor for people transacting online. The TRUSTe Internet Privacy Survey conducted last year by the Boston Consulting Group, for example, found that, for approximately 42 per cent of consumers, privacy concerns played a large part in their decisions not to give registration information on web sites. For 27 per cent of consumers surveyed, privacy concerns led them to provide false information.

So there is a great deal of resistance as people look at the prospect of their transactions and their accounts being interfered with by people who have no authority. The options of the bill give business and community the prospect of using electronic communications when dealing with government agencies, and the fact that people use paper or e-commerce is something that they will sort out for themselves as they go.

I draw the House's attention to the National Business Bulletin and an article published just recently which outlined e-business, `The voyage: Developing e-business strategies'. So the business community is well aware. There was a comment by a friend Bob Savage, former managing director and CEO of IBM, that Australian business leaders across the spectrum understood the significance of e-business and were moving quickly into it: end to end, e-commerce if done correctly could reduce business risk; done wrongly, it could significantly increase it. That is a summary of the document.

The Australian Stock Exchange said that, when it came to capital, a bank might be only part of the puzzle. The enterprise market brought together business, investors and their professional advisers. All of this is done on the Internet without any face-to-face to meeting. EM, enterprise marketing, is the Australian Stock Exchange process. It is a fascinating process, providing funds for investors and allowing people who want to go into innovative developments to meet possible financiers. It is a great process.

The Australian Business Chamber and my friend Phil Holt, a great leader of Australian business, talked about the e-commerce prospects that their organisation provides for members: access to Australian Business's own operating business-to-business e-commerce operational system, Tradehub, which has been developed over the past three years to cater for the need of small and medium sized businesses. This is a wonderful recommendation for the Australian Business organisation. The Minter Ellison lawyers say:

Rather than introduce a set of new laws or new regulatory framework, the draft bill removes existing legal impediments to developing electronic commerce in Australia. The existing legal requirements imposed in relation to paper-based commerce can be satisfied now by electronic means.

So that is a wonderful process that is in place.

The Australian Bankers Association commends the government and welcomes the draft Electronic Transactions Bill, complimenting the Attorney-General, who has joined us in the chamber, on the far-sightedness and the style of presentation that the government has provided. Freehill, Hollingdale and Page widely reported the Electronic Transactions Bill in their newsletters noting the significant advance that has been made by this government for Australia.

One has only to look around to see how important this process is. I picked up quite recently a copy of the main page of the electronic transactions bill from the government of Singapore. Singapore was dealing with these issues in 1997. It is no wonder they claim to have become the hub of Asia and are making such claims of significance in our area. It is a small island state, and it has moved in a way that will affect us, but we have learnt from this process. Their bill has a very prescriptive approach, which includes digital signatures and other factors that will be appendages to this legislation.

Australia's e-commerce report card, published recently by the Department of Communications, Information Technology and the Arts, contained some interesting reading for people who are concerned about the development of these issues. It is interesting to see that, of all nations on earth, Australians are the third most likely to be linked to the Internet. We are led by the United States, and leading the world is Finland. I would suggest that perhaps the climate there means that there is not much else to do for a great part of the year and that it is no wonder that they are on the Internet.

Mr DEPUTY SPEAKER (Mr Nehl) —They could always go to bed.

Mr CADMAN —I have looked at some of the population figures, Mr Deputy Speaker, and I have come to the conclusion that they may be doing both. The population figures and the purchasing of the Internet in Finland suggest what offers substantial evening entertainment there, I would think. But it is a very serious matter in the United States, where business and individuals are using the Internet both for recreation and for electronic commerce. Australian consumers spend about $100 million a year on the Internet. That is less than point one of one per cent of total retail sales. But, if the use of the Internet in the United States is any indication, that figure will rise rapidly.

This government has moved ahead in these areas. I would like to commend to the House the Business Entry Point, the BEP, where people can make contact with the Australian government, set up a business, find out how to prepare themselves and contact the tax office. The prospects for the future are terrific, and this legislation really epitomises the government's enthusiasm to make sure that we are the best in the world when it comes to the use of new technology. I commend the bill to the House and commend the Attorney for the style of the bill.