Mr WILLIAMS (Attorney-General) (10:18 AM) —in reply—I would like to thank the members who have made a contribution to the debate. Many, like the member for Mitchell, have a keen interest in the subject of electronic commerce. I am personally aware that not only does the member for Mitchell have a keen interest in the subject but many of his constituents do as well. In addition to thanking those members who contributed to the debate, I would like to thank the members of the Electronic Commerce Expert Group for their recommendations and to thank all of those who provided comments on the exposure draft of the bill.

Some members of the opposition have raised a range of electronic commerce issues in the course of debating the bill and I propose to respond to the particular points they have raised. But, in doing so, I want to make it clear that the government is well aware of the wide range of important issues raised by the development of electronic commerce in Australia and is, in fact, addressing them.

I refer members to the government's strategic framework for the information economy, which was issued in December 1998 after an extensive period of public consultation. The strategic framework identifies 10 strategic priorities that the government is addressing to ensure the smooth and rapid development of the information economy in Australia. More importantly, the strategic framework addresses these priorities in the context of the government's clearly stated vision for the development of the information economy in Australia. The government's mission is:

to ensure that the lives, work and well being of Australians are enriched, jobs are created, and the national wealth is enhanced, through the participation of all Australians in the growing information economy.

One of the strategic priorities is the development of a legal and regulatory framework to facilitate electronic commerce. The key action areas we have identified for this priority address the matters that the members of the opposition have raised—for example, they deal with privacy protection, security, authentication and consumer protection.

Let me make quite clear that it is neither possible nor desirable to deal with all the legal issues raised by electronic commerce in this particular bill. Electronic commerce does not affect a discrete area of law; it touches everything we do. In that context, the aim of the bill is simple. It is to ensure that the community in general and business in particular will be free to use electronic communications to satisfy existing legal requirements in a way that is consistent with international developments.

Some honourable members of the opposition have suggested that the government has been tardy in bringing this legislation before the House. This bill implements the policy statement that the Prime Minister made in his `Investing for Growth' statement in December 1997 that business should lead the development of the information economy in Australia. Extensive public consultation has been undertaken, and I make no apologies for having done that. There is no point developing a law to facilitate the use of electronic communications if it fails to achieve that purpose in the eyes of the community.

We sought the views of the public on the report of the Electronic Commerce Expert Group before finalising the government's response to the expert group's recommendations. The responses we received indicated clear support for the work of the expert group. The government then developed draft legislation to put the recommendations of the expert group into effect. This was not simply a matter of copying the model law of the United Nations Commission on International Trade Law, UNCITRAL, into the statute book; it is recognised by UNCITRAL itself that the model law is simply a guide for legislatures and that there may be a range of issues that may need to be addressed in its implementation.

We have adopted the approach, the structure and all the key concepts of the model law but adapted it to suit Australian legal traditions and the policy aims of the government. For example, this government has applied the provisions of the bill to Commonwealth government departments and agencies to ensure that they will be required to accept electronic communications from the public, subject to those communications satisfying certain requirements set out in the bill. Australia is one of the few countries applying the same principles for the use of electronic communications to both government entities and the community.

The exposure draft of the bill was released for public comment in January 1999. Seventy-three submissions were received on the bill, 35 of which were from the private sector. All submissions supported the intention, structure and content of the bill. A range of policy and drafting issues were also raised, which have been considered in finalising the bill. In addition, the states and territories have been consulted throughout the development of the bill. Australia was one of the first countries to publicly state its intention to implement the UNCITRAL model law. I might add that there is very little legislation internationally that is as comprehensive as this bill.

While the model law is widely recognised internationally as an important document, it is only now being considered for adoption in many countries. Even in the United States, the various states have enacted a range of laws in this area of varying degrees of effectiveness and usefulness. Indeed, a proposed uniform law on electronic commerce in the United States prepared by the National Conference of Commissioners for Uniform State Law, called the Uniform Electronic Transactions Act, was only finalised at the end of July this year. It is still likely to be some considerable time before the uniform law is enacted by all of the American states. This government was early in recognising the need for legislation like this bill and has moved swiftly to implement it.

Let me turn now to some of the particular issues raised by members of the opposition. Some misguided comments have been made about the Commonwealth's constitutional power to apply the Electronic Transactions Bill to the states and territories. There is doubt that the Commonwealth has power to apply a law like the Electronic Transactions Bill to the laws of the states and territories. There would be real concerns about the validity of a Commonwealth law that sought to directly govern the interpretation and effect of state legislation. It is the government's view that a constitutional challenge to a comprehensive Commonwealth scheme for electronic commerce would create enormous uncertainty.

The government prefers to take a cooperative approach with the states and territories to develop the appropriate legal framework for electronic commerce. Using brute constitutional force to achieve national policy goals is not the preference of this government. Indeed, this is one area of national law reform where I have seen a remarkable degree of cooperation from the states and territories. Everyone recognises the need for swift and uniform action. In such a situation it is not necessary for us to use the Constitution as a coercive instrument.

Members of the opposition have referred to the constitutional powers recited in section 12 of the Year 2000 Information Disclosure Act 1999. That legislation is a special case. As you would appreciate, the inexorable approach of the year 2000 meant there was considerable urgency in the need for its enactment and for it to have national application. However, that act has a limited application. The Electronic Transactions Bill will continue to shape the interpretation of all Commonwealth legislation for the foreseeable future. In such a situation a cooperative approach with the states and territories is clearly more desirable.

I took a proposal for a national uniform legislative scheme to the meeting of the Standing Committee of Attorneys-General in October 1998. All attorneys-general agreed in principle to my proposal at that meeting and also agreed that the uniform legislation would be modelled on the Commonwealth's bill. That agreement was reaffirmed by the attorneys-general at our meeting in April this year. The Commonwealth has worked closely with the states and territories in the development of the Electronic Transactions Bill. This cooperative approach has meant that we have developed a bill that we believe will be acceptable to all jurisdictions.

I understand that the uniform state and territory version of the Electronic Transactions Bill is nearly finished. There will be minor differences between the Electronic Transactions Bill and the uniform bill which are a necessary result of the different constitutional powers of the Commonwealth and the states and territories. The main difference will be the exemptions from the uniform bill which will be appropriate to the powers of the states and territories. It is likely that the uniform bill will exempt transactions involving wills and codicils, trusts and powers of attorney. I do not expect there to be any substantial delay by the states and territories in the enactment of the uniform bill. I understand that many jurisdictions are keen to finalise the development of the uniform bill so that it can be enacted in their jurisdictions soon. I thank the states and territories for their cooperative approach on this matter, which is due to the general recognition of the benefits of a national uniform legal framework for electronic commerce.

As the government stated in our Strategic Framework for the Information Economy, we are committed to enhancing online consumer protection. My colleague the Minister for Financial Services and Regulation announced the establishment of an Expert Group on Electronic Commerce on 17 September 1999. The expert group will provide advice on a range of consumer issues related to electronic commerce and will promote innovative policy initiatives. The expert group is chaired by Mr Mark Bouris, Executive Chairman, Wizard Financial Services. The establishment of the expert group was one of the initiatives contained in the detailed exposure draft policy framework for consumer protection in electronic commerce which Minister Hockey released on 26 May 1999.

The framework outlines the government's objective of creating a world-class consumer protection environment for electronic commerce in Australia. The initiatives proposed under the policy framework include a model code of conduct for traders on the Internet. Work on the development of the model code of conduct has now begun and a draft will be released for public comment later in the year. Public comments on the policy framework have been sought and a final version will be released during October 1999. This is in addition to the protection offered to consumers by the existing legal framework, including the Trade Practices Act 1974 and state and territory fair trading legislation.

Australia is playing a significant role in international work to ensure adequate protection for consumers on line. Australia is working with other OECD countries in drafting consumer protection guidelines for electronic commerce. The guidelines will be finalised during 1999 and will provide a framework for future multilateral cooperation between governments.

Australia's principal consumer protection enforcement agencies-the Australian Competition and Consumer Commission, the ACCC, and the Australian Securities and Investment Commission, ASIC- have been active in enforcement in online commerce. The government has recognised that the confidence of Australian businesses and other users in the security and authenticity of their online transactions and activity can be increased by governments facilitating the use of, and access to, authentication and encryption technology and systems.

Members of the opposition seem to be trying to have their cake and eat it too. On the one hand, the government is criticised for not providing greater certainty on the use of encryption in electronic commerce. On the other hand, the members of the opposition recognise that the government's approach of allowing business to decide what technology is appropriate for its needs is the right way to go.

The bill adopts a generic, principled approach to electronic signatures. Clause 10 sets minimum technology- neutral standards for an electronic signature to be legally equivalent to a handwritten signature. These standards are based on the UNCITRAL model law. The Electronic Commerce Expert Group recognised that it is not appropriate for legislation to `lock in' particular forms of electronic signature technology, particularly when there are no internationally agreed rules for laws on electronic signatures.

While a number of jurisdictions internationally have developed legislation, it is still too early to tell whether it impedes or assists business. Legislation that was too prescriptive in this area will run the risk of stifling business innovation and investment in electronic commerce. Digital signatures are a highly secure but expensive form of technology that may not be appropriate in all business circumstances. This means that business must have the flexibility to choose the appropriate signature technology for its needs. Business can determine what technology is, to quote from clause 10(1)(b) of the bill, as reliable as was appropriate for the purposes for which the information is communicated. It may be necessary for a business to defend its technology choice in a court. However, business will be able to rely upon expert evidence in doing so.

We have balanced the need for certainty against the need for flexibility in achieving this result, and this balance has been generally supported by public comments we have received. However, if the market indicates that there is a clear need for more prescriptive legislation in this area, then we will certainly consider it.

Concerns about the need for a legal regime for digital signatures are often based on uncertainty about the trustworthiness and security of electronic transactions. It is these kinds of concerns that the National Electronic Authentication Council has been established to deal with. The council is a new peak body that will oversee the development of a national framework for electronic authentication of online activity and enhance business and consumer confidence in systems for authenticating electronic commerce transactions. The council will provide a national focal point on authentication matters.

Honourable members of the opposition have suggested that the use of encryption in certain circumstances should attract criminal penalties. The Commonwealth Crimes Act 1914 currently contains computer offences. Honourable members would be aware that a national criminal code is currently being developed. I understand that officers are currently reviewing the existing computer offences and that a public issues paper has been released. The need for new criminal offences dealing with encryption offences will be considered in the review.

The exemption for courts and tribunals in subclause 13(4) has been included because of the consequences that the rules and the bill may have for the jurisdiction of courts and for parties in court proceedings. The rules of courts deal with a range of technical matters and it is more appropriate for the courts and tribunals themselves to determine how electronic communications will be used. I expect the courts and tribunals to take advantage of the benefits of electronic communications and I am aware that some of them are already doing that.

I believe that this is an important bill. It represents an important part of the government's strategic framework for the development of the information economy in Australia. The bill will also meet the Prime Minister's `Investing for Growth' commitment to develop a light-handed regulatory framework for the online environment to support and encourage business and consumer confidence. Further, the legislation will assist agencies to meet the Prime Minister's commitment to provide all appropriate government services online by 2001.

As recommended by the Electronic Commerce Expert Group, the Electronic Transactions Bill is based on the UNCITRAL Model Law on electronic commerce. Given the cross-border nature of electronic commerce, it is essential that we achieve international consistency in this area. The UNCITRAL Model Law is recognised as an international standard for electronic commerce legislation.

In addition to international consistency, it is critical that we have a coordinated approach for electronic commerce legislation across all Australian jurisdictions. The states and territories, in consultation with the Commonwealth, are continuing the development of their uniform legislation. State and territory complementary legislation will allow electronic communications to satisfy legal requirements that exist under state and territory law for paper documents. However, while it is a part of a national uniform scheme, the Commonwealth's bill will operate independently of any legislation in other jurisdictions. The Commonwealth bill will take effect immediately from its commencement and will apply to those Commonwealth laws specified in the regulations until July 2001 when it will apply to all Commonwealth laws.

The Electronic Transactions Bill creates a light-handed regulatory regime for the use of electronic communications in transactions. The bill facilitates the development of electronic commerce in Australia by broadly removing existing legal impediments that may prevent a person using electronic communications to satisfy obligations under Commonwealth law. The bill generally gives business and the community the option of using electronic communications when dealing with government agencies. The bill reflects the government's commitment to ensuring that Australians enjoy the social and economic benefits offered by the growth of the information economy. I commend the bill to the House.

Question resolved in the affirmative.

Bill read a second time.