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Monday, 21 November 2011
Page: 13088


Mr ROBERT (Fadden) (16:00): I rise to lend some comment from the coalition on the Customs Amendment (Military End-Use) Bill, noting, of course, that the Defence Trade Controls Bill 2011 and the Customs Amendment (Military End-Use) Bill 2011 are being debated cognately. We are now at the end of a road that we have journeyed down for a number of years. The coalition began the process of creating 'trusted communities', whereby Australian and US companies can trade defence equipment without the need for ostensible export licences. Indeed, the former Prime Minister, the Hon. John Howard AC, and the former President, George W Bush, signed the Treaty Between the Government of Australia and the Government of the United States of America Concerning Defence Trade Cooperation in Sydney on 5 September 2007. The Rudd government signed off on the subsequent implementation arrangements on 14 March 2008. We then waited for the US congress to pass implementation legislation at the end of September 2010. Then the Senate ratified the treaty on the following day, 29 September. The intent of the treaty is to permit the licence-free export of defence goods and services, provided, of course, they meet security and regulatory requirements between the Australian and US governments and between Australian and US companies.

Currently, Australian companies that need access to defence items or technologies in the US need an export licence from the US Department of State. This is to comply with the International Traffic in Arms Regulations, or ITAR, system. The existing export control regime, however, has focused on exports of tangible, physical, tactile goods. The growth of technology, especially computer and software technology, has meant that many defence export services can be provided literally over the net or through a range of brokers. These are not captured easily within existing controls. It is therefore argued that there are currently gaps in Australia's existing defence export controls. Those gaps exist in terms of internal or intangible transfer of technology; provision of services relating to defence and strategic goods and technology; the brokering of the supply of these goods, technologies and related services; and the exportation of goods intended for military end use that may prejudice Australia's security, defence or international relations.

The Defence Trade Controls Bill 2011, therefore, is designed to strengthen the defence export controls and to implement a treaty and provide the framework around the treaty between Australia and the United States of America. More specifically, the bill will establish and manage the 'trusted Australian community'. It will define membership requirements of this community. It will define offences for individuals and companies who fail to comply with their treaty obligations. It will establish monitoring powers and record-keeping requirements.

This process was begun by the coalition as it saw a desperate need to cut red tape, to simplify processes for sharing equipment, information technology and the like between Australian and US defence companies and to deliver new opportunities for Australia's defence industry to work closely with US industry, especially on sensitive defence technology projects. The coalition is fairly proud of the initiative. It sits in well with what the coalition is all about—boosting exports, boosting jobs, cutting red tape, helping companies enter global supply chain contracts, supporting jobs and providing a longer term stability for the Australian defence industry. It was after all the coalition that committed, year on year, to over 30 first- and second-pass approvals through the National Security Committee of Cabinet so that the Defence Cooperation Plan, the DCP, could be taken to a banker. The DCP outlined exactly when Defence would look to procure goods and services, and defence industry were able to plan their R&D, their financing and their people strategies around it. When Labor came to power, the DCP was cut from 10 years to four years. But now it is back again, as Labor have acknowledged the egregiousness of their mistake. Yet, in place of the 33 first- and second-pass approvals granted by the coalition, last year we were down nine—and in the previous year there were not too many more than that. Fourteen billion dollars worth of defence industry and defence projects have been pushed to the never-never. This is the Labor government's current track record on defence industry, so it is little wonder that they are lauding this particular bill and what has happened with defence industry as a result of it. But let this parliament be in no doubt: the process of cooperation began with the coalition, and my best guess is that when all is finally said and done it will be the coalition who will implement it sensibly and seriously to the very end.

The coalition also saw the need to speed up delivery of the next generation of defence technology through improved military-industrial collaboration, the coalition saw the need for further enhancement of interoperability between Australia and the US, and the coalition saw the need to ensure that the ADF continues to enjoy access to cutting-edge capabilities in the future. We believe that the intent and the spirit of this treaty reflect a significant trade and industrial cooperation between Australia and the US. We believe it will complement the ANZUS treaty and complement our close intelligence cooperation and the current free-trade agreement, and it is made possible by the unprecedented closeness of our alliance with the US.

The coalition are therefore wholly supportive of the intent of this legislation and broadly supportive of the direction in which the legislation is going. We do have a range of concerns, and these have been confirmed through a range of industry consultations. One concern is about the fact that Australia and the US signed the treaty without a regulation impact statement having been made. That is not surprising, considering that regulation impact statements are becoming very short and sweet—or, indeed, non-existent—in most legislation this government is putting through. Their approach is a far cry from their 2007 mantra that there would be a regulation impact statement for everything the government did and that they would do nothing without a cost-benefit analysis. The problem is that there is no cost-benefit analysis for this bill. Neither is there a cost-benefit analysis for the $43 billion NBN, but we digress when we begin to talk of one of the largest expenses in Australian history, which this government is undertaking without a cost-benefit analysis and in direct contravention of its 2007 policy. Why make some sort of comment about its integrity in the 2007 election? We will just move on from that little blip.

The DEPUTY SPEAKER ( Mr S Sidebottom ): Yes, I think you should.

Mr ROBERT: Although a regulation impact statement is not required under the treaty, in the bill there is an RIS which focuses more on examining proposals to implement a strengthening of the existing defence export controls. Indeed, the explanatory memorandum notes:

The RIS concludes that the proposal to strengthen Australia’s export controls will impose some additional regulation burden on the export of defence and strategic goods, technology and related services …

During the coalition's consultation with industry, concerns were raised about the role of the US State Department in approving Australian companies or individuals as trusted members of the Australian community. Industry was concerned that the process of gaining such approval might be cumbersome, costly and time-consuming, with no right of appeal. We share this concern. To date we have received nothing that would ameliorate this concern, and it was confirmed for the coalition when it was briefed by the Department of Defence, who also expressed that work was still required in this area. We look forward to seeing the work required in this area and to getting a feel for the cost, the time, the work and the right of appeal involved in the process. These issues will be a major focus of the proposed examination of the bill by the Senate Foreign Affairs, Defence and Trade Legislation Committee.

Coupled with this concern is the lack of confidence within the defence industry in the consistency of decisions made by the Defence Export Control Office about what strategic goods can or cannot be exported. I also have concerns that DECO's replacement IT system will not be operational in time for the commencement of the legislation. Questions on notice to which the government responded on 22 August 2011 said that the government was unable to provide the cost of this system and that the government was unable to provide the cost of running the new system. The government suggested that the new IT system would be operational in the first half of 2012. Well, if this government's ability for implementing IT systems is the same as the Labor government in Queensland's ability for IT systems, especially in health, I suggest we will be waiting an incredibly long time. The government's response to the questions on notice gives the coalition no confidence at all that the IT system which will support the implementation of the treaty is on track, or the boundaries, the costs and the time are known. There has been no indication given on whether or not a contract has been awarded, who to, or when the new system will actually be delivered. According to the government, the old system is terribly outdated, which begs the question: why has it now taken four years to implement a new system when this process started with the signing of the treaty in September 2007? And here we are with the government still unable to provide the opposition with basic questions, in terms of projects, of cost and time. I can only urge the government and urge the minister to take the issue a little more seriously, given Labor's track record in so many projects they have sought to implement.

I have also spoken to the minister with respect to the regulations that underpin the legislation. The legislation is in many respects a coathanger legislation, with much of the grunt work being done through the regulations. The minister has acknowledged that the regulations currently have not been drafted, and there is no regulation to provide to the opposition to understand the full gamut of what is being proposed. He has agreed, of course, that the regulations, when drafted, will be staffed out for comment and the coalition will have an opportunity then. But, of course, the staffing of the regulations will occur after the bill has passed the parliament. So we look forward to seeing the regulations and reserve our right to seek to strike them down if they do not meet the intent of what the minister has brought forward with respect to the bill.

With respect to the Customs Amendment (Military End-Use) Bill 2011, it of course is tied tightly to the Defence Trade Controls Bill 2011. Its purpose is to amend the Customs Act to include a power to prohibit the export of non-regulated goods that may contribute to a military end-use that may prejudice Australia's security, defence or international relations. The bill will implement the treaty between the government of Australia and the government of the United States of America concerning defence trade cooperation, which of course was started in September 2007. The power to be included in the new section 112BA of the Customs Act will enable the Minister for Defence to prohibit the export of specified, non-regulated goods to a particular place or person. In exercising this power, the Minister for Defence must suspect the goods would or may be used for a military end-use that may prejudice Australia's security, defence or international relations. Where the minister forms such a suspicion, the minister may issue a prohibition notice preventing the export.

Under the new subsection 112E(13) goods are or may be for a military end-use if the goods are or may be for use in operations, exercise or other activities conducted by an armed force or an armed group, whether or not that force or group forms part of the forces of the government of a foreign country. These provisions are being included in the Customs Act to reinforce our export controls by providing authority for intervention at the border of goods not otherwise regulated but nonetheless potentially being exported for military end-use contrary to our national interest. In other words, and quite simply, the bill will increase our compliance with regard to the export of not only military equipment but also non-tangible items such as services and intellectual property.

The treaty is widely held up to provide substantial benefits for defence. We will continue to hold the government accountable to ensure it achieves this stated aim. The intent is that it will improve commercial opportunities for Australian defence industry; that it will create a comprehensive framework for the two-way trade in certain defence articles required for specific end users, projects, research programs and operations; and that it will remove the need for export licences within an approved community of government facilities and private companies in Australia and the US. The minister has stated in conversation that costs associated with onerous security requirements will be met by the government. I look forward to seeing this in action. We remain strongly committed to local defence industry. We support the bills. We will have them referred to the Senate Foreign Affairs, Defence and Trade Legislation Committee upon reaching the Senate, to ensure that the issues I have outlined are discussed and examined and that the concerns are properly dealt with. I look forward to the Senate response and, more importantly, I look forward to the government quickly releasing the regulations so the entirety of what is being considered can be examined in greater depth.