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Monday, 21 November 2011
Page: 13106

Mr CLARE (BlaxlandMinister for Defence Materiel) (17:11): I thank the honourable members for Fadden, Chifley, Paterson, Blair, Solomon and Canberra for their contribution to this debate and for supporting this very important legislation on defence trade. This legislation gives effect to the defence trade cooperation treaty between Australia and the United States. It also strengthens Australia's export controls to align them with international best practice. The announcement by the Prime Minister and President Obama last week highlighted the importance of military cooperation between Australia and the United States. Military cooperation is fundamental to our national security. About half of Australia's war-fighting assets are sourced from the United States and we will spend $150 billion replacing or upgrading up to 85 per cent of our military equipment over the next 10 to 15 years. Strengthening this area of our alliance cooperation is, therefore, very clearly in our national interest.

The treaty removes the requirement for companies to seek individual licences for each export from the United States, allowing for the licence-free movement of eligible defence articles within an approved community. For the companies which join the approved community this will save time and money. It also has the potential to open up improved business opportunities for Australian companies to participate in US contracts.

The potential benefits of this legislation to the Australian defence industry have been well reinforced during this debate. The government recognises that for these benefits to be realised the treaty process must be easier to use and more commercially attractive than the current system, otherwise it will not be a success. That is why there has been extensive consultation with Australian industry during the development of these bills. That consultation was conducted over three major stages. Stage 1 was meetings with industry in eight capital cities and regional centres in December last year. Stage 2 was the establishment of the Defence Trade Cooperation Treaty Industry Advisory Panel in May this year. The panel includes experts from major Australian defence companies, small to medium businesses and the Department of Defence and has provided important advice on the development of these bills. Stage 3 was the release of the exposure draft of the bills for broader industry and community feedback in July this year. These bills are the result of that consultation.

I take this opportunity to once again thank Mr Ken Peacock, who led the consultation process with Australian industry. I also thank members of the advisory panel, who donated their time and expertise to ensure the treaty is a success. I have been impressed by the frank feedback from the panel, which has resulted in important changes to the bills and explanatory memorandums. I also take this opportunity to thank the officials in the Department of Defence and elsewhere who have put a lot of work into the preparation of this bill. They include strategic policy executives Mr Michael Shoebridge and Mr Murray Perks, who is here in the chamber today. I know Murray is retiring next year, and this legislation and its implementation are a fitting conclusion to a stellar career. I also thank their team at the Defence Export Control Office, the Defence General Counsel Mr David Lloyd and his team in defence legal and legislation areas, the drafting team in the Office of Parliamentary Counsel and the export control systems area, and the Defence Industry Security Directorate in the DMO. Their effort and their dedication to the development of this bill are greatly appreciated.

I note some concerns have been raised by the member for Fadden, and I would like to address those. The member for Fadden raised the issue of the government's record in first, second and other past approvals. The facts are that this year the government has approved 30 defence capability projects worth more than $5 billion. This takes the total value of project approvals since the government came to office to over $11 billion, and there is more to come before the end of this year. The member for Fadden also raised the issue of the Defence Export Control Office's IT system. As I said in my second reading speech, a procurement process to select a partner to develop and implement a new system is underway, and a contract is expected to be signed early next year. That new system will be set up and tested before the treaty enters into force.

The member for Fadden also raised the issue of regulations to this bill, and he is right to say that many of the important details of this bill will be included in the regulations. The regulations are currently being drafted and will be released for public comment and extensive consultation before the end of this year. It is planned for this consultation process to include consultation and feedback from the Defence Industry Advisory Panel, chaired by Mr Ken Peacock. It will also include engagement with peak industry groups—the Australian Industry Group and the Australian Industry and Defence Network. It will include website release of the draft regulations and explanatory statement; an email notification to approximately 400 industry members and government representatives who attended the treaty road show events in December 2010 and August 2011; the distribution of material to all industry members who are provided with export permits or licences during the exposure period; a DMO eportal banner which will redirect industry to the Defence Export Control Office website; DMO distribution via the Defence access office network; and the Defence Export Control Office 1800 number, which will have an option for industry to seek further information about the regulations.

I understand that some concern has been expressed about the impact the treaty processes will have on small to medium businesses. Defence has already made decisions which will particularly assist SMEs as they transition to operating under the treaty's 'approved community'. For example, there will be no membership fee for joining the approved community. Defence will not charge for security clearances where they are required. In addition, to minimise the initial impact on SMEs operating under the treaty, Defence will tailor free training programs upon request to address specific issues and provide assistance in understanding the application process and compliance requirements, including for specific security responsibilities. Defence will also ensure a streamlined case-by-case facility accreditation process, which means that some small to medium businesses may not be required to have their facility accredited, or will be accredited based on needs, subject to certain conditions. Defence will also put in place flexible ICT arrangements whereby ICT system accreditation is only required on a case-by-case basis when an identified business need is demonstrated. It will also produce an approved community manual to assist industry in understanding the requirements of operating under the treaty. It will seek SME involvement in the Pathfinder program which will assess the effectiveness and efficiency of processes and policies under the treaty prior to implementation and will continue active communications with industry through outreach activities including extensive distribution of flyers, website publication of frequently asked questions, an ongoing free-call inquiry line and extensive representation at defence industry events and a number of trade shows. I am advised that if these bills are passed by the House they will be considered in greater detail by the Senate Foreign Affairs, Defence and Trade Legislation Committee. I understand that committee has commenced its inquiry and has asked for submissions in relation to this legislation to be received by 31 January 2012. I thank members of the Joint Standing Committee on Foreign Affairs, Defence and Trade for their recommendation that both bills be passed without amendment. This will ensure quick passage of the bills through the House and avoid duplicating the examination being conducted by the Senate committee.

As I said in my second reading speech, this is very important legislation. It will strengthen our alliance with the United States and the relationship between our defence industries; improve interoperability of the Australian and United States armed forces; help to deliver equipment to our troops faster and cheaper; provide opportunities for the Australian defence industry to win work in the US defence market; and enhance Australia’s defence export controls to bring them in line with international best practice. I therefore commend the bills to the House.

Question agreed to.

Bill read a second time.

Ordered that this bill be reported to the House without amendment.