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Monday, 29 October 2012
Page: 8115


Senator JOHNSTON (Western Australia) (10:03): I rise to speak on the Defence Trade Controls Bill 2011 and the Customs Amendment (Military End-Use) Bill 2011. This is very important legislation. I want to say from the outset so that I can put the government and its officers at their rest that the coalition senators will be supporting this legislation and, I think I am bound to also say at this point, the amendments that they bring to the chamber. There may be some change in that, but I will afford the government the courtesy of advising it during the course of the morning if there are changes with respect to those amendments.

This is an extremely complex piece of legislation. Additionally, it was a non-controversial piece of legislation until I, predominantly, began to wade my way through it and realised that it contained a number of very significant potholes.

Having said that, I will commence by saying that the bill does two things. Firstly, it puts the flesh on the bones, if you like, of a John Howard-George Bush treaty designed to make the acquisition of controlled munitions and technology more cost-effectively and efficiently carried out on either side of the Pacific Ocean—the United States or Australia. Obviously, given the very high percentage of systems that we acquire from the United States, we are the principal beneficiary of such a scheme. Our first concern in dealing with this aspect of the bill is to see that it achieves its purpose.

The second part of the bill is an equally very important and vital piece of legislation for Australia. It controls the export of restricted defence strategic goods list items and, as it does this, it seeks to comply with the Wassenaar arrangement, which restricts the transmission, sale and trafficking in weapons of mass destruction or the componentry and technology thereof.

In my contribution to the debate on the second reading, I want to acknowledge a number of people: firstly, the defence team on the coalition side, with the addition of the very learned Senator Mason, who, of course is a specialist in higher education; Mr Stuart Robert, the shadow minister for defence, science and personnel; Senator Ronaldson, veterans affairs; Senator Humphries; and Senator Macdonald. They have all played a role in going through what is a very complex piece of legislation. I also want to compliment all the members of the Senate Foreign Affairs, Defence and Trade Committee for their persistence. And, may I say, the secretariat have done a fabulous job in getting to the bottom of what is, as I have already said, very complicated.

Professor Jill Trewhella and Mr Tim Payne from the University of Sydney have been very, very supportive in assisting us. Dr Pam Kinnear, very importantly, came along to the Senate and gave evidence. Boeing flew a witness out from Washington to give evidence to the committee on this subject matter. All of the defence industry witnesses who appeared assisted the committee greatly in seeking to get the public policy done well and properly in the Senate. This is what the Senate does best—scrutinising complex legislation.

We have received very little assistance by way of input from the ministers. This area is a dog's breakfast. It was a dog's breakfast from the beginning because these ministers, the senior and junior defence ministers, refused to take any real interest in it. It has been up to the Senate to clean this mess up as best we can. Not everybody is absolutely happy with where this is going to end up. Having said what I have said about the coalition's disposition, the fact is that the ministers dropped ball. They did not understand what they were doing. They never came to terms with what they were doing. At scrutiny of bills they got a timely wake-up call but ignored it. We have 10-year penalties for breaches of these rules, with strict liability offences. That is what we have given to our hardworking research community in Australia. We have put this upon their shoulders. Indeed, the committee report on the consultation is a damning indictment of the way in which this government does business. This is incompetence on steroids, may I say, Deputy President, in line with what we have come to accept and understand from the government to this point in time.

Having said that, I now want to talk about the treaty. As I said, it is a Howard-Bush treaty—a very important treaty and something that the parliament should be proud of and work towards. The purpose of the bill is to give effect to the treaty between the government of Australia and the government of the United States of America concerning defence trade cooperation. This treaty was signed in 2007 by Prime Minister John Howard and United States President George Bush.

It sought to do a number of things. It sought to provide a basis where there was an approved community membership—that is, a structure where we took Australian companies, Australian individuals, state and territory governments and national governments and declared that they were part of the approved community—allowing them to go forward and deal in products and technology, the subject of the international trafficking in arms regulations, in a way that was purportedly more cost effective, simple, convenient and effective. The question is: did it do that?

Our point of view in the opposition was to ask industry, 'What do you think?'; and when we did, a number of specialist individuals who have discrete training in this area came to us and said, 'The definitions are very wobbly, vague and uncertain, and we don't think that the bill achieves what it is intended to achieve.' And, of course, this is grist for the mill for the Senate. Indeed, the Senate preliminary report of August 2012 is quite castigating as to the ineffectiveness of the legislation to achieve its purpose insofar as the treaty objectives were concerned.

It also sought to increase opportunities for Australian defence companies; it sought to reduce obstacles; and it sought to be better than ITARs. They are all very laudable and very bipartisan objectives which we support, and, as I have said, we will be supporting them—as bad as they may be.

The second part of the legislation is the defence export control legislation. It controls the supply of DSGL—Defence Strategic Goods Lists—technology and services. It seeks to create, register and put in place a registration and permit regime and to introduce a number of criminal offences to enforce those new provisions. That is it in a nutshell. I have no doubt that it does all those, and quite well.

It was two weeks ago that we received the 20 pages of amendments to this legislation, largely dealing with this aspect, and if I may, Mr Deputy President, I will take the Senate through what has occurred in consultation since the Senate got hold of this.

The problem with this is that these provisions are so broad as to start alarm bells ringing in every research institution and every private research institution in Australia as to how they are to proceed and how they are to fit into this regime that has been put into place. The point is: the regime is required—it is needed. But it is needed in a way that is consultative, that has a transition period—and you will hear some more about that during the course of this morning, Mr Deputy President—and that is effective in its control, but which does not throw out the research baby with the bathwater and which does not leave Australia in a worse position to that of our international research competitors, predominantly in the United States and in Europe. That is the Senate's principal consideration with this legislation.

The amendments that we will put forward seek to get DECO—the Defence Export Control Office—to comply with applications for permits and for registration in a timely way: 15 days for non-complex and 35 days for complex. And if they have not done it in that time they are deemed to have approved: they are deemed to have said that those applications are exempt. Whether that gets up or not is another matter, but that is the intent because I think the research community have been put to an enormous amount of needless concern and trouble because consultation was not done properly in the first instance. Indeed, the reason for that was that ministers did not understand this legislation's full effect and parameters and were simply not interested.

I want to talk a little about the Wassenaar arrangement. The Wassenaar arrangement has a list of goods and technologies that it seeks to control the participating states trading. It deals with the dual use goods and technologies that have a military application pertinent to weapons of mass destruction. There are 41 members to this arrangement. Australia is one. The responsibilities are onerous but very necessary. We are dealing with a very serious piece of international public policy. Our participation in this comes with considerable responsibility and indeed we need to conduct ourselves in an exemplary way in adhering to the provisions and in going forward.

Having said all of that, let me turn to the situation that we see ourselves in now with this legislation. It has been hurried through the parliament. It first came in and was passed by the House of Representatives on 21 November 2011. It came to the Senate some short time thereafter and was referred to the committee for its inspection. The Scrutiny of Bills Committee took a look at this and found a number of problems, many of which have not been dealt with by the minister: the delegation of legislative power in clause 10 and the fact that many of the provisions referred to in the explanatory memorandum do not find their way into the legislation—they are anticipated to be in the regulations. That in itself causes, in my respectful opinion, the Senate a great deal of problems. Indeed, when you introduce a 10-year penalty for the breach of these terms at the very least the terms should be specified in considerable detail within the act—not just the explanatory memorandum.

The Scrutiny of Bills Committee reported on the fact that there were a number of anomalous provisions and a number of absolute offences, which I will deal with, wherein people needed to be aware of what was going on. The Alert Digest said:

The Committee has a long-standing interest in the availability of appropriate merits review and notes the explanation given for excluding it in this case.

This is merits review excluded in paragraph 112BA. It continues:

The Committee is therefore of the view that it would be appropriate for the Minister to report to Parliament on the use of the power. The Committee requests that the bill be amended to require annual reporting to Parliament on the exercise of the discretionary power in paragraph 112BA and seeks the Minister’s advice as to whether the bill can be amended to this effect.

That is with respect to the customs bill, which we do not take any issue with. It indicates that these two bills go hand in hand. The customs bill is in fact the mechanical instrument whereby the defence trade controls are enforced.

There are a number of provisions which caused the Scrutiny of Bills Committee concern. The ones that concern me greatly are the strict liability offences that are created in clauses 13 and 18, the reversal of onus in clause 31, the strict liability offence in clause 28 and so on.

We will work our way through a considerable number of amendments. As I say, we will pass the government's amendments, subject to some understanding with respect to a number of the points. But I think the intent of the coalition is to get on with the job of getting this done. The government has its own reasons for such haste.

In the three minutes that I have left, I want to talk about consultation. Consultation was feigned by the ministers and their departmental officials in dealing with a couple of areas and people affected by this legislation, in a way that left the whole thing virtually in a state of extreme disrepair in terms of consultation. When people began to see and hear and understand, largely through submissions to the Senate committee, what this legislation meant, there was uproar. There was outrage. And rightly so. The defence department, having seen the error of its ways, has, I must now acknowledge, undertaken proper consultation. Indeed, we have spent about three months, a considerable time, looking at the problems and the practical difficulties that the proponents of the submissions to the Senate committee have made and seeking to solve them.

Given the nature of the important material underlying the Wassenaar arrangement, nobody is going to be absolutely happy at any given time about all of the solutions to their problems. The cards have fallen on the side of government control. I think they were always going to have to fall that way, but that does not excuse the fact that people were needlessly left out in the cold in this process. If they had been engaged properly from the outset, we would not have found ourselves getting 20 pages of amendments two weeks ago and we would not have found ourselves with hard-working researchers wondering how their future research and the structure of the way in which they do their very lucrative business inside universities and other research institutions were going to continue, and they would not have had to drop everything and run around for the last three months, as they have had to, seeking to get some changes to this legislation.

It is not perfect. I know that many people here and those listening to this debate will be disappointed in the way that we have dealt with this legislation. But we must fall on the side of the government's intent to control much of this material, its transmission and its trade. As I say, that does not excuse the fact that they were not properly engaged.

I am running out of time. There are many more things that I wish to discuss about this, but we will continue parts of this debate when we deal with the very large volume of amendments that the government wants to put in and that the Greens are keen to put in also, and the coalition have a number of amendments that we want to pursue. I thank the Senate for its time. This is a very important piece of legislation which has had an inauspicious commencement in terms of its consultation. It has led us to a dark place, but I think we have come out of it.