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Monday, 29 October 2012
Page: 8131

Senator STEPHENS (New South Wales) (11:19): I too rise to speak, in what is a very important debate, in support of the legislation. As the chair of the committee that undertook the inquiry into the Defence Trade Controls Bill 2011, I have some observations to make. I begin, as Senator Johnston did, by thanking the committee members. I thank the secretariat in particular for their very professional support during what has been a protracted and difficult series of inquiries, being two lots of inquiries and two reporting processes. I also thank the research community for raising the issues that they did and for sustaining their efforts in bringing their points of view to the table. I thank the defence industry, who participated in the early rounds of consultations and helped us to understand where the flaws were in this bill. There were others, those involved in public policy think tanks and the like, who served to make us closely examine the bill.

As all of the speakers so far have said, this bill gives effect to the treaty between the government of Australia and the government of the USA concerning defence trade cooperation. That agreement was signed in 2007 by a former Prime Minister, John Howard, and a former US President, George W Bush. So that was in 2007—five years ago—and the Joint Standing Committee on Treaties considered the bill and recommended that binding treaty action be taken, in 2008—four years ago. The bill was introduced and passed in the House of Representatives a year ago and so, as is always the case with legislation as it comes through the legislative process and as it came to us, there was an opportunity for us to make sure that we gave the bill the scrutiny that it deserved.

Given the many criticisms that we have heard this morning—and there are very many legitimate criticisms that have been aired today—I want to say this. I want to thank Senator Ludlam, Senator Johnston, Senator Fawcett, Senator Bishop, Senator Kroger and Senator Humphries most sincerely because everybody on this committee actually applied themselves to this bill. When we understood (a) the complexity and (b) the problems, everybody really brought to bear their expertise and understanding of what this bill would do as to the unintended consequences that were teased out over a series of hearings and roundtables. It demonstrated to me how a Senate committee should work effectively: very collaboratively, very much in the national interest and very much eager to get the best outcome for everyone. The unintended consequences of the bill as it was originally drafted have been well canvassed here this morning by all of the contributors, and I thank them for that. It was very clear from the outset that the regulatory impact statement and the explanatory memorandum were inadequate, and we have all acknowledged that. Once that was discovered that was very important as no-one on the committee wanted to be seen to be complicit given the fact that the EM was so inadequate. So it was important that we worked together to ensure that we delivered, through the Senate process, a much stronger outcome for all concerned—particularly for Australian industry and our research institutions—and that we ensured that the bill—which has a very critical role in introducing controls as to the Defence and Strategic Goods List and services related to the Defence and Strategic Goods List and also technologies and goods, in creating registration and a permanent regime for the brokering of those Defence and Strategic Goods List goods, technologies and related services and in introducing a new range of criminal offences to enforce the new provisions—was actually workable, applicable and in the national interest and was also in the interests of our international relationships. As Senator Bishop so rightly said, the bill is critical to a range of technologies that are being developed here, critical to the intellectual property that comes from our research collaborations and critically important to the work of our institutions, our universities, our CRCs and also to ensure that they are not going to be disadvantaged in the process.

As I said, the bill was passed in the House of Representatives last year. When the bill was referred here, as other speakers have said, it was to allow further investigation into the issues of concern within the defence industry. That was how the brief actually came to the committee. From that time, the committee has worked assiduously to ensure that the concerns raised by industry and the research institutes have been heard and that all voices in this matter could be heard so as not to rush to an outcome that would lead to unintended consequences.

I have to say that we were incredibly concerned about the defence department's consultation process and the shortcomings. The committee approached other academic and research organisations to seek their submissions with regard to the effect of the bill on their work. So we had nine submissions, and eight supplementary submissions were received after that. So the preliminary report of the committee, which said, 'No, this bill should not be passed until there has been better consultation,' was taken very seriously by the government, as it should have been. It was of great concern to us, and I know it would have been of concern to Senator Carr to hear that parts of the government had not spoken to each other about this important research and innovation sector.

The submission from the Department of Industry, Innovation, Science, Research and Tertiary Education in July suggested that the consultation had some way to go before all parties could reach a solution. So it was of huge concern to government members and to the committee as a whole that even the government's position on these issues was not clear and coordinated. As speakers have said, rightly, the parties could not reach agreement on a preferred option. Given that and our report, the minister wrote to me as the then chair of the committee, advising of his action in response to our report.

I want to acknowledge that the minister appointed Mr Ken Peacock and Dr Alex Zelinsky, who is in the chamber today, to conduct further consultations on the bill. I want to credit and commend them for their work because they did grasp the challenge and they did grasp the importance of finding a resolution to these issues. They consulted with the university and research sector stakeholders, reported on their consultations and made significant recommendations, all of which have been taken up by the government, including: the notion of a transition period of 12 to 24 months for industry, particularly specialist military equipment, universities and the research sector to adopt the strengthened export controls and to allow Defence to complete its education and training program prior to full implementation of the bill; a pilot program to be conducted during the transition period that would involve a broad range of stakeholders to test and evaluate implementation arrangements, which would complement the Pathfinder program being conducted for the treaty provisions. It was important to make sure that there was some sort of policy coherence going on. Other recommendations are that Defence establish an advisory board, similar to the Defence Trade Cooperation Treaty Industry Advisory Panel, from industry, research, university and government stakeholders to advise the government on implementation issues during the transition period. The advisory board and engagement with the university and research sectors would inform the annual Wassenaar arrangement review of the Defence and Strategic Goods List to ensure that this list is up to date. Also, Defence should allocate additional resources to carry out the necessary stakeholder engagement, given that that was so inadequate in the first stage.

It would ensure that the bill reinforces the principle that all researchers including those operating under federal or state jurisdictions are subject to the same export control regulations, and the notion that permits should be granted for specific research programs and projects for extended periods, preferably for the life of the program or the grant, where risks allow, and not be transactional based where approvals are sought for every interaction in collaborating with a foreign partner. The proposed obligation would apply for permits for publications to be actually replaced with an offence provision that applies to individuals if they wilfully release controlled information into the public domain.

The Chief Defence Scientist and Mr Peacock worked with the research sector and the university sector and the defence industry sector to recommend a series of amendments which were agreed by the government. But not just that. At the same time, in response to the recommendations and the concerns of Universities Australia, the Chief Scientist, Professor Ian Chubb, was engaged in a different process. It was a complementary process, initiated at the request of the university sector, to convene a roundtable aimed at reaching an agreed path forward on the bill and to address concerns on various aspects of the bill raised by the university and research sectors. I particularly want to thank the Chief Scientist, Professor Ian Chubb, for undertaking this additional task which really complemented the work of the Defence Chief Scientist and Mr Peacock and resulted in key developments, including establishing a Strengthened Export Control Steering Group and, again, agreement to the transition period of at least 24 months with no offence provisions in effect, and pilot studies—and not just one pilot study but pilot studies. There will be a final report from the steering group to be tabled by ministers, bringing a parliamentary accountability, along with internal institutional practices and structures including a supplement to the Australian Code for the Responsible Conduct of Research to be developed to reduce the need to interact with government agencies on the legislative regime. There will also be exemptions for basic scientific research and for information already in the public domain.

Having had the problem developed and delivered to the committee that the consultation was absolutely inadequate—and I agree with everybody who has spoken so far in that sense—the work was undertaken by these three eminent people in bringing together roundtables and working through the problems, and because of their understanding of the way in which the research sector collaborates in an international projects and in cross-disciplinary projects, they were able to come up with a set of recommendations, all of which have been agreed to by the government and have now been incorporated into amendments.

This means that while the original bill, as it was drafted, was disappointing, I suppose, in many respects it proved to me most potently the strength and capacity of a Senate committee to deliver an outcome that is in the national interest, an outcome that proves the benefit of a diligent parliamentary process. I was really very grateful for the fact that it was intellectually very challenging for us to do this, but we were all persistent in making sure that what we had in front of us was a significant improvement on the original bill.

Now we have learned this lesson, we have consulted widely. We have been given an extension of time to report and, as a committee, we have done everything that we could to facilitate open and transparent discussion about the issues. We recognise the importance of the strengthened export controls regime in the bill and we appreciate the detailed and careful input of all the parties involved in the consultation process and their willingness to be cooperative in the interests of a satisfactory solution. So I know that when we go to the committee stage and debate the amendments—and there are many amendments that will be supported and I know that there are some that will not be supported—the minister will take those through. From this experience—which has been character building I would say would be one of expressions we might use, Senator Johnston—we can hope that the process undergone will prove to be an important learning experience not just for us and not just for the Department of Defence, which will use implementation process for the provisions of this bill to foster closer links with the research and university sectors and with the Department of Industry, Innovation, Science, Research and Tertiary Education and other relevant departments.

Before I close I would like to quote from one piece of correspondence that I have received since the amendments as drafted have been circulated. They come from Professor Tony Peacock, who is the chief executive of the CRC Association. In his email to me he writes:

The outcome for the research community is a good one. We now have the opportunity to provide expert advice on the defence and strategic goods lists, which is a significant improvement to the current situation.

He says:

For almost a decade I ran a lab that routinely modified viruses for pest animal control purposes. It would certainly require a permit from DECO to undertake the work under the new system. That is an entirely reasonable balance between freedom to operate and innovate and Australia's national security and international obligations.

He wrote:

I see no situation where Australian innovation will be stifled by this bill. Researchers routinely carry out their work against a background of legislation. In New South Wales a researcher that fails to adhere to animal experimentation laws can to go to jail for 12 months. I think it is alarmist to raise the spectre of serious criminal offences under the Defence Export Control Bill because it is not unique in this regard. I want to make it absolutely clear that the Department of Defence and in particular the Chief Defence Scientist, Dr Zelinsky, consulted respectfully and comprehensively with the Cooperative Research Centres Association and at no time through this process has the CRCA been rushed or pushed. The concerns I conveyed to your committee were properly addressed.

I commend the bill and I commend those who participated in the consultations. As many speakers have already said, our defence forces certainly deserve better than what transpired through this process and the Department of Defence will certainly be learning from their experience. Our defence industries deserve better too and certainly our research institutes deserve better. I am very confident that it is not just the Department of Defence and the advisers who drafted this bill in haste or in such inadequacy of the first instance who will learn from the experience. I think it is one that has been character-building for us all.