Government Greenlights Cutting Defence Research Red Tape

This week the Albanese Government has tabled in Parliament the review of the Defence Trade Controls Act 2012 (the Act) and the Government’s responseThe review and its recommendations too came with legislation likely to be passed by Parliament at its earliest convenience.

The Act regulates the supply, publication and brokering of military and dual-use goods, software, and technology. It ensures that controlled goods and technology cannot be transferred to groups or individuals whose interests are contrary to Australia’s. Whilst it is required by legislation that the Act is reviewed every five (5) years to ensure Australia’s export control regime remains fit for purpose, on this occasion, the changes are of pivotal concern for the success of AUKUS. Essentially, where the physical export of goods is well regulated, an area requiring further consideration is the intangible transfer of knowledge across borders.

The review was independently undertaken by Mr Peter Tesch, former Deputy Secretary in the Department of Defence, and Professor Graeme Samuel AC, President of the National Competition Council. The review made 10 recommendations, of which the Government agrees with seven and agrees-in-principle with the remaining three.

Strategic competition has revealed the imperative of Allies enhancing their research collaboration. At current the Act is unable to wholly fulfill this imperative, particularly in reference to the ‘rich opportunities’ in technology development afforded by AUKUS. The review therefore highlights the importance of the Act configured to ‘satisfy the heightened expectations and obligations associated with AUKUS transfers of the most sophisticated technologies and services’. In this light, recommended changes effectively seek to create a Free Trade Zone between the United States and Australia in areas of sensitive defence research. Though the changes would create freer flow of information between AUKUS partners, new penalties will be introduced for anyone who attempts to supply technology to a foreign person (in certain circumstances). The changes coincide with the U.S. National Defence Authorisation Act (NDAA) passed in December of last year which similarly exempts Australia and the UK from requiring stringent export licenses.

Some concerned by the changes reference the speed at which they have emerged and the shortness of time to consider their implications. The public consultation period lasted a single week, and the Senate Foreign Affairs, Defence and Trade Legislation Committee tabled it’s report a whole month-and-a-half early. The speed of the changes is likely due to the requirements the U.S. legislation places on the President of the United States. Every 120 days the President must certify to the U.S. Congress that Australia’s export control framework is compatible with the U.S. framework. Until these review changes are passed in Parliament, Australia is not compliant. Indeed, the first reporting date for the President is on 20 April 2024.

Other concerns raised pertain to the new penalty scheme associated with international information sharing. In submissions to the review, some institutions raised concern that the criminal sanctions may mean researchers will steer clear of international research altogether. In considering this concern, the Senate Foreign Affairs, Defence and Trade Legislation Committee concluded that the concerns are ‘largely centered on perceived unintended consequences’.

Between the Government and the Opposition, the changes raised by the review appear to be largely uncontroversial. The Coalition noted that parts of the defence industry have expressed concern but have ultimately supported the recommendations. The Greens are not supportive of the legislation. Greens Senator David Shoebridge stated the legislation was “dangerously undercooked”. In dissenting remarks, Senator Shoebridge stated: “It is almost as though whenever the words ‘national security’ are uttered by a government the Parliament ceases critical thought and just starts cheering instead”.

The Bill carrying the changes passed the House on Wednesday. Though the Senate is yet to agree to the changes and debate has been adjourned, it will likely be at the Senate’s next opportunity.

23 March 2024 | Connor Andreatidis, Consultant, Precision Public Affairs

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