Legislative Update - Strengthening Australia's Defence Framework

Overview

Australia’s Defence laws have undergone a number of reviews recently to ensure that they continue to remain fit for purpose and serve Australia’s interests in an increasingly complex strategic environment.

Two key pieces of Australia’s Defence framework are the Defence Act 1903 (Cth) and the Defence Trade Controls Act 2012 (Cth).

Recent developments have resulted in the passing of the following two Amending Acts to these two Principal Acts:

• The Defence Amendment (Safeguarding Australia’s Military Secrets) Act 2024 (SAMS Act); and
• The Defence Trade Controls Amendment Act 2024 (Cth) (DTC Act)

Both the SAMS Act and DTC Act received Royal Assent on 8 April 2024 with the SAMS Act commencing on 6 May 2024 and the DTC Act due to commence on a day fixed by proclamation or the date that is 6 months after the date of Royal Assent. The commencement date has now been fixed by proclamation and the DTC Act commences on 1 September 2024.*

In this update, we look at the key amendments introduced through these Amending Acts.

Defence Amendment (Safeguarding Australia’s Military Secrets) Act 2024 (Cth)

Following reports in late 2022 that ex-Australian Defence Force personnel may have been approached to provide military-related training to China, the Department of Defence (Defence) conducted a detailed examination into the adequacy of the policies and procedures surrounding the engagement of former Defence personnel by foreign governments.

The examination recommended strengthening Australia’s current defence framework to prevent certain individuals from training or working for certain foreign militaries where those activities would put Australia’s national security at risk.

This resulted in the passing of the SAMS Act which introduces a new foreign work authorisation regime into the Defence Act 1903 (Cth).

New Offence

Under this new regime, an individual commits an offence if:

• they are a former defence staff member, generally being a former member of the Australian Defence Force (ADF), the Department of Defence or the Australian Submarine Agency (foreign work restricted individual) who proposes to perform any work (including training) for, or on behalf of, a military organisation or government body of a relevant foreign country, and an exception does not apply; or
• they are an Australian citizen or permanent resident who is not a foreign work restricted individual and provides training to, or on behalf of, a military organisation or government body of a relevant foreign country concerning goods, software or technology within the scope of Part 1 of the Defence and Strategic Goods List (DSGL) or in relation to military tactics, military techniques or military procedures, and an exception does not apply.

In this update we refer to each of the above as affected individuals.

Foreign Work Authorisations

One of the key exceptions to the new offence created by the SAMS Act is where an affected individual has been granted a foreign work authorisation to undertake the proposed work or training.

Where an affected individual proposes to undertake any activity which is the subject of the new offence, they may make a request to the Minister for a foreign work authorisation in the approved form. They must then provide the information as required by that form. As at the date of this update, there is no current form approved.

The Minister may grant or refuse to grant a foreign work authorisation. Where granted, the foreign work authorisation will apply to the specific work or training, military organisation or government body and relevant foreign country as specified in the authorisation.

Where the Minister proposes to refuse to grant an authorisation or proposes to grant an authorisation that differs from that requested by the affected individual in its request, the Minister must provide written reasons for its proposed decision (except to the extent the Minister reasonably believes that doing so would prejudice the security, defence or international relations of Australia).

An affected individual has the right to apply for the original decision to be reviewed by the Minister or to refer the decision to the Administrative Appeals Tribunal for review of any original decision made by the Minister personally or for any decision made by the Minister following its review.

The Minister is required to take a number of matters into consideration when determining whether or not to grant a foreign work authorisation. The Minister is not limited to those considerations. The Minister must refuse to grant the authorisation if the Minister reasonably believes that the performance of the work, or the provision of the training by the affected individual would prejudice the security, defence or international relations of Australia.

An affected individual cannot request authorisation for the same work or training to be performed for the same foreign military organisation or government body of a relevant foreign country more than once every 12 months.

Minister’s powers to exclude certain individuals or foreign countries

The SAMS Act provides the Minister with the following powers to exempt certain affected individuals or foreign countries from the application of the new foreign work authorisation regime:

• the Minister of Defence may exclude a foreign country from the requirements of the SAMS Act. In which case, it would not then be a ‘relevant foreign country’. This means that affected individuals will not commit an offence by performing any work or providing any training to a military organisation or government body of that foreign country and there is no need for a foreign work authorisation; or
• the Minister for Defence may also determine a class of former defence staff members to not be ‘foreign work restricted individuals’. This class could be determined by the type of work the defence staff members perform and the period of time since that staff member has performed that work, although the Minister is not limited to those considerations.
• Where this applies, that former defence staff member will still be subject to the foreign work authorisation regime where they propose to provide any training within the scope of Part 1 of the DSGL or in relation to military tactics, military techniques or military procedures and would still require a foreign work authorisation in this context.

Other exceptions

The SAMS Act also contains other relevant exceptions, including where the work is performed as part of the individual’s employment by the Commonwealth, as part of work which is authorised by a written agreement with the Commonwealth or where the work solely or primarily involves providing humanitarian aid or performing an official duty for the United Nations or the International Committee of the Red Cross.

Penalties under the SAMS Act

The SAMS Act introduces three new penalties:

• where a foreign work restricted individual works for, or on behalf of, a military organisation or government body of a relevant foreign country and an exception does not apply, the maximum penalty is 20 years imprisonment;
• where an Australian citizen or permanent resident (who is not a foreign work restricted individual) provides training to, or on behalf of, a military organisation or government body of a relevant foreign country and the training relates to goods, software or technology within the scope of Part 1 of the DSGL or the training relates to military tactics, military techniques or military procedures, the maximum penalty is 20 years imprisonment; and
• for failing to comply with a condition of a foreign work authorisation, the maximum penalty is 5 years imprisonment.

Defence Trade Controls Amendment Act 2024 (Cth) (DTC Act)

In 2023, the Australian Defence Department released the Defence Strategic Review. The Defence Strategic Review contained several recommendations, which included continuing to strengthen defence partnerships with allies, including the United States of America (US) and the United Kingdom (UK).

The Australian Government passed the DTC Act to amend the Defence Trade Controls Act 2012 (Cth) with the stated aim of:

• further strengthening Australia’s export control regime to one that is comparable with the regime administered by the US; and
• creating an export control environment that allows a licence free transfer of DSGL goods, technology and services between Australia, the US and UK.

New Offences

The DTC Act creates the following three new offences:

• a person who supplies DSGL technology to a foreign person within Australia without a permit, commits an offence;
• a person who supplies DSGL goods (other than firearms) or DSGL technology within the scope of Part 1 (Munitions) or Part 2 (Dual Use) ‘Sensitive’ or ‘Very Sensitive’ Lists of the DSGL outside Australia, which were previously exported or supplied from within Australia, commits an offence; and
• an Australian person who provides DSGL services related to Part 1 of the DSGL to foreign persons outside of Australia without a permit, commits an offence.

The DSGL includes those goods, software and technology which are regulated under Australian export control legislation. A permit is required to export, supply, broker or publish DSGL items, unless an exception applies.

The DTC Act provides a national exemption of the export control permit requirements to the UK and the US. The purpose for this exemption is to remove barriers between Australia, the UK and the US so that there is scientific, technological and industrial cooperation. In December 2023, President Biden gave Australia and the UK exemptions from US export control regulations by creating the 2024 National Defense Authorization Act. The Government expects the passing of the DTC Act to unlock investment and collaboration opportunities for the Australian defence industry with its UK and US counterparts.

There are further exceptions under the DTC Act for the following persons or activities:

• AUKUS partners;
• Fundamental Research;
• Defence Trade Cooperation Treaty;
• Five Eyes;
• Australian Government employees;
• Foreign Country List;
• Build-to-print;
• Items returning to Australia;
• Original manufacturers;
• Firearms with serial numbers;
• Lapsed timeframes; and
• Grandfathered existing permits.

Implementation measures

The Department of Defence has established the following working groups to provide advice in relation to the implementation of the DTC Act:

• the Higher Education and Research Sector Working Group; and
• the Industry and Investment Working Group.

The Department of Defence is also undertaking a range of tasks to ensure that implementation of the DTC Act is successful. This includes developing a range of education and guidance materials for the Defence Export Controls website, co-designing online learning modules for the Defence Export Controls website with the above working groups, upgrading the ICT case management system and employing additional staff to process permit applications.

Penalties under the DTC Act

For the three new offences under the DTC Act listed above, the maximum penalties are 10 years imprisonment or 2,500 penalty units (equivalent to $782,500), or both.

The DTC Act commences on 1 September 2024 as now fixed by proclamation.* The offences will come into effect a further 6 months after commencement of the DTC Act.

*This article has been updated to reflect the signing of the Defence Trade Controls Amendment Commencement Proclamation 2024 on 18 July 2024.

Authors

Demetrios Christou | Partner | +61 2 8248 3428 | dchristou@tglaw.com.au

Lisa Ziegler | Partner | +61 8 8236 1103 | lziegler@tglaw.com.au

Ashlee Broadbent | Lawyer