The Victorian government’s independent innovation agency has raised serious concerns about the federal government’s controversial encryption bill, saying it would “greatly threaten” Australian startups and have a “deleterious effect” on their ability to compete overseas.
LaunchVic also said that the new powers given to law enforcement in the bill could lead to companies relocating overseas, and “severely disadvantage” the local sector.
The organisation has proposed a “high-level meeting” with representatives from the Victorian startup sector to discuss the legislation, and offered to work directly with the federal Home Affairs department to work on its impact on startups.
The Telecommunications and Other Legislation Amendment (Assistance and Access) Bill 2018 was introduced to Parliament in September, and soon referred to the Parliamentary Joint Committee on Intelligence and Security for an inquiry.
The legislation gives new powers to law enforcement and other bodies to require tech companies to assist with providing access to encrypted data and communications.
The bill has been widely criticised by tech companies and civil and digital rights experts, with concerns surrounding its impact on privacy and security and a lack of oversight and transparency.
In a submission to the committee, LaunchVic focused on the impact these new powers could have on the Australian startup sector.
“LaunchVic has considered the bill and is of the view that in its current form the bill may have a deleterious effect on the ability for startups to develop their products in Australia, attract customers, investment and create jobs,” LaunchVic chief Kate Cornick said in the submission.
“Introduction of this bill without considering the needs of startups has the potential to greatly threaten Australia’s competitive appeal to nurture and attract these high-growth firms,” she said.
“It seems apparent to LaunchVic that the needs of the startup community have not been considered in the current bill and, to the extent industry discussion has taken place, it has not included the views of startup agencies at a national or state level.”
If passed, the encryption bill could lead to consumers losing trust in startups’ products, and put local companies at a disadvantage to their international competitors.
“Startups are greatly exposed to legal and regulatory settings which have the potential to engender a loss of trust between the business and their customers through risks – real or inferred – to privacy, trust, data integrity and security.
“As startups compete in a global market, any legal and/or regulatory settings that adversely affect local operations could have a significant impact on a company’s ability to achieve its full potential on a global basis,” Dr Cornick said.
“There is therefore an international competitiveness consequence to this bill: the impost that the notice regime creates could severely disadvantage Australia’s startup ecosystem and make other jurisdictions far more appealing.”
These small tech companies would be “disproportionately impacted” by the notices that law enforcement would be able to issue under the new powers.
“Startups are often incredibly leanly resourced both in personnel and cashflow. Startups would therefore be disproportionately impacted by either a Technical Assistance Request or a Technical Assistance Notice and indeed the decision maker may not have adequate knowledge that the terms of such mechanisms may be reasonable, proportionate, practicable and technically feasible within a startup enterprise,” the submission said.
Dr Cornick called on the federal government and the committee to consult with the startup sector before giving the legislation the green light.
“LaunchVic considers that, notwithstanding there is clearly a place for appropriate legislative and regulatory settings to support the needs of law enforcement and the intelligence community, greater engagement with the startup sector should be a priority,” she said.
“In addition to providing more dynamic cooperation between organisations and law-enforcement and intelligence agencies, this would also send an important signal to startups, their investors and customers, that technology and innovation businesses can found, scale and grow in a supportive regulatory environment within Australia.”
LaunchVic has now joined fellow Victorian government body the Office of the Victorian Information Commissioner in criticising the federal government bill, with the privacy office centring its concerns around the impact on privacy and security of communications as a whole.