'1984' style encryption laws will stymie startup growth: founders
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'1984' style encryption laws will stymie startup growth: founders

Angry members of the country's startup community say the passing of the government's encryption legislation on Thursday will curb Australia's tech export success for decades to come.

The 'Assistance and Access' bill passed the House of Representatives late on the last sitting day of parliament for 2018, after Labor made the surprise decision to vote through the laws without some of its suggested amendments ahead of a review in 2019.

Attorney General Christian Porter asserted the importance of the bill in the House of Representatives on Thursday.

Attorney General Christian Porter asserted the importance of the bill in the House of Representatives on Thursday. Credit:Alex Ellinghausen

Larger telco companies have warned the laws, which would allow authorities to compel developers to modify systems to access encrypted information, may lead to unintended security flaws.

But smaller IT businesses and startup developers say they will now feel real consequences as they look to launch new businesses.

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"We are creating an absolute disadvantage — and it sounds like an epic "Nineteen Eighty-Four' situation," says founder of female-focused technology education startup Girl Geek Academy, Sarah Moran.

In submissions on the legislation a number of smaller internet security and email startups raised concerns about the global viability of Australia's tech sector.

It has been argued the laws are a significant disincentive to global investment in Australian-led companies, because any business founded here could have the Australian government order developers to make changes to code or provide access to encrypted information.

Sarah Moran warns the tech sector will not take kindly to the Opposition's decision to pass the legislation.

Sarah Moran warns the tech sector will not take kindly to the Opposition's decision to pass the legislation. Credit:Mathew Lynn

"When we create a technology product, we’re selling it to the whole world," Moran says.

"If the legislation says the Australian government can have a look inside that business, that's the problem... and the reason people invest in these companies is to scale them globally."

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Startup organisations issued warnings about the long-term impact of the legislation when it was proposed, with LaunchVic saying in a submission earlier this year the legislation would have an "international competitiveness consequence". LaunchVic declined to comment on the passing of the legislation.

ASX-listed businesses like encryption tech company Senetas have also issued warnings about the scheme.

Australia faces "the real prospect of sales being lost, exports declining, local companies failing or leaving Australia, jobs in this industry disappearing and related technical skills deteriorating," the $19 million company said in its submission on the policy.

Chief executive of independent email provider FastMail, Bron Gondwana, pointed to the risks of the scheme because of the difficulty complying with Europe's privacy requirements.

"This legislation makes complying with both Australian law and the EU's GDPR privacy requirements harder, putting Australian businesses at a disadvantage in a global marketplace," Gondwana says.

"A PR headache is an unusual Christmas gift to the technology industry of Australia - an industry that is key to our future economic growth."

Attorney General Christian Porter has championed the legislation for its power to fight terrorism, observing in his second reading speech "95 per cent of ASIO's most dangerous counterterrorism targets use encrypted communications".

On Thursday opposition leader Bill Shorten called on the government to "stay at work" beyond 5:00pm to pass the laws.

Moran says while it looked like Mr Shorten had a "Stephen Bradbury opportunity" to win the next election, support from the technology community for Labor will be lacking.

"I can’t comprehend if Labor doesn't understand how the internet works, or doesn't care," she says.

Shadow attorney general Mark Dreyfus said the opposition has secured an agreement with the government to review further changes to the legislation in February.

“The government have never properly addressed the concerns of business, both small and large, about the impact of this legislation," Mr Dreyfus said. "That is something the government must answer for."

Follow MySmallBusiness on Twitter, Facebook and LinkedIn.

Emma is the small business reporter for The Age and Sydney Morning Herald based in Melbourne.

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