Andrew Barr to lobby Defence Export Controls as local business feels pinch from red tape

Six months ago, the wait times for permits granted by Defence Export Controls - the regulator for military and dual-use goods and technology - began to balloon, the chief executive of a Canberra tech startup said, while shortly after the number of permits granted began to drop.

Daniel Shaddock's company Liquid Instruments manufactures test and measurement equipment used in labs across industries such as the semiconductor industry, aerospace, telecommunications and defence.

Though only a small portion of their exports are related to defence, the business has found export rules to be a growing obstacle, Mr Shaddock said.

He estimated permits are being knocked back for about 40 per cent of their market, regardless of what the technology is being used for.

"Something has changed this year, in that now the export permits, we're not getting answers very promptly," Mr Shaddock said.

"It's taking up to 100 days on average for us to receive an answer, which, by that time the customer has moved on and bought a competitor's product.

"And then more recently, we've basically been getting blanket denials of our export permits regardless of the end user for shipping to countries like Singapore, China, Malaysia, Greece, Israel."

Exports can only be prohibited by Defence Minister Richard Marles.

However, prior to this the regulator advises that it will recommend the minister reject a permit, meaning businesses still cannot legally ship their products.

Between January and August this year, only one permit was refused by the minister, while two permits were refused in the same period last year.

A Defence spokesperson said most applications are processed within 35 business days, but a small percentage of "highly complex export decisions" can take longer.

Between January and August 101 applications took longer than 35 days to process, most of which were completed within 50 days, the spokesperson said.

"Defence Export Controls assesses each export against Australia's legislative requirements," they said.

"There has been no change to the export controls legislation.

"Each export is assessed on a case-by-case basis."

Mr Shaddock said the delays had likely cost the business up to $2.5 million, but it was difficult to pinpoint a figure because of the loss of future trade, as clients moved to other businesses to fulfill orders.

Without a resolution in the next four weeks, they will need to move manufacturing overseas, which would mean losing between 20 and 25 Canberra-based manufacturing jobs.

"The products are already freely available from competitors in those countries with far greater specifications and capabilities than ours," he said.

"As a fairly new startup company, it's very challenging for us to compete with companies that have been doing this for several years."

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Mr Shaddock flagged the issue with ACT Chief Minister Andrew Barr at the end of August, when Mr Barr toured the business' Canberra office.

Liquid Instruments was a recipient of the ACT government's Priority Investment Program.

Mr Barr has committed to writing to the federal Defence Minister about the issue.

MOGLabs, which also produces lab equipment in the form of lasers, exports about a third of its product to China - and has seen that all drop off in the last six months.

"It's really killed about a third of our business at the moment," co-founder Robert Scholten said.

"And that means that we're losing staff, unfortunately at the moment through attrition.

"We just can't reappoint people because the business isn't there at the moment."

The company has recently been told seven permits, which were submitted nearly six months ago, will not be recommended, meanwhile another 30 are pending.

In that time, many of the customers have pulled out of orders, relaying that they can't wait up the the minimum 35 days for processing, or in some cases up to six months.

Mr Shaddock is advocating for more leeway to be given to businesses such as his, which he said are left in an "awkward position" by the export control rules.

"We have a new type of technology that our our startup company is based upon, and it is not neatly captured in in the export controls laws, it's not it's not foreshadowed by the export control laws," Mr Shaddock said. "And so we are in this awkward position."

"There needs to be some restoration of balance between the national security needs of Australia and its allies - But understanding the importance of being commercially competitive in the technology space if we are to continue to develop and advance our sovereign capabilities."