Members of the Australian technology industry have warned that the Government's encryption bill would devastate their reputation, triggering job losses and a reduction in exports.

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Under its proposed powers, the Assistance and Access Bill could require a company to create a new mechanism for law enforcement to access encrypted communications — for example, text messages from a terrorist suspect — while also demanding it keep the capability a secret.

Francis Galbally, chairman of the leading encryption provider Senetas, said this situation would breed serious mistrust of businesses like its own.

"The bill, should it become law, will profoundly undermine the reputations of Australian software developers and hardware manufacturers in international markets," he told the Parliamentary Joint Committee on Intelligence and Security (PJCIS) today.

Mr Galbally suggested the bill would create an impression that Senetas may have been obliged to make a secret modification to its products to help a government agency, which might also compromise the security of its systems more broadly.

And that is not the kind of reputation that Australian tech companies want, among their international competitors and customers.

A joint submission from the Communications Alliance, the Australian Industry Group and others echoed these concerns, stating that "the draft bill poses a real risk for the IT/communications export industry which Austrade values at $3.2 billion".

Reputation is important — just ask Huawei

Mr Galbally pointed out Australia has been "reluctant" to deal with some foreign tech companies because of the potential security risks posed by those countries' national security laws.

This year, for example, fears of this kind led the government to bar Chinese manufacturer Huawei from participating in the building of the 5G telecommunication network.

While Senetas supports the aims of the bill — to get at criminals who "go dark" online — Mr Galbally argued the Australian industry would suffer a similar impact overseas.

"I can tell you quite bluntly that this is not simply a risk; it will be a direct consequence of the bill becoming law," he said.

Prime Minister Scott Morrison, meanwhile, has urged the bipartisan committee to wrap up its hearings and report back to Parliament, so the legislation can be passed quickly before Christmas.

But Mr Galbally said many Australian corporations, including his own, had not previously been consulted on the language of the bill by the Home Affairs Department.

In a previous hearing, the Home Affairs Department said it had undertaken extensive consultations, including with Apple, Google and Microsoft.

'It just beggars belief'

The Government maintains that the bill cannot be used to demand the creation of "systemic" vulnerabilities, such as undermining encryption across all devices.

But the Senetas boss also raised concerns, echoed in a subsequent hearing by Lizzie O'Shea of Digital Rights Watch, that the term "systemic weakness" is not defined in the legislation.

The bill proposes three key powers: A technical assistance request: A company can choose to "voluntarily" help, such as give details about the development of a new online service

A technical assistance request: A company can choose to "voluntarily" help, such as give details about the development of a new online service A technical assistance notice: A company is required to give assistance if they can. For example, if they have the ability to decrypt a specific communication, they must or face fines

A technical assistance notice: A company is required to give assistance if they can. For example, if they have the ability to decrypt a specific communication, they must or face fines A technical capability notice: The company must build a new function so it can assist police, as long as it does not force encryption to be broken

Mr Galbally said the telecommunications sector was a complex arrangement of companies and technologies, meaning that a change in just one piece of it, like introducing a vulnerability, could have unforeseen "systemic" consequences.

Issues were also raised about the perceived lack of safeguards in the bill. For example, Ms O'Shea described the lack of judicial oversight as a "startling omission".

Mr Galbally said the bill was the equivalent of dropping an atom bomb to stop insurgents in Syria.

"I come here as an ordinary Australian citizen concerned that the Australian government is proposing legislation that hasn't been thought through, hasn't been tested with the proper people in this industry," he said.

"It just beggars belief."

Potential impact on parliamentary privilege

In an extraordinary last-minute intervention, the President of the Senate also warned this week that the bill could threaten one of Parliament's most respected traditions.

Scott Ryan made a late submission to the inquiry suggesting that the legislation may erode parliamentary privilege, which protects the work of politicians.

He said politicians could have their messages accessed by law enforcement agencies without their knowledge, and have sensitive correspondence used in investigations without being able to claim privilege.

"Unlike search warrants applying to premises, computer access warrants and warrants used to secure remote access to devices, are not served on any party with an interest, if they are served at all," Senator Ryan wrote.

"There is therefore no trigger for anyone within the parliamentary sphere to seek to raise privilege.

"Neither is there a clear path for the resolution of such claims if they are made."

Senator Ryan did suggest that protecting privilege could be achieved by tweaking the legislation to exclude anything related to parliament, and said he had raised the issue with the Attorney-General and the Minister for Home Affairs.

Mr Morrison and Mr Dutton invoked the threat of a terrorist attack over the Christmas period as part of their bid to expediate the bill's passing.

In a public hearing on Monday, Australian Security Intelligence Organisation head Duncan Lewis said there was a "general heightening" of terrorist threat around Christmas, but cited no specific threat.

The spy chief also said his agency would "immediately" seek to use the legislation when it becomes available.

After today's hearing, Labor signalled it was not ready to support the new laws.

In a letter to Attorney-General Christian Porter, Shadow Attorney-General Mark Dreyfus wrote that a bipartisan agreement on the PJCIS's report would not be reached — an unusual result for the intelligence committee, which typically works across the aisle.

"No point in passing a law which doesn't work," Opposition Leader Bill Shorten said. "No point in passing a law which leaves a backdoor open for Russian hackers to come in."

Labor said it would support an interim version of the bill to allow its immediate use by some security agencies.

