Fitch Solutions rates Australia’s encryption laws a negative

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Fitch Solutions rates Australia’s encryption laws a negative

Financial risk clouds darken.

Efforts to staunch a technology industry backlash over new encryption busting laws given to Australian security agencies have been dealt a body blow after the macro-research arm of global agency Fitch issued a sectoral warning of an “overall negative impact.”

Citing a Fitch Solutions Macro Research report issued on Thursday, the Australian Financial Review (AFR) has reported the ratings agency has advised clients that the new laws translate to a “negative for Australia's tech sector, but they will have the most impact globally, as they target international companies.”

The guidance from Fitch goes on to caution that if technology companies are required to follow the laws in Australia other nations are will seek similar powers weakening messaging security and “increase the threat of non-state actors” the AFR reported.

The entry of global risk agencies into the encryption law debate is a first rate headache for Australia’s security agencies and politicians because it suggests a serious miscalculation about how the new laws would be perceived by international capital markets.

The Fitch note came after Australian Signals Directorate chief Mike Burgess issued a strident rebuttal of what the intelligence collection and cyber security agency dubbed seven myths surrounding the Telecommunications and Other Legislation Amendment (Assistance and Access) Act 2018 (TOLA Act) on Wednesday.

“Many of the claims about the “dangerous” nature of the Act are hyperbolic, inaccurate and influenced by self-interest, rather than the national interest,” Burgess said in the statement.

However the way in which ASD’s so-called seven myths – which included “Agencies get unfettered power” and “Tech companies will be forced offshore” – is understood to have raised eyebrows in parts of the public service about what communications strategy, if any, exists following the passage of the new laws.

The deliberately open language articulating the new powers has also resulted a number of large firms operating in Australia running to their lawyers in a bid to obtain compliance advice about what information must be provided – or could legally be resisted – in the case of authorities seeking access to encrypted information, iTnews understands.

Meanwhile, Apple, Google, Microsoft, Twitter Dropbox and Evernote all piled in to kick the new laws, branding them “deeply flawed, overly broad, and lacking in adequate independent oversight over the new authorities” through the Reform Government Surveillance lobby group.

Australian tech sector’s bleak week

It’s been a particularly tough week in the local technology sector for those working in public policy, regulatory and government relations.

On Monday the Australian Competition and Consumer Commission (ACCC) put both Google and Facebook on notice it wants the inside mail on their algorithmic secret sauce as it figures out how to curb their market power on advertising and media here.

The move, reliably, elicited a rapturous response from major media organisations that have seen their advertising revenue evaporate from under their feet over the past decade.

The Australian Taxation Office went on to rain on the innovation parade of the banking sector on Tuesday after it was revealed it had moved on systemic milking of tech R&D concessions, winding up a gushing loophole some banks sailed nine-digit software boats onto.

Those moves were followed by nervous tremors at start-ups backed via bank venture funds which are bracing for a sharp reduction in risk appetite for new plays that potentially relied on now heavily pruned tax concessions.

There could be more bad news yet

A review of Australia’s military technology export controls being conducted by former head of spy watchdog the Inspector General of Intelligence and Security, Vivienne Thom is still yet to hand down its public report.

Australia’s university R&D sector this year rounded on efforts by the Department of Defence for new sweeping powers over what could, even retrospectively, be defined as dual use technologies.

The report has been anticipated for some time but is yet to emerge.

Labor Conference files Australia’s tech sector under Chapter 11

As the storm clouds gather over Canberra for Christmas, many in the tech sector are already looking to the 48th Australian Labor Party National Conference early next week to press some flesh for some policy input ahead of an anticipated May election, if not sooner.

While the fixture, in Adelaide this year, traditionally debates and rubber stamps party policies (which are not in of themselves government policies) the place of the tech sector post-Turnbull innovation revolution is heavy in symbolism at second last before “ALP National Constitution Organisational Policies”.

“CHAPTER 11: Australia’s place in a disrupted world” the Party Conference schedule reads.

An innocent coincidence, we're sure.

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