"Controlled material" means material (including equipment, technology, articles and services) to which the security requirements apply.

"Discriminate", "employee" and "contract worker" each have the meaning given in the EO Act.

"EO Act" means the Equal Opportunity Act 2010 (Vic).

"Security requirements" means any of the following -

(a) requirements made by the Australian government, that government's Department of Defence or any other department of that government under the Customs (Prohibited Exports) Regulations 1958 (Cth), the Defence Services Manual, or a term or condition of a licence or approval granted under those Regulations or under the Customs Act 1901 (Cth), including requirements for personal security clearances;

(b) the requirements of laws of the United States of America, including but not limited to, the International Trafficking in Arms Regulations and the Export Administration Regulations including requirements of any permit, licence or approval granted, or agreement made, under those laws;

(c) contractual requirements applying to the Applicant and relating to any of the requirements mentioned in paragraph (a) or (b).

"Specified conduct" means to discriminate on the ground of the nationality against any member of the Applicant's Victorian workforce or anyone who wishes to join that workforce, in relation to defence-related projects undertaken or to be undertaken by the Applicant, and only to the extent required to enable the Applicant to comply with the security requirements, and includes but is not limited to the following conduct to the extent that it is required to enable the Applicant to comply with the security requirements -

(a) requiring members or potential members of the Applicant's Victorian workforce to provide details of their nationality and country of origin to enable the Applicant to determine whether they are permitted under the security requirements to work on certain defence-related projects or to have access to controlled material or controlled information;

(b) identifying (by means of a badge, maintenance of a list or otherwise) those in its Victorian workforce permitted by virtue of their nationality to work on certain defence-related projects or have access to related controlled material or controlled information so as to distinguish them from those not so permitted;

(c) preventing the release of controlled material or controlled information to members of that workforce on the basis of their nationality;

(d) requiring members of that workforce to execute formal security agreements based on nationality;

(e) restricting access to controlled material and controlled information connected with certain defence-related projects to particular members of that workforce based on their nationality;

(f) restricting access to areas of its facilities connected with certain defence-related projects to particular members of its Victorian workforce based on their nationality;

(g) rejecting applications to join its Victorian workforce in positions relating to certain defence-related projects based on the job applicant's nationality, and taking into account a person's nationality in determining who should be offered employment or contract work requiring access to controlled material or controlled information;

(h) transferring members of its Victorian workforce from certain defence-related projects on the basis that, due to their nationality, the Applicant may not permit them to work on those projects, whether that transfer takes into account existing or changed nationality;

(i) disclosing information about the nationality of members of its Victorian workforce to -

(iv) any other organisation for which or on whose behalf or at whose request the Applicant undertakes work in respect of which the Applicant has (directly or indirectly) an obligation not to transfer defence-related information to non-Australian citizens.

"Workforce" of the Applicant means the Applicant's employees and contract workers.

The Tribunal hereby grants an exemption to the Applicant from the operation of sections 16, 18, 21, 107 and 182 of the EO Act to enable the Applicant to engage in the specified conduct.

This exemption is subject to the conditions in the Schedule. The exemption is to remain in force from 3 May 2012 to 2 May 2017.

1. This exemption applies only to conduct by the Applicant where it has taken all steps reasonably available (including steps that might be taken in negotiating or performing any contract) to avoid the necessity to engage in the specified conduct.
2. Where the specified conduct involves moving a member of the Applicant's Victorian workforce from one project, area or facility to another, the Applicant must, through a duly authorised officer, explain to the person why he or she is being transferred and must otherwise take all reasonable steps to avoid or limit harm or loss to that person which might arise from the transfer.
3. Where the Applicant has a system of badges or security passes to identify those in its Victorian workforce permitted by virtue of their nationality to work on certain defence-related projects or to access related controlled material or controlled information, or levels of access to that material or information, the pass or badge may show a code that indicates the holder's nationality, but not in such a way that a person unfamiliar with the code would be able to identify that nationality.
4. All information relating to security passes or badges, security clearance levels, or access to controlled material or controlled information, must be restricted to the Applicant's Manager of Security and Human Resources Manager and their properly appointed nominees on a 'need to know' basis.
5. The Applicant's employment policies must be amended as soon as reasonably possible so as to refer to the terms and conditions of this exemption, and to make it clear that the purpose of requiring information regarding nationality is solely to enable compliance with the security requirements.
6. The Applicant must provide a copy of this exemption to -
   • (a) existing contractors who supply it with contract workers, as soon as is reasonably possible after this exemption commences; and
   • (b) any new contractors who supply it with contract workers, as soon as is reasonably possible after the relevant contract is entered into.
7. The Applicant must report in writing to the Commission and the Tribunal six months after the commencement of this exemption, and every six months thereafter while the exemption is in force, detailing, in respect of the period to which the report relates, and in respect of the matters covered by this exemption -
   • (a) the steps taken by the Applicant to comply with the EO Act and the terms and conditions of this exemption, including training and education given to its Victorian workforce, compliance audits, and any complaints made under the EO Act;
   • (b) the number of applications to join its Victorian workforce rejected under the exemption and whether any (and if so, how many) were subsequently appointed to other roles;
   • (c) the number of members of its Victorian workforce moved to other projects, areas or facilities under the exemption, and any steps taken to minimise harm or loss to those people arising from the transfers;
   • (d) the number of Victorian workforce vacancies advertised or offered under the exemption.
8. The Tribunal, in determining whether to renew or revoke this exemption, may (as well as other factors) take into account any breach of these conditions and anything in any report under condition 7.

1. The applicant develops and produces advanced defence, aerospace and cyber-security systems in the air, on land, at sea and in space. In particular, it designs, manufactures and supports military aircraft, surface ships, submarines, radar, avionics, communications, electronics and guided weapon systems. These products are supplied to the Australian Defence Force (ADF) and to more than 100 countries including Australia and the United States of America (US).
2. In order to develop and manufacture these products, the applicant makes use of defence related technical data, goods and services, some of which are produced in the US and which are required to be kept secret. The US has passed laws which limit, by reference to nationality and place of birth, who can have access to that secret material. There are also secrecy requirements relating to Australian government work, which in part concern the nationality of the applicant's workers. To meet these requirements the applicant seeks information regarding the nationality and place of birth of some of its prospective employees, current employees and contractors (workforce) and uses that information to determine whether to offer work to some and to determine for others whether they can undertake certain work.
3. On its face, seeking and using information concerning a person's nationality or place of birth in this way is a breach of the prohibition in the Equal Opportunity Act 2010 (the EO Act) on discrimination on the basis of race in respect of employment.
4. So as not to act contrary to the law, the applicant sought and was granted an exemption from the then applicable Equal Opportunity Act 1995 (1995 Act). In broad terms, the exemption allowed the applicant to act in the manner described above, subject to detailed conditions. The exemption expired on 22 October 2011 and the applicant has sought a renewal on the same terms and subject to the same conditions under the EO Act.
5. I have decided to grant a further exemption on the same terms for a term of five years commencing on 3 May 2012. These are the reasons for that decision.

1. As stated above, the 2008 exemption expired on 22 October 2011. Interim exemptions were made on 27 October 2011 and 23 January 2012 for the period up to and including 2 May 2012. Those interim exemptions were made to preserve the applicant's position during the period the renewal application was heard and determined.
2. The Victorian Equal Opportunity and Human Rights Commission (Commission) was given notice of the exemption application. It sought and was granted leave to intervene.
3. Directions were made requiring the applicant to give notice of the exemption application to each of it Victorian employees and also to each union which represents its Victorian employees. The notice advised that the employees or unions could make submissions to the Tribunal about the exemption application. A written submission was made by the Australian Manufacturing Workers Union (AMWU). The AMWU later adopted the submissions of the Commission and did not attend the hearing.
4. A hearing was held on 23 January 2012. Affidavit material was relied upon by the applicant, including affidavits sworn by David Mahony, Company Secretary and Chief Counsel. Mr Mahony also gave some further oral evidence. Mr Mahony's evidence dealt with a range of matters including the applicant's business, its locations and workforce, the national and international background to the exemption application and the use of the previous exemption. The Commission made submissions to assist the Tribunal.
5. I will discuss the evidence before the Tribunal first and then turn to the legal issues raised.

1. The applicant is part of a worldwide group which operates across five continents and employs approximately 107,000 people.
2. In June 2008, the applicant acquired Tenix Defence, which is a company with capabilities in the naval and defence sectors. That purchase led to a national organisational restructure. The applicant has four business units, Aerospace, Maritime, Defence Logistics and Land & Integrated Systems, as well as corporate functions and shared services.
3. The applicant now operates from 70 locations in Australia and has approximately 6,100 employees.
4. The applicant's Victorian facilities are located in Bandiana, Longford, East Sale, Richmond, Williamstown, Tullamarine, Melbourne and Puckapunyal. As at 30 July 2011, the applicant employed 1,887 people in Victoria and had engaged a further 54 contractors. The applicant's workforce numbers regularly change as staff are employed, retired or seconded into and out of the State. Further, workforce numbers change as the applicant expands and enters into new contracts that require additional staff numbers and when contracts come to an end.
5. At the time of making the application, the applicant was working on seven contracts worth more than $100 million each. More than 770 people perform work on those projects, all of which attract restrictions arising from US laws. The majority of those people also require Australian security clearances.
6. The applicant anticipates entering into further contracts with the ADF and the Australian Intelligence Community which attract restrictions arising from US laws. It referred to an Australian Government Defence Capability Plan which indicates that the Government intends to invest $60 billion in major defence capital equipment proposals during the period up to 2013. In order to remain competitive, the applicant says it needs to deploy its workforce flexibly to meet the demands of those projects.
7. I accept that evidence.

The regime for access to protected defence related material

1. The laws which form the background to this application have been discussed in detail in other decisions of this Tribunal.[1] I will briefly summarise them here and make reference to relevant evidence before the Tribunal.

1. The Australian Security Intelligence Organisation Act 1979 (Cth) (ASIO Act) provides for security assessments to be obtained for individuals. The Australian Government's Protective Security Policy Framework, the Australian Security Manual and the Defence Security Manual describe policies which create requirements to the effect that persons who are to access classified defence related technical data, goods and services must hold Personnel Security Clearances. There is no provision of the ASIO Act which operates to overtake or nullify the EO Act prohibition on discrimination.
2. The applicant was unable to quantify an accurate number of Victorian employees and contractors whose work requires them to have access to the classified material described as that depends on current projects. However, the applicant says that the majority require access to that information and equipment and so require a Personnel Security Clearance. The evidence was that, currently, approximately 35% of the applicant's employees have such a Clearance.
3. In order to obtain a Personnel Security Clearance, the employee must either be a citizen of Australia or a non-Australian citizen who has a security clearance issued by the US, the United Kingdom, Canada or New Zealand or he or she must obtain a waiver of nationality from the Australian Defence Force (ADF). The Tribunal was told that a nationality waiver may only be granted in appropriate and exceptional circumstances. As applications for these Clearances are managed and processed by the Department of Defence, Defence Security Authority, the applicant cannot ensure that all employees can obtain one.

1. The US Arms Control Export Act 22 USC s2778 (2004) and the International Traffic in Arms Regulations 22 CFR s 120 (2003) (ITAR) impose export controls on the transfer of defence related technical data, goods or services (Controlled Material). Those controls include a requirement that the nationality of persons who will have access to Controlled Material be identified and disclosed and that there is restricted access to Controlled Material by persons of particular nationalities. Under these US laws, nationality refers not only to citizenship but also to place of birth.
2. The US has designated that certain countries pose a security risk to it such that steps must be taken to ensure that neither those nations nor their nationals can access Controlled Material. Those countries, referred to as proscribed countries, are named in the ITAR and change from time to time.
3. Where a person is a dual national, the citizenship of each country will be taken into account in determining whether that person can have access to Controlled Material. Dual nationals may be automatically approved to work on projects if the second nationality is of specific pre-approved countries, such as Australia, New Zealand, Japan, European Union and NATO countries. Specific approval is required for a dual national from a country not pre-approved by the US Department of State.
4. The evidence was that each of the four business units referred to above undertake work which is subject to these export controls. The applicant's customers and subcontractors located in or who have dealings with the US, are required to satisfy the ITAR requirements before they can transfer Controlled Material to and from the applicant. Where the applicant is a sub contractor to another company, whether located in the US or not, it must comply with the ITAR requirements so that the head contractor can also comply.
5. The practical effect of these requirements is that the applicant must know the nationality and place of birth of members of its workforce. The applicant must also be aware of any changes of nationality. The applicant must be able to give that information to the US contractor it deals with and, in some circumstances, to the US Department of State. In addition, the applicant must take steps to ensure that some dual nationals and persons from the proscribed countries do not have any access to Controlled Material. That means that they cannot work in any way on Controlled Projects and cannot have physical access to areas of the applicant's facilities where Controlled Material may be held or accessible.

1. In May 2011, the US Government made changes to the ITAR in relation to unclassified Controlled Material. Those changes came into effect on 15 August 2011 (ITAR amendments). The effect of the ITAR amendments is that a company such as the applicant may request that its workforce obtain a Personnel Security Clearance or it can undertake an internal screening process in relation to a person without such a Clearance. The screening process is used to determine the person's substantive contacts with proscribed countries or persons referred to in the amendment. Where the person has a Personnel Security Clearance or passes the screening process, he or she may have access to Controlled Material. The applicant has undertaken to commence developing a screening process which meets these changes.
2. The ITAR amendments do not automatically apply to existing contracts. It is expected that, over time, they will be included in new contracts. In the meantime, existing contracts must be amended for the changes to apply. The evidence given, which I accept, was that the applicant has around 310 agreements with a range of US companies that give it access to Controlled Material. Current agreements total 235 but the applicant continues to be bound by the secrecy obligations contained in the expired contracts. Approximately 10% of the current agreements have been amended to take account of the changes and new agreements will include them. The process for amendment requires the applicant to ask the prime contractor to seek agreement from the US Department of State. This can take three to eight months at best and potentially up to 12 months. As the contracts are usually between a number of parties, there may be further delay in having all parties sign. In some cases, the parties number up to 50 and so there may be a considerable delay in completing the execution process which must precede the change coming into effect.
3. Attached to the AMWU submission was a copy of an Australian Government Department of Defence document entitled "Australian Guidance to develop an Employee Screening Model for the 126.18 US ITAR exemption". The document states that it aims to provide guidance and considerations for Australian entities in developing a risk based model to reduce the chance of diversion of sensitive information and unclassified controlled US defence technology and goods to unauthorised third parties posed by the employee's personal circumstances.
4. It notes the following:
   • The screening process referred to in the ITAR amendments requires employees to agree to undertake the process.
   • Police checks and character references may assist in determining risk.
   • Records of the screening process are to be maintained to support an investigation that would be needed if a diversion occurred.
5. It says that Australian entities should consider developing questions that encourage employees (understood to include regular contractors) to disclose any substantive contacts with ITAR proscribed countries as part of the screening process. Mere contact with individuals or organisations from these countries does not automatically raise a concern but rather the nature and substance of the contact are determinative of the risk of diversion. If there is a risk of diversion, it says that options may include a management plan to reduce the risks of diversion, not allowing the employee to access Controlled Material or others as determined after consultation with the US Department of State.
6. It is suggested that guidance on substantive contacts and general risk indicators should address the following:
   • Personal, business or family contacts with foreign government officials, agents or proxies.
   • Contacts with individuals posing a risk of diversion of Controlled Material.
   • Continued demonstrated allegiance to a third country by the employee.
   • Frequent travel to an ITAR excluded country by the employee.
   • The employee maintaining assets in a third country.
7. The document suggests areas to be included in the screening process. I will refer to one to give a sense of the enquiries which are suggested should be made.
8. In order to assess the risk arising form relationships with ITAR proscribed countries, areas for consideration include the exploration of the totality of continuing connections to the country including holding a passport of that country, voting in elections or ballots or holding official appointments on behalf of a foreign government. The purpose of examining these areas is to determine whether the person has an affinity, loyalty or allegiance to the interests of a foreign power that would cause the person to act in a manner which might lead to a diversion of Controlled Material.

1. Further amendments to the ITAR are proposed to take account of the Defense Trade Cooperation Treaty (Treaty) between Australia and the US. In parallel to the proposed amendments, the Defence Trade Controls Bill 2011 is currently before the Federal Parliament.
2. According to Mr Mahoney's affidavit evidence, which I accept, in order to access to defence related technical data and hardware under that Bill, employees must be an Australian citizen, have a security clearance to minimum "Restricted" and be vetted for significant ties to proscribed countries, regardless of whether they are an Australian citizen or have a security clearance. The applicant says that these requirements are more onerous that the existing ITAR requirements. If the Bill in its current form becomes law, a breach of these requirements will be a breach of both Australian and US law.

1. The evidence regarding consequences of non-compliance with the ASIO Act and the ITAR, which is accepted, is as follows.
2. The consequences of non-compliance are significant. Existing approvals and licences may be withdrawn. The applicant may be subject to fines and other penalties. Security clearances given to applicant workforce members may be withdrawn.
3. If the applicant fails to comply with Australian requirements, its membership of the Defence Industry's Security Program may be cancelled. The ADF will not enter into contracts with Australian companies who are not members of that program, in relation to projects involving classified information or equipment. The applicant would then lose its main customer.
4. If the applicant breaches the ITAR or other US security requirements, the US contractor may be liable to very heavy penalties (both civil and criminal) themselves and may be banned by the US government either indefinitely or for a period from being a defence contractor for that government. The applicant would be liable to substantial damages for breach of its contract with the US contractor. Because the contract obliges the applicant to comply with the US security requirements, those damages might reflect the heavy penalties to which the US contractor was subject under the US security requirements. It is unlikely that it would be given further contract work by its US contractor.
5. The Tribunal was told that, in December 2008, the US Department of State had fined a company registered in Luxembourg $25million for violations of the ITAR.

1. The previous exemption required the applicant to report six monthly to the Tribunal and the Commission on the following matters:
   • The steps taken by the Applicant to comply with the EO Act and the terms and conditions of this exemption, including training and education given to its Victorian workforce, compliance audits, and any complaints made under the EO Act;
   • The number of applications to join its Victorian workforce rejected under the exemption and whether any (and if so, how many) were subsequently appointed to other roles;
   • The number of members of its Victorian workforce moved to other projects, areas or facilities under the exemption, and any steps taken to minimise harm or loss to those people arising from the transfers; and
   • The number of Victorian workforce vacancies advertised or offered under the exemption.
2. No submissions, were made by the Commission as to the content of the reports.
3. On my review of the reports and taking into account the affidavit material concerning this matter, I am satisfied that the applicant has in place appropriate strategies to ensure compliance with anti-discrimination legislation, including suitable training programs and show that those programs are internally audited.
4. No complaints have been made since September 2008. None were raised in the AMWU submission. The fact that no individual employees or any of the other unions made submissions in relation to this application reinforces the conclusion that the employees and contract workers have not experienced adverse effects as a result of the US Export Laws or the exemption.
5. In 2011, one job applicant was rejected for a position with the applicant due to ITAR concerns. As no other suitable positions were available, that person was not offered alternative employment.
6. Since 2008 there have been two persons transferred under the terms of the existing exemption. The applicant says that neither employee was disadvantaged by the move.
7. Between October 2008 and April 2011, no Victorian workforce vacancies were advertised or offered under the exemption. In 2011, there were advertisements and offers under the terms of the exemption for 94 roles.
8. I also note that, to date, the applicant has not used any badges or other means of identifying workforce members who are permitted to work on certain projects or have access to certain material or information so as to distinguish them from those not so permitted.
9. At the conclusion of the hearing, I directed the Commission to search its records to determine whether it had received any complaints against the applicant regarding its use of the previous exemption. The Commission wrote to the Tribunal to advise that it had located none.
10. I accept that information and the applicant's evidence as to the use of the previous exemption.
11. I find on the evidence before me that the existing employment or work arrangements of only two people were affected by the existing exemption in the period October 2008 to October 2011. The 94 positions offered in 2011 represent 4.8% of the July 2011 total workforce.

1. As described earlier, the applicant seeks a further exemption on the same terms as the last. The application requires an exemption from sections 16, 18, 21, 102 and 182 of the current EO Act subject to the same conditions which previously applied as to when that exemption may be relied upon. The practical impacts of the exemption sought include that the applicant would be entitled to:
   • (a) Seek nationality based information from members of its workforce;
   • (b) Identify, by means of a badge, maintenance of a list or otherwise, those members of the workforce who are permitted to work on certain projects or have access to certain material or information so as to distinguish them from those not so permitted;
   • (c) Limit which members of the workforce may have access to the specified material or information;
   • (d) Require members of the workforce to enter into security agreements based on their nationality;
   • (e) Restrict access to areas of its facilities connected with certain projects to particular members of the workforce based on their nationality;
   • (f) Reject applications for employment relating to certain projects based on the job applicant's nationality and take into account a person's nationality in determining who should be offered employment or contract work requiring access to specified material or information;
   • (g) Transfer members of the workforce from certain projects on the basis of their nationality; and
   • (h) Disclose information about the nationality of members of its workforce to entities such as the US Department of State; the US Department of Commerce and the Australian Department of Defence.
2. I will now turn to the Victorian law which applies to the application for the exemption.

1. The objectives of the EO Act include the elimination of discrimination to the greatest extent possible.[2] This leads to the EO Act, amongst other things, declaring prohibited certain forms of discrimination. Included in those prohibitions is discrimination on the basis of race, which includes nationality and ethnic origin.[3] Sections 16, 18 and 21 prohibit discrimination on the basis of a protected attribute such as race in the context of job applicants, employees and contract workers. Section 107 prohibits requesting discriminatory information that could be used to form the basis of discrimination against the person. Section 182 makes an offence of discriminatory advertising.
2. Section 13 says that the EO Act does not prohibit discrimination if an exemption applies. The consequence of section 13 is that, the conduct may be discriminatory under the EO Act, but there is no breach of law when that conduct is engaged in as it is not prohibited discrimination. In other words, that conduct is taken out of the Act.

1. The provisions dealing with exemptions are found in sections 89 and 90 of the EO Act.
2. Section 89 says that the Tribunal may, by notice published in the Government Gazette, grant an exemption from any provisions of the EO Act in relation to a person or classes of persons or an activity or class of activities or any other provision in any other circumstances specified by the Tribunal. An exemption may be granted for any period of not more than five years. An exemption may be renewed from time to time for a period of not more than five years. Exemptions may be granted or renewed subject to any conditions the Tribunal considers fit.
3. Section 90 of the EO Act sets out mandatory considerations for the Tribunal when exercising the power under section 89. Section 90 says:

In deciding whether to grant, renew or revoke an exemption, the Tribunal must consider -

(a) whether the proposed exemption is unnecessary because -

(i) an exception or exemption in this Act already applies to the conduct sought to be exempted; or

(ii) the conduct sought to be exempted would not amount to prohibited discrimination; and

(b) whether the proposed exemption is a reasonable limitation on the right to equality set out in the Charter of Human Rights and Responsibilities; and

1. The introductory words of section 90 confirm that these matters must be considered for renewals of exemptions as well as for new applications.
2. As a consequence of section 32(1) of the Charter of Human Rights and Responsibilities Act 2006 (Charter), the Tribunal must interpret section 89, so far as it is possible to do so, compatibly with human rights. The Tribunal is required to undertake the usual interpretative process to identify the meaning of section 89 and also to consider whether the purpose of section 89 can be interpreted compatibly with human rights.[4] Section 32(1) seeks to ensure that Charter rights are kept in mind when a statute is construed but does not require the language of a section to be strained to effect consistency with the Charter.[5]
3. The plain words of section 89 indicate that the purpose of the section is to empower the Tribunal to exercise a broad discretion to grant, renew or revoke exemptions from provisions of the EO Act. The Tribunal may apply conditions to the exemption and determine its term. Section 90 requires that the Tribunal take into account the listed matters when exercising the discretion. Section 90(b) directs the Tribunal to one of the human rights created by the Charter. As section 90(c) is open ended, the Tribunal may also take into account any other human rights which arise in the circumstances. In this way, the purpose of section 89 can be interpreted compatibly with human rights.
4. The onus of establishing that it is appropriate to renew the exemption falls on the applicant. In its written submissions the Commission raised concerns about whether the applicant had discharged the onus in relation to some matters. The Commission submitted that, ultimately, it was a matter for the Tribunal to determine whether the evidence produced was sufficient to justify the renewal being granted under section 89 and 90. I agree with that proposition.

1. When exercising the discretion created by section 89 of the EO Act, the Tribunal must consider the matters listed in section 90. Further, under section 38(1) of the Charter, as a public authority in making that decision, the Tribunal must not fail to give proper consideration to a relevant human right.[6] The right to equality will be considered as a mandatory consideration under section 90(b) and other human rights raised by the case will also be considered.
2. When considering whether to grant an exemption it is also appropriate that the Tribunal have regard to the objectives of the EO Act and, in the case of a renewal application, how the previous exemption has been used. Other circumstances surrounding the application will be considered.
3. It is convenient to deal here with a matter which arose in the previous exemption decision concerning the applicant. There was a discussion about whether the applicant might be public authority within the meaning of the Charter.[7] It was not necessary for that question to be decided in 2008 but it was suggested that it may become relevant on renewal of the exemption.
4. The applicant does not consider itself to be a public authority. Neither the applicant nor the Commission sought a formal finding to be made on this point. It was agreed that the applicant may be a public authority if it was delegated power or otherwise engaged to undertake the functions or responsibilities relevant to the defence of Australia on behalf of the Federal government. That would be consistent with the decision in Metro West v Sudi where the respondent organisation was delegated power to undertake some of the responsibilities of the Director of Housing and was funded by the government to do so.[8]
5. However, on the evidence before the Tribunal in this case, there was nothing to suggest that the applicant was exercising functions of a public nature or acting on behalf of the government in carrying out a public function. As a consequence, neither party pressed me to make a finding. In those circumstances, I will not do so.
6. Returning to the exemption application before me, I will deal with each matter raised by section 90 of the EO Act.

Section 90(a) EO Act - Whether the proposed exemption is unnecessary

1. As discussed above, the previous exemption expired in October 2011. The interim exemptions granted apply only until 2 May 2012. The applicant and the Commission agreed that there is no exception under the EO Act which applies. It was also agreed that, in the absence of an exemption, the conduct the applicant seeks to engage in would amount to prohibited discrimination. The proposed exemption is not unnecessary.

Section 90(b) - Whether the proposed exemption is a reasonable limitation on the right to equality

1. The Charter right to equality is found in section 8 and says:

(1) Every person has the right to recognition as a person before the law.

(2) Every person has the right to enjoy his or her human rights without discrimination.

(3) Every person is equal before the law and is entitled to the equal protection of the law without discrimination and has the right to equal and effective protection against discrimination.

(4) Measures taken for the purpose of assisting or advancing persons or groups of persons disadvantaged because of discrimination do not constitute discrimination.

1. The Charter defines discrimination to mean "discrimination (within the meaning of the Equal Opportunity Act 2010) on the basis of an attribute set out in section 6 of that Act."

1. Human rights should be construed in the broadest possible way.[9] The right to equality contained in section 8 is important and fundamental to human rights. Both national and international laws seek to eliminate discrimination on a range of grounds including racial discrimination. In Lifestyles Communities Ltd (No 3), Bell J discussed the right in the following way:

To treat somebody differently because of an attribute, such as gender, age or political or religious belief, is to make stereotypical assumptions about them personally and their behaviour. When a difference in treatment is not rationally based on individual worth and merit, but on the basis of such an attribute, the individual is not treated because of who they are. They are treated because of the stigma attached to the attribute . . .

Equal respect for individual worth is the foundation of pluralist and egalitarian society. Tolerance of difference, protection of minorities and encouragement of freedom for everybody are the basis of the interactions by which society functions as a coherent whole. When some people are stigmatised by reference to irrelevant personal attributes, their place in society is diminished, even denigrated. This diminishes society as a whole, introduces a negative dimension into social relations and potentially undermines social cohesion. When society could be enriched, it is diminished; when society could harness the talents of everybody, the talents of some are not harnessed at all.[10]

1. Under the EO Act it is discriminatory to seek information about a person's race, including their nationality and then to make use of that information to treat that person unfavourably. As is apparent from the discussion above about the previous exemption and the application for renewal, the granting of a renewal will allow the applicant to engage in conduct which will intrude on the right of some members of the applicant's workforce to be free from racial discrimination.

1. Section 90(b) directs me to consider whether the granting of an exemption which will have that effect is a reasonable limitation on the right to equality. The test to be applied to that task was one matter in issue in this case.
2. In its written submission the applicant made reference to a proportionality test considering whether the exemption meets a pressing need, is reasonable, goes no further than is necessary to address the pressing need and is established on clear and convincing evidence. The Commission noted that is not the test in Victoria - the statutory statement of the test is to be found in section 7(2) of the Charter.
3. I agree with the Commission. In my view, the effect of the words used in section 90(b) is to import into the EO Act the test contained in section 7(2) of the Charter when it comes to determining the reasonableness of any limit placed on the right to equality.
4. Section 7(2) of the Charter says:

A human right may be subject under law only to such reasonable limits as can be demonstrably justified in a free and democratic society based on human dignity, equality and freedom, and taking into account all relevant factors including-

(b) the importance of the purpose of the limitation; and

(d) the relationship between the limitation and its purpose; and

(e) any less restrictive means reasonably available to achieve the purpose that the limitation seeks to achieve.

1. I have already referred to the nature of the right to equality. That was not a matter of difference between the applicant and the Commission. The matters on which there was some difference concerned the importance of the purpose of the limitation and the proportionality of the limitation taking into account whether there was a less restrictive means reasonably available to achieve the same purpose.

1. The applicant contended that the purpose of the exemption, which will limit the right to equality, is to ensure that it will comply with both the EO Act and the ITAR which requires it to engage in racial discrimination. The applicant says that, if it were not for the ITAR, it would not seek the race based information and act on it in the way described. The applicant says it has no power to change the US laws. It seeks to ensure that it complies with its Victorian legal responsibilities and those imposed on it by its dealings with US companies.
2. The applicant submitted that all stated purposes of the exemption application ought to be taken into account. It said that, while commercial and private interest should be taken into account, it accepts that human rights will not be limited for the purpose of advancing a private corporation's commercial activities or profits.
3. The Commission submitted that the Tribunal must give rigorous consideration to the evidence relied on by the applicant to demonstrate the importance of the purpose of the limitation. In undertaking that task the Tribunal ought to maintain a distinction between the private economic purposes and the public safety purposes of the ITAR related exemptions.
4. The Commission submitted that the prioritising of private economic purposes over human rights would be inconsistent with what has been described as the value system of the Charter and that profitability alone would not be a sufficient basis for the granting of an exemption. The AMWU made a similar argument.
5. As described earlier, a failure to comply with ITAR would put at risk a significant part of the applicant's business. This makes it clear that a consequence of the exemption not being granted would be that the applicant may not be able to continue to undertake its business, at least in Victoria.
6. As shown by the evidence, the applicant's main customer is the ADF. Through the ADF, the applicant supplies the Australian government with a range of defence related systems. By the applicant undertaking its business, the Australian government may purchase products or systems in line with its assessment of the nation's defence needs. As noted earlier the Australian government is looking to invest $60billion in major defence capital equipment proposals in the near future. The applicant contends that compliance with the ITAR is in Australia's national interests as it allows access to US defence technology, which cannot be obtained elsewhere.
7. The employment offered to Victorians by the applicant is also a relevant matter. The evidence was that, as exemptions have been granted in other parts of Australia, the applicant's work would not cease - it would instead scale back the Victorian operations and relocate some to another Australian location. Even assuming that some employees relocated too, that would mean that a number of Victorians would lose their work.
8. The Tribunal was referred to the decision of the ACT Administrative Appeals Tribunal in Raytheon Australia Pty Ltd v ACT Human Rights Commission.[11] In that case President Peedom said that the interests in providing employment opportunities and the interest in the commercial viability of an applicant may not be sufficient to overcome the need to protect human rights. The loss of employment opportunities and commercial interests may be the cost of ensuring that important human rights are protected. President Peedom went on to say that it is more difficult to balance issues affecting national defence and security with protecting human rights. While the elimination of discrimination may decrease conflict and the need for security measures, it is likely that more is required to address the complexity of national defence. The measures adopted by the government are not matters the Tribunal can make informed findings about. President Peedom then commented:

Clearly any significant compromising of the defence and security of the nation is a matter of paramount importance.

1. I agree with these comments.
2. It is accepted by the applicant that commercial interests alone cannot justify interference with human rights.
3. I accept the proposition that the exemption is sought in order for the applicant to comply both with Victorian law and the ITAR, which have a significant impact on its business. I accept the proposition that, if it were not for the Australian and US laws, the applicant would have no need or interest in obtaining race related information from its workforce and making decisions about what work those people can and cannot do.
4. As to the balancing of employment interests and human rights, the use of the previous exemption ought to be taken into account. The evidence is that there have been no EO Act complaints about the applicant's use of the exemption since 2008. I again note that the AMWU was the only employee representative to make a submission and that no submissions were made by individuals about the effect of the exemption or the application for renewal.
5. In order to appreciate the importance of the purpose of complying with both sets of laws, it is helpful to consider the important EO Act objective of eliminating, to the greatest extent possible, discrimination and the reasons for the applicant seeking to comply with the ITAR. Those reasons include benefitting the applicant, but also benefitting Australia through having access to the applicant's defence related products and services and the interests of Victorians in having continuing employment opportunities. In my view, each of these matters is important when considering whether the granting of the exemption is justified.
6. In this case, it is also relevant to take into account the fact that the applicant seeks a renewal of the exemption on the same terms as the previous exemption. It submitted that the conditions attached to that exemption have been assessed as being appropriate and adapted to cause the least interference with relevant human rights. As has been seen, the use of the previous exemption has been extremely limited and it has touched a small percentage of the applicant workforce since 2008. While the process of seeking nationality based information and making use of that information is no small matter, it would seem fair to conclude that the extent of its intrusion into the enjoyment of the workforce's enjoyment of the right to equality has been small.
7. I am satisfied on the evidence before me that the terms of the exemption sought to be renewed have been designed to ensure that smallest possible degree of interference with the workforce member's right to equality and that design intention has been met through the use of the previous exemption.

1. The applicant contends that the consequence of the ITAR amendments is that, on an ongoing basis, the applicant continues to need to seek nationality based information from its workforce and, on request, disclose it to the US State Department in order to comply. While in future, the applicant will be able to undertake the screening process for non Australian citizens which may allow access to Controlled Material, that will be an evolving development as contracts are amended to take into account the changes and it develops its procedures. For this reason, the applicant maintains it requires an exemption in the same form but acknowledges that in future the terms of the exemption may be changed in such a way that the need to rely on it may reduce.
2. Both the Commission and the AMWU referred to the ITAR amendments as a less restrictive means reasonably available to the applicant to meet the ITAR obligations in a manner which intrudes less on human rights. It was argued that, as those amendments allow for greater access to unclassified Controlled Material, the scope of the required exemption might be reduced. I understand that the suggestion was that the possibilities offered by the ITAR amendments ought to be exhausted before an exemption be granted or relied upon.
3. The applicant contended that compliance with the ITAR amendments would still require it to seek information about where a workforce member was born and what citizenship he or she holds. As discussed above, if the individual does not hold or qualify for a Personnel Security Clearance, then further questions addressing the matters set out above from the Department of Defence document will likely be required. Given the guidance document, the enquiries are likely to include questions regarding race, citizenship and country of birth. The outcome of those enquiries will determine whether the individual can have access to unclassified Controlled Material.
4. Whether there is an alternative reasonably available at present requires consideration of a number of aspects of the current position.
5. As I understand it, at present under Australian law, the applicant would be required to determine if a workforce member has a Personnel Security Clearance in order for that person to undertake work which requires access to classified defence material. If such a Clearance is not held, then the applicant would need to enquire about the person's nationality to determine whether he or she would qualify or whether he or she holds an acceptable equivalent clearance from another country. As the outcome of that enquiry may for the basis for an act of discrimination, it would breach section 107 of the EO Act.
6. If no Clearance is available or obtained, current Australian law prohibits the workforce member from having access to classified defence material. When that impacts on a decision about whether to employ or engage that person, there will be a breach of section 16 or 21 of the EO Act. If a current workforce member's work arrangements are changed as a consequence of a Clearance not being held, that would involve discrimination prohibited by section 18 or 21 of the EO Act.
7. If the applicant advertises for workforce members by reference to their qualification for a Personnel Security Clearance or some other matter which touches on nationality, that would be a breach of section 182.
8. Compliance with current Australian law by the applicant in relation to some workforce members may involve prohibited discrimination and, in the absence of an exemption, the conduct described would be unlawful.
9. The same analysis can be applied to Controlled Material which falls within the existing ITAR and outside the ITAR amendments. Enquiries about Australian Personnel Security Clearances as a means to allow access to Controlled Material will require prohibited discrimination. If a Clearance is not held, enquiries may be made about nationality to determine whether the workforce member may be automatically approved to access the Controlled Material. As discussed above, that enquiry would breach section 107.
10. If the workforce member does not have a Personnel Security Clearance or is not from a pre-approved country, he or she cannot work in circumstances where access to Controlled Material is required. If these matters determine whether the person is to be employed or engaged or what work he or she may do, prohibited discrimination will arise under section 16, 18 or 21 of the EO Act.
11. Compliance with the existing ITAR by the applicant in relation to some workforce members may involve prohibited discrimination and, in the absence of an exemption, the conduct described would be unlawful.
12. Where the ITAR amendments apply to the particular contract and the work to be done, there are two routes to access to unclassified Controlled Material. The first requires a Personnel Security Clearance. If one is not held, the enquiries required to determine eligibility will be discriminatory as discussed above. If a Clearance is not obtained or available, the screening process is likely to include questions about nationality and also about place of birth. While the workforce member may agree to be screened, he or she cannot consent to prohibited discrimination. Questions of this type will still breach the EO Act in respect of race based discrimination.
13. If the person does not "pass" the screening process and if that matter determines whether the person is to be employed or engaged or what work he or she may do, prohibited discrimination will arise under section 16, 18 or 21 of the EO Act. As discussed above, in the absence of an exemption, there will be unlawful conduct by the applicant.
14. On my reading, the suggested questions for screening under the ITAR amendments may be more invasive than seeking race based information only. As illustrated above, the information sought touches on matters which would not ordinarily be required by an employer and relate not only to the workforce member personally but also to his or her family members and friends.
15. The screening process may raise questions about whether the applicant was breaching the EO Act by discriminating against its workforce on the basis of political belief or activity or personal association with a person identified by reference to an attribute such as race or political belief or activity. Further, the potential interference with the Charter right to privacy is apparent. As this application does not seek an exemption in respect of those forms of discrimination and where the screening process has yet to be developed, it is difficult to know what form it may take and what consequences may arise.
16. If and when the Defence Trade Controls Bill 2011 passes into law, it would seem to raise matters similar to those arising from the ITAR amendments.
17. In order for the applicant to comply with the current ITAR, including the ITAR amendments, it is likely that it will be required to seek nationality based information from many workforce members who apply for or are intended to access classified defence materials or Controlled Materials as part of their work. I am not persuaded on the material before me that the ITAR amendments present a reasonably available alternative to the exemption at this time. Whether they will in future remains to be seen.

1. Any interference with the right to equality is to be resisted. While the granting of a renewal of the previous exemption will have an impact on the capacity of the applicant to undertake its business and may affect its profitability, the circumstances of this application are far broader than that commercial matter. I have referred to the interests of the applicant's Victorian workforce. Like President Peedom, I am unable to undertake an analysis of the Federal Government's defence and security strategy or needs. The evidence before me about the relationship between the applicant and the Federal Government must be accepted.
2. The current Australian law and the Treaty and consequent Defence Trade Controls Bill 2011 suggest that the Australian Government, like the US Government, has determined that proper national security requires that persons who are not citizens or who may have connections with countries who are not, for want of a better word, allies, must not have access to secret defence related materials. Whether that approach is right or wrong, it would seem to underlie the legal framework the applicant operates within. With that background, and taking I into account the other matters discussed, interference with the right to equality via nationality based discrimination is a reasonable limitation.

Section 90(c) - All the relevant circumstances of the case

1. Section 90(c) is capable of allowing for consideration of a wide range of matters. The discussion above regarding the right to equality has canvassed the way in which the previous exemption has been used and alternatives to the exemption application. There is no need to re-visit those matters.
2. I will now turn to other human rights which may arise; how to balance the objectives of the EO Act and the circumstances leading to the application for the exemption; and the approach this and other Tribunals have taken to similar exemptions applications made by other entities.

1. As discussed earlier, the Tribunal is required to give proper consideration to relevant human rights when making decisions about exemptions. The other human right potentially impacted by the exemption application is the right to privacy contained in section 13 of the Charter. That arises because the seeking and use of race related information, including place of birth and citizenship details, might intrude on a person's privacy.
2. Section 13 says:

(a) not to have his or her privacy, family, home or correspondence unlawfully or arbitrarily interfered with;

1. The Explanatory Memorandum states that the section 13 right is modelled on Article 17 of the International Covenant on Civil and Political Rights 1966. Discussions of that right indicate that it is very broad and touches on matters such as personal dignity, personal autonomy and respect for personal identity.[12]
2. There is some judicial disagreement about the meaning of "arbitrarily" in section 13. In WBM v Chief Commissioner of Police[13] Kaye J said that "arbitrary" is a word of common use which "ordinarily denotes a decision or action, which is not based on any relevant identifiable criterion, but which stems from an act of caprice or whim." At paragraph [57] he said:

For the reasons which I have already set out, in my view the adverb "arbitrarily", in s 13(1) of the Charter, is to be construed in its ordinary English meaning, namely as denoting an interference with the right of privacy which is capricious and not based on any identifiable criterion or criteria.

1. That decision has been appealed but the matter has not yet been determined.
2. In PJB v Melbourne Health[14] Bell J considered the meaning of the word in the light of his earlier decision in Re Kracke and Mental Health Review Board[15] and WBM. Bell J referred to the Covenant and said that the meaning of the word must take into account the international jurisprudence surrounding the right, including comments from the Human Rights Committee. On doing so he concluded at paragraph [85] that:

. . . the human right in s 13(a) not to have your privacy, family, home or correspondence 'arbitrarily' interfered with extends to interferences which, in the particular circumstances applying to the individual, are capricious, unpredictable or unjust and also to interferences which, in those circumstances, are unreasonable in the sense of not being proportionate to a legitimate aim sought. Interference can be arbitrary although it is lawful.

1. Putting the two definitions together, I am satisfied that the possible interference with privacy raised by the exemption application cannot be regarded as arbitrary. That is for two reasons. First, given the context in which the race related information is to be sought, it cannot be categorised as capricious or based on no identifiable criterion or unpredictable. Secondly, given the discussion above which formed the basis for the view reached that the conduct sought to be exempted is justified under the Charter, for the same reasons, I would not regard it as being able to be categorised as unjust, disproportionate or unreasonable.
2. The consequence is that, in my view, there is no need to turn to an analysis of whether the exempt conduct may be justified under section 7(2) in the context of the section 13 right to privacy. The right is not engaged.
3. In the event that I am incorrect in that analysis, I am satisfied for the reasons expressed above that, if the section 13 right is engaged, then it can be justified under section 7(2).

1. I mentioned earlier the EO Act objective of eliminating discrimination to the greatest extent possible.[16] This important objective must not be lightly overridden. In determining whether the exemption ought to be granted, it is appropriate to consider whether, taking into account this objective, the interests served by the exemption are sufficient to justify taking the relevant conduct out of the prohibitions of the EO Act.
2. For the reasons discussed in the context of the Charter right to equality which has as its focus discrimination, I am satisfied that the interests served by the exemption, particularly in relation to the security requirements of Australia and the employment interest of a number of Victorians, justify taking the described conduct out of the prohibitions in the EO Act.

Exemptions in other jurisdictions and consistency within Victoria

1. I noted earlier that the applicant has been granted similar exemptions in New South Wales, South Australia and the Australian Capital Territory. I have already referred to potential employment consequences if the applicant's operations are moved away from Victoria. I consider it appropriate to give weight to the fact that equivalents of this Tribunal have reached the view that the exemptions are, under the terms of similar legislation, appropriate.
2. The Tribunal has recently granted similar exemptions to two other entities in Victoria.[17] For the sake of consistency and predictability in decision making, in the absence of a marked difference in circumstances or some particular matter relevant to this case, it is appropriate that the exemption be granted.

1. The AMWU argued against granting a five year exemption, suggesting that a shorter period would be sufficient because the ITAR amendments ought to overtake the need for an exemption at all. I consider it preferable to grant the exemption for the maximum five year period. Should the approach I have taken to the consequences of the ITAR amendments not be borne out and/or should the applicant's ongoing reports to the Tribunal and the Commission indicate that the terms of the exemption can be restricted further so as to have less impact on the workforce or not be required at all, the applicant or the Commission may seek a hearing as to amendment or revocation of the exemption. Accordingly, I have reserved liberty to apply for them each on that basis.

1. I have regarded as an important consideration in deciding whether the previous exemption should be renewed, how that exemption was used by the applicant over its three year duration. I have given significant weight to the comparatively small number of times recourse has been had to its terms and the fact that there have been no complaints about its use raised with the applicant, the Commission or the Tribunal.
2. Having regard to all of the matters discussed in these Reasons, I consider it appropriate to grant the applicant an exemption on the same terms as the previous exemption for a period of five years. I note that I have made a small amendment to paragraph (g) of the definition of "Specified conduct" to clarify its meaning.
3. As discussed above, I have reserved liberty to apply to each party should it become apparent that the exemption is no longer required or can be modified to reduce its impact on the applicant's workforce.

[1] For example, ADI Limited [2007] VCAT 2242; Boeing Australia Holdings Ltd [2007] VCAT 532; Raytheon Australia Pty Ltd v Victorian Equal Opportunity and Human Rights Commission [2011] VCAT 796

[3] See section 6 which sets out the list of attributes on the basis of which discrimination is prohibited and the definition of "race" contained in section 4 of the EO Act

[4] Momcilovic v The Queen [2011] HCA 34

[5] Momcilovic per Crennan and Keifel JJ at paragraph [565]

[6] The Tribunal is a public authority for the purposes of making decisions regarding exemptions under the EO Act - see Lifestyle Communities Pty Ltd (No 3) [2009] VCAT 1869

[7] BAE Systems Australia Ltd [2008] VCAT 1799 at paragraphs [64] - [72]

[8] [2009] VCAT 2025

[9] Re Application under the Major Crimes (Investigative Powers) Act 2004 [2009] VSC 381 per Warren CJ at paragraph [80]

[11] [2008] ACTAAT 19 at paragraph [63] - [65]

[12] Kracke v Mental Health Review Board [2009] VCAT 646 at paragraphs [619] - [620]; Castles at paragraph [69]; Peel Hotel Pty Ltd [2010] VCAT 2005 at paragraph [24]

[13] [2010] VSC 219 at paragraph [51]

[14] [2011] VSC 327

[15] [2009] VCAT 646