1. As noted above, the application for the two previous exemptions and this application for renewal arise from the US Export Laws. The US Export Laws are administered by the US Department of State and apply to Controlled Material which includes all hardware and software which has been designed, developed and manufactured for military or intelligence operation or that can be used in dual applications for defence or civil operations.
2. The background to and operation of the US Export Laws was set out in the Reasons for Decision given in relation to the first exemption granted to the Applicant Companies in 2004. It is not necessary to repeat the detail as the effect of the laws and their impact on the Applicant Companies and others are clear. It is sufficient to note that:
   • The US Export Laws restrict the governments, corporations and individuals who may have access to Controlled Material;
   • A US person, corporation, governmental entity or other entity must obtain authorisation from the Department of State before exporting Controlled Material to a "foreign person". A "foreign person" includes a third country national (which, in the case of exports between US and Australia, is interpreted to mean a country other than those two countries). A national includes a citizen but not a permanent resident, and also includes a person who is a dual national. The reference to exporting Controlled Material includes taking the material out of the US, transferring that material and disclosing it visually or orally;
   • The Department of State grants authorisations to US persons or entities to export Controlled Material. The licenses and agreements which result are premised on the importer complying with the conditions imposed which include compliance with the US Export Laws. A failure to do so may result in significant fines and a loss of access to Controlled Material;
   • The contracts entered into by the Applicant Companies which provide access to Controlled Material require, amongst other things, that the unauthorised transfer or provision of Controlled Material does not occur, including by disclosure to a person of a nationality not authorised by the relevant licence or contract.
   • To comply with this condition the Department of State requires the identification of the nationality of all personnel who will have access to the Controlled Material, disclosure to the relevant US contractor of the nationality of all personnel who will have access to the Controlled Material and limitations or prohibitions of particular nationalities having access to the Controlled Material.
   • Nationality is treated as being the country of citizenship but also the country of birth. 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 Controlled Projects if the second nationality is of specific pre-approved countries (such as European and NATO countries). Specific approval is required for a dual national from a country not pre-approved by the US Department of State.
   • The list of proscribed countries for the purposes of the US Export Laws includes Afghanistan, Angola, Belarus, Burma, China, Cyprus, Cuba, Haiti, Iran, Iraq, Liberia, Libya, Nigeria, North Korea, Rwanda, Somalia, Sudan, Syria, Vietnam, Yemen and Zimbabwe. Personnel from those countries are banned from having access to Controlled Material.
3. At the time of the 2004 exemption, the Applicant Companies were party to 49 agreements concerning Controlled Material. At the time of the hearing that number had risen to 132. As has been shown by the evidence, a number of the Applicant Companies' current and future projects involve Controlled Material.
4. The practical effect of these requirements is that the Applicant Companies must know the nationality and place of birth of its prospective employees and contractors and existing employees and contractors. The Applicant Companies must also be aware of any changes of nationality. The Applicant Companies 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 Companies must take steps to ensure that some dual nationals and persons from the proscribed list do not have any access to Controlled Material. That means that they cannot work in any way on Controlled Projects and also cannot have physical access to areas of the Applicant Companies' facilities where Controlled Material may be held or accessible. This is because someone being able to walk through such an area may amount to a visual disclosure in breach of the US Export Laws.
5. In Raytheon Senior Member McKenzie referred to recent steps taken to simplify the operation of the US Export Laws. They include the pre-approval of dual nationals from specified countries and the use of Australian government security clearances for limited approvals to access Controlled Materials. Senior Member McKenzie noted that the US Government has commenced a review of the process. The Applicant Companies have been actively involved in lobbying for these and other changes. However, at present in order to comply with the US Export Laws and so meet their contractual obligations to the Australian Government and others, the Applicant Companies are still required to collect the nationality based information about its prospective employees and contractors and existing employees and contractors. Accordingly, at present an exemption is still required to ensure that the Applicant Companies do not breach the EO Act in its efforts to comply with the US Export Laws.

1. The Applicant Companies gave evidence that they have taken steps to minimise the impact of the US Export Laws in a number of ways. Very limited persons have access to the nationality based information about the staff and only on a need to know basis. That nationality based information is not included on any identification pass or other document expressly or by use of colour or other coding. Where access to certain areas must be restricted, that is done by the programming of security passes to limit access to those areas. Such limits are not apparent on the face of the security pass. The nationality based information is not used for any purpose other than determining who may have access to the Controlled Material required to be used for Controlled Projects.
2. All recruitment for both Companies is done in house. This means that the recruiters are aware from the outset whether the US Export Laws will impact on the process. Where a new employee is required, nationality based information is collected at the time of application only where the role being filled will require the successful employee to have access to Controlled Material. If job applicants are rejected due to the US Export Laws requirements, they are considered for other roles within the Applicant Companies. The relevant advertisement makes reference to the impact of the US Export Laws on the position. Where those laws arise, job applicants are referred to an information page and links to relevant Department of Immigration web pages are included.
3. The Applicant Companies have comprehensive anti-discrimination policies which are regularly updated and about which all new staff are educated. Existing staff are also trained in this area with company wide face to face sessions being conducted every two years. Refresher courses are also available on line.
4. The Applicant Companies undertake regular audits in relation to all of its policies, including its anti-discrimination policies. That audit process records any complaints of discrimination including any arising due to the matters which are the subject of this application.
5. I accept that evidence.

1. As noted earlier two previous exemptions have been granted to the Applicant Companies. As part of the conditions of those exemptions, the Applicant Companies have been required to report to the Commission six monthly on the use of the exemption and other matters. Since 2007 the reports were required to address the following matters:

(a) all strategies in place to ensure compliance with anti-discrimination legislation, including all training programs, internal audits and complaints within each reporting period;

(b) the number of job applicants rejected for US Export Laws purposes, but subsequently appointed to other roles within each reporting period;

(c) the number of employees retrenched or redeployed due to US Export Laws requirements and any steps taken to minimise retrenchment or redeployment, and any steps taken generally to mitigate the impact of the Applicant Companies' responsibility under US Export Laws on the deployment of its workforce within each reporting period;

(d) the number of vacancies advertised within each reporting period, including the number of such vacancies where candidates were required to satisfy US Export Law related requirements.

1. The reports made since 2007 show that the Applicant Companies have in place appropriate strategies in place to ensure compliance with anti-discrimination legislation, including suitable training programs and show that those programs are internally audited. The reports also show that, as discussed above, the Applicant Companies have over time taken steps to minimise the effect of the US Export Laws on its workforce and its operations more generally.
2. Of interest is the fact that no complaints have been made during the period since November 2007. The fact that the relevant unions did not make submissions in relation to this application might support a conclusion that the employees and contract workers have not experienced adverse effects as a result of the US Export Laws or the exemption.
3. While in 2008 nine job applicants were rejected because of US Export Laws related requirements, none have been since. It seems likely that is because the Applicant Companies have refined their recruitment processes and so persons likely to be rejected do not apply or their applications did not proceed. One of those nine was employed in another role.
4. Since the last exemption was granted there have been no redeployments or redundancies of existing employees arising due to the US Export Laws.
5. The number of vacancies has varied over time. The evidence was that the variations arose because of the economic circumstances and the work being undertaken. There was some variation also in the number of vacancies advertised within each reporting period where candidates were required to satisfy US Export Law related requirements. As at July 2008 there had been 68 vacancies in the preceding six months with 54 affected by US Export Laws requirements. During the next reporting period of the 56 vacancies, 48 had US Export Laws requirements. The comparable figures for the next six months are 471 vacancies with 5 having US Export Laws requirements. Since 1 July 2009 there have been a total of 426 vacancies with none affected by US Export Laws requirements.
6. The effect of this information is that only 10 people have been affected by the exemption since November 2007.
7. I accept that evidence.
8. The Applicant Companies are content to have the same reporting obligations continue to apply.

1. It is my view that a further exemption should be granted for a period of three years. In reaching that view I have accepted that the exemption would allow conduct which discriminates on the basis of race and I have taken into account the matters discussed earlier as relevant to a decision under section 83. I have also considered the role of the Charter. Proceeding on the basis that the exemption may engage the rights of prospective employees and contractors and existing employees and contractors in relation to protection against discrimination and privacy, I have considered whether the limit applied to those rights is justified having regard to section 7(2) of the Charter. As this is not a measure to assist those disadvantaged because of discrimination, section 8(4) of the Charter does not apply to remove the risk of breach of the rights protected under section 8.
2. A matter of some significance in my view is the fact that the Applicant Companies would not seek nationality based information from its workforce at all if it were not for the existence of the US Export Laws. It must comply with those laws to undertake its business. The exemption allows it to comply with Victorian law also. There is no other reason the Applicant Companies seek to have their conduct taken out of the EO Act and would not seek the exemption otherwise.
3. No other means of achieving this end presents itself and so it would appear that there is no alternative but to proceed by way of an exemption.
4. If the exemption were not granted then much of the business of the Applicant Companies could not be undertaken in Victoria. That would lead to the loss of many jobs, particularly in regional areas. It would also reduce the competition for defence related goods and services in Australia and may lead to Australia having to import a significant amount of those necessary goods and services for use by its defence forces. While the profit motive is not a sufficient basis to grant the exemption, these wider economic and social impacts of the business of the Applicant Companies are relevant.
5. I am satisfied that the reports to the Commission and the evidence before me show that the exemption has been designed and used in such a way that it has had very limited use and has had a minimal effect on the Applicant Companies' employees and contractors. The Applicant Companies have developed anti-discrimination policies directed to ensuring that they and their workforces do not allow this form of discrimination to operate in any other circumstances. The Applicant Companies are not aware of any complaints about the use of the exemption since 2007.
6. Another relevant matter is that this is a renewal application for an exemption to be granted in essentially the same terms as two previous exemptions. That does not mean that the renewal ought to be automatic. However, where the evidence indicates that the exemption has been applied in as limited a way as possible, apparently without complaint from the workforce affected or from the unions representing that workforce and without the Commission seeking further information or raising concerns during its lifetime, renewal seems appropriate.
7. I am aware that the Applicant Companies' competitors have previously been granted exemptions elsewhere in Australia and also here in Victoria. Leaving to one side the financial impact on the Applicant Companies if the exemption were not granted, consistency in decision making points to the exemption being granted, subject to the other considerations discussed earlier being met.
8. As to the Charter, I am satisfied that the exemption sought would amount to a reasonable limit on the rights to protection from discrimination and to privacy. While those rights are of fundamental importance, so is the business undertaken by the Applicant Companies as it relates to providing the Australian Government with the means to maintain its defence capability and develop its defence industry. I am satisfied that the terms of the exemption sought goes no further than is necessary to allow the Applicant Companies to comply with the US Export Laws. The exemption is designed to meet that purpose and no less restrictive option is available. Should the approach taken by the US change at some time in the future, the exemption may be able to be modified or revoked. That would be welcome.
9. For these reasons the exemption is granted. The term of the exemption is three years commencing from 24 June 2011. The terms of the exemption are essentially the same as those granted previously with some clarification of matters to take account of how the Applicant Companies manage the lists of personnel and access requirements to its facilities.

[1] ADI Limited [2007] VCAT 2242

[2] ADI Limited [2004] VCAT 1963

[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] A292/2010 - Orders made and Reasons for Decision published on 19 April 2011. See also Lifestyle Communities (No 3) (2009) VCAT 1869; BAE Systems Australia Ltd [2008] VCAT 1799; Boeing Australia Holdings Ltd (2007) VCAT 532; ADI Limited (2007) VCAT 1799; ADI Limited [2004] VCAT 1963

[5] [2010] VSC 219

[7] See sections 3(a) and (b) of the EO Act

[8] See Raytheon at paragraphs [15] - [16]; Lifestyle Communities (No 3) at paragraph [7]; BAE Systems at paragraph [17]

[9] [2010] VSC 310 at paragraphs [185] - [186]

[11] See Raytheon at paragraph [41]