In a submission to the Parliamentary Joint Committee on Intelligence and Security, the company's chief executive, Rupert Taylor-Price, said the law, which is officially known as the Telecommunications and Other Legislation Amendment (Assistance and Access) Bill 2018, was having an effect both on foreign and local clients.

He said while he was unable to provide details due to commercial and confidentiality reasons, foreign governments and customers were assessing things by using media headlines and logical persuasion could not counter perception.

"We can verify that the export of Vault’s technology has been materially and detrimentally impacted by perception of the AA Act," he wrote in a submission dated 1 July.

Domestically, Taylor-Price said Vault relied on technology systems and software from many multinationals, much in the same way that the country needed the IP of many multinational businesses.

These companies sought hosting from Vault that ensured the following:

• Physically sovereign​ – data located on Australia soil
• Operationally sovereign​ – access to data is from within Australian; and
• Legally sovereign​ – data that is subject to Australian Law.

A review of the encryption law, instituted by the Parliamentary Joint Committee on Intelligence and Security, as soon as the law was passed, with a reporting date of 3 April, was expected to provide some solace to the technology industry.

But the PJCIS kicked the issue down the road, asking the Independent National Security Legislation Monitor, Dr James Renwick, to review the law and report back by 1 March 2020. The PJCIS will then submit a report to Parliament by 13 April 2020.

Taylor-Price said the size of the market and the compliance burden of the jurisdiction tended to lead to an exodus of data from Australia.

"Given Australia’s comparatively small market size, we have seen multinationals 'blacklist' Australia as a place to store data and, in some cases, that same company continues operations in China and Russia," he claimed.

"When multinationals choose to reduce or remove physical, operational and legal sovereignty from Australia the economic activity that supports these systems is also displaced, this results in a loss of Australian jobs, growth opportunity and taxation revenue."

The Vault chief also raised the issue of data sovereignty, pointing out that the Digital Transformation Agency had issued a whole-of-government hosting strategy which assured sovereignty for data centres, but not for the technology used in the cloud.

He recommended the government mandate that all sensitive data hosted in cloud environments be sovereign (including legal data sovereignty), and that staff go through an Australian Government Security Vetting Agency clearance where appropriate.

Taylor-Price also called for Government Procurement Rules to favour job creation, data protection, seeking to put Australia first and prioritising the benefits to Australia overall. "Procuring agencies should be obliged to report on the value, separately to price, for contracts they have awarded based on this criterion."

While the AA Law had addressed many law enforcement concerns, it was making the hosting of data within Australia less attractive, he said.

"The government should urgently pass legislation that sets out clear data sovereignty requirements. In the absence of legislation, we recommend that the Government urgently issues policy that protects sensitive Government data such as health, social security and national security," Taylor-Price said.

Last month, Amazon Web Services signed a whole-of-government deal with the Federal Government, enabling federal, state and territory agencies, as well as public universities and publicly-owned companies to use AWS Cloud services.

At the time, an industry source told iTWire: "Does no one in the organisation [DTA] see a problem with this? They go out of their way to make it easy for these companies — all of which have dubious records when it comes to paying tax — and not one Australian company gets the same special treatment.

"Can you imagine the US Government, or any other government for that matter, bending over backwards to advantage overseas competitors in selling to their governments? Most boast about doing the opposite and trying to help their local industry grow."