Senate Legislative and General Purpose Standing Committees Consolidated reports on the consideration of bills July-December 2009 Volume 3 Environment, Communications and the Arts; Finance and Public Administration; Legal and Constitutional Affairs (2024)

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Senate Legislative and General Purpose Standing Committees Consolidated reports on the consideration of bills July-December 2009 Volume 3 Environment, Communications and the Arts; Finance and Public Administration; Legal and Constitutional Affairs

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Australian Senate

Senate Legislation Committees

Reports on the Consideration of Bills July- December 2009

Volume 3

Feb ruary 201 0

Australian Senate

Senate Legislation Committees

Reports on the consideration of bills July-December 2009

Volume 3

Environment, Communications and the Arts Committee

Finance and Public Administration Committee

Legal and Constitutional Affairs Committee

ISSN 1834-4062

This document was printed by the Printing Unit, Department of the Senate, Parliament House, Canberra.

TABLE OF CONTENTS

Environment, Communications and the Arts Committee â¢ Environment Protection (Beverage Container Deposit and Recovery Scheme) Bill2009, dated September 2009 .. ... ... .... .... .. .. ..... ..... ..... ... ..... 1

â¢ Telecommunications Legislation Amendment (Competition and Consumer Safeguards) Bill 2009*, dated October 2009 .. .. ...... .. .. .... .. .. .. .. .. ...... .. . 37

â¢ Telecommunications Legislation Amendment (National Broadband Network Measures No. 1) Bill 2009, dated August 2009 .... ... ...... .... ............. .. .. .. .. .. .. .... .. .. ... ...... .... .. ... ... ...... .. ..... .. ....... ... ... .............. .. 107

Finance and Public Administration Committee â¢ National Security Legislation Monitor Bill 2009 , dated September 2009 .. ....... .... .... .... ... .... ... ... .. .... .... ... ....... .. .. ........ .. .. ...... .... ... ........... .. 149

â¢ Parliamentary Superannuation Amendment (Rem(:lval of Excessive Super) Bill 2009, dated September 2009 .. .. ...... .. .. ...... .. .... .... .. ...... ... 211

Legal and Constitutional Affairs Committeet â¢ Access to Justice (Civil Litigation Reforms) Amendment Bill 2009*, dated September 2009 .. ........ .. .... .... .... ...... .. .. .. .. ........ .. .... .. .. .......... .... .. .. . 247

â¢ Anti-Terrorism Laws Reform Bill 2009, dated October 2009 .. .... .. .... .. .. .. .. .... ..... 291

â¢ Australian Citizenship Amendment (Citizenship Test Review and Other Measures) Bill2009, dated September 2009 .... .. .. ...... .. .. .. .... .... .... .. . 343

â¢ Crimes Amendment (Working with Children Criminal History) Bill 2009*, dated November 2009 .... .. .. .... .. .. .. .. .... ........ .. .. .... ........ .. .... .. .. .. .. .. .. .. .. 379

t Volume 4 contains further reports of the Legal and Constitutional Affairs Committee

*Provisions of bill referred to committee.

The Senate

Environment, Communications, and the Arts Legislation Committee

Environment Protection (Beverage Container Deposit and Recovery Scheme) Bill 2009

September 2009

This document was printed by the Senate Printing Unit, Parliament House, Canberra

Committee membership

Committee members Senator Anne McEwen (ALP, SA) (Chair) Senator Simon Birmingham (LP, SA) (Deputy Chair) Senator Scott Ludlam (AG, WA) Senator Kate Lundy (ALP, ACT) Senator the Hon. Judith Troeth (LP, VIC) Senator Dana Wortley (ALP, SA)

Committee secretariat

Dr Ian Holland, Secretary Mr Jack Corbett, Senior Research Officer (Graduate Program) Mrs Dianne Warhurst, Executive Assistant

Committee address PO Box 6100 Parliament House Canberra ACT 2600

Tel: 02 6277 3526 Fax: 02 6277 5818 Email: eca.sen@aph.gov.au

Internet: http://www .aph.gov .au/senate/committee/eca _ ctte/index.htm

iii

Table of Contents

Committee membership ................................................................................... iii

Chapter 1 - Introduction ............â¢....................................................................... 1

Referral to the committee ....................................................................................... 1

Background to the bill ..... ..... ............. ........................ ................ ....... ...................... 1

The provisions of the bill ...... .............................. ..... .. .... .... .. ............................ .. ..... 5

Chapter 2 - Issues raised during the inquiry .................................................... 7

Introduction .................... .................. .. .. .. .. ..... .. ............ .. .................. ... ..... .. .... ......... 7

Litter reduction .. .... .. ........ .. .. ... ..... .. ..... ..... ..... ...... .. ..... .... .... .. .... .... ... .... .... ..... ..... .... .. 8

The impact of CDL on kerbs ide recycling ....... ... ........ .... .. ...... ... ... .. ...... ............ ... 1 0

The cost of CDL ... ....................................................... ........... ......... ................. .... 13

Conclusion ..... .... ... ............. .. .. ... ... .. ... ................... .......... ............. ...... ...... ..... ... ... ... 21

Additional Comments - Australian Greens .................................................... 23

Appendix 1 - Submissions, tabled documents and additional information ........................................................................................................ 25

Submissions .... ............. ............. .............. .... .. ..... ... .. ................. ....... ....... ...... ..... .. .. 25

Tabled Documents ................................................................................................ 28

Additional Information ......................................................................................... 28

Appendix 2 - Public hearings ........................................................................... 29

Referral to the committee

Chapter 1 Introduction

1.1 The Environment Protection (Beverage Container Deposit and Recovery Scheme) Bill 2009 (hereafter 'the bill') was introduced into the Senate on 14 May 2009. On 17 June 2009, the Senate referred the bill to the Senate Environment, Communications and the Arts Committee for inquiry and report by

17 September 2009.

1.2 The committee advertised the inquiry in The Australian on 1 July 2009 and 15 July 2009 and placed details of the inquiry on the committee's website. The committee also wrote to a number of organisations and stakeholder groups inviting written submissions by 23 July 2009.

1.3 The committee received submissions from 1 05 individuals, groups and organisations, as listed in Appendix 1. The committee held public hearings in Melbourne on 24 August 2009 and in Canberra on 7 September 2009. A list of those who gave evidence at these hearings is at Appendix 2. The committee thanks all those who assisted with its inquiry.

Background to the bill

Container Deposit Schemes

1.4 The principal intent of container deposit legislation is to place a monetary value on a used beverage container. This value provides an incentive for consumers to return beverage containers to collection centres for appropriate recycling or disposal.

1.5 There are several different models of container deposit schemes operating globally including in North America, Europe and South Australia. 1 In a traditional container deposit scheme, such as the system currently operating in South Australia, deposits apply to a range of beverages with the initial amount paid into a central fund by the producer. The cost of the deposit is then passed on to consumers in the retail price. Consumers have the opportunity to redeem the deposit by returning the beverage container to a designated collection point. Traditional container deposit

schemes were initially implemented in the 1970s and 1980s to reduce litter and require little centralised management or government involvement. 2

1.6 Variations to this basic model fall under the following broad categories:

Hyder Consulting Pty Ltd, Feasibility Study of a Container Deposit System for Tasmania, May 2009, p. 3.

2 Hyder Consulting Pty Ltd, Feasibility Study of a Container Deposit System for Tasman ia, May 2009, p. 5.

â¢ Deposit amount: Globally, this varies from as little as five cents to as much as 40 eurocents (around 80 Australian cents) and is generally regarded as the principal factor affecting beverage container recovery rates; 3

â¢ Range and types of containers: Under the traditional model the deposit applies only to carbonated drinks but in some instances this has been extended to other beverage containers;

â¢ Container sorting and transport arrangements: Generally, the key distinction is between retailer and centralised collection of returned beverages. Retailer collection is considered more convenient but less cost effective. Centralised collection is less convenient for individual consumers but more cost effective and allows for volume returns (restaurants, hotels etc.). 4 The other mode of collection, increasingly used in Europe, is by reverse vending machines (RVMs). 5 RVMs are an automated mechanism for returning deposits to consumers through a reconfigured vending machine. However, there remains considerable debate concerning the cost effectiveness of this collection system; 6

â¢ Recycling: Traditional programs generally do not require redeemed containers to be recycled, although recycling is common, due to the primacy of litter reduction as the objective of the initial program; and

â¢ Unredeemed deposits: Unredeemed deposits are generally either retained by the retailer to help cover program costs or accrued to public funds and are subsequently reinvested in other waste management programs.

Current Australian container deposit schemes

1. 7 South Australia is currently the only state in Australia to operate a container deposit scheme. 7 However, research undertaken by the Commonwealth and other state and territory governments into the viability of implementing a container deposit scheme has relevance to this bill.

Commonwealth Government

1.8 On 13 March 2008 the Drink Container Recycling Bill was introduced as a Private Members' Bill in the Senate. The Bill was referred to the Senate Standing

3 Hyder Consulting Pty Ltd, Feasibility Study of a Container Deposit System for Tasmania, May 2009, p. 9.

4 Hyder Consulting Pty Ltd, Feasibility Study of a Container Deposit System for Tasmania, May 2009, p. 12.

5 Hyder Consulting Pty Ltd, Feasibility Study of a Container Deposit System for Tasmania , May 2009, p. 12.

6 Environment Protection Authority (SA), Container Deposit Legislation (EPA 074/04), March 2004, p. 3.

7 Environment Protection Authority (SA), Container Deposit Legislation (EPA 074/04), March 2004, p. 1.

Committee on the Environment, Communications and the Arts on 20 March 2008. In his second reading speech, Senator the Hon Steve Fielding MP stated:

The Drink Container Recycling Bill 2008 provides a system of drink container stewardship plans, where producers, distributors or industry groups must submit an approved plan to achieve a 75 per cent recycling rate within two years of the commencement of the plan and 80 per cent within

five years. 8

1.9 The 2008 Senate Standing Committee on the Environment, Communications and the Arts Report titled the Management of Australia's waste streams (including consideration of the Drink Container Recycling Bill 2008), tabled on 3 September 2008, recommended that the Environment Protection and Heritage Council (EPHC) consider initiatives, including container deposit schemes, to improve away-from-home recycling.

EPHC consideration

1.10 At its meeting on 22 May 2009, the EPHC considered a report entitled Beverage Container Investigation -Final Report. The report provided an assessment of potential options for national measures, including container deposit legislation (CDL), to address resource efficiency, environmental impacts and the reduction of

litter from packaging wastes such as beverage containers. 9

1.11 The EPHC further agreed to conduct a community attitudes survey on preparedness to pay for increased recycling. The consumer attitudes survey has been designed to look at the willingness of consumers to pay for increased recycling rates and services across the waste stream. 10 The EPHC will consider the findings of the consumer attitudes survey, in conjunction with the National Packaging Covenant and the National Waste Strategy, at its 5 November 2009 meeting to determine whether or not to initiate a full regulatory impact statement into CDL. 11 The EPHC is not currently conducting any other CDL specific work as a result of the May 2009 Report. 12

South Australia

1.12 The South Australian Government introduced CDL in 1977. Following amendment to legislation in 2003, the scheme has expanded to capture a broad range ofbeverage containers including:

8 Senator the Hon Stephen Fielding MP, Senate Hansard, 13 March 2008, p. 773 .

9 Environment Protection and Heritage Council , 18'" Meeting of EPHC Communique, 22 May 2009, available http://www.ephc.gov.au (accessed 11 August 2009).

10 Dr Diana Wright, First Assistant Secretary, Department of Environment, Water, Heritage and the Arts, Proof Committee Hansard, 7 September 2009, p 2.

11 Dr Diana Wright, First Assistant Secretary, Department of Environment, Water, Heritage and the Arts, Proof Committee Hansard, 7 September 2009, p 6.

12 Dr Diana Wright, First Assistant Secretary, Department of Environment, Water, Heritage and the Arts, Proof Committee Hansard, 7 September 2009, p 4 .

â¢ flavoured milk and fruit juice in containers less than one litre; and

â¢ all non-carbonated soft (non-alcoholic) drinks in containers of three litres or less.

1.13 Previous exemptions for refillable glass soft drink bottles, glass containers for alcoholic and non-alcoholic cider and beverages were repealed when the new regulations took effect in 2003. However, plain milk and wine in glass containers remain outside the scope of the legislation, which also specifically exempts pure fruit juice and flavoured milk in containers with a capacity of one litre or greater. 13

1.14 In September 2008 the South Australian government increased the deposit on beverage containers from five cents to 10 cents as an added recycling incentive. 14 Evidence from Mr Peter Dolan of the Environment Protection Authority of South Australia indicated that collection data, as well as anecdotal accounts, suggested that the increased deposit had resulted in higher rates of return. 15

1.15 Under the current South Australian scheme, beverage manufacturers pay a deposit to a supercollector, who sets up a collection system and retains the manufacturer's funds until the consumer returns the used container and redeems their deposit. 16 The manufacturer passes the cost of the deposit and a handling fee of around 3-4 cents per unit on to the consumer in the retail price. 17 Unclaimed deposits are retained by the beverage manufacturer. The supercollector on-sells the used containers to beverage manufactures, distributors and wholesalers. 18

1.16 There are around 11 0 collection depots located throughout the state. Around 60 of these are licensed as recycling depots that can collect a range of other waste items. 19 The system costs the South Australian Government around $250,000 to administer annually. 20

13 Environment Protection Authority (SA), Container DepositLegislation (EPA 074/04), March 2004, p. 2.

14 Environment Protection Authority (SA), Container Deposit Legislation (EPA 074/04), March 2004, p. 2.

15 Mr Peter Dolan, Director, Environment Protection Authority (SA), Proof Committee Hansard, 7 September 2009, p. 8.

16 Environment Protection Authority (SA), Container Deposit Legislation (EPA 074/04), March 2004 p. 3.

17 Mr James Maxwell Spedding, Director of Sustainability, Veolia Environmental Services Australia, answer to question on notice, 24 August 2009 (received 24 August 2009).

18 Productivity Commission, Waste Management, report no. 38, October 2006 p. 239.

19 Mr Peter Dolan, Director, Environment Protection Authority (SA), Proof Committee Hansard, 7 September 2009, p. 9.

20 Mr Peter Dolan, Director, Environment Protection Authority (SA), Proof Committee Hansard, 7 September 2009, p. 9.

Northern Territory

1.17 On 11 March 2009, Northern Territory Chief Minister, the Hon Paul Raymond MLA, and the Minister for Natural Resources, Environment and Heritage, the Hon Alison Anderson MLA, announced that his government would adopt ' cash for containers' legislation, based on the Southern Australian scheme, by 2011. 21

Victoria

1.18 In Victoria a Private Members' Bill, introduced into the Legislative Council on 1 April2009, sought to amend the Environmental Protection Act 1970 to establish a beverage container deposit and recovery scheme. The Bill was passed by the Legislative Council on 24 June 2009 but the Legislative Assembly refused to entertain the Bill as the government was concerned that it sought to unlawfully impose a levy which, under the Constitution Act 1975, is exclusively the power of the Legislative Assembly. 22

New South Wales

1.19 In New South Wales, a Private Members' Bill was introduced into the Legislative Council on 10 April 2008 to amend the Waste Avoidance and Resource Recovery Act 2001 by instigating a container deposit scheme. It was negatived on division at the second reading, 18 June 2009. 23

Australian Local Government Association

1.20 The 2009 National General Assembly of Local Government resolved to support the introduction a container deposit scheme throughout the Commonwealth of Australia. 24

The provisions of the bill

1.21 The bill seeks to establish a national Beverage Container Deposit and Recovery Scheme that would be administered by the department responsible for the Environment Protection (Beverage Container Deposit and Recovery Scheme) Act 2009 (the Act).

21 Chief Minister, the Hon Paul Raymond MI..A, and the Minister for Natural Resources, Environment and Heritage, the Hon Alison Anderson MLA of the Northern Territory Government, 'Cash for Cleaning up the Territory', Press release, 11 March 2009.

22 Parliament of Victoria, Environment Protection Amendment (Beverage Container Deposit and Recovery Scheme) Bil/2009, available http ://www.legislation.vic.go v.au/, (accessed 6 August 2009).

23 Parliament of New South Wales, Waste Avoidance and Resources Recovery (Container Recovery) Bill 2008, available www .parliament.nsw .gov .aulprod/parlment/nswbi lls.nsf/131 a0 7fa4b8a041 cca256e61 00 12de 17 /bf517113ea29b646ca2572d6007cfe94!0penDocument (accessed 6 August 2009).

24 2009 National General Assembly of Local Government, National Convention Centre, Canberra, Resolutions, 21-24 June 2009, available http://nga.alga.asn.au/business/resolutions/2009 (accessed 9 September 2009).

1.22 Under the Act, a 10 cent deposit would apply to the sale of each eligible beverage container, with the deposit paid to the department. Labelled beverages would be eligible for a refund at authorised collection depots and transfer stations. The authorised collection depots and transfer stations would provide the refund upon receipt of eligible beverage containers. The department would then refund the deposit amount to the authorised collection depots and transfer station operators. Unclaimed deposits or levy funds would be retained by the department.

1.23 The deposit amount of 10 cents per eligible beverage container would be reviewed by the Minister every 5 years.

1.24 The 10 cent deposit would apply to containers not exceeding 4 litres of the following types:

â¢ A plastic or glass bottle;

â¢ An aluminium or steel can;

â¢ A liquid paperboard or composite carton; and

â¢ A composite container.

1.25 Penalties would apply to those persons contravening the provisions of the Act.

Chapter 2

Issues raised during the inquiry

Introduction

2.1 The committee welcomes the opportunity to reconsider the issue of a national beverage container deposit scheme and acknowledges the support within the community for consideration of extended producer responsibility schemes. The committee further acknowledges the work undertaken by Commonwealth, state and territory governments, local councils, industry bodies and interest groups to further public discussion and debate on this issue since it was last considered by the committee.

2.2 The committee received substantial evidence both in support of and against CDL. The committee recognises that this is a long-standing issue that has been the subject of debate at various levels of government, including the committee's recent investigation into the Drink Container Recycling Bill 2008, with significant resources and energy invested by all stakeholders.

2.3 The committee notes that the EPHC is currently considering the merits of national CDL. The committee further notes that recommendation 16 of the Senate Standing Committee on Environment, Communications and the Arts' report: Management of Australia's waste streams (including consideration of the Drink

Container Recycling Bill 2008), declares:

5.77 The committee recommends the Environment Protection and Heritage Council work towards a national container deposit system. As part of its review the committee recommends that the Environment Protection and Heritage Council consider the South Australian model and the Drink Container Recycling Bill2008. 1

2.4 The committee notes the potential for CDL to improve recycling and litter collection rates and further notes the popular support CDL enjoys within the community, as demonstrated by the number of submissions from members of the public supporting CDL and the various consumer surveys cited by submitters and witnesses.

2.5 The committee encourages the EPHC to contin.ue exploring the merits of national CDL, including consideration of the model proposed by the Environment Protection (Beverage Container D eposit and Recovery Scheme) Bill 2009.

Senate Environment, Communications and the Arts Legislation Committee, Management of Australia's waste streams (including consideration of th e Drink Container Recycling Bill2008) report, September 2008, p. 97.

Litter reduction

2.6 The committee was provided with a range of evidence arguing the need for national CDL, with improved litter reduction and recycling rates the dominant rationale. There was a general consensus among submitters and witnesses that reducing litter was desirable and that CDL had the potential to decrease beverage container litter rates. However, there was some contention around the proportion of beverage containers, relative to other litter, in the waste stream and the feasibility of other measures, including enforcement, to reduce litter rates. Councillor Helen Harris, Mayor of the City of Whitehorse noted:

Council's annual litter cost is approximately $500,000, which includes the cost of servicing all of council's litter bins in streets and parks .. .litter collection is the most practised environmental activity by parks community volunteers ... Most of the litter c'ollection and disposal activities would still need to continue even if all drink containers were removed from the litter stream, but the volume needed to be collected would be less and thus we would our costs. 2

2. 7 This view was supported by numerous submissions from members of the public lamenting the presence of litter in parks and waterways. Evidence presented by Australians for Refunds on Cans and Bottles (AFROCAB) outlined the group's perception of the public's interest in litter reduction:

[The public] ... understand that, as litter, drink containers are not just unsightly but also a cost to our communities. 3

Further, AFROCAB stated that beverage containers accounted for around 50 percent of total litter recorded through AFROCAB's roadside litter surveys, with anecdotal evidence collected from adopt-a-highway groups supporting this estimation. 4

2.8 A recent report by the EPHC concluded that CDL had the potential to reduce the national beverage container litter count by 48 percent with a commensurate 41 percent reduction in national beverage container litter volume. 5

This amounts to a 6

2 Councillor Helen Harris, Mayor, City of Whitehorse, Proof Committee Hansard, 24 August 2009, p. 3.

3 Mr Peter Cook, Convenor, Australian's for Refunds on Cans and Bottles, Proof Committee Hansard, 24 August 2009, p. 23.

4 Mr Peter Cook, Convenor, Australian's for Refunds on Cans and Bottles, Proof Committee Hansard, 24 August 2009, p. 29.

5 BDA Group and Wright Corporate Strategies, Beverage Container Investigation- Final Report, 22 May 2009, http://www.ephc.gov.au/taxonomy/term/53 (accessed 6 August 2009), p. 86.

percent reduction in the total national litter count and a 19 percent reduction in the total national litter volume. 6

2.9 The prevalence of unsightly litter underpinned the introduction of South Australian CDL in 1977. Evidence presented by the National Association of Retail Grocers of Australia (NARGA) stated that litter data shows South Australia has lower beverage container litter rates than do other states. 7 However, according to the NARGA, this does not necessarily translate into overall lower litter rates with other

states running anti-litter campaigns that have been more successful in reducing litter across the whole of the waste stream. 8

2.10 NARGA's evidence was supported by the Australian Food and Grocery Council (AFGC) who stated that Keep Australia Beautiful data demonstrates that Victoria is leading the nation with record low levels both in volume and number of littered items due to a comprehensive 'Dob in a Litterer' campaign. 9 In the opinion of the AFGC, the Victorian model demonstrates the effectiveness of balancing enforcement, education and infrastructure to reduce litter rates. 10 While Ms Pickles acknowledged that AFGC members do not want their brand associated with litter, the position of AFGC is that the National Packaging Covenant is best placed to manage the overall waste stream. 11 This position was supported by the Australian National Retailers Association. 12 ··

2.11 The ability of CDL to decrease litter rates was also questioned by the Keep Australia Beautiful Council NSW who claimed that there is evidence to suggest that littering behaviour is actually negatively affected by CDL as consumers can be . 'swayed into believing that since they have been charged a deposit for the container,

then they have a right to litter and leave it for someone else to clean it up'. 13

6 BDA Group and Wright Corporate Strategies, Beverage Container investigation - Final Report, 22 May 2009, http://www.ephc.gov.au/taxonomy/term/53 (accessed 6 August 2009), p. 86.

7 Mr Gerard van Rijswijk, Senior Policy Adviser, National Association of Retail Grocers of Australia, Proof Committee Hansard, 24 August 2009, p. 44.

8 Mr Gerard van Rijswijk, Senior Policy Adviser, National Association of Retail Grocers of Australia, Proof Committee Hansard, 24 August 2009, p. 44.

9 MsJenny Pickles, Australian Food and Grocery Council , Proof Committee Hansard. 24 August 2009, p. 50.

10 Ms Jenny Pickles, Australian Food and Grocery Council , Proof Committee Hansard, 24 August 2009, p. 51.

11 Ms Jenny Pickles, Australian Food and Grocery Council, Proof Committee Hansard, 24 August 2009, p. 50.

12 Australian National Retailers Association, Submission 105, p. 2.

13 Keep Australia Beautiful Council NSW, Submission 64, p. 2.

2.12 While litter reduction provided the policy imperative for some submitters, others, including the Total Environment Centre, argued that they were not supporting CDL to solve the litter problem but as a major additional recycling recovery system for Australia.14

The impact of CDL on kerbside recycling

2.13 The impact of CDL on kerbside recycling was a key issue raised by

submitters and witnesses. The committee heard a range of evidence with many witnesses arguing that the model proposed by the bill, which enables levy funds to be used to support the existing kerbside recycling system, provides a complementary framework for kerbside collection and container deposit recycling. Submitters who were less optimistic about the capacity of the two systems to co-exist were not necessarily opposed to CDL but were anxious to see more detail around how the proposed bill would operate. The key concern of these submitters was summarised in the V eolia Environmental Services submission:

Beverage container recovery schemes are not 'stand alone' solutions for resource recovery. As such, they should be used in conjunction with other compatible collection, recycling and educational systems to contribute effectively to an overall increase in resource recovery and a reduction in litter. 15

2.14 The committee heard a variety of figures regarding the rates of beverage containers collected though the existing recycling system. A report commissioned by the EPHC stated that 68 per cent of beverage containers are recovered for the at-home sector and 20 per cent for the away-from-home sector. 16 Councillor Bill Pemberton, from the City of Whitehorse stated:

It is up to us as local government in the City of Whitehorse to pick that [recycling] up, which is a cost. Then we have to dispose of it. It would be far better if the manufacturers of these particular vessels took some control over what happens to them. 17

2.15 Local government representatives pointed out that kerbside recycling services are a cost to councils, and through them ratepayers. Container deposit systems would have the potential to reduce those costs. Councillor Pemberton gave evidence that kerbside recycling collections have gone up by five to six per cent per annum over the

14 Mr Jeff Angel, Executive Director, Total Environment Centre, Proof Committee Hansard, 24 August 2009, p. 32.

15 Veolia Environmental Services, Submission 53, p. 2.

16 BDA Group and Wright Corporate Strategies, Beverage Container Investigation - Final Report, 22 May 2009, http://www.ephc.gov.au/taxonomy/term/53 (accessed 6 August 2009), p. 10.

17 Councillor Bill Pemberton, City of Whitehorse, Proof Committee Hansard, 24 August 2009, p. 4.

last two years. 18 However, because of the lack of landfill space in Melbourne, this is placing an added cost burden on local council. 19

2.16 Councillor Harris outlined how council pays the collection contractor a fee per tonne to sort and process the recyclables. 20 The more the council collects, the more it pays for that component of the contract. This fee is not the full cost of sorting and processing to the contractor, as the contractor is able to use the income from the sale of the recyclables to offset the operational costs and therefore offer council a competitive net price to receive and sort the recyclables. 21 Given this cost burden, Cr Pemberton concluded:

With the process we have seen, if we had a CDL the saving [for the City of Whitehorse] would be roughly $65 ,000 per year. 22

The evidence from the City of Whitehorse was echoed by several other submissions from Victorian local councils supporting CDL.

2.17 The key concern raised by submissions from the recycling industry is the potential for the economics of the kerb side system to be undermined by the removal of high value recycling items._ This argument was presented in submissions from V eolia Environmental Services, Transpacific Industries Group and the Waste Contractors and Recyclers Association of NSW who argued that the imposition of a deposit on beverage containers would cause households to stop placing beverage containers in their kerbs ide recycling bins (currently around 25 percent of kerb side recyclables are containers) in favour of redeeming the deposit. 23 This will mean that high value commodities like aluminium will be removed from the system despite the cost of collection remaining unchanged.

2.18 In making this point Transpacific Industries Group conceded that:

In preparing the submission, we have not had enough information to be able to model what might be left in the kerbside collection system from containers and what you might get from recouping that charge rather than

18 Councillor Bill Pemberton, City of Whitehorse, Proof Committee Hansard, 24 August 2009, p. 3.

19 Councillor Bill Pemberton, City of Whitehorse, Proof Committee Hansard, 24 August 2009, p. 3.

20 Councillor Helen Harris, Mayor, City ofWhitehorse, Proof Committee Hansard, 24 August 2009, p. 3.

21 Councillor Helen Harris, Mayor, City of Whitehorse, Proof Committee Hansard, 24 August 2009, p. 3.

22 Councillor Bill Pemberton, City of Whitehorse, Proof Committee Hansard, 24 August 2009, p. 4.

23 Veolia Environmental Services, Submission 53; Transpacific Industries Group, Submission 40; and Waste Contractors and Recyclers Association ofNSW, Submission 74.

purely selling into the open market... So for the purpose of our submission, we've assumed that a lot of high-value commodities would be taken out. 24

2.19 Veolia Environmental Services also gave evidence that, depending on the details of the scheme, the frequency of kerbside collection may need to change to account for the reduction in recycling volume. 25 However, this would not necessarily produce the cost reductions that local councils were anticipating, as collection and processing infrastructure would still be required despite lower usage. 26 Transpacific Industries Group also queried the City of Whitehorse's evidence that CDL would reduce costs as this would depend on the structure of the contract and efficiency of the contractor's facilities.

Transpacific Industries Group concluded that if the implementation of CDL resulted in an increase to the cost of kerbside collection, due to lower volume and the absence of valuable commodities, this would be passed on by the contractor to councils and ultimately ratepayers.

2.20 Overall, the evidence presented by the recycling industry argued that current kerbside collection systems were operating effectively with opportunities for improvement in the away-from-home sector, which were beginning to be realised. Mr Spedding ofVeolia Environmental Services summarised this position in his evidence:

The container deposit scheme should only be implemented if it offers significant improvements in resource recovery and litter reduction from where we are now ... We also believe that substantial effort and capital have been employed by local government and waste contractors over recent years to roll out extensive infrastructure to collect household recyclable materials via kerbside collection. It is our opinion that this infrastructure, coupled with education and coupled with now over a decade of experience, has resulted in a system that is performing well from the point of view of kerbside collection recovering recyclable material. As such, the potential to compromise these existing systems by adding a CDL that has not been thought through is quite serious ... We believe that CDL may be able to be introduced, but if it is, it needs to be introduced only after careful consideration and after time has been given to look at the impact on the existing infrastructure that is in place. 29

24 Mr Mark Williamson, Australian Recycling Manager, Transpacific Industri es Group, Proof Committee Hansard, 24 August 2009, p. 10.

25 Mr James Maxwell Spedding, Director of Sustainability, Veolia Environmental Services Australia, Proof Committee Hansard, 24 August 2009, p. 16.

26 Mr James Maxwell Spedding, Director of Sustainability, Veolia Environmental Services Australia, Proof Committee Hansard, 24 August 2009, p. 16.

27 Mr Mark Williamson, Australian Recycling Manager, Transpacific Industries Group, Proof Committee Hansard, 24 August 2009, p. 12.

28 Mr Mark Williamson, Australian Recycling Manager, Transpacific Industries Group, Proof Committee Hansard, 24 August 2009, p. 20.

29 Mr James Maxwell Spedding, Director of Sustainability, Veolia Environmental Services Australia, Proof Committee Hansard, 24 August 2009, p. 11.

2.21 The AFGC echoed this view that the current system is operating adequately and that the away-from-home sector was where real gains could be achieved:

We believe the [National Packaging Covenant] is best placed to deliver a future for Australia in terms of better packaging recovery, more than just focused on recovery through recycling but also at the up-front end, with better design of products for re-use, recyclability and minimising the environmental impact. 30

2.22 The inference that CDL and kerbside recycling are incompatible is rejected by the submissions and evidence presented to the committee by the Boomerang Alliance and the Total Environment Centre. 31 They argued that such statements are flawed when contrasted with the current cost of kerbside collections to local government. Mr Jeff Angel from the Total Environment Centre stated:

It [COL] does not harm kerbside. The last three government reports-the W A stakeholder panel report, the White report commissioned in New South Wales, and the most recent report from the EPHC, the BOA report-all say that it contributes financially in a positive net sense to kerbside. 32

2.23 This evidence was supported by the Boomerang Alliance who stated:

The basic maths is really simple: if there was a small amount of residual left in the kerbside bin, they [local councils] lose all that weight but they gain more revenue. The exercise in South Australia is that 20 per cent of what is redeemed still goes through kerbside . .. kerbside is a good system. It is one of the reasons we support funding flowing back to kerbside through this, because it is not whether kerbside is good or bad, it is that if you make any system work too hard, it will eventually break. 33

2.24 Evidence from the SAEP A, the statutory body that administers the South Australian CDL scheme, supported the view that CDL and l<:erbside are complementary while acknowledging that it may be different for a national scheme as the South Australian CDL existed before the kerbside system was implemented.

The cost of CDL

2.25 Just as the impact of CDL on kerbside recycling was contentious, so was the question of what the implementation ofCDL would cost, and would pay that cost. The

30 Ms Jenny Pickles, Australian Food and Grocery Council, Proof Committee Hansard, 24 August 2009, p. 43 . '

31 Boomerang Alliance, Submission 84; and Total Environment Centre, Submission 73.

32 Mr Jeff Angel, Executive Director, Total Environment Centre, Proof Committee Hansard, 24 August 2009, p. 35.

33 Mr Dave West, National Campaign Director, Boomerang Alliance, Proof Committee Hansard, 24 August 2009, p. 36. 34 Mr Peter Dolan, Director, Environment Protection Authority (SA), Committee Hansard, 7 September 2009, p. 8.

evidence heard by the committee suggests that how much and who pays largely depends on the model of CDL. However, acknowledging this caveat, the committee heard a wide range of figures concerning the economic costs of CDL.

2.26 Due to the profile of CDL as an issue and attempts by members of

Commonwealth, state and territory parliaments to pass CDL, there are a variety of publicly available studies that seek to quantify its cost. However, there exists a lack of consensus around the cost of CDL, or who pays for it. The desire for a more concrete understanding of the costs was reflected in a number of submissions including the

Shire ofYarra Ranges who, despite supporting CDL, stated:

... the costs involved need to be fully understood, as the community will be required to pay the price for improved environmental performance. 35

2.27 The most recent and prominent study of CDL was completed in May 2009 for the EPHC. The Beverage Container Investigation Report, prepared by consultants BDA Group and Wright Corporate Strategies (the BDA report), was cited by a number of submissions to the inquiry and was the subject of significant discussion at public hearings. The key point of contention, raised by critics of the BDA report, was the calculation of CDL's cost.

2.28 According to the BDA report, the primary costs of a container deposit scheme are system operating costs (including the capital costs of establishing collection centres and costs of container handling, transport and administration), costs of commercial collection and the inconvenience costs associated with redemption of deposits. 36 The value of the material recovered provides a direct economic benefit.

There are also cost savings associated with reduced materials in existing kerbside systems and drop-off recycling and avoided landfill costs. 38

2.29 The BDA report modelled these costs and benefits, and concluded that the total national annual net economic costs to government, industry and broader community including compliance and administrative costs are estimated to be $492

35 Shire of Yarra Ranges, Submission 61, p. 5.

36 BDA Group and Wright Corporate Strategies, Beverage Container Investigation - Final Report, 22 May 2009, http://www.ephc.gov.au/taxonomy/term/ 53 (accessed 6 August 2009), p. 90.

37 BDA Group and Wright Corporate Strategies, Beverage Container Investigation - Final Report, 22 May 2009, http://www.ephc.gov.au/taxonomy/terrn/53 (accessed 6 August 2009), p. 90.

38 BDA Group and Wright Corporate Strategies, Beverage Container Investigation - Final Report, 22 May 2009, http://www.ephc.gov.au/taxonomy/term/53 (accessed 6 August 2009), p. 90.

million per annum. 39 This comprises $763 million in economic costs and $294 million in economic benefits. 40

2.30 The BDA report's operating costs include capital and collection costs for depots and convenience zones, supercollector costs and transport costs. They also assessed the costs of implementation and administration of the scheme covering:

â¢ Administration including management of deposits, handling fees, auditing, ·fraud and unredeemed deposits;

â¢ Government costs associated with

legislation, ensuring proper labelling, required standards;

implementing and administering ensuring collection centres meet

â¢ Education costs including initial education of the public and on-going targeted education; and

â¢ Business costs - including setting up internal systems and management, accounting and labelling. 41

2.31 The BDA report calculated the primary economic benefit ofthe scheme as the value of the materials recovered - estimated to be $242 million annually.42 They also estimated some savings for the kerbside system, reduction in landfill costs and unredeemed tourist deposits. The table below provides a summary of the costs, as calculated in the BDA report, that would be shared by government, industry, consumers and the broader community:

39 BDA Group and Wright Corporate Strategies, Beverage Container Investigation - Final Report, 22 May 2009, http://www.ephc.gov. au/taxonomy/term/53 (accessed 6 August 2009), p. 91.

40 BDA Group and Wright Corporate Strategies, Beverage Container In vestigation - Final Report, 22 May 2009, http://www.ephc.gov.au/taxonomy/term/ 53 (accessed 6 August 2009), p. 91.

41 BDA Group and Wright Corporate Strategies, Beverage Container Investigation - Final Report, 22 May 2009, http: //www.ephc.gov.au/taxonomy/term/53 (accessed 6 August 2009), p. 92.

42 BDA Group and Wright Corporate Strategies, Beverage Container Investigation - Final Report, 22 May 2009, http://www.ephc.gov.au/taxonomy/term/53 (accessed 6 August 2009), p. 92.

Economic Impact $mlyr (BDA) 43

Costs

Handling I supercollectors I transport $51 7

Administration I implementation $21

Inconvenience costs $223

Commercial collection costs $26

Benefits

Material values

Savings for kerbside

A voided landfill costs

Unredeemed deposits- tourists

Total

$242

$24

$13

$15

$492

2.32 The BDA report compared the net economic cost of a wide range of policy options for increased beverage container recovery and recycling. It found that CDL had a higher net cost than other alternatives. However, it also concluded that no other option could achieve the litter reduction outcomes of CDL.

44 It further assessed CDL

as the most effective at improving recovery of beverage containers, but that workplace recovery or ari advance disposal fee would recover more packaging material overall. 45

2.33 The BDA report concluded that:

A CDS [container deposit scheme] is suitable as a national measure. There would be significant implementation costs in terms of establishing regulations and the government body to manage the system, changes for beverage manufacturers and retailers, and delivery of education for

43 BDA Group and Wright Corporate Strategies, Beverage Container Investigation - Final Report, 22 May 2009, http://www.ephc .gov.au/taxonomy/term/53 (accessed 6 August 2009), p. 94.

44 BDA Group and Wright Corporate Strategies, Beverage Container Investigation - Final Report, 22 May 2009, http://www.ephc .gov.au/taxonomy/term/53 (accessed 6 August 2009), p. 81.

45 BDA Group and Wright Corporate Strategies, Beverage Container Investigation - Final Report, 22 May 2009, http: //www.ephc.gov.au/taxonomy/term/53 (accessed 6 August 2009), p. 75.

consumers and industry on the operation of the scheme. It is expected to provide additional resource recovery and litter reduction outcomes across the whole litter stream with a relatively high level of certainty through a legislative base. 46

2.34 The EPHC sought a peer review of the BDA report. The peer review by Covec concluded:

The BDA report provides some useful analysis as an input to discussion at the national level ofthe best instrument to use to address resource recovery, environmental and litter impacts of beverage containers. However, there are a number of shortcomings. 47

The Covec review summarised these shortcomings as:

â¢ The limited scope of the study that in tum limits the contribution that it can make to some of the big policy questions. noted that this is a

limitation of the terms of reference, not ofthe BDA report in response);

â¢ The paucity of supporting material to validate many of the assumptions used in analysis; and

â¢ Incorrect methodology, particularly the way in which annuities are calculated to spread capital costs over time. 48

2.35 The South Australian Government's comments, contained in Attachment 1 of the BCWG's covering statement to the BDA report,_ outlined four concerns with the report. The South Australian Government claimed the BDA report:

â¢ Inaccurately assessed the costs of the South Australian CDL scheme;

â¢ Underestimated the savings of CDL for the kerbside system of a national scheme;

â¢ Contained incomplete consideration of the issue of unredeemed deposits under a national container deposit system; and

â¢ Inconsistently analysed the policy options. 49

2.36 Evidence presented to the committee by the SAEPA confirmed that their key concern with the costs presented in the BDA report was that BDA did not understand

46 BDA Group and Wright Corporate Strategies, Beverage Container Investigation - Final Report, 22 May 2009, http://www.ephc.gov. au/taxonomy/term/53 (accessed 6 August 2009), p. 98.

47 Covec, Beverage Container Investigation Peer Review, March 2009, http://www.ephc.gov.au/taxonomy/term/53 (accessed 6 August 2009), p. 14.

48 Covec, Beverage Container Investigation Peer Review, March 2009, http://www.ephc.gov.au/taxonomy/term/53 (accessed 6 August 2009), p. 14.

49 South Australian Government, Attachment 1 - Beverage Container Working Group Covering Statement, May 2009, http://www.ephc.gov.au/taxonomy/term/53 (accessed 6 August 2009), p. 14.

consumer behaviour. 50 The SAEP A argued that the inconvenience costs of $223 million assumed that consumers would return beverages to a depot every week. 51 In contrast, the usual behaviour of South Australian consumers was to return beverage containers every 3-6 months, significantly reducing the inconvenience cost. 52

2.37 This critique of the BDA report was supported by the Boomerang Alliance and the Total Environment Centre in their submissions and subsequent public evidence. 53 They were also concerned that the BDA report did not use an integrated model and that it did not work with real costs:

The BDA system tried to get it right, but it did not work on any real costs. It used theoretical numbers and, in trying to understand how to build a system well, in reality it took South Australia's system of a super collector and our [Boomerang Alliance] system, which is known as a hub and spoke, and put them both together and got it-excuse my language-arse backwards. 54

2.38 The Boomerang Alliance further stated that if the system proposed by the BDA report was actually rolled out as a national container deposit system, the Alliance would in fact oppose it, because it duplicates costs and it replicates existing systems. 55 The Boomerang Alliance contended that the current Environment Protection (Beverage Container Deposit and Recovery Scheme) Bill 2009 is quite

significantly focused on harnessing the economic value of the reprocessing. 56 As a result, it has quite different inputs and outputs to the model contained in the BDA report.

2.39 The Boomerang Alliance proposed an alternative model that they claimed better reflects the intent of the current bill. The Boomerang Alliance model included a network of hubs known as drive-through recycling centres where a range of recyclable items, including beverage containers, can be dropped off in addition to the development of convenience recycling centres or reverse vending machines (RVMs). 57

50 Mr Peter Dolan, Director, Environment Protection Authority (SA), Proof Committee Hansard, 7 September 2009, p. 10.

51 Mr Peter Dolan, Director, Environment Protection Authority (SA), Proof Committee Hansard, 7 September 2009, p. 10.

52 Mr Peter Dolan, Director, Environment Protection Authority (SA), Proof Committee Hansard, 7 September 2009, p. 10.

53 Boomerang Alliance, Submission 84; and Total Environment Centre, Submission 73.

54 Mr Dave West, National Campaign Director, Boomerang Alliance, Proof Committee Hansard, 24 August 2009, p. 33.

55 Mr Dave West, National Campaign Director, Boomerang Alliance, Proof Committee Hansard, 24 August 2009, p. 33.

56 Mr Dave West, National Campaign Director, Boomerang Alliance, Proof Committee Hansard, 24 August 2009, p. 33.

57 Boomerang Alliance, Document tabled by Mr Dave West, Public Hearing, 24 August 2009.

2.40 The Boomerang Alliance claimed that their 'hub and spokes' model would increase state and federal revenue by $8 r million after taking into account the current cost of the existing kerb side system. 58 However, while the $81 million represents a saving for government it remains an additional cost for consumers, specifically those consumers who choose not to redeem their deposit but instead recycle their beverage containers through the existing kerbside system.

2.41 Under the Boomerang Alliance polluter pays system model the $81 million saving for government is dependent on a proportion of beverage deposits being redeemed by recyclers through the kerbside system in order to offset the decreased volume of valuable commodities collected by the recycling industry. 59 The Boomerang Alliance model also assumed that the recycling depots or hubs would be used to collect a variety of recyclable materials, therefore spreading the cost of the administration across the entire waste recycling sector. 60 In addition, the Boomerang Alliance model has been designed to incorporate a greater number of RVMs than the model outlined in the BDA report, which they claim will reduce handling costs. 6 1 The Boomerang Alliance model also anticipated greater economic benefit flowing from greenhouse gas, water and litter savings. 62

2.42 The committee also heard evidence that opposed CDL because it is a tax and consequently bad for consumers and business:

You can argue as much as you like about how much that cost is going to be ... If there are $250 million worth of containers that have not come back, that is a $250 million tax on those people that, for some reason or other, could not return their containers. 63

2.43 The Australian Hotel Association and the Australian National Retailers Association both argued that this increased cost would translate into higher prices for consumers with a resulting negative impact on the sale of eligible beverages. 64

2.44 This view was not supported by all witnesses representing business interests, however: Alcoa Australia Rolled Products stated that:

At the end of the day the consumer will pay. It will cost us to have a sustainable planet, but that is what we need to do if we are going to look

58 Boomerang Alliance, Document tabled by Mr Dave West, Public Hearing, 24 August 2009 .

59 Boomerang Alliance, Document tabled by Mr Dave West, Public Hearing, 24 August 2009.

60 Mr Dave West, National Campaign Director, Boomerang Alli ance, Proof Committee Hansard, 24 August 2009, p. 34.

61 Boomerang Alliance, Document tabled by Mr Dave West, Public Hearing, 24 August 2009 .

62 Boomerang Alliance, Document tabled by Mr Dave West, Public Hearing, 24 August 2009.

63 Mr Gerard van Rijswijk, Senior Policy Adviser, National Association of Retail Grocers of Australia, Proof Committee Hansard, 24 August 2009, p. 44 .

64 Australian Hotels Association, Submission 103, p. 5; Australian National Retailers Association, Submission 105, p. 2.

after the planet, and I think that is a decision that the government has to make. 65

2.45 The key issue for Alcoa Australia Rolled Products was that the current proposal would not burden business with additional costs.

If the Australian government determines that the best solution through reclamation of used beverage containers is a container deposit legislation, then Alcoa ARP believes that it must support the development of infrastructure that ensures used beverage containers are collected and sorted as cost effectively as possible. 66

2.46 Alcoa also observed that:

for us to move to the green can and be able to recycle all of the used beverage containers in Australia we would have to invest somewhere between $20 million and $30 million to allow us to recycle probably another 25,000 tonnes of material a year. Again, financial assistance from the government, coming from a levy, would make that more economically viable, and I am sure there are other recyclers of containers who would say the same thing. 67

2.47 Concern about the start-up costs associated with CDL infrastructure were also raised by the SAEP A. They indicated South Australia would not face difficulties with a national scheme, but that the availability and accessibility of depots could be a problem for other jurisdictions. 68 Mr Spedding of Veolia Environmental Services commented that to:

set up from scratch what we have in Whyalla would probably cost $500,000 or $600,000 because we have an undercover area where the vehicles pull up and we have to be able to process three different materials with baling; so about half a million or so. 69

2.48 The Australian Chamber of Commerce and Industry also expressed concern that new labelling changes associated with the implementation of CDL would involve significant costs to business. 70 Both SAEP A and the Boomerang Alliance

65 Mr John Costley, General Manager Yennora Operations, Alcoa Rolled Products Australia, Proof Committee Hansard, 24 August 2009, p. 60.

66 Mr John Costley, General Manager Yennora Operations, Alcoa Rolled Products Australia, Proof Committee Hansard, 24 August 2009 p. 55.

67 Mr John Costley, General Manager Yennora Operations, Alcoa Rolled Products Australia, Proof Committee Hansard, 24 August 2009 p. 57.

68 Mr Peter Dolan, Director, Environment Protection Authority (SA), Proof Committee Hansard, 7 September 2009, p. 10.

69 Proof Committee Hansard, 24 August 2009, p. 16.

70 Australian Chamber of Commerce and Industry, Submission 102.

acknowledged that it would take around 18 months to initiate a national CDL and provide adequate transition time for business, local government and consumers. 71

Conclusion

2.49 The committee has noted widespread community support for initiatives that will increase rates of recycling and reduce levels of litter. However, the debate around the current bill, and the disagreement surrounding the recent BDA report to the EPHC, have highlighted how complex this area of policymaking can be. The committee supports improving the reuse and recycling of waste materials. It is unable to determine or quantify the benefits of the model proposed in the bill without further data. It is also not clear whether, even if this bill were to achieve improved recycling levels, that it would do so at the least cost to the community.

Recommendation 1

2.50 The committee recommends that the EPHC advance its analysis of container deposit schemes without delay, ensuring that any further modelling draws on data derived from existing container deposit schemes and includes consideration of the model outlined in this bill.

Recommendation 2

2.51 The committee recommends that the bill not be passed at this time.

Senator Anne McEwen Chair

71 Mr Peter Dolan, Director, Environment Protection Authority (SA), Proof Committee Hansard, 7 September 2009, p 10; Mr Dave West, National Campaign Director, Boomerang Alliance, Proof Committee Hansard, 24 August 2009, p. 40.

Additional Comments - Australian Greens

The Committee's inquiry into this Bill was an opportunity to survey the attitudes of industry, local council and community groups on a national scheme to deal with over 11 billion glass, plastic, steel, aluminium, PET and HDPE bottles used by Australians every year, 512,000 tonnes of which is currently going to landfill.

The Committee learned is that there is overwhelming support for such a scheme. Local councils understand the benefits; Australia's umbrella local government organisation has passed a resolution in support, as have many individual councils. Key industry players including as Visy, Alcoa, Revive Recycling, Eco-Waste and Sita Environmental Solutions expressed support. Community support runs in the 80-90% range in consecutive polls, and the Government of South Australia strongly supports a national version of the scheme that has operated successfully there for decades.

The Committee's report continues a recent pattern of providing evidence and coherent arguments for a proposal followed by a contradictory recommendation.

There is increasing impatience with the federal government for failing to act, when recycling container deposits will reduce our greenhouse gas emissions by nearly 1 million tonnes of C02 per year- the equivalent of switching 135,000 homes to 100% renewable energy. The scheme will save enough water to permanently supply over 30,000 Australian homes. It will deliver air quality improvements equivalent to taking 56,000 cars off the road. It will create approximately 1000 direct jobs and decrease litter.

The time has come for a national container deposit scheme. The benefits of the scheme contained in the Greens Bill is that it will fund the establishment of a network of recycling centres, into which other waste streams can be folded, such as e-waste, batteries etc. Another benefit is that the surplus that will be created by the scheme can be used to support industries to reprocess and recycle materials.

For decades the South Australian scheme has shown the way. Other jurisdictions are impatiently waiting for Commonwealth leadership, and this report is another missed opportunity for that leadership to be expressed. The 5 November meeting of the Environment Protection and Heritage Council will consider investigations undertaken on the community willingness to pay for a greater uptake of recycling. The EPHC must deliver a timetable and costed proposal at this meeting.

Senator Scott Ludlam Senator for Western Australia

Appendix 1

Submissions, tabled documents and additional information

Submissions

1 Mr Kim Sampson

2 Mr Michael Sayn

3 Ms Amanda Peyton

4 Ms Melanie Sharp

5 Mr Owen Church

6 Mr Ian Gray

7 Mr Bret Leversha

8 Ms Sarah Lockwood

9 Ms N atasha Key

10 Mr Michael Beasley

11 Mr Mark Verhagen

12 Ms Kathy Chapman

13 Mr lain Jenkins

14 Mr Russell Cunningham

15 Dr Jeffrey Erlich

16 Ms Hayley Quach

17 Mr Alphonsus Crawford

18 Mr Greg Hardy

19 MsLynHovey

20 The Friends ofWameet

21 Ms Sheena Pettigrew

22 Mr Andrew Yarrow

23 Tosca Looby

24 Mr Stephen Fletcher

25 Ms Mary Madigan

26 Dr Jennifer Lehmann

27 Mr Patrick Sunter

28 Mr Jeremy W oolhouse

29 Ms Vicky Morgan

30 Ms Catherine Warner

31 Mr Peter Cook, Australians for Refunds on Cans and Bottles

32 Dr Brian Earl and Ms Nina Earl

33 Ariel Richtman

34 Mr David Caldecott

35 Lee Fuller, Emerald for Sustainability

36 Ms Anne Goddard

37 Mr Tim Brindle

38 Ms Pamela Lloyd

39 Mr James Stranger

40 Transpacific Industries Group Pty Ltd

41 Mr Rufus Coffield-Feith

42 Mr Gerasimos Grammenos

43 Mr Ian Cohen

44 Mr Kein Chua

45 Ms Rosie Wong

46 Mr Tim Oseckas

4 7 Mr Graeme Legge

48 Lani Imhof

49 Ms Lyndall McCormack

50 Boroondara Bicycle Users Group

51 Mr Chris Murphy

52 Mount Alexander Shire Council

53 Veolia Environmental Services

54 Mr Laurie Pincini

55 Friends ofWoodlands Historic Park

56 Friends of the Pines Flora and Fauna Reserve

57 Jenny Henty

58 Matthew Frawley

59 Mr Roy Collins

60 Port Phillip Conservation Council Inc

61 Shire of Yarra Ranges

62 Mr Darren Wallace

63 Ms Marion Cook

64 Keep Australia Beautiful NSW

65 Ms Robin Baillie

66 Beaumaris Conservation Society Inc

67 Ms Nicole Lowe

68 Andersons Creek Catchment Area Landcare Group

69 Whitehorse City Council

70 Burnley Neighbourhood Centre

71 Australian Food and Grocery Council

72 City of Dare bin

73 Total Environment Centre

74 Waste Contractors & Recyclers Association ofNSW

75 Ms Olwyn Smiley

76 Mr Michael Filgate

77 National Association of Retail Grocers of Australia Pty Ltd

78 Mr Mark Riley

79 Borough of Queenscliffe

80 Mr Barry Brannan

81 Cardinia Shire Council

82 Ms Georgette Courtenay

83 Alcoa Australia Rolled Products

84 Boomerang Alliance

85 Ms Fiona Armstrong

86 Ms Barbara Ward

87 Ms Anne Harding

89 Ms Virginia Solomon

90 Ms Sarah Anderson

91 Ms Adele Pedder

92 Ms Penelope Swales

93 Ms Sally Harvey

94 Mr Colin Smith

95 Ms Angela Munro

96 Mr Craig Holmes

97 Ms Wendy Radford

98 Mr Ross Ferris

99 Mr Edward Anstee

100 Ms Jane Brownrigg

101 Kylie Richter-Cools

102 Australian Chamber of Commerce and Industry

103 Australian Hotels Association

104 Ms Madeleine Pieper

Tabled Documents

Copy of letter to Premier Brumby supporting a refund system for drink containers, tabled by Mr Peter Cook, Australians for Refunds on Cans and Bottles, Melbourne, 24 August 2009

Figures taken from the National Litter Index 2006, tabled by Mr Peter Cook, Australians for Refunds on Cans and Bottles, Melbourne, 24 August 2009

Copy of an email from Mr Joachim Quoden, General Manager, PRO EUROPE, regarding a deposit system, tabled by Mr Gerard van Rijswijk, National Association of Retail Grocers of Australia, Melbourne, 24 August 2009

Additional information to Senate Beverage Container Investigation, tabled by Mr Dave West, Boomerang Alliance, Melbourne, 24 August 2009

Additional Information

Copy of Final Report on th e Feasibility of a Container Deposit System for Tasmania, forwarded by the Department of Primary Industries, Parks, Water and Environment, Tasmania

Appendix 2

Public hearings

Monday, 24 August 2009- Melbourne

City of Whitehorse

Councillor Helen Harris, OAM, Mayor

Councillor William Pemberton, Councillor

Transpacific Industries Group Ltd

Mr Mark Williamson, LAustralian Recycling Manager

Veolia Environmental Services Australia

Mr Max Spedding, Director of Sustainability

Australians for Refunds on Cans and Bottles

Mr Peter Cook, Convenor

Mrs Marion Cook

Ms Jenny Henty (Private capacity)

Total Environment Centre

Mr Jeff Angel, Executive Director

Boomerang Alliance

Mr Dave West, National Campaign Director

Australian Food and Grocery Council

Ms Jennifer Pickles, General Manager, Packaging Stewardship Forum

National Association of Retail Grocers of Australia

Mr Gerard van Rijswijk, Senior Policy Officer

Alcoa Australia Rolled Products

Mr John Costley, General Manager Yennora Operations

Mr Brendan Foran, Corporate Affairs Manager-Eastern States

Monday, 7 September 2009 - Canberra

Department of Environment, Water, Heritage and the Arts

Dr Diana Wright, First Assistant Secretary, Environment Quality Division

Mr Greg Manning, Director, Product Stewardship Packaging Team, Waste Policy Branch, Environment Quality Division

Ms Kelly Pearce, Assistant Secretary, Waste Policy Branch

Environment Protection Authority, South Australia

Mr Peter Dolan, Director, Science and Sustainability Division

The Senate

Environment, Communications and the Arts Legislation Committee

Telecommunications Legislation Amendment (Competition and Consumer Safeguards) Bill 2009 [Provisions]

October 2009

This document was printed by the Senate Printing Unit, Parliament House, Canberra

Committee membership

Substitute members for this inquiry Senator the Hon. Ian Macdonald (LP, QLD) replaced Senator the Hon. Judith Troeth (LP , VIC) from 6 October to 23 October 2009

Participating members for this inquiry Senator Mark Bishop (ALP, WA) Senator Mary Jo Fisher (LP, SA) Senator the Hon. Ian Macdonald (LP, QLD) Senator the Hon. Nick Minchin (LP, SA)

Committee secretariat

Dr Ian Holland, Secretary Mr Geoff Dawson, Principal Research Officer Ms Sophie Dunstone, Senior Research Officer Mr Jack Corbett, Senior Research Officer (Graduate Program) Ms Jacquie Hawkins, Research Officer Mrs Dianne Warhurst, Executive Assistant

Committee address PO Box 6100 Parliament House Canberra ACT 2600

Tel: 02 6277 3526 Fax : 02 6277 5818 Email: eca.sen@aph.gov.au

Internet: http://www .aph.gov.au/senate/committee/eca _ ctte/index.htm

Ill

Table of Contents

Committee membership ................................................................................... iii

Chapter 1 .............................................................................................................. 1

Referral to the committee ........................................ ..... .......................................... 1

Purpose of the bill. .... ... ... .......... ... ....................... .... .......................................... ..... . 1

Outline of the bill. ................................................................................................... 1

Chapter 2 - Issues to do with separation of Telstra ......................................... 5

Provisions of the bill on separation of Telstra ........ ................................................ 5

Submissions on separation of Telstra ................. ..... ............................................... 6

ACCC's role in structural or functional separation ofTelstra .... ...... ; ............. ...... 14

Com1nittee comment .......................................... .. ... ........... .... ..... ............ .... .. .... ... 15

Chapter 3 - Access, competition and consumer safeguards .......................... 17

Access and anti-competitive conduct regimes .. .. .... ............ .... ......... ........... .. ... .... 17

Changes to part XIC of the Trade Practices Act .. .. .. ... ......................................... 20

Comments in submissions on Part XIC changes .......... -.......................... .............. 21

Committee comment on changes to the Trade Practices Act.. ... ...... .................... 27

Consumer safeguards ....................................... ......................... ............................ 27

Conclusion ..... .......................... ... ...... ... ........... .......... .. ...... ....... ..... .. ... ..... .. ..... .. .. .. . 28

Coalition Senators Dissenting Report ............................................................. 31

National Broadband Network (NBN) .......................... ......................................... 31

Significance of the NBN Implementation Study ....... .... ..... .. .. ............. ...... ...... .. ... 32

Urgency before Christmas ............... ... ........ ...... .. .... ...... ......... .... ...... .... ............... .. 3 7

Structural Separation ofTelstra .... .............. .. ... .. .................... ....... .. ....... ............... 38

Spectrum Threat ........ ... ...................... .... ... ................ .. ... ....................... .... ........ ... 3 9

Sovereign Risk .. ... .... ..... ........ .......... ... .. ... .. ................... .. .................. ............ .. .. ..... 40

Access arrangements ...... .. ..... ... ..... .... ..................... .. ..... ... .............. ............. ... .. ... . 41

Consumer Measures .......... .... ....................... .............. ... ................................. .... .. 43

Conclusion ..... ..... .................................................................................................. 44

Additional Comments submitted by Senator Scott Ludlam for the Australian Greens ................................................................................. 47

Additional Comments- Senator Fiona Nash .................................................. Sl

Appendix 1 ......................................................................................................... 53

Appendix 2 ......................................................................................................... 63

Chapter 1

Referral to the committee

1.1 On 17 September 2009, the Senate referred the Telecommunications Legislation Amendment (Competition and Consumer Safeguards) Bill 2009 to the Senate Environment, Communications and the Arts Legislation Committee for inquiry and report by 26 October 2009.

1.2 On 23 September, in accordance with usual practice, the committee advertised the inquiry in The Australian, calling for submissions by 7 October 2009. The committee also directly contacted a range of individuals and organisations to invite submissions.

1.3 The committee received 119 numbered submissions, listed at Appendix 1. The committee also received 224 form letters listed at Appendix 1.

1.4 The committee held public hearings in Melbourne and Canberra on 13 and 14 October 2009. The participants are listed at Appendix 2.

Purpose of the bill

1.5 The bill proposes to amend the Telecommunications Act 1997, Parts XIB and XIC of the Trade Practices Ac 1974, the Radiocommunications Act 1992 and the Telecommunications (Consumer Protection and Service Standards) Act 1999. The bill also makes consequential amendments to the National Transmission Network Sale Act 1998.

1.6 The bill seeks to introduce a series of regulatory reforms intended to enhance competitive outcomes in the Australian telecommunications industry and strengthen consumer safeguards. It seeks to 'promote an open, competitive telecommunications market to provide Australian consumers with access to innovative and affordable

services'. 1

1. 7 The reform package can be divided into three parts: addressing the vertical and horizontal integration of Telstra; streamlining the access and anti-competitive conduct regimes; and strengthening consumer safeguard measures such as the Universal Service Obligation and the Customer Service Guarantee.

Outline of the bill

Structure of the telecommunications sector

1.8 Part 1 of Schedule 1 proposes to insert a new Part 33 into the

Telecommunications Act 1997 with provisions for Telstra to voluntarily structurally separate.

Explanatory Memorandum, p. 3.

2 Explanatory Memorandum, p. 1.

1.9 According to the explanatory memorandum:

Structural separation may, but does not need to, involve the creation of a new company by Telstra and the transfer of its fixed-line assets to that new company. Alternatively it may involve Telstra progressively migrating its fixed-line traffic to the [National Broadband Network] over an agreed period of time and under set regulatory arrangements, and sell or cease to use its fixed-line assets on an agreed basis. This approach will ultimately lead to a national outcome where there is a wholesale-only network not controlled by any retail company- in other words, full structural separation in time 3

1.10 Part 1 of Schedule 1 also provides for Telstra to be functionally separated should Telstra choose not to voluntarily implement structural separation. The bill achieves functional separation by requiring Telstra to:

â¢ Conduct its network operations and wholesale functions at arm's length from the rest ofTelstra;

â¢ Provide the same information and access to regulated services on equivalent price and non-price terms to its retail business and non-Telstra wholesale customers; and

â¢ Put in place strong internal governance structures that provide transparency for the regulator and access seekers, and that ensure that equivalence arrangements are effective. 4

1.11 In the explanatory memorandum, the government cites Telstra's 'ongoing dominance in the Australian telecommunications market' as the reason for its strategy 'to correct this unique market structure, by introducing a set of measures designed to promote competition ... while providing Telstra with the flexibility to choose its future path'.

1.12 Under the bill, if Telstra chooses not to structurally separate, divest its hybrid fibre coaxial (HFC) cable network and its interests in Foxtel, Telstra will be prevented from acquiring spectrum which could be used for advanced wireless broadband services. However, in the event that the Minister is satisfied that Telstra's structural separation undertaking is sufficient to address the government's concerns about Telstra's dominant position in the market, the bill does enable the Minister to remove the requirements around the divestment of the HFC cable network and Fox tel. 5

Access and anti-competitive conduct regimes

1.13 Part 2 of Schedule 1 seeks to amend the current 'negotiate-arbitrate' model in Part XIC of the Trade Practices Act 197 4 for agreeing terms of access between providers and access seekers, in order to address the government's concern that the current model is not achieving effective outcomes.

3 Explanatory Memorandum, p. 1.

4 Explanatory Memorandum, p. 2.

5 Explanatory Memorandum, p. 2.

1.14 The bill allows the regulator, the Australian Competition and Consumer Commission (ACCC), to set up-front prices and non-price terms for declared services. These are intended to set a benchmark that access seekers can fall back on, should negotiations with the provider fail.

1.15 The bill also removes the ability to have decisions made under Part XIC of the Trade Practices Act subject to merits review, in order to 'promote regulatory certainty and timely decision-making'. Judicial review processes will continue to be available.

1.16 Part 3 of Schedule 1 is intended to streamline the enforcement process to which the ACCC must adhere. The bill makes changes to the competition notice process, and specifically to consultation and observation of procedural fairness by the ACCC. 6

Consumer protection

1.17 The bill amends the Telecommunications (Consumer Protection and Service Standards) Act 1999 by strengthening the Universal Service Obligation (USO), Customer Service Guarantee (CSG) and priority assistance services, as well as enhancing the regulatory powers of the Australian Communications and Media Authority (ACMA). These amendments are detailed in Parts 4 to 8 of Schedule 1 of the bill.

1.18 Part 4 of Schedule 1 includes new requirements of the universal service provider such as minimum performance benchmarks that must be met by the universal service provider. Performance standards to be determined by the Minister include maximum periods of time for new connections, fault rectification and reliability

standards, and perfon:nance standards in relation to payphones. There will also be 'new rules in relation to public consultation and notification of proposals to remove payphones'. 7

1.19 Under Part 5 of Schedule 1, the Minister can establish minimum CSG performance benchmarks. Part 5 also seeks to clarify CSG waiver provisions including the requix:ement for a customer's express agreement for a waiver and the inclusion of a statement outlining consequences of the CSG waiver.

1.20 Part 6 of Schedule 1 introduces a new service provider rule requiring service providers to either offer a priority assistance service in accordance with the Communications Alliance code on priority assistance, or inform customers of providers from whom they can purchase such a service if they require it. Telstra will remain bound by its current carrier licence condition requiring it to have priority assistance services.

1.21 Part 7 of Schedule 1 expands the powers of the ACMA to issue infringement notices under the Consumer Protection Act. The government intends that this will 'assist the ACMA in enforcing obligations under the telecommunications regulatory regime'.

6 Explanatory Memorandum, pp. 3-4.

7 Explanatory Memorandum, p. 5.

1.22 Part 8 of Schedule 1 substitutes a new defmition of civil penalty provision tc simplify and clarify the definition. 8

1.23 There was general support for the enhancement of consumer safeguards in th( bill, and this report concentrates on issues relating to the structural separation oJ Telstra, and on Trade Practices Act reforms.

8 Explanatory Memorandum, pp. 5-6.

Chapter 2

Issues to do with separation of Telstra Provisions of the bill on separation of Telstra

Addressing Telstra 's vertical integration

2.1 The bill provides that Telstra must separate either functionally or structurally. The Government argues that separation ofTelstra is needed because:

Telstra is one of the most integrated telecommunications companies in the world;

â¢ partly because of this integration, it has been able to maintain a dominant position in virtually all aspects of the market despite more than 10 years of open competition; and

â¢ Telstra's high level of integration has hindered the development of effective . . I

competitiOn.

2.2 The default position is that Telstra must functionally separate according to a functional separation undertaking approved by the Minister. The bill requires Telstra to comply with 'functional separation principles' listed in the bill, including that there should be equivalence in relation to the supply by Telstra of regulated services to its wholesale customers and its retail business units, and related matters. 2

2.3 Alternatively, Telstra may voluntarily structurally separate: that is, the ACCC may accept an undertaking from Telstra that-â¢ Telstra will not supply fixed-line carriage services to retail customers using a telecommunications network over which Telstra is in a position to exercise

control; and

â¢ Telstra will not be in a position to exercise control of a company that supplies fixed-line carriage services to retail customers using a telecommunications network over which Telstra is in a position to exercise control. 3

2.4 If a structural separation undertaking is in force, Telstra does not have to comply with the provisions about functional separation. 4

The Government's stated

preference is that Telstra should voluntarily structurally separate. 5

2.5 According to the explanatory memorandum, Telstra could undertake structural separation in several ways:

Explanatory Memorandum, p. 1.

2 Item 22, proposed additions to Schedule 1 of the Telecommunications Act 1997.

3 Item 21 , proposed section 577A of the Telecommunications Act 1997.

4 Item 22, proposed section 82 of Schedule 1 of the Telecommunications Act 1997.

5 Explanatory Memorandum, p. 8.

A few examples are:

â¢ Telstra may elect to facilitate the transfer of the provision of fixed-line carriage services to its retail customers to another carriage service provider, over which Telstra is not in a position to exercise control.

â¢ Telstra may establish a new company to supply fixed-line carriage services to its retail customers and divest enough of its interests in that company to ensure that it is no longer in a position to exercise control of that company.

â¢ Telstra may elect to progressively migrate the traffic of its retail customers to another national network for the provision of fixed-line carriage services, such network being a network over which Telstra is not in a position to exercise control. 6

Addressing Telstra's horizontal integration

2.6 The bill prevents Telstra from acquiring specified bands of spectrum, which could be used for advanced wireless broadband services, unless it structurally separates and divests its hybrid fibre coaxial (HFC) cable network and its interests in subscription television broadcasting licences (ie Foxtel). However the Minister may exempt Telstra from the requirements in relation to HFC networks and subscription television broadcasting licences if the Minister is satisfied that Telstra's structural separation undertaking is sufficient to address concerns about the degree of Telstra's power in telecommunications markets. 7

2. 7 The Government supports this measure on the grounds that:

Telstra's level of horizontal integration across the different delivery platforms-copper, cable and mobile-is in contrast to many countries where there are restrictions on incumbents owning both cable and traditional fixed-line telephone networks .... Telstra' s horizontal integration has significantly contributed to Telstra's ongoing dominance in the Australian telecommunications market. 8

Submissions on separation of Telstra

Submissions supporting the bill

2.8 Most submissions from stakeholder companies or consumer interest groups supported separation of Telstra. 9 Their core argument supports the government's view that Telstra's level of vertical integration has allowed Telstra to behave

6 Explanatory Memorandum, p. 92.

7 Item 22, proposed additions to Schedule 1 of the Telecommunications Act 1997. Explanatory Memorandum, p. 2.

8 Explanatory Memorandum, p. 2.

9 For example Vodaphone Hutchison Australia, Submission 40. Australian Telecommunications Users Group, Submission 44. Optus, Submission 47. Macquarie Telecom, Submission 69. iiNet, Submission 70. Austar, Submission 71 . Internode, Submission 73. Primus Telecom, Submission 76. Infrastructure Partnerships Australia, Submission 93. Telecommunications Expert Group, Submission 97.

monopolistically, to the detriment of competition and Australian consumers. For example:

A number of international comparisons show Australia with higher prices, less innovative offerings and poorer service levels including broadband speeds and switching practices. ATUG believes this is due to lack of effective competition in the telco sector. Examples include OECD Communications Outlook 2009 and Oxford Business School Broadband Quality Score 2009. 10

Telstra continues to identify the number of new carrier licences and ongoing price reductions as indicators of a vibrant, competitive marketplace, completely ignoring the figures included in the explanatory memorandum which show the extraordinarily high figures for the HHI, the Herfindahl-Hirschman Index, for this industry. That is a standard measure of concentration in industry that shows this industry is basically as concentrated as a dysfunctional duopoly. 11

2.9 Some noted that Telstra's market dominance has increased in recent years; for example:

Data from recent Telstra annual reports further shows how quickly competition has retreated in recent years. In the past three years there has been a fall of 290,000 individual consumers lines connected to competitors. This is a fall of 12.75% compared to a loss of0.6% of basic access lines by Telstra Retail in the same period.

2.10 Submissions argued that functional separation has been successful m the United Kingdom:

Perhaps the most compelling endorsem*nt of separation is provided by Of com which, following a recent assessment of the impact of the separation arrangements introduced by BT, has concluded that separation has been successful in delivering improved competition in the UK.

2.11 Infrastructure Partnerships Australia noted the benefits of structural separation listed in a 2003 OECD report and supported by the 1993 Hilmer report on national competition policy:

The [Hilmer] report advocated the separation of natural monopoly components (such as fixed copper network) from competitive functions (such as retail services). 14

10 Australian Telecommunications Users Group, Submission 44, p. 5. Similarly Competitive Carriers Coalition, Submission 48, p.2. Optus, Submission 47, p. 5.

11 Mr D. Havyatt (Unwired Australia), Proof Committee Hansard, 13 October 2009, p.20.

12 Competitive Carriers Coalition, Submission 48, p. 3. Similarly Unwired Australia, Submission 55,p. 3. The Explanatory Memorandum discusses market concentration and notes that it is increasing (except in retail mobile services): p. 21. 13 Optus, Submission 47, p. 7. Similarly Infrastructure Partnerships Australi a, Submission 93 , p.

12.

14 Infrastructure Partnerships Australia, Submission 93, p. 11.

2.12 Optus submitted that criticisms of separation 'do not stand up to scrutiny':

These criticisms fail to acknowledge that the reforms have been well signalled and that they are aimed squarely at delivering improved outcomes for all Australians by putting the industry on to a more competitive basis. The experience of the UK and New Zealand demonstrate the benefits that separation brings in terms of delivering pro-competitive outcomes. 15

2.13 The department argued that the dominance of one player in the market was such that action was required:

In the explanatory memorandum is a quote by Lord David Currie in the UK:

All that is needed is for the incumbent not to try their hardest to achieve reliability, timeliness and predictability to disrupt significantly the launch by competitors of a rival retail proposition .

. . . It is at that end, not who is the largest mobile phone player, the largest wireless player or the largest fixed-line player. It is about that competition angle. Are you able to disrupt someone's ability simply by not trying hard because across your set of businesses that part of your business that does infrastructure supply can simply say, 'I think I' ll just be passive in the face ofthis person' s needs. I might delay it or lose it or sleep on it.' None ofthat is unusual behaviour in marketplaces, and we all know it. The question in this is: has it arrived at a point where it sufficiently impedes supply of innovative services to consumers and businesses? The conclusion we have reached is that it does. 16

Other suggestions from supporters of the bill

2.14 Supporters of separation made some detailed suggestions for amendments. The Competitive Carriers Coalition (CCC) argued that the principles for functional separation should be legislated in more detail. 17 The CCC argued that it should be legislated that Telstra must at once implement changes to remove its incentives to discriminate against other retailers, although structural separation may take some years. 18 Unwired Australia argued that the legislation should provide more detail about the grounds on which the Minister may exempt Telstra from the pay TV and HFC network divestment provisions. 19 Unwired Australia suggested that if Telstra

15 Optus , Submission 47, p. 4.

16 Mr P. Harris, Department of Broadband, Communications and the Digital Economy, Proof Committee Hansard, 14 October 2009, p. 27.

17 Competitive Carriers Coalition, Submission 48, p. 5. Similarly Macquarie Telecom, Submission 69, p. 2.

18 Competitive Carriers Coalition, Submission 48, p. 7. Similarly Primus Telecom: 'Separation plans or undertakings should be required to achieve significant pro-competitive milestones along the way.' Submission 76, p. 2.

19 Unwired Australia, Submission 55, p. 7. Similarly Austar, Submission 71, p. 5.

breaches a functional separation undertaking, the ACCC should be able to apply to the Federal Court to force divestiture.20

Submissions opposing the bill

2.15 Stakeholder groups who opposed the separation provisions were Telstra and a number of investment managers or shareholder interest groups concerned about the likely effect of the changes on the value of Telstra shares. 21 Their main arguments were:

â¢ separation will discourage investment or cause efficiency losses;

separation will have high transitional costs for Telstra;

â¢ separation will reduce Telstra's share value.

2.16 Submissions from individual Telstra shareholders mostly focussed on the third point.

Effects on efficiency and investment

2.17 Investors Mutual argued that economic literature supports vertical integration:

In industries that face significant uncertainties only vertically integrated firms are the most economically efficient allocator of resources. 22

2.18 Telstra argued similarly that vertical integration 'reduces costs and facilitates innovation and is supported by international studies'. 23 In reply Unwired Australia said:

... Telstra also claims that separation is not required if it makes a series of changes in the wholesale regime to provide transparency and equivalence. I do not know how you can reconcile those two views: that you can get equivalency and transparency in a wholesale structure with a vertically

integrated firm, yet the vertically integrated firm has a lower cost structure and a greater ability to innovate than any other firm in the market. Quite frankly, if the first statement is true, that vertical integration reduces costs and facilitates innovation, then we should not attempt to have a competitive telco regime. 24

2.19 The Australian Shareholders Association argued that the bill will discourage investment:

20 Unwired Australia, Submission 55, p. 10.

21 Maple Brown Abbott, Submission 4; Australian Foundation Investment Company, Submission 53; Investors Mutual Ltd, Submission 68; BT Investment Management, Submission 74; Australian Shareholders Association, Submission 77. Barmen, telecommunications consultants, also opposed 'forced separation': Submission 96, p. 5.

22 Investors Mutual, Submission 68, p. 5. Similarly Telstra, Submission 88, p. 6.

23 Telstra, Submission 88, p. 5.

24 Mr D. Havyatt (Unwired Australia), Proof Committee Hansard, 13 October 2009, p. 20.

International investors in particular will consider Australia to have a much higher level of sovereign risk if this Bill is passed and the Government allowed to impose its will on a private company. 25

2.20 BT Investment Management submitted that:

It's a circular argument to suggest that because Telstra owns the only regulated bottleneck asset that it makes the bulk of fixed line market profit and should be broken up ...

Whoever owns it will make such a regulated profit .... We consider that Telstra's profit is high because it is a well run integrated business and because of its high level of investment relative to its competitors. 26

2.21 Telstra argued the changes 'have the potential to significantly increase regulatory uncertainty and hence reduce investment in telecommunications markets.' Telstra noted that it has a 62 per cent share of the market but makes 70 per cent of telecommunications sector capital investment (implying that this is a desirable result of the status quo). In reply Unwired Australia argued that the right comparison is with profit, not market share; Telstra still has 90 per cent of the industry's profit; thus Telstra is under-investing: 'Only people with market power can withhold

investments'. 27

Transitional costs

2.22 Telstra argued that the cost of separation would be in the range $500 million to $1.2 billion. 28 In the Government's view 'it is unclear what assumptions Telstra' s claimed implementation costs or effects on its share price are based on .. . Telstra' s claims can be assumed to represent the upper bounds of possible costs.' 29

2.23 Others disputed the likely cost of separation. Optus said:

These costs are unlikely to be anywhere near as much as Telstra has claimed. Optus notes that BT, which is a considerably larger company than Telstra, incurred costs of £153 Million in implementing a very detailed and robust form of functional separation... In many respects the costs to be incurred in implementing separation will simply be displacing costs the industry incurs to date operating under the present regulatory arrangements. In recent years the industry will have incurred costs of no less than $200 million operating within the present regulatory arrangements. 30

25 Australian Shareholders Association, Submission 77, p.3. Similarly Maple Brown Abbott, Submission 41 , p. 2.

26 BT Investment Management, Submission 74, p. 3.

27 Telstra, Submission 88, pp. 2,10. Mr D. Havyatt (Unwired Australia), Proof Committee Hansard, 13 October 2009, p. 20.

28 Telstra, Submission 88, p. 8. See discussion at Proof Committee Hansard, 13 October 2009, p.4.

29 Explanatory Memorandum, p. 28 .

30 Optus, Submission 47, p. 11. Similarly Mr A. Sheridan (Optus), Proof Committee Hansard, 13 October 2009, p. 18.

2.24 The Government has argued that:

Telstra's vertical integration affects all Australians and the economy more generally through higher telecommunications prices and reduced innovation and investment in the sector.... It is the Australian Government's considered view that the medium- and longer-term competition benefits for the economy, business and end-users of implementing functional separation outweigh the short-term costs to Telstra of implementing functional separation ifTelstra decides not to voluntarily structurally separate. 31

Effect on Telstra's share value

2.25 Telstra and some other stakeholder groups argued that separation would reduce Telstra's share value. These submissions were mostly from investment managers. 32 33 Their concern about share value was usually coupled with an argument that the separation envisaged by the bill was unfair as it was not foreshadowed at the time of privatisation: 34

In all three public offers Telstra was marketed as a strong investment on the basis of its large size and its position as the Australia' s only integrated telecommunications company. The same assets that the Government as now insisting Telstra divest were promoted strongly as reasons for investment in the company ... Obtaining full value for those assets in the situation of a forced sale will be difficult. 35

We believe that the proposed structural separation if it occurs would result in a permanent reduction in shareholder value ... the Government will be penalising Telstra for being successful and thereby penalising the many Telstra shareholders who relied on Government representations. 36

2.26 It was sometimes unclear whether the claim was that the increased

competition caused by separation would cause a transfer of profit from Telstra to its competitors in a zero-sum game, or that the community as a whole would lose because they believe Telstra's market dominance is economically efficient.

31 Explanatory Memorandum, p. 33.

32 The Committee notes that the two investment managers who gave evidence opposing the bill hold shares in Telstra but not in Telstra's Australian competitors. Mr A. Tagliaferro (Investors Mutual Ltd), Proof Committee Hansard, 13 October 2009, p. 42 . Mr R. Barker (Australian Foundation Investment Company), Proof Committee Hansard, 13 October 2009, p. 35 .

33 The 224 form letters which the committee received were mostly about thi s iss ue.

34 Telstra focussed on economic arguments, and mentioned fairness arguments only passingly; for example: 'Telstra' s shareholders have invested significant sums in these assets. To require them to divest their interests in these assets just as they are becoming profitable is unjust and raises questions of sovereign risk.' Submission 88, pp. 3, 8.

35 Australian Shareholders Association, Submission 77, p. 1. Similarly Maple Brown Abbott, Submission 41, pp. 1-2. Mr R. Barker (Australian Foundation In vestment Company), Proof Committee Hansard, 13 October 2009, p. 33 .

36 Australian Foundation Investment Company, Submission 53, p. 2.

2.27 Supporters of the bill argued that 'the government must stand firm and put the long term interests of all 22 million Australians ahead of the short term interests of less than 2 million Telstra shareholders.'37

2.28 On the question of whether the bill is fair to Telstra shareholders, the

department argued that the three Telstra privatisation prospectuses mentioned regulatory risk adequately:

I have a list here of the quite generic warnings that went in every Telstra share offer: 1997, 1999 and 2006.

The 1997 offer said: 'There can be no assurance that the current or future governments will not take further steps which alter Telstra's competitive position or the manner in which the Australian telecommunications industry is regulated.'

In the 1999 offer: 'There is also a risk that current or future governments will take steps that further alter Telstra's competitive position or the manner in which the Australian telecommunications industry is regulated.' 38

2.29 The T3 prospectus in 2006 said:

Regulation impacts the way Telstra does business and Telstra believes it is the most significant ongoing risk to Telstra. There can be no assurance as to future policies and regulatory outcomes. Regulatory outcomes may be significantly adverse to shareholders. 39

2.30 The Competitive Carriers Coalition argued that complaints that Telstra shareholders have been betrayed should not be taken seriously, since:

â¢ Every Telstra sale tranche acknowledged the simple reality that the regulation of telecommunications was subject to change;

â¢ Telstra shareholders are asking to have interests protected that are immeasurable. It is impossible to know what regulatory action might result in Telstra share movements over time. Functional separation of BT was followed by share growth, while Telstra's value has declined precipitously in recent years while it was brutally exercising market power;

â¢ It is not the Government's responsibility to protect the interests of the shareholders of one company over the interests of other companies' shareholders, and certainly not ahead of the interests of all citizens who have paid inflated prices for crucial communications services because of Telstra's unconstrained monopoly power .... 40

37 Internode, Submission 73, p. 2.

38 Mr P. Harris (Department of Broadband, Communications and the Digital Economy), Proof Committee Hansard, 14 October 2009, p. 29. Similarly Unwired Australia, Submission 55, p. 15.

39 Telstra 3 Share Offer Prospectus, October 2006, p. 42.

40 Competitive Carriers Coalition, Submission 48, p. 4. Similarly Internode, Submission 73, p. 2.

2.31 Supporters of the bill argued that in any case the likely detriment to Telstra's share price is uncertain or overstated. For example:

The market reaction to the announced package of reforms has been fairly mooted with Telstra's share price recovering after an initial small drop. More significantly, Optus notes that many industry analysts have retained their "Buy" recommendations on the Telstra stock following the

Government's announcement and predict share price accretion over the next twelve months as these reforms are implemented. 41

A more considered view is that these reforms address the inherent regulatory uncertainty within the industry, and once the reforms are implemented they will open up enormous potential for Telstra and other industry participants to pursue significant growth opportunities.42

If you look at what happened in the UK, BT share price actually improved relative to both the rest of the UK share market and to some of its standout competitors on the European continent. It improved because a lot of the uncertainty was removed and there was the promise that, over time, other aspects of regulation that constrained them in retail markets would be removed.43

2.32 The ACCC, in its submission to the Government's April 2009 National Broadband Network discussion paper, stated that vertical separation can enhance the value of separated firms. It reasoned that there may be some vertical dies-economies of scope which may arise as a firm takes on additional functions which are outside the

scope of its core functions and which the firm is not well equipped to perform. It gave examples of previous voluntary separations to support these claims. 44

Comments on horizontal separation of Telstra

2.33 Generally, stakeholders who supported structurally separating Telstra also supported horizontal separation:

Access to valuable content is likely to become an important force driving the take-up of higher speed broadband services. This creates a very real risk that a monopoly in premium content could be used to undermine future competition in broadband services.

The level of Telstra's horizontal integration across all Australian telecommunications platforms, including fixed line, mobile, coaxial fibre cable and Foxtel cable, is unusual if not unique among advanced

41 Optus, Submission 47, p. 11.

42 Primus Telecom, Submission 76, p. 2. Similarly Mr D. Foreman (Competitive Carriers Coalition), Proof Committee Hansard, 14 October 2009, p. 9.

43 Mr D. Forman (Competitive Carriers Coalition), Proof Committee Hansard, 14 October 2009, p. 9.

44 Australian Gas Light Company 2005, Toll 2007, Time Warner 2008. Memorandum, p. 10.

45 Optus, Submission 47, p. 7.

economies. Telstra's integration across all telecommunications technologies has significantly contributed to the organisation's ongoing dominance in the Australian telecommunications market and has allowed the organisation to utilise undue influence to block market participants. 46

The fact that FOXTEL has not extended its product portfolio to offer a competing broadband access product, unlike other major pay TV providers in the developed world, is a clear indication that the services and products available to consumers are being limited by the integration of Telstra and FOXfEL. AUSTAR believes that the divestiture of FOXTEL is a critical step in addressing competition concerns raised by Telstra's horizontal

â¢ â¢ 47

mtegratwn.

2.34 Optus noted that the horizontal separation provisions are ultimately discretionary and can be waived if the Minister is satisfied with the terms of Telstra's structural separation plan: 'On balance this approach appears reasonable.' 48

2.35 Opponents of the bill were often critical of horizontal separation. These included:

â¢ Australian Foundation Investment Company: 'shareholders have borne the risk of the [Foxtel and HFC] investments and should be allowed to reap the rewards'; and

â¢ BT Investment Management: 'restricting Telstra's access to 4G spectrum is counter-productive to effective industry development.' 49

ACCC's role in structural or functional separation of Telstra

2.36 The provisions concerning structural separation give the ACCC the role of accepting Telstra's undertaking concerning separation. If the ACCC considers that Telstra has breached the undertaking it may apply to the Federal Court for a remedy. 50

2.37 The provisions concerning functional separation give the ACCC the role of advising the Minister whether to accept a functional separation undertaking. 51 The ACCC must monitor and report annually on Telstra's compliance with a functional separation undertaking. 52

2.38 Submissions were generally supportive of this role. The Competitive Carriers Coalition urged that the process by which the ACCC considers structural separation

46 Infrastructure Partnerships Australia, Submission 93 , p. 13 .

47 Austar, Submission 71, p. 4.

48 Optus, Submission 47, p. 7. Similarly Australian Telecommunications Users Group, Submission 44, p. 6.

49 Australian Foundation Investment Company, Submission 53, p. 2. BT Investment Management, Submission 7 4, p. 2.

50 Item 21, amendments to the Telecommunications Act 1997, proposed section 577A ff.

51 Item 22, amendments to the Telecommunications Act 1997, proposed sections 77, 80.

52 Item 39, amendments to the Telecommunications Act 1997, proposed section 105B.

should have the highest level of public consultation, and there should be more guidance to the ACCC on what would be acceptable in an undertaking by Telstra. 53

2.39 Foxtel argued that the ACCC's discretion regarding Telstra's undertaking to structurally separate would be too broad, and matters that the ACCC should consider should be set out in the bill. 54

Committee comment

2.40 The object of telecommunications policy is to promote innovation in telecommunications, and more efficient and competitive services for the community as a whole. The Committee accepts the view of the Government and most industry stakeholders that the separation ofTelstra will bring long term benefits.

2.41 In the committee's view the three Telstra sale prospectuses were clear enough about the potential of regulatory changes in the telecommunication sector that might affect Telstra's competitive position. The committee notes that in any case there is a lack of consensus around what might be the long terms effects of separation on Telstra's share price.

2.42 It is not the government's role to support the share value of one

telecommunications company in preference to its competitors, however the committee does not believe that sufficient evidence has been presented that these regulatory reforms will be detrimental to Telstra's share price. The enhanced consumer protections offered in the bill, the greater regulatory certainty that will be brought about by its passage, and the improved efficiency and competition in the sector as a result, should together ensure a sound future for all Australia's telecommunications providers.

53 Competitive Carriers Coalition, Submission 48, p. 7-8. Similarly on consultation Unwired Australia, Submission 55, p. 9; Macquarie Telecom, Submission 69, p. 2.

54 Foxtel, Submission 98, p. 6.

Chapter 3

Access, competition and consumer safeguards

3.1 The bill proposes changes to parts XIB and XIC of the Trade Practices Act 197 4 administered by the Australian Competition and Consumer Commission (ACCC).

Access and anti-competitive conduct regimes

3.2 Part XIB of the Trade Practices Act 1974 (TPA) prohibits a service provider with a substantial degree of market power from engaging in conduct which has either the effect or purpose of substantially lessening competition. 1 Part XIB also contains provisions for the ACCC to issue a competition notice if it believes a carrier or carriage service provider is engaging in anti-competitive conduct.

3.3 The bill proposes two changes to Part XIB. First, the bill seeks to clarify the scope of ACCC intervention in instances of perceived anti-competitive conduct relating to content services. 2 This has arisen due to concerns that current practices, involving the bundling of content access with telecommunications services, may constitute anti-competitive conduct. 3 The government's position is that the current prov1s10ns do not specify whether content services, as defined in the

Telecommunications Act 1997, are covered by Part XIB.4

3.4 Second, the bill seeks to streamline the competition notices process to reduce delays. The consultation process, a statutory requirement in the competition notices process, has been criticised on the grounds that it is open to manipulation by parties intentionally drawing out negotiations to secure a competitive advantage. 5 The government is seeking to reduce delays currently penalising the victims of alleged anti -competitive conduct. 6

Inclusion of content services

3.5 Item 158 amends section 151AF to clarify that a telecommunications market, for the purpose of part XIB, includes content services as defined in the

Telecommunications Act 1997.

Explanatory Memorandum, pp. 53-54.

2 Explanatory Memorandum, pp . 53-54.

3 Explanatory Memorandum, pp. 53-54.

4 Explanatory Memorandum, pp . 53-54.

5 Explanatory Memorandum, pp . 54-55.

6 Explanatory Memorandum, pp. 54-55.

3.6 Content services include broadcasting services, online information services and online entertainment services that are currently offered as part of bundled packages by service carriers and carriage service providers. 7

3. 7 Optus supported the change. It said:

The opportunity exists for content especially that acquired on an exclusive basis, to be used for anti-competitive purposes through bundling with telecommunication services. It is appropriate, therefore, that content should be subject to the anti-competitive conduct provisions. 8

3.8 On the other hand, Foxtel disagreed with regulating access to content, on the grounds that this 'will constitute an inappropriate interference with the economic rights ofrights holder and content providers.'9 BT Investment Management argued that:

the ACCC is shaping-up to get into pay TV issues and on line content issues which may well have implications beyond Telstra ...

The ACCC already has wider discretionary powers over conduct in the telecommunications industry than apply in other industries. The ... proposed changes listed above increase regulatory uncertainty which is not in the long term interests of end users because it inhibits competition and increases risks in making investment. 10

3.9 The Government argues that, on the contrary, the reforms will increase regulatory certainty. It has reasoned that inclusion of content services is advisable since:

it is unclear whether Part XIB applies to content services supplied by carriers and carriage service providers. Clarifying the scope of Part XIB will increase regulatory certainty and reduce the risk of protracted legal disputes on this issue. 11

3.10 FreeTV agreed that the government's proposed reforms would increase . 12

certamty.

Changes to the competition notice-regime

3.11 The bill proposes repealing provisions that require the ACCC to consult the affected provider before issuing a Part A competition notice. 13 It would expressly

7 Explanatory Memorandum, pp 55 -56.

8 Optus, Submission 47, p. 8. Similarly Australian Telecommunications Users Group, Submission 44, p. 7. Austar, Submission 71, p. 5.

9 Fox tel, Submission 98, p. 16-17.

10 BT Investment Management, Submission 74, p. 7.

11 Explanatory Memorandum, p. 4.

12 FreeTV, Submission 72, p. 3.

remove any common law obligation on the ACCC to observe requirements of procedural fairness in relation to issuing a Part A competition notice. 14

3.12 The Government supports this change on the grounds that ' ... the consultation process prior to the issuing of a competition notice can delay enforcement action ... .'

These delays may lead to irreversible damage to the parties that are affected by any alleged anticompetitive conduct. ... [Removing the requirement of procedural fairness] will deny the party alleged to have taken part in anti competitive conduct the ability to delay the ACCC's enforcement activities on procedural grounds. The focus for both parties will therefore be on resolving the alleged illegal conduct, rather than on litigation aimed at

challenging the processes followed by the ACCC. The competition notice can be lifted at any time if the ACCC is satisfied that the allegation of improper conduct is mistaken, or the situation has been corrected.

If the ACCC commences court proceedings to enforce a Part A competition notice, the ACCC would still have to prove to the court that the competition rule had been breached by the alleged offender. 15

3.13 Telstra submitted that these changes exempt the ACCC from procedural fairness obligations without policy justification:

As a model litigant, the ACCC should at all times be required to meet an even higher standard of procedural fairness .. .. a competition notice is an administrative instrument. If used incorrectly, it is potentially damaging, hence the need for proper administrative process and administrative Jaw protections. If not, how can any investor have confidence that the power

will not be misused? ... the changes to Part XIC and Part XIB contained in the Bill will significantly increase regulatory uncertainty by allowing unfettered regulatory discretion. This will not provide the industry with the guidance and clarity it requires during a period of significant transition.

3.14 Other submissions generally supported the changes to Part XIB. 17 The ACTU

supported the reform 'because it will prevent those being issued with the notice from being able to delay the process'. 18 Similarly, Pipe Networks pointed out that the change would 'ensure that Telstra's focus is on remedying its anticompetitive conduct

13 A Part A competition notice states that the provider has engaged in certain anti-competitive conduct. A Part B competition notice states that the provider has contravened the competition rule (that is, the prohibition on anti-competitive conduct) - sections 151 AKA, 151AL. The two types of notice have different effects in any subsequent legal proceedings. There is no requirement for consultation before issuing a Part B competition notice. See Explanatory Memorandum, p. 53ff.

14 Item 159, amendments to section 151AKA of the Trade Practices Act.

15 Explanatory Memorandum, p. 4; similarly p. 54-55.

16 Telstra, Submission 88, p. 4, 11.

17 For example Optus, Submission 47, p. 8; Free TV, Submission 72 , p. 3.

18 ACTU, Submission 52, p. 5.

rather than disputing the process by which those notices were issued'; 19 iiNet argued that the proposed changes to Part XIB in fact did not go far enough, asserting that the ACCC should be able to issue binding rules of conduct in relation to anti-competitive conduct. 20

Changes to part XIC of the Trade Practices Act

Background on the access regime

3.15 Part XIC of the Trade Practices Act 1974 (TPA) contains the

telecommunications access regime. Under this regime, the ACCC may 'declare' specific telecommunications services. A telecommunications provider that supplies the declared service (an access provider) is obliged to supply it to other telecommunications service providers (access seekers) on request (subject to certain exceptions).

3.16 The terms on which a declared service is supplied are determined by agreement between the access provider and the access seeker. Failing this, the terms are as specified in:

â¢ an access undertaking previously lodged by the access provider and accepted by the ACCC (if there is one); or

â¢ in the absence of a relevant undertaking, a determination by the ACCC following arbitration.

3.1 7 This is known as the negotiate-arbitrate model.

3.18 The explanatory memorandum specifies that this approach was chosen over more direct methods of setting access terms in order to encourage market-based outcomes. However, determining terms and conditions of access under Part XIC has proven to be time-consuming and litigious. Since the start of the Part XIC regime in

1997, there have been 157 telecommunications access disputes notified, compared with three in other sectors. At March 2009, the ACCC was considering 51 access disputes, all involving Telstra. 21

Changes to the access regime

3.19 The bill proposes reforms of the regime to allow the regulator to set up-front prices and non-price terms for declared services. The ACCC will issue 'access determinations' for each declared service, with terms and conditions (and any appropriate exemptions or special rules) usually set for a period between three and five years. The regulator will also be able to determine ' fixed principles' , such as how depreciation is treated, to remain in force over a longer period if necessary.

3.20 The ACCC will have the power to make binding rules of conduct for the supply of declared services which would apply either in addition to, or as a variation

19 Mr D. Clapperton (Pipe Networks), Proof Committee Hansard, 13 October 2009, p. 25.

20 iiNet, Submission 70, attachment, p. 6-8.

21 Explanatory Memorandum, p. 45-6.

of, an access determination. The duration of binding rules of conduct would be limited to a maximum of 12 months. The government argues that this will allow the regulator to act quickly on issues affecting the supply of retail services. It is envisaged that binding rules of conduct will only be used on an occasional basis. 22

3.21 Access providers and access seekers may also make 'access agreements'. An access agreement would override an access determination or binding rules of conduct. 23

3.22 The bill also removes the right of appeal to the Australian Competition Tribunal against certain decisions of the ACCC under Part XIC ('merits review'). 24 The explanatory memorandum states that:

merits review of ACCC decisions under the [Trade Practices Act] can contribute to delays and regulatory uncertainty. This is problematic in the telecommunications sector which is characterised by rapid technological advances and changing market conditions.

3.23 The ACCC's decisions will still be liable to judicial review by the Federal Court under the Administrative Decisions (Judicial Review) Act 1977. 25 Substantial support for the proposed reforms was demonstrated in stakeholder responses to the Na tional Broadband Network: Regulatory Reform for 21st Century Broadband April

2009 discussion paper. 26

Comments in submissions on Part XIC changes

3.24 Submissions to this inquiry generally agreed that the negotiate-arbitrate model has failed. They supported the proposed changes, with some provisos or suggestions noted below. For example Optus said:

The negotiate/arbitrate model under Part XIC has proven to be a failure . It has provided Telstra with both the incentive and means to game the system to its advantage, which has resulted in a merry-go-round of regulatory disputes, delay and legal challenges. 27

3.25 Similarly the Australian Telecommunications Users Group said:

22 Item 71ff, amendments to the Trade Practices Act 1974. Explanatory Memorandum, p. 3.

23 Item 116, proposed section s 152AY, 152BE. Explanatory Memorandum, p. 138.

24 Item 108 repeals the right of review by the Tribunal of the ACCC's decision in relation to an application for exemption from standard access obli gation s. Item 128 repeals the ri ght of review by the Tribunal of the ACCC's decision in relation to accepti ng or varying an access undertaking.

25 Expl anatory Memorandum, p. 137.

26 Explanatory Memorandum, p. 51.

27 Optus, Submission 47, p. 8.

ATUG supports these amendments to Part XIC to provide more streamlined and timely outcomes which will be of benefit to end users by improving choice. 28

3.26 Telstra supported changes to Part XIC of the Trade Practices Act 'that will more closely align it with the access pricing arrangements used in other industries'. However, Telstra argued that the bill 'contains none of the explicit and inherent safeguards for access providers present in other regulatory frameworks'. Telstra argued that the bill gives the regulator much greater discretionary power than in those other industries:

This Bill is highly unusual in that it gives the regulator significant powers without setting out very careful prescriptions on how those powers should be used.

3.27 Telstra also argued that the changes to Part XIC need to be deferred until clear policy guidance to the regulator, along the lines of other industries, is included. 29

3.28 Foxtel preferred to retain the negotiate-arbitrate model, and did not think that the ACCC should be able to make upfront determinations. 30 BT Investment Management argued that the changes 'are unreasonable and give a role to the ACCC beyond what is reasonable for an independent regulator.'

3.29 The department responded that 'there are quite a lot of criteria set out that the Commission is required to take into account [in making an access determination] ... '

For example, under proposed new provision 152BCA, the commission has to take into account 'whether the determination will promote the long-term interests of end users'. That test requires it to have regard to the extent to which the determination will promote competition, achieve any-to-any connectivity and encourage efficient use of and investment in telecommunications infrastructure, having regard to feasibility of supply of services, the legitimate commercial interests of the suppliers of the services and the incentives and risks for investment. 32

3.30 While there was widespread support for Part XIC reform, there were some specific proposals and concerns raised regarding the relationship between access agreements and access determinations; the treatment of exemptions from standard access obligations; the transitional provisions; the removal of merits review; and the need for changes to the regime governing access to facilities.

28 Australian Telecommunications Users Group, Submission 44, p. 7. Other supporters of the changes (some with provisos or suggestions) were Mr J. Horan (Primus Telecom), Proof Committee Hansard, 13 October 2009, p. 25; ACTU, Submission 52, p. 2; Macquarie Telecom, Submission 69, p. 3; Austar, Submission 71, p. 5; Primus Telecom, Submission 76, p. 3.

29 Telstra,_Submission 88, p. 3.

30 Foxtel, Submission 98, pp. 2,7, 8.

31 BT Investment Management, Submission 74, pp 1, 8.

32 Mr R. Buettel (Department of Broadband, Communications and the Digital Economy), Proof Committee Hansard, 14 October 2009, p. 28.

Access agreements to prevail over access determinations

3.31 Several submissions were concerned that allowing access agreements to override the ACCC's access determinations would be at risk of abuse by Telstra's market power. For example Pipe Networks argued that the proposals are flawed since 'they allow access seekers' existing contractual agreements with Telstra to trump future terms of access set by the ACCC':

It would be dangerous to allow carriers and access-seekers to contract out of Regulated Terms because of the significant risk that carriers (and especially Telstra), by virtue of its position and superior bargaining power, could exert leverage upon access seekers to induce them to contract out of the Regulated Terms, to the detriment of competition. 33

3.32 Pipe Networks argued that the bill's scheme in which precedence goes to access agreements, in a situation of market power, without access to arbitration, could lead to a result worse than the status quo. 34

3.33 Several proposals were put forward in response to this issue. The Competitive Carriers Coalition suggested that access seekers with commercial agreements should be able to revert to ACCC-determined conditions on application. Macquarie Telecom suggested that an access agreement should only prevail over an access determination where the inconsistency is for the benefit of the access seeker. iiNet made similar

arguments. 35

3.34 The department commented that 'the relationship between access determinations and access agreements will also be given further consideration in the light of submissions provided by a number of parties'. 36

Treatment of exemptions from standard access obligations

3.35 Section 152AS of the Trade Practices Act allows the ACCC to grant exemptions from the standard access obligations for declared services via a disallowable instrument. The standard access obligations cover:

â¢ Supply of active declared service to service provider;

â¢ Interconnection of facilities;

â¢ Provision of billing information;

â¢ Timing and content of billing information;

â¢ Conditional-access customer equipment, and

33 Pipe Networks, Submission 51 , p. 2,6 & Proof Committee Hansard, 13 October 2009, p. 26 . Similarly D. Foreman (Competitive Carriers Coalition), Proof Committee Hansard, 14 October 2009, p. 8.

34 Pipe Networks, Submission 51, p. 6.

35 Competitive Carriers Coalition, Submission 48, p. 9-10. Similarly Macquarie Telecom, Submission 69, p. 4. iiNet, Submission 70, attachment, p. 3. Internode, Submission 73, p. 2.

36 Department of Broadband, Communications and the Digital Economy, answers to questions taken on notice.

â¢ Exceptions. 37

3.36 The bill repeals section 152AS. The need for ordinary exemptions is removed because the ACCC will be able to include provisions in an access determination which remove or limit the obligation of carriers or carriage service providers to comply with some or all of the standard access obligations. Anticipatory exemptions would still be available. 38

3.37 In their submission to the inquiry, Unwired Australia noted that:

The application of exemptions to defined geographic areas has been of some recent interest and litigation. There is particular concern in some quarters about the appropriateness of these exemptions, and, in particular, whether the legislative process as subsequently applies sufficiently requires the ACCC to consider the effect on all markets. 39

3.38 Unwired Australia recommended that the bill be amended so that an access determination must specify terms and conditions for all declared services, and that the determination not be able to exempt providers from offering the declared service. 40

3.39 The department responded that:

the bill continues to allow the ACCC to reduce regulation in a targeted manner, by providing that access determinations be able to exempt particular providers or classes of providers from having to provide access to the declared service. 41

Concerns with transitional provisions

3.40 Under the bill the ACCC, if it has started a public inquiry about a proposed access determination, may terminate any arbitration on foot about the related declared service. 42 Access seekers were concerned that this could create injustice. iiNet suggested that the trigger for terminating an arbitration should be the making of the access determination, not the starting of a public inquiry. Macquarie Telecom suggested that the price terms in the access determination should be backdated to when the access seeker started negotiations with the access provider.

37 Trade Practices Act 1974, sections 152AR, 152AS.

38 Item 94. Item 116, proposed paragraph 152BC(3)(h). Expl anatory Memorandum pp. 51 , 134. An anticipatory exemption applies to a service that is not yet declared at the time the exemption is made.

39 Unwired Australia, Submission 55, p. 13.

40 Unwired Australia, Submission 55, p. 13.

41 Department of Broadband, Communications and the Digital Economy, answers to questions taken on notice.

42 Item 154(12).

43 iiNet, Submission 70, attachment, p. 4. Macquarie Telecom, Submission 69, p. 4.

End of merits review

3.41 The bill repeals provision for merits review of certain ACCC decisions by the Australian Competition Tribunal. The intention of removing merits review in some circ*mstances is to reduce delays and regulatory uncertainty. The ACCC's decisions will still be liable to judicial review by the Federal Court under the Administrative Decisions (Judicial Review) Act 19 77. 44

3.42 Submissions from Telstra's competitors mostly supported this move. For example Optus said:

Today almost all commercial negotiations end up in a dispute before the ACCC, with these disputes in tum appealed to the Australian Competition Tribunal or the Federal court .. . Optus also argued for the removal of the provisions relating to the lodgement of ordinary access undertakings and merits based appeal processes, on the basis that each of these arrangements

has been largely used to frustrate and delay the regulatory decision making processes. 45

3.43 On the other hand Vodaphone Hutchison Australia, while agreeing that the negotiate-arbitrate model should be abolished, thought that the provisions give too much discretion to the ACCC:

We do not consider that the judicial review process is sufficient for promoting accountability in the Commission's decision. The threshold for identifying errors in law is too high ... We consider that an independent . . . 46

ments rev1ew 1s necessary ...

3.44 Telstra opposed the end of merits in context of the regulator's wide discretion and the importance of its decisions:

Typically, such rights are only removed where regulators have limited discretion. That is not the case here. Abolishing appeals on the merits of the ACCC's decisions only increases regulatory uncertainty, especially in view of the dramatically expanded powers. Telecommunications will be the only national utility industry in which there is no merits-based review of regulator's access pricing decisions. 47

3.45 Foxtel suggested a compromise approach, retaining a more limited form of merits review with time limits and restrictions on the information able to be considered. 48

44 Explanatory Memorandum, p. 13 7.

45 Optus, Submission 47, p. 8. Similarly Australian Tel ecommunications Users Group, Submission 44, p. 7.

46 Vodaphone Hutchi son Australia, Submission 40, pp. 1-2.

47 Telstra, Submission 88, p. 10. Similarly BT Investment Management, Submission 74 , p. 8.

48 Foxtel , Submission 98, p. 14.

Access to facilities

3.46 A regulatory framework aimed at ensuring fair access for all

telecommunications providers to telecommunications transmission towers and underground facilities is legislated in Schedule 1 of the Telecommunications Act 1997. Pipe Networks noted that this facilities access regime 'exists independently of the regime for access to ' declared services' in Part XIC of the Trade Practices Act 1974' and that 'Both Schedule 1 and Part XIC presently adopt a 'negotiate-arbitrate' model'. 49 Pipe Networks argued that the negotiate-arbitrate model under the Telecommunications Act 'suffers from the same failings as that in Part XIC' and that access to facilities legislated in Schedule 1 was potentially more relevant to the National Broadband Network (NBN) than that under Part XIC:

Of the nine services currently declared under Part XIC, six of those services relate to services supplied using legacy copper cables which may be rendered obsolete by the currently preferred Fibre-To-The-Premises (FTTP) model for the National Broadband Network (NBN).

In contrast, access to duct will be a vital component of the NBN. Access to telecommunications towers (for the deployment of fourth generation wireless services to provide coverage of 'gaps' in FTTP infrastructure) is also likely to be a significant part of the NBN. Access to both these types of facility is regulated by Schedule I and not Part XIC. 50

3.47 On that basis, Pipe Networks and Macquarie Telecom both recommended that the negotiate-arbitrate model under Schedule 1 of the Telecommunications Act should also be amended by the bill. 51 The department commented that regulation of access to telecommunications facilities is being considered separately. 52

Other matters

3.48 iiNet was concerned that the provlSlons about access determinations and binding rules of conduct may not allow urgent action to add to the terms of an existing access determination which does not cover the field. It suggested that the ACCC's power to make interim determinations, or binding rules of conduct, should be extended to cover this situation. 53

3.49 iiNet suggested that when holding a public inquiry on a proposed access determination, the ACCC should be able to consider all previous inquiries under Part XIC, not only previous inquiries on access determinations. 54

49 Pipe Networks, Submission 51, p. 3.

50 Pipe Networks, Submission 51, p. 4.

51 Pipe Networks, Submission 51 , p. 4; Mr Matt Healy, National Executive, Regulatory and Government, Macquarie Telecom, Committee Hansard, 13 October 2009, p. 26.

52 Department of Broadband, Communications and the Digital Economy, answers to questions taken on notice.

53 iiNet, Submission 70, attachment, p. 4.

54 iiNet, Submission 70, attachment, p. 4.

3.50 Unwired Australia suggested that the ACCC should be able to make fixed principles determinations that are to operate across all access determinations during their period of currency. 55

Committee comment on changes to the Trade Practices Act

3.51 The committee accepts the strong evidence of the need to reform the

negotiate-arbitrate model, and notes that most submitters support the bill's proposals.

3.52 The committee believes that some issues raised by submitters, particularly access-seekers, may present opportunities to further improve the regulatory framework. In the time available, the committee was not able to form a view about the detail of some of these proposals and how any amendments might be framed. Areas in which the committee thought there was a particular need to carefully examine submitter concerns were the circ*mstances under which access agreements will prevail over access determinations, and the retention of the negotiate-arbitrate model in the facilities access regime in Schedule 1 of the Telecommunications Act 1997.

Consumer safeguards

3.53 Numerous submitters were supportive of the proposed changes to consumer safeguards. 56 ATUG voiced their support for 'stronger Consumer Safeguards and the new approach of using performance benchmarks', whilst Macquarie Telecom acknowledged that a 'consumer protection approach' would give consumers greater choice and control over their telecommunications.

3.54 The Australian Communications Consumer Action Network (ACCAN) was supportive of the government's move to address the vertical integration of Telstra58 but was concerned that the bill did not go far enough with regard to consumer safeguards. 59 ACCAN recommended that:

... the Telecommunications Legislation Amendment (Competition and Consumer Safeguards) Bill 2009 be amended to redefine the definition of the Standard Telephone Service and to re-frame the LTIE so as to better serve the interests of end-users, whether consumers or business.

55 Unwired Australia, Submission 55, p. 12.

56 See Mr Andrew Sheridan, Optus, Proof Committee Hansard, 13 October 2009, p. 17; Mr John Horan, General Manager, Legal and Regulatory, Primus Telecom, Proof Committee Hansard, 13 October 2009, p. 26; Mr Matt Healy , National Executive, Government and Regulatory, Macquarie Telecom, Proof Committee Hansard, 13 October 2009, p. 26; Mr David Havyatt,

Manager, Regulatory and Corporate Affairs, Unwired Australia, Proof Committee Hansard, 13 October 2009, p. 26. 57 Mr Matt Healy, National Executive, Government and Regulatory, Macquarie Telecom, Proof Committee Hansard, 13 October 2009, p. 25.

58 Mr Allan Asher, Chief Executive Officer, ACCAN, Proof Committee Hansard, 13 October

2009, p. 53.

59 ACCAN, Submission 91 , p. 3.

60 ACCAN, Submission 91, p. 5.

3.55 ACCAN also proposed that the compensation payment mechanism bt automated, to increase the incentive on service providers to respond to problems in â¢ timely manner:

Service guarantees, standards, benchmarks and all that are a good idea, but I would still leave in there a sufficient incentive for suppliers to get things right by providing for compensation payments where they fail to do what they promise to do-where they fail to tum up to install, to repair and things like that. These days most people are in the workforce or getting back into the workforce, and it is actually quite costly to have time off work to be at home, and doubly frustrating when technicians do not come, so it is appropriate for there to be compensation payments. In order to be efficient, I would make them automatic so that a service failure automatically gives rise to an obligation on the supplier to make those compensation payments without a consumer having to go through a whole bureaucracy to establish that. 6 1

3.56 The committee notes the government appears to be aware of this issue, andi has responded to it in the current proposals through increased clarity and enforcement of penalties. The explanatory memorandum comments that 'by increasing civill penalties in some cases, carriers will be more likely to comply with the rather than pay compensation'. 62 The committee also draws attention to the fact that the explanatory memorandum specifically says that more extensive actions to expand . the scope of the universal service regime could occur in future. 63

Conclusion

3.57 The committee believes that the bill in its current form provides important and . timely reforms to Australia's telecommunications regulatory regime that will be of' benefit to providers and consumers. While further examination of issues raised above is warranted, the committee believes that the passage of the bill should not be delayed. In particular the committee notes the view, held by some stakeholders, that the legislation should be delayed until the results of the National Broadband Network implementation study are known. However the regulatory regime will operate regardless of the results of that study, and must be improved for consumers and carriers as soon as possible. The National Broadband Network should not be used as â¢ an excuse to delay reforms and to increase regulatory uncertainty.

3.58 Based on the answers to its questions on notice, the committee believes the government has recognised the concerns of stakeholders outlined above, and is examining them carefully. The committee asks that the minister address these concerns during consideration of the bills in the Senate.

61 Mr Allan Asher, Chief Executive Officer, ACCAN, Proof Committee Hansard, 13 October 2009, p. 54.

62 Explanatory Memorandum, p. 74.

63 Explanatory Memorandum, p. 74.

Recommendation 1

3.59 The committee recommends that the bill should be passed.

Senator Anne McEwen Chair

Coalition Senators Dissenting Report

Coalition Senators have serious concerns about the proposals contained in the Bill and the Government's claims about the urgency of the measures.

It is concerning that the majority report has almost entirely ignored the weight of the evidence presented to the Committee about this legislation. The vast majority of submissions to this inquiry are opposed to the provisions in the Bill tha1 deny Telstra access to spectrum unless it enters a structural separation undertaking. The hostility to this legislation is evident throughout the submissions encapsulated by Synstrat Management who state that the "proposed legislation is morally abhorrent". 1

National Broadband Network (NBN) There is no mistaking that this Bill is primarily about ensuring the Government's proposed National Broadband Network can work by forcing the participation of Telstra.

Labor' s attack on Telstra and its shareholders via Part 1 of Schedule 1 of this Bill, is a form of legislative blackmail that we believe can only be seen as an admission that its new NBN policy cannot be implemented without effectively re-nationalising Telstra's fixed-line network.

Labor doesn' t want its NBN to have to compete with Telstra; it wants its NBN to be a majority Government-owned monopoly. The Government recognises that Telstra's fixed line customers are its most valuable asset and requires their migration onto the NBN in order for it to have any chance of being viable.

The Second Reading Speech does not disguise this aim. In relaying the "options" open to the Company, Minister Albanese told the House that: Alternatively, it may involve Telstra progressively migrating its fixed line traffic to the NBN over an agreed period of time and under set regulatory

arrangements and for it to sell or cease to use its fixed line assets on an agreed basis. This approach will ultimately lead to a national outcome where there is a wholesale only network not controlled by any retail company-in other words, full structural separation in time. Such a negotiated outcome would be consistent with the wholesale only, open access market structure to be delivered through the National Broadband Network. 2

The evidence presented to the Committee from those supportive of the legislation, left Coalition Senators in no doubt that these legislative proposals are inextricably related to the NBN.

Synstrat Management, Submission, p 1 2

A. Albanese, House of Representatives Hansard, 15 September 2009

The Competitive Carriers Coalition CEO, David Forman, confirmed this during the Senate Committee hearing when he said in response to a question from Senator Birmingham:

If you suggested to me that the NBN was likely to succeed in the absence of this legislation, then I would suggest that was a pretty big bet. 3

Maple-Brown Abbott describe the bill as:

a high risk strategy to deliver the NBN and more competition in the telecommunications sector. It runs the risk of damaging Australia's sovereign risk rating as well as stifling investment and innovation in the telecommunications sector. It places too much power in the hands of the ACCC. 4

Significance of the NBN Implementation Study Minister Albanese stated during the second reading speech that:

The establishment of the NBN will fundamentally transform the competitive dynamics of the communications sector in this country. NBN Co . will be a wholesale only telecommunications provider with open access arrangements. 5

The NBN Implementation Study is due in February 2010. The Implementation Study is set to provide clarity on how the NBN roll-out will actually occur, how much it will cost taxpayers, how long it will take and how much consumers can expect to pay for the NBN's services.

Senator Conroy has previously outlined to the Committee the intent of the Government's Implementation Study. During Budget Estimates, he told the Committee that:

The government will shortly commence its implementation study, which will, among other things, work through the detailed network design and rollout schedule for the NBN. It will also investigate the extent of coverage that will be achieved by FTTP, next generation wireless broadband and satellite elements. That implementation study is due for completion in early 2010.

The Coalition has asked a range of questions about the NBN roll-out and each time the Government has used the guise of the Implementation Study to avoid providing further information. Some examples include:

Hearing, 14 October 2009, ECA 10 4

Maple-Brown Abbott, Submission, p 3 5

A. Albanese, House of Representatives Hansard, 15 September 2009 6

ECA Committee, Budget Estimates Hansard, 26 May 2009, ECA 126

â¢ Pricing

Senator Conroy, Senate Question Time 14 May 2009: The government recognises that affordability is an important factor that will drive take-up of services on the NBN. NBN prices cannot be structured without considering the prices people pay today for comparable services. Pricing levels on the National Broadband Network will be a key issue considered in the Implementation Study. 7

Budget Estimates, 26 May 2009:

Senator MINCHIN- Can you guarantee that the wholesale fixed line prices will be no higher than they currently are? Senator Conroy-That is why we are having an implementation study. 8

â¢ Costs and Financing

Budget Estimates, 26 May 2009: Senator MINCHIN- Thank you. I turn to the costing. We did touch on this $43 billion and the basis on which you came to that costing. Are you able to give the committee at least some breakdown of that $43 billion in terms of wages, equipment, capital and expenditure?

Senator Conroy-The implementation study is examining most of those issues.9

In an answer to a Question on Notice asked by Senator Abetz, Senator Conroy provided the following answer on 17 August 2009 10 :

What is the total Federal Government To be determined as part of the

contribution to its cost? Government' s consideration of the

Implementation Study.

If applicable, what other funding sources Private sector funding will be sought to are involved and what lS their invest in the company established to build contribution to the project cost? and operate a new National Broadband Network. Strategies to maximise private

sector investment will be investigated as part of the Implementation Study which will report in early 2010 .

Is the project to be completed m The rollout will be phased. The Tasmania stages/phases; if so, what is the timing element will commence first.

Senate Hansard, 14 May 2009 8

ECA Committee, Budget Estimates Hansard, 26 May 2009, ECA 143 9

ECA Committee, Budget Estimates Hansard, 26 May 2009, ECA 116 10 Senate Hansard, 14 August 2009

and cost of each stage/phase? Negotiations are currently in progress.

Projects under the $250 million Regional Backbone Blackspots Program are expected to commence in the first half of 2009-10.

What cost benefit or other modelling was done before the project was approved?

â¢ Rural and Regional Australia

The phasing and associated costs for the full rollout will be developed as part of the Implementation Study.

Costings were developed in consultation with and validated by the Department of Finance and Deregulation. The

Government has commenced the process to undertake a detailed Implementation Study that will include business case modelling.

ECA Committee, Budget Estimates, 26 May, 2009: Senator BIRMINGHAM-Are you basically saying when you talk about the NBN process-which we have learnt in the past 18 months or so, of course, is a bit like the piece of string that never ends-that regional Australia could be waiting 1 0-plus years to see the remaining $325 million spent anywhere? Senator Conroy-The regional review recommended to government that responses relating to the NBN are held until the outcome is fully known. Senator BIRMINGHAM-How do you define what the outcome being fully known of the NBN is?

Senator Conroy-At this stage, the final outcome is not known. Senator BIRMINGHAM-That is plainly obvious for all to see. Senator Conroy-It is a matter of ongoing discussions between ourselves and the Tasmanian government. It is a matter of an ongoing tender process to be commenced shortly for the Regional Backhaul Blackspots program. It is an ongoing process of the implementation study which will report in February next year. It is an ongoing discussion with satellite, wireless and fibre owners at the moment to meet the national broadband network proposal. All of those are ongoing. What we have said is that the project will take up to eight years. We have not tried to pretend that this is anything other than the largest infrastructure project in Australia's history.

Senator BIRMINGHAM-Will the outcome be known at the end of the scoping study in February next year or will it not be known for eight years when all your targets are met?

Senator Conroy-It is an implementation study. Senator BIRMINGHAM-That is right, you are not doing a scoping study. Senator MINCHIN-No, they are not bothering with that. Senator BIRMINGHAM-Sorry about that. Senator Conroy-It is an implementation study which will recommend to the then board how to implement our proposal to round out all of those issues, which have been legitimately raised by not only yourselves but also many in the sector. We are not going to rush simply because you are demanding we have an outcome before we actually have it, just because you are demanding it. 11

Senator BIRMINGHAM-No, at what point in all of these different processes will the Glasson requirement for an outcome to the NBN be met? What do you define to be the outcome?

Senator Conroy-We will see what the implementation study provides to us and then we might be in a better position to make an assessment along the lines that you are calling for. At that point we will be able to make an assessment of the question you are asking.

Senator FISHER-Will the study have a map of who will be covered, where and why? Senator Conroy-The implementation study is designed to generate the configuration of the network.

â¢ Cabling, aerial deployment, shareholdings

Senate Question Time, 16 June 2009: Senator Minchin: I ask the minister what assumption was made regarding the degree to which aerial cabling would be used in relation to the government's cost estimate of $43 billion for its NBN mark 2. Does the minister agree with Optus that the estimated cost of the project-that

is, $43 billion-will mean at least 70 per cent aerial deployment nationwide? Senator Conroy: but let me be clear: we have said we are having an Implementation Study to go through all of these issues. We have said that from day one, and we do not resile from that. We are in negotiations which will allow us to be definitive on that. Depending on whether one

11 ECA Committee, Budget Estimates Hansard, 26 May 2009, ECA 34-35 12 ECA Committee, Budget Estimates Hansard, 26 May 2009, ECA 35 13 ECA Committee, Budget Estimates Hansard, 26 May 2009, ECA 126

company or another company is involved, we will change this . 14

equatwn.

ECA Committee, Budget Estimates, 26 May, 2009:

Senator MINCHIN-The government has indicated a minimum shareholding of 51 per cent. Has the government indicated a maximum shareholding in this company? Currently it owns. all the shares. Mr Lyons-The government has indicated that there will be retail ownership caps yet to be determined. Other issues relating to the structure of the company will be finally determined after the implementation study. 15

ECA Committee, Supplementary Budget Estimates, 19 October 2009

Senator ML"lCHIN-So, up to $2 billion. At this stage, the maximum equity that the government will put into NBN Co. is $2 billion? Senator Conroy-Under that mechanism, yes. Senator MINCHIN-There has been no other decision to make any other moneys available, has there? I am not saying there might not be in the future, but to this point this is the only mechanism?

Senator Conroy-We have indicated that we will issue bonds. Senator MINCHIN-No, I am talking about equity. Senator Conroy-NBN Co. will, potentially, issue bonds. What was the time profile of the other equity? Mr Heazlett-It is over a number of years. Senator Conroy-Over a number of years. Mr Heazlett-Itis an issue that will also be dealt with as part of the implementation study as the appropriate mechanisms to utilise. 16

All this evidence points to a Government that announced a massive spending proposal without any detail to support it.

And despite the fact they have been unable, or unwilling to answer a single question about the NBN roll-out, they expect the Parliament to tick-off on significant changes to the telecommunications sector in a truncated period of time.

The Minister's Second Reading speech indicated that the measures are "designed to position the telecommunications industry to make a smooth transition to the NBN environment as the new network is rolled out. " 17

14 Senate Hansard, 16 June 2009 15 ECA Committee, Budget Estimates Hansard, 26 May 2009, ECA 112 16

ECA Committee, Budget Estimates Hansard, 19 October 2009, ECA 66 17 Albanese, House of Representatives Hansard, 15 September 2009

Yet, until we know how this network will be rolled out, it is the view of Coalition that it is premature for the Parliament to consider the reforms that affect the structure and operation of Telstra.

Urgency before Christmas In answer to Questions from Senator Ian Macdonald at Estimates on 19 October 2009 I '

the following exchanges took place: 8

Senator IAN MACDONALD-Telstra told us the other day that they are hopeful of coming to some negotiated settlement with you shortly, and I am wondering if you can update us-without, of course, giving away anything that is commercial-in-confidence-on what is the necessity for the bill that is currently before the parliament being passed before Christmas, and how are the negotiations going?

Senator Conroy-As I have said many times publicly, I am not going to be giving a day-by-day description of how negotiations m·e going other than to generally say-Senator IAN MACDONALD-We do not want it every day,just this one day.

Senator Conroy-Today is pat1 of every day. Senator IAN MACDONALD-All right.

Senator Conroy-! would say what I have said consistently, which is that discussions are constructive and positive. In terms of wanting to resolve it before Christmas and pass the legislation, it is very simple; there is a great deal of regulatory overhang on the Telstra share at the moment and Telstra

shareholders are very concerned about that. We are seeking to end the regulatory uncertainty around Telstra and the sooner that that can be done the better. We believe that dragging it into next year will not be to the benefit of the market as a whole or, importantly, Telstra shareholders.

Senator IAN MACDONALD-Of course, that is not Telstra' s view. I thought they were more into you-Senator Conroy-You asked me my view. I am giving you my view.

Senator MINCHIN-Are you telling Telstra what is good for Telstra? Senator IAN MACDONALD-Telstra shareholders-that is the point. Wouldn't Telstra know what is best for Telstra shareholders? Senator IAN MACDONALD-Could you answer the question? Senator Conroy-the Telstra share price dropped nearly 40 per cent.

Senator IAN MACDONALD-So you know what is better for Telstra shareholders? Senator Conroy-No, I am simply making the point that at the moment the market would say to you, if you go and read any analyst's report, that there is

18 ECA Committee, Budget Estimates Hansard, 19 October 2009, ECA 68-69

an enormous amount of regulatory overhang and if that were cleared up by Christmas I am sure every Telstra shareholder would be relieved. Senator IAN MACDONALD-That is not what the shareholder associations all told us. Senator Conroy-So they are now speaking on behalf ofTelstra shareholders! Senator IAN MACDONALD-Well, that is what they are; they are Telstra shareholders. Senator BIRMINGHAM-That is not what Telstra told us; they would expect to be speaking on behalf of their shareholders.

This exchange shows there is no real argument for passage this year and in fact, a delayed passage may well resolve many of the issues for both the Government and Telstra.

Structural Separation of Telstra As recently as May 2009 the Minister told the Committee that he had never advocated structural separation of the Telstra:

Senator Minchin: I am asking you whether you would rule out forced structural separation? Senator Conroy: I am not advocating it. I have never advocated it. I think I can say that but -Senator Minchin: Interestingly you have never actually advocated separation, as far as I can tell. Senator Conroy: I have certainly never advocated structural separation, I do not believe. I think that is a true statement. What I have said, though, is that the existing regime is not satisfactory.19

Coalition Senators are concerned that the Minister's position changed so rapidly.

Coalition Senators note that Labor did not propose structural separation in its 2007election policy, nor has it ever before proposed breaking-up Telstra.

Coalition Senators believe that the proposals in the Bill to either impose functional separation and potentially prevent Telstra accessing advanced spectrum, or to structurally separate and still risk forced divestment in its HFC cable network and its Foxtel interests, are an extreme and unacceptable way of forcing a publicly listed company to the negotiating table.

These choices offered in the Bill appear to have been structured by the Government to offer little more than a 'Clayton's choice' . The Government is on the record as saying that it is their 'clear desire that structural separation occur voluntarily'. During this inquiry it became clear from the way the Department responded to questions about legal advice and compensatory risks faced by the Commonwealth that this choice has only been structured to reduce the legal risk to the Commonwealth. The Government

19 ECA Budget Estimates, 26 May 2009, ECA 162

will clearly use the full force of this Bill to force structural separation, ideally through the transfer of assets into its NBN, however possible.

Foxtel also raised their concern about the discretion given to the ACCC stating that the "Bill does not set any limits on the Commission's power to accept or reject an undertakingfor Telstra to divest its interest in its HFC Cable or Foxtel. "20

In relation to divestiture of assets, we believe that this is a matter for shareholders and the Minister should not be given the discretion to require such divestiture, or not, in connection with a structural separation undertaking.

In its submission to the NBN Regulatory Reform discussion paper, even the ACCC was not convinced of the merits of divestiture ofTelstra's HFC network in advance of the completion of the Implementation Study. The ACCC said in their submission:

Therefore, the ACCC considers that the size of the benefits that would flow from the divestiture would, in the longer term, depend on the way in which the NBN is implemented, including the nature of any involvement by Telstra in the NBN Co. 21

Spectrum Threat Of particular concern to Coalition Senators is the Bill ' s proposal to legislatively prevent Telstra from acquiring specified bands of spectrum which could be used for advanced wireless broadband services.

This can be seen as nothing more than attempted legislative blackmail given that the mobile and wireless market is highly competitive in Australia with Telstra's network competitors actually having the majority of the market share. 22

As many submissions to the Senate inquiry have pointed out, and as was explained by Telstra in its evidence to the Committee, denying Telstra future advanced spectrum will mean there is no upgrade path to a higher speed and capacity next generation network.

Given Telstra has the largest network in the country, in terms of geographical coverage, this is likely to have greatest impact on rural and regional customers. In its submission responding to the Government's regulatory reform discussion paper, the ACCC advised that "no specific legislative changes are required to address competition concerns in relation to the allocation of spectrum. "

As Telstra highlighted in their submission to the inquiry:

2 ° Foxtel Submission, p 6 21 ACCC Submission, NBN Regulatory Reform Discussion Paper, p 9 22

ACCC telecommunications reports 2007- 08 Report 1, 2009, p 33 23 ACCC Submission 'National Broadband Network: Regulatory Reform for 21 51 Century Broadband '

June 2009, p 84

Taking Telstra out of the market for next generation spectrum will make the mobile market less competitive and punish the telecommunications company that has not only led innovation but invested in the world's fastest mobile wireless network covering 2.1 million square kilometres.

Denying Telstra access to spectrum will undoubtedly hurt consumers, particularly those in rural and remote Australia, by depriving them of an upgrade path with reduced competition and innovation. It will put at risk Australia's place as a global leader in the mobiles market. 24

Former ACCC chair Allan Fels is reported as saying that if the Government was fully covered under the Trade Practices Act the spectrum threat would likely amount to an abuse of market power. 25

The Government itself in the Explanatory Memorandum of this Bill acknowledges that there could be a loss to taxpayers ifTelstra is not allowed to participate in spectrum auctions through reduced competitive tension. 26

And ifTelstra is unable to further upgrade its mobile network, this could reduce the incentive for its competitors to also invest in next generation upgrades of their mobile networks.

Synstrat Management view this legislative proposal as:

Legal trickery in attempting to coerce Telstra to divest its assets under threat of being forbidden from bidding for 4G frequency spectrum, and therefore curtailing the long-term competitiveness of its mobile telephone network is an unethical way for the government to conduct its business.

Sovereign Risk The Government cannot ignore the overwhelming concerns expressed by Telstra shareholders through this inquiry, nor can they ignore the concerns expressed by well respected investment and management firms about this heavy-handed legislation. Coalition Senators believe the evidence presented to the Committee raises serious concerns that the Government must address.

In its submission, the Australian Foundation Investment Company (AFIC) stated:

If the Parliament passes this legislation we think Australia's investment standing could be significantly diminished. Investors, particularly international investors, will perceive substantially heightened sovereign risk if the Australian Government can act arbitrarily in this way. 28

24 Telstra Submission, p 3 25 'New Telco 'Monopoly' faulted', The Australian, 17/09/09, p 2 26

Explanatory Memorandum, 44 27 Synstrat Management, Submission, p 1 28

Australian Foundation Investment Company, p 3

AFIC are not alone in their concern about this Bill. BT Investment Management Ltd expressed similar concerns about investment certainty in stating that: We consider that the Telecommunications Legislation Amendment (Competition and Consumer Safeguards) Bill2009 (the Bill) goes beyond

well established regulatory practice and undermines independent regulation of the telecommunications sector by the Australian Competition and Consumer Commission. Our concerns are that the proposed legislation creates additional and unnecessary regulatory risk and so complicates risk assessment for investment purposes and potentially raises sovereign risk for our Telstra share holding.

The Australian Shareholders Association also highlighted their concerns in their submission:

The ASA is concerned not just about the value destroying nature of the proposal for Telstra shareholders, but also about the implications for investment generally. International investors in particular will consider Australia to have a much higher level of sovereign risk if this Bill is passed

and the Government allowed to impose its will on a private company. Investors, both small and large will consider that the level of risk of Government or regulator intervention when investing in highly regulated industries is increased by this decision. In addition the decision is likely to on impact the confidence the market will have in future privatisations.

Further, Maple-Brown Abbott strongly expressed their concern about the precedent established by this Bill:

The effects of the Bill are unprecedented in this country. If investors become concerned about exposure to acts of Government such as legislative and regulatory impositions, it could have a detrimental impact on the valuation of many financial assets, not only Telstra and the wealth of its 1.4

million shareholders. Of major concern is that the Bill may damage Australia' s sovereign risk rating. 31

And Packer and Co Ltd stated:

As international investors, we spend a great deal of time thinking about sovereign risk in our capital allocation decisions. We can assure you that the Government's actions will be closely monitored by the global . . 32

mvestment management commumty.

29 BT Investment Management Ltd Submission, p 2 30 Australian Shareholders Association Submission, p 3 31

Maple-Brown Abbott, Submi ssion, p 2 32 Willi am Packer, Packer & Co Ltd, Submission, p 2

Access arrangements Coalition Senators support sensible reform to improve existing competition provisions in the telecommunications sedor.

However, given the evidence presented to the Committee, we are concerned about some of the proposed amendments to the Trade Practices Act and the level of discretion that is handed to the regulator, the Australian Competition and Consumer Commission (ACCC).

Particularly, Coalition Senators note that the powers given to the ACCC seem unjustified in relation to even the suggestions put forward by the ACCC to the NBN Regulatory Reform Discussion Paper.

Coalition Senators have concerns about the total removal of merits review in relation to regulatory decisions under part XIC. We are also significantly concerned about the Government's proposal to waive procedural fairness.

Again, concerns were raised about these amendments during the Senate inquiry.

Vodafone Hutchinson indicated that the Bill should include provisions for a merits review of the ACCC declaration and/or determination. 33

Foxtel' s submission has focussed on the amendments to the TPA and they state that:

The Draft Bill proposed dramatic changes to the regulatory regime governing the telecommunications industry despite the Government not having undertaken a rigorous analysis or inquiry into whether there has been significant market failure justifYing such changes".

"The proposal to give the Commission the broad power to make interim access determinations without giving affected parties procedural fairness is contrary to well established principles equally of good public policy and administrative law designed to protect against arbitrary decision making. 35

In relation to the abolition of merits review, BT Investment Management Ltd stated:

As investors in Australian telecommunications we consider there are huge risks in allowing the ACCC to set prices up front without any right of appeal. Ordinarily in a market price setting is a right that follows investment, and in tum is instrumental in driving investment. The ACCC is not a market player; it does not make investment decisions and it does not face investment risk. 36

33 Vodafone Hutchinson Australia, Submission, p 1 34 Foxtel Submission, p 1 35

Foxtel Submission, p 2 36 BT Investment Management Ltd Submission, p 9

Vodafone Hutchinson highlight their concerns with the broad powers given to the ACCC under the proposals. They state in their submission to the inquiry that:

We are concerned, however, that the move to strengthen and streamline the access regime provides too much discretion to the Australian Competition and Consumer Commission (the Commission), with too little b.l. 37 accounta 11ty.

Vodafone Hutchinson also highlight the potential conflict of interest that exists due to the ACCC's responsibility for "both building the case for an access determination and assessing its merits " and that "the benefits from a merits review process exceed the costs associated with regulatory uncertainty of delays". 38

Coalition Senators strongly agree with the views ofFoxtel regarding the abolition of procedural fairness .

. . . the proposal to give the Commission the broad power to make interim access determinations without giving affected parties procedural fairness is contrary to well established principles equally of good public policy and administrative law designed to protect against arbitrary decision making.

Consumer Measures The Coalition supports sensible measures to ensure consumers are given appropriate protections and support in their telecommunications choices.

Coalition Senators note that these consumer measures are scheduled to commence on 1 July2010.

In relation to the Universal Service Obligations (USO), Coalition Senators want to ensure that the arrangements underpinning the USO are strong in order to ensure rural and regional Australians have access to quality and affordable telecommunications services.

However, Coalition Senators strongly believe that the NBN will require a thorough and comprehensive review of the USO regime. Even the Government has acknowledged that issues surrounding the USO would be considered when the NBN roll out was determined.

The Explanatory Memorandum (EM) entirely contradicts the Government' s proposed timing for this Bill. The EM States:

37 Vodafone Hutchinson Australia, Submission, p 1 38 Vodafone Hutchinson Australia, Submission, p 2 39

Foxtel, Submission 4 ° Communications Day, 22 October 2009, p 2

Broadening universal service arrangements at this time could lead to significant higher costs that may be avoided if the reforms were deferred until after the detailed operating arrangement for the NBN had been settled.

The Government has announced that once the detailed operating arrangements for the NBN have been settled, the Government will consider the broader range of issues associated with the delivery of universal access in an NBN environment. 41

It also specifically states that: "Future USO arrangements will be considered once the detailed operating arrangements for the NBN have been settled in early 201 0." 42

We therefore think on balance that it makes more sense to await the Implementation Study, which if completed on schedule, will not delay the 1 July 2010 commencement of these measures, to ensure that the USO does reflect the operating environment created by any NBN roll-out.

Conclusion Coalition Senators believe that the structure ofTelstra is a matter for Telstra and its shareholders.

The Government's decision to hold a gun to the head of the company is a concerning precedent that has raises sovereign risk questions about the Australian investment climate.

The threat to starve Telstra of future advanced mobile and wireless spectrum will harm rural and regional customers and will reduce competition in a highly competitive market.

While Coalition Senators strongly support sensible reforms to ensure competition improvements in the telecommunications market, we have concerns about the discretion this Bill gives to the Minister and ACCC, particularly through the proposed waiver of procedural fairness and the removal of merits review of regulatory decisions made by the ACCC under part XIC.

Given the proposed expansion of powers to the Minister and ACCC proposed by this Bill, Coalition Senators support continued consideration of areas in which the Bill can be improved.

Recommendation

Coalition Senators recommend that further consideration of this Bill not proceed until after the NBN Implementation Study has been completed, the Government

41 Explanatory Memorandum, p 66 42 Explanatory Memorandum, p 80

has tabled its response to the Implemenation Study and the Senate has certainty about the network structure of NBN Co and the regulatory framework which will surround it.

Should debate proceed in advance ofthe completion of the Implementation Study, the Bill should be amended to address the significant concerns raised with the Committee.

Senator Simon Birmingham Senator for South Australia

Senator the Hon. Ian Macdonald Senator for Queensland

Senator the Hon. Nick Minchin Senator for South Australia

Senator Mary Jo Fisher Senator for South Australia

Additional Comments submitted by Senator Scott Ludlam for the Australian Greens

The Australian Greens welcome the opportunity to begin the process of reversing the worst consequences of the privatisation of Telstra. The main aim of the bill is to address the horizontal and vertical integration ofTelstra, which has allowed the incumbent to unfairly exercise market power, ultimately to the detriment of the public interest. While the Telstra board will decide which form of separation the company will undergo, the most likely outcome will be a return to public hands of key network infrastructure which should never have been sold in the first place.

The amendments the Greens will propose to this bill are intended to strengthen the rights of three distinct interest groups, namely:

â¢ The end-users- 22 million Australians who will use the services carried over telecommunications networks, but most particularly users in rural and regional areas. â¢ The greatest diversity of market participants -to ensure that the playing field is

level

â¢ The workforce ofTelstra, protecting their interests during the transition period.

Principles with which the Greens have approached this bill:

â¢ The importance of telecommunications as an essential service, and the responsibility of providers to uphold universal service obligations; â¢ The potential for low-cost, fast broadband to improve economic prosperity, the delivery of education and medical services, strengthen social and professional

networks and increase Australia's integration and participation in the international community; â¢ The need to bridge the digital divides in Australia based on wealth and geography;; â¢ The importance of diversity in telecommunications markets, and the need to

restrain large players from abuse of market power;

â¢ Public ownership and control of natural monopoly components of telecommunications networks.

Greens position on the bill: The Greens seek Government agreement on the following amendments:

â¢ Protection of Telstra workforce The bill is currently silent on the impacts of functional or structural separation on the Telstra workforce. The Greens believe it is essential to protect the rights and entitlements ofTelstra's workforce to ensure no-one is worse off after the adjustments to Telstra's structure.

â¢ Protection of the rights of end-users The debate over the future Df Telstra (and the market structure of the proposed NBN) has tended to overlook the rights of the people who will ultimately use the telecommunications services- the end-users. For this reason the Greens will propose amendments which broaden the definition of 'Standard Telephone

Service' to cover the much larger array of telecommunications services which now exist, and we will move to make compensation payments liable under the Customer Service Guarantee (CSG) automatic rather than relying on customers to apply.

In particular these amendments will strengthen services in regional areas where services have traditionally been patchy or non-existent.

â¢ Access determinations to prevail over access agreements, by application As suggested by the Competitive Carriers Coalition and others, access seekers with prior commercial agreements should be able to fall back on later access determinations made by the ACCC, creating in effect a 'no disadvantage test' in access agreements.

â¢ Independent review of amendments to the TP A after 3 years to examine whether the access regime is functioning appropriately. This bill grants very wide discretion to the ACCC, to the degree that rights to procedural fairness and access to merits review by the Australian Competition Tribunal have been removed. The Greens acknowledge the reasoning behind these amendments but remain concerned that in solving one problem (removing the ability of the incumbent to mire access determinations in endless procedural delays) we will

have removed two avenues of redress which the industry may later regret. A formal review will allow the Government to assess whether the new access regime is functioning well.

Senator Scott Ludlam Senator for Western Australia

Additional Comments - Senator Fiona Nash

â¢ Many of those submitting to this inquiry have expressed their support for the separation legislation. A number of submissions overwhelmingly indicated that Telstra' s level of vertical integration and consequent monopoly has been detrimental to competition in the telecommunications industry. The submission from the Australian Telecommunications Users Group (ATUG) is a clear example of how the lack of competition has lead to higher prices for the consumer.

â¢ ATUG made the point very clearly that they believe regional Australia stands to be a beneficiary from a more effectively competitive market structure.

â¢ The central arguments from those submissions that oppose the bill are that separation will discourage investment or cause losses; and that separation transitional costs are too high for Telstra. In my view this reflects short terming thinking. Companies in other jurisdictions that have undergone separation have adapted to, and in some cases welcomed, their new regulatory environment.

â¢ As highlighted by the Department of Broadband, Communications and the Digital Economy, the three Telstra sale prospectuses were clear about the potential of regulatory changes in the telecommunication sector that might affect Telstra's competitive position.

â¢ Having attempted measures to encourage operational separation ofTelstra in 2005, it is apparent that that policy did not yield the results hoped for in terms of allowing for greater competition. Therefore, stronger separation is the only logical way forward.

â¢ I agree with the conclusion that previous "negotiate and arbitrate" models in dealing with access by the ACCC have not been effective. The changes regarding this in the legislation are a welcome step forward.

â¢ Evidence to the inquiry showed that there was agreement for the consumer safeguards in the bill. I believe these safeguards will prove efficient protection mechanisms, particularly for regional areas. ·

â¢ In 2005 the Page Research Centre, through the Regional Telecommunications Inquiry, identified there was a lack of competition in the telecommunications sector in rural and regional Australia. Its research found that lack of access to infrastructure at a fair price was inhibiting service providers entering into the regional market.

Senator Fiona Nash Senator for New South Wales

Appendix 1

Submissions and Answers to questions taken on notice

Submissions

1 Ms Veronica M Nicholls

2 Dr Ronald Thomson

3 Confidential

4 Mr Brett Davies

5 Mr Alan Tickle

6 Mr Adrian Rogers

7 Mr Wade McGirr

8 Mr David Lunn

9 Mr Richard Zielinski

10 Mr Simon Lee

11 Mr Michael Rosenthal

12 Mr Frank Johnson

13 Mr Brett Rosenthal

14 Mr Tony Bergman

15 MrTomBowen

16 Mr Frederic Mateme

17 Mr Greg Lane

18 Mr Ken Bundgaard

19 Mr Paul Myers

20 Mr Ken Jones

21 Mr Frank Hart

22 Mr Peter Thornhill

23 Mr Michael J Mead

24 Mr Robert Varcoe

25 Mr Gerry Dee

26 Mr Greg Sharah

27 Mr Steven Jarick

28 Mr Graham Poole

29 Mr Bruce Scurr

30 Ms Kathleen C Eiszelt

31 Mr Robert Ludlow

32 Mr Wayne E Griffith

33 Ms Beryl M Casling

34 Mr Steve Hart

35 Mr Tom Knox

36 Mr Lou Stefanetti

37 Ms Ruth Povey

38 Mr Winston Willis

39 Dr Douglas Kelso

40 Vodafone Hutchison Australia Pty Limited

41 Maple-Brown Abbott Limited

42 Mr Daryl Goss

43 Name Withheld

44 ATUG

45 Mr R A Mumberson

46 Mr John Murphy

47 Optus

48 Competitive Carriers' Coalition

49 Mr Dick Schoorl

50 Mr David Lidbetter

51 Pipe Networks Limited

52 Australian Council of Trade Unions (ACTU)

53 Australian Foundation Investment Company

54 Synstrat Management Pty Ltd

55 Unwired

56 Mr John Curtis

57 Mr Ian Reyes

58 Mr William Packer

59 Mr Anton Tagliaferro

60 Mr Cres James

61 Mr Ron Newell

62 Mr Colin R Milewski

63 Mr Tony Truda

64 Mr Geoff Neely

65 Mr Mike Elliott

66 Mr John Hines

67 Mr Narindar Singh

68 Investors Mutual Limited

69 Macquarie Telecom

70 iinet

71 AUSTAR United Communications Ltd

72 Free TV Australia

73 Internode and Agile

74 BT Investment Management Limited

75 452 Capital

76 Primus Telecom

77 Australian Shareholders' Association

78 Mr Brett Ward

79 Mr Robert Campiciano

80 Mrs sue barron

81 Name Withheld

82 Mr Michael Friebel

83 MrKwokKLeung

84 Mr Dennis Obst

85 Mr N Lienert

86 Mr Alan Bolder

87 Mr G M Beauchamp

88 Telstra

89 Pastor Malcolm Huf

90 Mr Jim Bond

91 Australian Communications Consumer Action Network (ACCAN)

92 Mr Brian Havard

93 Infrastructure Partnerships Australia

94 Mr Reg T Fisk

95 Mr Michael Baldwin

96 Bramex Pty Ltd

97 Communications Experts Group Pty Ltd

98 Foxtel

99 Mr Kevin Morgan

100 Mr Luc Corrado

101 Mr John Phillips

102 Mr Fernando Dias

103 Mr Ganesh Prasad

104 Mr Robert Spinks

105 Mr Brian Hall

106 Mr Douglas Booth

107 Mr Adrian Cardell

108 Mr Barry L Smith

109 Mr Paul Rasmussen

110 Mr Geoffrey Thompson

111 Mr Peter and Mrs Janet Ellis

112 Mr John Stretch

113 Mr Peter Hamilton

114 Mrs Jill Hamilton

115 Name Withheld

116 Confidential

117 Confidential

118 Confidential

119 Mr Bill Ranken

Form letters and letter writing campaigns

The committee received a form letter, and variations on it, from the following:

I Mrs C Keaton I Mrs H A Faulkner I Mr R J Hay

Mrs S L Hay MrsC MRae Mr J Gleeson

MrsMRowan Mr G S Charlton Mr & Mrs R C Prendergast

Mr R C Prendergast Mrs D B Prendergast Mrs J E M Whitehead

Mrs K Bleakley Mr B Barty MrsH Cook

Mr S Sambolic Mrs V Sambolic Dr4 C M Jeffs

Mr A Ball MrS Tadros Mr & Mrs W R Smith

Mr M J Baldwin Mrs K Lancaster Mr V Kusovski

Mr & Mrs H L Jackson Mr D W Lancaster Mr A A McLennan

Mrs L L Hill MrsN AHardy Mrs E M Colliss

Mr & Mrs W Nowak Mrs J Raengel MrL Crowe

Mrs RCrowe Mr G F Calcott Mrs M J Crandon

MrD Crandon Mrs J Jackson Mr D G Errington

Mrs B Errington Mrs SF Barty Mr & Mrs G Cashion

MrsDBowman Mr & Mrs B J Mannix Mr P F Hambley & Ms G

K Whitfield

Mrs R Martinez Mrs J B Rowley MrP F Orvad

Mrs M G Orvad Mr & Mrs A Hooker MrL Young

Mrs R L Pitt Ms V L Doherty MrJBowman

The Barker Family Patphil Pty Ltd, Clifford Mrs A A Gardiner Family A/C

Mr & Mrs J E Noakes Mrs B J Tuckerman Mr & Mrs E C Noble

Mr & Mrs M McConnell Mr & Mrs G Whelan Mr & Mrs A H Gal

Mr JHaug MrC C Paton Mr & Mrs R A v

Rowntree

Mr K W Atkinson Mrs L Henson Mr ARenson

MrDW Smith MrW GNixey Mr C J Dean

Mr & Mrs K F Streeter Mr & Mrs D M Love Mrs JM Ryan

Mr V C Coombes Mr & Mrs B R Ali Mrs C M Henderson

Mr J L Mercer Stone Family Mr & Mrs R E Hewison

Superannuation Fund

Pat Adams Superannuation Mr & Mrs L Nabbe MrM M Hierl Fund

Mrs B C Daniels MrM Silva MrsVDBock

N J C Case Super Fund Mr & Mrs R Billingham Mr & Mrs S O'Toole

Mr G Holowinski Ms H Delamore & Mr P MrM Freeman

Simmonds

Mrs B JNagy Mr R E Holterman Dr & Mrs R J Lewis

MrsPMBodey Mr & Mrs A Eager Mrs J Smith

MrHA Twyman MrB F Wood Miss B E McPhie

Mr & Mrs V Kusovski MrsEMEvans Mrs C Holowinski

Robert May MrsMC Lowe MrRLowe

Superannuation Fund

JC &RGDowd Mrs M R Zammit MrWPBreed

Mrs JBreed Mr & Mrs J B Drinkwater MrB VMedley

Miss J M Herbert Ms P Guida Ms P Calabro :

Ms JRisk Mrs E SHunt MrRGaspari I

MrB M Joyce Mrs F M Harvey Mrs I A McGrath

Mrs I C Chapman Mrs JM Allan Mr & Mrs A T Risk

MrMA Spreat Ms S Somerville Mr & Mrs A Pendlebury

Mr & Mrs L Vlasoff MrR JKeat Mr M Stanojevic

Mr & Mrs J S Gauci MrW S Evans Mrs P E O'Connor

MrJMorgan MrG Luck MrsALLuck

MrWWenham MrW S Furney Mrs M JFumey

100

Mrs C E Armstrong MrsKM Hall Mr & Mrs G D Shore

Mr & Mrs D R Agnew Mrs P M Martin Mrs H Fittler

Mr & Mrs N W Blizard Mrs S J Walker MrR J Curtis

Mr R E Brownsell Mrs E E Brownsell Mrs M Chandler

Mr R J O'Connor Mr A L & Mrs L E Mrs S Whitbourn

MacLeod

Mrs P J Gleeson Mrs Z H Smith Mr & Mrs P Mortensen

Mr I G and Mrs c J D & LHodges Mr JLNagy

Batchelor

Mrs S Montgomery Mr Bill Croke Mr & Mrs R N Baker

Mr & Mrs R Halsey Kerry Donlan John Spinks

Marion & Peter Orvad Beth Robinson Delia McNamara

Don & Margaret Driscoll Peter & Christine Subotic MrKBowman

Mr & Mrs E C Noble Mrs I C Chapman Elizabeth McAndrew

Mr & Mrs A H Russell Rymack Pty Ltd MrRBall

MrRJGamble Mr J H Mcintyre Mr and Mrs G K Stark

Mr and Mrs A Petersen Mrs M E Gordon MrW JWaugh

Mr and Mrs R K Johnson

101

The committee received another from letter from the following:

Mr Downes, Karen Keeshan, Western Margaret Koorey

Aurum Planning W A Pacific Financial Group PtyLtd

F A & M D Mellor Pty Ltd Mr David Smyth, Hartleys Mr Peter Kirk, Quill Group Limited Financial Planners

Mr David Teoh Graham Holmes Alan Muir, Future Wealth

Grant Robinson Garry & Desma Wedding

The committee received a number of letters and additional individual text from the following:

Mr Peter James-Martin Mark Walker John Carberry

Michael Toal David South Gerard O'Brien

TrevorGadd Stephen Ballinger Michael Coffey

Mark Kynaston Marc Venter Ernie Venter

Graeme Orr Duncan Walker Martin Webb

Jason & Helen Gereis Judith Lloyd Michael Hilliard

Dianne Norris

The committee received a further form letter from the following:

Ann & JeffBorgas Andrew & Bronwyn Hein Gordon & Ena Mibus

Robert & Valerie Arnold

The committee received copies of a letter that the committee understands distributed at Australian Foundation Investment Company from the following:

I Athina Pazolli I W emer Fuchs I W L Ranken

102

Answers to questions taken on notice

Department of Broadband, Communications and the Digital Economy (from public hearing, Canberra, Wednesday, 14 October 2009)

103

104

Appendix 2

Public hearings

Tuesday, 13 October 2009- Melbourne

Telstra

Optus

Dr Tony Warren, Executive Director, Regulatory Affairs

Mr David Quilty, Group Managing Director, Public Policy and

Communications

Mr Geoff Booth, Group Managing Director, NBN Engagement

Mr Bill Gallagher, General Counsel, Public Policy and Communications

Mr Andrew Sheridan, General Manager, Interconnect and Economic Regulation

Pip eN etworks

Mr Dale Clapperton, Legal Counsel

Mr Tony Dooley, External Legal Advisor

Unwired

Mr David Havyatt, Manager, Regulatory and Corporate Affairs

Macquarie Telecom

Mr Matt Healy, National Executive, Regulatory & Government

Primus Telecom

Mr John Horan, General Manager, Legal and Regulatory

Australian Foundation Investment Company

Mr Ross Barker, Managing Director

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Investors Mutual Ltd

Mr Anton Tagliaferro, Investment Director

Mr Jason Teh, Portfolio Manager/ Analyst

Australian Communications Consumer Action Network

Mr Allan Asher, Chief Executive Officer

Wednesday, 14 October 2009- Canberra

Competitive Carriers' Coalition

Mr David Forman, Executive Director

Australian Telecommunications Users Group

Ms Rosemary Sinclair, Managing Director

Department of Broadband, Communications and the Digital Economy

Mr Peter Harris, Secretary

Miss Pip Spence, First Assistant Secretary, Networks Policy and Regulation Division

Mr Rohan Buettel, Assistant Secretary, Networks Regulation Branch

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The Senate

Environment, Communications and the Arts Legislation Committee

Telecommunications Legislation Amendment (National Broadband Network Measures No. 1) Bill2009

August 2009

107

This document was printed by the Senate Printing Unit, Parliament House, Canberra

108

Committee membership

Committee Members Senator Anne McEwen (ALP, SA) (Chair) Senator Simon Birmingham (LP, SA) (Deputy Chair) Senator Scott Ludlam (AG, WA) Senator Kate Lundy (ALP, ACT) Senator the Hon. Judith Troeth (LP, VIC) Senator Dana Wortley (ALP, SA)

Participating Members participating in this inquiry Senator the Hon. Nick Minchin (LP, SA) Senator Mary Jo Fisher (LP, SA)

Committee secretariat

Ms Alison Kelly, Secretary Ms Veronica Gover, Principal Research Officer Ms Clare Guest, Executive Assistant

Committee address PO Box 6100 Parliament House Canberra ACT 2600

Tel: 02 6277 3639 Fax: 02 6277 5794 Email: eca.sen@aph.gov.au Internet: http://www .aph. gov .au/ senate/ committee/ eca _ ctte/index.htm

J1l

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Table of Contents

Committee membership ................................................................................... iii

Abbreviations ................................................................................................... vii

Chapter One - Introduction ............................................................................... !

Background ...... ................ ... ....... ... ...... .. .... ..... ...... ........ ...... .... ..... ... .. ... .. ... .......... ... .. 1

Conduct of the inquiry .............. ......... ...... ....... .. ...... ... ... .... ................ .... .............. .... 1

Context of the bill ............... ..... .. ..... ... ..... ...... .... .... .. .. .... ............. ... ..... ..................... 1

The bill .... ..... ........... -.......... ........ ..... ..... .. .... ......... ...... ..... ................... ... .................... 2

Note on references ........... ... .... .. ...... ........... ......... ... ... .... .... .... .. .... ................. ... ..... ... 6

Chapter Two - Inquiry issues ............................................................................. 7

Support for the bill. .................. .... ... .... ....... ........ ..... ........ .......... ..... ..... ... ...... ... ... .. .. . 7

Consultation on the bill ... ........ .... .......... ... .. .............. ........ ............... ................... .... 7

Requirements unclear ...... .. ... ..... ...... .. ................................... .................. .... ..... ....... 8

Timelines for consultation and supply of information .... .. .................................. .. . 9

Compensation for provision of information ... .................... ............ ......... .. ...... ... .. 11

Information security implications ... .... .... ... .... .... ................... ..... .... .. ..... ..... ... ........ 13

Competitive neutrality .................. ......................... .. .... ...................... ........... ........ 15

Other issues raised in submissions .. .. ........ ...... .... .... ... ..... .... ... ... .................. .. .... ... 17

Concluding remarks ....... .... .... ... .................... .... ................ ................. ...... .. ..... ..... . 18

Additional Remarks - Coalition Senators ..... ................................................. 21

Senate order for the production of documents ........ ....... ...... .... ......... .. .. ............... 21

Consultation ... ................ .... .. ..... ..... .. .............. ... ......... ... : ......... ...... ..... ... ··· ···· ....... .. 21

Compulsion .. .................... .. .. .. .. ...... .. ...... .... .. ...... ... .............. ............ ... .. .. ·· .... · ... ..... 22

Consultation time lines ....... ..... ............. ... ... ....... ..... ...... ........ .. · .. ··· ... · .. . ··· ······· .... .... 23

Immunities .............. ............ .... ... .... .. .... ......... .. .... .... ·· ·· .... . · .... ·· ........ ·· .. · .. ·· ····· .... · ... 25

Costs ................................................... .... ... ............................... ........... ... .............. 26

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Security of information ..... .... .... .. ........... .... ................. .. ..... ...... .... .................. .... ... 27

Competitive neutrality ................... ............ ......................... ......................... .. ... .... 28

Appendix 1- Submissions Received ................................................................ 31

Appendix 2 - Public Hearings .......................................................................... 33

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Abbreviations

...AER Australian Energy Regulator

ARA Australasian Railway Association

E CA Business Council of Australia

D BCDE

Department of Broadband, Communications and the Digital Economy (the Department)

E NA Energy Networks Association

F TTN Fibre-to-the-Node

F TTP Fibre-to-the-Premises

NBN National Broadband Network

iPIA Privacy Impact Assessment

RFP Request for Proposals

WSAA Water Services Association of Australia

vii

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viii

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Chapter One

Introduction

Background

1.1 The Telecommunications Legislation Amendment (National Broadband Network Measures No. 1) Bill 2009 (the bill) was introduced in the Senate on 25 June 2009 and referred to the Environment, Communications and the Arts Legislation Committee (the committee) on the same day, for inquiry and report by

1 7 August 2009.

Conduct of the inquiry

1.2 The committee advertised the inquiry in The Australian and invited written submissions by 16 July 2009. Details of the inquiry were placed on the committee's website; the committee also wrote to a number of organisations and stakeholders inviting written submissions.

1.3 Nine submissions were received by the committee, a list of which can be found at Appendix 1. Five of these respondents accepted the committee's invitation to appear at the public hearing held in Canberra on 4 August 2009, with the Department of Broadband, Communications and the Digital Economy (the Department) also appearing to answer questions.

1.4 The committee wishes to thank those who gave their time to participate in this mqmry.

Context of the bill

1.5 On 11 March 2008, the government released a Request for Proposals (RFP) to ' roll out and operate a new, open access, high-speed, fibre-based broadband network, providing downlink speeds of at least 12 megabits per second (Mbps) to 98 per cent of Australian homes and businesses.'

1.6 Acknowledging that, in order to build their business case, prospective proponents would require access to information detailing network infrastructure, and that the current incumbent, Telstra, would hold an unfair competitive advantage if it retained sole access to information about its network, the government introduced a bill that inserted a new Part 27 A into the Telecommunications Act 1997 (the Act).

http://www.archive.dbcde.gov.au/2009/apri llnation al broadband network request for propo sal s process, accessed 1 7 April 2009.

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1. 7 Part 27 A required telecommunication carriers to provide specific::

information to the Commonwealth relating to their existing telecommunicatior network infrastructure. This information could then be disclosed to compani( wanting to submit a bid under the RFP to provide a National Broadband Networ (NBN). The provisions of the bill were restricted to requiring information frm telecommunication carriers, and were to only remain in effect for one year, ceasing o 26 May 2009.

1.8 On 7 April 2009 the government announced the termination of the RFJ process and the subsequent decision to establish a company, known as the NBN Co . to build and operate a wholesale only, open access, superfast broadband network tha would:

... connect 90 percent of all Australian homes, schools and workplaces with broadband services with speeds up to 100 megabits per second; [and]

connect all other premises in Australia with next generation wireless and satellite technologies that will deliver broadband speeds of 12 megabits per second. 2

1.9 The government also announced the commencement of an extensive Implementation Study that would 'examine options for the operating arrangements, detailed network design, and ways to attract private sector investment for the roll-out, reporting to the government in early 2010. ' 3

1.10 To facilitate access to this information, the government introduced the Telecommunications Legislation Amendment (National Broadband Network Measures No. 1) Bill 2009 (the bill), which amends the previous information access regime in Part 27 A to include the provision of information by utilities. As stated in the Second Reading Speech:

To support the work of the Implementation Study and then, if appropriate, the roll-out of the network by the NBN company as quickly as possible, accessing information about existing or proposed things that might be used in the network, such as the ducts, pits and poles, is important. 4

The bill

Objective

1.11 The maJonty of stakeholders have indicated considerable support for the government's NBN announcement, and the government anticipates that most carriers and utilities will voluntarily provide information on a cooperative or commercial

2 http://www.minister.dbcde.gov.au/media/media releases/2009/022, accessed 10 August 2009.

3 Telecommunications Legislation Amendment (National Broadband Network Measures No . 1) Bill 2009, Second Reading Speech, Senate Hansard, 25 June 2009, p. 4272.

4 Telecommunications Legislation Amendment (National Broadband Network Measures No. 1) Bill 2009, Second Reading Speech, Senate Hansard, 25 June 2009, p. 4272.

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basis. However, to m1t1gate the potential risk of any delay in obtaining that infom1ation, the objective of this amendment is to ensure that the access to infom1ation will:

... facilitate the cost-effective and timely planning and roll-out of the NBN, in a manner that does not compromise the confidentiality and security of information about critical national infrastructure. 5

Areas of change

1.12 The committee notes that there are two main areas of change in this bill when compared to the existing Part 27 A of the Telecommunications Act 1997. The first is that this bill additionally requires information to be provided by utilities about their infrastructure, whereas currently that requirement can only be made of telecommunications carriers.

1.13 The second area of change is the purpose for which this information would be sought. The existing Part 27 A required information to be provided to the Department to support the competitive process of the now terminated RFP for the 2008 NBN initiative. This was to ensure that all prospective bidders had available to them the same pool of information about existing infrastructure on which to build their business case and underpin their proposal to build the NBN.

1.14 Under the bill, the Department's authorised information officer may require information to facilitate the Implementation Study, which will examine network components, including the technology mix and deployment methodologies, the roll out schedule and costings for the NBN. In addition, the information may be subsequently used to support the roll-out of the network by the NBN Company.

Obligation to provide information

1.15 The bill amends Part 27A of the Act, by extending the information access regime to include 'the collection of information from entities that own or operate infrastructure that could be relevant to the roll-out of the National Broadband Network but that are not carriers.'

1.16 As with the existing Part 27 A, the bill would allow the minister to make a disallowable instrument requiring specified carriers or utilities to provide designated information in an approved manner and form. Following the commencement of an instrument made by the minister, the carriers or would have an approved period of time in which to provide the information to an 'authorised information

5 Telecommunications Legislation Amendment (National Broadband Network Measures No. 1) Bill 2009, Explanatory Memorandum, p. 8.

6 Telecommunications Legislation Amendment (National Broadband Network Measures No. 1) Bill 2009, Second Reading Speech, Senate Hansard, 25 June 2009, p. 4272.

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officer', who is required to be of Senior Executive Service officer level within the Department and involved in the Implementation Study.

1.17 There are numerous consequential amendments and additions to the defmitions within Part 27 A, most relating to the inclusion of utilities within this Part.

Protected network information

1.18 The bill inserts a definition of 'protected network information' which replaces, but is closely modelled on, the previous defmition of protected carrier information, reflecting that in addition to telecommunication carriers, utilities may also be required to provide network information. The definition will include all information provided to an authorised information officer, whether it is provided voluntarily or through imposition of a written instrument by the minister.

1.19 The terminology, 'protected network information' extends protection to any information provided under the existing Part 27 A:

This means that all information that was protected carrier information prior to the changes made to Part 27 A by this Bill will be protected network information after the commencement of this defmition. 7

Na ture of designated information

1.20 The bill would limit the types of information that could be specified as designated information by the minister to:

... information about one or more existing or proposed things that could be used for, or in conjunction with, the creation of a broadband

telecommunications network, the supply of carriage services using such a network, or a matter incidental or ancillary to those topics. 8

Consultation required

1.21 Once a carrier or utility receives a copy of a draft instrument, amendments to section 531C(4) would extend the existing consultation period from three to fi ve business days, during which time affected carriers and utilities may provide comments, which are required to be considered by the minister.

1.22 When an instrument is agreed, the approved period for the provlSlon of information remains unchanged at not less than 10 business days. The Explanatory Memorandum lists the type of information that may be required relating to 'th e location, and where appropriate the capacity to accommodate fibre' of infrastructure, which could include information of:

7 Telecommunications Legislation Amendment (National Broadband Network Measures No. 1) Bill 2009, Explanatory Memorandum, p. 23 .

8 Telecommunications Legislation Amendment (National Broadband Network Measures No. 1) Bill 2009, Explanatory Memorandum, p. 25 .

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trenches (filled, part-filled or unfilled);

â¢ underground ducts;

â¢ conduit;

â¢ points of interconnection between distribution customer access network, the main network and the core transmission network;

â¢ backhaul transmission routes;

â¢ possible locations for wireless towers or space on existing towers; and

â¢ (in the case of relevant utilities) sewage pipes, stormwater drains and electricity poles and other overhead facilities. 9

1.23 It is not the intention of the minister to require the provision of information held by carriers or utilities that is the personal information of customers.

Extension to penalties

1.24 While proposed section 531F very closely mirrors the provision it seeks to replace, an additional subsection would provide for penalties to apply to activities such as aiding, abetting and procuring a contravention by a carrier or utility of a requirement to provide information.

Sunset clauses

1.25 A sunset clause is inserted at section 531F that would establish a time limit for the obligation on carriers and utilities to provide information. The proposed period of 10 years is sought to cover the anticipated deployment period for the NBN, providing assurance that the obligation is not indefinite.

1.26 Section 531 G also now includes a time limit of 30 June 2010 in relation to the use and disclosure of information provided by carriers and utilities for the purposes of the Implementation Study. Although the Implementation Study is anticipated to report by early 2010, the 30 June date incorporates some contingency for flexibility.

Protection of information

1.27 The bill amends Division 3 of the Act to enable the use of information for the purposes of planning and development of the NBN.

1.28 Section 531 G of the Act is amended to extend the existing protections to information provided by both utilities and carriers. The section additionally provides that the minister may make a determination that imposes further conditions on the use and disclosure of information by entrusted public officials; these could for example

9 Telecommunications Legislation Amendment (National Broadband Network Measures No . 1) Bill 2009, Explanatory Memorandum, p. 26.

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place further restriction on the type of network information that can be disclosed or the purposes for which it can be used.

1.29 The proposed amendment to section 531H details the conditions under which an authorised information officer would be permitted to disclose protected network information to an entrusted company officer of the NBN Company or of a designated broadband company, clarifying that disclosure can only be for the purposes relating to that company' s involvement in the roll-out of the NBN, or the company's eventual

supply of carriage services over the network. The disclosure must comply with any restricted recipient rules made by the minister under the existing section 531N.

1.30 Section 531K maintains the non-disclosure provisions for all entrusted company officers. Also maintained is the ability of the minister to make determinations that could, for example, restrict the types of entrusted company officers to whom information may be disclosed, or the purposes for which the protected network information may be used by, or disclosed to , an entrusted company officer.

Storage, handling and destruction of protected carrier information

1.31 The minister retains the ability to make rules relating to the storage, handling and destruction of information that is provided by carriers and utilities, as outlined in section 531P of the Act. Such rules were created and came into force on 6 August 2008, requiring compliance with stringent conditions for the storage, handling and destruction of information gathered.

Note on references

1.32 All references to the committee Hansard record are to the proof Hansard copy; consequently page numbers may vary slightly between the proof and the official Hansard transcript, as published.

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Chapter Two

Inquiry issues

Support for the bill

2.1 The committee invited submissions from over 45 organisations within the utilities and telecommunications sectors, and including Commonwealth, state and territory governments. Nine written submissions to this inquiry were subsequently received, which were generally supportive of the government's new policy objective to provide a fibre-to-the-premises (FTTP) broadband network to 90 per cent of Australian businesses, homes and schools.

2.2 The two major telecommunications infrastructure owners and operators, Telstra and Optus, were both supportive of the requirement to access accurate information about existing telecommunications and utility infrastructure and the consequent need for the amendment.

2.3 Optus was most positive in their support, stating in their brief submission that they had 'no concerns' with the proposed amendments and see this bill as 'a necessary piece of legislation to assist with the efficient and cost effective roll-out of the NBN.' 1 Although Telstra made suggestions for additional considerations by the government, they re-state their recent public commitment to 'engaging constructively with the Commonwealth and other stakeholders ... ' 2

2.4 Similarly, in their submission, Unwired provided several suggestions for improvements to the bill, but could see no reason 'why the Bill should not be adopted in its current form. ' 3 Mr David Havyatt from Unwired highlighted iti his evidence before the committee that the information sought by this bill was 'particularly critical to be able to make a decision about how [the NBN] would be deployed.'

Consultation on the bill

2.5 The committee notes the lack of formal consultation with utilities about the legislation prior to its introduction, which 'came as a surprise' to several submitters. 5

Optus, Submission 1, p. [1]

2 Telstra, Submission 7, p. 1.

3 Unwired, Submission 4, pp [1] & [5]

4 Mr David Havyatt, Committee Ha nsard, Canberra, 4 August 2009, p. 33 .

5 See for example, Integral Energy, Committee Hansard, Canberra, 4 August 2009, pp 2 & 3; Water Services Association of Australia, Committee Hansard, p. 7; Australasian Rail ways Association, Committee Hansard, pp 18 & 19; Telstra, Committee Ha nsard, p. 28.

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2.6 The Department indicated that it would have preferred to have undertaken wider consultations, but in practice it had not been feasible in the time available. It noted, however, that the intention to simplify access to infrastructure including that of non-telecommunications utilities, where technically feasible, was foreshadowed in the government's National Broadband Network: Regulatory Reform for 21st Century Broadband Discussion Paper released on 7 April2009.6

2. 7 While it had not been possible to consult directly with carriers and utilities potentially affected by the legislation prior to its introduction, the Department advised that it had since met with the Energy Networks Association, the Water Services Association of Australia and the Australasian Railway Association, as well as carriers. 7 The Department added that, while it had not had detailed discussions with utilities about the specific information that would be required, it had provided 'some guidance on the nature of the information to be sought.' 8

Requirements unclear

2.8 The committee heard a number of comments from stakeholders who believed the bill should provide greater detail relating to the type of information that they might be required to provide, the format in which it might be required and also the use to which that information may be put. Concern was also expressed that, without greater clarity, it was difficult for stakeholders to determine what resource imposition the requirement to provide information might have on their organisation.

2.9 Perhaps greatest concern was raised by utility representative organisations, which may be in part due to their not previously being required to provide such information to the Department.

2.10 The Australasian Railway Association (ARA) was 'concerned about the uncertainty ... of this legislation'. 9 In particular, as the bill did not specify how the information was to be provided, ARA believed this opened the possibility that utilities would be asked to provide physical access to their infrastructure so that observations of their infrastructure could be made for information purposes. ARA submitted it was concerned about the safety of workers and the security of railway operations. Although safety is carefully regulated by state legislation, ARA's concern was that Commonwealth legislation retained primacy over state legislation.

2.11 Water Services Association of Australia (WSAA) raised an identical concern at their appearance before the committee when they were asked to expand upon their

6 See National Broadband Network: Regulatory Refonnfor 21st Century Broadband Discussion · Paper, 7 April 2009, pp 9-10.

7 Mr Philip Mason, Department of Broadband, Communications and the Digital Economy (DBCDE), Committee Hansard, Canberra, 4 August 2009, p. 38.

8 Ms Pip Spence, DBCDE, Committee Hansard, Canberra, 4 August 2009, p. 39.

9 Mr Brett Hughes, ARA, Committee Hansard, Canberra, 4 August 2009, p. 18.

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reference to third-party access in their submission. Mr Claude Piccinin stated concern that:

... the bill only dealt with the provision of information. It was left unspoken what arrangements would be made in respect of actually accessing our infrastructure. 10

2.12 However, quite early in proceedings, the committee was able to clarify on the record that the purpose of this bill was to require access to information only; physical access to infrastructure assets and corridors was a completely separate issue and not the subject of this amendment.

2.13 In their submission, Energy Networks Association (ENA) were concerned regarding the lack of detail on the 'control procedures for the release of information' 11 to other parties, without which it would be difficult for them to gauge the risk of any such release.

2.14 Giving evidence at the public hearing, Telstra stated their belief that the scope of information required was rather broad: . .. the 'language [of the biii] needs to be tightened up quite significantly .. . to make sure the information is strictly for the building of the NBN and . . .

the type of information ... clearly specified. 12

2.15 In continuation, Mr William Gallagher gave the example of the bill currently referring to 'things ancillary to either the building of or the provision of services over the NBN' 13 as being purposes for which the information could be used. However, Mr Gallagher moments later acknowledged that the current bill is an improvement on the

previous legislation, admitting that ' . .. although we say it needs to be tightened -[now] there is at least some attempt to contain the nature of the information that can be requested.' 14

Timelines for consultation and supply of information

2.16 Concerns were raised with the committee about the time allowed both for consultations on any draft instrument requiring the provision of network information and for the provision of the information itself. 15

10 Mr Claude Pi ccinin, WSAA, Committee Hansard, Canberra, 4 August 2009, p. 12.

11 Energy Networks Association, Submission 5, p. 2.

12 Mr Geoff Booth, Tel stra, Co mmittee Hansard, Canberra, 4 August 2009, p. 27.

13 Mr William Gallagher, Telstra, Committee Hansard, Canberra, 4 August 200 9, p. 28 .

14 Mr Gallagher, Telstra, Committee Hansard, Canberra, 4 August 2009, p. 28.

15 See WSAA, Submission 2, p. 2; ENA, Submission 5, pp 1-2; Integral Energy, Submission 8, p. 2.

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2.17 ENA considered the five day timeframe to be 'particularly onerous' on energy network businesses, and, while recognising that this timeframe is designed to be a 'safety-net' should commercially cooperative processes fail, it noted there was no mention of proposed timeframes for these negotiations to take place. Given the implementation timeframe for the NBN and the likelihood that information would be requested in the near future, ENA considered that there should be consultations between the government and energy network businesses to 'mitigate the risk of being required to provide unavailable or onerous information requests'. 16

2.18 The WSAA considered that, while the five day consultation period would be sufficient for providing information about recent assets and in relation to metropolitan infrastructure, for legacy assets and regional water utilities, two weeks would be more . 17

appropnate.

2.19 WSAA also noted it could take even longer to provide advice on land and easem*nt availability because of the need to assess future infrastructure requirements at the time of the request. In addition, while assets registers contained information on existing infrastructure, information on works under construction is located elsewhere, which would make accessing this infom1ation more complex and time consuming. 18

2.20 Integral Energy argued that the five day consultation timeframe should be extended to fifteen days to give businesses a 'realistic opportunity' to ensure information requested was both 'directly relevant' and 'capable of being delivered', particularly given the potential civil penalty for failure to comply. 19

2.21 Similarly, Integral Energy argued that the minimum ten day timeframe for providing information should be extended to twenty working days, noting that it was 'unrealistic' to expect infrastructure businesses to have all the requested information at hand and in the format required. 20

2.22 The ARA concurred with the view that the consultation period on the draft instrument and the time for the provision of network information should be doubled. 21

2.23 While acknowledging that the timeframe was still of concern to some people, the Department considered that the increase from three to five days allowed for comment on a draft instrument was a 'reasonable' extension. 22 Further, there was an

16 Energy Networks Association, Submission 5, p. 2.

17 Mr Piccinin, WSAA, Committee Hansard, Canberra, 4 August 2009, p. 9.

18 WSAA, Submission 2, p. 2.

19 Integral Energy, Submission 8, p. 2.

20 Integral Energy, Submission 8, p. 2; See also Mr Anthony Englund, Integral Energy, Committee Hansard, Canberra, 4 August 2009, p. 4.

21 ARA, Committee Hansard, Canberra, 4 August 2009, p. 22.

22 Mr Mason, DBCDE, Committee Hansard, Canberra, 4 August 2009, p. 41.

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underlying assumption that by the time the point at which consultations on an instrument is reached, commercial discussions already would have taken place about the nature of the information being sought. The Department also noted that the timeframe is the 'mandatory time frame' but this would not 'preclude informal discussions about instruments as well. '23

2.24 With respect to the provision of information, the Department observed that the ten day period was a minimum amount of time and that 'a longer period can be provided.' 24

2.25 The Department indicated that any extension to the proposed consultation period would put pressure on its timeframes. A similar proposal to extend the time for providing requested information would raise the same concern. 25

Committee view

2.26 The committee notes that the time for consultation on a draft instrument has been extended from three to five business days and that the time for providing information is a minimum of ten business days.

2.27 Notwithstanding the concerns raised by submitters, the committee considers that, given the discussions that are likely to have taken place about the nature and format of the information required before the issuing of any instrument, and the need to ensure the NBN Implementation Study is not unduly delayed.

Compensation for provision of information

2.28 Four submissions raised concerns about the cost impost on utilities required to provide information under the extended regime and proposed the bill should require the government to provide compensation to cover reasonable costs incurred. 26

2.29 ENA considered that without knowing the level of detail and type of information required, utilities would be unable to determine the cost of providing the information, particularly in the timeframes proposed. ENA noted that there is 'no discussion on the ability for an entity to recover or be reimbursed for these costs.'

2.30 Integral Energy concurred with other submissions that they should be able to recover the full costs of providing requested information. 28 Integral Energy observed

23 Mr Mason, DBCDE, Committee Hansard, Canberra, 4 August 2009, p. 41.

24 Mr Mason, DBCDE, Committee Hansard, Canberra, 4 August 2009, p. 41.

25 Mr Mason, DBCDE, Committee Hansard, Canberra, 4 August 2009, p. 41.

26 See for example, WSAA, Submission 2, p. 3; ARA, Submission 3, p. 3; Integral Energy, Submission 8, p. 3; ENA, Submission 5, p. 2.

27 ENA, Submission 5, p. 2.

28 Integral Energy, Submission 8, p. 3.

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that as the bill provides for a 'wide range of possibilities as to the information' it was difficult to 'narrow down specific costs as a result.' 29 However, it expected to be reimbursed for the costs it incurred in supplying information either voluntarily or compulsorily. 30

2.31 The WSAA also expressed an expectation that its members would be recompensed for the costs incurred in assembling, collating and providing information in the form required. 31

2.32 The ARA indicated that it believed the legislation should be amended to include protections from 'unreasonable impacts on railways and unreasonable costs'. 32

2.33 When questioned on the costs incurred to provide information under the RFP process, Telstra indicated that the costs were 'internal costs' such as management and staff time in extracting the information from different databases and systems. In relation to the current bill, Telstra had not developed a position on whether suppliers of information should be recompensed for doing so. 33

2.34 The Department advised that the lack of an explicit compensation provision in the legislation was a reflection of the nature of the regime envisaged. There was the intention and preference to obtain information on a voluntary, commercial basis and that 'decisions parties make between themselves would be a matter for them to the extent that they would be compelled to provide information as a last resort.' 34

2.35 The Department advised that any payment for the provisions of information from carriers and utilities to the Implementation Study on a cooperative or commercial basis would be made from the budget for the NBN implementation on the authority of a departmental delegate. 35

Committee view

2.36 While the bill does not make compensation a requirement where information is sought on a mandatory basis under Part 27 A, the committee notes that it is the government's intention to seek information on a cooperative and commercial basis in the first instance. Were infonnation to be sought on a mandatory basis, the appropriateness of compensation would be a matter that might then require further consideration.

29 Mr Englund, Integral Energy, Committee Hansard, Canberra, 4 August 2009, p. 3.

30 Mr Englund, Integral Energy, Committee Hansard, Canberra, 4 August 2009, p. 3.

31 WSAA, Committee Hansard, Canberra, 4 August 2009, p. 8.

32 Mr Hughes, ARA, Committee Hansard, Canberra, 4 August 2009, p. 22.

33 Mr Gallagher, Telstra, Committee Hansard, Canberra, 4 August 2009, p. 25.

34 Mr Mason, DBCDE, Committee Hansard, Canberra, 4 August 2009, p. 40.

35 DBCDE, Answerto question on notice, dated 7 August 2009.

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Information security implications

2.37 Two main areas of information security that were raised with the committee: one relating to the general use, disclosure, storage, handling and destruction of any information provided under this bill; the other relating to the potential implications for national security that the broad provision of information may have.

General use, disclosure, storage, handling and destruction of information

2.38 Overall the committee notes that there was a general willingness to provide information voluntarily, provided stakeholders had confidence that there would be adequate confidentiality and security measures for information provided.

2.39 ENA submitted that the broadening of the defmition of an entrusted company officer ' carries with it infrastructure security and commercial implications, as well as possible risks', adding that:

This is also exacerbated by the fact that the businesses appear to have no control over whom the authorised information officer chooses to give the information to . 36

2.40 ENA also stated that it would be 'prudent' if information automatically became ' protected network information' as soon as it was received by the authorised information officer, rather than wait until the officer had reviewed it and provided a written undertaking to the fact. It was suggested that creating greater confidence for businesses could subsequently promote a 'freer flow of information'.

2.41 In commenting on the ability of the Australian Competition and Consumer Commission (ACCC) to access the information, Integral Energy believed that the bill did not clearly state the purpose for which the ACCC could gain that access. Noting that the both ACCC and also its subsidiary, the Australian Energy Regulator (AER), already have strong information gathering powers:

Integral Energy submits that the Bill should make it explicit that the ACCC and ... AER, may not use that information for the purpose of undertaking the economic regulation of essential infrastructure businesses. 38

2.42 Mr Piccinin from WSAA also expressed his views quite categorically that, in relation to the information provided, '[T]he security is not negotiable. ' 39 His submission was one example where concerns extended to the broad scope and extent

36 Energy Networks Association, Submission 5, p. 2.

37 Energy Networks Association, Submission 5, p. 2.

38 Integral Energy, Submission 8, p. 3.

39 Mr Piccinin, WSAA, Committee Hansard, Canberra, 4 August 2009, p. 12.

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of availability of information being perceived as having potential 'national security implications. ' 40

Concerns unfounded

2.43 In stark contrast to those views, Mr David Havyatt from Unwired highlighted to the committee that the telecommunications regime as it currently stands already provides 'an extensive facilities access regime whereby carriers are required to provide to each other information about their underground infrastructure and towers' . The information being requested by this bill 'could be requested by the ACCC or ACMA for the purpose of their regulatory function'.

2.44 However, through a 'quirk of drafting ' 41 , the government itself is not permitted to ask for that same information for the purposes of developing public policy relating to critical national infrastructure such as the NBN, and consequently requires this amendment to do so.

2.45 Mr Havyatt highlighted that there are ongoing relationships between water and electricity utilities, the railways and the telcos, through the common use of infrastructure and telecommunication services. His evidence also negated the concerns for national security, stating that:

... a large amount of the information that people are claiming is necessarily part of national security is actually physically available already, be that in topographical maps, or just by physically sighting. 42

Committee view

2.46 The committee acknowledges the concerns of stakeholders and the necessity to provide them with the confidence that their information will be dealt with the appropriate levels of security and confidentiality.

2.47 However the committee believes that both the extstmg measures under Part 27 A of the Act and those contained within the amendment provide adequate measures for use, disclosure, storage, handling and destruction of information provided to the authorised information officer. As clearly stated by the minister in the

Second Reading Speech:

The Bill imposes safeguards and limitations on the permitted purposes for which information may be disclosed and used ....

Provisions in Part 27A ... allow the Minister to make rules in subordinate legislation about the storage, handling and destruction of network

40 WSAA, Submission 2, p. [2]

41 Mr Havyatt, Committee Hansard, Canberra, 4 August 2009, p. 30.

42 Mr Havyatt, Committee Hansard, Canberra, 4 August 2009, p. 31.

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information, which are intended to protect the confidentiality qnd security of network information. 43

2.48 Similarly, the committee draws attention to the fact that existing penalty provisions for misuse of information are retained. Any breach of non-disclosure prohibitions by an entrusted public official remains a criminal offence under the Crimes Act 1914 and a similar breach by entrusted company officer would be a contravention of a civil penalty provision.

2.49 Despite comments that the government should make the instrument available to the sectors for comment, the committee highlights that witnesses stated that they were very happy44 with consultations they had recently had with the Department. In particular, Mr Piccinin from WSAA commented on the provisions within instruments created previously under Part 27 A:

... in discussions with the department we were pointed in the direction of the existing instrument with respect to telecommunications. They said that that would be translated across to our infrastructure ... So long as that is done we do not have a problem in respect to how [the instrument] would handle the security aspect ... 45

2.50 Finally, the committee notes that, when questioned about information provided to the Department under the previous RFP requirements of Part 27 A, and the perception that proponents could now use that information to build their own broadband network, the Department confirmed that:

Those proponents do not have the information any more . . . They have handed it back or they have destroyed it. 46

2.51 The committee strongly believes that the existing provisions and those in the proposed amendment contain appropriate security and confidentiality provisions for stakeholders to have confidence in the information gathering process.

Competitive neutrality

2.52 In its submission, the Business Council of Australia (BCA) expressed the view that the government's decision to proceed with this legislation raised a number of competitive neutrality issues that required further justification. BCA submitted 'that information compulsorily acquired from a private business in support of the NBN

43 Telecommunications Legislation Amendment (National Broadband Network Measures No. 1) Bill 2009, Second Reading Speech, Senate Hansard, 25 June 2009, p. 4273 .

44 See for example, Mr Hughes, ARA, Committee Hansard, Canberra, 4 August 2009, p. 20 .

45 Mr Piccinin, WSAA, Committee Hansard, Canberra, 4 August 2009, p. 13.

46 Mr Mason, DBCDE, Committee Hansard, Canberra, 4 August 2009, p. 38.

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company under Part 27 A will almost certainly be of commercial value' and would therefore confer 'a competitive advantage on the NBN company'. 47

2.53 Telstra also expressed concern that the current drafting of the description of information that may be collected under the regime is 'broad and very uncertain' and could be interpreted to extend to 'business plans and other information concerning the way in which a carrier intends to use its physical network infrastructure commercially'. Disclosure of this kind of information to the NBN company, Telstra argued, would 'raise serious issues of fairness and competitive neutrality'. 48 To mitigate this potential, Telstra proposed limiting the scope of the information that may be required to be provided under the legislation.

2.54 However, on the issue of competitive neutrality, Unwired observed that the current regulatory regime already provides for an extensive facilities access regime whereby telecommunications carriers are able to access each other's infrastructure and are required to provide information about their infrastructure to other carriers.

2.55 The Department agreed that the bill would need to cover information on the location, physical and functional characteristics of network facilities as proposed by Telstra, but indicated that the legislation was not limited to this type of information. It advised, however, that it was not envisaged that the kind of information detailed in Telstra's submission would be sought because of commercial and competitive concerns. In terms of safeguards, the Department noted that any request for information to be provided to the NBN company would need to be via an instrument that would be subject to consultation and ultimately disallowable. 50

Splitting of bill

2.56 The Opposition raised the feasibility of splitting the bill to provide that the current legislation only apply in respect of the Implementation Study and that a separate bill be required should the need to provide information to the NBN Company be established.

2.57 The Department advised that while the proposed regime does not have a specific legislative trigger, it does require a decision to be made by the government for information to be provided to the NBN Company. 51

47 BCA, Submission 9, p. 7.

48 Telstra, Submission 7, p. 2

49 Mr Havyatt, Unwired, Committee Hansard, Canberra, 4 August 2009, p. 30.

50 Mr Mason , DBCDE, Committee Hansard, Canberra, 4 August 2009, p. 43.

51 Mr Mason , DBCDE, Committee Hansard, Canberra, 4 August 2009, p. 39.

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Committee view

2.58 The committee does not support the suggestion that the bill be split in respect of its application to the Implementation Study and NBN Company, as it would potentially unnecessarily delay the NBN process if it became clear information should be provided to the NBN Company.

2.59 The committee notes that the parliament can make an in principle decision that the NBN Company can be provided with access to information if it is found to be appropriate and for the minister to exercise that judgment. The government would need to make a conscious decision to provide information to the company.

2.60 The committee also notes that if it is appropriate to provide information to the company, there will be strong and effective protections in place. The NBN Company would not have the power to request information directly itself, but would always have to request it through the Commonwealth.

Other issues raised in submissions

Privacy Impact Statement

2.61 In her submission to the Committee, the Privacy Commissioner suggested that it was unclear whether the 'protected network information' to be disclosed by carriers and utilities would include 'personal information' as defined by section 6(1) of the Privacy Act 1988 and that consideration be given to undertaking a Privacy

Impact Assessment (PIA). 52

2.62 Noting that it is not envisaged to seek information of a personal nature at this stage, the Department indicated that, as the bill provides a head of power rather than the specific type of information that may be requested, it would be more appropriate to determine whether a privacy impact assessment was required once an instrument is prepared. 53

Civil immunity concerns

2.63 In their submission, Telstra raised the issue of carriers and utilities being 'exposed to the possibility of liability' as a result of complying with the requirement to provide information. It was pointed out to the committee that some records may be unintentionally and unknowingly inaccurate for a variety of reasons.

2.64 Expanding on this issue before the committee, Mr Booth stated that Telstra would always provide their information on a 'best efforts basis', but highlighted that their network has been deployed over several decades. Consequently, ' we could not

52 Office of the Privacy Commissioner, Submission 6, p. 1.

53 Mr Mason, DBCDE, Committee Hansard, Canberra, 4 August 2009, p. 42 .

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categorically guarantee' the accuracy of their records, which 'maybe inconect, physically, or a road verge or a road [may have] been moved'. 54

2.65 Mr Piccinin from WSAA gave the example of over 400 water utilities in Victoria having been amalgamated into 15 in recent years, stating that in the process of such a wide scale rationalisation program, records ofthe infrastructure could 'get[s] lost along the way.' 55

2".66 Similarly, Mr Hughes from the ARA commented that it would be unreasonable if a business provided information 'in good faith', and was penalised when that information was subsequently found to be inaccurate. 56

2.67 When questioned by the committee on the issue of liability, the Department acknowledged it as an issue of which they were highly aware when drafting this amendment and also the existing Part 27 A. The Department also stated that information providers had the option of stating any limitations to the information they provide. Although remaining sensitive to concerns, the Department highlighted the necessity to balance these concerns with an incentive for information providers 'to provide the best quality information' to effectively inform the network planning processes. 57

Concluding remarks

2.68 The committee notes that there is general support for the government' s decision to deploy a FTTP broadband network to 90 per cent of Australian homes, businesses and schools. The committee also notes that the objective of this bill is to amend Part 27 A of the Telecommunications Act 1994 to facilitate the planning work of the Implementation Study and subsequently the roll-out of the NBN.

2.69 The committee has been made aware of a range of concerns and issues raised during the course of this inquiry. While noting that there could have been greater sector involvement in the drafting of this bill, which may have minimised these concerns, the committee acknowledges the time constraints under which this bill was drafted and introduced by the Department. The committee is also satisfied with the level of consultation with utilities and carries since the bill was introduced into the Senate, and the undertaking by the Department for ongoing consultation as instruments and/or are drafted in the future.

54 Mr Booth, Telstra, Committee Hansard, Canberra, 4 August 2009, p. 29.

55 Mr Piccinin, WSAA, Committee Hansard, Canberra, 4 August 2009, p. 15.

56 Mr Hughes, ARA, Committee Hansard, Canberra, 4 August 2009, p. 23.

57 Mr Mason, DBCDE, Committee Hansard, Canberra, 4 August 2009, 42.

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Recommendation

2. 70 The Committee recommends that the bill be passed.

Senator Anne McEwen Committee Chair

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Additional Remarks- Coalition Senators 1.1 The Coalition believes there are a number of flaws in the government's proposed National Broadband Network (NBN) proposal. This not withstanding, the Coalition will consider this bill on its merits and in conjunction with the government's latest policy on the NBN.

1.2 Primarily, Coalition Senators are concerned about the potential cost of this project and the fact the government arrogantly refuses to conduct any cost benefit analysis.

Senate order for the production of documents

1.3 Coalition Senators note that upon the introduction of this bill in the Senate on 25 June 2009, debate was adjourned 'to the next day of sittihg after the presentation of documents relating to the National Broadband Network tender process pursuant to an order of the Senate of 13 May 2009.,1

1.4 This order of the Senate requires that before further consideration of this NBN bill and any other NBN legislation that the government provide to the Senate, copies of the Australian Competition and Consumer Commission' s (ACCC) report to the Expert Panel and the Expert Panel' s report to the government. These reports relate to the Government's initial NBN proposal and Request for Proposal (RFP) process and the decision not to proceed with the proposal the ALP took to the last election and instead propose a $43billion fibre-to-the-premises option predominantly to be funded by government debt.

1.5 Coalition Senators still believe that this order of the Senate should be complied with and call on the government to provide these reports to the Senate to facilitate further consideration of this current bill.

Consultation

1.6 The Coalition is concerned by the overwhelming weight of evidence that indicated the government did not consult stakeholders about the content of this bill prior to its introduction.

1. 7 Coalition Senators are disappointed that utilities only became privy to potential obligations proposed by this bill after the bill was introduced. In evidence to the committee, M r Claude Piccinin, Deputy Executive Director, Water Services Association indicated that he was made aware of the bill through the media.

See Telecommurucations Legislation Amendment (National Broadband Network Measures No. 1) Bill2009,-Second Reading Speech, Senate Hansard, 25 June 2009, p. 4274.

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Senator MINCHIN - From the perspective of your industry, I would like to know when and how you learnt of the existence of this bill?

Mr Piccinin-The way I learnt about it is that I was sitting at my desk on a Friday afternoon, minding my own business, winding down and looking forward to the weekend, when a journalist asked, 'Would you care to comment on this?' and I said, 'What?' It was a total surprise, shall we say.

Senator MINCHIN- You found out from the media-Mr Piccinin - Indeed.

Senator MINCHIN - presumably after the bill had already been introduced?

Mr Piccinin-Indeed - yes . 2

1.8 Mr Brett Hughes, Director, Policy, Australasian Railway Association, stated in evidence to the committee that 'the rail industry is concerned about the lack of dialogue with government on this issue, which potentially has very significant impacts to the industry directly and Australia as a whole.'3

1.9 Further, it is surprising that in the time since the introduction of the bill those utilities that may be compelled to provide information have not been formally approached about their willingness or otherwise to cooperate.

1.10 Coalition Senators note that the Department of Broadband, Communications and the Digital Economy (the Department) has now met with some stakeholders to discuss their concerns, but remains opposed to any improvements to the bill to address stakeholder concerns.

1.11 Coalition Senators highlight our concerns about the Department' s lack of consultation on this legislation - particularly given that the government argues it is pivotal to the NBN implementation study.

1.12 The legislation was introduced almost three months after the announcement of the NBN Mark II proposal and the government should have been consulting with stakeholders over this period and as the bill was drafted. It is disappointing that the first stage of a project that will involve such a massive expenditure of taxpayer funds was not conducted in a cooperative and proactive way.

Compulsion

1.13 The Coalition notes that there was no evidence presented to the committee that carriers and utilities would not be prepared to cooperate with the government in providing information for the implementation study on a voluntary, commercial basis.

2 Mr Claude Piccinin, Committee Hansard, Canberra, 4 August 2009, p. 7.

3 Mr Brett Hughes, Committee Hansard, Canberra, 4 August 2009, p. 18 .

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Consultation timelines

1.14 The Coalition believes that the concerns expressed to the committee about the timelines for consultation have merit and should be further considered.

1.15 Submissions and/or evidence from Integral Energy, Energy Networks Association and the Water Services Association of Australia raised concerns with the time lines in the bill, both in relation to the consultation on the draft instrument and the time line for the provision of required information. 4

1.16 Given that the project is already experiencing delays and that it took four months to even appoint the lead advisers for the implementation study, the Coalition does not believe the arguments presented by the Department about their restrictive timelines have merit when they are being imposed at the expense of stakeholders.

1.17 Firstly, in relation to the period for consultation on any instrument to require the provision of information, the Coalition supports the recognition by the government that the existing consultation period is too short and that this bill amends section 531C(4) to extend the consultation period from three to five business days. However, given this bill will affect both carriers and utilities the Coalition is

sympathetic to the arguments presented to the committee that further consultation should be required.

1.18 We are inclined to support an increase in the consultation period to 10 business days. The government has not proven in this first step on the NBN Mark II proposal that they will be proactive in their engagement with stakeholders. Therefore to ensure that all stakeholders are given adequate time to consider any proposed instrument, we support calls for a further amendment to 531C(4).

1.19 The approved period for the provision of information remains unchanged by this bill at not less than 10 days. However, there was also evidence presented to the committee that this period should be extended.

1.20 Further, Coalition Senators also believe that the requirement that the minimum 10 day requirement for the provision of information should be extended to take account of the concerns raised by utilities about providing required information.

1.21 Integral Energy highlighted their concerns during the committee' s hearing into the bill.

Senator MINCHIN - Again, the bill provides for 10 working days for providing the information, the consultation having occurred. I think you recommend 20-working days, I assume. Would you like to expand on that?

4 See for example, Integral Energy, Submission 8; Water Services Association of Australia, Submission 2; and Energy Networks Association, Submission 5.

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Mr Englund - Depending on the scope of the information required it may be relatively easy to deliver what the department wants. However, as I averted to in my last response, most of our asset information is contained within our GIS systems and is relatively easy to deliver, but about 30 per cent of our asset information, which largely relates to ducts underneath our

larger metropolitan service the Parramatta, Liverpool areas and Western Sydney, into the Blue Mountains and down to the South of New South Wales-a lot of the assets were acquired pre-1990. We only have those in a scanned document format. They are not 100 per cent accurate and if, for example, the department is looking to acquire that information in a particular format or, perhaps more pertinently, they are looking to understand what level of capacity a particular electricity duct has, that would take us some time to acquire because we do not necessarily keep all of that information up to date. If they wanted cost information in addition to that, that would be another order of magnitude, because we would probably have to custom build something to deliver that.

Senator MINCHIN -It sounds as if even 20 working days might be

Mr Englund - It would be pushing it but we are trying to be helpful. 5

1.22 Similar concerns were expressed by the Water Services Association of Australia in relation to the difficulties in providing information about easem*nts in the 10 day period. 6

1.23 Officials from the Department confirmed at the hearing that the penalties for not complying with the timeframes could be onerous for carriers and utilities.

Senator MINCHIN - But if it is 10 days then I can imagine a minister being inclined to sign-off on 10 days. If you supply the information on the 11th day you are prima facie guilty of an offence under this bill, is that correct?

Mr Mason - It is a breach.

Senator MINCHIN- You have contravened the act. And the maximum penalty for contravening this act, as I understand, is $250,000?

Mr Mason - Yes. It depends on the nature of the party in some ways because for a carrier it is a carrier licence condition. 7

1.24 The Coalition believes that the views of stakeholders should be considered and the time to provide information should be extended to accommodate the difficulties utilities may have in obtaining and preparing the information required.

· 5 Mr Anthony Englund, Committee Hansard, Canberra, 4 August 2009, p. 4.

6 Mr Piccinin, Committee Hansard, Canberra, 4 August 2009, p. 9.

7 Mr Philip Mason, Committee Hansard, Canberra, 4 August 2009, p. 41.

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Immunities

1.25 During the inquiry, Coalition Senators questioned the Department about whether they had considered providing some level of immunity from civil penalties for carriers and utilities who inadvertently do not provide accurate information.

Senator MINCHIN- Thank you. The other issue that attracts my interest is a request made by some for the bill to provide a mechanism by which suppliers of information are granted an immunity from civil action based on any inaccuracy in the information provided that may incur damages to a third party. Has that been considered and rejected? Has it not been considered at all? Are there difficulties from your point of view in such an immunity?

Mr Mason- It is an issue that we are very aware of. It was something that was actually considered last year in the context of Part 27 A generally. We understand the sensitivity from the perspective of information providers but the other side of it is that there does need to be an incentive, we think, for information providers to provide the best quality information that they can. We would be concerned if there was too much immunity or too great an immunity that they may be perhaps a little lax in checking the details or the accuracy of it, which could have consequences for network planning and so forth.

Having said that, we recognise that there are sometimes limitations to carrying databases. For example, some of the utilities have indicated a lot of their infrastructure is quite old and it may not be that well recorded. So that is the countervailing one. In terms of how that can be dealt with in practice, it needs a degree of understanding, I suppose, on the part of the Commonwealth in seeking information from the implementation study and potentially, if it gets that far, from the national broadband network company

in relation to the quality of the information. It is potentially open to the information providers to state limitations to the information when they provide it, as well.

Senator MINCHIN- Yes, that is true. I know Senator Lundy expressed some surprise, but it is clear from evidence, particularly from utilities, that there is quite a bit of legacy network information that is stored on papyrus or something and not exactly well documented. Even with the best of endeavours, some of these utilities may have considerable difficulty supplying information which they could vouchsafe to be absolutely accurate. It would be unfortunate if they then paid a penalty for that. I understand you are sensitive to that, and that is something we may be able to pursue.8

1.26 Coalition Senators note that the Department has considered this issue and they think it unnecessary to include any immunity from civil liability in relation to the

8 Mr Philip Mason, Committee Hansard, Canberra, 4 August 2009, p. 42.

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provrswn of this information. However, we see strong merit in grvmg further consideration to including immunity for unintended inaccuracies in the information provided in the legislation to allay some of the concerns of utilities who have indicated they are willing to cooperate.

Costs

1.27 Utilities raised with the committee the issue of the costs associated with the provision of information that may be required by the government and the actual ongoing costs associated with the potential use of their infrastructure.

1.28 The Explanatory Memorandum states:

Any potential detriment to carriers and utilities if required to provide the information is outweighed by the national importance of the NBN to be planned and rolled out as efficiently as possible so that the economic and social outcomes that the NBN will facilitate are maximised. As identified above, the cost of making this information available is not considered onerous .9

1.29 We believe that the Explanatory Memorandum is potentially misleading as there is no evidence to support these assumptions regarding the costs to utilities or carriers of providing the information it may require.

1.30 As noted in the Majority Committee Report, four submissions to the inquiry raised concerns about the costs to utilities in providing information and that they would anticipate compensation to cover reasonable costs.

1.31 To highlight the validity of these concerns, Mr Hughes of the Australasian Railway Association told the committee that:

According to the legislation, railways will be required to provide information on land infrastructure and other facilities under their control. I am sure that you will appreciate that there are millions of pieces of information which may be requested varying from digital location information to the size of ducts. There are over 44,000 kilometres of rail track in Australia and countless stations, terminals, offices, yards, sidings, depots and other facilities . A simple question such as the boundaries of land under railway control represents an enormous amount of work to answer with any degree of accuracy. Yet this is exactly what the rail industry fears could be required under the legislation. If such information is required without due regard to reasonableness or compensation, it will impose an unacceptable burden on the Industry. 10

9 Telecommunications Legislation Amendment (National Broadband Network Measures No. 1) Bill2009, Explanatory Memorandum , p. 16.

10 Mr Hughes, Committee Hansard, Canberra, 4 August 2009, p. 18 .

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1.32 While the Coalition notes that it is the government's intention to seek information on a cooperative and commercial basis there is currently no mechanism that requires consideration of compensation under a mandatory requirement to provide information.

1.33 Further consideration should be given to whether this 'intention' of the government should be formalised in the legislation. If the government is confident that it can undertake commercial arrangements to obtain the information it requires, there can be limited concern about inserting a provision in the bill that will require reasonable costs being recompensed under a compulsory demand for information.

Security of information

1.34 One of the key concerns of Coalition Senators is the protection of sensitive information about assets and infrastructure provided to an authorised information officer. This is of particular concern given that the information of these utilities and carriers is of national security interest and the definition of who can potentially access any information is being broadened.

1.35 Protection of the integrity of information should be the paramount focus of the government throughout this process. While we support the government having flexibility in relation to the procedures for the protection of the information, we do believe that the stakeholders should be consulted about these protection and control regulations as suggested by Integral Energy. 11

1.36 In its submission to the inquiry, Energy Networks Association noted that the broadening of the definition of entrusted company officer in the bill 'carries with it infrastructure security and commercial implications, as well as possible risks, for businesses providing this type of information to a range of entities . .I2 -

1.37 We are concerned about the broad scope of people who could have access to the information over the life of the NBN Co. and that this bill gives the government the ability to impose obligations on carriers and utilities for a decade.

1.38 Integral Energy also raised their concerns in the committee hearing about the potential for the Australian Competition and Consumer Commission or the Australian Energy Regulator gaining access to information provided to the Commonwealth for the purposes of the NBN. 13 Upon questioning of the Department about this issue, they advised that though they understood the concerns the intention was not to broaden the scope of the information to be provided broader than for the 'purposes of

designing a network.' 14

11 Integral Energy, Submission 8, p. 3.

12 Energy Networks Association, Submission 5, p. 2.

13 Mr Englund, Committee Hansard, Canberra, 4 August 2009, p. 4.

14 Mr Mason, Committee Hansard, Canberra, 4 August 2009, p. 42.

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1.39 However, and as mentioned in the majority report, Telstra pointed out in . evidence to the committee that the scope for which information is to be provided is much broader than in the existing Act, and 'the language needs to be tightened up quite significantly in terms of the current legislation to make sure that information

provided is strictly for the building of the NBN and that it is much more specific than it currently is.' 15

1.40 The Coalition believes that the ten year sunset clause serves only to compound the level of concern about the procedures in place for the protection of any information that could be sought by the government.

Competitive neutrality

1.41 Coalition Senators are concerned that the government is blindly consumed by the anticipated social and economic benefits of the NBN upon delivery which assumes that the project will actually commence, let alone be completed.

1.42 This is evident throughout the Explanatory Memorandum, particularly m relation to competitive neutrality.

1.43 The Explanatory Memorandum states:

In relation to competitive neutrality it is recognised that any framework that compels the provision of information from one commercial entity to another, particularly where they may compete in some way, raises issues of competitive neutrality. However, where such considerations arise, they must be balanced against the larger public policy objectives of the Government's NBN policy, which, in the longer term, delivers benefits to consumers and the economy generally that will outweigh any competition concerns arising from accessing the information. 16

1.44 The Coalition believes that this explanation ignores the potential costs that will be imposed on utilities, carriers and taxpayers and is a statement that is based on broad generalisations rather than a detailed or rigorous analysis of the costs involved. As highlighted in the majority report, the Business Council of Australia's submission to the inquiry states:

Information compulsorily acquired from a private business in support of the NBN company under Part 27 A will almost certainly be of commercial value. The proposed Bill therefore confers a competitive advantage on the NBN company and is likely to have an impact on competition in the wholesale market for telecommunication services. As such we would

15 Mr Geoff Booth, Committee Hansard, Canberra, 4 August 2009, p. 27.

16 Telecommunications Legislation Amendment (National Broadband Network Measures No. I) Bill 2009, Explanatory Memorandum, p. 12.

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expect to see a rigorous cost-benefit analysis in support of the Bill in accordance with the COAG agreement. 17

1.45 The Coalition agrees with the concerns of the Business Council of Australia and we have serious concerns about the apparent lack of certainty surrounding the issue of competitive neutrality in the context of this bill and the NBN Co. going forward.

1.46 The Explanatory Memorandum further states that 'The provision of network information to the NBN Company would be subject to a further decision by the minister, thereby allowing any competitive neutrality issues to be considered further.'

1.4 7 We have considerable concerns about leaving these considerations in the hands of the minister. We therefore believe that further consideration should be given to limiting this bill to the provision of information for the implementation study only.

1.48 Should it be determined after the implementation study that the NBN Co. requires this information, the government should come back to the Parliament to get approval.

1.49 Given there are so many details still to be fmalised in regards to this project, we do not support giving the minister carte blanche powers with a ten year sunset clause.

1.50 In this we concur with the Business Council of Australia, who concluded in their submission:

The proposal raises a number of issues in relation to competitive neutrality principles agreed by all governments at COAG and therefore warrants a net benefit assessment.

The assessment should take into account the likely impacts on competition resulting from the provision and use of information under Part 27 A, in particular the possible consequences resulting from the broad defmition of information that can be required and the time period of up to 10 years.

1.51 We believe this bill should be for the purposes of the implementation study only and support the sunset of this requirement in June 2010.

17 Business Council of Australia, Submission 9, p. 7.

18 Telecommunications Legi slation Amendment (National Broadband Network Measures No. 1) Bill2009, Explanatory Memorandum, p. 16.

19 Business Council of Australia, Submission 9, pp 10-11.

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Recommendation

That the government further consider the concerns of stakeholders and refine the bill to accommodate these concerns, including through the reconsideration of the ten year sunset clause.

Senator Simon Birmingham Senator Judith Troeth Senator Nick Minchin

August 2009

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Optus

Appendix 1

Submissions Received

Water Services Association of Australia

Australasian Railway Association

Unwired

Energy Networks Association (ENA)

Office of the Privacy Commissioner

Telstra

Integral Energy

Business Council of Australia

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Appendix 2

Public Hearings

Canberra, 4 August 2009

Integral Energy

Mr Anthony Englund, Policy Manager

Mr Daryl Skene, Asset Information Manager

Australasian Railway Association

Mr Brett Hughes, Director Policy

Water Services Association of Australia

Mr Claude Piccinin, Deputy Executive Director

Telstra Corporation Ltd

Mr Geoff Booth, Group Managing Director, National Broadband Engagement

Mr William Gallagher, General Counsel, Public Policy & Communications

Department of Broadband, Communications and the Digital Economy

Mr Philip Mason, Assistant Secretary, Networks Policy and Regulation, National Broadband Network & Fibre Rollout Regulation Reform Branch

Ms Trudi Bean, Senior Executive Lawyer, Infrastructure and Digital Economy Services ·

Ms Pip Spence, First Assistant Secretary, Networks Policy and Regulation

Mr Don Markus, General Counsel

Unwired Australia Pty Ltd

Mr David Havyatt, Manager Regulatory and Corporate Affairs

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148

The Senate

Finance and Public Administration Legislation Committee

National Security Legislation Monitor Bill2009

September 2009

149

ISBN 978-1-74229-172-7

PO Box 6100

Parliament House

Canberra ACT 2600

Ph: 02 6277 3530

Fax: 02 6277 5809

E-mail: fpa .sen@aph.gov.au Internet: www.aph.gov.au/senate fpa

Printed by the Senate Printing Unit, Parliament House, Canberra.

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Membership of the Committee Members

Senator Helen Polley (Chair)

Senator Cory Bernardi (Deputy Chair)

Senator Doug Cameron

Senator Jacinta Collins

Senator Scott Ryan

Senator Rachel Siewert*

Substitute Members

ALP, TAS

LP, SA

ALP,NSW

ALP, VIC

LP, VIC

AG,WA

*Senator Scott Ludlam (AG, W A) to replace Senator Rachel Siewert

Participating Member for this inquiry

Senator Judith Troeth

Secretariat

Stephen Palethorpe

Christine McDonald

Andrew Bray

Nina Boughey

Alex Wilson

Bill Bannear

Samantha Ferry

Hanako Jones

Sophia Fernandes

Committee Secretary

Acting Committee Secretary

Principal Research Officer

Senior Research Officer

Research Officer

Executive Assistant

Ill

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VIC, LP

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TABLE OF CONTENTS

Membership of the Committee ........................................................................ iii

Abbreviations ................................................................................................... vii

Recommendations .............................................................................................. ix

Chapter 1 ............................................................................................................. !

Introduction .............................................................................................................. 1

The inquiry .... .... .... .................. .... .. ... .. .. .. .... ...................................................... ..... . 1

The bill. ..................................... ...................... ........................................ ... ............. 1

Background ... ...... ..... .. ... ........... .... .... ... ... ..... ........ ...... ..... ... ...... ...... ... .... ......... ... ... .... 2

Chapter 2 ............................................................................................................. 7

Key Issues .................................................................................................................. 7

Overview of evidence .... .......... ............. ..... ... .... .... ....... ..... .... ........... .... .... ... .... ... ..... 7

Independence of the monitor .... ...... .... ........ ..... .............. ......................... .............. .. 8

Referral mechanism ... .. ..... .......... .. ..... .... ....... .... ... .................................... .. ........... 15

Scope of reviews ....... ....... .... ..... ............................................... ........... ... .... ........ ... 22

Review criteria ........................ .. .................. .... .... ................... .... .... .................... ... 30

Reporting requirements ..................... .... ..... ............................................. ... .......... 36

Coalition Additional Comments ...................................................................... 43

Australian Greens Additional Comments ..................................................... .45

Appendix 1 ......................................................................................................... 49

Submissions Received ............................................................................................. 49

Additional Information Received .......................................................................... 49

Appendix 2 .................................................................... ,. .................................... 51

Public Hearing and Witnesses ............................................................................... 51

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Abbreviations

AGD Attorney-General's Department

AHRC Australian Human Rights Commission

AMCRAN Australian Muslim Civil Rights Advocacy Network

The bill National Security Legislation Monitor Bill 2009

Castan Centre The Castan Centre for Human Rights Law

CLA Civil Liberties Australia

The committee Finance and Public Administration Legislation Committee

Gilbert + Tobin Centre Gilbert+ Tobin Centre of Public Law

HRLRC Human Rights Law Research Centre

ICCPR International Covenant on Civil and Political Rights

ICJA International Commission of Jurists (Australia)

Law Council The Law Council of Australia

Monitor National Security Legislation Monitor

PIAC Public Interest Advocacy Centre

PILCH Public Interest Law Clearing House

PJCIS Parliamentary Joint Committee on Intelligence and

Security

PM&C Department of the Prime Minister and Cabinet

VII

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Recommendations

Recommendation 1 2.7 The committee recommends that the Senate pass the bill subject to the following recommendations.

Recommendation 2 2.13 The Committee recommends that the title of the bill be amended to: 'Independent National Security Legislation Monitor Bill2009'.

Recommendation 3 2.14 The Committee recommends that the bill be amended so that the Monitor be referred to as the 'Independent National Security Legislation Monitor'.

Recommendation 4 2.29 The committee recommends that the Government actively and regularly assess the adequacy of the resources and staff allocated to the Monitor's office.

Recommendation 5 2.56 The committee recommends that clause 6 of the bill be amended to state clearly that the National Security Legislation Monitor has the power to conduct inquiries on his/her own initiative on subjects which are within the functions of the Monitor.

Recommendation 6 2.70 The committee recommends that the bill be amended to enable the Parliamentary Joint Committee on Intelligence and Security to refer matters relating to Australia's counter-terrorism and national security legislation to the National Security Legislation Monitor for review and report.

Recommendation 7 2.88 The committee recommends that paragraph 6(1)(b) of the National Security Legislation Monitor Bill 2009 be amended to include reference to 'any other law of the Commonwealth, the States or the Territories to the extent that it relates to Australia's counter-terrorism and national security legislation'.

Recommendation 8 2.106 The committee recommends that the bill be amended to require the Monitor to assess whether counter-terrorism and national security legislation is being used as intended.

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Recommendation 9 2.111 The committee recommends that the bill be amended to allow the Monitor when performing his or her functions, to consult with independent statutory agencies such as the Office of the Privacy Commissioner and the Australian Human Rights Commission, as the Monitor considers necessary.

Recommendation 10 2.130 The committee recommends that the bill be amended to require the Monitor to assess whether the legislation is consistent with Australia's international human rights obligations.

Recommendation 11 2.137 The committee recommends that the bill be amended to require the Monitor to assess whether the legislation being reviewed remains a proportionate response to the threat posed to national security.

Recommendation 12 2.152 The Committee recommends that the bill be amended to require the Monitor to prepare two versions of any report that requires reference to sensitive material. The first version would be an unedited version for the Prime Minister, and the second, an edited version with references to sensitive material excluded for tabling in both Houses of Parliament.

Recommendation 13 2.162 The committee recommends that, if its earlier recommendation to require the tabling of the Monitor's reports in both Houses of Parliament is adopted, then the government be required to table a response to the Monitor's reports in both Houses of Parliament, within six months of receipt of the report.

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Chapter 1

Introduction

The inquiry

1.1 On 25 June 2009 the Senate, on the recommendation of the Selection of Bills Committee (Report No. 10 of 2009), referred the National Security Legislation Monitor Bill 2009 (the bill) to the Finance and Public Administration Legislation Committee (the committee) for inquiry and report by 7 September 2009 .

1.2 The inquiry was advertised in The Australian and through the Internet. The committee invited submissions from the Australian Government and interested organisations and individuals.

1.3 The committee received 15 public submissions. A list of organisations that made public submissions to the inquiry, together with other information authorised for publication, is at Appendix 1.

1.4 The committee held a public hearing in Canberra on 14 August 2009. Appendix 2lists the names and organisations of those who appeared. Submissions and the Hansard transcript of evidence may be accessed through the committee's website at www. a ph. gov .au/ senate/ committee/fapa ctte/index.htm.

The bill1

1.5 The bill establishes the statutory position of the National Security Legislation Monitor (the Monitor). The standing function of the Monitor will be to review the operation, effectiveness and implications of the counter-terrorism and national security legislation and report his or her comments, findings and recommendations to the Prime Minister. In addition, the Monitor must consider whether Australia's counter-terrorism and national security legislation contains appropriate safeguards for protecting individual rights, and whether the legislation remains necessary.

1.6 In reviewing the legislation, the Monitor must give particular emphasis to that legislation which has been used or considered in the previous financial year to ensure that the Monitor reviews the laws which have been used in a practical scenario. In conducting the review, the Monitor must have regard to Australia's international obligations as well as the agreed national counter-terrorism arrangements between the Commonwealth, states and territories.

Much of this section is based on the Explanatory Memorandum, p. 1.

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1. 7 The Monitor will be able to initiate his or her own reviews. The Prime Minister may also refer matters relating to counter-terrorism or national security to the Monitor for report directly back to the Prime Minister.

1.8 The Monitor must also prepare, and give to the Prime Minister, an annual report on the performance of his or her statutory functions. An edited report will be tabled in each House of Parliament.

1.9 The bill provides the Monitor with the power to compel the giving of sworn testimony, to hold both public and private hearings and to summon a person and to compel the production of documents and things. These powers are supported by criminal offences for conduct in the nature of contempt.

1.10 The bill requires that before a recommendation on appointment is made to the Governor-General, the Prime Minister must consult with the Leader of the Opposition.

1.11 The Minister, in the second reading speech, noted that:

The proposals in this Bill reflect the Government's commitment to ensure that Australia has strong counter-terrorism laws ,that protect the security of Australians, while preserving the values and freedoms that are part of the Australian way of lik 2

Background

National security legislation

1.12 In its December 2006 report, the Parliamentary Joint Committee on Intelligence and Security (PJCIS) observed that:

Since 2001, a series of terrorist events have served as a reminder of the risk and consequences of terrorist violence. Australia is not immune from these influences ... [The PJCIS has] concluded that a special terrorism law regime is justifiable and forms an important, although not exclusive, tool in Australia's counter-terrorism strategy ...

It is clear that Australia now has a highly developed legal framework and stronger institutional capacities to deal with the threat of terrorism. The terrorism law regime is, essentially, a preventive model, which differs in many respects from our earlier legal traditions . Bearing in mind the significance of these changes and the importance of terrorism policy into the future , we have recommended the appointment of an Independent Reviewer to provide comprehensive and ongoing oversight. The Independent Reviewer, if adopted, will provide valuable reporting to the

2 Senator the Hon Penny Wong, Minister for Climate Change and Water, Senate Hansard, 25 June 2009, p. 4260.

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Parliament and help to maintain public confidence in Australia's specialist terrorism laws. 3

1.13 The PJCIS also noted that since 2001 the Parliament has passed over thirty separate pieces of legislation dealing with terrorism and national security that extend the criminal law and expand the powers of intelligence and law enforcement agencies. This has coincided with the approval of very significant budget increases to fund new security measures. The PJCIS noted that the new terrorism law regime carries heavy penalties and introduces significant changes to the traditional criminal justice model. 4

Calls for an independent reviewer

1.14 A number of inquiries into different aspects of terrorism · and security legislation have recommended the establishment of an independent reviewer of national security legislation. The June 2006 report of the Security Legislation Review Committee, (the Sheller Committee, which was chaired by the Hon Simon Sheller AO QC), found that it was important that the ongoing operation of security legislation be closely monitored, and that Australian governments have an independent source of expert commentary on the legislation. The Sheller report discussed a number of models of future review including the appointment of an independent reviewer. 5

1.15 In December 2006 the PJCIS noted that post enactment review of national security legislation had been sporadic and fragmented with a focus on specific pieces of legislation rather than the terrorism law regime as a whole. The PJCIS concluded that there was a need for an integrated approach to ensure ongoing monitoring and refinement of law where necessary and recommended that the government appoint an Independent Reviewer of terrorism law in Australia. It was further recommended that the Independent Reviewer be free to set his or her own priorities, have access to all necessary information and that the Independent Reviewer report annually to the Parliament. 6

1.16 In the 2007 report on its inquiry into the proscription of 'terrorist

organisations' under the Australian Criminal Code, the PJCIS reiterated its view that an Independent Reviewer would provide a more integrated and ongoing approach to monitor the implementation of terrorism law in Australia. 7

3 Parliamentary Joint Committee on Security and Intelligence, Review of Security and Co unter Ten-orism Legislation, December 2006, p. vii.

4 Parliamentary Joint Committee on Security and Intelligence, Review of Security and Counter Ten-orism Legislation, December 2006, p. 21.

5 Security Legislation Review Committee, Report of the Security Legislation Review Committee, June 2006, p. 6.

6 Parliamentary Joint Committee on Security and Intelligence, Review of Security and Counter Terrorism Legislation , December 2006, p. 22.

7 Parliamentary Joint Committee on Security and Intelligence, Inquiry into the proscription of 'terrorist organisations' under the Australian Criminal Code, September 2007, p. 52.

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1.17 More recently, the Hon John Clarke QC, in his November 2008 report on the case of Dr Mohamed Haneef, recommended that consideration be given to the appointment of an independent reviewer of Commonwealth counter-terrorism laws. The Clarke report supported:

.. the notion of ensuring that the system is balanced between the need to endeavour to prevent terrorism and the need to protect an individual's rights and liberties. An independent reviewer could play an important part in , striking this necessary balance. 8

1.18 In October 2008, the Senate Legal and Constitutional Affairs Committee reported on its inquiry into a private Senators' bill; the Independent Reviewer of Terrorism Laws Bill 2008 [No. 2]. The bill sought to establish an 'Independent Reviewer of Terrorism Laws' to ensure ongoing and integrated review of the operation, effectiveness and implications of laws in Australia relating to terrorism. In its report the committee gave in-principle support to the bill and recommended a range of amendments to the bill including that the role of Independent Reviewer be carried out by a panel of three people with relevant expertise, whose terms of service be staggered where possible; and that, in addition to reporting to Parliament on inquiries undertaken by the Independent Reviewer in respect of terrorism legislation, an Annual Report on the activities of the Independent Reviewer is tabled in Parliament. 9 The bill was passed in the Senate on 13 November 2008 and was introduced into the House of Representatives on 24 November 2008.

1.19 On 23 December 2008, the Attorney-General, the Hon Robert McClelland MP announced the establishment of the National Security Legislation Monitor:

The Government will establish a National Security Legislation Monitor to review the practical operation of counter-terrorism legislation on an annual basis. The Monitor will be an independent statutory office within the Prime Minister's portfolio and will report to Parliament... The Government will progress this proposal as a priority. 10

Proposed amendments to National Security Legislation

1.20 On 12 August 2009, the Attorney-General released a discussion paper on proposed legislative reforms to Australia's counter-terrorism and national security legislation." Addressing the House of Representatives the Attorney-General stated:

8 The Hon John Clarke, Report of th e Inquiry into th e Cas e of Dr Mohamed Haneef, Volume One, November 2008, pp 255- 56.

9 Senate Constitutional and Legal Affairs Committee, Indep endent Reviewer of Terrorism Laws Bill 2008 [No . 2], October 2008, p. ix.

10 The Hon Robert McClelland MP, Attorney-General for Australia, 'Comprehensive Response To National Security Legislation Reviews', Press Release, 23 December 2008.

11 The Hon Mr Robert McClelland MP, Attorney-General, House of Representatives Hansard, 12 August 2009, pp 73- 74.

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The amendments proposed in this discussion paper seek to achieve an appropriate balance between the government's responsibility to protect Australia, its people and its interests and to instil confidence that our laws will be exercised in a just and accountable way. 12

1.21 The Attorney-General noted that the release of the discussion paper was a separate process to the establishment of the Monitor, which will 'be independent and will consider whether legislation adequately protects public safety, without reducing cherished public freedoms.'

12 The Hon Mr Robert McClelland MP, Attorney-General, House of Rep resentatives Hansard, 12 August2009,p. 73.

13 The Hon Mr Robert McClelland MP, Attorney-General, House of Rep resentatives Hansard, 12

August 2009, p. 73.

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Chapter 2

Key Issues

Overview of evidence

2.1 The committee received evidence from a variety of organisations that generally welcomed the establishment of the Monitor. The majority of evidence received included comments of support, which viewed the Monitor as an important office for improving the operation of terrorism and national security legislation. Typical of these was the following comment from the Gilbert + Tobin Centre of Public Law:

We welcome the National Security Legislation Monitor Bill 2009 as an initiative to establish ongoing, holistic and independent review of Australia's anti-terrorism laws. 1

2.2 Another example comes from the Federation of Community Legal Centres (Victoria):

The Federation welcomes in principle the proposal to establish a National Security Legislation Monitor, a permanent mechanism for independent review of counter-terrorism and national security legislation. The counter terrorism laws are extraordinary and it is imperative whilst they are in place that they are subject to regular, comprehensive and independent review. 2

2.3 Some witnesses highlighted the increase in the amount of legislation concerning terrorism and national security as a key reason for supporting the establishment of the monitor. The International Commission of Jurists (Australia) (ICJA) stated that:

At the outset the ICJA would first like to commend the Australian Government on creating such [an] office. The role of the Monitor is particularly important in light of the fact that over the past nine years there has been a proliferation of legislative activity concerning terrorism and national security. 3

2.4 Notwithstanding the broad ranging support for the establishment of the Monitor, the committee heard evidence on a range of issues including the following items which are discussed below:

â¢ the independence of the Monitor;

â¢ the review referral mechanism;

Gilbert + Tobin Centre of Public Law, Submission 1, p. 2.

2 Federation of Community Legal Centres (Victoria), Submission 9, p. 1.

3 International Commission of Juri sts (Australia), Submission 5, p. 2.

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â¢ the matters to which the Monitor must have regard when reviewing legislation; and

â¢ the Monitor's reporting requirements.

2.5 Only one submission opposed the establishment of the Monitor. The New South Wales Council for Civil Liberties stated that on balance ' ... the introduction of a National Security Legislation Monitor is not the best means of bringing the unsatisfactory legal situation that exists at present into a more satisfactory position. '4

2.6 At the outset the committee would like to endorse the widespread support for the bill. It also endorses the need to balance competing concerns which were highlighted in Senator Wong's second reading speech:

The proposals in this Bill reflect the Government's commitment to ensure that Australia has strong counter-terrorism laws that protect the security of Australians, while preserving the values and freedoms that are part of the Australian way oflife. 5

Recommendation 1

2.7 The committee recommends that the Senate pass the bill subject to the following recommendations.

Independence of the monitor

2.8 A consistent theme that ran throughout the inquiry was the need to ensure the Monitor's independence. While being an issue in its own right, the question of the Monitor's independence also underlies many related issues that are discussed later in this report, for example the referral mechanism and reporting requirements. The committee sees the notion of independence as fundamentally important to the position of the National Security Legislation Monitor. It will be an aspect of the Monitor's character that will heavily influence the public perception and legitimacy of the position. As a consequence, the committee has used this notion as a prism through which to assess the various issues raised during the committee's inquiry.

2.9 Many and witnesses argued that the independence of the Monitor

will directly affect the efficacy of his or her work. The committee heard that various features of the bill, both individually and cumulatively, will impact on the actual or perceived independence of the Monitor.

4 New South Wales Council for Civil Liberties, Submission 12, pp 1- 2.

5 Senator the Hon Penny Wong, Minister for Climate Change and Water, Senate Hansard, 25 June 2009, p. 4260.

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Title of the Monitor

2.10 Submitters and witnesses expressed concern that the title of the office and of the bill did not include the word 'independent'. The Law Council noted its disappointment that 'the term independent does not feature in the title of the [Monitor] Bill or in the title of the Monitor itself arguing that:

While many features of the [Monitor] underscore its independent character, the Law Council is of the view that it is of symbolic importance to include the term 'independent' in the title of the office. 6

2.11 Similarly the AHRC recommended that the 'independent status of the Monitor should also be reflected in the title of his or her office.' 7

Committee view

2.12 The committee is of the view that the inclusion of the word 'independent' in the title of the office and in the title of the bill will assist the public's understanding of the role of the Monitor as an independent reviewer of national security legislation. This in turn will improve public confidence in Australia's national security and terrorism laws.

Recommendation 2

2.13 The Committee recommends that the title of the bill be amended to: 'Independent National Security Legislation Monitor Bill2009'

Recommendation 3

2.14 The Committee recommends that the bill be amended so that the Monitor be referred to as the 'Independent National Security Legislation Mopitor'.

Legal Status of the Monitor

2.15 The Monitor is appointed under clause 11 of the bill. Subclause 11(1) reads as follows:

The National Security Legislation Monitor is to be appointed by the Governor-General by written instrument, on a part-time basis.

2.16 Some submissions and witnesses expressed concerns that the bill did not sufficiently define the legal status of the Monitor. For example, the Gilbert + Tobin Centre of Public Law (Gilbert+ Tobin Centre) argued that the bill did not address the legal status of the Monitor or whether it constitutes an independent statutory agency.

6 Law Council of Australia, Submission 4, p. 3.

7 Australian Human Rights Commission, Submission 11, p. 4.

8 Gilbert Tobin Centre of Public Law, Submission 1, p. 7.

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The Law Council of Australia (the Law Council) also expressed these concerns recommending that the bill be amended to include a specific provision outlining whether the Monitor is to be an independent statutory agency. 9

2.17 The Castan Centre for Human Rights Law (the Castan Centre) argued that the departments and agencies examined as part of the Monitor's work may often be part of the executive government and as a result:

Unless that statutory independence is established and made unambiguous, there would be an inevitable tension, both a legal tension and a practical operational tension, if the monitor were called upon to undertake a review of the activities of those departments or agencies. So we think there could be improvements in the wording of the bill to make that independence clear. 10

2.18 On a number of occasions the Government has sought to clarify the independent status of the Monitor. For example when the Monitor was first announced in December 2008, the Attorney-General, the Hon Robert McClelland MP stated that:

2.19 The bill's second reading speech refers to 'the establishment of an independent reviewer of terrorism laws' and goes on to highlight the Monitor's independent status:

... the role of the Monitor will be undertaken by one person who will be expected to be independent from the current administration of the counterterrorism legislation. 12

2.20 In responding to questions about the statutory independence of the Monitor, officers from the Department of the Prime Minister and Cabinet (PM&C) told the committee that the monitor ' ... is an independent statutory appointment within the Prime Minister's portfolio so the position itself does not fall within the department.'

9 Law Council of Australia, Submission 4, p. 20.

IO Dr Patrick Emerton, Associate, Castan Centre for Human Rights Law, Proof Committee Hansard, I4 August 2009, p. 2- 3.

II The Hon Robert McClelland MP, Attorney-General for Australia, 'Comprehensive Response To National Security Legislation Reviews', Press Release, 23 December 2008, emphasis added.

I2 Senator the Hon Penny Wong, Minister for Climate Change and Water, Senate Hansard, 25 June 2009, p. 4260.

I3 Mr Garry Fleming, Assistant Secretary, Border Protection and Law Enforcement Branch, Department of the Prime Minister and Cabinet, Proof Committee Hansard, I4 August 2009, p. 26.

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Committee view

2.21 While noting the concerns of some submitters and witnesses, the committee is satisfied that the bill provides sufficient statutory independence for the Monitor. The committee notes in particular the evidence of PM&C that the Monitor 'is an independent statutory appointment'. The committee also notes that the proposed appointment and office location arrangements for the Monitor are identical to those for the Commonwealth's independent Inspector-General of Intelligence and S

. 14

ec*nty.

Location of office, staffing and resources

2.22 Submitters and witnesses expressed concern that if the staff and the office of the Monitor were located within the PM&C, the independence of the Monitor may be reduced. For example, the Public Interest Advocacy Centre (PIAC) articulated these concerns stating:

... the Bill fails to specify whether the Monitor will be a new independent office or part of an existing office of department ... PIAC suggests that the Monitor should be a new, independent office to ensure that the Monitor is seen to be truly independent of government. 15

2.23 During the public hearings, committee members questioned witnesses on whether the location of the office within a government department may undermine the independence of the Monitor. The Gilbert +Tobin Centre stated:

I am not suggesting that the office should not be located within the Department of Prime Minister and Cabinet. Indeed, the Office of the Inspector-General of Intelligence and Security is also located within a government department and, indeed, that is necessary for administrative purposes. All I am suggesting is that that particular factor combinea with

other aspects of the legislation- things like the current reporting arrangements in sections 29 and 30-could have the effect of undermining public confidence in independence. If the office is going . to be located within a government department, as it necessarily must be, then steps must be taken to ensure that it is balanced by clear indications of the

independence of the office, for example, in the reporting requirements. 16

14 That is, appointment by the Governor-General following consultation between the Prime Minister and the Leader of the Opposition. See below for office location details.

15 Public Interest Advocacy Centre, Submission 15, p. 8.

16 Ms Nicola McGarrity, Director, Terrorism and Law Project, Gilbert + Tobin Centre of Publi c Law, Proof Committee Hansard, 14 August 2009 , p. 13.

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2.24 PM&C officials advised the committee that the staff in the office of the Monitor would be employees ofPM&C. 17

2.25 The funding to establish the Monitor was announced in the 2009-10 Budget:

... the Government will provide $1.4 million over four years to establish the National Security Legislation Monitor in the Department of the Prime Minister and Cabinet, to review the operation of counter-terrorism and national security legislation. 18

2.26 Several submissions and witnesses highlighted the level of resources allocated to the Monitor as being key to his or her effectiveness. The Law Council argued that ultimately 'the success of the Monitor is likely to be dependant upon the individual appointee and the resources he or she has at his or her disposa1.'

The Law Council

also stressed in its evidence to the committee that 'the monitor will require sufficient resources to be able to do this very important job.' 20 The Law Council compared the proposed resources of the Monitor, with the resources available to the United Kingdom's Independent Reviewer of Terrorism Laws, Lord Carlile:

The Law Council was fortunate to meet with [Lord Carlile] when he visited Australia earlier this year. He certainly indicated that he thought that at least three or four staff were necessary to fulfil his role. When you look at the budget allocation for this office, it appears that that allocation would be quite stretched to cover three or four staff as well as the part-time monitor. 21

2.27 Committee members questioned PM&C officers on the possible staffing and resources for the Monitor. Officers told the committee that two new positions would be created within PM&C to staff the Monitor's office, also telling the committee that:

... we notionally have two people in our minds, but a lot of it will depend on how the monitor, once appointed, chooses to work-whether, for example, that is in short bursts with a heavy load for a couple of months in each annual cycle plus a bit more as needed, or whether the monitor might prefer to be doing a number ofhours a week each week throughout the year.

17 Mr Garry Fleming, Assistant Secretary, Border Protection and Law Enforcement Branch, Department of the Prime Minister and Cabinet, Proof Committee Hansard, 14 August 2009, p. 25.

18 Budget Paper No.2, Budget Measures 2009- 10, May 2009, p. 372.

19 Law Council of Australia, Submission 4, p. 20.

20 Ms Rosemary Budavari, Director, Criminal Law and Human Rights Unit, Law Council of Australia, Proof Committee Hansard, 14 August 2009, p. 15.

21 Ms Rosemary Budavari, Director, Criminal Law and Human Rights Unit, Law Council of Australia, Proof Committee Hansard, 14 August 2009, p. 15.

22 Mr Garry Fleming, Assistant Secretary, Border Protection and Law Enforcement Branch, Department of the Prime Minister and Cabinet, Proof Committee Hansard, 14 August 2009, p. 26.

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Committee view

2.28 The committee agrees with the Law Council that the success of the Monitor is likely, in part, to be dependant on the resources that he or she has at his or her disposal. However the committee is of the view that what is considered to be sufficient resources will ultimately depend on a range of factors including the quantity, timing and scope of reference. It is difficult to predict these in advance of the establishment of the Monitor. The committee considers that funding allocated in the 2009-10 Budget is sufficient for the initial establishment of the office. However the committee would be concerned if at some stage in the future the Monitor is unable to fulfil his or her functions because of lack of resources. While the committee will continue to assess funding for the Monitor through its Estimates and Annual Report processes, it believes that ongoing consideration by the government is also required.

Recommendation 4

2.29 The committee recommends that the Government actively and regularly assess the adequacy of the resources and staff allocated to the Monitor's office.

Appointment process

2.30 Subclause 11 (2) outlines the process for the appointment of the Monitor:

Before a recommendation is made to the Governor-General for the appointment of a person as the National Security Legislation Monitor, the Prime Minister must consult with the Leader of the Opposition in the House of Representatives.

2.31 An area of concern to submitters and witnesses was the proposed appointment process for the Monitor. The bill states that the Monitor is to be appointed by the Governor-General following consultation between the Prime Minister and the Leader of the Opposition. Submitters and witnesses expressed concern that this process may undermine the independence of the monitor. The International Commission of Jurists

(Australia) (ICJA) articulated these concerns stating that: 'If the purpose of the legislation is to have an independent monitor then the monitor should be appointed by an independent non-political body.' 23

2.32 In their joint submission, the Public Interest Law Clearing House and the Human Rights Law Resource Centre argued that:

... it is considered that a transparent, and publicly accountable selection process, combined with comprehensively described functions , would assist to avoid any perception of lack of independence. 24

23 International Commission of Jurists (Australia), Submission 5, pp 4-5.

24 Public Interest Law Clearing House/Human Rights Law Research Centre, Submission 6, p. 11.

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Committee View

2.33 The committee does not believe that a more detailed and lengthy appointment process than prescribed in the bill would improve the independence of the Monitor. The committee believes that the requirement for the Prime Minister to consult with the Leader of the Opposition before making a recommendation to the Governor-General is sufficient for ensuring the Monitor's independence. The committee notes that this process is the same as that used to appoint the Inspector-General of Intelligence and

Security.

Qualifications of the Monitor

2.34 The issue of the Monitor's qualifications was also raised during the inquiry. Subclause 11 (3) requires that a person must not be appointed as the Monitor unless in the Governor-General's opinion, the person is suitable for appointment because of the person's qualifications, training or experience.

2.35 The Australian Muslim Civil Rights Advocacy Network (AMCRAN) stated that it 'is of the firm view that this requirement does not meet the complexities of the role' arguing that the Monitor needs to 'have extensive legal background.' 25

2.36 The committee questioned witnesses on whether the Monitor should be required to have a legal background. The Law Council responded:

Not necessarily. I think in the way the bill is drafted is that the person or persons who are selected, if there is an amendment to the bill, have to have suitable qualifications and experience. Obviously, a legal background would be an advantage in reviewing legislation and how it has been operating, but we would not necessarily see that that would be an absolute requirement. It would be up to the Prime Minister, in consultation with the Leader of the Opposition, to select a person or persons with suitable qualifications. 26

2.37 Officers from the Attorney-General's Department (AGD) told the committee that while legal qualifications would be taken into account 'it is the character and the experience of the person that are very important, not just the qualifications'. 27

Officers

from PM&C supported this proposition, telling the committee that:

I think that, clearly, relevant parts of the legal profession are going to be an obvious picking ground. A legal background will help. My only concern would be that, if you locked in that they had to have legal qualifications, you would potentially rule out someone who might be very well qualified to

25 Australian Muslim Civil Rights Advocacy Network, Submission 14, p. 4.

26 Law Council of Australia, Submission 4, p. 15.

27 Mr Garry J:leming, Assistant Secretary, Border Protection and Law Enforcement Branch, Department of the Prime Minister and Cabinet, Proof Committee Hansard, 14 August 2009, p. 24.

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do it. You might not get the best candidate, just because they do not have legal qualifications. 28

Committee view

2.38 The committee considers that prescribing mm1mum qualifications for the monitor is overly prescriptive and may exclude members of the community who would be well qualified to fulfil the role of monitor.

Referral mechanism

2.39 Many submissions raised the issue of how reviews by the Monitor will be initiated. In particular, a number of submitters and witnesses expressed concern that the Monitor's power to initiate his or her own inquiries was not clear. Others suggested that parties other than the Prime Minister or the Monitor should have the power to refer matters for report.

The Monitor's power to self-initiate inquiries

2.40 Clause 6 establishes the functions of the Monitor, part of which reads:

6 Functions of the National Security Legislation Monitor

(1) The National Security Legislation Monitor has the following functions: (a) to review the operation, effectiveness and implications of: (i) Australia's counter-terrorism and national security legislation; and (ii) any other law of the Commonwealth to the extent that it relates to Australia' s

counter-terrorism and national security legislation; (b) to consider whether Australia' s counter-terrorism and national security legislation: (i) contains appropriate safeguards for protecting the rights of individuals; and (ii) remains necessary;

(c) if a matter relating to counter-terrorism or national security is referred to the Monitor by the Prime Minister-to report on the reference.

2.41 Subclause 6(3) goes on to provide the Monitor with broad powers to do 'all things necessary or convenient to be done for or in connection with the performance of the Monitor's functions.'

2.42 Clause 7 then deals with the Prime Minister's powers to refer matters to the Monitor, including the power to refer matters on his or her own initiative or at the suggestion of the Monitor, to alter the terms of a reference and to give directions about the order in which the Monitor is to deal with references.

28 Mr Garry Fleming, Assistant Secretary, Border Protection and Law Enforcement Branch, Department of the Prime Minister and Cabinet, Proof Committee Hansard, 14 August 2009, p. 24.

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2.43 Several submitters noted that there are indications in the bill's supporting material that the Monitor has the power to self-refer matters. The Explanatory Memorandum states:

... the Monitor will be able to initiate his or her own reviews. It also provides scope for the Prime Minister to refer matters relating to counter-terrorism or national security to the Monitor to report on to the Prime Minister. 29

2.44 When introducing the bill, Senator the Hon Penny Wong repeated that 'the Monitor may initiate his or her own investigations'. 30

2.45 Despite these indications of the ability of the Monitor to self refer matters, the committee received evidence from numerous sources that the bill does not clearly specify who has the power to determine what matters will be referred to the Monitor for report.

2.46 A number of submissions have noted the contrast between the explicit references in the bill to the Prime Minister's powers of reference in paragraph 6(1 )(c) and clause 7, and the lack of specific reference to the Monitor's powers in the same regard. Indeed, some submissions and witnesses suggested that the only matters which can be investigated by the Monitor are those matters referred by the Prime Minister.

2.47 The Law Council of Australia expressed this concern in their submission:

.. . that the [Monitor] may not have a clear power to initiate and report on his or her own inquiries. While the [Explanatory Memorandum] suggest [the Monitor] has power to initiate his or her own investigations, the language of the Bill itself does not make this clear. For example, clause 7 provides that the [Monitor] can suggest that the Prime Minster refer a matter for inquiry, but it does not empower the [Monitor] to initiate its own reference. Even if the functions contained in clause 6 are interpreted in a manner broad enough to empower the [Monitor] to initiate his or her own investigations, the only place the [Monitor] could report on such investigations would be in his or her Annual Report, which may be prepared up to six months after the period of review. The Law Council submits that it is essential to the

independent character of the [Monitor] that he or she be clearly invested with the power to initiate his or her own inquiries and to report on any findings in a timely manner. 31

2.48 The Gilbert + Tobin Centre of Public Law sought to have this issue addressed via an amendment to the bill:

We are concerned that there is no explicit mention in section 6 of the Monitor's power to conduct inquiries upon his/her own initiative (beyond

29 Explanatory Memorandum, p. 4.

30 Senator the Hon Penny Wong, Minister for Climate Change and Water, Senate Hansard, 25 June 2009, p. 4260.

31 Law Council of Australia, Submission 4, p. 18.

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the obligation to lodge an annual report in section 29). At times, the Independent Reviewer in the United Kingdom has produced reports on his own volition and the Monitor should certainly possess a similar capacity.

It is possible that this power is implicit in section 6(1), especially given the statement in the Second Reading speech that '[t]he Monitor may initiate his or her own investigations' . However, rather than leaving it to implication, this power should be expressly set out in the National Security Legislation Monitor Bill2009. 32

2.49 Similar concerns about the ability of the Monitor to commence reviews on his or her own initiative were expressed by the Public Interest Law Clearing House and Human Rights Law Research Centre, Civil Liberties Australia and the Federation of Community Legal Centres (Victoria). 33

2.50 Mr Jonathan Hunyor, Director, Legal Section, Australian Human Rights Commission, accepted that the ability of the Monitor to initiate his or her own inquiries 'possibly falls within section 6(1) as we read it, but we agree that that is something that could and should be clarified'.

2.51 Mr Garry Fleming Assistant Secretary, Border Protection and Law Enforcement Branch, Department of the Prime Minister and Cabinet advised that the Monitor's power to investigate matters on his or her own initiative is implicit m subclause 6(3):

Within the core functions of the monitor, as expressed in clause 6 of the bill- reviewing the 'operation, effectiveness and implications' of the specific legislation and any other relevant law, and to 'consider' that legislation-under subclause (3) the monitor ' has the power to do all things necessary or convenient' for discharging that role. So, within that core role, he or she will not need a referral and can investigate anything on his or her own motion .. . 35

Committee view

2.52 It is quite clear from the Explanatory Memorandum, the Minister's second reading speech and evidence provided by officials, that the Government's intention is to allow the Monitor to undertake inquiries on his or her own initiative, and not solely at the instigation of the Prime Minister. The committee supports this intent.

32 Gilbert + Tobin Centre of Public Law, Submission 1, p. 5.

33 Public Interest Law Clearing House/Human Rights Law Resource Centre, Submission 6, pp 11-12; Civil Liberties Australia, Submission 8, p. 1; Federation of Community Legal Centres (Victoria), Submission 9, p. 2.

34 Mr Jonathan Hunyor, Director, Legal Section, Australian Human Rights Commission, Proof Committee Hansard, 14 August 2009, p. 9.

35 Mr Garry Fleming, Assistant Secretary, Border Protection and Law Enforcement Branch, Department of the Prime Minister and Cabinet, Proof Committee Hansard, 14 August 2009, p. 24.

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2.53 Based on the number of times this matter was drawn to the committee's attention, the committee accepts the bill does not express this intention as clearly as it might. The committee further notes that the Inspector-General of Intelligence and Security Act 1986 specifically allows the Inspector-General of Intelligence and

Security to undertake many of its inquiry functions on 'the Inspector-General's own motion'. 36

2.54 The committee sees no reason why the stated policy intent cannot be more clearly expressed in the bill.

2.55 The committee is of the view that clarifying the bill in this manner will enhance the perceived and actual independence of the Monitor.

Recommendation 5

2.56 The committee recommends that clause 6 of the bill be amended to state clearly that the National Security Legislation Monitor has the power to conduct inquiries on his/her own initiative on subjects which are within the functions of the Monitor.

Referrals by third parties

2.57 Several submissions and witnesses proposed that, in addition to the Prime Minister, other external parties should have the ability to refer matters to the Monitor for review and report. These suggestions were put forward to counter the perception that the Monitor's independence would be constrained by the referral mechanism only allowing references from the Prime Minister.

2.58 The Law Council of Australia argued that providing other parties with the ability to refer matters to the Monitor is necessary because the current situation 'invests the Executive Government with considerable control over the activities of the [Monitor]'.

2.59 A suggestion shared by several submitters was to give the Parliamentary Joint Committee on Intelligence and Security (PCTIS) the ability to refer matters to the Monitor. This is currently provided for in the Independent Reviewer of Terrorism Laws Bill 2008 [No. 2], paragraph 8(1 )(b).

2.60 The Law Council of Australia strongly endorsed giving the Pens the ability to refer matters to the Monitor:

The PJCIS plays an important oversight role in respect of a number of key agencies responsible for implementing Australia's anti-terrorism laws, such

36 Inspector-General of Intelligence and Security Act 1986, s. 8.

37 Law Council of Australia, Submission 4, p. 17.

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as the Australian Security Intelligence Organisation, the Australian Secret Intelligence Service and the Department of Defence . and has a specific review role in respect of key pieces of Australia's anti-terrorism legislation, such as the Security Legislation Amendment (Terrorism) Act 2002. Through its work, the PJCIS is well placed to identify any shortcomings or

inefficiencies in the content and operation of Australia's anti-terrorism measures and to identify appropriate matters to refer to the [Monitor] for review. In addition, the bipartisan, bicameral nature of the PJCIS would further enhance the independent character of the work undertaken by the

[Monitor]. 38

2.61 The Gilbert+ Tobin Centre of Public Law and the Public Interest Advocacy Centre also supported vesting the power to refer matters in the P JCIS. 39

2.62 The International Commission of Jurists Australia (ICJA) proposed the inclusion of state and territory attorneys-general in the referral process:

The ICJA submits that the Committee might want to consider widening the referral process to include relevant governmental organizations and persons, particularly those persons with whom the Monitor will be able to liaise (as per section 1 0). The ICJA submits that a broader referral process will ensure that all counter-terrorism and national security legislation and

Commonwealth criminal legislation is considered rather than just those chosen by the Prime Minister or the Monitor himself or herself. The Committee may thus want to consider the inclusion of State and Territory Attorneys General in the referral process. 40

2.63 Civil Liberties Australia (CLA) proposed an extensive list of organisations and persons that should have the ability to refer matters to the Monitor:

In CLA's opinion, references to the Monitor should be entitled to come from the Prime Minister, the Leader of the Opposition, the President of the Senate or the Speaker of the House of Representatives, as well as being able to be launched by an "own motion" process by the Monitor, without requiring the approval of a Prime Minister. Without at least the Leader of the Opposition involved, this legislation has a distinct party political sheen to it, whichever party is currently dominant: no party should have exclusive control- even temporarily- in such an important area oflaw.41 â¢

2.64 The Australian Muslim . Civil Rights Advocacy Network (AMCRAN) suggested extending this ability to members of the community:

38 Law Council of Australia, Submission 4, p. 17.

39 Gilbert + Tobin Centre of Public Law, Submission 1, pp 10-11 ; Public Interest Advocacy Centre, Submission 15, p . 8.

40 International Commission of Jurists Australia, Submission 5, p. 3.

41 Civil Liberties Australia, Submission 8, p. 1.

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AMCRAN submits that it would be both effective and pragmatic to provide a legislative mechanism to allow concerned individuals or groups with standing to be able to trigger review action by the Independent Reviewer. 42

2.65 Officials from the Department of the Prime Minister and Cabinet pointed out that there is nothing to prevent a person or organisation suggesting a matter to the Monitor for investigation which falls within the core functions set out in clause 6. 43 However, there would appear to be no statutory requirement for the Monitor to act on such suggestions.

2.66 The committee notes that there is a risk that the references received by the Monitor could exceed its capacity to undertake effective reviews if those able to refer matters to the Monitor are not responsible for the allocation of resources. This risk was highlighted by Mr Geoffrey McDonald, First Assistant Secretary, National

Security Law and Policy Division, Attorney-General's Department:

My initial thought about the problem with [third party referrals] is that someone has to take responsibility for the resources that are available to the monitor, so it is important that one portfolio control that flow. In that way that portfolio can ensure that the monitor is given proper support. 44

Committee view

2.67 The committee is of the view that a slight broadening in the referral mechanism is warranted in order to improve the independent nature of the Monitor. As drafted, the bill will only allow referrals from one side of politics. 45 This limitation may create the perception that the government of the day has control of the Monitor's activities.

2.68 The committee's preferred approach is that the bill should be amended to enable the PJCIS to refer matters relating to counter-terrorism or national security legislation to the Monitor. The PJCIS is a parliamentary committee comprised of both sides of politics. Over many years it has provided valuable input into the national security debate in Australia, including many sound recommendations to the

42 Australian Muslim Civil Rights Advocacy Network, Submission 14, p. 4.

43 Mr Garry Fleming Assistant Secretary, Border Protection and Law Enforcement Branch, Department of the Prime Minister and Cabinet, Proof Committee Hansard, 14 August 2009, p. 26.

44 Mr Garry Fleming Assistant Secretary, Border Protection and Law Enforcement Branch, Department of the Prime Minister and Cabinet, Proof Committee Hansard, 14 August 2009, p. 26.

45 It is acknowledged that recommendations for review from any side of politics could be adopted by the Monitor provided the self-referral power is clarified. However, this rather indirect mechanism would mean that one side of politics is reliant on the Monitor to initiate these reviews.

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government on national security laws. 46 As the committee noted earlier, referrals by the PJCIS are provided for under the Independent Reviewer of Terrorism Laws Bill 2008 [No. 2], a bill which was unanimously supported by the Legal and Constitutional Affairs Committee.

47 The committee agrees with the Law Council of Australia that 'the bipartisan, bicameral nature of the PJCIS would further enhance the independent character of the work undertaken by the [Monitor]'.

2.69 It is acknowledged that this approach has the potential to increase the work load of the Monitor. However, in the committee's view the benefits of bolstering the independence of the Monitor outweigh the minor resourcing constraints that may flow from a slight expansion of the referral mechanism. The committee also notes that in the context of the government's overall expenditure on national security activities, the outlay to establish and operate the Monitor will be modest. 48 So even a moderate increase in the cost of operating the Monitor will have a negligible impact on Australia's overall national security budget.

Recommendation 6

2.70 The committee recommends that the bill be amended to enable the Parliamentary Joint Committee on Intelligence and Security to refer matters relating to Australia's counter-terrorism and national security legislation to the National Security Legislation Monitor for review and report.

2. 71 If this recommendation is adopted, consideration will need to be given to the reporting arrangements. Clearly the report would need to be provided to the PJCIS and preferably to the Prime Minister also.

46 For example the Review of Security and Counter Terrorism Legislation, December 2006 and the Inquiry into the Terrorist Organisation Listing Provisions of the Criminal Code Act 1995, September 2007, Parliamentary Joint Committee on Intelligence and Security, www.aph.gov.aulhouse/committee/pjcis/index.htm (accessed 31 August 2009).

47 Independent Reviewer ofTerrorism Laws Bill2008 [No. 2}, Senate Legal and Constitutional Affairs Committee, October 2008, www .aph. gov .au/senate/ committee/legcon ctte/terrorism/report/report. pdf (accessed 31 August 2009).

48 The Government has allocated $1.4 million to establish the Monitor, with operational costs met from within the existing resourcing ofthe Attorney-General's portfolio with the funding being transferred from that portfolio to Prime Minister and Cabinet, Portfolio budget statements 2009- 10, budget related paper no.l.I5A: Prime Minister and Cabinet Portfolio, p.25 . By comparison the Australian Homeland Security Research Centre estimates total government expenditure on national security of $8.0 billion over the period 2002-03 to 2011-12, 2008- 09 Federal Budget Briefing on Hom eland Security Expenditure, May 2008, p. 4,

www. home! andsecurity .org.au/fi I es/2008-09 Federal Budget Briefing on Homeland Security Expenditure.pdf (accessed 31 August 2009).

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Scope of reviews

2. 72 The committee heard evidence relating to the scope of reviews undertaken by the Monitor. These included concerns relating to the laws which are subject to review, and whether the Monitor should have the function of examining proposed laws, and who the Monitor can consult in undertaking reviews.

Laws subject to review

2.73 Paragraph 6(1)(a) gives the Monitor the function of reviewing the operation, effectiveness and implications of Australia's counter-terrorism and national security legislation, and of any other law of the Commonwealth which relates to that legislation.

2.74 Counter-terrorism and national security legislation are defined in clause 4 as the following provisions of Commonwealth law:

(a) Division 3 of Part III of the Australian Security Intelligence Organisation Act 1979 and any other provision of that Act as far as it relates to that Division;

(b) Part 4 of the Charter of the United Nations Act 1945 and any other provision of that Act as far as it relates to that Part;

(i) Division 3A of Part IAA and any other provision of that Act as far as it relates to that Division;

(ii) sections 15AA and 19AG and any other provision of that Act as far as it relates to those sections;

(iii) Part IC, to the extent that the provisions of that Part relate to the investigation of terrorism offences (within the meaning of that Act), and any other provision of that Act as far as it relates to that Part;

(d) Chapter 5 of the Criminal Code and any other provision of that Act as far as it relates to that Chapter;

(e) Part IIIAAA of the Defence Act I 903 and any other provision of that Act as far as it relates to that Part;

(f) the National Security Information (Criminal and Civil Proceedings) Act 2004.

2.75 This definition is essentially broadened by subparagraph 6(1)(a)(ii) which allows the Monitor to review 'any other law of the Commonwealth to the extent that it relates to' the above list.

2.76 By comparison, paragraph 6(1)(b), which requires the Monitor to consider whether Australia's counter-terrorism and national security legislation contains appropriate safeguards for protecting the rights of individuals and remains necessary, appears narrower as it does not include the 'any other law' phrase.

2.77 Some submissions discussed whether the prescribed list of 'counter-terrorism and national security legislation' is adequate. The Gilbert + Tobin Centre for Public

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Law for example argued that the bill to 'some extent' rectifies the concern expressed by the Senate Standing Committee on Legal and Constitutional Affairs that the Independent Reviewer of Terrorism Laws Bill 2008 [No. · 2], as introduced, lacked detail about which laws were subject to review. They noted the detailed defmition in clause 4, and further note that paragraph 6(1 )(a) should 'allay concerns' in this regard. 49

2.78 The Law Council of Australia was 'pleased to see' the legislative provisions in clause 4:

... which comprise the most significant legislative provisions dealing with the investigation and prosecution of terrorist activity and include provisions previously not subject to independent review. 50

2. 79 The Castan Centre for Human Rights Law noted that the list of relevant legislation is 'less extensive' than that proposed in the Independent Reviewer of Terrorism Laws Bill 2008 [No. 2] as amended by the Senate. Whilst noting the 'catch-all' provision of subparagraph 6(1)(a)(ii), they argue its use could be limited:

Thus, for example, where clause 6( 1 )(b) directs the Monitor to consider the necessity of legislation, and the adequacy of the safeguards it contains, various pieces of legislation appear to be excluded which ought not to be, such as certain powers enjoyed by the Australian Federal Police pursuant to the Australian Federal Police Act 1979 (Cth) which are enlivened by reference to the offences created by Division 101 of the Criminal Code (Cth). 51

2.80 The Castan Centre proposes that the list in clause 4 should be expanded (particularly to include Division 72 of the Criminal Code) and that a catch all provision should be added to the definition in clause 4. 52

2.81 The Public Interest Law Clearing House and Human Rights Law Resource Centre also expressed concerns that the scope of clause 4 and subparagraph 6(1)(a)(ii) 'may not cover laws that do not relate to Australia's counter-terrorism and national security legislation but nevertheless impact on Australia's approach to counter terrorism or the human rights of Australian citizens'.

2.82 One submission raised the possibility of increasing the scope of the Monitor to include review of state and territory laws:

49 Gilbert + Tobin Centre for Public Law, Submission 1, p. 7. The Independent Reviewer of Terrorism Laws Bill 2008 [No 2] was subsequently amended by the Senate to include a list of legislation, following the report of the Senate Committee on Legal and Constitutional Affairs.

50 Law Council of Australia, Submission 4, p. 11.

51 Castan Centre for Human Rights Law, Submission 7, p. 3.

52 Castan Centre for Human Rights Law, Submission 7, p. 3.

53 Public Interest Law Clearing House/Human Rights Law Research Centre, Submissio n 6, pp 9-10.

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PIAC strongly submits that if the Monitor is to fulfil his functions of providing thorough reports of existing national security legislation he/she should be in a position to consider the entirety of the national security regime in Australia. PIAC is not convinced that clause 8(b) of the Bill, which provides that the Monitor may have regard to arrangements between the Commonwealth, the States and the Territories will enable the Monitor to do so. PIAC therefore recommends that the Bill be amended to enable the Monitor to consider all levels of the national security system.

Alternatively, PIAC recommends that the Commonwealth government should negotiate with the States and territories so that they enact similar legislation to ensure that there are equivalent independent reviewers operating in each state and territory. 54

2.83 The committee notes that paragraph 8(b) requires the Monitor to have regard to arrangements agreed from time to time between the Commonwealth, states and territories to ensure a national approach to countering terrorism.

Committee view

2.84 Various submissions appear to have identified a minor oversight in legislative drafting on this issue. Due to the absence of the 'any other law' phrase in

paragraph 6(1)(b) the bill appears to allow the Monitor to review the 'operation, effectiveness and implications' of 'any other law of the Commonwealth to the extent that it relates to Australia's counter-terrorism and national security legislation'55 but not to consider whether such 'other' legislation 'contains appropriate safeguards for protecting the rights of individuals'56 and 'remains necessary'. 57 This would be a curious and perhaps unintended outcome. The committee makes a recommendation (Recommendation 7) on this subject at the end of the following section.

Review of relevant State legislation

2.85 Some submitters argued that the Monitor should have the authority to examine state and territory national security and terrorism legislation. For example PIAC argued that:

The national security legislation expressly covered by the Bill is only a part of the existing raft of anti-terrorism legislation in force in Australia at the moment as all the states and territories have enacted their own counterterrorism legislation. PIAC strongly submits that if the Monitor is to fulfil his functions of providing thorough reports of existing national

54 Public Interest Advocacy Centre (PIA C), Submission 15, p. 6.

55 National Security Legislation Monitor Bill 2009, para. 6(1)(a).

56 National Security Legislation Monitor Bill2009, subpara. 6(1)(b)(i).

57 National Security Legislation Monitor Bill2009, subpara. 6(1)(b)(ii).

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security legislation he/she should be in a position to consider the entirety of the national security regime in Australia. 58

2.86 The Law Council highlighted existing arrangements between the

Commonwealth and State and Territory governments arguing that there 'may potentially be a conflict between the arrangements made between the Commonwealth, States and Territories in respect to counter-terrorism and Australia's international obligations in this area.' In this regard the Law Council suggested that:

In the event of any conflict between Australia' s international obligations and arrangements agreed to between the Commonwealth, States and Territories, the [Monitor] should be required to give priority to Australia' s international human rights obligations when evaluating the content, effectiveness and operation of the particular provision in question. 59

Committee view

2.87 The committee agrees that in order to effectively review Australia's counter terrorism and national security legislation, the Monitor will need to take into consideration the implications of any relevant law enacted by the States and Territories.

Recommendation 7

2.88 The committee recommends that paragraph 6(1)(b) of the National Security Legislation Monitor Bill 2009 be amended to include reference to 'any other law of the Commonwealth, the States or the Territories to the extent that it relates to Australia's counter-terrorism and national security legislation'.

Proposed legislation

2.89 Some submissions argued the Monitor should have the power to review proposed as well as existing legislation:

The Law Council would also support broadening the mandate and functions of the [Monitor] beyond the consideration of existing legislation to include a review role in respect of proposed or draft legislative provisions relating counter-terrorism or national security. In the past, when proposed changes to Australia's counter-terrorism measures have been introduced they have

often proceeded quickly through Parliament with little opportunity for robust scrutiny of their content and operation. Investing the [Monitor] with the power to review proposed additions or changes to Australia's anti terrorism laws would enhance existing Parliamentary scrutiny mechanisms and help ensure that such proposed provisions are necessary and effective

58 Public Interest Advocacy Centre, Submission 15, p. 6.

59 Law Council of Australia, Submission 4, p. 16.

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in countering terrorism, contain appropriate safeguards for protecting the rights of individuals and comply with Australia's international obligations, including our international human rights obligations. This function could be added by amending subclause 6(l)(a) to include a -reference to 'proposed additions or changes to any Commonwealth law to the extent that it relates to Australia's counterterrorism and national security legislation'. 60

We submit that the Monitor' s role should include active involvement in any proposals of new legislation, including contributing to and participating in relevant Senate Inquiries. 6 1

2.90 Similar views were expressed the Sydney Centre for International Law and the Public Interest Advisory Centre. 62

2.91 -The Department of the Prime Minister and Cabinet; and the

Attorney-General's Department have clarified that the Monitor does have the power to investigate proposed legislation or policy proposals (including the current National Security Legislation discussion paper), but only when such proposals are referred to him or her by the Prime Minister.

2.92 There is a risk that asking the Monitor to examine matters which are before the Parliament could compromise the Monitor's perceived independence, through potential endorsem*nt of government policy. Associate Professor Andrew Lynch, Centre Director, Gilbert+ Tobin Centre of Public Law, discussed the shortcomings of asking the Monitor to examine proposed laws:

.. .it does have the risk that the body might become an approval mechanism, whereas really the parliament must decide whether those changes to the laws are to be passed. We see the reviewer as having very much a review rather than a preview role in reporting to the government and to the parliament how those laws, once made, are actually operating in effect. Again, that concern is borne out by the approach taken by Lord Carlile in the UK on some issues, which was to indicate his support for proposed changes. That, in particular, was the incident which led to some concerns being expressed that part of his job was to sell the government's policy on antiterrorism laws. So we think that the review function should be confmed to exactly just that. 64

60 Law Council of Australia, Submission 4, p . 12 .

61 Australian Muslim Civil Rights Advocacy Network, Submission 14, p. 5.

62 Sydney Centre for International Law, Submission 2, pp 3-4; Public Interest Advocacy Centre, Submission 15, p. 7.

63 Mr Garry Fleming, Assistant Secretary, Border Protection and Law Enforcement Branch, Department of the Prime Minister and Cabinet, Proof Committee Hansard, 14 August 2009, p. 25.

64 Associate Professor Andrew Lynch, Centre Director, Gilbert + Tobin Centre of Public Law, Proof Committee Hansard, 14 August 2009, p. 14

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Committee view

2.93 The committee concurs with the views of the Gilbert + Tobin Centre on this issue. It is true that the Monitor may have valuable insights into proposed national security amendments. However, if publicising those views puts at risk the Monitor's independent status, then this will ultimately detract from the Monitor's broader objective as an independent reviewer of security legislation.

2.94 The committee notes that the Monitor won't be able to self-refer proposed legislation but that he or she may provide input if the matter is referred by the Prime Minister.

Complaints and operational matters

2.95 There appeared to be a degree of uncertainty among some witnesses about the role of the Monitor in investigating the activities of agencies.

2.96 Subclause 6(2) states that the Monitor is not responsible for considering individual complaints about the activities of Commonwealth agencies responsible for implementing counter-terrorism or national security legislation, or the resourcing and priorities of those agencies.

2.97 The Explanatory Memorandum explains that these exclusions are to 'provide greater clarity to the role and functions of the Monitor and to ensure no overlap with other oversight and accountability agencies such as the Inspector-General of Intelligence and Security and the Commonwealth Ombudsman.'

2.98 The Attorney-General's Department explained that the focus of the Monitor is on the operation and effectiveness of national security legislation. The activities of agencies would be relevant only to the extent that these indicated problems in the legislation:

Let us say the allegation was that Islamic people were being targeted unfairly. If the allegation was that they were being targeted unfairly because of procedures in the legislation-as a result of the way the legislation is drafted-then that would be a legitimate matter for the legislation monitor to consider. If, on the other hand, it was felt they were being targeted unfairly because there was some horrible policeman who was racist, or

something like that, then that would be more appropriately dealt with by the Ombudsman and Inspector-General of Intelligence and Security functions. That is the sort of delineation. Those accountability mechanisms have been operating for some time and have worked very well.

65 Explanatory Memorandum, p. 4.

66 Mr Geoffrey McDonald, First Assistant Secretary, National Security Law and Policy Division , Attorney-General's Department, Proof Committee Hansard, 14 August 2009, p. 23.

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2.99 Some submissions and witnesses argued that the Monitor's powers in relation to investigating how the laws are administered are not clear. For example, the New South Wales Council for Civil Liberties argued:

The significance of a law is to be seen not merely in bare text, but in how that text is interpreted by those who apply it. In particular, a law 's reach may be significantly extended or diminished by the interpretation which is placed on its terms . It is not entirely clear that the monitor' s functions , as proposed, cover this. 67

2.100 The Castan Centre for Human Rights Law suggested that there is 'a degree of tension' between the bill's requirement for the Monitor to give emphasis to laws which have recently been applied by agencies (clause 9) and its prohibition on the Monitor reviewing the priorities and resources of agencies (paragraph 6(2)(a)). The Castan Centre suggested that paragraph 6(2)(a) be deleted and replaced with a provision 'making it clear that the Monitor's review function extends to the activities of agencies,' 68 to remove this ambiguity.

2.101 Some submissions and witnesses advocated a stronger role for the Monitor in dealing with complaints by individuals and oversight of operational matters. Civil Liberties Australia argued:

It is hard to comprehend why such functions of the agencies are not the responsibility of the Monitor. Being able to review agency priorities in enforcing their own legislation, and what lies behind the selective decision-making, is crucial to effective functioning of the laws and should be in the province of the Monitor. In addition, the Monitor should be empowered to consider individual complaints about the activities of the agencies, which may well point to systemic problems in legislation and how

. . . 69

1t operates m practice.

2.102 The New South Wales Council for Civil Liberties proposed that the Monitor should have the ability to determine whether anti-terrorism legislation was being used for other purposes. 70

Committee view

2.103 The committee is of the view that if the Monitor were to become involved in individual complaints or cases, which can be the subject of much public scrutiny and political debate, then that would potentially compromise his or her independence or perceived independence.

67 New South Wales Council for Civil Liberties, Submission 12, p. 3.

68 Castan Centre for Human Ri ghts Law, Submission 7, p. 8.

69 Civil Liberties Australia, Submission 8, p. 1.

70 New South Wales Council for Civi l Liberties, Submission 12, p. 3.

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2.104 The committee is also of the view that individual complaints are best dealt with by existing accountability and oversight mechanisms (such as the

Commonwealth Ombudsman or the Inspector-General of Intelligence and Security). The Monitor's role ought to focus on whether or not the laws are necessary and contain appropriate safeguards, rather than considering the outcome of a particular case. The committee therefore accepts that such matters should be specifically excluded by the bill.

2.105 However, while the committee does not consider it appropriate for the Monitor to investigate and make judgments on individual cases, clearly the Monitor must be able to examine the way in which the legislation is being administered, to the extent necessary to determine whether that legislation is meeting its original purpose. The committee therefore recommends that the bill be amended to require the monitor to assess whether the legislation is being used as intended.

Recommendation 8

2.106 The committee recommends that the bill be amended to require the Monitor to assess whether counter-terrorism and national security legislation is being used as intended.

Consultation with other agencies

2.107 The Office of the Privacy Commissioner sought greater clarity about the way in which the Monitor will consult other agencies. However, it sought this clarification in the Explanatory Memorandum rather than in the bill itself:

In the Office's opinion the Explanatory Memorandum could provide some further detail in relation to the Monitor's functions under clause 10 (2) , by explaining that it would be expected that the Monitor would consult and take account of the views of oversight and accountability agencies on matters relevant to their particular jurisdiction. For example, the Monitor could be expected to consult with the Privacy Commissioner on matters that may significantly affect the handling of individuals' personal information or other aspects of personal privacy. 7 1

2.108 The Australian Human Rights Commission (AHRC) suggested that the bill could be strengthened by including the AHRC in subclause 10(2) as an agency which may be consulted. 72 This was supported by the Castan Centre for Human Rights Law. 73

71 Office of the Privacy Commissioner, Submission 10, p. 6.

72 Australian Human Rights Commission, Submission 11, p. 8.

73 Castan Centre for Human Rights Law, Submission 7, p. 8.

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2.109 Perhaps the simplest suggestion in relation to clause 10 of the bill came from Civil Liberties Australia:

To extend the ability of the Monitor to engage in community consultation, or to consult as widely as he or she likes, CLA recommends the addition of (2) (e) any other person or organisation. 74

Committee view

2.110 The committee notes that the bill already provides the Monitor with the power 'to do all things necessary or convenient to be done for or in connection with the performance of the functions'. 75 However, the committee is of the view that unless there is a sound reason for not allowing the monitor to consult with key independent agencies, including the Office of the Privacy Commissioner and the Australian Human Rights Commission, that these sorts of organisations should be added to clause 10.

Recommendation 9

2.111 The committee recommends that the bill be amended to allow the Monitor when performing his or her functions, to consult with independent statutory agencies such as the Office of the Privacy Commissioner and the Australian Human Rights Commission, as the Monitor considers necessary.

Review criteria

2.112 Several -submissions and witnesses discussed the criteria which the Monitor should use in reviewing national security legislation.

2.113 Clause 3 states that the Monitor is appointed to assist Ministers in ensuring that Australia's counter-terrorism and national security legislation:

(a) is effective in deterring and preventing terrorism and terrorism-related activity which threatens Australia's security; and

(b) is effective in responding to terrorism and terrorism-related activity;

(d) contains appropriate safeguards for protecting the rights of individuals.

2.114 The bill provides the functions of the Monitor are to:

â¢ review the 'operation, effectiveness and implications' of legislation (paragraph 6(1)(a));

74 Civil Liberties Australia, Submission 8, p. 1.

75 National Security Legislation Monitor Bill 2009, subclause 6(3).

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â¢ consider whether the legislation 'contains appropriate safeguards for protecting the rights of individuals' (subparagraph 6(1 )(b )(i));

â¢ consider whether the legislation remams necessary

(subparagraph 6(1)(b)(ii));

2.115 The bill also requires the Monitor to 'have regard to' Australia's obligations under international agreements (subclause 8(a)).

2.116 The committee heard a number of views concerning whether the criteria the Monitor will use to review legislation are adequately stated in the bill:

No priorities among these criteria are suggested. Nor is it clear why some are mentioned multiple times and others only once. 76

In our view section 8 of the amended Independent Reviewer of Terrorism Laws Bill 2008 , provides a much clearer outline of the mandate of the Reviewer. This section provides an unambiguous mandate to assess both the legislation and its operation in terms of not only human rights, privacy and other international obligations but also to assess any adverse social consequences. In our view this section should be adopted for the Monitor. 77

2.117 Other submissions expressed a view that the Monitor should make use of an expanded set of criteria when reviewing legislation:

PILCH and the HRLRC consider that the Monitor should be required to have regard to a non-exhaustive list of relevant considerations when determining review priorities, including but not limited to:

â¢ Australia's human rights obligations

â¢ the extent to which the laws under review alter fundamental legal principles;

â¢ whether the relevant laws are effective and workable, both within their own terms, and in combination with other legislation; and

â¢ whether there are any less-restrictive means by which the objectives of the relevant legislation could be achieved. 78

2.118 Areas of particular focus in submissions were whether the bill contains adequate consideration of the impact of anti-terrorism laws on human rights and the rights of individuals, whether the Monitor has sufficient scope to consider whether the laws adequately adopt Australia's international obligations, and whether the Monitor has sufficient power to consider the proportionality of legislation.

76 Castan Centre for Human Rights Law, Submission 7, p. 4.

77 Federation of Community Legal Centres (Victoria), Submission 9, p. 2.

78 Public Interest Law Clearing House/Human Rights Law Research Centre, Submission 6, p. 14 .

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Rights of Individuals

2.119 A number of submissions discussed the extent to which the bill requires the Monitor to be mindful of human rights issues.

2.120 The Sydney Centre for International Law argued the bill does not adequately address human rights standards. They propose that, in the absence of an Australian bill of rights, this could be resolved by making more direct reference to the International Covenant on Civil and Political Rights (ICCPR):

Terrorism laws have the very real potential to negatively impinge on fundamental human rights. Special provision for review based on human rights is important since terrorism laws can lack effective review mechanisms, and also human rights challenges cannot be raised directly in the courts given the absence of a federal Bill of Rights. Mandating compliance with Australia's obligations under the ICCPR will enhance the legitimacy of the government's antiterrorism legislation, both within Australia and abroad. 79

2.121 Whilst noting that safeguards for human rights may fall into subclause 6(1) (rights of individuals) and clause 8 (international standards), the Law Council of Australia stated:

... neither clause 6 nor clause 8 makes specific reference to human rights principles. The Law Council is of the view that specifying these particular matters in clause 6 would provide a concerted focus on the impact of Australia's anti-terrorism laws on the rights of individuals and help ensure that Australian laws in this area meet international human rights standards. 80

2.122 This view was shared by the Public Interest Law Clearing House (PILCH) and Human Rights Law Research Centre (HRLRC):

... PILCH and the HRLRC are concerned that clause 6 does not require the Monitor review the impact of Australia's counter-terrorism and national security legislation on international human rights standards and obligations. Although this role of the Monitor is perhaps implicit in given the objects of the Bill, an express provision would avoid any ambiguity. Accordingly, PILCH and the HRLRC submit that clause 6 should be amended to expressly require the Monitor to review the impact of Australia's counter terrorism and national security legislation on international human rights standards and obligations. 81

79 Sydney Centre for International Law, Submission 2, p. 3.

80 Law Council of Australia, Submission 4, p. 12.

81 Public Interest Law Clearing House/Human Rights Law Research Centre, Submission 6, p. 11.

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2.123 The Explanatory Memorandum notes in relation to the requirement in clause 8 for the Monitor to have regard to Australia's international obligations, that the Monitor:

... must have regard to Australia's human rights obligations such as the International Convention on Civil and Political Rights and the Convention against Torture and Other Cruel, Inhuman and Degrading Treatment or Punishment. In addition, the Monitor must also have regard to international instruments that Australia has become a party to which require Australia to enact a strong counter-terrorism framework such as the 16 United Nations counter-terrorism conventions and protocols and the United Nations Security Council Resolutions 1267 and 1373 concerning the freezing of

assets of terrorists. 82

2.124 Ensuring that counter-terrorism and national security legislation is 'consistent with Australia's international obligations, including human rights obligations' is also specifically referred to as one of the objects of the bill. 83

2.125 During the committee's public hearings, Departmental officials confirmed that Australia's international human rights obligations will be a core consideration for the Monitor in carrying out his or her statutory functions. 84

2.126 With regard to a related issue, the ICJA expressed concern that the reference to 'rights of individuals' in the bill is not clearly defmed:

The ICJA questions which 'rights of individuals' the legislation is referring to . The phrase 'rights of individuals' is not defined in the Bill. This being so the phrase can be interpreted in numerous ways and can be defined both inclusively and exclusively. This is because in Australia we do not have a Bill of Rights or a Charter of Rights, which clearly set outs [sic] what are 'the rights of individuals'. 85

2.127 The Office of the Privacy Commissioner suggested that this could be resolved through the provision of a 'non-exhaustive list of the kinds of rights that the Monitor should take into consideration' (such as privacy) in the Explanatory Memorandum. 86

Committee view

2.128 The committee notes that the bill specifies the level of consideration the Monitor is to give to Australia's human rights obligations. Clause 8 clearly states that,

82 Explanatory Memorandum, p. 5.

83 National Security Legislation Monitor Bill 2009, subclause 3(c).

84 Mr Garry Fleming, Assistant Secretary, Border Protection and Law Enforcement Branch , Department of the Prime Minister and Cabinet, Proof Comm ittee Hansard, 14 August 2009, p. 26.

85 International Commission of Jurists (Australia), Submission 5, p. 4.

86 Office of the Privacy Commissioner, Submission 10, p. 5.

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when performing his or her statutory functions, the Monitor 'must have regard to Australia's obligations under international agreements.' Officials clarified that human rights obligations will be a core consideration in this regard. This fact is confirmed by the Explanatory Memorandum which states that the Monitor 'must have regard to Australia's human rights obligations .. .' 87 The committee also notes the explicitly expressed objective of the bill in ensuring 'that Australia's counter-terrorism and national security legislation .. .is consistent with Australia's international obligations, including human rights obligations'. 88

2.129 While fully supporting these requirements in the bill, the committee believes that the bill could be further strengthened by requiring the Monitor to assess whether the legislation is consistent with Australia's international human rights obligations. This would provide the Government, the Parliament and other interested parties with important and useful information on Australia's compliance with international obligations further promoting confidence in the operation of national security and counter terrorism legislation.

Recommendation 10

2.130 The committee recommends that the bill be amended to require the Monitor to assess whether the legislation is consistent with Australia's international human rights obligations.

2.131 The committee further notes the concerns raised during the inquiry regarding the lack of definition for the phrase 'rights of individuals' in clause 6. The committee suggests that Government consider providing a definition of the phrase 'rights of individuals' in order to provide the Monitor with appropriate guidance on the nature of the rights the bill is intended to protect.

Proportionality

2.132 Many submissions welcomed the inclusion in the bill of the requirement to consider whether national security laws remain necessary. However, some submissions called for the Monitor to consider whether the laws under review are in proportion to the scale of the threat being legislated against:

While this function may be implicit, it may be useful for the Explanatory Memorandum to specify that the Monitor's considerations under clause 6(1 )(b )(ii) include among other things, an assessment of whether any limitation of individuals' rights to privacy (and other rights) under counterterrorism and national security legislation is proportional to an identified threat or potential threat of terrorism. 89

87 Explanatory Memorandum, p. 5.

88 National Security Legislation Monitor Bill 2009, paragraph 3(c), emphasis added.

89 Office of the Privacy Commissioner, Submission 10, p. 5.

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Paragraph 6(1)(b) includes appropriately the requirement that the monitor report on whether anti-terrorism laws are necessary, and subparagraph (i) allows the monitor to propose new safeguards. But the monitor is not given the function of considering whether a law is proportionate to the threat of terrorism at the time, nor, crucially, to advise that a law is intolerable. 90

Committee view

2.133 The committee notes that the Sheller Review report (Report of the Security Legislation Review Committee) used proportionality as the 'guiding principle' in its review of national security legislation. 91 Furthermore the Clarke review, which recommended that the government establish a national security legislation monitor, indicated that the Monitor should 'scrutinise all aspects of counter-terrorism legislation to ensure that the use of anti-terrorism powers is proportionate ... '. 92 Finally, the Independent Reviewer of Terrorism Laws Bill 2008 [No. 2] expressly states that a function of the Independent Review is to assess whether terrorism laws 'are proportional to the extant threat of terrorism'. 93

2.134 The committee is of the view that inclusion of the criterion of proportionality will enable the Monitor to assess whether national security legislation strikes the right balance between the protection of our national security and the protection of Australian individual values and freedoms.

2.135 The committee is of the view that inclusion of the criterion of proportionality will enable the Monitor to assess whether national security legislation strikes the right balance between the protection of our national security and the protection of Australian individual values and freedoms.

2.136 The committee agrees with the proposition that in undertaking his or her reviews, the Monitor should be expressly required to assess existing

counter-terrorism legislation is a proportionate response to the threat posed to national security.

90 New South Wales Council for Civil Liberties, Submission 12, p.3.

91 R eport of th e Security Legislation Review Committee, June 2006, p. 3, www .ag.gov.auJwww/agd/rwpattach .nsf/V AP/(03995EABC73F94816C2AF4AA2645 LRC+Report-+ Version+for+ 15+ June+ 2006[1 ].pdf/$file/SLRC+Report-+Version+for+ 15+ June+2006[1].pdf (accessed 31 August 2009). 92 Report of the Inquiry into the Case of Dr Mohamed Haneef, November 2008, p. 256,

www .haneefcaseinguiry.gov .auJwww/inguirylrwpattach .nsf/V API(3A6 790B96C927794AF 1 03 1 +FINAL.pdf/$file/Volume+ 1 +FINAL. pdf

(accessed 31 August 2009)

93 National Security Legislation Monitor Bill 2009, paragraph 8(1)(tb).

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Recommendation 11

2.137 The committee recommends that the bill be amended to require thE Monitor to assess whether the legislation being reviewed remains a proportionat(l response to the threat posed to national security.

Reporting requirements

2.138 A large number of submissions and witnesses commented on the reporting: requirements of the Monitor proposed in Part 4 of the bill. This Part sets out two key · reporting requirements: the provision of an annual report and reports on references from the Prime Minister.

Availability of reports

2.139 Subclause 29(1) requires that the Monitor must present an annual report to the Prime Minister relating to the performance of the Monitor's functions as set out in paragraphs 6(1)(a) and (b).

2.140 Subclause 29(5) requires that the Prime Minister must present an annual report of the Monitor to each House of the Parliament within 15 sitting days of receiving the report.

2.141 In evidence to the committee departmental officials clarified the bill's reporting requirements:

Senator LUDLAM- ... Could you just confirm for us then that apart from the annual reporting mechanism-! think the intention there is reasonably clear-the monitor will not be reporting in any fonn directly to the parliament?

Mr McDonald- No.

Senator LUDLAM-Will the referrals that come from the Prime Minister's office be made public? Will the parliament know when the Prime Minister has requested some activity of the monitor?

Mr Fleming-That is not a requirement in the legislation. 94

2.142 Submitters and witnesses expressed concern that only the annual report of the Monitor would be tabled in the Parliament, while reports on reviews conducted by the Monitor were not required to be tabled.

2.143 For example the Castan Centre noted that while the annual report of the Monitor would be provided to Parliament, 'there is no provision for the presentation to Parliament of the results of any other review work undertaken by the Monitor.' 95

Similarly the Australian Human Rights Commission (AHRC) argued that the bill 'does

94 Proof Committee Hansard, 14 August 2009, p. 25.

95 Castan Centre for Human Rights Law, Submission 7, p. 10.

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not require the Prime Minister to table reports made by the Monitor in response to a reference from the Prime Minister.'96 The ICJA submitted that:

There is some concern that if reports are only being made available to the Prime Minister there is a real risk that the reports may not be made publicly available ... [T]his restriction seems at odds with the Monitor's information gathering functions and the whole purpose of the legislation. 97

2.144 In its submission, the Castan Centre argued that the intended function of clause 30 (relating to reporting on references) when read in conjunction with clauses 6(1)(b) and 7, 'appears to be to permit the Prime Minister to direct the Monitor to undertake a review whose conclusions may well not be presented to the

Parliament.,gs While not offering a firm view on the desirability of such an outcome the Cas tan Centre noted that this risked 'capture of the Monitor by the Commonwealth Executive.'99 In evidence presented to the committee the Castan Centre argued that:

Our submission does not take a strong view on the question of whether the Prime Minister should be obliged to give to the parliament all reviews which the Prime Minister commissions, because there are competing considerations. Publicity and transparency are highly desirable but equally, given the current state of disarray surrounding the administration and operation of these laws, I think it would be highly desirable that the Prime Minister get better advice than currently seems to be being given, and to that extent there may be some advantage in having an independent person who can give confidential advice to the Prime Minister. 100

2.145 The Law Council also expressed its concerns regarding:

... the absence of the requirement in the [Bill] that these report be tabled in Parliament or otherwise be made publicly available. This means that the Prime Minister retains full control over what matters the [Monitor] inquires into and whether the public is able to access the [Monitor]'s findings. It leaves to the Prime Minister's discretion whether a Government response to

the [Monitor]'s is warranted and the Parliament and the public can be denied the opportunity to evaluate whether the Government's response to any findings made by the [Monitor] is appropriate. 101

96 Australian Human Rights Commission, Submission 11 , p. 6.

97 International Commission of Jurists (Australia), Submission 5, p. 3.

98 Castan Centre for Human Rights Law, Submission 7, p. 10.

99 Castan Centre for Human Rights Law, Submission 7, p. 10.

100 Dr Patrick Emerton, Associate, Castan Centre for Human Rights Law, Proof Committee Hansard, 14 August 2009, p. 3.

101 Law Council of Australia, Submission 4, p. 26.

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2.146 In a similar vein, the AHRC noted that not requiring the Prime Minster to table the Monitor's reports to Parliament 'may undermine public confidence in the independence of the monitor.' 102

2.147 In its 91h Alert Digest of 2009 the Senate Scrutiny of Bills Committee drew senators' attention to the fact that where the Monitor has provided a report to the Prime Minister 'there is no provision requiring the Prime Minister to present to the Parliament the report, an abridged version of the report or a statement announcing the reference or completion of the report.' 103 The Scrutiny of Bills committee has sought the Cabinet Secretary's advice on this matter and observed that the arrangement as currently proposed 'may be considered to insufficiently subject the exercise of legislative power to parliamentary scrutiny.rl 04

Committee view

2.148 The committee observes that, whether the Monitor's reports are provided to the Prime Minister alone or also to the Parliament, is an issue that goes to the heart of the Monitor's independence.

2.149 The committee is of the view that the reporting arrangements as drafted would be adequate if the intention was to establish a government department, where the department's primary responsibility is serve the government of the day. However, in this instance the government has made clear its intention for the Monitor to be independent statutory body. In the committee's view the Monitor's reporting requirements need to reflect the independent nature of the position.

2.150 The committee acknowledges that in order to properly perform his or her role the Monitor will need to access and assess confidential and classified material. The committee believes that the sensitive nature of this material must be respected. However, in the committee's view that should not preclude a version of the report from being tabled in Parliament. The Monitor should seek to present statistical and other information regarding the operation and effectiveness of terrorism laws in a manner that can be made available to the public. Taking this approach would enhance public confidence in the Monitor's independence.

2.151 The committee notes that under subclause 29(7) the Monitor must prepare and give to the Prime Minister a supplementary report that sets out any sensitive information that has been excluded from the Monitor's Annual Report. The committee sees no practical reason why a similar approach cannot be taken for referrals by the Prime Minister.

I 02 Australian Human Rights Commission, Submission 11, p. 6.

103 Alert Digest No. 9 of 2009, Senate Scrutiny of Bills Committee, August 2009, pp 74-75.

104 Alert Digest No.9 of2009, Senate Scrutiny of Bills Committee, August 2009, p. 75.

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Recommendation 12

2.152 The Committee recommends that the bill be amended to require the Monitor to prepare two versions of any report that requires reference to sensitive material. The first version would be an unedited version for the Prime Minister, and the second, an edited version with references to sensitive material excluded for tabling in both Houses of Parliament.

Exclusion of material from the annual report

2.153 Subclause 29(3) contains a list of material that must not be contained in the annual report of the Monitor, for example:

â¢ any operationally sensitive information;

â¢ any information that, if included in the report, would or might endanger a person's safety; and

â¢ information that might prejudice the conduct of Australia's foreign relations.

2.154 Subclause 29( 4) requires that the Monitor must get the advice of the responsible minister, or responsible ministers, concerned as to whether any part of the annual report contains information referred to in subclause 29(3).

2.155 Many submitters and witnesses were critical of these restrictions. In its submission, the Gilbert + Tobin Centre argued that 'every effort should be made ... to prevent the executive branch of government from having any involvement in the preparation of a report prior to its being tabled in Parliament.'

105 Similarly the Law

Council noted that 'the ability of the Executive Government to determine what information should be excluded from the [Monitor's) Annual Report also has the potential to undermine the independent character of the office.' 106 Expanding on this point, the Law Council argued that:

These provisions appear to detract from the central value of an independent reviewer of terrorism laws : namely the provision of independent, accessible information to the public regarding the practical operation of terrorism measures. 107

2.156 The ICJA highlighted the same concerns as several witnesses and submitters that subclause 29(3) provides that certain information may be excluded from the Monitor's annual report. The ICJA stated that 'this provision had the potential to undermine ... the provision of readily accessible information to the public'

108 noting

that:

105 Gilbert + Tobin Centre of Publi c Law, Submission I , p. 11.

106 Law Council of Australia, Submission 4, p. 24.

107 Law Council of Australia, Submission 4, p. 25 .

108 International Commission of Jurists (Australia), Submission 5, p. 4.

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The ICJA understands that on some occasions a report may contain information that is highly sensitive. We submit however that on those occasions the report could be worded to ensure that sensitive material is not at risk of publication. 109

2.157 Departmental officials told the committee that the reporting requirements as defined in the bill were designed to ensure that ongoing operations were not prejudiced as well as being conscious of the sensitivities in relation to information that is sourced from overseas. The committee heard that:

When the government made its decision-and the ministers in the government were certainly aware that the panel idea, or reporting directly to parliament, were possibilities-it was felt that, given the complexity of the security environment, it was probably best to have the monitor report through the Prime Minister. Just to give a bit of granularity to that, when it came to the Clarke inquiry, for example, we experienced huge difficulties in that often the information does not come from this country. Often it comes from other countries and we have to be very careful about sensitivities in relation to the information that is sourced from other countries. Quite often it is not apparent, on the face of it, what the sensitivity is, so this mechanism and the sort of model we have got here enable us to explore those matters. You would probably appreciate that much of the safety of Australians in the context of terrorism and acts of foreign interference and so on does depend on intelligence security cooperation with other countries. If you do not respect those other countries' sensitivities then you might find yourself not getting sufficient information. 110

Committee view

2.158 The committee, while acknowledging the concerns expressed in submissions, is of the view that there need to be mechanisms to avoid the inadvertent release of sensitive material. The release of such material has the potential to be highly damaging to the organisations and persons involved and also risks Australia's international relations. For this reason the committee supports the proposed arrangements for excluding sensitive material from the Monitor's Annual Report.

Government response

2.159 A number of submitters and witnesses pointed to the importance of the government publicly responding to the Monitor's reports and recommendations. For example, when asked what was most important amendment that could be made to the bill, Mr Jonathon Hunyor of the Australian Human Rights Commission responded:

... the main thing would be to ensure that the government responds to the reports, so there should be an explicit requirement in respect of the reports

109 International Commission of Jurists (Australia), Submission 5, p. 4.

110 Mr Geoffrey McDonald, First Assistant Secretary, National Security Law and Policy Division, Attorney-General's Department, Proof Committee Hansard, 14 August 2009, p. 22 .

198

of the monitor, which, as I have said, we think should follow reviews even when they are not referred by the Prime Minister. In our view the key improvement would be to ensure that those reports are tabled in parliament and that those reports are responded to by government. We think that would improve the effective operation and also the integrity of the monitor in the system set up under the bill. 111

Committee view

2.160 In this regard the committee notes the comprehensive response the government tabled in both Houses of Parliament in December 2008 to a series of bipartisan and independent reviews of our national security legislation conducted over the past three years. The committee agrees that if this practice was adopted for the Monitor's reports it would improve the effective operation and integrity of the Monitor. It would also enhance the Australian community's confidence that our law enforcement and security agencies have the tools they need to ensure national

security, while ensuring the laws and powers are balanced by appropriate safeguards.

2.161 If the committee's recommendation on releasing a version of the Monitor's reports to Parliament is adopted (recommendation 12 refers), then it flows that the government should prepare and table a response to the Monitor's report. The committee believes that it is reasonable to expect that government responses will be tabled in the Parliament within a predetermined timeframe. The committee is of the view that the government should respond within six months of receipt of a report as this will allow the Government sufficient time to consider the Monitor's report while also providing the Parliament access to timely information.

Recommendation 13

2.162 The committee recommends that, if its earlier recommendation to require the tabling of the Monitor's reports in both Houses of Parliament is adopted, then the government be required to table a response to the Monitor's reports in both Houses of Parliament, within six months of receipt of the report.

Senator Helen Polley

Chair

111 Mr Jonathon Hunyor, Director, Legal Section, Australian Human Rights Commission , Proof Committee Hansard, 14 August 2009, p. 10.

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200

Coalition Additional Comments

National Security Legislation Monitor

1.1 Whilst Coalition Senators support the passage of the Bill if amended as recommended by the committee, they would like to note their concerns regarding the location of the Monitor within the Department of Prime Minister and Cabinet.

1.2 The location of the Monitor within this Department may have an adverse impact on the independent nature of the Monitor. The Monitor should not be an instrument of the Government of the day and it should not be perceived this way by the public. Locating the Monitor within a Government Department could result in such a perception.

1.3 The Coalition Senators do not agree with the recommendation that the Monitor be required to assess whether legislation is consistent with Australia' s international human rights obligations (Recommendation 1 0) .

1.4 There are many international instruments to which Australia is signatory, some of which have been ratified into domestic law and some which have not. The legislation which the Monitor will be asked to oversee is domestic legislation and the existing domestic legal safeguards are the appropriate standard by which to judge it. Introducing a wide range of international instruments adds needless complexity to the Monitor' s task, without demonstrably adding to the effectiveness of the process.

1.5 Recommendation 11 addresses the appropriate test.

Senator Cory Bernardi

Deputy Chair

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202

Australian Greens Additional Comments

National Security Legislation Monitor

.1 The Australian Greens support the establishment of an office to review the operation of he many pieces of interlocking legislation dealing with offences relating to terrorism .

. 2 This function is essential to address the 30 new laws and more than 80 amendments to :be Criminal Code and the Crimes Act introduced in the name of the 'war on terror', which :iramatically increased state powers of surveillance and detention in the absence of the wuntervailing protection of a bill of rights .

.3 This office has the potential to play an essential accountability role in making clear to e Government and the broader public whether these laws are necessary, proportionate and :ffecti ve at meeting their stated objective. It is therefore an alarming sign of the Government's .'riorities that the office will be headed by a part time position with only two staff, with scant

e porting obligations, and the ability for the executive to sanitise those reports which do public. This is against the backdrop of $8 billion forecast spending on billion national

11ecurity out to 2012 for rapidly expanding agencies operating without many of the

[

countability checks which apply to other Commonwealth agencies. It is hoped that at a bare inimum this Committee's recommendations will be heeded and that in the course of the enate debates we can set a more appropriate mandate for this office.

4 The National Security Legislation Monitor Bill and the inquiry into it has benefited om several previous Private Members and Senator's Bills and inquiries regarding the stablishrnent of a mechanism to review Australia's anti-terrorism laws. The UK included such review mechanism when anti-terrorism laws were passed there. Australia did not follow this :1odel, although such an office has been recommended by:

â¢

the Security Legislation Review Committee chaired by the Hon Sheller AO QC, June 2006;

Parliamentary Joint Committee on Intelligence and Security in Dec 2006 and again in 2007;

Senate Legal and Constitutional Committee in October 2008;

The Senate through passage of a Private Senator's Bill in November 2008 ;

The government's response to various reviews issued on 23 December 2008 .

. 5 The enactment of some of the terror laws resulted in significant departures from stablished principles of Australian law and should be repealed rather than reviewed. This view mechanism should be run in parallel with efforts to repeal the more egregious .omponents of the terror laws as outlined in the Anti-Terrorism Laws Ref orm Bill (2009).

203

There are some laws which are so extreme, so repugnant, redundant or otherwise inappropriai that should be abolished and do not deserve the dignity of being subject to review. These include those that allowed the Haneef scandal to unfold, and include excessive 'dead tim e undue surveillance and invasion of privacy. The laws relating to sedition and the possession of a thing' are also amongst the laws that should be abolished.

1. Resources

1.6 The Committee's fourth recommendation draws attention to the fact that t government propose one part time Reviewer with two support staff. Given that the reviewer i to conduct analysis of the array of complex terror laws, review them every time they are usee or when the PM requests, or when the Reviewer so chooses, this is clearly a very staffing arrangement. As the demands on the Monitor increase so too should resources. T Monitor will require resources to facilitate advice from high-level and often very expensiv

legal minds, and means to travel to hold hearings and attend gatherings to report on th. activities of the office.

2. Independence

1. 7 The independence of this office is vital if this exercise is to increase public confidencâ¢ in balanced terror laws, which is why the Greens have argued that it should contain the won 'independent' in the title. The Greens would prefer the term Independent Reviewer 0 1 Terrorism Laws, not only because the wot:d 'monitor' evokes high school scenarios, but because the laws should be reviewed and changed, not minded.

1.8 The Greens believe that the Explanatory Memorandum for this Bill should clarify tha the Monitor is empowered to vet and appoint staff. Evidence provided by the Department o Prime Minister and Cabinet that they already had specific staff "in our minds" for the Monitor' : office, does not bode well for the independence of the Monitor, thus clarification is needed i 1 the Explanatory Memorandum.

3. Human Rights

1.9 In many respects this exercise is about human rights, an attempt to answer the endurin question about whether the anti-terrorism laws strike a balance between security and th protection of civil and political rights. The Australian Greens have consistently sought to li the efforts of this review mechanism to Australia's human rights obligations under the and Covenants we have signed, and also believe that the Human Rights Commissioner shoul be able to make references to the Monitor in addition to the Parliamentary Joint Committee o Intelligence and Security.

4. Scope

1.10 The scope of what the Reviewer can examine needs to be clarified by the government. It is essential that the Reviewer is not unduly limited to having regard to related and consequential impacts on legislation that may not at first appear to be strictly related to national security legislation, but which are considered relevant and utilised in connection with terrorism offences. In addition, we propose that the Monitor I Reviewer be given a specific mandate to examine whether the terror laws have been used in other contexts, whether they be industrial, environmental or organised crime contexts, to identify whether 'scope creep' is occurring.

204

5. Penalties

1.11 It is appropriate that the Monitor has been conferred powers to compel people to a

hearing and to produce documents and information. However, all of the penalties for failure to comply do not apply if the person has a "reasonable excuse" which includes not having to "answer a question, produce a document or thing or provide information on the grounds that to do so might tend to incriminate the person or expose the person to a penalty." This represents a

gaping hole in possible sources of evidence the Reviewer might draw from.

6. Limitations on the Reviewer

1.12 The Reviewer is not to review the priorities or use of resources by agencies. This poses a difficulty when the means to implement the laws and the safeguards within institutions are very much pertinent to the evaluation/assessment task assigned to the Reviewer. The Reviewer is also not to consider any individual complaints. This becomes blurred when each individual use of the laws triggers a review. High profile terrorism cases will invariably link the Monitor's work to the cases of individuals.

7. Annual Report

1.13 It should be noted that there is a lengthy list of things that may not be referred to in the annual report (in Section 29 (3) a, b, c, d, and e), each beginning with any information that might prejudice national security, the function of any agency, that would endanger a person's safety, from a document or deliberations of Cabinet of a Committee of the Cabinet or Commonwealth or State, about which the Monitor has to get advice from Minister/s. Several of these provisions can be interpreted very broadly, making for possibly extremely brief annual reports . It is essential that the annual reports are not vetted in advance by Ministers including the Prime Minister; such editing as is necessary to remove operationally sensitive information should be undertaken by the Monitor- not the Government- prior to the reports being tabled in Parliament.

8. Prime Minister's Referrals

1.14 In addition to making references, the Prime Minister can currently determine the order in which the Reviewer attends to the workload, which could overburden and divert the efforts of the office. For this reason, the number of references by the Prime Minister and their subject should be made public.

9. Reporting

1.15 As the bill stands currently, the only reporting obligations of the Monitor to Parliament may be heavily edited annual report. We believe it is essential that the Monitor be required to table a report (subject to the same conditions described in 8, above) with the Government required to provide a response within a period of 6 months.

1.16 The laws that were hastily created in Australia following the crimes of 11 September must be reviewed to determine which merit retention and modernisation. Mistakes were inevitable when the government of the day did not allow the parliament to debate each bill individually even though the anti-terrorism legislative package constituted some of the most dramatic changes ever made to Australia's security and legal environment.

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1.17 Two hundred pages of legislation and explanatory memoranda were introduced into th ee House of Representatives at 8pm and were expected to be debated at 12 noon the next day;, leaving entirely inadequate time for review and analysis. Amendments were made available tffi the Senate less than 24 hours before the commencement of debate in that Chamber, effective! . stripping the parliament of the time necessary to ensure that the laws were adequate to prevent ; deter and pursue terrorists while ensuring that any limits on free speech or association struck ai!D acceptable balance. The parliament was set up to fail, and fail it did. While the establishmenttJ of the Reviewer's office is overdue, proper time should be taken to consider amendments so that this office can enjoy cross-party support.

1.18 The Australian Greens are deeply committed to the principle of nonviolence.: Nonviolence is one of the four interconnecting pillars that are the foundation of our party's policy and practice. We condemn the violent crime of terrorism, and view nonviolence as a creative, planned, positive force to resolve conflict, believing it to be the best way to transfo i"Im oppressive power, symbols and behaviour. While some leaders and commentators deeply fe am the accusation of being "soft on terrorism" believing it to be corrosive of their public perception, standing and masculinity, the Greens believe that to maintain the anti-terrorismu laws in their current form is corrosive of democracy itself and the rule of law upon which it iSI based. The benefit of hindsight and the passage of time have revealed many of the laws aSI irrational, unworkable or extreme. It is high time they were reviewed.

Senator Scott Ludlam

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Submission Number

Appendix 1 Submissions Received

Submitter

Gilbert+ Tobin Centre of Public Law

2 Sydney Centre for International Law

3 The Law Society ofNew South Wales

4 Law Council of Australia

5 International Commission of Jurists Australia

6 Public Interest Law Clearing House and Human Rights Law Resource Centre

7 Castan Centre for Human Rights Law

8 Civil Liberties Australia

9 Federation of Community Legal Centres (Victoria)

1 0 Office of the Privacy Commissioner

11 Australian Human Rights Commission

12 New South Wales Council of Civil Liberties

13 Australian Lawyers for Human Rights

14 Australian Muslim Civil Rights Advocacy Network

15 Public Interest Advocacy Centre

Additional Information Received

Response to Question on Notice taken by Australian Muslim Civil Rights Advocacy Network at a public hearing on 14 August 2009

Response to Question on Notice taken by the Department of Prime Minister and Cabinet at a public hearing on 14 August 2009

Response to Questions on Notice taken by the Australian Human Rights Commission at a public hearing on 14 August 2009

Response to Questions on Notice taken by the Gilbert+ Tobin Centre of Public Law at a public hearing on 14 August 2009

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Appendix 2

Public Hearing and Witnesses

Canberra, Friday 14 August 2009

BUDAY ARI, Ms Rosemary, Director, Criminal Law and Human Rights Unit, Law Council of Australia

EMERTON, Dr Patrick, Associate, Castan Centre for Human Rights Law

FLEMING, Mr Garry, Assistant Secretary, Border Protection and Law Enforcement Branch, Department of the Prime Minister and Cabinet

HUME, Ms Maree, Principal Legal Officer, Security Law Branch, Attorney-General' s Department

HUNYOR, Mr Jonathon Neil, Director, Legal Section, Australian Human Rights Commission

LYNCH, Associate Professor Andrew, Centre Director, Gilbert+ Tobin Centre of Public Law

McDONALD, Mr Geoffrey, First Assistant Secretary, National Security Law and Policy Division, Attorney-General ' s Department

McGARRITY, Ms Nicola, Director, Terrorism and Law Project, Gilbert + Tobin Centre of Public Law

SCHOKMAN, Mr Ben, Senior Lawyer, Human Rights Law Resource Centre and Public Interest Law Clearing House

WOOD, Mr John, Board Member, Australian Muslim Advocacy Civil Rights Network

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The Senate

Finance and Public Administration

Legislation Committee

Parliamentary Superannuation Amendment (Removal of Excessive Super) Bi112009

September 2009

211

ISBN 978-1-74229-173-4

PO Box 6100 Parliament House Canberra ACT 2600 Ph: 02 6277 3530 Fax: 02 6277 5809 E-mail: fpa.sen@aph.gov.au Internet: www .aph.gov .au/senate_ fpa

Printed by the Senate Printing Unit, Parliament House, Canberra.

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Membership of the Committee Members

Senator Helen Polley (Chair)

Senator Cory Bernardi (Deputy Chair)

Senator Doug Cameron

Senator Jacinta Collins

Senator Scott Ryan

Senator Rachel Siewert

Participating Member for this inquiry

Senator Steve Fielding

Secretariat

Stephen Palethorpe, Committee Secretary

Christine McDonald, Acting Committee Secretary

Jane Thompson, Principal Research Officer

Nina Boughey, Senior Research Officer

Alex Wilson, Research Officer

Hanako Jones, Executive Assistant

Sophia Fernandes, Executive Assistant

Jll

213

ALP, TAS

LP, SA

ALP,NSW

ALP, VIC

LP, VIC

AG,WA

FFP, VIC

214

TABLE OF CONTENTS

Membership of the Committee ........................................................................ iii

Chapter 1 ............................................................................................................. !

Introduction .............................................................................................................. 1

The inquiry ...... .. ... .... ..... ...... .. ... .... ... .... ....... ... ........... .. .. .... .... .... ... ...... ..... .... ........ .... 1

Purpose of the bill ...................... ..... ...... ......... ..... ... .... .. .... .... ...... ..... ....... ...... ... .... .... 1

Background to Parliamentary superannuation arrangements .... .... ... ..... ... .... .... ...... 2

Parliamentary Contributory Superannuation Scheme .... .... ... ....... .. ........ .. .. ....... .. ... 3

Post-2004 arrangements ......... .. .. .... ... ... .... .... ..... ... ... .......... ... ..... .............. ....... ...... .. 7

Comparison of entitlements .. .. .... .. ....... .. ....... ... ..... .. ... ...... .. ..................... ..... .. .. .. .... . 8

Chapter 2 ........................................................................................................... 11

Key Issues ........ ........................................................................................................ 11

Financial implications ... ...... ...... ..... ......... .. ..... ... ........ ..... ........... .. ... .. .. .. .... ... ......... 11

Non-retrospectivity ............ ... .... ....... ... ... ..... .... ... .... ... ... ........... ... .... ..... ..... ...... .... ... 12

Compensation ... .... ...... ............... ............ .. .... ... .. .. .... ............. .. .............. ... ....... ...... . 13

Family First Dissenting Report ........................................................................ 17

Appendix 1 ......................................................................................................... 19

Additional Information Received .......................................................................... 19

Public Hearing and Witnesses ............................................................................... 19

Appendix 2 ......................................................................................................... 21

Assumptions made by the Department of Finance and Deregulation in the example provided on 11 September 2009 ................................................................................ 21

Appendix 3 ......................................................................................................... 23

Comparison of death and ill-health benefits from the PCSS and AGEST ....... 23

Appendix 4 ......................................................................................................... 29

Terms of Reference for a Review of the Parliamentary Entitlements Framework .............................................................................................................. 29

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Chapter 1

Introduction

The inquiry

1.1 On 17 June 2009 the Senate, on the recommendation of the Selection of Bills Committee (Report No. 8 of 2009), referred the Parliamentary Superannuation Amendment (Removal of Excessive Super) Bill 2009 (the bill) to the Finance and Public Administration Legislation Committee (the committee) for inquiry and report by 8 September 2009 . The inquiry was advertised in The Australian and also through the Internet. The committee invited submissions from the Australian Government and interested organisations and individuals. No submissions were received.

1.2 The committee held a public hearing in Canberra on 14 August 2009. Appendix 1 lists the witnesses who appeared and the additional information received. The Hansard transcript of evidence may be accessed through the committee's website at www.aph.gov.au/senate/committee/fapa ctte/index.htm.

1.3 The committee wishes that thank all those who assisted with this inquiry.

Purpose of the bill

1.4 The objectives of the bill are threefold:

â¢ to terminate the retirement scheme constituted by the Parliamentary Contributory Superannuation Act 1948 (the Parliamentary Contributory Superannuation Scheme or PCSS); and

â¢ to require existing members of the PCSS to choose a complying superannuation fund in line with the arrangements applying to new parliamentarians since 2004, under the Parliamentary Superannuation Act 2004; and

â¢ to require the Commonwealth to pay into the complying superannuation funds chosen by existing members their respective commuted superannuation benefits and ongoing superannuation contributions.1

1.5 The Parliamentary Superannuation Amendment (Removal of Excessive Super) Bill 2009 would require the Parliamentary Retiring Allowances Truse to

Parliamentary Superannuation Amendment (Removal of Excessive Super) Bill2009, c1.3.

2 The Parliamentary Retiring Allowances Trust (the Trust) has responsibility for matters where discretion has been given under the Parliamentary Contributo ry Superannuation Act 1948. The Trust consists of five trustees: the Minister for Finance and Deregulation who is the presiding trustee, plus two Senators and two Members of the House of Representatives appointed by their respective Houses .

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calculate the monetary value of a PCSS member's entitlement as at 30 June 2009, with this amount being transferred to either the member's chosen superannuation fund or a default fund. 3 The Commonwealth must then make future contributions to the member's chosen superannuation fund. 4 Proposed section 18D would ensure that members are not entitled or required to make further contributions to the PCSS.

Background to Parliamentary superannuation arrangements5

1.6 Currently, there are two parliamentary superannuation schemes in operation for members and senators (MPs). The first is the Parliamentary Contributory Superannuation Scheme (PCSS), which commenced operation in 1948 and was closed to new members from date of the 2004 election, which was held on 9 October 2004.

1. 7 The second is constituted by the arrangements made under the Parliamentmy Superannuation Act 2004. These relatively new arrangements only apply to MPs first entering, or former MPs re-entering, Parliament as a result of the 2004 election or subsequent elections. These arrangements require a percentage of a member's or senator's parliamentary income to be paid into a superannuation fund of their choice.6

1.8 The new arrangements originated during the lead up to the 2004 election when the then Leader of the Opposition, Mr Mark Latham MP, announced that a Labor Government would close down the current superannuation schemes for Federal MPs, judges and the Governor-General. In the press release that accompanied the announcement, Mr Latham stated that along with the Parliamentary scheme, the judges' and Governor-General's schemes:

... are well outside the community standard in Australia and have become out-of-date. They offer superannuation benefits seven times more generous than the current contribution scheme available to the general public.

Parliamentary superannuation has become a major source of public dissatisfaction and cynicism in modem politics. That is why a Labor Government will pass legislation closing the scheme to new entrants. 7

1.9 On 12 February 2004, the then Prime Minister, the Hon John Howard MP announced in response that the government would close the PCSS and establish new

3 Proposed sections 18C and 22BB- 22BE.

4 Proposed section 32.

5 This section is based on the Parliamentary Library's Bills Digest no. 131, 2003- 04, Parliamentary Superannuation Bill 2004, May 2004, www.aph.gov.au/library/pubslbd/2003-04/04bdl3l .pdf(accessed 21 August 2009) and Bills Digest no. 42, 2006-07, Parliamentary Superannuation Amendment Bil/2006, October 2006, www.aph.gov.au/library/pubslbd/2006-07/07bd042.pdf(accessed 21 August 2009).

6 If the member or senator does not choose a particular fund- the payments are made into the Australian Government Employees Superannuation Trust (AGEST).

7 Mr Mark Latham MP, Statement by Federal Labor Leader Mark Latham: Parliamentary Superannuation, Press Release, 10 February 2004.

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superannuation arrangements for new Members and Senators elected from the next federal election. The Prime Minister justified his decision on the basis of:

.. . a community perception that this super's too generous, I think the overall package is not too generous but people think the super's generous and rather than this thing drift on for months as the subject of a partisan political debate I've decided to act immediately to get it off the agenda as a partisan political issue ... 8

1.10 Prior to the 2004 election, the government introduced, and the Parliament passed, the bills which established the new superannuation arrangements. A broad overview ofthe pre-2004 and post-2004 arrangements is provided below.

Parliamentary Contributory Superannuation Scheme9

1.11 The Parliamentary Contributory Superannuation Act 1948 (the Act) provides a compulsory superannuation scheme under which benefits are paid to former members of Parliament, their spouses, and orphan children. Membership of the PCSS is compulsory for all Members of Parliament (MPs) who entered Parliament before 9 October 2004.10

1.12 The scheme is administered by the Department of Finance and Deregulation on behalf of the Minister for Finance and Deregulation. The Parliamentary Retiring Allowances Trust (the Trust) is responsible for matters where discretion has been provided under the Act. There are five trustees of the Trust- the Minister for Finance and Deregulation (or Minister authorised by the Minister for Finance and Deregulation) as presiding trustee, plus two Senators and two Members of the House of Representatives appointed by their respective Houses. 11

History of the scheme

1.13 The PCSS was established in 1948. A 1997 report of the Senate Select Committee on Superannuation detailed the following reasons for the scheme's establishment:

8 The Hon John Howard MP, Prime Minister, Transcript of the Prime Minister the Hon John Howard MP, Press Conference, Parliament House, Canberra, .12 February 2004.

9 This section is based on the Department of Finance and Deregulation's Parliamentary Contributory Superannuation Scheme Handbook, April 2009,

(accessed 20 August 2009).

10 Department of Finance and Deregulation, Parliamentary Contributory Superannuation Scheme Handbook, April2009, p. 1.

11 Department of.Finance and Deregulation, Parliamentary Contributory Superannuation Scheme Handbook, April2009, p. 1.

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â¢ entering Parliament often meant foregoing potential superannuation payouts from previous employers due to leaving that employer prior to retirement age;

â¢ electoral and parliamentary demands reduced members' chances to re-establish careers when their parliamentary term was over; and

â¢ the need to entice people to enter Parliament who would otherwise not come.12

Eligibility

1.14 Membership of the PCSS is restricted to MPs who entered Parliament before the closure of the scheme to new members from 9 October 2004.13 Parliamentarians who enter Parliament after this time, including former MPs who return to Parliament and former State Parliamentarians who join the Australian Parliament, are not eligible to joint the PCSS. Similarly, sitting MPs who leave Parliament and become entitled to a parliamentary retiring allowance and are re-elected to Parliament in the future are not eligible to rejoin the PCSS. 14

Contributions

1.15 Contributions to the scheme are a fixed percentage of:

(a) the backbench salary payable from time to time; and

(b) any additional salary, or allowance in the nature of salary, received from time to time for service as Prime Minister, a Minister or office-holder in Parliament. 15

1.16 Contributions are paid into the Consolidated Revenue Fund.

1.17 Ms Campbell, Deputy Secretary, Department of Finance and Deregulation described the contribution arrangements in the following manner:

The Parliamentary Contributory Superannuation Scheme requires members of parliament to contribute to their superannuation. Members are required

12 251h Report of the Senate Select Committee on Superannuation, Th e Parliamentary Contributory Superannuation Sch eme and the Judges' Pension Scheme, September 1997, p. 9.

13 Department of Finance and Deregulation, Parliamentary Contributory Superannuation Scheme Handbook, April2009, p. 1. The Parliamentary Contributory Superannuation Scheme Handbook notes an exception to this general principle where a serving MP who ceases to be a member of the House of Representatives on di ssolution of the House to stand for the Senate, or resigns from the Senate to stand for election to the House of Representatives, and is elected to that other House within three months will remain a member of the PCSS.

14 Department of Finance and Deregulation, Parliamentary Contributory Superannuation Scheme Handbook, April2009, p. 1.

15 Department of Finance and Deregulation, Parliamentary Contributory Superannuation Scheme Handbook, April 2009, p. 2.

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to contribute 11.5 per cent of post-tax salary for the first 18 years of their term and after that 5.75 per cent of post-tax salary. When members leave the parliament after having completed a minimum of 12 years service or four terms they are entitled to a pension. The minimum pension is 50 per cent of a backbencher's salary and the maximum pension is 75 per cent of a backbencher's salary. The amount that is paid depends on the years of service and there is also an element of pension paid for extra responsibilities, such as ministerial responsibilities. However, if retirement

is involuntary due to the loss of preselection or loss at an election, a member qualifies after completing eight years of service or three terms. 16

1.18 Ms Campbell went on to explain that, based on a backbencher's current salary of $127 060, eligible MPs would receive a taxable annual pension of $63 530 for the rest of their lives. 17

1.19 Salary sacrifice arrangements are not allowed under the PCSS. 18

Benefits payable to former Senators and Members

1.20 The PCSS is an unfunded defined benefit scheme. Therefore, when a pension becomes payable, benefits are funded from an appropriation within the Commonwealth Budget, and the member's entitlement is, generally, a multiple of years of service and a percentage of salary. Thus, the amount of benefit is fixed by a formula rather than by market returns on investments19 as is the case for accumulation superannuation funds.

1.21 The PCSS Handbook notes that on retirement from Parliament, a PCSS member is entitled to a retiring allowance (or pension) if:

(a) 12 or more years of service has been completed;

16 Ms Kathryn Campbell, Deputy Secretary, Department of Finance and Deregulation, Committee Hansard, 14 August 2009, p. 1.

17 Ms Kathryn Campbell, Deputy Secretary, Department of Finance and Deregulation, Committee Hansard, 14 August 2009, pp 1- 2. Ms Campbell also explained that if the MP were elected after 2001 , then a preservation age of 55 applies. Because pension entitlements are expressed as a percentage of the backbench salary as payable from time to time, the actual amount of the pension will increase as the backbench salary (and any other relevant additional salary) is increased (Department of Finance and Deregulation, Parliamentary Contributory Superannuation Scheme Handbook, April2009, p. 12).

18 Department of Finance and Deregulation, Parliamentary Contributory Superannuation Scheme Handbook, April 2009, p. 2.

19 Parliamentary Library, Superannuation Benefits for Senators and Members, June 2007, p. 2, www.aph .gov.au/library/intguide/POL/Super.htm (accessed 20 August 2009).

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(b) the member has on four occaswns, ceased20 to be a member on the dissolution or expiration of the House of which he or she was then a member or on the expiration of a term of office; or

(c) retirement is involuntary (due to the loss of pre-selection or loss of an election) and the member has completed not less than 8 years service or has on three occasions, ceased20 to be a member on the dissolution or expiration of the House of which he or she was then a member or on the expiration of a term of office. 21

1.22 According to the Handbook, a PCSS member with less than 8 years service who qualifies for a retiring allowance under (b) or (c) above, is deemed to have completed 8 years of service.

1.23 Where the scheme member is not entitled to a pension, they are entitled to a lump sum comprising a refund of contribution plus a supplement, the amount of which is:

â¢ two and one-third times the member contributions if the retirement is involuntary;

â¢ one and one-sixth times the member contributions during the past 8 years of service ifretirement is deemed to be voluntary. 22

1.24 Where, however, the minimum level of superannuation required under the Superannuation Guarantee (SG) legislation has not been provided by the payment of the lump sums described above, lump sum benefits will be increased. The SG minimum amount is calculated on the following basis:

â¢ member's voluntary retirement benefit as at 30 June 1992; plus

â¢ member's own contributions from 30 June 1992; plus

â¢ minimum SG employer contributions from 30 June 1992;

â¢ all accumulated with Public Sector Superannuation scheme interest until retirement. 23

20 A member is considered to have ceased to be a member on the di ssolution of the House of which he or she was a member or on the expiration of a term of office on the day on which he or she ceases to recei ve his or her backbench salary in respect of that term.

21 Department of Finance and Deregulation, Parliamentary Contributo ry Superannuation Scheme Handbook, April2009, p. 2.

22 Department of Finance and Deregulation, Parliamentary Contributory Superannuation Scheme Handbook, April 2009, p. 3.

23 Department of Finance and Deregulation, Parliamentary Contributory Superannuation Scheme Handbook, April2009, p. 4.

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Post-2004 arrangements24

1.25 The new arrangements, which began operation after the 2004 general election, introduced wholesale changes to the system governing Federal MPs' superannuation entitlements. This section describes the new arrangements while the following section seeks to compare the entitlements under each arrangement.

1.26 The new arrangements involve a 9 per cent government contribution up to 30 September 2006 and 15.4 per cent from 1 October 2006,25 payable into a superannuation fund chosen by the 'new MP'.26 The government contribution is calculated on total parliamentary salaries.

1.27 One of the key features of the post-2004 arrangements appears to be greater flexibility. Ms Campbell told the committee:

The pre-2004 scheme was a defined benefit very structured around the pension and the availability of a lump sum. The pest-2004 scheme is ... an accumulation system which allows members to make their own decisions about where their money is placed, including how it is invested, as well as portability-so it can be transferred into other schemes and members can also include other superannuation funds or elements that they have already accrued or are going to accrue into the future ... 27

1.28 There is no requirement for personal after tax contributions (as there is in the PCSS), however MPs are able to salary sacrifice up to 50 per cent of parliamentary salary. This enables them to supplement the government contribution.

1.29 One of the major differences between the pre- and post-2004 arrangements is the allocation of risk. As described above, the PCSS is a defined benefit scheme whereby a member's final benefit is calculated on a predetermined formula unrelated to the fund's investment earnings performance. Thus if investment returns decline, as has occurred so dramatically over the past 12 months, the fund is still required to meet the members' prescribed entitlements.

24 This section is based on the Department of Finance and Deregulation's Parliamentary Superannuation Arrangements for New Members of Parliament website, www. finance. gov .au/superannuation/pari i amentary-superann uati on/new -pari i amentary superannuation-arrangements.htm (accessed 25 August 2009).

25 The 9 per cent figure corresponds to the minimum required employer contributions under the Superannuation Guarantee provisions whereas the 15.4 per cent figure corresponds to the Commonwealth's notional contribution rate ofthe Commonwealth public servant's superannuation schemes (the Public Sector Superannuation Scheme and the Public Sector Superannuation Scheme- Accumulation Plan). 26 For the purpose of this discussion, 'new MP' refers to an MP first entering or re-entering

Parliament, at or after the 2004 election.

27 Ms Kathryn Campbell, Deputy Secretary, Department of Finance and Deregulation, Committee Hansard, 14 August 2009, p. 3.

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1.30 The post-2004 arrangements on the other hand, place new MPs

superannuation savings into accumulation funds. The final benefit under accumulation schemes is made up of contributions to the funds, plus any investment earnings, less administration costs. As a result, for accumulation schemes the financial risk of retirement saving is borne by the MP rather than the Treasury.

1.31 Under the new arrangements, MPs are able to choose a complying superannuation fund or Retirement Savings Account to receive their government contribution.28 As a result, MPs' superannuation entitlements are now managed by a range of different funds, each offering different superannuation products, benefits, fee structures and returns. So the superannuation entitlements of each new MP will vary depending on which fund they select and the performance of that fund. This is one reason why it is very difficult to directly compare the pre- and post-2004 arrangements.

1.32 In the event that a new MP does not choose a preferred fund, a default fund, as nominated by the Minister for Finance and Administration,29 becomes the MP's superannuation fund.

Comparison of entitlements

1.33 It is worth noting at the outset that due to the high number of variables, it is very difficult to make a meaningful comparison between the pre- and post-2004 arrangements. Variables such as retirement age, returns on investment, co-benefits (e.g. insurance and spouse benefits), and post-tax contributions, make the task of comparing entitlements under the two sets of arrangements a little like comparing apples and oranges.

1.34 The Department of Finance and Deregulation was asked to prepare a practical comparison between the pre- and post-2004 arrangements. The department provided the following instructive example which demonstrates that under this specific scenario there is little difference between the superannuation entitlements payable under the two schemes. The assumptions used to generate this example include, that the MP:

â¢ retires from Parliament in August 2010 at age 60;

â¢ the member had received the back bench salary for the duration of his/her serviCe which is currently $127 060 per annum; and

the post-2004 member had:

â¢ received employer contributions of 15.4 per cent per annum

(notwithstanding that Superannuation Guarantee was introduced progressively from 1992);

28 However, the fund must not be a self managed superannuation fund.

29 The Finance Minister has identified the Australian Government Employees Superannuation Trust (AGEST) as the default fund.

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â¢ salary sacrificed an amount each year equivalent to the after tax contribution of 11.5 per cent (or 5.75 per cent after 18 years of service) made by a member in the PCSS;

â¢ 15 per cent contributions tax on employer contributions was applied; and

â¢ a fund earnings rate, after investment fees and taxes, of 6 per cent.

1.35 The full list of assumptions is reproduced in Appendix 2.

Table 1--Comparison of pre- and post-2004 arrangements Qess than 8 years service)

Ytat-s of PCSS Entitlement - Value of benefit undet· post 2004

senice Involuntary Lump Sum Benefit (after tax) arrangements (after tax) 1 $43 ,081 $38.525

2 $86,162 $81,070

5 $208,159 S212,494

7 $2/9,676 S306,670

Source: Department of Finance and Deregulation, answer to question on notice, 11 September 2009, p. 3.

Table 2--Comparison of pre- and post-2004 arrangements (10-30 years service)

PCSS

PCSS Entitlement -

Value of

Years of Entitlement -full

50% 50% lump sum

benefit under

pension 2004

senice Pension pa (after Pension pa (after Lump Sum benefit tax) tax) (after tax) (after tax)

10 $62,764 $33 .912 $302,322 $455.485

15 $75.847 $41 ,043 $372,526 $723.596

20 $83,390 $44,943 $414,326 $996,809

30 $83.222 $44,882 $413558 $1 ,458,796

Source: Department of Finance and Deregulation, answer to question on notice, 11 September 2009, p. 3.

1.36 The department acknowledged that 'the above results are dependent on specific assumptions. Changes to any of the assumptions listed above may lead to a significant change in the results.'30

1.37- Despite the above example which shows a large degree of similarity between the benefits accrued under the two arrangements, a number of commentators have expressed the view that the benefits provided under the two schemes are not equivalent. The Parliamentary Library has observed that the post-2004 arrangements are 'far less generous than the PCSS scheme.'31 The Library's 2006 report goes on to

30 Department of Finance and Deregulation, answer to question on notice, 11 September 2009, p. 3.

31 Parliamentary Library, Bills Digest no. 42, 2006--07, Parliamentmy Superannuation Amendment Bill2006, October 2006, p. 3.

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note that the Commonwealth's notional contribution to the PCSS is about 70 per cent of a parliamentarian's income whereas the comparable rate under the new arrangements is 15.4 per cent. 32

1.38 Another significant difference between the pre- and post-2004 arrangements is death and invalidity benefits. The benefits under the PCSS are well defined, for example death benefits equal to five sixths of the rate of pension that the deceased member was being paid or would be entitled to, is payable to an eligible partner.

1.39 By contrast the post-2004 arrangements will vary from MP to MP depending on which superannuation fund they choose, as it depends on the nature of the insurance arrangement for the particular superannuation scheme that the member is in. Typically, death benefits will equate to the amount in the member's account plus any applicable death cover. The Department of Finance and Deregulation's comparison of the death and invalidity benefits provided by the PCSS and AGEST is reproduced in Appendix 3.

Committee view

1.40 The committee notes that while the two sets of arrangements are inherently difficult to compare, the new arrangements have aligned the superannuation entitlements of MPs elected post-2004, much more closely with the arrangements of the majority of Australians.

32 Parliamentary Library, Bills Digest no. 42, 2006-07, Parliamentary Superannuation Amendment Bil/2006, October 2006, p. 3.

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Chapter 2

Key Issues

2.1 The committee has identified three key issues that emerged from this inquiry: financial implications; the principle of non-retrospectivity; and compensation.

Financial implications

2.2 Very little information is available regarding the possible financial implications that will result if the bill is passed. The Explanatory Memorandum to the original 2004 legislation provided an estimate of the fiscal impact of closing the PCSS to contributing members. The estimate ranged from an annual fmancial saving of between $0.9-5.3 million, between 2004-05 and 2007-08. However, to extrapolate this figure to the current bill may be to significantly overstate its fiscal impact, as the bill would only apply to little over half of current MPs. 1 The committee notes that as the PCSS is now closed to new members, the number of sitting MPs that are contributing PCSS members will naturally decline over time. As a result, there will be fewer and fewer MPs entitled to the more generous PCSS, until a time is reached when there will be no more contributing members.

2.3 The Department of Finance and Deregulation provided the committee with an estimated cash cost of $317 million to close the PCSS in accordance with the approach described in bill. According to the department:

This cost estimate was derived by Mercer [which provides actuarial advice to the department] based on the assumption that members would become entitled to a pension from the date of closing the PCSS (assumed 1 July 2010), and would receive a lump sum amount that represents the fair value of that pension to transfer to a superannuation scheme of their choice?

2.4 The committee heard evidence from the Department of Finance and Deregulation that an estimate for the unfunded liability for current PCSS contributors is in the order of $220 million. 3

2.5 The Department explained the reason for this discrepancy:

The estimated cash cost of closing the PCSS [$317 million] is higher than the $220 million referred to in the hearings, which was based on unfunded

There are currently 126 sitting MPs that are members of the PCSS. This means that 100 of a total of 226 members and senators that are now covered by the new arrangements.

2 Department of Finance and Deregulation, answer to question on notice, 11 September 2009, p. 23.

3 Mr Alan Greenslade, First Assistant Secretary, Department of Finance and Deregulation, Committee Hansard, 14 August 2009, p. 7.

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superannuation liability attributed to PCSS contributors, due to the different assumptions that are applied in deriving the two figures. In particular, the approach proposed in the Bill requires the value of benefits payable to existing contributors to be calculated from 1 July 2010 rather than from the expected retirement date of members. It also requires an assumption that all members receive their full entitlement as a pension from that date. 4

Committee view

2.6 The committee acknowledges that in theory there could be some cost saving resulting from moving contributing members of the PCSS to the new arrangements, as the PCSS is a more generous scheme. However, this theoretical possibility is unlikely to eventuate because of a compensation liability that is likely to arise. As is discussed below, if the government is required to compensate contributing members on just terms for the removal of their PCSS entitlements, these potential savings will be severely eroded. If the compensation claims are sufficiently large then there will be an overall cost to the measure at the detriment of both the government and the taxpayer.

2. 7 The committee also notes the actuarial advice from the Department of Finance and Deregulation that the immediate cost of closing the PCSS is in the order of $100 million greater than the current unfunded liabilities of the PCSS. It would be a perverse outcome that in order to bring the superannuation entitlements of

'pre-2004 MPs' into line with the majority of Australians, the bill would impose an initial expense to taxpayers of approximately $1 00 million.

2.8 The committee is also of the view that MPs' superannuation entitlements should not be reviewed in isolation of other aspects of their remuneration. As discussed below the committee supports a holistic approach to MPs' entitlements.

N on-retrospectivity

2.9 The committee first considered this issue back in June 2004 when it inquired into the originating legislation; the Parliamentary Superannuation Bill 2004. In its report, the committee expressed concerns regarding the proposition put at that time, to extend the new arrangements to all sitting MPs. The committee reiterates its earlier remarks:

The Committee, however, is concerned that expanding coverage of the proposed arrangements to current parliamentarians may be at odds with the principle of non-retrospectivity. 5

4 Department of finance and Deregulation, answer to question on notice, 11 September 2009, p. 23 .

5 Senate Finance and Public Administration Legislation Committee, Provisions of th e Parliamentary Superannuation Bill 2004 and th e Parliamentary Superannuation and Other Entitlements Legislation Amendm ent Bill 2004, June 2004, p. 13 .

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2.10 The Minister's second reading speech for that bill, which sets out the government's rationale for not supporting its retrospective application, is also worth restating:

The government does not support retrospective changes to accrued superannuation. Of course, retrospectivity in most circ*mstances is a most undesirable thing. Such changes would not be in line with the superannuation arrangements applying generally in the community, which protect accrued superannuation entitlements. Existing senators and members will have made financial arrangements and commitments based

on the expectation of continued membership of the current scheme. It would be unfair and inequitable to reduce their entitlements retrospectively. 6

Committee view

2.11 The committee reaffirms its earlier comments regarding the principle of non-retrospectivity and endorses the proposition that it would be unfair and inequitable to reduce MPs' existing superannuation entitlements retrospectively.

Compensation

2.12 The Department of Finance and Deregulation raised the potential legal vulnerabilities of enacting the changes proposed by the bill. Officials told the committee:

There is also the issue of the legal risks. There is a risk under the Constitution about the unjust acquisition of property. Clearly members have different considerations of how valuable a pension is versus a lump sum, depending on a number of factors including lifestyle, age and length of service. But it is open that members may wish to challenge in the High Court on the fact that their property had been unjustly acquired. In the bill as it is currently drafted there is not guidance on how the pension would be converted to a lump sum and how that amount would be paid to another

fund. 7

2.13 This risk would seem to be heightened due to the acknowledgement by the department that '[t]here would be a significant change to the member's entitlements.' 8

6 The Hon Peter Slipper MP, Parliamentary Secretary to the Minister for Finance and Administration, House of Representatives Hansard, 12 May 2004, p. 28334 . 7 Ms Kathryn Campbell, Deputy Secretary, Department of Finance and Deregulation, Committee Hansard, 14 August 2009, p. 4.

8 Ms Kathryn Campbell, Deputy Secretary, Department of Finance and Deregulation , Committee Hansard, 14 August 2009, p. 5.

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Committee view

2.14 The committee is concerned about the prospect of exposing the

Commonwealth to a potentially lengthy and expensive legal challenge over the proposed changes. Ultimately, any legal costs incurred by the Commonwealth would be borne by the Australian taxpayer. Given that the number of MPs contributing to the PCSS will naturally diminish over time, the committee sees little value in pursuing the arrangements proposed in this bill, particularly when it poses the risk of a drawn out legal battle over commuted benefits.

2.15 In closing, the committee reflects back to the conclusions of its 2004 report on this subject. In that report the committee commented:

... the Committee considers that assessing parliamentary superannuation in isolation from the remainder of the parliamentary remuneration package has limitations. The Committee's view is that a holistic approach to parliamentarians' remuneration is required. To ensure that the approach is transparent and accountable in the eyes of the public, the Committee considers that there is a case for referring parliamentarians' remuneration as a whole ... for inquiry and report... 9

2.16 In this regard the committee notes the recent announcement by the Special Minister of State and Cabinet Secretary, Senator the Hon Joe Ludwig, of an independent review of the entire Parliamentary entitlements framework. 10 The review will trace out the path for the next stage of reform of Parliamentary entitlements and will report to government within six months of commencement. The report and recommendations of the panel will be reported publicly and will be considered by the government as a basis for reform of the Parliamentary entitlements system. 11

2.17 The terms of reference of the independent review specify that, amongst other things, 'the review should have regard to ... remuneration and allowances ... ' which will clearly include superannuation entitlements. The review's terms of reference are reproduced in full at Appendix 4.

2.18 The committee supports this holistic approach to parliamentarians' remuneration and looks forward to the publication of the review's fmdings.

9 Senate Finance and Public Admini stration Legislation Committee, Provisions of the Parliamentary Superannuation Bill 2004 and the Parliamentary Superannuation and Other Entitlements Legislation Amendment Bill2004, June 2004, p. 13 .

10 Senator the Hon Joe Ludwig, Cabinet Secretary and Special Mini ster of State,' Reform of parliamentary entitlements', Press release 35/2009, 8 September 2009.

11 Senator the Hon Joe Ludwig, Cabinet Secretary and Special Mini ster of State, Proof Senate Hansard, 8 September 2009, p. 43.

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Recommendation 1

2.19 The committee recommends that the Senate not pass the bill.

Senator Helen Polley

Chair

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232

Family First Dissenting Report

1.1 In 2004, the Howard Government took a step in the right direction by putting an end to the outrageous superannuation payments to new federal politicians.

1.2 This was an action too long in coming and one that did not go far enough.

1.3 The changes implemented in 2004 were inadequate because those politicians elected before 2004 still continued to remain eligible for excessive superannuation payouts on their retirement.

1.4 The Parliamentary Superannuation Amendment (Removal of Excessive Super) Bill 2009 would bring the superannuation entitlements of those politicians still on the Parliamentary Contribution Superannuation Scheme (PCSS) into line with more acceptable standards.

1.5 This is acknowledged explicitly by the committee in the report:

The committee notes that while the two sets of arrangements are inherently difficult to compare, the new arrangements have aligned the superannuation entitlements of MP's elected post-2004, much more closely with the arrangements of the majority of Australians. 1

1.6 Importantly, this Bill would remove the effective golden handshake that many federal politicians currently receive on retirement and bring all those politicians elected pre-2004 into a scheme more closely in line with the broader community.

1.7 Under the current PCSS, members of Parliament elected prior to 2004 who have completed a minimum of 12 years service or 4 terms are entitled to a lifetime pension upon their retirement. In the case of members of Parliament who retire involuntarily due to the loss of preselection or loss at an election, they are able to qualify for a lifetime pension after completing only eight years of service or three terms.

1.8 When a member dies, the pension continues to be collected by the member's spouse for an amount of five-sixths of the entitlement that was payable to the member.

1.9 According to Ms Katherine Campbell, Deputy Secretary of the Department of Finance and Deregulation,

The minimum pension is 50 per cent of a backbencher's salary and the maximum pension is 75 per cent of a backbencher's salary. The amount that is paid depends on the years of service and there is also an element of pension paid for extra responsibilities, such as ministerial responsibilities. 2

1.10 This means that a politician elected prior to 2004 in a by-election who gets re-elected on three more occasions and retires in 2010, having only ever served as a

Senate Finance and Public Administration Legislation Committee, Parliamentary Superannuation Amendment (Removal of Excessive Super) Bill2009, September 2009 , p. 10.

2 Ms Kathryn Campbell, Deputy Secretary, Department of Finance and Deregulation, Committee Hansard, 14 August 2009, p. 1.

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backbencher would receive a pension of $63 000 for the rest of their life. This is an outrageous amount and a blatant rort of taxpayers' dollars.

1.11 Furthermore, unlike other superannuation schemes which are exposed to market risks, and in many cases, have produced negative returns in the 2008-09 financial year, the PCSS has zero exposure to market risks. Instead, this is borne entirely by Australian taxpayers.

1.12 In response to a question on notice, the Department of Finance and

Deregulation stated:

The Parliamentary Contributory Superannuation Scheme (the pre 2004 arrangements) is an unfunded defmed benefits superannuation scheme, where benefits are based on length of parliamentary service and salary. Member benefits are not affected by investment returns .

Under the post 2004 arrangements, MPs become members of accumulation funds (or defined contribution funds) where member benefits are affected by the level of contributions made by the employer and the employee and investment earnings on those contributions. 3

1.13 Australians are tightening their belts and its time all politicians did the same. The government must surely lead by example. Just as the government is now looking to tighten those payments for fat cats who make their termination payments on the backs of hard-working Australians, so too must the same standards apply to politicians.

1.14 It is hypocritical for the Rudd Government to expect Australians to accept enormous government cuts in spending on vital services whilst they themselves remain immune to this pain. The first cuts in spending should be in pollies' super.

1.15 The next time the Government asserts that it is unable to adequately fund important community projects, they ought to look in their own backyard for this money.

1.16 This bill will send a powerful message to Australians that their elected representatives are not feathering their own nest. Family First is genuinely passionate about the fmancial security and welfare of Australians. This Bill offers those politicians who believe in a fair go for all and who genuinely want to improve the lives of their fellow Australians the opportunity to demonstrate this through their actions and not just through their words.

Recommendation 1

1.17 Family First recommends that the bill be passed.

Senator Steve Fielding

3 Department of Finance and Deregulation, answer to question on notice, 11 September 2009, p. 22.

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Appendix 1

Additional Information Received

Answers to Questions on Notice taken by Department of Finance and Deregulation at a public hearing on 14 August 2009.

Public Hearing and Witnesses

CANBERRA, FRIDAY 14 AUGUST 2009

CAMPBELL, Ms Kathryn, Deputy Secretary, Department of Finance and Deregulation

GREENSLADE, Mr Alan, First Assistant Secretary, Department of Finance and Deregulation

SOTIROPOULOS, Mr George, Branch Manager, Superannuation, Department of Finance and Deregulation

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236

Appendix 2

Assumptions made by the Department of Finance and Deregulation in the example provided on 11 September 2009

In order to make comparisons between the superannuation arrangements, the following assumptions have been made:

â¢ the member retires from Parliament in August 2010 at age 60;

â¢ the backbench salary at the time of the member's retirement is the same as the current rate of $127,060 per annum;

â¢ the member had received the backbench salary (per historic salary data) for the duration of his/her service;

â¢ the PCSS member's retirement is considered involuntary for the purpose of calculating benefits for service periods that are less than 12 years (and thus qualifying the member for a pension entitlement after eight years of service or three occasions);

â¢ for a member covered by the post 2004 arrangements:

â¢ the member had received employer contributions of 15.4% each year (notwithstanding that Superannuation Guarantee was introduced progressively from 1992) and in addition, has salary sacrificed an amount each year equivalent to the after tax contribution of 11.5% (or

5.75% after 18 years of service) made by a member in the PCSS;

â¢ the salary sacrificed amounts were calculated based on historic backbench salary and income tax rates (to which a Medicare levy of 1.5% was added);

â¢ administration fees and insurance fees that are charged by AGEST were applied;

â¢ 15% contributions tax on employer contributions was applied; and

â¢ a fund earnings rate, after investment fees and taxes, of 6% (this is based on the target asset return for the Balanced investment option in AGEST ofCPI plus 3.5% per annum over the investment timeframe);

â¢ for the purpose of calculating the after tax superannuation benefits:

â¢ the member does not have any other assessable income besides the superannuation entitlement; and

â¢ the tax rates for superannuation benefits in 2009-10 (plus a Medicare levy of 1.5%) were applied.

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Based on these assumptions, the tables below provide a comparison of the superannuation entitlements payable from the PCSS and the post 2004 arrangements for a backbencher, given the duration of service.

Under eight years of service (lump sum entitlements only for PCSS members)

Years of PCSS Entitlement- Value of benefit under post 2004

senice Involuntary Lump Sum Benefit (after tax) arrangements (after tax) 1 $43 ,081 $38,525

2 $86,162 $81,070

5 $208. 159 S212 , 191

7 $279,676 S306,670

Eight years of service or over

PCSS

PCSS Entitlement -

Vn lue of

Years of Entitlement -full

50% pensi(m, 50% lump sum benefit under

senice

2004

Pension pa (after Pension pa (after Lump Sum benefit arnmgemenrs tax) tax) (after tax) (alter tax)

10 $62. 764 $33.912 $302.322 $455.485

15 $75,847 $4 1,043 $372,526 $723,596

20 $8 3,390 $44.943 $414326 $996.809

30 $83,222 $-1-1,882 $t1 13 .5.58 $USS.796

Note: the above results are dependent on specific assumptions. Changes to any of the assumptions listed above may lead to a significant change in the results.

238

Appendix3

Comparison of death and ill-health benefits from the PCSS and AGEST

Details of the death and invalidity arrangements for the PCSS are provided at Attachment A, and those for AGEST are at Attachment B.

The following table summarises the general features of the two arrangements.

Summary Table- Death and Ill-Health Benefits from the PCSS and AGEST

PCSS AGEST

Commencement Cover starts on day the MP Subject to certain conditions, automatic cover commences when an employer contribution is received.

of cover becomes entitled to

parliamentary salary.

Benefits Death

Member is able to opt out of automatic cover. Also cover is not available for those over age 70.

Death

A penswn 1s payable to an Amount in the member's

eligible partner equal to five superannuation account plus sixths of the rate of pension that death cover, if any. the deceased member was being paid or is deemed to have been payable.

Invalidity Invalidity

Applies where the Applies where the MP is totally

Parliamentary Retiring and permanently disabled

Allowances Trust is satisfied (TPD) within the terms of the that the MP is unlikely, because insurance policy (see page 18 of physical or mental of attached document).

impairment, ever to be able to perform the duties of an MP a gam.

At least 8 years service or 3 terms'

239

Pension equal to the retirement The TPD benefit comprises the pension that the member would amount m the member' s be entitled to . The minimum account plus any TPD Cover. pension would be 50% of

backbench salary.

Less than 8 years service or 3 TPD Cover IS available either term/ as:

60% or more incapacity -

pension of 50% of backbench salary.

30% to 60% incapacity -

pension of 30% of backbench salary.

Less than 30% incapacity -lump sum equal to three and one third times the member' s contributions.

A term occurs on the dissolution or expiration of the relevant house or the expiration of the MP's term of office. Senators, who are elected for srx years, achieve a term after

completing three years and another term at the completion of the six years.

240

- unit based cover, where the level of cover decreases with age for the same level of premium; or - fixed cover, where the cost

of obtaining the same level of cover increases with age.

ATTACHMENT A

Death and invalidity arrangements in respect of PCSS members

For the PCSS, the relevant provisions relating to invalidity and death benefits are contained in Part V of the Parliamentary Contributory Superannuation Act 1948.

Invalidity Retirement Benefits under the PCSS

Members of the PCSS are entitled to an invalidity benefit if the Parliamentary Retiring Allowances Trust is satisfied that the MP is unlikely, because of physical or mental impairment, ever to be able to perform the duties of an MP again.

Where the member has completed at least eight years service or three terms he or she will be entitled to a pension. The pension is based on the service completed by the member with the minimum pension being equal to 50% ofbackbench salary.

Where the member has not completed sufficient service or terms, the form and value of the invalidity benefit will depend on the extent of the person' s incapacity in relation to non-parliamentary employment.

The three classes of invalidity are:

â¢ class 1 - 60 per cent to 100 per cent incapacity, with a benefit of a non-commutable pension of 50 per cent ofbackbench salary, which is subject to review;

â¢

class 2- 30 per cent to 59 per cent incapacity, with a benefit of a non-commutable pension of 30 per cent ofbackbench salary, which is subject to review; or

class 3 - less than 3 0 percent incapacity, with a benefit of a lump sum of three and one third times the member's own contributions.

Death benefits under the PCSS

Benefits payable to an eligible partner

A reversionary pension is payable to an eligible partner of a member. The reversionary pension is equal to five sixths of the rate of the pension to which the member is being paid or would have been entitled to be paid.

If the member died while aMP and had not completed eight years service, he or she is deemed to have completed eight years service for the purpose of calculating the amount of the pension.

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Benefits payable to orphan children

A reversionary pension is payable to any eligible children of a member who dies while a MP or is being paid a pension, provided the member is not survived by an eligible partner who is the natural or adoptive parent of the child and who is entitled to a reversionary pension.

To be eligible child, a child must be under 16, or under 25 if a full-time student, and have been dependent on the member, at the time of his or her death.

Benefits payable to a personal representative

In accordance with the formula specified in section 19AB of the Parliamentary Contributory Superannuation Act 1948, a lump sum may be payable to the personal representative of a deceased member who is not survived by an eligible partner or eligible child.

242

ATTACHMENT B

Death and Invalidity Benefits for MPs who are A GEST members

AGEST is the default fund for parliamentarians who entered Parliament on or after 9 October 2004.

For AGEST members the benefits payable on death or total and permanent disablement comprise the member's superannuation account balance plus any insurance cover that they have purchased.

Specific information on insurance cover available for members of AGEST can be found at pages 15 to 24 of the AGEST Product Disclosure Statement dated 1 January 2009. The relevant pages are attached.

If a Parliamentarian chooses a fund other than AGEST, insurance will depend on the specific arrangements that are available within that scheme.

243

244

Appendix 4

Terms of Reference for a Review of the Parliamentary Entitlements Framework

The review will provide advice and recommendations to Government addressing issues such as:

developing a single principles-based legislative basis that authorises the provision of specified entitlements, identifies who is eligible to access these entitlements and in what circ*mstances, and the purposes for which these entitlements may be used;

â¢ recommending framework changes that remove instances or overlap, duplication, inconsistency and gaps in the provision of entitlements;

defining in regulations and/or legislative instruments, key terms and the scope and any limits on entitlements use;

â¢ improving transparency in the use of taxpayer funded parliamentary entitlements;

â¢ enabling accountability processes to be mandated; and

â¢ recommending possible improvements to the protocol for handling allegations of misuse of entitlements.

In formulating advice and recommendations, the review should have regard to:

â¢ the development of a new simplified framework;

â¢ appropriate use of entitlements during election campaigns;

â¢ the inter relationship with the Members a/Parliament (Staff Act) 1984

employment framework;

â¢ entitlements provided at Parliament House;

â¢ remuneration and allowances (including the current electorate allowance):

â¢ private plated vehicles;

â¢ overseas study travel;

â¢ entitlements to Life Gold Pass and severance travel;

â¢ entitlements of former Prime Ministers (including a head of authority to provide any entitlements), Governors-General and former Parliamentarians;

â¢ production of postal vote applications under the printing entitlement; and

â¢ other matters considered relevant to the review.

The Review is to report to Government within six months of commencement.

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246

The Senate

Legal and Constitutional Affairs

Legislation Committee

Access to Justice (Civil Litigation Reforms)

Amendment Bill 2009 [Provisions]

September 2009

247

ISBN: 978-1-74229-151-2

This document was printed by the Senate Printing Unit, Department of the Senate, Parliament House, Canberra.

248

MEMBERS OF THE COMMITTEE

Members

Senator Patricia Crossin, Chair, ALP, NT

Senator Guy Barnett, Deputy Chair, LP, TAS

Senator David Feeney, ALP, VIC

Senator Mary Jo Fisher, LP, SA

Senator Scott Ludlam, AG, W A

Senator Gavin Marshall, ALP, VIC

Participating Members

Secretariat

Mr Peter Hallahan

Mr Tim Watling

Ms Monika Sheppard

Ms Cassimah Mackay

Suite Sl. 61

Parliament House

CANBERRA ACT 2600

Secretary

Acting Secretary (27-28 August 2009)

Senior Research Officer

Executive Assistant

Telephone: (02) 6277 3560

Fax: (02) 6277 5794

Email: legcon.sen@aph. gov .au

iii

249

250

TABLE OF CONTENTS

MEMBERS OF THE COMMITTEE ............................................................. iii

RECOMMENDATIONS ................................................................................. vii

Chapter 1 .............................................................................................................. 1

Introduction .............................................................................................................. 1

Purpose of the Bill ... .. .. .. .... .. ..... .. ..... ........ .. ..... ..... .. .. .... ...... ................. .... ..... .. ......... 1

Conduct of the inquiry ... .................. ...... ........... ............. ............. ... .... ...... ... ..... ... .... 1

Acknowledgement ... .... .......... ... .................... .. ....... .... ... ... .. ...... ... .. ... .... ...... ... .... .. .. .. 2

Scope of the report .. .... .. ... .. .. ....... ....... .. .. ... ...... ..... ... ...... .... .. ...... ........ ...... .... ... ... ...... 2

Notes on references ........... ..... .................... .... .... .. .. .... .. .. .... .... ...... ...... ...... ... .. ... ... .... 2

Chapter 2 .............................................................................................................. 3

Overview of the Bill .................................................................................................. 3

Case management ..... .... .. ... ... ... ....... .. ... ..... .. ...... ... .. ... ... .... ... ... ..... ....... .. .... ....... ....... . 3

Original jurisdiction .. ....... ....... .... ... ..... .... ... .... .. .. ... ........ .. ...... ... ... ... ........... ..... ...... 3

Case management in civil proceedings .... .... ... .. ... .. ... .... ....... ...... ... ... ... ... .... .... .... .4

General .. ... ... .. .... .. ....... ............. ..... ... ... ... ....... ... ........ ... ............ ... .. ... .. ...... .. .... ....... 6

Jurisdiction and appeals .. ...... ....... ............. ... ..... .. ..... ... ... .... ... ... ... ... .. .... ... ... .. .... ...... . 7

Original jurisdiction .. ..... ..... .. ...... .. .... .. ....... ... ... ...... ....... ................. ... .... .. ... ... .... ... 7

Appellate and related jurisdiction ... ... ..... ... ... ... .... .... ......... .... ...... ..... ... ... ....... .... .. . 8

Appeals to the High Court of Australia ...... ....... .. ... .... ............. .. ... ... .................. .. 9

Judicial responsibilities .... ... .... ......... ... .... .... ..... .. .... ..... .... ..... ..... .. ........ ....... .. ........ 10

Family Law Act 1975 ........... ... .... ... .. ......... ... ...... .... ... .. ....... ..... ..... ...... ... .. ... .... ... 10

Federal Court of Australia Act 1976 .. ...... ... ...... ...... ... ...... ... ................. .... ... .. .... 11

Federal Magistrates Act 1999 ... ... ... .. ... ...... ..... .... ...... .... .......................... .. .. .. .. ... 11

Judicial review .......... .. .. ..... ... .... .... .. ..... ... ... ....... ..... .. .............................. .... ..... ... 12

Chapter 3 ............................................................................................................ 13

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Key Issues ................................................................................................................ 13

Case management ......... .... .............. ..... ... ..... .... .. ..... .. .. .............. ..... ........ ............... 13

Oral hearings ................ ... .................... ........ .... ... ...... ..... .... ... .... .... ....... ..... ........ . 15

The overarching purpose .. .. ..... .... .................... ...... ..... ..... .. ............. ... .. .... ...... .... 15

The duty to act consistently .. .................. ......... ..... .. .... ..... .......... ...... .. .. ..... .. .. .. ... 16

Practice and procedural directions .... .. .... .... .............. .... ..... ............. .... .. .. .. .... .... 19

Costs orders ..... ... .......... ........ .. .... .. .... .... .. .... .. ......... ........ ..... ..... ..... ................ .... . 23

Jurisdiction and appeals ... .... .. ............ .. .. ... .... .............. .. ... .. ............... ........ ... ......... 24

Security for costs applications .. ... ... ............ .............. ... .. ....... ... ......... ....... .. ........ 24

Judicial responsibilities ... .............. ..... .... ..... .... ... .. ... .. ... .. .... ................. .............. ... 25

Committee view ...... .... ....... ........ ... ...... ........ ... ... ............ ........... .... ...... .... ... ........ .... 26

ADDITIONAL COMMENTS BY LIBERAL SENATORS ......................... 29

Case management ... .... ... ... ................. ...... ......... ..... .. .. ... ............ .. .... ........ .... ... .. .... . 29

The duty to act consistently and parties' lawyers .... .. ... ...... .. ............. ..... ... .... .... 29

Practice and procedural directions .... ..... ...... .... ...... ..... .... .............. .. ........... ..... .. 29

Judicial responsibilities ...... ............ ................. ..... ... ..... ...... ............. ..... .... .. .. ... .... . 30

APPENDIX 1 ..................................................................................................... 33

SUBMISSIONS RECEIVED ................................................................................. 33

APPENDIX 2 ..................................................................................................... 35

WITNESSES WHO APPEARED BEFORE THE COMMITTEE ................... 35

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RECOMMENDATIONS

Recommendation 1

3.90 The committee recommends that the government clarify the operation and purpose of proposed 37N(l) of the Federal Court of Australia Act 1976 (Schedule 1 item 6 of the Bill).

Recommendation 2

3.91 The committee recommends that proposed paragraph 24(1AA)(c) of the Federal Court of Australia Act 1976 (Schedule 2 item 13 paragraph (c) of the Bill) be deleted.

Recommendation 3

3.92 Subject to the above recommendations, the committee recommends that the Senate pass the Bill.

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254

Purpose of the Bill

Chapter 1 Introduction

1.1 On 25 June 2009, the Senate referred the Access to Justice (Civil Litigation Reforms) Amendment Bill 2009 (Bill) to the Senate Legal and Constitutional Affairs Legislation Committee for inquiry and report by 17 September 2009.

1.2 The Bill amends the Federal Court of Australia Act 1976, the Family Law Act 1975 and the Federal Magistrates Act 1999, and makes related amendments to the Administrative Decisions (Judicial Review) Act 1977.

1.3 The purpose of the Bill is threefold: to amend the Federal Court of Australia Act 1976 to strengthen and clarify the case management powers of the Federal Court of Australia (Federal Court), ensuring more efficient civil litigation; to streamline the Federal Court's appeals pathways for civil proceedings; and to clarify the powers of judicial officers in the Federal Court, the Family Court of Australia and the Federal

Magistrates Court.

1.4 A key objective of the reforms, as stated in the Explanatory Memorandum, is to effect a cultural change in the conduct of litigation, so that, in addition to the just resolution of disputes, the following considerations are prominent:

â¢ focussing the Federal Court, parties and their lawyers' attention on resolving disputes as quickly and cheaply as possible;

â¢ reducing the costs of litigation;

â¢ allocating resources in proportion to the complexity of the 1ssues m dispute;

â¢ avoiding unnecessary delays; and

â¢ management of the Federal Court's judicial and administrative resources as efficiently as possible. 1

Conduct of the inquiry

1.5 The committee advertised its inquiry in The Australian on 30 June 2009 and 1 July 2009, and details of the inquiry, the Bill and associated documents were placed on the committee's website from 27 June 2009. The committee also wrote to 74 organisations and individuals inviting written submissions by 31 July 2009.

1.6 The committee received 6 submissions, which are listed in Appendix 1 and available online at http://www .aph.gov .au/senate/committee/legcon ctte!index.htm.

1.7 The committee held a public hearing in Melbourne on 27 August 2009.

Explanatory Memorandum, p. 3.

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Page2

1.8 A list of witnesses who appeared at the hearing is at Appendix 2, and copies of the Hansard transcript are available through the internet at

http://www .aph. gov .au/hansard.

Acknowledgement

1.9 The committee thanks those organisations and individuals who made submissions and gave evidence at the public hearings.

Scope of the report

1.10 Chapter 2 provides an overview of the Bill. Chapter 3 discusses the key issues raised in submissions and evidence.

Notes on references

1.11 References in this report are to individual submissions as received by the committee, not to a bound volume. References to Committee Hansard are to the proof Hansard: page numbers may vary between the proof and the official Hansard.

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Chapter 2 Overview of the Bill

2.1 This chapter briefly outlines the main provisions of the Access to Justice (Civil Litigation Reforms) Amendment Bill 2009 (Bill), being amendments to the Federal Court of Australia Act 1976, Family Law Act 1975 and the Federal Magistrates Act 1999 in respect of:

â¢ case management;

â¢ jurisdiction and appeals; and

â¢ judicial responsibilities.

Case management

2.2 The Bill will make changes to the Federal Court of Australia Act 1976 (Act), amending Part III Division 1 (Original Jurisdiction) and Part VI (General), and inserting new Part VB (Case management in civil proceedings), to strengthen and clarify the case management powers of the Federal Court of Australia (Federal Court).

2.3 The Explanatory Memorandum states that these amendments are aimed at ensuring the proportionate use of public resources in civil proceedings, thereby providing access to justice (defined as the quick, efficient and fair resolution of civil disputes) for all court users. 1

Original jurisdiction

2.4 Proposed section 20A will give the Federal Court the power to deal with civil matters without an oral hearing (either with or without the consent of the parties) when exercising its original jurisdiction and if satisfied that:

â¢ the matter is frivolous or vexatious; or

â¢ the issue or issues on which determination of the matter depends have been decided authoritatively in the case law; or

â¢ determination of the matter would not be significantly aided by an oral hearing because:

â¢ there is no real issue of fact relevant to determination of the matter; and

â¢ the legal arguments in relation to the matter can be dealt with adequately by written submissions. 2

Explanatory Memorandum, p. 3.

2 Schedule 1 Item 5

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Page4

2.5 The Explanatory Memorandum states that this provlSlon will allow the Federal Court to deal with matters 'on the papers' where this will lead to just resolution of a dispute by the quickest, least expensive and most efficient method, consistent with proposed section 37M, which creates an overarching purpose. 3

Case management in civil proceedings

2.6 Schedule 1 Item 6 of the Bill will create new Part VB, dealing with case management in civil proceedings. Its central provision will be proposed section 37M:

(1) The overarching purpose of the civil practice and procedure provisions is to facilitate the just resolution of disputes:

(a) according to law; and

(b) as quickly, inexpensively and efficiently as possible. 4

2.7 The inclusive objectives of the overarching purpose are set out in the Bill:

â¢ the just determination of all proceedings before the Federal Court;

â¢ the efficient use of the judicial and administrative resources available for the purposes of the Federal Court;

â¢ the efficient disposal of the Federal Court's overall caseload;

â¢ the disposal of all proceedings in a timely manner;

â¢ the resolution of disputes at a cost that is proportionate to the importance and complexity of the matters in dispute. 5

2.8 These provisions are intended to: assist judges with the confident application of active case management powers; ensure the Federal Court considers broader aims than the interests of justice between the parties; and clarify that case management is a relevant consideration in the attainment of justice. They are also intended to remind litigants that costs should be proportionate to the matter in dispute, particularly in so-called mega-litigation. 6

2.9 Proposed section 37N will impose a duty on parties to civil proceedings, and their lawyers, to conduct the proceeding (including negotiations for settlement of the dispute) in a way that is consistent with the overarching purpose:

The duty is important to ensure that everyone involved in liti gation is focussing on the real issues in dispute and resolving them as early and quickly as possible. If the parties conduct settlement negotiations and/or

3 Explanatory Memorandum, p. 8.

4 Proposed subsection 37M(l); and Schedule litem 4

5 Proposed subsection 37M(2)

6 Explanatory Memorandum, pp 4 & 9. Also, see State of Queensland v J L Holdings Pty Ltd (1997) 141 ALR 353 which the EM states has created a restrictive judicial interpretation of what is in the interests of justice, and has made judges more cautious about considering the need to effectively and efficiently manage the court's overall workload: seep. 3.

258

participate in alternative dispute resolution with this goal in mind, they may not need to proceed to a hearing. 7

Page5

2.10 The Federal Court must take into account any failure to comply with the statutory duty when exercising its discretion to award costs in a civil proceeding. The Explanatory Memorandum provides examples of the type of conduct that the Federal Court might consider to be a breach of this duty:

â¢ unreasonably refusing to participate in conciliation, mediation, arbitration or other alternative dispute resolution opportunities;

â¢ failing to act in good faith in attempting to resolve or narrow issues in the proceedings;

â¢ unreasonably rejecting an offer of settlement of part or whole of the proceedings; or

â¢ pursuing issues in the proceeding that had no reasonable prospect of success, including vexatious or frivolous issues.8

2.11 A personal costs order may also be made against a lawyer who, when required by the Federal Court, fails to provide his or her client with an estimate of the likely duration of the proceeding, or part thereof, and the likely amount of costs in the proceeding, including party-party costs. 9

2.12 The Bill will give the Federal Court discretion to make directions about the practice and procedures to be followed in civil proceedings. A non-exclusive list of possible directions is set out in proposed subsection 37P(3), for example: setting time limits for the doing of anything; providing for submissions to be made in writing; limiting the length of submissions; or referring a matter to alternative dispute resolution.

2.13 Failure to comply with a Federal Court direction may result in such order or further direction as the Federal Court thinks appropriate, for example:

â¢ dismissal of the proceeding in whole or in part;

â¢ striking out, amending or limiting any part of a party's claim or defence;

â¢ disallowance or rejection of evidence;

â¢ awarding costs against a party;

â¢ ordering that costs awarded against a party are assessed on an indemnity basis or otherwise. 10

7 Explanatory Memorandum, p. 10. Also, see Schedule litem 3

8 Explanatory Memorandum, p. 11; and proposed subsection 37N(4)

9 Proposed subsections 37N(2) & (5)

10 Proposed subsections 37P(5) & (6). The Explanatory Memorandum notes that directions under proposed section 37P are likely to be made at the interlocutory stage of proceedings, and as such, cannot be appealed without leave: see section 24.

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2.14 In concluding remarks, the Explanatory Memorandum refers to similar case management legislation implemented in NSW (Civil Procedure Act 2005 (NSW)), and notes that:

The present amendments will complement the Court's existing use of the docket system (where one judge is assigned to manage each case) and will . . . II

Improve access to JUstice.

General

2.15 Section 43 of the Act concerns the types of costs orders that may be made by the Federal Court (excluding criminal law proceedings). The Bill proposes to amend that provision, inserting a new subsection (3) to specify the extent of this judicial discretion, including:

â¢ making an award of costs at any stage in a proceeding, whether before, during or after any hearing or trial;

â¢ making different awards of costs m relation to different parts of the proceeding;

â¢ ordering the parties to bear costs in specified proportions;

â¢ awarding a party costs in a specified sum;

â¢ awarding costs in favour of or against a party whether or not the party is successful in the proceeding;

â¢ ordering a party's lawyer to bear costs personally;

â¢ ordering that costs awarded against a party are to be assessed an indemnity basis or otherwise. 12

2.16 These amendments will codify various judicial powers relating to costs, either at law or under the Rules of Court, for example, Order 62 Rule 9 regarding the awarding of costs against a lawyer personally.

2.17 Under the Bill, section 49 of the Act will be repealed and replaced. The new section 49 would allow, in certain circ*mstances, reserved judgements in both criminal and civil matters to be made public by a judge other than the judge who presided over the proceeding:

The purpose of this amendment is to avoid unnecessary cost, delay and inconvenience that may arise where a Judge is not able to deliver his or her judgment at a time and date that is otherwise convenient to the parties. 13

11 Explanatory Memorandum, p. 4.

12 Proposed subsection 43(3). Also, see proposed subsections 37N( 4)-(5) regarding costs for breach of the duty to act consistently with the overarching purpose and proposed paragraphs 37P(6)( d)-(e), regarding costs for failure to comply with a direction.

13 Explanatory Memorandum, p. 13 . Also, see Schedule 1 Item 8; and section 75 of the Federal Magistrates Act 1999

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2.18 The Bill will also repeal and replace subsection 53A(l), allowing the Federal Court to refer proceedings, or any part of them or any matter arising out of them, to an arbitrator, mediator or suitable person for resolution by an alternative dispute resolution process. Alternative dispute resolution might include processes such as conciliation, neutral evaluation or case appraisal. Only referrals to arbitration, which effect binding decisions require the consent of the parties. 14

Jurisdiction and appeals

2.19 The Bill will also amend Part III Division 1 (Original Jurisdiction) and Division 2 (Appellate and related Jurisdiction), and Part IV (Appeals to the High Court) of the Act, to streamline the Federal Court's appeals pathways for civil proceedings, and provide the Federal Court with greater flexibility in dealing with appeals and related applications.

Original jurisdiction

2.20 At present, subsection 20(2) requires interlocutory matters, as specified in subsections 20(3) and 20(5), coming before the Federal Court from a tribunal or authority to be heard by a Full Court.

2.21 Proposed subsection 20(2A) will effect the necessary changes to allow:

... the Court to decide if one of the interlocutory matters .. . would be more appropriately dealt with by a single Judge , rather than convening a Full Court for a minor procedural matter. 15

2.22 The Explanatory Memorandum emphasises that the Federal Court alone will decide whether an application for an order is to be heard by a single judge or the Full Court, 16 a theme repeated several times in relation to other provisions of the Bill.

2.23 The Act presently allows a single judge or Full Court to exercise certain powers in relation to an appeal from an authority or tribunal under subsection 20(2). The Bill proposes to insert a reference to subsection 20(1A), allowing the provision to apply to all matters in the Federal Court's original jurisdiction determinable by the Full Court. 17

2.24 In exercising its original jurisdiction, the Act gives the Federal Court certain powers, for example: joining or removing a party; or making an order that an appeal be dismissed for want of prosecution. Schedule 2 Items 7 & 8 will enable a single

14 Schedule 11tems 1, 9 &10

15 Explanatory Memorandum, p. 14. Also, see Defence Force Retirement and D eath Benefits Authority v Lokan (QUD 288 of 2007). Note that minor amendments are also made to subsection 20(2) by Schedule 21tem 1.

16 Explanatory Memorandum, pp 14-15 . Also, see Schedule 2 Items 3 & 41 ; and Thomas Borthwick & Sons (Pacific Holdings) Ltd v Trade Practices Commission ( 1988) 18 FCR. A similar amendment is made to subsections 20(5), 25(2), (2B) & (5) & 26(2) by Schedule 2 Items 10, 18 , 23 , 25 and 28.

17 Schedule 2 Item 6. Also, see Defence Force Retirement and Death Benefits Authority v Lokan (QUD 288 of2007)

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judge sitting in Chambers or in open court, or a Full Court, to give directions in its original jurisdiction under proposed subsection 37P(2). This is in addition to the Federal Court's generic ability to give directions about conduct of a matter. 18

Appellate and related jurisdiction

2.25 Paragraph 24(l)(a) of the Act provides that the Full Court has jurisdiction to hear and determine appeals from the judgements of a single judge exercising either original or appellate jurisdiction. The Bill will amend this provision by limiting the avenue of appeal to judgements of a single judge exercising original jurisdiction only:

This ensures that the appeal pathway for single Judge decision in the appellate jurisdiction is consistent with the appeal pathway for Full Court Decisions, as there is no avenue for decisions of a Full Court to be appealed within the Court. This amendment is intended to reduce the workload of the Court by removing an unnecessary layer of appeal from decisions of single Judges exercising appellate jurisdiction. 19

2.26 There will still be an avenue of appeal from judgements of a single judge exercising appellate jurisdiction. The Bill will amend Part IV subsection 33(2) of the Act to provide that these judgements can be appealed to the High Court of Australia with special leave to appeal. 20

2.27 Proposed new subsection 24(1AA) will replace section 24(1AAA), providing that, in relation to certain interlocutory decisions, there is no appeal to the Full Court from the judgement of a single judge exercising original jurisdiction:

These interlocutory matters involve minor procedural decisions for which there should be no avenue of appeal. The removal of the right to appeal for these types of matters will ensure the efficient administration of justice by reducing delays caused by appeals from these decisions. 21

2.28 Schedule 2 Item 14 of the Bill inserts four new subsections, the cumulative effect of which is to clarify interlocutory judgments appeal rights and reduce costs currently incurred in litigating these matters.22

2.29 At present, there is a statutory presumption that appeals from the Federal Magistrates Court, excepting migration judgments, are to be heard by the Full Court, unless the Chief Justice considers that it is appropriate for the appeal to be heard by a single judge. The Bill will reverse this presumption, reflecting 'current practice', and

18 Explanatory Memorandum, p. 16; and Schedule 2 Item 9. Note: the Explanatory Memorandum erroneously refers to Schedule 2 Item 8 as the proposed insertion of new paragraph 20(5)( da).There are similar provisions in the Bill for the Federal Court's appellate jurisdiction: see Schedule 2 Items 21 & 22; and subsection 25(2B).

19 Explanatory Memorandum, p. 17; and Schedule 2 Item 12. This amendment renders subsection 24(1AAA) superfluous.

20 Schedule 2 Items 29-31

21 Explanatory Memorandum, p. 18; and Schedule 2 Item 13 of the Bill.

22 Explanatory Memorandum, p. 18; and Schedule 2 Item 14 of the Bill. Also, see Jefferson Ford Pty Ltd v Ford Motor Company of Australia Limited [2008] FCAFC 60

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omit the word 'migration', allowing a single judge to hear and determine all appeals from the Federal Magistrates Court, unless otherwise appropriate.23

2.30 The Act provides that a single judge can state any case or reserve any question concerning a matter with respect to which an appeal would lie to the Full Court, and the Full Court has jurisdiction to hear and determine the case or question. Under Schedule 1 Item 12 of the Bill, this would only apply to single judges exercising original jurisdiction. Schedule 2 Item 26 therefore 'rectifies' subsection 25(6) of the

Act, providing:

... that a single Judge can refer a difficult question to a Full Court in all circ*mstances, even when there is no avenue of appeal to the Full Court. This will assist the Court in dealing with novel cases and will provide an important safeguard in relation to the amendments being made by item

12 ... This also addresses the existing inconsistency where single Judge decisions in the appellate jurisdiction cannot be appealed to the High Court, though Full Court decisions in the appellate jurisdiction can be appealed. 24

2.31 In general, interlocutory decisions of a Full Court in the Federal Court's original jurisdiction are appealable with leave to the High Court of Australia. However, the Explanatory Memorandum states that a few interlocutory decisions in the original jurisdiction involve minor procedural decisions for which there should be no avenue of appeal:

The removal of the right to appeal will ensure the efficient administration of justice by reducing delays caused by appeals from these decisions.Z 5

Appeals to the High Court of Australia

2.32 Schedule 2 Item 32 of the Bill will amend section 33 of the Act, inserting three new subsections to provide that there is no appeal to the High Court of Australia from a number of specified interlocutory decisions of the Full Court in the Federal Court's original jurisdiction, and both a single judge and the Full Court in the Federal Court's appellate jurisdiction:

â¢ proposed subsection 33(4A) specifies the relevant interlocutory decisions for the Federal Court's original jurisdiction;

â¢ proposed subsection 33( 4B) specifies the relevant interlocutory decisions for the Federal Court's appellate jurisdiction; and

â¢ proposed subsection 33( 4C) allows interlocutory decisions made in the course of a matter to be listed as one of the grounds in an application for special leave to appeal the Federal Court's final decision. 26

23 Schedule 2 Items 15 & 16; and Explanatory Memorandum, p. 19. Also, see subsections 25(1A) & 25 (1AA).

24 Explanatory Memorandum, pp 22-23. Also, see subsecti on 25(6) of the Act and Schedule 2 Item 26 ofthe Bill. This amendment renders part subsections 33(2) & (4) .superfluous .

25 Expl anatory Memorandum, p. 24. These comments apply equally to the Court's appellate jurisdiction.

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2.33 Schedule 2 amendments will apply in relation to proceedings, appeals and related applications, and cases stated or questions reserved commenced on or after commencement of Schedule 2 of the Bill.27

Judicial responsibilities

2.34 The Bill will amend also the Act, the Family Law Act 1975 and the Federal Magistrates Act 1999 to clarify the powers of their judicial officers, especially the heads of each federal court.

Family Law Act 1975

2.35 The Bill will amend Part IV Division 2 (the Family Court of Australia) of the Family Law Act 1976.

2.36 Subsection 21B of the Family Law Act 1976 currently provides that the Chief Judge is responsible for ensuring the orderly and expeditious discharge of the business of the Family Court of Australia. Schedule 3 Item I of the Bill will 'broaden' this responsibility to also ensure the effective discharge of the Family Court of Australia's business:

The purpose of this amendment is to make it clear that it is the responsibility of the Chief Judge to manage issues that impact upon the effective running of the Court, which might include judicial performance issues, in order to ensure that the resources of the Court are used and allocated appropriately and that Judges can manage their workloads and deliver judgments in a timely manner. 28

2.37 Part of subsection 21B will be omitted by the Bill, and replaced by Schedule 3 Item 3, which will insert proposed subsection 21B(lA) into the Family Law Act 1976. This subsection would elaborate upon the general responsibilities of the Chief Judge by providing examples of what actions the Chief Judge may take to fulfil these responsibilities, such as: assigning particular caseloads, classes of cases or functions to particular judges; temporarily restricting a judge to non-sitting duties; or ensuring appropriate access to annual health assessments, short-term counselling services, and judicial education:

This [latter] amendment supports and encourages the retention of systems that are already in place at the Court and is flexible enough to allow the Chief Judge to ensure that the type of assistance that best meets a Judge's needs is available. 29

2.38 The Bill will insert two subsections into section 21B (Arrangement of the business of the Court) of the Family Law Act 1976:

26 Schedule 2 Item 32

27 Schedule 2 Item 33

28 Explanatory Memorandum, p. 25; and Schedule 3 Item

29 The Explanatory Memorandum provides examples of what non-sitting dues might constitute: see pp 26-27.

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â¢ proposed subsection 21B(4) clarifies that in exercising, or assisting in the exercise of, the functions or powers set out in new paragraph 21B(lA)(a) the Chief Judge and the Deputy Chief Judge will have the same protection and immunity as he or she has in judicial proceedings of the Family Court of Australia; and

â¢ proposed subsection 21B(5) will amend the application of section 39B of the Judiciary Act 1903, providing that the Federal Court will not have jurisdiction with respect to the specified powers in proposed subsection 21B(1A) of the Family Law Act 1976.30

2.39 The Bill will also insert subsections into section 22 (appointment, removal and resignation of judges) of the F amity Law Act 19 7 6, including:

â¢ 22(2AAA), which will require a commission of appointment to assign a judge to a particular location; 31 and

â¢ 22(2AAB), which will clarify that the Chief Judge, in deciding whether to consent to a judge sitting in another location on a permanent basis, will have the same protection and immunity as he or she has in judicial proceedings of the Family Court of Australia.

Federal Court of Australia Act 1976

2.40 The Bill will amend Part 2 Division 1 (Constitution of the Court) of the Act.

2.41 Schedule 3 Items 7, 8, 9, and 10 propose similar amendments to the Act, as for Schedule 3 Items 1, 2, 3, 5 and 6 in the Family Law Act 1976 (see paras 2.35-2.39 above).

Federal Magistrates Act 1999

2.42 The Bill will amend Part III (Jurisdiction of the Federal Magistrates Court) of the Federal Magistrates Act 1999.

2.43 Schedule 3 Items 11, 12 and 13 also propose similar amendments to the Federal Magistrates Act 1999, as for Schedule 3 Items 1, 3 and 5 in the Family Law Act 1976 (see paras 2.35-2.39 above).

2.44 The amendments to be made by Schedule 3 of the Bill, apart from the assignment of judges to particular locations, apply in relation to judges and federal magistrates whether appointed before or after the commencement of the amendments. 32

30 Schedule 3 Item 5. Also, see Schedule 3 Item 6 making similar provision for the Attorney General and Chief Judge under proposed section 22(2AAA). Section 39 of the Judiciary Act I903 provides that the original jurisdiction of the Federal Court of Australia includes jurisdiction with respect to any matter in which a writ of mandamus, prohibition or an

injunction is sought against an officer of the Commonwealth.

31 Explanatory Memorandum, p. 28.

32 Schedule 3 Item 14

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Judicial review

2.45 Schedule 3 Part 2 Item 15 proposes to insert three new paragraphs into Schedule 1 of the Administrative Decisions (Judicial Review) Act 1977 excluding certain decisions of the head of court from judicial review under the Administrative Decisions (Judicial Review) Act 1977. These exclusions relate, for example to: the

assignment of caseloads or functions to particular judges or federal magistrates; the restriction of judges or federal magistrates to non-sitting duties; or decisions about the location at which a judge or federal magistrate will be permanently located:

Any decisions under these provisions still carry the protection inherent in the wording of the relevant enabling section that decisions must be made subject to appropriate consultation. Review by the High Court under section 75(v) of the Constitution will also remain. 33

33 Explanatory Memorandum, p. 31; and Schedule 3 Item 15

266

Chapter 3 Key Issues

3.1 During the course of the inquiry, the committee heard that submitters and witnesses broadly supported the Access to Justice (Civil Litigation Reforms) Amendment Bill 2009 (Bill). Particular provisions were nonetheless singled out for comment, and the following key issues are addressed in this chapter:

â¢ Case management:

â¢ oral hearings;

â¢ the overarching purpose;

â¢ the duty to act consistently;

â¢ practice and procedural directions; and

â¢ costs orders

â¢ Jurisdiction and appeals:

â¢ single judge interlocutory decisions in the original jurisdiction

â¢ Judicial responsibilities:

â¢ temporary restriction to non-sitting duties

Case management

3.2 Without exception, submitters and witnesses endorsed the concept of case management as a method by which civil proceedings can be made quicker, more efficient and more fairly resolve disputes.

3.3 The Federal Court of Australia (Federal Court) submitted that the relevant amendments - Schedule 1 - will enhance its capacity to manage actively the conduct of civil proceedings, 1 and the Law Council of Australia (Law Council) stated that this important case management role is now well accepted?

3.4 As indicated in the Explanatory Memorandum, the decision of the High Court of Australia (High Court) in State of Queensland v J L Holdings Pty Ltd (JL Holdings) provided part of the rationale for the Schedule 1 amendments. 3 During the course of this inquiry, that case was distinguished in another High Court decision, Aon Risk Services Australia Limited v Australian National University (Aon).

Federal Court of Australia, Submission 4, p. 1

2 Law Council of Australia, Submission 2, p. 3.

3 (1997) 141 ALR 353; and Explanatory Memorandum, p. 3.

4 [2009] HCA 27 (5 August 2009)

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3.5 The committee notes however the broader rationale for the enhancement of the Federal Court's case management powers, particularly the key objective of effecting a cultural change in the conduct of civil litigation.

3.6 In its evidence, the Federal Court considered that the Bill will support a cultural change by focussing on 'the quick and inexpensive logic as the goal by which all works shall be done':

You heard in the past many concerns about the costs of the proceedings consuming the value of the issue in dispute or being more than the value of the issue in dispute, and that raised that whole concept about proportionality, that the proceedings ought to be proportional to the issues

in dispute. It is that shift which helps and facilitates what I would describe as active case management logic. 5

3.7 The Federal Court added also that the Bill will send a powerful message from the Parliament on behalf of the Australian community about its expectations as to how the justice system is to operate. At present, the federal courts are publicly funded, and lengthy litigation can 'tie up' these courts' limited resources. The Federal Court testified that:

If those resources are consumed under the access to justice criteria by a few in very long and tedious proceedings, that will deny access to many because the resources are not available to permit access to all those other people where the resources have been consumed by a few ... There is no doubt that the direction that we are taking in terms of focusing on efficient and [in]expensive will provide greater access to many people who probably now are not getting access because (1) it is too slow and (2) it is too expensive for them. 6

3.8 The Attorney-General's Department (Department) agreed that the Bill will increase access to justice for the Australian community, telling the committee that:

It has never been the case that parties have an entitlement to Rolls Royce justice. They have an entitlement to justice, and the protections are there for that ... The bill does very much put into play how the court deals with your case and his case and her case, and your own assessment of how important

your case is will not dictate the carriage of your matter. 7

3.9 Schedule 1 aims primarily to ensure the proportionate use of public resources in civil proceeding .8 Most submitters and witnesses broadly supported these amendments but considered certain aspects of Schedule 1 worthy of further

5 Mr Warwick Soden, Registrar & CEO, Federal Court of Australia, Committee Hansard, Melbourne, 27 August 2009, p. 11 .

6 Mr Warwick Soden, Registrar & CEO, Federal Court of Australia, Committee Hansard, Melbourne, 27 August 2009, p. 11.

7 Mr Matthew Minogue, Assistant Secretary, Justice Improvement Branch, Attorney-General's Department, Committee Hansard, Melbourne, 27 August 2009, pp 15, 18 & 21.

8 Explanatory Memorandum, p. 3.

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consideration: oral hearings; the overarching purpose; the duty to act consistently; practice and procedural directions; and costs orders.

Oral hearings

3.10 The Bill proposes to g;jve the Federal Court the power to deal with civil matters without an oral hearing (either with or without the consent of the parties) when exercising its original jurisdiction and if satisfied of certain conditions.9

3.11 Whilst acknowledging that the relevant provision - proposed section 20A -codifies existing powers, the NSW Law Society, Young Lawyers (NSW Young Lawyers) remained concerned with the imprecise nature of the prescribed powers. Its submission questioned whether the Federal Court or a judge can make an order without prior notice to the parties and in circ*mstances where the parties have not been given an opportunity to make submissions in relation to an order for an oral hearing.

3.12 The NSW Young Lawyers suggested that the Bill be amended to ensure that all parties are aware of the manner in which a section 20A order would be made, and clarify whether parties will be given an opportunity to address the Federal Court or a judge with regard to making of such an order.10

The overarching purpose

3.13 The Bill will create an overarching purpose for the civil practice and procedure provisions of the Federal Court of Australia Act 1976 (Act), that is, the just resolution of disputes according to law in the quickest, most inexpensive and efficient "bl II manner as poss1 e.

3.14 The Department urged the committee to bear in mind that the overarching purpose will be the 'touchstone' governing how the powers to be conferred by the Bill are expected to be exercised: 'There is an obligation on both the court and the parties and legal representatives involved in the matter to have regard to that.'

3.15 The Law Council and NSW Young Lawyers considered that the relevant provision- proposed section 37M- will clarify (and strengthen) the Federal Court's powers to case manage actively following the High Court's decision in J L Holdings. 13

As indicated above, this consideration is arguably redundant.

3.16 The Australian Network of Environmental Defender's Offices (ANEDO) argued however that the provision is not responsive to the needs of less well resourced

9 Proposed section 20A

10 NSW Law Society, Young Lawyers, Submission 3, pp 1-2.

11 Proposed section 37M. This principle is similar to subsection 56(1) of the Civil Procedure Act

2005 (NSW).

12 Mr Philip Kellow, Deputy Registrar, Federal Court of Australia, Committee Hansard, Melbourne, 27 August 2009, p. 9.

13 Law Council of Australia, Submission 2, p. 4; and NSW Law Society, Young Lawyers, Submission 3, p. 3.

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litigants, limiting the Bill's capacity to improve access to justice. ANEDO noted that, in contrast to rule 1.1 (2)( c) of the Civil Procedure Rules (UK) and section 57 (1 )(d) of the Civil Procedure Act 2005 (NSW), the non-exclusive objectives of the overarching purpose contain no reference to the parties' financial resources and/or any imbalance between them.

3.17 ANEDO suggested that proposed section 37M is not appropriate where one party is an individual, small business or small NGO, and recommended that proposed paragraph 37M(2)(e) be amended to make express reference to the financial position of the parties as a relevant factor. 14

The duty to act consistently

3.18 The Bill will impose a duty on parties to civil proceedings, and their lawyers, to conduct the proceedings (including settlement negotiations) in a manner consistent with the overarching purpose (duty). 15

3.19 Submissions and evidence regarding the relevant provision - proposed section 3 7N - focussed specifically upon the practical application and cost consequences of the statutory duty, that is, proposed subsections (2), (3) and (5).

Regarding a party's lawyers

3.20 The Law Council generally supported the extension of the duty to a party's lawyers - proposed subsection 3 7N(2) - but cautioned that proposed paragraph 37N(2)(b) does not strike an appropriate balance between the application of the overarching purpose and its public objectives, and the individual rights and objectives of a party.

3.21 Proposed subsection 37N(2) states:

(2) A party's lawyer must, in the conduct of a civil proceeding before the Court (including negotiations for settlement) on the party's behalf:

(a) take account of the duty imposed on the party by subsection (1); and

(b) assist the party to comply with the duty.

3.22 The Law Council argued that proposed paragraph (b): serves no purpose when a client complies with the duty; but may create conflict where a client partially or wholly rejects his or her lawyer's advice formulated after consideration of the duty:

The question then arises as to the scope of the obligation upon a legal representative to "assist" a party to comply with its duty in circ*mstances in which a party chooses to conduct the proceeding in manner which may not be in compliance with the duty imposed upon the client. 16

14 Australian Network of Environmental Defender's Offices, Submission 6, pp 4-5.

15 Proposed section 37N

16 Law Council of Australia, Submission 2, p. 4; and NSW Law Society, Young Lawyers, Submission 3, p. 5.

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3.23 Similarly, the Cape York Land Council Aboriginal Corporation submitted that such a situation might be complicated by the unique role played by Native Title Representative Bodies, which have additional obligations under native title legislation.

3.24 The Cape York Land Council Aboriginal Corporation suggested that the proposed provision requires further clarification or limitation (to take account of the particular complexities of the native title system), and the Law Council agreed, more broadly, that proposed paragraph (b):

... ought to be qualified by words such as 'subject to the instructions of the client' so that the section recognises that the duty of the lawyer is to advise the client about it and do what they can, but ultimately the lawyer will not be in breach of that duty if in fact the client gives instructions to act in a

different way .17

3.25 Alternately, or in addition, the Law Council proposed that the 'vague' and 'general' word 'assist' could be clarified by either adding a paragraph (c) or renumbering subsection 37N(2) with a new paragraph (b): 'Advise the client how to comply with the duty.' 18

3.26 The Federal Court acknowledged the Law Council's concerns, agreeing with NSW Young Lawyers that the proposed provision has been more positively drafted than analogous state/territory provisions, for example, section 57 of the Civil Procedures Act (NSW). The Federal Court opined:

It may well be that something needs to be done to accommodate those concerns. The danger is not to provide the potential for any wiggle room or abuse of that whereby situations may possibly be constructed where a practitioner never becomes responsible for the conduct because it is always

done in accordance with instructions. 19

3.27 The Department did not consider that the problematic word 'assist' requires defmition, and expressly rejected the Law Council's preferred amendment to the Bill (see para 3.24 above):

The purpose of describing the overarching purpose in terms of both obligations on parties and an obligation to take account of that obligation and to assist the client to comply with that obligation for the lawyers was to make sure that the case management principles were as comprehensive as possible. If the obligation was only on the parties and the lawyer had this

get-out-of-jail card, if you like, ofbeing able to say, 'I was instructed to do it a certain way,' it would very much disempower the provisions ... Under their professional rules now lawyers already have obligations to assist

17 Mr Malcolm Blue QC, Director, LCA, Committee Hansard, Melbourne, 27 August 2009, pp 3 & 4-5; Law Council of Australia, Submission 2, p. 5; and Cape York Land Council Aboriginal Corporation, Submission 5, p. 1.

18 Mr Malcolm Blue QC, Director, LCA, Committee Hansard, Melbourne, 27 August 2009, p. 5.

19 Mr Philip Kellow, Deputy Registrar, Federal Court of Australia, Committee Hansard, Melbourne, 27 August 2009, p. 10; and NSW Law Society, Young Lawyers, Submission 3, p. 4.

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clients to understand their rights and obligations ... they are not new issues for them to face. 20

Regarding costs orders

3.28 The Bill will require the Federal Court to take into account any failure to comply with the duty to act consistently with the overarching purpose when exercising its discretion to award costs in a civil proceeding.21

3.29 NSW Young Lawyers noted that the relevant provision- proposed subsection 37N(4)- mirrors subsection 56(5) of the Civil Procedure Act 2005 (NSW), except for its mandatory nature. Its submission argued that a mandatory obligation would:

â¢ unduly increase the time needed to consider and formulate an award of costs, creating a burden on the Federal Court's time; and

â¢ allow parties to make submissions in relation to any perceived breaches of the duty, leading to 'unregulated and possibly unfounded allegations of one party against another party and further drawn out litigation in regards to the award of costs.'22

3.30 Similarly, while the Law Council also generally supported proposed subsection 37N( 4), it argued that the duty to act to consistently with the overarching purpose should not apply to settlement negotiations (proposed subsection 37N(l), Schedule 1 item 6). These negotiations are normally the subject of settlement or 'without prejudice' privilege. According to the Law Council, the Federal Court's need to enquire into the settlement negotiations could abrogate the settlement privilege, a possibility to which the Law Council was staunchly opposed.23

Regarding personal costs orders

3.31 The Bill will specifically provide for the making of a personal costs order against a lawyer who, when required by the Federal Court, fails to provide his or her client with an estimate of the likely duration of the proceeding, or part thereof, and the likely amount of costs in the proceeding, including party-party costs.24 This is in addition to the Federal Court's general discretion to make costs orders (see para 3.54 below).

3.32 NSW Young Lawyers submitted that the relevant provision - proposed subsection 3 7N(3)- would assist litigants in becoming fully informed, noting that, in NSW at least, the provision does l).Ot deviate from existing professional requirements.

20 Mr Matthew Minogue, Assistant Secretary, Justice Improvement Branch, Attorney-General's Department, Committee Hansard, Melbourne, 27 August 2009, p. 16.

21 Proposed subsection 37N(4)

22 NSW Law Society, Young Lawyers, Submission 3, p. 5.

23 Mr Malcolm Blue QC, Director, LCA, Committee Hansard, Melbourne, 27 August 2009, p. 3; and Law Council of Australia, Submission 2, p. 5.

24 Proposed subsections 37N(3) & (5)

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In its view, proposed subsection 37N(3) is conducive to promoting an efficient federal civil litigation regime.25

3.33 In contrast, and more broadly, the Law Council argued that the possibility of personal costs orders creates conflict between a lawyer and his or her client. The Law Council intimated that the issue of personal costs orders might more appropriately not be dealt with in the Bill:

Once it gets to the point of there being a suggestion that lawyers should pay there really is a conflict between the lawyer and the client. If it is accepted that the party has breached this obligation and has not acted in a way that is consistent with the overarching purpose then the question really is: is it the client's fault or the lawyer's fault? It is our suggestion that that ought not to be fought out in the arena with the other party present and hearing the intimacy of the dealings between the lawyer and the client; that ought to be dealt with as a separate matter with the other party not participating. 26

Practice and procedural directions

3.34 The Bill proposes to give the Federal Court discretion to make directions about the practice and procedures to be followed in civil proceedings, including a non-exclusive list of possible directions. 27

3.35 Submissions and evidence raised directions regarding limitations on the number of witnesses, and referral to arbitration, mediation and alternative dispute resolution (ADR) as matters of concern.

Limitations on the number of witnesses

3.36 Proposed paragraph 37P(3)(c) will give the Federal Court discretion to make directions limiting the number of witnesses who may be called to give evidence (or the number of documents that may be tendered in evidence).

3.37 The Law Council opposed this 'undesirable' provision in Bill, first arguing that it would go beyond controlling proceedings, and give the Federal Court a general and plenary power:

This power would affect in a more fundamental way the manner in which a party, through its legal representatives, determines is [sic] the best way to present its case. In the adversarial system, decisions of this type are the prerogative of the parties. 28

3.38 In support of its argument, the Law Council cited a decision of the Full Court in Hospitality Group Pty Ltd v Australian Rugby Union Ltd in which Justices Hill, Finkelstein and Emmett held:

25 NSW Law Society, Young Lawyers, Submission 3, p. 5.

26 Mr Malcolm Blue QC, Director, LCA, Committee Hansard, Melbourne, 27 August 2009, p. 3.

27 Proposed subsections 37P(2)-(3)

28 Law Council of Australia, Submission 2, p. 5.

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The learned primary Judge seems to be of the opinion that a court has authority to decide which witnesses a party may call. This is not correct. It is for a party and his lawyers to decide what evidence is to be called in support of that party's case, and it is not a function of the court to become involved in that process. 29

3.39 Coupled with a party's prerogative, the Law Council told the committee that there are natural limitations which apply to the number of witnesses that a party will call:

If a party calls too many witnesses on the same point then, firstly, there is increased risk that there will be a conflict between those witnesses-that is a natural disincentive to a party calling too many witnesses-and, secondly, there is the time and cost that the party will incur in doing that. 30

3.40 In addition, the Law Council expressed concern regarding when a judge might impose a limitation under proposed paragraph 37P(3)(c), particularly in the 'dynamic and organic' context of civil proceedings:

A limit imposed under s37P(3)(c) may prevent a party from leading relevant evidence which is available to it but with the consequence that it does not establish the facts for which it contends. 31

3.41 The Federal Court however rejected that the provision would result in any injustice. Representatives referred to the Docket System (whereby a judge is allocated responsibility for a case for its duration), stating that this endows judges with in-depth knowledge of proceedings before the Federal Court:

It would be rare for the court to engage a crude number count and say that you are allowed five witnesses each, or such an approach. It would be done very much in the context of the case and the issues that really do need to be agitated and established. 32

3.42 Emphasising the importance of case management, the Department agreed with the Federal Court on this point, conceding that 'were a judge not intimately involved in the case from its beginning in the court all its way through, the Law Council's concerns might be better founded. '33

3.43 The Federal Court referred also to existing Rules of Court- namely Order 42 rule 4A - which essentially provide for judicial powers similar to that proposed in paragraph 37P(3)(c). Its view was that:

29 Hospitality Group Pty Ltd v Australian Rugby Union Ltd (2001) 110 FCR 157 at para 80

30 Mr Malcolm Blue QC , Director, LCA, Committee Hansard, Melbourne, 27 August 2009, p. 2.

31 Law Council of Australia, Submission 2, p. 5; and Mr Malcolm Blue QC, Director, LCA, Committee Hansard, Melbourne, 27 August 2009, pp 2-3.

32 Mr Philip Kellow, Deputy Registrar, Federal Court of Australia, Committee Hansard, Melbourne, 27 August 2009 , p. 9; and Mr Warwick Soden, Registrar & CEO, Federal Court of Australia, Committee Hansard, Melbourne, 27 August 2009, p. 10.

33 Mr Matthew Minogue, Assistant Secretary, Justice Improvement Branch, Attorney-General's Department, Committee Hansard, Melbourne, 27 August 2009, p. 14.

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A legislative provtston of this kind would make it very clear and unambiguous that the court has such a power. But the key issue would be how the court exercises that power, and it is not a power to be exercised willy-nilly, for want of a better description.34

3.44 The Federal Court emphasised that there is no suggestion that the provision will override extant rules of evidence and other legislative provisions regarding the conduct of proceedings:

So it is not a power that would be used to exclude evidence that would otherwise be admissible. It is more taking on the situation that arises particularly where expert evidence is necessary. Rather than having eight experts giving evidence on the one point, it is sufficient to have one expert

give evidence on that point. 35

Wheth er to amend the 'plenary' power

3.45 As indicated above, submissions and evidence differed on the potential effect of proposed paragraph 37P(3), and consequently, the arguments extended to whether the provision ought to be amended.

3.46 The Law Council strongly supported retention of trial judges' existing powers to control hearings, including extant rules of evidence and the power to prevent abuse or vexation (such as adverse costs orders):

Judges do have power via cost orders to impose a very substantial disincentive on parties who do call too many witnesses or tender too many documents. Judges can make cost orders against parties for the unnecessary calling of witnesses, even if the party is successful. They can make those orders on an indemnity basis rather than the normal party-party basis. In an extreme case where it is the lawyer's fault they can make an order against the lawyer personally. It is our submission that it is more appropriate that judges use those powers as disincentives combined with the natural

disincentives to control the number of witnesses and the number of documents that are called and tendered. 36

3.47 Accordingly, the Law Council recommended that:

a power such as that proposed in s3 7P(3 )(c) might better be expressed as one that can only be exercised with the consent of the parties; or

34 Mr Warwick Soden, Registrar & CEO, Federal Court of Australia, Committee Hansard, Melbourne, 27 August 2009 , p. 8.

35 Mr Philip Kellow, Deputy Registrar, Federal Court of Australia, Committee Hansard, Melbourne, 27 August 2009, p. 9.

36 Mr Malcolm Blue QC, Director, LCA, Committee Hansard, Melbourne, 27 August 2009, p. 3; and Law Council of Australia, Submission 2, p. 6.

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there be no such power, but there be provision for cost consequences if a party unnecessarily prolongs a hearing by leading patently unnecessary evidence. 37

3.48 The Law Council preferred the second proposal however the Federal Court's evidence indicated that its existing powers are not adequate to limit the number witnesses who may be called to give evidence or the number of documents that may be tendered in evidence. A representative told the committee:

I do not believe [costs orders are] the remedy for a whole lot of ills caused by too many witnesses and too many documents. It certainly does not remedy the loss of time. It certainly does not remedy the overall costs to all concerned. It penalises the person who has to pay the costs, who might not be the person to make the decision about the number of witnesses to call.

.. .Judges are not going to tell practitioners how to run their case completely. But we believe there needs to be a power to be exercised in those circ*mstances where it is appropriate and desirable to do so. 38

3.49 These factors are in addition to: potentially impecunious parties (from whom costs cannot be recovered); the reality that costs orders return 50- 80 per cent only of actual costs; and the fact that litigation is a traumatic experience for many litigants.39

3.50 NSW Young Lawyers agreed with the Federal Court, submitting that proposed paragraph 37P(3)(c) is an effective clarification and confirmation of the Federal Court's power to 'implement evolving principles of 21 st century case management. '40

Arbitration, mediation and alternative dispute resolution

3.51 A second concern raised in submissions was that of court-ordered referral to arbitration, mediation and ADR. Under the Bill, this is an alternative to the non-exclusive directions.41

3.52 ANEDO submitted that ADR is likely to be less successful in public interest litigation than it would be in private litigation: the plaintiff often has no financial interest in the litigation; and the defendant may be unwilling or unable to give the sought after remedy:

In such cases, compulsory ADR is likely to merely add to the time and expense of proceedings which would already be prohibitive for many public interest clients.42

37 Law Council of Australia, Submission 2, p. 6; and Mr Malcolm Blue QC, Director, LCA, Committee Hansard, Melbourne, 27 August 2009, p. 5.

38 Mr Warwick Soden, Registrar & CEO, Federal Court of Australia, Committee Hansard, Melbourne, 27 August 2009, pp 8-9; and Mr Philip Kellow, Deputy Registrar, Federal Court of Australia, Committee Hansard, Melbourne, 27 August 2009, p. 9.

39 Mr Matthew Minogue, Assistant Secretary, Justice Improvement Branch, Attorney-General's Department, Committee Hansard, Melbourne, 27 August 2009, p. 15.

40 NSW Law Society, Young Lawyers, Submission 3, p. 6.

41 Proposed subsections 37P(4) and 53A(1)

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3.53 Consequently, ANEDO suggested that the Federal Court be required to take a certain consideration into account as a prerequisite to exercising the power to be given under the relevant provisions- proposed subsections 37P(4) and 53A(l)- namely the public interest nature of civil litigation, as compared with private litigation.43

Costs orders

3.54 The Bill will clarify the types of general costs orders which may be made within the Federal Court's discretion.44 Submissions and evidence regarding the relevant provision - proposed subsection 43(3) - were limited, but presented two diametrically opposed views.

3.55 On the one hand, NSW Young Lawyers submitted that the provision largely reflects the current exercise of the discretion. However, it qualified its support on the basis that codification increases the significance of costs orders which might in turn increase appeals from a costs decision (on the basis that the judge did not consider one of the specified options).

3.56 To avoid the problem, NSW Young Lawyers favoured instead a provision setting forth the general rule regarding costs (that costs follow the event). Its view was that proposed subsection 43(3) is likely to be interpreted in accordance with this common law principle in any event, but that its recommendation is broader while remaining discretionary. 45

3.57 In contrast, ANEDO vehemently opposed the general rule regarding costs:

The problem with this rule is that it produces a significant amount of uncertainty about who will ultimately pay the costs of the legal action and in what amount. Given the high cost of litigating in the Federal Courts, especially against well resourced corporations like developers and

government agencies, this uncertainty has a significant deterrent effect ... The spectre of potentially hundreds of thousands of dollars in costs incurred by respondents will deter most public interest litigants from bringing a case, even where the prospects of success are very strong. 46

3.58 ANEDO submitted that the Federal Court has been slow to recognise and reluctant to facilitate public interest litigation so far as costs orders are concerned. It submitted that the Bill ought to go further and expressly authorise the making of public interest litigation costs orders. In particular, it recommended that the Bill define a 'public interest proceeding' and expressly require judges to make public interest costs orders in public interest proceedings.47

42 Australian Network of Environmental Defender's Offices, Submission 6, p. 6.

43 Australian Network of Environmental Defender's Offices, Submission 6, p. 6.

44 Proposed subsection 43(3)

45 NSW Law Society, Young Lawyers, Submission 3, pp 7-8.

46 Australian Network of Environmental Defender's Offices, Submission 6, p. 6.

47 Australian Network of Environmental Defender's Offices, Submission 6, pp 8-9.

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Jurisdiction and appeals

3.59 Amendments in Schedule 2 aim to streamline the Federal Court's appeals pathways for civil proceedings, and provide the Federal Court with greater flexibility in dealing with appeals and related applications.

3.60 The Federal Court submitted that the proposed reforms will eliminate unnecessary litigation (by removing legislative inconsistencies), and support the efficient conduct of appeals (by allowing a greater role for single judges in the resolution of interlocutory matters). 48

3.61 However, other submissions and evidence, while not contesting these outcomes, expressed concern regarding the treatment of security for costs applications.

Security for costs applications

3.62 The Bill proposes to limit the types of interlocutory decisions which can be appealed to the Full Court from the judgement of a single judge exercising original jurisdiction.49

3.63 The Law Council broadly supported the proposition that there be some categories of decision which cannot be appealed, but disagreed with the Explanatory Memorandum's description of security for costs applications as 'minor procedural decisions':

A decision that an applicant provide security for costs may have profound consequences for that party. Equally, a decision refusing an order for the provision of security may leave a respondent exposed to a significant risk in respect of its ability to recovers its costs if it is successful in the proceeding. It is not unusual for applications for security for costs to be the subject of a strong contest between the parties. 5°

3.64 ANEDO expressed similar concerns, particularly in the context of public interest litigation where many environmental litigants are poorly resourced. 51

3.65 Both ANEDO and the Law Council strongly supported retention of the right to appeal by leave for security for costs decisions (proposed subsection 24(1AA), Schedule 2 item 13 paragraph (c)), with the former also suggesting that the Bill amend the Act to include a presumption against granting an order for security for costs in public interest litigation.

48 Federal Court of Australia, Submission 4, p. 1; and Mr Warwick Soden, Registrar & CEO, Federal Court of Australia, Committee Hansard, Melbourne, 27 August 2009, p. 7.

49 Proposed subsection 24(1AA)

50 Law Council of Australia, Submission 2, p. 6; Mr Malcolm Blue QC, Director, LCA, Committee Hansard, Melbourne, 27 August 2009, p. 4; and Explanatory Memorandum, p. 18 .

51 Australian Network of Environmental Defender's Offices, Submission 6, p. 10.

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Judicial responsibilities

3.66 The Bill will amend the Act, the Family Law Act 1975 and the Federal Magistrates Act 1999 to clarify the powers of their judicial officers, especially the heads of each federal court. According to the Explanatory Memorandum, these amendments- contained in Schedule 3- are intended to clarify existing powers. 52

3.67 Most submissions and evidence broadly supported the Schedule 3

amendments, the exception being the Federal Court itself, which told the committee:

We did not seek those provisions, we did not ask for them and we do not think they are necessary. 53

3.68 The provision which excited most comment was that enabling the Chief Justice, Chief Judge or Chief Federal Magistrate to temporarily restrict a judge or federal magistrate to non-sitting duties. 5 4

3.69 Submissions and evidence questioned whether the provision would compromise judicial independence. The Law Council, for example, stated:

The Law Council would not support an amendment that sacrifices judicial independence for administrative convenience, and potentially amounts to interference in the exercise of Chapter III judicial power or compromises the independence of the judiciary. 55

3.70 It suggested amending the Bill to specify that the power could only be used to allow a judge or magistrate to deal with a backlog of cases. In evidence, the Law Council could not foresee any other reason that ought to justify a judge or magistrate's removal, especially in view of other circ*mstances being catered for in the Bill. 56

3.71 The Department however drew the committee's attention to the Explanatory Memorandum, which details a range of circ*mstances which would be covered by the amendments:

... essentially things like undertaking further research, judicial education, further education on other areas- for example, that could be in preparation for a judge moving to a new panel or a new area of expertise or undertaking particular project work in an area of interest to the court .. Judges do other non-judicial functions to assist the operation of the court. That can be research, project work, outreach to communities or international work- all

52 Explanatory Memorandum, p. 25.

53 Mr Warwick Soden, Registrar & CEO, Federal Court of Australia, Committee Hansard, Melbourne, 27 August 2009, p. 11.

54 Schedule 3 Items 3, 10 & 12

55 Law Council of Australi a, Submission 2, p. 6.

56 Mr Malcolm Blue QC, Director, LCA, Committee Hansard, Melbourne, 27 August 2009, pp 4 & 5-6; and Law Council of Australia, Submissio n 2, p. 6.

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those types of things-so there are other non-judgment writing issues that this provision would also apply. 57

3.72 The Department did not believe it necessary to set out these other

circ*mstances in the Bill on the bases that: the proposed provision does not empower the Chief Justice to interfere with the independence of an individual judge; and section 15 of the Act limits the Chief Justice's powers to the orderly and expeditious discharge of the business of the Federal Court only. 58

3.73 The committee notes however that Schedule 3 of the Bill also encompasses the Family Court of Australia and Federal Magistrates Court, whose positions with respect to the Bill were not readily ascertainable.

Committee view

3.74 A key objective of the Bill is to effect a cultural change in the conduct of civil litigation, including improved access to justice in the Federal Court of Australia. The committee supports this objective and commends the Australian Government's recent initiatives in this regard.

3.75 The Bill will enhance the Federal Court of Australia's capacity to manage actively the conduct of civil proceedings, and will focus all persons involved in civil proceedings before the court on the overarching purpose of civil litigation: the just resolution of disputes according to law and as quickly, inexpensively and efficiently as possible.

3.76 During the course of the inquiry, the committee heard that submitters and witnesses broadly supported the Bill. Particular provisions were nonetheless singled out for comment, and the committee responds to those comments as follows.

3. 77 In relation to oral hearings, the committee considers that proposed subsection 20A(2) sufficiently identifies the circ*mstances in which the Federal Court of Australia may deal with a matter 'on the papers'. In such circ*mstances, allowing the parties any further opportunity to make submissions would be both unnecessary and inconsistent with the objectives of the Bill.

3.78 The Australian Network of Environmental Defender's Offices identified parties' financial positions as a relevant factor in civil proceedings. The non-exclusive objectives clause - proposed subsection 37M(2) - will enable the Federal Court of Australia to take this factor into account should a particular case merit such consideration.

3.79 In relation to proposed subsection 37N(l), neither the Explanatory Memorandum nor evidence from the Attorney-General's Department offered any specific justification for the inclusion of settlement negotiations in the duty to act

57 Mr Matthew Minogue, Assistant Secretary, Justice Improvement Branch, Attorney-General's Department, Committee Hansard, Melbourne, 27 August 2009, p. 17; and Explanatory Memorandum, p. 26.

58 Mr Matthew Minogue, Assistant Secretary, Justice Improvement Branch, Attorney-General's Department, Committee Hansard, Melbourne, 27 August 2009, p. 17.

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consistently with the overarching purpose. The committee understands that such negotiations are sometimes used to impede proceedings. However, the committee is not persuaded that this traditional legal privilege should be so readily eliminated from the Federal Court of Australia Act 1976 without adequate explanation, and if the government wishes to persist with this change, a full justification should be provided.

3.80 The committee agrees that proposed paragraph 37N(2)(b) could be better drafted. Both the Law Council of Australia and the Federal Court of Australia highlighted interpretive problems with the provision, contrasting it with analogous state/territory legislation. The committee urges the Attorney-General's Department to further examine and consider the relevant provisions of that legislation to identify how proposed paragraph 37N(2)(b) might be drafted to address all concerns raised before the committee.

3.81 The committee did not receive sufficient information to form a view regarding an appropriate forum for the determination of personal costs orders (proposed subsection 37N(3)). However, in relation to costs orders under proposed subsection 37N( 4), the committee endorses the provision as it stands. While failure to act consistently with the overarching purpose must be considered by the Federal Court of Australia in the making of a costs order, the making of any such order remains discretionary. For that reason, the committee does not accept that the provision will unduly increase any burden on the court.

3.82 The Law Council of Australia argued that proposed paragraph 37P(3)(c) would grant the Federal Court of Australia a plenary power to limit the number of witness who may be called to give evidence. The committee accepts evidence from the Federal Court of Australia that it would judiciously exercise the proposed power and in an informed manner, consistent with the objectives of the Bill and with regard to rules of evidence and other legislative requirements.

3.83 The Bill will allow the Federal Court of Australia to consider whether a matter be referred to arbitration, mediation or alternative dispute resolution. Whether or not successful in resolving the dispute, the committee views the provisions as consistent with the legislative objectives, noting also that proposed subsection 37P(4) remains discretionary.

3.84 For both this inquiry and the committee's inquiry into Access to Justice, a great deal of information has been received on the topic of public interest litigation and costs orders regimes. The committee understands that there is a perceived need for legislative reform, and the (limited) evidence to this inquiry specifically recommended mandated public interest litigation costs orders. The . committee is reluctant to eliminate the judicial discretion afforded by section 43 of the Federal Court Act 1976. For that same reason, the committee declines also to recommend codification of the general rule regarding costs.

3.85 Another key objective of the Bill is to streamline the Federal Court of Australia's appeals pathways for civil proceedings, and provide the court with greater flexibility in dealing with appeals and related applications. This will no doubt

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eliminate some unnecessary litigation and enhance the role of single judges in the resolution of interlocutory matters on appeal. 59

3.86 Submissions and evidence broadly supported the proposed amendments, except so far as security for costs applications were concerned. The Law Council of Australia and Australian Network of Environmental Defender's Offices noted that security for costs orders impact on the continued conduct of litigation and are of such import that they should remain appealable. The committee agrees .

3.87 The third key objective of the Bill is to clarify the powers of judicial officers in the Federal Court of Australia, the Family Court of Australia and the Federal Magistrates Court.

3.88 While submissions and evidence, again, broadly supported these amendments, the committee notes that the Federal Court of Australia, and possibly also the other federal courts, did not seek or view the amendments as necessary. Be that as it may, the committee heard speCific criticisms of the temporary restriction to non-sitting duties provisions only.

3.89 Essentially, the Law Council of Australia viewed the provisions as potentially interfering with judicial independence in contravention of the Constitution. The Attorney-General's Department did not consider it necessary to amend the relevant provisions, and the committee considers it sufficient that the enabling legislation circ*mscribes the powers of the head judicial officers

Recommendation 1

3.90 The committee recommends that the government clarify the operation and purpose of proposed 37N(1) of the Federal Court of Australia Act 1976 (Schedule 1 item 6 of the Bill).

Recommendation 2

3.91 The committee recommends that proposed paragraph 24(1AA)(c) of the Federal Court of Australia Act 1976 (Schedule 2 item 13 paragraph (c) of the Bill) be deleted.

Recommendation 3

3.92 Subject to the above recommendations, the committee recommends that the Senate pass the Bill.

Senator Trish Crossin

Chair

59 Federal Court of Australia, Submission 4, p. 1; and Mr Warwick Soden, Registrar & CEO, Federal Court of Australia, Committee Hansard, Melbourne, 27 August 2009, p. 7.

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ADDITIONAL COMMENTS BY LIBERAL SENATORS

1.1 Liberal senators do not agree with certain findings of the majority members in the committee's report into the provisions of the Access to Justice (Civil Litigation Reforms) Amendment Bill2009 (Bill).

Case management

The duty to act consistently and parties' lawyers

1.2 In relation to proposed subsection 37N(2), the Law Council of Australia warned that proposed paragraph (b) does not strike an appropriate balance between the application of the overarching purpose and its public objectives, and the individual rights and objectives of a party. Instead, the Law Council of Australia suggested that proposed subsection 37N(2) be qualified with the insertion of the phrase, 'subject to the instructions of the client', where appropriate. 1

1.3 Liberal senators note that other submissions and evidence - namely, the Federal Court of Australia and NSW Law Society, Young Lawyers- acknowledge the Law Council of Australia's concerns, and also that, in at least this regard, the Bill is not consistent with comparable provisions in other jurisdictions (for example, sections 56 & 57 of the Civil Procedure Act 2005 (NSW).

1.4 The majority members of the committee urge the Attorney General's Department to further examine and consider the relevant provisions of state/territory legislation however, Liberal senators consider this response insufficient.

Recommendation 1

1.5 Liberal senators recommend that proposed subsection 37N(2) be amended to recognise that lawyers' obligations under proposed section 37N(2) are subject to the instructions of the client.

Practice and procedural directions

1.6 Proposed paragraph 37P(3)(c) will give the Federal Court discretion to make directions limiting the number of witnesses who may be called to give evidence (or the number of documents that may be tendered in evidence). The Law Council of Australia described the proposed paragraph as 'undesirable', persuasively arguing that

Mr Malcolm Blue QC, Director, LCA, Committee Hansard, Melbourne, 27 August 2009, pp 3 & 4-5; Law Council of Australia, Submission 2, p. 5; and Cape York Land Council Aboriginal Corporation, Submission 5, p. 1.

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it would give the Federal Court of Australia an unjustifiable plenary power.2 It suggested that:

a power such as that proposed in s37P(3)(c) might better be expressed as -one that can only be exercised with the consent of the parties; or

there be no such power, but there be provision for cost consequences if a party unnecessarily prolongs a hearing by leading patently unnecessary evidence. 3

1. 7 Liberal senators note a recent decision of the Full Court in Hospitality Group Pty Ltd v Australian Rugby Union Ltd which lends support to the Law Council of Australia's arguments,4 and consider that the Law Council of Australia's proposals are meritorious.

Recommendation 2

1.8 Liberal senators recommend that proposed paragraph 37P(3)(c) be deleted or alternately, paragraph (c) be amended so that the provision commences with the words, 'With the consent of the parties'.

Judicial responsibilities

1.9 The Federal Court of Australia, one of three federal courts affected by the Bill, told the committee:

We did not seek those [Schedule 3] provisions, we did not ask for them and we do not think they are necessary. 5

1.10 Liberal senators refer in particular to Schedule 3 items 3, 10 and 12 of the Bill, which enable the head judicial officer to temporarily restrict a judge or federal magistrate to non-sitting duties in the Federal Court of Australia, Family Court of Australia, or Federal Magistrates Court of Australia.

1.11 The Law Council of Australia bluntly stated:

2 Law Council of Australia, Submission 2, p. 5.

3 Law Council of Australia, Submission 2, pp. 5-6.

4 Hospitality Group Pty Ltd v Australian Rugby Union Ltd (200 1) 110 FCR 157 at para 80

5 Mr Warwick Soden, Registrar & CEO, Federal Court of Australia, Committee Hansard, Melbourne, 27 August 2009, p. 11.

6 Law Council of Australia, Submission 2, p. 6.

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1.12 Liberal senators cannot put the case any better, other than to add that the proposed plenary provisions were unnecessary, unjustifiable and unworthy of Liberal senators' support.

Recommendation 3

1.13 Liberal senators recommend that Schedule 3 items 3, 10 and 12 of the Bill be reconsidered with a view to the addition of appropriate terms and conditions circ*mscribing the proposed power.

Senator Guy Barnett

Deputy Chair

Senator Mary Jo Fisher

285

286

Submission Number

APPENDIX 1 SUBMISSIONS RECEIVED

Submitter

Western Australian Bar Association

Law Council of Australia

NSW Young Lawyers Civil Litigation Committee

Federal Court of Australia

Cape York Land Council Aboriginal Corporation

Australian Network of Environmental Defender's Offices

ADDITIONAL INFORMATION RECEIVED

Answers to Questions on Notice - Provided by the Attorney-General's Department on Wednesday 15 September 2009

2 Correspondence regarding evidence given at public hearing on Thursday 27 August - Provided by the Attorney-General's Department on Wednesday 15 September 2009

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APPENDIX2

WITNESSES WHO APPEARED BEFORE THE COMMITTEE

Melbourne, Thursday 27 August 2009

BLUE, Mr Malcolm, QC, Director Law Council of Australia

KELLOW, Mr Philip, Deputy Registrar Federal Court of Australia

MACKAY, Ms Anita, Acting Principal Legal Officer, Justice Improvement Branch Attorney-General's Department

MEAGHER, Mr Joseph, Senior Legal Officer, Federal Courts Branch Attorney-General's Department

MINOGUE, Mr Matthew, Assistant Secretary, Justice Improvement Branch Attorney-General's Department

SODEN, Mr Warwick, Registrar and Chief Executive Officer Federal Court of Australia

TRENT, Ms Kimberlee, Acting Principal Legal Officer, Federal Courts Branch Attorney-General's Department

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The Senate

Legal and Constitutional Affairs

Legislation Committee

Anti-Terrorism Laws Reform Bill2009

October 2009

291

ISBN: 978-1-74229-152-9

This document was printed by the Senate Printing Unit, Department of the Senate, Parliament House, Canberra.

292

MEMBERS OF THE COMMITTEE

Members

Senator Patricia Crossin, Chair, ALP, NT

Senator Guy Barnett, Deputy Chair, LP, TAS

Senator David Feeney, ALP, VIC

Senator Mary Jo Fisher, LP, SA

Senator Scott Ludlam, AG, WA

Senator Gavin Marshall, ALP, VIC

Secretariat

Mr Peter Hallahan

Mr Tim Watling

Ms Cassimah Mackay

Suite Sl. 61

Parliament House

Secretary

Principal Research Officer

Executive Assistant

Telephone: (02) 6277 3560

Fax: (02) 6277 5794

CANBERRA ACT 2600 Email: legcon.sen@aph.gov.au

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TABLE OF CONTENTS

MEMBERS OF THE COMMITTEE ............................................................. iii

CHAPTER 1 ........................................................................................................ 1

INTRODUCTION .................................................................................................... 1

Conduct of the inquiry .. ....... ..... ... ..... ...................... ... ... ................. ..... ..... ..... .......... 1

Acknowledgement ... .... .. .. .... ... ... .... .. ............... ...... ...... ... ... .. ... ..................... ............ 2

Note on references ....................... ... .............................. .... .... .......................... ..... .. . 2

CHAPTER 2 ........................................................................................................ 3

PROVISIONS ........................................................................................................... 3

Schedule 1- Criminal Code Act 199 5 ........................................................ ..... ........ 3

Schedule 2- Crimes Act 1914 .. ............. ... .. .... ... .... ............................ .... ... ........... ... 7

Schedule 3 -Australian Security Intelligence Organisation Act 1979 .................. 7

Schedule 4 - National Security Information (Criminal and Civil Proceedings) Act 2004 ··· ·· ·· ··· ·· ······················· ····························'············································· ····· 8

CHAPTER 3 ...................................................................................................... 11

ISSUES .................................................................................................................... 11

Schedule 1 -Amendments to the Criminal Code Act 1995 ... ... ..... ......... ... .... ...... 12

Schedule 2- Amendments to the Crimes Act 1914 ................. ... ... ..... .. ... .. .... .... .. 23

Schedule 3 -Amendments to the Australian Security and Intelligence Organisation Act 1979 ... ....... ....................... ... .................. ...... .. ..... ..................... .. 26

Schedule 4 - repeal of the National Security Information (Criminal and Civil Proceedings) Act 2004 ...... .......... .. ..... .. .... ............ .. .......... .. .. .... ....... ................. .... 28

Conclusion ······· ········· ··· ···· ··· ···· ······ ········· ·· ············· ·· ···· '···· ··· ·········· ·············· ··· ··· ···· 28

ADDITIONAL COMMENTS BY THE AUSTRALIAN GREENS ............ 31

APPENDIX 1 ..................................................................................................... 35

SUBMISSIONS RECEIVED ................................................................................. 35

APPENDIX 2 ......................................................................................... ............ 37

295

WITNESSES WHO APPEARED BEFORE THE COMMITTEE ................... 37

APPENDIX 3 ..................................................................................................... 39

SUMMARY OF AMENDMENTS ........................................................................ 39

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CHAPTER! INTRODUCTION

1.1 On 25 June 2009, the Senate referred the Anti-Terrorism Laws Reform Bill 2009 (the Bill) to the Senate Legislation Committee on Legal and Constitutional Affairs, for inquiry and report by 28 October 2009.

1.2 The Bill was introduced in the Senate on 23 June 2009 by Senator Scott Ludlam. The Bill seeks to amend the Criminal Code Act 1995 (CCA), the Crimes Act 1914 (CA), and the Australian Security Intelligence Organisation Act 1979 (ASIO Act), and to repeal the National Security Information (Criminal and Civil Proceedings) Act 2004.

1.3 The Explanatory Memorandum describes the Bill's purpose as the restoration of 'core democratic principles into Australian laws dealing with terrorism offences'. 1

1.4 The Bill aims to bring about amendments relating to the defmition of terrorism offences, provisions relating to the proscription of 'terrorist organisations' as well as interaction with them, and offences related to 'reckless possession of a thing' potentially relating to the commission of a terrorist offence ', and to repealing the offence of sedition.2

1.5 The amendments also amend provisions relating to detention of terrorism suspects including changes to the periods of detention of persons suspected of terrorism offences and bail conditions for such persons.3

1.6 The Bill would also see the ASIO Act amended in relation to the questioning and detention of terrorism suspects.4

Conduct of the inquiry

1. 7 The committee advertised the inquiry in Th e Australian newspaper on 1 July 2009, and invited submissions by 31 July 2009. Details of the inquiry, the Bill, and associated documents were placed on the committee's website. The committee also wrote to over 100 organisations and individuals inviting submissions.

1.8 The committee received 26 submissions which are listed at Appendix 1. Submissions were placed on the committee's website for ease of access by the public.

1.9 The committee held a public hearing in Sydney on 22 September 2009. A list of witnesses who appeared at the hearings is at Appendix 2 and copies of the Hansard transcript are available through the Internet at http://aph.gov.au/hansard.

Explanatory Memorandum, p. 2.

2 Explanatory Memorandum, p. 2, relating to Schedule 1 of the Bill.

3 Explanatory Memorandum, p. 2, relating to Schedule 2 of the Bill.

4 Explanatory Memorandum, p. 2, relating to Schedule 3 of the Bill.

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Acknowledgement

1.10 The committee thanks the organisations and individuals who made submissions and gave evidence at the public hearing.

Note on references

1.11 References in this report are to individual submissions as received by the committee, not to a bound volume. References, to the committee Hansard are to the proof Hansard: page numbers may vary between the proof and the official Hansard transcript.

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CHAPTER2 PROVISIONS

2.1 This chapter summarises the main provisions contained in the Bill, the content of the law as it stands, and the changes the proposed amendments represent. For ease of reference, a comparative table of the proposed changes is contained in Appendix 3.

Schedule 1- Criminal Code Act 1995

2.2 Items 1 and 2 would repeal the offence of sedition under section 80.2 of the CCA.

2.3 Items 3 and 4 relate to the definition of 'terrorist act' in section 100.1. At

present, the term is defmed as follows:

terrorist act means an action or threat of action where: (a) the action falls within subsection (2) and does not fall within subsection (3); and (b) the action is done or the threat is made with the intention of advancing a political, religious or ideological cause; and (c) the action is done or the threat is made with the intention of:

(i) coercing, or influencing by intimidation, the government of the Commonwealth or a State, Territory or foreign country, or of part of a State, Territory or foreign country; or (ii) intimidating the public or a section of the public.

(2) Action falls within this subsection if it: (a) causes serious harm that is physical harm to a person; or ·(b) causes serious damage to property; or (c) causes a person' s death; or

(d) endangers a person' s life, other than the life of the person taking the action; or (e) creates a serious risk to the health or safety of the public or a section of the public; or (f) seriously interferes with, seriously disrupts, or destroys, an electronic system including, but not limited to :

(i) an information system; or (ii) a telecommunications system; or (iii) a financial system; or (iv) a system used for the delivery of essential government services; or

(v) a system used for, or by, an essential public utility; or (vi) a system used for, or by, a transport system.

(3) Action falls within this subsection if it: (a) is advocacy, protest, dissent or industrial action; and (b) is not intended:

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(i) to cause serious harm that is physical harm to a person; or (ii) to cause a person's death; or (iii) to endanger the life of a person, other than the person taking the action; or (iv) to create a serious risk to the health or safety of the public or a section of the public.

(4) In this Division: (a) a reference to any person or property is a reference to any person or property wherever situated, within or outside Australia; and (b) a reference to the public includes a reference to the public of a country other than Australia.

2.4 The amendments would remove reference to the advancement of a political, religious or ideological cause in existing paragraph (b), but would also remove any threat to commit a terrorist act from the terms of the offence.

2.5 Item 4 would repeal existing subsections (2) and (3), which serve to elaborate on the types of offences that fall within the defmition of 'terrorist act' (in the case of subsection 2) and do not fall within the definition (subsections 3). The replacement provisions would allow that:

(2) Action falls within this subsection if it: (a) causes a person's death; or (b) endangers a person' s life, other than the person taking the action; or (c) causes serious harm that is physical harm to a person; or (d) involves taking a person hostage; or (e) creates a serious risk to the health or safety of the public or a section of the public. (3) Action falls within this subsection if it:

(a) is advocacy, protest, dissent or industrial action; and (b) is not intended: (i)to cause serious harm that is physical harm to a person; or (ii) to cause a person's death; or

(iii) to endanger the life of a person, other than the person taking the action; or (iv) to involve taking a person hostage. (3A) Action falls within this subsection if it takes place in the context of, and is associated with, an armed conflict (whether or not an international armed conflict).

2.6 The Explanatory Memorandum summarises the intention of the replacement provisions as:

â¢ Limiting action that can be considered a terrorist act to action that causes a

person's death; endangers a person's life (other than the person taking the action); causes serious physical harm to a person; involves taking a person hostage or creates or a serious risk to the health or safety of the public;

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Removing references to the damage of property and interference, disruption or destruction of information, telecommunication, financial, transport, or essential public utility systems or the delivery of essential government services as action that can be considered a terrorist act; and

â¢ providing that an action will not fall within the definition of a terrorist act if the action is advocacy, protest, dissent or industrial action and is not intended either to cause a person's death, to cause serious physical harm to a person, to endanger another person's life, or to involve the taking of a person hostage. 1

2.7 One noteworthy aspect of the proposed amendments is the inclusion within the definition of a terrorist act of taking a person hostage, which is not currently explicitly included within the defmition.

2.8 Item 5 would repeal section 101.4 of the CCA, which prohibits the possession of things connected with the preparation for, the engagement of a person in, or assistance in, terrorist acts. Subsection (2) prohibits recklessness in respect of the connection between the item they possess and the uses for which it is intended.

Subsection (3) provides that an offence occurs even if the terrorist act does not take place.

2.9 In defining 'terrorist organisation' in section 102.1, item 7 would remove reference to organisations that assist or foster the doing of a terrorist act from the class of organisations covered by the definition.

2.10 Items 6, 8 and 10 deal with the proscription of terrorist organisations through regulation, currently covered by subsection 102.1 (2). The provisions detail steps to be taken by the Minister in specifying an organisation as a terrorist organisation for the purposes of the section. They include a requirement that the Minister be satisfied on reasonable grounds that an organisation is directly or indirectly engaged in, preparing, planning, assisting in or fostering the doing of a terrorist act (even where such an act has not occurred or will not occur), or are advocating the doing of such an act. Other requirements include a briefing on the proposed regulation to the Leader of the

Opposition, and a 'sunset' clause limiting the listing of an organisation by regulation to no more than 2 years, notwithstanding that it may be subsequently re-listed. Lastly, the current provisions allow for a listed organisation or individual to make application to be de-listed, and that the Minister must consider the application. The Minister may take any matter into consideration when considering the application to be de-listed.

2.11 These provisions would be repealed under Item 8, and replaced with new subsections 102.1(1AA), (2), (2AA), (2AB), (2AC), (2AD), and (2AE). In summary, the new subsection provide that before the Governor-General makes a regulation specifying an organisation as a terrorist organisation, the Minister must ensure the organisation is notified, if it is practical to do so, of the proposed listing and the

organisation and its members are notified of their right to oppose the proposed listing. The Minister must also cause to be published, on the internet, in newspapers, in the

Explanatory Memorandum, p. 3. Emphasis added.

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Gazette and in any other way required by regulation, a notice that the regulation has been made and the consequences of the listing for the members of the organisation.

2.12 They would also provide that an organisation has the right to oppose the proposed listing. The Minster must also be satisfied on reasonable grounds that the organisation is directly or indirectly engaged in preparing, planning, assisting in the doing of a terrorist act or advocates the doing of a terrorist act. The decision to list an organisation would also be reviewable by the Administrative Appeals Tribunal, under procedures to be defined by regulation. The public notice would also state the time in which such an application can be made, who can apply for the review and where the application for review can be made.

2.13 New subsection (2AA) would require the Minister to seek advice and take into account recommendations of an Advisory Committee, established under new section 102.1AB, in making a decision whether the Minister is satisfied on reasonable grounds that the organisation is directly or indirectly engaged in preparing, planning, assisting in the doing of a terrorist act or advocates the doing of a terrorist act. The Advisory Committee would also be empowered to publicise its role, engage in public consultations or do anything else it considers necessary in carrying out its function.

2.14 The Committee would consist of at least 5 members appointed by the Minister, holding office on a part-time basis for a specified period of no more than 3 years. The Minister would not be permitted to appoint a person to the Advisory Committee unless satisfied the person is not otherwise connected to the process of listing an organisation and unless the Minster is satisfied that the person has knowledge of or experience in human or civil rights, security analysis, public affairs, public administration, legal practice or a field specified in regulations. The Minister would be required to terminate the appointment of a member in writing, and a member would resign in the same way.

2.15 Item 10 would substitute the current strict liability offence of receiving training from, or providing training to, a terrorist organisation, regardless of their knowledge of that fact. It would substitute new section 102.5 which provides for an offence if training is given or received when the organisation is known to be a terrorist organisation, or when the person is reckless about whether the organisation is a ·terrorist organisation.

2.16 Item 11 to 15 would amend section 102.7 of the CCA to replace the word 'support' with the term 'material support' and define the latter term to exclude the mere publication of views that appear to be favourable to an organisation or its objectives. These items implement a recommendation by the Parliamentary Joint Committee on Intelligence and Security made in their Review of Security and Counter-Terrorism Legislation in December 2006 .Z

2.17 Item 16 would repeal section 102.8, which provides for an offence where a person 'intentionally associates' on 2 or more occasions with a member or promoter of a terrorist organisation, where the association provides support to the organisation,

2 www.aph.gov.au/house/committee/pjci s/securityleg/report/chapterS .pdf, p. 79.

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and that the person intends for that support to take place. The section also provides for a separate offence, requiring only 1 occasion of association, where a person has previously been convicted under the section.

Schedule 2- Crimes Act 1914

2.18 Item 1 would repeal current section 15AA of the Crimes Act (CA), which provides for offences in respect of which a bail authority should grant bail only in 'exceptional circ*mstances'. The offences include:

â¢ Terrorism offences (except those dealing with association with terrorist organisations)

â¢ Commonwealth offences causing death, regardless of intention to do so;

â¢ Treason, sedition, treachery or espionage (or similar), including ancillary offences defined under the Criminal Code, where a person's death is alleged to have been caused by the conduct or where the conduct carried a substantial risk of causing the death; 3

2.19 Items 2 to 7 relate to the powers of detention for a person suspected of a terrorism offence. They would insert a specific requirement that the person be informed of their rights, at least in substance if not in comprehensive technical terms, at all material times.

2.20 They would also repeal some existing provisions which set out the circ*mstances in which a person being held on suspicion of a terrorism offence can be detained for longer than the maximum period specified in the CA, for any 'reasonable time' that 'questioning of the person is reasonably suspended or delayed'.

Schedule 3 -Australian Security Intelligence Organisation Act 1979

2.21 Items 1 to 4 concern requests from the relevant Minister for warrants to detain and question a person suspected of being connected with a terrorism offence.

2.22 Subsection 34F(6) currently requires the Minister, when considering a request for a warrant in respect of a person previously detained under the same part of the ASIO Act, to consent to the request for another warrant only if satisfied that new or materially different information has come to hand that would justify the new warrant. The Bill would insert two new paragraphs (c) and (d) to provide that a warrant may

not be issued unless the issuing authority is satisfied that the offence in relation to which the warrant is sought was committed after the end of the person's previous period of detention and arose in different circ*mstances to those in the offence to which any earlier warrants arose. New paragraph (d) would provide that the

questioning of the person under the warrant requested must not relate to the offence to which any earlier warrant relates or the circ*mstances in which such an offence was committed.

3 Paragraph 15AA(2)(c), referring to Divisions 80 and 91 of the Criminal Code, and section 24AA of the CA.

4 Paragraph 23CA(8)(1) and (m).

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2.23 Item 6 would repeal existing subsection 34K(10) which prohibits a detained person from contacting anybody at any time while in detention. The provision is subject to subsection 11, which prescribes various classes of persons with whom contact may be made. These include, for example, any person identified in the arrest warrant, the Ombudsman, the Australian Federal Police, and the Inspector-General of Intelligence and Security. Item 6 would repeal the blanket prohibition, while retaining the provisions in subsection 11. The practical effect of the amendment is further discussed in chapter 3.

2.24 Items 5 and 7 would reduce the maximum period a person can be detained in connection with a terrorism offence under the ASIO Act from 168 hours to 24 hours.

2.25 Item 8 would repeal section 34ZP of the Act, which clarifies that a detained person may be questioned in the absence of a lawyer of the person's choice. The Bill would not amend the section 34ZO, which gives serves to constrain the detained person making contact with a lawyer of their choice.

2.26 Item 9 would repeal provision for the parent, guardian or other representative of a detained person to be removed if they are considered unduly disruptive to the questioning of the person. This would mean that provisions allowing contact with a parent or guardian under section 34ZE would not be constrained by authorities

forming the view that the parent, guardian or other representative was unduly disrupting the questioning of the person.

2.27 Item 10 would repeal subsection 34ZS(2), which provides than an offence is committed if certain operational information is disclosed by a person in the 2 years following the expiry of a warrant for questioning and detention. The amendment would see secrecy provisions about warrants limited to the term of the warrant.

2.28 Item 11 would repeal section 34ZT, which provides for regulations prohibiting or regulating access to information by lawyers acting for a person who is or was the subject of a warrant under the Act.

Schedule 4 -National Security Information (Criminal and Civil Proceedings) Act 2004

2.29 The Bill would repeal the National Security Information (Criminal and Civil Proceedings) Act 2004. The Act protects information from disclosure during Commonwealth criminal or any civil proceedings where the disclosure is likely to prejudice Australia's national security. The Act originally applied only to criminal proceedings, before its amendment in 2005 to cover federal, state and territory civil matters also. The summary description of the operation of the Act applies most accurately to criminal matters, and while civil matters are dealt with similarly under the 2005 amendments, a number of distinctions exist.5

5 Key differences in the Act's treatment of civil proceedings include, for example, broader circ*mstances for permitted disclosure of information, and broader application of security clearance provisions for legal representatives. For detailed description of the difference between criminal and civil cases under the Act, refer to the National Security Information Legislation Amendment Bill 2005, Revised Explanatory Memorandum, pp 1-2.

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2.30 Specifically, the Act aims to protect information whose disclosure is likely to prejudice Australia's defence, security, international relations, law enforcement interests or national interests. The compromise of this information could possibly affect the security of the nation.

2.31 At the time the Bill was tabled, the Government argued that existing rules of evidence and procedure did not provide adequate protection for information related to national security where that information may be adduced or otherwise disclosed during the course of court proceedings.6

2.32 The Act provides for a procedure in cases where information relating to, or the disclosure of which may affect, national security could be introduced during a federal criminal or any civil proceeding, including interlocutory and discovery proceedings. The Act also covers a proceeding that is the subject of certain applications under section 39B of the Judiciary Act 1903 and the Extradition Act

1988.

2.33 The Act provides for information to be introduced in such a form so as to facilitate the prosecution of an offence without prejudicing national security and the rights of the defendant to a fair trial.

2.34 A party must notify the Attorney-General at any stage of a proceeding where that party expects to introduce information that relates to, or the disclosure of which may affect, national security. This includes information that may be introduced through a document, a witness's answer to a question or the presence of a witness.

2.35 Upon notification, the Attorney-General considers the information and determines whether disclosure of the information is likely to prejudice national security. If so, the Attorney-General may issue a certificate which prevents the disclosure of the information or allows the information to be disclosed in a summarised or redacted form.

2.36 In the case of a trial, any certificates that have been issued must be considered at a closed hearing of the trial court prior to commencement. The Attorney-General may intervene in the proceeding. The court rules on the admissibility of the original information and considers the certificate. The court may:

â¢ agree with the Attorney-General, that the information not be disclosed or disclosed other than in a particular form, in which case the trial continues or the defendant appeals; or

â¢ disagree with the Attorney-General and order disclosure of the information in which case the trial continues or the prosecution appeals.

6 National Security Information (Criminal Proceedings) Bill 2004, Explanatory Memorandum, p. 1.

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CHAPTER3 ISSUES

3.1 This private senator's bill is before the committee at the same time as the Attorney-General and his department are concluding a public consultation process over changes to Australia's national security legislative framework. The exposure draft of the Attorney's bill discloses that several of the issues and amendments being foreshadowed in this Bill, or very similar ones, are already being considered by the Government. However, the Bill currently before the Committee proposes some amendments that are not included in the Attorney's Exposure Draft. In light of the continuing calibration of the Government's exposure draft, and its likely introduction to the Parliament in coming months, this report briefly summarises the views put by submitters with a view to making a contribution to the final form of the reforms being considered by the Government. For the reasons discussed above, the committee has not made a specific recommendation on the substantive issues or overall merit of the Bill but is of the view that this report along with Hansard transcripts of hearings and

submissions should form part of this current discussion.

3.2 The majority of submitters were positive about the changes signalled in the Bill. 1 A number of submissions received by the committee dealt with the provisions of the Bill in tum, while others considered the merit of the proposed amendments more generally. At the outset, however, the committee notes the ambivalence to the current

set of laws expressed by a number of submitters, as evidenced by the following contribution from the Law Council of Australia (the Law Council):

When these provisions were initially introduced, it was certainly the Law Council's submission that the existing body of criminal law was sufficient, although the Law Council was open to the possibility that there was a need for specific offences or specific law enforcement powers to deal with these emergencies in unusual circ*mstances. The Law Council's position was, and it has not changed, that a cogent case was never made for why that existing body of laws was inadequate.2

3.3 Other submitters expressing a similar view in this regard included the Australian Muslim Civil Rights Advocacy Network (AMCRAN), the Human Rights Law Resource Centre, and the International Commission of Jurists (Australia) (ICJA). 3

See, for example, Islamic Information and Support Centre of Australia, submission 16, pp 2-4; Liberty Victoria, submission 23 , p. 1; Australian Islamic Mission, submission 10; Mr Ghayass Sari, submission 9; ICJA, submission 26, pp 1-2; Mr Mohamad Tabbaa, submission 12; Ms Christie Elemam, submission 4; Human Rights Law Resource Centre, submission 21 .

2 Ms Helen Donovan, Committee Hansard, 22 September 2009, p. 15.

3 AMCRAN, submission 15, p. 5; Human Rights Law Resource Centre, submission 21 , p. 4; ICJA, submission 26, p. 4.

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Schedule 1- Amendments to the Criminal Code Act 1995

Sedition

3.4 The current offence of sedition would be repealed by the Bil1. 4

The ICJA 5

and

the Law Council expressed a common view that the sedition laws currently in place serve no useful purpose, are broadly drafted and rely on unqualified and undefined terms, resulting in an imprecise and uncertain scope of application. For these reasons they supported the proposed repeal. The availability of the current 'good faith' defence offers, in the Law Council's opinion, little respite:

The availability of a 'good faith defence' to the sedition charges does not allay these concerns. The fact that a court may ultimately find, after charges have been laid and a prosecution commenced, that the particular conduct falls within the limited 'good faith' exception, does not diminish the fear of criminal liability experienced by those engaged in publishing or reporting on matters that could potentially fall within the broad scope of the sedition offences. 6

3.5 Similarly, the Law Council took little solace in the fact that current sedition laws have fallen into disuse, submitting that:

They have not been used to date. They have not been used for many years. But the Law Council thinks there is a danger in having these types of offences remain on the statute book even if they are not used. That is partly because ... the law enforcement agencies sometimes as a result have a misunderstanding about the extent of their powers or about what sort of activity may be subject to criminal investigation and criminal prosecution. We have to remember-and this relates not only to the sedition offences but also to a number of the other offences which are covered by the discussion paper and by this bill-that, even though they might not be invoked and nobody may ever be charged or prosecuted for those offences, they provide a hook for the use of law enforcement powers and they allow police to obtain telephone interception warrants, for example, along with warrants to use a number of other intrusive powers. So, having them remain on the statute book is in itself a risk, notwithstanding that they may not be invoked

. . 7

m prosecutwn.

3.6 The ICJA submitted that, if not repealed:

... the sedition offences will continue to pose a significant threat to freedom of speech and expression, the right to which is set out in Article 19 of the International Covenant on Civil and Political Rights and Article 19 of the Universal Declaration of Human Rights. Australia is a party to both of these

4 Sedition occurs when a person urges another person to overthrow by force or violence either the Constitution, the Government of the Commonwealth, a State or a Territory, or the lawful authority of the Government of the Commonwealth. 5 ICJA, submission 26, p. 4.

6 Law Council of Australia, submission 14, p. 4.

7 Ms Helen Donovan, Committee Hansard, 22 September 2009, p. 11.

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international instruments. The ICJA is also concerned that as presently worded the offences set out in section 80.2 can be recklessly committed even though there may be a lack of intention requisite for such an offence. This anomaly is problematic. 8

Pagel3

3.7 The Australian Press Council informed the Committee that current anti terrorism laws had caused Australia to move from a position in the top 12 in the world listing of countries with a free press in 2002, to 35 1\ and submitted in respect of sedition laws that:

By and large the real problem with this sort of legislation is not that it involves censorship, but that it involves self-censorship ... there is a potential there in the sedition laws and in the support for a proscribed organisation laws of the media being unable to report matters of public

interest and concern because they themselves might be accused of either sedition or support for a proscribed organisation. 9

3.8 Notably, the Gilbert and Tobin Centre of Public Law (the Gilbert and Tobin Centre) were a notable exception to the trend and opposed the amendment, but did not elaborate on their reasons for taking this position. 10

Definition of 'Terrorist Act'

3.9 The Bill would significantly narrow the definition of a 'terrorist act' under the Act, removing the making of a threat of action from the definition. It would also remove references to the damage of property and interference, disruption or destruction of information, telecommunication, financial, transport, or essential public utility systems or the delivery of essential government services as action that can be considered a terrorist act. Reaction to the proposed amendment was mixed.

3.10 The Law Council supported the amendment, arguing that it was:

... of the view that the Australian definition of terrorist act in section 100.1 of the Criminal Code is broader than [the] internationally accepted definition [and] ... includes threats of action, as well as completed acts. This not only inappropriately broadens the definition but, because of the interaction between slOO.l(l) and s100.1(2), also renders the definition, in part, unintelligible. 11

3.11 The Federation of Community Legal Centres for the most part supported the proposed reform, criticising the current arrangements as follows:

In section 102 of our act we have a very broad category of offences in relation to organisations. It is an offence to have various sorts of involvements with any organisation, whether or not it has ever been proscribed by the government, which is engaged in preparing, planning,

8 ICJA, submission 26, p. 4.

9 Mr Jack Herman, Committee Hansard, 22 September 2009, p. 18 .

10 Gilbert and Tobin Centre for Public Law, submission 1, p. 1.

11 Law Council of Australia, submission 14, p. 7.

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assisting or fostering directly or indirectly the doing of a terrorist act. So we have a very broad statutory notion of ' an organisation', which hangs on a very broad statutory notion of 'terrorist act' . Our notion of a 'terrorist act' does not distinguish between civilian violence and military violence; it does not distinguish between internal conflicts and international conflicts; it does not distinguish between actions that take place in the context of an ongoing armed conflict and acts that take place in a purely civilian context-for example, a suicide bombing in a cafe in Tel Aviv. We do not draw a distinction between that and violence in a military conflict situation. There are a number of distinctions and different international instruments. Various other jurisdictions often tend to be sensitive to one or more those distinctions in the way frame their laws in this area. I think the Australian position is peculiar in that it is sensitive to none of the relevant distinctions. It is about the failure of sensitivity to any of the relevant distinctions. And

hanging on that very broad notion of 'terrorist act' is a whole range of broader offences, including our very broad 'organisation' offences, that operate very expansively compared to other comparable countries. 12

3.12 The ICJA viewed the amendment with mixed feelings, supporting the removal of 'threat' and 'threat of action', but submitting that:

.. . the removal of the phrase ' intention of advancing a political, religious or ideological cause' from the definition, may reduce the possibility of a particular political, religious or ideological group being particularly targeted by the police, media and the public, however terrorism will always have a political and ideological character. The ICJA suggests that perhaps merely the removal of 'religious' would be a more positive amendment. 13

3.13 However, the Gilbert and Tobin Centre did not support the amendment, submitting that they:

... believe that it is appropriate for threats to commit a terrorist act to be criminalised. Therefore, we do not support item 3 since it removes the ' threat of action ' and ' threat to commit a terrorist act' from the definition of a ' terrorist act', but does not, as recommended by the Security Legislation Review Committee (' SLRC ') in 2006, create a separate offence of making a

threat to engage in a terrorist act.

We support the recommendations of the SLRC that: (I) 'threat of action' and 'threat to commit a terrorist act' be deleted from the definition of a ' terrorist act ' in subsection I OO.I (1) of the Criminal Code; and (2) a separate offence of 'threat of action' or 'threat to commit a terrorist act' be included in Division I 01.

3.14 In addition to removing reference to the threat of an act, Item 3 would remove the current requirement that, to be a terrorist act, an act must advance a political,

12 Dr Patrick Emerton, Committee Hansard, 22 September 2009, p. 5.

13 ICJA, submission 26, p. 5.

14 Gilbert and Tobin Centre of Public Law, submission 1, p. 2.

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religious or ideological cause. The Gilbert and Tobin Centre would also retain the 'motive' requirement, which Item 3 would remove.

The effect of doing so would effectively render would-be terrorist acts as 'normal' violations of the criminal law, no different in character to traditional offences such as murder, assault and arson. It is the intention of 'advancing a political, religious or ideological cause' (combined with the other intentional element of the definition of a 'terrorist act' - that the action is done with the intention of coercing a government or intimidating the public) that distinguishes terrorist acts from other forms of criminal conduct. Australia's counter-terrorism laws (which give expansive powers to intelligence gathering and policing agencies to prevent and respond to

terrorist acts, create broad preparatory offences and impose serious penalties for committing those offences) were justified by reference to the extraordinary nature of the threat posed by terrorism. The gravity of the potential harm and the intention of offenders meant that it was appropriate to enact laws that derogated from fundamental human rights and ordinary principles of criminal justice. We would therefore oppose any attempt to

broaden the definition of a 'terrorist act' which might potentially extend it to less serious forms of criminal conduct which do not meet the description of'political violence'. 15

3.15 Item 4 largely replicates the provisions of existing subsection 3, which go to the intention behind the act or threat and provide that an act or threat is not a terrorist act if it was not intended to cause harm or endanger life. However, the Bill would remove from the definition the creation of an offence by virtue of there being a serious risk to the health and safety of the public. The Gilbert and Tobin Centre took the opportunity to compare Australia's definition with those of other western nations, and commented that:

Action would only constitute a 'terrorist act' if it causes a certain level of personal harm. That is, it would not be sufficient (as it is currently under subseCtion 100.1(2)) for the act to cause serious damage to property and seriously interfere with, disrupt or destroy information,

telecommunications, financial, transport, or essential public utility systems or the delivery of essential government services. In including damage to property and infrastructure in the definition of a 'terrorist act', Australia has followed the UK example. We accept the argument put forward by

Professor Kent Roach that there are ' real questions whether it is necessary to define all politically motivated serious damage to property or serious disruptions to electronic systems as terrorism'. We would prefer item 4 of the Bill to the current subsection 100.1(2). This would delete damage to property and infrastructure as part of the definition of a 'terrorist act' , bringing Australia more into line with the approach in Canada and New Zealand. The definition of a terrorist act in Canada, for example, only

includes property damage where it is likely to result in the death or serious bodily harm to a person, endanger a person' s life or cause a serious risk to the health or safety of the public (or a segment of the public). Failing the

15 Gilbert and Tobin Centre of Public Law, submission 1, pp 2- 3.

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simple removal of the property and infrastructure aspects of subsection 100.1 (2), we would favour the introduction of a similar qualification in respect of those provisions. 16

3.16 However, the Gilbert and Tobin Centre did not support the removal of the offence of a serious risk to the health and safety of the public from subsection 100.1(3)(b) of the Act.

The reason for [the proposed removal] is not clear from the Explanatory Memorandum to the Bill. We do not support item 4. This is because we believe, as with hostage-taking, that such an act is of sufficient severity that a person should not be excused merely on the ground that he or she was engaging in advocacy, dissent, protest or industrial action. 17

3.17 The ICJA also did not support the amendment, on the grounds that the only action that would fall outside the definition of 'terrorist act' would be 'advocacy, protest, dissent or industrial action', and considered that such a narrow definition of what fell outside the definition could infringe Australia's obligations to the International Convention on Civil and Political Rights (ICCPR). 18

New offence- taking of hostages

3.18 The Bill would create a new offence of taking a person hostage, unless the action was advocacy, protest, dissent or industrial action and was not intended to involve the taking of a hostage or cause harm of a type contained in proposed paragraph 100.1(3)(b). While not widely commented on, the proposal attracted specific support from the Gilbert and Tobin Centre. 19

Exclusion of armed conflict

3.19 The Bill inserts a new subsection100.1(3A) to provide that action will not be a terrorist act if it takes place in the context of, and is associated with, an armed conflict. The armed conflict need not be an international armed conflict. 'Armed conflict' is defined in the new section 100.1(3B) as having the same meaning that it has m Division 268 of the Criminal Code. The amendment garnered general support. 20

Possession of a thing connected with a terrorist act

3.20 Item 5 repeals section 101.4 of the Criminal Code. Section 101.4 prohibits the possession of a thing connected with preparation for, the engagement of a person in, or assistance in a terrorist act, where the person knows or is reckless as to the existence of that connection.

3.21 The Law Council criticise the existing provisions, and argue that:

16 Gilbert and Tobin Centre ofPublic Law, submission 1, pp 3---4.

17 Gilbert and Tobin Centre of Public Law, submission 1, p. 5.

18 ICJA, submission 26, p. 5.

19 See, for example, Gilbert and Tobin Centre of Public Law, submission 1, p. 4 .

20 See, for example, Gilbert and Tobin Centre of Public Law, submission 1, p. 4; Australian Muslim Civil Rights Advocacy Network, submission 15, p. 11 .

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These types of offences, which expose a person to sanction for actions undertaken before he or she has formed any definite plan to commit a criminal act, represent a departure from the ordinary principles of criminal Iaw ... Some may argue that it is necessary to have widely drafted terrorism offences on the statute books so that law enforcement agencies have the room and flexibility to take a proactive and preventative approach. It is

often assumed that no harm will ensue because ultimately the authorities are unlikely to resort to the terrorism provisions without evidence of a threat of the most serious nature. However, the Law Council believes that poorly defined, overly broad offence provisions can never be justified on

the basis that, despite their potentially wide application, they are only intended to be utilised by the authorities in the most limited and serious of circ*mstances. An unacceptable element of arbitrariness and unpredictability arises when the determination of whether or not a person is charged with a terrorist offence under Part 5.3 of the Criminal Code is left to the broad discretion ofprosecutorial authorities. 2 1

3.22 The Gilbert and Tobin Centre make the point that:

The Explanatory Memorandum to the Bill does not give any reasons why this section and not any of the other preparatory offences in Division 101 of the Criminal Code should be repealed. In our opinion, section 101.4 is not unique. Many of the other offences in Division 101 have the same problems as section 101.4. 22

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3.23 The Gilbert and Tobin Centre went on to criticise the vagueness and lack of clear guidance given in the subsection to decision makers, and recommend a review of all of the preparatory offences in Division 101 of the Criminal Code, with an eye to determining whether these offences are effectively targeted to the threat ofterrorism?3

Terrorist organisation regulation and proscription

3.24 As detailed in the previous chapter, the Bill would replace arrangements going to the proscription of an organisation by the Minister. As summarised by the Explanatory Memorandum, the amendments would:

â¢ provide notification, if it is practicable, to a person, or organization affected, when the proscription of an organization is proposed;

â¢ provide the means, and right, for persons and organizations, to be heard in opposition, when proscription is considered;

â¢ provide for the establishment of an advisory committee, to be appointed to advise the Attorney-General on cases that have been submitted for proscription of an organization;

21 Law Council of Australia, submission 14, p. 8.

22 Gilbert and Tobin Centre of Public Law, submission 1, p . 6.

23 Gilbert and Tobin Centre of Public Law, submission 1, p. 6.

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â¢ require the committee to consist of people who are independent of the process of proscribing terrorist organizations, such as those with expertise in security analysis, public affairs, public administration and legal practice;

â¢ require the role of the committee be publicised; and

â¢ allow the committee to consult publicly and to receive submissions from members of the public to assist in their role.

3.25 The Law Council provided a lengthy argument against the current

proscription arrangements, on the basis of a lack of transparency, a denial of natural justice to proscribed organisations, and the perception that mere advocacy of terrorism is grounds for listing. They observe that:

... having now observed the listing provisions in operation for several years, the Law Council questions whether the provisions actually serve any intrinsic law enforcement purpose. Any attempt to understand the law enforcement rationale behind how and when organisations are identified for proscription is frustrated by the opaque and ad hoc manner in which the proscription power has been exercised?4

3.26 AMCRAN took the view that:

proscription is an inherently anti-democratic and draconian measure and we oppose the proscription regime in its entirety. However, we support the amendments in principle as they provide greater safeguards to the proscription process (including an independent advisory committee, notification to the organisation being listed, a means to be heard before being proscribed, consultation)? 5

Discretion to proscribe

3.27 The Law Council opposes the provisions that the Bill seeks to amend, and has done for some time. In supporting the amendments to the extent that they enhance transparency and natural justice, the Council:

... opposed the enactment of the listing provisions when they were introduced ... The basis of that opposition was the view that the Executive should not be empowered to declare that an organisation is a proscribed organisation without:

â¢ prior judicial review and authorisation of the exercise of the power; and

â¢ the opportunity for affected citizens to be heard.

The Law Council maintains its objections to the listing provisions on that basis. 26

24 Law Council of Australia, submission 14, p. 10.

25 AMCRAN, submission 15, p. 14.

26 Law Council of Australia, submission 14, p. 10.

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3.28 The Gilbert and Tobin Centre were concerned at the lack of guidance afforded the Attorney-General in the exercise of their discretion to proscribe, a concern also expressed by the ICJA.27

'Fostering'

3.29 The Gilbert and Tobin Centre had concerns on a number of fronts. These included the breadth of the term 'fostering', which is used in connection with terrorist acts in the current legislation, but which is undefmed.

3.30 The Centre agreed that the term should be deleted from the Code, an outcome achieved by Item 7 of this Schedule.28 Nonetheless, the Bill would still provide for an organisation which 'assists' with a terrorist act to remain within the definition. This came under criticism from the ICJA, on the basis that the term was undefined and hence has the same drawbacks as does 'fostering'.29

Notification process

3.31 The Gilbert and Tobin Centre supported the proposal to establish a notification process for proscribed organisations both before and after their proscription, and were unpersuaded by the Attorney-General's Department's previous argument to the Parliamentary Joint Committee on Intelligence and Security that

'providing notice prior to listing could adversely impact operational effectiveness and prejudice national security'. 30 The Centre's counter-argument was as follows:

First, the proscription of an organisation can never be so urgently required that there is insufficient time for prior notification and consultation to occur. This is because proscription does not have any immediate effect. It merely facilitates the prosecution of individuals for terrorist organisation offences under Subdivision B of Division 102. In addition, quite apart from proscription by the executive, an organisation may in any event be found to be a terrorist organisation by a court under subsection 102 .1(1). Second, the

Statement of Reasons conventionally issued by the Attorney-General' s Department after a regulation is made is based on publicly available details about an organisation. It is therefore difficult to see how disclosing this information to the relevant organisation or its members prior to a regulation being made would prejudice national security.

3 1

27 Gilbert and Tobin Centre of Public Law, submission 1, p. 7; ICJA, submission 26, pp 7- 8.

28 Gilbert and Tobin Centre of Public Law, submission 1, p. 8. The Centre makes other noteworthy criticisms of the definition of'terrorist organisation', particularly in respect of the terms 'advocacy' and 'praise'. The observations are set out on page 8 of the Centre's submission .

29 ICJA, submission 26, p. 5.

30 Gilbert and Tobin Centre of Public Law, submission 1; Attorney-General's Department, submission 10, Parliamentary Joint Committee on Intelligence and Security, Inquily into th e Terrorist Organisation Listing Provisions of th e Criminal Code Act 1995, 2007, p. 13 .

31 Gilbert and Tobin Centre ofPublic Law, submission 1, p. 10.

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Advisory listing committee

3.32 This amendment attracted general support. In its support, proponents considered that it would:

â¢ assist the proscribed organisation and affected persons to understand the reasons for proscription;

â¢ give the community a sense of assurance about controversial proscription decisions;

â¢ educate the community about proscription and therefore improve the deterrence function of proscription;

â¢ ensure that the Listing Advisory Committee has all the information necessary to make recommendations to the Attorney-General; and

â¢ contribute to the strength of accountability mechanisms by providing the community with a template against which to judge the ultimate decision made by the Attorney-Genera1. 32

Appeal to the Administrative Appeals Tribunal

3.33 This item was supported by, among others, the Federation of Community Legal Centres of Victoria and AMCRAN. 33

3.34 This item elicited concern from the ICJA, who took the view that:

... while it is commendable that the government is seeking to heighten its accountability, the power to proscribe organisations should remain in the hands of the Governor-General rather than tribunals and courts as it is a most serious task. Merits review would likely not achieve a result better than advice from the Listing Advisory Committee. 34

3.35 The Gilbert and Tobin Centre took a similar line, and explicitly did not support the item, submitting that:

Merits review by the AA T is inconsistent with our opinion that proscription decisions are more appropriately made by the executive branch of government. Furthermore, merits review is unlikely to be effective given the traditional deference of the courts to the executive branch of government on matters of national security ... building a safeguard onto the front of the proscription process, namely, creating an Advisory Listing Committee, is likely to be more effective than ex post facto merits review.35

32 See, for example, Gilbert and Tobin Centre of Public Law, submission 1, pp 10-11.

33 Federation of Community Legal Centres ofVictoria, submission 19, p. 12; AMCRAN, submission 15, p. 16.

34 ICJA, submission 26, p. 7.

35 Gilbert and Tobin Centre of Public Law, submission 1, p. 11.

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Training with a terrorist organisation

3.36 Currently, the offence of training with a terrorist organisation is a strict liability offence; a prosecutor need not prove that a person knew or was reckless about whether the organisation was a terrorist organisation to successfully convict, the burden of proof being on the defendant to prove otherwise. The amended provision would require knowledge of, or at least recklessness as to whether, an organisation is a terrorist organisation before an offence is committed.

3.37 The Gilbert and Tobin Centre views the current provision as 'particularly problematic', and support the proposed amendment. However, they call for better targeting of the provision to more narrowly focus on conduct that prepares a person for terrorist acts. They point to the recommendations of the Security Legislation Review Committee, and point out that training in the use of office equipment would technically fall under the existing provisions. They suggest that an element of the offence be 'either that the training be connected with a terrorist act or that the training is such as could reasonably prepare the organisation, or the person receiving the training, to engage in, or assist with, a terrorist act'36 The Islamic Council of Victoria raised similar concerns, as did AMCRAN.37

3.38 The Law Council would repeal the section, rather than amend it as the Bill proposes. 38

Providing support to a terrorist organisation

3.39 The Bill would require that 'support' provided to a terrorist organisation be 'material' before it can be successfully prosecuted. 'Material' is defined as not including 'the mere publication of views that appear to be favourable to an organisation or its objectives. The Bill would further require that the person either intends or is reckless as to whether the material support will be used by the organisation to engage in a terrorist act. The_ proposed amendment received general support.39

3.40 A number of submitters saw problems with the current provisions insofar as 'support' is not defined in the Criminal Code, and as was noted by the SLRC in 2006, could be regarded as support that directly or indirectly helps a terrorist organisation engage in a terrorist act, and may even extend to the publication of views that appear to be favourable to a proscribed organisation and its stated purpose.

40 To this end, the

36 Gilbert and Tobin Centre of Public Law, submission 1, p. 12, referring to the Security Legi slation Review Committee, Report of th e Security Legisla tion Review Committee, June 2006, pp 114-118. The lslamic Council of Victoria took a similar view, submission 6, p. 2.

37 Islamic Council of Victoria, submission 6, p. 2; AMCRAN, submission 15, p. 17.

38 Law Council of Australia, submission 14, p. 14.

39 See, for example, Human Rights Law Resource Centre, submission 21, p. 5; Federation of Community Legal Centres of Victoria, submission 19, p. 12.

40 Gilbert and Tobin Centre ofPublic Law, submission 1, p. 13 , referring to the Security Legislation Review Committee, Report of the Security Legislation Review Committee, June 2006, p. 121.

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Gilbert and Tobin Centre consider that the Bill appropriately limits the scope of the offence, and they support the proposed amendment. 41

3.41 The Law Council cited the inquiry by the Hon John Clarke QC into the Haneef case and argued for the repeal of the provisions creating the offence of providing support for a terror organisation, but went on to say:

However, if the section is to remain, the Law Council supports an amendment to the section designed to clarify that the assistance provided must be 'material' assistance and, at the very least, more than the mere publication of views that appear to be favourable to an organisation or its objectives ... the Law Council is of the view that the section should require knowledge rather than recklessness as to whether the organisation was a terrorist organisation.42

3.42 The ICJA supported the amendment but noted that:

... a person can be guilty of the offence if they are reckless as to whether the organisation is a terrorist organisation, or whether the material support or resources provided will be used in such an activity. The ICJA therefore submits that the person should have actual knowledge in order to be able to provide ' material support' and the section should be amended

d. I 43 accor mg y.

Associating with a terrorist organisation

3.43 Under section 102.8 of the Criminal Code, it is an offence to knowingly associate, on two or more occasions, with a member of a listed terrorist organisation or a person who directs and/or promotes activities of a listed terrorist organisation, with the intention of providing support and that support would assist the organisation to expand or continue to exist. The Bill would repeal the provision.

3.44 The Gilbert and Tobin Centre supported the repeal of the provision on two grounds. These were as follows:

First, this offence interferes with fundamental human rights -the freedoms of speech and association - and this interference is disproportionate to the protection of the community from the threat of terrorism. This is because section 102.8 does not properly target the culpable conduct. It is the provision of support to the terrorist organisation that should be criminalised (as per section 102.7 of the Criminal Code), rather than the person' s association with a member of the organisation.

Second, this offence has been identified as a major contributor to the unhelpful perception amongst Australian Muslim communities that they are being targeted in a discriminatory manner by the counter-terrorism laws. This is one of the greatest challenges facing the Commonwealth in achieving an effective counter-terrorism strategy. Terrorism is far more

41 Gilbert and Tobin Centre ofPublic Law, submission 1, p. 13.

42 Law Council of Australia, submission 14, p. 15 .

43 ICJA, submission 26, p. 8.

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likely to emerge from a divided society in which some feel marginalised and disempowered on the basis of their race or religious beliefs. Any factors that may isolate and exclude Muslim communities must be seriously addressed. 44

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3.45 The Law Council concurred, and again drew this committee's attention to the conclusions of the Security Legislation Review Committee, which reported that:

The breadth of the offence, its lack of detail and certainty, along with the narrowness of its exemptions, has led the SLRC to conclude that considerable difficulties surround its practical application. Some of these difficulties include the offences' potential capture of a wide-range of

legitimate activities, such as some social and religious festivals and gatherings and the provision of legal advice and legal representation. Further, the section is likely to result in significant prosecutorial 1

. . 45

comp tcahons.

3.46 For its part, the Law Council argued that:

The Law Council submits that the association offence casts the net of criminal liability too widely by criminalising a person's associations, as opposed to their individual conduct. .. The Law Council is of the view that this is unnecessary because existing principles of accessorial liability already provide for an expansion of criminal responsibility to cover attempts, aiding and abetting, common purpose, incitement and conspiracy. These established principles draw a more appropriate line between direct and intentional engagement m criminal activity and peripheral association. 46

Schedule 2- Amendments to the Crimes Act 1914

Presumption against bail

3.4 7 Item 1 of this Schedule would repeal current section 15AA of the Crimes Act, which provides for a strong presumption against bail for certain offences, so much so that in relation to most terrorism offences a bail authority must be satisfied that exceptional circ*mstances exist to justify bail being granted.

3.48 The proposal to repeal the section received support from the Law Council, which argued that there was no evidence to demonstrate why a reversal of the onus of proof in relation to bail was necessary to aid the investigation or prosecution of terror offences, and that:

No evidence has been put forward, for example, to suggest that persons charged with terrorism offences are more likely to abscond while on bail, re-offend, threaten or intimidate witnesses or otherwise interfere with the investigation. Prior to the introduction of sl5AA, the existing bail

44 Gilbert and Tobin Centre ofPublic Law, submission 1, pp 13- 14.

45 Security Legislative Review Committee, Report of the Security Legislation Review Committee 2006 at paragraph 10.75.

46 Law Council of Australia, submission 14, p. 15 .

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provisions already provided the court with the discretion to refuse bail on a range of grounds, and to take into account the seriousness of the offence in considering whether those grounds were made out. No reason was given as to why these existing provisions were inadequate to guard against any perceived risk to the community in terrorism cases. 47

3.49 The Gilbert and Tobin Centre argued that the proposed amendment goes too far, and that some offences justify the presumption against bail, but that the current arrangements are also unbalanced. Gilbert and Tobin submitted that:

The law in relation to bail is based on the principle that a person should not be deprived of his or her liberty without conviction for a criminal offence. There are, of course, exceptions such as where the prosecution provides evidence that the person might flee the country or destroy evidence or cause further danger to the community. An obligation on the defendant to prove exceptional circ*mstances before bail will be granted undermines the presumption of innocence, and therefore is generally only imposed with respect to offences of the highest degree of seriousness.

Section 15AA ... treats almost all terrorism offences as satisfying this seriousness threshold. Whilst this may be correct in relation to some terrorism offences - for example, the offence in section 101.1 of the Criminal Code of engaging in a terrorist act (which carries a maximum life term of imprisonment) - it is patently incorrect in relation to others - for example, the membership offence in section 102.2 of the Criminal Code (which carries a maximum term of imprisonment of only ten years). 48

3.50 On the whole, however, the proposed amendment was supported. 49

Time limits on detention without charge

3.51 Current section 23CA and 23CB provide for periods of time that are not to be counted when calculating the period of time a person has been held without charge for the purpose of complying with time limits on detention without charge. The provisions therefore have the effect of extending the time in which a person can be held. This measure attracted widespread support.50 One of the periods of so-called 'dead time' is provided for under paragraph 23CA(8)(m) which allows questioning to be 'reasonably suspended or delayed' for a period specified by magistrate or justice of the peace, and for that period not to be counted toward the period the person has been held. The Bill would repeal paragraph 23CA(8)(m), require a person to be informed of their rights, and require any application for an extension of detention to be heard by a judge instead of a magistrate or justice of the peace.

47 Law Council of Australia, submission 14, p. 17.

48 Gilbert and Tobin Centre of Public Law, submission 1, p. 14.

49 See; for example, the Islamic Council of Victoria, submission 6, p. 2; AMCRAN, submission 15, p. 22; ICJA, submission 26, p. 11.

50 See, for example, Islamic Information and Support Centre of Australia, submission 16, p. 3; AMCRAN, submission 15, p. 23; Federation of Community Legal Centres, submission 19, p. 14.

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3.52 The Law Council submitted that, while the current investigation period is nominally capped at 24 hours, this does not operate as a safeguard against prolonged detention without charge because allowance for reasonable 'dead time' means that the 24 hours of questioning may be spread out over a period of weeks. The Council also argued that there is no clear limit in sub-paragraph 23CA(8)(m) and section 23CB on how many times police can approach a judicial officer to specify certain time periods as dead time, and that the threshold test that police need to satisfy in order to obtain an extension of the detention period is low. The conduct of ongoing routine investigative activities is enough to justify prolonged detention. 5 1

3.53 Furthermore, the Council submitted that the time taken to make and dispose of a dead time application automatically further extends the dead time. Therefore, if the judicial officer hearing a dead time application under section 23CB fails to make a decision on the spot, and instead adjourns the matter, even for a period of days, then this time itself counts as dead time. 52

3.54 This creates the real risk that detained suspects or their legal representatives may be deterred from raising points of law or challenging evidence on the basis that it may delay the presiding judicial officer's pronouncement on the application.

3.55 To this end, the Law Council agreed with the Gilbert and Tobin Centre that a finite limit should be placed on how long a person can be held without charge. Gilbert and Tobin submitted that 48 hours would be a reasonable period.53 As such, neither the Law Council nor Gilbert and Tobin supported the repeal of paragraph 23CA(8)(m), but did endorse proposed section 23DA, which would require applications to be heard by a judge. 54 In addition, the Law Council recommended the amendment of sections:

â¢ 23CB to ensure police only have one opportunity to apply to a judicial officer to declare a specified period as reasonable dead time for the purposes of calculating the investigation period;

â¢ 23CB to preclude a judicial officer from adjourning an application made under section 23CB for more than a specified number of hours, or alternatively, amend sub-paragraph 23CA(8)(h) to provide that any period of adjournment in excess of a certain number of hours is not dead time and therefore must be included in the calculation of the investigation period;

â¢ 23CB and 23DA to require that if a suspect is not legally represented when an application is made under section 23CB or section 23DA, the police should be required to produce the suspect in person so that the judicial officer determining the application can satisfy him or herself that the suspect

51 Law Council of Australia, submission 14, p. 20 .

52 Law Council of Australia, submission 14, p. 20 .

53 Law Council of Australia, submission 14, p. 21.

54 Gilbert and Tobin Centre of Public Law, submission 1, p. 16. The Law Council also supported this amendment, but expressed a preference for applications to go to a Supreme Co urt Judge.

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understands the nature of the application and has been given his or her opportunity to be heard on the application;

â¢ Amend section 23CB to require that applications must be made to a Supreme Court Judge, or at least a judicial officer, rather than permitting such applications to be determined by a justice of the peace or bail justice. 55

Schedule 3 -Amendments to the Australian Security and Intelligence Organisation Act 1979

Reduction in maximum length of detention

3.56 As described in the previous chapter, amendments to the ASIO Act would reduce the maximum period a person can be held for questioning under the Act from 7 days to 1 day. This measure attracted widespread support.56 The Gilbert and Tobin Centre submitted that:

It is not acceptable in a liberal democracy for a State police force to detain people in secret for several days, nor should it be acceptable for intelligence agencies like ASIO. No other comparable jurisdiction has enacted laws pennitting the detention of citizens not suspected of any crime. ASIO's detention power is unnecessary and unjustifiable and should be repealed. While the fact that this power has not been used in the seven years of its existence points to the restraint and responsibility of the members of ASIO, it may also be said to provide clear evidence that it is unnecessary. 57

3.57 At the committee's public hearing, Ms Emily Howie from the Human Rights Law Resource Centre submitted in respect of the current ASIO detention provisions that her organisation:

[S]upport[s] the amendments in the bill before the committee, particularly because currently a person can be detained without charge under an ASIO warrant for up to 168 hours and a separate warrant can be issued at the end of that time if new material justifies it. This year the United Nations Human Rights Committee has stated that these provisions affect people's rights to liberty and security of the person and that, to the extent that they can affect people's ability to communicate with counsel of their own choosing, they also impinge upon the right to a fair trial. The ASIO detention provisions have also being considered by the UN Committee Against Torture, which has said that, to the extent that these provisions infringe people's rights to take proceedings to court to determine the lawfulness of their detention, they are in breach of article 2 of the Convention Against Torture. 58

55 Law Council of Australia, submission 14, p. 22.

56 See, for example, Human Rights Law Resource Centre, submission 21, p. 5; Federation of Community Legal Centres of Victoria, submission 19, p. 18; AMCRAN, submission 15, p. 25 .

57 Gilbert and Tobin Centre of Public Law, submission 1, p. 17.

58 Ms Emily Howie, Committee Hansard, 22 September 2009, pp 25-26.

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3.58 Dr Patrick Emerton, representing the Federation of Community Legal Centres of Victoria, considered the current ASIO provisions to be inappropriate, and that:

[T]he vesting of coercive investigatory powers in a body that is not a police force is at odds with some of the fundamentals of our constitutional tradition. It has consequences that then play out on the ground in an adverse way in respect of community members. They get policed by ASIO, but ASIO is not a body that conducts itself with the norms of a police force. They do not have the same rights in relation to ASIO officers that they have in relation to police officers and there are not the same constraints of publicity and accountability on ASIO that operate on police officers both as

a matter of law and the long tradition of the constabulary. For those reasons we remain opposed to the vesting in ASIO of coercive powers of the sort that that part of the ASIO Act gives them. 59

3.59 The Law Council supported the direction taken in the proposed amendments, but would prefer to see the repeal of the whole of the relevant Division of the Act, and an alternative approach taken which:

â¢ limits questioning to four hours with a four hour extension;

â¢ requires judicial approval for any further extension; and

â¢ entitles the subject to legal representation.60

3.60 A number of other submitters also called for ASIO's questioning and detention powers to be repealed in their entirety. 61

Other provisions

3.61 Other amendments would repeal provlSlons which allow a detainee to be questioned even in the absence of their lawyer, and in the absence of their parent, guardian or other representative if that person is deemed to be overly disruptive. The offence of disclosing operational information within 2 years of learning the information as a result of the issue of a warrant would also be repealed.

3.62 The Gilbert and Tobin Centre argued for the explicit recognition of a right to take advice prior to being questioned, for the preservation of lawyer/client confidentiality, against the ability of ASIO to remove a representative for being overly disruptive, and against the offence of disclosing operational information.

59 Dr Patrick Emerton, Committee Hansard, 22 September 2009, p. 8.

60 Law Council of Australia, submission 14, p. 24.

61 See, for example, Australian Islamic Mission, submission 10, p. 1; Ms Christie Elemam, submission 4, p. 1.

62 Gilbert and Tobin Centre ofPublic Law, submission 1, p. 17, endorsing a previous submission to an inquiry of the Parliamentary Joint Committee on Intelligence and Security on this subject.

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Schedule 4 - repeal of the National Security Information (Criminal and Civil Proceedings) Act 2004

3.63 The National Security Information (Criminal and Civil Proceedings) Act 2004 deals with the disclosure during judicial proceedings of information that it is deemed might prejudice national security. This Bill would repeal it.

3.64 The Gilbert and Tobin Centre do not support the repeal of the Act, but call instead for a review of its terms by an independent reviewer. The review is warranted by criticism of the Act by judicial officers and practitioners, which the Centre claim is inefficient and (in part) unworkable because of its requirement for security clearance of practitioners and judicial staff, and other requirements. 63

3.65 The Law Council would not repeal the Act either, instead calling for amendments to repeal the security clearance process contained in section 39, or in the alternative, amend the section so as to give the Court a greater role in both determining whether a notice should be issued and reviewing a decision to refuse a legal representative a security clearance. The Council sets out a possible method of achieving this outcome in its submission. 64

3.66 On the other hand, the Federation of Community Legal Centres of Victoria supports the proposed repeal, submitting that:

The Act allows the Attorney General to closely monitor and regulate court processes in both criminal and civil proceedings. We see this as a clear breach of the doctrine of the separation of powers which is a comer stone of

our legal system. The act gives extensive power to the government to control who participates in legal proceedings. The regime of security clearances is inconsistent with the principle of a judiciary which is independent from government. We submit that the power to determine how proceedings will be run should rest with the court. The regimes constructed in the Act for closed hearings, Ministerial certificates and security clearances are not the only method of dealing with classified and security sensitive information. The courts should be allowed to make a broad range of orders to protect such information. 65

Conclusion

3.67 As stated at the beginning of this chapter the committee makes no formal recommendation about the passage of this Bill but has used this inquiry process as a mechanism to further the public discussion on ways to improve laws relating to terrorist activity in Australia. To this end, the committee will forward to the Attorney General copies of this report, along with Hansard transcripts and submissions to the inquiry so that they might assist him in progressing the consultation currently underway on the national security legislation framework. In particular, the committee will draw the Attorney's attention to the issues, arguments and proposals made in this

63 Gilbert and Tobin Centre of Public Law, submission I, p. 18.

64 Law Council of Australia, submission 14, p. 27.

65 Federation of Community Legal Centres ofVictoria, submission 19, p. 23.

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Bill, and about which considerable comment was made by submitters, in respect of the ASIO Act and the proscription regime.

Senator Trish Crossin Chair

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ADDITIONAL COMMENTS BY THE AUSTRALIAN GREENS 'Terrorist crime, serious as it is, does not threaten our institutions of government or the existence as a civil community. The real threat to the

life of the nation, in the sense of a people living in accordance with its traditional laws and political values, comes not from terrorism, but from laws such as these. That is the true measure of what terrorism may achieve. It is for parliament to decide whether to give the terrorists such a victory.' 1

1.1 The Australian Greens submitted the Anti-Terrorism Laws Reform Bill to the scrutiny of the Senate and its Legal and Constitutional Committee as a means of reforming the most egregious of the hastily enacted laws that seriously curtail human rights and fair trials in the years after the attacks on September 11, 2001. These laws urgently need to be reviewed to determine which merit retention and modernisation,

and which should be struck from our statutes as embarrassing and offensive mistakes.

1.2 We acknowledge the impending debate on the establishment of the National Security Legislation Monitor who will undertake this reviewing role. The proposals in the Anti-Terrorism Laws Reform Bill are those which we believe lack the merits of even being deserving of review by this busy office.

1.3 The Greens join others on the Committee in hoping that the expertise and debate generated by this inquiry will feed into the government's discussion paper process on the anti-terrorism laws.

1.4 The government should note the high degree of agreement among the submitting parties in supporting the direction of this Bill, and that legal experts and organisations making submissions to the Attorney's discussion paper process have also commended the approaches taken in this Bill.

1.5 A close comparative reading of the Anti-Terrorism Laws Reform Bill and the Government's discussion paper and Exposure Draft reveals less common ground than has been suggested. The key points of divergence are outlined below.

â¢ The government's paper extensively broadens rather than narrows the definition of a terrorist act despite the advice of the Sheller Committee: The Greens bill very carefully considers the statutory definition of a 'terrorist act' and brings it into line with internationally accepted definitions. Some of the terminology used within the Criminal Code in relation to terrorism offences is inadequately defined and vague. Treating the definition of terrorism in legislation as a broad-brush policy manifesto enlivens far

Lord Hoffman, A v Secretary of State for the Home Department.

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reaching and heavily punishable offences in Division 101-103 of the Criminal Code.

â¢ The government exposure draft leaves broad ranging sedition offences in place, giving them the new name of 'urging violence'. Sedition, or offences formerly known as sedition, are not necessary when incitement or other public order offences already exist on our statutes. They remain unacceptable in societies where the right of citizens to criticise their government is viewed, indeed celebrated, as an essential component of democratic life.

â¢ The government exposure draft proposes an increase in the intrusion of the Attorney into the judicial system under the National Security Information Act. The Greens strenuously oppose this Act because it breaches the doctrine of separation of powers and requires security clearance for lawyers while providing no justification. Requiring security clearance for lawyers threatens the right to a fair trial and limits the pool of lawyers permitted to act in cases. It also threatens the independence of the legal profession by allowing the executive arm of government to effectively 'vet' and limit the class of lawyers who are able to act in matters which might involve sensitive information.

By undermining the independence of the legal profession, the right to an impartial and independent trial with legal representation of one's choosing is undermined. This Act permits for closed court proceedings in certain circ*mstances for terrorism cases, and provisions relating to the designation of evidence as 'secret'. Accused persons can have evidence led against them without the ability of their counsel to evaluate the evidence. Even in the absence of such practices, the threat of their invocation hangs over legal proceedings for as long as the NSI Act remains in force.

â¢ The government exposure draft proposes a seven day 'dead time' limit whereas this Bill proposes 24 hours as reasonable time to overcome delays associated with communicating with different time zones to verify information. Other legal experts providing evidence to the inquiry contend that 48 hours should be the maximum.

â¢ As the Committee notes in its report, the Attorney's Exposure Draft leaves ASIO's enhanced powers untouched. Australians continue to be very concerned about the coercive, investigatory, police-like powers granted to an intelligence agency that does not have the same accountability or publicity as a properly constituted police force.

â¢ The Attorney's exposure draft does not address the myriad of problems revealed by the current process used to proscribe an organisation or individual, which was universally condemned through this Inquiry, and the suggestion of an Advisory Committee universally supported. In fact, the government's Bill extends the duration of each listing, thus reducing the frequency of review.

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1.6 Since the implementation of the controversial counter terrorism laws there have been several rigorous inquiries and detailed reports providing specific recommendations for reform.

1.7 While the Australian Greens were disappointed that it deepens rather than reverses aspects of the Howard-Ruddock terror laws, we commended the Attorney General for providing an opportunity for public comment on the 448-page National Security Legislation Discussion Paper and encouraged community engagement.

1.8 The Greens have also supported the speedy establishment of the promised reviewer of terrorism laws - indeed, we supported the passage of such an office, in stronger form, through the Senate in late 2008. This person is yet to be appointed, and the proposal that it be a part time position supported by two staff is absurd given the huge expectation on this office, and the daunting backlog of poorly drafted, draconian legislation that this office will confront.

1.9 Australia's parliament and community did not get an opportunity to hold a thorough and considered debate over the terrorism laws when they were introduced; nor did they consent to the substantial reallocation of resources away from healthcare, environmental protection and education to carelessly defined security imperatives and the entrenchment of a massive internal surveillance effort.

1.10 Now is the time for this thorough and considered debate about methods for reducing the risk of terrorist violence while strengthening our democracy and upholding the values which these laws were supposed to defend. We commend this bill as an important part of furthering this debate.

1.11 Finally, I wish to record my thanks to the Committee and its hard working secretariat for the constructive way in which all members engaged in this inquiry.

Senator Scott Ludlam Australian Greens

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330

Submission Number

APPENDIX 1 SUBMISSIONS RECEIVED

Submitter

Gilbert + Tobin Centre of Public Law

Name Withheld

Jamal Daoud

Christie Elemam

Ken McKinnon

Islamic Council of Victoria

Russo Lawyers

Mona Helal

Ghayass Sari

Australian Islamic Mission Inc

Lawrence McNamara

Muslim Student's Association of Victoria

Kaled Elhassan

Law Council of Australia

Australian Muslim Civil Rights Advocacy Network (AMCRAN)

Ahlus Sunnah Wal Jama'ah Association

David Keep

Attorney-General's Department

Federation of Community Legal Centres (Vic) Inc

Marilyn Shepherd

Human Rights Law Resource Centre

W aseem Lodhi

Libery Victoria (Victorian Council for Civil Liberties)

Asem Judah

Berhan Ahmed

The International Commission of Jurists Australia

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ADDITIONAL INFORMATION RECEIVED

1 "Anti-Terrorism Laws: A Guide for Community Lawyers" - provided by Dr Patrick Emerton, Wednesday 23 September 2009

332

APPENDIX2

WITNESSES WHO APPEARED BEFORE THE COMMITTEE

Sydney, Tuesday 22 September 2009

DO NOV AN, Ms Helen, Co-Director, Criminal Law and Human Rights Branch Law Council of Australia

EMERTON, Dr Patrick, Member, Anti-Terrorism Laws Working Group Federation of Community Legal Centres (Victoria)

HERMAN, Mr Jack Richard, Executive Secretary Australian Press Council

HOWIE, Ms Emily, Senior Lawyer Human Rights Law Resource Centre

LYNCH, Dr Andrew, Director Gilbert and Tobin Centre of Public Law

McDONALD, Mr Geoffrey Angus, First Assistant Secretary, National Security Law and Policy Division Attorney-General's Department

McGARRITY, Ms Nicola, Director, Terrorism and Law Project Gilbert and Tobin Centre of Public Law

McKINNON, Professor Ken, Chairman Australian Press Council

NANDAGOP AL, Ms Prabha, Secondee Lawyer Human Rights Law Resource Centre

WILLIAMS, Professor George Private Capacity

WILLING, Ms Annette Maree, Assistant Secretary, Security Law Branch, National Security Law and Policy Division Attorney-General's Department

WOOD, Mr John, Board Member Australian Muslim Civil Rights Advocacy Network

333

334

w w (]1

Schedule number

(Criminal Code Act)

Item number

1,2

3,4

APPENDIX3

SUMMARY OF AMENDMENTS

Offence or provision Current Summary of proposed amendment

Offence of Sedition Repeal

Definition of 'terrorist terrorist act means an action or threat of terrorist act means an action where: act' action where: (a) the action falls within subsection (2)

(a) the action falls within subsection (2) and does not fall within subsection (3) or subsection (3A); and

and does not fall within subsection (3); (b) the action is done with the intention and of:

(b) the action is done or the threat is â¢ coercing, or influencing by made with the intention of advancing a intimidation, the government of political, religious or ideological cause; the Commonwealth or a State, and Territory or foreign country, or of

made with the intention of either

country; or â¢ intimidating the public or a

â¢ coercing, or influencing by section of the public .

intimidation, the government of the Commonwealth or a State, (2) Action falls within this subsection if Territory or foreign country, or of it: part of a State, Territory or (a) causes a person's death; or

foreign country; or (b) endangers a person's life, other than

w w Ol

Page 40

â¢ intimidating the public or a section of the public.

(2) Action falls within this subsection if it:

(a) causes serious harm that is physical harm to a person; or

(b) causes serious damage to property; or

(d) endangers a person's life, other than the life of the person

taking the action; or

(e) creates a serious risk to the health or safety of the public or a

section of the public; or

(f) seriously interferes with, seriously disrupts, or destroys, an

electronic system including, but not limited to:

(i) an information system; or

(ii) a telecommunications system; or

(iii) a financial system; or

(iv) a system used for the delivery of

the person taking the action; or (c) causes serious harm that is physical harm to a person; or (d) involves taking a person hostage; or

(e) creates a serious risk to the health or safety of the public or a section ofthe public.

(3) Action falls within this subsection if it: (a) is advocacy, protest, dissent or industrial action; and (b) is not intended:

â¢ to cause serious harm that is physical harm to a person; or â¢ to cause a person's death; or â¢ to endanger the life of a person,

other than the person taking the action; or â¢ to involve taking a person hostage.

(3A) Action falls within this subsection if it takes place in the context of, and is associated with, an armed conflict (whether or not an international armed

conflict).

essential government

services; or

(v) a system used for, or by, an essential public utility; or

(vi) a system used for, or by, a transport system.

(3) Action falls within this subsection if it:

(a) is advocacy, protest, dissent or industrial action; and

(b) is not intended:

â¢ to cause serious harm that is physical harm to a person; or

â¢ to cause a person's death; or â¢ to endanger the life of a person, other than the person taking the action; or

â¢ to create a serious risk to the health or safety of the public or a section ofthe public.

5 Possession of things Possession of things connected with the Repeal connected with a preparation for, the engagement of a

(,.)

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6, 8

terrorist act

Definition of 'terrorist organisation'

Proscription of an organisation

person in, or assistance in, a terrorist act. Recklessness · in respect of a connection between a possession and the uses for which it is intended is also an offence,

as is possession or recklessness even if a terrorist act does not occur.

Minister must be satisfied on reasonable grounds that an organisation is directly or indirectly engaged in, preparing, planning, assisting in or fostering the

doing of a terrorist act ( even where such an act has not occurred or will not occur), or are advocating the doing of such an act. Must brief Leader of the Opposition on proposed regulation.

'Sunset' clause limiting the listing of an organisation by regulation to no more than 2 years, but can be subsequently re-listed. Listed organisation or individual

may make application to be de-listed, and that the Minister must consider the application. The Minister may take any matter into consideration when

considering the application to be de-listed.

Minister must ensure the organisation is notified, if it is practical to do so, of proposed listing and the right to oppose it. Minister m1,1st also publish a notice that

the regulation has been made and the consequenqes of the listing for the members of the organisation. The Minster must also be satisfied on reasonable grounds that the organisation is directly or

indirectly engaged in preparing, planning, assisting in the doing of a terrorist act or advocates the doing of a terrorist act. The decision to list would be reviewable by the · Administrative Appeals Tribunal.

Minister required to seek advice and take into account recommendations of an Advisory Committee in making listing decision. Advisory Committee

empowered to publicise its role, engage in public consultations or do anything else it considers necessary in carrying out its

w w co

. '

....

10 Training

11-15 Support

16 Association

Strict liability offence of receiving training from, or providing training to, a terrorist organisation, regardless of knowledge of that fact.

Offence where a person intentionally provides support to an organisation they know to be a terrorist organisation, or they intentionally provide support to a terrorist organisation and are reckless

about whether it is such an organisation.

Offence where a person intentionally associates on 2 or more occasions with a member or promoter of a terrorist organisation, where the association provides support to the organisation, and

that the person intends for that support to take place. Separate offence, requiring only 1 occasion of association, where a person has previously been

Page 43

function. Committee would consist of at least 5 members appointed by the Minister, holding office on a part-time basis for a specified period of no more than 3 years .

Offence if training is given or received when the organisation is known to be a terrorist organisation, or when the person is reckless about whether the organisation

is a terrorist organisation.

The support provided.would be required to be 'material support', excluding the mere publication of views which appear favourable to the organisation.

Repeal·

Page 44

convicted under the section.

2 1 Presumption against Bail authority should grant bail only in Repeal

(Crimes bail 'exceptional circ*mstances' when the

Act) ·charge is a terrorism, treason, sedition,

treachery offence, or a commonwealth offence causing death, regardless of intention to do so.

2-7 Powers of detention The maximum period of detention of a The maximum period of detention may be person detained in relation to a terrorism extended for specific purposes already offence may be extended, by a listed in the legislation, and only by a Magistrate, Justice of the Peace, of Federal Court Judge. The person must Federal Court Judge, for any 'reasonable also be informed of their rights at all

time' during which questioning is material times. 'reasonably suspended or delayed'. The extension period is uncapped by the legislation.

Detainees are not specifically required to be informed of their rights.

3 (ASIO) 1-4 Detention and Minister may only authorise request for Would require that second offence be

questioning warrant to detain and question a person committed, after release from first previously the subject of a similar detention period, before new warrant warrant when satisfied that new or could be authorised by Minister or issued materially different information is at by authority. Questioning of the person

hand to justify new warrant. under the second warrant must not relate

to the offence about which the first

I warrant was sought.

5,7 Period of detention Maximum 168 hours Maximum 24 hours

6 Outside contact A person detained under this part of the Repeal

Act may not contact anyone while in custody

8 Legal representative Detained person may be questioned Repeal

without legal representative

9 Undue disruption Parent, guardian or other representative Repeal

of a detained person may be removed from questioning if conduct deemed

VJ unduly disruptive

......

10 Disclosure of Offence where previously detained Repeal

information person discloses operational information they learned through the issue of a warrant, within 2 years of the warrant being in force

11 Information for legal Regulations may be made to regulate Repeal

representatives access to information by the legal representative of a person seeking a remedy in relation to a warrant issued under the Act.

4 (NSI 1 Entire Act Relates to disclosure of information Repeal

Act) during Commonwealth criminal or any

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civil proceedings where the disclosure is likely to prejudice Australia's national security.

The Senate

Legal and Constitutional Affairs

Legislation Committee

Australian Citizenship Amendment (Citizenship Test

Review and Other Measures) Bill 2009

September 2009

343

ISBN: 978-1-74229-153-6

This document was printed by the Senate Printing Unit, Department of the Senate, Parliament House, Canberra.

344

MEMBERS OF THE COMMITTEE

Members

Senator Patricia Crossin, Chair, ALP, NT

Senator Guy Barnett, Deputy Chair, LP, TAS

Senator David Feeney, ALP, VIC

Senator Mary Jo Fisher, LP, SA

Senator Scott Ludlam, AG, WA

Senator Gavin Marshall, ALP, VIC

Substitute Member

Senator Sarah Hanson-Young, AG, SA replaced Senator Scott Ludlam for the Committee's Inquiry into the Australian Citizenship Amendment (Citizenship Test Review and Other Measures) Bill2009

Participating Members

Senator Concetta Fierravanti-Wells, LP, NSW

Secretariat

Mr Peter Hallahan

Mr Tim Watling

Ms Cassimah Mackay

Suite Sl. 61

Parliament House

Secretary

Principal Research Officer

Executive Assistant

Telephone: (02) 6277 3560

Fax: (02) 6277 5794

CANBERRA ACT 2600 Email: legcon.sen@aph.gov.au

Ill

345

346

TABLE OF CONTENTS

MEMBERS OF THE COMMITTEE ............................................................. iii

RECOMMENDATIONS ................................................................................. vii

CHAPTER 1 ........................................................................................................ 1

INTRODUCTION .................................................................................................... !

Conduct of the inquiry .. ..... ..... ...... .. ........... ................................... .......................... 1

Acknowledgement ............................................................................. ......... .. .......... 2

Note on references ... ... ..................... ... .. ................... ............. .............. .. ........ .. .. .... .. 2

CHAPTER 2 ........................................................................................................ 3

PROVISIONS ........................................................................................................... 3

CHAPTER 3 ........................................................................................................ 5

ISSUES ...................................................................................................................... 5

Exception for physical or mental incapacity resulting from torture or trauma outside Australia ..... .. ........................ .. .... ..... ....... .................. ... ...... ... ......... ...... ... ... . 5

Citizenship applications from minors: subsection 21(5) amendments ................. 10

COALITION SENATORS' DISSENTING REPORT .................................. 15

ADDITIONAL COMMENTS BY THE AUSTRALIAN GREENS ............ 21

APPENDIX 1 ..................................................................................................... 25

SUBMISSIONS RECEIVED ................................................................................. 25

APPENDIX 2 ..................................................................................................... 27

WITNESSES WHO APPEARED BEFORE THE COMMITTEE ................... 27

347

348

RECOMMENDATIONS

Recommendation 1

3.35 The committee recommends that the Bill be passed.

VII

349

350

CHAPTER! INTRODUCTION

1.1 On 25 June 2009, the Senate referred the Australian Citizenship Amendment (Citizenship Test review and Other Measures) Bill 2009 to the Senate Legal and Constitutional Affairs Legislation Committee for inquiry and report by 7 September 2009.

1.2 The Bill was introduced in the Senate on 25 June 2009 by Senator the Hon. Penny Wong, Minister for Climate Change and Water, at the request of Senator the Hon. John Faulkner, Minister for Defence, and Senator the Hon. Chris Evans, Minister for Immigration and Citizenship.

1.3 The Bill seeks to amend the Australian Citizenship Act 2007 to make changes to the Australian Citizenship Program, and in particular, the citizenship test implemented by the former government. $123.6 million was [provided over 5 years in the 2007/08 Budget to establish and implement the test. 1 According to the Explanatory memorandum, the Bill aims to achieve the following, much of which was recommended by the Australian Citizenship Test Review Committee (CTRC). The Bill:

â¢ provides that certain applicants may be eligible for citizenship without sitting the citizenship test if, at the time of application, they have a physical or mental incapacity that is as a result of suffering torture or trauma outside Australia;

â¢ provides that the citizenship test must be successfully completed within a specified period;

â¢ provides that to be eligible for citizenship by conferral, applicants who are under 18 years of age must be permanent residents at both the time of application and the time of decision; and

â¢ streamlines the application process so that citizenship testing and citizenship application would usually take place in one visit to immigration offices.

The committee notes that both hard and electronic copies of the Explanatory Memorandum for the Bill contained misnumbered Item numbers, and understands that this error will be rectified at third reading stage.

Conduct of the inquiry 1.4 The committee advertised the inquiry in The Australian newspaper on 1 July 2009, and invited submissions by 31 July 2009. Details of the inquiry, the Bill, and associated documents were placed on the committee's website. The committee also wrote to over 100 organisations and individuals inviting submissions.

Answer to Legal and Constitutional Affairs Estimates Committee question on noti ce, Immigration and Citizenship portfolio, received 17 Jul y 2009.

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1.5 The committee received 21 submissions which are listed at Appendix 1. Submissions were placed on the committee's website for ease of access by the public.

1.6 The committee held a public hearing in Melbourne on 27 August 2009, A list of witnesses who appeared at the hearings is at Appendix 2 and copies of the Hansard transcript are available through the Internet at http://aph.gov.au/hansard.

Acknowledgement

1. 7 The committee thanks the organisations and individuals who made submissions and gave evidence at the public hearing.

Note on references

1.8 References in this report are to individual submissions as received by the committee, not to a bound volume. References to the committee Hansard are to the proof Hansard: page numbers may vary between the proof and the official Hansard transcript.

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CHAPTER2 PROVISIONS

2.1 Item 1, 3 and 4 provide that certain people who have suffered torture or trauma outside Australia and who have a physical or mental incapacity (which need not be permanent) may meet the requirements for citizenship by conferral. The word 'permanent' is removed (by Item 1) from the simplified outline in section 19G to ensure that the explanation is consistent with the amendments made by items 25 and 27 (items 3 and 4).

2.2 Taken together, the amendments provide that a person will satisfy the requirements for application for citizenship under subsection 21 (3) if the applicant has a physical or mental incapacity at the time the person makes the application, as a result of the person having suffered torture or trauma outside Australia and the person:

â¢ is not capable of understanding the nature of the application at the time the person made the application; or

â¢ is not capable of demonstrating a basic knowledge of the English language at that time; or

â¢ is not capable of demonstrating an adequate knowledge of Australia and of the responsibilities and privileges of Australian citizenship at that time.

2.3 The Explanatory Memorandum explains that the new provisions have been inserted in response to a recommendation of the CTRC, which considered that the current exemption criteria do not take into consideration the effect of severe and chronic symptoms resulting from the experience of torture and trauma. The purpose of new subsection 21 (3B) is to ensure that certain people who have a physical or mental incapacity as a result of having suffered torture or trauma outside Australia are exempted from the requirement to sit a citizenship test.

2.4 Item 2 replaces existing subsection 21 (2A), removing the current requirement that the citizenship test be successfully completed prior to application for citizenship is made. Instead, the new provision will require that an eligible person successfully takes the test and completes it within a prescribed period. The amendment is consistent with the amendment made by item 32, which provides that the Minister may determine the period within which a person must start the test and for the period within which a person must complete the test, and with the recommendations of the CTRC that the process of applying for citizenship and sitting the test be streamlined. By removing the requirement to sit and successfully complete the test before applying for citizenship, the amendments will allow eligible applicants in many circ*mstances to meet all the requirements for citizenship on the same day, including successfully completing the test. However, to ensure that a person will not be eligible for

Explanatory Memorandum, p. 6.

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Page4

citizenship if they are unable to successfully complete the test within a reasonable period of time, the amendments allow the Minister to specify a period of time within which a person must start the test and complete the test.

2.5 Item 5 repeals the current subsection 21 ( 5) and substitutes a new subsection. The current subsection provides that a person is eligible to become an Australian citizen if the Minister is satisfied that the person is under 18 years of age at the time the person made the application, whereas the new provision provides that a person is eligible to become an Australian citizen if the Minister is satisfied that the person is under 18 years of age at the time of application and is a permanent resident at the time of application and at the time of the Minister's decision. The implication of this amendment would be to require an applicant for Australian citizenship who is under

18 to hold a permanent resident visa before their application can be proceeded with.

2.6 Item 6 would allow the Minister to specify a time period within which an applicant for citizenship by conferral must start and complete the test, with a view to streamlining the application process in line with the CTRC's recommendations.

2. 7 Item 7 amends provisions relating to the requirement to pledge commitment to Australia, and reflects the amendments made in Items 1, 3 and 4. Under the amendment, an applicant will not be required to pledge commitment to Australia if they have suffered physical or mental trauma outside Australia, and meet one or more of the conditions set out under paragraph 2.2 of this chapter.

2.8 Item 8 relates to the charging of consistent application fees, in the context of the amendments to section 21. Item 9 relates to application, and makes provision for persons who successfully sat a citizenship test prior to the commencement of the amendments to be excused from sitting another test should their application for citizenship be made after the commencement of the amendments.

354

CHAPTER3 ISSUES

3.1 The Bill attracted general support from most submitters, primarily through its recognition of at least some of the difficulties faced by applicants for citizenship who have suffered hardship before their arrival in Australia. 1

3.2 The main issues that arose during the inquiry went to:

â¢ the scope of the exception to the requirement to take the Citizenship Test (the test) as proposed in the Bill; and

â¢ the impact of the proposed amendments for citizenship applications by minors. This chapter addresses each issue in tum.

Exception for physical or mental incapacity resulting from torture or trauma outside Australia

3.3 Proposed subsections 21(3A) and (3B) would amend existing arrangements which permit a person with permanent physical or mental incapacity resulting in the person's inability to understand the nature of their application to become an Australian citizen without sitting the test. The new provisions would, subject to other conditions, bring those suffering from physical or mental incapacity as a result of having experienced torture or trauma outside Australia within the scope of the exception to the requirement for the test. The incapacity need not be permanent, and need only impair the applicant's understanding of the nature of their application, basic knowledge of English, of their knowledge of the responsibilities and privileges of Australian citizenship in order to qualify under the exception.

3.4 The committee was told by Professor Kim Rubenstein, who sat on the Citizenship Test Review Committee (CTRC) referred to in earlier chapters, and the recommendations of which underpinned the proposed exception, that the content of proposed subsection 21(3B) was different from that recommended by the review

committee. The most notable effect of the wording recommended by the review committee would have been to broaden the class of persons who could be excused from sitting the citizenship test beyond those who had suffered torture or trauma to those who were unable to understand the nature of their application, the right and

Support for the Bill was very often coupled with criticism of the Citizenship Test. See, for example, Newcomers Network, submission 5, p. 1; Chief Minister for the Northern Territory, submission 17, p. 1; Refugee Council of Australia, submission 10, p. 2; Uniting Justice, submission 4, p. 2; Federation of Ethnic Communities' Councils of Australia, submission 1, p.

1; Ms Zoe Anderson, proof committee hansard, 27 August 2009 , p. 2. A notable exception to the general support received for the Bill was Mr Bob Such MP, Member for Fisher, submission 20.

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responsibilities of citizenship, or to basically grasp English, because of a mental or. physical problem. 2

In support of her position, Professor Rubenstein argued that:

Mental health is the condition, as opposed to how the mental health condition was caused, and mental health problems are experienced by people other than trauma and torture victims. My submission to this committee would be that that, as a matter of principle, people who reside permanently in Australia, who are connected to Australia sufficiently and who in every other respect satisfY citizenship requirements but by virtue of their mental health are unable to take the test should not be precluded from becoming Australian citizens.3

3.5 The desire to broaden the exception was a common one. While most

submitters who addressed this issue praised the introduction of the exception, its scope was criticised as being too narrow. The Refugee and Immigration Legal Centre called for the complete exemption of refugees and humanitarian entrants from the requirement to sit the test.

The Immigration Advice and Resource Centre (IARC),

which submitted jointly with the Refugee Advice and Casework Service (RACS) summarised the view of a number of submitters when it argued that:

There are especially vulnerable and disadvantaged sub groups within the broader migrant community in Australia - including in particular refugees and humanitarian entrants- who will not always fall [within] the narrow exception provided for .. . [M]any refugees and humanitarian entrants, for example, may have suffered persecution in their countries of origin, which falls short of the legal definition of torture. Similarly many may suffer from psychological injuries resulting from past experiences, which fall short of trauma in the clinical sense. Yet such past experiences and the continuing psychological after-effects may well impact on the relevant individual's ability to learn and process new material - such as a new language and concepts associated with the rights and obligations of citizenship - and successfully complete an exam in a formal and potentially stressful environment. 5

3.6 IARC and RACS also listed some of the specific experiences and

circ*mstances that could impinge on a person's ability to perform in an examination. These included:

â¢

Experiences of discrimination and abuse and the related after-effects;

Experiences of prolonged separation from families;

Long periods of uncertainty while awaiting resolution of immigration status;

Physical or mental disabilities; 6

Professor Kim Rubenstein, proof committee hansard, 27 August 2009, p. 25.

Professor Kim Rubenstein, proof committee hansard, 27 August 2009, p. 25 .

Refugee and Immigration Legal Centre, submission 21 , p. 3.

IARC/RACS, submission 9, p. 3.

Which , unless they are permanent, will not fall within the exception provided for in the Bill.

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Limited education and/or illiteracy in the native language; and

Socio-economic and/or cultural factors impacting on a person's ability to attend English and citizenship education sessions.7

3.7 The Castan Centre for Human Rights Law had similar concerns about the breadth of the exception, and noted that:

It is well recognized that individuals respond to trauma in very personal ways. It is misleading to associate refugees with trauma or traumatic responses as many refugees are very resilient people who cannot be characterized in that way. We are concerned at the inappropriate association of refugees with 'torture or trauma' through this proposal and at its potential to exclude refugees who do not exhibit symptoms of trauma. This

is contrary to the Australian government's international obligations to facilitate the assimilation and naturalisation of all refugees as explained above, and potentially discriminates between refugees according to their individual vulnerability. 8

3.8 The fact that the exception would apply only to torture or trauma experienced offshore was a matter of concern for a number of witnesses. Dr Susan Kneebone argued that in many cases trauma will largely take place in Australia, and provided the compelling example of trafficked people, for whom the majority of their abuse will take place at the hands of their traffickers, once they reach Australia.9

3.9 On a similar note, Ms Zoe Anderson, appearing for the Refugee Advice and casework Service (RACS) said at the hearing that:

There are also many other factors beyond experiences of the past persecution in the country of origin which may cause psychological injuries adversely affecting the ability of refugees and humanitarian entrants to learn new material and pass an exam. These include, for example,

experiences of prolonged separation from close family members and experiences of long periods of uncertainty about their ultimate fate while awaiting resolution of status and/or visa grants, in some cases in detention. These are experiences which will often have occurred in Australia rather

than outside. The exemption in its current form therefore does not adequately address the special needs of individuals in such circ*mstances. 10

3.1 0 Upon examination of the Government's response to the CTRC's report, the committee notes the government's recognition that:

The Government agrees that there is a small group of individuals who suffer from psychological disorders as a direct result of having experienced torture and trauma. To assist these most vulnerable clients - many of whom need citizenship the most - the Government will amend Section 21 (3 )(d) of

7 IARC/RACS, submission 9, p. 3.

8 Castan Centre for Human Rights Law, submission 14, p. 7.

9 Dr Susan Kneebone, p roof committee hansard, 27 August 2009, p. 19.

10 Ms Zoe Anderson, proof committee hansard, 27 August 2009, pp 2-3.

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the Australian Citizenship Act 2007 as recommended by the Review Committee. 11

3.11 The policy document would impose no condition on where torture and trauma is required to have occurred to be applicable, which is at variance with the position taken in the Bill.

3.12 The committee is convinced by the arguments in favour of removing the proposed requirement that torture or trauma occur offshore before it can fall under proposed subsection 21(3B), and strongly urges the Government to reconsider whether the requirement should remain in the Bill.

Other issues regarding the exception to the citizenship test

3.13 The Castan Centre, and others, expressed disquiet about the terminology used in the Bill:

'Trauma' (which may mean simply 'injury') is .. . undefined but in this context appears to refer to the psychological effect of traumatizing incidents. It is submitted that 'trawna' in this proposal does not have an independent meaning, legal or otherwise, except as an assessment of the effect of events upon an individual.

In our view, the effect of this amendment will be to introduce new criteria which are themselves unclear and open to interpretation/challenge. 12

3.14 The Department responded that the terminology reflected the feedback that had been received by the Citizenship Test Review Committee, which stated in its report that:

The Committee considers the current exemption criteria do not take into consideration the effect of severe and chronic symptoms resulting from the experience of torture and trauma. These may include strong anxiety associated with learning difficulties, and while some are

permanent, others, though severe, are not necessarily permanent. 1

3.15 Concerns were also expressed about possible inconsistency between the Bill and the Explanatory Memorandum. In particular, the Castan Centre noted that the Bill referred to the effect of 'torture or trauma' , whereas the Explanatory Memorandum refers to the combined effects of 'torture and trauma' .

3.16 However, the committee notes that the EM, when referring to those suffering from 'torture and trauma', is referring to the collective group of persons for whom exemption from the citizenship is suggested by the CTRC, and that the subsequent use

11 Movingfonvard .. .lmproving Pathways to Citi=enship - Government Response, Australian Government, November 2008, p. 4.

12 Castan Centre for Human Rights Law, submission 14, pp 67.

13 Movingfonvard .. .Improving Pathways to Citi=enship, Au stralian Citizenship Test review Committee, Commonwealth of Australia, August 2008, p. 35.

14 Castan Centre for Human Rights Law, submission 14, pp 67 , emphasis added.

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of the term 'torture or trauma' in the Bill is not inherently contradictory, as the Bill intends to pick up those who have suffered either torture or trauma.

3.17 In its supplementary submission, the Department provided further information on the number of applicants with permanent incapacity, and addressed concerns relating to the method of assessment of claims of incapacity15 in the following way:

During [the period 1 October 2007 and 30 June 2009] 366 people applied for citizenship under the permanent physical or mental incapacity provisions provided in subsection 21(3) of the Australian Citizenship Act 2007. Of these, 189 people who applied under the permanent incapacity provision acquired citizenship when they were found to have a permanent

incapacity which meant they were not capable of understanding the nature of the application. This number represents 0.1% of the total number of people who acquired citizenship by conferral during this period. In each case clients were required to provide evidence of their incapacity in the

form of a letter from a specialist in the field related to their incapacity. Each assessment is made on the basis of the information provided by the specialist. Citizenship officers do not make assessments of a person 's incapacity. It is anticipated that the number of people who will be able to acquire citizenship under the proposed s21 (3 )(d) will remain a very small percentage of the overall caseload. 16

3.18 The committee notes disagreement from a number of submitters with the scope of the exemption to take the test. However, members note that most dissenters would prefer to see the removal of the citizenship test altogether, a factor which must inform their position on the exemption contained in the Bill. The committee is also mindful of the fact that the citizenship test enjoys bipartisan support, and that the test brings with it some notable benefits. For example, the committee was reminded of the role of the test in empowering some permanent visa holders who, but for the need to

pass the test, might be precluded from taking classes in English. As Dr Susan Kneebone said at the committee's hearing:

I absolutely agree with you on that point. The citizenship test can be used in a way which is inclusive and does incorporate, as you say, particularly women who may not have a lot of contact outside their family circle or outside their home. It is well known that migrant women are often the ones

left out of the reckoning and this is a way of including them. I think we are 0 th 17

m agreement on at.

3.19 While the committee can see arguments in favour of broadening the proposed exemption, it is mindful of the desirability of requiring the test be successfully completed in as many cases as is fair and possible. The proposed exemption will cater to those for whom sitting and passing the test would be an unfair and unreasonable

15 See, for example, Australian Lawyers for Human Rights, submission 3, p. 4; Castan Centre for Human Rights Law, submission 14, p. 6.

16 Department oflmmigration and Citizenship, answer to question on notice, received 1 September 2009. 17 Dr Susan Kneebone, proof committee hansard, 27 August 2009, p. 17.

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requirement. The Department has arrangements in place to assist those in less extreme situations who are having difficulty preparing for the examination, and taken together with the proposed exemption, the committee takes the view that an appropriate balance has been struck.

Citizenship applications from minors: subsection 21(5) amendments

3.20 The Bill would also amend arrangements for applicants for citizenship by conferral who are under the age of 18. Currently subsection 21(5) of the Act provides that a person is eligible to become an Australian citizen if the Minister is satisfied that the person is aged under 18 at the time the person made the application.

3.21 Subsection 24(2) confers a discretion to the Minister to refuse to approve a person becoming an Australian citizen despite the person being eligible to become an Australian citizen under subsection 21(2), (3), (4), (5), (6) or (7) of the Act, and policy instructions from the Minister in relation to this provision require that most people under the age of 18 be a permanent resident at time of application. 18 While the Act does not specify any criteria for the exercise of this discretion, the discretion is limited to the subject matter, scope and purpose of the statute. 19 The Bill aims to implement government policy that, in general, people must be residents before they can become citizens.

3.22 The Department explained the practical operation of the existing provisions as follows:

The policy instructions provide an aid to decision-makers exercising the discretion under subsection 24(2) and a decision-maker must consider the circ*mstances of a particular case in deciding whether it is appropriate to apply the policy in exercising the discretion.

In the case of an applicant who does not meet the policy requirements, the full circ*mstances of the case, including the best interests of the child, are taken into consideration to determine whether the application nevertheless warrants approval outside of policy because of the exceptional nature of those circ*mstances. The legislation in the past had been left deliberately broad in order to accommodate very exceptional cases that came to the attention of the department. 20

3.23 The Department explained the rationale behind the proposed amendments this way:

In recent years the provision to confer citizenship on children under the age of 18 has been increasingly utilised by clients and their agents in an attempt to circumvent migration requirements or as a last resort when all migration

18 Department of Immigration and Citizenship, submission 11, p. 6, emphasis added.

19 Department of Immigration and Citizenship, submission 11 , p. 5, citing Minister for Aboriginal Affairs v Peko-Wallsend Ltd (1986) 162 CLR 24 at 40 per Mason J.

20 Department of Immigration and Citizenship, submission 11, p. 5

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options have been exhausted, including requests for ministerial intervention, and removal from Australia is imminent. This can result in children being conferred citizenship but there being no or little prospect of their family remaining lawfully in Australia or returning to Australia in the foreseeable future because there is no migration option available to those

family members ... Subsection 21(5), and a similar provision in the Australian Citizenship Act 1948, were not intended to be used in this way. It was not the intention, for example, that an unauthorised arrival in Australia who was under 18 years of age at time of their arrival would have

the right to Australian citizenship on their arrival. 21

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3.24 In its supplementary submission to the committee, the Department reported that 415 children applied in their own right for citizenship between 1 October 2007 and 30 June 2009. Of these 14 were not permanent residents at the time of the application. This is the cohort that would be impacted by the proposed amendment. Of this cohort, 4 had their citizenship conferred following a favourable decision of the AAT.

3.25 Much of the criticism levelled at the proposed amendments went to this point: that the current legislation allows for exceptional cases, but that the proposed amendments would remove the discretion to confer citizenship when circ*mstances warranted it. Professor Kim Rubenstein recommended the retention of the broad discretion, through the scrapping of the proposed amendment to subsection 21(5):

My recommendation is to not include the amendment, to leave section 21(5) exactly as it is and to review policy, which I think is possible in a way that would maintain a lawful decision-making process under the section as it currently stands but also deal with the issues that the minister is concerned about in terms of the links between the migration program and the citizenship program. 23

3.26 Victoria Legal Aid summarised the view of many submitters m its

submission:

This broad discretion ... recognises that children are a particularly vulnerable group. There can be extraordinary and compelling reasons for the grant of citizenship to children. The presence of this discretion in Australian citizenship law recognises that the unique vulnerabilities of children sometimes raise unusual circ*mstances, where a grant of citizenship is warranted. The Minister should have the power to deal with those unusual and compelling circ*mstances appropriately.

There is, as far as VLA is aware, no evidence that there has been a large increase in the number of applications for the grant of citizenship [under

21 Department of Immigration and Citizenship, submission 11, p. 6

22 Department of Immigration and Citizenship, Answer to Question on Notice, received 1 September 2009.

23 Professor Kim Rubenstein, proof committee hansard, 27 August 2009, p. 36.

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21(5)]. VLA does not accept that the continues presence of a broad discretion in s21 ( 5) will adversely impact on Australia's capacity to control migration, or citizenship. As demonstrated in the case of SMNX v Minister for Immigration and Citizenship [2009] AATA 539 discretion in s21(5) will

be exercised only in the exceptional case. The exercise of the discretion, further, can be guided by appropriately drafted policy.24

3.27 Submitters such as Ms Rowena Irish, representing IARC, were not convinced of the wisdom of relying on ministerial intervention powers to adequately deal with the interests of a minor. They submitted that the process was 'lengthy, uncertain, non compellable and not subject to review'.25

3.28 Professor Kim Rubenstein argued in her supplementary submission that the applicant in the SNMX case would not succeed if subsection 21(5) were repealed, because the factors underpinning the Administrative Appeals Tribunal's decision in that case would not have been considered under the Migration Act framework. 26 It was on that basis that Professor Rubenstein argued that an applicant under subsection 21(5) in similar circ*mstances to those of SNMX, would have no path to citizenship.27

3.29 The Department concluded that a 'very small group' of people under the age of 18 would no longer have direct access to Australian citizenship should the amendment proceed, but anticipated

... that any such people with exceptional circ*mstances would appropriately be accommodated under the Migration Act 1958 (the Migration Act), if necessary, by way of Ministerial Intervention powers available under the Migration Act. Once granted a permanent resident visa under the Migration Act they would have a pathway to citizenship.28

3.30 In its supplementary submission to the committee, the Department maintained its position, notwithstanding the claims of Professor Rubenstein

To say that '(c)hildren are largely dependent upon the parent's claim under the Migration Act' is true if the child is applying for a visa as a secondary applicant, i.e. as a member of their parent's family unit, the parent being the primary applicant. However, that does not mean that a child cannot apply

for a visa other than as a member of their parent's family unit.

24 Victoria Legal Aid, submission 6, p. 2.

25 Ms Rowena Irish, proof committee hansard, 27 August 2009, p. 4.

26 Professor Rubenstein also argued that the amendment to subsection 21(5) was unnecessary and that an acceptable policy outcome could be achieved simply through amendments to the Australian Citizenship Instructions, which prescribe the policy surrounding the legislation. The committee notes evidence from the Department, at page 47 of the transcript, of its belief that the amendment was made necessary by virtue of departmental decisions being overturned by the AA T, as in the case of SNMX.

27 Professor Kim Rubenstein, submission 7 (strpplementary), pp. 4, 5.

28 Department of Immigration and Citizenship, submission 11 , p. 7.

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... [T]here is nothing to prevent a child making an application relying on their own claims to being a person to whom Australia has protection obligations (paragraph 36(2)(a)), subject only to the issue of the child's capacity to understand the nature of the application. If the child is too young to understand the nature of the application, then he or she could only make a valid application through a parent or legal guardian, albeit that the application (and the claims made in it) would be the child's own application. 29

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3.31 The Department also pointed out that, had SNMX not been granted citizenship through their application under subsection 21(5), an application for a Protection visa would have been open to them, and that:

It is a matter for his legal advisers as to why such an application was never made by SNMX in circ*mstances where he was not subject to a statutory bar. Given that he was eligible to apply for Australian citizenship, there may have been no need to do so, however he was not subject to a statutory bar which prevented him from making an application for a protection visa

which would have provided a pathway through to holding a permanent visa to be eligible for Australian citizenship. 30

3.32 The committee is mindful of the need to ensure that avenues exist to ensure the fair treatment of all claimants to Australian citizenship, diverse though they may be. It has examined carefully the arguments in relation to the proposed amendment to subsection 21(5), and the concern raised that in closing off what the government considers a 'loophole', more legitimate and compelling claims might be denied recourse. As the foregoing discussion discloses, stakeholders' views diverge

significantly.

3.33 Nonetheless, the committee must give strong weight to the considered and repeated advice from the Department that other avenues to citizenship do exist for those for whom existing subsection 21(5) might otherwise have been an option.

3.34 The committee is not persuaded to recommend any amendment to the Bill in this regard.

29 Department of Immigration and Citizenship, submission 11 (s upplementary), pp 1- 2. The Department cited Chen Shi Hai v Minister for Immigration and Multicultural Affairs (2000) 74 ALJ 775; Soondur v Minister for Immigration and Multicultural Affairs [2002] FCAFC 324 at [35]- [36] ; Re Woolley; and Ex parte Applicant M276/2003 [2004] HCA 49 at [103] , [155] in

support in their argument. 30 Department oflmmigration and Citizenship, submission 11 (s upplementary), p. 5.

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Recommendation 1

3.35 The committee recommends that the Bill be passed.

Senator Trish Crossin

Chair

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COALITION SENATORS' DISSENTING REPORT 1.1 The main issues that arose during the inquiry went to:

â¢ The scope of the exception to the requirement to take the citizenship test and in particular, the exception for physical or mental incapacity resulting from torture or trauma outside Australia- s.21(3A) and (3B) amendments; and

â¢ Citizenship applications for minors- s.21(5) amendment

1.2 Other issues regarding streamlining the administration of the test were non controversial, noting the concerns expressed by the Department about seeking to overcome people sitting the test well in advance of being eligible to apply for citizenship.

Opposition to the provisions seeking to remove the requirement for a 'permanent physical or mental incapacity'

1.3 Coalition Senators oppose the provisions seeking to remove the requirement for a 'permanent physical or mental incapacity' and maintain that the requirement in the exception for 'permanent physical or mental incapacity' be retained.

1.4 The amendments proposed in the Bill extend the exemption to people who have a physical or mental incapacity at the time of making the application that is as a result of the person having suffered torture or trauma outside Australia. Such persons would still need to satisfy the other criteria, e.g. 4 years residence in Australia.

1.5 Concerns were raised at the hearing about the introduction of extending the exemption to one category of people, namely those who had suffered torture or trauma outside Australia, to the exclusion of others, for example, women who .had suffered torture and trauma in Australia as a consequence of trafficking. It must be noted that the current provisions refer to 'permanent physical or mental incapacity' without qualification of where or how that incapacity resulted.

1.6 Coalition Senators are concerned that in expressly referring to torture or trauma, the Bill inappropriately and unsuccessfully attempts to frame exclusion from citizenship testing around one (and only one) possible cause (torture and trauma) giving rise to the effect (a mental state) when the latter (the effect) is the appropriate trigger for exclusion, irrespective of its cause.

1.7 This approach is unnecessarily emotive, inflammatory, and unconstructive. Most importantly, it takes the Bill way 'off the mark'.

1.8 The Government has not adequately made the case in favour of their Bill for a range of reasons but in particular as the defmition of 'trauma' is so vague and ambiguous; it is almost meaningless and could potentially open the floodgates. This also is unacceptable.

Australian Citizenship Test Review Committee suggested amendment

1.9 The Australian Citizenship Test Review Committee (the Review Committee) suggested the following simpler amendment That s. 21(d) be amended to read:

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'has a physical or mental incapacity at that time means the person is not capable due to the physical or mental incapacity of:

Understanding the nature of the application at that time; or

Demonstrating a basic knowledge of the English language at that time; or

Demonstrating an adequate knowledge of Australia and of the responsibilities and privileges of Australian citizenship at that time.'

1.10 According to the Committee, s.23A sets out the process for a citizenship test and it states in the note that the test must be related to the eligibility criteria refened to in paragraphs 21(2)(d) understanding of the nature of the application, (e) a basic knowledge of the English language and (f) an adequate knowledge of Australia and the responsibilities and privileges of Australian citizenship. It argued that 'mental incapacity' ought not to be confmed to just understanding the nature of the application at that time, but ought to refer to all three criteria, all of which are relevant to citizenship testing.

1.11 The methodology suggested by the Review Committee is simpler and non discriminatory. Coalition senators suggest that the Review Committee's proposed amendment be adopted with the addition of the word 'permanent'. Accordingly, we suggest that s.21(3A) and (3B) of the Bill be removed and substituted with the following amendment to s.21(d):

'has a permanent physical or mental incapacity at that time means the person is not capable due to the permanent physical or mental incapacity of:

Understanding the nature of the application at that time; or

Demonstrating a basic knowledge of the English language at that time; or

Demonstrating an adequate knowledge of Australia and of the responsibilities and privileges of Australian citizenship at that time.'

1.12 Coalition Senators have concerns that the dropping of word 'permanent' has the potential to extend this exemption to a much wider group of people. There is a big difference between a 'permanent physical or mental incapacity' and a 'physical or mental incapacity'.

1.13 At present the Act also allows exemption from sitting the test for people who suffer from permanent physical and psychological disorders of any origin. Removal of 'permanent' from the definition will lead to confusion about eligibility and definitions about 'permanent' and 'temporary' incapacity. We have no information about how many people may be in this category. Regrettably, this figure was not able to be provided by DIAC at the hearing because the Department did not know and indeed, have been unable to provide an answer in questions on notice. This is disturbing and unacceptable that the Government has no idea of the consequences intended or unintended, if the Bill passes.

1.14 Permanent residents including refugees are required to have lived in Australia for four years before eligibility for citizenship. If those granted protection visas are still suffering from a 'temporary' incapacity after four years, then arguably their

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condition could be considered 'permanent', and the current law allows for those people to be exempt from the test.

1.15 There is concern that this new exemption could be used by some to bypass the requirement to have adequate English and knowledge of Australian values, in particular to limit the opportunity for women to learn English, a point that was canvassed by a number of the witnesses at the hearing.

1.16 It is particularly important for humanitarian and refugee entrants who suffer a range of other obstacles if an incentive to learn English language is removed.

Recommendation to bolster 'assistance' to sit the test

1.1 7 Current provisions in the legislation allow people who have a physical or cognitive impairment (whether permanent or temporary) that prevents them from sitting the Standard Test to sit an 'assisted test'. In the 'assisted test', an administrator may talk the person through the computer-based test. The test administrator may read aloud the questions and multiple choice answers, ask the person which answer they think is correct and select on the computer the answer that the person indicates. An applicant has 90 minutes to complete the test which is double the time allotted for others.

1.18 Coalition senators support extending 'assistance' to people to help them pass the test rather than opening up the category to a wider group of people, and hence, potential exploitation.

Why is there a need to change the citizenship test given the extremely high pass rate?

1.19 Coalition senators also question the need for changes to the citizenship test, given the high pass rates. DIAC officials were unable to explain the inadequacy of the current pass rate such as it needed changes, as is seen from the following exchange:

Senator Fierravanti-Wells- Given the very, very high levels of pass of the citizenship test- it is 97 per cent, from your snapshot-why do we need to change the test? Even in the humanitarian categories, it is 84 per cent. I just do not understand.

Ms Forster-! am sure you are aware, from previous discussions

Senator Fierravanti-Wells-1 am aware of the report.

Ms Forster- ofthe review of the committee. The government has stated its response to that review and it has indeed moved on with the test.

Senator Fierravanti-Wells- Perhaps I can ask the . question in another way. What statistics are you relying upon that make a pass rate of 97 per cent inadequate, so that you have to change it completely? In other words, what are you trying to achieve? Are you trying to achieve 100 per cent? What is so materially and statistically wrong with the current system? What are you trying to achieve here?

Ms Larkins- ! think the government's intent was to respond to the findings of the committee review, which found that, for a small subset of those people, they were disadvantaged in sitting the test.

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Senator Fierravanti-Wells-In other words, make it easier for everybody. 1

1.20 The focus on extending the exception resulted in questioning of the high pass rates of the citizenship test and the number of conferrals of citizenship. Given the high pass rates, it is clear that the Government's changes are politically motivated. Reference was made during the hearing to the statistics contained in the Australian Citizenship Test Snapshot Report, July 2009. During the hearing, much was made that the humanitarian program had an 84% pass rate- roughly about 10,500 of 12,727 for period 1 October 2007 to 30 June 2009. The following points were made clear during the hearing:

â¢ It was pointed out that humanitarian applicants sit the test on average 1.9 times;

â¢ The 16% non-pass rate reflects people who come back (roughly 2,000) and sit the test at a subsequent time (can sit as many times as you need to); and

â¢ DIAC agreed it was wrong to say that there were hundreds of people who are never going to sit the test for fear of failure to pass (contrary to other evidence given)

1.21 Citizenship can be acquired through application or conferral- in 7 situations:

â¢ General eligibility criteria and successfully completing a citizenship test -ss.21(2) and (2A);

â¢ Permanent physical or mental incapacity - s.21 (3) - exempt from citizenship test;

â¢ Person aged 60 or over or has hearing, speech or sight impairment- s.21(4) exempt from citizenship test;

â¢ Person aged under 18 - s.21 (5) - exempt from citizenship test;

â¢ Person born to a former Australian citizen- s.21(6)- exempt from citizenship test;

â¢ Person born in Papua- s.21(7)- exempt from citizenship test; and

â¢ Statelessness - s.21 (8) - exempt from citizenship test

1.22 DIAC have advised that in the period 1 October 2007 to 30 June 2009, 168,293 people were conferred citizenship under s.21 either through application or conferral. DIAC was asked for a breakdown of the figures for each of the 7 situations, but has advised that:

We are not readily able to provide a breakdown of numbers against each subsection of the Act.Z

Proof Committee Hansard, 27 August 2009, p. 40.

2 Email correspondence from Ms Reuelle Forster to the Committee Secretariat, in response to questions from Senator Fierravanti-Wells, received 2 September 2009.

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1.23 Coalition Senators find this remarkable. How can the Government seek to â¢change provisions such as these and not have the statistical analysis to base its

:assertions of the need for change?

1.24 However, DIAC were able to count the number of people whose citizenship was conferred under the permanent physical or mental incapacity provisions of s.21 (3) for the period 1 October 2007 to 30 June 2009-366 people applied and of these, 189 were conferred citizenship. It is amazing that DIAC cannot provide a breakdown and hence, Coalition Senators have sought to work this out from other information:

For the period 1 October 2007 to 30 June 2009, 138,155 people sat the Citizenship test and 133,925 passed on the first or subsequent attempt (these are people in the general eligibility criteria ss.21 (2) and (2A) referred to above (namely 1 ofthe 7 situations above)

â¢ Hence, one would assume that the difference between 168,293 and 133,925 i.e. 34,368 represents people who had citizenship conferred on them (presumably the other 6 situations referred to above)

This would then mean that roughly 20% or 1 in 5 people acquire citizenship by conferral rather than applying and sitting the test.

1.25 Accordingly, Coalition Senators are concerned that s.21 conferrals other than for general eligibility criteria applicants who sit the citizenship test is already considerable and ought not be extended further.

Amendments to waive residency requirements for athletes and some other categories

1.26 Coalition Senators also note that on 31 August 2009 in a letter to our Committee Senator The Hon Chris Evans, Minister for Immigration and Citizenship, advised his intent to amend the Government's Bill with a not insignificant amendment (relating to a residence requirement for certain persons) of four ( 4) pages and notes of seven (7) pages which will now have to be considered on its merits.

1.27 The onus is on the Government to outline the urgency of waiving residency requirements for athletes and other categories of people. In the ordinary course, the proposed amendments ought to have been open to proper examination and scrutiny by the Committee and groups and organisations wishing to make submissions on the amendments. A separate inquiry on the amendments would also have afforded

interested groups, organisations and members of the public the opportunity to comment on the changes.

Senator Guy Barnett

Deputy Chair

Senator Mary Jo Fisher

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Senator Concetta Fierravanti-Wells

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ADDITIONAL COMMENTS BY THE AUSTRALIAN GREENS I ntroduction

1 .2 The Australian Citizenship Amendment (Citizenship Test Review and Other Measures) Bill 2009 essentially seeks to amend the Citizenship Act to exempt applicants who cannot complete the test because of mental or physical incapacity occasioned by torture or trauma; and tighten the eligibility criteria for persons under

18 by requiring they be permanent residents before granting citizenship.

1. 3 While the Greens do not support the premise of the Citizenship Test, and continue to hold concerns over aspects of this legislation, we recognise that the Minister has sought to improve the way in which the test is applied in response to some of the recommendations made in the report of the Australian Citizenship Test Review Committee.

Subsection 21 (3) exceptions from the citizenship test

1.4 The majority of submissions and evidence received by the Committee argue that while an exemption from the requirements to sit the citizenship test is provided for sufferers of past torture and trauma experienced, the exemption identified in Subsection 21(3) of the Bill is too narrow.

1.5 Many refugee and humanitarian entrants, for example, that may have suffered persecution within their countries of origin, would fall short of the legal definition of torture. Similarly, the requirement that mental or physical incapacity is as a result of suffering torture or trauma outside of Australia, is too prescriptive, particularly when discussing trafficked persons, or those held in detention whilst their visa application is being determined.

1.6 It is not appropriate to limit the definition of torture or trauma to those that have suffered psychological damage outside of Australia. In their submission, Castan Centre for Human Rights Law argues that:

Many refugees have been re-traumatised by their treatment in Australia, and have suffered trauma from prolonged detention ... whilst under Australia' s care and jurisdiction.'

1. 7 At a minimum, consideration must be given to expanding the definition to include persons traumatised by their experience in an Australian detention facility, and trafficked persons who have suffered trauma and persecution in Australia at the hands of persons here.

Castan Centre for Human Rights Law, Monash University, Submission15, p. 8.

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1.8 There was also confusion around how a person's level of incapacity will be measured, and by whom. The Refugee Advice and Casework Service argued in their evidence to the committee that:

individuals falling within the exception would still be forced to submit to the potentially humiliating process of having themselves declared mentally incapable. In addition, a significant strain may well be placed upon the 2

already overburdened mental health services.

Recommendation 1

1.9 The Greens submit that the exemption within 21(3) is too narrow, and must be expanded to include all refugee and humanitarian visa holders from the requirement to sit the test.

Recommendation 2

1.10 If the exemption proposal is not broadened, we recommend that the amendment be broadened to include people who have suffered significant trauma while in Australia.

1.11 Proposed subsection 21(3B) and paragraph 26(1)(ba) be amended by omitting the words "outside Australia"

Subsection 21 (5) removal of exemption for minors

1.12 The Committee heard evidence throughout the Inquiry regarding concerns over the removal of the Ministerial discretion clause, effectively allowing the Minister to grant citizenship to a child or young person who is not a resident. Of particular concern was that by requiring a person under 18 years of age to be a permanent resident at time of the application and decision for citizenship, the best interests of the child are not being taken into account.

1.13 Children are a particularly vulnerable group of, and their visa status if often as a result of factors beyond their control. According to the Refugee

Australia's obligations under the Convention on the Rights of the Child to act in the best interests of the child must be the guiding and determining factor in deciding whether a child can be conferred Australia citizenship. Of particular relevance is the degree of the child's connection to Australia, to the extent that it may amount to a form of citizenship, rather than their formal visa status. 3

2 Refugee Advice and Casework Service, Proof Committee Hansard, p. 2.

3 Refugee and Immigration Legal Centre, Submission 21 , p. 13 .

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Recommendation 3

1.14 Given Australia's commitment to the Convention on the Rights of the Child, the Greens recommend that Subsection 21(5) be omitted, and replaced with a clause that requires the Minister to take into account, when deciding whether an applicant under the age of 18 years of age is eligible for conferral of citizenship, the best interest principle from Article 3 of the Convention of the Rights of the Child.

Alternative pathways to citizenship

1.15 While a number of the proposed amendments contained in this legislation will make it easier to obtain citizenship, the Greens remain concerned at the lack of legislative implementation for alternative pathways to citizenship.

1.16 It is largely the most vulnerable applicants, such as refugee or humanitarian entrants, who have experienced most difficulties with the passing the test. Given the Australian Citizenship Test Review Committee recommended a range of other alternative pathways, including Citizenship Education Programs in English and in

languages other than English, the Government must develop its alternative pathway to citizenship plan as a priority.

Recommendation 4

1.17 The Greens support the recommendation put forward by the Refugee and Immigration Legal Centre that "any alternative pathway proposed by the Government for refugee and humanitarian entrants, must not involve the completion of any form of computer-based, multiple choice test and the training element of this pathway must be available in languages other than English."

Recommendation 5

1.18 The Greens further recommend that if refugee and humanitarian applicants are not exempt from the test, a review mechanism be implemented, under the current powers of the Commonwealth Ombudsman, for refugee and humanitarian applicants to challenge their ability to access support, in order to undertake the test.

Public scrutiny

1.19 Given Recommendation No.18 of the Australian. Citizenship Test Review Committee recommended that:

4 ibid

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all citizenship test questions, regardless of the pathway, be made publicly available and education experts be consulted on the number of questions to be in the bank. 5

1.20 It is disappointing that the Government does not see the merit in ensuring there is appropriate public scrutiny of the citizenship test.

1.21 Appropriate levels of public scrutiny would ensure and promote public discussion around what are appropriate questions to include in the test.

Recommendation 6

1.22 Considering the Department for Immigration and Citizenship recently published the "Australian Citizenship Test Snapshot Report", the Greens recommend that this information, and the questions included within the test, be released, on an annual basis, to encourage public engagement and scrutiny in the process.

Conclusion

1.23 The Greens continue to hold concerns around the narrow exemption clauses for minors and past sufferers of trauma and torture, as well as the failure to include alternative pathways for citizenship, or appropriate levels of public scrutiny of the citizenship test.

1.24 Although we have been strong advocates for the abolition of the citizenship test, we recognise that the amendments posed within this Bill seek to improve the current testing regime, and we will seek to address the recommendations outlined above, when the Bill is debated in the Senate.

1.25 As such, the Greens reserve our final position on the Bill.

Sarah Hanson-Young Australian Greens' Spokesperson for Immigration

5 Australian Citizenship Review Committee, Moving Forward .. .Jmproving Pathways to Citizenship (The Woolcott Report) Commonwealth of Australia, August 2008, p. 5.

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Submission Number

APPENDIX 1 SUBMISSIONS RECEIVED

Submitter

Federation of Ethnic Communities' Councils of Australia (FECCA)

Coalition for Asylum Seekers, Refugees and Detainees (CARAD)

Australian Lawyers for Human Rights

UnitingJustice Australia

Newcomers Network

Victoria Legal Aid

Kim Rubenstein

Clothier Anderson Associates

Immigration Advice and Rights Centre

Refugee Council of Australia

Department oflmmigration and Citizenship (DIAC)

Multicultural Council of the Northern Territory

Forum of Australian Services for Survivors of Torture and Trauma

New South Wales Council for Civil Liberties

Castan Centre for Human Rights Law

Community Relations Commission NSW

Canberra Multicultural Community Forum (CMCF)

Northern Territory Chief Minister, Minister for Multicultural Affairs

Refugee and Immigration Legal Service

Bob SuchMP

Refugee and Immigration Legal Centre

ADDITIONAL INFORMATION RECEIVED

1. Answers to Questions on Notice - Provided by the Department of Immigration and Citizenship, received Tuesday 1 September 2009

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Pa e26

2. Attachment for Answers to Questions on Notice - Provided by the

Department of Immigration and Citizenship, received Tuesday 1 September 2009

3. Answers to Questions on Notice- Provided by the Department oflmmigration and Citizenship, received Wednesday 2 September 2009

4. Answers to Questions on Notice - Provided by the Refugee Advise and Casework Service, received Wednesday 3 September 2009

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APPENDIX2

WITNESSES WHO APPEARED BEFORE THE COMMITTEE

Melbourne, Thursday 27 August 2009

ANDERSON, Ms Zoe, Solicitor Refugee Advice and Casework Service

FORSTER, Ms Renelle, Assistant Secretary, Citizenship Branch Department of Immigration and Citizenship

IRISH, Ms Rowena, Acting Director/Principal Solicitor Immigration Advice and Rights Centre

KNEEBONE, Dr Susan, Deputy Director Castan Centre for Human Rights Law, Monash University

LARKINS, Ms Alison, Acting Deputy Secretary Department of Immigration and Citizenship

MORONEY, Mr Matt, Principal Legal Officer, Legal Framework Branch Department of Immigration and Citizenship

RUBENSTEIN, Professor Kim Privaty Capacity

STEW ART, Mrs Lauri, Solicitor Clothier Anderson and Associates

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The Senate

Legal and Constitutional Affairs

Legislation Committee

Crimes Amendment (Working with Children -Criminal History) Bill 2009 [Provisions]

November 2009

379

ISBN: 978-1-74229-201-4

This document was printed by the Senate Printing Unit, Department of the Senate, Parliament House, Canberra.

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MEMBERS OF THE COMMITTEE

:Members

Senator Patricia Crossin, Chair, ALP, NT

Senator Guy Barnett, Deputy Chair, LP, TAS

Senator David Feeney, ALP, VIC

Senator Mary Jo Fisher, LP, SA

Senator Scott Ludlam, AG, W A

Senator Gavin Marshall, ALP, VIC

Participating Members

Senator Sarah Hanson-Young, AG, SA

Secretariat

Mr Peter Hallahan

Ms Margaret Cahill

Ms Cassimah Mackay

Suite Sl. 61

Parliament House

Secretary

Research Officer

Executive Assistant

Telephone: (02) 6277 3560

Fax: (02) 6277 5794

CANBERRA ACT 2600 Email: legcon.sen@aph.gov.au

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TABLE OF CONTENTS

MEMBERS OF THE COMMITTEE ............................................................. iii

RECOMMENDATIONS ................................................................................. vii

CHAPTER 1 ................................................................................................â¢....... 1

INTRODUCTION .................................................................................................... 1

Summary of key amendments ... .. ................ ..... .... .... .... ... .... .. ..... ............ .. ... .. .. ...... . 2

Conduct of the inquiry ..... ....... .... ... .... ..... .............. ...... ....... ... .. .............. ... ..... .. .. .. .. .. 3

Acknowledgement ... .. ... ..... .. ... ... ...... ... ........ ... .... ... ............... ... ........ ... .... ..... ... .. ... .... 3

CHAPTER 2 ........................................................................................................ 5

OVERVIEW OF THE BILL ................................................................................... S

Background .... .. ...... ..... ... .... ... .. ... ... ..... ... ... .... ....... ..... ... .. ...... ... ... ... ............... .. .. ...... .. 5

Summary of Provisions .......... ..................... .... .. .... ........ .. ...... ........ ...... ... .. ....... .. ..... 6

Safeguards under the Bill ... ... .... ... .... ... ... ... ... .. .... ... .. ... ... .. .... .. ..... .. ..... .... ...... ... .. ..... . 9

CHAPTER 3 ...................................................................................................... 11

ISSUES .................................................................................................................... 11

Submissions endorsing the Bill .. ... ..... .... ... ..... .. ... ..... ..... ....... ... .......... .. .. .. .. ....... .... 11

Disclosure and use of information concerning pardoned and quashed convictions ............ ...... ... .... .. .. ...... .... ......... .. ... ... ....... .... ...... ........... .. ... .. .... ....... .... .. ....... .... ... .. .. 13

Disclosure and use of information concerning all spent convictions ..... .. ..... ...... . 16

Definition of 'working with children' .... ... .. ..... ... ... .. .... ...... ....... ...... .. ......... ..... ... .. . 20

Privacy issues ... .. ...... .. .. ....... ...... .... ....... ... ... .. .. ... ... .... .. .. ............... ........... ..... ... ... .. . 23

Government response to privacy issues .. ..... ... ............... ... .. ..... ..... ......... ... .... ... .... 28

Committee comments ..... ... ......... ..... ... ... .. ... ........ ................. ... ..... ......................... 29

ADDITIONAL COMMENTS BY LIBERAL SENATORS ......................... 33

ADDITIONAL COMMENTS BY THE AUSTRALIAN GREENS ............ 37

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APPENDIX 1 ..................................................................................................... 39

SUBMISSIONS RECEIVED ................................................................................. 39

APPENDIX 2 ··········································!··························································41

WITNESSES WHO APPEARED BEFORE THE COMMITTEE ................... 41

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RECOMMENDATIONS

R ecommendation 1

3.91 The committee recommends that the Bill be amended to provide for a

f urther review of the legislation after three years of operation, in addition to that p rovided for by proposed section 85ZZGG.

Recommendation 2

3.92 The committee recommends that subject to recommendation 1, the Senate 1>ass the Bill.

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CHAPTER! INTRODUCTION

1.1 On 10 September 2009, the Senate referred the provisions of the Crimes Amendment (Working With Children- Criminal History) Bill 2009 (the Bill) to the Legal and Constitutional Affairs Legislation Committee for inquiry and report by 29 October 2009. On 29 October 2009 the Senate agreed to extend the reporting date until 17 November 2009. On 17 November 2009 the Senate agreed to further extend the reporting date untill9 November 2009.

1.2 The Bill was introduced in the House of Representatives on 20 August 2009 by the Minister for Home Affairs, the Hon Brendan O'Connor MP. The Bill amends Part VIIC of the Crimes Act 1914 (the Act) to create exceptions to provisions that prevent the disclosure of pardoned, quashed and spent convictions.

1.3 The Bill would implement the Council of Australian Governments' (COAG) agreement of 29 November 2008 to facilitate the inter-jurisdictional exchange of criminal history information for people working with children, including information about spent, pardoned and quashed convictions. It will create new exceptions to the non-disclosure provisions, which will have the effect of allowing pardoned and quashed convictions to be disclosed, and expanding the existing exceptions for the disclosure of spent convictions for persons who work, or seek to work, with children.

1.4 The Act currently only allows disclosure of information on spent convictions in relation to a person working with children for the limited purpose of determining whether the person has been convicted of a designated offence, which includes a sexual offence or an offence against the person where the victim was under 18 years at the time the offence was committed. Under the proposed amendments, these convictions, as well as convictions for non-sexual offences (ie: all offences regardless of nature), can be disclosed to and taken into account by Commonwealth, State and Territory screening agencies in determining whether the person is suitable: to work with children. 1

1.5 Proposed section 85ZZGA of the Bill outlines the objective of the new exclusions as being to help protect children from sexual, physical and emotional harm by permitting criminal history information to be disclosed and taken into account in assessing the suitability of persons for work with children.

1.6 The Minister explained the Government's reasoning in seeking to create the new exceptions in the following terms:

The Australian Institute of Criminology, in its report Child sexual abuse: offender characteristics and modus operandi, noted that incarcerated sexual offenders are more likely to have previous convictions for non-sexual offences than for sexual offences.

See Explanatory Memorandum, p. 1.

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Further, law enforcement agencies have indicated that charges relating to offences against children are often withdrawn as a decision is made to protect the child victim from the stress and trauma of giving evidence, cross-examination and simply waiting for committal and trial.

For these reasons, jurisdictions considered at COAG that it was appropriate to consider a person's full criminal history, including non-conviction information, in assessing whether he or she poses a risk to children if employed in child related work. 2

1. 7 The Minister's second reading speech acknowledged that child-related employment screening is a difficult and challenging process, requiring the careful balancing of potential risks to children with individual rights to privacy, employment and the freedom to participate in the community as a volunteer. Indeed, it is clear from the response to this inquiry that balancing these interests is the key issue that emerged in this inquiry, and while some submissions were of the view that the trade off of rights of individuals is justified, others were concerned that this undermines some important legal principles.

Summary of key amendments

â¢ Repeal the existing exclusions in Division 6 which relate to the disclosure of spent convictions information in relation to the care, instruction or supervision of minors.

â¢ Replace the existing exclusions with new exclusions which allow the disclosure of information:

â¢ about a person's spent, quashed and pardoned convictions,

â¢ to or by a prescribed person or body permitted or required by or under a prescribed law to obtain and deal with information about persons who work, or seek to work, with children, and

â¢ for the purpose of obtaining or dealing with such information m accordance with the prescribed law.

â¢ Defme 'child' and 'work' for the purposes of the new exclusions.

â¢ Specify criteria that screening units must meet before they can be prescribed to enable them to obtain and deal with Commonwealth criminal history information.

â¢ Require the Minister for Home Affairs to cause a review of the operation of the new provisions to be conducted after an initial trial period.3

2 The Hon Brendan O'Connor MP, Minister for Home Affairs, House Hansard, 20 August 2009, . p.8476.

3 Explanatory Memorandum, p. 1.

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14Conduct of the inquiry

] .8 The committee advertised the inquiry in The Australian newspaper on 2 3 September 2009, and invited submissions by 28 September 2009. Details of the iinquiry, the Bill and associated documents were placed on the committee's website.

The committee also wrote to over 90 organisations and individuals inviting s ubmissions.

1. 9 The committee received 17 submissions which are listed at Appendix 1. Submissions were placed on the committee's website for ease of access by the public.

1. 10 A public hearing was held in Melbourne on 10 November 2009. A list of witnesses who appeared at the hearing is at Appendix 2, and copies of the Hansard transcript are available through the internet at http://aph.gov.au/hansard.

Acknowledgement

1.11 The committee thanks organisations and individuals who made submissions and gave evidence at the public hearing.

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Background

CHAPTER2 OVERVIEW OF THE BILL

2 .1 At its meeting of 29 November 2008, COAG agreed to an implementation plan for its agreement in relation to the inter-jurisdictional exchange of criminal history information for people who work or seek to work with children. The plan required each jurisdiction to prepare, introduce and seek passage of legislative

amendments within nine months, to enable the information exchange to commence in 12 months. All jurisdictions, except Victoria and the Australian Capital Territory, would exchange information on non-conviction charges for screening of people working with children. 1

2.2 The Minister for Home Affairs, in his second reading speech, referred to the Scoping Study and Implementation Plan which preceded the COAG agreement. This study identified the safeguarding of children from sexual, physical and other abuse as a key priority for all Governments. The Minister explained that the study:

. .. noted that assessment of the criminal history of people working with children or seeking to work with children is an important part of the overall strategy for managing risks to the safety and wellbeing of children. 2

2.3 The Minister acknowledged that child-related employment screening 1s a difficult and challenging process. He observed that it:

... requires careful balancing of potential risks to children with individual rights to privacy, employment and the freedom to participate in the community as a volunteer. 3

2.4 He further noted that:

The exchange of information permitted by the Bill is subject to stringent safeguards to ensure that the information is dealt with appropriately and to limit any potential misuse of the information. 4

2.5 At the public hearing, the Attorney-General's Department provided

background on how the bill will impact on the existing arrangements.

Ms Sarah Chidgey clarified the purpose of the bill, emphasising that it builds on systems already in place in the States:

Communique, Council of Australi an Governments' Meeting, Canberra, 29 November 2008, pp 11-12.

2 The Hon Brendan O'Connor l\1P, Minister for Home Affairs, House Hansard, 20 August 2009, p. 8475. 3 The Hon Brendan O'Connor l\1P, Minister for Home Affairs, House Hansard, 20 August 2009, p. 8475.

4 The Hon Brendan O'Connor l\1P, Minister for Home Affairs, House Hansard, 20 August 2009, p. 8476.

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... most jurisdictions already have screening assessments in place for those working with children and risk assessment frameworks operating in accordance with each jurisdiction's privacy requirements. This bill simply allows these three categories of Commonwealth convictions to be provided to other jurisdictions. It is the case at the moment that a number of jurisdictions, in their own jurisdictions, already take into account their own pardoned and quashed convictions. The idea behind the COAG agreement

was to ensure that jurisdictions exchange that same level of information with each other.

Our understanding is that, under the existing regime-which will continue in this new regime with an expanded range of information-employers will simply receive a yes or no about somebody's suitability for employment. They are not given a person's criminal history. None of that information goes beyond the qualified screening assessment units. 5

Summary of Provisions

2 .6 The proposed amendment to section 85ZS deals with the effect of pardons for persons wrongly convicted. This section currently provides that:

where a person is convicted of an offence but is later pardoned because he or she was wrongly convicted of the offence, in particular circ*mstances and for particular purposes:

â¢

the person is not required to disclose the fact that he or she was charged with, or convicted of the offence;

it is lawful for the person to claim that he or she was not charged with, or I convicted of, the offence;

the person is not subject to any legal duty or disability to which he or she would not have been subject if he or she had not been convicted; and

other people may not disclose or take into account (for the particular purpose) the fact that the person has been charged or convicted, without his or her consent. 6

2.7 The Bill proposes to amend S85ZS so that it is subject to certain exclusions from the current non-disclosure requirements. This proposed amendment would have the effect of allowing agencies, such as the CrimTrac and the Australian Federal Police, to disclose the pardoned convictions of a person who works with children or who is seeking to work with children.

2.8 Item 3 of the Bill proposes amendments to section 85ZT(l) and (2)

concerning quashed convictions so that it is subject to the same exclusions as section 85ZS. 7

This section currently provides that where a person's conviction has been

5 Ms Sarah Chidgey, Committee Hansard, 10 November 2009, pp 17-18.

6 Explanatory Memorandum, p. 4.

7 See Item 6, proposed new Subdivision A - Exclusions (Divisions 2 and 3).

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'quashed, the person is not required to disclose the fact that they have been charged ·with, or convicted of, the offence. Under this amendment, a person seeking or "engaged in child-related work would have to disclose a quashed conviction for the

:purpose of assessing the risk they may pose to the safety and well-being of children.

2. 9 Similarly, Item 4 amends section 85ZU dealing with the effect of quashed convictions, making it subject to the exclusions in Subdivision A of Division 6. This section currently provides that:

Where a person's conviction has been quashed, in particular circ*mstances and for particular purposes:

It is lawful for the person to claim that he or she was not charged with, or convicted of, the offence, and

Other people may not disclose or take into account (for the particular purpose) the fact that the person has been charged or convicted, without his or her consent. 8

2.10 Under the proposed amendment, the new exclusions will permit agencies, such as the Australian Federal Police and CrimTrac, to disclose quashed convictions for the purpose of assessing the suitability of persons for work with children.

2.11 Currently, the Privacy Commissioner examines requests to exclude a person from being obliged to disclose their spent conviction. Item 5 would extend the Privacy Commissioner's role to considering requests where the conviction was pardoned or quashed.

2.12 The explanatory memorandum considers this amendment would implement an important safeguard:

. . . against broader dissemination of pardoned and quashed convictions, extending the existing safeguard which applies to spent convictions.9

2.13 As outlined in Chapter 1, the current Act does not allow for the disclosure of criminal history information about pardons or quashed convictions, and for spent convictions, only allows disclosure in relation to a person working with children for a designated offence. This includes a sexual offence or an offence against the person where the victim was under 18 years at the time the offence was committed.

2.14 The Minister in his second reading speech indicated that the jurisdictions at COAG determined that it 'was appropriate to consider a person's full criminal history, including non-conviction information, in assessing whether he or she poses a risk to children if employed in child related work.' 10 He cited a 2001 report of the Australian Institute of Criminology which noted that incarcerated sexual offenders were more

likely to have previous convictions for non-sexual offences than for sexual offences.

8 Explanatory Memorandum, p. 5.

9 Explanatory Memorandum, p. 5.

10 The Hon Brendan O'Connor MP, Minister for Home Affairs, House Hansard, 20 August 2009 ,

p. 8476.

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2.15 Item 6 would insert new section 85ZZGB which would provide for the disclosure of information about a person's pardoned, quashed or spent convictions to a prescribed person or body, where that information is disclosed for the purpose of obtaining or dealing with such information in accordance with the prescribed law.

2.16 Item 6 would also insert new section 85ZZGC which would provide the same conditions on disclosure as new section 85ZZGB, but in relation to a prescribed person or body taking into account criminal history information received through the information exchange as required or permitted by law.

2.17 Similarly, proposed section 85ZZGD provides the same exclusions as the 85ZZGB, except that these are in relation to the disclosure of information by a prescribed person or body. The Explanatory Memorandum explains that this section would allow:

a prescribed person or body to disclose information received under the exchange where there is a statutory obligation to use or disclose information for the protection of a particular child or class of children, as part of a legislated child protection function. 11

2.18 Proposed new section 85ZZGE provides a safeguard for the individual with regard to prescribed persons and bodies. The Explanatory Memorandum explains that:

A comprehensive regime for assessing people who work, or seek to work with children must be balanced with a person's right to rehabilitation, privacy and employment. Accordingly, the use and disclosure of extended criminal history information will be subject to stringent safeguards and conditions. 12

2.I9 This Item would require that before a person or body is prescribed by the Governor-General for the purposes of sections 85ZZGB, 85ZZGC or 85ZZGD to receive conviction information, certain requirements must be met. These requirements are specified in S85ZZGE, and are listed in full in paragraph 2.24.

2.20 Section 85ZZGF of the Bill provides the following definitions for Subdivision A.

child means a person who is under 18 .

work includes the following: (a) work: (i) under a contract of employment, contract of apprenticeship or contract for services; or

(ii) in a leadership role in a religious institution, as part of the duties of a religious vocation or in any other capacity for the purposes of a religious institution; or (iii) as an officer of a body corporate, member of the committee of management of an unincorporated body or association or member of a partnership; or

II Explanatory Memorandum, p. 8.

I2 Explanatory Memorandum, p. 6.

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(iv) as a volunteer, other than unpaid work engaged in for a private or domestic purpose; or (v) as a self-employed person; (b) practical training as part of a course of education or vocational training;

2.21 As discussed in the Explanatory Memorandum, the definition for the term 'child' is consistent with the definition used by the exchange of criminal history information for people working with children working group. The Explanatory Memorandum further explains that the broad definition of the term 'work':

. . . wiJI assist in comprehensive child-related employment screening and ensure that all forms of work which involve children are captured by the definition. This item also provides the capacity to prescribe additional roles and activities to ensure that emerging forms of child-related work can be included. 13

2.22 Proposed section 85ZZGG requires the Minister to begin a review of the operation of Subdivision A by 30 June 2011, complete it within three months, and table the report in Parliament. The Explanatory Memorandum states that:

Given the sensitive nature of the information that will be available under the information exchange it is important to assess the effectiveness of the regime, and ensure that information is being dealt with appropriately. 14

2.23 Item 7 of the Bill repeals paragraphs 85ZZH(e) and (f) of the Act which contain the current limited exceptions to the application of Division 3 regarding spent convictions. The proposed exceptions contained in Item 6 will apply more broadly to / 'a person who works, or seeks to work, with children' than the current scheme. The

new exceptions will also cover all offences and will not be limited to those defined as 'designated offences' which include a sexual offence or an offence against the person where the victim was under 18 at the time the offence was committed.

Safeguards under the Bill

2.24 The Minister's second reading speech demonstrates that the Government is aware that the proposals in this bill potentially infringe on a person's right to rehabilitation, privacy and employment. The Minister's speech emphasised the safeguards which are part of this proposal, which are intended to ensure the

information is dealt with appropriately, and to limit any potential misuse. He described the safeguards as having three key features:

Firstly, the COAG agreement requires that a person or body will only be prescribed in each jurisdiction for the purposes of enabling them to receive conviction information if the person or body:

â¢ is authorised by the government of the state or territory in which it operates;

13 Explanatory Memorandum, p. 8.

14 Explanatory Memorandum, p. 9.

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â¢ has a legislative basis for screening that prohibits further release or use of the information (except for legislated child protection functions in exceptional circ*mstances);

â¢ complies with applicable privacy, human rights and records management legislation;

â¢ reflects principles of natural justice; and

â¢ has risk assessment frameworks and appropriately skilled staff to assess risks to children 's safety.

Secondly, to reinforce the importance of these safeguards, before a person or body in a state or territory can be prescribed in regulations to allow them to deal with Commonwealth criminal history information, I must first be satisfied that they meet all of these safeguards in their own jurisdiction. In particular, I will require their assessment processes to reflect principles of natural justice, including access to a merits review or appeal process by an independent arbiter.

Thirdly, the information can only be used to assess a person ' s suitability to work with children and cannot be used for a general employment suitability b . 15

or pro 1ty assessment.

2.25 The Minister acknowledged that sensitive information will be available under the information exchange, and that it will be important to assess the effectiveness of the regime, and ensure that information is being dealt with appropriately. The Bill provides for a three month review of the new provisions, to commence no later than 30 June 2011.

2.26 The committee notes two minor errors in section headings in the Explanatory Memorandum. The section dealing with the proposed defmitions of 'children' and 'work' should be labelled 'Section 85ZZGF'; and the section dealing with the review of the operation of subdivision A of the Bill should be labelled 'Section85ZZGG'.

15 The Hon Brendan O'Connor MP, Minister for Home Affairs, House Hansard, 20 August 2009, p. 8476.

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CHAPTER3 ISSUES

3 .1 Submissions supporting the Bill were received from a broad range of organi sations, ranging from child advocacy groups, childcare provider groups, and church and community and organisations which provide activities and services for children.

3. 2 A number of other organisations, while supportive of the broad principle underlying the Bill, raised serious concerns with various aspects of the Bill. Issues rai sed included the breadth of disclosure and rationale supporting it, the implications for the presumptions currently in the Crimes Act in relation to quashed and pardoned

convictions, human rights issues and the right to rehabilitation, the adequacy of privacy safeguards, the prescription of bodies receiving and using criminal history information, and defmitional issues.

Submissions endorsing the Bill

3.3 Community Child Care Co-operative, which advocates for quality children's services, expressed support for the Bill stating that the safety of a child in a children's service and a child's own rights to safety outweighed a person's interest in putting the offence behind him or her via the normal application of the spent conviction scheme. 1

3.4 The Salvation Army (Eastern Australian Territory) made a similar point, while acknowledging that there is a tension between conflicting interests:

The Salvation Army maintains a strong belief in the possibility of change for all offenders regardless of the nature of the offence, and is opposed to any form of unnecessary discrimination against them. However we feel that the disclosure of spent, pardoned and quashed convictions across jurisdictions for people working or seeking to work with children, youth

and other vulnerable persons is necessary for the protection of children.2

3.5 The Salvation Army explained that:

. . . it is estimated that around 70% of prison inmates themselves report having experienced abuse as children, highlighting the devastating and long-term effects of childhood abuse. The damage done to them should be acknowledged, and every effort made to prevent similar effects on future

. 3

generations.

3.6 Some submissions, while supporting provisions ofthe Bill, expressed a view that consideration be given to a broader child-related screening framework.

Submission 2, p. 2.

2 Submission 8, p. 2.

3 Submission 8, p. 2.

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3.7 The Australian Childhood Foundation expressed the view that the Bill will significantly enhance the capacity of organisations to protect children accessing services and programs. The Foundation noted that:

In our work with child related organisations, they welcome the structures and tools to manage risk to children, and view the content of prior criminal behaviour as pivotal in their capacity and confidence to provide safe environments for children. In our experience, if there is any unease for the children's services or activity providers, it is that there is not enough information available about applicants.

We believe that information relating to charges withdrawn or not proven should not be excluded. The decision to exclude such information does not take into account the prevalence of child sexual abuse and the overwhelmingly poor rate of prosecution and convictions for child sex offences. 4

3.8 Dr Joe Tucci from the Australian Childhood Foundation elaborated on why the Foundation sees the need for the disclosure of information concerning spent convictions:

From our point of view, we see adults who were sex offenders a long time ago who basically go underground or do not come to the attention of any authorities, not because they are not necessarily not engaging in sexual assault against children but because they have learnt how to avoid being caught. Over the period of time in which convictions can become spent it does not necessarily follow that they are not engaging in that kind of sexual assaulting and behaviour; it is just that we do not know about it. An early conviction can point to the ongoing risk that this person might pose to children. That kind of information needs to be made available across jurisdictions. It will also help those authorities that are responsible for

making decisions around a working with children check or something similar so that they are able to make some evaluation of whether that person is fit to work with or support children. I do not think that we should just let that information slide by. It should be made available and then contextualised by the people who are in the decision-making position. 5

3.9 While the submission received from Bravehearts gave thorough support to the provisions of the Bill, it also suggested further consideration of more extensive background checks, noting the limitations of a system based on criminal history checks only for persons working with children. Other areas for screening suggested in the submission included whether people had been subject to disciplinary hearings or diversionary programs, their employment history and also overseas checks.

3.10 A submission from the Commissioner for Children Tasmania strongly supported the inclusion of non-conviction information in any screening of individuals

4 Submission 16, pp 1-2.

5 Dr Joe Tucci, Committee Hansard, 10 November 2009, p. 13 .

6 Submission 7, p. 1.

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Jfor child-related work and endorsed the scope of the Bill. The Commissioner did

h owever observe that the expression 'risk assessment frameworks' in proposed s .85ZZGE is not defined, and recommended that:

In order to be proclaimed a 'prescribed body' or 'prescribed person' the person or body's 'risk assessment frameworks' should be defined. 7

3.11 Other submissions in support of the Bill or the COAG initiative were received from Hon. James Wood AO QC8; Family Daycare Australia9; Scouts Australia 10; Surf Lifesaving Australia 11; the Attorney-General and Minister for Corrective Services (WA) 12 and the Commissioner for Children and Young People and Child Guardian

(Qld) 13 â¢ A brief submission was also received from the Law Society ofNSW advising that the Society's Criminal Law and Juvenile Justice Committees had reviewed the Bill and 'have no objection to the provisions of the Bil1'. 14

Concerns about aspects of the Bill

3.12 While there was widespread support for the Bill, a number of submissions while supporting endeavours to improve safety and protection to children from harm through child-related screening processes, raised concerns with the Bill's provisions.

3.13 These concerns focussed on the following issues:

â¢ disclosure and use of information concerning pardoned and quashed convictions;

â¢ disclosure and use of information concerning all spent convictions;

â¢ definition of 'working with children'; and

â¢ adequacy of privacy protections.

Disclosure and use of information concerning pardoned and quashed convictions 3.14 Section 85ZS of the Crimes Act currently provides that a person who has been granted a free and absolute pardon because they were wrongly convicted of an offence is :

â¢ not required to disclose the fact that they were charged with, or convicted of the offence;

7 Submission 1, p . 2.

8 Submission 3.

9 Submission 5.

10 Submission 10.

11 Submission 11 .

12 Submission 12.

13 Submission 14.

14 Submission 13 .

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â¢ able to claim that he or she was not charged with, or convicted of, the offence;

â¢ not subject to any legal duty or disability to which he or she would not have been subject if he or she had not been convicted; and

â¢ able to expect that other people may not take into account that the person was charged with or convicted of the offence, without consent.

3.15 Section 85ZU of the Crimes Act provides similar protections for a person whose conviction has been quashed in particular circ*mstances and it is lawful for a person to claim that they were not charged with, or convicted of, the offence, and other people may not disclose or take into account the fact that the person was charged or convicted, without their consent.

3.16 The Crimes Act does not currently provide any exceptions to the protections afforded under sections 85ZS and 85ZU.

3.17 The proposed new exceptions to allow the disclosure and use of information relating to a person's pardoned and quashed convictions caused concern for a number of submitters. The Law Council of Australia, the Queensland Council for Civil Liberties and the Queensland Law Society all raised issues about these proposed amendments.

3.18 The Law Council expressed support for endeavours to minimise the risk of harm to children by carefully screening persons involved with their care, supervision and instruction. However, the Council expressed concern that:

... several of the Bill's provisions potentially interfere with a person's right to rehabilitation, privacy and employment without any demonstrated . 'fi . 15 JUStl tcatwn. 3.19 The Law Council argued that the Second Reading Speech and the Explanatory Memorandum failed to explain why or how the fact that a person was once wrongly convicted of an offence should be taken into account in determining suitability to engage in child-related work.

3.20 Referring to the provisions in the Crimes Act regarding pardoned and quashed convictions which are discussed above, the Council reminded the committee that those provisions do not provide for any exceptions or exclusions, and reflect the principle that:

... if a person has been pardoned (on the basis of a wrongful conviction) or their conviction has been quashed or set aside by a higher court on review, they are entitled to the full benefit of that decision. That requires that the person be treated as if the conviction had never occurred. 16

3.21 The Law Council summed up the implications of the proposal:

15 Submission 15, p. 1.

16 Submission 15, p. 2.

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Any different approach would mean that, once convicted, a person's guilt can never be fully expunged even where the process by which the conviction was secured is found to have been flawed. 17

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3.22 It was further explained that these amendments may result in limiting a person's employment opportunities because of a prior criminal charge, even though they had been exonerated. The Council emphasised that it was important to note that these amendments relate to offences of all types and are not confined to pardoned or quashed convictions for offences against children.

3.23 The Law Council also submitted that the approach in the Bill is potentially inconsistent with Australia's obligations under the International Covenant on Civil and Political Rights:

This appears to be inconsistent with 14(2) of the International Covenant on Civil and Political Rights which provides that person should be treated as innocent until proven guilty. In that respect, the Law Council notes that those jurisdictions with Human Rights Acts, namely the ACT and Victoria, have both declined to participate in the exchange of information on non conviction charges.

The amendments, by their very nature, declare that it will sometimes be legitimate (and therefore compliant with applicable privacy, human rights and natural justice principles) to take into account, including to a person's disadvantage, a charge in relation to which that person was ultimately exonerated. 19

3.24 The Law Council concluded that:

In the absence of evidence demonstrating that these amendments will deliver improved child protection outcomes which warrant interference with fundamental rights, the Law Council submits that the proposed exceptions to the prohibition on the disclosure and . use of information relating to pardoned or quashed convictions should not be passed.

3.25 The Queensland Council for Civil Liberties was also highly critical of this aspect of the Bill:

The quashing of their conviction or a person's pardon must mean that they didn't commit the offence. How then it can in any rational sense be proper to require them to disclose the fact they were charged? 21

3.26 The Queensland Law Society also expressed 'serious concerns' about aspects of the Bill and was also of the view that the requirement to disclose pardoned and

17 Submission 15, p. 2.

18 Submission 15, p. 2.

19 Submission 15, pp 2-3 .

20 Submission 15, p. 3.

21 Submission 4, p. 1.

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quashed convictions for child related screening was not justified and had not been based on empirical evidence. The Society described the research which the Minister quoted in his Second Reading speech for justification for these amendments as 'limited and dated' and draws attention to the need for further discussion around the issue. 22

3.27 The Queensland Law Society stated that the requirement to disclose pardoned and quashed convictions is inconsistent with section 5(1) of the Queensland Criminal Law (Rehabilitation of Offenders) Act 1986, which embodies the notion that when a conviction is quashed on appeal or pardoned, it should effectively be treated as if it never occurred. 23

3.28 While supportive of the initiative to facilitate the inter-jurisdictional exchange of criminal history information, the Office of the Privacy Commissioner also questioned the relevance of including information about quashed and pardoned convictions in assessments. The Office's view is explained more completely in the subsequent section of this report entitled 'Privacy issues'.

Disclosure and use of information concerning all spent convictions

3.29 The Law Council of Australia and other submitters also commented on the proposed amendments relating to spent convictions.

3.30 The Law Council reminded the committee that the Crimes Act currently provides that when persons are being assessed for a position which relates to the care, instruction or supervision of minors, the assessment may have access to and take into account any information about prior convictions for a sex offence or an offence committed against a child, even though even though that offence would otherwise be regarded as a spent conviction. The Law Council noted that this provision was to be repealed and replaced with a significantly broader exception that would allow all spent convictions, not just sex offences or those against children, to be disclosed where the person was being assessed for suitability for working with children.24

3.31 The Law Council acknowledged that exemptions from the spent convictions regime were sometimes needed but questioned why it was necessary to disclose all convictions rather than those that might be relevant to the situation.

3.32 The Law Council submitted that no justification has been offered for why complete access to information about a person's spent convictions was needed. The Council noted the explanations offered in the Second Reading Speech. These were to the effect that the Australian Institute of Criminology report Child sexual abuse: offender characteristics and modus operandi had observed that incarcerated sexual offenders are more likely to have previous convictions for non-sexual offences than for sexual offences; and that law enforcement agencies have indicated that charges relating to offences against children are often withdrawn as a decision is made to

22 Submission 9, p. 1.

23 Submission 9, p. 1.

24 Submission 15, p. 5.

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:protect the child vtctlm from the stress and trauma of gtvmg evidence, cross examination and simply waiting for committal and trial. However, the Law Council did not regard this explanation as empirically compelling, contending that:

... even if the accuracy of these claims is accepted, they establish nothing further than that the absence of prior convictions for sexual offences is not, in itself, a reliable indicia of whether a person is suitable to work with children. 25

3.33 The Law Council submitted that the danger of this broad disclosure of convictions is that it raises the risk that people will be discriminated against on the basis of old convictions, regardless of relevance to the inherent requirements of the position sought. The Law Council drew the committee's attention to the Australian Human Rights Commission (AHRC) submission on the draft Model Spent

Convictions Bill, which provided a case study highlighting the nature of the risk:

Employment as a youth worker: The complainant was employed as a locum caseworker for a State Government Department. He disclosed his criminal convictions and provided information regarding the circ*mstances surrounding his convictions. He states that he then applied for a permanent position. He was told that due to his criminal history, a drug possession

(marijuana) charge 16 years ago, he would not be appointed to the position and could no longer have one-on-one contact with clients. The complainant's employment was then terminated.26

3.34 The proposed safeguards that were proposed to apply in relation to

compliance of a prescribed person or body with standards set in proposed s85ZZGE were acknowledged and welcomed, but described by the Law Council as offering limited protection. The Law Council also noted what it considered an omission from the Bill:

... while the Explanatory Memorandum provides that a prescribed person or body may only use a person's criminal history information 'for the limited purpose of assessing the risk that [the] person may pose in working with children' and that the 'information may not be used for the purpose of a

general probity or employment suitability check', this prohibition is not reflected in the Bill itself. 27

3.35 The Law Council submitted that in the absence of evidence demonstrating that a particular type of spent conviction is relevant to assessing a person's suitability to care for, supervise or instruct children, such a conviction should not be able to be disclosed or taken into account, and that the Senate should reject the proposed

amendment. The Council stated that if the proposed amen<;lment were to be passed, it supported the AHRC submission to the Government on the model. The AHRC's

Position in essence was that there should be a balancing amendment to the Human ' '

25 Submission 15, p. 6.

26 Submission 15, p. 7.

27 Submission 15, p. 7.

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Rights and Equal Opportunity Act 1986 to make discrimination on the ground of criminal record unlawful.

3.36 The Queensland Council of Civil Liberties put a similar argument to that of the Law Council. It submitted that an inquiry should be conducted to assess what types of offences might signify that a person has a propensity to mistreat minors and also over what period that propensity might continue.28

3.37 The submission of the Queensland Law Society was similar in character, the Society submitting that a spent conviction should only be required to be disclosed when a causal link can be established between the offence and the type of employment sought. The Society's submission was scathing:

The spent convictions scheme is built on the premise that historic convictions are not a reliable indicator for determining future behaviour and reliance upon such convictions has the potential to result in serious prejudice to a former offender. The use of criminal history information to

exclude individuals from employment not only impacts upon a former offender's rehabilitation, but ultimately increases their risk of re-offending.

It is concerning that this Bill provides yet another example of a rapidly expanding criminal history checking regime that encroaches upon the spent convictions scheme without justification borne from relevant modem research. 29

3.38 The submission of the Office of the Privacy Commissioner also expressed the view that it was unclear why the Bill permitted the use and disclosure of an individual's full criminal history irrespective of the type of offence. The Office's view is expounded more completely in the subsequent section of this report entitled 'Privacy issues'.

Government response regarding spent, pardoned and quashed convictions

3.39 The Attorney-General's Department submission responded to the issues raised about the proposed exemptions in respect of spent, pardoned and quashed convictions. In relation to the requirement that all convictions could be disclosed, not just those relating to sexual or child related offences, the Department told the committee that:

It is appropriate to consider a person ' s complete criminal history in assessing whether he or she poses a risk to children if employed in child related work. The nature and circ*mstances of the offence of which a person is convicted may be relevant in assessing the person's suitability to work with children even if it is not a violent or sexual offence. For example, convictions for a range of offences where the victim is a child may be relevant. Other types of offences such as drug trafficking offences or offences of menacing or harassing another person may also be relevant. Restricting the exchange of criminal history information to certain categories of offences may create a risk that relevant information would not

28 Submission 4, p. 2.

29 Submission 9, p. 6.

404

be disclosed to a screening unit and could undermine the

comprehensiveness of the screening process. 30

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3.40 At the public hearing, the Department also addressed the question of

disclosure of all offences, not just those of obvious relevance to child related employment. Officers explained that it would be difficult to include only certain categories, as there may be other offences where the circ*mstances may make the offence relevant to assessing a person's suitability to work with children.

Officers

advised that screening units, with skilled staff, would assess the relevance of convictions.

We would also accept that there may be such offences where they may not be relevant and the job of the screening unit is to properly filter relevant offences from non-relevant offences. There is a full natural justice process that each of them comply with where individuals who are the subject of

screening have the opportunity to respond to any adverse information and most processes have both their merits review and a judicial review of findings of screening units in place. So there is a full process for that to be worked through with the screening unit. 32

3.41 Concerning the inclusion of quashed or pardoned convictions, a matter of considerable controversy for several submitters, the Department responded that:

The fact that a person's conviction for an offence has been quashed or pardoned does not necessarily make the facts and circ*mstances of that offence irrelevant to an assessment of the risk that the person poses to children if employed in child related work. A person' s conviction may be

quashed for reasons that do not negate the credibility of evidence on which the conviction was based. Accordingly, non-conviction information may be useful in assessing the suitability of a person to work with children. 33

3.42 Addressing the balance that is to be struck between the interests of child safety and rehabilitation and the right to work, the Department pointed to the safeguards built into the Bill:

The jurisdictional authorised screening units that assess a person' s suitability to work with children are required to have risk assessment frameworks and appropriately skilled staff to assess risks to children's safety and to comply with the principles of natural justice. This will ensure that, when a screening unit receives a person ' s complete criminal hi story information, it undetiakes a rigorous process to determine the relevance of a particular conviction to a person ' s suitability to work with children.

An applicant for a working with children check would always have an opportunity to access the criminal history information available to the screening unit and to respond to the veracity or circ*mstances of criminal

30 Submission 17, p. 2.

31 Ms Sarah Chidgey, Committee Hansard, 10 November 2009, p. 18.

32 Ms Sarah Chidgey, Committee Hansard, 10 November 2009, p. 18.

33 Submission 17, p. 2.

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history information relating to them that had been sourced by the screening unit.34

3.43 In evidence before the committee, the Department emphasised that the 'bill has been designed to strike an appropriate balance between protecting children from harm and providing individuals with opportunities to find · gainful employment. '35

3 .44 The Department told the committee that it had been advised that all current jurisdictional screening units have appeals processes in place for decisions made in relation to working with children checks and that each jurisdictional authorised screening unit would be required to complete a number of specific tasks before

making a decision to issue a negative notice to an application:

â¢ disclosure of the criminal history information to the individual;

â¢ allowing the individual a reasonable opportunity to be heard; · and

â¢ consideration of the individual's response prior to the finalisation of the screening decision. 36

3.45 Responding to concerns that the Bill may breach Australia's Human Rights obligations, the Department maintained that this was not the case, as while the Bill allows a screening unit to consider pardoned or quashed convictions, 'it does not override the presumption of innocence'. 37

Definition of 'working with children'

3.46 Proposed s85ZZGF of the Bill defines 'child' as a person who is under 18 years of age; and 'work' is defined broadly as including the following:

work includes the following:

(a) work:

(i) under a contract of employment, contract of apprenticeship or contract for services; or

(ii) in a leadership role in a religious institution, as part of the duties of a religious vocation or in any other capacity for the purposes of a religious institution; or

(iii) as an officer of a body corporate, member of the committee of management of an unincorporated body or association or member of a partnership; or

(iv) as a volunteer, other than unpaid work engaged in for a private or domestic purpose; or

34 Submission 17, pp 2-3.

35 Ms Sarah Chidgey, Committee Hansard; IO November 2009, p. 17.

36 Submission 17, p. 2.

37 Submission 17, p. 4.

406

(v) as a self employed person;

(b) practical training as part of a course of education or vocational training;

( c) acting in a prescribed capacity or engaging in a prescribed activity.

Page 21

3.47 However, the Bill does not define the term 'working with children'. The lack of a definition of this term was a matter of concern to a number of submitters.

3 .48 The Law Council of Australia pointed out that under the current provisions of the Crimes Act, relevant exemptions to the spent conviction regime are drafted so that they only apply to the assessment of people engaged in or seeking to engage in a job or activity which involves 'the care, instruction or supervision' .of children. However, the approach in the Bill is different, referring to 'work, or seek to work, with children.'

3 .49 The Law Council was of the view that this phrase is very broad and could encompass large parts of the workforce who work alongside or in contact with people under the age of 18, but who have no direct responsibility for them. 38 The Queensland Law Society made a similar observation, claiming that the breadth of the definition meant that it would 'encapsulate a vast number of individuals whose roles involve

only indirect association with children', for example retail shop employees.39

3.50 At the hearing, Ms Rosemary Budavari of the Law Council provided the committee with some examples of the potential impact of this amendment:

The broadness of the phrase might mean that a cleaner in a childcare centre may have to have their conviction disclosed or taken into account.

... some of the hypothetical scenarios we considered when looking at this were things like someone working at McDonald' s, where there is going to be a clientele of both adults and children; is that working with children? Or someone working in a retail outlet where some of the customers are going to be adults and some are going to be children- is that working with

children, potentially? 40

3.51 The Law Council submitted that there is no need or child protection imperative for breaching the privacy of this broader class of persons by subjecting them to criminal history checks, let alone in circ*mstances where their pardoned, quashed and spent convictions may be disclosed and taken into account. It was of the view that a definition of 'work with children' should be added to the Bill which provides that the phrase only encompasses those directly engaged in the care,

supervision or instruction of children or close contact with children. Ms Budavari advised the committee that the Law Council felt this approach was reasonable and proportionate to the risk being addressed. 41

38 Submission 15, p. 9.

39 _ Submission 9, p. 2.

40 Ms Rosemary Budavari, Committee Hansard, 10 November 2009, pp 4-5.

41 Ms Rosen:i.ary Budavari, Committee Hansard, 10 November 2009, p. 4.

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3.52 The Queensland Law Society also thought that the breadth of the definition would be problematic in that it would require a much larger number of people to undergo screening, and strain the resources of screening organisations.

3.53 Dr Joe Tucci of the Australian Childhood Foundation also felt a definition of 'working with children' should be included in the Bill:

I think it would be helpful, because I think then you give some purpose to what the legislation is about, and you can find some common dimensions across all of the jurisdictions. As you would know, many of the jurisdictions do have some form of working-with-children check now, and

if they do not they are actively working on developing it, so I think having a definition of it would definitely give a focus to why this information needs to be exchanged.42

3.54 The Attorney-General's Department provided some explanation of this issue, advising the committee that:

The Bill does not broaden the scope of persons who may need to undergo a working with children check as these requirements are defined in each jurisdiction. Defining 'working with children' in the Commonwealth Bill is not possible as there are some variations between jurisdictions in how the

term is defined. 43

3.55 The Department elaborated on this issue at the hearing, advising that the Bill was drafted to fit into the current screening processes that exist in each jurisdiction which operate under their own definitions.

We examined those very closely and in fact circulated to states and territories a possible draft of the definition of 'working with children'. States and territories informed us that including that in a Commonwealth bill would create real difficulties for them because each of their jurisdictions has a slightly different definition and imposing our definition

on them could create difficulties with the operation of their existing screening processes. They advised us quite strongly that they would prefer a system in which we pick up their existing legislative arrangements, basically, and have general requirements that our minister has to be satisfied of, but if we in our bill drafted a whole set of privacy requirements which applied to them, they could potentially conflict with their own definitions of 'working with children' and our own separate privacy requirements and create real difficulties for a workable system.

3.56 While the Department is of the view that the current amendment will work appropriately, officers acknowledged that a consistent approach to the defmition of 'working with children' between jurisdictions is an issue that could be considered further.

42 Dr Joe Tucci, Committee Hansard, 10 November 2009, pp 13-14.

43 Submission 17, p. 4.

44 Ms Sarah Chidgey, Committee Hansard, 10 November 2009, p. 18.

45 Ms Sarah Chidgey, Committee Hansard, 10 November 2009, p. 19.

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Privacy issues

3.57 Item 5 of the Bill would amend paragraph 85ZZ(l)(b) of the Crimes Act to extend the Privacy Commissioner's role to include receiving written requests for exclusion from the quashed and pardoned convictions scheme and advising the Minister whether an exclusion should be granted. The Commissioner already has a

similar function in respect of spent convictions.

3.58 The Office of the Privacy Commissioner (the Office) made a comprehensive submission to the inquiry in which it raised a number of issues in relation to privacy safeguards. The Office's submission is a useful document which provides a clear explanation of the operation of the privacy principles as they impinge on the proposals

in this Bill. The committee thanks the Office for the submission, and commends it to Senators for close reading as part of the consideration of this Bill.

3.59 The Office expressed support for the initiative underlying the Bill, acknowledging the importance of the public interest objective aimed at protecting children from sexual, physical and emotional harm through comprehensively assessing the criminal history information of people working with or seeking to work with children. However, the Office also acknowledged the importance of ensuring that any information excluded from the quashed, pardoned and spent convictions schemes is relevant to the purpose for which it will be used, and is not mishandled. The Office highlighted the tensions that underlie the widening of the exclusions:

The challenge is to ensure that individuals are not prevented from working with children because of a minor offence committed more than 10 years earlier which had no bearing on that risk. 46

3.60 The Office's submission addressed a number of safeguards which it considered 'may help to ensure that screening units do not take account of irrelevant criminal history information, that such information will only be used for a relevant purpose and that the information is not misused in another way.t4

The issues raised by

the Office were as follows:

â¢ coverage of the Privacy Principles;

â¢ use and disclosure for a relevant purpose;

â¢ privacy safeguards in prescribed laws;

â¢ privacy safeguards and prescribed persons or bodies; and

â¢ Privacy Commissioner's functions.

Coverage of the privacy principles

3.61 The Office pointed out that the Bill and the Explanatory Memorandum do not clarify which types of persons or bodies will be prescribed as screening units, and

46 Submission 6, p. 5.

47 Submission 6, p. 6.

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submitted that it is also possible that some of these entities may not be covered by privacy law.

3.62 The Office gave the example of small businesses with an annual turnover of $3 million or less, which it said were not generally covered by" the Privacy Act 1988 unless they are contracted service providers to a Commonwealth government agency or otherwise brought within the coverage of the Privacy Act. The Office also advised that the Act does not cover State or Territory government agencies other than ACT government agencies. While some entities that are exempt from the Privacy Act may be covered by applicable State or Territory privacy laws, others may not.

3.63 To ensure appropriate coverage, the Office suggested that proposed section 85ZZGE of the Bill could be amended to require the Minister to be satisfied that a person or body 'is subject to' applicable Commonwealth, State or Territory privacy law before it may be prescribed as a screening unit.

3.64 The Office submitted that by way of meeting such a requirement, a person or body that seeks to be prescribed as a screening unit and that is not covered by privacy laws, could:

i) If it is a small business, choose to be covered by the Privacy Act under section 6EA of the Privacy Act, which states that 'a small business operator may make a choice in writing given to the [Privacy] Commissioner to be treated as an organisation'

ii) If it is a small business, be prescribed as an 'organisation' for particular acts or practices under section 6E(2) of the Privacy Act, which states that 'this Act also applies, with prescribed modifications (if any), in relation to the prescribed acts or practices of a small business operator prescribed for the purposes of this subsection as if the small business operator were an organisation'

iii) If it is a State or Territory authority or instrumentality, be prescribed as an 'organisation' under section 6F(l), which states that 'this Act applies, with the prescribed modifications (if any), in relation to a prescribed State or Territory authority or a prescribed instrumentality of a State or Territory (except an instrumentality that is an organisation because of section 6C) as if the authority or instrumentality were an organisation' or

iv) Where possible, be declared covered by a State or Territory privacy scheme. 48

3.65 The Office also suggested a fall-back position should its suggestion not be adopted, which would require the development, in consultation with the Office, of a set of publicly available guidelines on good privacy practice for all entities handling criminal history information under the Bill irrespective of whether they are covered by the Privacy Act or other privacy laws.

48 Submission 6, pp 7-8.

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Use and disclosure for a relevant purpose

3. 66 The Office advised the committee of a fundamental principle in the privacy Act:

.. . it is a fundamental principle of the Privacy Act that an individual's personal information should only be used for a purpose to which the information is relevant. 49

3.67 In relation to the Bill, the Office submitted that in its view, an individual' s full criminal history information may not always be relevant to assessing a person's suitability to work with children.

3.68 Addressing the proposed use and disclosure of quashed or pardoned conviction information as provided for in the Bill, the Office noted that the reasons given for inserting the original protections relating to the non-disclosure of this information were that 'if it is subsequently found that a person was wrongly convicted and a pardon is granted on that basis, justice requires that the person should be put in the same position as if he or she had never been convicted at all. '50 On this basis, the Office questioned the relevance of including information about quashed and pardoned

convictions in assessments:

In the Office's opinion where an individual has been exonerated in relation to a particular offence, that person may have a reasonable expectation that this information will not need to be collected or taken into account by others. The Office is also unsure of the relevance of such information in assessing a person' s suitability to work with children. 5 1

3.69 This view had similarities to that put by the Law Council and others, which are described earlier in this report.

3.70 The Office suggested that if this information was, however, judged to be relevant, then screening staff should be provided with publicly available criteria for determining relevance:

The Office would suggest that screening unit staff handling this informatioD be provided with clear publicly available criteria to help them identify the comparative relevance of particular criminal history information in assessing a person's suitability to work with children and make consistent

decisions. 52

Privacy safeguards in prescribed laws

3. 71 The Office noted that the Bill refers to 'prescribed Commonwealth, State and Territory laws' which require or permit a screening unit .to ' deal with information about persons who work, or seek to work, with children' . The Office advised the

49 Submission 6, p. 8.

50 Submission 6, p. 8. The submission was referring to the second reading speech for the Crimes Legislation Amendment Bill 1989.

51 Submission 6, p. 8.

52 Submission 6, p. 9.

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committee that it understood that laws would be developed and prescribed in fulfilment of the COAG agreement. It expressed concern that these laws should contain appropriate privacy safeguards, and suggested the inclusion of the following safeguards in any such laws:

i) Publicly available assessment criteria - The prescribed laws should contain publicly available criteria to assist screening units to assess an individual's suitability for child-related work. Such criteria should reflect that assessing a person's criminal history is a risk management tool and not a guarantee that an individual is suitable or unsuitable to work with children.

ii) Use for a limited purpose - A screening unit should only use a person's criminal history information 'for the limited purpose of assessing the risk that [the] person may pose in working with children. The information may not be used for the purpose of a general probity or employment suitability check'.

iii) Clearly require or authorise uses or disclosures - If a prescribed law is intended to require or permit the use or disclosure of a person's criminal history information, it should clearly and unambiguously require or authorise such use or disclosure and identify the circ*mstances in which this information may be used or disclosed. This measure will help to clarify whether a particular use or disclosure falls within the 'required or authorised by or under law' exceptions to the use and disclosure privacy principles in IPP lO.l(c), ll.l(d) and NPP 2.l(g).

iv) Natural justice and appeals- Natural justice should apply where a screening unit intends to make an adverse decision about an individual on the basis of their criminal history information. This may include obtaining the individual's consent before undertaking the suitability assessment, disclosing criminal history information considered as part of the assessment, allowing the individual a reasonable opportunity to be heard, considering the individual's response before finalising a decision and allowing a right to appeal a decision. 53

3. 72 In relation to safeguard ii, the 'use for limited purpose' safeguard, the Office stated that while this is referred to in the Explanatory Memorandum, it does not appear to be included in the Bill, and suggested that it be included in any prescribed laws.

3.73 The Office also suggests that when the laws are prescribed by regulation, the explanatory statement should state that the prescribed laws contain these privacy safeguards.

Privacy safeguards and prescribed persons or bodies

3.74 The Office advised the committee that in its view, the Bill and Explanatory Memorandum could provide more detail about safeguards relating to the prescription by the Minister of a person or body as a screening unit in proposed s85ZZGE of the

53 Submission 6, pp 9-10.

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3ill. The Office reiterated its suggestion that the Minister should be satisfied that a erson or body is 'subject to' applicable privacy laws before it is prescribed as a screening unit. The Office stated that if this was impractical, the Explanatory Memorandum could include a non-exhaustive list of the factors the Minister could t ake into account in determining whether a person or body complies (or is likely to c omply) with applicable privacy laws.

3.75 The Office submitted the following comments:

â¢ that the list of factors to be considered by the Minister could include whether the prescribed person or body has appropriate policies and procedures in place for the handling of information about individuals' criminal history and has appropriate complaint handling practices.

â¢ to ensure there are risk assessment frameworks and appropriately skilled staff, the Explanatory Memorandum could include a non-exhaustive list of the factors the Minister may consider when assessing this criterion. These factors could include whether:

â¢ The person or body has policies, procedures and training programs in place to help staff determine from a risk management perspective, if particular criminal history information is relevant to assessing the suitability of a person to work with children; and

â¢ The person or body has policies, procedures and training programs in place to ensure that staff will handle individuals' criminal history information appropriately. 54

3.76 The Office also drew the committee's attention to a possible omission in the Bill, noting that while the Explanatory Memorandum states that 'a person or body will only be prescribed for the purpose of enabling them to receive conviction information if the person or body has a legislative basis for screening that prohibits further release

or use of the information (except for legislated child protection functions in exceptional circ*mstances)', the Bill does not specifically refer to this criterion. The Office suggested that it may enhance consistency with the Memorandum if this criterion were added to proposed section 85ZZGE of the Bill.)

Functions of the Privacy Commissioner

3.77 On the basis of the Office's submission, it is not clear whether there was any consultation with the Office of the Privacy Commissioner about its intended new role under the Bill, especially since the Office submitted that it considered it would be appropriate for the Privacy Commissioner to be consulted any future proposed

exclusions from the quashed or pardoned convictions scheme.) 6

54 Submission 6, pp 10-11.

55 Submission 6, p. 11.

56 Submission 6, p. 12.

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Current child-related employment exclusions

3.78 The Office noted that the Bill proposes to repeal the exclusions in sections 85ZZH (e) and (f) of the Crimes Act which currently apply to screening for child related work, and drew the committee's attention to item 15 in Schedule 4 of the Crimes Regulations 1990, which also contains an exclusion applying to screening fo r child-related work. The Office suggested that it may be appropriate to repeal item 15 in Schedule 4. This may help to ensure there is a consistent approach to applying exclusions from Part VIIC of the Crimes Act for individuals who work or seek work with children.

Government response to privacy issues

3.79 The Attorney-General's Department did not respond individually to all of the points made in the Office of the Privacy Commissioner's submission, but did make a number of comments in relation to the Office's comments relevant to issues raised in the Office's submission that it is important to establish safeguards regarding privacy and how disclosure and use of information will be controlled. The Department submitted that:

Section 85ZZGG of the Bill provides that the Minister for Home Affairs must be satisfied that a screening unit complies with privacy and records management legislation in the relevant jurisdiction before it can become a prescribed body under the Regulations. By virtue of the power to prescribe a screening unit, the Minister also has the power to remove a screening unit from the list of prescribed bodies where such an organisation fails to meet its ongoing obligation to comply with privacy laws. The Minister and the Implementation Working Group will undertake independent reviews after the 12 month trial period to ensure that the privacy safeguards set out in the Bill provide adequate protection to individuals. One of the factors relevant to the Reviews will be whether screening units are complying with privacy

bl . 0 57

o 1gatwns.

3.80 The Department responded briefly in the public hearing on the Bill to the Office's suggestions for enhancing privacy safeguards:

Issues were raised about why our bill does not have very detailed privacy requirements that all jurisdiction screening units have to comply with ... The reason is that this bill is very much fitting into screening processes that exist in every jurisdiction. Most jurisdictions have their own privacy legislation that governs the operation of their screening units .. . 58

3.81 The Department disagreed with the Office of the Privacy Commissioner's suggestion to repeal item 15 of Schedule 4 of the Crimes Regulations 1990. Ms Chidgey noted at the hearing that this item:

.. . certainly overlaps to a degree with this bill. That covers a narrower range of convictions but a slightly broader category of people, and it just

57 Submission 17, p. 3.

58 Ms Sarah Chidgey, Committee Hansard, 10 November 2009, p. 18 .

414

covers spent convictions. It is important that that be there if there are jurisdictions-Victoria, for instance-where they do not necessarily want the full range of pardoned or quashed convictions. It also covers some categories that the bill will not pick up. So, if we remove that, we could

inadvertently limit some of the existing flow of information. 59

C ommittee comments

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3 .82 The committee acknowledges that a number of respected organisations such a s the Law Council have raised significant concerns about this Bill, and does not dismiss these concerns lightly. However, on this occasion the safeguarding children from abuse must outweigh those concerns, and the committee is therefore of the view that the Bill should be supported.

3.83 In coming to this view the committee was persuaded by the evidence of two organisations in particular, these being the sensible and balanced analysis of the Salvation Army (Australian Eastern Territory), and the Australian Childhood Foundation.

3.84 For its part, the Salvation Army pointed to the need for informed risk

management:

It is important to emphasise that disclosure is intended to allow this information to be known and taken into account for risk management rather than to automatically preclude employment, particularly when the conviction was many years in the past with no subsequent convictions and

the applicant has shown evidence of positive change. However disclosure can give the prospective employer opportunity to make a more accurately informed decision and to ensure that appropriate risk management 0 0 1 h

strateg1es are m p ace w ere necessary.

3.85 The Australian Childhood Foundation reminded the committee of the unfortunate reality that necessitates the proposed amendments. While quoted earlier in this chapter, Dr Tucci's evidence is of sufficient weight to quote again in this conclusion:

caught. Over the period of time in which convictions can become spent it does not necessarily follow that they are not engaging in that kind of sexual assaulting and behaviour; it is just that we do not know about it. An early conviction can point to the ongoing risk that this person might pose to children. 6 1

59 Ms Sarah Chidgey, Committee Hansard, 10 November 2009, p. 19.

60 Submission 8, p. 2.

61 Dr Joe Tucci, Committee Hansard, 10 November 2009, p. 13 .

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3.86 The Committee also notes the evidence of the officers of the Attorney General's Department which pointed out that most jurisdictions already have screening arrangements in place which take account of their own pardoned and quashed convictions. The initiatives in this bill will build on what is already in place, allowing the details of Commonwealth convictions to be provided to other jurisdictions and facilitating the exchange of information between jurisdictions. As

such, the Bill is not a radical departure from existing principles. As noted by the Department representative:

I think there has been some misunderstanding that this sets up a sort of national scheme for the Commonwealth controlling all checks to do with working with children. All this bill does is remove Commonwealth legislative barriers to the provision of some categories of Commonwealth conviction information. It does not regulate any state or territory conviction information. We have carefully avoided trying to impose a Commonwealth checking regime over the top of the existing state and territory ones. We have left state and territory checking regimes intact. The idea is that we simply prescribe those regimes so that we can give them our pardoned, quashed and additional categories of spent convictions-Commonwealth convictions- information. 62

3.87 The committee was also reassured by Attorney-General's Department evidence that the Bill will not lead to unwarranted disclosure of a person's criminal history, and this information will be confined to the qualified screening assessment units. Prospective employers will receive only a yes or no answer as to whether a person is suitable for working with children.63

3.88 The committee also notes that the Senate Standing Committee for the Scrutiny of Bills reported on this Bill in Report No. 12 of2009, and published a comprehensive response received from the Minister to issues raised in Alert Digest No. 11. That committee appears to have been satisfied with the Minister's response, noting ' ... the processes in place in screening units in other jurisdictions which are designed to provide natural justice to those affected by the operation of the provisions.' 64

3.89 The committee noted the detailed submission of the Office of the Privacy Commissioner concerning the need to ensure stringent privacy safeguards are in place, and the department's response that most jurisdictions already have their own privacy legislation. The committee was unable to reconcile these views, which are apparently conflicting. The committee suggests that Minister and the Implementation Working Group independent reviews referred to in the Department's submission use the standards described by the Office as a yardstick to determine whether screening units are adequately complying with privacy obligations.

3.90 The committee was persuaded by the evidence of the Office of the Privacy Commissioner that a review of the legislation after 12 months of operation may not be

62 Ms Sarah Chidgey, Committee Hansard , p. 23.

63 Ms Sarah Chidgey, Committee Hansard , pp 18-19.

64 Senate Standing Committee for the Scrutiny of Bills, Report No. 12 of 2009, p. 512.

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s ufficient due to the possibility that evidence after this period may be limited, and that a three-year review should be conducted. The committee recommends accordingly.

Recommendation 1

3.91 The committee recommends that the Bill be amended to provide for a further review of the legislation after three years of operation, in addition to that provided for by proposed section 85ZZGG.

Recommendation 2

3.92 The committee recommends that subject to recommendation 1, the Senate pass the Bill.

Senator Trish Crossin

Chair

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ADDITIONAL COMMENTS BY LIBERAL SENATORS

1.1 Liberal Senators support the broad thrust of the majority report and

recommendations, and strongly agree with the imperative of minimising the risk of sexual, physical and emotional harm to children by stringent screening of people who are seeking to work with them. Nonetheless, Liberal Senators note that a number of significant and respected organisations that gave evidence to this inquiry, including the Law Council of Australia, hold reservations about a number of aspects of the Bill.

These reservations include: whether sufficient justification has been provided for over-riding important legal principles associated with quashed and pardoned convictions; a lack of a definitions of 'working with children'; and the adequacy of privacy safeguards.

1.2 Liberal Senators note evidence by the Attorney-General's Department that this Bill simply allows Commonwealth spent, quashed and pardoned convictions to be provided to other jurisdictions. 1 The Departmental representative stated that:

information. 2

1.3 This evidence, which apparently seeks to reassure the committee that there is nothing controversial about this Bill, is in stark contrast with the evidence of the Law Council of Australia, the Office of the Privacy Commissioner, and the Queensland Council for Civil Liberties. Either these organisations have indeed misunderstood the Bill, or else the Department is underestimating or understating its significance.

1.4 There is no indication in the Explanatory Memorandum or the second reading speech that this is a routine Bill building on an existing regime. Indeed, unless a reader of the Explanatory Memorandum was wholly familiar with the checking system in the state jurisdictions in respect of people who seek to work with children, the wording of the introduction to the Explanatory Memorandum would clearly lead the reader to assume that what was proposed was wholly new:

The amendments would create an exception for convictions of persons who work, or seek to work, with children so that those convictions can be disclosed to and taken into account by Commonwealth, State and Territory screening agencies in determining whether the person is suitable to work with children.

Ms Sarah Chidgey, Committee Hansard, 10 November 2009, pp 17-18.

2 Ms Sarah Chidgey, Committee Hansard, p. 23 .

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1.5 This text can clearly be read as a new power for such screening agencies, and as such, the Explanatory Memorandum is inadequate and potentially misleading.

1.6 The Department also advised the committee that 'a number of jurisdictions, already take into account their own quashed and pardoned convictions'.3 As such, the concerns expressed by the Law Council and others remain valid, as by proposing the Bill, the Australian Government is effectively endorsing principles and practices that the Law Council has identified as problematic. For example, as quoted in the main . report, where the Council told the committee that:

and

... several of the Bill's provisions potentially interfere with a person's right to rehabilitation, privacy and employment without any demonstrated justification. 4

Any different approach would mean that, once convicted, a person's guilt can never be fully expunged even where the process by which the conviction was secured is found to have been flawed. 5

1. 7 While not prepared to go as far as the Law Council and recommend that the exceptions proposed in the Bill not be passed, Liberal Senators express their disquiet about what the Law Council describes in the preceding paragraphs, which the Bill facilitates and extends.

1.8 Liberal Senators are to some extent reassured about the extent of the safeguards built into the Bill, and the assurances provided in evidence. However they are nonetheless strongly of the view that the Bill would be enhanced by a definition for 'working with children'. Liberal Senators acknowledge efforts to incorporate such a defmition in the bill and the obstacles that have precluded this inclusion, but remain of the view that the lack of a clear definition is still a significant issue.

1.9 Liberal Senators note that the Department does not appear to consider that there will be a significant widening of classes of people being checked, as was apparent in the following exchange:

Senator FISHER-What if McDonald's seeks to employ someone behind the counter? After all, a child may want to go to the loo and ask a member of McDonald's staff for assistance.

Ms Chidgey-The difficulty with that is that it is just not relevant to this bill, in the sense that whether anyone currently needs a check will not be

3 Ms Sarah Chidgey, Committee Hansard, 10 November 2009, pp 17-18.

4 Submission 15, p. 1.

5 Submission 15, p. 2.

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changed by this bill. The requirements for a check are currently set in state and territory legislation, and they will continue.6

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1. 10 While understanding the point made by the departmental representative, L iberal Senators remain of the view that a clear and consistent definition across j urisdictions would be beneficial and would reduce the potential for a larger group of :people to be affected by the legislation than is intended.

Recommendation 1

1.11 Liberal Senators recommend that the Australian Government and the States and Territories, through the SCAG processes, work towards adopting a consistent definition of 'working with children' across all jurisdictions.

1.12 Liberal Senators also support the heightened privacy safeguards suggested by the Office of the Privacy Commissioner, and the suggestion in the main report that these be used as a yardstick to determine whether screening units are adequately complying suggest considered by SCAG for implementation. Liberal Senators do not think the main report goes far enough however, and consider that this suggestion

should have been given the force of a recommendation.

1.13 As noted above in paragraph 1.6, by proposing the Bill, the Australian Government is endorsing practices which are apparently already in place in most State jurisdictions. Liberal Senators do not accept that it is sufficient for the Australian Government to be leaving the enforcement of privacy principles entirely to what is

already in place in the States. Liberal Senators point out that the use of quashed and pardoned convictions information when assessing a person's suitability to work with children, particularly when this is in relation to all convictions and not just those of obvious relevance, is a serious step with potentially far-reaching implications. Liberal

Senators are of the view that the Australian Government should be taking a leadership role and ensuring that the privacy safeguards are stringent and uniform. As such, the recommendations of the Office of the Privacy Commissioner have much to recommend them, and should be used as the standard against which the operations of the screening units are assessed.

Recommendation 2

1.14 Liberal Senators recommend that the Government provide a more comprehensive and concise statement about the adequacy of privacy safeguards in screening units, and the standards to which these units will be required to adhere.

Senator Guy Barnett Deputy Chair

Ms Chidgey, Committee Hansard , p. 23.

Senator Mary Jo Fisher

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ADDITIONAL COMMENTS BY THE AUSTRALIAN GREENS 1.1 This Bill provides for Commonwealth pardoned, spent or quashed convictions to be disclosed in criminal history information provided by CrimTrac or the AFP to employers assessing a prospective employee's suitability through a Working with Children Check.

1.2 This Bill was subjected to a very rapid inquiry, which was going to proceed without an opportunity to discuss its merits or weaknesses in a public hearing due to the large load of legislation before this Committee. Given the very divergent views the Committee did have a brief half day Inquiry which proved to be very useful in clarifying a number of core issues that had not been communicated clearly in the Explanatory Memorandum or Bill.

1.3 Several thoughtful submissions appreciated the gravity of the legal principles at stake in disclosing spent, pardoned or quashed convictions because in so doing incentives and reward for rehabilitation are removed, or a person's name is marked for life even when they were wrongly convicted or exonerated. Other submissions described the cumbersome nature of current screening processes that are not linked nationally, and welcomed efforts to streamline processes and strengthen measures to protect children.

1.4 QLD Law Society noted that the Bill, 'provides yet another example of a rapidly expanding criminal history checking regime that encroaches upon the spent convictions scheme without justification borne from relevant modem research," urging the government to commission further research, invite public discussion and reasoned parliamentary debate. The Law Council was critical that the safeguards

regime, 'offer little protection in the circ*mstances.'

1.5 The Privacy Commissioner contended that it is important to ensure that any information on such convictions, "is relevant to the purpose it will be used for .. . given the sensitivity attached to this information and the potential for an individual to be stigmatised, embarrassed or discriminated against if it is mishandled," and suggests a number of safeguards that screening units do not use irrelevant criminal history information, and that such information only be used for a relevant purpose."

1.6 The Australian Greens acknowledge an epidemic· of sexual violence against women and children across Australia at shamefully high levels. The Greens also believe that it is every child's right to experience the conditions for optimal health, growth and development, and protection from violence and abuse. In examining the Bill in question, it remains unclear as to how disclosing spent, quashed or pardoned

convictions can in this instance better protect children's human rights.

1. 7 Along with the government of Victoria, the Greens do not support the sharing of information relating to non-convictions as it would be inconsistent with the

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principle of innocent until proven guilty and is inconsistent with human rights which Victorian and ACT citizens enjoy through their Charters of Human Rights.

1.8 The Australian Greens support the Committees recommendation for a review of the legislation after three years of operation. In addition the Greens believe the Bill should be amended to:

1) Take account of the Privacy Commissioner's sensible suggestions, in particular to disclose quashed, spent or pardoned convictions only where the offence is demonstrably relevant to the situation, where a causal link can be established between the offence and the type of employment.

2) Provide a definition of 'working with children' for the purposes of disclosing convictions under Commonwealth laws in order to provide guidance to the states and proscribing authorities as to the scope of situations under which disclosures could be deemed appropriate. Not only legal and civil liberties experts were concerned with this issue, the Australian Childhood Foundation agreed that a definition would give some purpose to the legislation.

3) Provide consequential amendments to the Human Rights and Equal Opportunity Commission Act to make discrimination on the ground of criminal record unlawful.

4) Address the inconsistency between the Explanatory Memorandum and the Bill noted by the Law Council in proposed s85ZZGE to include the prohibition into the Bill that is referred to in the EM.

Senator Scott Ludlam

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Submission Number

11.

3 .

4 .

10.

11.

12.

13.

14.

15 .

16.

17.

APPENDIX 1 SUBMISSIONS RECEIVED

Submitter

Commissioner for Children Tasmania

Community Child Care Co-operative Ltd (NSW)

NSW Law Reform Commission

Queensland Council for Civil Liberties

Family Daycare Australia

Office of the Privacy Commissioner (Cth)

Bravehearts Inc

The Salvation Army (Australia Eastern Territory)

Queensland Law Society

Scouts Australia

Surf Life Saving Australia

Attorney-General; Minister for Corrective Services (W A)

The Law Society ofNew South Wales

Commission for Children and Young People and Child Guardian

Law Council of Australia

Australian Childhood Foundation

Attorney-General's Department

ADDITIONAL INFORMATION RECEIVED

1 Answers to Questions on Notice, provided by the Attorney-General's Department Monday 16 November 2009

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APPENDIX2

WITNESSES WHO APPEARED BEFORE THE COMMITTEE

Melbourne, Tuesday 10 November 2009

BUDA V ARI, Ms Rosemary, Co-Director, Criminal Law and Human Rights Law Council of Australia

CHIDGEY, Ms Sarah, Assistant Secretary, Criminal Law and Law Enforcement Branch Attorney-General's Department

FIELD, Ms Autumn, Acting Principal Legal Officer, Criminal Law and Law Enforcement Branch Attorney-General's Department

PILGRIM, Mr Timothy, Deputy Privacy Commissioner Office of the Privacy Commissioner

SOLOMON, Mr Andrew, Director of Policy Office of the Privacy Commissioner

TUCCI, Dr Joe, Chief Executive Officer Australian Childhood Foundation

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THE PARLIAMENT OF THE COMMONWEALTH OF AUSTRALIA

PARLIAMENTARY PAPER No. 427 of 2009 ORDERED TO BE PRINTED

ISSN 0727-4181