BILLS DIGEST NO. 87, 2017–18              16 March 2018

Foreign Influence Transparency Scheme Bill 2017 and Foreign Influence Transparency Scheme (Charges Imposition) Bill 2017

Cat Barker
Foreign Affairs, Defence and Security Section

Deirdre McKeown
Politics and Public Administration Section

Jaan Murphy
Law and Bills Digest Section

Date introduced:  7 December 2017

House:  House of Representatives

Portfolio:  Attorney-General

Commencement: On proclamation or 12 months after Royal Assent, whichever occurs first.

Links: The links to the Bills, their Explanatory Memoranda and second reading speeches can be found on the home pages for the Foreign Influence Transparency Scheme Bill 2017 and the Foreign Influence Transparency Scheme (Charges Imposition) Bill 2017, or through the Australian Parliament website.

When Bills have been passed and have received Royal Assent, they become Acts, which can be found at the Federal Register of Legislation website.

All hyperlinks in this Bills Digest are correct as at March 2018.

Key issues for debate

The Foreign Influence Transparency Scheme Bill 2017 (the FITS Bill) will establish the Foreign Influence Transparency (FIT) Scheme, under which persons will be required to register if undertaking certain activities on behalf of a foreign government, public enterprise, political organisation, business or individual.

Key issues for debate in relation to the FIT Scheme generally (pages 15–19, 21–24 and 58–69) include:

•       whether the FIT Scheme infringes the implied right to political communication or freedom of religion under the Constitution (pages 21–24) or inappropriately limits human rights (pages 15–19)

•       whether disclosure requirements should be placed on the targets of foreign influence—ministers, members of parliament and senior public officials (pages 58-59)

•       what accountability and oversight arrangements might be appropriate for the Scheme (pages 60–61)

•       whether it would be more appropriate for a statutory agency to administer the Scheme than a department (page 60)

•       whether amendments should be made to expand the role of the Scheme administrator to include an education role for potential and continuing registrants (page 62)

•       the potential for the FIT Scheme to be circumvented through the use of interposed entities (pages 64–68).

Key issues for debate in relation to Part 1— Preliminary clauses and definitions of the FITS Bill will be the breadth and scope of key definitions including foreign principal (clause 10), on behalf of (clause 11), activity for the purpose of political or governmental influence (clause 12) and communications activity (clause 13) (pages 24–32).

Key issues for debate in relation to Part 2— Registration under the scheme include:

•       the scope of activities that will be registrable if undertaken in Australia for the purpose of political or governmental influence (clause 21), particularly in relation to communication activities and donor activities (pages 32–34 and 37–46)

•       the lack of post-separation restrictions on the activities of recent Cabinet Ministers and recent Ministers, members of Parliament and other holders of senior Commonwealth positions and lack of secondary employment restrictions for members of Parliament (pages 35–37) and

•       the scope of the exemptions in clauses 24–30, particularly those for legal advice or representation (clause 25), religion (clause 27), news media (clause 28) and commercial or business pursuits (clause 29) and the lack of exemptions for academics, universities, think tanks and not-for-profit organisations (pages 39–50).

A key issue for debate in relation to Part 3—Responsibilities of registrants under the scheme will be whether the regulatory burden associated with compliance is proportionate (noting that no Regulatory Impact Statement has been published) (pages 50–51 and 64).

Key issues for debate in relation to Part 4—Obtaining and handling scheme information include:

•       whether the Secretary should be required to correct and update the register in a timely manner (page 52)

•       the lack of provision for a recipient to object to a notice requiring information (clauses 45 and 46) (pages 52–53) and

•       the potential impact on parliamentary privilege (pages 53–54).

Key issues for debate in relation to Part 5—Enforcement are:

•       the potentially limited scope of offences for failing to register (clause 57) due to the requirement to prove that a person knew they were required to register (pages 55–57) and

•       whether civil penalties should be considered as an alternative enforcement mechanism (page 57).

Purpose of the Bills

The purpose of the Foreign Influence Transparency Scheme Bill 2017 (the FITS Bill) is to establish the Foreign Influence Transparency (FIT) Scheme, under which persons will be required to register if undertaking certain activities on behalf of a foreign government, foreign public enterprise, foreign political organisation, foreign business or an individual who is neither an Australian citizen nor a permanent Australian resident.

The purpose of the Foreign Influence Transparency Scheme (Charges Imposition) Bill 2017 (FITS Charges Bill) is to provide for charges to be imposed for registration and renewal of registration under the FIT Scheme.

Structure of the FITS Bill

The FITS Bill contains six parts:

•          Part 1 includes definitions applicable throughout the Bill. It also includes provisions relating to the constitutional basis of the Bill and its interaction with state and territory laws.

•          Part 2 sets the scope of the FIT Scheme by outlining when a person is liable to register, which activities are registrable and exemptions.

•          Part 3 sets out the obligations of registrants.

•          Part 4 requires that the Secretary maintain the register, provides powers to compel information and documents relevant to the FIT Scheme and outlines how information relevant to the Scheme may be communicated and otherwise dealt with.

•          Part 5 provides for offences relevant to the FIT Scheme.

•          Part 6 contains provisions relevant to the administration of the FIT Scheme, including enabling the imposition of charges, providing rule-making and delegation powers, and providing for annual reports on, and a review of the operation of, the Scheme.

Background

The Government introduced the Foreign Influence Transparency Scheme Bill 2017 (FITS Bill) and the Foreign Influence Transparency Scheme (Charges Imposition) Bill 2017 (FITS Charges Bill) on 7 December 2017. The Bills are part of a legislative package that also includes the National Security Legislation Amendment (Espionage and Foreign Interference) Bill 2017 (EFI Bill) and the Electoral Legislation Amendment (Electoral Funding and Disclosure Reform) Bill 2017 (Electoral Bill).

The Explanatory Memorandum outlines the objective and rationale for the FITS Bill as follows:

The objective of the Bill is to introduce a transparency scheme to enhance government and public knowledge of the level and extent to which foreign sources may, through intermediaries acting on their behalf, influence the conduct of Australia’s elections, government and parliamentary decision-making, and the creation and implementation of laws and policies.

Foreign influence can have serious implications for political sovereignty and national policy as it may result in the prioritisation of foreign interests over domestic interests. For example, where a foreign principal engages an intermediary to represent their interests within Australia, the relationship between the intermediary and the foreign principal, and thereby the foreign interest, can remain hidden. This undermines the ability of decision-makers in government, as well as the public, to fully understand and evaluate the actions of that intermediary, and to make informed decisions.

…

There is currently no formal mechanism requiring instances of foreign influence to be made known to government and the public. While some forms of foreign influence are captured through lobbying registers, these registers primarily target very narrow conduct, being lobbying of government representatives and politicians. Furthermore, these registers are not supported by binding legislative or regulatory frameworks and enforcement mechanisms. Similarly, Ministerial codes of conduct that variously regulate the post-employment activities of Ministers, are not supported by binding legislative or regulatory frameworks. This can impede the ability of these schemes to illuminate activities undertaken by former Ministers on behalf of foreign actors.

The scheme will achieve its transparency objective by publicly identifying the forms and sources of foreign influence exerted over political and governmental processes in Australia. It will do this by way of a publicly available register, containing information about the nature of a person’s relationship with a foreign principal, and the activities undertaken pursuant to that relationship.[1]

The Prime Minister stated:

Being registered under the scheme should not be seen as any kind of taint. And certainly not as a crime.

To the contrary it is applying the basic principles of disclosure to allow the public and policymakers to assess any underlying agenda.

But if you fail to disclose your ties to a foreign principal then you could be liable for a criminal offence.

This is not about shutting down legitimate debate, but rather enabling it.[2]

In contrast, a media report has described the proposed Foreign Influence Transparency (FIT) Scheme as casting:

… a cloud over all dealings between foreigners, their representatives and the government. Whether it is competition policy, foreign investment, regulatory reform or anything that requires a ministerial decision, advocates will have to be registered, spelling out the nature of the activity they are covering. Unregistered foreign influence becomes a crime.[3]

Schemes to regulate lobbying and foreign influence

United States

The FITS Bill is ‘derived from and modelled on legislation in other countries’ including the United States (US) Foreign Agents Registration Act 1938 (FARA).[4] The FARA is:

… a disclosure statute that requires persons acting as agents of foreign principals in a political or quasi-political capacity to make periodic public disclosure of their relationship with the foreign principal, as well as activities, receipts and disbursements in support of those activities. Disclosure of the required information facilitates evaluation by the government and the American people of the statements and activities of such persons in light of their function as foreign agents.[5]

In 1966 Congress amended the FARA ‘shifting its focus toward the promotion of transparency of an agent’s lobbying activities on behalf of its foreign client’.[6] According to a report by the US Department of Justice (DOJ), these amendments ‘narrowed the reach of FARA so that the government has to prove that a foreign agent is acting at the order, request, or under the direction and control of a foreign principal.’[7] The amendments caused uncertainty for many potential registrants, with the result that the DOJ allowed persons to seek an advisory opinion from the DOJ as to whether they were under an obligation to register.[8] The amendments also ‘reduced the incidence of criminal FARA prosecutions in favor of increased civil and administrative resolution of FARA violations’.[9]

In 1995, amendments to the FARA ‘generally limited FARA’s registration requirements to agents of foreign governments and foreign political parties and allowed agents of other foreign entities to register under the LDA’s [Lobbying Disclosure Act] disclosure requirements’.[10]

FARA provides for several exemptions, including for news and press services, activities in furtherance of bona fide religious, scholastic, academic or scientific pursuits and activities in furtherance of the fine arts.[11]

FARA registration is required of a person who undertakes, or agrees to undertake in the US, on behalf of a foreign principal, directly or through any other person:

•       political activities for or in the interests of a foreign principal

•       work as a public relations counsel, publicity agent, information-service employee or political consultant for or in the interests of a foreign principal

•       soliciting, collecting, disbursing or dispensing contributions, loans, money, or other things of value for or in the interests of a foreign principal or

•       representing the interests of a foreign principal before federal agencies or officials of the US Government.[12]

FARA simply mandates disclosure to the federal government and only prohibits wilful failure to register, or misleading statements. According to the DOJ report, seven criminal FARA cases were bought between 1966 and 2015, with the DOJ stating that it seeks voluntary compliance with the law and its report concluding that it lacks ‘a comprehensive FARA enforcement strategy’.[13]

The FARA Registration Unit in the National Security Division (NSD) of the DOJ is responsible for the administration and enforcement of the FARA.

The FARA has three key obligations relating to registrants: registration (including exemptions), disclosure, and record keeping. The main provisions concerning the Department of Justice are enforcement, penalties and reporting.[14] A similar structure has been adopted in the FITS Bill.

The Prime Minister described the FIT Scheme as ‘an improved version … of the Foreign Agent Registration arrangements in the United States’.[15]

The FARA operates in conjunction with the US legislation that regulates domestic lobbying, the Lobbying Disclosure Act 1995 (LDA).[16] The FARA includes an exemption that permits agents of certain foreign principals who register under the LDA to not also register under the FARA.[17] To qualify for this exemption:

… agents of foreign principals first must represent foreign principals other than foreign governments and foreign political parties. Second, those agents must have engaged in lobbying activities for purposes of the LDA and registered under that statute.[18]

Canada

Canada has not introduced legislation regulating foreign influence, but does have a strong domestic lobbying scheme under the Lobbying Act.[19] The Lobbying Act includes provisions for the development of a Lobbyists Code of Conduct and requires the registration of both consultant (third-party) lobbyists and in-house lobbyists for corporations and organisations. The Lobbying Act defines the term ‘public office holder’ which includes Senators and Members of the House of Commons and their staff, Ministers and their staff, officers and employees of federal departments and agencies, Governor in Council appointees, and members of the Canadian Armed Forces and the Royal Canadian Mounted Police.[20]

The Lobbyists Code of Conduct was last updated in 2015 following public consultation and referral to a House of Commons Committee.[21] The Code is published in the Canada Gazette.

The Lobbying Act created the position of Commissioner of Lobbying who is appointed by the Governor in Council after consultation with the leaders of all recognised parties and the approval of the appointment by resolution of the Senate and the House of Representatives.[22] The Commissioner is an independent officer of the parliament with investigative powers and a mandate to ensure compliance with the Lobbying Act and the Lobbyists’ Code of Conduct, maintain the Registry of Lobbyists and deliver an education and awareness program.[23]

Australia

In Australia, federal lobbying is not regulated by a statutory code of conduct or register of lobbyists. The Lobbying Code of Conduct, and the register it created, was established in 2008 by ‘Executive decision’.[24] The current Code requires third-party lobbyists to register when they lobby ‘Government representatives’.[25] This term is defined as a Minister, Parliamentary Secretary, a person employed by a Minister or Parliamentary Secretary under the Members of Parliament (Staff) Act 1984 (MoPS Act), an agency head and other public servants and members of the Australian Defence Force, but does not include non-executive members of parliament.

The Secretary of the Department of the Prime Minister and Cabinet is responsible for the registration of lobbyists and dealing with breaches of the Code, although the penalty for a breach is not specified. The Secretary is not required to provide public reports on the operation of the Code and the Register.

In June 2017, academic John Warhurst described the current regime in the following way:

Registration is too limited in its scope because it only deals with so-called third-party lobbyists rather than the much larger world of in-house corporate, union and other institutional lobbyists, as well as peak bodies. The current scheme is also too weakly enforced and too limited in preventing lobbying by former ministers and others fresh out of government … The strength of insider politics is that it is conducted behind closed doors and the public hardly knows most of those people who engage in lobbying.

Most lobbyists are former political advisers … They have in common almost complete public anonymity, as is the case with most political staffers … Their general anonymity may be their best protection.[26]

George Rennie, lecturer in lobbying strategies and American politics at the University of Melbourne, provided a similarly harsh assessment of Australian federal, state and territory lobbying regimes:

For the most part, Australia has a system of ill-enforced state and federal codes, administered by partisan bodies …

In reality, Australia’s lobbying codes are political red herrings: existing so governments may claim, falsely, there are safeguards against improper lobbying.[27]

Like the federal domestic lobbying scheme, the FIT Scheme regulates third parties, in that registration will not be required under the scheme if the foreign principal engages in the activity himself, herself or itself. The rationale is that such activities are transparent on their face, as the recipient of the information is aware that the foreign principal is the one advancing the position, interests or information.[28]

Committee consideration

Parliamentary Joint Committee on Intelligence and Security

The FITS Bill has been referred to the Parliamentary Joint Committee on Intelligence and Security (PJCIS) for inquiry and report by 23 March 2018. Details of the inquiry are at the inquiry homepage. Matters raised in submissions to the inquiry are discussed below.

Senate Standing Committee for the Scrutiny of Bills

The Senate Standing Committee for the Scrutiny of Bills (Scrutiny of Bills Committee) had concerns with several aspects of the Bills.

Broad delegation of powers

Clause 67 of the FITS Bill will allow the Secretary to delegate all or any of his or her functions or powers under the FIT Scheme to an SES employee, acting SES employee or an APS employee who holds or is acting in an Executive Level 2 or equivalent position in the department. The Committee was concerned with both the scope of powers that may be delegated (particularly given the Secretary’s powers to compel information under Division 3 of Part 4 and to share scheme information under Division 4 of Part 4) and the categories of people to whom they may be delegated. It requested the Attorney-General’s advice as to:

•       why it is considered necessary to allow for the delegation of any or all of the Secretary’s powers to Executive Level employees and

•       the appropriateness of amending the Bill ‘so as to, at a minimum, limit the delegation of coercive information gathering powers and the communication of scheme information’ to SES employees.[29]

Significant matters to be provided for in rules

The FITS Bill will allow certain matters to be provided for in rules that the minister may make by legislative instrument under clause 71. The Committee was concerned that what it considered to be significant matters (including in relation to when and how disclosures about communications activity must be made under subclause 38(2) and the purposes for which the Secretary may communicate scheme information under clause 53) will be provided for in secondary instead of primary legislation, particularly in rules, which receive less executive scrutiny than regulations.[30] It sought the Attorney-General’s detailed advice on why it is considered necessary and appropriate to include those matters in delegated legislation; why it is appropriate that rules be used instead of regulations; and what circumstances it is envisaged it may be necessary to expand the purposes for which scheme information may be communicated, and the appropriateness of amending the Bill to require the Minister to consider any comments made by the Information Commissioner before making any rules for the purposes of clause 53.[31]

Offence-specific defences (evidential burden placed on defendants)

The FITS Bill includes specific defences to the offences of failing to fulfil a reporting responsibility, failing to comply with a notice requiring information, and providing false information or documents.[32] A defendant wishing to rely on any of these defences in proceedings for a relevant offence will bear an evidential burden in relation to the matter (which would require adducing or pointing to evidence that suggests a reasonable possibility that the matter exists).[33] The Committee recognised that the defendant will bear only an evidential rather than a legal burden, but nonetheless stated that it expected any reversal of the burden of proof to be justified.[34] It did not consider that the defences met the criteria for offence-specific defences set out in the Government’s Guide to Framing Commonwealth Offences, and requested the Attorney-General’s detailed justification for each offence-specific defence and his advice as to the appropriateness of amending the Bill to instead include those matters as elements of the relevant offences.[35]

Offence penalties

Clause 57 of the FITS Bill will create a tiered set of offences for failing to register or renew registration, under which higher penalties will apply if this was intentional, and if a registrable activity was actually undertaken. The maximum penalties will range from 12 months to seven years imprisonment. The Committee did not consider that sufficient justification for these penalties, including by reference to similar offences carrying similar penalties, had been provided in the Explanatory Memorandum. It sought the Attorney-General’s detailed advice on the justification for the proposed penalties.[36]

Application of absolute liability to an element of an offence

Clause 61 of the FITS Bill will create an offence for destruction of records relating to the FIT Scheme. The prosecution will be required to prove fault for three of the four physical elements of the offence, but absolute liability will apply to the circumstance that a registrant was required to keep certain records. The Committee did not consider that this application of absolute liability complies with guidance in the Government’s Guide to Framing Commonwealth Offences, and queried why strict liability (which allows for a defence of mistake of fact to be raised) had not been used instead. It sought detailed justification for the use of absolute liability from the Attorney-General.[37]

Charges impose through delegated legislation

The FITS Charges Bill will provide for charges payable in accordance with clause 63 of the FITS Bill to be imposed, and for the amount of charge payable to be prescribed in regulations. The Committee noted its view that it is for Parliament to set the rate of tax, not makers of delegated legislation, and that if charges are to be prescribed by regulations, guidance on the method of calculating the charge should at least be included in primary legislation. It requested the Attorney-General’s advice on why there are no limits on the maximum charge included in the Bill, and whether guidance on the method of calculation and/or a maximum charge could be included in the Bill.[38]

Policy position of non-government parties/independents

Following the first day of hearings for the PJCIS inquiry into the FITS and EFI Bills, Shadow Attorney-General Mark Dreyfus indicated that the Opposition shared the Government’s concern about foreign interference. However, he also suggested that the Australian Labor Party was ‘not yet convinced’ and said that concerns expressed at the hearing:[39]

… show that the government hasn’t quite probably achieved the intention that these Bills [FITS and EFI] are designed to serve. We probably need to have a serious look at a whole range of matters including the way that these Bills have been prepared.[40]

On 8 February 2018, during a parliamentary debate Mr Dreyfus referred to the FITS Bill as ‘a bill which introduces an onerous registration scheme for individuals or entities said to be undertaking certain activities on behalf of a foreign principal’.[41] He noted that the proposed exemptions are ‘exceptionally narrow’ and in reference to charities suggested that:

… the effect of extraordinarily expansive definitions in the [FIT] scheme means that the bill will capture Australian charities who conduct, activities and purposes are entirely benign …This will be imposed on charities despite the fact that these are all already closely regulated by the Australian Charities and Not-for-profits Commission.[42]

The Australian Greens have expressed similar concerns with the FITS and EFI Bills, stating:

This legislation risks criminalising a wide range of actions which are not only legitimate, but for the common good …

These include medical and other academic research and public interest journalism …

The legislation is shoddily drafted and too broad in scope, and needs amending to ensure that it properly targets foreign interference in our political system.[43]

At the time of writing there did not appear to be any publicly available comment from other non-government parties and independents.

Position of major interest groups

Submissions to the PJCIS inquiry into the FITS Bill acknowledge the need for an appropriate legislative framework to maintain national security and regulate foreign influence on government policy and public opinion. However, most submissions do not support the Bill in its current form and have recommended amendments and, in some cases, consultation with stakeholders before it proceeds further. Stakeholders are generally concerned that:

… the broad scope of the measures may unduly impact those that have no intention to disrupt Australian democracy and sovereignty, while lacking the ability to curb the types of influential behaviour that is of identifiable concern.[44]

Some of the main concerns are summarised briefly below. Further comment on the Bill from major interest groups is provided, where relevant, in the ‘Key issues and provisions’ section of this Digest.

Scope of the FIT scheme

Many stakeholders expressed concern with the scope of the FIT Scheme, in particular the breadth of the definitions of foreign principal (clause 10), on behalf of (clause 11), activity for the purpose of political or governmental influence (clause 12) and communications activity (clause 13). Submissions from organisations representing a broad range of professions and interests such as lawyers, the media, the arts, charities and not-for-profit organisations and universities have argued that, if not amended, these definitions will have a detrimental impact on these sectors.[45]

Exemptions

Academic and scholastic pursuits

Universities and academics have argued for the inclusion of a specific exemption relating to activities that are academic or scholastic in nature.[46] Universities Australia pointed to an exemption in the FARA for a person engaging in bona fide religious, scholastic, academic, or scientific pursuits or of the fine arts..[47] The Australian Major Performing Arts Group (AMPAG), the umbrella organisation representing 28 major performing arts companies has argued for a similar exemption for arts activity.[48]

Charities and not-for-profit organisations

The Australian Charities and Not-for-profits Commission (ACNC), several individual charities and not-for-profit organisations (NPOs) and some other stakeholders have objected to the application of the FIT Scheme to NPOs, particularly when exemptions have been included for some ‘business and commercial pursuits’. They have suggested an expansion of the commercial or business pursuits exemptions in clause 29 to cover non-commercial entities such as charities and think tanks, and/or an exemption for organisations registered under the ACNC.[49] Some stakeholders also raised concerns about the combined impacts of the FITS Bill, the Electoral Bill and other recent reforms on the NPO sector and its ability to advocate on matters of public policy.[50]

Media organisations

Submissions from media organisations have argued for a number of changes to the FITS Bill including narrowing the scope of definitions, particularly on behalf of (clause 11) and an extension of the news media exemption (clause 28) to cover broadcasters or a more broadly framed exemption for media organisations.[51] The Joint Media Organisations (JMO) and Foxtel submissions suggest that proposed media exemptions (clause 13 and clause 28) demonstrate a ‘serious misunderstanding’ of the media and content distribution businesses.[52] Foxtel has also suggested that an exemption for media organisations ‘should apply to all distribution platforms’.[53]  Other submissions have referred to the complications resulting from the ownership structure of media businesses, for example the acquisition in 2017 of Network Ten by the CBS Corporation.[54]

Lawyers and other professionals

The Law Council of Australia (LCA) and Law Firms Australia (LFA) argued for an expansion of the exemption in clause 25 for legal advice or representation, to cover commercial and administrative legal activities.[55] Both organisations also suggested an additional exemption for members of professions—such as lawyers, doctors and accountants—for activities that are incidental to the provision of professional services, in line with the exemption in the domestic Lobbying Code of Conduct.[56]

Religion exemption

Submissions from the Australian Catholic Bishops Conference (ACBC) and the Australian Catholic University (ACU) outlined concerns about the religion exemption (clause 27). The ACBC noted that the Catholic Church in Australia is ‘not affiliated with Vatican City State nor any other foreign government’ and that the Church ‘does not undertake activities on behalf of a foreign government’.[57]

Constitutionality

The issue of the implied right to political communication was raised by a number of stakeholders. Submissions from the LCA and Australian Lawyers for Human Rights (ALHR) questioned the proportionality of the measures. The LCA stated:

While such freedoms [political communication and expression] may be legitimately restricted on rounds such as national security or public order, the Bill, in its current form, fails to justify the necessity or proportionality of the proposed reforms.[58]

The ACU argued that the Bill may, despite the religion exemption, infringe section 116 of the Constitution, which provides for freedom of religion.[59]

Strengthening disclosure requirements on the targets of foreign influence

The LCA suggested that disclosure requirements should be placed on the targets of foreign influence—ministers, members of parliament and senior public officials.[60] This approach was also advocated by the former Independent National Security Legislation Monitor, Bret Walker, and some other stakeholders.[61]

Financial implications

The Government has not made public the total expected cost of the FIT Scheme, nor the expected cost of registration.

The Government has allocated $3.2 million over four years to partially fund the scheme. The costs of administering the Scheme will be partially offset by charges imposed for registration and renewal of registration under the FIT Scheme.[62]

Statement of Compatibility with Human Rights

As required under Part 3 of the Human Rights (Parliamentary Scrutiny) Act 2011 (Cth), the Government has assessed the Bills’ compatibility with the human rights and freedoms recognised or declared in the international instruments listed in section 3 of that Act. While the Government considers that the Bills are compatible, they appear to raise a number of human rights concerns.[63]

The Government notes that the FITS Bill engages the following human rights:

•       the right to liberty of person and freedom from arbitrary detention in Article 9(1) of the International Covenant on Civil and Political Rights (ICCPR)

•       the right to be presumed innocent in Article 14(2) of the ICCPR

•       the right to privacy in Article 17 of the ICCPR

•       the right to opinion and freedom of expression in Article 19 of the ICCPR

•       the right to freedom of association in Article 22 of the ICCPR and

•       the right to take part in public affairs and the right to vote and be elected in Article 25 of the ICCPR.[64]

However it appears that the FITS Bill also engages the right to freedom of thought, conscience and religion, as discussed below under the heading ‘The right to freedom of thought, conscience and religion’.[65]

When can human rights be limited?

As noted by the Parliamentary Joint Committee on Human Rights (PJCHR), limitations (or restrictions) may be imposed on most human rights provided certain standards are met. In general, for a limitation on a human right to be considered justifiable, the measure must:

•       be prescribed by law (it must have a clear legal basis)

•       pursue a legitimate objective (the measure is necessary and addresses an area of public or social concern that is pressing and substantial enough to warrant limiting the right)

•       have a rational connection to the objective to be achieved (the measure is likely to be effective in achieving the objective) and

•       be proportional (the limitation is proportionate to the objective being sought).[66]

The ways in which some of the rights identified above are affected by the Bill (some of which overlap with constitutional protections) is briefly discussed below.

The right to liberty of person and freedom from arbitrary detention

The Bill limits the right to liberty of a person and the freedom from arbitrary arrest and detention by imposing penalties of imprisonment ranging from six months to seven years for the various offences in the Bill. The Government notes that the purpose of these offences is to ‘provide a meaningful and serious deterrent for non-compliance with the scheme’ and provide ‘sufficient means to pursue a person who is deliberately undermining the transparency objectives of the scheme’.[67]

The Government argues that the penalties for the offences ‘are appropriate and commensurate with the seriousness and culpability of offending’ and more specifically, that ‘the highest penalties, of seven years imprisonment, reflect conduct where a person is seeking to subvert the transparency objectives of the scheme’.[68] Further, it considers that the court process (including availability of defences and the discretion of the courts to implement an appropriate penalty based on all of the circumstances of the case) will ensure ‘the application of the penalties is not disproportionate’.[69] However, this view is not universally accepted.

For example, a number of submissions to the PJCIS inquiry into Bill argue that the penalties (including terms of imprisonment) are ‘draconian’ or ‘extremely harsh’,[70] especially as they can apply ‘irrespective of whether or not any harm has been caused’,[71] and therefore may not represent a proportional measure.[72] The LCA argued that the proposed offences may be difficult to prove to a criminal standard, and suggested that civil rather than criminal penalties should be considered.[73]

The right to opinion and freedom of expression

The right to opinion and freedom of expression overlaps with the implied constitutional right to freedom of political communication.[74] It also overlaps with other rights, including the right to freedom of thought, conscience and religion, and the right to take part in public affairs and the right to vote.[75]

The right to freedom of expression includes freedom to seek, receive and impart information and ideas of all kinds, regardless of frontiers, either orally, in writing or in print, in the form of art, or through any other media.[76] The Government acknowledges:

The Bill engages the right to freedom of expression as it will require persons to impart information under the scheme, and will regulate certain activities undertaken on behalf of a foreign principal, including the seeking, receiving and imparting of information and ideas generally.[77] [emphasis added].

The Government argues that the obligation for certain persons to register and provide ongoing reports ‘will promote a number of other human rights, including the ability to hold opinions and take part in public affairs’ by ‘ensuring access to current and accurate information about activities being undertaken to influence political and governmental systems and processes’.[78] It also considers that the limitations in the FITS Bill are reasonable, necessary and proportionate to the objective of the Scheme.[79]

The PJCHR noted that by requiring a person to apply for registration within 14 days of undertaking registerable activities on behalf of, or entering into a registrable arrangement with, a foreign principal (a widely defined term) to avoid the imposition of penalties (including criminal penalties) the Bill:

interferes with that person's freedom to disseminate ideas and information, and therefore limits the freedom of expression.[80]

As a result, the PJCHR concluded that compatibility of the Bill with the right to opinion and freedom of expression was questionable, and sought advice from the Minister regarding:

•       whether the proposed obligation on persons to register where they act 'on behalf' of a 'foreign principal' is sufficiently circumscribed to ensure that the limitation on human rights is only as extensive as strictly necessary and

•       whether the measure is accompanied by adequate safeguards (with  particular reference to the exemptions from registration, including the exemption to news media in section 28 of the bill).[81]

The rights to freedom of association, to take part in public affairs, vote and be elected

The right to freedom of association protects the right of individuals to join with others in a group to pursue common interests. The right prevents laws from imposing unreasonable and disproportionate restrictions on the right to form associations, including imposing procedures that may effectively prevent or discourage people from forming an association.[82] The right to take part in public affairs includes the right of every citizen to take part in the conduct of public affairs by exerting influence through public debate and dialogues with representatives either individually or through bodies established to represent citizens.[83]

The Government notes that the Bill engages these rights because it regulates certain activities undertaken on behalf of a foreign principal that may fall within the scope of those rights.[84] For example, were a group of persons to form an association and hold a protest with a view to influencing a section of the Australian public in relation to a political or governmental process on behalf of a foreign principal, the association may be required to register under the scheme, noting that failing to register when required to do so ‘may result in criminal liability’.[85]

The Government notes that whilst ‘the scheme will not prevent activities being undertaken on behalf of a foreign principal’ the requirement for certain persons ‘to register and disclose those activities may be interpreted as limiting the freedom of association’ and ‘limiting the right to take part in the conduct of public affairs’.[86] However, whilst acknowledging this limitation the Government argues (in relation to freedom of association) that the limitation is reasonable, necessary and proportionate to providing transparency about foreign influence in Australia’s political and governmental processes and protecting Australia’s national security interests.[87]

However, for the similar reasons noted above in relation to the right to opinion and freedom of expression, an alternative view expressed by the PJCHR is that:

The breadth of these definitions, their potential application, the cost of compliance and the consequence of non-compliance raise concerns that the bill may be insufficiently circumscribed, and may unduly obstruct the exercise of the freedom of expression, association and right to take part in public affairs.[88]

As a result, the PJCHR concluded that compatibility of the Bill with the rights to freedom of association and to take part in public affairs had not been established, and sought the same advice from the Minister as noted above in relation to the right to opinion and freedom of expression.[89]

The right to privacy

The right to privacy protects against arbitrary and unlawful interferences with an individual's privacy, and recognises that individuals should have an area of autonomous development; a 'private sphere' free from government intervention and excessive unsolicited intervention by others. It also includes the right to control the dissemination of information about one's private life.[90]

This right is engaged as the Bill proposes to require persons to publicly disclose information pertaining to the activities and relationships undertaken on behalf of a foreign principal.[91]

In relation to the right to privacy, the PJCHR noted that the Secretary's proposed power to make available to the public 'any other information prescribed by the rules' is very broad. As limitations on the right to privacy ‘must be no more extensive than is strictly necessary’, the PJCHR noted ‘questions arise as to whether this aspect of the measure is proportionate.’[92]

The right to equality and non-discrimination

The PJCHR noted that the Government has not identified the Bill as engaging the right to equality and non-discrimination.[93] However, the PJCHR noted:

… the breadth of the definition of 'foreign principal', coupled with the definition of 'on behalf of', raises concerns that the registration requirement may have a disproportionate negative effect on persons or entities that have a foreign membership base, and could therefore amount to indirect discrimination on the basis of nationality.[94]

The PJCHR sought advice from Minister regarding the Bill’s compatibility with this right.[95]

The right to freedom of thought, conscience and religion

The Government has not identified the Bill as engaging the right to freedom of thought, conscience and religion. However, as freedom of religion includes communicating religious beliefs both in private and public[96] and (as noted above) overlaps with freedom of expression, it would appear that the Bill also engages and potentially limits this right. This right also overlaps with the constitutional right to free exercise of religion, which is explored separately below.

As discussed below, registerable activities include parliamentary lobbying and other activities with a purpose of political or government influence. This means that where such activities include the communication of religious beliefs on behalf of a foreign principal, the requirement to register is triggered. As a result, if for example an individual:

•       as part of lobbying for increased funding for services to disadvantaged communities, communicated a particular religious belief regarding how impoverished persons should be treated as a reason for arguing for increased funding

•       engaged in communications activity that included the communication of religious beliefs as part of an effort to raise awareness of particular issues (for example, to garner support for non-interference by a foreign government in a particular religion’s succession process for a position within that religion)

and undertook these activities on behalf of a foreign principal, then that person would be required to apply for registration within 14 days of undertaking the registerable activity to avoid the imposition of penalties (including criminal penalties). For the reasons noted above in relation to the right to opinion and freedom of expression, the Scheme may therefore inappropriately limit the rights in question (by potentially exposing individuals to criminal penalties for non-registration and/or via the ‘chilling’ effect the registration requirements themselves and the cost of registration may create).

Key issues and provisions: FITS Bill

Set out first below is information on the FITS Bill and related issues by Part. This is followed by a section on general issues that relate to the FIT Scheme more broadly or cut across more than one Part of the Bill.

The issues highlighted in the information by Part are as follows.

For Part 1 (preliminary clauses and definitions):

•        constitutionality and

•        the scope of key definitions.

For Part 2 (registration):

•        post-separation employment of ministers and MPs

•        secondary employment of MPs

•        coverage of ministerial advisers and senior public servants and

•        the scope of the FIT Scheme and exemptions, specifically:

–      activities ‘in Australia’

–      permanent Australian residents

–      communications activity and the news media exemption

–      donor activity

–      commercial or business pursuits exemptions

–      application of commercial or business pursuits exemptions to former Cabinet ministers, ministers, MPs and senior Commonwealth officers

–      not-for-profit organisations

–      academics, universities and think tanks

–      the legal advice or representation exemption

–      activities of professionals that are incidental to service provision

–      the United Nations exemption and

–      the religion exemption.

For Part 4 (obtaining and handling information):

•        the lack of a definition of ‘national security’ for the purposes of whether information is made public

•        the lack of an obligation on the Secretary to correct or update the register

•        the scope of the notice to produce power in relation to ‘any person’ and

•        whether a person subject to a notice to produce is able to provide the information sought.

For Part 5 (offences):

•        the limited scope of the offences for failing to register and

•        the application of the offences to persons other than individuals, bodies corporate and partnerships.

The general issues covered are:

•        whether the FIT Scheme is the most effective way of achieving what the Government hopes to achieve

•        responsibility for administering the FIT Scheme

•        accountability and oversight

•        guidance on the FIT Scheme

•        resources required to administer and monitor the FIT Scheme

•        costs of registration and compliance with the FIT Scheme

•        potential circumvention or defeat of the FIT Scheme through indirect influence

•        definition of ‘controlled’ and potential for circumvention of the FIT Scheme

•        interaction of the EFI Bill with the FITS Bill and

•        application of the FIT Scheme to persons other than individuals, bodies corporate and partnerships.

Part 1—Preliminary clauses and definitions

Outline

Clause 4 sets out a simplified outline of the FITS Bill which provides that:

•        a person who undertakes activities on behalf of a foreign principal may be liable to register under the scheme, depending on who the foreign principal is, the activities the person undertakes and in some cases on whether the person has recently held a senior Commonwealth position (including as a member of Parliament)

•        certain information about registrants and their activities will be made publicly available

•        registrants have various responsibilities under the scheme, aimed at ensuring that: the Secretary has up-to -date information about the activities of registrants, especially during voting periods for federal elections and if a registrant makes disbursements or communications on behalf of the foreign principal, appropriate disclosures are made and

•        various penalties apply for non-compliance with the scheme.

Constitutional basis

Clause 7 is a severability provision designed to prompt the High Court to ‘read down’ any substantive provision to the extent it may exceed the legislative power of the Commonwealth (that is, the provision is to be interpreted to the extent permissible by the Constitution under the listed constitutional power, or other listed constitutional heads of power).

Another purpose of clause 7 is to ensure that in the event that proposed provisions or aspects were found to be unsupported by a Constitutional head of power, the Act would continue operating to the extent that another head or heads of power provides a valid Constitutional basis.[97]

Issue: constitutionality

A number of submissions suggested that the Bill is potentially unconstitutional in part or in whole, but generally the submissions did not provide detailed arguments as to why this would be the case.[98] These arguments were raised in the context of the implied freedom of political communication and freedom of religion. These are explored below.

Does the Bill infringe the implied freedom of political communication?

It is arguable whether the Bill infringes the implied freedom of political communication. The High Court has held that there is an implied freedom of political communication under the Constitution, as a necessary part of our system of representative and responsible government. The freedom is not a personal right but a limitation on legislative power, and the Court has developed a test to determine when the freedom is unjustifiably burdened by a law. The test, known as the Lange test, asks if a law ‘effectively burdens the freedom of political communication either in its terms, operation or effect’,[99] and if so, ‘whether the provision is reasonably appropriate and adapted, or proportionate, to serve a legitimate end in a manner which is compatible with the maintenance of the prescribed system of representative government.’[100]

In Unions NSW (2013) the High Court also relevantly stated that the freedom applied not just to communication between ‘electors and government or candidates’, but extended to communication by other ‘persons and entities (who) have a legitimate interest in governmental action and the direction of policy’.[101]

A number of submissions to the PJCIS argued that the Bill does in fact impermissibly interfere with the implied freedom of political communication.[102] The only submission to provide detailed arguments as to why the Bill impinges the implied freedom of political communication was that from Mr Ernst Willheim, a Visiting Fellow with the ANU College of Law. Mr Willheim argued:

The practical effect of the registration, fee and reporting requirements is to regulate the manner in which certain political communications may be made …

On the basis that the first arm of the constitutional test is established, the question next arises whether the law is appropriate and adapted to a legitimate end. Are the purpose of the law and the means adopted legitimate? The purpose may be clear enough. What about the means adopted? How should this be tested? One possibility would be to examine the nature and more relevantly the effects of foreign ‘interference’ …

Is the legislation ‘appropriate and adapted’ in the sense that it identifies the relevant threats? Much is said about alleged interference by large foreign owned corporations and wealthy individuals, for example mining companies, media companies, drug companies and foreign intelligence agencies. Have foreign companies and foreign individuals sought to influence Australian public debate in order to advance their commercial interests? …

… If the proposed legislation does not address major aspects of foreign interference, if the regulation of activities by academics, artists and others burdens freedom of political communication without significantly addressing the heart of any foreign interference problem, can it truly be said that the proposed regulation of free speech satisfies the 'appropriate and adapted' test? Do the registration and related requirements fail the test of constitutional validity?[103] [emphasis added]

In contrast to the above arguments, the Explanatory Memorandum contends that whilst the Bill could be interpreted as ‘limiting the right to take part in the conduct of public affairs’ (and by inference, potentially infringing the implied right to political communication[104]) it represents a ‘proportionate’ response to making the sources of foreign influence transparent:

The Bill could be interpreted as limiting the right to take part in the conduct of public affairs. This is because it will require a person to register if they undertake certain activities on behalf of a foreign principal, including activities which could be described as ‘influencing through public debate and dialogues.’ In addition to registration requirements, if a person distributes communications materials on behalf of a foreign principal as part of the contribution to public debate, that person may be required to make a disclosure in the material about the foreign principal.

The requirements may be interpreted as being restrictions, but are nonetheless reasonable in all of the circumstances. The objective of the Bill is to enhance transparency for the Australian Government and public, to ensure that foreign principals are not exerting undue influence over political and governmental processes. This is a legitimate objective and requiring a person to register and report on such activities is not an unreasonable restriction in pursuit of this objective.[105] (emphasis added)

The Explanatory Memorandum presents a similar argument in relation to the media, noting the exemption included for news media (clause 28).[106] That exemption does not extend to state-owned media.

It would appear that the constitutionality of the proposed measures is likely to turn not only on the facts of each case, but also primarily on whether the provisions are considered by a court to be reasonably appropriate and adapted to serve a legitimate purpose (reducing inappropriate foreign influence in Australia) in a manner compatible with the constitutionally prescribed system of representative government.[107]

Does the Bill infringe freedom of religion?

The ACU argued that the Bill may, despite the inclusion of clause 27, infringe section 116 of the Constitution, which provides for freedom of religion.[108]

What types of laws does section 116 prevent the Commonwealth from making?

Section 116 is composed of four main parts. Relevantly to the FIT Scheme, one of those parts provides that the Commonwealth may not make laws that prohibit the free exercise of religion (the ‘free exercise’ clause).[109]

Summary—High Court’s interpretation of section 116 and the ‘free exercise’ clause

In the limited case law on the interpretation of section 116 of the Constitution as it relates to the ‘free exercise’ clause, the High Court has held that the free exercise of religion is not absolute: the question is whether the law in question operates to ‘unduly infringe’ on the free exercise of religion.[110]

The first issue is whether the Bill will unduly infringe on the free exercise of religion. The Bill could be viewed as limiting the free exercise of religion because it may require religious persons:

•       who undertake registerable activity on behalf of a foreign principal (for example, a foreign person who is an authority figure within the religion) or

•       who, for a religious reason or religiously-connected reason undertake registerable activity on behalf of a foreign principal (for example, communicating to an MP that religion’s teaching on a particular matter with a view to persuading them to adopt a position on a particular matter that reflects that religious teaching)

to not only register (with the associated cost), but also to potentially make a disclosure in the material about the foreign principal.

Some of the case law on section 116 of the Constitution has applied a narrow interpretation of what is meant by the ‘exercise’ of religion: the observance and practice of it.[111] In contrast ‘freedom of religion’ under Articles 6 and 18 of the ICCPR includes communicating religious beliefs both in private and public as an aspect of the exercise or expression of religion.[112] If the broader, contemporary understanding of what constitutes the exercise of religion is adopted, then arguably the Bill’s regulatory and administrative burden may have a ‘chilling effect’ on communicating religious beliefs and therefore it is at least arguable that the FIT Scheme may—in some circumstances—be considered a law that indirectly limits the free exercise of religion.

The next issue is to determine the purpose to which the law is directed, and whether in pursuing a permissible objective, any limitations placed on the free exercise of religion by Parliament are ‘reasonably necessary’, ‘reasonably required’ or unduly infringe the free exercise of religion.[113] It is said that this approach ‘makes it possible to accord a real measure of practical protection to religion without involving the community in anarchy’.[114]

In examining whether legislation encroaches on the Constitutional limitation on laws prohibiting the free exercise of religion, the High Court has emphasised that the purpose of the law must be ascertained. [115] If a law has a purpose that ‘is unconnected to the free exercise of religion’ it will not be invalidated by section 116, even if it ‘incidentally affects that freedom’.[116]

A stated by Brennan CJ ‘a law must have the purpose of achieving an object which s 116 forbids’ to breach the Constitution.[117]

This means that the key question in determining compatibility of the FIT Scheme with section 116 of the Constitution will be: can the Bill (if passed) be characterised as a law with a specific purpose unconnected with the free exercise of religion?

States and territories

Clause 8 will provide that the Commonwealth, states and territories are not required to register under the FITS Act. Clause 9 will provide that the Act does not exclude or limit the operation of a state or territory law to the extent that it is capable of operating concurrently with the Act. This is relevant where state and territory lobbying laws and ministerial codes of conduct overlap with the FITS Bill.[118] It should be noted that, unlike the federal domestic Lobbying Code of Conduct and Register of Lobbyists, Queensland, New South Wales, South Australia and Western Australia have introduced statutory lobbying schemes.[119]

Definitions (Part 1, Division 2)

Proposed Division 2 of Part 1 of the Bill sets out definitions that will apply throughout the FITS Act. Some key terms and their proposed definitions are set out in Table 1 below.

Table 1: key definitions

Term

Definition

Communications activity

(clauses 10 and 13)

A person will undertake communications activity if the person ‘communicates or distributes information or material’ (which will include ‘information or materials in any form, including oral, visual, graphic, written, electronic, digital and pictorial forms’).

See further the text following this table.

Designated vote

(clause 10)

(a) a referendum; or

(b) a vote, survey, or other process for the expression of opinions, of the kind prescribed by the rules for the purposes of this paragraph.

The Explanatory Memorandum notes that this definition ‘is intended to include a federal election or by-election’.[120]

Donor activity

(clause 10)

A person will undertake donor activity if:

(a)              the person disburses money or things of value; and

(b)              neither the person nor a recipient of the disbursement is required to disclose it under Division 4, 5 or 5A of Part XX of the Commonwealth Electoral Act 1918.[121]

Foreign principal

(clause 10)

(a) a foreign government

–      the government of a foreign country or of part of a foreign country or

–      an authority of the government of a foreign country or

–      an authority of the government of part of a foreign country or

–      a foreign local government body or foreign regional government body.

(b) a foreign public enterprise

a company or any other person (other than an individual) controlled by the government of a foreign country or of part of a foreign country.[122]

(c) a foreign political organisation

includes a foreign political party.

(d) a foreign business

a person (other than an individual) that:
(a) either:

(i) is constituted or organised under a law of a foreign country or of part of a foreign country; or

(ii) has its principal place of business in a foreign country; and

(b) is not a foreign government, foreign public enterprise or foreign political organisation.

(e) an individual who is neither an Australian citizen nor a permanent Australian resident. (See the ‘Permanent Australian residents’ part of the ‘Issues: scope of the FIT Scheme and exemptions’ section of this Digest).

See further the text following this table.

Influence

(clause 10)

This will include ‘affect in any way’.

Lobby

(clause 10)

General political lobbying

(clause 10, EFI Bill and Electoral Bill)

Parliamentary lobbying

(clause 10)

This will include:

(a) communicate, in any way, with a person or a group of persons for the purpose of influencing any process, decision or outcome; and

(b) represent the interests of a person, in any process.

The Bill uses a very broad definition of lobbying. The Explanatory Memorandum states that the definition is:

… non-exhaustive and the term is intended to capture all circumstances in which a person represents the interests of another person, whether in formal or informal processes or proceedings.[123]

General political lobbying will mean lobbying any one or more of the following:

(a) a Commonwealth public official;

(b) a Department, agency or authority of the Commonwealth;

(c) a registered political party;

(d) a candidate in a federal election;

(e) a person or entity that is registered under the Commonwealth Electoral Act 1918 as a political campaigner

other than lobbying that is Parliamentary lobbying.

Note: paragraph (e) of the definition is not included in the FITS Bill, but would be inserted by Schedule 5 of the EFI Bill. A definition of political campaigner will be inserted into the Commonwealth Electoral Act 1918 by the Electoral Bill.[124]

Parliamentary lobbying will mean lobbying any one or more of the following persons:

(a) a member of the Parliament;

(b) a person employed under section 13 or 20 of the Members of Parliament (Staff) Act 1984.

On behalf of

(clauses 10 and 11)

A person will undertake an activity on behalf of a foreign principal if the activity is undertaken:

(a)              under an arrangement with the foreign principal; or

(b)              in the service of the foreign principal; or

(c)              on the order or at the request of the foreign principal; or

(d)              under the control or direction of the foreign principal; or

(e)              with funding or supervision by the foreign principal; or

(f)              in collaboration with the foreign principal.

It will not matter whether or not consideration is payable for the activity.

See further the text following this table.

Person

(clause 10)

The definition of person in clause 10 is also very broad, particularly as a person need not be a resident in Australia or ‘formed or created in Australia’. The term is defined as:

(a) an individual;

(b) a body corporate;

(c) a body politic;

(d) a partnership;

(e) an association (whether or not incorporated);

(f) an organisation (whether or not incorporated);

(g) any combination of individuals who together constitute a body;

(h) any body of a kind prescribed by the rules;

whether or not resident in, formed or created in, or carrying on business in, Australia, and whether constituted under an Australian or foreign law or not constituted under a law at all.

Political or governmental influence

(clauses 10 and 12)

A person will undertake activity for the purpose of political or governmental influence if a purpose of the activity (whether or not there are other purposes) is to influence, directly or indirectly, any aspect (including the outcome) of certain processes. The term is relevant to the scope of registrable activities under clause 21.

See further the text following this table.

Purpose

(clause 14)

The purpose of an activity may be determined by having regard to any one of more of the following:

(a)              the intention or belief of the person undertaking the activity;

(b)              the intention of any foreign principal on whose behalf the activity is undertaken;

(c)              all of the circumstances in which the activity is undertaken.

This definition is relevant to determining whether an activity is undertaken for the purpose of political or governmental influence (clause 12) and is therefore registrable under clause 21, and whether an activity falls within an exemption in proposed Division 4 of Part 2.

Recent Cabinet Minister

(clause 10)

Recent Minister or member of parliament

(clause 10)

Recent holder of a senior Commonwealth position

(clause 10)

Senior Commonwealth position

(clause 10)

a person:

(a) who was a Minister and a member of the Cabinet at any time in the three years before the particular time; and

(b) is not at the particular time a Minister, member of the Parliament or holder of a senior Commonwealth position.

a person:

(a) who was a Minister or a member of the Parliament at any time in the three years before the particular time; and

(b) is not at the particular time a Minister, member of the Parliament or holder of a senior Commonwealth position.

a person:

(a) who held a senior Commonwealth position at any time in the 18 months before the particular time; and

(b) is not at the particular time a Minister, member of the Parliament or holder of a senior Commonwealth position.

(a) agency head (within the meaning of the Public Service Act 1999);

(b) deputy agency head (however described);

(c) an office established by or under a law of the Commonwealth and equivalent to that of agency head or deputy agency head.

Registrable activity

(clauses 10, 20, 21, 22 and 23)

Registrable activity in relation to a foreign principal will include:

•        parliamentary lobbying on behalf of a foreign government

•        activities in Australia (including parliamentary lobbying, general political lobbying, communications activity and donor activity) for the purpose of political or governmental influence if undertaken on behalf of particular foreign principals

•        activities of recent Cabinet Ministers on behalf of foreign principals other than individuals and

•        activities of recent Ministers or members of Parliament and recent holders of a senior Commonwealth position on behalf of foreign principals other than individuals if the person is contributing experience, knowledge, skills or contacts gained in his or her former role.

See further the overview of proposed Part 2 of the Bill.

Registrable arrangement

An arrangement between a person and a foreign principal for the person to undertake an activity that, if undertaken by the person, would be registrable in relation to the foreign principal.

Scope of the definition of foreign principal

The LCA submission noted its concern that the inclusion of ‘an individual who is neither an Australian citizen nor a permanent Australian resident’ in the definition of foreign principal (clause 10) may have the effect of:

… capturing activity that is well beyond the intent of the measures, and will apply to a very wider range of individuals that currently engage in dialogue on Australian domestic policy either directly or through a third-party entity, including as a client, member or financial supporter.[125]

ALHR noted that as nearly half of the Australian population is either born overseas or has one or both parents born overseas:

… over 49 per cent of Australian will have family and friends who live overseas and who are likely to fall within the definition of ‘foreign principal’.[126]

This view was supported by the Federation of Communities’ Councils of Australia (FECCA) as the peak body representing culturally and linguistically diverse communities (CALD) in Australia.[127]

The ACBC also had concerns with this aspect of the definition suggesting that ‘it will apply to a wide range of individuals who cannot be identified with precision at any time.’[128] The ACBC believes that this broad definition ‘has the potential for the Pope or other Church official being interpreted as a ‘foreign principal’.[129]

The Joint Media Organisations (JMO) submission suggested that the definition of foreign principal should be restricted to a foreign government ‘and businesses and/or individuals operating on behalf of foreign governments for the purpose of influencing the Australian government’.[130] Similarly the American Chamber of Commerce in Australia (AmCham) submits that a foreign business or individual ‘that does not have any association with a foreign government or political organisation should not be an object of special scrutiny simply because they are not Australian’.[131]

Definition of ‘foreign business’

The AFMA has suggested an amendment to the definition of foreign business to avoid foreign businesses that are registered as foreign companies with the Australian Securities and Investments Commission being treated as foreign principals.[132] The ALHR submission suggests that the definition of this term is so broad that it:

… would appear to be intended to catch every foreign entity not otherwise specified in the Bill, even those entities which are not carrying on a business, or not carrying on a business for profit, including trusts, charities, schools, universities think tanks … [133]

Another stakeholder has stated a contrary view suggesting that private businesses operating in authoritarian systems are ‘potentially just as subject to state control when it comes to promoting national objectives in Australian or elsewhere’.[134]

Undertaking activity on behalf of a foreign principal

Clause 11 will define the meaning of undertaking an activity on behalf of a foreign principal. This will occur when a person undertakes an activity under an arrangement with, in the service of, on the order or at the request of, under the control or direction of, with funding or supervision by, or in collaboration with the foreign principal.[135]

It does not matter ‘whether consideration is payable’ for these activities, suggesting that persons undertaking both volunteer and paid activities will be required to register (subclause 11(2)). The FARA includes a similar registration requirement:

… the Act does not require that agents be compensated for their action on the foreign principal’s behalf, meaning that the registration requirement applies to both paid and volunteer agents.[136]

While such a requirement is not explicitly imposed by clause 11, the Explanatory Memorandum indicates that it is the Government’s intention that an activity is only taken to be on behalf of a foreign principal if the foreign principal had ‘an awareness of, and some role in facilitating, the activities’:

A person would not be considered to be undertaking an activity ‘on behalf of’ a foreign principal where the foreign principal has no knowledge or awareness of the nature of the activities in question, and it is purely coincidental that the person’s actions may in some way benefit, or align with the interests of, the foreign principal.[137]

This may have implications for proving offences in circumstances where what is sometimes termed ‘wilful blindness’ has occurred (see further the ‘Proving that a person was acting on behalf of a foreign principal’ part of the ‘Issue: limited scope of offences’ section of this Digest).

A number of stakeholders have suggested that the definition of acting on behalf of a foreign principal should be more narrowly defined, particularly if the broad definition of foreign principal is retained. The LCA recommended that clause 11 should only cover activities that are ‘materially connected to the will of a foreign principal, in line with the approach adopted under the FARA scheme’ and ‘are known to be on behalf of a foreign principal’.[138]

Industry associations with members who could be defined as foreign principals have expressed concern that, in some circumstances, they could be defined as acting on behalf of a foreign principal and may be required to register under the FIT Scheme.[139] They point out that their purpose is to represent the joint interests of the organisations they represent, and consider that this should be distinguished from circumstances where a person is acting on behalf of a particular foreign principal.[140]

The ACBC and the university sector have also suggested amendments to the scope of clause 11.[141] The latter warned that, for academics with international partnerships and collaborations, an activity undertaken in collaboration with a foreign principal (subclause 11(1)(f)) may be registrable and could, in future, discourage research collaboration.[142] The ALHR also questioned the use of the word ‘collaboration’ and has concerns about the wide definition of on behalf of.[143]

AGD’s supplementary submission stated that the FIT Scheme ‘is not expected to stifle normal academic collaborative activities’.[144]

Activity for the purpose of political or governmental influence

Subclause 12(1) will provide that a person undertakes an activity for the purpose of political or governmental influence if a purpose of the activity is ‘to influence, directly or indirectly, any aspect (including the outcome)’ of one or more of the following:

•        a process in relation to a federal election or a designated vote

•        a process in relation to a federal government decision

•        proceedings of a House of the Parliament

•        a process in relation to a registered political party

•        a process in relation to a member of the Parliament who is not a member of a registered political party

•        a process in relation to a candidate in a federal election who is not endorsed by a registered political party.[145]

Item 4 of Schedule 5 of the EFI Bill will expand the definition to also include ‘processes in relation to a person or entity registered under the Commonwealth Electoral Act 1918 as a political campaigner’.[146]

The Electoral Bill will amend the Commonwealth Electoral Act 1918 to, amongst other things, introduce the concept of a political campaigner. A person or entity (other than a political entity or an MP), will be required to register as a political campaigner for a given financial year if:

•        the amount of political expenditure incurred by or with the authority of the person or entity during that or any one or more previous three financial years is $100,000 or more or

•        the amount of political expenditure incurred by or with the authority of the person or entity:

–      during that financial year is $50,000 or more and

–      during the previous financial year was at least 50 per cent of the person or entity’s allowable amount for that year.[147]

Political expenditure will mean expenditure incurred for one or more political purposes.[148]

Subclause 12(2) will provide that without limiting subclause 12(1), an activity will be for the purpose of political or governmental influence if a purpose of the activity is to ‘influence an aspect of a process or proceedings mentioned in that subsection by influencing the public, or a section of the public, in relation to the process or proceedings’ (emphasis added).

Subclauses 12(3), (4), (5) and (6) will provide examples of things that will be processes in relation to federal government decisions, registered political party and independent MPs and candidates. Item 5 of Schedule 5 of the EFI Bill will insert a list of examples of things that will be processes in relation to registered political campaigners. The examples cover a wide variety of processes. For instance, those listed in relation to a registered political party include processes relating to the party’s: constitution, platform, policy, administration, conduct of a campaign, selection of candidates, allocation of preferences, selection of party officers or delegates, election of leader of the party, and selection of ministers or shadow ministers or party spokespersons.

It should be noted that the examples in subclauses 12(3), (5) and (6) are not exhaustive lists, nor is the list in relation to registered political campaigners that will be inserted by the EFI Bill.[149]

The definition of political or governmental influence underpins clause 21, which deals with activities that are registrable because they take place in Australia for the purpose of political or governmental influence. Clause 14, which sets out how the purpose of an activity may be determined, is relevant to the scope of clause 12 and consequently, clause 21.

Several submissions raised concerns about the scope of this definition, particularly the requirement that political influence ‘need only be ‘a’ purpose of an activity, and it need not be the main or a predominant purpose’. [150]

Communications activity

Clause 13 will provide that a person undertakes communications activity ‘if the person communicates or distributes information or material’. This will be a category of registrable activity under clause 21, but broadcasters, publishers of periodicals and carriage service providers will not be regarded as having undertaken a communications activity ‘only because’ the broadcaster broadcasts the information or materials, a publisher of a periodical (for example, a newspaper) publishes the information or materials, or the carriage service provider supplies the listed carriage service used to communicate the information or materials (subclauses 13(3) and (4)).[151] This is intended to ensure that a broadcaster, publisher or carriage service provider will not be required to register under the FIT Scheme only because it is the means through which information or material is distributed.[152]

A number of submissions raised concerns about the broad definition of communications activity and questioned whether the exception (and exemption in clause 28) would operate as intended. Submissions by the JMO and Commercial Radio Australia expressed concern about the impact of the FITS Bill on media businesses, in particular ‘the commercial relationship for content supply across all categories’.[153] On this issue the JMO submission states:

… the drafting of the [media] exemptions [in clause 13 and clause 28] is flawed, and appears to suggest a serious misunderstanding of both the nature of media organisations’ businesses and the chain of relationships which form in the business of content distribution.[154]

JMO suggested that media organisations do not act as the conduit in the same way a carriage service provider does and ‘the two platforms have differences, despite being grouped together’ (subclause 13(3)).[155] Its submission also notes that content supply arrangements mean ‘all media companies—regardless of their own foreign principal status—would have to register to mitigate the risk of any content running foul of the scheme’.[156] The Foxtel submission expressed concern that a number of channels on its platform would be required to register under the FIT Scheme, and that the associated record keeping requirements may render it impossible to keep those channels on the platform.[157] Its submission also outlined similar arguments to those made by JMO, noting that the status of broadcasters is very unclear:

… where a broadcaster is broadcasting content from a foreign principal (eg state owned media), this is only ever done pursuant to an agreement (supply contract) with the foreign principal.[158]

Universities were concerned that this definition could have an impact on the communication of research findings, while the Go8 suggested that in 2017, ‘every one of the interactions involved in producing the 23,736 collaborative research papers’ involving an international author would be captured by the FITS Bill.[159] The LCA was concerned that while the Bill includes exemptions for publishers and broadcasters, there is no indication as to how this provision will interact with, for example, social media platforms.[160]

The LCA suggested that clause 13:

… will have the practical effect of deterring individuals and organisations from engaging in political and policy discussion across a range of communication platforms.[161]

AGD’s supplementary submission notes that the FIT Scheme applies ‘regardless of the medium used’ to undertake activities on behalf of a foreign principal in Australia and that in these circumstances ‘a social media platform may be required to register’.[162]

With reference to communication activities, the ACBC also suggested an additional exemption to:

… protect certain public communications that will be fully transparent or which do not raise foreign influence concerns. This will ensure that the Bill does not unreasonably burden the implied freedom of communication on governmental and political affairs.[163]

Part 2—Registration under the scheme

Requirement to register (Part 2, Division 2)

Clause 16 will require a person to register under the FIT Scheme if the person becomes liable to register and is not already registered. Subclause 18(1) will describe when a person becomes liable to register under the Scheme in relation to a foreign principal, in particular, if the person:

•        undertakes an activity on behalf of a foreign principal that is registrable in relation to the foreign principal (as per Division 3 of Part 2 (see below)) or

•        enters a registrable arrangement with a foreign principal (an arrangement to undertake an activity that would be registrable).

The Bill makes it clear that the onus is on the person to determine whether or not they need to register. A person must apply to the Secretary no later than 14 days after becoming liable to register (subclause 16(1)). It will be an offence not to register if a person is liable to do so (clause 57, see the ‘Offences’ sub-heading below and Table 3 (in Appendix 1)).

The person will be registered from the day a valid application is given to the Secretary.

Subclauses 18(1) and (3) make it clear that a person will be liable to register under the scheme if there is a registrable arrangement in place with a foreign principal, even if the person never undertakes an activity under the arrangement. The Explanatory Memorandum provides the following example:

… a person in Australia may enter into a contract with the government of Country B to engage in general political lobbying once a specified circumstance occurs. The person becomes liable to register from the date of the contract, irrespective of whether the specified circumstance occurs or the general political lobbying activities are actually subsequently undertaken.[164]

Clause 19 outlines when a person ceases to be liable to register. Clauses 31 and 32 (proposed Division 5 of Part 2) will provide details on the end of the person’s registration. Clause 32 lists three possible days on which registration ends, with registration ending on the earliest of the following days:

•        the day specified by the person in a notice given to the Secretary as specified in subclause 31(3)

•        the first day after the end of the renewal period for registration (if the person is required to renew but does not do so) or

•        a day prescribed by the rules.

Failing to register will be an offence under clause 57. See further ‘Offences’ below.

Registrable activities (Part 2, Division 3)

Clauses 20–23 will describe four types of registrable activities:

•        parliamentary lobbying on behalf of a foreign government (clause 20)

•        activities in Australia for the purpose of political or government influence: other forms of parliamentary lobbying, general political lobbying, communications activity and donor activity (clause 21)

•        registrable activities of recent Cabinet Ministers (clause 22) and

•        registrable activities of recent Ministers, members of parliament or other holders of senior Commonwealth positions (clause 23).

Table 2 (see Appendix 1) summarises the circumstances in which persons will be required to register under the FIT Scheme in relation to each registrable activity. Exemptions apply for each type of registrable activity (see Table 2 and ’Exemptions’ below).

The Explanatory Memorandum describes the range of activities registrable under the FIT Scheme:

The scheme has intentionally been crafted so that a broader range of activities are considered to be registrable activities if undertaken on behalf of a foreign principal that is a foreign government, with fewer activities being considered to be registrable activities if undertaken on behalf of a foreign principal that is a foreign business or individual.[165]

As noted above, the Prime Minister has described the registration requirements of the scheme in the following way:

Registration requirements are carefully structured so that the closer you get to the heart of Australian politics, the more likely it is that you must register.[166]

Clause 20: Parliamentary Lobbying on behalf of a foreign government

Clause 20 will apply to any lobbying in Australia of an MP or a person employed under specific sections of the MoPS Act that is undertaken on behalf of a foreign government (for any purpose). The domestic lobbying code applies to the lobbying of ministers but not all members of parliament. Academics, commentators and minor parties have argued that the definition of those lobbied should include all members of parliament. The FITS Bill acknowledges that ‘lobbying a member of parliament or their staffer is an activity which is inherently political in nature’.[167]

Clause 21: activities in Australia for the purpose of political or governmental influence

Clause 21 will apply to a very broad range of registrable activities in Australia for the purpose of political or governmental influence, as detailed below.

Parliamentary lobbying (not included in clause 20)

This will cover parliamentary lobbying activity on behalf of all foreign principals except foreign governments.

General political lobbying

Clause 21 will apply to general political lobbying in Australia on behalf of any kind of foreign principal. Clause 10 will define general political lobbying as lobbying any one or more of the following:

•        a Commonwealth public official

•        a department agency or authority of the Commonwealth

•        a registered political party or

•        a candidate in a federal election.

Schedule 5 of the EFI Bill will expand the list of persons lobbied to also include ‘a person or entity that is registered under the Commonwealth Electoral Act 1918 as a political campaigner’. A definition of political campaigner will be inserted into the Commonwealth Electoral Act 1918 by the Electoral Bill.

Communications activity

This will cover communications activity on behalf of any kind of foreign principal, but exemptions for news media are detailed in clause 28. The exemption will apply if:

•        the foreign principal is a foreign business or individual and

•        the activity is solely, or solely for the purposes of, reporting news, presenting current affairs or expressing editorial content in news media.

These terms are not defined and are potentially very broad, even when their ordinary meanings are applied. Initial reaction to the FITS Bill has included questions about local media operating on behalf of various foreign principals or advocating the line of a particular foreign government.[168] The FITS Bill and the Explanatory Memorandum do not provide guidance on these circumstances.

See further the ‘Communications activity and the news media exemption’ part of the ‘Issues: scope of the FIT Scheme and exemptions’ section of this Digest.

Donor activity

The effect of item 4 in the table in subclause 21(1) and the definition of donor activity in clause 10 is that a person will be required to register in relation to donor activity if neither the person nor the recipient of the disbursement is required to disclose it under Division 4, 5, or 5A of Part XX of the Commonwealth Electoral Act 1918 and the donor activity is undertaken for the purpose of political or governmental influence by a foreign government, a foreign public enterprise or a foreign political organisation. Donor activity on behalf of a foreign business or individual will not be registrable. See further the ‘Donor activity’ part of the ‘Issues: scope of the FIT Scheme and exemptions’ section of this Digest.

It is not clear that a person would be required to register in the example provided in the Explanatory Memorandum, as this donor activity may also be covered by the provisions contained in the Electoral Bill.[169] The Electoral Bill will broaden the definition of ‘associated entity’ in the Commonwealth Electoral Act 1918, and therefore it is possible that the student union would be required to declare donations as an associated entity or third party campaigner.[170]

Clause 21(2) will provide that if an activity falls into more than one item of the four in subclause 21(1), registration will be required for each item.

Clauses 22 and 23: Recent ministers, MPs and senior public servants

Clause 22 will apply to recent Cabinet Ministers, defined in clause 10 to mean a person:

•        who was a Minister and a member of the Cabinet at any time in the three years before the particular time and

•        is not at the particular time a Minister, member of the Parliament or a holder of a senior Commonwealth position.

A recent Cabinet Minister will be required to register under clause 22 for any activities he or she undertakes on behalf of a foreign principal (other than an individual) that are not registrable under another provision of proposed Division 3 of Part 2. So for example, a recent Cabinet Minister engaged in lobbying MPs would instead be required to register under clause 20.

Clause 22 will not include lobbying or other activities on behalf of a foreign principal who is an individual as a registrable activity. Examples of registrable activities would include employment with a foreign university or an advisory position with a foreign public enterprise.[171]

Clause 23 will apply to the registrable activities of recent Ministers, members of Parliament and other holders of senior Commonwealth positions. The same time restriction (three years) applies to recent Ministers and members of Parliament as for recent Cabinet Ministers (clause 10). For holders of a senior Commonwealth position, that is positions at agency head and deputy agency head levels (clause 10), the restriction is 18 months.

A recent Minister or member of Parliament or a recent holder of a senior Commonwealth position will be required to register under clause 23 for any activities he or she undertakes on behalf of a foreign principal (other than an individual):

•        that are not registrable under another provision of proposed Division 3 of Part 2 and

•        to which he or she contributes experience, knowledge, skills or contacts gained in his or her former role.

Clause 6 (Extraterritoriality) provides that the FITS Act applies both within and outside Australia. This is applicable to the registration requirements of clauses 22 and 23. The Explanatory Memorandum states:

For these categories of registrants, it does not matter where they undertake activities. They are required to register even if none of their activities are undertaken in Australia.[172]

Issue: post-separation employment

Clauses 22 and 23 will not impose a time restriction on when a recent Cabinet Minister, a recent Minister or member of Parliament or a recent holder of a senior Commonwealth position can commence lobbying. A person falling into one of these categories can commence lobbying as long as he or she has registered.

The Explanatory Memorandum states:

Section 22 does not prohibit recent Cabinet Ministers from engaging in activities on behalf of a foreign principal. They may be employed by, or act in any capacity for, a foreign principal. It is simply necessary for them to register to ensure there is transparency in relation to their connection to the foreign principal.[173]

The federal government’s domestic Lobbying Code of Conduct and Statement of Ministerial Standards impose a ban for a period of 18 months after a minister (or Cabinet Minister) ceases to hold office on lobbying on matters in which they have had official dealings in their last 18 months in office. The restriction for people employed in ministerial offices under the MoPS Act at Adviser level and above, members of the Australian Defence Force at Colonel level or above (or equivalent), and Agency Heads or persons employed under the Public Service Act 1999 in the Senior Executive Service (or equivalent) is 12 months.[174] A number of lobbying codes include much stronger post-separation employment rules: for example the Canadian Lobbying Code prohibits former designated public office holders (including ministers) from lobbying for a period of five years.[175]

Discussion about the Canadian post-separation employment rule has raised some interesting issues. There is a view that the five-year ban on lobbying imposes a disproportionately harsh limit on those who fall under its ambit—what is reasonable ‘for a senior mandarin or political adviser cannot be appropriate for the most junior of staffers’. [176] One suggested solution is ‘a legislated sliding scale based on the role of the individual in question’ and noting under the provisions of the Canadian Accountability Act the parliament can instruct the lobbying commissioner to grant more waivers ‘to more appropriately limit lobbying activity’.[177]

A more extreme example of restrictions on post-separation employment is found in the Executive Order, Ethics commitments by Executive Branch appointees, issued by President Trump in January 2017. The pledge taken by political appointees includes the following restrictions:

4. I will not, at any time after the termination of my employment in the United States Government, engage in any activity on behalf of any foreign government or foreign political party which, were it undertaken on January 20, 2017, would require me to register under the Foreign Agents Registration Act of 1938, as amended.[178]

Consideration could be given to whether the federal domestic codes and the FIT Scheme should adopt stronger and more compatible post-separation employment requirements.

AGD’s submission to the PJCIS stated:

The Scheme is a light touch approach that provides necessary transparency, rather than legislating for restrictions, or banning post-Ministerial employment by foreign principals.[179]

Its supplementary submission restated this view:

The department is of the view that MOPS Staff should not be included in the Scheme at this time, but this could be considered as part of the review required by section 70 which must take place within five years of the Scheme commencing.[180]

Issue: secondary employment

The FITS Bill will not have any impact on whether a current Cabinet Minister, Minister, member of Parliament or holder of a senior Commonwealth position is be able to engage in secondary employment, including registrable activities, while still a member of parliament or senior public servant.[181]

The definitions of recent Cabinet Minister, recent Minister or member of Parliament and a recent holder of a senior Commonwealth position in clause 10 have two requirements. The terms apply to a person:

•        who was:

–      a Minister and member of the Cabinet any time in the previous three years

–      a Minister or a member of the Parliament any time in the previous three years or

–      a holder of a senior Commonwealth position any time in the previous 18 months and

•        is not currently a Minister, member of the Parliament or a holder of a senior Commonwealth position.

The definitions appear to have been drafted on the assumption that someone who currently holds such a position would not be engaged in activities that would be registrable on behalf of a foreign principal. However, there are gaps in existing mechanisms regulating secondary employment, particularly of MPs who are not ministers, which mean this may not always be the case.

The conflict of interest provisions in the statutory Australian Public Service Code of Conduct would appear to prevent current holders of senior Commonwealth positions from engaging in registrable activities on behalf of a foreign principal.[182]

The Statement of Ministerial Standards, while not having the force of law, would appear to prevent Cabinet ministers and ministers from engaging in secondary employment such as lobbying, stating:

2.19 Ministers are required to withdraw from any professional practice or the day to day management of any business. They may not receive any significant income other than as provided for by these Standards …

2.20 A Minister shall not act as a consultant or adviser to any company, business, or other interests, whether paid or unpaid, or provide assistance to any such body, except as may be appropriate in their official capacity as Minister …[183]

However, there is no code of conduct covering other federal members of parliament or parliamentary policy on secondary employment. Although secondary employment would need to be declared on the relevant Register of Pecuniary Interests, it is possible that a senator or member could, depending on the circumstances:

•        engage in activities on behalf of a foreign principal that would be registrable under clause 20 (parliamentary lobbying) or 21 (activities in Australia for the purpose of political or governmental influence), in which case he or she would be required to register

•        engage in activities on behalf of a foreign principal that would be registrable under clause 22 (registrable activities of recent Cabinet Ministers) or 23 (registrable activities of recent Ministers, members of Parliament and other holders of senior Commonwealth positions) if the person was no longer a member of parliament but, because of the second limb of the definition of recent Cabinet Minister and recent Minister or member of Parliament, he or she would not be required to register.

Issue: coverage of ministerial advisers and senior public servants

The definition of parliamentary lobbying (clause 10) acknowledges that staff employed under sections 13 or 20 of the MoPS Act can be the target of lobbying. It would be compatible with the domestic lobbying Code if recent MoPS staff employed by Cabinet ministers and ministers were required to register under the FIT Scheme in the same way as former ministers and senior public servants under clause 23.

It is not clear why the definition of recent holder of a senior Commonwealth position (clause 10) is a person who held a relevant position within the last 18 months while a recent Minister or member of Parliament is defined as a person who held a relevant position within the last three years. A senior Commonwealth officer, such as an agency head, would have had access to high-level ministerial information and had the opportunity to develop extensive experience and contacts. A backbench or non-government MP may not have had similar opportunities.

Exemptions (Part 2, Division 4)

Proposed Division 4 of Part 2 will list a range of exemptions that will apply to a person otherwise required to register under the FIT Scheme. A person will not be required to register if any of these exemptions apply even though the person’s activities fall within the registrable activities described in clauses 20 to 23. The exemptions will apply to:

•        activities for the sole purpose of humanitarian aid or assistance (clause 24)

•        provision of legal advice or representation (clause 25)

•        diplomatic, consular or similar activities (clause 26)

•        religious-related activities (clause 27)

•        activities for the sole purpose of reporting news, presenting current affairs or expressing editorial content in news media (clause 28)

•        commercial or business pursuits (clause 29) and

•        circumstances prescribed by the rules (clause 30).

The application of the exemptions will differ depending on the type of foreign principal on whose behalf an activity is undertaken and the type of registrable activity. See further Table 2 (in Appendix 1).

Issues: scope of the FIT Scheme and exemptions

Activities ‘in Australia’

A person engaged in an activity that is registrable under clauses 20 (parliamentary lobbying) or 21 (activities for the purpose of political or governmental influence) will only be required to register under the FIT Scheme if the activity takes place ‘in Australia’. This appears to create gaps in the FIT Scheme’s coverage, particularly with respect to parliamentary or general political lobbying. It would mean, for example, that an Australian minister, MP or Commonwealth official could be lobbied by a person acting on behalf of a foreign principal while overseas, yet the person who lobbied would not be required to register.[184] Imposing reporting obligations on the targets of lobbying and other forms of influence instead of those attempting to exert influence could provide transparency about such interactions. See further the ‘Is the FIT Scheme the most effective way of achieving what the Government hopes to achieve?’ part of the ‘General issues’ section of this Digest.

Permanent Australian residents

The definition of foreign principal includes an individual who is ‘neither an Australian citizen nor a permanent Australian resident’. This could represent a potential weak point in the regime, as almost all permanent Australian residents (PARs) are foreign citizens.[185]

Differences between citizenship and permanent residency

The rights conferred on PARs differ from those of Australian citizens in some important aspects. As noted by the Department of Home Affairs:

A permanent resident has most of the rights and entitlements of a citizen, however there are differences…

·          A citizen has an automatic right of entry to Australia, however if a permanent resident chooses to travel internationally, they need to ensure they have a permanent visa with a valid travel authority if they wish to return to Australia as a permanent resident.

·          A citizen can vote in Australian Government elections. In most cases permanent residents cannot …[186]

It has also been noted:

Australian citizenship has little practical effect on the everyday situation of the permanent migrant. People who are permanent residents have the same access as citizens to the national health program and public education at the primary and secondary school level. They also have some access to welfare support and public tertiary education. Many are also eligible for special settlement services to help them take part in mainstream life as soon as possible.

There are however some distinct advantages to acquiring Australian citizenship. These are an Australian passport, eligibility for permanent government employment, the right to vote in government elections and security from deportation. Australian citizenship also has great symbolic value for the population at large, in that it formally establishes membership of the national community.[187]

Key differences include that PARs are excluded from:[188]

•        electoral and political participation (the integrity of which is a central focus of the Bill)

•        some types of employment with the Commonwealth (and state and territory governments), and especially roles that require security clearance[189]

•        the right (and duty) to serve on juries.[190]

It appears that key rationale for excluding PARs from the above rights and responsibilities includes that they are not citizens, that key rights and roles (especially those related to government, electoral and political processes or institutions) should be reserved for citizens and because of the potential security risk posed by non-citizens.

As such, it is somewhat surprising that PARs are excluded from the definition of ‘foreign principal’ in a Bill that purports to establish a regime focused on ensuring the integrity of the very processes and institutions that are reserved for citizens and from which PARs are currently excluded.

Implications for the FIT Scheme

Excluding PARs from the definition of foreign principal may allow persons acting on behalf of PARs to engage in conduct that would be registerable if the individual did not hold PAR status. This might pose an integrity risk to the FIT Scheme.

As demonstrated in the examples under ‘Potential circumvention or defeat of the FIT Scheme through indirect influence’, the exclusion of PARs from the definition of ‘foreign principal’ raises the prospect of a foreign principal using PARs to circumvent the FIT Scheme.

Communications activity and the news media exemption

As noted above, subclause 28(1) will provide an exemption for a person undertaking activities (including, most relevantly, communications activity) on behalf of a foreign principal who is a foreign business or an individual where the activity is solely, or solely for the purpose of, reporting news, presenting current affairs or expressing ‘editorial content’ in news media.

This exemption does not apply to recent Cabinet Ministers, Ministers, members of Parliament and other holders of senior Commonwealth positions (subclause 28(2)). The Explanatory Memorandum notes that as a person defined in clause 22 or 23 will not be exempt; the person:

… will still need to register even if the foreign principal is a foreign business or a foreign individual and the activity is solely for the purpose of reporting news, presenting current affairs or expressing editorial content in news media.[191]

The terms used in the exemption are not defined and are potentially very broad, even when their ordinary meanings are applied. In particular, the use of the phrases ‘presenting current affairs’ and ‘editorial content’ in ‘news media’ might effectively allow foreign controlled, owned, operated or directed media operating in Australia to use news media and editorial content to try and influence the public, or a section of the public, in relation to various government or political processes or proceedings.

The FARA includes an exemption for news and press services and publications that is narrower than that included in the FITS Bill.[192] It does this by emphasising, among other requirements, the percentage of local ownership required:

FARA excludes from regulation as an agent of a foreign principal “any news or press service or association organized” under domestic laws or any publication that is distributed for “bona fide news or journalistic activities.” To qualify for this exemption, the ownership stake of U.S. citizens in the news organization must be at least 80% and its officers and directors must be U.S. citizens as well. Furthermore, the organization or publication cannot be “owned, directed, supervised, controlled, subsidized, or financed, and none of its policies are determined by any foreign principal [as defined under FARA].”[193]

Examples of media operating in the US that have been directed to register under the FARA or, in some cases, have not been required to register have been discussed recently in the journal Foreign Policy. One article noted that the US Department of Justice recently ordered RT, ‘the Russian state-backed English-language news organization, to register as a foreign agent under the Foreign Agents Registration Act’.[194] The authors question why China Central Television (CCTV American), recently rebranded as CGTN America and ‘one of China’s biggest government–controlled news outlets’ has not been required to register.[195] They note:

… CGTN America has been described as an attempt by China to spread its soft power globally.

Its coverage of U.S. domestic issues is professional and not clearly slanted in one direction or another. But any China-related reports strictly follow Chinese Communist Party media guidelines, presenting China as a positive, peaceful force whose geopolitical interests are righteous.[196]

Another US publication, Chinese-language newspaper Qiao Bao, is owned by a US company, Rhythm Media Group, ‘which is incorporated in California and also maintains an office in Beijing. Rhythm Media also owns Chinese-language radio stations in Seattle and Bellevue, Washington’.[197] As in the case of CGTN America, Qiao Bao coverage of ‘local news, its take on China-related topics often closely echoes that found in China’s own heavily regulated and censored newspapers’.[198] It also is not registered under FARA.

In Australia, similar examples have been reported recently, one concerning:

… Chau Chak Wing, one of Australia’s biggest political donors, [and] a major owner of Chinese language media in Australia … Chau has emphatically denied any connections with the ruling Communist Party or knowledge of its insidious United Front Work Department yet his newspapers tend to take a pro-Beijing line.[199]

Another example involves ‘Chinese language media mogul Tommy Jiang’ who ‘owns 11 radio stations, nine newspapers and several websites and magazines, which reach many of Australia’s 1 million residents with Chinese heritage’.[200] Mr Jiang is reportedly looking to expand his media business as he is ‘seeking to gain control of up to 36 radio licences or stations in Australia’.[201]

It is not clear the extent to which the activities outlined in the examples above will fall within the scope of the FIT Scheme. Further, the news media exemption will not apply where the foreign principal is a foreign government or a foreign public enterprise (or a foreign political party). However, there is a risk that foreign principals may use associate or de facto control schemes to mask an entity as a foreign business when it is, in reality, a foreign public enterprise (thereby accessing an exemption that is not intended to apply). This could be addressed through the inclusion in the Bill of appropriate tracing rules mechanisms. See further the ‘Definition of controlled and potential for circumvention of the FIT Scheme’ part of the ‘General issues’ section of this Digest.

Stakeholder views on this exemption were varied. The submission to the PJCIS by Epoch Times supports the FITS Bill and urges the Government to introduce a more robust ‘legal framework to counteract the ever growing Chinese communist influence in Australia’.[202] The media organisation, described on its website as ‘the largest Chinese-language newspaper outside of mainland China and Taiwan’, suggests that many local Chinese media are now a mouth piece for the Communist Party.[203]

Both the Foxtel and JMO submissions included concerns about the narrowness of the news media exemption, with Foxtel suggesting that the exemption must reflect the reality of business relationships in the sector (content supply arrangements including with foreign principals) and cover all forms of distribution including online and on-demand distribution.[204] Foxtel also referred to the need for a broadly framed exemption for media operators, and had additional concerns that the Bill could have unintended consequences relating to political advertising.[205] Another submission suggested that the exemption allowed under subclause 28(1):

… might be too broad because the dissemination of propaganda by ‘expressing editorial content in news media’ would allow foreign media businesses or foreign ‘think tanks’ that are in reality fronts for foreign governments or non-media businesses to provide such content without either registration or other identification of the source of the material.[206]

As previously noted submissions from both Free TV Australia and Network Ten have expressed concern that the latter may be captured by the provisions of the Bill following the acquisition of Network Ten by the CBS Corporation on 16 November 2017.[207]

Donor activity

Unlike all other types of registrable activities, donor activity will not be registrable if it is undertaken on behalf of a foreign principal that is a business or an individual. The Explanatory Memorandum states that this is intentional, but does not provide the rationale for the approach taken. It states that ‘there are a range of situations in which transparency is not required for donor activities for foreign businesses and individuals, even if it is for the purpose of political or governmental influence’, but does not provide any examples of such situations to substantiate the claim.[208] The Attorney-General’s Department’s submission to the PJCIS’s inquiry appears to suggest that the Government may have decided not to include donor activity on behalf of foreign businesses and individuals under the FIT Scheme due to concerns it might give rise to constitutional challenges on the basis of impermissible limitations on the right to freedom of political communication.[209]

Commercial or business pursuits exemptions

Subclause 29(1) will provide that a person is exempt in relation to an activity the person undertakes on behalf of a foreign business or individual where that activity is undertaken solely, or solely for the purposes of, the pursuit of bona fide business or commercial interests in relation to preparing to negotiate, negotiating or concluding a contract for the provision of goods or services. The exemption will not apply if the activity in any way relates to national security, defence or public infrastructure (see further below).

Subclause 29(2) will provide that a person is exempt in relation to any activity the person undertakes on behalf of a foreign public enterprise or foreign business where the activity is a commercial or business pursuit undertaken under the name of the foreign principal, or where an individual undertakes that activity in the course of his or her employment by the foreign public enterprise or foreign business. The Explanatory Memorandum notes that this exemption is intended to ensure:

•        that Australian branches of foreign-owned global corporations are not captured under the scheme if the Australian branch is operating under the same or similar trading name as the foreign principal and

•        where an individual is directly employed by a foreign business and the activities undertaken by that individual can be clearly attributed to and linked with the foreign business or foreign public enterprise.[210]

As noted above, the exemption for commercial negotiations set out in subclause 29(1) will not apply if an activity relates in any way to national security, defence, or public infrastructure within the meaning of Division 82 of the Criminal Code Act 1995 (Criminal Code). Neither national security nor defence are defined in the Bill. The Explanatory Memorandum states that the terms are intended to take their ordinary meanings and provides some examples of what is intended to be captured.[211] However, the lack of definitions may lead to uncertainty about whether or not the exemption applies in particular circumstances, particularly in the case of national security, the scope of which is less settled and seems to be continually expanding. To provide greater certainty, consideration could be given to adopting the definition of security used in the Australian Security Intelligence Organisation Act 1979 (ASIO Act).[212]

The definition of public infrastructure (which will be inserted into the Criminal Code by the EFI Bill) is quite broad and may significantly reduce the scope of the exemption. Specifically, it will extend to:

(e)              any infrastructure, facility, premises, network or electronic system (including an information, telecommunications or financial system) that:

              (i)                            provides or relates to providing the public with utilities or services (including transport of people or goods) of any kind; and

              (ii)              is located in Australia; and

              (iii)              belongs to or is operated by a constitutional corporation or is used to facilitate constitutional trade and commerce.[213]

The exemption for commercial negotiations will not apply where the foreign principal is a foreign government or a foreign public enterprise (or a foreign political party). However, there is a risk that foreign principals may use associate or de facto control schemes to mask an entity as a foreign business when it is, in reality, a foreign public enterprise (thereby accessing an exemption that is not intended to apply).[214] This could be addressed through the inclusion in the Bill of appropriate tracing rules mechanisms. See further the ‘Definition of controlled and potential for circumvention of the FIT Scheme’ part of the ‘General issues’ section of this Digest.

Application of commercial or business pursuits exemptions to former Cabinet ministers, ministers, MPs and senior Commonwealth officers

The following rationale is provided in the Explanatory Memorandum for recent Cabinet ministers being required under clause 22 to register under the FIT Scheme if they are undertaking any activity on behalf of a foreign principal:

… by virtue of holding such a senior position within the Australian Government, these persons bring significant influence to bear in any activities undertaken on behalf of a foreign principal. Given recent Cabinet Ministers have occupied a significant position of influence, are likely to have a range of influential contacts with decision making authority in the political process and have had access to classified and sensitive information concerning current and recent Australian Government priorities, it is in the public interest to know when such persons have an arrangement with a foreign principal.[215]

And similarly for recent ministers, MPs and other holders of senior Commonwealth positions being required under clause 23 to register under the FIT Scheme if they are undertaking any activity on behalf of a foreign principal to which they are contributing experience, knowledge, skills or contacts gained in their former role:

… by virtue of holding a position in the Australian Parliament or a senior position in the Australian Government bureaucracy, these persons bring significant influence to bear in any activities undertaken on behalf of a foreign principal. It is appropriate and in the public interest to require transparency of such individuals where the person is contributing skills, knowledge, contacts and experience gained through their previous public role.[216]

Subclauses 27(2) and 28(2) exclude recent Cabinet ministers and recent ministers, MPs and other holders of senior Commonwealth positions from the application of the exemptions in clauses 27 and 28 relating to religious activities and news media, because there is ‘merit in the Australian public and government decision makers knowing when and in what circumstances such persons are acting on behalf of’ foreign principals, even when solely for purposes relating to religion or news media.[217]

Recent Cabinet ministers and recent ministers, MPs and other holders of senior Commonwealth positions will, however, be able to rely on the exemptions that apply to commercial or business pursuits in clause 29. It is not clear why the rationale for excluding those individuals from the religion and news media exemptions has not also been applied to the commercial or business pursuits exemptions.

Not-for-profit organisations

Many of Australia’s international development, environment, human rights and other non-government organisations (NGOs)—including CARE Australia, Amnesty International Australia and Greenpeace Australia—have links with overseas counterparts through international/transnational confederation arrangements. For example, CARE Australia is affiliated to CARE International, ‘a global confederation of 14 National Members and 4 Affiliates with a common vision and mission to defeat poverty, as is outlined in the CARE 2020 Program Strategy’.[218] Under this arrangement:

The CARE International Secretariat [located in Geneva, Switzerland] coordinates and supports this network to achieve our common impact goals and shared global priorities in line with our global CARE 2020 Vision and Program Strategy. It leads CARE’s global advocacy and represents the confederation at the United Nations, the European Union and at key global forums.[219]

Similarly, the Catholic international development NGO, Caritas Australia, is a member of Caritas Internationalis, which has its headquarters in Rome—‘co-ordinating emergency operations, formulating development policy and advocating for a better world for everyone. All national Caritas organisations are members of their own regional Caritas networks and the international confederation’.[220] Amnesty International Australia, which is overseen by a National Board, also works with the human rights group’s International Secretariat, based in London, which ‘is responsible for the majority of the organisation’s research and leads our campaigning work’.[221] Greenpeace Australia is affiliated with Greenpeace International, which works to ‘facilitate the development and agreement of the network’s future direction, support the national and regional offices and ensure alignment by developing processes and providing mechanisms’.[222]

Many of these organisations undertake advocacy, lobbying and communications activities aimed at changing Australian government policies, both domestic and foreign, in collaboration with foreign affiliates and/or with the assistance of foreign funding. For example, Amnesty International Australia and Amnesty International UK are both engaged in a global campaign aimed at enhancing protection for refugees by national governments.[223] Australian international development NGOs such as CARE Australia and CARITAS Australia are part of a broader NGO campaign, ‘The Campaign for Australian Aid’, aimed at increasing Australia’s foreign aid budget and this campaign is part funded by the US-based Bill and Melinda Gates Foundation.[224]

Due to the breadth of what is captured by the defined terms foreign business (which does not specifically exclude not-for-profit or charitable organisations) and undertaking registrable activity on behalf of a foreign principal (which includes instances where the activity is undertaken with funding from or in collaboration with a foreign principal), it appears that Australian NGOs with any type of foreign links will be required to register under the FIT Scheme and meet associated obligations.

Further, while an exemption to the FIT Scheme will apply under subclause 29(2) for the activities of individuals acting in their capacity as employees of foreign businesses, that exemption does not appear to apply to employees of NGOs (despite NGOs apparently falling within the definition of foreign business) because it is limited to activities that are ‘commercial or business pursuits’. In its supplementary submission to the PJCIS, AGD stated that the exemption would apply to an employee of CARE Australia, because ‘they are undertaking business pursuits in their capacity as an employee’.[225] However, it is difficult to see how that would be the case when the term ‘commercial or business pursuits’ is not defined and the Explanatory Memorandum states that the term is ‘intended to take its ordinary meaning to include activities relating to trade, commerce, buying, selling, dealing and marketing’.[226]

Many stakeholders have objected to the inclusion of NPOs in the FIT Scheme and suggested some form of exemption.[227] Several stakeholders, including the Australian Charities and Not-for-profits Commission (ACNC), Community Council for Australia and the LCA, considered that organisations registered with the ACNC should be exempted from the FIT Scheme entirely, given the obligations associated with ACNC registration extend to not engaging in or promoting activities that are contrary to public policy and not promoting or opposing a political party or candidate.[228] AFMA and the ACBC noted the domestic Lobbying Code excludes certain charitable, religious and non-profit organisations from the definition of lobbyist, and suggested an exemption to registration under the FIT Scheme consistent with the exclusions under that Code.[229] Some stakeholders also suggested that the breadth of definitions and lack of clarity could, in combination with the regulatory burden associated with registration, lead to charities reducing their involvement in advocacy aimed at influencing public policy, to the detriment of the most vulnerable in the community.[230] Finally, some stakeholders suggested that if NPOs are not exempted from the FIT Scheme, registration charges should at least be waived for NPOs with charitable status.[231]

In its supplementary submission to the PJCIS, AGD suggested that if the PJCIS was minded to consider an exemption for charities, the definition of ‘charitable purpose’ in section 12 of the Charities Act 2013 could provide a starting point:

The exemption could be for a person who undertakes an activity on behalf of a foreign principal if the sole purpose for which the activity is undertaken is a charitable purpose as defined in the Charities Act 2013.[232]

Academics, universities and think tanks

It is not clear whether academics accepting funding from foreign sources for activities such as specialist teaching and research programs and all expenses paid invitations to speak at conferences, or universities accepting funds to set up research centres, will come within the provisions of the FIT scheme.[233] The latter concern also raises the position of think tanks which accept foreign funding, with the media suggesting the Australia-China Relations Institute and the Australian Strategic Policy Institute as possible examples.[234]

Professor of International Security and Intelligence Studies at the Australia National University, John Blaxland has suggested:

Some colleagues are uneasy about the potential ramifications and the prospect of controversial views being taken as being unduly influenced by foreign powers.[235]

He also suggested that the laws [FITS and EFI Bills] need to be carefully worded with clear caveats.[236]

Consideration will need be given to when it is appropriate to require academics, universities and think tanks to register under the FIT Scheme and whether the Scheme is crafted so as to capture such instances without also inadvertently capturing other circumstances.[237]

The US FARA has exempted from registration agents of foreign principals engaged in bone fide scholastic and academic pursuits. This exemption applies to:

Any person engaging or agreeing to engage only in activities in furtherance of bona fide religious, scholastic, academic, or scientific pursuits or of the fine arts.[238]

US lawyers have suggested that many of the exemptions in FARA, including those listed above, ‘are poorly defined and the Department of Justice’s FARA Unit has issued few regulations or advisory guidance interpreting them’.[239] They note that, apart from universities, think tanks and other scholarly institutions often use FARA’s academic exemption to avoid registration.[240]

In 2016 the Office of the Inspector General (OIG) of the US Department of Justice conducted a performance audit of the FARA.[241] One difficulty identified by the FARA Unit concerned:

… the breadth and scope of existing exemptions to the FARA registration requirement and determining whether activities performed by certain groups, such as think tanks, non-governmental organizations, university and college campus groups, foreign media entities, and grassroots organizations that may receive funding and direction from foreign governments fall within or outside those exemptions. According to the FARA Unit, these types of organizations generally claim that they act independently of foreign control or are not serving a foreign interest and are not required to register.[242]

The OIG recommended that the National Security Division conduct a formal assessment of the LDA exemption along with other current FARA exemptions and determine whether a formal effort to seek legislative change on any of these exemptions is warranted. This recommendation was accepted by the NSD.[243]

The difficulties associated with the FARA exemption that covers bona fide scholastic and academic pursuits may have disinclined the Australian Government to include a similar exemption in the FITS Bill.

A number of submissions to the PJCIS argued for the inclusion of an exemption for research and academic activity. The Group of Eight submission noted that research projects are ‘increasingly supported by funding from international organisations’ and stated that this ‘creates a legitimate concern that the Bill will impose a regulatory burden on a large volume of routine activity that is disproportionate to the risks of that activity’.[244] Universities Australia recommended that the Bill be amended to include:

… a specific exemption for activities that are predominantly academic or scholastic in nature. At a minimum, such a definition should include teaching and research activities, including the communication of research findings by any means.[245]

The Attorney-General’s Department’s submission outlined reasons for not adopting FARA-style exemptions for bona fide scholastic and artistic pursuits, arguing:

Australia’s proposed scheme does not have these exemptions because activities only come within the scope of the Scheme when they are tied to influencing Australian political and governmental systems and processes. Therefore, in most instances, scholastic and artistic pursuits would not be registrable under the Scheme.[246]

Stakeholders also raised the issue of the welfare of international students and advocacy by universities on behalf of international students. Universities Australia suggests that a university making representations to government on behalf of an international student ‘could potentially become registrable conduct’.[247]

In answer to questions raised by the Group of Eight and Universities Australia, AGD stated that as the FIT Scheme is narrower than the US FARA, a FARA-style exemption for academics and universities was ‘not appropriate in the Australian context’.[248]

Legal advice or representation exemption

The LCA noted that the exemption for legal advice or representation (clause 25) is a narrow one, ‘only extending to advice or representation in judicial, criminal, or civil law enforcement proceedings’.[249] The LCA was concerned that activities in a commercial or administrative context may be activities that will require registration under the FIT Scheme. The ALHR and Law Firms Australia noted similar limitations of this exemption.[250]

Activities of professionals that are incidental to service provision

Some stakeholders argued for the inclusion of a new exemption for members of the professions—such as lawyers, doctors and accountants—in line with the exemption in the domestic Lobbying Code of Conduct.[251] The definition of ‘lobbyist’ in this Code excludes:

… members of professions, such as doctors, lawyers or accountants, and other service providers, who make occasional representations to Government on behalf of others in a way that is incidental to the provision to them of their professional or other services. However, if a significant or regular part of the services offered by a person employed or engaged by a firm of lawyers, doctors, accountants or other service providers involves lobbying activities on behalf of clients of that firm, the firm and the person offering those services must register and identify the clients for whom they carry out lobbying activities.[252]

United Nations exemption

Clause 26 includes an exemption for a ‘UN or associated person’ within the meaning of Division 71 of the Criminal Code. However, the exemption is quite narrow, and based on the example set out in the Explanatory Memorandum, possibly narrower than intended.[253]

The definitions of ‘UN personnel’ and ‘associated personnel’ in Division 71 of the Criminal Code are confined to personnel carrying out activities in support of a UN operation and officials and experts present in an official capacity in the area where a UN operation is being conducted. The definition of ‘UN operation’ is limited to operations for the purpose of maintaining or restoring international peace and security or where the Security Council or General Assembly has declared that there exists an exceptional risk to the safety of the personnel engaged in the operation. The exemption therefore appears not to apply to activities of a UN employee that are not directly related to a specific operation.

Further, due to the Criminal Code definitions, the exemption appears to apply to personnel of specialised agencies of the UN (such as the World Health Organization), but not related organisations (except for the International Atomic Energy Agency) and possibly not of funds and programs of the UN.[254] This would mean personnel from agencies such as the International Organization for Migration and the United Nations Development Programme would not be covered by the exemption.

Finally, it is not clear why UN personnel should be provided with an exemption, but not personnel of other international organisations funded by national governments, such as the OECD. In response to a question from the PJCIS on this matter, AGD appeared open to the suggestion of extending the exemption to other international organisations ‘to the extent that [they] represent the interests of the international community’, but indicated any exemption would need to be carefully crafted ‘so as not to undermine the Scheme’s transparency objective’.[255]

Religion exemption

Clause 27 will provide an exemption for a person (other than a recent Cabinet Minister, Minister, member of Parliament or other holder of a senior Commonwealth position) acting on behalf of foreign principal if:

•       the foreign principal is a foreign government and

•       the otherwise registerable activity is solely, or solely for the purposes of, acting in good faith in accordance with the doctrines, tenets, beliefs or teachings of the particular religion of the foreign government.

To give context to this exemption and criticisms of its drafting, a brief background to how religion generally interacts with government in Australia and in foreign jurisdictions is provided below.

Different models of government-religious interaction

Internationally, a wide diversity of models for state-religion relations exists including:

•       Atheistic states—ranging from models that only actively exclude religion or religiously-based/motivated reasons from public life to models that also aim to exclude religion from the private lives of citizens

•       Secular states—ranging from strict separationist models where religion is privatised, to traditional (or ‘soft’) models that avoid identification of the state with any religion and provide a neutral framework that accommodates a broad range of religions and beliefs (including non-belief) within society and public life and

•       Theocratic states—ranging from states with ‘official’ religions that accommodate other religions or non-belief, through to states that do not tolerate any religion other than the ‘official’ religion.[256]

In this regard, Australia can be regarded as a ‘traditional’ secular state, as Australia’s constitutional model of secularism was intended to protect religious freedom and to prevent the establishment of a Commonwealth-sanctioned ‘official’ religion[257] and avert attempts ‘to sanitize the public square of religion’.[258]

Importantly, as secularism is not a universally accepted norm of governance there will arise circumstances where religious (or religiously motivated) beliefs or positions on issues are raised in public life by individuals on behalf of (or having been motivated by) foreign religious bodies or individuals, some of which may be government-sanctioned or linked. For a secular state to successfully accommodate a broad range of religions and beliefs (including non-belief) within society and public life it appears necessary to accommodate religions and beliefs (and the communication of those religious beliefs) linked to foreign governments with an ‘official’ religion.

What does the religious exemption capture?

Putting aside the example of the Catholic Church used in the Explanatory Memorandum (subject to criticism by some stakeholders, as noted below[259]) there are a number of foreign states that have ‘official’ religions. Of those, some have governmental bodies dedicated to that religion, and therefore those bodies are a foreign government as defined in the Bill.[260]

This means that where—for example—an authority of a foreign country responsible for that state’s official religion organises a person to undertake otherwise registerable activity in Australia (for example, lobbying parliamentarians about a particular issue) that person would be exempt from having to register provided that activity was solely, or solely for the purposes of, acting in good faith in accordance with the doctrines, tenets, beliefs or teachings of the particular religion of the foreign government.[261]

As the practice of religion includes communicating religious beliefs both in private and public,[262] it would therefore exempt a person from registering when they communicate the beliefs of a particular religion of a foreign government in circumstances that would otherwise be registerable. As noted in the Explanatory Memorandum:

This exemption is intended to exclude the activities of religious bodies which have such a clear and transparent relationship with a foreign government that registration under the scheme would not achieve additional transparency.[263]

Importantly, the exemption provided by clause 27 does not apply to actions undertaken on behalf of other types of foreign principals, for example, individuals. This means it will not exempt activities undertaken on behalf of religious entities that are separate to a foreign government or foreign individuals who are religious leaders, a point made by AGD:

This exemption seeks to explicitly avoid the activities of a church that is linked to a foreign government from being registrable under the Scheme. It does not apply to religions that are not linked to a foreign government. The intention of the exemption is to ensure that, in situations where the head of a church may also be the head of a state, activities undertaken in accordance with the doctrines and tenets of the religion are not registrable, even if they are for the purpose of political or governmental influence.[264] [emphasis added]

Criticisms of the exemption

A number of submissions to the PJCIS inquiry into the Bill were critical of the exemption, for different reasons. For example, noting that ‘there is no hierarchy of human rights—they are all interrelated, interdependent and indivisible’ the ALHR criticised the exemption provided by clause 27 on the basis that:

It is unclear why section 27 privileges religious lobbying on behalf of theocracies. This does not seem to be a desirable exception.[265]

In contrast to the above generalised criticism of clause 27, the ACBC had very specific criticisms of the measure and the Explanatory Memorandum including:

•       the exemption is drafted ‘on the incorrect belief that the Catholic Church in Australia acts on behalf of a foreign government, i.e. Vatican City State’ and that ‘given the Catholic Church in Australia does not act on behalf of a foreign government, the clause would confer no exemption on members of the Catholic Church in Australia’, and

•       the exemption does not address the potential for the Pope or other Church officials being interpreted as a foreign principal and hence ‘as it is presently drafted, potentially requires every bishop, priest, deacon, religious sister, brother, lay person or Catholic-controlled legal entity advocating or communicating in relation to public policy to register and report on their activities under the terms of the Bill’.[266]

In part, the ACBC’s views were based on what it termed ‘common misunderstandings of the nature of the Church and raise issues relating to three distinct entities: the Catholic Church, the Holy See and Vatican City State, as well as the status of the Pope’.[267] Whilst beyond the scope of this Digest to explore in detail, suffice to say that it has been noted by legal academics:

There is a considerable amount of confusion as to the exact legal characterization of the Holy See and the Vatican. Although most scholars would agree that the Holy See and the Vatican are different legal persons, legal opinion on their… “unique and complex” interrelationship, differs widely. [268]

The Holy See and Vatican are (as argued by the ACBC) generally considered different legal persons, however, this view is not universally accepted. Some jurisdictions have regarded the Holy See and the Vatican as interchangeable.[269]

It is this latter view that appears to underlie the drafting of the Explanatory Memorandum, which states ‘this exemption seeks to avoid the activities of the churches affiliated with foreign government, such as the Catholic Church being registrable under the Scheme’ (emphasis added).[270] This is also the view of the Department of Foreign Affairs and Trade.[271] However, in its supplementary submission AGD noted:

… in light of evidence from the Australian Catholic Bishops Conference (ACBC), the Catholic Church in Australia may not have a foreign principal, in which case registration is not required.[272]

It would appear that as views on the precise relationship (and the nature of that relationship) between the Catholic Church in Australia and the Holy See and Vatican City differ widely, there is at least some ambiguity as to whether clause 27 would operate to exempt otherwise registerable activities undertaken solely, or solely for the purposes of, acting in good faith in accordance with the doctrines, tenets, beliefs or teachings of the Catholic Church on behalf of the Holy See, Vatican City or the Pope respectively and this is likely to be determined by the courts on a case-by-case basis.

Offences

Failing to register will be an offence under clause 57. If a person knows that they are required to apply for registration and:

•          intentionally or recklessly omits to do so, the maximum penalty will be 12 months imprisonment and/or 60 penalty units ($12,600) for an individual or 300 penalty units ($63,000) for a body corporate[273]

•          recklessly omits to do so, and then undertakes a registrable activity, the maximum penalty will be five years imprisonment and/or 300 penalty units ($63,000) for an individual or 1,500 penalty units ($315,000) for a body corporate[274]

•          intentionally omits to do so, and then undertakes a registrable activity, the maximum penalty will be seven years imprisonment and/or 420 penalty units ($88,200) for an individual or 2,100 penalty units ($441,000) for a body corporate.[275]

It will also be an offence under clause 57 for a person to give the Secretary a notice under section 31 (notice of end of liability to register) if a registrable arrangement exists between the person and a foreign principal, and the person knows that the registrable arrangement will still be in existence on the day specified in the notice. If the person undertakes a registrable activity after the day specified, the maximum penalty will be seven years imprisonment and/or 420 penalty units for an individual or 2,100 penalty units for a body corporate; otherwise, it will be 12 months imprisonment and/or 60 penalty units for an individual or 300 penalty units for a body corporate.[276]

Part 3—Responsibilities of registrants

Proposed Part 3 will outline the reporting and other obligations of persons once they are registered under the FIT Scheme.

A registrant will be required to give the Secretary notice:

•        if there is a material change in the person’s circumstances (such as starting to undertake another kind of registrable activity) (clause 34)

•        if the person undertakes donor activity on behalf of a foreign principal for the purpose of political or governmental influence, and the total value of the money or things of value disbursed during that activity reaches the electoral donations threshold or a multiple of that threshold (clause 35)

•        confirming or updating the person’s registration if a voting period begins for a federal election (other than a by-election) or for a designated vote (clause 36) and

•        if the person undertakes certain activities on behalf of a foreign principal at any time during the voting period for a federal election (other than a by-election) or for a designated vote, where the activity relates to that election or vote (clause 37). The activities covered will be:

–      parliamentary lobbying on behalf of a foreign government

–      activities (other than donor activity) for the purpose of political or governmental influence and

–      donor activity conducted for the purpose of political or governmental influence, where the total value of the money or things of value disbursed during that activity reaches the electoral donations threshold or a multiple of that threshold in the voting period.

All such notices will be required to be in writing, in an approved form (if any), given in an approved manner (if any) and accompanied by any information or documents required by the Secretary. Notices under clauses 34–36 will be required within 14 days, and those under clause 37 within seven days.

The Explanatory Memorandum notes but does not explain why the obligations under clauses 36 and 37 do not apply to voting periods for by-elections.[277] In a hung Parliament where numbers are critical in the House of Representatives, a by-election has the potential to cause instability for the Government of the day, including the loss of government.[278]

Under clause 38, a registrant will be required to make a disclosure in accordance with the rules if the person undertakes communications activity on behalf of a foreign principal for the purpose of political or governmental influence. Subclause 38(2) will provide that the rules may prescribe instances of communications activity, when and how disclosures are to be made, the content, form and manner of disclosures, and circumstances in which a person is exempt from making a disclosure.[279]

Under clause 39, registrants will be required to either renew their registration or give the Secretary a notice under section 31 (notice of end of liability to register) before the end of the renewal period each year. A renewal or notice will be required to be in writing, in an approved form (if any), given in an approved manner (if any) and accompanied by any information or documents required by the Secretary.

Clause 40 will require registrants to keep records of particular matters, including registrable activities and information or material forming communications activity, while registered under the FIT Scheme and for five years afterwards.

Offences

Failure to renew registration will be an offence under clause 57. If a person knows that they are required to renew registration and:

•        intentionally or recklessly omits to renew registration, the maximum penalty will be 12 months imprisonment and/or 60 penalty units ($12,600) for an individual or 300 penalty units ($63,000) for a body corporate[280]

•        recklessly omits to renew registration, and then undertakes a registrable activity, the maximum penalty will be five years imprisonment and/or 300 penalty units ($63,000) for an individual or 1,500 penalty units ($315,000) for a body corporate[281]

•        intentionally omits to renew registration, and then undertakes a registrable activity, the maximum penalty will be seven years imprisonment and/or 420 penalty units ($88,200) for an individual or 2,100 penalty units ($441,000) for a body corporate.[282]

Under clause 58, a person will commit a strict liability offence if:

•          the person is required to give a notice under Division 2 of Part 3, make a disclosure under section 38 or keep records under section 40 and

•          the person fails to do so.

The maximum penalty will be 60 penalty units ($12,600) for an individual 300 penalty units ($63,000) for a body corporate.

The application of strict liability will mean that no fault element will need to be proved, and the defence of mistake of fact (under section 9.2 of the Criminal Code) will be available.

Part 4—Obtaining and handling scheme information

Foreign Influence Transparency Scheme register (Part 4, Division 2)

Clause 42 will require the Secretary to keep a register that includes certain information and documents relating to each person who is registered.

Clause 43 will generally require the Secretary to make available to the public online:

•        the name of each person registered in relation to a foreign principal and the name of the foreign principal

•        a description of the kind of registrable activities the person undertakes on behalf of the foreign principal and

•        any other information prescribed by the rules.[283]

The Secretary will not be required to make information publicly available if he or she is satisfied that it is commercially sensitive, affects national security or is of a kind prescribed by the rules.[284] The rules may also prescribe circumstances in which the Secretary is to remove publicly available information from the website.[285]

Issue: meaning of national security

National security is not defined. No guidance is provided in the Bill on how the Secretary is to determine whether certain information is commercially sensitive or affects national security (for the purposes of clause 43), though there is a note stating that a person may identify information as commercially sensitive when providing it, and information in the Explanatory Memorandum on what might fall within the scope of national security.[286] Consideration could be given to adopting the definition of security used in the ASIO Act.[287]

Issue: no obligation to correct or update register

Clause 44 will provide that the Secretary may correct or update information in the register. However, there will be no requirement for corrections or updates to be made within a certain period of time (or at all). Registrants will have obligations to notify the Secretary of various matters within 14 days (and in one case, seven days) or potentially face criminal prosecution. Given the purpose of the FIT Scheme is to provide transparency about persons undertaking activities on behalf of foreign interests, it would seem appropriate to impose on the Secretary an obligation to update or correct the register to reflect the information received in a timely manner. The US FARA, on which the FIT Scheme is based, requires the Attorney-General to make registration and update statements available on the internet ‘as soon as technically practicable’ after they have been filed.[288]

Powers to obtain information (Part 4, Division 3)

Proposed Division 3 of Part 4 will allow the Secretary to issue notices requiring persons to provide information and documents relevant to the FIT Scheme. There will be two types of notice:

•        if the Secretary reasonably suspects that a person might be liable to register, and the person is not registered, the Secretary may issue a notice requiring that person to provide information and documents that may satisfy the Secretary as to whether or not they are liable to register (under clause 45) and

•        if the Secretary reasonably believes that any person has information or a document that is relevant to the operation of the FIT Scheme, the Secretary may issue a notice requiring that person to provide the information or document (under clause 46).

Before issuing a notice, the Secretary must consider the costs that might be incurred by the person in complying with the notice.[289]

A person must comply with a notice within the period specified in the notice (which must be at least 14 days) or as extended.[290]

The Secretary may inspect, copy and retain documents produced in response to a notice.[291]

Issue: scope of notices issued to any person

The scope of information that may be requested of any person under clause 46, being information or documents ‘relevant to the operation of the scheme’, is quite broad. Noting also the reasonably broad purposes for which such information may be shared under clause 53 (including enforcement related activity and the protection of security—see further ‘Communication and dealing with FIT Scheme information’ below), consideration could be given to narrowing the scope of information and/or the purpose for which it may be sought. For example, the Secretary could perhaps be limited to requiring information that may satisfy the Secretary as to whether:

•        a person is liable to register in relation to a foreign principal or

•        a registrant is complying with their obligations under the FIT Scheme.

Issue: whether person has and is able to provide information or documents sought

Clauses 45 and 46 provide for a person from whom information or documents are sought to seek an extension of time in which to provide the information. However, they make no provision for a person to object to the notice either in its entirety (for example, on the basis that they do not in fact have the information or document) or in part (for example, because of the disproportionate costs that providing the information might involve). Consideration could be given to the inclusion of a mechanism for a person to request the withdrawal of a notice or the issue of a revised notice (which the Secretary would then have discretion to refuse), or the insertion of a ‘reasonable excuse’ defence to the offence in clause 59 for failing to comply with a notice.

Offences

It will be an offence under clause 59 for a person to fail to comply with a notice, punishable by up to six months imprisonment and/or 30 penalty units ($6,300) for an individual and up to 150 penalty units ($31,500) for a body corporate. It will be a defence if a person failed to comply only because the information was not provided in the specified period, the person took all reasonable steps to provide it in that period, and the person provided it as soon as practicable after the end of that period.[292]

It will be an offence under clause 60 to provide false or misleading information in response to a notice, punishable by up to five years imprisonment and/or 300 penalty units for an individual and up to 1,500 penalty units for a body corporate. This is five times the maximum penalty for the general Commonwealth offences of knowingly providing false or misleading information (under sections 137.1 and 137.2 of the Criminal Code). The Explanatory Memorandum provides the following justification for the penalty:

This is appropriate given the … serious implications of the provision of false or misleading information or documents and the fact that the person is deliberately seeking to defeat the transparency objectives of the scheme. It also seeks to ensure that persons who are issued notices under sections 45 and 46 provide accurate information, therefore ensuring the scheme holds information that accurately reflects the scale and scope of foreign influence activities in political and governmental processes in Australia. The penalty recognises the serious implications that unchecked and unknown forms and sources of foreign influence can have on Australia’s democratic system of government.[293]

Three specific defences to this offence will be available under subclauses 60(2)–(6) (see Table 3 (in Appendix 1)).

Privileged information

A person will not be excused from providing information or a document on the basis that it might tend to incriminate them or expose them to a penalty; however, the information will not be admissible against them in criminal or civil proceedings, except for an offence of providing false or misleading information.[294]

The Bill will not otherwise explicitly modify common law or legislated privileges, including legal professional privilege, that a person may wish to claim in relation to information sought under a notice.

Issue: impact on parliamentary privilege

While the FITS Bill will not explicitly modify parliamentary privilege, evidence given to the PJCIS by Bret Walker and the Clerks of the Senate and the House of Representatives raised concerns about the impact that these provisions might have on that privilege.[295] Mr Walker was particularly concerned about the immunity that members of parliament ‘have from executive requirement or compulsion to disclose the content of dealings … [they] have with people’.[296] He suggested that under clause 46 (under which the Secretary may issue a notice requiring a person to provide information or documents):

… there is a power given to a member of the executive, under ministerial direction, to require a parliamentarian or a parliamentarians staff to give their side or their version of a dealing by a lobbyist.[297]

He noted further that clauses 59, 60 and 61 ‘have offences where it would be appropriate, in the duty of a policeman, to seek a warrant to execute against the office of the parliamentarian’.[298]

The Clerk of the Senate agreed with Mr Walker’s view and stated that:

… parts of the bill are confronting to the traditional scope of privilege, particularly where coercive powers given to an executive office under the bill appear intended to operate in the parliamentary sphere.[299]

Mr Walker considered that it would be preferable for parliamentary lobbying to be dealt with through procedures and practices of each House, instead of in legislation. He was also of the view that a savings clause would be insufficient to deal with the impact of the FIT Scheme on parliamentary privilege.[300]

The Clerk of the Senate agreed that a ‘presumption that privilege is not affected, or a savings provision’ was ‘unlikely to provide certainty as to the operation of the scheme’, and suggested some approaches for consideration:[301]

•          An exemption could be included similar to those in Division 4 Part 2 of the FITS Bill, covering material that forms part of proceedings in parliament as defined in the Parliamentary Privileges Act 1987.[302]

•          Regardless of whether or not parliamentary material is exempted from registration, ‘privilege would best be preserved by a provision curbing the power of the Secretary to require information where that information forms part of proceedings in parliament’. The Secretary’s powers ‘could be exercised subject to similar procedures as exist in the search warrant protocol’ which operates ‘in accordance with an MOU between the Executive Government and the Presiding Officers’.[303]

•          Consideration could be given to including ‘a provision in the bill formalising the right of parliamentarians to raise claims of privilege, and the right of the relevant House to determine them’.[304]

The Clerk of the Senate also suggested that it may be appropriate for the privileges committees of the two Houses to give consideration to developing appropriate mechanisms to pursue the same policy aims in the parliamentary sphere.[305]

The Clerk of the House of Representatives raised similar issues including the possibility of ‘a protocol agreed between the Presiding Officers and the relevant Minister for the operation of the scheme’.[306] The Clerk supported the Senate proposal for a specific exemption for material ‘that might fall within the definition of proceedings in Parliament’ and the suggestion that the privileges committees of both Houses work together to develop an ‘appropriate framework’ to deal with ‘circumstances where parliamentary privilege is engaged’.[307]

Alternatively, it would be open to the Parliament, by passing the Bill with certain amendments, to clearly and explicitly ‘entrench upon the extent of privilege already existing’[308] and hence abrogate parliamentary privilege to any extent (and in any circumstances) it sees fit. This possibility was acknowledged by the Clerks of both Houses.[309]

Communicating and dealing with FIT Scheme information (Part 4, Division 4)

A scheme official will be permitted to communicate or otherwise deal with scheme information for the purposes of performing their functions under the FIT Scheme.[310]

Communicating or dealing with scheme information will also be authorised:

•        for a purpose specified, and to a person specified, in the table in clause 53 (including for enforcement related activity, the protection of revenue and the protection of security)

•        where the information has already been communicated or made public with the authority of the Commonwealth or

•        if the person obtained the information under proposed Division 4 of Part 4, for the purpose for which it was obtained.[311]

Offences

The Bill does not include specific offences for unauthorised communication or other dealings with scheme information. However, unauthorised communication or other dealings with scheme information would fall within the existing secrecy offences in Parts VI and VII of the Crimes Act 1914 and the proposed secrecy offences in Schedule 2 of the EFI Bill, which would replace them.[312]

Part 5—Criminal offences

Proposed Part 5 will create offences relating to the FIT Scheme, in particular:

•        a tiered set of offences for failing to register or renew registration, under which higher penalties will apply if this was intentional, and if a registrable activity was actually undertaken

•        offences for giving a notice of end of liability to register, knowing that a registrable arrangement will still be in place (again with a higher penalty associated if an activity is actually undertaken on behalf of the foreign principal) and

•        offences for:

–      failing to fulfil responsibilities under the scheme

–      failing to comply with a notice requiring information to be given to the Secretary

–      providing false or misleading information or documents in response to a notice given by the Secretary and

–      engaging in conduct that results in destruction, damage or concealment of records that registrants are required to keep.

The maximum penalty for the least serious offences is 60 penalty units ($12,600), ranging up to seven years imprisonment for the most serious offences.

The offences, related obligations, maximum penalties and, where applicable, specific defences, are set out in Table 3 (in Appendix 1).

Issue: limited scope of offences for failing to register

Proof of knowledge required

The offences in subclauses 57(1), (3) and (4) for failing to apply for or renew registration will each require the prosecution to prove that the person knew that the person was required to apply for or renew registration by the end of a period. The default fault element that would otherwise apply to that circumstance is recklessness.[313] The Government has chosen to instead specify knowledge as the fault element, thereby imposing a higher threshold for the prosecution to meet:

A requirement that the prosecution prove knowledge is uncompromising in the sense that a person cannot be said to know a circumstance or result unless that person is certain of its existence or eventuality. [emphasis in original][314]

Under the Bill as currently drafted, a person who is reckless as to whether they are required to apply for or renew registration and omits to do so will not face criminal liability. The Explanatory Memorandum does not outline the Government’s rationale for the decision to impose a higher bar to prosecution than would be the case if a fault element had not been specified. In response to a question from the PJCIS on this matter, AGD stated that it did not consider it necessary to include offences with recklessness or negligence as the fault element:

The obligation will be on the individual to determine whether they are liable to register under the scheme. Given this, the department does not consider it appropriate that a person could be liable to offences with penalties of up to seven years imprisonment unless they know of the existence of the requirement to register or renew registration.[315]

Nonetheless, consideration could be given to the inclusion of similar offences that would apply where a person is reckless as to whether they are required to apply for or renew registration, with lower penalties to reflect the less demanding prosecution threshold, either instead of or in addition to those in subclauses 57(1), (3) and (4).

Proving that a person was acting on behalf of a foreign principal

A person will be required to register under the FIT Scheme if the person undertakes a registrable activity on behalf of a foreign principal or enters into an arrangement to do so. The definition of undertaking an activity on behalf of a foreign principal might present difficulties for prosecutors. As noted above, subclause 11(1) will provide that a person undertakes an activity on behalf of a foreign principal if the person undertakes the activity under an arrangement with, in the service of, on the order or at the request of, under the control or direction of, with funding or supervision by, or in collaboration with the foreign principal.

While such a requirement is not explicitly imposed in subclause 11(1), the Explanatory Memorandum indicates that it is the Government’s intention that an activity is only taken to be on behalf of a foreign principal if the foreign principal had knowledge or awareness that activities were undertaken on its behalf.[316] In addition, subclause 11(3) states that, without limiting subclause 11(1), a person undertakes an activity on behalf of a foreign principal if both the person and the foreign principal knew or expected that the person would or might undertake an activity in the circumstances that make the activity registrable.

This may have implications for proving offences in circumstances where what is sometimes termed ‘wilful blindness’ has occurred. Whilst the precise meaning and scope of the ‘wilful blindness’ doctrine is not a settled matter in Australia, various authorities suggest it is where:

•        a combination of suspicious circumstances and failure to make inquiry may sustain an inference of knowledge of the actual or likely existence of the relevant matter[317] or

•        ‘it can almost be said that the defendant actually knew. He suspected the fact; he realised its probability; but he refrained from obtaining the final confirmation because he wanted in the event to be able to deny knowledge’ with the intent ‘to cheat the administration of justice’.[318]

As such, some doubts remains as to whether ‘knowledge’ may be inferred from the circumstances surrounding the commission of the alleged offence, but it appears that it can—provided knowledge is the only rational inference available from the circumstances.[319]

This means that where the person or foreign principal argues that they did not know or expect that the activities would take place, in circumstances that strongly suggest otherwise, or suggest they ought to have known, but choose not to make inquiries that would have led to that knowledge, but there other inferences available, it may not be possible to prove an offence.

Consideration could be given to amending subclause 11(3) along the following lines:

Without limiting subsection (1), a person undertakes an activity on behalf of a foreign principal if:

•        both the person and the foreign principal:

–      knew (or were reckless as to whether) the person would or might undertake the activity or

–      expected that the person would or might undertake the activity and

•        that the person would or might do so in circumstances set out in section 20, 21, 22 or 23 (whether or not the parties expressly considered the existence of the scheme).

Civil penalties?

The LCA considered that in many cases, it will be difficult to prove to a criminal standard that activities were conducted in breach of the FIT Scheme. It suggested that consideration be given to the inclusion of a civil penalty regime as an alternative enforcement mechanism.[320] Justice Connect and the Australian Professional Government Relations Association suggested that civil penalties may be more appropriate than criminal offences for the type of conduct in question.[321] In its supplementary submission to the PJCIS, AGD stated that it did not consider it necessary to include civil penalty provisions in the Bill and noted that enforcement of the scheme could be considered as part of the review of the FIT Scheme that will be required under clause 70.[322]

Issue: application of offences to persons other than individuals, bodies corporate and partnerships

Unless otherwise specified, the penalty listed for a Commonwealth offence is that which applies to a natural person (an individual) and is the maximum penalty that may be imposed.[323] The Crimes Act 1914 provides:

•        unless the contrary intention appears, a Commonwealth offence is deemed to refer to bodies corporate as well as individuals and

•        where a body corporate is convicted of a Commonwealth offence, unless the contrary intention appears, the court may impose a penalty of up to five times the maximum penalty for an individual.[324]

The FITS Act will apply to persons other than individuals and bodies corporate, including partnerships, associations and organisations (whether or not incorporated) and bodies politic. The Crimes Act does not provide general rules for the application of offences to those other types of person. Clause 64 will set out how the Act, including offences against the Act, applies to partnerships. However, clause 65 will provide that the FIT Scheme will apply to other unincorporated bodies as though they were legal persons, but with changes prescribed by the rules. This will mean that the application of offences in the Act to those other types of entities, including the associated penalties, is not clear from the primary legislation. See further the ‘Application of the FIT Scheme to persons other than individuals, bodies corporate and partnerships’ part of the ‘General issues’ section below.

Part 6—Miscellaneous

Part 6 of the Bill will:

•        allow charges to be imposed for applications for, and renewals of, registration (clause 63, with the Foreign Influence Transparency Scheme (Charges Imposition) Bill 2017)

–      see further ‘Costs of registration and compliance with the FIT Scheme’ below

•        set out how the FIT Scheme will apply to partnerships (clause 64), and provide that the application of the Scheme to other unincorporated bodies will be prescribed in rules (clause 65)

–      see further ‘Application to persons other than individuals, bodies corporate and partnerships’ below

•        allow the Secretary to approve forms for the purposes of the FIT Scheme and a manner for giving a notice or renewal (clause 66)

•        allow the Secretary to delegate all or any of his or her functions or powers under the FIT Scheme to an SES employee, acting SES employee or an APS employee who holds or is acting in an Executive Level 2 or equivalent position in the department (clause 67)

•        allow the Secretary to enter into a written agreement with a person for the performance of services in relation to the FIT Scheme, and make payments in accordance with any such agreement (clause 68)

•        require the Secretary to prepare an annual report on the operation of the FIT Scheme and give it to the Minister for presentation to the Parliament (clause 69)

–      see further ‘Accountability and oversight’ below

•        require a review of the scheme to be completed within five years of the FIT Scheme commencing, with a report on the review tabled in each house of Parliament (clause 70)

–      see further ‘Accountability and oversight’ below and

•        allow the Minister to make rules prescribing matters required or permitted to be prescribed, or necessary or convenient to be prescribed, for giving effect to the FIT Scheme, with some limitations (clause 71).

General issues

Is the FIT Scheme the most effective way of achieving what the Government hopes to achieve?

Former Independent National Security Legislation Monitor, Bret Walker, has argued that Australia ‘should not imitate a system where only decent and law abiding entities comply with requirements that we most want to affect sinister and untoward elements of influence’. He suggested that disclosure requirements should be imposed on the targets of foreign influence, instead of those attempting to exert influence:

The best approach is to require, as close as possible to real time, disclosure by anybody at any level in the Australian government or the Australian Parliament, of the true identity, avowed aim and substantial nature of all approaches by or on behalf of foreign powers, including businesses owned or championed by foreign States.[325]

Anne-Marie Brady, an academic who has conducted research on Chinese influence, takes a different view. While recognising that some will try and get around the proposed laws, she considers that the awareness created by the scheme will have a positive impact:

"Putting some sunlight on it is a good thing," she said, noting there has been too much blindness to this for too long. "A lot of the pushback is going to have to come from people in Australian society having a better idea of what is going on and who they're interacting with."[326]

It may not be practical to impose disclosure requirements on all targets of foreign lobbying as suggested by Bret Walker above, but disclosure by ministers of portfolio-related meetings and events has been required by some state and overseas governments for a number of years. The Queensland Ministerial Handbook states:

3.12 Ministers are required to proactively disclose on a monthly basis portfolio related meetings and events. Personal, electorate or party political meetings or events, media events and interviews and information contrary to public interest (e.g. meetings regarding sensitive law enforcement, public safety or whistle-blower matters) are not to be released.[327]

Since July 2014 the New South Wales Government has required ministers to publish quarterly summaries from their diaries detailing:

8.14… scheduled meetings held with stakeholders, external organisations, third-party lobbyists and individuals. Scheduled meetings include meetings scheduled to take place in person or by videoconference, teleconference or telephone call.[328]

The United Kingdom Ministerial Code includes the following requirement:

Departments will publish quarterly, details of Ministers’ external meetings. Meetings with newspaper and other media proprietors, editors and senior executives will be published on a quarterly basis regardless of the purpose of the meeting.[329]

Disclosure of meetings held by federal ministers and senior public servants with foreign principals in Australia and overseas would place some responsibility for transparency on the targets of foreign lobbying and other forms of influence.

The LCA submission emphasised the need for the FITS Bill ‘to strengthen transparency and disclosure obligations on the recipients of foreign influence’—members of parliament, ministers and public officials. The LCA believes that the introduction of these measures, which it described as its ‘primary recommendation’, will mean:

… transparency in policy development will be more effectively achieved, and it will focus attention on activities that are the source of real and tangible foreign influence in Australia politics and policy development. [330]

Another submission noted that the Bill ‘only looks at the activities of the agent and not those at whom the activities are aimed’. The author suggested that the:

… real transparency of foreign influence activity would be better secured if the appointment diaries of Ministers and members of parliament were published (in real time) including the names of participants in meetings with them that are not public meetings (other than matters of national security and claims for whistleblower protections) …[331]

In its supplementary submission, AGD argued that strengthening disclosure obligations on recipients of foreign influence would place an obligation on a person who has little or no opportunity of determining the purpose or aims of the person seeking to influence, making it impossible for them to comply with such a regime.[332]

Responsibility for administering the FIT Scheme

Under the Bill as currently drafted, responsibility for the FIT Scheme rests with the Secretary of a Department of State (specifically, under current arrangements, the Attorney-General’s Department). Consideration could be given to the merits of creating a statutory agency to administer the FIT Scheme, or alternatively, appointing an independent officer of the Parliament to administer the Scheme.

This approach is used in Canada where the Office of the Commissioner of Lobbying was established in July 2008 under the Lobbying Act to support the Commissioner of Lobbying.[333] The position of Commissioner of Lobbying is appointed by the Governor in Council after consultation with the leaders of all recognised parties and the approval of the appointment by resolution of the Senate and the House of Commons.[334] The Commissioner is an independent officer of the Parliament with investigative powers and a mandate to administer and enforce the Lobbying Act and enforce compliance with the Lobbyists’ Code of Conduct.[335]

The Queensland Integrity Commissioner is also an independent officer of the Queensland Parliament, whose role and functions are set out in the Integrity Act 2009 (Qld). These roles include the regulation of lobbying.

Of relevance in the federal Parliamentary context, in 2017 the federal Government established the Independent Parliamentary Expenses Authority (IPEA) as a new statutory agency responsible for the travel expenses and allowances and work expenses of members of parliament and their staff.[336] The IPEA has advisory, reporting and auditing responsibilities relating to these expenses.[337]

Accountability and oversight

Delegation power

As noted above, clause 67 will allow the Secretary to delegate all or any of his or her functions or powers under the FIT Scheme to an SES employee, acting SES employee or an APS employee who holds or is acting in an Executive Level 2 or equivalent position in the department. Consideration could be given to whether the ability to delegate functions and powers should be more limited, both in terms of which functions and powers may be delegated, and to whom. The LCA recommended that if any delegations were to be permitted, they should be restricted to administrative functions only (rather than, for example, the power to compel information).[338] The ability to require a person to produce documents and information is a coercive power, and failure to comply will be an offence punishable by up to six months imprisonment (under clause 59). The Government’s Guide to Framing Commonwealth Offences recommends that notice to produce powers only be delegated where they are likely to be used frequently, and that delegations not be permitted beyond the SES.[339]

The Scrutiny of Bills Committee was also concerned with both the scope of powers that may be delegated and the categories of people to whom they may be delegated. It requested the Attorney-General’s advice as to:

•       why it is considered necessary to allow for the delegation of any or all of the Secretary’s powers to Executive Level employees and

•       the appropriateness of amending the Bill ‘so as to, at a minimum, limit the delegation of coercive information gathering powers and the communication of scheme information’ to SES employees.[340]

Annual reports

Clause 69 will require the Secretary to provide the Minister with a report on the operation of the FIT Scheme as soon as practicable after the end of each financial year. The Minister must table the report in each house of Parliament within 15 sitting days.[341]

The matters to be covered in the annual report are not listed in the Bill, which instead provides for the Rules (made by the Minister) to prescribe them. Consideration could be given to specifying key matters to be included in annual reports in the Act, while still providing for additional matters to be prescribed by Rules.

The report must not include information that the Secretary is satisfied is commercially sensitive, affects national security or is of a kind that the Rules prescribe should not be made public.[342] As noted earlier in this Digest, national security is not defined. No guidance is provided in the Bill on how the Secretary is to determine whether certain information is commercially sensitive or affects national security. Again, consideration could be given to adopting the definition of security used in the ASIO Act.[343]

Review of the FIT Scheme

Clause 70 will require the Minister to cause a review to be conducted of the operation of the FIT Scheme within five years of its commencement, the person who undertakes the review to report in writing to the Minister, and the Minister to table the report in each house of Parliament within 15 sitting days.

The clause will not require the Minister to appoint a person to conduct an independent review, meaning the review could be undertaken by the department administering the scheme. Consideration could be given to whether it would be preferable to require the Minister to appoint an independent reviewer or panel of reviewers.[344]

The Bill does not require a review of the FIT Scheme by a parliamentary committee. However, the Parliament could refer the operation of the FIT Scheme to an existing committee or a select committee in future. Consideration could also be given to the inclusion of a statutory requirement for a committee to review the Scheme within a given period, either in addition to or instead of the review requirement in clause 70.

The Auditor-General will have jurisdiction to audit the FIT Scheme without the need for specific legislative amendments.

Oversight

While the Auditor-General will be able to audit the scheme and decisions made by the Secretary will reviewable under the Administrative Decisions (Judicial Review) Act 1977, the Bill will not provide for any sort of standing oversight of the Secretary and department’s administration of the scheme. Consideration could be given to amending the Bill to include an oversight function for an existing independent officer such as the Commonwealth Ombudsman and/or the Inspector-General of Intelligence and Security, or a dedicated role such as an inspector-general of the FIT Scheme. Matters appropriate to subject to such oversight might include:

•        the keeping of the full and public versions of the register, including:

–      whether those records are being updated by the Secretary in a timely fashion and

–      whether the exemptions to the publication of information in subclause 43(2) are being appropriately applied

•        the exercise of the Secretary’s powers under proposed Division 3 of Part 4, including:

–      whether the notice to produce powers are being exercised appropriately, especially notices that may be issued to any person under clause 46 and

–      the retention of documents under clause 49

•        communication and other dealings with FIT Scheme information under proposed Division 4 of Part 4 and

•        whether the exemptions to the inclusion of information in annual reports in subclause 69(3) are being appropriately applied.

Public reporting of findings, with appropriate allowances made for sensitive information, could be required.

Guidance on the FIT Scheme

The provisions in the FITS Bill do not include a requirement that the Secretary publish guidelines that would assist people in determining whether or not they need to register under the FIT Scheme or outline the scope of the exemptions (clauses 24—30) and what they are intended to include or exclude. Similarly there is no indication that the Secretary has an education role in, for example, outlining a registrant’s obligations under the FIT Scheme once he or she has registered.

The mandate of the Canadian Commissioner of Lobbying includes:

… developing and implementing educational programs to foster public awareness of the requirements of the Act[345]

A report tabled in 2011 by the Commissioner for Lobbying in Canada, noted the educational role of the position when, in 2010, the definition of ‘Designated Public Office Holder’ was expanded to include all members of the Canadian Parliament:

When the Regulations were amended in September 2010 to expand the definition of designated public office holder (DPOH) and include Members of Parliament and Senators, the Commissioner wrote to these new DPOHs. She provided them with information on their responsibilities under the Lobbying Act. She also reached out to all registered lobbyists and reminded them of key aspects of the disclosure requirements for lobbyists, particularly as these related to communications with the newly designated public office holders. The Commissioner also gave presentations to some party caucuses in both the House of Commons and the Senate.[346]

One of the recommendations of the OIG audit of the operation of the FARA concerned the publication of advisory opinions. The OIG recommended that the National Security Division consider the value of making FARA advisory opinions publicly available as an information resource.[347] The NSD accepted this recommendation.[348]

In the Australian context, the recently established IPEA has the statutory power to issue written rulings regarding the travel expenses and travel allowances of individual senators and members of the House of Representatives.[349] These rulings may be published on the IPEA website in some circumstances. In making the decision to publish IPEA takes into account: the preference of the senator or member concerned, whether performance of IPEA functions is assisted by publication, the public interest served by publication and applicable legal considerations.[350]

AGD’s supplementary submission has stated:

Upon passage of the Bill, the department will develop guidance material and an education and outreach program. Guidance material will be available online. The Department also intends to provide support to persons who are unsure if they need to register under the Scheme.[351]

While it may be the intention that the Secretary will provide guidance to registrants and potential applicants, the FITS Bill does not impose any obligation to do so. Consideration could be given to the inclusion of a statutory obligation for the Secretary (or whomever is responsible for administering the Scheme, noting ‘Responsibility or administering the FIT Scheme’ above) to publish guidance on the FIT Scheme.

Resources required to administer and monitor the FIT Scheme

Academic George Rennie has commented on the lack of resources available to monitor current Australian lobbying regimes:

But, with the exception of state-based anti-corruption bodies (themselves lacking the necessary tools), the ability to police lobbying in Australia is almost nonexistent.[352]

As there is currently no federal anti-corruption commission, Rennie’s view suggests that the Secretary will require extensive resources to effectively monitor the FIT Scheme and whether persons intended to be captured under the Scheme are in fact applying for registration. Given the focus of the Scheme on foreign influence, this would presumably include staff with foreign language skills. The Government has not made public the total expected cost of the FIT Scheme.[353]

AGD stated in its supplementary submission that the FIT Scheme had been costed on the basis of departmental estimates ‘that there could be 500 registrants in the first year of operation’.[354] It did not give details on how this figure was calculated.

The 2016–2017 Annual Report of the Office of the Commissioner of Lobbying of Canada states that the Office has an overall budget of about $4 million (CAD) and has 28 full-time employees.[355]

The Office consists of four groups:

·          The Office of the Commissioner directly supports the Commissioner, including in her role of Deputy Head. This group provides legal and strategic advice, and administrative support.

·          The Office of the Deputy Commissioner and Chief Financial Officer is responsible for all corporate services, including: integrated strategic and operational planning; financial and human resource management; information technology; strategic policy; internal and external communications advice; audit and evaluation; security; facilities management; and, workplace safety. The Deputy Commissioner and Chief Financial Officer is also responsible for the coordination and delivery of all outreach activities.

·          The Registration and Client Services Directorate is responsible for developing and maintaining the Lobbyists Registration System (LRS). The LRS allows lobbyists to register and report their lobbying activities. This Directorate aids registrants, public office holders and the general public in using the LRS, in searching the Registry, and in understanding the Act and the Code.

·          The Investigations Directorate is responsible for supporting the Commissioner in her mandate to ensure compliance with the Lobbying Act and the Lobbyists’ Code of Conduct. The Directorate monitors lobbying activities, verifies the accuracy of a sample of monthly communication reports submitted by lobbyists, and reviews and investigates allegations of non-compliance. It also reviews applications for exemptions to the five-year prohibition on lobbying for former designated public office holders.[356]

The US FARA Registration Unit has about eight staff, including three attorneys:

… responsible for a considerable range of activities. The unit is responsible for processing and monitoring new and existing FARA registrations on an ongoing basis. This includes receiving, reviewing and processing documentation and payments, and addressing late or inaccurate submissions. The unit also performs periodic formal inspections to assess the adequacy of registrant reporting and disclosure, and conducts open source searches to identify individuals that may be obligated to register. It also provides, upon request, advisory opinions to individuals who are unsure whether FARA registration is required of them and maintains foreign agent submissions in electronic and hard copy form for public consumption.[357]

FARA Unit staff use various sources of information to ‘help identify potential or delinquent foreign agents’. The NSD accepted the OIG audit recommendation to expand the sources of information used to identify foreign agents.[358]

In the Australian context, while not necessarily comparable in scope to the FIT Scheme, the IPEA operates with an annual departmental appropriation in 2017–18 of $10.1 million and an Average Staffing Level for the current financial year of 66.[359] The IPEA is headed by a Chief Executive Officer supported by five independent members of the Authority, appointed by the Governor-General, who are ‘responsible for the statutory functions’ of the IPEA.[360]

Costs of registration and compliance with the FIT Scheme

Clause 63 will provide that a person is liable to pay a charge imposed by the Foreign Influence Transparency Scheme (Charges Imposition) Act 2017 if the person makes an application for registration or renews a registration. Clause 6 of the Foreign Influence Transparency Scheme (Charges Imposition) Bill 2017 will provide that the amount of charge payable is that prescribed in Regulations (which the Governor-General will make under clause 7). The Government has stated that charges imposed under the FIT Scheme will partially recover the costs of establishing, administering and maintaining the scheme, and that a Cost Recovery Impact Statement will be made available online before any charges are levied.[361] It has not made public the amount it expects to charge for registration, except to say that it anticipates the charge to be lower than for registration under the US FARA, ‘which is US$305 for the initial filing and for each mandatory six monthly-supplemental statement’.[362]

The Government has also not published a Regulatory Impact Statement (RIS) in relation to the FIT Scheme. A RIS would normally set out matters including how many individuals and organisations are expected to be impacted by a regulatory scheme and the estimated costs for them of complying with the scheme. There will be compliance costs associated with the FIT Scheme beyond registration and renewal, as the Scheme requires registrants to provide information and documents to the Secretary and maintain certain records.[363] Several stakeholders raised concerns about the regulatory burden associated with the FIT Scheme.[364] In response to a question from the PJCIS on this matter, AGD stated only that the ‘regulatory impacts of the Scheme were carefully considered by the Government when determining the scope of the Scheme’.[365]

Potential circumvention or defeat of the FIT Scheme through indirect influence

Further to the potential issues raised in relation to when an entity is taken to be controlled by another person is the potential for persons to circumvent or defeat the purposes of the FIT Scheme through the use of indirect influence.[366] This issue is best illustrated through examples.

Example 1: parliamentary lobbying on behalf of a foreign government

In the example illustrated below, a foreign government directs a person who is not a foreign principal (in this case a permanent Australian resident, though it could also be an Australian company or citizen) to direct another person to engage in parliamentary lobbying on behalf of the foreign government.

It is not clear whether Person 1 would be required to register, because while that person is acting on behalf of the foreign government, the person does not engage directly in parliamentary lobbying.

It is also not clear whether Person 2 would be required to register, because while that person does engage in parliamentary lobbying, it might be arguable that it is not on behalf of the foreign principal, due to a lack of a direct link between person 2 and the foreign government. It is possible that Person 2 might be taken to be ‘in the service of’ a foreign principal which, according to the Explanatory Memorandum, ‘is intended to cover situations where the person’s activities fall short of being ordered, directed or requested by the foreign principal, but are still helping or meeting the needs of the foreign principal’.[367] If Person 2 was taken to be ‘in the service of’ the foreign government, Person 2 would be required to register. However, while the intent might be to capture such circumstances, it might be difficult to prove that a person is in the service of a foreign principal, particularly in situations where (unlike this simple example) more than one person is inserted between the foreign principal and the person engaging in a particular activity.

Example 2: activities in Australia for the purpose of political or governmental influence

In the example illustrated below, a foreign principal directs a person who is not a foreign principal to direct another person to engage in communications activity for the purpose of political or governmental influence (such as influencing a federal government decision) on behalf of the foreign principal.

It appears likely that Person 1 would be required to register, due to the definition of activity for the purpose of political or governmental influence, which explicitly includes activity the purpose of which is to influence, directly or indirectly, one or more of the listed processes or proceedings (including processes related to federal government decisions).

However, it is not certain that Person 2 would be required to register, for the same reasons as outlined for Person 2 in example 1 above. Given the purpose of the FIT Scheme is to provide transparency about who is acting on behalf of a foreign principal, it would seem more important to the Scheme’s objectives that Person 2 be required to register than Person 1.

Implications and possible amendments

As the Bill does not contain any ‘tracing’ rules, it runs the risk of being circumvented by inserting persons who are not foreign principals between the foreign principal and the person(s) undertaking the relevant activity.

Consideration could be given to:

•        amending the definition of undertaking an activity on behalf of a foreign principal to include activity ‘in the service of the foreign principal, whether directly or indirectly’ (subclause 11(1)(b)); equivalent amendments could also be considered for some of the other limbs of that definition, such as ‘on the order or at the request of the foreign principal’ (subclause 11(1)(c)) and ‘under the control or direction of the foreign principal’ (subclause 11(1)(d)) and/or

•        inserting tracing or integrity rules to deal with interposed entities or persons.

Amending the definition of foreign principal so that it does not exclude Australian permanent residents might also go some way towards mitigating opportunities to circumvent the FIT Scheme. See further the ‘Permanent Australian residents’ part of the ‘Issues: scope of the FIT Scheme and exemptions’ section of this Digest.

Definition of controlled and potential for circumvention of the FIT Scheme

The definition of controlled may not capture or effectively deal with schemes that use interposed entities, associates, and other related parties to hide or obscure the actual ownership and control of a particular company or entity. [368]

Definition of controlled in the Bill

The definition of controlled is relevant to when a person (other than an individual) is taken to be a foreign public enterprise (which is when it is controlled by the government of a foreign country or a part of a foreign country). This is an important definition, as some activities are registrable if the foreign principal is a foreign public enterprise, but not if it is a foreign business. Likewise, some exemptions apply if the foreign principal is a foreign business, but not if it is a foreign public enterprise.

Under the definition in clause 10, a company will be controlled by another person (the controller) if one or more of the following apply:

•          the controller holds more than 50% of the issued share capital of the company

•          the controller holds more than 50% of the voting power in the company

•          the controller is in a position to appoint more than 50% of the company’s board of directors

•          the directors (however described) of the company are accustomed or under an obligation (whether formal or informal) to act in accordance with the directions, instructions or wishes of the controller

•          the controller is in a position to exercise control over the company.[369]

The issues posed by interposed entities and associated and related parties

In other areas of the law (for example, taxation, company, and commercial) it is common to see various schemes that make use of interposed entities, associates or related parties to try and circumvent the law. In broad terms these schemes can be divided into two categories (noting that they can and do often overlap):

•       the use of associates and interposed entities to hide ownership and control of a company (‘associate schemes’) and

•       the use of a large, but not majority, ownership stakes to control the company (‘de-facto control schemes’).

These are briefly explained below.

Associate schemes

Generally, a company is considered a separate legal entity from its owners.[370] Associate schemes are designed to take advantage of that assumption.[371] In simple terms, an associate includes a company or other entity owned or controlled by another entity and individuals with specific relationships with the company (for example, directors).[372]

Associate schemes aim to mask ownership and control of one entity by using a range of associates or other interposed entities to hold shares or control board appointments on behalf of the parent company or ultimate controller.

A simple example is where—to avoid the application of various taxation or takeover related rules—a parent company holds less than a controlling percentage of shares of a company (the target company), but then directs some of its subsidiaries or other entities which it effectively controls (even if it does not own more than 50 per cent of them) to purchase parcels of shares in their own names, resulting in the parent company—via its own shareholding and those of its associates and its subsidiaries—effectively being able to control the target company. See the further example 1 and diagram set out in Appendix 2.

There are many more complex variations on the very simple example of an associate scheme provided above (including those that also combine elements of de-facto control schemes, discussed below).

Other areas of the law have developed various ‘tracing’ or ‘associate inclusive control’ tests to combat and prevent control or ownership of a particular entity from being obscured, and to also (at least in effect) ignore the separate legal status of the entities used in a scheme to mask ownership or control of a particular entity.

De-facto control schemes

Traditionally, control of a company is measured by the proportion of ownership of shares or voting rights necessary to control the affairs of the company.[373] This is usually 50% or more of share capital or voting rights.

De facto control schemes seek to take advantage of the fact that not all shareholders are active in the affairs of the company, and therefore it is possible (in some circumstances) to control the company with a shareholding or entitlement to voting rights less than 50%.

A simple example of a de facto control scheme is where a parent company either purchases a large (but not controlling) stake in existing company (for example, 30%) or creates a subsidiary and then sells the majority of shares and voting rights in it (for example, 60%) where the shares it does not own are held by a large number of small, non-related and inactive shareholders (for example, passive or ‘silent’ investors). See the further example 2 and diagram set out in Appendix 2.

In these circumstances the parent company (with or without associates) effectively controls the company, despite not having what would traditionally be considered a controlling stake in it.

Other areas of the law (most notably taxation law) have developed specific integrity measures that assume or impute control of an entity despite the lack of a controlling stake by the parent company or its associates.

Use of both associate and de facto control of to circumvent the FIT scheme

Further challenges are posed because de facto control schemes can be combined with associate schemes to create even more complex ownership/control structures. Example 3 and its associated diagram in Appendix 2 demonstrate an example of how the use of associates and obtaining de facto control of a company can potentially be used together to circumvent the regime as currently drafted.

Possible solutions

As noted above, other areas of the law (most notably taxation law) have adopted specific integrity measures designed to combat the use of associates and interposed entities to mask who has actual effective management control of the company, and to impute control of the company in certain circumstances. Taxation law does this by tracing control and ownership interests (for example, shares) through various mechanisms, including the concept of ‘associate-inclusive control’. In simple terms, an entity's ‘associate-inclusive control interest’ in any other entity is the aggregate of:

•        its direct and indirect control interests in the entity and

•        direct and indirect control interests of its ‘associates’.[374]

In other words, by using an entity's total ‘associate-inclusive control’ interest as the mechanism by which to determine control, the use of interposed entities and associates to mask ownership or control of an entity is significantly reduced or eliminated.

To provide greater clarity and certainty, and improve the ability of the FIT Scheme to effectively deal with control of foreign companies by foreign governments through the use of associates, interposed entities or de facto control arrangements, consideration could be given to amending the Bill to include variations of the three specific integrity measures related to control of companies contained in section 340 of the Income Tax Assessment Act 1936 (ITAA 1936)—specifically, a ‘strict control test’, an ‘assumed controller test’ and a ‘defacto control test’ (See further table 4 in Appendix 2). These would complement the existing general integrity measures contained in subparagraphs (a)(iii), (iv) and (v) of the definition of controlled in clause 10.

Interaction of the National Security Legislation Amendment (Espionage and Foreign Interference) Bill 2017 with the Foreign Influence Transparency Bill 2017

Schedule 5 of the National Security Legislation Amendment (Espionage and Foreign Interference) Bill 2017 (EFI Bill) will make amendments that expand the scope of the FIT Scheme and provide for transitional arrangements.

Transitional arrangements

Part 1 of Schedule 5 of the EFI Bill will outline transitional provisions for registration where ‘a registrable arrangement is in existence between a person and a foreign principal’ at the time the FITS Act commences. In this case registration would be required six months after the commencement of the FITS Act. The Explanatory Memorandum for the EFI Bill suggests that the provisions of clause 16 would not be imposed and a person registering would be required to apply for registration within 14 days after the end of the six month period.[375]

The amendments to the FITS Bill in Schedule 5, Part 2 relate to the Electoral Legislation Amendment (Electoral Funding and Disclosure Reform) Bill 2017.

General political lobbying

Item 3 of Schedule 5 of the EFI Bill will expand the definition of ‘general political lobbying’ (in clause 10 of the FITS Bill) to include ‘a person or entity that is registered under the Commonwealth Electoral Act 1918 as a political campaigner’.

Under the Electoral Bill (proposed subsection 287F of the Commonwealth Electoral Act, at item 11 of Schedule 1 to that Bill) a person or entity will be required to register as a ‘political campaigner’ if their political expenditure during the current, or in any of the previous three financial years was $100,000 or more. A person or entity will also be required to register as a political campaigner if their political expenditure during a financial year is $50,000 or more and during the previous financial year was at least 50 per cent of their allowable amount for that year. The Explanatory Memorandum to the EFI Bill suggests that registered political campaigners have been included in the definition of ‘general political lobbying’ because ‘lobbying such persons or entities is an inherently political activity’.[376] A person would only be required to register under the FITS Bill if the political campaigner was lobbied on behalf of a foreign principal.

Activities for the purpose of political or governmental influence

Item 4 of Schedule 5 of the EFI Bill will expand the definition of activity for the purpose of political or governmental influence in subclause 12(1) to include activities for the purpose of influencing ‘processes in relation to a person or entity registered under the Commonwealth Electoral Act 1918 as a political campaigner’. Item 5 will insert proposed subsection 12(7) to provide examples of such processes. The amendments will mean that a person who undertakes general political lobbying, communications activity or donor activity in Australia on behalf of a foreign principal in order to influence a process in relation to a political campaigner will be required to register under the FIT Scheme.

Application of the FIT Scheme to persons other than individuals, bodies corporate and partnerships

The FITS Act will apply to persons other than individuals and bodies corporate, including partnerships, associations and organisations (whether or not incorporated) and bodies politic.[377] Clause 64 sets out how the Act, including offences against the Act, will apply to partnerships. However, clause 65 will provide that the FIT Scheme will apply to other unincorporated bodies as though they were legal persons, but with changes prescribed by the rules. In response to a question from the PJCIS on this matter, AGD stated that clause 65 had been included ‘to provide sufficient flexibility should a circumstances [sic] arise where a person is not a “legal person” or a partnership, but should be subject to the operation of the scheme’.[378] However, the Government and Parliament have seen fit to include provisions in other primary legislation outlining the application of that legislation to other types of person that for the purpose of the FIT Scheme would need to be addressed by the Rules. For example, the Security of Critical Infrastructure Bill 2017 includes provisions setting out how the Bill will apply to trusts, superannuation funds that are trusts, and unincorporated foreign companies; and the Anti-Money Laundering and Counter-Terrorism Financing Act 2006 includes provisions setting out how the Act applies to unincorporated associations and trusts with multiple trustees.[379] Given the potential penalties associated with failing to register or comply with requirements imposed on registrants, it might be more appropriate for the application of the FIT Scheme to all types of person, or at least those to which it might foreseeably apply, to be set out in the Act.

Key issues and provisions: FITS Charges Bill

Clause 5 of the FITS Charges Bill will provide for charges payable in accordance with clause 63 of the FITS Bill to be imposed. Clause 6 will allow the amount of charge payable to be prescribed in regulations. Clause 7 will provide the authority for the Governor-General to make Regulations to give effect to the FITS (Charges) Act.

Concluding comments

While there appears to be broad support among stakeholders for the objectives of the FIT Scheme, a range of issues arise in relation to the design of the Scheme. As drafted, the FITS Bill would appear to apply both more broadly than intended or than might be appropriate in some respects, and more narrowly than would be required to meet the Government’s objectives (for example, by providing opportunities for those motivated to do so to circumvent the scheme). Parliament may wish to consider amendments to the scope of the FIT Scheme (most notably some of the definitions underpinning it) and the exemptions provided, to provide greater clarity to the Scheme and ensure that activities of the most concern will be captured without the Scheme operating more broadly than is necessary.

Appendix 1: Tables

Table 2: When a person will be required to register under the FIT Scheme

This is a modified version of the table in the Foreign Influence Transparency Scheme overview available on the Attorney-General’s Department website. The table below includes additional detail on some aspects and incorporates amendments to the FIT Scheme included in Schedule 5 of the EFI Bill.

Parliamentary lobbying on behalf of a foreign government (clause 20)

Activities in Australia for the purpose of political or governmental influence

(clause 21)

Activities of former Cabinet Ministers

(clause 22)

Activities of former Ministers, MPs and senior Commonwealth officials

(clause 23)

Who must register

Any person

Any person

A person who was a Cabinet Minister in the preceding three years

A person who was:

•        a minister or MP in the Australian Parliament in the preceding three years or

•        the head or deputy head of a Commonwealth department or agency in the preceding 18 months

Acting on behalf of whom?

A foreign government

Dependent on activity, as follows.

Parliamentary lobbying (defined in clause 10):

•        a foreign public enterprise

•        a foreign political organisation

•        a foreign business

•        an individual who is neither a citizen nor a permanent resident of Australia

General political lobbying (defined in clause 10 of the FITS Bill and item 3, Schedule 5 of the EFI Bill):

•        a foreign government

•        a foreign public enterprise

•        a foreign political organisation

•        a foreign business

•        an individual who is neither a citizen nor a permanent resident of Australia

Communications activity (defined in clause 13):

•        a foreign government

•        a foreign public enterprise

•        a foreign political organisation

•        a foreign business

•        an individual who is neither a citizen nor a permanent resident of Australia

Donor activity (defined in clause 10):

•          a foreign government

•          a foreign public enterprise

•          a foreign political organisation

Any of the following:

•        a foreign government

•        a foreign public enterprise

•        a foreign political organisation

•        a foreign business

Any of the following:

•        a foreign government

•        a foreign public enterprise

•        a foreign political organisation

•        a foreign business

Types of activities

Parliamentary lobbying

(defined in clause 10)

Any of the following:

•        Parliamentary lobbying not already covered by section 20

•        general political lobbying

•        communications activity

•        donor activity

Any activity on behalf of a foreign principal that is not registrable under another provision

Any activity on behalf of a foreign principal:

•        that is not registrable under another provision and

•        to which the person contributes experience, knowledge skills or contacts gained in the person’s former capacity as a minister, MP or holder of a senior Commonwealth position

Purpose of activities

Any purpose

Influencing, directly or indirectly, any aspect (including the outcome) of proceedings of a house of Parliament and/or a process in relation to a:

•        federal election or a designated vote

•        federal government decision

•        a registered political party

•        member of the Parliament who is not a member of a registered political party

•        candidate in a federal election who is not endorsed by a registered political party and/or

•        person or entity registered under the Commonwealth Electoral Act 1918 as a political campaigner

(activity for the purpose of political or governmental influence is defined in clause 12 of the FITS Bill and item 4, Schedule 5 of the EFI Bill)

Any purpose

Any purpose

Location of activities

In Australia

In Australia

Anywhere

Anywhere

Which exemptions apply?

•        Activities for sole purpose of the provision of humanitarian aid (clause 24)

•        Provision of legal advice or legal representation (clause 25)

•        Diplomatic, consular or similar activity (clause 26)

•        Religious-related activity (clause 27)

Dependent on foreign principal, as follows.

Foreign government

•          Activities for sole purpose of the provision of humanitarian aid (clause 24)

•          Provision of legal advice or legal representation (clause 25)

•          Diplomatic, consular or similar activity (clause 26)

•          Religious-related activity (clause 27)

Foreign public enterprise

•          Activities for sole purpose of the provision of humanitarian aid (clause 24)

•          Provision of legal advice or legal representation (clause 25)

•          Commercial or business pursuit in capacity as employee of/undertaken under the name of the foreign principal (subclause 29(2))

Foreign political organisation

•          Activities for sole purpose of the provision of humanitarian aid (clause 24)

•          Provision of legal advice or legal representation (clause 25)

Foreign business

•          Activities for sole purpose of the provision of humanitarian aid (clause 24)

•          Provision of legal advice or legal representation (clause 25)

•          Activities for sole purpose of reporting news, presenting current affairs or expressing editorial content in news media (clause 28)

•          Activities for sole purpose of the pursuit of bona fide business or commercial interests relating to a contract (subclause 29(1))

•          Commercial or business pursuit in capacity as employee of/undertaken under the name of the foreign principal (subclause 29(2))

Individual who is neither a citizen nor a permanent resident of Australia

•        Activities for sole purpose of the provision of humanitarian aid (clause 24)

•        Provision of legal advice or legal representation (clause 25)

•        Activities for sole purpose of reporting news, presenting current affairs or expressing editorial content in news media (clause 28)

•        Activities for sole purpose of the pursuit of bona fide business or commercial interests relating to a contract (subclause 29(1)

•        Activities for sole purpose of the provision of humanitarian aid (clause 24)

•        Provision of legal advice or legal representation (clause 25)

•        UN or associated person (26(2))*

•        Activities for sole purpose of the pursuit of bona fide business or commercial interests relating to a contract (subclause 29(1))*

•        Commercial or business pursuit in capacity as employee of/undertaken under the name of the foreign principal (subclause 29(2))*

•        Activities for sole purpose of the provision of humanitarian aid (clause 24)

•        Provision of legal advice or legal representation (clause 25)

•        UN or associated person (26(2))*

•        Activities for sole purpose of the pursuit of bona fide business or commercial interests relating to a contract (subclause 29(1))*

•        Commercial or business pursuit in capacity as employee of/undertaken under the name of the foreign principal (subclause 29(2))*

Lobbying whom?

An MP or person employed under section 13 or 20 of the MoPS Act

(clause 10)

If the activity is parliamentary lobbying (other than under clause 20), an MP or person employed under section 13 or 20 of MoPS Act (clause 10).

If the activity is general political lobbying, a:

•        Commonwealth public official

•        department, agency or authority of the Commonwealth

•        registered political party

•        candidate in a federal election and/or

•        person or entity registered under the Commonwealth Electoral Act 1918 as a political campaigner

(clause 10 of the FITS Bill and item 3, Schedule 5 of the EFI Bill)

If the activity is communications activity or donor activity, N/A.

If the activity is lobbying, anyone who is not:

•        an MP or person employed under section 13 or 20 of MoPS Act

•        a Commonwealth public official

•        a department, agency or authority of the Commonwealth

•        a registered political party

•        a candidate in a federal election and/or

•        a person or entity registered under the Commonwealth Electoral Act 1918 as a political campaigner

(as lobbying of any of these entities would be registrable under clause 20 or clause 21)

Otherwise, N/A

If the activity is lobbying, anyone who is not:

•        an MP or person employed under section 13 or 20 of MoPS Act

•        a Commonwealth public official

•        a department, agency or authority of the Commonwealth

•        a registered political party

•        a candidate in a federal election and/or

•        a person or entity registered under the Commonwealth Electoral Act 1918 as a political campaigner

(as lobbying of any of these entities would be registrable under clause 20 or clause 21)

Otherwise, N/A

* The Attorney-General’s Department’s overview table does not identify these exemptions as applicable to former Cabinet Ministers and former Ministers, MPs and senior Commonwealth officials. However, there does not appear to be anything in the Bill to exclude those individuals from the operation of the exemptions in subclause 26(2) and clause 29.

Table 3: Offences in the FIT Scheme Bill

OBLIGATION/S

OFFENCE

MAXIMUM PENALTY

SPECIFIC DEFENCES

Failing to apply for or maintain registration (clause 57)

Apply for registration (clause 16)

Renew registration (clause 39)

The person:

•        knows that the person is required to apply for or renew registration

•        intentionally omits to do so

•        undertakes registrable activity on behalf of a foreign principal

(subclause 57(1))

Individual: 7 years imprisonment and/or 420 penalty units ($88,200)

Body corporate: 2,100 penalty units ($441,000)

N/A

The person:

•        knows that the person is required to apply for or renew registration

•        recklessly omits to do so

•        undertakes registrable activity on behalf of a foreign principal

(subclause 57(3))

Individual: 5 years imprisonment and/or 300 penalty units ($63,000)

Body corporate: 1,500 penalty units ($315,000)

N/A

The person:

•        knows that the person is required to apply for or renew registration

•        intentionally or recklessly omits to do so

(applies whether or not registrable activity is undertaken; subclause 57(4))

Individual: 12 months imprisonment and/or 60 penalty units ($12,600)

Body corporate: 300 penalty units ($63,000)

N/A

A registered person may give a notice if satisfied they are no longer liable to register (clause 31)

A registered person commits an offence if:

•        the person gives the Secretary a notice under section 31 (notice of end of liability to register)

•        a registrable arrangement exists between the person and a foreign principal

•        the person knows that the registrable arrangement will still be in existence on the day specified in the notice

•        the person undertakes registrable activity on behalf of the foreign principal after that day

(subclause 57(2))

Individual: 7 years imprisonment and/or 420 penalty units

Body corporate: 2,100 penalty units

N/A

A registered person commits an offence if:

•        the person gives the Secretary a notice under section 31 (notice of end of liability to register)

•        a registrable arrangement exists between the person and a foreign principal

•        the person knows that the registrable arrangement will still be in existence on the day specified in the notice

(applies whether or not registrable activity is undertaken; subclause 57(5))

Individual: 12 months imprisonment and/or 60 penalty units

Body corporate: 300 penalty units

N/A

Record keeping and other obligations (clauses 58 and 61)

Keep records (clause 40)

The person:

•        is required to keep records under section 40 (absolute liability)

•        does an act (or omits to do an act) with the intention of avoiding or defeating the object of the Act or any element of the FIT Scheme

•        the act or omission results in damage to or destruction of a scheme record, concealment of a scheme record or the registrant being prevented from keeping scheme records

(clause 61)

Individual: 3 years imprisonment and/or 180 penalty units ($37,800)

Body corporate: 900 penalty units ($189,000)

N/A

Give notice to Secretary under Division 2 of Part 3:

•        material changes in circumstances (clause 34)

•        donor activity in Australia for the purpose of political or governmental influence (clause 35)

•        registration review when voting period begins (clause 36)

•        registrable activity during voting period (clause 37)

Disclose communications activity (clause 38)

Keep records (clause 40)

A person commits a strict liability offence if:

•        the person is required to give a notice under Division 2 of Part 3, make a disclosure under section 38 or keep records under section 40

•        the person fails to do so

(clause 58)

Individual: 60 penalty units

Body corporate: 300 penalty units

N/A

Providing information and documents (clauses 59 and 60)

Comply with notice requiring information be given to the Secretary about whether the person is liable to register (clause 45)

Comply with notice to give Secretary information relevant to the scheme (clause 46)

The person:

•        is given a notice under section 45 or 46

•        gives information or produces a document in response

•        does so knowing that the information or document is false or misleading, or omits a matter or thing without which it is misleading

(clause 60)

Individual: 5 years imprisonment and/or 300 penalty units

Body corporate: 1,500 penalty units

This is five times the maximum penalty for the general Commonwealth offences of knowingly providing false or misleading information (under sections 137.1 and 137.2 of the Criminal Code).

Information or document not false or misleading in material particular

(subclauses 60(2) and (3))

Secretary did not take reasonable steps to inform the person of the existence of the offence

(subclauses 60(4) and (5))

Document accompanied by written, signed statement identifying the false or misleading information the document contains

(subclause 60(6))

The person:

•        is given a notice under section 45 or 46

•        fails to comply with the notice in a specified period (including as extended)

(clause 59)

Individual: 6 months imprisonment and/or 30 penalty units

Body corporate: 150 penalty units

Failed to comply only because information not provided in specified period, took all reasonable steps to provide in that period, and provided as soon as practicable after the end of that period

(subclause 59(2))

Appendix 2: Further detail on issues and potential solutions relating to the definition of controlled

Example 1: simple example of an associate scheme designed to circumvent the FIT Scheme

In this example the use of associates is highlighted: a foreign government owns and controls three companies (formed under its own laws).Those companies are considered associates of the foreign government and each other. In turn whilst each of those companies owns less than 50 percent of the fourth foreign company (and therefore are not considered to have a controlling stake in it), they nonetheless collectively own and control 60 per cent of the fourth foreign company. This, therefore, allows the foreign government to indirectly–via its three associated companies–control the fourth foreign company.

As currently drafted it may be difficult to prove that foreign company four is controlled by the foreign government, that is, that a foreign government is in ‘a position to exercise control over the company’. This is because the circumstances outlined in paragraph (a) of the definition of controlled in clause 10 may not always apply to such an arrangement. Reasons why it may be difficult to prove that foreign company four is in fact controlled by a foreign government (in which case it is a foreign public enterprise and not a foreign business) include:

•        a lack of publicly available information to determine the share ownership and control relationships between the foreign government, and its three subsidiary/controlled companies and

•        the difficulty in proving that foreign companies one, two, and three (which are considered separate legal entities to their owners, in this case the foreign government) act on the direction of the foreign government, pass on instructions to foreign company four, or otherwise fail to exercise the degree of control and power that their individual shareholdings allow them to over foreign company four in a truly independent manner.

Example 2: simple example of a de facto control scheme designed to circumvent the FIT Scheme

In this example the use of de facto control is highlighted: a foreign government owns 35% of a foreign company. In turn, the other 65% of the company is widely held by various non-associated entities and individuals who do not actively participate in the affairs of the company. This means that despite holding less than a controlling stake in the company, the foreign government is nonetheless able to control it.

Whilst arguably subparagraphs (a)(iii) and (v) of the definition of controlled may capture this type of arrangement there may nonetheless be merit in the Bill adopting specific integrity measures modelled off those used in taxation law (discussed below) to ensure that such arrangements cannot circumvent the regime. This is because as currently drafted it may be difficult to prove that the foreign company #1 is controlled by the foreign government, that is to say that the foreign government is:

•        in ‘a position to appoint more than 50% of the company’s board of directors’ or

•        in ‘a position to exercise control over the company’.

Reasons why it may be difficult to prove that the foreign company one is in fact controlled by a foreign government (in which case it is a foreign public enterprise and not a foreign business) include:

•        a possible lack of publicly available information to determine the share ownership and control relationships between the foreign government

•        the historical failure of other shareholders to vote on board appointments may not automatically amount to the foreign government being ‘in a position to appoint more than 50%’ of the board of directors (the argument being that at least theoretically at any future time the other shareholders could appoint the majority of directors to the board of the company in question, and therefore control it) and

•        difficulties proving that the directors appointed by the minority shareholder (in this case the foreign government) are accustomed or under an obligation to operate the company as directed or intended by the foreign government minority shareholder.

Example 3: use of both associate and de facto control of to circumvent the FIT scheme

In this example, the foreign government (FP) indirectly owns 45% of foreign company #4, via three foreign companies it controls. As noted above, traditionally a 45% stake would not be considered a controlling interest in the company. However, in this example, the other 55% of the shares in foreign company #4 are widely held by non-associated, inactive shareholders. This means that the foreign government can control foreign company #4 via its associates.

Whilst arguably proposed subparagraph (a)(v) of the definition of controlled in clause 10 may apply (that is, the controller, in this case the foreign government, is ‘in a position to exercise control over the company’) this may be, as a matter of practicality, difficult to prove for reasons discussed above. However, if the de facto control or assumed controller tests were incorporated into the Bill, along with the concept of ‘associate-inclusive control’ interests, the foreign company #4 would not be treated as a foreign business (and hence able to access various exemptions under the regime) as control would be imputed to the foreign government, despite the use of associated companies to effect control over foreign company #4. Instead, foreign company #4 would be considered a foreign public enterprise, better reflecting the reality that it is, in practice, controlled by the foreign government (despite associated entities being interposed between the foreign government and foreign company #4).

Comparison of specific integrity measures in the ITAA 1936 and the FITS Bill provisions

The relevant integrity measures in the ITAA 1936 are designed to ensure that foreign companies controlled by Australians are taxed appropriately (for example, by imputing income to Australia, thus ensuring it is taxed here and not overseas). Those three measures and how they differ from the measures contained in the Bill are set out in the table below.

ITAA 1936 test

Comparable provisions in the Bill

Key differences

Suggested adaption for the Bill

Strict control test: 340(a)

A company will be a controlled foreign company (CFC) if a group of 5 or fewer Australian entities have an associate-inclusive control interest of at least 50% in the company.

subparagraphs   (a)(i), (ii) and (iii) of the definition of controlled in clause 10

Tests in (a)(i) and (ii) do not capture control interests of associates.

Test in (a)(iii) may capture control interests of associates, but there may be merit in adopting a specific integrity measure dealing with the use of associates to control a foreign company.

A company is controlled by another person (the controller) if… there is a group of 5 or fewer foreign entities or persons the aggregate of whose associate-inclusive control interests in the company is not less than 50%

Assumed controller test: 340(b)

Under the "assumed controller test" (sometimes also referred to as the "objective de facto control test"), a company will be a CFC if a single Australian entity (the assumed controller) has an associate-inclusive control interest of at least 40%.

However, there will be no assumed controller if it can be shown that the company is controlled by a group of entities unrelated to the Australian entity or its associates.

subparagraphs (a)(v) and possibly also (a)(iii) and (a)(iv) of the definition of controlled in clause 10

Test in (a)(iv) does not automatically capture control interests of associates.

Tests in (iii) and (v) may apply to the use of associates to control a foreign company, but there may be merit in adopting a specific integrity measure dealing with the use of associates to control a foreign company.

A company is controlled by another person (the controller) if… both of the following apply:

(1)    at that time, there is a single foreign entity or person (in this paragraph called the assumed controller) whose associate-inclusive control interest in the company is not less than 40% and

(2)    the company is not controlled by a group of entities not including the assumed controller or any of its associates.

De facto control test: 340(c)

Under the de facto control test, a company will be a CFC if it is controlled by a group of 5 or fewer Australian entities either alone or together with associates (whether Australian or otherwise).

subparagraphs (a)(v) and possibly (iii) of the definition of controlled in clause 10

As above. In addition, the test applied by the ITAA 1936 is actual (not potential) control. In contrast the Bill, whilst not dealing specifically with control via associates, does apply to potential control.

A company is controlled by another person (the controller) if… at that time, the company is controlled, or could be controlled, by a group of 5 or fewer foreign entities or persons, either alone or together with associates (whether or not any associate is also a foreign entity, or an Australian entity controlled by a foreign entity or its associates).

© Commonwealth of Australia

Creative Commons

With the exception of the Commonwealth Coat of Arms, and to the extent that copyright subsists in a third party, this publication, its logo and front page design are licensed under a Creative Commons Attribution-NonCommercial-NoDerivs 3.0 Australia licence.

In essence, you are free to copy and communicate this work in its current form for all non-commercial purposes, as long as you attribute the work to the author and abide by the other licence terms. The work cannot be adapted or modified in any way. Content from this publication should be attributed in the following way: Author(s), Title of publication, Series Name and No, Publisher, Date.

To the extent that copyright subsists in third party quotes it remains with the original owner and permission may be required to reuse the material.

Inquiries regarding the licence and any use of the publication are welcome to webmanager@aph.gov.au.

Disclaimer: Bills Digests are prepared to support the work of the Australian Parliament. They are produced under time and resource constraints and aim to be available in time for debate in the Chambers. The views expressed in Bills Digests do not reflect an official position of the Australian Parliamentary Library, nor do they constitute professional legal opinion. Bills Digests reflect the relevant legislation as introduced and do not canvass subsequent amendments or developments. Other sources should be consulted to determine the official status of the Bill.

Any concerns or complaints should be directed to the Parliamentary Librarian. Parliamentary Library staff are available to discuss the contents of publications with Senators and Members and their staff. To access this service, clients may contact the author or the Library’s Central Enquiry Point for referral.

Members, Senators and Parliamentary staff can obtain further information from the Parliamentary Library on (02) 6277 2500.

[1].              Explanatory Memorandum, Foreign Influence Transparency Scheme Bill (FITS Bill), pp. 8–9.

[2].              M Turnbull, ‘Second reading speech: National Security Legislation Amendment (Espionage and Foreign Interference) Bill 2017’, House of Representatives, Debates, 7 December 2017, pp. 13145–9.

[3].              D Uren, ‘Overreacting to "extreme threat"’, The Australian, 14 December 2017.

[4].              M Turnbull (Prime Minister), Transcript of joint press conference: Parliament House, Canberra: foreign Interference; foreign donations; same-sex marriage; citizenship, media release, 5 December 2017, p. 2.

[5].              Foreign Agents Registration Act (FARA) website.

[6].              C Brown, The Foreign Agents Registration Act (FARA): a legal overview, Congressional Research Service, 4 December 2017, p. 2.

[7].              United States, Department of Justice, Office of the Inspector General (DOJ OIG), Audit of the national security division’s enforcement and administration of the Foreign Agents Registration Act, Audit division, 16–24, DOJ OIG, September 2016, p. 2.

[8].              Ibid.

[9].              Ibid.

[10].              Brown, The Foreign Agents Registration Act (FARA): a legal overview, op. cit., pp. 2–3.

[11].              Foreign Agents Registration Act 1938 (United States), 22 U.S.C. §611(d), §613.

[12].              Ibid., §611(c)(1). See also Brown, The Foreign Agents Registration Act (FARA): a legal overview, op. cit., p. 5.

[13].              DOJ OIG, Audit of the National Security Division’s Enforcement and Administration of the Foreign Agents Registration Act, op. cit., p. 8.

[14].              Foreign Agents Registration Act 1938, 22 U.S.C. § 611 et seq. See also Brown, The Foreign Agents Registration Act (FARA): a legal overview, op. cit., p. 6.

[15].              Turnbull, Transcript of joint press conference, media release, 5 December 2017, op. cit.

[16].              Lobbying Disclosure Act 1995 (United States).

[17].              Brown, The Foreign Agents Registration Act (FARA): a legal overview, op. cit., p. 10.

[18].              Ibid.

[19].              Lobbying Act (Canada), RSC 1985, c. 44.

[20].              Ibid., subsection 2(1) and Lobbyists code of conduct, ‘Introduction’, 30 November 2015.

[21].              Lobbyists’ Code of Conduct website.

[22].              Lobbying Act, section 4.1, op. cit. See also Office of the Commissioner of Lobbying of Canada website.

[23].              Ibid.

[24].              Government response to Senate Standing Committee on Finance and Public Administration report, Knock, Knock ... who’s there? The Lobbying code of conduct, January 2009, p. 3.

[25].              Department of the Prime Minister and Cabinet (PM&C), Lobbying code of conduct, PM&C, Canberra, 2013, para. 2.3.

[26].              J Warhurst, ‘Lambie’s package needs to focus on those former ministers who have entered the influence business’, The Canberra Times, 19 October 2017, p. 18.

[27].              G Rennie, ‘Australia’s lobbying laws are inadequate, but other countries are getting it right’, The Conversation, 21 June 2017.

[28].              Explanatory Memorandum, FITS Bill, p. 47.

[29].              Senate Standing Committee for the Scrutiny of Bills (Scrutiny of Bills Committee), Scrutiny digest, 1, 2018, The Senate, 7 February 2018, pp. 73–4.

[30].              Ibid., pp. 66–7.

[31].              Ibid., pp. 67–8.

[32].              The offences and defences are in subclause 58(1) (defence in subclause 34(5)), subclause 59(1) (defences in subclause 59(2)) and subclause 60(1) (defences in subclauses 60(2)–(6)) respectively.

[33].              Criminal Code Act 1995, section 13.3.

[34].              Scrutiny of Bills Committee, Scrutiny digest, op. cit., p. 64.

[35].              Ibid., p. 65. Attorney-General’s Department, A guide to framing Commonwealth offences, infringement notices and enforcement powers, Canberra, 2011.

[36].              Ibid., pp. 68–71.

[37].              Ibid., pp. 72–3.

[38].              Ibid., pp. 75–6.

[39].              M Dreyfus, Transcript of radio interview, ABC RN Breakfast: Pink batts; National Integrity Commission; Foreign interference bills, media release, 31 January 2018.

[40].              Ibid.

[41].              M Dreyfus, ‘Matters of public importance: Charities’, House of Representatives, Debates, 8 February 2018, pp. 65–6.

[42].              Ibid.

[43].              N McKim, Foreign interference laws, media release, 24 January 2018.

[44].              Law Council of Australia (LCA), Submission to the Joint Parliamentary Committee on Intelligence and Security (PJCIS), Inquiry into the Foreign Influence Transparency Scheme Bill 2017, January 2018, [Submission no. 4], p. 5.

[45].              See for example LCA, Submission to the PJCIS, op. cit., pp. 5–6, Australian Charities and Not-for-profits Commission (ACNC), Submission to the PJCIS, Inquiry into the Foreign Influence Transparency Scheme Bill 2017, 12 February 2018, [Submission no. 33], pp. 3–4, Community Council for Australia (CCA), Submission to the PJCIS, Inquiry into the Foreign Influence Transparency Scheme Bill 2017, February 2018, [Submission no. 34], p. 1, Australian Lawyers for Human Rights (ALHR), Submission to the PJCIS, Review of the Foreign Influence Transparency Scheme Bill 2017, 22 January 2018, [Submission no. 7], pp. 6–8, Free TV Australia, Submission to the PJCIS, Review of the Foreign Influence Transparency Scheme Bill 2017, 15 February 2018, [Submission no. 47], pp. 1–3, Joint Media Organisations (JMO), Submission to the PJCIS, Review of the Foreign Influence Transparency Scheme Bill 2017, 23 January 2018, [Submission no. 19], pp. 1–2, Universities Australia, Submission to the PJCIS, Inquiry into the Foreign Influence Transparency Scheme Bill 2017, 22 January 2018, [Submission no. 9], pp. 4–5, Group of Eight Australia (Go8), Submission to the PJCIS, Inquiry into the Foreign Influence Transparency Scheme Bill 2017, 22 January 2018, [Submission no. 11], pp. 3–4; Go8, Supplementary submission to the PJCIS, Inquiry into the Foreign Influence Transparency Scheme Bill 2017, 16 February 2018, pp. 3–5.

[46].              See Universities Australia, Submission to the PJCIS, op. cit., p. 2; Go8, Submission to the PJCIS, op. cit., p. 4.

[47].              Universities Australia, Submission to the PJCIS, op. cit. See United States Code, Title 22, Chapter 11, Foreign Agents and Propaganda, §613(e).

[48].              Australian Major Performing Arts Group (AMPAG), Submission to the PJCIS, Inquiry into the Foreign Influence Transparency Scheme Bill 2017, n.d., [Submission no. 37], p. 6. The same view was expressed by the Chamber of Arts and Culture WA, Submission to the PJCIS, Inquiry into the Foreign Influence Transparency Scheme Bill 2017, 15 February 2018, [Submission no. 54], p. 2.

[49].              See, for example, LCA, Submission to the PJCIS, op. cit., pp. 13–14; Australian Financial Markets Association (AFMA), Submission to the PJCIS, Inquiry into the Foreign Influence Transparency Scheme Bill 2017, 17 January 2018, [Submission no. 3], p. 7; ACNC, Submission to the PJCIS, op. cit., p. 4; Oxfam Australia, Submission to the PJCIS, Inquiry into the Foreign Influence Transparency Scheme Bill 2017, February 2018, [Submission no. 57], p. 3; The Smith Family, Submission to the PJCIS, Inquiry into the Foreign Influence Transparency Scheme Bill 2017, February 2018, [Submission no. 60], pp. 4–5.

[50].              ACNC, Submission to the PJCIS, op. cit., p. 4; Australian Council for International Development (ACFID), Submission to the PJCIS, Inquiry into the Foreign Influence Transparency Scheme Bill 2017, 15 February 2018, [Submission no. 55], pp. 5–6; 350.org Australia, Submission to the PJCIS, Inquiry into the Foreign Influence Transparency Scheme Bill 2017, 14 February 2018, [Submission no. 62], pp. 1, 3; Social Ventures Australia, Submission to the PJCIS, Inquiry into the Foreign Influence Transparency Scheme Bill 2017, 15 February 2018, [Submission no. 42], p. 2; GetUp, Submission to the PJCIS, Inquiry into the Foreign Influence Transparency Scheme Bill 2017, n.d., [Submission no. 63], pp. 2–3.

[51].              See, for example JMO, Submission to the PJCIS, op. cit., pp. 7–8, Foxtel, Submission to the PJCIS, Inquiry into the Foreign Influence Transparency Scheme Bill 2017, 29 January 2018, [Submission no. 27], pp. 2–5.

[52].              Ibid., (JMO, p. 3; Foxtel, p. 2).

[53].              Ibid., Foxtel.

[54].              Network Ten, Submission to the PJCIS, Inquiry into the Foreign Influence Transparency Scheme Bill 2017, [Submission no. 56], 15 February 2018, Free TV Australia, Submission to the PJCIS, op. cit., p. 1.

[55].              LCA, Submission to the PJCIS, op. cit., p. 12; Law Firms Australia (LFA), Submission to the PJCIS, Inquiry into the Foreign Influence Transparency Scheme Bill 2017, 22 January 2018, [Submission no. 10], pp. 4–7.

[56].              LFA, Submission to the PJCIS, op. cit., p. 6; LCA, Submission to the PJCIS, op. cit., p. 13.

[57].              Australian Catholic Bishops Conference (ACBC), Submission to the PJCIS, Inquiry into the Foreign Influence Transparency Scheme Bill 2017, 22 January 2018, [Submission no. 12], pp. 2, 7. See also Australian Catholic University (ACU), Submission to the PJCIS, Inquiry into the Foreign Influence Transparency Scheme Bill 2017, 22 January 2018, [Submission no. 6].

[58].              LCA, Submission to the PJCIS, op. cit., pp. 8–9.

[59].              ACU, Submission to the PJCIS, op. cit.

[60].              LCA, Submission to the PJCIS, op. cit., p. 5.

[61].              B Walker, ‘What problem, exactly, would a foreign agents law fix?’, The Interpreter, Lowy Institute blog, 29 November 2017; V Heath, Submission to the PJCIS, Inquiry into the Foreign Influence Transparency Scheme Bill 2017, 22 January 2018, [Submission no. 15], pp. 4–5; PJCIS, ‘Foreign Influence Transparency Scheme Bill 2017, National Security Legislation Amendment (Espionage and Foreign Interference) Bill 2017’, Official committee Hansard, 30 January 2018, pp. 14–15 (evidence from the Office of the Australian Small Business and Family Enterprise Ombudsman).

[62].              Explanatory Memorandum, FITS Bill, p. 3; Explanatory Memorandum, FITS (Charges) Bill, p. 3; S Morrison (Treasurer) and M Cormann (Minister for Finance), Mid-year economic and fiscal outlook 2017–18, p. 137.

[63].              The Statements of Compatibility with Human Rights can be found at page 6 of the Explanatory Memorandum to the FITS Bill and page 4 of the Explanatory Memorandum to the FITS Charges Bill.

[64].              Explanatory Memorandum, FITS Bill, p. 7.

[65].              International Covenant on Civil and Political Rights, done in New York on 16 December 1966, [1980] ATS 23 (entered into force for Australia (except Art. 41) on 13 November 1980; Art. 41 came into force for Australia on 28 January 1994), Article 18.

[66].              Parliamentary Joint Committee on Human Rights (PJCHR), Guide to Human Rights, PJCHR, Canberra, June 2015, pp. 7–8.

[67].              Explanatory Memorandum, FITS Bill, p. 9.

[68].              Ibid.

[69].              Ibid., p. 10

[70].              Financial Services Council (FSC), Submission to the PJCIS, Review of the Foreign Influence Transparency Scheme Bill 2017, 22 January 2018, [Submission no. 16], p. 2; AFMA, Submission to the PJCIS, op. cit., p. 5.

[71].              ALHR, Submission to the PJCIS, op. cit., pp. 3, 12.

[72].              Ibid.

[73].              LCA, Submission to the PJCIS, op. cit., p. 15.

[74].              Explanatory Memorandum, National Security Legislation Amendment (Espionage and Foreign Interference) Bill 2017 (EFI Bill), p. 9; Australian Law Reform Commission (ALRC), Secrecy Laws and open Government in Australia, Report, 112, ALRC, Sydney, December 2009, p. 53–4; ALRC, Traditional Rights and Freedoms— Encroachments by Commonwealth Laws, Report, 129, ALRC, Sydney, December 2015, pp. 80–5.

[75].              Explanatory Memorandum, EFI Bill, p. 9; Icelandic Human Rights Centre (IHRC), ‘The right to freedom of expression and religion’, IHRC website, n.d.; Attorney-General’s Department (AGD), ‘Right to freedom of opinion and expression’, AGD website, n.d.: ‘The right to freedom of opinion and expression may also be relevant to… the right to freedom of thought, conscience and religion in article 18 of the ICCPR’; United Nations Human Rights Council, Report of the Special Rapporteur on freedom of religion or belief, 23 December 2015, p. 4: ‘freedom of religion or belief, the rights to free personal orientation and free communicative interaction with others constitute… positive interrelatedness with freedom of opinion and expression.’

[76].              PJCHR, Human rights scrutiny report, 1, 6 February 2018, p. 37; Explanatory Memorandum, FITS Bill, p. 14.

[77].              Explanatory Memorandum, FITS Bill, p. 14.

[78].              Ibid.

[79].              Ibid., pp. 14–15.

[80].              PJCHR, Human rights scrutiny report, op. cit., p. 37. The AHLR made a similar point: ALHR, Submission to the PJCIS, op. cit., p. 5.

[81].              PJCHR, Human rights scrutiny report, op. cit., pp. 41–2.

[82].              Ibid., p. 38.

[83].              Ibid.

[84].              Explanatory Memorandum, FITS Bill, pp. 15–17.

[85].              Ibid., p. 15.

[86].              Ibid., pp. 15–16.

[87].              Ibid., p. 16.

[88].              PJCHR, Human rights scrutiny report, op. cit., p. 41.

[89].              Ibid., pp. 41–2.

[90].              Ibid., p. 38.

[91].              Explanatory Memorandum, FITS Bill, p. 13.

[92].              PJCHR, Human rights scrutiny report, op. cit., pp. 41–2.

[93].              Ibid., p. 44.

[94].              Ibid., p. 43.

[95].              Ibid., p. 44.

[96].              Australian Human Rights Commission (AHRC), ‘Freedom of religion and belief’, Human Rights Brief, 3, updated 8 March 2006.

[97].              In this regard clause 7 appears to align with current Commonwealth drafting standards with respect to such clauses. See: Office of Parliamentary Counsel, Drafting Direction no. 3.1: constitutional law issues, reissued January 2017, pp. 8–10.

[98].              See for example: ALHR, Submission to the PJCIS, op. cit., p. 4; ACU, Submission to the PJCIS, op. cit., p. 1; LCA, Submission to the PJCIS, op. cit., pp. 8–9; E Willheim, Submission to the PJCIS, Review of the Foreign Influence Transparency Scheme Bill 2017, 15 January 2018, [Submission no. 2], pp. 1, 3–4.

[99].              Unions NSW v New South Wales (2013) 252 CLR 530, [2013] HCA 58, at [35]; Lange v Australian Broadcasting Corporation (1997) 189 CLR 520 at p. 567, [1997] HCA 25.

[100].              Unions NSW v New South Wales op. cit., at [44].

[101].              Ibid., at [30].

[102].              See for example: ALHR, Submission to the PJCIS, op. cit., p. 4: ‘ALHR expresses strong doubts as to the adequacy of the Constitutional basis for the Bill… particularly in the light of the onslaught by the Bill and the Package as a whole on the implied Constitutional right of political communication’; LCA, Submission to the PJCIS, op. cit., pp. 8–9; Willheim, Submission to the PJCIS, op. cit., pp. 1, 3–4.

[103].              Willheim, Submission to the PJCIS, op. cit., pp. 3–4.

[104].              As noted by the Australian Human Rights Commission (AHRC) ‘similarly to the Human Rights Committee, the High Court has emphasised the connection between the rights recognised in Article 25 [the right to take part in the conduct of public affairs] and the rights to freedom of association and expression’: AHRC, ‘Right to take part in public affairs, voting rights and access to public service’, AHRC website, n.d.

[105].              Explanatory Memorandum, FITS Bill, pp. 16–17.

[106].              Ibid., p. 15.

[107].              The most recent formulation of this test with regards to freedom of political communication has been in Brown v Tasmania (2017) 349 ALR 398, [2017] HCA 43, refining the test set out in McCloy v New South Wales (2015) 257 CLR 178, [2015] HCA 34.

[108].              ACU, Submission to the PJCIS, op. cit.

[109].              Section 116 provides: ‘The Commonwealth shall not make any law for establishing any religion, or for imposing any religious observance, or for prohibiting the free exercise of any religion, and no religious test shall be required as a qualification for any office or public trust under the Commonwealth’. The ‘free exercise’ clause is the component of section 116 that is likely to be of relevance to any restrictions on the ability of persons with religious beliefs to engage in registerable activity linked to their religion.

[110].              See generally: Adelaide Company of Jehovah’s Witnesses Inc v Commonwealth (1943) 67 CLR 116, [1943] HCA 12 (Jehovah’s Witnesses Case) as per Latham CJ at [9]: ‘it is left to the court to determine whether the freedom of religion has been unduly infringed by some particular legislative provision. This view makes it possible to accord a real measure of practical protection to religion without involving the community in anarchy.’

[111].              Krygger v Williams (1912) 15 CLR 366; [1912] HCA 65; Adelaide Company of Jehovah’s Witnesses Inc v Commonwealth (1943) 67 CLR 116, [1943] HCA 12; Kruger v Commonwealth (1997) 190 CLR 1, [1997] HCA 27.

[112].              AHRC, Freedom of religion and belief, op. cit.

[113].              Adelaide Company of Jehovah’s Witnesses Inc v Commonwealth [1943] HCA 12; (1943) 67 CLR 116 at p. 131: ‘…  it is left to the court to determine whether the freedom of religion has been unduly infringed by some particular legislative provision’ (per Latham CJ); p. 155: ‘…the liberty and freedom of religion guaranteed and protected by the Constitution is subject to limitations which it is the function and the duty of courts to expound. And those limitations are such as are reasonably necessary for the protection of the community and in the interests of social order.’ (per Starke J);and p. 159: ‘If the Regulations only conferred such powers as were reasonably required to [achieve a purpose unconnected with religion] … they could not be impeached under s. 116, even if they interfered incidentally with… the free exercise of religion…’ (per Williams J).

[114].              Ibid., at 131-132 (per Latham CJ).

[115].              Krygger v Williams [1912] HCA 65, (1912) 15 CLR 366 at 369 per Griffith CJ; See also: Church of the New Faith v Commissioner of Pay-roll Tax (Vic) [1983] HCA 40, (1983) 154 CLR 120 (Scientology Case) at 135–136 (per Mason ACJ and Brennan J). Note that the Scientology Case did not concern section 116 (but rather a challenge to State payroll tax liability). However, Mason ACJ and Brennan J made remarks relevant to the interpretation of the 'free exercise' clause. They stated: ‘the freedom to act in accordance with one's religious beliefs is not as inviolate as the freedom to believe, for general laws to preserve and protect society are not defeated by a plea of religious obligation to breach them’; Adelaide Company of Jehovah’s Witnesses Inc v Commonwealth [1943] HCA 12; (1943) 67 CLR 116 at p. 160 (as per William J).

[116].              Kruger v Commonwealth [1997] HCA 27; (1997) 190 CLR 1 at 133–134 (per Gaudron J).

[117].              Kruger v Commonwealth [1997] HCA 27; (1997) 190 CLR 1 at 40.

[118].              Explanatory Memorandum, FITS Bill, pp. 20–1. The NSW ministerial code of conduct is legislated in a regulation made under the Independent Commission Against Corruption Act 1988: Independent Commission Against Corruption Amendment (Ministerial Code of Conduct) Regulation 2014.

[119].              See Integrity Act 2009 (Qld); Lobbying of Government Officials Act 2011 (NSW); Lobbyists Act 2015 (SA); Integrity (Lobbyists) Act 2016 (WA).

[120].              Explanatory Memorandum, FITS Bill, p. 25.

[121].              Part XX of the Commonwealth Electoral Act 1918 deals with election funding and financial disclosure. Division 4 requires the disclosure of donations to candidates or political parties. Division 5 requires the disclosure of electoral expenditure. Division 5A requires political parties, associated entities and those who spend more than the disclosure amount on political expenditure in a financial year to provide annual returns.

[122].              Controlled is defined in clause 10. Issues arising from the definition are explored in the ‘Definition of controlled and potential for circumvention of the FIT Scheme’ part of the ‘Key issues and provisions: FITS Bill’ section of this Digest.

[123].              Explanatory Memorandum, FITS Bill, p. 28.

[124].              For more information on the Electoral Bill see D Muller, Electoral Legislation Amendment (Electoral Funding and Disclosure Reform) Bill 2017, Bills digest, 81, 2017–18, Parliamentary Library, Canberra, 2018.

[125].              LCA, Submission to the PJCIS, op. cit. pp. 10–11.

[126].              ALHR, Submission to the PJCIS, op. cit., p. 6.

[127].              Federation of Communities’ Councils of Australia (FECCA), Submission to the PJCIS, Inquiry into the Foreign Influence Transparency Scheme Bill 2017, [Submission no. 59], 15 February 2018, p. 2.

[128].              ACBC, Submission to the PJCIS, op. cit., p. 3.

[129].              Ibid., p. 2.

[130].              JMO, Submission to the PJCIS, op. cit., p. 2. See also Free TV Australia, Submission to PJCIS, op. cit., p. 2.

[131].              American Chamber of Commerce in Australia (AmCham), Submission to the PJCIS, Inquiry into the Foreign Influence Transparency Scheme Bill 2017, [Submission no. 8], 22 January 2018, p. 3.

[132].              AFMA, Submission to the PJCIS, op. cit., p. 7.

[133].              ALHR, Submission to the PJCIS, op. cit., p. 6.

[134].              P Jennings, Submission to the PJCIS, Inquiry into the Foreign Influence Transparency Scheme Bill 2017, [Submission no. 14], 21 January 2018, p. 2.

[135].              Subclause 11(1).

[136].              Brown, The Foreign Agents Registration Act (FARA): a legal overview, op. cit., p. 4.

[137].              Explanatory Memorandum, FITS Bill, p. 34.

[138].              LCA, Submission to the PJCIS, op. cit., pp. 11–12.

[139].              See, for example FSC, Submission to the PJCIS, op. cit., p. 1; AFMA, Submission to the PJCIS , op. cit., p. 3, AmCham, Submission to the PJCIS, op. cit., p. 2; AMPAG, Submission to the PJCIS, op. cit., p. 2, ACFID, Submission to the PJCIS, op. cit., p. 5, Australian Industry Group (AI Group), Submission to the PJCIS, Inquiry into the Foreign Influence Transparency Scheme Bill 2017, [Submission no. 32], 5 February 2018.

[140].              However, if an industry association was dominated, and its agenda driven, by person(s) who represent particular foreign government interests, the argument for that association to register might be regarded as more compelling.

[141].              ACBC, Submission to the PJCIS, op. cit., p. 8.

[142].              Universities Australia, Submission to the PJCIS, op. cit., pp. 2–4.

[143].              ALHR, Submission to the PJCIS, op. cit., p. 7.

[144].              AGD, Supplementary submission to the PJCIS, Inquiry into the Foreign Influence Transparency Scheme Bill 2017, [Submission no. 5.1], n.d., p. 8.

[145].              Subclause 12(1). See subclauses 12(3) to 12(6) for examples of processes covered by the provision.

[146].              The amendment would commence immediately after the FITS Act and Part 1 of Schedule 1 of the Electoral Act (but only if both of those do in fact commence): EFI Bill, clause 2.

[147].              See proposed section 287F of the Commonwealth Electoral Act 1918, at item 11 of Schedule 1 to the Electoral Bill. For more information on the Electoral Bill see D Muller, Electoral Legislation Amendment (Electoral Funding and Disclosure Reform) Bill 2017, op. cit.

[148].              Electoral Bill, proposed subsection 287(1) (definitions of political campaigner, political expenditure and political purpose), proposed section 287F (requirement to register as a political campaigner) and proposed section 287L (determining an application for registration).

[149].              Explanatory Memorandum, FITS Bill, p. 39; Explanatory Memorandum, EFI Bill, p. 304.

[150].              AmCham, Submission to the PJCIS, op. cit., p. 4. See also ALHR, Submission to the PJCIS, op. cit., p. 8.

[151].              Broadcaster is defined in clause 10, and periodical in subclause 13(5).

[152].              Explanatory Memorandum, FITS Bill, pp. 40–1.

[153].              JMO, Submission to the PJCIS, op. cit., p. 3, Commercial Radio Australia, Submission to the PJCIS, Review of the Foreign Influence Transparency Scheme Bill 2017, 25 January 2018, [Submission no. 21].

[154].              Ibid. See also Foxtel, Submission to the PJCIS, op. cit., p. 2.

[155].              JMO, Submission to the PJCIS, op. cit., p. 5.

[156].              Ibid.

[157].              Foxtel, Submission to the PJCIS, op. cit., p. 1.

[158].              Ibid., p. 2.

[159].              Universities Australia, Submission to the PJCIS, op. cit., p. 2, Go8 Supplementary submission to the PJCIS, op. cit., p. 2.

[160].              LCA, Submission to the PJCIS, op. cit., p. 14.

[161].              Ibid., p. 14.

[162].              AGD, Supplementary submission to the PJCIS, op. cit., p. 29.

[163].              ACBC, Submission to the PJCIS, op. cit., pp. 8–10.

[164].              Explanatory Memorandum, FITS Bill, p. 45.

[165].              Explanatory Memorandum, FITS Bill, p. 47.

[166].              Turnbull, ‘Second reading speech: National Security Legislation Amendment (Espionage and Foreign Interference) Bill 2017’, op. cit., p. 13147.

[167].              Explanatory Memorandum, FITS Bill, p. 48.

[168].              See, for example, D Wroe, ‘Shining light into dark corners of foreign influence’, The Canberra Times, 9 December 2017, p. 5.

[169].              See Explanatory Memorandum, FITS Bill, p. 55 for the example of donor activity.

[170].              See proposed section 287H of the Commonwealth Electoral Act 1918, at item 11 of Schedule 1 to the Electoral Bill. For more information on the Electoral Bill see D Muller, Electoral Legislation Amendment (Electoral Funding and Disclosure Reform) Bill 2017, Bills digest, 81, 2017–18, Parliamentary Library, Canberra, 2018.

[171].              Ibid., p. 57.

[172].              Ibid., p. 19.

[173].              Ibid., p. 57.

[174].              See PM&C, Lobbying code of conduct, op. cit.

[175].              Lobbying Act (Canada), op. cit., s.10.11 (1).

[176].              W Scott Thurlow, ‘Bringing lobbying out of the shadows of the Accountability Act’, Policy Options, 19 April 2016.p. 3.

[177].              Ibid.

[178].              United States, Ethics Commitments by Executive Branch appointees, Exec. Order No. 13770, Fed. Reg. 82, 9333, 28 January 2017.

[179].              AGD, Submission to the PJCIS, Inquiry into the Foreign Influence Transparency Scheme Bill 2017, January 2018, p. 10.

[180].              AGD, Supplementary submission to the PJCIS, op. cit., pp. 25–6.

[181].              Although this is not a usual occurrence, the House of Representatives Standing Committee of Privileges and Members’ Interests is currently conducting an ‘Inquiry concerning the appropriate conduct of a Member or possible contempt of the House by the former Member for Dunkley [Bruce Billson]’. The House of Representatives referred the matter to the Committee on 4 September 2017.

[182].              Public Service Act 1999, sections 13 and 14. The Australian Public Service Commission reports on types of breaches of the APS Code of Conduct in its annual State of the service report.

[183].              PM&C, Statement of ministerial standards, op. cit., p. 5.

[184].              This same limitation appears to exist under the US FARA. The definition of ‘agent of a foreign principal’ under the FARA refers to conduct undertaken ‘within the United States’: USC, Title 22, Chapter 11, §611(c) (§619 states that the FARA ‘shall be applicable in the several States, the District of Columbia, the Territories, the Canal Zone, the insular possessions, and all other places now or hereafter subject to the civil or military jurisdiction of the United States’).

[185].              The exception would be a stateless person who has been granted permanent residency in Australia.

[186].              Department of Home Affairs, ‘Australian permanent resident information’, Department of Home Affairs website.

[187].              D Smith, J Wykes, S Jayarajah and T Fabijanic, Citizenship in Australia, Department of Immigration and Citizenship, Canberra, [2010], p. 3.

[188].              These differences are examined in: S Pillai, ‘The rights and responsibilities of Australian citizenship: a legislative analysis’, Melbourne University Law Review, 37(3), 2014, pp. 736–85; K Betts and B Birrell, ‘Making Australian citizenship mean more’, People and Place, 15(1), 2007, p. 45; G Taylor, ‘Citizenship rights and the Australian Constitution’, Public Law Review, 12(3), 2001.

[189].              For example, applicants for roles in Australian intelligence agencies must be Australian citizens.

[190].              Betts and Birrell, ‘Making Australian citizenship mean more’, op. cit., p. 48.

[191].              Explanatory Memorandum, FITS Bill, pp. 68–9.

[192].              USC, Title 22, Chapter 11, §611(d).

[193].              Brown, The Foreign Agents Registration Act (FARA): a legal overview, op. cit., pp. 8–9.

[194].              B Allen-Ebrahimian and E Groll, ‘China's flagship TV network hasn't registered as a foreign agent’, Foreign Policy, 19 December 2017.

[195].              Ibid.

[196].              Ibid.

[197].              B Allen-Ebrahimian, ‘Beijing builds its influence in the American media’, Foreign Policy, 21 December 2017.

[198].              Ibid.

[199].              M Sainsbury, ‘Sam Dastyari wasn’t the first to take Chinese money, just ask Howard’, Crikey, 19 December 2017.

[200].              N McKenzie and A Joske, ‘Mr China backs Alexander, but savages foreign interference efforts’, The Sydney Morning Herald, 16 December 2017, p. 4.

[201].              Ibid. Consideration will also need to be given to the treatment of social media organisations. See for example: L Etter, V Silver and S Frier, ‘Too close to power’, The Australian Financial Review, 8 January 2018, p. 36.

[202].              Epoch Times, Submission to the PJCIS, Inquiry into the Foreign Influence Transparency Scheme Bill 2017, [Submission no. 23], 23 January 2018, p. 1.

[203].              Ibid.; Epoch Times website. Some academics have described Epoch Times as ‘a newspaper run by Falun Gong’: C Hamilton and A Joske, Submission to the PJCIS, Inquiry into the National Security Legislation Amendment (Espionage and Foreign Interference) Bill 2017, [Submission no. 20], January 2018, p. 38.

[204].              Foxtel, Submission to the PJCIS, op. cit., p. 2. See also JMO, Submission to the PJCIS, op. cit., p. 7.

[205].              Foxtel, Submission to the PJCIS, op. cit., pp. 4–5.

[206].              V Heath, Submission to the PJCIS, op. cit., p.4.

[207].              Network Ten, Submission to the PJCIS, op. cit.; Free TV Australia, Submission to the PJCIS, op. cit., p. 1.

[208].              Explanatory Memorandum, FITS Bill, p. 55.

[209].              AGD, Submission to the PJCIS, op. cit., p. 17 (it states: ‘Recognising the importance of freedom of political communication including through political donations, the FITS Bill has been scoped to limit registration requirements to donor activity undertaken on behalf of a foreign government, foreign public enterprise or a foreign political organisation’).

[210].              Explanatory Memorandum, FITS Bill, pp. 71–2.

[211].              Ibid., p. 70.

[212].              Australian Security Intelligence Organisation Act 1979 (ASIO Act), section 4. Alternatively, a modified version of the definition of national security to be inserted into Division 90 of the Criminal Code by the EFI Bill (proposed section 90.4) could be considered. However, that definition is very broad.

[213].              EFI Bill, item 8 of Schedule 1 (proposed section 82.2).

[214].              Submissions to the PJCIS’s inquiry relevant to this point include J Fitzgerald, Submission to the PJCIS, Inquiry into the National Security Legislation Amendment (Espionage and Foreign Interference) Bill 2017, [Submission no. 26], 22 January 2018; A Brady, Submission to the PJCIS, Inquiry into the National Security Legislation Amendment (Espionage and Foreign Interference) Bill 2017, [Submission no. 28], n.d.

[215].              Explanatory Memorandum, FITS Bill pp. 56–7.

[216].              Ibid., p. 59.

[217].              Ibid., pp. 67, 69.

[218].              Care International, ‘Who we are: global network’, CARE International website.

[219].              Ibid.

[220].              Caritas Internationalis, ‘Who we are’, Caritas Internationalis website.

[221].              Amnesty International Australia, ‘How we’re run: the international secretariat’, Amnesty International Australia website.

[222].              Greenpeace International, ‘Management structure’, Greenpeace International website.

[223].              Amnesty International UK, ‘Campaigns: I welcome refugees’, Amnesty International UK website; Amnesty International Australia, ‘Campaigns: refugees’, Amnesty International Australia website.

[224].              Campaign for Australian Aid, ‘Who we are’, Campaign for Australian Aid website.

[225].              AGD, Supplementary submission to the PJCIS, op. cit., p. 31.

[226].              Explanatory Memorandum, FITS Bill, p. 72.

[227].              See for example: ACNC, Submission to the PJCIS, op. cit.; CCA, Submission to the PJCIS, op. cit., pp. 6–9; LCA, Submission to the PJCIS, op. cit.; pp. 13–14; ACBC, Submission to the PJCIS, op. cit., pp. 7–8; AFMA, Submission to the PJCIS, op. cit., p. 7; ALHR, Submission to the PJCIS, op. cit., p. 9; The Human Rights Council of Australia, Submission to the PJCIS, Inquiry into the Foreign Influence Transparency Scheme Bill 2017, [Submission no. 29], 31 January 2018, p. 3.

[228].              ACNC, Submission to the PJCIS, op. cit., pp. 2–4; CCA, Submission to the PJCIS, op. cit., pp. 5–9; LCA, Submission to the PJCIS, op. cit., pp. 13–14; ACFID, Submission to the PJCIS, op. cit., pp. 3–4, 7; Charities Act 2013, section 11. This recommendation was also made by several individual NGOs that made submissions, including: The Salvation Army, World Vision Australia, RSPCA Australia, The Pew Charitable Trusts, Justice Connect, Social Ventures Australia, JMTinc, 350.org Australia, Oxfam Australia, The Smith Family and WWF-Australia.

[229].              AFMA, Submission to the PJCIS, op. cit., p. 7; ACBC, Submission to the PJCIS, op. cit., pp. 7–8.

[230].              See for example ACNC, Submission to the PJCIS, op. cit., pp. 3–6; The Smith Family, Submission to the PJCIS, Inquiry into the Foreign Influence Transparency Scheme Bill 2017, [Submission no. 60], February 2018, pp. 4–5; Oxfam Australia, Submission to the PJCIS, op. cit., pp. 8–9.

[231].              Ibid., p. 6; Justice Connect, Submission to the PJCIS, Inquiry into the Foreign Influence Transparency Scheme Bill 2017, [Submission no. 50], 15 February 2018, pp. 6–7; The Salvation Army, Submission to the PJCIS, Inquiry into the Foreign Influence Transparency Scheme Bill 2017, 15 February 2018, p. 9.

[232].              AGD, Supplementary submission to the PJCIS, op. cit., p. 6.

[233].              P Riordan, ‘Unis fear anti-treason net could snare academics’, The Australian, 15 December 2017, p. 4. A number of Australian universities also host Confucius Institutes. A list can be found on the University of Sydney website. The Parliamentary Library has published a FlagPost explaining arrangements for these institutes, see G Wade, ‘Confucius Institutes and Chinese soft power in Australia’, FlagPost, Parliamentary Library blog, 24 November 2014.

[234].              R Baxendale, ‘Carr returns fire after think-tank funding questioned’, The Australian, 15 December 2017, p. 4.

[235].              Riordan, ‘Unis fear anti-treason net could snare academics’, op. cit.

[236].              Ibid.

[237].              These issues are raised in Willheim, Submission to the PJCIS, op. cit.

[238].              USC, Title 22, Chapter 11, §613(e).

[239].              Z Parks, R Kelner, and B Smith, ‘Foreign Agents Registration Act may be at tipping point’, Law360 (online), 30 August 2016.

[240].              R Kelner and B Smith, The Foreign Agents Registration Act (“FARA”): a guide for the perplexed, Covington & Burling [law firm], 12 January 2018.

[241].              DOJ OIG, Audit of the National Security Division’s Enforcement and Administration of the Foreign Agents Registration Act, op. cit.

[242].              Ibid., p. iii.

[243].              Ibid., p. 35.

[244].              Go8, Submission to the PJCIS, op. cit., p. 4.

[245].              Universities Australia, Submission to the PJCIS, op. cit., p. 2.

[246].              AGD, Submission to the PJCIS, op. cit., p. 7.

[247].              Universities Australia, Submission to the PJCIS, op. cit., p. 7. See also A McLaren, Submission to the PJCIS, Inquiry into the Foreign Influence Transparency Scheme Bill 2017, [Submission no. 22], January 2018, p. 3.

[248].              AGD, Supplementary submission to the PJCIS, op. cit., p. 8.

[249].              LCA, Submission to the PJCIS, op. cit., p. 12.

[250].              ALHR, Submission to the PJCIS, op. cit., p. 9 and LFA, Submission to the PJCIS, op. cit., pp. 6–7.

[251].              See LFA, Submission to the PJCIS, op. cit., p. 6; LCA, Submission to the PJCIS, op. cit., p. 13.

[252].              PM&C, Lobbying code of conduct, op. cit., para. 3.5(f).

[253].              The example outlined on pages 65–6 of the Explanatory Memorandum to the FITS Bill does not appear to relate to a UN operation within the Criminal Code definition.

[254].              United Nations (UN), ‘Directory of United Nations system organizations: specialized agencies’, ‘Directory of United Nations system organizations: related organizations’ and ‘Directory of United Nations system organizations: funds and programmes’, UN System website.

[255].              AGD, Supplementary submission to the PJCIS, op. cit., p. 34.

[256].              B Scharffs ‘Four views of the citadel: the consequential distinction between secularity and secularism’, Religion and Human Rights, 6(2), 2011, pp. 109–126; T Li-Ann, ‘Contentious liberty: regulating religious propagation in a multi-religious secular democracy’, Singapore Journal of Legal Studies, December 2010, pp. 484–515; R Barker, ‘Is Australia a secular country? It depends what you mean’, The Conversation, 14 May 2015; G Bouma, Freedom of religion and belief in 21st century Australia, AHRC, Sydney, 2011; L Cannold, ‘Australia's fading separation between church and state’, Religion & Ethics, ABC Australia, 13 May 2011; M Bird, ‘Whose religion? Which secularism? Australia has a serious religious literacy problem’, Religious & Ethics, ABC Australia, 23 September 2015; A Deagon, ‘Secularism as a religion: questioning the future of the “secular” state’, The Western Australian Jurist, 8, 2017, pp. 31–94; L Backer, ‘Theocratic constitutionalism: an introduction to a new global legal ordering’, Indiana Journal of Global Legal Studies, 16(1), Winter 2009, pp. 85–172, p. 92; J Neoh, ‘The name of God on trial: narratives of law, religion and state in Malaysia’, Law Text Culture, 18, 2014, pp. 198–220, pp. 200–1.

[257].              Lumb, Moens and Trone: the Constitution of the Commonwealth annotated, 9th edn, LexisNexis Butterworths, Chatswood, 2016, p. 467.

[258].              Bird, ‘Whose religion?’, op. cit. See also S McLeish, ‘Making sense of religion and the Constitution: a fresh start for section 116’, Monash University Law Review, 18(2), 1992, pp. 207–236, p. 223: ‘underlying s 116 there exists a general conception of state neutrality toward religion, reflected both in the avoidance of religious preferences and in respect for the autonomy of individuals in matters of religion, especially as participants in the wider community.’(emphasis added)

[259].              Explanatory Memorandum, FITS Bill, pp. 66–67; ACU, Submission to the PJCIS, op. cit., p. 1; ACBC, Submission to the PJCIS, op. cit., pp. 2–6.

[260].              Clause 10.

[261].              Clause 27.

[262].              Bouma, Freedom of religion and belief, op. cit.

[263].              Explanatory Memorandum, FITS Bill, p. 66.

[264].              AGD, Supplementary submission to the PJCIS, op. cit., p. 2.

[265].              ALHR, Submission to the PJCIS, op. cit., p. 9.

[266].              ACBC, Submission to the PJCIS, op. cit., p. 2.

[267].              Ibid., pp. 3–4.

[268].              C Ryngaet, ‘The legal status of the Holy See’, Goettingen Journal of International Law, 3(3), January 2011, pp. 829–59.

[269].              Ibid., p. 855 and citations therein.

[270].              Explanatory Memorandum, FITS Bill, p. 66.

[271].              Department of Foreign Affairs and Trade (DFAT), ‘Holy See: the country brief’, DFAT website, n.d.

[272].              AGD, Supplementary submission to the PJCIS, op. cit., p. 10.

[273].              Subclause 57(4). Subsection 4B(2) of the Crimes Act 1914 provides that if a natural person is convicted of an offence punishable only by imprisonment, the court may unless the contrary intention appears impose a pecuniary penalty instead of, or in addition to, imprisonment using the formula: term of imprisonment (months) x five penalty units. Subsection 4B(3) of the Crimes Act provides that where a body corporate is convicted of a Commonwealth offence, unless the contrary intention appears, the court may impose a penalty of up to five times the maximum penalty for an individual. Subsection 4AA(1) of the Crimes Act provides that a penalty unit is currently equal to $210.

[274].              Subclause 57(3).

[275].              Subclause 57(1).

[276].              Subclauses 57(2) and (5).

[277].               Explanatory Memorandum, FITS Bill, pp. 80–4.

[278].               During the 43rd ‘hung’ Parliament (September 2010 – August 2013) no by-elections were held. See Parliamentary handbook, 45th Parliament, By-elections.

[279].               Clause 71 will provide that the minister may make rules for the purposes of the FIT Scheme by legislative instrument.

[280].               Subclause 57(4).

[281].               Subclause 57(3).

[282].               Subclause 57(1).

[283].               Clause 71 will provide that the Minister may make rules for the purposes of the FIT Scheme by legislative instrument.

[284].               Subclause 43(2).

[285].               Subclause 43(3).

[286].               Explanatory Memorandum, FITS Bill, p. 94.

[287].               ASIO Act, section 4. Alternatively, a modified version of the definition of national security to be inserted into Division 90 of the Criminal Code by the EFI Bill (proposed section 90.4) could be considered. However, that definition is very broad.

[288].               United States Code, §616(d)(2).

[289].               Subclauses 45(5) and 46(5).

[290].               Subclauses 45(3) and (4) and 46(3) and (4).

[291].               Clauses 48 and 49; certified copies or access to documents must be provided to persons otherwise entitled to those documents.

[292].               Subclause 59(2).

[293].               Explanatory Memorandum, FITS Bill, pp. 136–7.

[294].                             Clause 47. The information or document may only be used against the person in proceedings for an offence against proposed section 60 of the Act, or an offence against section 137.1 or 137.2 of the Criminal Code that relates to proposed Division 3, Part 4 of the Act.

[295].              PJCIS, Official committee Hansard, 16 February 2018, pp. 1–9.

[296].              Ibid., pp. 3–4.

[297].              Ibid., p. 2.

[298].              Ibid., p. 4.

[299].              Clerk of the Senate, Submission to the PJCIS, Inquiry into the Foreign Influence Transparency Scheme Bill 2017, [Submission no. 67], 27 February 2018, p. 1. Note: the FITS Bill captures activities intended to influence, directly or indirectly ‘proceedings of a house of the Parliament’ (subclause 12(1)(c)). This term is not further defined in the Bill, but as an illustration, ‘proceedings in parliament’ is defined in subsection 16(2) of the Parliamentary Privileges Act 1987 for some purposes of that Act as ‘all words spoken and acts done in the course of, or for the purposes of, or incidental to, the transacting of the business of a House or of a committee’.

[300].              PJCIS, Official committee Hansard, op. cit., p. 7.

[301].              Clerk of the Senate, Submission to the PJCIS, op. cit., p. 5.

[302].              Ibid.

[303].              Ibid.

[304].              Ibid.

[305].              Ibid., p. 6.

[306].              Clerk of the House of Representatives, Submission to the PJCIS, Inquiry into the Foreign Influence Transparency Scheme Bill 2017, [Submission no. 66], 23 February 2018, p. 5.

[307].              Clerk of the House of Representatives, Supplementary submission to the PJCIS, Inquiry into the Foreign Influence Transparency Scheme Bill 2017, 28 February 2018.

[308].              PJCIS, Official committee Hansard, op. cit., p. 1.

[309].              Clerk of the House of Representatives, Submission to the PJCIS, Inquiry into the Foreign Influence Transparency Scheme Bill 2017, 23 February 2018, p. 4; Clerk of the Senate, Submission to the PJCIS, op. cit., pp. 2, 4-6.

[310].               Clause 52. Scheme information is defined in clause 50 and scheme official in clause 51. The definition of scheme official will extend beyond APS employees to ‘any other person who performs functions in relation to the scheme under an agreement with the Commonwealth’.

[311].               Clauses 53–55.

[312].               EFI Bill, Schedule 2.

[313].               Criminal Code, section 5.6. A person is recklessness with respect to a circumstance if the person is aware of a substantial risk that the circumstance exists or will exist and having regard to the circumstances known to the person, it is unjustifiable to take the risk: Criminal Code, subsection 5.4(1).

[314].               I Leader-Elliott, The Commonwealth Criminal Code: a guide for practitioners , Commonwealth Attorney-General’s Department in association with the Australian Institute of Judicial Administration, March 2002, p. 67.

[315].              AGD, Supplementary submission to the PJCIS, op. cit., p. 44.

[316].               Explanatory Memorandum, FITS Bill, p. 34.

[317].               Pereira v Director of Public Prosecutions (1988) 82 ALR 217, [1988] HCA 57 at [11]. See also: Richardson and Wrench (Holdings) Pty Limited and Richardson and Wrench Limited v Ligon (1994) 123 ALR 681, [1994] FCA 1222 where, in relation to willful blindness,  Burchett J at [32] noted ‘this is not constructive, nor is it imputed, knowledge; it is actual knowledge reduced to a minimum by the defendant's wilful act, and the point of the case was that the minimum of actual knowledge was enough’.

[318].               G Williams, Criminal law: the general part, 2nd edn, Stevens, London, 1961, p. 159, cited with approval in Director of National Parks & Wildlife V Histollo Pty Ltd (1995) 88 LGERA 214, [1995] NSWLEC 132; R v Crabbe [1985] HCA 22, (1985) 156 CLR 464 and Commissioner of the Australian Federal Police v Lordianto [2017] NSWSC 1196.

[319].               Pereira v Director of Public Prosecutions, op. cit.

[320].              LCA, Submission to the PJCIS, op. cit., pp. 15–16.

[321].              Justice Connect, Submission to the PJCIS, op. cit., p. 2; APGRA, Submission to the PJCIS, Inquiry into the Foreign Influence Transparency Scheme Bill 2017, [Submission no. 13], p. 10.

[322].              AGD, Supplementary submission to the PJCIS, op. cit., p. 6.

[323].               Section 4D of the Crimes Act 1914 provides that unless the contrary appears, a specified penalty is taken to be the maximum penalty that may be imposed on conviction for an offence.

[324].               Crimes Act, section 4B.

[325].               Walker, ‘What problem, exactly, would a foreign agents law fix?’, op. cit.

[326].               D Wroe, ‘Chinese whispers: why now is the time for Australia's foreign interference laws’, The Sydney Morning Herald (online edition), 9 December 2017.

[327].               Queensland Government, Department of the Premier and Cabinet, The Queensland ministerial handbook, Ch. 3.12, Ministerial diaries. 7th edn., May 2016, p. 38. The diaries are published on the Queensland Government website.

[328].               New South Wales Government, Department of Premier and Cabinet, ‘Publication of Ministerial diaries and release of overseas travel information’, Premier’s Memorandum M2015-05, 30 September 2015. The diaries are published on the NSW Department of Premier and Cabinet website, ‘Ministers’ diary disclosures’.

[329]. United Kingdom Cabinet Office, Ministerial code, January 2018, p. 22.

[330].              LCA, Submission to the PJCIS, op. cit., p. 5 and p. 8.

[331].              V Heath, Submission to the PJCIS, op. cit., pp. 4–5. See also the comments in evidence given by the Office of the Australian Small Business and Family Enterprise Ombudsman: PJCIS, Official committee Hansard, 30 January 2018, pp. 14–15.

[332].              AGD, Supplementary submission to the PJCIS, op. cit., p. 4.

[333].              Canada, Office of the Commissioner of Lobbying of Canada website.

[334].               Lobbying Act (Canada), RSC 1985, c. 44, section 4.1(1).

[335].               Office of the Commissioner of Lobbying of Canada, ‘The Lobbyist’s Code of Conduct’, Commissioner website.

[336].              Independent Parliamentary Expenses Authority Act 2017. The Independent Parliamentary Expenses Authority (IPEA) has operated as a statutory authority since 1 July 2017.

[337].               IPEA, ‘Legislative framework’, IPEA website.

[338].              PJCIS, Official committee Hansard, 30 January 2018, p. 40.

[339].              AGD, A guide to framing Commonwealth offences, infringement notices and enforcement powers, op. cit., p. 90.

[340].              Scrutiny of Bills Committee, Scrutiny digest, op. cit., pp. 73–4.

[341].               Acts Interpretation Act 1901, subsection 34C(3).

[342].               Subclauses 69(3) and 43(2)(c).

[343].               ASIO Act, section 4.

[344].              For examples of such provisions, see Independent Parliamentary Expenses Authority Act 2017, section 62; Defence Act 1903, section 51XA.

[345].               Office of the Commissioner of Lobbying of Canada, ‘Mandate’, Commissioner website.

[346].               Office of the Commissioner of Lobbying of Canada, Administering the Lobbying Act: observations and recommendations based on the experience of the last five years, Report presented by the Commissioner of Lobbying to the Standing Committee on Access to Information, Privacy and Ethics, updated 13 December 2011, p. 23.

[347].               United States Department of Justice, Office of the Inspector General, Audit of the National Security Division’s enforcement and administration of the Foreign Agents Registration Act, Department of Justice, Washington, September 2016, p. 21.

[348].               Ibid., p. 32.

[349].               Parliamentary Business Resources Act 2017, section 37.

[350].               See IPEA, ‘Rulings’, Fact sheet, IPEA website, December 2017.

[351].              AGD Supplementary submission to the PJCIS, op. cit., p. 38.

[352].               Rennie, ‘Australia’s lobbying laws are inadequate, but other countries are getting it right’, op. cit.

[353].               The Government has allocated $3.2 million over four years to partially fund the scheme: Explanatory Memorandum, FITS Bill, p. 3; S Morrison (Treasurer) and M Cormann (Minister for Finance), Mid-year economic and fiscal outlook 2017–18, p. 137.

[354].              AGD Supplementary submission to the PJCIS, op. cit., p. 40.

[355].               Office of the Commissioner of Lobbying of Canada, Annual report 2016–2017, Office of the Commissioner of Lobbying of Canada, June 2017, p. 4.

[356].                            Ibid.

[357].               United States Department of Justice, Office of the Inspector General, Audit of the National Security Division’s enforcement and administration of the Foreign Agents Registration Act, Department of Justice, Washington, September 2016, p. 3.

[358].               Ibid., p. 35.

[359].               Australian Government, Portfolio budget statements 2017–18: Budget paper no. 1.8: Finance portfolio, p. 135. The ‘About IPEA’ page of the IPEA’s website states that the IPEA currently employs ‘around 60 staff’.

[360].               IPEA, ‘Leadership’ IPEA website.

[361].               Explanatory Memorandum, FITS (Charges) Bill, p. 3.

[362].              AGD, Supplementary submission to the PJCIS, op. cit., p. 39.

[363].               See proposed Part 3 of the Bill.

[364].              See for example: AFMA, Submission to the PJCIS, op. cit., p. 6; Foxtel, Submission to the PJCIS, op. cit., pp. 3–4; LFA, Submission to the PJCIS, op. cit., p. 7; ACNC, Submission to the PJCIS, op. cit., pp. 4–6; CCA, Submission to the PJCIS, op. cit., pp. 7–9; PJCIS, Official committee Hansard, 30 January 2018, pp. 14–15 (evidence from the Office of the Australian Small Business and Family Enterprise Ombudsman).

[365].              AGD, Supplementary submission to the PJCIS, op. cit., p. 39.

[366].              Submissions to the PJCIS’s inquiry relevant to this point include J Fitzgerald, Submission to the PJCIS, op. cit.; A Brady, Submission to the PJCIS, op. cit.

[367].               Explanatory Memorandum, FITS Bill, p. 33.

[368].              Submissions to the PJCIS’s inquiry relevant to this point include J Fitzgerald, Submission to the PJCIS, op. cit.; A Brady, Submission to the PJCIS, op. cit.

[369].               Paragraph (a) of the definition deals with companies. Other types of person are dealt with under paragraph (b) of the definition.

[370].               Salomon v Salomon & Co Ltd [1897] AC 22; Strong v Brough & Son (Strathfield) Pty Ltd (1991) 9 ACLC 1018; Automatic Self-Cleansing Filter Syndicate Co v Cunninghame [1906] 2 Ch 34; John Shaw & Sons (Salford) Ltd v Shaw [1935] 2 KB 113.

[371].               See for example: Commissioner of Taxation v BHP Billiton Finance Limited (2010) 182 FCR 526, [2010] FCAFC 25 as per Edmonds J at [37] where it was held that, even though the parent company owned the subsidiary, conflation of the activities of separate entities is impermissible. Therefore the subsidiary was not a ‘mere conduit’ of its parent in that case.

[372].               Income Tax Assessment Act 1936, section 318.

[373].               Case law suggest that ‘control’ means control of the company by shareholders in that capacity, that is, in an economic sense: Mendes v Commissioner of Probate Duties (Vic) (1967) 122 CLR 152, [1967] HCA 23; WP Keighery Pty Ltd v FCT (1957) 100 CLR 66, [1957] HCA 2; FCT v Commonwealth Aluminium Corporation Ltd (1977) 32 FLR 210. See also: Australia, Parliament, Taxation of foreign source income: an information paper, forming part of the Economic statement, April 1989 delivered on 12 April 1989 by the Honourable P.J. Keating, M.P., Treasurer of the Commonwealth of Australia, Parl. Paper 93, Canberra, April 1989, p. 19.

[374].               See for example: Income Tax Assessment Act 1936, section 349.

[375].               Explanatory Memorandum, EFI Bill, p. 302.

[376].               Ibid., p. 303.

[377].               Person is defined in proposed clause 10.

[378].              AGD, Supplementary submission to the PJCIS, op. cit., p. 45.

[379].              Security of Critical Infrastructure Bill 2017, clauses 55 and 56; Anti-Money Laundering and Counter-Terrorism Financing Act 2006, sections 238 and 239.