Referral to the Committee
9.1
The Bill was referred to the Committee by the Prime Minister on 8 December 2017. The Committee received a number of submissions and conducted public hearings in January, February and March 2018.
9.2
On 7 June 2018, the Attorney-General wrote to the Committee and proposed a number of amendments to the Bill. The Attorney-General’s proposed amendments, and a copy of his letter, were accepted as submissions, and posted to the Committee’s website.
9.3
In his letter, the Attorney-General stated that these amendments are intended to:
narrow the scope of the scheme by limiting the definition of ‘foreign principal’ only to foreign governments, foreign political organisations and other persons who are closely related to foreign governments and foreign political organisations;
amend key definitions including ‘on behalf of’ and ‘activity for the purpose of political or governmental influence’;
introduce new exemptions for industry representative bodies, and individuals making personal representations and expanding other exemptions;
increase the period within which former Cabinet Ministers bear additional obligations from three years to ten years;
extend the additional registration requirements for former senior officials to specifically cover former Ambassadors and High Commissioners;
increase the period within which former Ministers, members of Parliament and senior officials bear additional obligations from 18 months to seven years;
introduce a transparency notice scheme, allowing the Secretary [of the Attorney-Generals’ Department] to issue a notice that a particular entity or individual is related to a foreign government, and
introduce new and revised criminal offences.
9.4
A supplementary Explanatory Memorandum did not accompany the proposed amendments that were provided to the Committee, though the Department advised that one will be prepared to support the introduction of the proposed amendments into the House of Representatives.
9.5
The Committee published the Attorney‑General’s proposed amendments on 8 June 2018 and sought submissions by 15 June 2018. The Committee subsequently held three public hearings (all scheduled on 18 June 2018). The Committee thanks all stakeholders for their engagement in the inquiry and the time taken to provide the Committee with advice in reviewing the proposed amendments and the original Bill. The Committee greatly appreciates stakeholders’ contributions.
9.6
Stakeholders broadly supported the Attorney-General’s proposed amendments, with many commending the proposal’s narrowing of the scope of the Scheme. The refinements proposed by the Attorney-General were also viewed as ‘bolstering the constitutional validity of the proposed law, as it will be easier to argue that its provisions are appropriate and adapted to serve the legitimate end’.
9.7
The Committee welcomes the Attorney‑General’s careful consideration of the concerns identified by stakeholders during the Committee’s review and the assistance he has provided to the Committee in presenting proposed amendments for its consideration.
9.8
This Chapter discusses those proposed amendments in detail, and reviews the evidence the Committee has received on those amendments. The structure of this Chapter broadly mirrors the structure of the preceding chapters, as follows:
scope of actors and activities proposed to be covered by the Scheme,
the application of parliamentary privilege to the Bill,
registrants’ obligations and operation of the Scheme,
enforcement provisions, and
Scope of actors and activities
9.9
In this section the following amendments are discussed:
Section 10—Definition of ‘foreign principal’
Section 11—Undertaking activity on behalf of a foreign principal
Section 12—Activity for the purpose of political or governmental influence
Section 13—Communications activity
Extension of obligations for Cabinet Ministers, Ministers and former senior Commonwealth office holders
9.10
A large number of stakeholder concerns regarding scope and activities covered by the Scheme (as discussed in Chapter 3) are addressed by the Attorney‑General’s proposed amendments. This was reflected in evidence to the Committee on the Attorney‑General’s proposals.
9.11
In short, the Attorney-General’s proposed amendments refine the central definitions of:
‘foreign principal’ – section 10
Remove ‘a foreign business’;
Remove ‘foreign public enterprise’ and replace with ‘foreign government related entity’;
Remove ‘an individual who is neither an Australian citizen nor a permanent Australian reside’ and replace with ‘a foreign government related individual’.
‘undertaking activities on behalf of a foreign principal’ – section 11
Remove the words ‘under control of’ the foreign principal
Remove ‘with funding or supervision by the foreign principal’
Remove ‘in collaboration with the foreign principal’.
‘activity for the purpose of political or governmental interference’ – section 12
Clarify that the purpose must be the ‘sole or primary purpose’ or a ‘substantial purpose’
‘communications activities’ – section 13
Exclude broadcasters, carriage service providers and publishers from the definition where they merely edit information or materials produced by a foreign principal
9.12
The following paragraphs provide more detail on the Attorney-General’s proposed amendments to the Scheme’s scope and the evidence received.
Section 10—Definition of ‘foreign principal’
9.13
There are three significant changes with respect to the definition of a ‘foreign principal’:
Remove ‘a foreign business’;
Remove ‘foreign public enterprise’ and replace with ‘foreign government related entity’;
Remove ‘an individual who is neither an Australian citizen nor a permanent Australian reside’ and replace with ‘a foreign government related individual’.
9.14
In referring the amendments, the Attorney-General noted:
Limiting the range of foreign principals in respect of whom registration is required serves two important objectives. First, this amendment will ensure the scheme is more closely focussed on promoting transparency in relation to foreign government influence on Australian political and government processes. The effect of these amendments will be that a person will only need to be required to register if they undertake registrable activities on behalf of:
a foreign political organisation, or
a foreign entity or individual that is closely-related to a foreign government or political organisation
Second, this amendment will assist to ensure that the regulatory burden imposed by the scheme is reasonable and proportionate, by reducing the circumstances in which registration will be required.
Removal of ‘foreign business’ and ‘foreign public enterprise’
9.15
The Attorney‑General’s proposal to remove the term ‘foreign business’ from the definition of a ‘foreign principal’ was strongly supported by stakeholders.
9.16
The Committee considers that the proposed amendment to remove ‘foreign business’ from the definition of a ‘foreign principal’, substantially addresses the concerns raised in evidence on the original Bill. This is discussed in Chapter 3 at paragraphs 3.15-3.23. The term ‘foreign public enterprise’ was not discussed in evidence on the original Bill.
9.17
However, the introduction of the term ‘foreign government related entity’ in the Attorney‑General’s proposed amendments raised some limited concerns similar to those expressed about the inclusion of the term ‘foreign business’. These concerns are addressed in the following section.
Proposed definition of a ‘foreign government related entity’
9.18
The Attorney-General has proposed to include a new term within the definition of a ‘foreign principal’: a ‘foreign government related entity’.
9.19
The amendments propose to define ‘foreign government related entity’ as ‘a person, other than an individual, who is related to a foreign principal that is a foreign government or a foreign political organisation’. Certain threshold requirements are also proposed to measure the relationship between the entity and the foreign principal.
9.20
In his letter providing the proposed amendments to the Committee, the Attorney‑General stated:
The key implication of this change is that persons will not be required to register if they undertake activities on behalf of a foreign business … unless that business … is closely related to a foreign government or foreign political organisation’. … Limiting the range of foreign principals will ensure the scheme is more closely focused on promoting transparency in relation to foreign government influence on Australian political and government processes.
9.21
An entity will be a ‘foreign government related entity’ where it satisfies certain threshold requirements. Different thresholds apply to measure the close relationship to a foreign principal for companies, non-companies and, if the person is a person other than a body politic and the foreign principal is a foreign political organisation.
9.22
For companies, the following thresholds apply:
the foreign principal holds more than 15 per cent of the issued share capital of the company; or
the foreign principal holds more than 15 per cent of the voting power in the company; or
the foreign principal is in a position to appoint at least 20 per cent of the company’s board of directors; or
the directors (however described) of the company are under an obligation (whether formal or informal) to act in accordance with the directions, instructions or wishes of the foreign principal; or
the foreign principal is in a position to exercise, in any other way, total or substantial control over the company.
9.23
If a person is not a company, it will fall within the definition of a ‘foreign government related entity’ where either of the following are satisfied:
the members of the executive committee (however described) of the person are under an obligation (whether formal or informal) to act in accordance with the directions, instructions or wishes of the foreign principal, or
the foreign principal is in a position to exercise, in any other way, total or substantial control over the person.
9.24
Where the relevant foreign principal is a foreign political organisation, and the person is a person other than a body politic, the following thresholds must be met to satisfy the definition of ‘foreign government related entity’:
a director or officer or employee of the person, or any part of the person, is required to be a member or part (however described) of that foreign political organisation, and
that requirement is contained in a law, or in the constitution, rules or other governing documents by which the person is constituted or according to which the person operates.
9.25
In his letter to the Committee, the Attorney‑General stated that the threshold ‘reflects the reality that a foreign government or political organisation need not have absolute control over a company to be able to exercise significant influence, or even actual control, over its activities’.
Evidence received
9.26
The Committee received the following evidence on the proposed term and its thresholds.
9.27
Professor Anne Twomey welcomed the refinements to the Bill’s scope, noting that the proposed amendments ameliorate the concerns expressed by universities and academics on the application to collaborations and joint research undertakings. Chief among the assisting amendments was the narrowing of the definition of ‘foreign principal’ to exclude foreign companies, foreign bodies and foreign nationals (unless they are closely related to a foreign government or foreign political organisation). Universities Australia similarly supported these amendments and provided similar evidence to the Committee at the public hearing.
9.28
However, Professor Twomey noted that the proposed term of ‘foreign government related entity’ may nonetheless capture universities and academics, while acknowledging that certain research collaborations should be registered under the Scheme. According to her analysis, some foreign universities are likely to satisfy the definition of ‘foreign government related entity’ (such as universities in China), whilst others are private institutions (such as Harvard, Stanford, MIT and Columbia). Professor Twomey also commented that other universities are public bodies to the extent that they are partly funded and regulated but exercise a high degree of independence from government (such as UCLA, UC Berkley and most universities in the United Kingdom).
9.29
Similar analysis was provided by the Australian Major Performing Arts Group (AMPAG) with respect to foreign performing arts institutes. The Department sought to address this concern: ‘the department does not consider that collaboration between Australian and foreign arts organisations would fall with the definition of undertaking activities on behalf of a foreign principal in section 11 of the Bill’.
9.30
The Law Council submitted that this definition does not align with other relevant Commonwealth legislation: (Corporations Act 2001 (Cth), the Foreign Acquisitions and Takeovers Act 1975 (Cth) and the Financial Sector (Shareholdings) Act 1998 (Cth)). Each of those Acts specify 20 per cent as the level at which control is assumed. The Law Council stated:
The policy objectives of the Foreign Acquisitions and Takeovers Act 1975 (Cth) and the Bill are similar in that they seek to ‘regulate’ foreign activities in Australia.
9.31
The Council therefore recommended that the proposed threshold for companies be amended to 20 per cent ownership to align with other Commonwealth regulation. This recommendation was re‑iterated at the public hearing on the proposed amendments, with the Council further explaining:
It doesn't create a legal problem but it does create a problem in terms of certainty, I think, for business and the management of corporations. I think if you have a shifting sands approach to what the parliament defines as something which deals with, as it were, foreign control in different legislation, it does end up, I think, causing potential unnecessary confusion and individuals coming along when they are caught out to say, 'Well, they thought it was actually what aligned with other pieces of legislation.' We see that in other areas of law when we are called upon to be prosecutors or to defend people in terms of explanations being put forward on a number of fronts. I would have thought you'd want legislation to be consistent in terms of foreign control.
So why pick 15 per cent rather than 20 per cent? I don't know. That's something within the gift of the parliament, and you're elected for that very reason. I would have thought you would have legislation that is similar across the board when you're dealing with concepts of foreign control. But, to answer your question, Senator, directly, there is nothing legally wrong with that. There is nothing constitutionally wrong with that. But, from a legal perspective—and we see this when we prosecute or defend—when you have a shifting sands approach to these matters in different pieces of legislation, it creates confusion and potential unnecessary excuses being brought up.
9.32
The Department advised that the percentage set was to establish that a company relates to the foreign government and not its control, which is arguably a higher threshold. In a supplementary submission responding to the recommendation of the Law Council, the Department stated:
The threshold of 15% represents the level of government involvement at which a company can be considered to be related to a foreign government or foreign political organisation (as opposed to controlled). This threshold is consistent with Schedule 1 of the Broadcasting Services Act 1992. The thresholds in that Act apply in relation to the deemed control of companies that hold broadcasting and other licences, with the express object of inter alia encouraging ‘diversity in the control of the more influential broadcasting services’. While ultimately a matter of judgment, the objects of the Broadcasting Services Act and FITS Bill are closely aligned, as both are directed at regulating influential activities.
9.33
The Department provided similar advice at the public hearing stating that it is not seeking to limit the term only to entities owned by a foreign government, noting that ownership can indicate a level of control or relatedness to the foreign government.
9.34
The Australian Professional Government Relations Association was of the view that the proposed amendment should be further amended to clarify that the definition does not apply to entities which may satisfy the thresholds specified (particularly companies) where those entities are independent of government and ‘in no way subject to government direction’. The Association provided the example of a foreign pension fund to advance its concerns.
9.35
The Australian Charities and Not-for-profit Commission commented that ‘foreign government related entity’ will require organisations (such as charities) to ascertain ownership or control structures of entities, and allegiance or obligations of individuals. This may be difficult for many organisations and individuals.
9.36
As noted in Chapters 3 and 4, the Committee received significant evidence on the Bill’s application to charities and not‑for‑profits in Australia. The Community Council for Australia, had expressed significant concern regarding the scope of the Bill as introduced by the Prime Minister—identifying a ‘chilling effect’ on charities’ advocacy of their charitable purpose. However, at the public hearing on the Attorney‑General’s proposed amendments, the Community Council for Australia stated:
I want to start by commending the government, the opposition and people on this committee for listening to the concerns of charities. We certainly welcome the amendments that have been made. There's no doubt that most charities will no longer face the risk of having to register as foreign agents. Many of the anomalies have been addressed.
9.37
Nevertheless, the Council did note some continuing concerns regarding the proposed term ‘foreign government related entity’, particularly as many foreign partner-charities receive funding from foreign governments that may satisfy the threshold set in the definition.
9.38
The Department responded to these ongoing concerns of the charities sector in a supplementary submission and at the public hearing on the proposed amendments.
9.39
On the concern expressed by the Australian Charities and Not-for-profit Commission with regards to the obligations on charities to ascertain ownership or control structures of entities they work collaboratively with, the Department submitted:
The potential registrant will be in the best position to make decisions about their requirement to register, including the purpose of the activity or arrangement. The Attorney-General has stated that the onus is on a registrant to do his or her own due diligence.
9.40
While acknowledging there would be an increased regulatory burden, the Department asserted that the proposed amendment to narrow the definition of foreign principal would go some way to ameliorate these impacts as:
fewer charities will ultimately need to register
to the extent that individual charities may be required to register, they will need to register in relation to fewer foreign principals, and
overall, the regulatory burden will be significantly decreased.
… the Scheme is designed as a transparency mechanism, rather than a punitive enforcement framework. Following passage of the Bill, the department will create guidance material and an education and outreach program. Guidance material will be made available online. The department also intends to provide support to persons who are unsure if they need to register under the scheme.
9.41
At the public hearing, the Department noted that the Bill requires only for a person to undertake due diligence and so make reasonable inquiries to ascertain the relatedness of a person with a foreign government. The Bill does not establish a positive or strict obligation, such as required in the Anti-Money Laundering and Counter-Terrorism Financing Act 2006:
The distinction we were seeking to draw was simply with a positive obligation—as, for example, in the anti-money-laundering and counterterrorism framework—in which an entity is put to a substantial obligation of positively confirming or identifying a customer, client et cetera. The obligations here are certainly ones that would require a person to make a reasonable inquiry. They don't require a person to, for example, go and obtain proof—records of incorporation, shareholder registers or the like. They should make reasonable inquiries, but they don't impose an obligation like those in the AML/CTF legislation.
9.42
To assist persons who may be unsure if they are required to register, the Department also confirmed that guidance material would be available online, as well as education and outreach programs.
9.43
In response to concerns raised regarding companies meeting the threshold of share capital, the Department drew a distinction between foreign funding and ownership of issued share capital:
So receiving more than 15 per cent of your funding from a foreign government is not the same as more than 15 per cent of your issued share capital being owned. Therefore, I don't think we would see that subparagraph (a)(i) would have any operation if it were only foreign funding that were the link to a foreign government. If there was another element of direction or control within one of the other subparagraphs that would be a different situation. But simply receiving foreign funding would not fall within the definition.
Proposed definition of a ‘foreign government related individual’
9.44
The Attorney-General’s proposed amendments would remove the term ‘an individual who is neither an Australian citizen nor a permanent Australian resident’ and replace it with ‘foreign government related individual’.
9.45
The amendments propose to define ‘foreign government related individual’ as follows:
foreign government related individual means an individual:
(a) who is neither an Australian citizen nor a permanent Australian resident; and
(b) who is related to a foreign principal that is a foreign government, foreign government related entity or foreign political organisation in either or both of the following ways:
(i) the individual is under an obligation (whether formal or informal) to act in accordance with the directions, instructions or wishes of the foreign principal; or
(ii) the foreign principal is in a position to exercise, in any other way, total or substantial control over the individual.
Evidence received
9.46
The Australian Council of Trade Unions (ACTU) submitted concerns that the proposed amended definition of a ‘foreign government related individual’ would be satisfied ‘merely by a person being subject to the law and administrative authority of their home country’.
9.47
The Department responded to the ACTU’s concerns, stating:
It is not clear to the department that the individuals to whom the ACTU submission refers would fall within this definition. If the individuals do not meet these criteria, the registration requirements of the scheme will not arise. If the individuals do meet these criteria then it is not clear to the department why the activities mentioned in the ACTU submission should be exempt from the registration requirements.
9.48
Universities Australia supported the appropriateness of the proposed amended definition. It advised the Committee:
These make it clear that an ordinary individual not connected with a foreign government will not be considered a foreign principal. This will allow universities to assist international students and staff in their dealings with government, which can assist with the welfare of these groups without being captured by the scheme, which I think is entirely appropriate.
Retention of ‘foreign political organisation’
9.49
The Attorney-General’s proposed amendments do not amend the definition ‘foreign political organisation’, which forms part of the definition of ‘foreign principal’.
9.50
As introduced by the Prime Minister, the term ‘foreign political organisation’ is defined as follows:
foreign political organisation includes a foreign political party.
9.51
The Explanatory Memorandum provides:
The definition is not intended to be limited to registered political parties. If an organisation operates as a political organisation in a foreign country or part of a foreign country, or if a foreign country does not have a system of registration for political parties, the organisation would be captured under this definition.
9.52
The proposed definition is an inclusive definition and is not exhaustive in the types of organisations that may be ‘foreign political organisations’.
9.53
A number of organisations expressed concern about the proposed definition, with some advising that it may extend to ‘relationships that charities have with international partners or counterpart (sister) organisations’.
9.54
The Australian Council for International Development recommended that the term be amended to expressly exclude international charities or advocacy groups. It stated:
Many ACFID member organisations are part of international confederations or alliances, or routinely work with like-minded global organisations or groups to advance issues of global importance. We address issues that transcend national boundaries such as poverty, gender equality, climate change and responding to humanitarian crises. It is therefore appropriate that ACFID member organisations collaborate with international partner organisations and advocacy groups – some of which may be defined as political organisations. As has been done for the EFI [Espionage and Foreign Influence] Bill, we propose that the FITS Bill makes it clear that ‘political organisation’ does not include international charities or advocacy groups.
9.55
Similarly GetUp! raised concerns with the term ‘foreign political organisation’ and recommended that it be defined to include only organisations that field candidates in parliamentary elections. GetUp! Noted that the ‘current non-exhaustive definition could include independent international advocacy groups and think tanks that operate independently from all foreign governments, which is inappropriate.’
9.56
The Australian Council of Trade Unions expressed similar concerns stating that the term ‘may capture foreign unions (or at least those that might have affiliations to political parties in their home countries) or international union organisations.
9.57
The Department noted comparisons made with the Committee’s report on the National Security Legislation Amendment (Espionage and Foreign Interference) Bill 2017, which recommended that a definition be provided to clarify what foreign political organisations may be covered by the term ‘foreign political organisation’. Responding to concerns about the retention of the term ‘foreign political organisation’ and the perceived ambiguity in its definition, the Department stated:
The FITS Bill and National Security Legislation Amendment (Espionage and Foreign Interference) Bill serve very different purposes. The department does not accept that in all cases the definitions across the two bills should be identical.
In each bill, foreign principal and foreign political organisation have different operations in their respective (and distinct) contexts. The definitions in the Espionage and Foreign Interference Bill define the scope of an espionage or foreign interference offence, which is then criminal conduct. The definitions in the FITS Bill establish the context in which activities should be the subject of greater transparency.
9.58
In relation to political advocacy, the Department noted that the ‘explanatory memorandum does draw the strong implication that it would be a political party or something akin to a political party rather than any organisation in the ordinary course of its business’. The Department suggested that this ‘does not support an interpretation that the definition extends to international advocacy organisations where they are not operating politically.’
9.59
The Department acknowledged that clarity could be brought by inserting this interpretation in the Explanatory Memorandum or in the Bill, stating ‘as to which one of those is preferred, ultimately it's a matter for policy decision or the views of the committee’.
9.60
Responding to a suggestion by change.org for there to be a register of organisations deemed to be ‘foreign political organisations’, the Department confirmed that there was no intention to create such a register. Instead, guidance material and support will be made available.
Section 11—Undertaking activity on behalf of a foreign principal
9.61
The Attorney-General has proposed narrowing the definition ‘undertaking activity on behalf of a foreign principal’ under section 11 of the Bill.
9.62
The amendments remove references to activities that are undertaken:
under the control of the foreign principal;
with funding or supervision by, the foreign principal; and
in collaboration with, a foreign principal.
9.63
In his letter to the Committee, the Attorney-General stated:
In combination with the amendments to reduce the range of foreign principals in respect of whom registration is required, the effect of these amendments to section 11 will be to ensure that, for example:
academics are not required to register where they collaborate with counterparts working for foreign state universities or research institutes, or are supervised by such counterparts, and
charities are not required to register solely because they receive funding from foreign governments of foreign government related entities.
9.64
The Attorney-General has also proposed inserting a new subsection 11(4) as follows:
An activity undertaken by a company registered under the Corporations Act 2001 is not undertaken on behalf of a foreign principal merely because the company is a subsidiary (within the meaning of the Corporations Act 2001) of a foreign principal.
9.65
The effect of the new subsection will be that Australian subsidiaries will not be required to register under the Scheme merely because a parent company meets the definition of a ‘foreign government related entity’. However, as with any other company, entity or individual, a subsidiary may be required to register if it undertakes registrable activities for the purpose of political or governmental influence at the direction of its parent company.
Evidence received
Retention of ‘arrangement’ in proposed subsection 11(1)(a)
9.66
As discussed in Chapter 3, a significant number of stakeholders expressed concern with the inclusion of ‘with funding or supervision by, the foreign principal’ and ‘in collaboration with, a foreign principal’ in the definition. A number of stakeholders were therefore supportive of the proposed removal of these terms from the definition of ‘undertaking activity on behalf of a foreign principal’.
9.67
For example, the Law Council of Australia considered the proposed amended definition an improvement as it
narrows the instances where a person will be taken to be acting under the influence of a foreign principal by removing the term ‘control’ and removing the concept of ‘funding or supervision’ and ‘collaboration’ with a foreign principal. As the Committee may recall, the Law Council recommended a definition aligned with the laws of agency, which is similar to the current proposal.
The removal of ‘funding’ in proposed paragraph 11(1)(e) assists charities (as well as the narrowing of the definition of foreign principal) as it is now clear that the charity would need to be following orders or a direction of a foreign principal and the foreign principal is connected with a foreign government. This also addresses the concern that the Law Council raised regarding the person not having any knowledge of the foreign principal’s involvement (e.g. in the case of a fundraising campaign where donations are received from multiple sources).
9.68
However, a number of stakeholders also identified that the retention of ‘under an arrangement with the foreign principal’ (proposed section 11(1)(a)) may nonetheless capture the types of collaborations and funding sources that were proposed to be removed by the Attorney‑General’s amendments.
9.69
‘Arrangement’ is defined in proposed section 10 of the Bill as follows:
arrangement includes a contract, agreement, understanding or other arrangement of any kind, whether written or unwritten.
9.70
The definition is an inclusive definition and is not exhaustive of all of the types of relationships that may exist between a person and a foreign principal that are captured by the Scheme.
9.71
A ‘registrable arrangement’ is similarly defined in proposed section 10 of the Bill as follows:
registrable arrangement means 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.
9.72
Professor Anne Twomey noted that while the Attorney-General’s letter states that the effect of the proposed amendments will be to ensure that ‘academics are not required to register where they collaborate with counterparts working for foreign state universities or research institutes, or are supervised by such counterparts’, there is
… still the possibility that they might be caught if the foreign university is regarded as a foreign principal, the research cooperation involves an ‘arrangement’ with that foreign university, and a substantial purpose of the research is governmental influence (eg a project aimed at influencing governments to apply better ways of dealing with drought or soil salinity). Of course if the foreign principal sought to control or influence the outcome of the research collaboration, then it would fall within the category of arrangements that should be registered. If, however, the foreign university’s arrangements simply involved the provision of facilities, the exchange of staff or the funding of conferences, without any influence over the research outcomes, then it would not meet the purposes of the Act to require registration.
9.73
Accordingly, Professor Twomey was of the view that it would be preferable for the term ‘arrangement’ to be clarified. According to her analysis, the term as defined in proposed section 10 could potentially include the funding arrangements and collaboration arrangements that the government has already agreed to remove from the provision.
9.74
Professor Twomey was of the view that it would be consistent with the other revisions of the Bill and aid its clarity if the term ‘arrangement’ was defined ‘more narrowly so that it only applied to arrangements that involve “an obligation (whether formal or informal) to act in accordance with the directions, instructions or wishes of the foreign principal” (consistent with the definition of foreign government related individual)’.
9.75
At the public hearing, the Department responded to Professor Twomey’s recommendation for further amendment, stating that ‘those suggestions are not consistent with the policy outcome that's intended to be achieved here. There isn't equivalency between the concepts that have been used there’.
9.76
However Universities Australia supported Professor Twomey’s recommendations, noting:
it would still be useful to ensure that ‘under an arrangement with’ more closely reflects the intended targeting of the scheme – that is, where the foreign principal exercises some control or direction, through the arrangement, to lobby or conduct communications activities in its interest.
9.77
In supporting this recommendation, Universities Australia was of the view that it is important to distinguish those situations where an ‘arrangement’ exists with an intention on behalf of the foreign principal to have an Australian proxy act in the interests of the foreign principal, from those situations where an Australian entity acts in its own interests, albeit whilst having a partnership with a foreign entity.
9.78
The Department responded to these comments, clarifying its interpretation of the meaning of an arrangement:
The department considers that an arrangement between two parties indicates a level of consideration, structure and planning about the proposed activities. Even though those activities may go beyond the scope of the other matters listed in section 11, the department considers it appropriate for arrangements to continue to fall within the definition of undertaking activity on behalf of a foreign principal in section 11, without further qualification or limitation.
9.79
The Department further explained that the term ‘arrangement’ will involve a shared understanding and a degree of structure in the agreement between the person and the foreign principal:
To arrive at an understanding there need to be some concepts which have become the subject of said understanding. The understanding comes from something, and so the concept to be covered here is the arrangement. The arrangement may be in the form of an understanding—it may be documented; it may not be—but to arrive at an understanding there needs to be some commonality or sharing of views on an approach, issue or the like and, in this instance, we're referring to an arrangement. That's how it's been defined.
9.80
The Committee notes that the effect of paragraph 18(1)(a) of the Bill is that a person is only required to register if they ‘undertake an activity on behalf of a foreign principal that is registrable in relation to the foreign principal’. The paragraph requires that the registrable activity, such as ‘general political lobbying’, be conducted ‘on behalf of’ the foreign principal, for example because the activity is conducted ‘under an arrangement’. The plain effect of the paragraph is that it is not sufficient that a person have an arrangement with a foreign principal and separately engages in registrable activities for the purpose of political or governmental influence; the activities must be engaged in under the arrangement referred to in paragraph 11(1)(a), or under one of the other limbs in subsection 11(1).
Retention of proposed subsection 11(3)
9.81
Following receipt of the Attorney-General’s proposed amendments, a number of organisations sought clarification on the effect of proposed subsection 11(3). Subsection 11(3) remains unamended by the Attorney-General’s proposed amendments.
9.82
Section 11(3) provides:
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 expected that:
(a) the person would or might undertake the activity; and
(b) 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).
9.83
Some stakeholders were of the view that proposed subsection 11(3) would be in addition to the requirements at proposed subsection 11(1) (as opposed to a limitation on subsection 11(1)) which list the range of relationships discussed above. For example, the Australian Charities and Not-for-profit Commission stated:
However, while section 11(1) of the Bill has been amended, the ACNC notes that no changes have been made to section 11(3). The ACNC is still of the view that section 11(3) means that simply discussing activities for the purpose of political or governmental influence with a foreign principal could mean that such activities may be considered to be undertaken on behalf of the foreign principal. We would encourage the Committee to consider ways of amending section 11(3) in particular to ensure that more than simply knowledge on the part of both parties means that a person is undertaking activity on behalf of a foreign principal.
9.84
The Australian Council for International Development described the impact of the retention of proposed section 11(3) if it were to be considered an additional ‘gateway’ for liability under the Scheme:
Section11(3) has also not been deleted, which provides that even knowledge by the foreign principal that lobbying or other activity to influence government policy might take place by the civil society group is the basis for an activity being determined to be ‘on behalf of’. If 11(3) is not deleted, then it is conceivable that should a civil society group make a presentation to a foreign government that includes a plan of its future work, then it must register as an agent of that government if it then undertakes those activities.
9.85
At the public hearing on the proposed amendments, Oxfam Australia provided its reasoning as to how proposed subsection 11(3) is viewed as an alternative test to that provided in proposed subsection 11(1). It noted the beginning words in subsection 11(3)—‘Without limiting subsection (1)—and provided the following summary:
As an additional filter I don't think that there's any problem with section 11(3). Our concern is that it be read not as an additional filter but another way in which a person or organisation could be seen as acting on behalf of. So even knowledge by the foreign principal of that lobbying or other activity to influence government policy might take place is a basis for determining that that activity is taken on behalf of, as defined by the act.
9.86
The Department disagreed with this reading and sought to clarify the purpose of the provision:
Obviously some submitters have understood that provision to broaden the scope of the meaning of undertaking activity 'on behalf of'. We don't read it that way. The purpose of the provision is to ensure that both the person and the foreign principal need to know or expect that the person would or might undertake the activity. This is intended to ensure that where a person—there is a coincidental overlap between what they end up doing and the desires of the foreign principal, but it's not reasonable to draw a causal link between those two. If a person is really acting on their own because they think that it would be of benefit to the foreign principal, but the foreign principal has never heard of them, doesn't know about them and has no reason to expect that they would go and undertake the lobbying they undertook, it's supposed to ensure that that is not falling within the definition. So we read it the opposite way to how some of the submitters have.
9.87
At the public hearing, the Committee sought further clarification from the Department on the particular phrasing ‘Without limiting subsection (1)’.
Section 12—Activity for the purpose of political or governmental influence
9.88
Under section 12 of the Bill, the Attorney-General has proposed to narrow the definition of ‘activity for the purpose of political or government influence’ to required that the sole or primary purpose, or a substantial purpose, of the activity is to influence any aspect of a political or governmental process, as opposed to it being a purpose of the activity.
9.89
This proposed amendment was welcomed by a number of stakeholders. For example, the Law Council stated:
The definition of ‘activity for the purpose of political or governmental influence’ (proposed section 12) is also an improvement as it narrows activity to the ‘sole or primary purpose, or a substantial purpose’ of influencing political matters. The introduction of a sole, primary or substantial purpose into proposed section 12 is positive, although there may be some ambiguity as to what amounts to ‘a substantial purpose’.
9.90
Universities Australia noted that the changes would assist in addressing concerns about the application of the Scheme to research collaborations in the tertiary sector:
We also welcome the changes to the definition of 'political purposes'. These make it clear that where research results in policy relevant outcomes, the communication or dissemination of these results will not trigger the requirements to register even where the research is conducted in partnership with an international colleague or institution.
9.91
The Law Council suggested however that consideration be given to replacing the term ‘substantial’ with ‘dominant’.
9.92
The Department responded to this recommendation, advising the Committee that ‘references to ‘dominant’ in legislation have the same meaning as ‘primary’ and referred to advice from the Office of Parliamentary Counsel that ‘primary’ is the preferred, modern form of drafting’.
9.93
At the public hearing on the amendments, the Committee sought evidence on the scope of decisions that may be captured by the term ‘federal government decisions’ as included in the list of activities that will be for the purpose of political or governmental influence (proposed section 12(1)(b)). The Community Council for Australia expressed concern that a breadth of activities may be captured:
I think a process related to a federal government decision, clause 12(1)(b), is something that many charities are actively engaged in. While it has been narrowed, I think that the whole of clause 12—a person undertakes an activity for the purpose of political or governmental influence—says sole or primary purpose or substantial purpose. It often is a substantial purpose to try and improve government investment in housing or drug treatment or addressing United Nations development goals. It's often a key part of what people are doing.
9.94
In response to the Committee’s questions at the public hearing, the Department advised that it had not considered any options to limit proposed subsection 12(1)(b).
Section 13—Communications activity
9.95
The Attorney-General’s proposed amendments to section 13 (Communications activity) provide that broadcasters, carriage service providers and publishers are not required to register, merely because they edit information or materials produced by a foreign principal to ensure:
compliance with Australian media laws and regulations, or
the information or materials can be re-transmitted or published, for example by shortening a television program by a few seconds so that it fits into an allocated timeslot.
9.96
The proposed amendments are technology-neutral, and will apply to all media formats and technologies, including print and online media, free‑to‑air, subscription and streaming television, and publishers.
9.97
In a submission to the Committee, the Attorney-General explained:
The purpose of limiting the exemption in subsection 13(3) by including a requirement that the identity of the producer is apparent from the information or material disseminated, or is otherwise disclosed in accordance with the rules, is to ensure that the exemption does not inadvertently enable foreign governments, political organisations, and related entities and individuals to exploit our free press as a vehicle for covert foreign influence.
9.98
The Attorney-General’s submission also stated that media organisations and publishers ‘will not be required to register if the identity of the principal is already transparent’. Examples of this would include:
in the case of an opinion piece published in a newspaper or periodical – where the piece is published under the name of its author;
in the case of a book published by a publisher – where the book is published in the name of the author; or
in the case of a live interview on radio or television – the identity of the interviewee would be inherently transparent.
9.99
However, the Attorney-General’s submission also reasoned that registration would be required in instances such as:
… if the disseminator broadcasts or publishes the material as though it was native content, thereby concealing the provenance of the material, registration should be required. For example, registration may be required where a foreign government provides an Australian media organisation with content that is intended to influence the Australian people, or a section thereof, in relation to a political or governmental process, and the media organisation publishes or broadcasts that content, as though it were the Australian organisation's own editorial position.
9.100
Proposed changes to subsection 13(3) mean that it is no longer necessary to define 'broadcaster' and 'periodical' in section 10 of the Bill and these definitions are proposed to be removed.
9.101
The specific exemption for carriage service providers in current subsection 13(3) has been retained in revised subsection 13(4), as carriage service providers do not communicate or distribute information or material in the ordinary course of their business, but rather provide the means by which concern service providers communicate information or material.
Evidence received
9.102
The Joint Media Organisations supported the Attorney-General’s proposed amendments (to proposed sections 13 and 28) commenting:
By significantly narrowing the scope of the Bill the amendments substantially improve the Bill and markedly reduce the unintended consequences for media organisations as they undertake the ordinary course of their businesses.
9.103
Similarly, the Law Council noted the refinement offered by the Attorney‑General’s proposed amendments. It stated:
‘Communications activity’ has also been limited so that broadcasters, carriage service providers and publishers will not be required to register where they are undertaking their ordinary business on behalf of newly defined foreign principals. As the Committee may recall, the Law Council noted that while there were exemptions for publishers and broadcasters, there were concerns as to how it would interact with platforms such as social media. The amendments to ‘communications activity’ and the limiting of foreign principals appear to at least partly ameliorate these concerns.
9.104
However, the Organisations recommended that additional clarifications be provided in the Explanatory Memorandum which, in its view, would ‘ensure the Government’s intention regarding some matters is expressly understood. This would further assist media organisations in managing compliance with the Bill’. More specifically, the Organisations sought clarification in the Explanatory Memorandum on the following:
Section 13(3) (as per the proposed amendments) – a possible clarification to express that ‘producer’ has a general meaning and denotes the person or organisation generally responsible for the content. This is as opposed to the media industry definition of ‘producer’, which specifies a person with a defined role within the content creation process, and
Section 13(3) (as per the proposed amendments) – a possible clarification that ‘ordinary course of the disseminator’s business’ includes circumstances where a broadcaster broadcasts a channel, program or stream under an arrangement (content supply agreement) with a foreign principal.
Extension of obligations for Cabinet Ministers and Commonwealth position holders
‘Former Cabinet Ministers’
9.105
The Bill, as introduced by the Prime Minister in December 2017, imposes additional registration requirements on recent Cabinet Ministers for a period of three years after they cease to be a Member of Parliament or a holder of a senior Commonwealth position.
9.106
Under the Attorney-General’s proposed changes, the definition of ‘recent Cabinet Minister’ under section 10 of the Bill has been replaced with ‘former Cabinet Minister’. A former Cabinet Minister, within the meaning of the Bill, will be a person who was a member of the Cabinet in the past 10 years and who is not presently a designated position holder, such as a former Cabinet member who remains a member of the Parliament.
9.107
In his submission to the Committee explaining the amendments, the Attorney-General provided:
Increasing this period to 10 years reflects a considered judgment that the reasons for imposing these additional registration requirements on former Cabinet Ministers, as outlined in the Explanatory Memorandum, remain germane for a longer period of time than is presently reflected in the Bill.
9.108
The Attorney-General reflected the definition change to former Cabinet Ministers in section 22 of the Bill, which proposes to capture that an activity a person undertakes on behalf of a foreign principal is registrable in relation to the foreign principal if the person is a former Cabinet Minister, the activity is not registrable in relation to the foreign principal under another provision of the Division, and the person is not exempt under Division 4 (exemptions) in relation to the activity.
Recent designated position holder
9.109
As introduced by the Prime Minister, the Bill imposes additional registration requirements on former junior Ministers, members of Parliament, Secretaries and Deputy Secretaries of Commonwealth departments, and the heads and deputy heads of other Commonwealth agencies for a period of 18 months after they cease to hold such positions. The Attorney-General’s amendments propose to extend these obligations to Ambassadors or High Commissioners. These positions are collectively re-defined as part of the Attorney-General’s proposed amendments to ‘a recent designated position holder’.
9.110
A ‘recent designated position holder’ means a person who has been any of the following within the past seven years, and is not presently in one of these roles:
a member of the Parliament;
an Agency Head (within the meaning of the Public Service Act 1999), a deputy agency head (however described);
the holders of an office established by or under a law of the Commonwealth and equivalent to that of Agency Head or deputy agency head, and
the holder of an office of the Commonwealth as an Ambassador or High Commissioner, in a country or place outside Australia.
9.111
In his submission to the Committee explaining the amendments, the Attorney-General provided:
The inclusion of former Ambassadors or High Commissioners in the concept of recent designated position holder recognises that such persons play a unique role in Australia's foreign relations and that, when acting on behalf of a foreign government, political organisation, or related entity or individual in their retirement or upon ceasing their role as Ambassador or High Commissioner, such persons have the potential to be uniquely influential. Accordingly, it is appropriate and in the public interest to require transparency from such individuals.
9.112
Further, the Attorney-General’s amendments propose to increase the period for which recent designated position holders are subject to additional registration obligations from 18 months to seven years after ceasing in a particular role. The Attorney-General submitted that the proposed extension ‘reflects a considered judgment that the reasons for imposing these additional requirements remain germane for a longer period of time than is presently reflected in the Bill’.
9.113
The Attorney-General reflected the definition change to recent designated position holder in section 23 of the Bill, which proposes to capture that an activity a person undertakes on behalf of a foreign principal is registrable in relation to the foreign principal if:
The person is a recent designated position holder, and
In undertaking the activity, the person contributes experience, knowledge, skills or contacts gained in the person’s former capacity ad a designated position holder, and
The activity is not registrable in relation to the foreign principal under another provision of the this Division, and
The person is not exempt under Division 4 in relation to the activity.
Committee comment
9.114
The Committees notes that the amendments proposed by the Attorney-General substantially address most issues raised by submitters during the Committee’s inquiry. In Chapter 10, the Committee provides its recommendations in response to these proposed amendments.
9.115
There are also some outstanding issues which the Committee considers warrant examination and these are discussed in Chapter 10.
Exemptions
9.116
In this section the following amendments are discussed:
Humanitarian exemption (section 24)
Legal advice or representation exemption (section 25)
Religion exemption (section 27)
Government, commercial or business pursuits (section 29)
Industry representative bodies (section 29A)
Personal representation in relation to administrative process etc (section 29B)
9.117
The Attorney-General’s proposed amendments engage with a number of the issues raised in submissions and public hearings on the exemptions provisions contained in Part 2 of the Bill.
9.118
Some of these concerns have been addressed through redefining the term foreign principal, with the Attorney-General noting ‘the amendments … to remove foreign individuals from the range of foreign principals in respect of whom registration is required will largely resolve [the issue of making representation on behalf of individuals]’.
9.119
For example, the exemption for news media only applied if the foreign principal was a foreign business or individual. As these persons no longer form part of the definition of foreign principal, an exemption for news media is no longer required.
9.120
However, in addition to changing the definition of foreign principal, the Attorney-General proposed several changes to Part 2, Division 4 (exemptions) of the Bill that were identified through submissions and public hearings as being of concern.
9.121
These proposed amendments include:
Humanitarian exemption (section 24)
9.122
The Attorney-General’s proposed amendments broaden the humanitarian exemption. The Attorney-General’s proposal—to replace the word ‘solely’ with ‘primarily’— means that the exemption would extend to ‘a person in relation to an activity the person undertakes on behalf of a foreign principal if the activity is, or relates primarily to, the provision of humanitarian aid or humanitarian assistance’.
Legal advice or representation exemption (section 25)
9.123
The Attorney-General proposed two amendments on exemptions for legal advice or representation. Proposed section 9A, as discussed above, contains a savings provision for legal professional privilege, and clarifies that the Secretary’s powers to request information do not extend to privileged documents.
9.124
Proposed section 25 has been amended to broaden activity ‘solely’ relating to legal representation to ‘primarily’ relating to legal representation. The proposed amendment also captures legal representation in relation to an administrative process of a government involving the foreign principal.
Evidence received
9.125
The Law Council of Australia supported the broader exemption for legal advice and legal representation (proposed section 25). However the Law Council also recommended
a further change be made to the exemption for legal advice or representation to make it consistent with the federal Lobbying Code of Conduct—namely, that the words 'or relates primarily to' should be replaced [with] ‘or is incidental to’ [to] ensure that the test in the exemption is consistent with the language at clause 3.5 subparagraph (f) of the federal Lobbying Code of Conduct.
9.126
Similarly Law Firms Australia supported the proposed amendments, and suggested the words ‘or relates primarily to’ should be replaced by ‘or is incidental to’ to ensure consistency with the language of the Federal Lobbying Code of Conduct.
9.127
The Department responded noting that
incidental activities would fall within the legal advice and representation exemption (at proposed new section 25 … as long as the incidental activity relates primarily to the provision of legal advice or representation (as defined in section 25).
9.128
In regard to the use of the term ‘primarily’, the Department—including reference to advice from the Office of Parliamentary Counsel—said that it is the preferred modern drafting term and that 'primarily' for the purpose of legal advice would also include those activities that are incidental to the delivery of such legal advice.
9.129
Australian Lawyers for Human Rights welcomed the expansion of the exemption in relation to legal advice and representation, but suggested the exemption should also cover:
work that is incidental to providing legal advice or representation, and
all forms of legal representation without limit as to the type of matters in question.
9.130
The Department considered this unnecessary, and maintained that the limited exemption for legal representation is deliberate and necessary. The Department stated that:
If a foreign principal engages a lawyer to represent them in lobbying activities that are not connected to a legal process, and the other requirements of the scheme are met, it would be appropriate for that lawyer to be required to register’.
Religion exemption (section 27)
9.131
The Attorney-General proposed simplifying section 27 of the Bill to put the religion exemption ‘beyond doubt’. Under the proposed changes, ‘a person is exempt in relation to a religious activity the person undertakes, in good faith, on behalf of a foreign principal’.
Evidence received
9.132
The Australian Catholic Bishops Conference submitted that the proposed new exemption for religion did ‘not offer certainty or clarity and so may have the effect of discouraging legitimate public policy comment by religious groups’. They suggested that the exemption should be amended to read either that
‘a person is exempt in relation to an activity the person undertakes in good faith primarily for religious purposes’
or,
‘a person is exempt in relation to an activity the person undertakes in good faith in accordance with the doctrines, tenets, beliefs or teachings of the person’s religion or primary purpose of that religion.
9.133
In response, the Department confirmed that the proposed section 27, as amended, ‘clearly places all religious activity undertaken on behalf of a foreign principal outside the scope of the scheme’. At a subsequent public hearing, the Department noted that
the amendment we've included here was, in fact, actually intended to give effect to or to respond to the concerns articulated by the Australian Catholic Bishops Conference in its previous submissions and evidence to this committee. We certainly were under the impression we had faithfully given effect to that and had mirrored the exemption in the United States Foreign Agents Registration Act that they had referenced in their submissions. To the extent that there's any residual concern that that is not the effect achieved by the amendments, then we are open to either of those form of words to make that very clear.
Government, commercial or business pursuits (section 29)
9.134
The Attorney-General proposed adding ‘government’ to section 29 of the Bill, which has also been expanded to cover activities undertaken by individuals on behalf of a foreign government in the individual’s capacity as an officer or employer of the foreign government.
9.135
The Attorney-General noted ‘such activities are inherently transparent, so there would be little benefit in requiring individuals acting in their official capacity as an employee or officer of a foreign government to register’.
Evidence received
9.136
The Australian Professional Government Relations Association (APGRA) supported the intent of the proposed amendment, but suggested it lacked clarity:
It appears clear that it would apply where the activity relates to a contract for the provision of goods or services (although it would be useful to confirm this). It is unclear, however, whether the exemption would apply to activities relating to a regulatory approval relevant to a commercial transaction or project. Similarly, where change is sought to legislation or public policy in pursuit of the bona fide commercial or business objectives of the foreign government related entity.
9.137
The Attorney-General’s Department responded by noting the Explanatory Memorandum ‘indicates that the term is intended to be interpreted broadly and includes activities that are related to trade and commerce’. The Department went on to say,
If the activity related to lobbying in relation to broader legislation or public policy of interest to a foreign government related entity then this would not be considered to be a ‘commercial or business pursuit’. This type of lobbying is intended to fall within the scope of the scheme, so that there is transparency for decision-makers and the public about such activities being undertaken on behalf of a foreign principal. This can be clarified in the Supplementary Explanatory Memorandum.
9.138
At a public hearing, the Committee questioned the Department about section 29—exemption: commercial business pursuits—and its operation. Subsection (2) of that section currently exempts an individual from having to register where the individual undertakes activities that are a commercial or business pursuit undertaken in the individual's capacity as a director or officer or employee of a foreign government-related entity. This provision does not require that the individual employment relationship with the foreign government-related entity be disclosed in order for the individual to come within the exemption in section 29(2).
9.139
This differs from officers and employees of foreign governments, dealt with in section 29(1), which requires the activity be undertaken in the name of the foreign principal. The Committee queried whether there was a risk of a person undertaking otherwise registrable activities on behalf of foreign government-related entities while failing to disclose their employment relationship.
9.140
The Department confirmed this, stating that:
The provision does not require them to be doing something 'in the name of', but it does require them to be doing it in their capacity as an employee also. If they were operating in their personal capacity, they would not attract the exemption. So they need to be engaging in their official duties to attract that exemption.
9.141
The Committee further queried whether the exemption should apply only where the employment relationship is clear on the face of the otherwise registrable activity undertaken by the individual. This would ensure that a person who appropriately conducts activities overtly on behalf of a foreign government-related entity is not treated in the same manner as a person who fails to disclose their relationship with a foreign principal.
9.142
In response, the Department indicated that a reference to 'in the name of the relevant foreign principal' could be added to the provision to place the matter beyond doubt.
Industry representative bodies (section 29A)
9.143
The Attorney-General proposed adding section 29A to the Bill in order to exempt entities formed in Australia from registering in cases where a person is representing the interests of business or industry, the entity is not solely representing foreign interests, and the activity is or primarily relates to, representing the interests of business.
Evidence received
9.144
The proposed exemption was supported by Universities Australia. Similarly, Chemistry Australia and Australian Industry Group welcomed the Government’s ‘good faith effort’ to respond to and address the concerns that industry expressed about the initial Bill.
9.145
However, both Chemistry Australia and Australian Industry Group submitted that proposed subsection 29A(d) created ambiguity and did not achieve the purpose. Chemistry Australia acknowledged the sound intention of the amendment, but contended that:
clause (d) is extremely ambiguous in the context of the day-to-day activities of an industry representative body and provides a real likelihood of unintended consequences on all of its members and activities.
9.146
Both submitters suggested either deleting proposed section 29A(d), or providing further guidance in the Bill or Explanatory Memorandum on the kinds of activities that are included and excluded by proposed section 29A(d).
9.147
The Attorney-General’s Department responded to Chemistry Australia and the Australian Industry Group maintaining that
paragraph 29A(d) is needed. The Attorney-General stated in Submission 84.1:
This (section 29A) addresses concerns raised in the Committee’s inquiry by professional industry bodies that the Bill as introduced imposes an unnecessary regulatory burden on such entities by requiring them to register as they do not represent the interests of any particular foreign principal member. Rather, the professional industry body represents the interests of the industry as a whole, not the interests of the foreign principals who may form part of its membership. If a professional industry body were to lobby on behalf of one of its foreign members (rather than on behalf of the industry as a whole), it may still be required to register.
Deleting paragraph 29A(d) would not achieve the policy intention of the exemption.
Personal representation in relation to administrative process etc (section 29B)
9.148
The Attorney-General’s proposed section 29B provides a broad exemption for individuals where the foreign principal is also an individual, where the two individuals are members of the same family or know each other personally, or where the activity relates to an administrative government process or affects the personal welfare of the foreign individual.
9.149
The Attorney-General’s proposed amendments remove an individual from the definition of a ‘foreign principal’. This has been replaced with a ‘foreign government related individual’. While it may be unlikely that a ‘foreign government related individual’ would be raising a personal matter, the proposed amendment place this exemption beyond doubt.
Charities - evidence received
9.150
The proposed change to limit the definition of ‘foreign principal’ in proposed section 10 was strongly supported by community, charity and not-for-profit groups, with the Charities and Not-for-profits Commission noting that ‘these are welcome amendments which, in our initial assessment, would reduce the number of charities likely to be required to register with the Scheme’.
9.151
However, a number of submitters identified concerns that an exemption has been proposed in the Bill for industry representative bodies, but not charities. The Community Council for Australia (CCA) noted that,
the exclusions given to peak industry bodies and businesses have not been provided to peak charity bodies and charities. Charities face real and enforceable restrictions on their capacity to participate in political activities, restrictions that business and industry peak bodies do not have to comply with. CCA does not believe charities pose such a risk to national security that they should be identified as a higher risk than businesses or industry peak bodies.
9.152
Similarly, Oxfam noted the exemption provided to professional industry bodies which is not available to charities:
The amendments proposed by the Attorney General include an exemption for professional industry bodies which represent the collective interests of members, and have both domestic and foreign entities within their membership. The exemption has been proposed in response to concerns raised by industry bodies that the Bill would impose an unnecessary regulatory burden, as they do not represent the interest of any foreign principles who may form part of their membership.
Australian charities and public interest not-for-profits that work with ‘foreign principals’ are in a similar position in cases where international relationships and partnerships inform domestic advocacy, but do not direct it.
9.153
At a public hearing, the CCA suggested that some definitions could be further refined, and a number of charities will remain concerned and uncertain about their registration requirements, particularly given the degree of international collaborations.
9.154
CCA went on to note that
a lot of the work that charities do—not most charities, but a substantial number of charities—involves international collaboration with organisations that have substantial government involvement. Whether or not they will be captured I'm unsure, and that's the issue. It remains uncertain. Given that most charities are very risk averse in terms of their reputation—most charities trade in trust—the idea of having to go on a foreign register if they engage in those activities or if when they come back to Australia they advocate for positions that those global groups may have supported I think is a real issue.
9.155
The Attorney-General’s Department responded to the requests for an exemption for charities with the following:
It is not necessary to include such an exemption because charities will only be required to register to the extent that they engage in registrable activities on behalf of a foreign principal for the purpose of political or governmental influence. The definitions of foreign principal and undertaking activities on behalf of a foreign principal are proposed to be significantly narrowed by the amendments.
Therefore, any charity that is not operating on behalf of a foreign government, foreign political organisation, foreign government related entity or foreign government related individual will simply not be affected by the registration requirements of the scheme.
9.156
At a public hearing, clarifying why a charity that was pursuing its publicly stated and registered purpose would need to register, the Department responded:
It comes back to the objects of the scheme. We're not seeking to regulate particular sectors—charities, businesses et cetera. Rather, the bill seeks to provide transparency to certain types of dealings on behalf of certain entities to achieve certain effects, with some limited exemptions thereof. So it's not the case that the bill specifies that charities are subject to a particular obligation. Rather, it says that, broadly, where persons and entities engage in registrable activities on behalf of a foreign principal for the purpose of political government influence—which has been that narrowed-down concept that some charities may engage on behalf of a foreign principal and some businesses may do work on behalf of a foreign principal—that's where the scheme comes in.
Other exemptions – evidence received
9.157
The ACTU raised a number of concerns with the Bill and proposed that ‘it seems that the clearest pathway to resolving our concerns would be to insert an appropriately drafted exemption for trade union related activity in Division 4 Part 2 of the Bill’.
9.158
In response, the Attorney-General’s Department submitted that,
It is not clear how trade union activities may be captured by the Bill, and to the extent they are, the basis on which should be exempt. Where a registrable activity is covered, it is because it is undertaken in Australia on behalf of a foreign principal for the purposes of political or government influence. Where that is the case, the policy intent is that the activity be registrable.
9.159
AMPAG raised concerns that many Australian arts organisations looking to collaborate internationally would be required to register and maintain up-to-date entries, which would generate an ‘unproductive administrative burden on the organisation’. AMPAG recommended that the Bill be further amended to clarify that it does not cover this kind of arts activity and ‘an additional exclusion for the arts be added to Division 4’.
9.160
Optus made a submission that the Committee ‘consider possible exemptions being granted … where a relationship makes a positive contribution to Australia’s national interest. This could be applied to companies which have a strong, established, positive relationship in Australia’.
9.161
The Attorney–General’s Department responded to this submission with the following:
The department does not consider such an exemption to be necessary given the amendment to section 11 to insert new subsection 11(4). If a foreign government related entity is directing a subsidiary to engage in registrable activities in Australia for the purpose of political or governmental influence, the department considers that there is a public interest in such activities being transparent.
Parliamentary privilege
Savings provision
9.162
The Attorney-General has proposed adding section 9A (Relationship of this Act to certain privileges and immunities) to clarify that the Bill does not affect the law relating to Parliamentary privilege or legal professional privilege.
9.163
Proposed section 9A(3) (Effect on Secretary’s power to obtain information and documents) ensures the Secretary’s powers to obtain documents and information under sections 45 and 46 of the Bill do not extend to requiring a person to give information or documents where the information or documents are protected by privilege or immunity, or where complying with the requirement would involve a breach of a privilege or immunity.
9.164
Reflecting the proposed amendments at section 9A (Relationship of this Act to certain privileges and immunities), the Attorney-General’s amendments also provide that where a notice is issued by the Secretary under:
proposed section 45 (Notice requiring information to satisfy Secretary whether person is liable to register under the scheme) or
proposed section 46 (Notice requiring information relevant to scheme),
the notice must set out:
the effect of section 9A (relationship of this Act to certain privileges and immunities) in relation to the notice; and
the effect of section 60 of this Act and sections 137.1 and 137.2 of the Criminal Code (false or misleading information).
9.165
The proposed amendments include a note (under both section 45 and section 46) stating that a notice issued by the Secretary for further information does not override those privileges and immunities that are provided for in section 9A.
9.166
In a joint supplementary submission responding to the proposed amendments, the Clerk of the House of Representatives and the Clerk of the Senate noted that the amendment ‘appears to largely address the concerns raised in our earlier submissions, particularly by placing appropriate boundaries on the Secretary’s powers under the bill’.
9.167
The Clerks added that the provisions ‘endorse an interpretation that respects the traditional scope of privilege’, and that the provisions would be ‘bolstered’ by section 16 of the Parliamentary Privileges Act 1987, which prohibits forensic examination of parliamentary proceedings in courts and tribunals.
9.168
The Clerks also noted that the proposed narrowing of the definition of ‘undertaking activity on behalf of a foreign principal’ to remove the concept of ‘collaboration’ addressed concerns that this concept was ‘potentially problematic’ for interactions with members and senators.
9.169
Mr Bret Walker SC, appearing before the Committee to address the proposed amendments, described the proposed addition of section 9A as a ‘commendable step in the right direction’. However, he considered that the new section ‘doesn’t go far enough’ in that it would not deal with all the kinds of activities that members of parliament may undertake outside formal parliamentary proceedings.
9.170
Mr Walker also noted that, due to the small number of cases that have been considered by the courts, there was a lack of clarity in the definition of ‘parliamentary proceeding’, which meant that the scope of proposed section 9A would be uncertain. He noted, however, that parliamentarians’ offices would
need to be very sure about the connections of really every new person with whom you have dealings. They need not be overtly foreign dealings: they may be dealings with people, social groupings within Australia, who have foreign connections. Bearing in mind the largely migrant nature of us and our immediate ancestors in the large majority of this population, that's a lot of people.
9.171
Responding to an example put forward by the Committee, Mr Walker confirmed that if a member of parliament who was the chair of a parliamentary friendship group were to discuss a certain issue relating to foreign policy at a meeting with the ambassador of a foreign country, and subsequently raise that issue with the Minister for Foreign Affairs, then it was likely that the member would be required to register under the FITS Bill.
9.172
Mr Walker indicated that, to address these issues, the Bill would need to be amended to provide that the ‘provisions of the Bill do not apply to members or senators in relation to their parliamentary office’. Following this, Mr Walker considered that each of the houses should
devise, as they see fit, an appropriate amendment to their standing orders to ensure that they remain in full control of the kind of disclosures that they think appropriate for their members to make to the world about their arrangements with what I call foreign principals.
9.173
Mr Walker noted that the registers of interests for members and senators, conducted under the standing orders for each house, provided an ‘exact analogy’ for how the dealings of members and senators should be treated. He considered that such an approach would avoid
the very unseemly prospect of public servants—part of the executive branch of government—purporting to hold to account members and senators for their arrangements with people with respect to their parliamentary office.
9.174
The Committee sought the Attorney-General’s Department’s views on Mr Walker’s evidence at a subsequent public hearing. The Department noted that the intent of proposed section 9A was not to exclude members of parliament from the operation of the scheme, but rather to ensure that the Bill does not abrogate parliamentary privilege. The Department noted that the question of whether members of parliament should be ‘carved out’ of the Bill, and standing orders amended to create an appropriate registration requirement for members, was a policy question. The Department stated, however, that there was no impediment to such a carve-out being implemented in the Bill if that was the desired policy outcome.
Committee comment
9.175
The Committees notes that the amendments proposed by the Attorney-General substantially address most issues raised by submitters during the Committee’s inquiry. In Chapter 10, the Committee provides its recommendations in response to these proposed amendments.
9.176
There are also some outstanding issues which the Committee considers warrant examination and these are discussed in Chapter 10.
Registrants’ obligations and operation of the Scheme
9.177
In this section the following amendments are discussed:
Publishing sensitive information on the register
Registrants’ obligations
9.178
The Attorney-General’s proposed amendments do not seek to amend registrants’ obligations under the Bill.
9.179
The Australian Professional Government Relations Association (APGRA) provided a supplementary submission to the proposed amendments. APGRA raised concerns regarding the disclosure and publication of information:
We submit that the broad publication of any information beyond the name of the parties and a general descriptor of the type of activity undertaken is not required from a public interest perspective and would serve to prejudice the legitimate interests of a foreign government related entity and their professional advisers.
9.180
AGPRA submitted that the information disclosed under the Scheme should be ‘limited to details disclosed under the Lobbying Code of Conduct, a system that is currently working well. Further, reporting should only be required once per quarter as a ‘more reasonable compliance burden’.
9.181
The Department responded to these recommendations advising:
To achieve the transparency objectives of the Scheme, certain information relating to a person’s registration must be collected. The information that is collected is intended to capture the essential details relevant to a person’s registration, to ensure that an accurate and comprehensive record is kept.
The information that a registrant is likely to be required to provide includes:
the name of the person and general details (address, occupation, citizenship status and any prior government employment, including position and term of employment)
the name of the foreign principal and general details (contact details, nationality, type of foreign principal and general description of business/activities)
high level details of the nature of the relationship between the registrant and the foreign principal (e.g. whether there is a contract in place, an informal agreement or otherwise) and whether the person has received / is receiving financial benefits from the foreign principal, and
issues of interest which the registrant intends to pursue on behalf of the foreign principal (i.e. environmental issues, defence contracts, a particular vote or policy).
9.182
In regards to the reporting requirements, the Department suggested that:
The reporting obligations are intended to facilitate the timely provision of current and accurate information to the Scheme.
The potential compliance burden associated with the scheme has been substantially reduced, by narrowing the range of foreign principals in relation to which registration is required. Timely and accurate information is particularly important in relation to activities undertaken, for the purpose of political or governmental influence.
Operation of the Scheme
Delegation power
9.183
As discussed in Chapter 6, the Secretary may delegate all or any of his or her functions or powers under the Scheme to a Senior Executive Service (SES) employee, acting SES employee or an acting Executive Level 2 or equivalent position in the department. The delegation power is not limited to certain decisions or administrative functions, meaning the decision to request information, withhold publication of information or share information with other agencies could be made by an acting Executive Level 2 officer.
9.184
While some information requests may relate to more minor matters, the requested information could also relate to highly sensitive information—in some cases, privileged information—and this power may be delegated.
9.185
The Attorney-General proposed an amendment to section 67 (Delegations) to remove the Secretary’s ability to delegate the following:
coercive information gathering powers (proposed sections 45 and 46), and
powers relating to communication of Scheme information (proposed section 52).
9.186
The Law Council noted that the amendments would not prevent the Secretary from delegating her or her powers to publish or withhold from publication Scheme information (proposed sections 43 and 67). The Council commented:
Decisions about what to include for the purposes of registration on the website may include deciding what matters are ‘commercially sensitive’, affect ‘national security’ or are of a kind otherwise prescribed (proposed subsection 43(2)). Such matters are appropriately handled at the highest political or governmental level. The suggestion that such matters can be undertaken by less senior officials is of concern to the Law Council.
9.187
The Council also noted that the Bill retains the ability for other matters to be prescribed in rules that would require the Secretary to withhold Scheme information from publication on those grounds (proposed subsection 43(2)(c)). The Council commented:
The Law Council would appreciate the opportunity to comment on what is contained in any Rules. Given their potential significance, for example, exclusion of reasons for inclusion on the register, matters which in the context of commercial sensitivity and national security could well have an adverse impact on individuals, this is the kind of detail on which the Law Council and other organisations might offer valuable views.
Publishing sensitive information on the register
9.188
The Attorney-General has also proposed an amendment to section 43(2) to clarify that the website ‘must not include information that the Secretary is satisfied’ is commercially sensitive, or affects national security.
9.189
The terms ‘commercially sensitive’ and ‘national security’ are not defined in the Bill. The Attorney-General’s letter to the Committee did not explain the reason for the proposal.
Evidentiary certificates
9.190
The Attorney-General also proposed an amendment relevant to the operation of the Scheme which removes the provision of evidentiary certificates. Proposed sections 51(2) and 51(3) provide that the Minister is able to sign a certificate stating that a specified person was a scheme official.
9.191
The Explanatory Memorandum to the Bill states:
Whether or not a person is, or was at a specified time, a scheme official is a technical matter of fact. The use of an evidentiary certificate is an efficient means to establish the fact that a person is, or was, a scheme official. The evidentiary certificate is only prima facie evidence of the fact that the person was a scheme official at a particular time. The use of a prima facie evidentiary certificate will allow a defendant to adduce evidence to the contrary, that the person was not a scheme official, was not a scheme official at the particular time. Therefore, the use of a prima facie evidentiary certificate will not prevent a defendant from contesting the question of whether the person in question was a scheme official.
9.192
The Attorney-General’s letter to the Committee did not explain the reason for proposed sections 51(2) and 51(3).
Transparency notices
9.193
The amendments proposed by the Attorney-General also include new Division 3—Transparency notices. These amendments propose to grant the Secretary the power to issue, vary or revoke transparency notices (proposed sections 14A to 14E). If a notice is issued, the person or entity named in the notice will be a foreign principal for the purposes of the Scheme.
9.194
This issue was not identified in evidence during the Committee’s review of the Bill. In a submission referring to the his proposed amendments, the Attorney‑General explained that the framework ‘may be of utility in cases where,
… there is some genuine uncertainty about whether a company or individual is related to a foreign government – a declaration-making power may provide clarity for putative registrants, and
a company or individual is attempting to conceal their relationship with a foreign government’.
9.195
At the public hearing, the Department further explained the purpose of the transparency notice scheme:
The benefit of inserting the transparency notice regime is that, if a notice is issued, then the entity or person named in it is a foreign principal. That will provide clarity to a potential registrant. If there is a notice and they are working with or for that particular entity or individual, they will at least know that, for that part of the various steps that need to be taken, there is a foreign principal.
9.196
Under proposed section 14A (Issuing transparency notices), the Secretary may issue a notice that the person is a ‘foreign government related entity’ or a ‘foreign government related individual’ if satisfied that the person meets the relevant legislative definition of either term.
9.197
In his letter to the Committee proposing the amendments, the Attorney‑General identified the key features of the notice-system as follows:
the notice must be in writing and be made publicly available (proposed subsection 14A(2));
the notice comes into force when it is issued and remains in force until it is revoked (proposed subsection 14A(4));
the Secretary may vary a notice if he or she is satisfied that the details in the notice should be updated or corrected (proposed subsection 14C(1));
the Secretary must revoke a notice if he or she ceases to be satisfied that the person is a ‘foreign government related entity’ or a ‘foreign government related individual’ (proposed subsection 14C(2));
the decision of the Secretary to issue, vary or revoke a notice may be reviewed by the Administrative Appeals Tribunal (proposed section 14D);
the Secretary’s powers to issue, vary or revoke a notice cannot be delegated (proposed amendments to section 67), and
the notice, as well as variation or revocation, is not a legislative instrument (proposed subsections 14A(5), 14C(5)).
9.198
When considering whether to issue a notice the Secretary needs only to have a state of satisfaction before issuing a ‘transparency notice’ (proposed section 14A). The satisfaction must meet administrative law standards. In being satisfied that a person is a foreign government related entity/individual, the Secretary must only consider relevant information and not act arbitrarily, in bad faith, or unreasonably.
9.199
The effect of a transparency notice is to deem the person named in it to be a foreign government related individual/entity.
9.200
In a prosecution for an offence, the practical effect of a notice will be, effectively, to shift onto the accused the evidentiary burden of establishing that he/she is not a foreign government related individual/entity.
9.201
The amendments also propose that the Secretary can use the information‑gathering powers under proposed section 46 (Notice requiring information relevant to the scheme) to be satisfied about whether a person is a ‘foreign government related entity’ or ‘foreign government related individual’ (proposed subsection 14A(1) – Note 2).
9.202
As discussed in Chapter 6, section 46 is a considerable information-gathering power. If the Secretary reasonably believes that a person (including a third party) has information or a document that is relevant to the operation of the Scheme, the Secretary may issue a notice to that person to produce that information. Failure to comply with such a notice is a criminal offence punishable by six months imprisonment (section 59).
9.203
The publication of the transparency notice will not be subject to consideration of other matters (Section 43 provides that the Secretary may withhold publication on commercially-sensitive or national security grounds). That is, once the Secretary has issued a transparency notice, it must be published, even if that publication is prejudicial to national security or exposes commercially-sensitive material. As the decision to issue a transparency notice is not subject to consideration of certain matters, it is possible therefore, that a transparency notice will not be issued where it may, for example, prejudice national security.
9.204
To effect this requirement the Attorney-General has also proposed two minor amendments which list additional items the Secretary must include on the register under section 42(3) of the Bill. These items—included to reflect the proposed addition of transparency notices, above—are:
any transparency notices issued under section 14A, and
any revocation or variation of a transparency notice under section 14C.
9.205
Under the Attorney-General’s amendments, the Secretary would not be required to observe procedural fairness in issuing, varying or revoking a notice (proposed subsections 14A(3) and 14C(4)). Procedural fairness traditionally involves two requirements: the fair hearing rule and the rule against bias.
9.206
The hearing rule requires a decision maker to afford a person an opportunity to be heard before making a decision affecting their interests. The rule against bias ensures that the decision maker can be objectively considered to be impartial and not to have pre‑judged a decision.
9.207
The Attorney-General’s letter to the Committee providing the amendments, does not provide explanation as to why procedural fairness is not to be provided. At the public hearing, the Department stated:
The transparency notice doesn't create any rights or obligations in relation to the person who's named in it. Being named as a foreign principal doesn't create anything for that person. It provides clarity to a potential registrant, but the person or entity named in the notice doesn't have to do anything differently because of being named in the notice. The potential registrants, if they were the ones to whom we were to provide procedural fairness, would be highly unlikely to be able to be identified. They may be a very large class. It would be administratively impossible to provide procedural fairness to potential registrants of persons who might be named in such a notice. I would also note that, by their very nature, persons and entities who may be named in a notice will be outside of Australia's jurisdiction and therefore providing meaningful procedural fairness to them may not be possible. So, for those reasons, procedural fairness has been excluded, but merits review is available to any person who is able to demonstrate that they are affected by the decision.
9.208
A decision by the Secretary under proposed section 14A is reviewable by the Administrative Appears Tribunal (AAT) under proposed section 14D. As such, the reasons for that decision can be requested (Administrative Appeals Tribunal Act 1975 (Cth) section 28) and, subject to meeting certain exemptions, including a certificate by the Attorney-General, must be provided (Administrative Appeals Tribunal Act 1975 (Cth) subsection 28(1)). In turn a decision of the AAT may be reviewed on a question of law by the Federal Court (Administrative Appeals Tribunal Act 1975 (Cth) subsection 44(1)) and on further review by the High Court.
9.209
Under the proposed amendments, a transparency notice is ‘prima facie’ evidence of the matters in the notice and further evidence can be presented. Accordingly, in an AAT review on the merits, further evidence can be adduced as to the basis on which the Secretary was ‘satisfied’. In a judicial review, the Federal Court will also apply administrative law standards, such as whether the state of satisfaction has been reasonably formed.
9.210
The Attorney-General’s proposed amendments also include provisions which will protect the Commonwealth (including a Minister, Secretary, department or other agency) from defamation because the Secretary has issued, revoked or varied a notice, or has made the notice publicly available.
Evidence received
9.211
The Law Council of Australia expressed concern that the proposed transparency notice scheme does not align with general administrative law principles. The Council made the following recommendations for further amendment:
that the proposed subject be given notice of the proposal for the Secretary to issue a transparency notice and a statement of the material facts on the basis of which the Secretary is satisfied that the person is a foreign‑government related entity or individual
that the Secretary should be required to accept and take into account submissions from the subject and a reasonable period should be allowed for submissions;
that the Secretary be required to provide a copy of the notice to the subject of the notice.
9.212
Law Firms Australia made similar recommendations for further amendment, commenting that the same requirements could apply to any variation of the transparency notice considered by the Secretary.
9.213
The Law Council was also of the view that the provisions should be further amended to make clear the matters to be considered by the Secretary when considering to issue a transparency notice, which should include any submissions from the subject of the proposed notice. The Law Council stated:
the problem with section 14A, which is the state of satisfaction provision, is that it doesn't limit what the secretary may have regard to or where the secretary gets her or his information from in order to issue that transparency notice.
9.214
The Law Council considered it may be appropriate for these procedures (notifying the person, providing reasons, and seeking their comment) to be waived ‘if the Secretary reasonably considers that the need for the notice is so urgent that it should be issued without the notification process’. In such a case, the Law Council was of the view that the Secretary should be required to provide the information to the subject along with the notification to the subject that the transparency notice has been made. Law Firms Australia provided similar evidence.
9.215
Responding to these recommendations, the Department advised:
Section 28 of the Administrative Appeals Tribunal Act 1975 allows any person who is entitled to apply to the Administrative Appeals Tribunal (AAT) for a review of the decision to request the person who made the decision to give the applicant a statement in writing setting out the findings on material questions of fact, referring to the evidence or other material on which those findings were based and giving the reasons for the decision. The person who made the decision is required to give such a statement to the applicant within 28 days of receiving the request. Including a similar provision in the FITS Bill is unnecessary as it would be duplicative of the existing law.
9.216
The Department similarly responded to the Law Council’s recommendation for a copy of the transparency notice to be provided to the subject of that notice:
The department does not consider this necessary, given that the persons or entities who may be subject to a transparency notice are not themselves the subject of obligations under the scheme. The entities will, in many cases, not be located within Australia. The subjects will, in any, event have access to the notifications published online.
9.217
Although it acknowledged that the person could seek reasons for the decision under the AAT, the Law Council nonetheless stated that ‘it is essential for effective rights of review that the Secretary provides reasons containing an adequate explanation for these decisions’.
9.218
At the public hearing on the proposed amendments, the Law Council explained its position as to why additional procedural fairness is required despite the access to reasons provided in the Administrative Appeals Tribunal Act 1975:
I think where we are probably at odds is this question of what happens prior to the notice being issued. ... I think our concern, and where we probably differ, is that step before the notice is issued, and that is the procedural fairness point. That not only makes for good law; it also makes for good business climate in this country to know that before you have something being issued against you that may impact upon your commercial interests, you will be given an opportunity to be heard. … We do know that from time to time … bureaucrats can stuff up and stuff up badly. So it's better that they have an information package before them from both sides before a decision is made.
9.219
The Department acknowledged that ‘a person could perceive that it is not ideal for them to be named in such a notice’, and the notice could impact relationships—including business relationships—with Australian persons. However the Department referred back to transparency as the purpose of the Scheme:
I think the point that you made in your question is that there might be dire consequences and potentially losing business as a result of the fact of the making of a transparency notice. On that point, it remains the case that the purpose of the scheme is about transparency in respect of foreign influence and there is not, notwithstanding the different interpretation that certain sectors have taken, an adverse inference to be drawn from the fact of an entity seeking to engage in a foreign influence.
9.220
The Law Council also noted that there may be circumstances where a person affected by a transparency notice applies to the Secretary to vary or revoke it. Proposed section 14C gives the Secretary power to vary or revoke a notice, however the Secretary may also refuse an application to vary or revoke the notice. The Law Council recommended that such a refusal decision should be subject to review by the AAT.
9.221
The Department acknowledged that the first opportunity that the subject of the transparency notice will have to raise concerns regarding that notice will be after the fact, and via the AAT process. In response to concerns raised by the Law Council, the Department indicated that ‘merits review of a refusal to vary or revoke a transparency notice is necessary. Judicial review would be available under the Administrative Decisions (Judicial Review) Act 1977’.
9.222
Given that a transparency notice deems the subject of that notice to be a foreign government related individual or entity, the Law Council described the practical effect of that notice effectively as to ‘shift onto the accused the evidentiary burden of establishing that he/she is not a foreign government related individual/entity. Given that this fact is a critical element of the various offences, the defendant should not bear that burden’.
9.223
Accordingly, the Law Council therefore recommended that the Bill be amended to state that a transparency notice does not reverse or affect any burden of proof that would otherwise apply. Law Firms Australia provided similar advice on the effect of the transparency notice and provided the same recommendation for further amendment.
9.224
The Department refuted these concerns and outlined the processes available:
If the person affected by the notice wishes to challenge the notice, merits review will be available in the AAT.
If a transparency notice has been issued, the prosecution will be entitled to rely on it. If the person wishes to challenge the validity of that notice in a prosecution then they will be able to do so, in accordance with the ordinary processes for collaterally challenging administrative decisions in the course of a prosecution, where the validity of the decision is relevant to the question of criminal liability. Collateral challenges will generally be permitted in the course of a prosecution: ‘[O]nly the clearest language in a statute should be held to have taken away the right of a defendant in criminal proceedings to challenge the lawfulness of an administrative decision made against him where the prosecution is premised on its validity’ (Gray v Woollahra Municipal Council per Whealy J at [111]); nothing in the Bill purports to limit the right of a defendant to challenge the issuance of a notice in a prosecution. If they succeed, the prosecution will be required to prove beyond a reasonable doubt that the entity or person named in the notice is a foreign principal.
9.225
At the public hearing on the proposed amendments, the Law Council argued strongly for further amendments to provide for procedural fairness, clarifying that they did not oppose the transparency notice scheme:
What we are suggesting is that the rules of natural justice or procedural fairness ought to apply so that if a notice is to be issued, rather than what the bill provides at the moment, which is issuance without notice, notice be provided to the recipient and the recipient, rather than having the notice come into effect instantly or immediately, be given an opportunity to make a submission and that the secretary be obliged to take those matters into account and then provide reasons..
9.226
The Law Council also considered it reasonable that there be capacity to issue an immediate notice in urgent circumstances. Expanding on their concerns with regard to procedural fairness, the Law Council further reasoned:
The question … is that under the present terms of the bill, these notices can be issued without people being given an opportunity to be heard first. The problem with that, as politicians would know and other members would know, is that if something is published about you in circumstances where you haven't been the subject of being given an opportunity to respond to it, and it then impacts upon either your standing or your business, that will have a detrimental impact on individuals. All we are really seeking is there be procedural fairness accorded before the secretary issues that notice to enable a person to be heard.
Committee comment
9.227
The Committees notes that the amendments proposed by the Attorney-General address some issues raised by submitters during the Committee’s inquiry. In Chapter 10, the Committee provides its recommendations in response to these proposed amendments.
9.228
There are also several outstanding issues which the Committee considers warrant examination and these are discussed in Chapter 10.
Enforcement
9.229
The Attorney-General’s proposed amendments engage with a number of the issues raised during the public hearings on the enforcement provisions. In particular, the Attorney-General has proposed introducing a tiered range of offences that include the element of recklessness.
9.230
The Bill contains five offences with an additional four proposed in the Attorney-General’s amendments:
Section 57 contains five offences for failing to apply for or renew registration:
Intentional omission to apply or renew knowing required to do so and registrable activity undertaken
Intentional omission to apply or renew reckless as to requirement to do so and registrable activity undertaken
Reckless omission to apply or renew knowing required to do so and registrable activity undertaken
Reckless omission to apply or renew reckless as to whether required to do so and registrable activity undertaken
Reckless omission to apply or renew knowing required to do so, whether or not registrable activity undertaken
Section 57A proposes to introduce four similar offences capturing circumstances in which a person gives notice of the end of their liability to register while still being liable to register:
Notice given knowing arrangement still exists, and registrable activity undertaken
Notice given reckless as to whether arrangements still exist, and registrable activity undertaken
Notice given knowing arrangement still exists, whether or not registrable activity undertaken
Notice given reckless as to whether arrangement still exists, whether or not registrable activity undertaken
9.231
A key concern of submitters on the enforcement provisions was the severity of the penalties. The Attorney-General’s amendments propose reducing the maximum sentence under the Bill from seven to five years, and reducing some other penalties.
9.232
A table of the offences and penalties, as proposed by the Attorney-General’s amendments, under section 57 and 57A is as follows:
|
Proposed section
|
Offence
|
What must be proved
|
Maximum penalty
|
|
Failing to apply for or renew registration
|
|
57(1)
|
Intentional omission to apply or renew knowing required to do so and registrable activity undertaken
|
The prosecution must prove that the person knew they were required to register or renew registration; they intentionally omitted to do so; and undertake a registrable activity.
|
5 years imprisonment
($315,000 for bodies corporate)
|
|
57(2)
|
Intentional omission to apply or renew reckless as to requirement to do so and registrable activity undertaken
|
The prosecution must prove that the person was required to register or renew registration [and was reckless as to whether required to do so]; intentionally omits to do so; and undertake a registrable activity.
|
3 years imprisonment ($189,000 for bodies corporate)
|
|
57(3)
|
Reckless omission to apply or renew knowing required to do so and registrable activity undertaken
|
The prosecution must prove that the person knew they were required to register or renew registration; they were reckless in omitting to do so; and undertake a registrable activity.
|
3 years imprisonment
($315,000 for bodies corporate)
|
|
57(3A)
|
Reckless omission to apply or renew reckless as to whether required to do so and registrable activity undertaken
|
The prosecution must prove that the person was required to register or renew registration [but was reckless as to whether required to do so]; recklessly omitted to do so; and undertake a registrable activity.
|
2 years imprisonment ($189,000 for bodies corporate)
|
|
57(4)
|
Reckless omission to apply or renew knowing required to do so, whether or not registrable activity undertaken
|
The prosecution must prove that the person knew they were required to apply or renew registration; they recklessly omitted to do so.
NOTE: There is no requirement to prove that the person then went on to undertake any registrable activities
|
12 months imprisonment
($63,000 for bodies corporate)
|
|
Giving notice of end of liability to register while still liable to register
|
|
57A(1)
|
Notice given knowing arrangement still exists, and registrable activity undertaken
|
The prosecution must prove that the person gave the Secretary notice cancelling their registration and at the time they did this, a registrable arrangement still exists; that the person knows that a registrable arrangement still in existence on the day the person’s registration in relation to the foreign principal is to cease; and they went on to undertake a registrable activity after that day.
|
5 years imprisonment
($315,000 for bodies corporate)
|
|
57A(2)
|
Notice given reckless as to whether arrangements still exist, and registrable activity undertaken.
|
The prosecution must prove that the person gave the Secretary notice cancelling their registration and at the time they did this, a registrable arrangement still exists; that the person did this [reckless] as to whether a registrable arrangement will still be in existence on the day the person’s registration in relation to the foreign principal is to cease, and the person undertakes a registrable activity after that day.
|
3 years imprisonment ($189,000 for bodies corporate)
|
|
57A(3)
|
Notice given knowing arrangement still exists, whether or not registrable activity undertaken
|
The prosecution must prove that the person gave the Secretary notice cancelling their registration; at the time a registrable arrangement was still in existence, and the person knows the registrable arrangement will still be in existence on the day the person’s registration in relation to the foreign principal is to cease.
NOTE: There is no requirement to prove that the person then went on to undertake any registrable activities
|
12 months imprisonment ($63,000 for bodies corporate)
|
|
57A(4)
|
Notice given reckless as to whether arrangement still exists, whether or not registrable activity undertaken
|
The prosecution must prove that the person gives the Secretary notice cancelling their registration; and at the time a registrable arrangement was in existence, and will still be in existence on the day the person’s registration in relation to the foreign principal is to cease.
NOTE: There is no requirement to prove that the person then went on to undertake any registrable activities
|
6 months imprisonment
($31,500 for bodies corporate)
|
9.233
No changes were proposed to section 58 of the Bill (failure to fulfil responsibilities under the scheme).
9.234
The offence for providing false or misleading information in response to a request from the Secretary for information or documents (s.60) carried a five year maximum penalty under the Bill. Submitters and witnesses noted this was five times the penalty under the Criminal Code for a similar offence. The Attorney-General’s amendments propose lowering this penalty to three years. The penalty for section 61 (destruction etc. of records) is proposed to be lowered from three to two years.
9.235
The Attorney-General’s amendments also propose to impose absolute liability with respect to the majority offences with respect to the person undertaking activities on behalf of the foreign principal. The effect of that is that a person may not intend, or otherwise be reckless as to, whether they undertook activities on behalf of a foreign principal after the end of the applicable period. Further, that person will not have a defence available of mistaken fact.
9.236
The letter from the Attorney-General did not explain the rationale for its inclusion.
Evidence received – section 57 and 57A
9.237
The Law Council of Australia noted that the Attorney-General’s proposed section 57 of the Bill ‘has the potential to be unworkable and does not appear to make sense’. In particular, the Law Council raised concerns with the introduction of absolute liability in sections 57(5) and 57A(5) of the Bill. Unlike the inclusion of strict liability offences in section 58 of the Bill, absolute liability does not allow a defence of honest and reasonable mistake of fact to be raised.
9.238
The Law Council identified that proposed section 57(1) required a person to know they are required to apply or renew registration under the scheme. Further, it must be proved that the person undertook a registrable activity after the end of the period. The Law Council noted that undertaking such an activity involves voluntariness (a wilful or intentional action) which cannot be excluded by a provision purporting to attach absolute liability. The prosecution would still need to prove that the person voluntarily undertook the stated activity, and that ‘absolute liability adds nothing to the normal requirements that the defendant engaged in some prohibited act’.
9.239
At a public hearing, the Law Council noted that
The issue … with the absolute liability provisions, as we read it, is that a person could be guilty of an offence here even if there was no intention to commit a crime. If it was strict liability, the defence of a mistake of fact is available. With absolute liability, a mistake of fact is not a defence
9.240
Further, Australian Lawyers for Human Rights submitted that there ‘is no reason in principle why a defence of honest and reasonable mistake of fact should not be permitted under the Bill … to impose absolute liability is both undesirable and inconsistent with Commonwealth Guidelines’.
9.241
The Department responded to the Law Council’s submission stating that it considers absolute liability to be appropriate.
Absolute liability only applies to the part of the physical element which requires the activity the person undertakes on behalf of the foreign [principal] to be undertaken after the end of the period.
If absolute liability did not apply to the part of the physical element … then the prosecution would need to prove knowledge and recklessness in relation to the same fact, which would be anomalous.
The department notes that in all cases, the prosecution is still required to prove the relevant fact and fault element. The application of absolute liability simply ensures the prosecution does not need to prove two fault elements, or does not need to prove the fault element twice for different paragraphs of the offence.
Evidence received – criminal versus civil penalties
9.242
The Law Council of Australia, Australian Lawyers for Human Rights, and the APGRA raised concerns that some penalties in the enforcement provisions remained criminal rather than civil. The Law Council said it maintained the view
that consideration should be given to the availability of civil penalties to enforce compliance with the scheme rather than criminal penalties. However, if criminal penalties are to be employed, absolute liability should not be a basis for the proposed offences and the appropriate defences should be considered.
9.243
The Law Council also offered that:
For our part, we haven't seen any evidence that would suggest that having a civil penalty regime would make it more attractive for somebody to breach this law than if there were criminal provisions.
9.244
Australian Lawyers for Human Rights submitted that ‘appropriate penalties should be civil, not criminal’ and that penalties should be harm-based.
9.245
APGRA noted that there were ‘real questions of proportionality raised by the specification of significant imprisonment terms for failures to comply under the Scheme’ and advised that the Bill should be ‘amended to impose appropriate civil penalties for the offences included’.
9.246
In response, the Attorney-General’s Department argued that
For civil penalties to be effective, the department would effectively need to have the powers of a regulator. We would need to vastly expand our investigative powers in order to be able to gather the evidence to rely on for such an action to be taken. The department's position is that the criminal offences in the bill are appropriate and that the enforcement of the bill is appropriately done by law enforcement agencies using their powers, which have been obviously the subject of detailed consideration over many years.
Evidence received – self-incrimination
9.247
The Law Council also raised concerns regarding self-incrimination and noted that proposed section 47(2) of the Bill was:
your classic use immunity. But there's no derivative use immunity here. There is nothing that would then prevent that information being able to be used by investigators to further lines of inquiry in order to obtain information or to give to the prosecution so they deploy it to work out what your defence is.
9.248
The Law Council went on to confirm that proposed section 47(2) did not contain a derivative immunity, referring to 47(2)(a), (b) and (c) which are not permissible in evidence against the individual but noting that the Bill does not then prohibit the use in proceedings:
This is really about trying to protect and safeguard the operation of the legislation so nobody can come down the track later and say, 'Well, this impacts upon the right to a fair trial because they're obtaining this information and being able to deploy it through derivative use, so people will actually know how and what they're going to do in relation to matters.' … But this provision, if I can assure you, is a use immunity, not a derivative use immunity. They're two separate concepts.
9.249
Responding to the Law Council, the Department stated:
Section 47 in our view does provide a derivative use immunity. A derivative use immunity clause restricts any self-incriminating information or documents provided by a person from being used to investigate unlawful conduct by him or her. Subsection 47(2) provides that information given or the document or copy produced will not be admissible in evidence against the individual in criminal and civil proceedings, except for proceedings where it's alleged that they've provided false or misleading information or for perjury-type offences. So that has the effect that any document that the person is required to produce can't be used against them in any other criminal proceedings. Our understanding is that the provision that's included in the bill is the standard derivative use immunity provision that the Office of Parliamentary Counsel use when establishing such immunities. The discussion that I've just referred to is set out in the explanatory memorandum to section 47.
Evidence received – false or misleading information
9.250
The Attorney-General’s proposed amendments lower the penalty for providing false or misleading information from five to three years imprisonment.
9.251
However, this penalty remains three times that in the Criminal Code for a similar offence. Section 137.1 of the Criminal Code provides a 12 month imprisonment sentence for providing false or misleading information. The existing defences available under the Criminal Code and the Bill are identical for provision of false or misleading information.
9.252
The Committee questioned the Attorney-General’s Department on the reason for this discrepancy at a public hearing on 18 June 2018. The Department explained the differences as follows:
the purpose of the scheme is to bring transparency to things that can damage our democracy, whereas providing a false or misleading document to another type of agency might have a financial impact on the Commonwealth or some other impact but doesn't get to the purpose of the scheme, which is preventing Australia from being the subject of foreign influence without transparency. So hence the higher penalty.
Implementation and commencement
9.253
The Committee did not seek substantial evidence on the Bill regarding the implementation of the scheme (other than that guidance material be developed to clarify the scope of the Scheme), and as a result, it is has not been examined in earlier chapters of this report.
9.254
However, submitters provided some evidence on implementation matters following receipt of the Attorney-General’s proposed amendments.
9.255
Universities Australia reflected on the implementation of the Defence Trade Controls Act 2012 which, following a process of legislative improvement was now an operational and workable scheme with proactive compliance. Universities Australia referred to the usefulness of specialist advice under that scheme to removing barriers to compliance:
the university sector has noted the effective role played by the regulator (the Defence Export Controls Office) in assisting universities to understand and comply with their obligations under the scheme. Members have noted the helpful and professional attitude of the regulator’s staff, who have made it significantly easier to comply with the scheme, particularly with their provision of specialist advice on matters related to the control scheme.
We would strongly suggest that a similar approach could work well in the implementation of this scheme, particularly the provision of a dedicated contact point with ready access to advice on compliance. This would have the advantage of making the scheme more effective through reducing barriers to compliance.
9.256
At the public hearing on the amendments, Universities Australia reiterated:
The reason we mentioned the Defence Trade Controls Act is that there was a very constructive process through its implementation. It was not a simple thing to do—it was complex and there were substantial obligations on universities—but it was a very constructive process. There was a lot of ground covered. We just thought that it is a very good model to put up as one that the committee might like to not only know about but also make a recommendation on in relation to or at least consider. That was, as I said, a complex set of interactions between the parliament, regulators and universities. After a lengthy process of discussion—it was lengthy—we are actually now in a position where, as I understand it from the last briefing I had, universities are over-reporting. We are being very careful to do exactly what is required. In fact, in many cases, we are doing a bit more than what is required. So all those reportable instances are not just being reported adequately but there is a very good relationship between universities and the officials in Defence who run the scheme.
9.257
The Department responded to the recommendation stating:
The Attorney-General’s Department will administer the scheme. The department thanks Universities Australia for this useful suggestion and will work with the Department of Defence to benefit from its experience in relation to the Defence Trade Controls Act 2012.
9.258
Proposed section 2 provides that the Scheme may commence at a date fixed by Proclamation or within 12 months of its Royal Assent. At the public hearing on the proposed amendments, the Department advised that implementation of the Scheme may take some months:
Commencement by proclamation is intended to provide the opportunity to make regulations that are necessary to give effect to the scheme as well as the administrative arrangements that are necessary to administer the transparency register. … The nature of the arrangements that we require are going to depend on the scheme that is obviously enacted by the parliament. I wouldn't wish to presume that it was passed in a particular form but, depending on the form that it takes, as passed by the parliament, that'll inform the nature and extent of the administrative arrangements that we'd need to make. However, I would anticipate that those would take a number of months.
Committee comment
9.259
The Committees notes that the amendments proposed by the Attorney-General substantially address issues raised by submitters during the Committee’s inquiry. In Chapter 10, the Committee provides its recommendations in response to these proposed amendments.
9.260
There are also some outstanding issues which the Committee considers warrant examination and these are discussed in Chapter 10.