CHAPTER 1


CHAPTER 1

INTRODUCTION AND BACKGROUND

Referral of the inquiry

1.1        On 28 November 2012, the Crimes Legislation Amendment (Organised Crime and Other Measures) Bill 2012 (Bill) was introduced into the House of Representatives by the Minister for Justice, the Hon Jason Clare MP.[1]  On 29 November 2012, the Senate referred the provisions of the Bill to the Legal and Constitutional Affairs Legislation Committee (committee) for inquiry and report by 13 March 2013.[2]

Purpose of the Bill

1.2        The Bill consists of two schedules. Schedule 1 of the Bill seeks to amend the Proceeds of Crime Act 2002 (POC Act) to:

  • ensure that evidence relevant to unexplained wealth proceedings can be seized under a search warrant;
  • allow the time limit for serving notice of a preliminary unexplained wealth order to be extended by a court in certain circumstances;
  • harmonise provisions relating to the payment of legal expenses for unexplained wealth cases;
  • allow charges to be created over restrained property to secure payment of an unexplained wealth order;
  • remove a court's discretion to make unexplained wealth restraining orders, preliminary unexplained wealth orders and unexplained wealth orders once relevant criteria are satisfied; and
  • expand the Parliamentary Joint Committee on Law Enforcement's oversight of unexplained wealth investigations and litigation.

1.3        The Explanatory Memorandum to the Bill (EM) states that the amendments in Schedule 1 are designed to strengthen the Commonwealth's unexplained wealth regime and 'ensure that the Government has strong laws to target the substantial profits made by serious and organised crime'.[3]


1.4        Schedule 2 of the Bill seeks to amend the Criminal Code Act 1995 (Criminal Code) to:

  • provide that cross-border firearms trafficking offences cover firearm parts;
  • introduce aggravated offences for dealing in 50 or more firearms and firearm parts;
  • increase the penalties for illegal importation or exportation of larger numbers of firearms; and
  • introduce aggravated offences for importing or exporting 50 or more firearms or firearm parts during a six month period.

Background

1.5        The proposed changes to the POC Act and the Criminal Code arise in the context of previous parliamentary committee recommendations, and announced reforms to the regulation of firearms in Australia.

Commonwealth unexplained wealth laws

1.6        In February 2010, the parliament passed amendments to the POC Act to introduce provisions relating to unexplained wealth orders.[4] The unexplained wealth provisions are one of five types of asset confiscation proceedings provided for in the POC Act, and are designed to undermine organised crime by targeting the profits of crime. The Australian Federal Police (AFP) has stated:

These provisions can be used to target criminals who derive an income from criminal activity, but because of where they sit in criminal enterprise and their lack of proximity to the offences committed, cannot be pursued through criminal prosecution or traditional proceeds of crime action.[5]

1.7        The EM outlines how the Commonwealth's unexplained wealth provisions operate:

[I]f a court is satisfied that there are reasonable grounds to suspect that a person's total wealth exceeds the value of the person's wealth that was lawfully acquired, the court can compel the person to attend court and prove, on the balance of probabilities, that their wealth was not derived from offences with a connection to Commonwealth power. If a person cannot demonstrate this, the court may order them to pay to the Commonwealth the difference between their total wealth and their legitimate wealth.[6]

1.8        There are three types of orders which can be made by the courts under the unexplained wealth provisions in the POC Act. Subject to relevant criteria, a court may make:

  • a restraining order, which prevents certain property from being disposed of or otherwise dealt with by any person;[7]
  • a preliminary unexplained wealth order, which requires a person to appear before the court for the purpose of enabling the court to decide whether or not to make an unexplained wealth order in relation to the person;[8] and
  • an unexplained wealth order, which requires a person to pay an amount to the Commonwealth if the court is not satisfied that the whole or any part of the person's wealth was not derived from a Commonwealth offence, a foreign indictable offence, or a state offence that has a federal aspect.[9]
Parliamentary Joint Committee inquiry into unexplained wealth legislation

1.9        In July 2011, the Parliamentary Joint Committee on Law Enforcement (PJC‑LE) initiated an inquiry into Commonwealth unexplained wealth legislation and arrangements. The PJC-LE's final report, tabled in March 2012, made 18 recommendations in relation to Commonwealth unexplained wealth arrangements, which that committee considered would significantly enhance the effectiveness of those arrangements, if implemented.[10]

1.10      The Australian Government has accepted, either wholly or in part, 15 of the PJC‑LE's recommendations.[11] Schedule 1 of the Bill seeks to implement six of these recommendations in relation to the Commonwealth's unexplained wealth legislation.[12]

National firearm reforms

1.11      In the Bill's Second Reading Speech, the Minister explained that the proposed amendments to the Criminal Code in Schedule 2 of the Bill will complement a range of other measures to better regulate firearms in Australia, agreed to by the Standing Council on Police and Emergency Management. The initiatives outlined by the Minister include:

  • establishing a National Firearms Register, to replace more than 30 different registers and databases currently used;
  • nationwide rollout of the Australian Ballistics Identification Network;
  • developing a National Firearms Identification Database for use by law enforcement agencies;
  • specialised firearms training for Australian law enforcement officers;
  • establishing a specialised Firearm Intelligence and Targeting Team within the Australian Customs and Border Protection Service (Customs);
  • a national campaign on unlicensed firearms; and
  • expansion of the Australian Crime Commission's Firearm Tracing Capability.[13]

Key provisions of the Bill

1.12      This section outlines the key provisions of the Bill which were commented on by submitters and witnesses during the inquiry.

Schedule 1 – amendments to the POC Act

1.13      The three main areas of Schedule 1 which attracted attention during the inquiry are the amendments that would: remove judicial discretion in relation to making unexplained wealth orders once certain criteria have been met; remove the ability for legal fees to be paid out of restrained assets; and enable the seizure of things relevant to unexplained wealth proceedings.

Removing judicial discretion in relation to unexplained wealth orders

1.14      The Bill seeks to amend the POC Act to remove the courts' general discretion to decide whether to make unexplained wealth restraining orders,[14] preliminary unexplained wealth orders[15] and unexplained wealth orders[16] once relevant criteria are satisfied.[17] Whereas the POC Act currently provides that a court 'may' make an order in such circumstances, under the proposed amendments, a court 'must' make an order once the relevant criteria are met.

1.15      For all three types of orders, the removal of judicial discretion is limited to cases where the unexplained amount exceeds $100,000, in order to maintain the courts' discretion in cases where smaller amounts of wealth are unexplained.[18]

1.16      The EM emphasises the fact that the current discretion the courts have in relation to making unexplained wealth orders is in contrast to most other types of proceeds of crime orders, which a court must make if it is satisfied that the criteria have been met.[19] Additionally, the courts can still refuse to make an unexplained wealth restraining order, or an unexplained wealth order, if 'it is not in the public interest to make the order'.[20] A court may also revoke an unexplained wealth restraining order or a preliminary unexplained wealth order in certain circumstances, if it is 'in the interests of justice' to do so.[21]

1.17      These amendments seek to implement Recommendations 12 and 13 of the PJC-LE's report.[22]

Removing the ability for legal fees to be paid out of restrained assets

1.18      Item 2 of Schedule 1 repeals subsections 20A(3A) to (3C) of the POC Act, in order to remove the courts' ability to order that property which is the subject of a restraining order (under section 20A) may be disposed of for the purposes of meeting a person's reasonable legal fees.

1.19      Section 179S of the POC Act provides that a restraining order may be made in respect of property which is subject to a person's effective control, even if they are not the legal owner of that property. Item 20 of Schedule 1 repeals section 179SA, which currently allows a court to order that property which is the subject of an order under section 179S may be disposed of for the purposes of meeting a person's reasonable legal fees.

1.20      These amendments implement recommendation 10 of the PJC-LE's report.[23]

Enabling the seizure of things relevant to unexplained wealth proceedings

1.21      Items 23-24 of Schedule 1 insert proposed new paragraphs 227(1)(h) and 228(1)(h) into the POC Act, in order to enable the seizure of things that are relevant to unexplained wealth proceedings during the execution of a search warrant granted by a magistrate.[24] Item 28 of Schedule 1 would insert a proposed definition of 'thing relevant to unexplained wealth proceedings' into section 338 of the POC Act, namely:

thing relevant to unexplained wealth proceedings means a thing (including a thing in electronic form) as to which there are reasonable grounds for suspecting that it may be relevant for the purposes of initiating or conducting proceedings under section 20A or Part 2-6.

1.22      The EM explains that the current search warrant provisions prevent officers from seizing some materials relevant to unexplained wealth proceedings:

For example, the current search warrant provisions would not necessarily allow the seizure of material relevant to ascertaining the total wealth of a person (such as evidence of a person's income or legitimately acquired property) or evidence of unlawful activities from which a person has derived wealth. Furthermore, officers are not able to collect evidence relating to summary offences and foreign offences, even though restraint action in unexplained wealth matters can be based on the commission of summary or indictable Commonwealth offences, or foreign indictable offences.[25]

1.23      These proposed amendments implement recommendation 5 of the PJC-LE's report.[26]

Schedule 2 – amendments to the Criminal Code

1.24      Proposed new aggravated firearm offences are provided for in Schedule 2 of the Bill.

Aggravated offences for dealing in 50 or more firearms and firearm parts

1.25      Schedule 2 would create several new aggravated firearm offences for dealing in 50 or more firearms or firearm parts in a six-month period. These offences relate to:

  • cross-border disposal or acquisition of firearms or firearm parts within Australia, in the course of trade or commerce among the states and territories;[27]
  • taking or sending firearms or firearm parts across state or territory borders within Australia;[28]
  • importing prohibited firearms or firearm parts into Australia;[29] and
  • exporting prohibited firearms or firearm parts from Australia.[30]

1.26      These new aggravated offences would attract a penalty of life imprisonment or 7,500 penalty units, or both. The relevant basic offences attract a penalty of 10 years imprisonment or 2,500 penalty units, or both. The Minister stated in his Second Reading Speech that the penalties for these new aggravated offences 'will make the maximum penalty for trafficking in firearms the same as the maximum penalty for trafficking in drugs'.[31]

Conduct of the inquiry

1.27      The committee advertised the inquiry in The Australian newspaper on 5 December 2012. Details of the inquiry, including links to the Bill and associated documents, were placed on the committee's website at www.aph.gov.au/senate_legalcon. The committee also wrote to 75 organisations and individuals, inviting submissions by 31 January 2013.

1.28      The committee received eight submissions, which are listed at Appendix 1. All submissions were published on the committee's website.

1.29      The committee held a public hearing for the inquiry on 7 February 2013 in Canberra. A list of witnesses who appeared at the hearing is at Appendix 2, and the Hansard transcript is available through the committee's website.

Acknowledgement

1.30      The committee thanks those submitters and witnesses who contributed to the inquiry.

Note on references

1.31      References to the committee Hansard are to the proof Hansard. Page numbers may vary between the proof and the official Hansard transcript.

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