Chapter 2


Key issues

2.1        This chapter outlines the key issues raised in submissions received by this inquiry, which include:

  • general issues concerning unexplained wealth laws;
  • retrospectivity;
  • exemption from disallowance;
  • privilege against self-incrimination;
  • legal professional privilege;
  • significant matters in delegated legislation;
  • immunity from liability; and
  • privacy concerns.

2.2        This chapter also sets out the committee's views and recommendations.

A national scheme for unexplained wealth

Constitutional basis for a national scheme

2.3        As outlined in chapter 1 of this report, the Unexplained Wealth Legislation Amendment Bill 2018 (the bill), seeks to establish a national scheme to target unexplained wealth. Due to constitutional limitations, this will require one or more States to refer their power to the Commonwealth. The Department of Home Affairs (the department), noted that to preserve the constitutional basis, amendments cannot be made to Schedules 1, 2 and 4 of the bill, as these Schedules are being referred in their present form, by the New South Wales Parliament.[1] The department explained that after this bill has been enacted, it is possible for amendments to be made pursuant to the reference power at proposed section 14C, provided these amendments are unanimously agreed to by the relevant parties.[2]

Implementing a national unexplained wealth scheme

2.4        Submitters expressed mixed views in relation to the establishment of a national scheme for unexplained wealth. The Police Federation of Australia noted its support for the bill and outlined that it has been advocating for 'harmonised' unexplained wealth legislation since 2007 and that 'crime bosses were exploiting differences in criminal laws in Australia.'[3] The Police Federation of Australia argued for the need to tackle such changes urgently and implored 'all states to enact legislation, consistent with the Bill to ensure a truly national unexplained wealth regime is implemented.'[4]

2.5        In contrast, Civil Liberties Australia noted that it did not support the bill because unexplained wealth laws have been used beyond their original intent.[5] They explained that the laws were originally justified on the basis that they would only be used 'to combat serious and organised crime where the criminals were using such sophisticated business models that it would be extremely difficult to secure convictions against senior-level bosses.'[6] However, Civil Liberties Australia noted that a 2017 review of Tasmania's unexplained wealth laws found that its laws were not confined for use against 'senior organised crime figures', but applied to anyone whose wealth was unexplained, or who may have profited from crime.[7] They noted that the review found that Tasmania's unexplained wealth laws had been used to recover amounts as small as $3,000. Civil Liberties Australia urged the committee to investigate the application of unexplained wealth laws at federal and state levels.[8]

2.6        In response to the concerns raised by Civil Liberties Australia, the department explained that the bill, in part, responds to recommendations made following two separate reviews of unexplained wealth legislation and arrangements.[9] Furthermore, the department noted that the bill requires the minister to cause an independent review to be undertaken of the national unexplained wealth provisions, following the fourth anniversary of the commencement of this bill.[10]

2.7        In relation to concerns that the provisions of the bill would be used against petty criminals, the department noted that the bill contains a number of protections 'which ensure that unexplained wealth orders do not unfairly impact upon petty offenders.'[11] These safeguards include:

  • The court may refuse to make an unexplained wealth restraining order, a preliminary unexplained wealth order or an unexplained wealth order if satisfied that there are not reasonable grounds to suspect that the person’s total wealth exceeds by $100,000 or more the value of the person’s wealth that was lawfully acquired (see ss 20A(4)(a), 179B(4) and 179E(6)(a) of the POC Act).
  • The court may refuse to make an unexplained wealth restraining order or unexplained wealth order if satisfied that doing so is not in the public interest (ss 20A(4)(b) and 179E(6)(b) of the POC Act).
  • The court may exclude property from the scope of some of these orders or revoke these orders in a range of situations, including (for some orders) where it is in the public interest or the interests of justice to do so (ss 24A, 29A, 42 and 179C).[12]

Retrospectivity

2.8        As noted in chapter 1 of this report, the bill proposes three provisions which would apply retrospectively.[13] Both the Law Council of Australia (Law Council) and the Senate Scrutiny of Bills Committee (Scrutiny Committee) raised concerns relating to the retrospective operation of these provisions, noting that retrospective provisions 'challenge a basic value of the rule of law.'[14]

2.9        The Law Council explained that the impact of retrospective laws may be particularly acute where a person who has not been charged with or convicted of an offence, could have their property rights interfered with.[15] The Scrutiny Committee and Civil Liberties Australia also noted that the POC Act applies without the need to prove 'on the usual criminal standard (that is, beyond reasonable doubt), that the person has committed an offence.'[16] Civil Liberties Australia elaborated on this point:

Unexplained wealth laws are not conviction-based. They remove the need to prove a person has engaged in any criminal activity or indeed that any offence has even been committed. Unexplained wealth laws reverse the burden of proof by requiring a person to prove on the balance of probabilities that assets are not the proceeds of crime.[17]

2.10      However, the Explanatory Memorandum (EM) noted that these 'amendments do not have the effect of criminalising conduct which was otherwise lawful prior to the amendments.'[18] The EM outlined the rationale for the retrospective operation of these provisions:

Retrospective operation is required to ensure that unexplained wealth action is not frustrated by requiring law enforcement agencies to obtain evidence of, and prove, the precise point in time at which certain property or wealth was derived, acquired, realised or became subject to the effective control of a person.

Such a requirement would be unnecessarily onerous and would be contrary to the objects of the Act. Further, it would be almost impossible to show the point at which wealth or property was acquired or derived in cases where a person has accumulated significant amounts of wealth and property over decades and has no apparent source of legitimate income, especially in relation to property that is portable and not subject to registration requirements or where relevant financial records have been destroyed or lost over time.

Previous amendments to unexplained wealth orders and restraining orders have been applied retrospectively to property or wealth acquired before the amendments commenced...

It is also necessary to apply these amendments retrospectively to offences against a law of a 'participating State' to ensure that the aims of the POC Act are not frustrated. It is necessary for these provisions to apply retrospectively as the criminal conduct of the person may continue over several years or may not be discovered immediately.[19]

2.11      The Scrutiny Committee concluded by reiterating its concern with provisions that apply retrospectively and noted that it 'leaves to the Senate as a whole the appropriateness of retrospectively applying amendments which widen the scope of the unexplained wealth regime.'[20]

Exemption from disallowance

2.12      Proposed section 14F outlines when a non-participating State is a cooperating State. Proposed subsection 14F(4) provides that the minister may, by legislative instrument, declare a State to not be a cooperating State. Pursuant to proposed subsection 14F(5) of the bill this legislative instrument is not subject to disallowance as outlined in section 42 of the Legislation Act 2003.

2.13      The Scrutiny Committee expressed the view that 'exempting delegated legislation from disallowance is a serious matter' and where a bill seeks to exempt delegated legislation from the usual disallowance process, 'the committee would expect a sound justification to be provided in the [EM].'[21] Consequently, the Scrutiny Committee sought the minister's justification for exempting declarations made under new subsection 14F(4) from disallowance.

2.14      In its submission, the department explained that the exemption from disallowance at proposed subsection 14F(5) is justified by virtue of subsection 44(1) of the Legislation Act 2003, which specifies that the rules of disallowance at section 42 do not apply if the enabling legislation for the instrument:

  1. facilitates the establishment or operation of an intergovernmental body or scheme involving the Commonwealth and one or more States; and
  2. authorises the instrument to be made by the body or for the purposes of the body or scheme...[22]

2.15      The department noted that an instrument made under proposed subsection 14F(4) 'is intended to facilitate the operation of the National Cooperative Scheme on Unexplained Wealth...'[23] Further, the department submitted that this scheme would be made up of the Commonwealth and one or more States, and it would not be appropriate for the Commonwealth Parliament to be permitted to 'unilaterally disallow instruments that are part of a multilateral scheme.'[24]

2.16      The department explained that cooperating States benefit from the new equitable sharing arrangements at Schedule 5 of the bill and explained the importance of allowing the minister to declare by legislative instrument that a State is not a cooperating State:

A State's ongoing participation in the Scheme as a 'cooperating State' is intended to facilitate continued good faith negotiations with the Commonwealth and encourage the State to fully commit to the Scheme at a later date. The Minister's ability to remove this status by legislative instrument is vital in ensuring that a State cannot continue to indefinitely benefit from the equitable sharing arrangements where it has demonstrated it has no intention of re-engaging with the Scheme.

If there is a risk that such an instrument would be disallowed, this would jeopardise the ongoing effectiveness of the Scheme.[25]

Privilege against self-incrimination

2.17      Item 6 of Schedule 4 proposes to introduce new Schedule 1 into the POC Act.  Part 1 of new Schedule 1 deals with production orders and provides a magistrate may make a production order requiring a person to produce documents or make documents available for inspection by an authorised State/Territory officer. Proposed paragraph 5(1)(a) states that a person is not excused from producing a document or making a document available for inspection on the grounds that producing the document or making it available 'would tend to incriminate the person or expose the person to a penalty'. In effect, the proposed provision would override a person's privilege against self-incrimination.

2.18      The Law Council explained that the privilege against self-incrimination is 'a substantive right of long standing, applicable to criminal and civil penalties and forfeiture', which is 'deeply ingrained in the common law'.[26] The Law Council noted that privilege against self-incrimination is required by the International Covenant on Civil and Political Rights as well as being protected under Australia's legislative framework.[27]

2.19      The EM notes the rationale for abrogating the privilege against self‑incrimination:

It is appropriate to override the privilege against self-incrimination and legal professional privilege under subclause 5(1) as criminals regularly seek to hide their ill-gotten gains behind a web of complex legal, contractual and business arrangements. As such, requiring the production and availability of relevant documents is necessary to enable law enforcement to effectively trace, restrain and confiscate unexplained wealth amounts. This provision therefore accords with the principles at Part 9.5.3 of the Guide to Framing Commonwealth Offences, Infringement Notices and Enforcement Powers (the Guide).

...

Further, it should be noted that similar provisions overriding the privilege against self-incrimination exist at section 206 of the POC Act.[28]

2.20      The department elaborated on the above points, noting that Part 9.5.3 of the Guide states that it may be appropriate to override the privilege against self‑incrimination 'where it could seriously undermine the effectiveness of a regulatory scheme and prevent the collection of evidence.'[29] The department explained that for some unexplained wealth matters relevant information can only be obtained from persons with some connection to criminal conduct, such as 'the individual that committed the original crime, a financial institution that dealt with property suspected of being proceeds of an offence or professional intermediaries responsible for laundering the property through legal structures.' The department argued that to allow these individuals to rely on the privilege against self-incrimination 'would frustrate the operation of production orders and, in many cases, would prevent law enforcement from gathering the information required to support the unexplained wealth action.'[30]

2.21      The department maintained that production orders as proposed by the bill have been designed to minimise the impact on a person's privilege against self‑incrimination as production orders can only be made by a court and magistrates retain the discretion to not make a production order.[31] The department also noted that pursuant to subclause 1(3) of new Schedule 1, production orders have a narrow scope and therefore the risk of the privilege of self-incrimination being overridden is minimised.[32]

2.22      Finally, the department reiterated that the abrogation of the privilege against self-incrimination already exists for current production orders under paragraph 206(1)(a) of the POC Act.[33] Consequently, the department noted that the bill does not change the current Commonwealth arrangements concerning production orders, but rather extends the current arrangements to States and Territories that participate in the Scheme.[34]

Use and derivative use immunities

2.23      The Scrutiny Committee noted that where privilege against self-incrimination has been overridden, it will consider 'the extent to which the use of self-incriminating evidence is limited by use or derivative use immunity provisions.'[35] The Scrutiny Committee explained the difference between a 'use immunity' and a 'derivative use immunity':

A use immunity generally provides that the information or documents produced in response to the statutory requirement (in this case, in response to a production order) will not be admissible in evidence against the person that produced it. A derivative use immunity generally provides that anything obtained as a direct or indirect consequence of the production of the information or documents will not be admissible in evidence against the person that produced it.[36]

2.24      Both the Law Council and Scrutiny Committee acknowledged that the bill contains a use immunity under subclause 5(2) of new Schedule 1, which states that the document is not admissible in evidence, in a case of a natural person, except in proceedings relating to the provision of false or misleading information or documents.[37]

2.25        However, the Law Council and Scrutiny Committee expressed concern that the bill does not contain a derivative use immunity. They outline that, pursuant to clause 18 of new Schedule 1, information obtained as a result of a production order may be disclosed under certain circumstances.[38] Moreover, proposed paragraph 18(5)(b) explicitly allows for the admissibility of information indirectly obtained through this clause, stating:

...this clause does not affect the admissibility in evidence of any information, document or thing obtained as an indirect consequence of a disclosure under this clause.[39]

2.26      The Scrutiny Committee noted that the EM does not sufficiently address this matter and sought further advice from the minister in relation to the appropriateness of overriding the privilege against self-incrimination.[40] Analogous recommendations were also made by the Law Council:

  • A fuller explanation be provided in the Explanatory Memorandum of the importance of the public interest and why the abrogation of the privilege is considered absolutely necessary; and
  • Both a use and derivative use immunity should apply to civil and criminal proceedings.
  • In relation to the issue of information sharing with state or territory agencies, no direct or derivative use should be made of the material by state or territory agencies in relation to criminal proceedings.[41]

2.27      However, the department argued that to apply a derivative use immunity to civil and criminal proceedings would not be appropriate.[42] The department explained that in the case of civil proceedings subclause 1(6) of new Schedule 1 outlines that a document may be subject to a production order, where the purpose is to determine whether to take civil action under State and Territory unexplained wealth legislation, or proceedings under the unexplained wealth legislation of the State or Territory.[43] Consequently, the department noted that to allow a derivative use immunity for civil proceedings would defeat the purpose of production orders as it is intended to operate under the bill.[44]

2.28      In the case of criminal proceedings, the department argued that a derivative use immunity would 'have the potential to severely undermine the existing ability of authorities to investigate and prosecute serious criminal conduct'[45] and provided the following example:

For example, if a derivative use immunity was included, where an investigator in a criminal matter could potentially have access to privileged material, the prosecution may be required to prove the provenance of all subsequent evidentiary material before it can be admitted. This creates an unworkable position wherein pre-trial arguments could be used to inappropriately undermine and delay the resolution of charges against the accused.[46]

2.29      Additionally, the department noted that the bill (as well as the current provisions within the POC Act), only allow for the derivative use and sharing of information contained within produced documents, with a specific authority and for a legitimate purpose, as set out in the table at subclause 18(2) of new Schedule 1.[47] Finally, the department outlined that production orders do not affect the courts inherent power to manage criminal and civil proceedings.[48]

Legal professional privilege

2.30      Similar to the abrogation of the privilege against self-incrimination, proposed paragraph 5(1)(c) of new Schedule 1 specifies that a person is not excused from producing a document or making a document available on the grounds that the production of the document or making it available would disclose information that is the subject of legal professional privilege.

2.31      As noted above, proposed subclause 5(2) of new Schedule 1 contains a use immunity, which would also apply to information that is the subject of legal professional privilege; however, a derivative use immunity is not contained in the bill. The EM contains no further justification apart from that outlined at paragraph 2.19 of this report.

2.32      Both the Law Council and Scrutiny Committee explained the importance of legal professional privilege being 'not merely a rule of substantive law but an important common law right which is fundamental to the administration of justice.'[49] The Scrutiny Committee elaborated on its concern:

The committee considers that abrogating legal professional privilege may unduly trespass on individual rights, as to do so may interfere with legitimate, confidential communications between individuals and their legal representatives. In this regard, the committee notes that while the explanatory memorandum provides a limited policy justification for abrogating legal professional privilege, it does not provide any information about how any interference with individual rights will be addressed (for example, it does not set out any safeguards).[50]

2.33      In light of these concerns, the Scrutiny Committee sought further advice from the minister as to the appropriateness of overriding legal professional privilege.[51]

2.34      In its submission, the department explained why it was necessary to override legal professional privilege:

Serious and organised crime groups frequently set up elaborate financial and legal structures to conceal or disguise their wealth. Lawyers can become unwittingly caught up in this process if they provide advice to a client on matters such as setting up a trust structure, incorporating a business or selling property.

However, in other circumstances, lawyers may become professional facilitators. The use of legal practitioners to launder illicit funds is an internationally established money laundering method, and law enforcement have reported that it can be difficult in many cases to distinguish legitimate legal advice from advice given to intentionally frustrate the operation of future investigations.

As production orders can be issued prior to restraint action or during a covert investigation, if legal professional privilege was not removed tension could also arise between a lawyer’s professional obligations to their client and the fact that they could not take instructions to clarify or waive legal professional privilege from their client due to the non-disclosure requirements under clause 16 of proposed Schedule 1. The abrogation of legal professional privilege prevents this tension from arising.[52]

2.35       Similar to the abrogation of privilege against self-incrimination, the department reiterated that production orders must be made by a court and a magistrate retains the discretion to not issue a production order. Further, the department noted that the POC Act already permits the abrogation of legal professional privilege for production orders and that the bill merely extends this aspect to States and Territories participating in the scheme.[53]

Significant matters in delegated legislation

2.36      Part 2 of new Schedule 1 provides for the issuing of a notice to a financial institution, requiring that institution to provide certain information to an authorised State/Territory officer for the purpose of determining whether to take any action under the unexplained wealth legislation of the State or Territory.[54] Subclause 12(3) of new Schedule 1 lists the officials of a participating State who may give a notice to a financial institution. However, proposed paragraph 12(3)(d) does not provide a similar list for self-governing Territories and instead specifies that this will be 'prescribed by the regulations in the Territory.'

2.37      As noted by the Scrutiny Committee, proposed paragraph 12(3)(d) appears to allow for significant matters to be prescribed in the regulations:

The bill would therefore appear to permit the regulations to confer coercive evidence-gathering powers on a potentially broad range of persons. The bill does not set a limit on the categories of persons on whom powers may be conferred.

The committee's consistent view is that significant matters, such as the persons empowered to exercise coercive evidence-gathering powers, should be included in primary legislation unless a sound justification for the use of delegated legislation is provided.[55]

2.38      Apart from noting that similar provisions apply in relation to Commonwealth notices to financial institutions, the EM does not set out a rationale for this provision.[56] As such, the Scrutiny Committee sought the following information from the minister:

The committee requests the minister's detailed justification for allowing regulations to prescribe classes of persons authorised to issue notices to financial institutions under clause 12 of proposed Schedule 1.

The committee also seeks the minister's advice as to the appropriateness of amending the bill to specify the category of persons who may be empowered under the regulations to issue notices under clause 12 of proposed Schedule 1.[57]

2.39      The Law Council noted that it shared the concerns raised by the Scrutiny Committee and similarly recommended that the bill set out 'the criteria or class of persons for the definition of who may exercise coercive evidence-gathering powers in self-governing Territories...'[58]

2.40      In its submission, the department provided some context in relation to the development of this provision. The department explained that paragraph 12(3)(d) of new Schedule 1 'arose out of negotiations with the States and Territories and was created to ensure that the Scheme was sufficiently flexible to allow appropriate officials in the Territories to issue notices to financial institutions in unexplained wealth cases.'[59] The department noted that the Australian Capital Territory currently does not have an unexplained wealth scheme and therefore it was not possible to accurately define potential future officials who would be vested with the power to issue notices to financial institutions.[60]

2.41      The department additionally noted that this regulation-making power will be subject to the rules of disallowance under section 42 of the Legislation Act 2003, and will be subject to oversight by the Parliamentary Joint Committee on Law Enforcement.

Immunity from liability

2.42      As noted in chapter 1 of this report, clause 14 of new Schedule 1 provides that financial institutions as well as officers, employees and agents of financial institutions, are protected from any action, suit or proceedings in relation to any action taken by the institution or person under a notice under clause 12 or in the mistaken belief that action was required under the notice. The EM outlines the intent of this provision:

Subclause 14(1) ensures that financial institutions and related persons are not exposed to situations where they may be criminally liable for failing to comply with a notice under clause 17, but would nevertheless expose themselves to liability (for releasing private information etc.) by complying with this notice.[61]

2.43      The Scrutiny Committee explained the effect of this provision and the reason for its concern:

This removes any common law right to bring an action to enforce legal rights. The committee notes that this applies even if the relevant action was not taken in good faith.

The committee expects that if a bill seeks to provide immunity from liability, particularly where such immunity could affect individual rights, this should be soundly justified. In this instance, the explanatory memorandum provides no such justification, merely restating the operation and effect of the relevant provisions.[62]

2.44      In light of the concerns raised, the Scrutiny Committee sought further advice from the minister as to why immunity from civil and criminal liability is considered appropriate, 'particularly without any requirement that the action be taken in good faith...'[63]

2.45      The department explained that:

Subclause 14(1) replicates existing subsection 215(1) of the POC Act, which was introduced at the recommendation of the Australian Law Reform Commission. The Commission found that financial institutions and their employees could expose themselves to civil and criminal liability for the mere act of providing financial information or documents to an authorised officer, even where they were compelled to do so.

On this basis, the Commission recommended that financial institutions and their employees should be protected from any action, suit or proceedings in relation to its or their response to a notice.[64]

2.46      The department also explained that the immunity from liability would only operate narrowly—that is, in relation to action taken under a particular notice. Therefore, the immunity from liability 'will not protect an employee from civil or criminal liability if they deliberately engage in conduct that clearly falls outside of the parameters of the notice.'[65]

Privacy

2.47      As explained in chapter 1 of this report, the bill proposes to expand certain definitions within the Telecommunication (Interception and Access) Act 1979 (TIA Act) to allow the Commonwealth, a participating State and Territories to disclose and use information without the need to show a link to a prescribed offence.[66] The EM notes that the proposed provision might be used, for example, 'where the wealth vastly exceeds the person's known lawful income but the underlying predicate offending is not known.'[67]

2.48      The Scrutiny Committee explained its concerns with these provisions:

Thus, it would appear that such information could be used to investigate a person's wealth despite there being no specific information as to any criminal offending. This impacts on a person's right to privacy and raises scrutiny concerns as to whether allowing such information to be used or disclosed for such purposes unduly trespasses on personal rights and liberties.[68]

2.49      The statement of compatibility within the EM noted that the limits on the right to privacy are 'reasonable, necessary and proportionate to achieving the legitimate objective of ensuring that law enforcement authorities are in a position to effectively combat serious and organised crime...'[69] Additionally, the EM noted that the TIA Act already allows for the communication of lawfully intercepted information or interception warrant information relevant to certain orders. The amendments in the bill, it explained, 'merely extend the existing disclosure laws to ensure that they also cover information relevant to unexplained wealth provisions.'[70]

2.50      However, the Scrutiny Committee raised concerns that 'the type of information that can be intercepted can include highly personal information.'[71] The Scrutiny Committee also suggested, that '[a]llowing the disclosure of such information to investigate a person's wealth, without the need to provide any link to a particular offence, raises scrutiny concerns as to whether these measures risk unduly trespassing on a person's right to privacy.'[72]

2.51      In addition to sharing the concerns of the Scrutiny Committee, the Law Council also noted that the information provided pursuant to a notice under proposed section 12 'may include a substantial amount of personal and financial information.'[73] As such, the Law Council recommended that the views of the Privacy Commissioner be obtained to ensure that the measures in the bill were necessary and proportionate.[74]

2.52      In response to the Law Council's concerns, the department explained that the TIA Act already contains a range of protections to safeguard a person's privacy and noted that lawfully intercepted information can only be used in limited circumstances.[75] Similarly, the bill only permits the disclosure of information to specific authorities and for a specified purpose as set out in the table at subclause 18(2) of new Schedule 1.[76] Finally, the department noted that the use of these powers will be reported to the minister annually and is subject to scrutiny by the Parliamentary Joint Committee on Law Enforcement.[77]

Committee view

2.53      In its submission, the department, noted that '[s]erious and organised crime groups are increasingly operating in a more coordinated and organised manner and are frequently controlling activities that span national and international borders.'[78] Given the challenges posed by the increasingly sophisticated, coordinated and cross‑jurisdictional operations of serious and organised crime groups, the committee considers it necessary and timely that the Commonwealth seek to establish a national scheme to target unexplained wealth.

2.54      It is important to note that the bill is a result of consultations between Commonwealth, State and Territory governments. Also, due to constitutional limitations, one or more States must refer their power to the Commonwealth. This will be achieved through a text referral of Schedules 1, 2 and 4 from the New South Wales Parliament, and therefore these Schedules cannot be amended. The committee, however, notes that there is scope for amendments to be made after the bill has been enacted in its present form, but that this can only occur if the parties to the Intergovernmental Agreement on the National Cooperative Scheme on Unexplained Wealth, unanimously agree to the amendments. Consequently, any amendments by the Commonwealth Parliament to these schedules would place the national scheme on unexplained wealth in jeopardy.

2.55      The committee acknowledges that the concerns raised during this inquiry are in relation to retrospectivity, privilege against self-incrimination, legal professional privilege, the exemption from disallowance, immunity from liability, significant matters being in delegated legislation and privacy. The committee notes that most of the provisions that relate to these concerns are contained within Schedules 1, 2 and 4 of the bill, which must be enacted in its present form.

2.56      The committee has given careful consideration to the issues raised by submitters, but has ultimately arrived at the view that the provisions in the bill are justified. Each of these concerns is discussed below.

Retrospectivity

2.57      In relation to the concerns relating to retrospectivity, the committee notes that the bill does not criminalise conduct that was otherwise lawful prior to the amendments. The committee is also persuaded by the evidence provided by the department, that it would be almost impossible for law enforcement to prove the precise point in time when property or wealth was acquired. The committee also notes that the POC Act contains a similar provision and therefore the bill merely extends current provisions of the POC Act to participating States and self-governing Territories. The committee is therefore of the view that the retrospective application of the bill is justified.

Privilege against self-incrimination and legal professional privilege

2.58      The committee acknowledges the concerns relating to the abrogation of legal professional privilege and privilege against self-incrimination. The committee agrees that these privileges are fundamental to the administration of justice. However, the committee is also of the view that in limited circumstances, and with sound justification, these privileges can be appropriately overridden.

2.59      The committee notes the advice provided by the department, to the affect that production orders have a narrow scope and therefore the risk of the privileges being overridden is minimised. Also, the committee accepts the view put by the department that to allow criminals to rely on these privileges would frustrate the operation of production orders and would, in some instances, prevent law enforcement from gathering information required to support the unexplained wealth action. The committee also notes that the abrogation of the privilege against self-incrimination and legal professional privilege already exists for current production orders under the POC Act and therefore the bill merely extends these arrangements to participating States and self-governing Territories. Accordingly, the committee considers that, under these circumstances, it is appropriate that these privileges are overridden.

Exemption from disallowance

2.60      Regarding the minister's declaration under proposed subsection 14F(4) being exempt from disallowance, the committee notes the advice from the department—that subsection 44(1) of the Legislation Act 2003 specifically allow for the rules of disallowance at section 42 to not apply under certain circumstances. The committee is of the view that these circumstances are met as the declaration under proposed subsection 14F(4) is intended to facilitate the operation of an intergovernmental scheme, namely, the National Cooperative Scheme on Unexplained Wealth.

Significant matters in delegated legislation

2.61      In relation to allowing the regulation to specify, in the case of self-governing Territories, the kind of person who may issue notices to financial institutions, the committee is mindful that the scheme needs to maintain a degree of flexibility, particularly in light of the Australian Capital Territory currently not having an unexplained wealth scheme. The committee further notes that the regulation will be subject to the rules of disallowance and that the operation of new Schedule 1 (which includes notices to financial institutions), will be subject to oversight by the Parliamentary Joint Committee on Law Enforcement.

Immunity from liability

2.62      Regarding the concerns relating to financial institutions and its officers, employees and agents being immune from liability, the committee notes that the immunity would only operate narrowly. Furthermore, the immunity was introduced into the POC Act at the recommendation of the Australian Law Reform Commission and the bill merely extends this immunity to apply to action taken in respect of notices to financial institutions issued by participating States and self-governing Territories. Consequently, the committee is of the view that the amendment as proposed by the bill is justified and appropriate.

Privacy concerns

2.63      In relation to the privacy concerns, the committee considers that the bill appropriately limits the circumstances when disclosure of information to specific authorities for a specified purpose, is permitted. Furthermore, the committee is reassured that the use of powers under the TIA Act will be reported to the minister annually and is subject to scrutiny by the Parliamentary Joint Committee on Law Enforcement.

2.64      The committee supports the establishment of a national scheme to target unexplained wealth and considers that the bill achieves the right balance between protecting the rights of individuals and providing law enforcement with sufficient tools to deprive serious and organised crime groups of their wealth.

Recommendation 1

2.65      The committee recommends that the bill be passed.

Senator the Hon. Ian Macdonald
Chair

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