Chapter 3
The Provisions of Concern to the Committee
3.1
This chapter sets out the committee's concerns with the application,
operation and consequences of the provisions identified in Appendix 3.
Recognition of the main policy of the bill
3.2
Before considering its concerns with these provisions, the committee
acknowledges the policy intent of the bill which is to protect the
confidentiality of taxpayer information and has the following objectives:
(a) to protect the confidentiality of taxpayers’ affairs by imposing strict
obligations on taxation officers (and others who acquire protected taxpayer information),
and so encourage taxpayers to provide correct information to the Commissioner;
and
(b) to facilitate efficient and effective government administration and law
enforcement by allowing disclosures of protected tax information for specific,
appropriate purposes.[1]
3.3 The committee recognises and respects this policy of
protecting the confidentiality of taxpayers' affairs and the need for the
Australian Taxation Office to have robust protections in place to achieve that
policy.
3.4 However, there is a second policy included in the
bill, namely, to override the operation of parliamentary privilege by making
parliamentary committee operations justiciable, by setting conditions of access
between parliamentary committees and their witnesses, by dictating the manner
in which parliamentary committees must hear evidence and by making any
departure from those conditions a criminal offence. This second policy is a
major departure from the long-standing supremacy of parliamentary privilege and
a significant trespass on the powers, privileges and immunities of the Houses
and their committees and on the rights of witnesses of the Parliament.
The provisions of concern
3.5 The Tax Laws Amendment (Confidentiality of Taxpayer
Information) Bill 2009 contains 5 schedules. Schedule 1 amends the Tax
Administration Act 1953 and contains the main amendment providing for the
confidentiality of taxpayer information. The other schedules contain
consequential amendments, other amendments, repeals and regulations about
transitional matters which are not relevant to the committee’s inquiry.
3.6 Subdivision 355-B contains provisions governing the
disclosure of protected information (as defined) by taxation officers.
Subdivision 355-C contains provisions governing the on-disclosure of protected
information by other people. Proposed section 350-25 creates an offence for a
serving or former taxation officer to disclose protected information. Proposed
section 355-155 creates a similar offence for a person or entity who is not a
taxation officer. Various exceptions are then created, including in proposed
section 355-55, disclosure by taxation officers to Ministers and committees of
Parliament. The exception for disclosure to parliamentary committees in
proposed subsection 355-55(2) is as follows:
(2) Section 355-25 does not apply if:
(a) the
record is made for, or the disclosure is to, a committee of one or both Houses
of the Parliament; and
(b) the
making of the record or the disclosure is in response to a request of the
committee for the record or the information; and
(c) the
record or disclosure is for the purpose of the committee performing any of its
functions or exercising any of its powers; and
(d) in the
case of a written disclosure—the disclosure is treated as evidence taken in
camera; and
(e) in the
case of an oral disclosure—the disclosure is made in camera.
Note: A defendant bears an evidential burden in
relation to the matters in this subsection: see subsection 13.3(3) of the Criminal
Code.
3.7
There is no parallel exception for persons or entities other than
taxation officers to provide protected information to a parliamentary
committee, a point queried by the Scrutiny of Bills Committee and also the
subject of a submission to this committee from the Acting Commonwealth Ombudsman.[2] The
Assistant Treasurer's response to the Scrutiny of Bills Committee (contained in
its First Report of 2010) affirms the Government's intention that such
information should be provided to committees only by taxation officers. It is
therefore an offence for any other person to provide such information to a
committee.[3]
3.8
The offence provision for taxation officers is as follows:
355-25 Offence—disclosure of protected information
by taxation officers
(1) An entity commits an offence if:
(a) the
entity is or was a taxation officer; and
(b) the
entity:
(i) makes
a record of information; or
(ii) discloses
information to another entity (other than the entity to whom the information
relates or an entity covered by subsection (2)) or to a court or tribunal;
and
(c) the
information is protected information; and
(d) the
information was acquired by the first‑mentioned entity as a taxation
officer.
Penalty: Imprisonment for 2 years.
3.9
A further provision of concern to the committee sets limits on
disclosure to the Parliament as follows:
355-60 Limits on
disclosure to Ministers and Parliament
(1) Sections 355-45
and 355-55 are the only exceptions to the prohibition in section 355-25 on
which an entity who has acquired protected information as a taxation officer
can rely in making a record of the information for, or disclosing the
information to, a Minister, a House of the Parliament or a committee of one or
both Houses of the Parliament.
Note: Disclosures that are not prohibited by
section 355-25 are not affected by this subsection. For example, a
taxation officer may disclose information to a Minister if the Minister is the
entity to whom the information relates, or is an entity covered by subsection
355-25(2) in relation to the information.
(2) Subsection (1)
has effect despite any power, privilege or immunity of either House of the
Parliament, of the members of either House of the Parliament or the committees
of either or both Houses of the Parliament, except to the extent that those
powers, privileges or immunities can be invoked to compel the disclosure of protected
information.
(3) However,
nothing in this Subdivision affects the law relating to the powers, privileges
or immunities of either House of the Parliament, of the members of either House
of the Parliament or of the committees of either or both Houses of the
Parliament in relation to the recording or disclosure of particular protected
information if the information has been disclosed in accordance with
section 355-45 or 355-55.
Note: A reference in subsection (3) to
members of either House of the Parliament includes a reference to Ministers.
3.10
In the committee's view, the provisions are complex, poorly
drafted and very difficult to understand, a point made very strongly to the
committee by Dr Twomey in both her submission and oral evidence:
The first and most obvious point is that the meaning of cl
355-60 is most unclear...........As a constitutional lawyer who is familiar
with parliamentary privilege, I find this provision extremely confusing. What
hope does a taxation officer have in interpreting these provisions?[4]
3.11
In their evidence to the committee, Treasury officers conceded
that the intention of the provisions was not clearly expressed:
I think it is meant to mean that those restrictions that are
dealt with in the previous sections do not apply if the committee invokes its
power to compel, and I think that is perhaps where the drafting-if I can be
critical of the drafting with hindsight-might be wrong.[5]
3.12
It is a fundamental principle, essential to the rule of law, that
legislation should be clearly drafted and able to be understood by those who
are subject to it. In the committee's view, the provisions in Subdivisions
355-B and 355-C do not pass that basic test. Further issues associated with
unclear drafting are discussed below under "Workability of the
provisions".[6]
The creation of offences for providing information to parliamentary
committees
3.13
The intention of the bill is to consolidate and standardise the
various secrecy provisions that exist across the taxation legislation. It
appears to the committee that the policy decision to include the provision of
information to parliamentary committees in the legislative scheme has been
poorly thought through. Uniform provisions have been applied to circumstances
where they are entirely inappropriate. The most unacceptable feature of the
provisions is the creation of offences applying to persons who provide
information of a certain type to committees. The idea that a person might be
punished for providing evidence to a committee runs counter to the whole thrust
of the law of parliamentary privilege for the past three and a half centuries,
law which has existed to protect the operations of parliament and its
committees from outside interference, including by protecting the right of
witnesses to give evidence and punishing those who would interfere with that
right. As suggested in her evidence by the Clerk of the Senate, the bill is
asking the Parliament to legitimise behaviour which it would otherwise treat as
a contempt.[7]
3.14
Senate Privilege Resolution 6 includes the following contempts:
Interference with witnesses
(10) A person shall not, by fraud, intimidation, force or
threat of any kind, by the offer or promise of any inducement or benefit of any
kind, or by other improper means, influence another person in respect of any
evidence given or to be given before the Senate or a committee, or induce
another person to refrain from giving such evidence.
Molestation of witnesses
(11) A person shall not inflict any penalty or injury upon,
or deprive of any benefit, another person on account of any evidence given or
to be given before the Senate or a committee.[8]
3.15
Indeed, the Parliament regards interference with, or the
imposition of a penalty on, witnesses to be such a serious matter that it
included a criminal offence in the Parliamentary Privileges Act 1987 as
an alternative to the contempt jurisdiction in appropriately serious cases.[9] As the
former chair of the committee pointed out during the public hearing on the
bill, the offences in the Tax Laws Amendment (Confidentiality of Taxpayer
Information) Bill 2009 are in direct contradiction of the offence in section 12
of the Parliamentary Privileges Act.[10]
Although Treasury officers put forward the view that any uncertainty about the
relationship between the Parliamentary Privileges Act and the new offence provisions
would be resolved by the fact that the new offences were a later enactment and
would therefore take precedence over the Parliamentary Privileges Act, this
view was disputed by the Clerk of the Senate on the basis that any abrogation
of parliamentary privilege required an express declaration to that effect.[11] It was also
rejected during the public hearing by the former chair of the committee in the
following terms:
CHAIR—Sure. But what does trouble me is that it seems
to me that this runs right up against section 12 of the Parliamentary
Privileges Act of 1987, in particular subsection (2), which says:
(2)
A person shall not inflict any penalty or injury upon, or deprive of any
benefit, another person on account of:
(a)
the giving or proposed giving of any evidence; or
(b)
any evidence given or to be given; before a House or a committee.
And then there is a penalty. Now you have got one statute
saying a person cannot be punished for giving evidence to the parliament or one
of its committees and then this statute says a person shall be punished if they
do give a defined category of evidence if requested or compelled by the
parliament or one of its committees. With all due respect to the written
Treasury submission, it is absolutely not an adequate response to say that this
Act impliedly repeals or impliedly amends the Parliamentary Privileges Act to
that extent. The Parliamentary Privileges Act, which itself gives effect to and
continues the provisions captured by section 49 of the Constitution, although
technically merely another Act of the Commonwealth parliament, is a fundamental
constitutional statute. Now you do not impliedly amend a fundamental
constitutional statute like that. It is unheard of. I think that a court would
struggle to say that a statute like the Tax Laws Amendment (Confidentiality of
Taxpayer Information) Bill 2009 effects an implied amendment to a fundamental
constitutional statute. The court would at least expect that there was an
express amendment to section 12 of the Parliamentary Privileges Act, and it may
be that that is necessary.[12]
3.16
The committee notes that none of the other existing statutory
provisions limiting the powers, privileges or immunities of Parliament involve
offences. It is the committee's firm view that the use of an offence provision
to limit the relationship between parliamentary committees and their witnesses
is unacceptable in principle and offensive to the separation of powers.
3.17
The committee also received evidence that the offence provisions
created possibly unintended consequences for the relationship between persons
other than tax officers, and parliamentary committees.
3.18
In a submission to the inquiry, the Acting Commonwealth Ombudsman
advised that the bill will cause difficulties to the Ombudsman's work by interfering
in the relationship between the Ombudsman and parliamentary committees.
The Commonwealth Ombudsman often appears before Parliamentary
committees to provide comments and information on a range of matters within his
jurisdiction, including taxation matters. The operation of the bill as it
appears to affect the Ombudsman is in possibly restricting taxation information
that can be provided to the Ombudsman by the Australian Taxation Office and
possibly impacting on the information that the Ombudsman can provide to
Parliamentary committees.
The bill provides, at s 355-155, that an entity commits an
offence if it discloses information it acquired under the exceptions in
Subdivisions 355-B and C. As noted above, the exceptions in section 355-50 and
355-60 do not seem to cover the usual provision of information to the
Ombudsman; similarly none of the exceptions in Subdivision C apply to
information given to the Ombudsman. This leads to the awkward situation that
the Bill presently does not clearly provide for the disclosure of taxation
information to the Ombudsman other than under its formal coercive powers of s 9
(which is rarely used) but if it did, then the restrictions on on-disclosure of
information would then apply to the Ombudsman. This would include restricting
the provision of information, by the Ombudsman, to a Parliamentary Committee.[13]
The committee
sees this as an example of the inevitable problems caused by unnecessary
legislation.
3.19
The ALRC was also critical of the over-reliance on criminal sanctions
in statutory secrecy provisions:
criminal sanctions should only be imposed where they are
warranted - when the disclosure of government information is likely to cause
harm to essential public interests - and where this is not the case, the unauthorised
disclosure of information is more appropriately dealt with by the imposition of
administrative penalties.[14]
Justification for the provisions
3.20
Apart from the inappropriate use of an offence provision, the
committee was concerned by another threshold issue, namely, the lack of any
demonstrated need for the provisions.
3.21
The question that should always be asked with any proposed
statutory provision, is "what is the need for the provision and what is
the evil which it seeks to remedy?" One of the oldest rules of statutory
interpretation, the mischief rule, has at its core the question, "what is
the mischief or defect which is not provided for in the law as it stands at
present?"
3.22
In addressing this point, the Clerk of the Senate noted in her
submission to the committee:
There are no known instances where Senate committees have
requested (or ordered the production of) tax file numbers or other information
pertaining to individual taxpayers. There is one occasion where a document
which may have included a tax file number was tabled in the Senate. It was
subsequently established that the number was part of a longer reference
sequence on correspondence and was not identified as a tax file number (Senate
Debates, 19 June 1996, p. 1805).[15]
3.23
Parliamentary committees rarely investigate individual cases and
while they are often approached by individuals with an individual case, such
cases are not usually investigated. Rather they serve as an illustration of
systemic or wider policy issues.
3.24
As to whether Senate committees would ever inquire into the
taxation affairs of individual taxpayers, the committee considers this would be
highly unusual. As noted by the Clerk of the Senate, it has not happened in
the past:
there is no justification that has been put forward for these
provisions. In my view they are unnecessary. They are addressing a problem that
does not exist. Committees have not needed individual taxpayer information to
conduct the kinds of inquiries they undertake, which tend to be into systemic
issues. Historically, committees have not asked for this kind of information.[16]
This was also acknowledged by Treasury officials in evidence
before the committee:[17]
Senator FARRELL—To get back to the point that Dr Laing
is making, she is saying that no case has been made out for this. The example
you are giving, I think, is where a tax officer is reluctant to provide the
information at all. There is no suggestion here that the tax officer is going
to be prohibited from providing the information. The only restriction is that
it be in camera. Presumably, then, you have had circumstances where the
information has been required in circumstances where it has not been in camera?
Mr McCullough—No, not that I can recall where it has
been required by the committee not in camera.
...
Senator FARRELL—Can you give us an example where a tax
officer has been required by a committee to give evidence about an individual’s
tax circumstances and that has not been in camera?
Mr McCullough—No, I cannot, but I have given you what
I thought were—
Senator FARRELL—Okay, can you stop at that point. Is
that the point you are making, Dr Laing?
Dr Laing—Yes, Senator, and I think you could also say
that the evidence of the Treasury officer shows that the existing system works.[18]
3.25
Moreover, questioning of the need for these statutory secrecy
provisions also arose during the Economics Legislation Committee consideration
of the bill. During that committee’s public hearings on the bill on 25 February
2010, the following evidence was given by Treasury officers:
CHAIR—Do you have any instances where identifiable
information has been provided? Can you provide an example of that?
Mr Rutherford—I cannot, actually. I have been involved
in the project for the last two or three years, and I did ask the ATO officers
working alongside us whether they could think of any particular instances. I
imagine it has happened before, because the ATO does have formal guidance for
its officers. But certainly it is not a common occurrence and, as a result, neither
the ATO nor I in my own experience could identify any particular case. I guess
the point to reiterate is that it is a very rare circumstance where it would be
required. But the bill acknowledges that, in some limited circumstances, it
might.[19]
3.26
The Rule of Law Association of Australia (RoLAA), an association
which has as one of its objectives a reduction in the complexity, arbitrariness
and uncertainty of Australian laws, also submitted to the committee that the
need for the provision had not been made out:
as far as RoLAA is aware no parliamentary committee has ever
sought any information on the affairs of individual taxpayers, and properly
left such matters to the Australian Tax Office. It should be left to the good
sense of parliamentarians to determine what matters should be reviewed by them
and how, without limiting the fundamental right of parliamentary privilege
which is there to benefit all those whom they represent.[20]
3.27
In a submission received by the committee from the Acting
Commonwealth Ombudsman, the lack of a need to provide individual taxpayer
information to parliamentary committees was also noted:
It would be extremely unusual for the Ombudsman to provide
information to a Parliamentary Committee that would identify or be reasonably
capable of identifying an entity (an essential component of the definition of
protected information).[21]
3.28
It is of concern to this committee that such a significant policy
change as it affects the Parliament is being proposed in the knowledge that
there has been neither demonstrated nor persuasive need for it.
3.29
In response to questioning by the committee, Treasury officials said
that the purpose of the provision was to give certainty to officers appearing
before parliamentary committees:
to be able to look on the face of the Act that they deal with
and say, “Right, I cannot disclose this to a committee unless it is in camera”.[22]
3.30
While the committee appreciates the concern of Treasury officials
to ensure that taxation officers know where they stand and the conditions under
which they may disclose information to a parliamentary committee, it is clear
to the committee that this matter should not be the subject of legislation.
Rather, it should be a matter of training for taxation officers:
Senator McLUCAS—Mr McCullough, I come back to Senator
Farrell’s point. I still do not understand the motivation or the need for these
elements of the bill. I understand your point that officers appearing in front
of committees who have protected information that they carry are nervous about
talking about that or being compelled to talk about that, but isn’t that an
internal training issue? You just tell people: ‘You are allowed to say these
things to a Senate committee. If they ask you, “What’s Jan McLucas’s tax file
number?” you can say, “I’m sorry; that’s protected information”. I think that
is an issue for your training of your officers to appear in front of a
committee rather than a very, very big stick to break this nut.[23]
3.31
This is a point that has been made on numerous occasions by the committee
when it has drawn attention to the need for senior officials to be more
knowledgeable of their obligations when dealing with parliamentary committees.[24]
3.32
Although no evidence was given to the committee that
parliamentary committees had ever asked for tax officers to provide the kinds
of sensitive taxpayer information that the bill is designed to protect, the
committee appreciates that there may be such a requirement in the future.
3.33
In fully considering this matter, the committee has given thought
to how, in that rare but possible circumstance that a disclosure over which the
Treasury officials have expressed concern might occur, existing protections might
operate? On this point it took evidence from the Clerk of the Senate that
there already exist well established procedures within the Senate for dealing
with such a need, should it ever, on the rare occasion acknowledged by Treasury
officials, arise, as follows:
If they did, however, there are well established procedures
formalised in various Senate resolutions to deal with these requests. For
example, a claim of public interest immunity would be the obvious solution in
such cases should they ever arise, and there are clear procedures to deal with
these. Moreover, potential harm to the privacy of an individual is a well
established ground of public interest immunity.[25]
3.34
The committee draws attention to
these well established practices which the Parliament already has in place for
the protection of privacy, including in the very specfic area of taxpayer confidentiality.
3.35
The Standing and other Orders of
the Senate make comprehensive provision for these matters. Standing Order
25(14) authorises any legislative and general purpose standing committee to
meet and transact its business in private session. Standing Order 37 sets out
procedures for dealing with in camera evidence obtained by Senate committees.
Privilege resolution 1 sets out "procedures to be observed by Senate
committees for the protection of witnesses", including ensuring all witnesses
are afforded the opportunity to give their evidence in a private session of the
committee. Finally, the committee draws attention to a resolution setting out
the procedures to be followed by Senate committees and witnesses in relation to
claims of public interest immunity. An application under this resolution,
could, for example, include an application by a witness that they not be
required to divulge confidential taxpayer information unless it is received on
an in camera basis, or an application that it not be divulged at all.
3.36
The committee concludes that the Parliament already has strong
safeguards and mechanisms for the protection of taxpayer confidentiality. The
committee further concludes that the need for the provisions has not been made
out.
Workability of the provisions
3.37
The committee has already noted the direct clash between the
proposed offences and the offence in section 12 of the Parliamentary Privileges
Act. The provisions also set up a more fundamental clash with parliamentary
privilege.
The
effect of section 16 of the Parliamentary Privileges Act
3.38 Paragraph
355-55(2) (c) of the bill before the committee provides:
the record or disclosure is for the purpose of the committee
performing any of its functions or exercising any of its powers.
3.39
What is of concern to the committee is that while the requirement for
“the record or disclosure is for the purpose of the committee performing any of
its functions or exercising any of its powers" sounds reasonable, once that
requirement is in the statute it becomes justiciable. It is justiciability which
causes the collision with parliamentary privilege. If a matter were ever to
come before a court under this provision, the court would be required to
adjudicate on whether the record or disclosure was for the purpose of the
committee. It would involve a court inquiring into the relevance of the
committee's activities to its terms of reference. This is a matter which has
always been considered to be the exclusive responsibility of each House in
relation to its own committees and beyond the competence of courts to
adjudicate on.
3.40
Furthermore, there would be a need to lead evidence. Questions would be
asked about whether the record or disclosure was for the purpose of the
committee performing any of its functions or exercising any of its powers;
about what was the purpose of the committee; and about what any of the
committee's functions or powers were. Evidence of these matters could only come
from parliamentary proceedings. The likely source of such evidence would either
be debate in the House establishing the terms of reference of the committee's
inquiry, or deliberations of the committee in interpreting or applying the
terms of reference. This would be needed to establish what the "purpose of
the committee in performing any of its functions or exercising any of its
powers" was. Inevitably, the court would be involved in all manner of
questioning about the committee proceedings themselves.
3.41
As noted by the Clerk of the Senate in her submission:
For example, proving that an officer provided the information
to a committee in response to a request from the committee would involve
questioning of that request: was it a request specifically for that
information; if not specifically, what was it about the request that led the
officer to interpret it as such? What was the committee's purpose in making the
request? In relation to the requirement for the disclosure to be for the
purpose of the committee performing any of its functions or exercising any of
its powers, there would need to be an assessment of the relevance of the
request to the committee's terms of reference, involving the interpretation by
a court of those terms of reference.
This is precisely what subsection 16(3) of the Parliamentary
Privileges Act proscribes as unlawful. The freedom of proceedings in parliament
from questioning in any place outside of parliament has been fundamental to the
integrity of parliamentary operations for centuries and certainly since it
first received statutory expression in Article 9 of the Bill of Rights in 1689.
Subsection 16(3) of the Parliamentary Privileges Act provides:
(3) In
proceedings in any court or tribunal, it is not lawful for evidence to be
tendered or received, questions asked or statements, submissions or comments
made, concerning proceedings in Parliament, by way of, or for the purpose of:
(a) questioning
or relying on the truth, motive, intention or good faith of anything forming
part of those proceedings in Parliament;
(b) otherwise questioning or establishing the credibility, motive,
intention or good faith of any person; or
(c) drawing, or inviting the drawing of, inferences or conclusions
wholly or partly from anything forming part of those proceedings
in Parliament.
In the case of a prosecution under section 355-155, it would
be necessary to show that a person was not a tax officer and that they gave
particular evidence to a committee. While the production to a court of a
transcript of the committee evidence that showed such a disclosure would not
necessarily amount to an impeachment or questioning of proceedings in
parliament contrary to subsection 16(3), it is almost certainly the case that
no defence would be possible without reliance on the parliamentary proceedings.[26]
3.42
Dr Twomey agreed that the provision will cause real practical questions
of parliamentary privilege to arise once a matter is litigated under the
provision:
The defendant bears the evidential burden in relation to the
application of the exception to cl 355-25. This means that a taxation officer
would have to establish that he or she received a ‘request’ from a
parliamentary committee for the protected information, that it was ‘for the
purpose of the committee performing any of its functions or exercising any of
its powers’ ......Whether or not the request for the information was ‘for the
purpose of’ the committee performing its functions or exercising its powers
would not only be difficult to establish, but could potentially raise issues of
parliamentary privilege if it were alleged that the request had been made for
private or gratuitous purposes that did not fall within the committee's
functions or powers. Section 16 (3) of the Parliamentary Privileges Act provides that in proceedings in any court it is not lawful for evidence to be
tendered or questions asked concerning proceedings in Parliament for the
purpose of questioning the intention or good faith of anything forming part of
those proceedings in Parliament. Is it intended to override section 16(3)
(which derives from the Bill of Rights 1688) or is it intended that the
defendant be left unable to lead the evidence necessary to satisfy the
evidential burden laid upon him or her?[27]
3.43
The extent of these practical problems was evident in questioning by
committee members:
Senator O’BRIEN—It has been the occasion that a
witness has asked to give evidence in camera and has given that evidence in
camera but that the committee has resolved the evidence should then be
published. Would that witness be protected?
...
O’BRIEN—If that were challenged, the officer would
have to establish that the disclosure was for the purpose of the committee
performing any of its functions or exercising any of its powers, which would be
another test that the witness would have to satisfy. What I am saying is that
the court would say that may be true, but was the committee doing something
else. Sorry, does 355-55(2)(c) also apply?
Mr McCullough—I am struggling to imagine a
circumstance where a committee—
Senator O’BRIEN—What I am getting too is this. If the
committee had a term of reference, would that enable the court to examine
whether the question put or the information which came before the committee
fell within the terms of reference? That would be a bit of a slippery slope for
a witness, I would think, if there were some question mark as to whether the
evidence fell within the terms of reference of the committee....
Senator O’BRIEN—It may not be empowered to inquire
into a matter. The court might find that the matter it was inquiring into with
that particular question was not strictly speaking germane to the terms of
reference before the committee and therefore it might not be a matter which
complies with 355-55(2)(c) and therefore, whatever else happens, the witness
may not have that defence. Is that a reasonable proposition?
Mr McCullough—I am sorry, we are out of my depth here.
I would have to take legal advice on the question of whether, if a committee
was operating outside its power, the witness was protected if the witness gave
it in camera.
Senator O’BRIEN—It does seem to me that it is
self-evident that that matter would have to be entertained by the court if it
were looking at these provisions as a defence.[28]
3.44
The significance of this problem is immediately apparent. Apart
from the committee's firm in-principle view that such a breach of the
separation of powers, of having the courts investigating the internal
operations of parliamentary committees, is unacceptable, two immediate
consequences need to be dealt with. Either
proceedings in Parliament would necessarily be called into question, in
contravention of section 16 of the Parliamentary Privileges Act 1987, or
the Privileges Act would have to be read down so as to permit such questioning.
This problem was pointed out by the Clerk of the Senate in her submission to
the committee:
My main concern is that the exception in subsection 355-55(2)
to the prohibition in section 355-25, and the prohibition in section 355-155,
would appear to be unworkable unless the law relating to the
powers, privileges and immunities of the Houses - and specifically section 16
of the Parliamentary Privileges Act 1987 - is read down to permit
proceedings in parliament to be questioned in a court to the extent necessary
for a defendant to bear the evidential burden in respect of the matters listed
in subsection 355-25(2) or for the prosecution of an offence under section 355-155.[29]
3.45
As has already been set out in Chapter 2 above, such a reading down of
the powers, privileges and immunities of the Parliament provided for in section
49 of the Constitution may only occur by an express statutory declaration. The
provisions in question do not provide such an express statutory declaration. As
the Clerk points out:
Unlike the case with the Auditor-General Act 1997,
there is nothing in either the bill or the Explanatory Memorandum to identify
the provisions as a declaration for the purposes of section 49 of the
Constitution. The provisions do not meet the test suggested by the ALRC in its
recent report on secrecy provisions because their intention is not clearly
stated. As noted above, the need for an express declaration rather than the
drawing of an inference by necessary implication is required by the very clear
terms of section 49 of the Constitution.[30]
3.46
In evidence before the committee, Dr Twomey emphasised the importance of
having a clear declaration that parliamentary privilege is being overridden:
I think it is important for the parliament to make very clear
what it is proposing to do in relation to privilege. If the parliament intends
that its committees and its houses shall still have the power to compel the
disclosure of these documents and that any disclosure made pursuant to such
compulsion not be an offence then that needs to be clearly stated, and not as
an exception to an exception as it arises under section 355-60(2).[31]
Are the provisions effective in protecting
sensitive taxpayer information?
3.47
The bill declares that the power of Houses of Parliament and their committees
to compel the production of information is not affected by the provisions in
question. This led Dr Laing to query how effective the provisions were in
protecting sensitive taxpayer information:
the offences in the bill are useless anyway as a means of
protecting sensitive information. There is nothing in the bill, and this has
been confirmed in the explanatory material and previous evidence of Treasury
officers, that prevents committees and the Houses exercising their powers of
compulsion. So this information could be acquired if the committee agreed to
summon the witness and require the answering of questions. There is no
limitation on use of compulsive powers. There is no restriction on committees
publishing material they get, so even if they followed the procedures in the
bill, took the evidence in camera, there is nothing to prevent them publishing
that information once they have taken it. So this suggests to me that it is not
the sensitive information per se that is important, because this bill does not
prevent sensitive information being disclosed to parliamentary committees. It
seems to me the focus is not in the right place because what the bill does is
place limits on tax officers and others in their dealings with parliamentary
committees.[32]
3.48
Other witnesses were of the view that the declaration preserving the
ability of the Houses to compel the production of information was not entirely
clear. In a submission to the committee, Dr Twomey expressed considerable
concern at the confusion which the provisions would cause:
The problem is that all these provisions are so unclear, it
is impossible to know what to make of them. Personally, they just make my head
spin. Heaven only knows how a court would interpret them. This is the nub of
the problem. How can Parliament be asked to limit the privileges and powers of
its Houses when it cannot really know how the legislation would operate in
practice will be interpreted by a court? Clearly greater clarity is needed,
especially in relation to such an important matter.[33]
3.49
In giving evidence to the committee, Dr Twomey again emphasised the confusion
the provisions would cause for both taxation officers and the courts:
My
other real concern is that both from the point of view of the taxation officer
and the courts, I think the provisions are very, very unclear in the way that
they operate. I note that the Clerk mentioned then that it is not intended at
all to limit the powers of the Houses or committees to compel evidence. The
difficulty though is that the provisions themselves are not abundantly clear in
relation to that point. The way the provisions work is that you start off with
a basic offence, saying you cannot disclose information, and then you move to
section 355-55(2) which says that the offence does not apply if the taxation
officer is giving information to the parliamentary committee in response to a
request, for the purpose of the committee’s functions and powers and the
evidence disclosed in camera. But then you move to section 355-60 and it says
the only exceptions to the original offence provision in relation to giving
information to the parliament are those in section 355-55(2) above, which is
the one I just mentioned, or if the information has already been made public.
So that is all right. You can
understand that. But then you get to section 355-60(2), which says that
subsection (1) has effect despite parliamentary privilege except to the extent
that the powers, privileges or immunities can be invoked to compel the
disclosure of protected information. That is where things become very
difficult, because the problem is that you have had an express offence; an
express exception—something that says the exceptions are completely
exclusive—and then something that says they are exclusive unless you compel
evidence, but it does not say that the compulsion of evidence is itself an
exception to the original offence. So you have to imply that, and that is where
everything starts becoming confusing and, I would imagine, (a) difficult for a
taxation officer who has to work out whether they are obliged to give
information or not and (b) very difficult for a court that needs to interpret
what parliament intended.[34]
3.50
In its submission to the committee, the Rule of Law Association of
Australia, expressed concern that “the wording of the proposed amendments
offend the rule of law as there is a lack of clarity on what protections remain
for a taxation officer who was to provide information to Parliament”.[35] The
submission went on to support Dr Twomey's submission relating to the lack of
clarity of the provision, noting “The lack of clarity as identified by Dr
Twomey, has the potential to waste many hours of the courts' time”.[36]
3.51
In evidence before the committee, Treasury officers acknowledged on
several occasions that the provisions could have been expressed better.[37]
3.52
The committee concludes that the provisions are not clearly expressed,
that they will cause confusion for taxation officers and courts alike and that
they are therefore unworkable.
Do the provisions place an individual in
an unfair position?
3.53
It is also of concern to the committee that even before the provision is
enacted, its scope is not understood. Moreover, the policy which it purports to
implement (of providing certainty and clarity for the responsibilities of
taxation officers), is clearly not being met.
3.54
Dr Twomey was particularly concerned that the provisions placed an
onerous burden on tax officers and were fundamentally unfair;
one of the points that Dr Laing makes is one that concerns me
as well—that is, the position of the taxation officer upon whom an evidential
burden is placed in relation to establishing the conditions upon which evidence
is given to a parliamentary committee under section 355-55(2), under which the
defendant, being the taxation officer, would somehow need to establish an
evidential burden in relation to the fact that the information was requested
and that it falls within the purpose of the committee’s functions and powers.[38]
3.55
Dr Laing suggested that the focus on individual officers was misplaced:
Looked at through the parliamentary end of the telescope,
this bill is asking you to sanction behaviour that you would otherwise treat as
a contempt. It is proposing to punish witnesses on account of evidence they
give to parliamentary committees, and the very existence of an offence
provision of this nature may operate as a threat and a deterrent to potential
witnesses, and this is something the parliament has hitherto taken very
seriously indeed. In my view, the offence provisions are obnoxious in
principle. Why would any parliament allow these sorts of provisions without
compelling justification? But if parliament is going to limit itself in the way
in which it approaches this kind of information, wouldn’t it be better to do it
from another angle and to focus on the sensitive information itself and to say
something like, ‘A person cannot be required to disclose the information’. This
is what the provision in the Auditor-General Act does and also there are some
other provisions in the Migration Act which are framed in that way. The big
difference is that they are not offence provisions. To me it is quite bizarre
that a proposed limitation on the capacity of parliament to carry out its
function should take the form of an offence that can be committed by a witness.
In this context I would like to remind the committee that in
its 49th report, which was on the Parliamentary Privileges Amendment
(Enforcement of Lawful Orders) Bill, it specifically rejected the idea of
individual public servants carrying the can for what were, in effect, disputes
between the parliament and the executive over access to information. It also
rejected the idea of the courts having a role at the adjudication of disputes
with the executive.[39]
3.56
In its 49th report, the committee examined a private senator's bill
which proposed that parliamentary orders for documents should be able to be
enforced by the courts, with the courts having the opportunity to review any
claims of public interest immunity made in respect of the documents.[40]
Specifically, the bill was designed to ensure that when a minister in one
House, who is immune from the contempt powers of the other, instructs a public
servant to disobey an order of that other House, a mechanism is available to
bring that minister before a court with a capacity to make orders binding on
the Minister concerned, rather than on a public servant caught in a conflict
between the operation of two contradictory orders.[41] The
committee, and all witnesses to that inquiry, accepted that the position of a
public servant without such protection was untenable but it nonetheless
rejected the need for the bill, concluding that the existing arrangements were
appropriate.[42]
3.57
The reality is that Parliament and its committees are accustomed to
dealing with the Executive and finding solutions to potential impasses over
access to information, without subjecting individual public servants to
penalties. The bill would reverse this practice and inappropriately subject
individual tax officers and others to penalties in situations where political
solutions have traditionally been applied.
3.58
The committee acknowledges the bill's intention to provide greater
guidance to individual tax officers but reaffirms its earlier conclusion that
such guidance is best provided by better training rather than criminal
sanctions.
Interference with the operations of parliamentary committees
3.59
An issue related to the clash between parliamentary privilege and the
provisions in the bill is the extent to which any statute should purport to direct
the operations of individual parliamentary committees. In the case of tax
officers, they do not breach the proposed provisions if, in addition to the
other conditions in subsection 355-55(2), their disclosures to parliamentary
committees meet the following tests:
(d) in the case of a written disclosure - the disclosure is
treated as evidence taken in camera; and
(e) in the case of an oral disclosure - the disclosure is
made in camera
3.60
As well as raising the problem of justicability, the provisions as drafted
indicate a lack of understanding of the parliament's procedures for handling in
camera evidence. Effectively prescribing the manner in which parliamentary
committee must receive evidence is an interference in the operations of the
parliament and its committees which is wrong in principle:
CHAIR—My point is that it is not for the executive
government to instruct committees of parliament what their powers are to be; it
is for the parliament to establish its own committees, which is done by
resolution rather than by act of parliament.[43]
3.61
Existing Parliamentary procedures for dealing with sensitive information
have been noted in paragraphs 3.33-3.35. The committee is of the view that
these existing procedures are sufficient to safeguard any sensitive information
that might be required by a committee as part of its investigations.
3.62
It is also of concern to the committee that even before the provision is
enacted, its scope is not understood. Moreover, the policy which it purports to
implement (of providing certainty and clarity for the responsibilities of
taxation officers), is clearly not being met.
3.63
Parliamentary committees have experience in, and established processes
for, handling sensitive or private information:
CHAIR—......It may very well be that, in an unusual case
like that, it is perfectly appropriate and indeed at the core of the functions
of the committee to examine publicly the tax affairs of a person.
Mr McCullough—Yes, Senator, and if that is the case
then the committee can compel the production of protected information under 355-60(2).
CHAIR—Which rather supports Dr Laing’s position that
the parliament should not tie its hands in saying that this can only ever be
done in camera.
Mr McCullough—Except that that is not what the bill
does. It allows the committee to decide, ‘No, we want to have this publicly,
so we can compel it.’ It just, again, puts the witness, the person who is
providing the information, in a clear position. They know they have been
compelled, so they are no longer under the other restriction.
CHAIR—All right.
Senator McLUCAS—That would be done by the committee,
not by your bill.
Dr Laing—Exactly.
Senator McLUCAS—That is what would be happening.
Mr McCullough—If it were not for this bill, without a
compulsion a witness might be appearing and would have the difficulty in a
public hearing of not providing it. They would have to—
Senator McLUCAS—I do not necessarily think so, because
the practice would be that the committee would deliberate and decide to compel
the witness to appear. The witness could request that the material be provided
in camera. The committee can make a decision about that one way or the other.
Mr McCullough—To that extent, I would submit that the
bill supports that existing practice.
Senator McLUCAS—Which is the point from the Clerk.
That is the point I think the Clerk is making, that the committee will decide
its destiny. The fact that you have a piece of legislation is pretty well
irrelevant. Have I got that right?
Dr Laing—I think that is right, Senator McLucas. The
bill is not necessary to do what you say is its purpose.
3.64
The committee concludes that the provisions are not clearly expressed,
that they will cause confusion for taxation officers and courts alike and that
they are unworkable.
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