Reference

1.1     On 1 September 2021, the President made a statement to the Senate regarding a letter he had received from Senator Patrick raising as a matter of privilege the failure of the Commissioner of Taxation, Mr Chris Jordan AO,  to comply with an order of the Senate requiring the production of documents related to JobKeeper payments.¹ Senator Patrick’s letter provided the background to the matter, outlining the Commissioner’s refusal to comply with two Senate orders on the basis of a public interest immunity claim. In response to the President’s statement, Senator Patrick stated:

It's a very serious matter when a member of the executive fails to comply with a lawful order of the Senate.²

1.2     The President, applying the criteria set out in Privilege Resolution 4, determined that a motion to refer this matter to the Committee of Privileges should have precedence and Senator Patrick immediately gave notice of such a motion.³ On 19 October 2021, the Senate considered the motion and agreed to refer the following to the Committee of Privileges for inquiry and report:

1.3     Having regard to the matters raised by Senator Patrick in correspondence tabled by the President on 1 September 2021:

(a) whether the Commissioner of Taxation has, without reasonable excuse:
(i) disobeyed a lawful order of the Senate,
(ii) failed to produce documents in accordance with an order of the Senate, or
(iii) improperly interfered with the power of the Senate to obtain information necessary to support its accountability functions; and
(b) if so, whether any contempt was committed in that regard.⁴

Role of the committee

1.4     It is the role of the committee to establish the facts of matters referred to it and to make findings and recommendations. It is not for the committee to determine whether a contempt has been committed, nor to impose a penalty for such a contempt: those are matters for the Senate to determine.

1.5     In conducting an inquiry that relates to allegations of contempt the committee is required to follow the procedures set out in Privilege Resolution 2. Specifically, if the committee considers that there are allegations against any person which warrant investigation as a possible contempt, then it must inform the person of the allegations made against them and the particulars of any evidence received in relation to the person. The person must be given reasonable opportunity to respond to those allegations.

Conduct of the inquiry

1.6     The committee commenced its inquiry by considering the documents submitted to the President by Senator Patrick and the public interest immunity claims raised by the Commissioner of Taxation on 12 August 2021 and the Treasurer on 26 August 2021.

1.7     The committee gathered additional evidence to help establish the relevant facts, inviting further comments and submissions from Senator Patrick, the Minister representing the Treasurer (Minister Birmingham) and, as the person who might be the subject of allegations, the Commissioner of Taxation.

1.8     The committee received three submissions to the inquiry from Senator Patrick, the Commissioner and Minister Birmingham. These submissions are at appendix 1.

Background

1.9     On 4 August 2021, the Senate ordered the Commissioner of Taxation to table the list of all employers with an annual turnover of greater than $10 million that were paid a JobKeeper payment, the number of employees paid, the total amount paid and any amount returned. The Senate required this information be provided by Thursday, 12 August 2021.⁵

1.10   In his response, the Commissioner raised a public interest immunity claim (PII) relating to the public interest in maintaining the confidentiality of taxpayer information. He noted that:

…compliance with the OPD will involve disclosure of information relating to the taxation and financial affairs of approximately 10,000 taxpayers, across a range of entities, including public and private companies, individuals/sole traders, partnerships and trusts, and a diverse range of industries.⁶

1.11   His response concluded that:

It is due to the significant consequences for ongoing confidence in the Commissioner's ability to keep information confidential that the Commissioner claims PII. This is the case for any matters that require the disclosure of protected taxpayer information contrary to tax officers' obligations of confidentiality.⁷

1.12   On 23 August the Senate explicitly rejected that claim and ordered the Commissioner “to comply fully with the order”.⁸

1.13   On 26 August 2021, the Government responded to this order with a letter from the Treasurer raising a public interest immunity claim on essentially the same grounds. Namely, that the disclosure of individual taxpayer information:

• would harm the public interest by undermining public confidence in taxation laws and taxation administration; and
• may prejudice the commercial interests of businesses that received JobKeeper payments.⁹

1.14   The Treasurer noted:

In good faith and in full compliance with the laws at the time, Australian citizens and businesses have provided information to the Commissioner of Taxation for the purposes of accessing Government support during a national crisis. They did so with the Australian Government’s public and explicit assurances to them that it would maintain confidence in the data they provided, consistent with the tax secrecy laws that apply.¹⁰

1.15   The Commissioner of Taxation responded to the order on the same day by declining to take any further action until the Treasurer’s public interest immunity claim was determined by the Senate.¹¹

1.16   These events raise a threshold procedural question of whether a minister may seek to make a public interest immunity claim on behalf of independent statutory authorities or statutory office-holders. In discussing this issue, Odgers’ Australian Senate Practice notes that:

There has been a degree of acceptance that it is appropriate for such officers to make public interest immunity claims directly, where it would not be appropriate for a minister to do so because of the relationship (or lack thereof) between the authority and the minister.²

1.17   In his submission to the inquiry, Senator Patrick characterised the Treasurer’s public interest immunity claim as a direction not to comply with the Senate’s order:

A Senate OPD directed at an official cannot be countermanded by a Minister. Any direction to not comply with an order of the Senate is not a lawful order.¹³

1.18   The committee agrees that it would be problematic for a minister to direct an independent statutory officer not to provide information required by the Senate.  To do so would potentially misconstrue the relationship between the Treasurer and the Commissioner.  The committee does not accept the characterisation of the Treasurer’s claim as a direction to the Commissioner not to comply with the order, although it may have created that perception with some.

1.19   It is notable though that the Treasurer’s claim did not identify any new basis for resisting production of the information beyond the grounds already raised by the Commissioner and rejected by the Senate. It might also be argued that, while the Senate has not explicitly considered the Treasurer’s claim, the subsequent reference of this matter to this committee indicates that the Senate was unlikely to accept the claim.

Criteria for a finding of contempt

1.20   Under section 4 of the Parliamentary Privileges Act 1987, conduct does not constitute an offence against a House (that is, a contempt) unless it amounts, or is intended or likely to amount, to an improper interference with the free exercise by a House or committee of its authority or functions, or with the free performance by a member of the member’s duties as a member. As the committee noted in its 150th report, this provision restricts, the previously unrestricted, category of acts which may be treated as contempts.¹⁴

1.21   In determining matters relating to contempt, the committee has the guidance of the Senate Privilege Resolutions.¹⁵ In particular, the committee is required to apply the three criteria set out in Privilege Resolution 3:

1. Applied to the circumstances of this inquiry, the first of these criteria reserves the Senate’s contempt powers for matters involving substantial obstruction of the Senate performing its functions.
2. The second criterion – regard for the existence of any other remedy – recognises that the Senate is generally reluctant to deal with conduct as a contempt where another, more appropriate, avenue for redress is available.
3. The third criterion relates to the culpability of persons alleged to have committed a contempt by requiring the committee to consider whether they knowingly committed the act which may constitute a contempt and, if so,  whether they had any reasonable excuse for doing so.

1.22   Privilege Resolution 6 is a non-exhaustive list of prohibited acts which may be treated by the Senate as contempts. Essentially, it operates as a caution of the types of conduct which may cause the Senate to invoke its power to punish contempts. Senator Patrick argued that the Commissioner’s failure to provide documents to the Senate could constitute a contempt on two grounds, namely:

• A person shall not, without reasonable excuse, disobey a lawful order of the Senate… (Privilege Resolution 6(8)); and
• A person shall not, without reasonable excuse…refuse or fail to produce documents, or to allow the inspection of documents, in accordance with an order of the Senate… (Privilege Resolution 6(13)).¹⁶

1.23   In addition to considering the statutory threshold for conduct to constitute a contempt and the guidance provided by the Privilege Resolutions, the committee has regard to the precedents provided by its earlier reports on matters giving rise to allegations of contempt, and the action taken by the Senate in relation to those reports. For example, the committee ‘now regards culpable intention on the part of the person concerned as essential for the establishment of a contempt.’¹⁷

Consideration of matters

Substantial obstruction

1.24   As noted, the first criterion the committee must consider under Privilege Resolution 3 is whether the conduct of the Commissioner of Taxation could amount to a substantial obstruction of the Senate performing its functions.

1.25   Senator Patrick submitted that the Commissioner’s refusal to comply with the second order should be dealt with as a contempt consistent with the guidance in Privileges Resolutions 6(8) and 6(13):

The final order of the Senate is a lawful order directed at an independent statutory officer, and the Commissioner must comply… It is my strong view that the Tax Commissioner is in contempt of the Senate.¹⁸

1.26   In determining whether the Senate has been obstructed, the committee is not required to evaluate the public interest claims raised by the Commissioner and the Treasurer: that is ultimately a matter for the Senate. For the purposes of this inquiry, it is sufficient to note that the inquiry powers of the Houses are essential to support the Houses obtaining the information they require to effectively perform their legislative and accountability functions. It cannot be doubted that the Senate being unable to obtain necessary information could substantially obstruct the performance of its accountability functions.

1.27   The committee has considered the content of the public interest immunity claims further in addressing whether the Commissioner had a reasonable excuse for his conduct (see paragraph 1.40).

Other remedies

1.28   Under Privilege Resolution 3, the committee is required to consider whether there is another, more appropriate, remedy available (other than the Senate’s power to investigate and punish contempts).

1.29   In his submission to the inquiry, Senator Patrick maintained that a Senate order for the production of documents is similar to a court subpoena or order to produce.  He noted that:

In the event of non-compliance, the Senate may impose on a person a penalty of a fine or imprisonment for a period not exceeding 6 months.¹⁹

1.30   While the committee agrees that these remedies are undoubtedly available, it has not been the practice of the Senate to immediately have recourse to them. In discussing the issue of resistance by governments to orders made by the Senate, Odgers clarifies that the Senate has generally pursued political or procedural remedies rather than resorting to the power to punish contempts:

It is open to the Senate to treat a refusal to table documents as a contempt of the Senate. In cases of government refusal without due cause, however, the Senate has preferred political remedies. In extreme cases the Senate, to punish the government for not producing a document, could resort to more drastic measures than censure of the government, such as refusing to consider government legislation.²⁰

1.31   Senator Patrick considered that the Senate exercising its power to punish a contempt was the appropriate remedy in this case. In this context, he submitted that:

There is a general perception amongst the public service and the public that the Senate can be treated with contempt…

Respectfully, I suggest that disrespect for the Senate by the public and public officials is directly related to the Senate’s willingness to suffer contempt.²¹

1.32   However, in his statement to the Senate, the President noted that other procedural and legislative remedies available to the Senate included:

• taking action to consider the public interest immunity claim made by the Treasurer, or
• seeking the publication of the information by legislative means.²²

1.33   To date, no action has been taken by the Senate to consider the Treasurer’s public interest immunity claim or to determine the threshold question of whether such a claim is appropriate in circumstances where an order is directed at an independent statutory officer. The committee notes that the Senate order of continuing effect of 13 May 2009, relating to public interest immunity claims, provides some guidance on the appropriate principle to be applied in equivalent circumstances where information is sought by a Senate committee (rather than the Senate itself). Specifically, that order contemplates circumstances where a public interest immunity claim “…should more appropriately be made by the head of an agency, by reason of the independence of that agency from ministerial direction or control”.²³

1.34   In terms of a possible legislative response, the submission from the Commissioner of Taxation outlines the various legislative proposals considered by the Parliament for public disclosure of JobKeeper information.²⁴

1.35   Of these various proposals only one has been agreed by both Houses. On 2 September 2021, the Senate amended the Treasury Laws Amendment (2021 Measures No. 2) Bill 2021 to require publicly listed entities to give notice to the market of any JobKeeper payments they have received during a financial year and of any voluntary repayments of JobKeeper they have made to the Commonwealth. These amendments also required ASIC to publish a consolidated report of this information.²⁵ The House agreed to these amendments on the same day.

1.36   The committee acknowledges that these amendments require publication of only a subset of the information sought through the Senate orders directed to the Commissioner of Taxation. The committee also notes that proposed amendments to the bill, that would have required the disclosure of information by a broader class of recipients of JobKeeper payments, were not agreed by the Senate. ²⁶

1.37   Nevertheless, the Senate undoubtedly has the power to independently require information; legislation is not required. The committee also accepts that senators may have cogent reasons for not supporting a legislative requirement for publication of particular information in circumstances where the concurrence of the House in such a proposal seemed remote.

1.38   The Commissioner suggested in his submission that it may be possible to supply information about JobKeeper recipients in a manner which provides sufficient detail to enable the Senate to fulfil its accountability function but gives due regard to maintaining the privacy of taxpayer information:

I wish respectfully to suggest that it may be possible for me to supply information to the Senate about JobKeeper recipients in a manner which:

1. provides sufficient particulars to enable the Senate to fulfil its critical functions in examining the disbursement of public funds on the JobKeeper program; but
2. does not impinge upon the protections afforded to taxpayers under Division 355 of Schedule 1 to the TAA, at all or to the same extent as the OPD (I note that Division 355 only prohibits the disclosure of information which “identifies, or is reasonably capable of being used to identify”, an entity: see s 355-30(1)(c).  It also includes an exception for the disclosure of “periodic aggregate tax information”: s 355-47)…²⁷

1.39   It is beyond the remit of this committee to broker an agreement which addresses the public interest issues identified by the Commissioner and the Government, while satisfying the requirements of the Senate for information to support its accountability functions. However, the committee notes that this, at the very least, suggests there is a genuine prospect of resolving this matter through the usual approach of negotiation rather than through the exercise of the contempt powers of the Senate.

Culpability

1.40   The final criterion the committee is required to consider relates to culpability and, in particular, whether the Commissioner had a reasonable excuse for conduct which might otherwise amount to a contempt.

1.41   The Commissioner acknowledged the power of a Senate order to require the production of the information sought despite statutory provisions which, apart from the operation of parliamentary privilege, would make it an offence for taxation officers to disclose such information:

…I note that I have proceeded on the basis, which I fully accept, that the Senate’s powers extend to requiring the production of the documents sought under the OPD contrary to the express requirements of Division 355 of Schedule 1 to the TAA.  In making this observation, I am not seeking in any way to put in doubt the settled understanding of the Senate’s powers or of my obligations notwithstanding Division 355.  It is rather to note that the obligation is one that required caution on my part because it required me to do something which Division 355, a law passed by both Houses of Parliament, otherwise forbade me to do.²⁸

1.42   However, he submitted that the information sought in the orders is “protected information” (within the meaning of the Taxation Administration Act) and that there is a significant public interest in preserving the confidentiality of such information:

“Protected information” is collected by taxation officers under, and for the purposes of administering, taxation laws.  It includes confidential and highly sensitive personal and commercial information.  It is vital to the integrity and effectiveness of Australia’s taxation system that taxpayers have confidence in the maintenance of confidentiality over such information.  This encourages taxpayers to disclose information voluntarily in a system that is fundamentally dependent on self-assessment and voluntary compliance for its efficient and effective operation.²⁹

1.43   The Commissioner further submitted that:

…when providing personal and financial information to the ATO to enrol in (and demonstrate ongoing eligibility for) the JobKeeper scheme, I believe that taxpayers would legitimately have expected that that information would only be used for the purposes of my administration of the scheme.  It continues to be my belief that the public disclosure of that information may harm the public interest by undermining confidence in our ability to keep taxation information confidential, although I accept my obligation to disclose it to the Senate and that its further disclosure is a matter for the Senate.

I also believe that public disclosure of the information sought in the OPD may cause commercial or other harm to the entities identified (which include individuals/sole traders, partnerships, trusts and private companies), including by indicating that they reasonably predicted or have experienced a decline in turnover and that their turnover exceeds (or exceeded) $10 million.³⁰

1.44   The Minister representing the Treasurer (Minister Birmingham) supported this position in his submission:

At all times, the Commissioner has acknowledged the seriousness of the situation and his respect for the Senate and its functions. However, the Commissioner holds reasonable and legitimate concerns about the precedent that would be set by disclosing the highly sensitive tax information of more than 10,000 taxpayers.³¹

1.45   The Minister also noted that:

…the Senate has accepted the proposition that secrecy provisions contained in statute have no effect on the powers of the Houses to seek information from persons who have that information. However, the Government is firmly of the view that the protection of confidential taxpayer information is paramount and that the reasons outlined by the Commissioner in his letter of 12 August 2021 for not complying with the Order were reasonable and should not be considered as conduct amounting to contempt.³²

1.46   The Tax Commissioner submitted that he had a reasonable excuse for not complying with the Senate orders while he awaited the Senate’s consideration of the public interest immunity claim (PII) made by the Treasurer:

…I respectfully submit that I had a reasonable excuse for not producing the documents sought under the OPD and accordingly, am not in contempt of the Senate.

I view the OPD, and my responsibilities in relation to it, with the utmost seriousness.  In the period leading up to 26 August, Australian Taxation Office (ATO) staff took all necessary steps to ensure that information was collated and ready to be produced to the Senate to comply with Order 1219.  Whilst I remain deeply concerned about the implications that may flow from public disclosure of the information sought under the OPD (on which I elaborate below), I affirm my commitment to producing the information to the Senate without delay if and in the event that the Treasurer’s PII claim is rejected by the Senate.³³

1.47   Furthermore, the Commissioner contended that if he had complied with the order before consideration of the Treasurer’s claim he would have pre-empted the Senate’s consideration of the matter:

Had I produced the documents sought under the OPD on 26 August 2021, I would have pre-empted the outcome of the Senate’s adjudication of the Treasurer’s PII claim and made that adjudication futile.  I was cognisant of the fact that once the documents were provided, they could not be recalled.  To the best of my knowledge, the scope of the OPD is not typical in that it requires the production of confidential information about a significant number of taxpayers.³⁴

My intention was not to interfere with the Senate’s processes, but to allow those processes to be followed in the proper and customary way before producing information which is, by its nature, ordinarily protected...³⁵

1.48   Minister Birmingham, in a similar vein, submitted that:

The Government's position is that the Commissioner's actions in declining to comply with the Order and produce the relevant taxpayer information to the Senate amounts to a reasonable excuse and should not be considered to reach a standard of conduct that would be found to be a contempt of the Senate.³⁶

1.49   The view of the committee is that these arguments would carry greater weight if the Senate had not already explicitly rejected a virtually identical public interest immunity claim made by the Commissioner who was the only person in a position to provide the information sought under the orders.

1.50   The Treasurer’s intervention served to delay an acceptable resolution of this matter. A sounder approach, in circumstances where an order is directed at an independent statutory officer, would have been to allow time for that officer to engage in negotiations with the proponents of the Senate order to provide the information in a manner which addresses any legitimate public interest concerns. 

Findings and conclusions

1.51   Under section 49 of the Constitution, the Senate undoubtedly has the power to punish obstruction of its functions as a contempt. The principal remedy which the Senate may seek against an executive refusal to provide information or documents in response to a requirement of the Senate is to use its power to impose a penalty of imprisonment or a fine for contempt, in accordance with the Parliamentary Privileges Act 1987.³⁷

1.52   In this regard, the Senate has never conceded that claims of public interest immunity by ministers are anything other than claims but it has not sought to enforce orders for the production of documents which are resisted by the executive using its power to punish contempts. This is no doubt explained in part by the practical difficulties involved in the use of this power, particularly the probable inability of the Senate to punish a minister who is a member of the House of Representatives. Instead, the Senate has typically applied political or procedural penalties, or has pursued other means of obtaining the information.³⁸

1.53   The criteria set down in Privilege Resolution 3 make it clear that consideration of this matter by the committee requires it to consider whether the power to punish a contempt is the appropriate remedy in these circumstances in order to protect the Senate’s capacity to obtain the information it requires to perform its functions. The committee is also required to consider the rationale the Commissioner has advised for his failure to comply with the Senate orders in evaluating whether he had a reasonable excuse for not doing so. The committee is not tasked with a mere formal assessment of whether an order has been made and not complied with.

1.54   This committee will be circumspect about recommending the Senate make a finding of contempt, particularly in relation to matters which have at their heart political disagreements, but it stands ready to do so in cases involving intractable obstruction of the Senate. In this case, however, an independent statutory officer has advanced public interest grounds for withholding information which the committee accepts reflect genuine concerns related to the administration of the taxation system rather than an attempt to shield government policies or administration from effective scrutiny.

1.55   Moreover, the committee notes that the Commissioner has proposed a potentially acceptable approach to providing the information the Senate requires. In these circumstances, it would be precipitous to have recourse to the ultimate remedies at the Senate’s disposal to protect the integrity of its operations. Accordingly, the committee concludes that a contempt should not be found in relation to the matters referred to it.

1.56   Noting the Commissioner’s proposal for resolving this matter, the committee considers that the Senate should have the opportunity to determine whether this would result in the Senate obtaining adequate information regarding expenditure under the JobKeeper program. While the committee is confident the Commissioner will meet his responsibilities to comply with the Senate order, in the event that he does not provide the required information in a manner which is acceptable to the Senate, it would be open to the Senate to refer this matter back to the committee for further consideration.

1.57   The committee recommends that the Senate adopt the conclusion at paragraph 1.55, that no contempt be found in relation to the matters referred.

 

Senator Deborah O'Neill
Chair

Navigation: Previous Page | Contents

---

Footnotes