The purpose of the Crimes Amendment (Penalty Unit) Bill 2017 (the Bill) is to amend section 4AA of the Crimes Act 1914 (the Act) by increasing the amount of the penalty unit from $180 to $210 for Commonwealth criminal offences.[1] The Bill also postpones the date at which the penalty unit begins automatically adjusting in line with the Consumer Price Index (CPI) at three year intervals, from 1 July 2018 to 1 July 2020.

Structure of the Bill

The Bill comprises one schedule which outlines the two amendments to the penalty unit provisions of the Act.

Background

The Commonwealth penalty unit was introduced in 1992 as part of reforms recommended by the 1991 Review of Commonwealth Criminal Law (the Review).[2] Penalty units had also been suggested in a 1988 report on sentencing by the Law Reform Commission.[3] The Review, chaired on behalf of the Attorney-General’s Department by the former Chief Justice of the High Court, Sir Harry Gibbs, concluded that ‘a system of penalty units be employed in Commonwealth legislation’ such that it might be efficiently updated ‘by amendment of one Act’.[4]

Fines are calculated by multiplying the amount set as the penalty unit by the number of units prescribed for offences in different legislation. For example, the maximum fine for possessing controlled drugs is 400 penalty units which when calculated at the present value of a penalty unit amounts to $72,000.[5] Penalty units vary for different offences: letting your cattle trespass on Commonwealth land is worth only 1 penalty unit, whereas bribing a foreign official is worth 10,000 penalty units for an individual and 100,000 penalty units for a corporate body.[6]

Modelled on the system of penalty units implemented first by Victoria (1981), then Queensland (1985) and New South Wales (1987), the Commonwealth penalty system was similarly intended to improve the efficiency of legislation. The penalty unit system has been maintained in all Australian jurisdictions except South Australia. Table 1 sets out current levels of penalty units in each Australian jurisdiction. There have been some calls for greater consistency across Australia so that the financial penalties for similar offences are more uniform.[7] It is not easy, however, to make a clear comparison between the amount of penalty units at the Commonwealth with the states and territories, because they are formulated with substantially different categories of offences.

Table 1: Australian Penalty Units 2016/7

$Amount	Jurisdiction	Legislation
$210.00	Commonwealth	Crimes Legislation Amendment (Penalty Unit) Bill
$180.00	Commonwealth	Crimes Legislation Amendment (Penalty Unit) Act 2015
$157.00	Tasmania	Penalty Units and Other Penalties Act 1987
$155.46	Victoria	Monetary Units Act 2004
$154.00	Northern Territory	Penalty Units Act 2009
$150.00	ACT[8]	Legislation Act 2001
$121.90	Queensland	Penalties and Sentences Act 1992
$110.00	New South Wales	Crimes (Sentencing Procedure) Act 1999
Various	Western Australia	Penalty units are set for different categories of legislation.
N/A	South Australia	There is no system of penalty units in South Australia.

Source: Parliamentary Library.

As noted in the Review report, the dollar amount specified in many Commonwealth Acts frequently needed to be individually amended as the ‘erosion of the value of money sooner or later causes the amount specified to be unrealistic’.[9] Reflecting the unanimous views of submissions to the Review, the Commonwealth Director of Public Prosecutions observed that the proposed reforms were ‘eminently sensible’.[10]

In the second reading speech in support of the Crimes Legislation Amendment Bill 1992 which introduced Commonwealth penalty unit, Senator Bob McMullan stated that the usefulness of the change was apparent in the fact that ‘by simple amendment of one provision, the Parliament can ensure that the penalties for all Commonwealth offences reflect current monetary values’.[11] Furthermore, it would ‘not preclude Parliament from using legislation to reflect the seriousness with which any particular offence is viewed by the Parliament by altering the number of penalty units prescribed for a particular offence’.[12]

This Bill is the latest in a series of amendments to the law since 1992 intended to increase the amount of money set as the penalty unit. Table 2 sets out a timeline of previous changes, the legislative instrument containing the amendment, the year of the change and a comparative figure in 2016 dollar terms to show the value of the penalty unit over time.

Table 2: summary of changes to penalty unit since 1992

$Amount	$2016[13]	Year	Legislation
$100	$182.00	1992	Crimes Legislation Amendment Act
$110	$179.44	1997	Crimes and Other Legislation Amendment Act
$170	$183.50	2012	Crimes Legislation Amendment (Serious Drugs, Identity Crime and Other Measures) Act
$180	$182.30	2015	Crimes Legislation Amendment (Penalty Unit) Act
$210	$210.00	2017	Crimes Legislation Amendment (Penalty Unit) Bill

Source: Parliamentary Library.

As part of the reforms in 2012, the Government proposed to standardise the review process by requiring a triennial review at the behest of the Attorney-General of the penalty unit so that the penalty could be maintained in real terms.[14] In a submission to the senate the Australian Crime Commission expressed their support for regular reviews of the amount of a penalty unit ‘to ensure the deterrent factor remains high’.[15] In 2015, this was amended to provide for automatic indexation in line with CPI rounded to the nearest 50 cents every three years beginning on the 1 July 2018.[16] The current proposal in this Bill will increase the amount of the penalty and delay indexation until 1 July 2020.

Committee consideration

Senate Standing Committee for the Scrutiny of Bills

The Scrutiny of Bills Committee has reviewed the Bill and made no comment in the Scrutiny Digest.

Policy position of non-government parties/independents

Both the Australian Labor Party and Coalition while in Government have introduced and supported Bills to increase the amount of the penalty unit.

There is no publicly articulated opposition to an increase of the penalty unit by independents and
non-government parties.

Position of major interest groups

No public statement has been made about the proposal to change the penalty units by major interest groups.

Financial implications

The increase in the amount of the penalty unit is expected to increase the revenue collected by the Commonwealth from financial penalties. In the Minister’s second reading speech, he stated that the measure was estimated to boost revenue by $80 million over the next four years.[17] The Explanatory Memorandum also states: ‘[t]his measure was approved and announced as part of the 2016-17 Mid-Year Economic and Fiscal Outlook’.[18]

Statement of Compatibility with Human Rights

As required under Part 3 of the Human Rights (Parliamentary Scrutiny) Act 2011 (Cth), the Government has assessed the Bill’s compatibility with the human rights and freedoms recognised or declared in the international instruments listed in section 3 of that Act. The Government considers that the Bill is compatible.[19]

Key issues and provisions

After its most recent amendment in 2015, section 4AA(1) of the Act specifies the penalty unit as $180. Item 1 proposes to change the amount stated to $210. This will see an initial increase of $30 to the penalty unit at 1 July 2017 when the proposed Act is set to commence.

Item 3 clarifies that the penalty rate increase set out in Item 1 will apply to an offence committed on or after the date of commencement.

Changes made in 2015 introduced an automatic indexation of the penalty unit. This remains in place, but Item 2 postpones the date at which the penalty unit first adjusts by substituting ‘1 July 2018’ with ‘1 July 2020’.

Increase

The Bill’s increase in the penalty unit represents an above average rise to the amount of the penalty unit.

As previously shown in Table 1 above, the real value of the penalty unit since its introduction in 1992 has been relatively stable: around $180 in 2016 dollar terms, with each subsequent change maintaining this value to within a few dollars variance. When the penalty unit system was introduced, it was anticipated that it would need to be continually reviewed and amended as needed.[20] For example, the first increase of the penalty unit from $100 to $110 corresponded with a 9.6 per cent increase in the Consumer Price Index (CPI).[21] The increase in 2015 consistently followed this historical practice, but this increase pushes the value of the penalty unit higher than the historic average.

It has been stated by the Minister that this increase will ‘strengthen courts’ ability to impose appropriate punishments on serious offenders’.[22] As well as acting as a strong deterrent, the change is also expected to boost revenue by $80 million over the forward estimates.[23]

Indexation

In 2015, subsection 4AA(1A) was amended to remove the requirement for the Attorney-General to review the amount of the penalty unit every three years after the date it was last reviewed. This was removed on the basis that such a review was no longer required with the introduction of automatic indexation, based on the CPI.

Speaking on the indexation measures introduced in 2015 Michael Keenan, the Minister for Justice, stated:

By instituting an automatic indexation process, the bill provides an efficient mechanism for maintaining the penalty unit value into the future while still ensuring that value is made clear for members of the public, enforcing agencies.[24]

The reason for delaying the automatic indexation of the penalty unit in this Bill is not expressly stated in the Explanatory Memorandum or in the Minister’s second reading speech. The intention of the Bill is justified on the grounds that strong penalties have a deterrent effect, and that an increase to penalty units will boost revenue.

Together with the higher than average increase to the value of the penalty unit, this change indicates that the increase to the penalty unit is a conscious policy decision rather than a routine maintenance of the penalty unit value as this was already provided for in 2015 with the introduction of the automatic indexation mechanism set to commence in 2018.

[1]. Crimes Act 1914.

[2]. Attorney-General’s Department (AGD), Review of Commonwealth criminal law: fifth interim report, June 1991.

[3]. Australian Law Reform Commission, Sentencing, Report, 44, Canberra, 1988, pp. 59, 62.

[4]. AGD, Review, op. cit.

[5]. Crimes Act 1914, section 90.

[6]. Crimes Act 1914, section 90; Criminal Code 1995, section 70.2.

[7]. U Nedim, ‘What is a penalty unit? Is the current system unfair?’, NSW Courts (Sydney Criminal Lawyers) website, 12 May 2015.

[8]. The penalty unit for an individual is $150 and $750 for a corporation. At the Commonwealth level, section 4B(3) of the Crimes Act 1914 states that the court may when it thinks fit in the circumstances and where the Act does not provide otherwise, multiply the pecuniary units imposed on a body corporate by a factor of five times the amount of the penalty that could be imposed on a natural person.

[9]. AGD, Review, op. cit.

[10]. CDPP submission quoted in AGD, Review of Commonwealth criminal law: fifth interim report, Canberra, June 1991, p. 194.

[11]. Crimes Legislation Amendment Act 1992 (Cth); B McMullan, ‘Second reading speech: Crimes Legislation Amendment Bill 1992’, Senate, Debates, 16 September 1992, p. 924.

[12]. Ibid.

[13]. Figures in $2016 dollar terms have been calculated with the aid of the Reserve Bank of Australia ‘inflation calculator’ which uses CPI.

[14]. M Biddington, Crimes Legislation Amendment (Serious Drugs, Identity Crime and Other Measures) Bill 2012, Bills digest, 46, 2012–13, Parliamentary Library, Canberra, 2011.

[15]. Australian Crime Commission (ACC), Submission to the Senate Standing Committee on Legal and Constitutional Affairs, Crimes Legislation Amendment (Serious Drugs, Identity Crime and Other Measures) Bill 2012, submission no. 3, 6 November 2012, p. 3.

[16]. Crimes Legislation Amendment (Penalty Unit) Act 2015 (Cth).

[17]. M Keenan, ‘Second reading speech: Crimes Amendment (Penalty Unit) Bill 2017’, House of Representatives, Debates, 16 February 2017, p. 11.

[18]. Explanatory Memorandum, Crimes Amendment (Penalty Unit) Bill 2017, p. 5; S Morrison (Treasurer) and M Cormann (Minister for Finance), Mid-year economic and fiscal outlook 2016–17, p. 105.

[19]. The Statement of Compatibility with Human Rights can be found at page 3 of the Explanatory Memorandum to the Bill.

[20]. B McMullan, ‘Second reading speech’, op. cit.

[21]. MA Nielsen, Crimes and Other Legislation Amendment Bill 1996, Bills digest, 101, 1996–97, Department of the Parliamentary Library, Canberra, 1996.

[22]. M Keenan, ‘Second reading speech’, op. cit.

[23]. Ibid.

[24]. M Keenan, ‘Second reading speech: Crimes Legislation Amendment (Penalty Unit) Bill 2015’, House of Representatives, Debates, 15 June 2015, p. 6155.

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