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Parliamentary Joint Committee on Law Enforcement
Commonwealth unexplained wealth legislation and arrangements

SMITH, The Hon. Gregory Eugene (Greg), SC, Attorney-General and Minister for Justice, New South Wales


CHAIR: Welcome. You are cognisant of the inquiry we are inquiring into. I invite you to make an opening statement and my committee would like to ask you a couple of questions.

Mr Smith : I am aware and I was present when the parliament passed amendments to the Criminal Assets Recovery Act 1990—that is, the Criminal Assets Recovery Amendment (Unexplained Wealth Provisions) 2010. I have some knowledge of that particular piece of legislation, although it is primarily the responsibility of the Minister for Police and Emergency Services, Mike Gallacher. However, I am aware from my discussions with various people that unexplained wealth provisions are of growing use. Most of the cases settle. It seems to be working well.

The Crime Commission uses the Criminal Assets Recovery Act 1990 regularly and in fact confiscates more money than the rest of the jurisdiction in Australia combined—that is their claim, and I think it is right. Their legislation was subject to a successful High Court challenge a few years ago but the parliament quickly rectified that problem and at present I think they are regularly using the powers, including more use of the unexplained wealth provisions.

CHAIR: We are looking at the prospect of having greater harmonisation of unexplained wealth provisions across the country very much on the basis that crime does not observe constitutional or geographic boundaries; it looks for windows of opportunity. I am interested in a comment from you about the need in contemporary law enforcement for greater consistency of laws, particularly in respect to unexplained wealth.

Mr Smith : I certainly support the concept of harmonisation, through model laws, I think. I do not think referral is the best way to deal with it. I am not bragging but I think our state is doing well in this area and it would be very difficult to convince us that we should refer the power when it is working well. But, just as with the outlaw bikie legislation and other laws to do with organised crime, I think there has to be as much consistency as we can possibly get together. I do not believe the harmonisation has yet been discussed by the standing committee on law and justice, but I will try to get it raised if it is not going to be raised by the Commonwealth at the next meeting.

CHAIR: You are right. It has not been discussed to date. The basis of this inquiry is that two years ago legislation was passed by the federal parliament with respect to unexplained wealth. Over that two-year period, not one case has been brought to the courts. That is mainly because the evidence of the Australian Federal Police, the Australian Crime Commission and others is that effectively their legislation does not work. We are trying to make the distinction between crime and punishment and also protecting the community by taking attacking the business model underpinning criminal enterprise. We are trying to make that distinction, as Commissioner Hyde indicates, from being reactive to crime to being proactive about techniques and strategies that actually prevent further crime in the community.

One of the things that we are very keen to look at is not having it necessarily linked to a precursor offence and secondly—and more importantly, probably—having it constructed on a reverse onus of proof basis. Would that be attractive to your government?

Mr Smith : Yes. In the current criminal assets recovery act, I do not think there is a verse onus; I am not sure.


Mr Smith : Certainly the issue is on the balance of probability rather than beyond reasonable doubt. Reverse onus issues are difficult in the criminal law but this is not quite the criminal law, as you say it is more to do with the proceeds of crime. I think it is more the reco-type idea, which I think we probably need to look at more carefully. My government does not have a position on it at the moment, let us put it that way, but we would be interested to look at it.

CHAIR: Is it fair to say you have not got a closed mind to it at this stage?

Mr Smith : No. Never have closed mind about anything to do with crime.

CHAIR: Said like a true prosecutor! I might hand over to Senator Mason, the deputy chair of the committee.

Senator MASON: Good morning, Attorney. You mentioned that your first reaction is that you would prefer model legislation as opposed to a referral of powers. Speaking both as a politician and as a senior counsel and attorney-general, do you it would be possible to secure sufficient harmonisation, if not uniformity, from among the federation, if we go down the path of model legislation?

Mr Smith : I think so. I am looking at what is happening with the outlaw bikie legislation at the moment and there has been good cooperation between the states and territories over that. Although not all the jurisdictions have got identical laws, certainly Western Australia, South Australia and the Northern Territory have come in close to what New South Wales is doing, which is fixing up the problem that the High Court exposed. The Queensland model is not that much different, and I gather the likely Victorian legislation will be similar again. So by this transfer of attitudes, we have been having discussions about it at the Standing Committee on Law and Justice and through our officers, particularly through the officers. I think in these areas we should be able to achieve a similar harmony. I notice that Victoria were against some unexplained wealth a couple of years ago when it was discussed. There might be a different attitude shown by the new government—I don't know. They have got different attitudes on some aspects of criminal behaviour. I have not discussed this with Robert Clark but will.

Senator MASON: Attorney, I think what you are saying to the committee is that, speaking as a lawyer, legislation can be drafted from model legislation that would sufficiently be in harmony that it would cover the field.

Mr Smith : Yes, I think so. We are all conscious that crime does not recognise state boundaries, and it is great if you can register orders made in one state in another state's courts. That helps a lot. Passing on of information is important. That seems to be quite well established now by the states and the Commonwealth through the Australian Crime Commission or the Federal Police and the various state agencies. There seems to be a good level of cooperation there. We have got the Uniform Evidence Act that seems to be spreading out: Victoria has taken it on; Tasmania; I think Queensland is taking it on; New South Wales and the Commonwealth had it originally. Whether Western Australia will take it on, I don't know, but hopefully they will. That has worked well so that helps you get a body of jurisprudence in different states where they can look at each other's interpretations and find them useful to follow when their legislation is similar, and I think that is a good thing.

Senator MASON: So there is room for optimism if we went down the model legislation route—that is your point, isn't it?

Mr Smith : Yes.

Senator MASON: Certainly, politically, it would be easier for the Commonwealth. We prefer referral of powers, Attorney.

Mr Smith : I have noticed that. We want to continue operating as a sovereign state.

Senator MASON: Understood. Thank you very much.

Senator PARRY: Who would develop the model legislation and who would coordinate it and who would run with it—that is my king question?

Senator MASON: New South Wales.

Mr Smith : I don't know. New South Wales often does.

CHAIR: Don't be bashful.

Mr Smith : I have only been here for a year in the position of Attorney but we have been leading on things such as succession law and commercial arbitration. I don't think we would shrink at this: on the national legal profession initiative we are one of the leading states there, so if we can only get it to be national it would be much better. I think we do and, in cooperation with the Commonwealth, I think Nicola Roxon and I will be able to get on on these things with the other state Attorneys just as we did with Robert McClelland. I think it is an excellent idea.

Ms GRIERSON: Attorney, your legislation differs in that you need not have the reasonable suspicion; you have to satisfy the court that a person has engaged in or acquired property from serious crime related activity. Does that weaken your legislation and make it too soft?

Mr Smith : I really have not had a chance to go deeply into the legislation, because, as I have said, I am not the primary minister responsible. I am not a minister responsible for it. But reasonable suspicion type legislation is difficult to get political acceptance of, I believe. I think maybe in the sense of getting ex parte injunctions and that sort of thing, that might be enough in many cases. But I really have not studied the law closely enough, I am sorry.

Ms GRIERSON: Well then, I am not sure my next question might go to that sort of detail as well. It may not be something that you want to comment on, but—

Mr Smith : The balance of probabilities is not a difficult test.

Ms GRIERSON: Yes. One of the other provisions is that the court may refuse to make an unexplained wealth order if it finds that it is not in the public interest to do so or it may reduce the amount that would otherwise be payable. Do you know if that provision has ever been invoked?

Mr Smith : No, I do not, because so far, all the cases involving these powers have settled. There has been no testing by a court on it. There have been cases where other provisions of the Criminal Assets Recovery Act have been examined, but that is more in relation to the powers they have had for some time.

Ms GRIERSON: Thank you.

CHAIR: Senator Wright.

Senator WRIGHT: Good morning, Attorney, and thank you for your time. I have been listening with interest. I am interested in following up from Ms Grierson and her last question. You said earlier that the amount that had been obtained was as much as the accumulated amount that had been sized throughout the other jurisdictions. Is that right?

Mr Smith : That is my understanding. That would not include the tax department, of course. As far as I know, they have been very active over the years in seizing assets. I recall with Abraham Gilbert Saffron, after he was charged in the 1980s with conspiracy to defraud Commonwealth over unpaid taxes, that the tax department went in and cleaned him out. That has always been an effective way of dealing with criminals, but generally after they are charged. The tax department can put on a notional assessment of someone if they think they have got too many assets. It is sometimes very difficult for people to prove that they have paid tax on the money that they have used to buy their assets. That is not necessarily isolated to criminal matters, but it can be effective. In the area of criminal assets recovery, my understanding is that New South Wales has done very well compared with the other states and the Commonwealth.

Senator WRIGHT: What I want to follow up on, just so I understand, is: that would include recovery in relation to the legislation before it was amended in relation to the unexplained wealth provisions?

Mr Smith : Yes.

Senator WRIGHT: Okay.

Mr Smith : It is more that use of the legislation. That part of the legislation has been so successful—I think a lot more successful than the legislation that my department is responsible for, the Confiscation of Proceeds of Crime Act 1989. That requires a conviction. Whilst it is a useful piece of legislation, they do not recover anything like the amounts that the Crime Commission does, as I understand it.

Senator WRIGHT: Since the recent unexplained wealth provisions were introduced in September 2010—and the question that Ms Grierson was asking about requiring a reasonable suspicion that the income is related to a serious crime related activity—I am interested in the extent to which there has been successful recovery of wealth in that time.

Mr Smith : I am told that the unexplained wealth provisions were useful, but the real strong legislation is the provisions we already had. This is like some extra help but it has not been that sensational, if I can put it that way. It is getting used more, but they already felt that they were doing pretty well under the other provisions.

Senator WRIGHT: Thank you. I do not have any other questions.

Mr MATHESON: In your introduction, you said that part of your legislation had to be amended. Could you go into more detail in relation to why it had to be amended?

Mr Smith : My recollection is that they could get ex parte injunctions and grab the assets without letting the owner know, and I think that once they had the assets it was very difficult for the owner to recover his or her position. I think the High Court ruled that there was a breach of chapter III of the Constitution—that the methods used were not as clean as they should be, using a state court which could on other occasions be dealing with Commonwealth matters.

Mr MATHESON: Did that relate to the Ange matter?

Mr Smith : What is the name of it?


Mr Smith : It could. A company was involved. I am sorry—we had a debate about this about three years ago; I just have not kept it in my mind. The then state government with our cooperation amended the legislation to give the respondent to these proceedings greater rights so that at least they had a chance to get in and argue.

Mr MATHESON: That may well have been a case where costs were awarded against the state.

Mr Smith : It probably was.

Senator PARRY: I do not want to turn this into a Geoffrey Robertson hypothetical, but, Mr Anderson, you heard what the Attorney said in relation to developing the legislation, each state doing their own thing and who would lead. What is the Commonwealth Attorney-General's view or the department's view on a lead agency or not a lead agency?

Mr Anderson : The department's view is certainly that—

Mr Smith : Do you have the Commonwealth Attorney-General there?

Senator PARRY: Not the Attorney-General himself but a very senior office-bearer, Mr Iain Anderson.

Mr Smith : Good.

Mr Anderson : The department's preference is a reference, of course, because that enables the Commonwealth to address the current deficiencies in its own legislation. As to who would lead if there were to be a model law exercise, that is a matter that can just be agreed between Attorneys. We do not have any particular preference as to who would lead; the main thing is finding a willing jurisdiction that is prepared to supply the necessary input to take that on. But the referral, of course, is the key thing for the Commonwealth to address its own legislation, which the model laws will not necessarily do.

CHAIR: This is the position of power.

Mr Anderson : Absolutely.

Senator PARRY: Would SCAG take this up? My concern with SCAG is: how long would it take?

Mr Smith : Our amendments here followed the SCAG meeting the previous year, so that was not too bad. If it is seen as a major issue by the other states, I am sure it will get some acceleration. But you are right, in a sense, in being a little bit doubtful, because it is the offices' activity really that gets things done. I am not saying that the ministers are not hardworking and trying, but the amount of time and the number of matters on the agenda make it difficult to spend a lot of time on any particular issue.

Senator PARRY: Is the objection to referral of powers because of a state jurisdictional issue, an uncomfortable issue, or is it more deep-seated than that?

Mr Smith : I do not want to be sounding again like we are bragging. We think we do it better than the Commonwealth on these criminal issues and these forfeiture-of-assets issues, and if it ain't broke we don't want to change it. It is working well here and it could work well elsewhere, I think. I do not know; it might be a lack of resources that the Commonwealth puts into these types of matters. I am not sure. The Australian Federal Police have a big area to cover but a limited jurisdiction and often they rely on the state police to put the numbers into surveillance, into arrests and even into the investigations. That is my experience, anyhow. Certainly in the area of people held in Villawood detention centre, the states effectively bailed the Commonwealth out over those riots.

Senator PARRY: I think we are delving into other matters, but thank you, Attorney.

Mr Smith : They are useful in showing the resources that are available. It is the state governments that have greater resources in the area of law enforcement.

CHAIR: I think the nub of the argument really gets down to being a constitutional one and for the Commonwealth to be seized of power to be exercised across the board with respect to some elements of crime. One of the things that is certainly exercising the mind of my committee is: can we better utilise our resources collaboratively to prosecute the issue against serious and organised crime? One of the comments I made earlier is that crime does not know boundaries. It operates as a business, certainly a nefarious business but nevertheless still seized of business acumen about looking for windows of opportunity to prosecute its endeavours. So we are trying to see whether we can work to have a model that will ensure consistency across the country with respect to how we deal with the contemporary notion of serious and organised crime.

Mr Smith : I do not know what happens in other states, but I think what has been very effective here is the use of the state crime commission with its powers of a royal commission to gather evidence, and the secrecy aspect of it. They can require people to give incriminatory answers, although they are privileged unless they lie. I think that is probably one of the main reasons that we are recovering a lot more money. I do not know whether the other states are using their similar agencies or whether they are using the police. The police are stretched because there is always something new coming up.

CHAIR: And, in the main, they do not have those powers. One of the areas we are interested in is particularly utilising the resources and coercive powers of the Australian Crime Commission to fall into that area as well. These are matters that we are certainly well and truly exploring. I would like to think that I could send you a copy at some stage—once we have further adduced all the evidence—of our report and recommendations in that respect.

Mr Smith : Thank you. I would like that.

CHAIR: Greg, once again, thanks for coming here. Obviously this committee is very much about ensuring the adequate resources of law enforcement across the country. It is a very dark week I understand in New South Wales with respect to law enforcement, with Senior Constable David Rixon being shot and killed last week, one day after New South Wales celebrating the 150th anniversary of the New South Wales Police Force. On behalf of my committee I offer our sincere condolences. A death of a police officer is a very tragic thing when we know that, there by the grace of God, it could have been any other police officer throughout the country. It takes a very special sort of person, with courage to match, to put on that uniform and do what we as community leaders require of the police: to look after and protect our citizens. On behalf of my committee, please extend to the police minister, Mr Gallacher, and police commissioner, Andrew Scipione, our sincere condolences.

Mr Smith : I will, Chris. Thank you very much for that. I share your sadness about what has happened and will pass those very thoughtful comments on.

CHAIR: Thank you, Attorney, for giving your time today and for your cooperation. The committee may of course come back to you, and indeed probably will come back to you in writing, on some other questions arising out of today's discussion. I should point out is that we did invite every one of your colleague attorneys to be present today, and in true style New South Wales has shown the bravery of being here to be intimidated by this committee!

Mr Smith : Thank you.

CHAIR: Catch you later, Greg.

Mr Smith : See you later, Chris.

CHAIR: Thank you to everyone who participated today. I know that it does take a lot of time out of your agenda. We wanted to have you here for a range of different reasons, including our own internal political reasons—to be able to demonstrate to the parliament that the matters that are being discussed by this committee are in the minds of all those involved in law enforcement, companies and securities, Taxation, Customs and everywhere else. This is not just one of those things that you run up the flagpole and see whether it works or not; we want to be able to demonstrate to our political colleagues on both sides of the parliament that this is something that is contemporary if we are to be serious about fighting serious and organised crime. Your attendance and your evidence here today are very much appreciated. It does show that in the minds of all those agencies involved in law enforcement in this country the issue of unexplained wealth is significant if we are to be serious about addressing serious and organised crime in a contemporary sense. I thank everyone for their participation. Committee members, thank you for being here. Mal, thank you for your 15 years at the helm of the South Australian police force. I am sure there will be a function or two, and I might see you at them in South Australia!

Committee adjourned at 11:01