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Advisory Report on the National Security Legislation Amendment (Espionage and Foreign Interference) Bill 2017
2. 2. The Bill and its referral

The Bill and its referral

2.1
On 7 December 2017, the Prime Minister, the Hon. Malcolm Turnbull MP, introduced a package of national security bills into the House of Representatives. The bills included:
Foreign Influence Transparency Scheme Bill 2017;
National Security Legislation Amendment (Espionage and Foreign Interference) Bill 2017; and
Home Affairs and Integrity Agencies Legislation Amendment Bill 2017.
2.2
On 8 December 2017, the Prime Minister referred the bills to the Committee, requesting that the Committee, so far as possible, conduct its inquiry in public.
2.3
This report is the Committee’s review of the National Security Legislation Amendment (Espionage and Foreign Interference) Bill 2017 (the Bill).

Objectives of the Bill

2.4
The Prime Minister’s referral letter noted that, following the Prime Minister’s direction on 12 May 2017, the Attorney-General had conducted a ‘comprehensive review of Australia’s espionage and foreign interference laws’. The review considered:
the adequacy and effectiveness of existing espionage and treason offences under the Criminal Code Act 1995 and the official secrets offences under the Crimes Act 1914,
the merit of creating specific foreign interference offences within the Criminal Code,
the merit of creating a legislative regime based on the United States’ Foreign Agents Registration Act 1938, and
whether there are complementary provisions that would strengthen agencies’ ability to investigate and prosecute acts of espionage and foreign interference.
2.5
The letter summarised the outcomes of the review as follows:
The legislative package implements the outcomes of the Attorney-General’s review. Australia’s existing criminal laws are not fully effective in deterring and countering pervasive foreign interference activities directed against our interests. In particular, existing criminal laws relating to espionage, secrecy, sabotage and treason needed to be updated, and new foreign interference and theft of trade secrets offences enacted, to ensure Australia is not a permissive operating environment for malicious foreign actors.
Australian law should also require transparency around activities undertaken in Australia on behalf of foreign principals where the activities are intended to influence political or government processes.
2.6
The Bill repeals existing criminal offences and introduces a range of new offences into the Criminal Code in relation to espionage, foreign interference, sabotage of public infrastructure, and secrecy of Commonwealth information. The Bill also amends a range of existing offences, including those in relation to treason, treachery, and other threats to security.
2.7
According to its Explanatory Memorandum, the objective of the Bill is to
modernise and strengthen Australia’s espionage, foreign interference, secrecy and related laws to ensure the protection of Australia’s security and Australian interests.[1]
2.8
The Explanatory Memorandum states that existing laws do not adequately counter these activities. Rather, a lack of serious criminal penalties and law enforcement powers in the current laws is said to have resulted in a ‘permissive operating environment for malicious foreign actors’.[2] The Explanatory Memorandum states:
Foreign actors are currently seeking to harm Australian interests on an unprecedented scale, posing a grave threat to Australia’s sovereignty, prosperity and national security. This threat is a substantial concern for the Australian Government. If left unchecked, espionage and foreign interference activities may diminish public confidence in the integrity of political and government institutions, compromise Australia’s military capabilities and alliance relationships, and undercut economic and business interests within Australia and overseas.[3]
2.9
The objectives of the specific measures in the Bill are discussed in the context of each offence later in this report.

Conduct of the inquiry

2.10
After receiving the Prime Minister’s referral, the Committee initially agreed to complete its inquiry and report to the Parliament by 20 February 2018, and later extended this date to 23 March 2018. Following the receipt of proposed Government amendments to the Bill on 5 March 2018 (discussed later in this report), the Committee further extended its reporting date.
2.11
The Chair of the Committee, Mr Andrew Hastie MP, announced the inquiry by media release on 15 December 2017 and invited submissions from interested members of the public.
2.12
The Committee received 51 submissions and 20 supplementary submissions. 2543 form letters were also received to the inquiry. A list of submissions received by the Committee is at Appendix A.
2.13
The Committee held five public hearings and one private hearing in Canberra on 30 and 31 January, 15 and 16 February, and 16 March 2018. Details of the hearings are included at Appendix B. The Committee also received two classified briefings.
2.14
Copies of submissions and the transcript from the public hearing can be accessed on the Committee’s website at www.aph.gov.au/pjcis. Links to the Bill and Explanatory Memorandum are also available on the Committee’s website.

Timeframe for the inquiry

2.15
In referring the Bill, the Prime Minister asked that the Committee present its report by 15 February 2018.
2.16
A number of submitters raised concerns regarding the timeframe for the inquiry.
2.17
As noted in previous reports, the Committee considers it performs a vital role in scrutinising national security legislation prior to its consideration by the Parliament. Over the last five years the Committee has examined every national security bill and has made a significant number of recommendations—these recommendations have gone to strengthening the integrity, operation, clarity and oversight of national security measures. The Government has agreed to all the Committee’s recommendations made on various bills.
2.18
These significant and unprecedented new measures in relation to foreign influence and interference in Australia require careful consideration and the Committee is pleased to undertake this inquiry. In the current climate, Australia must seek to protect the integrity of its national institutions against both covert interference and obscured influence.
2.19
However, to perform these functions effectively, time is needed for public consultations. This enables the Committee to interrogate a bill, and ensure the integrity and proportionality of the proposed measures, clarity and effectiveness in their application and operation, and an adequacy of safeguards. In this instance, the Committee was requested to inquire into and report on these complex issues in ten weeks which included the Christmas/New Year holiday period. The Committee reiterates previous requests that, as far as possible when considering the need for future national security legislation, sufficient time be provided for the Committee to undertake a comprehensive inquiry. This is particularly necessary where no prior public consultation on a Bill has been conducted by the relevant departments.

Report structure

2.20
This report consists of 11 chapters:
Chapter 1 discusses the current threat environment that provides the context for the Committee’s inquiry,
the remainder of Chapter 2 summarises the contents of the Bill and its structure,
Chapter 3 discusses certain issues that were raised during the Committee’s inquiry that concern more than one of the Bill’s components,
Chapter 4 discusses the rationale for and breadth of conduct captured by the new secrecy offences proposed in the Bill,
Chapter 5 discusses the defences available and other matters relating to the new secrecy offences proposed the Bill,
Chapter 6 discusses the new espionage offense proposed in the Bill,
Chapter 7 discusses the new foreign interference offences and the theft of trade secrets offence proposed in the Bill,
Chapter 8 discusses the new sabotage offences proposed in the Bill,
Chapter 9 discusses the revised offences for treason, treachery and other threats to security proposed in the Bill,
Chapter 10 discusses Schedules 3 to 5 of the Bill, and a range of consequential amendments contained in Schedules 1 and 2, and
Chapter 11 contains the Committee’s concluding comments.

Outline of the Bill

2.21
The Bill comprises five schedules, mostly affecting the Criminal Code Act 1995. The Bill also proposes a range of consequential and other amendments to the following Acts:
Aboriginal and Torres Strait Islander Act 2005
Agricultural and Veterinary Chemicals (Administration) Act 1992
Archives Act 1983
Australian Citizenship Act 2007
Australian Crime Commission Act 2002
Australian Federal Police Act 1979
Commonwealth Electoral Act 1918
Chemical Weapons (Prohibition) Act 1994
Comprehensive Nuclear-Test-Ban Treaty Act 1998
Crimes Act 1914
Defence Home Ownership Assistance Scheme Act 2008
Freedom of Information Act 1982
Foreign Evidence Act 1994
Law Enforcement Integrity Commissioner Act 2006
Liquid Fuel Emergency Act 1984
Migration Act 1958
National Greenhouse and Energy Reporting Act 2007
Native Title Act 1993
Offshore Minerals Act 1994
Ombudsman Act 1976
Parliamentary Service Act 1999
Public Service Act 1999
Renewable Energy (Electricity) Act 2000
Surveillance Devices Act 2004
Textile, Clothing and Footwear Investment and Innovation Programs Act 1999
Telecommunications (Interception and Access) Act 1979
Foreign Influence Transparency Scheme Act 2017
Box 2.1   Summary of proposed amendments

Schedule 1- Treason, espionage, foreign interference and related offences

2.22
Schedule 1 amends and introduces a range of new or modernised offences against the security of the Commonwealth into Parts 5.1 and 5.2 of the Criminal Code.

Treason (Item 4, clause 80.1AA)

2.23
The Bill amends the existing offence of ‘Treason—materially assisting enemies etc’ in section 80.1AA of the Criminal Code to align with modern terminology related to armed conflict. Treason offences continue to carry a maximum term of imprisonment for life.

Treachery (Item 4, clause 80.1AC)

2.24
The Bill replaces the existing treachery offence in Part II of the Crimes Act 1914 with a new offence in Part 5.1, Division 80 of the Criminal Code.
2.25
The current treachery offence criminalises conduct against both Australia and other countries, including attempts to overthrow the government, levy war against or instigate an invasion into a proclaimed country. The amendments proposed in Schedule 1 will limit the treachery offence to conduct engaged in with the intent of overthrowing the Commonwealth Government, the Australian Constitution, or the government of an Australian state or territory. The amendments also extend the offence to conduct engaged in with the intent of overthrowing the ‘lawful authority’ of the Commonwealth Government. The offence continues to carry a maximum penalty of imprisonment for life.

Sabotage (Item 8)

2.26
The Bill replaces the current sabotage offence in Part II of the Crimes Act 1914 with seven new offences in Part 5.1, Division 82 of the Criminal Code. While the existing offences are limited to defence property, the proposed new sabotage offences are premised on damage caused or vulnerabilities introduced to ‘public infrastructure’. The term ‘public infrastructure’ is broadly defined to cover a range of public and private interests. The proposed offences relate to conduct involving:
sabotage of public infrastructure, including sabotage of public infrastructure involving a foreign principal, where the person intends to, or is reckless as to whether the sabotage would prejudice Australia’s national security, or advantage another country’s national security,
introducing vulnerability to public infrastructure, where the person intends or is reckless as to whether the conduct will:
prejudice Australia’s national security, or
harm or prejudice Australia’s economic interests, or
disrupt state or Federal Government functions, or
damage public infrastructure,
preparing or planning sabotage or the introduction of vulnerability to public infrastructure.
2.27
The proposed amendments will increase the maximum penalty for a sabotage offence from 15 years to 25 years. The maximum penalties for the other offences introduced into this Division range from seven to 20 years imprisonment.
2.28
The Bill creates a defence against the Division for certain conduct by public officials, in addition to the general defences available in Part 2.3 of the Criminal Code.
2.29
The amendments require the Attorney-General to consent to a person being committed for trial for offences against this Division. The Bill proposes that, when deciding whether to provide this consent, the Attorney-General must consider whether the person’s conduct might be authorised in a way mentioned in the defences outlined in the Division. The Attorney-General’s consent is not required to arrest, charge or remand an accused person in custody or on bail.

Other threats to security (Item 8)

2.30
The Bill inserts new versions of other existing offences against the state into Part 5.1, Division 83 of the Criminal Code, including:
advocating mutiny—renamed and with broader application than the ‘inciting mutiny’ offence in Part II of the Crimes Act 1914, and carrying a reduced maximum penalty,
assisting prisoners of war to escape—which will carry a reduced maximum penalty compared to the existing offence in Part II of the Crimes Act 1914,
military-style training involving a foreign government principal—renamed from the ‘unlawful drilling’ offence in Part II of the Crimes Act 1914 and carrying an increased maximum penalty, and
interference with political rights and duties, renamed from the existing ‘interfering with political liberty’ offence in Part II of the Crimes Act 1914 and carrying an increased maximum penalty.
2.31
The penalties for these offences will range from seven to 20 years imprisonment.
2.32
The amendments require the Attorney-General to consent to a person being committed for trial for these offences. This is not currently required. The Bill proposes that when deciding whether to consent to committing the accused person to trial for the offence of ‘military-style training involving foreign government principal’ or ‘interference with political rights and duties’ the Attorney-General must consider whether the person’s conduct might be authorised in a way mentioned in the defences outlined in Division 83. The Attorney-General’s consent is not required to arrest, charge or remand an accused person in custody or on bail.

Espionage and related offences (Item 17)

2.33
Schedule 1 will amend Part 5.2 (Division 91) of the Criminal Code to replace current espionage laws. The new offences deal with information or articles ‘made available’ to foreign principals. The Bill introduces a range of new offences relating to espionage, including:
dealings with information intentionally or recklessly prejudicing Australia’s national security (proposed sections 91.1 and 91.2),
dealing with information that has a security classification or that ‘concerns’ Australia’s national security (proposed section 91.3),
aggravated espionage offences (proposed section 91.6),
espionage on behalf of a foreign principal (proposed section 91.8)
soliciting, procuring, or making it easier to commit an espionage offence (proposed section 91.11), and
preparing for an espionage offence (proposed section 91.12).
2.34
The offences will be broader in scope than current espionage offences, capturing a range of information including classified information; information concerning Australia’s ‘national security’; and any other information made available to a foreign principal with intent or recklessness as to national security.
2.35
For the purposes of Part 5.2, and Division 82 of Part 5.1 of the Criminal Code, the amendments will introduce a definition of the ‘national security’ of Australia and other countries. The definition is similar to but broader in scope than the definition of Australia’s ‘security’ provided in the Australian Security Intelligence Organisation Act 1979,[4] and will include a country’s political, military or economic relations with other countries.
2.36
The amended espionage offences will increase the maximum penalty for espionage offences from 25 years imprisonment to imprisonment for life. The penalties for other offences introduced into Part 5.2 range from maximum terms of 15 to 25 years imprisonment.
2.37
A range of defences against the proposed offences will be introduced, in addition to the general defences available in Part 2.3 of the Criminal Code.
2.38
Schedule 1 continues to require the Attorney-General to consent to a person being committed for trial for offences against Part 5.2. The Bill proposes that when deciding whether to consent to committing the accused person to trial the Attorney-General must consider whether the person’s conduct might be authorised in a way mentioned in the various defences outlined in Part 5.2. The Attorney-General’s consent is not required to arrest, charge or remand an accused person in custody or on bail.

Foreign interference and theft of trade secrets (Item 17)

2.39
Schedule 1 will insert nine new foreign interference offences into Part 5.2 (Division 92) of the Criminal Code, including:
intentional or reckless foreign interference,
preparing for a foreign interference offence, and
recklessly or knowingly supporting, funding or being funded by a foreign intelligence agency.
2.40
The proposed offences are intended to target conduct that is described as ‘falling short’ of traditional espionage, treason and secrecy offences.[5] The new offences will capture conduct undertaken on behalf of, or in support of, a foreign principal; and which is covert, deceptive, menacing or undisclosed. ‘Foreign principal’ will be defined broadly to encompass a range of foreign actors: including public organisations, public enterprises, terrorist organisations and the local or regional governments of foreign countries.
2.41
A range of defences against the proposed offences will be introduced, in addition to the general defences available in Part 2.3 of the Criminal Code.
2.42
The Bill also inserts a new offence for theft of trade secrets involving a foreign government principal into Part 5.2 (Division 92A). The new division will make it an offence to dishonestly receive, obtain, take, copy or duplicate, sell, buy or disclose information that is a trade secret on behalf of a foreign government principal.
2.43
Schedule 1 continues to require the Attorney-General to consent to a person being committed for trial for offences against Part 5.2. The Bill proposes that when deciding whether to consent to committing the accused person to trial the Attorney-General must consider whether the person’s conduct might be authorised in a way mentioned in the various defences outlined in Part 5.2. The Attorney-General’s consent is not required to arrest, charge or remand an accused person in custody or on bail.

In Camera Proceedings (Item 19)

2.44
The amendments proposed in Schedule 1 will enable judicial officers to hold a broader range of proceedings relating to Part 5.2 of the Criminal Code in camera. Currently, section 93.2 of the Criminal Code enables judicial officers to order proceedings heard in federal courts, territory courts, or other courts exercising federal jurisdiction to be held in camera where it is in the ‘interest of the security or defence of the Commonwealth’. The proposed amendments will change this threshold, to being in the interests of Australia’s ‘national security’, which will be defined to include Australia’s political, military or economic relations with other countries.

Destroying or damaging Commonwealth property (Item 22)

2.45
The offence of destroying or damaging Commonwealth property will be removed from Part II of the Crimes Act 1914 and inserted into Part 7.2 of the Criminal Code, which deals with theft and other property offences. The penalty for this offence will not be changed, and remains as a maximum term of ten years of imprisonment.

Schedule 2 - Secrecy

2.46
Schedule 2 introduces a new Part 5.6 to the Criminal Code to replace the current secrecy provisions set out in Parts VI and VII of the Crimes Act 1914.
2.47
The proposed offences are broader in scope than current offences. The provisions capture the conduct of any person, and any type of information, so long as that information was originally made or obtained by a person by reason of that person being a Commonwealth officer or otherwise engaged to work for the Commonwealth.
2.48
The offences proposed in Schedule 2 will regulate conduct involving ‘inherently harmful information’ (proposed section 122.1); conduct involving any information which does, will or is likely to cause harm to Australia’s interests (proposed section 122.2). The offences will capture:
‘dealings’, including intentionally receiving, obtaining, collecting, possessing, making a record of, copying, altering, concealing, communicating, publishing or making information available,
removing information from its place of proper custody or holding such information outside a proper place of custody,
failing to comply with a direction regarding the retention, use or disposal of such information, and
aggravated offences for the above conduct (proposed section 122.3).
2.49
Schedule 2 will also replace the existing offence of unauthorised disclosure by a current or former Commonwealth officer in section 79 of the Crimes Act 1914 with a similar offence in section 122.4 the Criminal Code.

Inherently harmful information

2.50
The offences proposed in section 122.1 create, in effect, a general prohibition on all ‘dealings’ with ‘inherently harmful information’ made or obtained by a Commonwealth officer or person otherwise engaged to work for the Commonwealth, by virtue of their position. ‘Inherently harmful information’ is defined in section 121.1 to include:
security classified information,
information made or obtained by a domestic or foreign intelligence agency,
information relating to the operations, capabilities, technologies of, methods or sources used by domestic of foreign law enforcement agencies, or
information compulsorily acquired by the Commonwealth from a person.
2.51
In contrast to the provisions in proposed section 122.2, the offences do not require the person dealing with the information to cause harm, or intend to cause harm to Australia’s national security, or Australia’s interests.

Conduct causing harm to Australia’s interests

2.52
The offences in proposed section 122.2 criminalise dealings with any information made or obtained by a person by reason of that person being a Commonwealth officer or otherwise engaged to work for the Commonwealth, where the conduct causes, will cause or is likely to cause harm to Australia’s interests. The phrase ‘cause harm to Australia’s interests’ is defined in proposed section 121.1 to include interfering with or prejudicing:
the prevention, detection, investigation, prosecution or punishment of Commonwealth criminal offences and civil penalty provisions,
certain functions of the Australian Federal Police,
Australia’s international relations, meaning Australia’s political, military and economic relations with foreign governments and international organisations,[6]
the relations between the Commonwealth and a State or Territory; and
the health or safety of the public or a section of the public.

Defences

2.53
The amendments include a range of defences to these offences. The defendant bears an evidential burden in relation to these defences, which means that the defendant must point to evidence that suggests a reasonable possibility that the defence is made out. If achieved, the prosecution must then refute the defence beyond reasonable doubt.
2.54
All persons dealing with ‘inherently harmful information’ will need to rely upon these provisions.

Penalties

2.55
The maximum sentence for a breach of the secrecy provisions will be increased from the current seven year maximum penalty, to a maximum penalty of 20 years imprisonment for aggravated offences. The penalties range between two and 20 years imprisonment.

Consent not required to initiate proceedings

2.56
The consent of the Attorney-General is not proposed to be required to institute proceedings against a person for any of the secrecy offences. This is in contrast to the current ‘official secrets’ offence contained in section 79 of the Crimes Act 1914.[7]

Schedule 3 - Aggravated offence for giving false or misleading information

2.57
Schedule 3 amends Division 137 of Part 7.4 of the Criminal Code to create a new aggravated offence for providing false or misleading information. The offence arises where a person gives false or misleading information or omits certain information in connection with an Australian Government security clearance. The underlying offence carries a maximum penalty of imprisonment for one year. The proposed aggravated offence will carry a maximum penalty of imprisonment for five years.

Schedule 4 - Telecommunications serious offences

2.58
Schedule 4 amends the definition of ‘serious offence’ in section 5D of the Telecommunications (Interception and Access) Act 1979. The proposed amendments will enable the Australian Federal Police, the Australian Commission for Law Enforcement Integrity and the Australian Criminal Intelligence Commission to apply to an issuing authority for a telecommunications interception warrant for the purpose of investigating the offences proposed in the Bill.

Schedule 5 - Foreign Influence Transparency Scheme

2.59
Schedule 5 of the Bill will amend the Foreign Influence Transparency Scheme Act 2017 (FITS Bill), if and once the Foreign Influence Transparency Scheme Bill 2017 and the Electoral Legislation Amendment (Electoral Funding and Disclosure Reform) Bill 2017 have been passed by the Parliament. The amendments will:
align the disclosure threshold for donor activity under the Foreign Influence Transparency Scheme with the disclosure threshold in the Commonwealth Electoral Act ($13 500),[8] and
import the term ‘political campaigners’[9] into the Foreign Influence Transparency Scheme so that:
lobbying a political campaigner could be a registrable activity, and
influencing processes in relation to a political campaigner could be a registrable activity.

[1]     

Explanatory Memorandum, p. 11.

[2]     

Explanatory Memorandum, p. 11.

[3]     

Explanatory Memorandum, p. 11.

[4]     

Section 4 of the Australian Security Intelligence Organisation Act 1979 provides: ‘security means:
(a) the protection of, and of the people of, the Commonwealth and the several States and Territories from:
(i) espionage;
(ii) sabotage;
(iii) politically motivated violence;
(iv) promotion of communal violence;
(v) attacks on Australia’s defence system; or
(vi) acts of foreign interference;
whether directed from, or committed within, Australia or not; and
(aa) the protection of Australia’s territorial and border integrity from serious threats; and
(b) the carrying out of Australia’s responsibilities to any foreign country in relation to a matter mentioned in any of the subparagraphs of paragraph (a) or the matter mentioned in paragraph (aa).

[5]     

Attorney-General’s Department, Submission 6, p. 7.

[6]     

Proposed section 121.1 adopts the definition of ‘international relations’ provided in the National Security Information (Criminal and Civil Proceedings) Act 2004, which provides: ‘international relations means political, military and economic relations with foreign governments and international organisations’.

[7]     

Crimes Act 1914, section 85. Note: the existing offence ‘Disclosure of information by Commonwealth officers’ contained in section 70 of the Crimes Act 1914 (largely replicated in proposed section 122.4 of the Criminal Code), does not currently require consent to proceed.

[8]     

The Electoral Bill will amend the definition of ‘disclosure threshold’ in the Commonwealth Electoral Act 1918 to be $13 500 (which will be subject to indexation).

[9]     

The term political campaigner will be a new definition inserted into the Commonwealth Electoral Act 1918 to mean a person or entity that is registered as a political campaigner under section 287L (this will cover entities where the amount of political expenditure incurred by or with the authority of the person or entity during that or any one of the previous 3 financial years is $100 000 or more; or the amount of political expenditure incurred by or with the authority of the person or entity: during that financial year is $50 000 or more; and during the previous financial year was at least 50% of the person or entity’s allowable amount).