Note: Where available, the PDF/Word icon below is provided to view the complete and fully formatted document
Foreign Affairs, Defence and Trade Legislation Committee - Senate Standing - Australian Civilian Corps Bill 2010 [Provisions] - Report, dated November 2010


Download PDF Download PDF

Ok « 3» Australian Senate

Senate Legislation Committees

Reports on the consideration of bills July-December 2010

Volume 2

Australian Senate

Senate Legislation Committees

Reports on the consideration of bills

July-December 2010

Volume 2

Foreign Affairs, Defence and Trade Committee Legal and Constitutional Affairs Committee

Rural Affairs and Transport Committee

© Parliament of the Commonwealth of Australia 2010

ISSN 1834-4062

This document was printed by the Printing Unit, Department of the Senate, Parliament House, Canberra.

TABLE OF CONTENTS

Foreign Affairs, Defence and Trade Committee • Australian Civilian Corps Bill 2010*, dated November 2010....................................1

Legal and Constitutional Affairs Committee • Aviation Crimes and Policing Legislation Amendment Bill 2010, dated November 2010....................................................................................................... 37

• Corporations Amendment (Sons of Gwalia) Bill 2010*, dated November 2010..........................................................................................................................63

• Crimes Legislation Amendment Bill 2010, dated November 2010...................... 101

• Criminal Code Amendment (Misrepresentation of Age to a Minor) Bill 2010, dated June 2010..........................................................................................137

• Evidence Amendment (Journalists' Privilege) Bill 2010 and Evidence Amendment (Journalists' Privilege) Bill 2010 (No. 2), dated November 2010........................................................................................................................171

Rural Affairs and Transport Committee • Airports Amendment Bill 2010*, dated November 2010.................................. 205

* Provisions of bill referred to committee.

-

The Senate

Foreign Affairs, Defence and Trade Legislation Committee

Australian Civilian Corps Bill 2010 [Provisions]

November 2010

1

© Commonwealth of Australia 2010

ISBN 978-1-74229-367-7

Printed by the Senate Printing Unit, Parliament House, Canberra.

2

Core members

M embers o f the committee

Senator Mark Bishop, ALP, WA (Char) Senator Russell Trood, LP, QLD (Deputy Chair) Senator Michael Forshaw, ALP, NSW Senator Steve Hutchins, ALP, NSW Senator Helen Kroger, LP, VIC Senator Scott Ludlam, AG, WA

Secretariat

Dr Kathleen Dermody, Committee Secretary Ms Jane Thomson, Principal Research Officer Ms Erja Vanhalakka-Stephenson, Senior Research Officer

Ms Pamela Corrigan, Research Officer Ms Angela Lancsar, Administrative Officer

Senate Foreign Affairs, Defence and Trade Committee Department of the Senate PO Box 6100

Parliament House Canberra ACT 2600 Australia

Phone: + 61 2 6277 3535 'Fax: +61 2 6277 5818 Email: fadt.sen@aph.gov.au

Internet: www.aph.gov.au/Senate/committee/fadt_ctte/index.htm

iii 3

4

Table o f contents

M em bers of the com m ittee......................................................................................iii

C hapter 1 ..................................................................................................................... 1

Introduction.............................................................................................................. 1

Background............................................................................................................. 1

Purpose of the bill................................................................................................... 1

Conduct of the inquiry............................................................................................ 1

Scrutiny of Bills Committee................................................................................... 2

Submissions............................................................................................................ 2

Acknowledgement.................................................................................................. 2

C hapter 2 ..................................................................................................................... 3

Background to the bill.............................................................................................. 3

Origins of the Australian Civilian Corps................................................................ 4

The Australian Civilian Corps................................................................................ 6

C hapter 3 ..................................................................................................................... 9

Provisions of the bill................................................................................................. 9

Purpose of the Bill.................................................................................................. 9

The ACC register...................................................................................................10

Statement—humanitarian and development objectives....................................... 11

ACC values and code of conduct..........................................................................12

Breaches of code....................................................................................................14

Right to review..................................................................................................... 15

Terms and conditions of employment.................................................................. 16

Safety and security—duty of care........................................................................ 21

Returning to employment after deployment......................................................... 24

Delegation of minister's power............................................................................. 25

Reporting obligations........................................................................................... 26

Further consultation.............................................................................................. 27

Conclusion............................................................................................................ 27

Appendix 1 ................................................................................................................. 29

Public submissions.................................................................................................. 29

6

Chapter 1

Introduction

Background

1.1 The Australian Civilian Corps Bill 2010 was introduced in the House of Representatives on 23 June 2010. The following day, the Senate referred the provisions of the bill to the Senate Foreign Affairs, Defence and Trade Legislation Committee for inquiry and report by 24 August 2010. On 19 July 2010, the Governor- General prorogued the 42nd Parliament and dissolved the House of Representatives.

On 24 August 2010, the committee tabled its report out of session informing the Senate that after due consideration, it had resolved not to continue its inquiry into the provisions of the bill. It noted that if the bill were reintroduced in the new parliament, the Senate may again refer it to the committee for inquiry.

1.2 On 30 September, the Minister for Foreign Affairs re-introduced the bill into the House of Representatives and on the same day the provisions of the bill were referred to the committee with a reporting date of 17 November 2010.

1.3 The committee notes that, when recommending the proposed legislation for inquiry and report, the Selection of Bills Committee identified the following principal issues for consideration:

• concerns relating to costs and logistics, and adequate protection for Australians working overseas under the program; and

• the potential for conflicts of interest arising from AusAID selecting civilian specialists who may be AusAID employees as they are not excluded from applying.1

Purpose of the bill

1.4 The purpose of the bill is to establish the Australian Civilian Corps and to provide the legal framework for the employment and management of Australian Civilian Corps employees. The Corps is to consist of persons engaged as Australian civilian corps employees to perform duties overseas.

Conduct of the inquiry

1.5 During its first inquiry, the committee advertised the inquiry in thq Australian on 30 June, 14 July and 11 August. It also wrote to relevant ministers and departments calling for written submissions and contacted a number of other organisations,

1 Selection of Bills Committee, Report No. 11 o f2010, 30 September 2010, Appendix 2.

2

commentators and academics inviting them to make submissions to the inquiry. The committee received one submission.

1.6 Once the bill was re-referred, the committee again advertised the inquiry in the Australian and wrote to many individuals and organisations, including the Community and Public Sector Union (CPSU), seeking written submissions.

Scrutiny of Bills Committee

1.7 The Senate Standing Committee for the Scrutiny of Bills considered the Bill and raised a number of concerns, which are discussed in chapter 3.

Submissions

1.8 The committee received three additional submissions. All submissions are listed at Appendix 1. The committee agreed that, based on the submissions, a public hearing was not required but wrote to AusAID seeking additional information or advice on a number of matters raised in the submissions and by the Scrutiny of Bills Committee. AusAID was unable to respond in time for its answers to be incorporated in the report.

Acknowledgement

1.9 The committee thanks all those who assisted with the inquiry.

8

Chapter 2

Background to the bill

2.1 Over recent years, many countries and international organisations have acknowledged the need to have deployable civilian expertise standing ready to assist in the immediate aftermath of conflict.1 In his report to the Security Council, the Secretary-General stated:

Decades of international experience have taught us that, while every case is unique, certain types of support are almost always needed. Time and again, war-ravaged people have asked us to help them establish security and safety, restore basic services and core Government functions, support a political transition and jump-start economic recovery.1 2

2.2 Despite this recognised need for early and better targeted assistance, the international community, as expressed through the United Nations, concedes that it often fails to provide civilian experts such as judges, police officers, administrators and engineers, and when it does it is too late and the numbers are insufficient. For example, the Secretary-General reported that too often the international community has missed the early window of opportunity to provide basic security and shore up and build confidence in political processes and strengthen core national capacity necessary

for sustainable peace. He said:

Time and again, we have failed to catalyse a response that delivers immediate, tangible results on the ground. Often, it has taken many months before essential government functions resume or basic services are available. In some cases, it has taken several years before the international community has aligned its efforts behind a common strategic vision.

Capacities and resources have been insufficient to meet urgent demands on the ground. Even though capacity is limited, we frequently struggle to focus scarce resources on a limited set of agreed results that can enhance confidence in and commitment to a peaceful future.3

1 UN Security Council, 'Security Council hears 60 speakers, asks Secretary-General to advise organisation within one year on best ways to support national peace building efforts', 20 May 2008. SC/933, http://www.un.org/News/Press/documents/2008/sc9333.doc.htm (accessed 2 July 2009) and UN Security Council, Annex to letter dated 2 May 2008 from the Permanent Representative of the UK to the UN addressed to the President of the Security Council,

S/2008/291.

,2 United Nations Security Council, 'Report of the Secretary-General on peace-building in the immediate aftermath of conflict, S/2009/304'. S/PV.61, 22 July 2009, p. 4.

3 United Nations, General Assembly, Security Council, 'Report of the Secretary-General on peacebuilding in the immediate aftermath of conflict' A/63/881-S/2009/304, 11 June 2009, http://www.securitycouncilreport.org/atf/cf/%7B65BFCF9B-6D27-4E9C-8CD3- CF6E4FF96FF9%7D/PCS%20S%202009%20304.pdf (accessed 22 October 2010).

9

4

2.3 A number of countries have already taken steps within their respective administrations to improve their civilian capacity for stabilisation, nation building and crisis management operations. They include the United States, the United Kingdom, Canada, Germany and the European Union. Australia is following their example and has begun to take concrete steps towards developing a deployable civilian capacity that can, when requested, respond quickly to crisis and post conflict situations.

Origins o f the Australian Civilian Corps

2.4 Australia has a long and established history of providing civilian personnel to assist in stabilisation and reconstruction operations around the world particularly in the Asia Pacific region. For example a number of government departments including BEAT, Attorney-General's Department, AusAID, Australian Electoral Commission, Customs, Department of Finance and Deregulation, Office of Financial Management, and Treasury, have contributed to peacekeeping operations in Bougainville, East Timor and Solomon Islands.

2.5 On numerous occasions, Australia has also provided civilian specialists, especially in health and reconstruction, to assist countries recover from the effects of natural disasters. For example, Australia provided civilian assistance following an earthquake and tsunami that hit Western Solomon Islands on 2 April 2007, which affected over 36,000 people, damaging or destroying thousands of houses across 304 communities.4 It also provided assistance in December 2008, when tens of thousands of people along the northern coast of PNG were displaced by a combination of king tides, high seas and two tropical depressions in the Pacific.5 Australian Civilian specialists also responded to the call for help following the September 2009 tsunami that struck Samoa and parts of Tonga, claiming over 140 lives and devastating villages along the south-east coast of Samoa.6 Around the same time a series of earthquakes caused widespread destruction in West Sumatra. A month later, Australians had cleared school sites, erected temporary education and health facilities, provided school supplies and were working with authorities in Padang to meet water supply needs.7

4 Queensland Government, Environment Protection Agency, 'Fact Sheet Solomon Islands tsunami', updated 16 May 2007; and AusAID, Solomon Islands, http://www.ausaid.gov.au/countrv/countrv.cfm?CountrvID=16&Region=SouthPacific (accessed 6 January 2009).

5 UN Office for the Coordination of Humanitarian Affairs, Regional Office for Asia and the Pacific, 'Papua New Guinea: Tens of thousands displaced by coastal flooding', Humanitarian News, 12 December 2008.

6 UN News service, 'Over 3,000 Samoans left homeless by deadly Pacific tsunami', http:www.un.org/apps/news/printnews.asp?nid=32443 (accessed 8 October 2009).

7 See AusAID website, 'Responding to regional disasters', Archived http://www.ausaid.gov.au/hottopics/topic.cfm7nU6431 7034 6666 3570 5245 (accessed 22 October 2010).

10

5

2.6 While Australian civilians have contributed to stabilisation and recovery efforts over many decades, recently some Australians identified the potential for Australia to improve its response in this area through a more coordinated whole-of- govemment approach to the recruitment, training and deployment of such personnel.8

Recognised need

2.7 The concept of 'a deployable public service' was raised by representatives attending the 2020 Youth Summit that meet in Canberra on 12 and 13 April 2008. The idea involved:

...the development of a 'bureaucratic reserve' of government officials available to assist in the development of governance in less developed countries and failed states.9

2.8 Meeting a week later, the 2020 group discussing Australia's future security and prosperity recognised that 'once intervention [in a crisis situation] began it was important that there was a structure to transition to capacity building, and ultimately to return sovereignty to the local population'. At this point, the group noted the idea generated at the Youth Summit for the establishment of a deployable public service and included this proposal in the list of ideas it presented to the government.10 1 1

2.9 Of the many proposals to come out of the 2020 gathering, the government responded favourably to this idea of a deployable public service and 'agreed to develop a policy framework to enable rapid deployment of civilian experts to assist in international disaster relief, stabilisation and post conflict reconstruction efforts'. It stated that once established, a national deployable civilian capacity would:

...allow more rapid and early delivery of stabilisation and recovery assistance to countries that experience conflict or natural disaster. The program will be sufficiently adaptable to allow Australia to tailor its response to a particular event or emergency and will improve Australia's

integration into multilateral reconstruction and stabilisation operations'.11

8 For example, in 2008, the committee found that to achieve an effective whole-of-govemment training framework for civilian deploying to an overseas operation, the Australian Government 'must find a way to integrate the separate training programs and ad hoc courses into a coherent whole.' It went on to suggest that a central agency was required to provide overarching strategic guidance and planning. See Standing Committee on Foreign Affairs, Defence and Trade, Australia's involvement in peacekeeping operations, August 2008, p. 179.

9 Australia 2020, Australia 2020 Summit Final Report, Commonwealth of Australia 2008, p. 367.

, 10 Australia 2020, Australia 2020 Summit Final Report, Commonwealth of Australia 2008, p. 378.

11 Australian Government, Responding to the Australia 2020 Summit, Commonwealth of Australia, 2009, p. 227 or p. 240, http://www.australia2020.gov.au/docs/govemment response/2020 summit response full.pdf (accessed 22 October 2010).

11

6

2.10 During 2009, AusAID led a whole-of-govemment taskforce, comprising members from Defence, AFP, PM&C, the Australian Government Solicitor and Attorney-General's Department, to formulate policy for developing an Australian

deployable civilian capacity. Mr Robert Jackson, who was leading the team, informed the committee in June 2009 that no new agency would be created. Australia's deployable civilian capacity was not intended to be a humanitarian initiative; it was to provide 'technical experts for post-conflict and post-disaster environments to start the

stabilisation and reconstruction phase'. He explained that the term 'reconstruction' should be interpreted in a broader context—'the economy, the machinery of government and essential services as well'. The intention was to have people pre­ identified so that the process of getting people on the ground to assist was speeded up.12 The 2009 Budget statement on Australia's International Development Assistance Program announced that in cooperation with other government agencies, AusAID would:

...pre-identify, train, deploy rapidly and sustain civilian technical expertise. The program will build on Australia's experience of deploying civilian experts in post-conflict situations, for example in East Timor and Solomon Islands, and improve Australia's integration into multilateral reconstruction and stabilisation operations.13

In January 2010, AusAID published a document that provided detailed information about the proposed Australian Civilian Corps (ACC).14

The Australian Civilian Corps

2.11 The ACC is intended to enable Australia to deploy civilian specialists rapidly to contribute to stabilisation and countries affected by natural disaster or conflict. It will comprise a register of up to 500 civilians chosen for their knowledge and skills in areas such as public administration and finance, law and justice, engineering, health administration and community development and for their ability to work in demanding overseas environments. They are to be drawn from all levels of government and the broader Australian community and stand ready to be called up for overseas service when a country requests assistance to cope with an emergency or crisis situation. According to AusAID, register personnel 'will be expected to be able to deploy within 28 days for assignments up to three to six months'.15

12 Committee Hansard, 19 June 2009, pp. 40-41.

13 Statement by the Hon. Stephen Smith MP , Minister for Foreign Affairs and the Hon Bob McMullan MP, Parliamentary Secretary for International Development Assistance, Budget Australia's International development Assistance Program, A Good International Citizen, 12 May 2009, p.41.

14 AusAID, The Australian Civilian Corps, Supporting stabilisation and recovery from disaster and conflict, January 2010.

15 AusAID, The Australian Civilian Corps, Supporting stabilisation and recoveiy from disaster and conflict, January 2010, pp. 3 and 16.

12

7

2.12 AusAID stated that all ACC personnel will receive comprehensive training prior to deployment. They will undertake core training after joining the register and training specific to their particular assignment prior to any deployment. The training programs are to ensure that they 'can perform effectively in challenging overseas

environments and integrate well with other deployed Australian Government personnel, host countries and multilateral organisations'.16 The training would be designed to build competencies specific to overseas deployment that range from the more general competencies including understanding stabilisation and recovery practices, first aid, teamwork and leadership skills to situational and cultural awareness.

2.13 The Office of the Australian Civilian Corps, located in AusAID in Canberra, is to manage deployments in cooperation with other government agencies. It will develop the register over four years and be responsible for:

• recruiting civilian specialists onto the Australian Civilian Corps register;

• ensuring that register personnel are prepared for deployment;

• strategic planning for deployments;

• managing deployments including logistics, human resource and security matters;

• implementing public communication strategies; and

• providing support for whole-of-govemment input and advice.

2.14 The Office is to provide appropriate deployment program design, risk- management and security arrangements for deployments. AusAID explained that the Office would consist of AusAID staff and secondees from other Government departments such as Prime Minister and Cabinet, Department of Foreign Affairs and Trade, Defence, Australian Federal Police and the Australian Government Solicitor.17

2.15 Those on the register are to remain in their regular employment until agreeing to deploy. They will be paid a salary, commensurate with the environment into which they are going. While on deployment, they may work in-line with host government officials or as advisors. The Australian Government has established an interim

deployment capacity and intends to have the ACC fully operational by 2011.18

16 AusAID, The Australian Civilian Corps, Supporting stabilisation and recovery from disaster and conflict, January 2010, pp. 12-13.

17 AusAID, The Australian Civilian Corps, Supporting stabilisation and recovery from disaster and conflict, January 2010, p. 19.

18 AusAID, The Australian Civilian Corps, Supporting stabilisation and recovery from disaster and conflict, January 2010, p. 20 and Statement by the Hon. Stephen Smith MP , Minister for Foreign Affairs and the Hon Bob McMullan MP, Parliamentary Secretary for International Development Assistance, Budget Australia's International Development Assistance, A Good International Citizen, 11 May 2010, p. 31.

13

8

2.16 Submitters to the inquiry and analysts such as Anthony Bergin and Bob Breen support the concept of Australia developing a deployable civilian capability.19 For example, the CPSU noted the importance of having 'a group of people who can be quickly deployed to provide timely and appropriate assistance in stabilisation, recovery and development planning activities to countries affected by natural disasters and conflict'.20 The committee also notes that the establishment of the ACC is consistent with measures taken by some other countries to develop their deployable civilian capacity and with the United Nations' call for improved responses to post conflict situations.

2.17 While there is strong support for the establishment of the ACC, a number of submitters and the Senate Standing Committee for the Scrutiny of Bills have raised specific concerns about certain provisions of, or omissions from, the proposed

legislation. The CPSU went so far as to question the need for a new and separate employment framework. It stated that the Public Service Act 'comes with a decade of precedent in its application' and 'a new Bill, to deal with the temporary employment of people in highly stressful situations is of concern'.21

Committee view

2.18 The committee recognises that the establishment of the ACC is in keeping with international developments and is a practical and sensible way of managing Australia's deployments of civilian specialists to countries affected by conflict or natural disaster. While the committee fully supports the policy, its focus in this report is on the employment framework that is to be established under the provisions of the bill.

2.19 The committee notes the CPSU's view that there appears to be no compelling reason for separate legislation and that the Public Service Act provides an appropriate employment framework for ACC personnel who will be engaged as Commonwealth employees. The committee understands, however, that the government's intention was to establish a legal and employment framework that would be designed especially to meet the particular demands placed on ACC personnel. Even so, in light of the standing of the Public Sei-vice Act 1999, the committee in the following chapter relies on it as a model against which to assess the provisions of the bill.

19 Anthony Bergin and Bob Breen, 'Rudd's Army: A Deployable Civilian Capacity for Australia', Policy Analysis, Australian Strategic Policy Institute, 25 May 2009.

20 Submission 3, p. 1.

21 Submission 3, p. 1.

14

Chapter 3

Provisions of the bill

Purpose of the Bill

3.1 The purpose of this bill is to establish the Australian Civilian Corps (ACC) and create a legal framework for the employment and management of ACC employees.1 Under the provisions of the bill, civilian specialists are to be engaged 'as a new category of Commonwealth employee', to work in crisis environments overseas for specific periods before returning to their regular employment'.1 2 The bill provides for terms and conditions and other employment arrangements that are designed specifically for this unique kind of employment.

Overseas jurisdiction

3.2 Clause 8 provides that the bill will apply to all actions, omissions, matters and things overseas. This clause expressly extends the application of the bill to things that take place outside Australia.3

The Director-General

3.3 If enacted, the bill would confer responsibility on the Director-General of AusAID, under the Minister for Foreign Affairs, for managing the ACC. On behalf of the Commonwealth, the Director-General would have 'all the rights, duties and powers

of an employer in respect of ACC employees'.4

Employees

3.4 Clause 19 provides for the Director-General to engage persons as ACC employees. They may be engaged for the purposes of performing or potentially performing duties overseas, and/or performing duties in Australia that are incidental, preparatory or ancillary to the performance or potential performance of overseas

duties. According to the Explanatory Memorandum, these duties might include undertaking training in Australia prior to a deployment or attending debriefing after a deployment.5

1 Explanatory Memorandum, Outline and paragraph, 4.

2 The Hon. Kevin Rudd, House o f Representatives Hansard, 30 September 2010, p. 2.

3 See also Explanatory Memorandum, paragraph 20.

4 Clause 18.

5 Explanatory Memorandum, paragraph 54.

3.5 The bill states that ACC employees must be engaged for a specified period, which can be extended subject to limitations prescribed by regulations.6 For example regulations could be promulgated under this provision, imposing a limitation of 3 years on the term of employment or restricting to two the number of times an

employee’s term could be extended.7 According to the Explanatory Memorandum, these provisions reflect the time-limited nature of deployments for ACC employees. There would be no ongoing ACC employees.8

3.6 The provisions of the bill allow for a person employed by the Commonwealth in another capacity to be engaged as an ACC employee. People who are not Commonwealth public servants are also eligible for employment with the ACC.9

The ACC register

3.7 As noted in the previous chapter, AusAid has created a register that will be developed over the next four years. The Office of the Australian Civilian Corps has responsibility for maintaining the register, for recruiting and preparing specialists for overseas deployment and managing the deployments. In its submission, the CPSU noted the lack of detail about the operation of this register and asked:

Who is eligible to apply for the register? Does it have an expiry date? What is the relationship of someone on the register to the Commonwealth or AusAID Director General? Who maintains the register? Who decides who is on the register? Is there really to be a register? If so, the register and details about its operation need to be included in the Bill.10 1 1

3.8 The committee notes that an AusAID publication, The Australian Civilian Corps, Supporting stabilisation and recovery from disaster and conflict, provides information about the register, and gives some indication of the personnel who would be eligible to register. AusAID also has information on its website about the Corps, and the people it is looking to place on the register. It explains that specialists would be chosen for inclusion on the deployment register based on their expertise and demonstrated experience in relevant areas. It notes that they would 'require personal attributes appropriate for deployment into difficult environments such as self-reliance, flexibility, cross-cultural sensitivity and resilience and would undergo medical and police checks. AusAID provides a comprehensive list of the technical expertise needed. Through its website, AusAID also invites interested people to contact the agency for more information.11

6 Subclause 19(2) and 19(3).

7 These examples were given in the Explanatory Memorandum , paragraph 54.

8 Explanatory Memorandum, paragraph 56.

9 Clause 19(6).

10 Submission 3, p. [3].

11 AusAID website, 'Australian Civilian Corps', http://www.ausaid.gov.au/acc/ (accessed 29 October 2010).

16

11

3.9 The committee is satisfied with the information available on the register and does not see the need for the proposed legislation to include detail on this matter.

Conflicts of interest

3.10 When referring the bill for inquiry, the Senate Selection of Bills Committee identified potential conflicts of interest arising from AusAID selecting civilian specialists who may be AusAID employees as a matter for consideration.12

3.11 The Australian Public Service Commission was of the view that the existing procedures applying to the Australian Public Service (APS) were 'sufficient for the Office of the Australian Civilian Corps to apply in the selection and management of personnel on the ACC register'. It noted that disallowing AusAID staff to be included

on the register 'could be detrimental to the overall objectives of the Australian Civilian Corps'.13

3.12 The committee accepts that making AusAID officers ineligible for engagement with the Corps would be both unfair to these officers and unnecessarily deny ACC the opportunity to engage AusAID officers with the required expertise and experience. To remove the risk of real or apparent conflicts of interest arising, the committee suggests that the Australia Government ensure that the selection process is transparent, without patronage or favouritism and based on merit. Further, that the

values and code covering the conduct of ACC employees provide appropriate advice and directions on recruitment and selection procedures (see also paragraphs 3.17 and 3.55-56).

Statement—humanitarian and development objectives

3.13 Although it welcomed the creation of the ACC, World Vision Australia (WVA) observed that some of the most important aspects of the proposed legislation were yet to be produced, including the ACC Values and the Code of Conduct. It noted:

As a highly visible new element o f A ustralia’s aid program, the ACC needs to be seen to be part o f AusAID and to be fully aligned with A ustralia’s international development and hum anitarian objectives. W hile noting that the detail o f this alignm ent will be described in the ACC Values, Code o f Conduct or other operational guidelines, W VA considers that a clause should be inserted into the draft bill to describe the purpose o f the A C C .14

12 Selection of Bills Committee, Report No. 11 o f 2010, 30 September 2010, Appendix 2.

13 Submission 2.

14 Submission 1 (made to the first inquiry).

17

12

3.14 World Vision Australia suggested that the legislation should 'specify the purpose of the ACC with regard to the achievement of Australia’s humanitarian and development objectives'.1"

3.15 The committee notes that the Public Service Act 1999 provides, as one of its objectives, a central guiding principle—'to establish an apolitical public service that is efficient and effective in serving the Government, the Parliament and the Australian public'.1 5 16 Although not necessary, the committee can see value in the proposed legislation making a clear statement on the overarching principle and objectives governing the operation of the ACC.

Recommendation 1

3.16 The committee recommends that the bill include a statement on the humanitarian and development purpose for establishing the Australian Civilian Corps.

ACC values and code of conduct

3.17 AusAID noted that ACC personnel would be required to adhere to a set of values 'tailored to the particular role of the ACC in assisting countries recover from disasters and conflict'. The values would provide the philosophical foundations for the ACC, set out the principles, standards and ethics to be embodied by the Corps and articulate its culture and operating ethos. They are also intended to 'guide personnel and underpin the Civilian Corps operations'. The Explanatory Memorandum stated that the values would be based on the APS Values, but designed 'to reflect the unique nature of the ACC and its overseas working environment'.17 According to AusAID, the values would also help inform selection processes.18

3.18 The bill does not elaborate on these values but clause 12 provides for regulations to be made that will prescribe them. Further, under clause 13, the Director- General may issue, by legislative instrument, directions in relation to the values for the purposes of determining their scope or application.19

3.19 There is also to be an ACC Code of Conduct that is to apply to ACC employees.20 Again this code is not specified in the proposed legislation but the bill

15 Submission 1 (made to the first inquiry).

16 Subsection 3(a), Public Service Act 1999.

17 Explanatory Memorandum, paragraphs 27-28.

18 AusAID, Tlje Australian Civilian Corps, Supporting stabilisation and recovery from disaster and conflict, January 2010, p. 17.

19 Clause 13.

20 Clause 15.

18

13

provides for the promulgation of regulations that may prescribe the code.ni The Explanatory Memorandum stated:

It is intended that the ACC Code of Conduct will be a public statement of the standards of behaviour and conduct that are expected of ACC employees. It is proposed that the ACC Code of Conduct will incorporate

elements of the APS Code of Conduct and will draw on the various overseas codes of conduct which already apply in APS agencies which have employees on duty overseas (including AusAID's Code of Conduct for Overseas Service).2 1 22

3.20 The bill requires the code to include a rule that ACC employees must at all times behave in a way that upholds the ACC Values.23 It also requires the Director- General to uphold and promote the ACC Values.24 2 5

3.21 The Australian Public Service Commission informed the committee that the Office of the Australian Civilian Corps had agreed to consult with the Commission on elements of the subordinate legislation that would govern the Australian Civilian Corps operation, including the ACC Values and Code of Conduct.-2

3.22 In its submission, the Australian Red Cross, which has extensive experience in providing humanitarian assistance, highlighted the importance of the ACC having clearly defined values.26 In the committee's view, AusAID should also consult with the Australian Red Cross in formulating its values and code of conduct.

3.23 The CPSU noted the proposal to link closely the ACC Values to those of the APS and to base the ACC Code of Conduct on the APS and various overseas codes already applying to APS agencies employing personnel on overseas duty. In its view, this connection should be stated in the primary legislation to ensure that the regulations reflect parliament's intention. In this regard, the committee notes that the APS Values and the APS Code of Conduct are contained in the Public Service Act. Given that the ACC Values and Code of Conduct are to be promulgated under regulations, the committee supports the CPSU's recommendations to amend clauses

12 and 15.

21 Clause 15.

22 Explanatory Memorandum, paragraphs 33-34.

23 Subclause 15(2).

24 Clause 14 and Explanatory Memorandum, paragraphs 32-34.

25 Submission 2.

26 Submission 4, p. [3],

19

14

Recommendation 2

3.24 The committee recommends that a new subsection (2) be added to section 12 as follows:

(2) Regulations made under this Section must provide that Australian Civilian Corps Values be consistent with the APS Values.

3.25 The committee recommends that a new subsection (1A) be added to section 15 as follows:

(1A) Regulations made under this Section must provide that Australian Civilian Corps Code of Conduct incorporate the APS Code of Conduct and the AusAID Code of Conduct for Overseas Service.

Breaches of code

3.26 The provisions of the bill contemplate that on occasion an ACC employee may breach the ACC Code of Conduct. Under clause 17 of the bill, the Director- General would be able to impose various sanctions on an ACC employee found to have breached the code. Such sanctions would include: termination of employment; re-assignment of duties; deductions from salary, by way of fine; and a reprimand.

3.27 These sanctions are modelled on those applying to a breach of the APS Code of Conduct but do not include a reduction in classification or in salary. The Explanatory Memorandum noted that these measures were omitted as such action was

'not considered appropriate given the short-term nature of most ACC employment'.27

3.28 Subclause 17(2) allows regulations to be made that may limit this power to impose sanctions, for example, by placing a ceiling on the amount that may be deducted from an employee’s salary by way of fine.28 Although this provision reflects the approach taken in section 15 of the Public Service Act 1999, the Scrutiny of Bills

Committee expressed concern about the power to impose a fine. In its view, this power 'is granted in very wide discretionary terms' and therefore sought the Minister's advice on whether some limits to its exercise should be prescribed in the primary legislation.29

3.29 Failing an amendment to the bill that would place reasonable constraints on the exercise of this power, the committee suggests that regulations made under subclause 17(2) provide guidance on the circumstances that would warrant a fine and on upper limits.

27 Explanatory Memorandum, paragraph 41.

28 Explanatory Memorandum , paragraph 40.

29 Senate Standing Committee for the Scrutiny of Bills, Alert Digest, No. 8 of 2010, p. 4.

20

Right to review

3.30 When dealing with the right to review, the provisions governing breaches of the code of conduct depart from those in the Public Service Act. Subclause 17(3) requires the Director-General to establish procedures for determining whether an ACC employee has breached the code. These procedures are not a legislative instrument.30 The provisions of the bill also allow for procedures that set out matters to be taken into account when determining a sanction.31 Subclause (6) provides that the procedures:

• must have due regard to procedural fairness;

• may be different for different categories of ACC employees; and

• must entitle an ACC employee to an internal AusAID review of the following decisions:

• that the employee has breached the ACC Code of Conduct; and

• to impose a sanction on the employee.32

3.31 Subclause 17(7) allows the Director-General to provide exemptions to the entitlement to an internal review relating to decisions on breaches and sanctions. As an example, a note to this subclause explains that the instrument might provide that there is no entitlement to review 'if the application for review is frivolous or vexatious'.

3.32 The Public Service Act also allows for exemptions to review but requires that any such exemptions must be made under regulation and hence subject to Parliamentary scrutiny. In addition, the Public Service Act has provisions which

afford an APS employee greater protections when seeking a review. For example, the committee notes that, while the Public Service Act allows for regulations to prescribe exemptions to the entitlement to review, it requires among other things for the regulations to:

...provide for an application for review to be referred to the Merit

Protection Com m issioner if the applicant is not satisfied with the outcome o f an initial review within the responsible A gency.33

___________________________________________________________________________________ 15_

30 Subclause 17(10).

31 Explanatory Memorandum, paragraphs 39-43.

32 The Explanatory Memorandum provides the following advice: 'There are two fundamental principles of procedural fairness; the hearing rule and the bias rule. The hearing rule requires a . decision-maker to give an opportunity to be heard to a person whose interests will be adversely affected by the decision. The bias rule requires a decision-maker to be disinterested or unbiased

in the matter to be decided'. Explanatory Memorandum, paragraphs 45— 46. Although not mentioned, another important safeguard ensuring procedural fairness is a person's right to have full knowledge of, and the evidence supporting, the allegation against them.

33 Paragraph 33(4)(c), Public Service Act 1999.

21

16

3.33 The committee is concerned about two critically important aspects of clause 17. Firstly, there is no provision for an external review. Secondly, the Director- General may impose sanctions for a breach of the Code of Conduct and establish procedures for determining whether an ACC employee has breached the Code including providing for exemptions to the entitlement for a review. Unlike those in the Public Service Act, these procedures are not legislative instruments.34

3.34 The Scrutiny of Bills Committee also raised concerns about the absence of any form of external merits review and the possible inappropriate delegation of legislative powers in the case of exceptions to the entitlement to review. It stated:

...in the context of breaches of the Australian Civilian Corps Code of Conduct, these [exceptions] are to be made by the Director-General and are (by subclause 17(1)) declared not to be a legislative instrument. For this reason, the power to provide for exceptions to the entitlement to review may be thought to make rights unduly dependent upon (potentially) non- reviewable decision.

The problem also gives rise to concerns that the power to make exceptions is inappropriately delegated as it is not subject to parliamentary scrutiny.35

3.35 The committee remains concerned about the wide discretionary powers that clause 17 confers on the Director-General especially in respect of the rights to a review and the absence of a provision allowing expressly for an external merits review.

Recommendation 3

3.36 The committee recommends that consistent with the Public Service Act, the bill require that exemptions to the entitlement to review be made under regulations and subject to Parliamentary scrutiny.

Recommendation 4

3.37 The committee recommends that the bill include a provision that would allow an ACC employee, following an adverse finding of AusAID's internal review, to apply for the matter to be referred to an external merits review authority. The committee suggests that this provision should be modelled on section 33 of the Public Service Act.

Terms and conditions of employment

3.38 AusAID explained that deployed civilian specialists would receive a remuneration package that reflected 'the particular conditions and hardships of each

34 Section 33, Public Service Act 1999.

35 Senate Standing Committee for the Scrutiny of Bills, Alert Digest, No. 8 of 2010, p. 5.

22

17

deployment'.36 Under the bill, the Director-General may from time to time determine in writing the remuneration and other terms and conditions of employment applying to an ACC employee or employees.37 While clause 20 enables the Director-General to make determinations with regard to ACC employees' terms and conditions, clause 9 states that the Australian Civilian Corps Act would operate subject to the Fair Work Act.38 A note to clause 20 also makes clear that the National Employment Standards under the Fair Work Act, which provide certain minimum entitlements to national system employees, would apply to ACC employees.39

Equity

3.39 The CPSU acknowledged that the Director-General's discretion to set terms of employment would be limited by the operation of the National Employment Standards. It was concerned, however, that the bill 'appears to allow the Director General to set employment conditions for Corps employees below minimum standards applying to Commonwealth employees generally'. It recommended that:

The Bill m ust be amended to ensure that any direction under s.20(l)

provides no less than the remuneration and other conditions o f employment provided for in a Fair W ork instrument and/or a W R Act collective

transitional instm m ent and other conditions which apply at that time to comparable employees engaged by AusA ID .40

3.40 The committee understands the CPSU's concerns to ensure that a benchmark is set that would guarantee that remuneration and other conditions of employment for an ACC employee would not fall below that of a comparable Commonwealth employee.

3.41 The CPSU was also concerned about equity issues under the employment arrangements specified in the Bill and the potential for Corps employees to be on different wages and conditions. It stated:

I f someone comes from outside the APS where their salary is not

maintained, they might be working on lower conditions than someone seconded from an APS agency which does have salary maintenance.

36 AusAID, The Australian Civilian Corps, Supporting stabilisation and recovery from disaster and conflict, January 2010, pp. 5 and 16.

37 Subclause 20(1).

38 Explanatory Memorandum, paragraphs 21 and 60-62. Subclause states that the Act has effect subject to the Fair Work Act 2009 and the Fair Work (Transitional Provisions and Consequential Amendments) Act 2009.

39 See for example note to Subclause 20(2). The Minister for Foreign Affairs stated that ACC employees would 'have all the rights and protections afforded to Commonwealth employees, and be covered by the same minimum standards of employment as other Australian employees under the Fair Work Act' The Hon. Kevin Rudd, House o f Representatives Hansard, 30 September 2010, p. 2.

40 Submission 3, p. [2],

23

18

Conversely, should APS employees on salary maintenance be more expensive than other employees, this raises concerns about preference not being given to APS employees because of the higher remuneration cost.41

3.42 It argued that these complex issues must be worked through before the Bill is finalised.42

3.43 The committee agrees with the CPSU that issues around matters such as equity need to be clarified. It recognises the difficulties, however, resolving such matters, especially where the circumstances of each engagement and the levels and types of skills required are so variable. The engagement of people from the private sector is a further complicating factor. It is of the view that the overarching policy governing the determination of employment arrangements needs to be stated clearly and implemented consistently and fairly. Transparency and access to information would enable potential applicants to judge for themselves whether or not to accept the terms and conditions of their employment.

3.44 As noted earlier, however, all employees enjoy the protections afforded under the Fair Work Act.

Accrual o f employment entitlements

3.45 The Public Service Commission was confident that officers transferring from the Public Service Act to the ACC would not incur any loss of terms and conditions, such as leave entitlements.43 The CPSU was not so convinced. With regard to matters such as superannuation, it noted that for APS employees seconded to the ACC, 'consideration must be given to the impact on these entitlements, with proper attention given to rectifying any possible detriment for those in defined benefit schemes'. It recommended that consideration must also be given to amending the bill to ensure that employment by the ACC counts as service for all purposes.44 It argued that the same principle should apply to a private sector employee:

There is a lack of clarity regarding continuity of 'service' if a private sector employee is given unpaid leave to work for the Corps. Does a private sector employee who is on unpaid leave from their normal employment to enable employment by the Corps still accrue Long Service Leave, redundancy entitlements, personal and other accrued entitlements with their normal employer during service with the Corps and how is that provided for under law?45

41 Submission 3, p. [4],

42 Submission 3, p. [4],

43 Submission 2.

44 Submission 3, p. [4],

45 Submission 3, pp. [5— 6].

24

19

3.46 The CPSU explained that the Fair Work Act 2009 defines 'service and continuous service' in relation to accrual of employment entitlements.46 It noted further that the Act 'provides that a period of unpaid leave or absence to perform eligible community service is ‘service’ with the employer who grants the leave without pay to enable the employee to perform the service.47 The Public Service Act

sets out what constitutes eligible community service in Division 8 of Part 2-2 and includes voluntary emergency management activity. In the union's view, the Act appears to exclude the absence of an employee to perform voluntary emergency management activity if that community service is paid employment.48 It argued:

As service with the Corps is paid, it appears that the Fair Work Act protections provided to employees performing eligible community service within Australia are currently not provided to employees taking up employment with the Corps.49

3.47 The CPSU suggested that the government 'should either amend the Fair Work Act 2009 or this Bill to ensure private sector employees are not disadvantaged in relation to accrued entitlements when employed by the Corps'.50

Recommendation 5

3.48 The committee recommends that the government look closely at the provisions governing accrued entitlements to ensure that employees who take up employment with the ACC are not disadvantaged in respect of entitlements such

as superannuation, long service and annual leave.

Leave from regular employer

3.49 The bill provides for leave to be granted to a Commonwealth employee for the purpose of employment with the Corps. Under clause 27, the Prime Minister may issue directions to a Commonwealth employer in relation to the granting of leave to Commonwealth employees for the purposes of service in the Corps.

3.50 The CPSU pointed out that the directions the Prime Minister may issue under clause 27(2) are not dependent upon an APS employee actually requesting leave without pay to work for the Corps. It argued that this arrangement was in contrast to clause 26(1) which provides an employer (other than a Commonwealth employer) may, at the request of an employee, grant unpaid leave to enable the employee to take up employment with the Corps.

46 Submission 3, p. [6] is referring to s.22, Fair Work Act 2009.

47 Submission 3, p. [6] is referring to s.22(2)(b)(i), Fair Work Act 2009.

48 Submission 3, p. [6] is referring to s. 109(2) Fair Work Act 2009.

49 Submission 3, p. [6],

50 Submission 3, p.[ 6],

25

2 0

3.51 It recommended that 'this anomaly should be rectified to guard against any suggestion that the government intends to allow Commonwealth employees to be required to take leave to begin service with the Corps without requesting such'.51 To remove any such doubt, the committee makes the following recommendation.

Recommendation 6

3.52 The committee recommends that paragraph 27(2)(a) of the bill be amended to include the term 'at the request of the employees'. Paragraph 27(2)(a) to read:

(a) the granting of leave to employees, at the request of the employees, for the purposes of service in the Australian Civilian Corps.

Suspension or termination o f employment

3.53 The bill provides for regulations to be made dealing with the suspension of ACC employees from their duties. In respect of terminating employment, the bill provides for the Director-General to terminate the employment of an ACC employee by written notice. Such actions are governed by the rules and entitlements that apply to termination of employment under the Fair Work Act.52 The committee notes that the Public Service Act requires that a written notice terminating the employment of an ongoing APS employee must specify the grounds for termination.53 Given the

significance of such a decision on an employee's reputation and career prospects, the committee believes that, if an ACC employee's employment with ACC is terminated, he or she should be entitled to know the reasons for their dismissal.

Recommendation 7

3.54 The committee recommends that subclause 23(2) be added requiring the notice to specify the ground or grounds that are relied on for termination.

3.55 The committee notes that the bill does not contain certain provisions that are in the Public Service Act including provisions covering protection for whistleblowers, prohibition on patronage and favouritism and promotion of employment equity.54 In

light of concerns expressed earlier about conflicts of interest and related probity matters, the committee suggests that the bill incorporate these sections from the Public Service Act.

51 Submission 3, p. [4],

52 Clause 23.

53 Section 29, Public Service Act 1999.

54 See sections 16,17 and 18, Public Service Act 1999.

26

21

Recommendation 8

3.56 The committee recommends that the government give consideration to including in the bill provisions governing the protection of whistleblowers, prohibition on patronage and favouritism and promotion of employment equity.

Safety and security— duty of care

3.57 When recommending that the provisions of the bill be examined, the Selection of Bills Committee identified concerns relating to the protection of ACC employees working overseas as matters for consideration.55 Subclause 19(4) permits the Director- General to impose conditions on engagement. These conditions may deal with probation, citizenship, fonnal qualifications, security, character and health clearances,

which may include psychological clearances. An employee may need to satisfy these conditions before employment commences or during the employment.56

3.58 According to AusAID: Ά rigorous recruitment process will underpin the selection of high calibre and experienced individuals', who would be required to undergo 'medical, psychological and security checks'.57 They are to be selected on

personal attributes appropriate to the environments in which they would work and include cross-cultural sensitivity, flexibility, self-reliance and resilience.58 AusAID explained that the safety of deployed civilian specialists would be a priority and noted

that 'during deployment planning, threat and risk assessments will be prepared and appropriate arrangements for security will be put in place'.59

3.59 The CPSU, however, expressed strong reservations about the occupational health and safety aspects of the proposed legislation. It argued that while deployed overseas, an ACC employee must have the same rights and obligations that they would have under Australian law if employed in Australia. The CPSU suggested that such rights and obligations should be protected in the proposed legislation. In its assessment, however, it was not clear where the duty of care resides. It stated:

The Bill appears to be part of a process of transitioning of civilian public servants into roles traditionally occupied by defence personnel, but without the health and safety support of defence organisations. AusAID for example currently has one staff counsellor for all of its Australian and overseas deployed personnel, and CPSU members advise that AusAID struggles to

55 Selection of Bills Committee, Report No. 11 o f2010, 30 September 2010, Appendix 2.

56 Explanatory Memorandum, paragraphs 55-57.

57 AusAID, The Australian Civilian Corps, Supporting stabilisation and recovery from disaster and conflict, January 2010, p. 11.

58 AusAID, The Australian Civilian Corps, Supporting stabilisation and recovery from disaster and conflict, January 2010, p. 11.

59 AusAID, The Australian Civilian Corps, Supporting stabilisation and recovery from disaster and conflict, January 2010, p. 17.

27

2 2

meet its duty of care to ensure that those working in high pressure/ traumatic/unstable situations are appropriately demobilised.60

3.60 In its view, there exists 'a significant risk for the government and for AusAID' with this transition to the 'new way of doing business'.61 The Australian Red Cross also recognised the need for careful and specific management when sending humanitarian and development specialists overseas to provide technical assistance in times of crisis. From its extensive experience, it produced a list of 'key learnings for

deployees' that may assist in the successful management of the ACC. They included obligatory pre-departure briefing and preparation, including safety and security and in country support whilst on deployment, including access to phsycosocial services.62

3.61 The committee notes that it raised a number of similar concerns in its report on Australia's involvement in peacekeeping. The government's response to recommendations in that report provide some insight into improvements made in mission planning and the pre-deployment preparation of military and civilian personnel. The government acknowledged the need for personnel to satisfy pre­ deployment training and the scope for further development and refinement of training modules.63 It should be noted that the Australian Red Cross has developed 'expertise in health and psychosocial support for deployees and such modules could be tailored to the needs' of the ACC.64

Secondment o f ACC employees

3.62 Subclause 24(1) allows the Director-General to arrange for an Australian Civilian Corps employee to be seconded for a specified period to anybody or organisation (including an international body or organisation). The CPSU held concerns for ACC employees under these arrangements. It noted:

Seconded employees are likely to be engaged in overseas locations suffering natural disaster or conflict. Such situations are often politically unstable and provide less personal security than one would expect to enjoy in Australia. When a Corps employee is seconded to another body or organisation, who controls the employee and does the body or organisation have a duty to provide a safe place and system of work, or does that duty remain with the Corps? This is a critical issue which needs to be

addressed.65

60 Submission 3, p. [5],

61 Submission 3, p.[ 5],

62 Submission 4, p. [4],

63 Senate Standing Committee on Foreign Affairs, Defence and Trade, Australia's involvement in peacekeeping operations, August 2008, pp. 177-8. Government Response to the Senate Standing Committee on Foreign Affairs, Defence and Trade report on Australia's involvement in peacekeeping operations, response to recommendation 11 and 12.

64 Submission 4, p. [5].

65 Submission 3, p. [7],

28

23

3.63 The CPSU argued further that Corps employees who are seconded to another body or organisation should not suffer a reduction in remuneration or conditions of employment (including the provision of appropriate accommodation and security) during that secondment. It stated that this objective 'should be guaranteed in the Bill rather than requiring individual employees to negotiate the terms of the secondment'.

It stated further:

Any Corps employee who is seconded must be provided with the same rights and obligations they would have under Australian law if they were employed within Australia. This is especially important in relation to occupational health and safety, workers compensation, the ability to initiate tort action, personal security, privacy, professional liability, due process in dealing with disputes arising from the seconded employment and other employment and civil rights.66

3.64 The committee notes that subclauses 24(5) and 24(6) appear to answer in part the concerns raised about the status, responsibilities and obligations of ACC employees seconded to another organisation. A secondment does not affect the person's status as an ACC employee or the application of any provision in the bill

during the period of secondment. The Explanatory Memorandum stated further that 'the ACC Code of Conduct would continue to apply to an ACC employee who is on secondment'.67 Subclause 24(6) makes clear that a secondment does not affect any rights, powers or immunities that a secondee has by virtue of holding any office or position to which they have been seconded. Nor does a secondment affect the extent to which the secondee is subject to obligations or liabilities in relation to discipline by virtue of holding any office or position to which they have been seconded.

3.65 The CPSU also noted that conflicts of interest 'may occur where a Commonwealth employee is seconded to another body or organisation if the function of that body or organisation is to deliver Corps projects'. It noted that this situation

'may result in Corps employees managing and delivering projects at the same time which is clearly inappropriate'. It was of the view that the problem may be addressed through the proposed ACC Values to be incorporated into the proposed ACC Code of Conduct.68

3.66 While welcoming secondments as an important part of the ACC, World Vision Australia was concerned that the terms of secondment 'leave the door open for inappropriate deployments, particularly in humanitarian or emergency situations in which the roles of civilian and military actors must be clearly defined'. It recommended that clause 24 be amended 'to specify that secondments must be

66 Submission 3, pp. [6-7].

67 Explanatory Memorandum, paragraph 75.

68 Submission 3, p. [7],

29

24

consistent with the guidelines of the Australian Civilian Corps and other international principles including those of principles of civil-military cooperation'.69

3.67 The committee accepts that the Director-General should take every care to ensure that an ACC employee is not being seconded to an organisation or into a situation or taking on duties that would bring that employee into conflict with the ACC Values or Code of Conduct. As an extra safeguard against any such likelihood, the committee supports WVA's suggestion and makes the following recommendation.

Recommendation 9

3.68 The committee recommends that an additional subclause be inserted in clause 24 stating that any arrangements for, agreements on and actual secondments under this clause must be consistent with ACC Values and Code of Conduct and AusAID Code of Conduct for Overseas Service.

3.69 The CPSU has raised a number of questions about the terms and conditions of employment, and duty of care responsibilities for ACC employees seconded to another organisation. The committee believes that the Australian Government should review the provisions of the bill to ensure that a seconded ACC employee is entitled to all the rights and protections afforded to an ACC employee. To achieve this objective, the committee notes the CPSU recommendation that a new subclause 24(3A) be

inserted in clause 24 stating that, 'An Agreement made under subsection (2) or (3) shall not reduce the remuneration or other employment conditions of Australian Civilian Corps' employees'.70

Returning to employment after deployment

3.70 The Australian Public Service Commission was of the view that membership of the Civilian Corps presented a unique development opportunity.71 Even so, the CPSU noted that for AusAID and other APS employees seconded to work for the ACC there were 'concerns around whether their previous positions will be available

on their return'. In its view, this situation must be clarified to ensure that employees return to their substantive position'. It recommended that the bill be amended to 'provide the opportunity for APS employees to return to their substantive position on the conclusion of the period of service with the ACC'.72

3.71 The committee understands the importance of providing assurances to a person who is transferring to the ACC that their substantive position would be available to them on their return. Practical considerations and the inability to predict

future circumstances, such as a major agency or departmental restructure, mean that

69 Submission 1.

70 Submission 3, p. [6],

71 Submission 2.

72 Submission 3, pp. [4— 5].

30

25

such an assurance is difficult to give. The committee believes, however, that an employee should be able to resume duties with their home agency or department in a substantive position at level and without loss of status or entitlements.

3.72 AusAID explained that the ACC would place a high priority on achieving a 'smooth and positive transition for returning civilian specialists back to their workplace'. It referred to assisting employees readjust to normal life, by providing medical and psychological debriefing and support arrangements. The committee believes that AusAID also needs to give close attention to and resolve matters relating to employment arrangements for ACC employees on their return to ensure that they would not be disadvantaged because of their absence due to service with the ACC.

Delegation of minister's power

3.73 Subclause 30(l)(c) would allow the Minister to delegate in writing any or all of his proposed powers to 'a person who holds an office or appointment under an Act'. The Scrutiny of Bills Committee expressed concern about subclause 30(1) and the broad delegation of the Minister's power to 'a person who holds an office or appointment under the Act'. It noted:

Where broad delegations are made, the Committee considers that an explanation o f why these are considered necessary should be included in the explanatory memorandum. In this case, the explanatory memorandum simply describes the effect o f the provision and does not provide any explanation or justification o f it.73 7 4 7 5

3.74 The Scrutiny of Bills Committee sought the Minister's advice on this matter so it could 'better assess whether the clause makes rights, liberties or obligations unduly dependent upon insufficiently defined administrative powers'. 4

Costs and logistics

3.75 When recommending that the provisions of the bill be referred for examination, the Selection of Bills Committee identified concerns relating to costs and logistics of the program as matters for consideration.73

3.76 The bill states that there are no direct financial impacts from this bill which as noted earlier establishes an employment framework. There will be costs, however, for the actual recruitment, employment and training of the 500 civilians. In 2009, AusAID

announced that the government would provide $52 million 'to enable the rapid deployment of Australian civilians into overseas disaster or conflict affected

73 Senate Standing Committee for the Scmtiny of Bills, Alert Digest, No. 8 of 2010, pp. 6-7.

74 Senate Standing Committee for the Scrutiny of Bills, Alert Digest, No. 8 of 2010, p. 7.

75 Selection of Bills Committee, Report No. 11 o f 2010, 30 September 2010, Appendix 2.

31

26

countries'.76 The provisions of the bill also do not cover the logistics of developing the register and deploying civilians to overseas operations.

3.77 The committee recognises the ACC is in its infancy and that matters relating to costs and logistics will become evident as the Corps continues to evolve.

Reporting obligations

3.78 The committee notes that the Government intends to have the ACC fully operational by 2011. By that time, the values and the code of conduct should have been issued. Their promulgation may satisfy some of the concerns raised by World

Vision and the CPSU and provide answers to questions about conflicts of interest. The Director-General may also have issued directions or written determinations that may clarify procedures relating to the scope or application of the values and the code of conduct, the remuneration and other terms and conditions of employment for ACC employees.

3.79 Unforseen or unintended consequences, if any, that arise as the ACC becomes fully operational and the costs associated with the work of the ACC should also start to become apparent. At this early developmental stage, the committee believes that it is critical for the Director-General to provide a comprehensive account of the ACC as it evolves and of any difficulties encountered in implementing the provisions of the bill that may require legislative refinements.

3.80 The Explanatory Memorandum notes that the ACC will not have its own annual report but its activities will be included in AusAID's Annual Report.77 In light of the importance of informing Parliament about the activities of this new and important body as it develops, the committee recommends that the Director-General ensure that the report on the ACC is self contained, comprehensive and assists parliamentary scrutiny.

Recommendation 10

3.81 The committee recommends that the Explanatory Memorandum be more explicit on ACC's reporting obligations by specifying that the report on the activities of the ACC will form a separate and discrete section in AusAID's Annual Report and will include financial statements.

3.82 The committee also recommends that the Australian Government review the operation of the ACC including the employment framework established under the provisions of this bill no later than mid-2013 for the Minister to table in Parliament.

76 AusAID website, 'New Australian Civilian Corps to assist in disaster and conflict zones', Focus online, Archived, 27 October 2009, http://www.ausaid.gov.au/hottopics/topic.cfm7nVV115 4988 8043 4374 974

77 Explanatory Memorandum, paragraph 25.

32

27

Further consultation

3.83 The committee notes that the CPSU has requested that the government consult with the union with regard to any amendments to the bill, the process of finalising the bill and the employment arrangements of Corps employees generally. In light of the expertise and the interest that the union has in employment matters relating to public

servants, the committee supports the CPSU's suggestion. It also suggests that AusAID consult with the Australian Red Cross not only on the ACC Values and Code of Conduct but the development of training modules.

Conclusion

3.84 The committee has examined the provisions of the bill and identified a number of concerns. The most serious deficiencies are around the issues of protecting the rights of ACC employees from the exercise of inappropriate delegated authority or the Director-General's wide discretionary powers. Although the bill is modelled on the Public Service Act, there are notable omissions and it is these important omissions that, in the committee's view, leave some rights unnecessarily vulnerable particularly an ACC employee's right to review.

3.85 The committee accepts that the ACC Values and ACC Code of Conduct may go some way to allaying these concerns and urges the Australian Government to ensure that these documents take account of the concerns identified in this report. In other cases, the committee believes that the government should consider amending the bill to ensure consistency with the Public Service Act and to put beyond doubt queries about employment conditions especially in respect of entitlements for review and accrued employment entitlements. The committee notes its recommendation for more stringent reporting obligations and for a review.

Recommendation 11

3.86 The committee recommends that, subject to consideration of the committee's recommendations dealing with the provisions of the bill, the Senate pass the bill.

Senator Mark Bishop Chair

33

34

Appendix 1

Public submissions

1 World Vision Australia

2 Australian Public Service Commission

3 Community and Public Sector Union (CPSU)

4 Australian Red Cross

35

36

The Senate

Legal and Constitutional Affairs

Legislation Committee

Aviation Crimes and Policing Legislation

Amendment Bill 2010

November 2010

© Commonwealth of Australia

ISBN: 978-1-74229-355-4

This document was printed by the Senate Printing Unit, Department of the Senate, Parliament House, Canberra.

38

MEMBERS OF THE COMMITTEE

Members

Senator Patricia Crossin, Chair, ALP, NT

Senator Guy Barnett, Deputy Chair, LP, TAS

Senator Mark Fumer, ALP, QLD

Senator Scott Ludlam, AG, WA

Senator Stephen Parry, LP, TAS

Senator Louise Pratt, ALP, WA

Secretariat

Ms Julie Dennett

Mr Tim Watling

Mr Bill Bannear

Ms Rosalind McMahon

Ms Kate Middleton

Committee Secretary

Inquiry Secretary

Senior Research Officer

Administrative Officer

Administrative Officer

Suite SI.61 Telephone: (02) 6277 3560

Parliament House Fax: (02) 6277 5794

CANBERRA ACT 2600 Email: legcon.sen@aph.gov.au

iii

39

40

Table o f Contents

MEMBERS OF THE COM MITTEE.................................................................. iii

ABBREVIATIONS.......................................................................................... vii

RECOMMENDATIONS.........................................................................................ix

Chapter 1 ..................................................................................................................... 1

Introduction and overview....................................................................................... 1

Summary of key amendments................................................................................ 1

Conduct of inquiry.................................................................................................. 2

Acknowledgement.................................................................................................. 2

Chapter 2 ..................................................................................................................... 3

Provisions and issues................................................................................................ 3

Revised definitions................................................................................................. 3

Increased penalties.................................................................................................. 3

New offences.......................................................................................................... 6

Schedule 2—Policing at airports............................................................................ 8

Issues raised in submissions................................................................................. 10

APPENDIX 1 .............................................................................................................15

SUBMISSIONS RECEIVED 15

42

ABBREVIATIONS

ACC Australian Crime Commission

AFP Australian Federal Police

Beale Audit New Realities: National Policing in the 21st

Century—Federal Audit o f Police Capabilities

CASA Civil Aviation Safety Authority

CCL New South Wales Council for Civil Liberties

Copal Act Commonwealth Places (Application o f Laws) Act

1970

DPC New South Wales Department of Premier and

Cabinet

EM Explanatory Memorandum

MOU Memorandum of Understanding

NSW Police New South Wales Police Force

PFA Police Federation of Australia

The Act Crimes (Aviation) Act 1991

vii

43

44

RECOMMENDATIONS

Recommendation 1

2.68 The committee recommends that the Explanatory Memorandum to the Bill be amended, so as to include examples of behaviour that would, and would not, be considered intimidation, to provide guidance on the appropriate limit of the application of the offence established by item 7.

Recommendation 2

2.70 The committee recommends that, subject to the preceding recommendation, the Senate pass the Bill.

46

Chapter 1

Introduction and overview

1.1 On 30 September 2010, the Senate referred the Aviation Crimes and Policing Legislation Amendment Bill 2010 (the Bill) to the Legal and Constitutional Affairs Legislation Committee for inquiry and report by 16 November 2010.

1.2 The Explanatory Memorandum (EM) explains that the Bill seeks to strengthen the existing legislative framework surrounding Australia's international and domestic aviation security through increasing penalties for aviation-related crimes and through creating new aviation-related offences.1

1.3 The Bill also contains amendments relating to the policing capabilities of the Australian Federal Police (AFP) which support the move to an 'All-in' policing and security model at airports, as recommended by the 2009 Federal Audit of Police Capabilities.

Summary of key amendments

1.4 The Bill seeks to amend various subsections of the Crimes (Aviation) Act 1991 (the Act), relating to crimes on aircraft and policing at airports.

1.5 Schedule 1 deals with aviation-related crimes and identifies four tiers of new penalties:

• Tier one—maximum penalty of life imprisonment;

• Tier two—maximum penalty of 20 years imprisonment;

• Tier three—maximum penalty of 14 years imprisonment;

• Tier four—maximum penalty of ten years imprisonment.1 2

1.6 The offences specific to each tier are explored in Chapter 2.

1.7 Schedule 1 amendments also propose three new offences to be inserted into the Act:

• assaulting a crew member (section 20A);

• reckless endangerment of the safety of an aircraft likely to endanger life or cause serious harm (section 22A); and

• direct or indirect possession or placing dangerous goods onboard an aircraft , likely to endanger life or cause serious harm (section 23A).3

1 Explanatory Memorandum, γ. 1.

2 Explanatory Memorandum, pp 1-2.

Page 2

1.8 Schedule 2 relates to airport policing and contains a number of amendments to the Commonwealth Places (Application o f Laws) Act 1970 (Copal Act) and the Australian Federal Police Act 1979. The amendments in Schedule 2 seek to provide members of the AFP with powers to search, arrest and investigate offences when

committed at certain airports, and to remove doubt as to the legal basis for AFP members or special members to be sworn in to other police forces.3 4 These amendments are explored in more detail in Chapter 2.

Conduct of inquiry

1.9 The committee advertised the inquiry in The Australian newspaper on 14 October 2010. Details of the inquiry, the bill and associated documents were placed on the committee's website. The committee also wrote to 64 organisations and individuals inviting submissions.

1.10 The committee received nine submissions which are listed at Appendix 1. These submissions were placed on the committee's website.

1.11 The committee regrets it has to note its disappointment that the submission from the Attorney-General's Department was not lodged on time. This significantly frustrated the committee’s consideration of the bill. While the committee is pleased to exhibit some flexibility in these matters, repeated delays in lodgement are unacceptable. The legislative process is not improved by tardiness on behalf of those departments that have a stake in the legislation themselves.

Acknowledgement

1.12 The committee thanks those organisations and individuals who made submissions.

3 Explanatory Memorandum, p. 2.

4 Explanatory Memorandum, p. 4.

48

Chapter 2

Provisions and issues

2.1 This chapter sets out the key provisions of the Aviation Crimes and Policing Legislation Amendment Bill 2010 (the Bill). The Bill contains two schedules.

Revised definitions

2.2 The proposed legislation seeks to update the definition of a Commonwealth aerodrome, which is currently:

.. .an area o f land or w ater in Australia that is owned by the Commonwealth and used, or intended for use, either wholly or partly, for, or in connection with, the arrival, departure or other m ovem ent o f aircraft; or a Federal airport; and includes any building, structure, installation or equipment in that area, or on the land that forms the Federal airport, that is provided for use in connection with the operation o f that area or land as an aerodrome or

Federal airport, as the case may b e .1

2.3 Schedule 1 proposes to replace the term 'Federal airport' in the definition of 'Commonwealth aerodrome'. 'Federal airport', a term originally derived from the repealed Federal Airports Corporation Act 1986, would be replaced with 'a core regulated airport' within the meaning of the Airports Act 19961

2.4 Airports that fall within the definition are: Sydney (Kingsford-Smith), Sydney West (Badgery's Creek); Melbourne (Tullamarine); Brisbane; Perth; Adelaide; Gold Coast; Hobart; Launceston; Alice Springs; Canberra; Darwin; Townsville; and any airport specified in the regulations, where the site of the airport is a Commonwealth place.

2.5 The definition has been framed to apply the relevant sections of the Bill to significant airports for which there is clear constitutional power for the offences contained in the Bill to apply, principally because the airports are Commonwealth places or are in a territory.

2.6 A definition of 'serious harm' is also included to give effect to new offences proposed by the Bill.

Increased penalties

2.7 The Bill proposes various changes to the Crimes (Aviation) Act 1991 (the Act) (o increase penalties for a number of offences. Under the proposal, maximum 1 2

1 Explanatory Memorandum, p. 6.

2 Explanatory Memorandum, p. 6.

49

Page 4

penalties for some aviation-related crimes would increase. Determination of the proposed penalty for each offence has been undertaken in line with considerations spelt out in the Guide to Framing Commonwealth Offences, Civil Penalties and Enforcement Powers.3 The government argues that these proposed changes would allow these offences to carry appropriate penalties. They fall into three general categories of penalties which have been increased to 20 years, 14 years and 10 years respectively.

2.8 According to the Explanatory Memorandum (EM), these increased maximum penalties would improve consistency between the Act and other similar Commonwealth legislation. The changes would also ensure the consistency of penalties relating to offences within the same tier4 5 , and hence similar levels of potential seriousness.3

Penalties increased to 20 years

2.9 The offences listed in this section fall within tier two of the categorisation system outlined in the EM. Tier two offences are described as follows:

The offences in this tier all carry a serious aggravating element of interference with the operation or safety of an aircraft or airport. These offences typically involve the creation of significant danger to whole groups of people.6

2.10 The maximum penalties of five offences are increased to 20 years imprisonment.

2.11 Item 6 amends the maximum penalty for the offence of intentionally prejudicing the safe operation of an aircraft. The maximum penalty would be increased from 14 years to 20 years imprisonment.

2.12 Item 8 amends the maximum penalty for the offence of assaulting, threatening or intimidating a crew member onboard an aircraft interfering with his or her ability to perform function or duties. The maximum penalty would be increased from 14 years to 20 years imprisonment.

2.13 Item 16 amends the maximum penalty for the offence of endangering an aircraft in flight in Australian territory or by an Australian citizen. The maximum penalty would be increased from 14 years to 20 years imprisonment.

3 This guide can be found at: http://www.ag.gov.au/www/agd/agd.nsf/Page/Publications GuidetoFramingCommonwealthOff ences.CivilPenaltiesandEnforcementPowers (accessed 8 November 2010).

4 See Chapter One for an explanation of the use of tiers in the legislation.

5 Explanatory Memorandum, pp 7-11.

6 Explanatory Memorandum, pp 1-2.

Page 5

2.14 Item 17 amends the maximum penalty for the offence of endangering the safety of an aircraft in flight, or an air navigation facility so as to affect the safety of an aircraft in flight. The maximum penalty would be increased from 7 years to 20 years imprisonment.

2.15 Item 18 amends the maximum penalty for the offence of using a substance or thing to commit an act of violence at a prescribed airport, where the act causes or is likely to cause injury or death and endanger the safe operation of the airport. The maximum penalty would be increased from 15 years to 20 years imprisonment.

Penalties increased to 14 years

2.16 Tier three offences would attract a maximum penalty of 14 years of imprisonment. Tier three offences are described as follows:

Offences contained within this tier deal with actions involving or actions against aircraft and aviation environments. Many offences have the aggravating element o f danger or harm to an individual but unlike the more serious tier one and two offences, none require proof o f recklessness as to the safety o f human life or proof o f danger to whole groups o f people.7

2.17 Item 19 amends the maximum penalty for the offence of destroying or disrupting facilities or services of a prescribed airport, or destroying or seriously damaging any aircraft at a prescribed airport so as to endanger life or the safe operation of the airport. The maximum penalty would be increased from 10 years to

14 years imprisonment.

2.18 Item 20 amends the maximum penalty for the offence of endangering the safety of a Commonwealth aerodrome or air navigation facility or those within its limits. The maximum penalty would be increased from 7 to 14 years imprisonment.

Penalties increased to 10 years

2.19 Tier four offences would attract a maximum penalty of 10 years imprisonment. The EM described this tier as including 'catch-all' offences which do not have the more serious, aggravating elements of the higher penalty offences.8 Six offences within this category are affected by the Bill.

7 Explanatory Memorandum, p. 2.

8 Explanatory Memorandum, p. 2.

Page 6

2.20 Item 5 amends the maximum penalty for the offence of taking or exercising control of a Division 3 aircraft. The maximum penalty would be increased from 7 years to 10 years imprisonment.9

2.21 Item 10 amends the maximum penalty for the offence of recklessly endangering the safety of an aircraft. The maximum penalty would be increased from 7 years to 10 years imprisonment.

2.22 Item 12 would amend the maximum penalty for the offence of carrying or placing dangerous goods onboard an aircraft. The maximum penalty for this offence would be increased from 7 years to 10 years imprisonment. The default maximum fine that would apply to this offence under the Crimes Act would be 600 penalty units

($66,000).

2.23 Items 14 and 15 would amend the maximum penalties for hoax and threat offences. The maximum penalties for these offences would be increased from 2 years to 10 years imprisonment. The default maximum fine that would apply to this offence under the Crimes Act would be 600 penalty units ($66,000). Currently, the maximum penalty of 2 years is significantly lower that the penalty for other hoax offences

contained in Commonwealth legislation.

2.24 Item 21 amends the maximum penalty for the offence of threatening to damage a Commonwealth aerodrome or air navigation facility or harm those within. Item 22 amends the maximum penalty for the offence of making a false statement about taking control or endangering the safety of a Commonwealth aerodrome or air navigation facility or harming persons within. The maximum penalties for both offences have been increased from 2 years to 10 years imprisonment.

New offences

2.25 Schedule 1 of the Bill also proposes three new aviation-related offences. They are intended to ensure that an appropriate range of offences are applicable in the airport environment and the aviation sector.10

2.26 The new offences are based on existing offences in the Act. In one case, a lower-level version of the offence is established, while in the other two cases, an aggravated version of the offence (i.e. likely to endanger life or cause serious harm) is created.

9 A Division 3 Aircraft is an Australian aircraft, a Commonwealth aircraft; a defence aircraft; a foreign aircraft that is in Australia; or a foreign aircraft that is outside Australia while engaged in a flight that started in Australia or that was, when the flight was started, intended to end in Australia.

10 Explanatory Memorandum, p. 1.

52

Assault of an aircraft crew member

2.27 Item 7 inserts a new section 20A into the Act to create a new general offence of assaulting, threatening with violence or intimidating an aircraft crew member. The maximum penalty for this offence would be 10 years imprisonment. In essence, this is a lower level version of the existing offence of assaulting, threatening with violence or otherwise intimidating a member of the aircrew, which requires that the offence results in the interference with the member's performance of functions or duties connected with the operation of the aircraft. This is not a requirement for the new, more general offence.

2.28 Item 9 provides for alternative verdicts for offences against the existing higher level section. If a person is not found guilty of the existing higher level assault offence, he or she may still be found guilty of the more general offence of assaulting crew proposed by the Bill.

2.29 Under the current legislation it is necessary to prove that an act of assault has interfered with the capacity of a crew member to perform their function or duty. Through the creation of this new offence, it would no longer be necessary to find a person guilty of such an offence which requires proof that the defendant’s conduct

impeded a crew member’s ability to perform their function or duties. The EM argues that the 'liability for such an assault should not depend on the crew member's ability to perform his or her duties.'11

Endangering safety of an aircraft

2.30 Item 11 inserts a new section 22A into the Act. The section creates a new offence of recklessly endangering the safety of an aircraft likely to endanger life or cause harm to an individual. The maximum penalty for this offence would be 14 years imprisonment.

2.31 The offence detailed in section 22A is an aggravated offence provision following on from the existing lower penalty offence of endangering the safety of an aircraft (section 22). The proposed offence deals with more serious actions, where the act in question carries the potential or risk of causing serious harm or endangering life.

The higher penalty level takes this into account.

2.32 As with the assault offence described above, a clause has been added that provides for alternative verdicts for offences against this subsection. A person may be found not guilty under subsection 22A(1) (an offence likely to endanger a person's life

or cause serious harm), but may still be found guilty under section 22 (endangering the safety of an aircraft). 1 1

Page 7

11 Explanatory Memorandum, p. 7.

Page 8

Having dangerous goods onboard an aircraft

2.33 Item 13 inserts a new section 23A into the Act. The section creates a new offence of direct or indirect possession or placing of dangerous goods onboard an aircraft giving rise to death or serious harm to an individual. The maximum penalty that would apply for this offence is 14 years imprisonment.

2.34 The offence in section 23A is an aggravated offence provision following on from the lower penalty offence of carrying or placing of dangerous goods onboard an aircraft.

2.35 This item also provides for alternative verdicts for offences against this subsection. A person may be found not guilty under subsection 23A(1) (engaging in an act likely to endanger a person's life or cause serious harm), but may still be found

guilty under section 23(1) (carrying, placing or delivering dangerous goods).

Policing at airports

2.36 In January 2009, the Australian Government commissioned Mr Roger Beale AO to conduct an audit of policing in Australia. The audit was established to examine and report on Commonwealth law enforcement arrangements including Australian Federal Police (AFP) capabilities.

2.37 On 18 December 2009, the Minister for Home Affairs, The Hon Brendan O'Connor MP, released New Realities: National Policing in the 21s' Century—Federal Audit o f Police Capabilities (Beale Audit) and outlined the government's response to

the recommendations contained within.12 This included reforms to strengthen major airport policing in Australia. Central to these reforms was the announcement of a new model for the policing of Australia's 11 major airports—Adelaide, Alice Springs, Brisbane, Cairns, Canberra, Darwin, Gold Coast, Hobart, Melbourne, Perth and Sydney.

2.38 With respect to the AFP's aviation function, the Beale Audit recommended replacing the current 'hybrid' or 'unified policing model' with an 'All-In' policing model. It argued that given the Commonwealth's international obligations, its broader responsibilities for the regulation of aviation and airports and its legal capacity in relation to Australia's principal airports, the 'All-In' model provides the most effective integrated airport policing capability.13 The audit recommended the Commonwealth:

...vigorously pursue the replacement o f the existing Unified Policing Model with an 'All In' model under which the Com m onwealth accepts the responsibility o f funding and staffing nationally coordinated airport security and policing services, noting that this will likely take several years before

12 The audit was provided to government on 30 June 2009. It can be found at: http://www.ema.gov.au/www/agd/agd.nsf/Page/Publications_FederalAuditofPoliceCapabilities (accessed 8 July 2010).

13 Federal Audit o f Police Capabilities, June 2009, pp 11-12.

Page 9

being fully operational. It should take any legislative action, or pursue the renegotiation of arrangements in a number of states and territories, to ensure that the powers of AFP members policing airports are clear and adequate to the task.14 1 5

2.39 Certain aspects of this Bill provide amendments that support the move towards an 'All-In' policing model. As described in Chapter 1, it amends two acts: the Commonwealth Places (Application o f Laws) Act 1970 (Copal Act) and the Australian Federal Police Act 1979 to provide AFP members with the powers to investigate

offences committed at certain airports.

2.40 Amendments to the Copal Act overcome a technical anomaly that renders standard AFP arrest and search powers unavailable to the AFP when dealing with state offences that are applied as Commonwealth law in airports that are Commonwealth places. The EM argues that under the current arrangements the AFP lack the appropriate range of powers to conduct investigations in these situations.13

2.41 The standard powers that will be enabled by the Bill include the powers to search, gather information and arrest, seize and condemn forfeitable goods, institute proceedings in respect of offences, remand and discharge defendants and engage in 'forensic procedures'.16

2.42 In his Second Reading Speech, Minister Brendan O'Connor provided an example of how these changes would provide an officer with a 'fully-sworn' presence:

For example, if a murder, assault or theft occurs at Sydney or Melbourne airport, this is a state offence that applies as Commonwealth law because these are Commonwealth places. These amendments will ensure standard

AFP powers—such as arrest and search—are available in response. Handling of these cases is also governed by protocols between the Australian Federal Police and state and territory police.

The amendment to the AFP Act removes doubt as to the legal basis for AFP members to be appointed as members or special constables of state and territory police forces. The bill also makes clear the legal basis for AFP members to be appointed as members of police forces or other law enforcement agencies of foreign countries.

Conferral of special constable status is an important tool for cooperation between police forces, and gives a member of a force the powers of another police force, subject to appropriate controls and accountabilities. The

14 Federal Audit o f Police Capabilities, June 2009, p. 12.

15 Explanatory Memorandum, p. 4.

16 Explanatory Memorandum, p. 14.

Page 10

amendments make clear that AFP members can participate in these arrangements.17

2.43 Item 1 of Schedule 2 explicitly allows AFP members and special members to be appointed (sworn in) as members or special constables to state and territory police forces and other law enforcement agencies of foreign countries. While this is an existing practice, the amendment will clarify the legal basis for this to occur.18

Issues raised in submissions

2.44 The committee received a total of nine submissions to the inquiry, and the issues they raise are summarised in this section.

2.45 The Bill was given general support by the Police Federation of Australia (PFA), Qantas, the Civil Aviation Safety Authority (CASA), South Australia Police, the Attorney-General's Department and the Australian Crime Commission. The New South Wales Council for Civil Liberties, the New South Wales Department of Premier and Cabinet and Victoria Police raised several issues with the Bill.

Changes to policing arrangements

2.46 As noted above, the Bill includes provisions that amend legislation in line with the Australian Government's stated intention to move to an 'All-In' airport policing model, as recommended by the Beale Audit. These provisions were supported by PFA, Qantas, South Australia Police and the Australian Crime

Commission.

2.47 Both PFA and Qantas were of the view that the current policing arrangements were not effective and that the proposed changes would be an improvement.

2.48 PFA informed the committee that they had previously examined police resources at the eleven major airports and concluded that the Unified Policing Model was failing. PFA's conclusion was that airport policing should be reformed to give the AFP sole responsibility at major airports.19 PFA therefore supported the Bill.

17 Hon. Brendan O'Connor, Second Reading Speech, House of Representatives, Hansard, 29 September 2010, p. 261. The Minister also notes that special arrangements will need to be made for Caims Airport which is not a Commonwealth place. While these amendments allow for AFP members to be sworn as special constables of the Queensland Police, the Minister also indicates that the government has written to the Queensland Government suggesting that they legislate for AFP members to be able to access relevant powers.

18 Explanatory Memorandum, p. 13.

19 Police Federation of Australia, submission 1, pp 1-2.

Page 11

2.49 Qantas noted statements it had made previously to the effect that the current resource deployment arrangements contributed to sub-optimal security outcomes. Qantas therefore welcomed the proposed changes."0

2.50 The Australian Crime Commission (ACC) supported the proposed changes to policing contained in the Bill, on the grounds that it would improve ACC operations, stating:

In particular, [Schedule 2] Item 1, which deals with the appointment of members to other police forces, will pave the way in Commonwealth law for ACC staff who are AFP Special Members and AFP members on

secondment to the ACC to acquire additional powers as needed to effectively participate in ACC operations and investigations that concern offences against both State and Commonwealth laws.2 0 21

2.51 The New South Wales Department of Premier and Cabinet (DPC) informed the committee that the New South Wales Police Force (NSW Police) had advised them that the proposed changes in the Bill were uncontentious.22 However, DPC raised some concerns with the committee regarding the proposed transition to an 'All­ In' policing model, which is facilitated by the Bill.

2.52 Firstly, DPC drew the committee's attention to existing mixed model cooperative arrangements for the policing of Sydney Airport between the NSW Police and the AFP, which are contained in a Memorandum of Understanding (MOU) and Letter of Exchange, with provision for a number of NSW Police operational interests at Sydney Airport.23

2.53 DPC was of the view that these documents would require careful review to ensure that NSW Police's interests were protected during and after the transition to the 'All-In' model. These interests include emergency and incident management, security, information exchange and responding to serious and mandatory reportable crimes at the airport.24 2 5

2.54 Victoria Police raised a similar issue, highlighting the need to consider the investigation of serious crimes using state offences. Victoria Police's submission specifically noted the need to develop investigation protocols as part of the transition to the new policing model.23

20 Qantas, submission 2, p. 1.

21 Australian Crime Commission, submission 6, p. 3.

22 NSW Department of Premier and Cabinet, submission 7, p. 1.

23 NSW Department of Premier and Cabinet, submission 7, p. 1.

24 NSW Department of Premier and Cabinet, submission 7, p. 1.

25 Victoria Police, submission 9, p. 1.

Page 12

2.55 A second issue related to the transition to the 'All-In' model raised by DPC was the management of large scale emergencies at Sydney Airport. Currently, this responsibility falls to NSW Police. DPC noted that if the AFP assumed responsibility

for all policing at Sydney Airport, this could include responsibility for emergency management. As this issue is not addressed in the current Bill, DPC recommended further discussion on the issue by the agencies involved.26

2.56 In its submission to the committee, the Attorney-General’s Department submitted that:

As part o f the im plem entation o f the ‘A ll-In’ model, it is expected that [the M OU and Letters o f Exchange] will be review ed and renegotiated to ensure that the responsibility for future responses and investigations remain[s] effective...[i]t is expected that the A FP and State and territory police will continue to work closely together to m aintain public safety and efficiently use resources in response to serious crimes. In the case o f serious state offences and critical incidents, it is anticipated that the current arrangem ents in operation would continue to apply.27

2.57 The Department also submitted that:

Effective transition to the ‘A ll-In’ model is heavily reliant on the

relationships that are already in place betw een the AFP and State and Territory police. The ‘A ll-In’ m odel will be im plem ented in close

consultation with the States and Territories over the next two to four years. As the transition progresses, all jurisdictions will be consulted in relation to timing and transitional arrangem ents.28

2.58 The committee notes that the successful introduction of the 'All-In' policing model will naturally require the kind of ongoing discussion and cooperation between government agencies that has been promised by the Attorney-General’s Department. The committee is satisfied that the particular measures included in the proposed legislation are sound, and that transition challenges appear manageable.

Increased penalties

2.59 The increased penalties for aviation crimes that would be established by the Bill were specifically referred to in submissions by Qantas, CASA, and the NSW Council for Civil Liberties.

2.60 Qantas and CASA supported the increased penalties. CASA informed the committee that it would shortly be reviewing civil aviation legislation, including the

26 NSW Department of Premier and Cabinet, submission 7, p. 2.

27 Attorney-General's Department, submission 8, p. 3.

28 Attorney-General's Department, submission 8, p. 3.

Page 13

Civil Aviation Act 1988. This review would include ensuring that the offence provisions in that legislation also carried appropriate penalties.29

2.61 The NSW Council for Civil Liberties (CCL) was of the view that the increased penalties were unlikely to result in a commensurately increased deterrent effect.30 CCL questioned whether the proposed penalties reflected the seriousness of

the offences, noting that the Explanatory Memorandum did not make any arguments justifying the increases on that ground.31

2.62 The Attorney-General’s Department submitted that, at least in respect of offences involving intimidation:

Intim idation in some cases could be highly disruptive, a threat to safety and warrant a higher penalty given that an aircraft is a confined space, often includes children and aged passengers and the crew has other duties which are also relevant to safety. These circumstances mean that the consequences o f the commission o f the offence are particularly dangerous and

dam aging.32

2.63 The Department also pointed out that incidents would be investigated by the AFP for assessment as to their seriousness, and that the AFP may choose not to send a matter on to prosecution. In the event a matter is prosecuted and a conviction recorded, the Court retains the discretion to impose a penalty appropriate in the circumstances of the individual case.33

2.64 The committee is of the opinion that given the seriousness of the crimes involved the increased penalties are warranted.

C reation o f n ew o ffen ces

2.65 In addition to the point raised above, CCL was also concerned by the new general offence of assaulting, threatening with violence or intimidating a crew member, with a maximum penalty of 10 years. CCL questioned the unqualified nature of 'intimidation' and noted that a person may therefore be subject to conviction for behaving with justified annoyance, such as by shouting or threatening to inform the

crew member's employer.

2.66 The Attorney-General’s Department’s response to this observation was that:

Aggressive behaviour directed against aircraft crew members, particularly in instances where the behaviour is intimidating or escalates into an assault,

29 Civil Aviation Safety Authority, submission 3, p. 1.

30 New South Wales Council for Civil Liberties, submission 4, p. 2.

31 New South Wales Council for Civil Liberties, submission 4, p. 2.

32 Attorney-General's Department, submission 8, p. 2.

33 Attorney-General's Department, submission 8, p. 2.

Page 14

may well be captured by this offence. However, this kind of behaviour would only be subject to this offence if in fact it did intimidate an aircraft crew member. General annoyance and frustration could be expressed about a problem in a range of ways without it necessarily being intimidating and falling within the provision.34

2.67 The committee is inclined to agree with the CCL that the unqualified nature of intimidation may capture behaviour of a kind that should not fall within an offence carrying a maximum penalty of 10 years imprisonment. The committee is therefore of the opinion that further guidance as to the appropriate application of the intimidation provision be given in the EM.

Recommendation 1

2.68 The committee recommends that the Explanatory Memorandum to the Bill be amended, so as to include examples of behaviour that would, and would not, be considered intimidation, to provide guidance on the appropriate limit of the application of the offence established by item 7.

2.69 On the basis of the submissions provided over the course of the inquiry, the committee is satisfied, with the exception of the issue raised in paragraph 2.65, that the Bill will improve aviation security through the proposed changes to policing, offences and penalty structure.

Recommendation 2

2.70 The committee recommends that, subject to the preceding

recommendation, the Senate pass the Bill.

Senator Trish Crossin

Chair

34 Attorney-General's Department, submission 8, p. 2.

A PPENDIX 1

SUBMISSIONS RECEIVED

Submission Number

1

2

3

4

5

6

7

8

9

Submitter

Police Federation of Australia

Qantas Airways Limited

Civil Aviation Safety Authority

NSW Council for Civil Liberties

South Australia Police

Australian Crime Commission

Law Enforcement Policy Branch, NSW Department of Premier and Cabinet

Attorney-General's Department

Victoria Police

62

The Senate

Legal and Constitutional Affairs

Legislation Committee

Corporations Amendment (Sons of Gwalia) Bill 2010

[Provisions]

November 2010

© Commonwealth of Australia

ISBN: 978-1-74229-357-8

This document was printed by the Senate Printing Unit, Department of the Senate, Parliament House, Canberra.

MEMBERS OF THE COMMITTEE

Members

Senator Patricia Crossin, Chair, ALP, NT

Senator Guy Barnett, Deputy Chair, LP, TAS

Senator Mark Fumer, ALP, QLD

Senator Scott Ludlam, AG, WA

Senator Stephen Parry, LP, TAS

Senator Louise Pratt, ALP, WA

Secretariat

Ms Julie Dennett Committee Secretary

Mr Owen Griffiths Principal Research Officer

Ms Kate Middleton Administrative Officer

Suite SI.61 Telephone: (02) 6277 3560

Parliament House Fax: (02) 6277 5794

CANBERRA ACT 2600 Email: legcon.sen@aph.gov.au

iii 65

66

Table o f Contents

MEMBERS OF THE COM MITTEE.................................................................. iii

RECOMMENDATIONS........................................................................................vii

CHAPTER 1 ................................................................................................................ 1

Introduction.............................................................................................................. 1

Background............................................................................................................. 1

Purpose of the Bill.................................................................................................. 3

Conduct of the inquiry............................................................................................ 4

Acknowledgement.................................................................................................. 4

Scope of the report.................................................................................................. 4

Note on references.................................................................................................. 4

CHAPTER 2 ................................................................................................................ 5

OVERVIEW OF THE BILL................................................................................... 5

Key provisions of the Bill....................................................................................... 5

CHAPTER 3 ................................................................................................................ 7

KEY ISSUES............................................................................................................. 7

Introduction............................................................................................................ 7

Approach of the B ill............................................................................................... 7

Drafting concerns................................................................................................. 13

Conclusion............................................................................................................ 23

APPENDIX 1 .............................................................................................................27

SUBMISSIONS RECEIVED................................................................................. 27

Additional Information Received..........................................................................27

Answers to Questions on Notice............................................................................27

67

APPENDIX 2 29

WITNESSES WHO APPEARED BEFORE THE COMMITTEE.................. 29

68

RECO M M ENDATIONS

Recommendation 1

3.78 The committee recommends that, subject to the drafting matters raised by the Law Council of Australia during this inquiry being addressed, the Senate pass the Bill.

These drafting matters are:

• the inclusion of 'debts', as well as 'claims' in relevant proposed new sections to ensure the consistent use of terminology in the Corporations Act;

• the amendment of proposed new subsection 563A(1) to clarify the types of claims which rank above subordinated claims;

• the amendment of proposed new paragraph 563A(2)(b) to clarify that a claim by a person against a company must arise from th a t p e rso n 's involvement in dealing in the relevant company's shares;

• the amendment of current section 563B of the Corporations Act to clarify that statutory interest on non-subordinated claims will rank above subordinated claims under proposed section 563A;

• the insertion of a definition of the term 'external administration' in proposed new section 600H; and •

• amendments to ensure that the Bill does not disturb the effective operation of creditors' schemes of arrangement.

69

70

CHAPTER 1

Introduction

Background

1.1 On 23 June 2010, the Senate referred the provisions of the Corporations Amendment (Sons of Gwalia) Bill 2010 (Bill) to the Legal and Constitutional Affairs Legislation Committee (committee) for inquiry and report by 24 August 2010.1 On 23 July 2010, the committee tabled a short report which stated that, as a result of the prorogation of the 42nd Parliament, the committee had resolved not to continue the

inquiry into the Bill. The report also noted that, if the Bill were reintroduced in the new parliament, the Senate could again refer it to the committee for inquiry.

1.2 Following the commencement of the 43rd Parliament, the Bill was reintroduced into the House of Representatives on 29 September 2010 by the Hon. David Bradbury MP, Parliamentary Secretary to the Treasurer. On 30 September 2010, the Senate again referred the Bill to the committee for inquiry and report by 18 November 2010.

The H ig h C o u rt decision

1.2 The Bill results from a High Court of Australia decision relating to the voluntary administration of a gold mining company, Sons of Gwalia Ltd. In Sons o f Gwalia Ltd v Margaretic (the Sons of Gwalia case), the plaintiff shareholder had purchased shares in the company shortly before the company went into voluntary

administration.* 2 The shareholder commenced action against the company claiming that, at the time of purchasing his shares, the company was in breach of its continuous disclosure requirements under section 674 of the Corporations Act 2001 (Cth) (Corporations Act). Alternatively the shareholder claimed that, as a consequence of the non-disclosure, he was a victim of misleading and deceptive conduct by the company under section 52 of the Trade Practices Act 1974 (Cth), section 1041H of the Corporations Act and section 12DA of the Australian Securities and Investments

Commission Act 2001 (Cth). He claimed damages under each Act as a creditor of the company.

.1 Note: previously, pursuant to the resolution of the Senate of 13 May 2010 referring time critical bills to legislative and general purpose standing committees, the provisions of the Bill were referred to the Senate Economics Legislation Committee. On 3 June 2010, following consideration of the Bill, this committee determined that there were no substantive matters that required examination.

2 Sons o f Gwalia Ltd v Margaretic (2007) 231 CLR 160.

Page 2

1.3 The issue for judicial determination was whether the shareholder should be admitted as an unsecured creditor under the deed of company arrangement, ranking equally with other unsecured creditors, on the basis he had been induced to purchase shares of the company as a result of conduct prior to its insolvency. Under section 5 63A of the Corporations Act, the payment of a debt owed by a company to a person 'in the person's capacity as a member of a company' is postponed until the debts of all other creditors are satisfied. However, the High Court determined that claims by persons who purchased shares in a company relying on misleading or deceptive information from the company, or material non-disclosures, were not claims 'as a member of the company’ and therefore were not postponed under section 563A behind the claims of unsecured creditors.3 In making its decision, the High Court affirmed the decision of the House of Lords in Houldsworth v City o f Glasgow Bank, which established that a person's capacity to bring a claim for damages can be affected by how the person acquired the shares and whether the person still holds them.4 5

1.4 In February 2007, the then Parliamentary Secretary to the Treasury, Mr Chris Pearce MP referred the issues raised in the Sons of Gwalia case to the Corporations and Market Advisory Committee (CAMAC). CAMAC delivered its report on this issue, Shareholder claims against insolvent companies, in December 2008. The report noted that this was a policy area where certainty was required but that the views of interested parties were divided. CAMAC commented that, while all of its members were not of the same view, overall it was not persuaded of the need for a change from the position established by the Sons of Gwalia case.3 CAMAC noted a legislative trend towards the facilitation of private remedies in corporate regulation:

Any move to curtail the rights of recourse of aggrieved shareholders where a company is financially distressed could be seen as undermining the apparent legislative intent to empower investors.6

1.5 On 19 January 2010, the Hon. Chris Bowen MP, then Minister for Financial Services, Superannuation and Corporate Law (the minister) announced a package of reforms to Australian corporate insolvency laws. As part of these reforms, the Government proposed to introduce legislation designed to reverse the effects of the decision of the High Court in the Sons of Gwalia case. The minister stated:

Any direct benefits to aggrieved shareholders arising from non­ subordination are outweighed by the negative impacts on shareholders generally as a result of restrictions on access to, and increases in, the cost of

3 Corporations and Markets Advisory Committee, Shareholder Claims Against Insolvent Companies: Implications o f the Sons o f Gwalia decision, December 2008, p. 5.

4 Houldsworth v City o f Glasgow Bank (1880) 5 AC 317.

5 Corporations and Markets Advisory Committee, Shareholder Claims Against Insolvent Companies: Implications o f the Sons o f Gwalia decision, December 2008, p. 63.

6 Corporations and Markets Advisory Committee, Shareholder Claims Against Insolvent Companies: Implications o f the Sons o f Gwalia decision, December 2008, p. 64.

Page 3

debt financing for companies...The Government also remains concerned that the Sons of Gwalia decision has the potential to further increase uncertainty and costs associated with external administration...The decision has also been taken in light of the decision's potential negative impact on business rescue procedures.7

Purpose of the Bill

1.6 On 23 April 2010, the then minister released an exposure draft of the Bill, which was used as part of a public consultation process undertaken by the Treasury. The minister explained:

This Bill is designed to restore the position of the law as it was commonly understood to apply before the Sons of Gwalia decision. It is inequitable for shareholder claimants to rank as creditors alongside ordinary unsecured creditors, like small businesses, in corporate insolvencies. The Government has been concerned about the effects of the Sons of Gwalia decision on access to, and the cost of, debt finance and the potential uncertainty it created.8

1.7 According to the Explanatory Memorandum (the EM), the Bill:

• amends the rights of persons bringing claims for damages in relation to shareholdings under the Corporations Act and is intended to reverse the effect of the High Court of Australia's decision in Sons o f Gwalia Ltd v Margaretic; 9 and

• streamlines procedures for external administrations.

1.8 The Bill has three key consequences:

• all claims arising from the buying, selling, holding or otherwise dealing in shares are to be ranked equally and postponed until after all other creditors' claims have been satisfied;

• for persons bringing claims regarding shareholdings, their right to vote as creditors in a voluntary administration or a winding up is removed unless they receive permission from the court, and their right to receive reports to creditors is removed unless they make a written request to the external administrator; and

7 The Hon. Chris Bowen MP, Minister for Financial Services, Superannuation and Corporate Law, and Minister for Human Services, 'Corporate Insolvency Reform Package', Media Release No. 004, 19 January 2010.

8 The Hon. Chris Bowen MP, Minister for Financial Services, Superannuation and Corporate Law, and Minister for Human Services, 'Draft Legislation to Reverse Sons of Gwalia Released', Media Release No. 035, 23 April 2010.

EM, p. 3. 9

Page 4

• any restriction on the capacity of shareholders to recover damages against a company based on how they acquired their shares or whether they still hold the shares, is eliminated.10

Conduct of the inquiry

1.9 The committee advertised the inquiry in The Australian newspaper and details of the inquiry, the Bill and associated documents were placed on the committee's website. The committee also wrote to a number of organisations and individuals, inviting submissions by 27 October 2010. Submissions received before the prorogation of the 42nd Parliament were accepted as submissions to this inquiry.

1.10 The committee received seven submissions, and one supplementary (revised) submission, all of which are listed at Appendix 1. All submissions were published on the committee's website. In some cases these submissions duplicated comments made to The Treasury's consultation regarding the exposure draft of the Bill (which was termed the Corporations Amendment (No. 2) Bill 2010).

1.11 The committee held a public hearing in Canberra on 26 October 2010. A list of witnesses who appeared at the hearing is at Appendix 2, and copies of the Hansard transcript are available online at http://www.aph.gov.au/hansard.

Acknowledgement

1.12 The committee thanks those organisations and individuals who made submissions and gave evidence at the public hearing.

Scope of the report

1.13 Chapter 2 provides a brief outline of the key provisions of the Bill, and Chapter 3 discusses the key issues raised in submissions and evidence.

Note on references

1.14 References in this report are to individual submissions as received by the committee, not to a bound volume. References to the committee Hansard are to the proof Hansard. Page numbers may vary between the proof and the official Hansard transcript.

10 EM, p. 3. Also see the Hon. Chris Bowen MP, Minister for Financial Services, Superannuation and Corporate Law, and Minister for Human Services, 'Legislation Reversing Sons o f Gwalia Introduced into Parliament', Media Release No. 064, 2 June 2010.

CHAPTER 2

OVERVIEW OF THE BILL

Key provisions of the Bill

2.1 The key provisions of the Bill amend the Corporations Act.

2.2 Item 1 of Schedule 1 of the Bill inserts Part 2F.4 'Proceedings against a company by members and others' and proposed new section 247E. Proposed new section 247E provides that a person is not prevented from obtaining damages or other

compensation from a company only because the person:

(a) holds, or has held, shares in the company; or

(b) has subscribed for shares in the company; or

(c) has a right to be included in the register that the company maintains under section 169.1

2.3 This proposed section abrogates the rule in the decision of the House of Lords in Houldsworth v City o f Glasgow Bank which established that a person's capacity to bring a claim can be affected by how the person acquired the shares and whether the person still holds them.1 2

2.4 Item 2 of Schedule 1 repeals the existing section 563A and substitutes proposed new section 563A. Proposed subsection 563A(1) provides that the payment of a 'subordinate claim' made against a company is to be postponed until all other claims made against the company are satisfied.

2.5 Proposed subsection 563(2) outlines that in this section the term 'subordinate claim' means (a) a claim for a debt owed by the company to a person in the person's capacity as a member of the company; or (b) any other claim that arises from dealing in shares in the company. This has the effect that any claim brought by a person against a company that arose from the buying, selling, holding or otherwise dealing with a shareholding is to be postponed in an external administration until after all

other claims have been paid.3

2.6 Item 3 of Schedule 1 inserts proposed section 600H which outlines the entitlements of a person whose claim against a company is postponed under proposed new section 563A. These are: (a) to receive a copy of any notice, report or statement

1 Section 169 of the Corporations Act sets out the general requirements for a register of company members.

2 EM, p. 7. Houldsworth v City o f Glasgow Bank (1880) 5 App Cas 317.

3 EM, p. 7.

Page 6

to creditors only if the person asks the administrator or liquidator in writing; and (b) to vote in their capacity as a creditor of the company, during the external administration of the company, only if the court so orders.

2.7 Item 4 of Schedule 1 provides that: (1) section 563A, as amended by the Schedule, applies to a claim that arises after this Schedule commences; and (2) section 600H, as inserted by the Schedule, applies to any claim made against a company if the external administration of the company commences after the Schedule commences (being the day after Royal Assent).

2.8 The EM notes that the Bill has no significant financial impact on

Commonwealth expenditure or revenue and describes the Bill as having a low compliance cost impact. In terms of regulatory impact on business, the EM states that the amendments in the Bill will facilitate the provision of credit to companies, reduce the costs for insolvency practitioners and improve the efficacy of external administration.4

4 EM, pp 3-4.

76

CHAPTER 3

KEY ISSUES

Introduction

3.1 The submissions received can be divided into those that discussed the policy approach of the Bill, and those who were supportive of the Bill but raised concerns regarding drafting issues. In particular, the submission from the Law Council of Australia, Corporations Committee (LCA) raised a number of drafting concerns with the Bill. At the public hearing on 26 October 2010, the Committee requested that The Treasury provide a response to these drafting concerns.

Approach of the Bill

3.2 As previously noted by the CAMAC report , there are divergent views regarding the appropriate status of shareholder claims against insolvent companies. These opposing views were reflected in the submissions and evidence received by the committee. The key issues and concerns raised during the inquiry include:

• the appropriateness of aggrieved shareholder creditors ranking equally with unsecured creditors in an insolvency process;

• the impact of the Sons of Gwalia case on access to credit for Australian companies;

• the effect of allowing aggrieved shareholders claims on external administrations; and

• the issue of investor protection.

A g g r ie v e d sh a reh o ld e r cla im s a n d u n secu red creditors

3.3 Chartered Secretaries Australia (CSA) were broadly supportive of the Bill, noting that it 'merely restores the position, well understood by the market, creditors and shareholders, as to priorities of payment in the event of insolvency'.1 2 Principally, CSA was concerned that the approach in the Sons of Gwalia case could negatively affect the rights of creditors. During the insolvency process, creditors may have the choice to vote on whether a company should end administration and resume trading, enter into a deed of company arrangement (a binding arrangement between a company and its creditors governing how the affairs of the company will be dealt with) or should be wound up. CSA stated that, if aggrieved shareholders had the same right to vote at a creditors' meeting, they could 'decisively influence administration outcomes'.3

1 Corporations and Markets Advisory Committee, Shareholder Claims Against Insolvent Companies: Implications o f the Sons o f Gwalia decision, December 2008, p. 63.

2 Chartered Secretaries Australia, Submission 1, p. 1.

3 Chartered Secretaries Australia, Submission 1, p. 3.

Page 8

3.4 In this context, the EM notes that in most liquidations, unsecured creditors receive, at best, a small percentage of the funds they are owed. It describes a scenario where 'there could be 5000 aggrieved shareholders...[and] their votes could significantly affect the efficacy of the liquidation and reduce the returns for other creditors'.4

3.5 The relative positions of shareholders and unsecured creditors were contrasted in several submissions. For example, the Australian Financial Markets Association (AFMA) argued that unsecured creditors should be differentiated from shareholders because:

....unlike shareholders, they do not take an investm ent risk on the company; rather they provide their goods and services on com m ercial terms with credit as part o f that business arrangem ent.5

3.6 Similarly, Mr Robert McKenzie of the LCA stated:

O rdinary unsecured creditors like trade creditors are not in the same position as shareholders. Shareholders take risks in order to get capital appreciation and dividends paid out o f profits. U nsecured creditors do not get that opportunity.6

3.7 CSA highlighted the importance of maintaining the distinction between debt and equity in a limited liability company. CSA's view was that shareholders should absorb the risk of insolvency as part of the risks they take in acquiring shares and that, until the Sons of Gwalia case, creditors expected to have priority over shareholders in having access to the company's equity base during an insolvency process. Further, while shareholders risk losing their equity investment, they also benefit from the distribution of any dividends and any capital gains from their shareholding. In contrast, creditors can only recover the principal owed to them (as well as interest in some cases).7

3.8 This position was not accepted by IMF Australia, which quoted the High Court judgement in the Sons of Gwalia case to support its position. In that case, then Chief Justice Gleeson stated that what determined the case was that the respondent's claim was not founded in his rights as a shareholder but the obligations that arose by virtue of the company's conduct.8 IMF Australia did not agree that shareholders should 'assume the risk of that they will be lied to when making investment decisions as part of the trade off for gaining a share of any potential profit or capital gain'. Further:

Shareholders, as with all other beneficiaries o f the [market protection regime], should be able to expect the companies w ith whom they deal to

4 EM, p. 8.

5 Australian Financial Markets Association, Submission 4, p. 3.

6 Mr Robert McKenzie, Proof Committee Hansard, 26 October 2010, pp 1-2.

7 Chartered Secretaries Australia, Submission 1, p. 3.

8 Sons o f Gwalia v Margaretic (2007) 231 CLR 160, per Gleeson CJ at 185.

Page 9

comply with their statutory obligations and invest freely in and allocate capital within, the m arket on that basis.9

3.9 It was also noted that many creditors have options to protect their interests if a company becomes insolvent. Recoveries and Litigation Support (RLS) noted that banks concerned about loans to companies have the option to secure those loans and should not be preferred over aggrieved shareholders.10 1 1 Similarly, IMF Australia disputed the position in the EM that 'as the shareholder group...is best able to manage the risk of management misconduct, shareholders as a group should bear the cost of

failing to manage this risk'.11

3.10 IMF Australia noted that, in the modem equity market, shareholders remain outside of the relevant company and have little influence on its operation, or insight into its performance. IMF Australia contrasted the position of shareholders with that of trade creditors and unsecured finance creditors 'who are typically much closer to the company' and banks who 'are always in close contact with company management' and can access the company's records to assess the risk of their loans. While the above groups have options to protect themselves from company insolvency, 'only investors in the shares of the company are unable to take steps to secure their position at the time they enter into their transaction with the company'.12

A c c e s s to cred it

3.11 A key rationale for the Bill was the effect of the Sons of Gwalia case on access to credit and debt financing for Australian companies. As the EM stated:

The effect o f Sons o f Gwalia v M argaretic is to shift losses suffered by shareholders, due to misleading conduct or non disclosure, from

shareholders to unsecured creditors.

By reducing the likely return to unsecured lenders in the event o f

insolvency, the decision is likely to increase credit spreads for unsecured debt and to adversely affect the availability o f credit, particularly in respect o f distressed com panies and companies where there have been concerns regarding corporate disclosure.13

3.12 The Australia Financial Markets Association (AFMA) supported this position, noting that its members were 'of the firm view that the practical effects of the High Court's decision...on lending behaviour are harmful and warrant a change to the law'.14 AFMA argued that, while the Sons of Gwalia decision was expected to only affect a

few cases, it has broader relevance 'because lenders are unable to determine which cases it will ultimately apply at the time credit is given'. Since the natural reaction of

9 IMF Australia, Submission 6, p. 6.

10 Recoveries and Litigation Support Submission 2, p. 2.

11 EM ,p. 16.

12 IMF Australia, Submission 6, p. 18.

13 EM ,p. 15.

14 Australian Financial Markets Association, Submission 4, p. 1.

Page 10

lenders in these circumstances is to increase the cost of credit, tighten credit conditions or reduce the amount of unsecured credit made available, this has 'undesirable consequences for Australian companies seeking to finance their businesses through debt issues'.15

3.13 While AFMA acknowledged that it was not possible to provide data to measure the precise effect of the Sons of Gwalia decision, it had received 'consistent and broad based feedback from member firms reporting the harmful effect of the decision on the price and availability of unsecured lending in recent years'.16

3.14 AFMA noted the significance of overseas finance for Australian companies, highlighting that foreign investors hold 79 per cent of bonds issued by Australian non- financial companies. It argued that the Sons of Gwalia case had disadvantaged Australian companies seeking funding in international debt markets, especially in the

United States:

Investors in this m arket are accustom ed under US law to all shareholders, w hether aggrieved or not, being subordinated to secured and unsecured creditors. Consequent to the Sons o f Gwalia decision, some US corporate bond m arket investors have a m arkedly reduced appetite for unsecured A ustralian d eb t.17

3.15 AFMA also informed the Committee that its members expected that reversing the effect of the Sons of Gwalia case 'will increase the availability and lower the cost of unsecured debt finance for Australian companies...[and] assist development of the corporate bond market in Australia by providing greater certainty and lowering the risk associated with unsecured corporate debt'.18

3.16 CSA was also deeply concerned that the decision in the Sons of Gwalia case would affect opportunities for Australian companies to obtain debt finance or credit in the United States, which would ultimately disadvantage Australian shareholders.19 2 0 In particular:

Potential lenders to any A ustralian com pany will be confronted with higher risk on unsecured debts (a lower recovery rate in the case o f com pany failure) than before. Consequently, CSA is o f the opinion that interest rates charged on unsecured debt will increase to com pensate for the increased risk.

3.17 In contrast, IMF Australia considered it a 'remarkable fact' that the Bill was undergoing parliamentary scrutiny 'without any evidence of the cost or availability of debt being affected by the Sons of Gwalia decision having been made public'. It noted

15 Australian Financial Markets Association, Submission 4, p. 2.

16 Australian Financial Markets Association, Submission 4, p. 4.

17 Australian Financial Markets Association, Submission 4, p. 3.

18 Australian Financial Markets Association, Submission 4, p. 5.

19 Chartered Secretaries Australia, Submission 1, p. 2.

20 Chartered Secretaries Australia, Submission 1, p. 5.

80

Page 11

that the experience in the United Kingdom, which does not discriminate between shareholder claims and other unsecured creditors 'suggests the effect is negligible, if existent at all'.21 IMF Australia contended:

In Australia, there has been no evidence that the Sons o f Gwalia decision resulted in any increase in credit margins or difficulty for Australian companies to raise debt finance.22

3.18 IMF Australia also argued that, to make a reasoned decision on the Bill, Parliament would need evidence in respect of a number of factors, including 'the nature and extent of any increased costs of, and access to, debt financing caused by the Sons of Gwalia decision'.23

E ffe c t on ex tern a l a d m in istra tio n s

3.19 The EM to the Bill states that the Sons of Gwalia decision 'has had a negative effect on costs and delays in the conduct of some external administrations, and consequentially a diminution of returns to creditors'. It notes:

Costs and delays arise due to the complexities introduced into external administration in respect o f identifying w hich parties are creditors and the quantification o f their claims for the purpose o f providing access to information, determ ining voting rights and m aking distributions o f funds.24

3.20 However, Recoveries and Litigation Support (RES) supported the position established by the Sons of Gwalia case. It suggested that unsecured creditors and admitted shareholder creditors had received significant funds through the administration process in the Sons of Gwalia case (21 cents in the dollar).25 This presumably also indicates that payments for creditors had not been diluted through the

claims of aggrieved shareholders.

3.21 RES noted that, contrary to an argument made in the CAMAC report, Shareholder claims against insolvent companies, the issue of complexities in determining shareholder claims had not been evident in the Sons of Gwalia case:

The established and successful Gwalia adm inistrators' processes and documentation can be used as an example to establish a regime to deal with aggrieved shareholders claims in other failed com panies which have fraudulently m isled or deceived their investors.26

3.22 IMF Australia also did not accept the argument in the EM. It argued that only a few insolvency administrations each year will be affected and distinguished the Sons

21 IMF Australia, Submission 6, p. 2.

22 IMF Australia, Submission 6, p. 11.

23 IMF Australia, Submission 6, p. 21.

24 EM, p. 16.

25 Recoveries and Litigation Support, Submission 2, p. 1.

26 Recoveries and Litigation Support, Submission 2, p. 2.

Page 12

of Gwalia example where the administrator dealt with 8000 shareholder compensation claims within about a year:

Not many cases will be as complicated as the Sons of Gwalia administration. The position adopted by the administrators of that company, from personal experience, is such that administrative complexity can no longer be used as an argument in favour of the Bill.27

3.23 However, the Insolvency Practitioners Association noted it had previously made submissions to government explaining the negative impact on insolvency administrations of the decision in Sons of Gwalia. It pointed to a recent Federal Court decision that 'illustrates the difficulties for a liquidator in managing large shareholder claims based on a company's alleged misrepresentations, and the need for the court to intervene using existing law in order to facilitate the progress of administrations'.28

3.24 CSA also perceived the potential for uncertainty for administrators in adjudicating the claims of aggrieved shareholders and the risk of substantial delay for creditors. The approach in the Sons of Gwalia case could divide the rights of shareholders, creating uncertainty and allowing recent shareholders to make a claim due to inadequate disclosure by the company, while longer term shareholders may have no claim. CSA was also concerned that shareholders could claim equal rights with creditors without having to prove their claim, potentially leading to speculative claims.29 3 0

3.25 Mr Robert McKenzie of the LCA commented that a majority of its members supported a change in the law to restore the position in respect of shareholder claims prior to the Sons of Gwalia case. He stated:

The reason for this prevailing view is that dealing with shareholders claims causes delays, increased complexity, increased costs and increased court involvement, all of which prejudice the financial returns for other unsecured creditor claims. Dealing with the shareholder claims and other unsecured creditors equally is therefore contrary to the efficient and cost-effective administration of an insolvency regime in our submission. More of the assets are lost in administration costs rather than being returned to creditors as dividends.

In vesto r p ro te c tio n

3.26 The EM notes that, if shareholder claims are not subordinated, the burden of meeting compensation claims falls on unsecured creditors instead of those who are responsible for or who benefited from the misconduct of the company. The situation created by the Sons of Gwalia decision, 'does not, therefore, create any incentive for

27 IMF Australia, Submission 6, p.14.

28 Insolvency Practitioners Association, Submission 5, p. 2. IO N Limited, in the matter o f ION Limited (Subject to Deed o f Company Arrangment) [2010] FCA 1119.

29 Chartered Secretaries Australia, Submission 1, p. 4.

30 Mr Robert McKenzie, LCA, Proof Committee Hansard, 26 October 2010, pp 1-2.

Page 13

those who are responsible for misconduct (or who take advantage of misconduct) to adopt alternative behaviour'.31

3.27 IMF Australia disagreed with this assertion:

This argum ent...falsely assumes that directors o f listed companies

contemplating breaching the M arket Protection Regime are only deterred from doing so because their company or themselves may have to pay compensation if they breach the legislation and are caught. IM F submits that the prim ary deterrent effect o f the M arket Protection Regime is the negative effect on the directors' reputations that would arise on being publicly identified as the cause o f the companies' legislative breach. The compensation is usually covered by insurance, but the directors' reputations would be perm anently harmed. 32

3.28 IMF Australia noted that the whole foundation of the market protection regime 'rests on companies being able to be held accountable for breaches'. It argued that subordinating defrauded shareholders from claiming damages against a company 'would be to eschew the purpose for which the Market Protection Regime was designed'.33 Specifically:

A direct consequence o f the passage o f the Bill will be to make unviable the enforcement o f the M arket Protection Regime... [It] will become

commercially unviable to enforce against companies with net unsecured assets o f less than about $50 m illion (that is "Small to M edium Cap

Companies") unless it is known to the victims o f the contravention at the commencement o f proceedings that the company has insurance that will materially respond.34

Drafting concerns

3.29 A number of submissions were broadly supportive of the approach adopted by the Bill but also pointed to areas where there could be greater clarity in the proposed legislation. Some submissions suggested a range of amendments to circumvent possible unintended consequences for the operation of other sections of the Corporations Act.

G e n e ra l issues

Debts and claims

3.30 The Insolvency Practitioners Association (IPA) highlighted that the wording in proposed new section 563A 'does not accord with section 553 of the Corporations Act [dealing with debts or claims that are provable in a winding up] which refers to

31 EM,p. 16.

32 IMF Australia, Submission 6, p. 16.

33 IMF Australia, Submission 6, p. 6.

34 IMF Australia, Submission 6, p. 7.

"debts payable" (not owed) by the company, and to "all claims against" the company'.35

3.31 The IP A also contrasted the wording in subsection 563B(2) that 'payment of the interest is to be postponed until all other debts and claims in the winding up have been satisfied' with that in proposed new section 563A which only refers to claims.36 As the IP A explained:

If there is a judgment debt obtained against the company by a person arising from the person buying, holding, selling or otherwise dealing in shares in the company, that debt may not be subordinated...This is because a debt is different from a mere claim. In that case, the shareholder who was misled, and who has a judgment for the loss suffered, would be able to prove in the insolvency of the company along with all other creditors....The question would then arise if that shareholder creditor has recovered its judgment debt from the company before its formal insolvency - should that

creditor then be entitled to retain it, or should the law provide that the insolvency practitioner has a right of recovery of the amount paid to the shareholder by the company?...The proposed provisions do not directly deal with these issues and they are left unclear.37

3.32 The LCA also suggested that proposed new subsection 563A(1) should refer to 'all other debts owed by or claims made against' a company to make it consistent with other provisions within Subdivision D of the Corporations Act and proposed new subsection 563A(2). Similarly this could apply to the proposed new section 600H which could be changed to 'a person whose debt or claim against the company'.38

3.33 In response the Treasury noted that, while it may improve consistency with other provisions of the Corporations Act, the inclusion of 'debts' in addition to claims in proposed subsection 563A(1) is unnecessary as '[cjlaims made against a company will include all debts owed by the company'.39

3.34 The Treasury later provided additional information to the committee, stating that, in relation to this matter, the amendments proposed by the LCA 'would not undermine the intended policy underlying clause 2 in the Bill'.40

Return o f capital

3.35 In addition, the LCA noted that current section 563A subordinates 'debts' owed to members to all 'debts owed to or claims made by persons otherwise than as a member of the company'.41 It argued that 'qualification has been lost in the wording of

Page 14_________________ ________ __ __________________________________________________

35 Insolvency Practitioners Association, Submission 5, p. 1.

36 Insolvency Practitioners Association, Submission 5, p.l.

37 Insolvency Practitioners Association, Submission 5, p.2.

38 Law Council of Australia, Corporations Committee, Submission 3, pp 1-2.

39 Treasury, Answer to question on notice provided 4 November 2010, p. 2.

40 Treasury, Additional information provided 12 November 2010, p. 2.

41 Law Council of Australia, Submission 3, supplementary submission, p. 2. Italics in submission.

Page 15

the proposed s563A and leaves an unintended lacuna whereby a 'subordinate claim' is arguably subordinated to all other claims (including those by members for a return of capital).42 At the public hearing, Mr McKenzie commented:

...there are different types of claims: where shareholders are involved; where a dividend has been declared; and where there is misleading and deceptive conduct—or for a return of capital. Obviously we do not want the return of capital to be caught in this; it never has been and should not be.

So, effectively, what we are asking there is just to make sure that that is the situation by essentially clarifying what sorts of claims to rank above the subordinated claims.43

3.36 The LCA recommended that this section be made clearer by being amended to read:

The payment of a subordinate claim made against a company is to be postponed until all other debts or claims admissible to proof against the company under s553 are satisfied.44

3.37 However, according to The Treasury, the status quo is maintained in respect of the ranking of claims for return of capital:

It is our view that subsection 563A(2) definition is broad enough to cover claims for return of capital. Such claims are therefore necessarily excluded from "other claims" in subsection 563A(1).

It should be noted that the effect of section 563A is to rank certain claims below non-subordinated claims. It does not override any other rules regarding the ranking of subordinated claims amongst themselves. It will therefore not have the effect of making return of capital claims rank equally with, say, unpaid dividend claims.45

3.38 Nonetheless, The Treasury appeared to alter its position, indicating in further information provided to the committee that it did not oppose the LCA's suggested amendments above. It stated:

...the suggested amendments provide that the claims referred are only those that are admissible to proof and that such amendments would maintain the intended policy underlying clause 2 in the Bill. In view of this, Treasury does not oppose these LCA proposed amendments. 46

42 Law Council of Australia, Submission 3, supplementary submission, p. 2. Italics in submission. Section 553 of the Corporations Act outlines debts or claims that are provable in a winding up process.

43 Mr Robert McKenzie, LCA, Proof Committee Hansard, 26 October 2010, p. 2.

44 Law Council of Australia, Submission 3, supplementary submission, p. 2. Italics in original.

45 Treasury, Answer to question on notice provided 4 November 2010, p. 2.

46 Treasury, Additional information provided 12 November 2010, p. 1.

Page 16

Ά person'

3.39 The LCA also suggested that proposed new paragraph 563A(2)(b) may be too widely drafted, and could refer to a claim by a person against the company arising from another person dealing in the shares. For greater certainty, the section could be amended to read 'any other claims by a person that arises from that person' buying, holding, selling or otherwise dealing in shares in the company.47

3.40 The Treasury conceded that there was possible ambiguity due to the inclusion in the text of 'a person' in proposed new paragraph 563A(2)(b) and informed the committee that it would examine whether the paragraph as drafted will give effect to the government's intent:

Treasury will exam ine w hether the paragraph as stated will give effect to the Government's policy intention. W e note that any possible ambiguity could be addressed by the simple rem oval o f the offending w ords.48

3.41 The Treasury later provided additional information to the committee, stating that, in relation to this matter, it does not oppose the removal of 'a person' from paragraph 563A(2)(b).49

N o m in e es a n d c u sto d ia n s

3.42 Allens Arthur Robinson (AAR) commented that the broad language in proposed new paragraph 563A(2)(b) was necessary:

...because most equity investors do not becom e "members" directly; they are not entered on the register, but hold beneficial ownership through nom inees and custodians, who are entered on the register... [FJurther, m any equity investors invest through warrants and other rights with respect to shares.

3.43 However, AAR argued that the wording used in the Bill does not adequately cover this issue because it only deals with holding and dealing in the shares themselves, rather than interests in shares and rights with respect to shares. AAR's

suggested approach was to redraft proposed new paragraph 563A(2)(b) to read:

(b) any other claim that arises from a person buying, holding, selling or otherw ise dealing in, or with respect to, shares in the com pany or interests in, or rights w ith respect to, shares (issued or unissued) in the company, including rights against any person to acquire or dispose o f shares or interests in shares in the com pany.50

3.44 In response, The Treasury noted that the Bill:

...reflects the intention that subordination w ill not extend to claim s arising from dealings in non-shareholder equity interests, e.g. transactions in

47 Law Council of Australia, Submission 3, supplementary submission, p. 2. Italics in submission.

48 Treasury, Answer to question on notice provided 4 November 2010, p. 2.

49 Treasury, Additional information provided 17 November 2010, p. 1.

50 Allen Arthur Robinson, Submission 7, p. 5.

86

Page 17

derivatives. Such claims were not understood to be subordinated by section 563A prior to the Sons of Gwalia decision.51

3.45 The Treasury also drew attention to the CAM AC report which recommended that, if the government chose to 'reverse' the effect of the Sons of Gwalia decision, 'subordination of claims arising from shareholder interests should not extend to claims arising from other kinds of equity interests'. Further:

In the case of nominees or custodians, claims arising from their buying, selling, holding or dealing in shares will be subordinated by the provision. The provision does not require the buying etc of shares to have been carried out by the person making the claim.52

D e fin itio n o f 'extern al a d m in istra tio n '

3.46 The LCA highlighted the use of the term 'external administration' in proposed section 600H, noting that this term is not defined in the Corporations Act. The LCA submitted that the wording of the proposed section should be clarified to indicate:

(a) if proposed paragraph 600H(a) is to apply to schemes of arrangement under Part 5.1 of the Corporations Act; and

(b) the ambit of the term 'external administration' in proposed paragraph 600H(b) (ie. whether it is confined to the forms of external administration in section 600H(a)).53

3.47 Specifically, the LCA suggested that the words 'during the external administration of the company' in proposed paragraph 600H(b) be replaced with 'while the company is an externally administered body corporate'. Such an amendment would make use of an existing defined term in the Corporations Act.54

3.48 The Treasury outlined the various uses of the term 'external administration' in the Corporations Act. In particular, it commented that Chapter 5 of the Corporations Act is headed 'External Administration' and, with one specialised exception, all kinds of corporate insolvency proceedings are included in that Chapter. In its view, the term

'external administration' would 'be read in line with the intended policy underlying the Bill and in accordance with the ordinary meaning of the term as all kinds of corporate insolvency administration under the Corporations Act'.55

3.49 However, The Treasury later provided additional information to the committee:

Treasury notes that a definition of external administration could be inserted into section 600H to address the LCA's concerns. If appropriate, the definition could be accompanied by explicit references to processes to

51 Treasury, Answer to question on notice provided 4 November 2010, p. 5.

52 Treasury, Answer to question on notice provided 4 November 2010, p. 5.

53 Law Council of Australia, Corporations Committee, Submission 3, p. 2.

54 Law Council of Australia, Corporations Committee, Submission 3, p. 2.

55 Treasury, Answer to question on notice provided 4 November 2010, p. 3.

Page 18

which the provision is intended to apply. This would address the LCA's concerns and still give effect to the underlying policy behind the Bill.56

S ta tu to ry In terest claim s

3.50 The LCA also drew attention to the need for clarity regarding the ranking of statutory interest on claims pursuant to subsection 563B(1) which provides for interest to be added on to debts or claims paid by a liquidator in the winding up of a company. Subsection 563B(2) provides that payments of interest on these debts and claims are postponed until all other debts and claims in the winding up have been satisfied, other than debts owed to members of the company. 57 The LCA noted that this is difficult to interpret consistently with proposed new section 563A and, accordingly, raises a number of questions for consideration.58

3.51 At the public hearing, Ms Barbara Gordon of the LCA elaborated:

[D]o we want our Sons of Gwalia claims to be paid out before any of the other creditors are paid interest on their debts? That is one question. If the answer to that is no, then what will happen is that the existing creditors will get their 100 cents in the dollar. They will then get interest on those debts. Then the Sons of Gwalia type claims and the other existing claims for

dividends et cetera which fall within the definition of 'subordinate claim' would then presumably be payable, and we would be guessing—and that is all we are doing at the moment—from the draft of the legislation that interest should then be payable in relation to those claims once both paragraphs (a) and (b) have been paid. But this is a question that needs consideration, some sort of decision needs to be made and then the legislation needs to be tweaked to amend section 563B to reflect the outcome of that consideration.59

3.52 The response from The Treasury to these concerns noted that the existing rule was that claims covered by the current section 563A are ranked after payment of non- subordinated claims and after payment of interest on those non-subordinated claims. The Treasury maintained that the Bill was not intended to alter this approach and that this was not an issue that had been raised during the CAMAC examination or

exposure draft consultation. However, The Treasury acknowledged the potential problem highlighted by the LCA:

The LCA supplementary submission does highlight a possible issue regarding whether the current cross referencing in section 563B will be read as referring to all subordinated claims (as intended) in subsection 563A(2) or only to paragraph 563A(2)(a) claims...Treasury will examine whether the paragraph as stated will give effect to the Government's policy intention.60

56 Treasury, Additional infonnation provided 12 November 2010, p. 2.

57 Law Council of Australia, Submission 3, supplementary submission, p. 3.

58 Law Council of Australia, Submission 3, supplementary submission, p. 3.

59 Ms Barbara Gordon, LCA, P ro o f Committee Hansard, 26 October 2010, p.3.

60 Treasury, Answer to question on notice provided 4 November 2010, p. 3.

Page 19

3.53 The Treasury later provided additional information to the committee on this matter:

To address the LCA's concern, section 563B could be amended to clarify that interest on non-subordinated claims will rank above all subordinated claims under the proposed section 536A. Treasury does not oppose these LCA amendments.61

S ch em es o f a rra n g e m e n t

3.54 Where a company may become insolvent (or already is insolvent), there are several forms of external administration available so that control of the company's affairs is taken from the company's directors and put into external hands. These include voluntary administration, receivership, creditors' schemes of arrangement and winding up.62

3.55 A creditors' scheme of arrangement is one form of external administration of a company in financial difficulty. Under a creditors' scheme of arrangement, a company may restructure its debts through a compromise of creditors' claims to avoid liquidation. A scheme binds creditors only if it is approved by a majority of creditors and must also be approved by the court.63 The Treasury explained further to the committee:

Section 411 [of the Corporations Act] provides that a creditors' scheme of arrangement is binding on a class of creditors only if a majority by number and more than 75% by value of creditors in that class vote for the scheme. There are separate requirements for votes by members (in that capacity) in a members' scheme of arrangement.

Approval by the Court is also required before a scheme can bind a class of creditors or members. This provides protection against abusive schemes.64 6 5

3.56 The creditors' scheme of arrangement option has not been commonly used since the voluntary administration procedure is regarded as being subject to less formality, delay, expense and greater flexibility of outcome.56 Nonetheless, the LCA argued 'there may be a resurgence in popularity of creditors' schemes of arrangement in the wake of recent court decisions'66 and 'schemes of arrangement [might] regain

61 Treasury, Additional information provided 12 November 2010, p. 2.

62 P.Redmond, Companies and Securities Law: Commentaries and Materials, Fifth Edition, Thomson Reuters, Prymont, 2009, p. 122.

63 P.Redmond, Companies and Securities Law: Commentaries and Materials, Fifth Edition, Thomson Reuters, Prymont, 2009, p. 122.

64 Treasury, Answer to question on notice provided 4 November 2010, p. 3.

65 P.Redmond, Companies and Securities Law: Commentaries and Materials, Fifth Edition, Thomson Reuters, Prymont, 2009, p. 130.

66 Law Council of Australia, Corporations Committee, Submission 3, supplementary submission, p. 6.

89

Page 20

popularity in the context of claims against the company where creditors will also have claims against third parties arising out of the same circumstances'.67

3.57 The LCA also noted that the postponement of claims by proposed new section 563A 'is confined to the context of winding up' a company, meaning that the Bill does not adequately address situations where there is an attempt to formally reconstruct an insolvent company through a scheme of arrangement process. In particular, an insolvent company will be unable to use a scheme of arrangement to achieve an effective compromise with creditors and shareholders with 'subordinate claims' as these claims will survive any reconstruction of the company.68

3.58 Ms Barbara Gordon explained further:

W ith this legislation clause 600H (b) deprives [subordinated creditors] o f their right to vote...The problem with a schem e o f com pany arrangement, however, is that a scheme w ill only bind a class o f creditor who has voted in relation to the schem e....The legislation as it is proposed effects a

postponem ent o f the subordinate claims; it does not extinguish them ...That is the reason for the problem . Y ou cannot reconstruct a com pany and come out clean on the other end if these subordinated claims survive the

reconstruction, so there needs to be some m echanism for binding these claimants to the reconstruction...69

3.59 The LCA suggested that the most efficient solution to accommodate the scheme of arrangement process is to amend proposed new paragraph 600H(b) (which restricts the capacity of creditors with subordinate claims to vote when the company is in external administration) to clearly not apply in the context of schemes of arrangement. Alternatively, part of the Corporations Act dealing with the administration of creditors' compromises could be amended to extinguish the subordinate claims where 'the return to those creditors will be less than complete satisfaction of their debts and claims'.70

3.60 The LCA summarised their concerns about the effect of the Bill on creditors' schemes of arrangements as: (a) the lack of clarity regarding the application of proposed paragraph 600H(b) on meetings convened for approving a scheme of arrangement; (b) that proposed new paragraph 600H(b) may have no application if a scheme is proposed by creditors or the company itself (as the proposed section is restricted to 'during' external administration); and (c) the lack of clarity regarding whether a company subject to a scheme of arrangement is in 'external administration'

for the purposes of 600H(b).71

67 Ms Barbara Gordon, LCA, Proof Committee Hansard, 26 October 2010, p. 3.

68 Law Council of Australia, Corporations Committee, Submission 3, supplementary submission, p. 5.

69 Ms Barbara Gordon, LCA, P roof Committee Hansard, 26 October 2010, pp 4-5.

70 Law Council of Australia, Submission 3, supplementary submission, p. 5.

71 Law Council of Australia, Submission 3, supplementary submission, p. 6.

3.61 In relation to proposed new section 600H, the Insolvency Practitioners Association also noted a number of drafting issues. These were as follows:

• proposed new section 600H refers to 'person whose claim against a company is postponed', but it is the payment not the claim which is postponed;

• proposed new section 600H should be included in the list of sections allowing electronic communications in section 600G; and

• proposed new section 600H allows a person to apply to a court for the right to vote, but the law should allow representative applications on behalf of groups of shareholders.72

3.62 In its response to the issues raised by the LCA, The Treasury initially commented that schemes of arrangement involving shareholder compensation would be expected to occur 'very rarely', that is:

In recent years, there have been nil to four insolvency related schemes o f arrangement per year. Overwhelmingly, reorganisations occur through the non-court based process afforded by voluntary administrations. In recent years, there have been approxim ately 1500 to 2100 voluntary

administrations per year.73 7 4

3.63 However, The Treasury clarified its view on the effect of the Bill with respect to schemes of arrangement, outlining two possible scenarios. In the first, the court grants subordinated shareholder compensation claimants leave to vote (for example where the court detennines it is appropriate they should vote, in light of factors such as whether they have a financial interest in the company) and they are bound if the class of creditors collectively votes 'yes'. In the second, the court does not grant subordinated shareholder compensation claimants leave to vote and consequently the scheme cannot bind them.,4

3.64 The Treasury noted this second scenario will mean subordinated shareholder compensation claimants 'will effectively remain free to frustrate deals in relation to matters in which they may have no demonstrated interest (or to use their ability to frustrate deals to extract from other stakeholders a financial interest which they would not otherwise be entitled to)'. Therefore:

Treasury is examining whether, in respect o f any schem es o f arrangement that might arise in respect o f companies subject to shareholder

compensation claims, the Bill is effective in achieving its policy

objectives.75

3.65 The Treasury later provided additional information to the committee, noting it had undertaken further discussions with the LCA regarding its concerns:

______________________________________________________________________________ Page 21

72 Insolvency Practitioners Association, Submission 5, p. 2.

73 Treasury, Answer to question on notice provided 4 November 2010, p. 3.

74 Treasury, Answer to question on notice provided 4 November 2010, p. 3.

75 Treasury, Answer to question on notice provided 4 November 2010, p. 6.

Page 22

It is Treasury's understanding that the LCA's concerns may be addressed by amendments that would have the effect of providing that a Part 5.1 compromise or arrangement would be binding on creditors with subordinated claims who had not been given leave to vote, despite the fact that a meeting of that class of creditors had not been ordered by the Court under section 411(1). Treasury does not oppose these LCA proposed amendments.76

S u b sid ia ries

3.66 Allens Arthur Robinson (AAR) suggested that the Bill should also subordinate claims against subsidiaries to ensure that claims by shareholders are not picked up by class order deeds of cross guarantees issued by the company and its subsidiaries. The result would be that shareholders have claims against subsidiaries which rank equally with creditors of those subsidiaries.77

3.67 In response to this issue, The Treasury stated 'that where a shareholder made a claim against a subsidiary and the subsidiary then sought contribution or indemnity from a parent company, the later claim is not considered to have been subordinated under the current section 563A'. It also noted that the Bill does not purport to alter the

status quo in respect of this issue.78

A p p lic a tio n p r o v isio n a n d c o m m e n c e m e n t

3.68 Several submissions raised concerns regarding which claims the Bill would apply to and the commencement of the Bill. AAR's submission noted that Item 4 of Schedule 1 of the Bill provides that proposed section 563A 'applies to a claim that arises after this Schedule commences'. AAR was concerned that this would mean that claims which 'arise' prior to the Schedule's commencement would continue to enjoy the priority afforded to them according to the principles in the Sons of Gwalia case.

Since proposed new section 563A is an amendment to a provision of the Corporations Act which operates in relation to external administrations, AAR argued it was therefore appropriate that the provision operate by reference to the commencement of the relevant external administration and not when the relevant claims arose. AAR

submitted that the wording should be amended to:

(1) Section 563A of the Corporations Act 2001, as amended by this Schedule, applies to a claim made against a company if the external administration of the company commences after this Schedule commences.79

3.69 AAR commented that, as it stood, the benefits of the Bill would be delayed for a considerable period, 'possibly until all shareholder claims which arose prior to the enactment of the Bill are statute-barred'.80 AAR also stated that the current

76 Treasury, Additional information provided 12 November 2010, p. 2.

77 Allens Arthur Robinson, Submission 7, p. 5.

78 Treasury, Answer to question on notice provided 4 November 2010, p. 5.

79 Allens Arthur Robinson, Submission 7, p. 2. Underlining in original.

80 Allens Arthur Robinson, Submission 7, p. 3.

Page 23

proposed transition provision could result in situations where 'aggrieved shareholders making claims within the same external administration will be subject to different priority regimes depending on whether their claims arose prior or subsequent to the commencement of the Bill'.81

3.70 The Insolvency Practitioners Association considered that section 553 'adopts clearer wording which should be used in the application provision'.82 Subsection 553 (1) provides:

...in every winding up, all debts payable by, and all claims against, the company (present or future, certain or contingent, ascertained or sounding only in damages), being debts or claims the circumstances giving rise to which occurred before the relevant date, are admissible to p ro o f against the company.

3.71 Australian Financial Markets Association also expressed concern about any delay in the commencement date of the Bill:

...if the legislation was to be substantively amended or its passage delayed for an extended period...[this] could harm Australia's standing as an

investment location, especially amongst international investors who are anticipating enactment o f the legislation.83

3.72 The EM states that the Bill does not have retrospective effect.84 8 5 The Treasury responded that the Bill applies to claims arising after commencement and noted that this reflects an 'underlying policy decision that the Bill should not reduce the value of existing property rights of some claimants with a corresponding increase in the value of property rights of other claimants'. The Treasury further advised the committee:

Legal advice has been obtained that indicates that doing so without

providing adequate compensation to the persons whose property rights are adversely affected may amount to a constitutionally impermissible acquisition o f property.83

Conclusion

3.73 The committee acknowledges that the proposed measures in the Bill comprise an important amendment to a complex area of corporate regulation. This is intended to implement the government's policy of reversing the effect of the High Court's decision in the Sons of Gwalia case.

3.74 The committee recognises that conflicting viewpoints exist in relation to the issue of ranking aggrieved shareholders claimants during a corporate insolvency

81 Allens Arthur Robinson, Submission 7, p. 4.

82 Insolvency Practitioners Association, Submission 5, p. 2.

83 Australian Financial Markets Association, Submission 4, p. 5.

84 EM, p. 3.

85 Treasury, Answer to question on notice provided 4 November 2010, p. 5.

Page 24

process. The committee agrees with the approach in the Bill and the position that these claims should not rank equally with unsecured creditors and trade creditors. As noted in a number of submissions, the Bill restores the commonly understood position which

existed prior to the Sons of Gwalia case.

3.75 The committee acknowledges the statement made by IMF Australia that further inquiries should be undertaken regarding the effect of the Sons of Gwalia case on access to credit for Australian companies.86 While the committee agrees this data would be useful in considering the Bill, it agrees with the Australian Financial Markets Association that:

...it is not possible to provide data to m easure the precise effect o f the Sons o f Gw alia decision and related governm ent decisions, given the nature o f the response by lenders, the im pact o f the global financial crisis and the range o f other factors that im pact the level and terms o f unsecured

lending.87

3.76 It is unfortunate that some of the drafting issues identified in this inquiry were not previously raised during the exposure draft consultation and resolved prior to the introduction of the Bill into Parliament. However, the committee appreciates the efforts of submitters and witnesses, in particular the Corporations Committee of the Law Council of Australia, for raising potential issues with the drafting of the Bill. The committee also acknowledges The Treasury for promptly responding to these drafting concerns, once they were drawn to its attention.

3.77 The Treasury has indicated that it does not oppose the amendments to the Bill proposed by the Law Council of Australia which are highlighted above. Consequently the committee considers that these proposed amendments should be incorporated before the Bill is passed into law. Since the sections of the Corporations Act dealing with corporate insolvency 'are interpreted closely by the courts',88 it would be unfortunate if consequential amendments were required to address any unintended consequences caused by drafting concerns in the Bill.

Recommendation 1

3.78 The committee recommends that, subject to the drafting matters raised by the Law Council of Australia during this inquiry being addressed, the Senate pass the Bill.

These drafting matters are:

• the inclusion of 'debts', as well as 'claims' in relevant proposed new sections to ensure the consistent use of terminology in the Corporations Act;

86 IMF Australia, Submission 6, p. 21.

87 Australian Financial Markets Association, Submission 4, p. 4.

88 Insolvency Practitioners Association, Submission 5, p.l

Page 25

• the amendment of proposed new subsection 563A(1) to clarify the types of claims which rank above subordinated claims;

• the amendment of proposed new paragraph 563A(2)(b) to clarify that a claim by a person against a company must arise from th a t p e rso n 's involvement in dealing in the relevant company's shares;

• the amendment of current section 563B of the Corporations Act to clarify that statutory interest on non-subordinated claims will rank above subordinated claims under proposed section 563A;

• the insertion of a definition of the term 'external administration' in proposed new section 600H; and

• amendments to ensure that the Bill does not disturb the effective operation of creditors' schemes of arrangement.

Senator Trish Crossin

Chair

96

APPEN D IX 1

SUBMISSIONS RECEIVED

Submission Number Submitter

1 Chartered Secretaries Australia

2 Recoveries and Litigation Support

3 Law Council of Australia, Corporations Committee

Supplementary Submission

4 Australian Financial Markets Association

5 Insolvency Practitioners Association

6 IMF Australia

7 Allens Arthur Robinson

Additional Information Received 1. Additional information provided by The Treasury on 12 November 2010

2. Additional information provided by The Treasury on 17 November 2010

Answers to Questions on Notice 1. Answers to Questions on Notice provided by The Treasury on 4 November 2010

Ί

98

APPENDIX 2

WITNESSES WHO APPEARED BEFORE THE COMMITTEE

GORDON, Ms Barbara, Member, Corporations Committee, Law Council of Australia; Member, Insolvency and Reconstruction Committee, Business Law Section, Law Council of Australia; Senior Consultant, McKenzie Moncrieff Lawyers; Assistant Professor, Law School, University of Western Australia

McAULIFFE, Mr Daniel, Acting Manager, Governance and Insolvency Unit, Department of the Treasury

MCKENZIE, Mr Robert, Deputy Chair, Corporations Committee, Law Council of Australia; Member, Insolvency and Reconstruction Committee, Business Law Section, Law Council of Australia

MILLER, Mr Geoffrey, General Manager, Corporations and Financial Services Division, Department of the Treasury

99

100

The Senate

Legal and Constitutional Affairs

Legislation Committee

Crimes Legislation Amendment Bill 2010

November 2010

101

© Commonwealth of Australia

ISBN: 978-1-74229-356-1

This document was printed by the Senate Printing Unit, Department of the Senate, Parliament House, Canberra.

MEMBERS OF THE COMMITTEE

Members

Senator Patricia Crossin, Chair, ALP, NT

Senator Guy Barnett, Deputy Chair, LP, TAS

Senator Mark Fumer, ALP, QLD

Senator Scott Ludlam, AG, WA

Senator Stephen Parry, LP, TAS

Senator Louise Pratt, ALP, WA

Secretariat

Ms Julie Dennett

Mr Tim Watling

Mr Bill Bannear

Committee Secretary

Inquiry Secretary

Senior Research Officer

Ms Rosalind McMahon Administrative Officer

Ms Kate Middleton Administrative Officer

Suite SI.61

Parliament House

CANBERRA ACT 2600

Telephone: (02) 6277 3560

Fax: (02) 6277 5794

Email: legcon.sen(a>ar>h. gov.au

iii 103

104

Table of Contents

MEMBERS OF THE COM M ITTEE..................................................................iii

ABBREVIATIONS................................................................................................. vii

CHAPTER 1 ................................................................................................................ 1

INTRODUCTION.................................................................................................... 1

Purpose of the Bill.................................................................................................. 1

Conduct of the inquiry............................................................................................ 2

Acknowledgement.................................................................................................. 2

Note on references.................................................................................................. 3

CHAPTER 2 ................................................................................................................5

OVERVIEW OF THE BILL................................................................................... 5

Schedule 1 - ACC dismissal powers...................................................................... 5

Schedule 2 - Appointment of ACC examiners...................................................... 8

Schedule 3 - Crimes Act amendments................................................................... 9

Schedule 4 - special payments for AFP appointees............................................. 13

CHAPTER 3 ..............................................................................................................15

Issues........................................................................................................................ 15

Limit on term of appointment of ACC Examiners............................................... 15

Appointment of part-time examiners................................................................... 16

Identification material.......................................................................................... 19

Removal of unfair dismissal provisions...............................................................20

APPENDIX 1 ............................................................................................................ 23

SUBMISSIONS RECEIVED.................................................................................23

ADDITIONAL INFORMATION RECEIVED...................................................23

105

APPENDIX 2 ............................................................................................................. 25

WITNESSES WHO APPEARED BEFORE THE COMMITTEE..................25

ABBREVIATIONS

ACC Australian Crime Commission

ACC Act Australian Crime Commission Act 2002

AD JR Act Administrative Decisions (Judicial Review) Act 1977

AFP Australian Federal Police

APS Australian Public Service

CEO Chief Executive Officer

CPSU Community and Public Sector Union

FW Act Fair Work Act 2009

EM Explanatory Memorandum

PJC ACC Parliamentary Joint Committee on the Australian

Crime Commission

PS Act Public Service Act 1999

TIA Act Telecommunications (Interception and Access) Act

1979

107

108

RECO M M ENDATIONS

Recommendation 1

3.16 That the legislation be amended to provide for the engagement of examiners on a part-time basis only where the examiner is a current or former judicial or quasi-judicial officer of a federal, state or territory court or tribunal.

Recommendation 2

3.32 That, subject to the foregoing recommendation, the Senate pass the Bill.

109

110

CHAPTER 1

INTRODUCTION

Purpose of the Bill

1.1 On 21 June 2010, the Crimes Legislation Amendment Bill 2010 (the Bill) was referred to the Legal and Constitutional Affairs Legislation Committee for inquiry and report by 21 September 2010. With the intervening election, the Bill was re-referred and a new reporting date of 17 November set.

1.2 The explanatory memorandum (EM) to the Bill explains that it seeks to improve the ability of the Australian Crime Commission (ACC) to deal with serious misconduct by its staff while making other amendments to strengthen law enforcement agencies’ powers to gather, examine and use evidence to investigate and prevent the commission of criminal offences. The Bill would amend the Australian

Crime Commission Act 2002 (ACC Act), the Australian Federal Police Act 1979 (AFP Act), the Crimes Act 1914 (Crimes Act) and the Telecommunications (Interception and Access) Act 1979 (TIA Act).1

1.3 Specifically, the Bill would:

• align the dismissal powers of the Chief Executive Officer (CEO) of the ACC to deal with serious misconduct and corruption with those of the Australian Federal Police (AFP) Commissioner, so that the ACC CEO will be able to make a declaration that a staff member’s conduct amounts to serious misconduct and thereby remove application of the Fair Work Act 2009 in relation to the dismissal of that staff member;

• provide for different arrangements for appointing ACC examiners, with the aim of increasing flexibility. The ACC Act currently only allows the appointment of full-time examiners. The EM submits that this does not meet the operational needs of the ACC. The amendments would allow the ACC to utilise part time examiners as well as full-time examiners. This would enable the ACC to approach examinations in a more strategic way, use different examiners for different purposes depending on the particular type of investigation or operation, and appoint examiners in different regions of Australia;

• extend the application of certain search-related provisions in the Crimes Act that currently only apply to searches conducted under warrants in relation to premises so they also apply to searches conducted under a warrant in relation . to a person. The EM argues that the amendments would help police deal more

1 Explanatory Memorandum, p. 1.

Page 2

effectively with electronic equipment, such as laptop computers and smartphones, located during searches under a warrant in relation to a person;

. insert rules to govern when documents produced under Division 4B, Part IAA of the Crimes Act, which deals with the power to obtain information and documents, must be returned to the person who produced them or to their owner;

. streamline and extend provisions governing applications for, and

determination of, orders in relation to things seized and documents produced under Part IAA of the Crimes Act, which deals with search, information­ gathering, arrest and related powers;

• allow the AFP Commissioner to delegate responsibility for dealing with and returning things seized and documents produced under Part IAA of the Crimes Act;

• introduce a new standing power for the AFP to take fingerprints and

photographs of arrested persons when taking them into custody in relation to a Commonwealth offence. This would assist in establishing identity, and maintaining accurate arrest records; and

• amend the AFP Act to enable the Commissioner to authorise a payment in special circumstances that arise out of, or relate to, the person’s engagement as an AFP appointee, bringing the AFP into line with other Commonwealth agencies with respect to the making of payments in special circumstances.

Conduct of the inquiry

1.4 After the Bill was re-referred, the committee advertised the inquiry in The Australian newspaper on 13 October 2010, and invited submissions by 27 October 2010. The committee also wrote to a number of organisations and individuals inviting submissions. Details of the inquiry, the Bill and associated documents were placed on

the committee's website.

1.5 The committee received four submissions, which were placed on the committee's website for ease of access by the public. These are listed at Appendix 1.

1.6 The committee held a public hearing in Melbourne on 4 November 2010. Witnesses who appeared at the hearing are listed at Appendix 2. The

Hansard transcript is available on the committee's website at:

http://www.aph.gov.au/senate/committee/legcon ctte/crimes legislation amendment 43rd/submissions.htm.

Acknowledgement

1.7 The committee thanks the organisations and individuals who made submissions and gave evidence at the public hearings.

Page 3

Note on references

1.8 Submission references in this report are to individual submissions as received by the committee, not to a bound volume. References to the committee Hansard are to the proof Hansard. Page numbers may vary between the proof and the official Hansard transcripts.

114

CHAPTER 2

OVERVIEW OF THE BILL

2.1 This chapter sets out the key provisions of the Crimes Legislation Amendment Bill 2010 (the Bill). The Bill contains four schedules.

Schedule 1 - ACC dismissal powers

2.2 Under section 28 of the Australian Federal Police Act 1979 (AFP Act), the Commissioner may at any time, by notice in writing, terminate the employment of an AFP employee. The Commissioner also has the power under section 40K of the AFP Act to declare that the employment of an AFP employee was terminated because the Commissioner believes on reasonable grounds that the employee’s behaviour amounts to serious misconduct and is having, or is likely to have, a damaging effect on the morale or reputation of the AFP. Where a declaration has been made under section 40K, the Fair Work Act 2009 (FW Act) (with the limited exception of some provisions) no longer applies to that dismissal.

2.3 This contrasts with arrangements for staff of the Australian Crime Commission (ACC). Under section 29 of the Public Service Act 1999 (PS Act), the ACC Chief Executive Officer (CEO) has the power to dismiss employees on the basis of one of the following grounds:

• the employee is excess to the requirements of the agency;

• the employee lacks, or has lost, an essential qualification for performing his or her duties;

• non-performance, or unsatisfactory performance, of duties;

• inability to perform duties because of physical or mental incapacity;

• failure to satisfactorily complete an entry-level training course;

• failure to meet certain conditions (for example, health or security clearance requirements);

• breach of the Code of Conduct (this would include serious misconduct or corruption); or

• any other grounds prescribed by the regulations (no other grounds are currently prescribed).

2.4 While agreeing that these grounds would likely cover situations in which the CEO has lost confidence in the integrity of an employee, the Parliamentary Joint Committee on the Australian Crime Commission (PJC ACC) has noted that:

The CEO of the ACC does not have an equivalent power to summarily dismiss or suspend employees while under investigation ... [and]... is required to comply with the procedures set out in the Public Service

Page 6

Com m issioner's Directions 1999, and the decision w ill be subject to a review process, which m ay be lengthy.

2.5 The PJC ACC went on to recommend:

That the A ustralian G overnm ent review existing arrangem ents for the suspension and dism issal o f C om m onw ealth law enforcem ent agency employees believed on reasonable grounds to have engaged in serious m isconduct or corruption, and that the G overnm ent take action^ as

appropriate, bearing in m ind the need to respect the rights o f employees.

2.6 This Schedule would amend the Australian Crime Commission Act 2002 (ACC Act) and the Telecommunications (Interception and Accessj Act 1979 (TIA Act) to provide the ACC CEO with powers mirroring those of the AFP Commissioner to deal with serious misconduct and corruption. The primary effect of these changes will be that the ACC CEO will be able to make a declaration that the conduct of a member of the staff of the ACC, who has been dismissed under section 29 of the

PS Act, amounts to serious misconduct. Such a declaration would cause the FW Act not to apply in relation to the dismissal of that staff member.

2.7 Item 1 of the Schedule would insert a definition of serious misconduct into the relevant subsection of the ACC Act. Serious misconduct would be defined as:

• corruption, a serious abuse of power, or a serious dereliction of duty; or

• any other seriously reprehensible act or behaviour, whether or not acting, or purporting to act, in the course of his or her duties.

2.8 Item 2 would allow the ACC CEO to make a declaration of serious misconduct where:

• the employee in question was employed under the PS Act;

• the employee has been terminated; and

“ the CEO believes on reasonable grounds that the employee has engaged in serious misconduct or that their conduct is having or is likely to have a damaging effect on:

• the professional self-respect or morale of some or all of the ACC staff; or

" the reputation of the ACC with the public, any government or law enforcement agency.

2.9 The effect of the declaration would be that provisions of the FW Act relating to unfair dismissal, notice of termination, and payment-in-lieu, would not apply. The 1 2

1 PJC ACC, Report on the ACC Annual Report 2007-2008, p. 30.

2 PJC ACC, Report on the ACC Annual Report 2007-2008, p. vii.

116

Page 7

declaration would need to be in writing, made within a day of the dismissal of the employee, and a copy given to the employee in question.

2.10 The CEO would be required to provide reports to both the Minister for Home Affairs and the ACC Board detailing the grounds for the belief of serious misconduct, the nature and findings of any investigation into the conduct in question, and any other matter the CEO considers relevant.

2.11 The power to make a declaration would not be delegable, and would have prospective effect only.

2.12 The other major part of this Schedule would amend the TIA Act, and concerns the use of lawfully intercepted information for the purpose of investigating alleged misbehaviour or improper conduct of an employee, reporting on that conduct, or as part of a decision in relation to an employee's termination. At present, the AFP is

empowered to use intercepted information in the circumstances outlined above. In contrast, the Explanatory Memorandum (EM) observes that:

Although the TIA Act currently allows the ACC to use lawfully intercepted information in any ‘proceeding’ in so far as it relates to the alleged

misbehaviour or alleged im proper conduct o f an officer o f the

Commonwealth, it does not extend to use in internal investigations by the ACC o f alleged improper conduct or use in supporting action taken following such an investigation. 3

2.13 The amendments would give the ACC the power to use lawfully intercepted information in the same way as the AFP in investigating misconduct and making termination decisions. This would be achieved by expanding the range of pennitted purposes for which the ACC may use lawfully intercepted material to include:

• an investigation of, or an inquiry into, alleged misbehaviour, or alleged improper conduct, of a member of the staff referred to in subsection 47(1) of the ACC Act;

• a report on such an investigation or inquiry;

• the making by a person of a decision in relation to the employment of such a staff member; or

• a review (whether by way of appeal or otherwise) of such a decision.

2.14 The items do not provide a power to intercept, only a power to use information that has already been lawfully intercepted.

2.15 The Schedule would also allow the chief officer of an agency to communicate lawfully intercepted information to the CEO of the ACC if the information relates, or appears to relate, to an act or omission by an ACC employee that may give rise to a decision by the CEO of the ACC to terminate the employment of that member of staff.

3 Explanatory Memorandum, p. 10.

Page 8 2 16 The amendment is not limited to members of the staff of the ACC who are employed under the PS Act because the agency which originally obtained the information may not be in a position to know how that member of staff is emp oye by the ACC. However, once the information has been given to the ACC, the ALL would only be able to use that information to investigate a member of staff who is

employed under the PS Act and not other members of staff.

2.17 Notably, the amendments relating to the TIA Act would have retrospective operation, allowing the ACC CEO to use lawfully intercepted information gathered prior to the commencement of the relevant items.

2.18 The final item in the Schedule provides for a compulsory review of the operation of the proposed amendments contained in the Schedule two years after they commence.

Schedule 2 - Appointment of ACC examiners

2.19 The EM argues that the current arrangements governing the appointment of ACC examiners do not meet operational requirements, largely because they do not allow for part-time appointments. The amendments would require the CEO to report six-monthly to the Minister on any arrangements made with examiners. As to the

rationale behind the amendment, the EM contends that:

The requirement that examiners be appointed only on a full-time basis adversely affects the ACC’s ability to effectively manage and conduct examinations. Allowing the appointment of part time examiners will enable the ACC to approach examinations in a more strategic way, for example, by allowing the ACC to draw from a pool of examiners as

operational needs require. It will also enable the ACC to use different examiners for different purposes depending on the particular type of investigation or operation being conducted. For example, this will give the ACC the ability to use examiners with particular skills in operations or

investigations where such skills are necessary. This amendment will also allow examiners to be appointed in different regions of Australia.4

2.20 Whereas full-time examiners require ministerial permission to engage in outside employment, part-time examiners would not be subject to this restriction, due to the nature of their employment. However, the Bill would prohibit such outside employment where the CEO considers that a conflict exists or may exist in relation to the proper performance of the examiner's duties. Failure to comply with a written

direction from the CEO relating the outside employment would be grounds for dismissal.

In addition to providing for part-time appointments, the amendments would remove the current ten year limit on the total period served by an examiner. This

Explanatory Memorandum, p. 15.

Page 9

would apply to those already employed at commencement as well as new appointments.

Schedule 3 - Crimes Act amendments

2.22 Amendments in Schedule 3 relate to the way searches are conducted under the Crimes Act 1914 (Crimes Act).

P a rt 1 - S ea rch es o f a p re m is e s o r p erso n

2.23 Division 2 of Part IAA of the Crimes Act distinguishes between searches of a premises and a person for the purposes of how the search is to be conducted, and how items located during a search must be dealt with. The amendments would extend some

of these provisions to help police deal more effectively with electronic equipment located during a search under a warrant in relation to a person.

2.24 A warrant in relation to a person authorises the executing officer or a constable assisting to search the specified person, and things found in the possession of the person and any recently used conveyance, for things of the kind specified in the warrant.

2.25 It is now possible for a person to possess large amounts of data on equipment that can be carried in, for example, their pockets, backpack or handbag. This could include data held on a laptop computer, smartphone or USB drive. The amendments would enable a thing found during a search under a warrant in relation to a person to be moved to another place for examination and processing if it is significantly more practicable to do so having regard to the timeliness and cost of examining or processing the thing at another place and the availability of expert assistance, and the executing officer or constable assisting suspects on reasonable grounds that it contains or constitutes evidential material, or if the person consents in writing.

2.26 When an item is moved to another place for examination or processing, the amendments would require the executing officer to inform the occupier of the warrant premises (or, in the case of a warrant in relation to a person, that person) of the address of the place and the time at which the examination or processing will be carried out, and allow the occupier (or the person) or his or her representative to be present during the examination or processing. Exceptions to these general obligations apply where an executing officer believes on reasonable grounds that to do so might endanger the safety of a person or prejudice an investigation or prosecution.

2.27 The amendments would also contain the same time limits for holding items seized under a warrant in relation to a person, as those for a warrant in relation to premises, and impose the same ability to access, copy, document or print data from any equipment seized. They would also require that equipment be seized only when it would be impractical to copy or print the data, or if continued possession of the equipment could constitute an offence by the occupier of the premises or the person who possessed it, as the case may be.

Page 10

ΕιίΗ5Ε:ΕΞ?=ΐΕ£5Ξί:a person While police are currently empowered to operate electronic equipment seized under a warrant in relation to a person, to determine whether data that is evidential material is held on, or accessible from, the equipment and obtain access to such data, they are unable to seek assistance if they are unable to operate it as a result of data encryption or password protection. This item would operate retrospectively, so that assistance with extraction and copying of data can be obtained on an item seized prior to the commencement of the item.2.29 At the present time, magistrates may make relevant orders in respect of a warrant in relation to premises, where they are satisfied that there are reasonable grounds for suspecting that evidential material is held in, or is accessible from, a computer or data storage device. The magistrate must also be satisfied that the specified person falls within one of the categories specified in the Act and has relevant knowledge of the seized device. The amendments would allow magistrates to make these orders in respect of a warrant in relation to a person.2.30 Currently, when data being held on a non-warrant premises is accessed through equipment seized from premises in respect of which a warrant has been executed, executing officers are required to notify the occupiers of premises on which that data is held. The amendments would extend this requirement to circumstances where the equipment through which the data is accessed is seized under a warrant in respect of a person.2.31 The last substantive item in this part of the Bill would provide for the payment of compensation for damage caused to electronic equipment, data or programs and corruption of programs resulting from equipment being operated, where the equipment was seized under a warrant in relation to a person. Compensation is payable if the damage or corruption occurred because insufficient care was exercised in either selecting the person who was to operate the equipment or in operating the equipment. The amendments mirror those already in place for equipment seized under a warrant in respect of premises.Pat 12 - R eten tio n a n d tr e a tm e n t o f s e iz e d ite m s a n d d o c u m e n ts2.32 This part of the Schedule also deals with amendments to the Crimes Act, and would make changes to the arrangements for the use, sharing and return of items seized under various parts of the Act._.33 The first set of amendments will insert rules about when documents produced un er Division 4B must be returned to the person who produced them or to the owner.lvision 4B provides police with power to obtain documents relating to serious terrorism and non-terrorism offences. There are currently no requirements in relation to tie Division, and these amendments would impose the same return requirements as already exist in respect of items seized under other divisions.120

Page 11

2.34 The second set of amendments relate to provisions that currently govern the application for, and determination of, orders in relation to things seized and documents produced. This would include allowing orders to prevent things or documents being used in terrorist acts, terrorism offences or serious offences to be sought and made regardless of which division a thing or document was obtained under.

2.35 As it stands, a magistrate may make certain orders in relation to things seized under the division of the Act dealing with terrorist acts. Orders are available to prevent a seized thing from having to be returned to the owner if a magistrate is

satisfied that there are reasonable grounds to suspect that if it were, it would be likely to be used in the commission of a terrorist act, terrorism offence or serious offence. However, the EM argues that items likely to be used in a terrorist or other serious offence are more likely in practice to be seized under a different division of the Act, because the division dealing specifically with terrorist offences contains relatively

limited stop and search powers.5 The amendments would insert a new section enabling the making of orders in relation to things and documents produced under any section of the relevant Part of the Act, and make consequent amendments to the list of exceptions to the general obligation to return items to their owners. The amendments would provide for orders:

• that the thing be retained for a specified period;

• that the thing is forfeited to the Commonwealth;

• that the thing is to be sold and the proceeds given to the owner (unless the thing is a document); or

• that the thing is to be otherwise sold or disposed of.

2.36 These amendments will also require certain things of the Commissioner and a magistrate determining an application for an order to ensure that the rights of persons with an interest in a thing or document for which an order is sought are protected. This will extend obligations that currently exist only in relation to certain orders or on a more limited basis so that they apply to all orders in relation to things seized and documents produced.

2.37 The amendments would provide that, where a magistrate is not convinced that a seized item is required to be retained or should be retained for a reason specified in the Act, the item should be returned to its owner, author or the person from whom it was seized, depending on the item and the division of the Act under which it was seized. In making an application for the retention of an item, the police would be required to take reasonable steps to identify and notify people believed to have an interest in the item. A magistrate hearing the application would be required to allow an interested party to appear and be heard in respect of the application. These

5 Explanatory Memorandum, p. 33.

Page 12______________________ _________________ ____ _____________________________________

amendments are based on obligations that currently exist only in relation to certain

orders.

2 38 The amendments dealing with retention and return of seized items would have retrospective effect, so that police deal appropriately with evidence that they have lawfully acquired prior to the commencement of these amendments. In the absence of such a provision, police would be required to separate material seized pre-amendment and post-amendment, which the EM contends would impose a considerable and impractical burden on the storage of evidence.

2.39 The final amendment would create an additional delegation power for the Commissioner. The amendments would permit the Commissioner to delegate to Commonwealth officers responsibilities relating to returning things seized and documents produced. The term 'Commonwealth officer' is defined as a person holding

office under, or employed by, the Commonwealth and certain other classes of persons. The EM explains the need for this amendment thus:

The AFP routinely executes search warrants.. .on behalf of Commonwealth agencies such as Centrelink, the Australian Taxation Office and the Australian Securities and Investments Commission. Where the AFP is satisfied that an agency has exhibit handling capacity consistent with AFP’s

guidelines, it may allow the agency to take possession of seized items for the puiposes of an investigation. However, at present, the AFP still retains responsibility for retention and return of those items. Where another agency is leading an investigation, it is appropriate for an officer of that agency to be responsible for the retention and return of things seized or documents

produced that are relevant to that investigation.7

2.40 The amendments would provide for the Commissioner to make this delegation only if he or she is satisfied on reasonable grounds that the officer is able to properly exercise the relevant powers, functions or duties. This would include considering whether the relevant agency has procedures in place for property handling and storage

and disposal of exhibits sufficient to meet relevant obligations under the Act, and would be subject to the existence of appropriate administrative arrangements between the agency and the AFP.

P a rt 3 - f in g e r p r in ts a n d p h o to g r a p h s

C u rren tly , a p o lic e o ffic e r a t th e ra n k o f se rg e a n t o r ab o v e, o r w h o is in ch arg e

o t le po ice sta tio n at th e re le v a n t tim e , c a n ta k e o r a u th o rise th e c o lle c tio n o f

fin gerprints, p h o to g ra p h s, h a n d w ritin g o r v o ic e sa m p le s, w h en :

• the su b je c t c o n se n ts in w ritin g ; o r

the o ffic e r b e lie v e s o n re a s o n a b le g ro u n d s th a t it is n e c e s s a ry to do so to:

Explanatory Memorandum, p. 35.

Explanatory Memorandum, p. 36.

122

Page 13

• establish who the person is; or

• identify the person as the person who committed the offence; or

• provide evidence of, or relating to the offence; or

• the officer suspects on reasonable grounds that the person has committed another offence and the identification material is to be taken for the purpose of identifying the person as the person who committed the other offence or of providing evidence of, or relating to, the other offence.

2.42 The provision does not permit officers to fingerprint or photograph a person for the purpose of providing an identifying record of that person’s arrest, which may be problematic if the person escapes from custody or if there is a question about who was arrested (for example, because the person provides a false name).

2.43 The amendments would provide for an additional standing power for police officers to take fingerprints or photographs, purely as an adjunct to a lawful arrest, where the arrest is in relation to an offence punishable by imprisonment for a period of 12 months or more. The purpose of this amendment is to provide police with a fast and practical way to establish the identity of arrested persons, which it is argued would assist police to prove matters relating to identity in court proceedings and maintain accurate records of arrests.

2.44 Existing provisions which require police to destroy identification material taken under this section after 12 months if proceedings have not been instituted or have been discontinued, or if a person is acquitted or is found to have committed an offence but no conviction is recorded, would remain in place.

Schedule 4 - special payments for AFP appointees

2.45 This Schedule would amend the AFP Act to enable the Commissioner to authorise a payment in special circumstances that arise out of, or relate to, a person’s engagement as an AFP appointee. A similar provision exists in relation to employment under the PS Act, but because they are employed under a different act, does not apply to employees of the AFP. The Bill would provide that a consultant would fall under the definition of an AFP appointee, where the Commissioner so decides. Payments, including periodic payments, are limited by the Bill to $100 000. Delegation of the proposed power by the Commissioner to a senior AFP delegate is provided for.

2.46 In the absence of a special payment provision, the AFP has been obliged to make ex-gratia payments, which require consultation with, and approval from, the Department of Finance and Deregulation, the Department of Prime Minister and Cabinet, the Minister for Home Affairs and the Prime Minister. This can often take a

considerable amount of time. An alternative option has been the seeking of an act of grace payment, but these are suited to moral obligations owed to the applicant, not legal ones.

Page 14

2.47 The Bill would provide for a payment to a person to be authorised where it is appropriate to do so because of special circumstances that relate to, or arise out of either the person's engagement, or another person's engagement by the AFP. No other conditions are required to be met by the Commissioner in making a payment, although conditions may be imposed by the Commissioner on the payment.

2.48 Inserting a special circumstance payment provision into the AFP Act would remove the need to seek ex-gratia payments for AFP appointees in cases that relate to their employment, provide the Commissioner with the discretion to expediently grant payments to AFP appointees in special circumstances, and provide the AFP with the same capacity to make payments in special circumstances as other Commonwealth agencies that fall under the jurisdiction of the PS Act.

CHAPTER 3

Issues

3.1 The main issues raised in evidence provided to the committee are discussed in this section.

Limit on term of appointment of ACC Examiners

3.2 The Bill would abolish the current ten year limit on the cumulative term of examiners so that they may be re-appointed on a five yearly basis without limitation.

3.3 The Law Council of Australia disagreed with this measure, arguing that at the establishment of the ACC in 2002 the Government placed significant emphasis on the role of the examiner in ensuring that the ACC’s coercive powers were used

appropriately and that:

...To fulfil their role properly, ACC examiners need to be willing and able to robustly challenge submissions from police that the use of the coercive powers is necessary in any particular circumstance. This requires examiners to bring an objective and independent perspective to assessing ACC

operations and investigations... Limiting the examiners’ term of appointment...was intended to help safeguard their objectivity and independence. First, it removed any incentive for examiners to exercise their authority in a manner which might help secure their re-appointment. Further, it was designed to ensure that the examiners preserved a degree of separateness from the ACC as an institution and did not become entrenched in the ACC’s law enforcement culture. Finally, given the highly secretive environment in which the ACC exercises its coercive powers, enforced turnover in the key examiner role was designed to mitigate against the development of an organisational culture which might tolerate unethical, unlawful or corrupt practices. 1

3.4 The Law Council noted that in 2007, not long before the three examiners then appointed to the ACC reached five years in the role, the Government passed legislation which increased the maximum permissible period of service from five to ten years and that:

Now, as the ACC’s initial examiners approach ten years in the role, it is proposed to remove any limit on the maximum duration of an examiner’s total period of appointment...The Law Council submits that the rationale behind capping an examiner’s maximum period of appointment remains

sound. The need to safeguard the independence and objectivity of ACC examiners is as pertinent now as it was when the ACC Establishment Act was passed in 2002. There is no reason why the ACC’s desire for continuity and experience should suddenly be regarded as trumping the need for

1 Law Council of Australia, submission 3, pp 2-3.

Page 16

structural safeguards which mitigate against the misuse and overuse of the coercive powers. If the Government is of the view that this amendment is genuinely required to allow the ACC to effectively fulfil its mandate, the amendment should, at the very least, first be considered by the Parliamentary Joint Committee on the Australian Crime Commission, or its

likely successor the Parliamentary Joint Committee on Law Enforcement.2

3.5 However, the committee took evidence from the ACC at its hearing, and heard that:

We would particularly say in understanding serious and organised crime, its nature and its methodologies that, in fact, the experience that [examiners] build up over a period of time is something that we would want to retain.3

3.6 While the committee is mindful of the reasons behind the limitations on term which were contained in the legislation establishing the ACC, it is swayed by the operational imperative to retain, where possible, expertise developed over time. It is also encouraged by the Attorney-General's Department's evidence that reappointment to the position of examiner has followed only from a full re-application process:

When an examiner’s appointment expires the usual merit selection process would be followed in selecting new examiners...[f]or those examiners who are already appointed there might be a provision where they could be automatically reappointed by the minister. The process that has been

followed more recently is for positions to be advertised and a full application process to follow. 4

3.7 While this may not assuage all the concerns raised by the Law Council, it should offer some reassurance that the appointment and re-appointment processes for examiners are merit-based, and as such promote appointment of the best person for the job in all the circumstances.

Appointment of part-time examiners

3.8 The amendments would also allow for the appointment of part-time examiners. The rationale for this amendment is set out by the ACC as follows:

Currently, the ACC may only appoint examiners on a full-time basis. This has, on occasion, limited the ACC's ability to effectively manage and conduct examinations. The appointment of both full-time and part-time examiners will allow for greater flexibility in the appointment and utilisation of examiners and ensure the ACC can approach examinations in a more strategic and efficient way. The amendments will also ensure

2 Law Council of Australia, submission 3, pp 2-3.

3 Ms Karen Barfield, ACC, Proof Committee Hansard, 4 November 2010, p. 9.

4 Ms Sarah Chidgey, Attorney-General's Department, P roof Committee Hansard, 4 November 2010, p. 10.

126

Page 17

broader geographic cover of examiners as part-time examiners could be appointed in different regions of Australia.5

3.9 The amendments would require the ACC CEO to report to the Minister as soon as practicable after 30 June and 31 December each year on the arrangements made by the CEO in relation to particular examiners, and the committee notes the ACC's submission that this would allow the Minister to be well informed of the work of examiners.6

3.10 However, the Law Council had serious objections to the proposal, which are worth setting out at length:

When the Australian Crime Commission Establishment Bill was first introduced into parliament in 2 0 0 2, it included provision for the appointment of part-time examiners. This particular aspect of the Bill attracted considerable criticism when the Bill was reviewed by the

Parliamentary Joint Committee on the National Crime Authority. A number of witnesses who appeared before the Committee expressed concern that if examiners were appointed on a part-time basis, and only paid per hour or per diem as needed, this may compromise their independence. It was feared that, in order to ensure that they were given work, part-time examiners might be inclined to more readily accede to requests to use the coercive powers. Further, police might have greater opportunity to pick and choose which examiners they used based on who had proven most amenable to past applications. The Committee reached the view that such concerns were well founded and recommended that the Bill be amended to provide that no part­ time examiners be engaged on a per-hour or per-diem basis. The Government also recognised the validity of the concerns raised about part­ time appointments and amended the Bill to provide that examiners must be appointed on a full time basis.

In 2005, the Parliamentary Joint Committee on the Australian Crime Commission reviewed the operation of the ACC Act. In response to a submission from the Attorney-General’s Department, the Committee re­ considered the need for and desirability of appointing part-time examiners. After reiterating the types of concerns raised when the ACC Establishment Bill was first introduced, the Committee concluded [that part time examiners should not be used].

As noted above, the need to safeguard the independence and objectivity of ACC examiners is as pertinent now as it was when the ACC Establishment Act was passed in 2002. While the ACC may desire to maximise the flexibility of its staffing arrangements, this should not be allowed to

compromise the procedures which were put in place to ensure that the ACC’s extraordinary powers were used sparingly and only when absolutely necessary. [I]f the Government is of the view that this amendment is

genuinely required to allow the ACC to effectively fulfil its mandate, the

5 ACC, submission 1, p. 5.

6 ACC, submission 1, p. 5.

Page 18

am endm ent should, at the very least, first be considered by the

Parliam entary Joint Committee on the A ustralian C rim e Com m ission, or its likely successor the Parliam entary Joint Com m ittee on Law Enforcement.

3.11 The Law Council appeared to offer guarded and reluctant support for the proposal in only one circumstance:

...if allow ance is to be made for the appointm ent o f part-tim e ACC

examiners then it must only be on a perm anent part-tim e basis with fixed rem uneration per annum .7 8

3.12 In this regard, the committee notes the submission of the ACC that part-time appointments would only be made when justified by extra workload, which would be difficult to estimate with any certainty.9 The ACC has clarified with the committee secretariat that the intention is to provide for both permanent part time appointments,

and also for a pool of examiners to be drawn upon on an 'as needs' basis as determined by operational requirements. 10

3.13 The committee recognises the practical arguments which underpin the proposal, and accepts that it offers attractive resource efficiencies. However, the committee is also mindful of the issues raised by the Law Council, and considers they have merit.

3.14 The special powers exercisable by examiners are not to be taken lightly, so it is only sensible that the people chosen to be examiners, and their terms of service, warrant careful scrutiny. The committee also notes the Law Council's evidence that the matter has been considered by parliamentary committees in the past, and has not met with success.

3.15 The confluence of these factors leads the committee to recommend that the Act be amended to provide for appointments that are not full time, but that appointees be current or former judicial or quasi-judicial officers of a court or tribunal. If accepted, this qualification would address at least some of the committee's concerns,

and would strike a balance between the competing priorities outlined in the foregoing discussion.

Recommendation 1

3.16 That the legislation be amended to provide for the engagement of examiners on a part-time basis only where the examiner is a current or former judicial or quasi-judicial officer of a federal, state or territory court or tribunal.

7 Law Council o f Australia, submission 3, pp 3-4.

8 Law Council o f Australia, submission 3, p. 3.

9 ACC, submission 1, p. 5.

10 Email correspondence, 12 November 2010.

128

Page 19

Identification material

3.17 The ACC supported amendments which would allow for fingerprints and/or photographs to be taken by certain ACC officers following any lawful arrest in respect of a Commonwealth offence or a state offence with a federal aspect. The ACC

submitted that the amendment 'would contribute to more effective Commonwealth law enforcement by extending powers to new situations, standardising procedures and ensuring that appropriate safeguards are in place in all cases' . 11

3.18 The Law Society of South Australia recommended the removal of the clause, on the basis that it was:

...[A] significant extension of the power of the police by authorising police to require fingerprints or photographs (including video recordings) without cause. The only criteria that must be satisfied is that the person, from [whom] the fingerprints or photographs are to be taken, is in lawful custody and that the offence in respect of which the person is in custody has a maximum penalty of at least 12 months imprisonment (most, if not all offences a person will be in lawful custody for will satisfy this criterion). The great concern with the amendment is that the State, through this provision, authorises a major trespass on the subject's person without any of

the safeguards ordinarily applicable when Parliament requires the taking of forensics from the subject. It is also of considerable concern that the proposed law is open to misuse and abuse by police (ie to knowingly [or] wrongfully arrest/detain a person with a view to obtaining] identification material) . * 12

3.19 The Law Society went on to say that:

The problem is magnified when 'lawful custody' is considered. The term has been the subject of judicial consideration, but is not clearly defined in the Crimes Act. Examples of 'lawful custody' include arrest, pre-charge and obviously pre-conviction, while in prison awaiting trial, while in the charge

of the court during a superior court trial, and while being detained by police under legislation that provides the right to detain for a set period pre­ charge. The point is that, not only does the Bill propose that forensics be taken from a person without cause, but it does so in circumstances where a person may not be convicted or even charged with an offence. Even further, it arguably extends to persons who are detained (ie, not even arrested) . 13

3.20 The Law Society concluded that:

Fundamentally, if identification material, which would otherwise constitute an assault, trespass or breach/invasion of a person's privacy/liberties, is to be compulsorily taken from a person prior to conviction, there should be the

11

12

13

ACC, submission 1, p. 6.

Law Society of South Australia, submission 2, pp 1-2. Emphasis in original.

Law Society of South Australia, submission 2, pp 1-2. Emphasis in original.

Page 20

safeguard of proper cause to do so (as is presently the case). The proposed [provision] will inevitably lead to the major risk of the police inappropriately taking someone in lawful custody with a view to taking fingerprints/photographs. A law which is open to such misuse or abuse by law enforcement authorities should not be permitted. 14 1 5

3.21 In respect of the definition of 'lawful custody' the committee was told at its hearing that in order to invoke the provision allowing identification material to be taken, the person would need to be arrested in accordance with the requirements contained in the Crimes Act, and that no other kind of remand or detention attracts the application of the provision.

3.22 Having regard to the other criticisms levelled at the identification provisions by the Law Society of South Australia, the committee feels comfortable that the likely advantages the provisions offer will more than offset the potential shortcomings. In particular, the committee notes the improved accuracy with which a person might be

identified, and the consequent accuracy of their legal records, as speaking to the merits of the provisions for the advancement of justice and efficiency in the legal system.

Removal of unfair dismissal provisions

3.23 While the ACC CEO currently has the power to dismiss employees for breach of the APS Code of Conduct, the Fair Work Act 2009 (FW Act) applies to dismissals in respect of employees employed under the Public Service Act 1999 (PS Act) and provides protection where dismissal was harsh, unjust or unreasonable.

3.24 However, as noted by the Parliamentary Joint Committee on the Australian Crime Commission, there is concern that employees suspected of serious misconduct or corruption could remain within the organisation and may seek to jeopardise investigations while an unfair dismissal process is being completed. 16

3.25 The ACC argued in its submission that:

The ACC operates in a unique environment, tackling serious and organised crime at the highest level across Australian jurisdictions. Staff work in positions of tmst with access to sensitive criminal intelligence, including intelligence derived from the exercise of coercive powers and telecommunication interception, that other [Australian Parliamentary

Service] officers do not. The ACC Act obliges the ACC to exercise a higher level of rigour in protecting sensitive criminal intelligence. As a result, it is

14 Law Society of South Australia, submission 2, pp 1-2.

15 Ms Sarah Chidgey, P roof Committee Hansard, 4 November 2010, p. 6; Mr Peter Whowell, Proof Committee Hansard, 4 November 2010, p. 10.

16 PJC ACC, Report on the ACC Annual Report 2007-2008, p. 30.

130

Page 21

reasonable for the community to expect a higher standard of integrity from ACC staff. 17

3.26 The ACC explained that the misconduct as a result of which a staff member might be dismissed under the amendments:

...may fall outside the range of matters normally considered in deciding if a termination of employment was fair under the [FW Act]. In this regard, it should be noted that the [FW Act] aims 'to provide remedies if a dismissal is found to be unfair, with an emphasis on reinstatement' (section 381(l)(c)). Being forced to maintain or re-instate the employment of a person considered to be a corruption risk can impact on the activities that the ACC can undertake and expose the ACC or our partners to significant risk.18

3.27 Finally, the ACC submitted that the provisions are designed to be used in exceptional circumstances:

...where a person's actions significantly impact on the ACC's functions and reputation as a law enforcement agency. The CEO would consider invoking the provisions only in cases involving serious misconduct, which is defined...as corruption, a serious abuse of power, or a serious dereliction of

duty...or any other seriously reprehensible act or behaviour...whether or not acting, or purporting to act, in the course of his or her duties...19

3.28 However, The Community and Public Sector Union (CPSU) argued that the application of the FW Act was critical:

The reinstatement of unfair dismissal rights to Australian employees, through the Fair Work Act 2009, was a critical part of the Your Rights at Work campaign. These rights form a core part of the Government’s industrial relations policy and in our view it would be inappropriate for ACC employees to be denied these rights. The amendments proposed in the

Bill would allow the CEO of the ACC to issue a declaration disapplying the FW Act once an employee has been found to have breached the APS Code of Conduct and terminated under the Public Service Act 1999. All Australian Public Service employees employed under Public Service Act

1999 have access to the unfair dismissal protections and procedures on the Fair Work Act. This includes employees working in areas of the highest security clearance and other sensitive areas. There is no evidence to suggest that dealing with serious misconduct in the ACC would require limiting the protections or remedies available to ACC employees in a way that is not

applied to any other APS employees.20

17 ACC, submission 1, p. 3.

18 ACC, submission 1, pp 3^4.

19 ACC, submission 1, p. 4.

20 CPSU, submission 4, pp 1-2.

Page 22

3.29 The CPSU speculated that the amendment may be motivated by concern at the prospect of having potentially sensitive matters dealt with in the open proceedings of Fair Work Australia, but argue that such concerns are unfounded because the FW Act provides specifically for such eventualities.21

3.30 First and foremost, the committee accepts the view of the ACC that the information with which it deals on a regular basis is frequently highly sensitive, and would be available to very few other APS employees. The committee further accepts that the implications for inappropriate use of such information could very easily include loss of life for an informant or other exposed individual. The committee considers that these factors justify the measure being proposed.

3.31 The committee is mindful that the CEO of the ACC would be required to report to the Minister for Justice and the ACC Board each time the new power was used, and that the making of a declaration under the amendments would be reviewable under the Administrative Decisions (Judicial Review) Act 1977. In addition, the Bill requires an independent review after two years of operation, providing a reasonable time for any shortcomings to come to light. Taken together, the committee is convinced that the measure is justified, and that in practice its operation would be properly and appropriately monitored.

Recommendation 2

3.32 That, subject to the foregoing recommendation, the Senate pass the Bill.

Senator Trish Crossin

Chair

21 CPSU, submission 4, p. 2. The FW Act provides for orders to be made to hold private hearings, restrict attendance and prohibit publication of attendees and evidence of those hearings (ss 593 and 594).

132

APPENDIX 1

Submission Number

1

2

3

4

SUBMISSIONS RECEIVED

Submitter

Australian Crime Commission

The Law Society of South Australia

Law Council of Australia

Community and Public Sector Union

ADDITIONAL INFORMATION RECEIVED

1. Additional information provided by Australian Crime Commission on 12 November 2010

2. Additional information provided by Australian Crime Commission on 12 November 2010

3. Answers to Questions on Notice provided by Attorney-General’s Department, Australian Federal Police and Australian Crime Commission on 16 November 2010

133

'

134

APPENDIX 2

WITNESSES WHO APPEARED BEFORE THE COMMITTEE

BARKER, Ms Catherine, Assistant Director, Criminal Law Reform, Attorney- General’s Department

CHIDGEY, Ms Sarah, Assistant Secretary, Criminal Law and Law Enforcement, Attorney-General’s Department

De VEAU, Ms Philippa, National Manager, Legal Services, Australian Crime Commission

HARFIELD, Ms Karen, Executive Director, Performance and Stakeholder Management, Australian Crime Commission

SCHEETZ, Ms Carolyn, National Manager, People, Standards & Security, Australian Crime Commission

SCOTT, Commander Alan, Manager, AFP Melbourne Office, Australian Federal Police

WFIOWELL, Mr Peter, Manager, Government Relations, Australian Federal Police

136

The Senate

Legal and Constitutional Affairs

Legislation Committee

Criminal Code Amendment (Misrepresentation of Age to Minor) Bill 2010

June 2010

© Commonwealth of Australia

ISBN: 978-1-74229-264-9

This document was printed by the Senate Printing Unit, Department of the Senate, Parliament House, Canberra.

138

MEMBERS OF THE COMMITTEE

Members

Senator Patricia Crossin, Chair, ALP, NT

Senator Guy Barnett, Deputy Chair, LP, TAS

Senator David Feeney, ALP, VIC

Senator Mary Jo Fisher, LP, SA (Until 11 March 2010)

Senator Scott Ludlam, AG, WA

Senator Gavin Marshall, ALP, VIC

Senator Stephen Parry, LP, TAS (From 11 March 2010)

Participating Members

Senator Nick Xenophon, IND, SA

Secretariat

Ms Julie Dennett

Ms Monika Sheppard

Ms Kate Middleton

SuiteS 1.61

Parliament House

CANBERRA ACT 2600

iii

Secretary

Senior Research Officer

Executive Assistant

Telephone: (02) 6277 3560

Fax: (02) 6277 5794

Email: legcon.sen@,aph.gov.au

139

140

TABLE OF CONTENTS

MEMBERS OF THE COM MITTEE..................................................................iii

CHAPTER 1 ................................................................................................................1

Introduction and Overview.....................................................................................1

Summary of key amendments................................................................................1

Conduct of the inquiry............................................................................................2

Acknowledgement..................................................................................................2

Scope of the report..................................................................................................2

Note on references..................................................................................................2

CHAPTER 2 ................................................................................................................3

Key issues...................................................................................................................3

Persons targeted by the Bill....................................................................................3

The need for the Bill...............................................................................................4

Empirical data regarding online misrepresentation of age.....................................8

Committee view......................................................................................................9

ADDITIONAL COMMENTS BY LIBERAL SENATORS...........................13

MINORITY REPORT BY SENATOR XENO PHON.................................... 15

Introduction.......................................................................................................... 15

Background........................................................................................................... 15

Misrepresentation of Age to a Minor................................................................... 16

Response to criticisms of the Bill......................................................................... 18

Conclusion............................................................................................................20

APPENDIX 1 ............................................................................................................ 23

SUBMISSIONS RECEIVED.................................................................................23

APPENDIX 2 ..............................................................................................................25

WITNESSES WHO APPEARED BEFORE THE COMMITTEE.................. 25

vi 142

RECOMMENDATIONS

Recommendation 1

2.32 The committee recommends that the Senate should not pass the Bill.

143

144

CHAPTER 1

Introduction and Overview

1.1 On 4 February 2010, the Senate referred the Criminal Code Amendment (Misrepresentation of Age to a Minor) Bill 2010 (Bill) to the Legal and Constitutional Affairs Legislation Committee for inquiry and report by 30 June 2010. 1

1.2 The Bill was introduced in the Senate as a private senator's bill by South Australian Senator Nick Xenophon. The impetus for the Bill was the case of Carly Ryan, a 15-year old South Australian who was murdered in 2007 by a 50-year old man who, together with his son, had posed online as a 2 0 -year old.

1.3 The Explanatory Memorandum (EM) explains that the Bill is designed to protect those under the age of 18 years from internet predators who intentionally lie about their age so as to gain the trust of minors.1 2 Senator Xenophon told the Parliament that existing laws are not achieving this purpose:

Currently in many jurisdictions police have to prove a sexual predator has a prurient interest in m isrepresenting their identity.

This can be a difficult task and can result in police being unable to act, even when they believe there is a threat.

This bill would rem ove any doubt. If an adult knowingly lies to a minor about their age online, they have broken the law .3

Summary of key amendments

1.4 The Bill amends Subdivision C of Division 474 (Telecommunications Offences) of the Schedule to the Criminal Code Act 1995 (Criminal Code). The six-page Bill proposes to insert three substantive sections into the Criminal Code:

• creating new offences for the online misrepresentation of age to persons under 18 years of age;

• clarifying the provisions relating to those offences; and

• providing a limited number of defences to those offences.4

1 Journals of the Senate, No. 108-4 February 2010, p. 3143.

2 Explanatory Memorandum, p. 1.

3 Senate Hansard, 3 February 2010, p. 62.

4 Proposed sections 474.40-474.42.

Page 2

1.5 Due to the content of submissions and evidence received by the committee, the inquiry focussed primarily on those provisions creating the new offences. These are contained in proposed section 474.40.

1.6 Proposed subsection 474.40(1) makes it an offence for a person (the sender) to use a carriage service to transmit a communication to another person (the recipient) with the intention of misrepresenting the sender's age in circumstances where the recipient is someone who is, or who the sender believes to be, under 18 years of age and where the sender is at least 18 years of age.

1.7 Proposed subsections 474.40(2) and 474.40(3) extend this offence by, respectively, adding the element of an intention to make it easier for the sender to physically meet the recipient and the element of an intention to commit an offence (other than that proposed by subsection 474.40(1)).

Conduct of the inquiry

1.8 The committee advertised the inquiry in The Australian newspaper on 10 February 2010 and 24 February 2010. Details of the inquiry, the Bill and associated documents were placed on the committee's website. The committee also wrote to 57 organisations and individuals inviting submissions.

1.9 The committee received nine submissions which are listed at Appendix 1. Submissions were placed on the committee's website for ease of access by the public.

1.10 The committee held a public hearing in Canberra on 9 March 2010. A list of witnesses who appeared at the hearing is at Appendix 2, and copies of the Hansard transcript are available through the internet at http://www.aph.gov.au/hansard.

Acknowledgement

1.11 The committee thanks those organisations and individuals who made submissions and gave evidence at the public hearing.

Scope of the report

1.12 Chapter 2 discusses the key issues raised in submissions and evidence.

Note on references

1.13 References in this report are to individual submissions as received by the committee, not to a bound volume. References to the committee Hansard are to the proof Hansard', page numbers may vary between the proof and the official Hansard transcript.

146

CHAPTER 2

Key issues

2.1 Submitters and witnesses supported increased protection for children communicating online, including communications with persons above the age of 18 years who are misrepresenting their age for unlawful reasons. However, the committee heard that the Bill is problematic as it does not sufficiently target persons committing unlawful behaviour. Some submitters also questioned the need for the Bill on the basis of existing provisions within the Criminal Code.

Persons targeted by the Bill

2.2 Proposed section 474.40 creates three offences involving online misrepresentation of age to a minor, and there was considerable comment on this provision's omission of an element of intent.

2.3 Bravehearts, a not-for-profit organisation dealing specifically with child sexual assault, told the committee that 'it is always about the intention of the person who is making contact with the child'.1 In noting the omission, Civil Liberties Australia remarked on the breadth of the provision which, it argued, then captures otherwise innocent misrepresentations:

Under the current draft, you could use the legislation to throw the Wiggles (or any adult actor dressing up on children's TV) into prison for three (3) years. This Bill could close Playschool!1 2

2.4 Several other submissions made similar comments. For example, South Australia Police pointed out that the Bill does not contain any defence for 'humorous, innocent or erroneous transmissions'.3 Bravehearts suggested that, 'there probably just needs to be some sort of out in the legislation to cover [such situations]'.4

2.5 In its submission, Bravehearts argued specifically that the terminology within the Bill needs to more adequately define the concerning behaviour:

...the proposed amendment [section 474.40] needs to more specifically target individuals who misrepresent their age to a minor where the intention

1 Mrs Hetty Johnston, Bravehearts, Committee Hansard, 9 March 2010, p. 4. Also see Commander Stephanie Taylor, AFP, Committee Hansard, 9 March 2010, p. 11 and p. 12.

2 Submission 3, p. 1.

3 Submission 7, p. 1. Also see Mr Paul McMahon, Submission 5, p. 1; Bravehearts, Submission 8, pp 1-2; and NSW Attorney-General, Submission 9, p. 2.

4 Mrs Hetty Johnston, Bravehearts, Committee Hansard, 9 March 2010, pp 3-4.

Page 4

is to groom a child in order to commit an offence or to commit an offence against a child. Defining aspects of this might include:

• A person over 18 years of age is misrepresenting his true identity and age, specifically targeting an individual child under the age of 18 years of age; the communication is occurring directly and specifically between the individual adult and the individual child/young person rather than the adult misrepresenting themselves on a general scale to a broad audience.

• On-line communication is occurring on a one-to-one basis over a period of time; that is - the communication that is occurring between the adult and the young person is ongoing.

• The person over 18 years of age is otherwise unknown to the child or has not disclosed that they are known to the child; that is, the adult does not know the child outside of the contact established on-line or where the identity of the adult is, or otherwise would be, known to a child, but is deliberately withheld.5

2.6 In spite of the breadth of proposed section 474.40, witnesses agreed that the Bill would provide an important tool for law enforcement agencies.6 Ms Susan McLean, an expert in cyber safety gave evidence that:

...this sort of law will be really important because a lot of people who are on the borderline of criminal offending do it if they think they can get away with it or if there is not much chance of them being caught, but having robust legislation in place can in fact prevent some of those peripheral types

of people. And of course it is an extra piece of legislation for law enforcement. . . 7

2.7 The Australian Federal Police (AFP) concurred with the latter comment, stating that:

...from the AFP's perspective, any legislation that is provided to us that assists us in the work that we do is greatly appreciated.8

The need for the Bill

2.8 The second issue raised in some submissions was the necessity for the Bill.9 Among these submitters, the Law Society of South Australia referred particularly to sections 474.26-474.28 within the Criminal Code, stating that these provisions

5 Submission 8, p. 2.

6 For example, Mrs Fletty Johnston, Bravehearts, Committee Hansard, 9 March 2010, p. 3; and Ms Susan McLean, Committee Hansard, 9 March 2010, p. 6.

7 Committee Hansard, 9 March 2010, pp 6-7.

8 Commander Stephanie Taylor, AFP, Committee Hansard, 9 March 2010, p. 10.

9 For example, Law Society of South Australia, Submission 2; Civil Liberties Australia, Submission 3; and South Australia Police, Submission 7.

148

arguably provide a 'reasonable measure of protection for minors in respect of the activities of adults seeking sexual relationships with them'. 10 1 1

2.9 Sections 474.26-474.27 of the Criminal Code currently make it an offence for a sender to use a carriage service to transmit a communication to a recipient with the intention of procuring, or making it easier to procure, the recipient to engage in, or submit to, sexual activity with the sender.

2.10 'Sexual activity' is defined in section 474.28 of the Criminal Code as:

(a) sexual intercourse as defined in section 50 AC of the Crimes Act 1914; or

(b) an act of indecency as defined in section 50AB of that Act; or

(c) any other activity of a sexual or indecent nature that involves the human body, or bodily actions or functions.

The activity referred to in paragraph (c) need not involve physical contact between people.

2.11 At the public hearing, several questions were directed toward the requirement for intent in sections 474.26 (procurement) and 474.27 (grooming). Witnesses were asked whether the grooming provision covers situations where an adult is misrepresenting his or her age to a minor for the purpose of gaining the child's trust and where there is, as yet, no question of sexual or prurient intent.

2.12 The representative from Bravehearts considered this a 'really critical issue',11 indicating that the Criminal Code does not cover an intention to groom:

...that is where the legislation is failing, at least from our point o f view. Offenders are able to run rings around law enforcement somewhat. The grooming process involves an initial contact with the child that is then built upon. There is an ongoing com munication between an adult purporting to be a child and the child themselves. I think there has to be a point at which law enforcement agencies can intervene right there.12

2.13 Ms McLean agreed that the offences created by the Bill would enable law enforcement agencies to pre-empt unlawful behaviour13 and took issue with the requirement in the existing provisions - sections 474.26 and 474.27 - to show sexual intent:

...m any people will engage with a young person perhaps to see what

happens or to see if they can or to see w hat comes out o f it. It might not start o ff as sexual, or vice versa.

_______________________________________________________________________________ Page 5

10 Submission 2, p. 1.

11 Mrs Hetty Johnston, Bravehearts, Committee Hansard, 9 March 2010, p. 3.

12 Mrs Hetty Johnston, Bravehearts, Committee Hansard, 9 March 2010, p. 4.

13 Committee Hansard, 9 March 2010, p. 9.

149

Page 6

When it comes to having to prove that it was for sexual procurement and you have no evidence or you have not got to the point where they may be exchanging images of child pornography or engaging in grooming behaviours that are normalising this, but you clearly know the intention because you can tell by the communication—it may be something like 'run

away with me', 'play truant from school' and things like that to try to get the child to do something that is against his parent's wishes—this type of legislation will be a good addition to what we already have.14

2.14 An AFP witness acknowledged that officers have encountered cases of older persons pretending to be younger persons in communications with minors and where there appears to be neither any innocent explanation nor any suggestion of sexual intent. The witness told the committee that proving intent is vital in the prosecution of

an offence:

It will not be sufficient just to suggest to the court that we have been able to show that there has been contact; we actually have to prove the intention of the person that is actually grooming or involved with the child at the time.15

2.15 The Bill will create offences of absolute liability.16 However, the AFP did not appear convinced that the Bill would overcome the present difficulties of proving intent or that it would ultimately prove useful in the prosecution of serious offences. The AFP representative did agree that the Bill would give the agency scope for early

investigation and intervention:

Any legislative tool that we have that is going to assist us in these investigations is very useful, but the difficulty is in proving intention and proving what the purpose might be for that engagement. That is where we are probably going to have some difficulty for the prosecution. If it were

simply for an intervention or for a prevention, then the legislation would be appropriate...the tools supporting the investigation of something far more serious in nature might be a bit lacking.

If the offence was, strict and absolute, that the person was lying about their age and we could prove that then obviously there would be some scope for us to move in that realm. But if we are talking about grooming a child for some kind of serious offence being committed against a child, lying about their age is not going to move us along.17

2.16 The NSW Attorney-General agreed with these comments. In his submission, the NSW Attorney-General stated that, 'in limited circumstances, in order to give law

14 Committee Hansard, 9 March 2010, p. 7.

15 Commander Stephanie Taylor, AFP, Committee Hansard, 9 March 2010, p. 10.

16 Proposed subsection 474.41(1).

17 Commander Stephanie Taylor, AFP, Committee Hansard, 9 March 2010, pp 11-12.

150

Page 7

enforcement the ability to intervene before a criminal offence has been committed, it is appropriate for the preparatory steps of an offence to be criminalised'. 18 The submission cited examples of offences which were stated to be a justifiable departure from the law of attempt. However, the NSW Attorney-General went on to describe the Bill as lacking the relevant nexus between preparatory steps and an identifiable criminal intent:

.. .in each o f [the cited] offences, the intent that the accused had at the time o f com mitting the relevant offence can be easily identified as a preparatory step in the com m ission o f a more serious, and identifiable, offence or form o f unlawful activity.

The offences proposed in the Bill however, lack this clear connection between the preparatory step being undertaken with an identifiable criminal intent.

It is therefore difficult to see how these offences could assist law enforcement authorities with preventing the further commission of a crime.19

2.17 The NSW Attorney-General added, 'moreover, the preparatory step that is to be criminalised, is not necessarily conduct that society regards as deserving criminal sanction'.20

2.18 Although the language and structure of the Bill mirrors the existing procurement and grooming offences, one submitter noted a significant difference: paragraph (c) of the definition of 'sexual activity' within the Criminal Code is

inconsistent with paragraph 474.40(2)(c) of the Bill in that the latter captures physical contact only.

2.19 The Law Society of South Australia submitted that the Criminal Code recognises that an unlawful relationship can occur between parties that does not involve a physical meeting or physical contact.21 This view was supported by Bravehearts who told the committee:

...quite often [legislation] is pretty much targeted at physical contact with the child after a grooming process, whereas our experience tells us that probably more often, or at least as often, offenders are engaging young people over the net to provide them with photos or perform acts in front of

18 Submission 9, p. 1.

19 Submission 9, pp 1-2.

20 Submission 9, p. 2.

21 Submission 2, p. 1.

Page 8

cameras and whatnot. That is not about meeting a child, but it is still about sexually assaulting a child via exploitation...

2.20 The Law Society of South Australia suggested that the word 'physically' be removed from paragraph 474.40(2)(c)2 2 23 and was prepared to support the Bill (with amendments). On the other hand, the South Australia Police supported the existing procurement and grooming provisions, which were to be amended by the Crimes Legislation Amendment (Sexual Offences Against Children) Bill 2010.'4 The South Australia Police considered that those amendments would simplify and expand the existing procurement and grooming offences.25

2.21 A representative from the Attorney-General's Department (Department) also commented:

.. .we already have offences in Commonwealth legislation both for with an intention to procure someone under 16 for sexual activity as well as for a broader grooming offence where the intention is just to make it easier to procure. That covers situations that are broader than just misrepresentation

of age. It can cover any communication for any purpose as long as the ultimate outcome is to make it easier to procure.26

Empirical data regarding online misrepresentation o f age

2.22 Statistics provided to the committee indicate that the incidence of Australian children communicating online is extremely high. In 2009, the Australian Bureau of Statistics reported that, in the 12 months prior to April that year:

...an estimated 2.2 million (79%) children accessed the Internet either during school hours or outside of school hours. The proportion of males (80%) accessing the Internet was not significantly different from females (79%). The proportion of children accessing the Internet increased by age, with 60% of 5 to 8 year olds accessing the Internet compared with 96% of

12 to 14 year olds...A higher proportion of children used the Internet at home (92%) than at school (8 6 % ).27

22 Mrs Hetty Johnston, Bravehearts, Committee Hansard, 9 March 2010, p. 4.

23 Submission 2, p. 1.

24 Senate Legal and Constitutional Affairs Legislation Committee, Crimes Legislation Amendment (Sexual Offences Against Children) Bill 2010, 18 March 2010. That bill was passed in the Senate on 18 March 2010 and received Royal Assent on 14 April 2010 (Act No. 42 of 2010).

25 Submission 7, p. 1.

26 Ms Sarah Chidgey, Assistant Secretary, AGD, Committee Hansard, 9 March 2010, p. 15.

27 Australian Bureaus of Statistics, http://www.abs. gov.au/ausstats/abs@..nsf/Products/4901.0~Apr+2009~Main+Features~Intemet +use+and+mobile+phones?OpenDocnment (accessed 21 June 2010).

152

Page 9

2.23 In the United States of America, the Polly Klaas Foundation has inquired further into the Internet habits of teens (ages 13 to 18) and tweens (ages 8 to 12). Its 2005 survey included the following findings:

• online teens frequently communicate virtually with someone they have never met: 54% have done so using instant messaging, 50% via email, and 45% in a chat room;

• nearly one third of online teens (30%) said they have talked about meeting someone whom they have only met through the Internet;

• one in four (27%) said they have talked online about sex with someone they never met in person, and nearly one in five (19%) reported knowing a friend who has been harassed or asked about sex online by a stranger; and

• nearly one in eight (1 2%) found that someone online was an adult pretending to be much younger.28

2.24 In relation to the Internet habits of Australian teens and tweens, Ms McLean advised that there is no Australian data comparable to that compiled by the Polly Klaas Foundation:

There is really good data coming out o f Australia now in relation to cyber bullying. There is not really good data coming out o f Australia in relation to online sexual solicitation and grooming o f children...[W ]e have a smaller population, so we are not going to see the same numbers o f kids.29 3 0

2.25 Ms McLean also alluded to a popular misconception that grooming occurs in America, or elsewhere, but not in Australia:

Certainly w hilst cyberbullying itself is the major online safety consideration for young people here in Australia, by virtue o f the fact o f the way kids use technology, there is still going to be a percentage o f young Australian children who are groomed. We know they are groomed by people within Australia. W e certainly know o f cases where Australian kids have been groomed by people in other parts o f the world. '0

Committee view

2.26 The committee strongly supports the protection of Australian children who communicate online, whether that protection is required due to cyberbullying or to sexual predators. The Bill therefore highlights and attempts to address an important

•28 Polly Klaas Foundation, 'Topline Findings from Omnibuzz Research', 2005. http://www.pollvklaas.org/intemet-safetv/intemet-pdfs/PollingSummarv.Ddf (accessed 21 June 2010).

29 Committee Hansard, 9 March 2010, p. 8.

30 Committee Hansard, 9 March 2010, p. 9.

Page 10

and potentially far-ranging issue affecting families, and the Australian community as a whole.

2.27 However, the committee heard from most contributors to the inquiry that the Bill is problematic. Some contributors were critical of the Bill for its failure to incorporate an element of intent, a problem complicated by the omission of any allowance for 'innocent' online communications. Others argued that, essentially, the

Bill duplicates and does not improve on the existing procurement and grooming provisions relevant to carriage service communications (sections 474.26 and 474.27 of the Criminal Code, respectively). In relation to the latter argument, the fundamental point of contention was the existing intent requirement.

2.28 Some submissions and witnesses considered the requirement to prove sexual intent as not very helpful in cases where persons misrepresenting their age to minors online are doing so in order to establish and develop the trust of the minor. These contributors considered that the Bill covers pre-grooming behaviour, providing law enforcement agencies with an opportunity for early intervention and prevention.

2.29 In contrast, others told the committee that the requirement to prove intent continues to exist for the more serious offences (such as procurement and/or grooming, as opposed to misrepresentation of age). While the Bill could assist with early intervention or prevention, it would have this limited effect only.

2.30 The committee notes that few submissions were received for this inquiry, none of which were lengthy. While the committee therefore commends the broad objective of the Bill, insufficient information was received during the inquiry to allow the committee to make a fully informed decision to recommend the passage of the Bill

(with or without amendments). In particular, the committee has reservations as to how precisely the Bill would interact with or complement existing provisions in the Criminal Code, and considers that more information is required in this regard.

2.31 In accordance with its views expressed above, the committee endorses the creation of the Joint Select Committee on Cyber Safety on 25 February 2010, the terms of reference for which include: the nature, prevalence, implications of and level of risk associated with cyber safety threats (such as abuse of children online - cyber-bullying, cyber-stalking and sexual grooming); exposure to illegal and

inappropriate content; and the analysis of information on achieving and continuing world's best practice safeguards.31 The committee anticipates that a detailed and focussed examination of these issues will ultimately achieve similar objectives to the Bill, and awaits with interest the outcomes of that inquiry.

31 Journals of the Senate, No. 113-9 March 2010, pp 3259-3259.

Page 11

Recommendation 1

2.32 The committee recommends that the Senate should not pass the Bill.

Senator Trish Crossin

Chair

156

A D D ITIO N AL COM M ENTS BY LIBERAL SENATORS

1.1 Liberal senators endorse the Chair's report and strongly support the objective of the Bill, which is to protect persons under the age of 18 years from internet predators who intentionally lie about their age so as to gain the trust of minors.

1.2 Ms Susan McLean indicated that online grooming of young people occurs within Australia,- notwithstanding the lack of readily available data. Unfortunately, the veracity of this evidence was demonstrated during the course of the inquiry with the reported murders of two more young people:

• in Queensland, eight-year old Trinity Bates was murdered by a 19-year old man who had befriended her parents on the social networking site, Facebook; and

• in New South Wales, 18-year old Nona Belomesoff was murdered by a 20-year old stranger who she had met on Facebook and who allegedly lured her to her death.

1.3 These tragedies serve as a warning not only to young people communicating online but also to persons in positions of responsibility and persons with the ability to institute protective measures.

1.4 While the problem identified and sought to be addressed in the Bill (online grooming) is a highly commendable objective, it is part of a much larger problem.

1.5 The Federal Parliament has, through the creation of the Joint Select Committee on Cyber Safety, recognised that cyber safety is a contemporary and critical issue concerning young people online - an issue that requires consideration, action and support on a much broader scale than is envisaged in the Bill. Liberal

senators strongly endorse the work of that committee, noting its comprehensive and targeted terms of reference.

1.6 However, cyber safety is only part of a much broader issue: how do we protect young people from those persons who would prey upon their innocence and trust? Whether through enhanced cyber safety, designed to educate and instil safe practices online, or through an appropriate and effective classification system for films

and computer games, it is incumbent on all members of the Australian community to minimise and thwart the efforts of those persons who would prey upon a young person. 1

1 Explanatory Memorandum, p. 1.

2 Committee Hansard, 9 March 2010, p. 9.

Page 14

1.7 While strongly supporting the objective of the Bill, Liberal senators consider that a much broader and effective strategy is required to appropriately protect young people in the Australian community. For this reason, Liberal senators do not support the Bill in its current form.

Senator Guy Barnett Senator Stephen Parry

Deputy Chair

158

M INO RITY REPORT BY SENATOR XENOPHON

Introduction

1.1 The Criminal Code Amendment (Misrepresentation o f Age to a Minor) Bill 2010 (Bill) intends to protect those under the age of 18 from internet predators over the age of 18 who lie about their age in order to establish a relationship with the minor, to potentially meet them and who may intend to commit an offence.

1.2 While there are existing provisions for grooming under the Criminal Code, this Bill is designed to intervene in cases before any grooming takes place. That is, it is the lie to the minor by an adult that becomes the offence.

1.3 The Bill also aims to provide police at state, territory and federal levels with additional powers that could allow them to intervene at an early stage to protect the child from potential internet predators.

Background

1.4 The Bill was introduced following the murder of 15 year old South Australian teenager Carly Ryan on 19 February 2007.

1.5 Carly met '20 year old' 'Brandon Kane' online in the middle of 2006 and in the months following told family and friends she had 'fallen in love with him' and believed that he loved her too.

1.6 Her mother, Sonya Ryan, later told media:

She [Carly] said Brandon was really cute and that she really liked him.

She was like a giddy teenager in love - really happy, really light and really excited.1

1.7 After a few weeks 'chatting' with 'Brandon', Carly also began communicating online with 'Brandon's' supposed adopted father.

1.8 However, 'Brandon' and 'Shane' were, in fact, constructed identities by the same person - 47 year old Garry Francis Newman who, it was later revealed during the court process, had maintained in excess of 2 0 0 fake online identities over a number of years to communicate with teenage girls, seeking to have sex with them.

1.9 In January 2010, Garry Francis Newman was found guilty of Carly Ryan's murder and has since been sentenced for a minimum of 29 years in prison.

1 Adelaide Advertiser, Carly Ryan: A loving girl who fe ll prey to an online predator, 23 January 2010.

159

Page 16_____________________________ _________________ ____________ ______________________

Misrepresentation of Age to a Minor

1.10 Although lying about one's age is not uncommon in the general community, misrepresenting one's age in order to gain someone s trust is deceptive and may suggest that that person intentionally seeks to mislead the other, possibly for malicious intent.

1.11 After all, for what reason would a 47 year old lie to a 14 year old about his age by some 30 years, other than to gain her trust in the hope that she'll take him into her confidences, as was the case with Carly Ryan.

1.12 The Bill is intended to deter those adults who would otherwise seek to misrepresent their age to a minor with the intention of subsequently grooming them for sexual activity.

1.13 In her submission to the committee, cyber safety expert and director of Cyber Safety Solutions, Ms Susan McLean, refers to a 2005 survey conducted in the United States of 742 teenagers as an example of how common it is for teenagers to be misled online:

54 percent of teens admitted communicating with someone they've never met using an Instant Messaging program, 50 percent via email and 45 percent in a chat room.

16 percent of all respondents or one in eight youth aged 8 to 18 discovered that someone that they were communicating with online was an adult pretending to be much younger.2

1.14 Ms McLean goes on to explain that, given the ease with which personalities can be created online, more needs to be done to ensure that:

There is no way to accurately age verify any internet user, the same way that there is no way for anyone using the internet to really know who they are engaging with unless of course they are known to them in real life.

Adults, who for a variety of reasons, go online pretending to be a likeminded teen, rarely have honest intentions.3

1.15 While it can be argued that not all online sex predators lie about their age, and not all those who lie about their age are online sex predators, the Bill seeks to reduce the possibility of grooming from occurring by making it illegal in the first place for an adult to misrepresent their age to a minor.

1.16 Ms McLean also stated during the Senate committee hearing:

Ms McLean——[T]his sort of law will be really important because a lot of people who are on the borderline of criminal offending do it if they think

2 Submission 6, p. 3.

3 Submission 6, p. 3.

160

Page 17

they can get away w ith it or if there is not much chance o f them being

caught, but having robust legislation in place can in fact prevent some o f those peripheral types o f people.4

1.17 The Bill includes three levels of offences and related penalties for adults misrepresenting their age to a minor - the misrepresentation in and of itself, misrepresentation with the intention of meeting the recipient physically, and misrepresentation with the intention of committing an offence.

1.18 In this way, the Bill allows police to recognise the different motives behind the misrepresentation and how these may be considered as preparatory to grooming.

1.19 It also means that an individual can be 'flagged' with police as exhibiting behaviours which may lead to grooming offences and therefore can be monitored by Police to ensure that the more serious offence of grooming does not take place.

1.20 During the Senate committee hearing, Ms McLean argued that this Bill would enable police to pre-empt situations in the interest of children at risk:

Ms McLean— I think you would be able to pre-empt. I will give you an example. M rs Citizen comes into the police station and says, 'I've been checking m y child's chat logs and I am concerned about the content.' It might not be anything sexual; it is just that the mum is concerned. Her daughter talks o f Bill, 17, whom she has just met online, and he lives

whatever.

If the police looked into that, so started an investigation, and clearly found that the person at the other end was pretending to be a young person— and it had not gone to that sexual space yet, and who is to say whether it would or it would not; you assume it has— I think it would give them an extra piece

o f legislation in their arsenal.

They w ould be able to prevent some o f this, whereas at the moment they have to w ait until the sexual contact or content has occurred. 5

1.21 However, there are concerns about resources available to state/territory and federal police to investigate such matters.

1.22 Ms McLean has worked in the area of cyber safety since 1994, initially as part of the Victorian Police Force where, in 2006, she was appointed Victoria's first 'cyber-cop': 6

4 Committee Hansard, 9 March 2010, p. 6.

5 Committee Hansard, 9 March 2010, p. 9.

6 The Age, Cyber-crime cases ignored by untrained police, 7 March 2010.

Page 18

I would average one call every 14 days from a mother trying to report cyber-bullying or grooming [to police] only to be told 'it's not our problem and to go to the federal authorities.

Cyber-crime [at a state level] is not a focal point. It was all in the too hard basket. They will tell you there is an e-crime unit, but this is for high-level fraud, stolen identities, major crime. It is not about cyber-bullying, stalking,

harassing. There is no expertise and they don't see it as their problem.

1.23 The Bill aims to provide police with additional powers to intervene in cases brought to their attention, where specific grooming offences may not yet have taken place.

1.24 Victoria Police, in it's submission to the committee, said:

Victoria Police supports the amendments contained within the draft Bill and believes that their implementation will allow its members and officers to more effectively protect children from online exploitation.7 8

1.25 Ms Hetty Johnson, President of Bravehearts, also saw the Bill as useful for Police:

Senator XENOPHON—In broader terms, would you look at it as: is this a tool for the police to be able to keep tabs on and warn people who do not have an innocent explanation for communicating with children, for posing as children when they are clearly adults?

Ms Johnston—Yes, I think it is an incredibly important tool for police.9

Response to criticisms of the Bill

1.26 Under the provisions of the Bill, there are clear defences to protect those who make innocent remarks about their age which could be considered misrepresentation - such as a grandmother saying she'll be '21 again' or, as some submitters to the inquiry claimed might occur as an unintended consequence of the Bill, the Wiggles could be held liable for 'pretending' to be children.

1.27 In response to this, Susan McLean argued during the Senate hearing that:

Ms McLean—When police are looking for evidence in relation to the laying of charges down the track they are going to look at the content of the communication. My submission would be that, if grandma were chatting to the grandchild, it would be very clear in that regard that that is not a person

out there who is trying to groom a young person.

7 The Age, Cyber-crime cases ignored by untrained police, 7 March 2010.

8 Submission 1, p. 1.

9 Committee Hansard, 9 March 2010, p. 4.

162

Page 19

With any sort of legislation, police have to have the evidence before charges are going to be laid. If all you have got is a chat that appears to be between grandma and grandchild then there is no way a prosecution is going to eventuate anyway. 10

1.28 In addition, such innocent incidences and other examples are clearly covered within the defences of the Bill:

474.42 Defences to offences against section 474.40

(1) It is a defence to a prosecution for an offence against section 474.40 that the defendant believed at the time the communication was transmitted that the recipient was not under 18 years of age.

Note: A defendant bears an evidential burden in relation to the matter in this section, see subsection 13.3(3).

(2) In determining whether the defendant had the belief referred to in subsection (1), the jury may take into account whether the alleged belief was reasonable in the circumstances.

(3) A person is not criminally responsible for an offence against section 474.40 because of engaging in particular conduct if the conduct:

(a) is of public benefit; and

(b) does not extend beyond what is of public benefit.

In determining whether the person is, under this subsection, not criminally responsible for the offence, the question whether the conduct is of public benefit is a question of fact and the person’s motives in engaging in the conduct are irrelevant.

Note: A defendant bears an evidential burden in relation to the matter in this subsection, see subsection 13.3(3).

(4) For the purposes of subsection (3), conduct is of public benefit if, and only if, the conduct is necessary for or of assistance in:

(a) enforcing a law of the Commonwealth, a State or a Territory; or

(b) monitoring compliance with, or investigating a contravention of, a law of the Commonwealth, a State or a Territory; or

(c) the administration of justice; or

(d) conducting scientific, medical or educational research that has been approved by the Minister in writing for the purposes of this section.

(5) A person is not criminally responsible for an offence against section 474.40 if:

(a) the person is, at the time of the offence, a law enforcement officer, or an intelligence or security officer, acting in the course of his or her duties; and

10 Committee Hansard, 9 March 2010, p. 7.

163

Page 20

(b) the conduct of the person is reasonable in the circumstances for the purpose of performing that duty.

Note: A defendant bears an evidential burden in relation to the matter in this section, see subsection 13.3(3).

1.29 It is when the misrepresentation is between an adult and a minor and is clearly with the purpose of gaining that child's trust in order to pursue an inappropriate relationship that the provisions under this Bill would apply.

1.30 As Ms McLean told the Senate Committee:

Ms McLean—,..[T]he difference is when someone does it with the intent to misrepresent their age and to make the young person believe that they are dealing with a young person.

My grandmother told me that she was 21 forever. Was she trying to misrepresent her age to me? No. That is just what a lot of old people do— you know, Tm 40 again.' I think there is a defined difference between that

and what we are talking about here.

With any sort of legislation, police have to have the evidence before charges are going to be laid. If all you have got is a chat that appears to be between grandma and grandchild then there is no way a prosecution is going to eventuate anyway. 11

1.31 The defences contained within the Bill also address cases when the adult cannot reasonably know the person they were communicating with is a minor, for example, if the teenager pretends to be over 18 years of age.

1.32 Concerns around the practicality of applying the Bill have also been raised in terms of how it would actually assist police to intervene in cases and how police would be notified of instances of misrepresentation by an adult to a minor about age.

1.33 This Bill could better assist police in the protection of minors in instances when they receive notice from a member of the public who says, for example, that they've become aware their daughter has befriended a stranger online who says he's of the same age but they don't believe he is for whatever reason.

1.34 This Bill should reduce the incidence of online sex predators and provide authorities with a useful tool to monitor such behaviours.

Conclusion

1.35 The intent of this Bill is to further protect those under the age of 18 from internet predators by making the first attempt by an unknown adult towards a child illegal.

11 Committee Hansard, 9 March 2010, p. 7.

164

Page 21

1.36 The simple fact is that some predators lie about their age in order to gamer a minor’s trust. They pretend to be the same age, to attend a nearby school, to like the same movies, all with the intention of convincing the minor that they are the same age as them and therefore can be tmsted.

1.37 This Bill would make this act illegal, and would have the effect of either deterring persons from doing so or would give police additional options to investigate possibly suspicious characters.

Recommendation 1

1.38 That the Bill be passed with amendments to reflect submissions by child protection and cyber safety groups to ensure police are able to act against adults who misrepresent their age and other related information to a minor online.

Senator Nick Xenophon Independent Senator for South Australia

165

166

A PPEN D IX 1

SUBMISSIONS RECEIVED

Submission Number

1

2

3

4

5

6

7

8

9

Submitter

Victoria Police

The Law Society of South Australia

Civil Liberties Australia

Northern Territory Police

Mr Paul McMahon

Ms Susan McLean

South Australia Policing

Bravehearts

New South Wales Attorney-General

ht

168

APPEN D IX 2

WITNESSES WHO APPEARED BEFORE THE COMMITTEE

CHIDGEY, Ms Sarah, Assistant Secretary, Criminal Law and Law Enforcement Branch, Attorney-General's Department

JOHNSTON, Mrs Hetty, Founder and Chairperson, Bravehearts

McLEAN, Ms Susan, Private capacity

ORANGE, Ms Kate, Senior Legal Officer, Criminal Law and Law Enforcement Branch, Attorney-General's Department

TAYLOR, Commander Stephanie, Australian Federal Police

WHOWELL, Mr Peter, Manager, Government Relations, Australian Federal Police

169

170

The Senate

Legal and Constitutional Affairs

Legislation Committee

Evidence Amendment (Journalists' Privilege) Bill 2010 and

Evidence Amendment (Journalists' Privilege) Bill 2010 (No. 2)

November 2010

© C o m m o n w e a lth o f A u stra lia

ISBN: 978-1-74229-397-4

This document was printed by the Senate Printing Unit, Department of the Senate, Parliament House, Canberra.

MEMBERS OF THE COMMITTEE

Members

Senator Patricia Crossin, Chair, ALP, NT

Senator Guy Barnett, Deputy Chair, LP, TAS

Senator Mark Fumer, ALP, QLD

Senator Scott Ludlam, AG, WA

Senator Stephen Parry, LP, TAS

Senator Louise Pratt, ALP, WA

Participating Members

Senator the Hon George Brandis SC, LP, QLD

Senator Nick Xenophon, IND, SA

Secretariat

Ms Julie Dennett Committee Secretary

Mr Owen Griffiths Principal Research Officer

Ms Kate Middleton Administrative Officer

Suite SI.61 Telephone: (02) 6277 3560

Parliament House Fax: (02) 6277 5794

CANBERRA ACT 2600 Email: legcon.sen@,aph.gov.au

iii 173

174

Table of Contents

MEMBERS OF THE COM MITTEE..................................................................iii

RECOMMENDATIONS....................................................................................... vii

CHAPTER 1 ................................................................................................................1

INTRODUCTION....................................................................................................1

Background............................................................................................................. 1

Legislative history..................................................................................................2

Evidence Amendment (Journalists' Privilege) Bill 2010.......................................3

Evidence Amendment (Journalists' Privilege) Bill 2010 (No. 2)...........................3

Conduct of the inquiry............................................................................................3

Acknowledgement..................................................................................................4

Scope of the report................................................................................................. 4

Note on references..................................................................................................4

CHAPTER 2 ............................................................................................................... 5

OVERVIEW OF THE BILLS.................................................................................5

Introduction............................................................................................................5

Definitions..............................................................................................................5

Key operative provisions........................................................................................6

Extended application to all proceedings for Commonwealth offences..................6

Miscellaneous provisions with minor differences..................................................6

Key provisions distinguishing the Wilkie B ill.......................................................7

Key provisions distinguishing the Brandis Bill......................................................8

CHAPTER 3 ............................................................................................................... 9

KEY ISSUES.............................................................................................................9

Broad support for New Zealand model..................................................................9

Whistleblower protection.....................................................................................10

1 0

Defining journalism

A telecommunications loophole?............................................................................13

Extending protection................................................................................................14

Uniformity................................................................................................................15

Conclusion................................................................................................................16

DISSENTING REPORT BY LIBERAL SE N A T O R S..................................... 19

ADDITONAL COMMENTS BY THE AUSTRALIAN GREENS............... 21

APPENDIX 1 ................................................................................................................23

SUBMISSIONS RECEIVED................................................................................... 23

ADDITIONAL INFORMATION RECEIVED.................................................... 23

APPENDIX 2 ............................................................................................................... 25

WITNESSES WHO APPEARED BEFORE THE COMMITTEE................... 25

176

RECOM M ENDATIONS

Recommendation 1

3.31 The committee recommends that the Senate pass the Evidence Amendment (Journalists' Privilege) Bill 2010.

178

CHAPTER 1

INTRODUCTION

Background

1.1 On 15 November 2010, the Senate referred the Evidence Amendment (Journalists' Privilege) Bill 2010 (a private member's bill introduced by Mr Andrew Wilkie MP) and the Evidence Amendment (Journalists' Privilege) Bill 2010 (No. 2) (a private senator's bill introduced by Senator the Hon George Brandis SC) to the Senate

Legal and Constitutional Affairs Legislation Committee (committee) for inquiry and report by 23 November 2010.

1.2 Both of these Bills seek to amend the Evidence Act 1995 (Cth) (Evidence Act) so that the journalists' privilege not to give evidence is afforded stronger protections, thereby ensuring that journalists' informants are given a higher likelihood of confidentiality. Both Bills contain identical provisions on the substantive issues and are identical in effect with respect to journalists' privilege. However, the Brandis Bill broadens the privilege beyond journalists to create a more general 'professional' privilege, in the form of a judicial discretion. 1

1.3 A shield law, or journalists' privilege, is intended to provide journalists with the right to refuse to give evidence in order to protect the confidentiality of their sources of information. Information is often made available to journalists only on the condition that the identity of source is kept confidential. Clause 3 of the Australian Journalists Association Code of Ethics provides that journalists must:

Aim to attribute information to its source. Where a source seeks anonymity, do not agree without first considering the source’s motives and any alternative attributable source. Where confidences are accepted, respect them in all circumstances.1 2

1.4 The issue of journalists' privilege was highlighted in 2006-07, when two journalists, Mr Gerard McManus and Mr Michael Harvey refused to divulge the source of their report that a former minister had ignored a recommendation to increase war veterans' benefits by $650 million, and had instead presented cabinet with a plan

1 A comprehensive summary of the background to, and operation of, the current Bills is provided in Parliamentary Library, Evidence Amendment (Journalists' Privilege) Bill 2010 (No. 2) & Evidence Amendment (Journalists' Privilege) Bill 2010, Bills Digest Nos. 38-39, 2010-11. This report relies heavily on material contained in the Bills Digest.

2 Available at http://alliance.org.au/media_alliance_code_of_ethics/ (accessed 19 November 2010). Note: the Australian Journalists Association (AJA) is a division of the Media Entertainment and Arts Alliance. The code of ethics and associated complaints system only applies to AJA members.

179

Page 2 __________________________________ ___________________ ______ ______________________

to spend only $150 million. In June 2007, Mr Harvey and Mr McManus were each fined $7000 for contempt of court.3

Legislative history

1 5 in 2007, the Howard government amended the Evidence Act to introduce a limited professional confidential relationship privilege for journalists. This privilege, contained in Part 3.10, Division 1A of the Evidence Act, provides that a court may direct (on its own initiative or upon application) that relevant evidence not be adduced

in proceedings. The court must give such a direction if a protected confider (a person who has made a protected communication to a journalist) would be harmed by the adduction of the evidence, and that harm outweighs the desirability of taking that evidence. However, the court may still adduce evidence if the communication

involves misconduct. Factors that the court is to take into account are also listed, including:

• the probative value and importance of the evidence;

• the nature and gravity of the offence, defence or cause of action and subject matter of the proceeding;

• the availability of other evidence;

• the likely effect of adducing the evidence on the protected confider;

• the means available to the court to limit hann likely to be caused;

• if a criminal matter, whether prosecutor or defendant is seeking to adduce the evidence; and

• whether the substance of the protected confidence or protected identity has already been disclosed.

1.6 The court must also take into account, and give the 'greatest weight', any risk of prejudice to 'national security'. Finally, the court must state its reasons for giving or refusing to give a direction under this section.

1.7 In 2009, the Rudd government introduced the Evidence Amendment (Journalists' Privilege) Bill 2009 (2009 bill). The 2009 bill provided for the insertion of an objects clause in Division 1A and amendments to the list of factors the court must consider. The 2009 bill also provided that the court must consider the prejudice

to national security' but that this was no longer to be given the 'greatest weight'. Finally, the 2009 bill would have extended the applicability of the privilege to cover

R v Gerard Thomas McManus and Michael Hai-vey [2007] VCC 619.

Evidence Amendment (Journalists'Privilege) Act 2007.

180

Page 3

Commonwealth criminal matters in all Australian courts. The 2009 bill was not passed by the Senate and lapsed on the prorogation of the 42nd Parliament. "

Evidence Amendment (Journalists' Privilege) Bill 2010

1.8 On 28 September 2010, the Attorney-General, the Hon Robert McClelland MP, Mr Wilkie and Senator Nick Xenophon released a joint media release. This media release announced that the Australian Government would support a private member's bill put forward by Mr Wilkie and Senator Xenophon which 'would provide additional protection for journalists and their sources'. It also noted that the government had previously introduced amendments to the Evidence Act based on the agreed model by the Standing Committee of Attorney's General on uniform shield laws (the 2009 bill) . 5 6

1.9 The Evidence Amendment (Journalists' Privilege) Bill 2010 (the Wilkie Bill) was introduced into the House of Representatives on 18 October 2010 and passed on 28 October 2010. The Bill was introduced into the Senate on 15 November 2010 by Senator the Hon Mark Arbib, Minister for Sport. During the second reading debate for the Bill, Senator Brandis moved the following amendment:

...[that] the bill, together with the bill o f the same title introduced by

Senator Brandis on 29 September 2010, be referred to the Legal and Constitutional Affairs Legislation Committee for inquiry and report by 23 N ovem ber 2010.7

1.10 This amendment was put and passed.

Evidence Amendment (Journalists' Privilege) Bill 2010 (No. 2)

1.3 As noted above, the Evidence Amendment (Journalists' Privilege) Bill 2010 (No. 2) (the Brandis Bill) was introduced into the Senate on 29 September 2010 by Senator Brandis. Although the Brandis Bill was introduced into the Parliament before the Wilkie Bill, the numbering arrangements have resulted in the Brandis Bill being the Evidence Amendment (Journalists' Privilege) Bill 2010 (No. 2).

Conduct of the inquiry

1.11 Details of the inquiry, the Bill and other associated documents were placed on the committee's website. The committee also wrote to a number of organisations and individuals, inviting submissions by 18 November 2010.

5 The provisions of the previous bill, the Evidence Amendment (Journalists' Privilege) Bill 2009, were referred to the Senate Legal and Constitutional Affairs Legislation Committee for inquiry on 19 March 2009. The committee tabled its report on 7 May 2009.

6 Attorney-General, the Hon Robert McClelland MP, Mr Andrew Wilkie MP, Member for Denison and Senator Nick Xenophon, 'Strengthening journalist shield laws', Joint Media Release, 28 September 2010.

7 Journals o f the Senate, No. 8, 15 November 2010, p. 264.

181

Page 4

1.12 The committee received seven submissions, which are listed at Appendix 1. All submissions, apart from one that was accepted on a confidential basis, were published on the committee's website.

1.13 The committee held a public hearing in Canberra on 18 November 2010. A list of witnesses who appeared at the hearing is at Appendix 2, and copies of the Hansard transcript are available online at http://www.aph.gov.au/hansard.

Acknowledgement

1.14 The committee thanks those organisations and individuals who made submissions and gave evidence at the public hearing.

Scope of the report

1.15 Chapter 2 provides a brief outline of the key provisions of both Bills, and Chapter 3 discusses the key issues raised in submissions and evidence.

Note on references

1.16 References in this report are to individual submissions as received by the committee, not to a bound volume. References to the committee Hansard are to the proof Hansard. Page numbers may vary between the proof and the official Hansard transcript.

182

CHAPTER 2

OVERVIEW OF THE BILLS

2.1 Chapter 2 examines the main provisions contained in the two Bills and compares their distinguishing features.

Introduction

2.2 The two Bills share certain key elements, although they insert them into the Evidence Act in different ways. Both Bills are identical in their effect with respect to the journalists' privilege. 1

2.3 The model on which both Bills are based is contained in New Zealand's Evidence Act 2006. Section 68 of that Act provides that journalists are not required to give evidence unless the party requesting the evidence can prove that certain criteria have been satisfied. This differs from the current situation in Australia where a journalist is required to provide evidence unless they can establish that they fall within

one of the grounds which justify an exemption.1 2

2.4 Both Bills would effectively reverse the burden of proof so that, rather than a journalist having to prove that they should be given the privilege, the onus shifts to the person seeking the evidence who would have to prove why the journalist should not be given the otherwise automatic exemption.3

2.5 The Brandis Bill also creates a more general privilege for professionals by providing the courts with the capacity to protect a range of professional confidential relationships.

Definitions

2.6 Both Bills provide definitions of:

• 'informant' - a person who gives information to a journalist in the normal course of the journalist's work for the purpose of its publication in a news medium;

1 Parliamentary Library, Evidence Amendment (Journalists' Privilege) Bill 2010 (No. 2) & Evidence Amendment (Journalists' Privilege) Bill 2010, Bills Digest Nos. 38-39, 2010-11, pp 17 and 20.

2 Evidence Act 1995 (Cth), section 126B.

3 Parliamentary Library, Evidence Amendment (Journalists' Privilege) Bill 2010 (No. 2) & Evidence Amendment (Journalists' Privilege) Bill 2010, Bills Digest Nos. 38-39, 2010-11, pp 4­ 5.

183

Page 6

. 'journalist' - a person who works in such a way that in the normal course of that person's work they may be given material by an informant in the expectation that the information may be published in a news medium; and

• 'news medium' — a medium for the dissemination to the public or a section of the public of news and observations on news.

Key operative provisions

2.7 The key operative provisions in both Bills provide an assumption that journalists who have promised not to disclose the identity of an informant cannot be compelled to answer questions in such a manner that the promise of confidentiality is

thwarted." The court can, however, require the evidence to be provided if a party can satisfy the court that 'the public interest in the disclosure of [that] evidence' outweighs:

• any likely adverse effect on 'the informant or any other person'; and

• the public interest in the communication of facts and opinion to the public by the news media and, accordingly also, in the ability of the news media to access sources of facts.4 * 6

2.8 The court may also make any terms and conditions it thinks fit on any order to disclose the relevant evidence.7

Extended application to all proceedings for Commonwealth offences

2.9 The two Bills propose to extend the operation of the protections included in the Bills to all proceedings for Commonwealth offences. 8 This follows the model in the government's 2009 bill.

Miscellaneous provisions with minor differences

2.10 Item 3 of Schedule 1 of the Wilkie Bill applies the journalists' privilege to pre-trial proceedings by introducing proposed new subsection 131 A( 1) into the Evidence Act. This subsection allows someone who is the subject of a disclosure

requirement to refuse the order and it would fall to the party seeking disclosure to

4 See Item 1 o f Schedule 1 in both Bills.

Parliamentary Library, Evidence Amendment (Journalists' Privilege) Bill 2010 (No. 2) & Evidence Amendment (Journalists' Privilege) Bill 2010, Bills Digest Nos. 38-39, 2010-11, (B* ^ d^C β' ί Γ)^086^ neW su^sec^ on 126H(1) (Wilkie Bill); proposed new subsection 126D(1)

Proposed new subsection 126H(2) (Wilkie Bill); proposed new subsection 126D(2) (Brandis Bill).

Proposed new subsection 126H(3) (Wilkie Bill); proposed new subsection 126D(3) (Brandis

8 See proposed new section 131B in both Bills.

184

Page 7

apply to the court for an order that the rebuttable presumption of the privilege should apply.

2.11 The Brandis Bill does not deal with pre-trial proceedings. However, current subsection 131A(1) of the Evidence Act would give an extended application to both the journalists' privilege and the general professional privilege since it stipulates that these matters are to be dealt with by the courts in the same manner as if the objection to providing this information under a disclosure requirement is an objection to giving evidence in court.9

2.12 Finally, Item 4 of Schedule 1 of the Wilkie Bill amends sections of the Family Law Act 1975 (Family Law Act) to adjust the relevant provisions so that the correct sections of the Evidence Act are referred to when there is a relevant case under the Family Law Act. 10 1 1 Item 5 of Schedule 1 of the Wilkie Bill also seeks to tidy up the

Family Law Act by repealing section 100C (which is effectively superfluous since a new arrangement in the Family Law Act (sections 69ZX and 69ZN) ensures that it is the court's duty in all proceedings involving children to ensure that their best interests are protected) . 11

Key provisions distinguishing the Wilkie Bill

2.13 The Wilkie Bill repeals Division 1A of Part 3 of the Evidence Act (currently titled 'Professional confidential relationship privilege') and inserts proposed new Division 1A titled 'Journalists' privilege'. The numbering of the sections proposed by the Bill is explained in the EM by reference to the uniform model law, namely that sections 126A-126F are left vacant in line with a future intention to address the matters that should be canvassed there. 12 The new Division has a proposed definition section introducing the definitions (outlined above) and also the key operative provisions in proposed new section 126H. With respect to the definitions, the EM explains that bloggers, to the extent they may be defined as operating on a casual or

9 Parliamentary Library, Evidence Amendment (Journalists' Privilege) Bill 2010 (No. 2) & Evidence Amendment (Journalists'Privilege) Bill 2010, Bills Digest Nos. 38-39, 2010-11, p. 19.

10 The Bill Digest notes that, in such a relevant case, a journalist may be required to give evidence regarding their confidential information when it is in the child's best interest that this occurs. The Brandis Bill would not require such an amendment since it makes no changes to the existing numbering scheme of the Evidence Act to which the Family Law Act refers: Parliamentary Library, Evidence Amendment (Journalists' Privilege) Bill 2010 (No. 2) & Evidence Amendment (Journalists' Privilege) Bill 2010, Bills Digest Nos. 38-39, 2010-11,

p. 19.

11 The Bill Digest notes that the Brandis Bill would not require such an amendment since it makes no changes to the existing numbering scheme of the Evidence Act to which the Family Law Act refers: Parliamentary Library, Evidence Amendment (Journalists'Privilege) Bill 2010 (No. 2) & Evidence Amendment (Journalists' Privilege) Bill 2010, Bills Digest Nos. 38-39, 2010-11, p. 19.

12 EM (Wilkie Bill), p. 2.

185

Page 8_________________________________ ___________ ____ ________________________________

unpaid basis, would not come within the definition of a journalist, who must be operating within 'the normal course of [their] work'.

Key provisions distinguishing the Brandis Bill

2.14 The Brandis Bill amends 'Division 1A - Professional confidential relationship privilege' of the Evidence Act by inserting the definitions (outlined above) into current section 126A. The EM explains that disclosures to a non-journalist that might be opportunistically relayed to a news medium outside of the normal course of that person's work would not be covered by the privilege. 14

2.15 Item 2 of Schedule 1 replaces the current reference to a journalist with 'another person' in Division 1A - Professional confidential relationship privilege, thereby creating the more general privilege for professionals, in the form of a judicial discretion. The term 'professional' is not defined.1"

2.16 The Brandis Bill also seeks to replace the provision which currently deals with the loss of the privilege in cases of misconduct (section 126D 'Loss of professional confidential relationship privilege: misconduct') with a new 126D containing the key operative provisions (outlined above). * i

13

14

15

EM (Wilkie Bill), p. 3.

EM (Brandis Bill), p. 2.

The Bills Digest notes that, because no one could access the proposed professional privilege without the consent of the relevant court, it would be interpreted within a rich legal histoiy 8 i i Parllamentary Library, Evidence Amendment (Journalists’Privilege) Bill i J 2) & Evidence Amendment (Journalists'Privilege) Bill 2010, Bills Digest Nos. 38­

39, 2010-11, p. 19.

186

CH APTER 3

KEY ISSUES

3.1 Chapter 3 discusses the key issues raised in submissions and evidence during the committee's inquiry.

Broad support for New Zealand model

3.2 In the submissions received by the committee, there was broad support expressed for the approach, taken in both Bills, to adopt the New Zealand model of creating a rebuttable presumption that the confidential relationship between a journalist and their source should be protected.

3.3 For example, Australia's Right to Know (ARTK) noted that both Bills propose a new model for protection of journalists' sources which it supports:

ARTK is strongly in favour of a rebuttable presumption, where a journalist is not compelled to answer questions or produce documents that would disclose a protected confidence or protected identity unless the party seeking disclosure rebuts the presumption by establishing that any harm likely to be suffered by the journalist, the confider or any other individual,

as well as any harm to the public interest in freedom of the press and media access to sources is outweighed by the necessity for the information to be disclosed in the interests of justice. 1

3.4 Similarly the Australian Press Council commented that, notwithstanding the differences between the Bills, 'the immediate passage of either Bill through the Parliament would ameliorate the situation where journalists can be unnecessarily exposed to convictions and make the default position a respect for their ethical responsibility to protect the confidentiality of their sources'.1 2 In particular:

The existing Australian laws, state and federal, leave open what might happen. At best they suggest that judges 'may' take into account the desirability of not calling professionals (in this case, journalists) to reveal sources. This leaves journalists vulnerable to legal fishing expeditions that may make them subject to contempt of court charges for failure to divulge

sources, simply, in most cases, because the litigants are unwilling to do the work to unmask the sources. In short, the existing legislation is no real protection at all.3

1 Australia's Right to Know, Submission 2, p. 1 2 Australian Press Council, Submission 1, p. 3.

3 Australian Press Council, Submission 1, p. 3.

187

Page 10____________ _____________________ _______ ___________ _________ "

Whistleblower protection

3 5 Mr Peter Bennett, the National President of Whistleblowers Australia,

considered the approach of the Bills to be a 'small step' towards protecting people who disclose information in the public interest, however it was questionable whether it provided 'suitable protection to those whistleblowers who are the source of the information'. He argued there was a risk the approach in the Bills ’could lead naive

whistleblowers into a false sense of security, and thus leave them extremely vulnerable to other adverse action, which could place their livelihood, career, health and well-being in serious jeopardy'.4

3.6 Mr Bennett suggested a number of amendments to the Bills to further protect whistleblowers, including:

• that journalists must provide 'informed advice' to their sources of 'potential risks in breaching criminal or other laws or facing common law action'; and

• section 126D be clarified regarding the pre-eminence of 'public interests' in order that 'courts take into account not only the likely adverse effect on the individual whistleblower but on the national culture of disclosing wrongdoing.5

3.7 Similarly Mr Jack Herman, Executive Secretary of the Australian Press Council, commented that 'the coin of sources has an obverse side, which is protection of public interest disclosures or whistleblower protection'. He suggested that, if whistleblower protections existed, 'fishing expeditions through journalists' work material would not be required'.6 However, he considered the Bills would be effective in situations where 'a prosecutor is unable to completely prove his case and attempts to do so by forcing a journalist or journalists to dob in someone who is alleged to have been their source' . 7

Defining journalism

The scope and limits of the application of the Bills was a key point of discussion during the public hearing. The definitions of'journalist', 'news medium' and informant' in both Bills replicate those in subsection 68(5) of the Evidence Act 2006 (NZ). The EM to the Wilkie Bill suggests that these definitions limit the coverage of the proposed protection:

4 Mr Peter Bennett, Submission 4, p. 2.

5 Mr Peter Bennett, Submission 4, pp 3-5.

: Mi Jack Herman, Australian Press Council, P roof Committee Hansard, 18 November 2010, p. 5.

Mr Jack Herman, Australian Press Council, P roof Committee Hansard, 18 November 2010, pp 5-6.

188

Page 11

It is also significant to note that the journalist should be operating in the course of their work. This means that the journalist should be employed as such for the privilege to operate, and private individuals who make postings on the internet or produce non-professional news publications, where this is not their job, will not be covered by section 126H.8

3.9 Similarly, the EM to the Brandis Bill notes that it is 'not intended that a claim for privilege could be made in respect of disclosures to a non-journalist that might be opportunistically relayed to a news medium outside the normal course of that person's work'.9

3.10 Mr Jack Herman from the Australian Press Council highlighted the difficulties in relation to defining the tenn 'journalist'. He explained:

We do not define a 'journalist' so much as 'journalism', which we see as engaged in inquiry...leading to publication of material by, a media organisation or a news organisation—of news, current affairs or a documentary nature. The definition is very wide. It needs to necessarily be wide nowadays, because journalism has become a much wider field and includes things such as photojournalism, video journalism, audio journalism, online journalism and a whole lot of other areas. 10 1 1

3.11 Mr Jonathan Este, Communications Director for the Media Entertainment and Arts Alliance, highlighted the speed at which online tools for journalism evolve, stating that if definitions in the Bills are too prescriptive 'that is going to lead...into difficulties up the track' . 11

3.12 ARTK supported the definition of'journalist' used in both Bills 'on the basis that it does not seek to introduce a restrictive statutory term leaving it largely to its ordinary meaning'. In its view, this is 'an effective mechanism for excluding those who are not acting in good faith' . 12 ARTK also noted that the definition in the Bills allows a court to take a case by case approach to determining whether or not something is journalism:

The concept of a journalist and journalism has and continues to change over time and it will continue to do so. It is important it applies in a technologically neutral way and that a journalist would be included in the definition regardless of who they are or in what medium they publish. This

definition achieves that. 13

8 EM (Wilkie Bill), p. 4.

9 EM (Brandis Bill), p. 2.

10 Mr Jack Herman, Australian Press Council, Proof Committee Hansard, 18 November 2010, p. 2.

11 Mr Jonathan Este, Media, Entertainment & Arts Alliance, Proof Committee Hansard, 18 November 2010, p. 15.

12 Australia's Right to Know, Submission 2, p. 2.

13 Australia's Right to Know, Submission 2, p. 3.

189

Page 12

3 13 The relationship between each part of each of the Bills was also highlighted as

significant in interpreting the scope of application. At the public hearing, Ms Creina Chapman from the ARTK commented that determinations regarding who the Bills will apply to will relate to both the definitions of 'journalist' and 'news medium'. She

argued '[w]here it is published will make a considerable difference'. 14 A representative from the Attorney-General's Department (Department) also noted the protection in both Bills only 'applies where a journalist has promised an informant not to disclose [their] identity' . 15

3.14 The challenge of determining how the definitions of 'journalist', 'news medium' and 'informant' would operate for the purposes of the Bills was illustrated by discussion during the public hearing regarding the example of Wikileaks, a website dedicated to publishing whistleblower information anonymously. 16 Mr Herman of the Australian Press Council stated that 'most people would regard Wikileaks or some sort of aggregations of raw material like that as not being a news medium but something of

an intermediary between infonnation and the public' . 17 However, representatives of the ARTK considered the actions commonly undertaken by Wikileaks would be 'journalism' because of the acts of obtaining documents and selecting 'what to put up' . 18

3.15 While supporting the approach in the Bills, Professor Mark Peterson, a journalism academic at Bond University, also considered that the definition of 'journalist' could be broadened to encompass 'journalism academics, retired journalists, freelance journalists and journalism students'. He proposed this could be

achieved by deleting 'who in the normal course of that person's work' from the definition of'journalist'. He explained:

Many journalism educators produce high quality investigative journalism, either in book, feature or news form, although this may be occasional and not 'in the normal course of their work'. Further, journalism students at scores of tertiary programs throughout the country produce high quality media products, often featuring investigative stories which might rely on confidential sources, and often on an unpaid basis. The above groups

invariably ascribe to the same ethical codes as working journalists. 19

14 Ms Creina Chapman, Australia's Right to Know, P roof Committee Hansard, 18 November 2010, p. 12.

15 Mr Matthew Minogue, Attorney-General's Department, P roof Committee Hansard, 18 November 2010, p. 21.

16 Available at http://www.wikileaks1oig (accessed 19 November 2010).

17 Mr Jack Herman, Australian Press Council, Proof Committee Hansard, 18 November 2010, p. 3.

18 Ms Creina Chapman & Ms Emma Cowdroy, Australia's Right to Know, P roof Committee Hansard, 18 November 2010, p. 13.

19 Professor Mark Peterson, Submission 3, p. 2.

190

Page 13

3.16 Mr Ken Parish, a legal academic at Charles Darwin University, disagreed with the view that the protection in the Bills should be extended to cover amateur bloggers and 'citizen journalists', rather than just professional journalists. He noted that, while professional journalists are not subject to professional disciplinary proceedings, their profession has a code of ethics and there is 'a clearly identifiable peer group or

"community of practice'" which encourages journalists to behave ethically.20

A telecommunications loophole?

3.17 Mr Parish strongly supported both Bills, but advocated that the rebuttable presumption/qualified immunity they create should apply more broadly. In particular, he submitted it should apply to protect journalists' telephone and email records from access by law enforcement agencies. Mr Parish highlighted the recent investigation of

a suspected leak by a police officer to a journalist in the Northern Territory which, he argued, indicated a significant loophole in Commonwealth law, undermining the efficacy of the Bills.21 During the investigation, Northern Territory police utilised section 178 of the Telecommunications (Interception and Access) Act 1979 (Cth) (TI Act) in order to access the journalist's phone records to identify the alleged leaker. He explained:

...s.178 as it presently stands allows any law enforcement agency to access the records of any journalist whenever it sees fit for the purpose of investigating any suspected breach of the criminal law however trivial, including an alleged breach of the criminal law consisting solely of the act of "whistleblowing" to a journalist itself. Police, public servants or teachers who "leak" to a journalist will almost always be committing some sort of offence against relevant public sector legislation by doing so.22

3.18 To close this 'loophole', Mr Parish suggested that both the Evidence Act and the TI Act be amended to provide that:

• any law enforcement access to a journalist's telecommunication records should require a warrant; and

• the decision to issue a warrant should be subject to the same rebuttable presumption of non-disclosure as provided in the Bills."3

3.19 However, the Department does not consider there to be a loophole in relation to the proposed amendments to the Evidence Act. This is because the 'interception powers broadly defined do not relate to the admissibility or adducing of evidence in hearings once litigation or action have commenced'.24 At the public hearing, a

20 Mr Ken Parish, Submission 6, pp 2-3.

, 21 Mr Ken Parish, Submission 6, p. 3.

22 Mr Ken Parish, Submission 6, p. 5.

23 Mr Ken Parish, Submission 6, p. 6.

24 Mr Matthew Minogue, Attorney-General's Department, Proof Committee Hansard, 18 November 2010, p. 18.

191

Page 14______________________________________ ____________ ________ ____________________ "

departmental representative provided further information on the operation of the TI Act: In relation to the specific incident you are referring to, the Northern Territory Police were investigating a criminal offence in terms of the

leaking of the information. They got access to the journalists records under the TI Act which is available to them for that purpose...The provisions in the [TI Act] actually require the police force to notify the carrier who holds

those records to then provide those records to them...The access arrangements are for the investigation of a criminal offence, an offence that has a pecuniary penalty attached to it or for the protection of the public revenue...If it is a criminal offence to provide information to some other person and the police are investigating that offence...any person's phone

records could be accessed."5

Extending protection

3.20 As noted in Chapter 2 of this report, a substantive difference between the two Bills is the Brandis Bill's amendment to the definition of 'protected confidence' in section 126A(1) and the consequent expansion of the scope of section 126B, thereby introducing a general professional privilege for a wider range of relationships.

3.21 Currently in Australia, only the Evidence Act 1995 (NSW) includes a general professional confidentiality privilege.* 26 However, the Australian Law Refomi Commission (ALRC) and others have proposed that such a privilege should be introduced. The ALRC report on the Uniform Evidence Law in 2005 recommended:

The uniform Evidence Acts should be amended to provide for a professional confidential relationship privilege. Such a privilege should be qualified and allow the court to balance the likely harm to the confider if the evidence is adduced and the desirability of the evidence being given.27

3.22 The ALRC report noted, that while only the privileged professional relationship recognised in common law exists between a lawyer and client, there are many other relationships where a public interest may be established in maintaining confidentiality. These relationships could include, for example, doctor and patient, psychotherapist and patient, and social worker and client.28 However, the ALRC also

noted that it had received a range of submissions on this proposal, including a number expressing their opposition. These submissions highlighted that not all professions are

"■5 Wendy Kelly, Attorney-General's Department, P roof Committee Hansard, 18 November 2010, p. 19.

26 Section 126A, Evidence Act 1995 (NSW).

27 Australian Law Reform Commission, Uniform Evidence Law, Report 102, 2005, p. 511.

28 Australian Law Reform Commission, Uniform Evidence Law, Report 102, 2005, p. 500.

192

Page 15

subject to rigorous regimes of professional obligation and that a privilege not to provide evidence can potentially be abused.29

3.23 As outlined above, most of the submissions received during the committee's inquiry expressed broad support for the approach taken in both Bills, without a strong preference for either. For example, ARTK, as a group representing media organisations, did not feel qualified 'to express a view on the merits or otherwise of whether protection should be available in relation to any relationships other than that between a journalist and an informant'.30

3.24 Mr Ken Parish preferred the Brandis Bill because it extends the proposed presumption/qualified immunity to a range of relationships of confidence, not just journalists and their sources:

In my view there is no persuasive reason why the protection of the proposed presumption/qualified immunity should be confined to journalists as opposed to other relevant professionals whose work may give rise to

relationships or situations of confidence.31

3.25 However, the Victorian Director of Public Prosecutions preferred the Wilkie Bill as 'it has a more narrow application and less [is] likely to lead to the exclusion of otherwise admissible evidence'.32 He also raised a particular issue in relation to the Brandis Bill, stating that it 'repeals the existing provision dealing with the loss of privilege in circumstances where the communication or document was made in furtherance of the commission of a fraud or an offence or commission of an act that rends a person liable to civil penalty'. Further:

Although the specific journalists' privilege would remain subject to the public interest test, it is our view that communication made in furtherance of fraud or criminal offending be explicitly excluded from the operation of the privilege.33 3 4

Uniformity

3.26 The EM to the Brandis Bill notes the intention of the proposed amendment to the definition of 'protected confidence' is 'to bring the Commonwealth Act in line with the regime currently provided in the New South Wales Evidence Act 1995'.iA However, the Victorian Director of Public Prosecutions also emphasised the problems which might be caused by the differences between jurisdictions in approaches to this issue. He noted that Victoria has not enacted any legislation which recognises either

29 Australian Law Reform Commission, Uniform Evidence Law, Report 102, 2005, pp 505-508.

30 Australia's Right to Know, Submission 2, p. 3.

31 Mr Ken Parish, Submission 6, p. 2.

32 Director of Public Prosecutions, Victoria, Submission 5, p. 2.

33 Director of Public Prosecutions, Victoria, Submission 5, p. 2.

34 EM (Brandis Bill), p. 1.

193

Page 16__________ _______ ._______________________________ ___________________________ ~

'professional confidential relationships' or specific 'journalists' privilege' and that this privilege is not recognised in the common law. Further:

This lack o f uniform ity m ay lead to a peculiar situation w here in the

running o f a jo in t State/C om m onw ealth prosecution an issue o f privilege is raised w hereby evidence is capable o f being adm itted w ith respect to the V ictorian offences but excluded w ith regard to the C om m onw ealth

offences.35

Conclusion

3.27 While the committee notes the contribution of the Brandis Bill to the issue of journalists' privilege and the related issue of a wider professional privilege, it considers the Wilkie Bill to be preferable. As noted by the Australian Press Council, the Wilkie Bill has already passed the Flouse of Representatives and 'contains

additional provisions that clarify some issues not overtly referred to in Senator Brandis' Bill'.36

3.28 In the committee's view, the implications of a general professional confidentiality privilege in Commonwealth law have not been adequately explored. As noted above, the ALRC's consideration of this issue revealed that a range of views

exist regarding the benefits of such a reform. Potentially, this proposal could have serious consequences for the introduction of evidence in legal proceedings involving relevant professionals.

3.29 While this is a complex and disputed area, in the view of the committee, journalists' privilege can be differentiated from other professional privileges because of the nature of the public interest. Journalists' privilege operates not only to protect the privacy of the source and the relationship of trust between the journalist and the

source, but also to protect public interests in the accountability of public officials, an informed public and the free flow of information, all of which are vital components of a democratic society. Journalists' privilege can also be distinguished by the fact that there have been specific cases in the past where journalists have suffered serious legal consequences because of their adherence to their professional code of ethics in protecting the confidentiality of their sources.

3.30 The committee also expresses concern about the issues raised by Mr Ken Parish regarding the access of journalists' telecommunication records by law enforcement agencies for the purposes of identifying confidential sources of information. However, the committee considers that amendments to the Evidence Act

or the TI Act do not appear to be an appropriate way of addressing these issues. New legislation designed to protect legitimate whistleblowers, in particular public servants who make confidential disclosures in the public interest, may be preferable.

j 5 Director of Prosecutions, Victoria, Submission 5, p. 1.

36 Australian Press Council, Submission 2, p. 3.

194

Page 17

Recommendation 1

3.31 The committee recommends that the Senate pass the Evidence Amendment (Journalists' Privilege) Bill 2010.

Senator Trish Crossin

Chair

195

196

D ISSEN TING REPO RT BY LIBERAL SENATORS

1.1 Last year, in the Senate Legal and Constitutional Affairs Legislation Committee (committee) report into the provisions of the Evidence Amendment (Journalists' Privilege) Bill 2009, Liberal senators recommended an amendment to create 'a rebuttable presumption in favour of journalist-source confidentiality' . 1 Liberal senators feel vindicated that this approach has now been adopted in the Evidence Amendment (Journalists' Privilege) Bill 2010 (Wilkie Bill) and subsequently supported by the government. This approach has also been taken in the Evidence Amendment (Journalists' Privilege) Bill 2010 (No. 2) (Brandis Bill).

1.2 Liberal senators prefer the Brandis Bill. The provisions of the Brandis Bill clearly achieve the objective of providing genuine protection to confidential communications between journalists and their sources. The Brandis Bill also goes further, extending the protection in section 126B of the Evidence Act 1995 to other professional confidential relationships. This amendment restores uniformity between the New South Wales and Commonwealth regimes and avoids arbitrarily confining the circumstances in which a claim for privilege may be justifiably asserted. As noted by Mr Ken Parish, there is no persuasive reason why the protection of the Bills should

be confined to journalists as opposed to other relevant professionals whose work may give rise to relationship or situations of confidence.1 2

1.3 Liberal senators acknowledge the many" concerns, raised during the public hearing, regarding the appropriate scope of the journalists' privilege provided by the Bills. Often these concerns related to the interpretation of the phrase 'in the normal course of that person's work' in relation to the definition of 'journalist', and the broad nature of the definition of 'news medium'. It was also noted that the motivations of a

'journalist' may also be relevant to judicial interpretation of the definitions in the Bill.3 Several representative examples were raised, by both witnesses and Senators, which illustrated that potential uncertainty exists regarding who would be entitled to claim journalists' privilege under the Bills. These included:

• an academic who occasionally provided content to a 'news medium';

• a current or former politician who regularly contributed to a 'news medium'; and

• a person who occasionally contributed material to a 'news medium' but who was not primarily employed or paid as a journalist; and

1 Liberal senators' additional comments in Senate Legal and Constitutional Affairs Legislation . Committee, Evidence Amendment (Journalists' Privilege) Bill 2009 [Provisions], May 2009, p. 30.

2 Mr Ken Parish, Submission 6, p. 2.

3 Ms Creina Chapman, Australia's Right to Know, P roof Committee Hansard, 18 November 2010, p. 15.

Page 20

. the possible operation of social networking websites as a 'new medium'.

1.4 Both Bills contemplate a necessary level of judicial discretion and interpretation in determining who falls within the protection of the journalists' privilege. However, in the view of Liberal Senators, there is scope for the Explanatory Memorandum of the Bill eventually passed by the Senate to provide more guidance to ensure inappropriate categories of persons are not included within the journalists' privilege.

1.5 Finally, the committee's inquiry into journalists' privilege has highlighted again the need for complimentary legislation designed to protect whistleblowers who make confidential disclosures in the public interest. Liberal senators reiterate their additional comments in the committee's report on the government's Bill last year, that these pieces of legislation should be concurrently introduced for comprehensive consideration.4

Recommendation 1

1.6 Liberal senators recommend that the Senate pass the Evidence Amendment (Journalists' Privilege) Bill 2010 (No. 2).

Senator Guy Barnett Senator Stephen Parry

Deputy Chair

beral senatoi s additional comments in Senate Legal and Constitutional Affairs Legislation ™mittee’ Evidence Amendment (Journalists'Privilege) Bill 2009 [Provisions], May 2009,

198

ADDITO NAL COM M ENTS BY THE AUSTR A LIA N GREENS

1.1 The Australian Greens support the Evidence Amendment (Journalists' Privilege) Bill 2010.

1.2 Effective shield laws for journalists and whistleblowers act as a fortification against wrongdoing and an encouragement to vigilance and integrity. We believe that a strong and independent press is an essential safeguard for a democratic society, and that the individuals who disclose matters to journalists in the public interest should also receive protection from threat or disadvantage.

1.3 However the Australian Greens assert that such protections should extend beyond the traditional definition of a journalist to include all persons involved in the act or process of journalism; no matter who they are or in what medium they publish.

1.4 The bill states that the definitions of'journalist' and 'news medium' are already quite broad. In Schedule 1, section 126G:

journalist means a person who in the normal course of that person's work may be given information by an informant in the expectation that the information may be published in a news medium

news medium means a medium for the dissemination to the public or a section of the public of news and observations on news

1.5 'Journalism' and 'blogging' are two examples of activities that end up producing certain kinds of media outputs that are often 'observations on news' or are conveyed to 'a section of the public'. What remains ambiguous in this interpretation is whether 'in the normal course of that person's work' implies that a journalist has to be paid.

1.6 For the sake of clarity, the Australian Greens seek to amend the definitions in the Bill to:

journalism means the reporting in a news medium of facts which are, to the best knowledge of the person reporting those facts, fair, true and accurate, and includes incidental processes such as the gathering of information for that purpose

journalist means a person who engages in journalism, no matter who the person is nor the medium in which the person publishes his or her material

1.7 We argue that it should not rest on whether or not your work is paid as to whether these protections are afforded, but rather whether or not it is in the public interest for the source to be protected. It would therefore become the responsibility of

199

the court to decide whether or not the source disclosure was in the public interest, as is entirely appropriate.

1.8 This was raised in the Senate Inquiry by Jonathan Este, Director of Communications, Media, Entertainment and Arts Alliance:

I f an academ ic is w riting on Crikey or in the new spaper, p a id or unpaid, what they are doing is deem ed to be jo u rn a lism so it sh o u ld be protected... rather than tiying to define w h a t is or is not a jou rn a list, by saying they are p a id and this is the norm al course o f their work, is to ask: is the outcom e o f

what they are doing an act o f journalism ? (Senate Legal and Constitutional Affairs - Legislation Committee, 18 November 2010).

1.9 The Greens also seek to ensure that protection is proffered to those operating in independent and alternative media, not just the traditional or major media outlets.

Page 22__________________ __________________ _____________________________________________

Senator Scott Ludlam

Australian Greens

200

APPENDIX 1

SUBMISSIONS RECEIVED

Submission Number

1

2

3

4

5

6

7

Submitter

Australian Press Council

Australia's Right to Know

Professor Mark Pearson

Mr Peter Bennett, National President, Whistleblowers Australia

Director of Public Prosecutions (Victoria)

Mr Ken Parish

Confidential

1

2

ADDITIONAL INFORMATION RECEIVED

Answers to Questions on Notice provided by the Attorney-General's Department on 23 November 2010

Answers to Questions on Notice provided by Australia's Right to Know on 23 November 2010

201

202

APPENDIX 2

WITNESSES WHO APPEARED BEFORE THE COMMITTEE

ANGEL, Mr Joseph, Legal Officer, Justice Policy Branch, Access to Justice Division, Attorney-General’s Department

CHAPMAN, Ms Creina, Australia’s Right to Know

COWDROY, Ms Emma, Australia's Right to Know

ESTE, Mr Jonathan, Director of Communications, Media, Entertainment and Arts Alliance

HERMAN, Mr Jack Richard, Executive Secretary, Australian Press Council

KELLY, Ms Wendy, Director, Telecommunications and Surveillance Law Branch, Attorney-General’s Department

MINOGUE, Mr Matthew, Acting First Assistant Secretary, Access to Justice Division, Attorney-General’s Department

PANAGODA, Ms Ruvani, Acting Principal Legal Officer, Justice Policy Branch, Access to Justice Division, Attorney-General’s Department

PARISH, Mr Ken, Private capacity

203

~

204

The Senate

Rural Affairs and Transport Legislation Committee

Airports Amendment Bill 2010 [Provisions]

November 2010

205

© Commonwealth of Australia 2009

ISBN 978-1-74229-391-2

This document was prepared by the Senate Standing Committee on Rural Affairs & Transport and printed by the Senate Printing Unit, Department of the Senate, Parliament House, Canberra.

206

M em bership o f the committee

Members

Senator Glenn Sterle, Chair Senator the Hon. Bill Heffeman, Deputy Chair Senator Trish Crossin Senator Steve Hutchins Senator Fiona Nash Senator Rachel Siewert

Western Australia, ALP New South Wales, LP Northern Territory, ALP New South Wales, ALP New South Wales, NATS

Western Australia, AG

Participating members participating in this inquiry

Senator Chris Back Senator Julian McGauran

Western Australia, LP Victoria, LP

Secretariat

Ms Jeanette Radcliffe, Secretary Ms Trish Carling, Senior Research Officer Ms Lauren McDougall, Executive Assistant

PO Box 6100 Parliament House Canberra ACT 2600 Ph: 02 6277 3511

Fax: 02 6277 5811 E-mail: rat.sen@aph.gov.au Internet: http://www.aph.gov.au/senate/committee/rat ctte/index.htm

iii

207

iv

208

TABLE OF CONTENTS

Membership of committee iii

Chapter 1 1

Introduction

Airports Amendment Bill 2010 1

Conduct of the inquiry 1

Acknowledgements 1

Background to the bill 1

Current airport planning framework - issues of concern 3

Infrastructure investment issues 4

Incompatible developments 5

Purpose of the bill 6

Key provisions of the bill 7

Schedule 2 - Technical amendment of the Airports Act 1996 11

Chapter 2 13

Key issues

Background 13

Consultation on draft legislation 16

Requirements for greater detail in airport master plans 17

Expanded major development plan requirements 22

Non-legislative changes 30

Other issues 33

Conclusion 36

Additional comments by Coalition Senators 41

Expanded master plan requirements 41

Expanded major development plan requirements 43

Consultative mechanisms 43

APPENDIX 1 45

Submissions Received

APPENDIX 2 47

Public Hearings and Witnesses

209

210

Chapter 1

Introduction

Airports Amendment Bill 2010

1.1 The Airports Amendment Bill 2010 (the bill) was introduced into the House of Representatives on 30 September 2010 and was passed by the House on 25 October 2010.

1.2 The bill was introduced into the Senate on 26 October 2010. On 30 September 2010, the bill was referred for inquiry to the Rural Affairs and Transport Legislation Committee (the committee) on the recommendation of the Senate Selection of Bills Committee.1

Conduct of the inquiry

1.3 Notice of the inquiry was posted on the committee's website. The committee also wrote directly to a number of peak bodies seeking their comments on the provisions of the bill. The committee received 34 submissions (see Appendix 1).

1.4 The committee held a public hearing in Melbourne on 3 November 2010 and heard evidence from a number of key organisations including the Australian Airports Association, the Australian Local Government Association, Urban Taskforce Australia and a number of airport corporations. The committee also heard evidence

from the Department of Infrastructure and Transport. A full list of witnesses who appeared at the hearing is at Appendix 2 and copies of the Hansard transcript are available through the Internet at http://aph.gov.au/hansard.

Acknowledgements

1.5 The committee appreciates the time and effort of those who provided oral and written evidence to the inquiry. Their work has assisted the committee considerably in its inquiry.

Background to the bill

1.6 The Airports Amendment Bill 2010 is underpinned by the Government's National Aviation Policy White Paper, Flight Path to the Future (the White Paper) which was released on 16 December 2009. The White Paper outlines the Government's policy objectives in relation to aviation and airports. It also outlines the

1 Selection of Bills Committee, Report No. 11 of 2010, 30 September 2010, Appendix 1.

Page 2__________ _______ _______________ _______ ____________ ______ ______________________

steps already taken and the actions still required to be taken in order to achieve these objectives.2

1 7 The White Paper sets out the background to the governance of Australia's federal airports which were privatised between 1997 and 2003, when long-term leases over the airport sites were sold to private sector operators. Leased federal airports are regulated under the Airports Act 1996 and, as they are sited on Commonwealth land, any planning and development issues on these sites are administered under Commonwealth law.3 4 5

1.8 As discussed in the White Paper, leased airports not being subject to state and local government planning laws has raised concerns regarding the framework governing planning and the lack of opportunities for communities to participate effectively in consultation. This lack of consultation has proved problematic and been the cause of some frustration, particularly in cases where airport developments will have a direct impact on residents' homes, workplaces and suburban amenity.

1.9 The planning regulatory arrangements referred to in the bill currently apply to 19 airports: Adelaide, Alice Springs, Archerfield, Bankstown, Brisbane, Camden, Canberra, Darwin, Essendon, Gold Coast, Hobart, Jandakot, Launceston, Melbourne (Tullamarine), Moorabbin, Parafleld, Perth, Sydney (Kingsford-Smith) and Townsville.

1.10 Currently, under the Airports Act, these airports are required to develop and seek approval for both long-term strategic master plans and major development plans for individual development proposals deemed significant enough to warrant specific assessment.2 1

Master plan

1.11 The Airports Act currently requires each airport operator to prepare and obtain approval from the Minister for a master plan. In addition to addressing noise, environmental and land use issues, the master plan sets out the strategic planning framework for the airport for a 20-year period. In developing a master plan, the airport

is required to directly inform the relevant state/territory or local government, publish the draft plan and invite comment from the public (allowing a period of 60 business days). Information about any public comment received is required to be provided to

the Minister when submitting the plan for approval.6

2 Airports Amendment Bill 2010, Explanatory Memorandum, p. 1.

3 Department of the Parliamentary Library, Bills Digest No. 25, 2010-11, p. 3.

4 Department oi Infrastructure, Transport, Regional Development and Local Government, Flight Path to the Future: National Aviation Policy White Paper, p.156.

5 Airports Amendment Bill 2010, Explanatory Memorandum, p. 2.

6 Airports Amendment Bill 2010, Explanatory Memorandum, pp 3-5.

212

Page 3

1.12 Airport master plans require updating every five years or earlier (if requested by the Minister) and these updates are also subject to a public consultation period of 60 business days.

Major development plan

1.13 Major development plans are a separate planning process that provide for public consultation and Ministerial assessment of specific development proposals on leased federal airport sites. The provisions of the Airports Act relating to major development plans "are intended to promote the orderly development of leased federal airports and to ensure that major airport developments are consistent with the terms of airport leases and master plans".7 The current framework for major development plans is also intended to take into account the operational, safety, noise, environmental and community impacts of developments and allow them to be assessed.8 9

1.14 The Explanatory Memorandum to the bill notes that the requirement for a major development plan is triggered if the development involves any of the developments listed in section 89 of the Airports Act. The list includes:

• any new runway capacity;

• specified new passenger terminal capacity;

• new taxiway, railway or road capacity, where such an upgrade significantly increases the capacity of the airport; or

• significant environmental impact.

1.15 Airports preparing a major development plan are subject to the same process as those developing a master plan. There is a requirement to inform the relevant state/territory or local government and to allow 60 days for public comment following the publication of the draft plan. There is also a requirement to provide details of any public comment to the Minister when submitting the plan for approval.10

Current airport planning framework - issues of concern

1.16 A number of issues of concern in relation to the current airport planning framework were outlined in the White Paper. The issues raised and arguments put forward include:

• Airports have become large, complex operations that support a wide range of aeronautical and non-aeronautical activities which can have significant impacts on communities. There has been an increased incidence of investment

7 Airports Amendment Bill 2010, Explanatory Memorandum, p. 4.

8 Airports Amendment Bill 2010, Explanatory Memorandum, p. 4.

9 Airports Amendment Bill 2010, Explanatory Memorandum, pp 4-5.

10 Airports Amendment Bill 2010, Explanatory Memorandum, pp 3-5.

213

Page 4

and development on airport sites generating controversy - particularly when people feel that their interests have not been adequately considered.

. Airports are responsible for generating a significant number of vehicle movements. Airports developments that result in a significant increase in the number of airport users can have a substantial impact on connecting transport infrastructure and lead to increased urban congestion and vehicle emissions

and a reduction in the efficiency of the surrounding transport network.

. The Airport planning system is currently not being properly integrated with the off-airport transport planning system. This lack of integration is contributing to an uncoordinated transport system, which in turn is having an impact on cities' broader productive capacity and imposing unnecessary social

and economic costs.

• Under current arrangements, some developments on airport sites are not canvassed in detail in master plans and fall outside the trigger criteria for major development plans. This has resulted in these developments not being open to community consultation - as may have been the case if they had occurred outside the airport boundary.

• There is currently no general requirement for airports to consult regularly with communities and state/territory planning authorities. There is a view that this has led to excessive use of land on airport sites not directly related to aviation operations and not consistent with the interests of sumounding communities.

• The planning framework that applies to leased federal airports is not sufficiently integrated with the planning laws applying to neighbouring communities and surrounding regions. This has, at times, resulted in disjointed development outcomes and negative community impacts, with both economic and social costs.11

Infrastructure investment issues

1.17 During the Government's consultations with airports, the importance of continued investment in federal airports was raised. A number of problems relating to the impact the current regulatory framework has on facilitating investment were outlined in the White Paper, including:

” Major development plans as currently framed may impact on some aeronautical developments that will have little community impact. There is no mechanism which allows an airport-lessee company to seek an exemption from the major development plan process for these types of developments.

1 Major development plan requirements sometimes result in an unnecessary duplication of consultation processes where effective consultation could have occurred had there been sufficient detail in the airport master plan.

11 Airports Amendment Bill 2010, Explanatory Memorandum, pp 5-6.

214

Page 5

• Airport environment strategies are currently developed, consulted upon, and approved in a process entirely separate from master plans, creating unnecessary complexity and duplication of effort for airports, communities and state and local governments.1"

Incompatible developments

1.18 Prior to the release of the White Paper, a Government Green Paper expressed a view that there are a range of activities that are likely to be incompatible with the long-term operation of an airport as an airport. The types of activities identified included long-term residential development, residential aged or community care facilities, nursing homes, hospitals and schools.13

1.19 The Airports Legislation Amendment Regulations 2009, No. 231 were made in 2009 and provided that any developments considered incompatible with the operation of the airport as an airport would constitute 'major airport developments'.14

1.20 In the current bill, the provisions relating to incompatible developments have been transferred to the principal Act and have been strengthened. An 'incompatible development' is defined to be a development of any of the following facilities:

• a residential dwelling (except accommodation for students studying at an aviation education facility at the airport);

• a community care facility;

• a pre-school;

• a primary, secondary, tertiary or other educational institution (except an aviation educational facility); and

• a hospital (except a facility with the primary purpose of providing emergency medical treatment to persons at the airport and which does not have in-patient facilities).1"

1.21 Further, section 89A of the bill provides that:

... a person is prohibited from carrying out any incompatible development relating to an airport, unless the Minister gives approval for the preparation of a draft major development plan for the incompatible development. If a person contravenes the requirements of proposed subsection 89A(1), they commit an offence that carries a penalty of 400 penalty units or $44,000. If

12 Airports Amendment Bill 2010, Explanatory Memorandum, pp 6-7.

13 Department of Infrastructure, Transport, Regional Development and Local Government, Flight Path to the Future: National Aviation Policy Green Paper, December 2008.

14 Department of the Parliamentary Library, Bills Digest No. 25, 2010-11, p. 5.

15 Airports Amendment Bill 2010, Explanatory Memorandum, p. 22.

Page 6

an airport-lessee company is convicted of the offence, a court may impose a fine of not more than 5 times the penalty.

Purpose of the bill

1.22 The bill amends the Airports Act 1996 (the Act) and brings into effect the legislative reforms announced in the White Paper, in particular to improve the regulatory framework in relation to planning.

1.23 The key areas in which the bill amends the Airport Act are as follows:

• strengthening the requirements for airport master plans and major development plans to support more effective airport planning and better alignment with state, territory and local planning;

• in relation to the first five years of a master plan, requiring additional information such as a ground transport plan and detailed information on proposed developments to be used for purposes not related to airport services (eg. commercial, community, office or retail purposes);

• restructuring the triggers for major development plans including capturing proposed developments with a significant community impact;

• prohibiting specified types of development which are incompatible with the operation of an airport site as an airport. However, an airport-lessee company will have the opportunity to demonstrate to the Minister that such a development could proceed through a major development process because of exceptional circumstances;

• integrating the airport environment strategy into the master plan requiring only one public comment period for the combined document recognising that an airport environment strategy is better articulated in the context of the airport's master plan. Transitional provisions are included to address how the expiry dates of environment strategies will be aligned with the expiry dates of master plans; and

■ clarifying ambiguous provisions and making housekeeping amendments to update certain provisions of the Airports Act.1 6 17

16 Pu °n°Svd Subsection 89A(2), Airports Amendment Bill 2010, p. 16, quoted in Department of the Parliamentary Library, Bills Digest No. 25, 2010-11, p. 5.

17 Airports Amendment Bill 2010, Explanatory Memorandum, pp 1-2.

216

Key provisions of the bill18

Schedule 1 - Amendment of the Airports Act 1996

Part 1 - Master plan amendments

1.24 Schedule 1 contains the new provisions to Section 71 of the Airports Act 1996 which specifies the matters to be set out in draft or final master plans.

1.25 Proposed paragraph 71(2)(ga) requires that, for the first five years of operation of the master plan, it incorporates a ground transport system plan, including the following:

• road network plan;

• facilities for moving people and freight around the airport;

• links between the road network and public transport system in and outside the airport;

• arrangements with state or local authorities in relation to these networks;

• capacity of the ground transport system to support the operations and activities of the airport; and

• effect of proposed developments on the transport system and traffic flows.

1.26 Proposed paragraph 71 (2)(gb) requires information in the master plan just for a five year period, on proposed developments for purposes not related to airport services such as commercial, community, office or retail purposes.

1.27 Proposed paragraph 71 (2)(gc) requires information in the master plan just for a five year period, on the effect proposed developments will have on employment levels and the local and regional community and its economy and how it fits in with planning schemes for commercial and retail development near the airport.

1.28 Repealed paragraph 71 (2)(h) only required the date of approval of a draft environment strategy. Proposed paragraph 71 (2)(h) provides for the details required in an environment strategy to now part of a master plan for an airport. Details to be included in the environment strategy are taken from existing section 116. They include the following:

• airport-lessee company's objectives for the environmental management of the airport;

_______________________________________________________________________________Page 7

18 Information presented in this section is based on information contained in Department o f the Parliamentary Library, Bills Digest No. 25, 2010-11, pp 6-11.

Page 8

. areas identified by the airport-lessee company within the airport site, in consultation with state and federal bodies as being environmentally significant; • sources of environmental impact associated with airport operations;

. the studies, reviews and monitoring carried out by the airport-lessee company of environmental impact associated with airport operations;

. timeframes for completion of studies etc or reporting on monitoring;

• specific measures carried out by airport-lessee company to prevent, control or reduce environmental impact;

• timeframe for completion of specific measures;

• details of consultations and their outcomes to prepare the strategy; and

• any other matters prescribed in the regulations.

1.29 Item 61 repeals Division 2 of Part 6 of the Airports Act 1996. Existing Division 2 of Part 6 of the Act dealt with environmental strategies. They are now proposed to be part of the master plan. Sections 114 to 131 are repealed as a result of the repeal of Division 2.

1.30 Subsection 71(3) relates to the content of a draft and final master plan for joint-user airports. Joint-user airports are defined in section 7B of the Act.

1.31 Item 4 repeals paragraph 71 (3)(h) and substitutes proposed paragraphs 71 (3)(ga)-(h) which provide for identical provisions for joint user airports as for proposed paragraphs 71(2)(ga)-(h).

1.32 Item 5 repeals subsection 71(6) and substitutes subsection 71(6) which includes an additional paragraph and provides that if a draft or final master plan is not consistent with state or territory planning schemes, the inconsistencies are required to be justified.

Other amendments

1.33 Item 16 amends section 5 to insert a definition of state to include the Australian Capital Territory and the Northern Territory.

1.34 Section 70 deals with the purposes of a final master plan. Proposed paragraphs 70(2)(3)-(g) contain provisions from repealed subsection 115(2) which relate to the intended purposes of final environment strategies. They have been included in section 70 together with the purposes of final master plans.

1.35 Item 27 inserts proposed section 71A after section 71. Proposed 71A(1) provides that a draft or final master plan must identify proposed incompatible developments. Proposed subsection 71 A(2) defines 'incompatible developments'. It relates to the development or re-development of facilities such as residential

218

Page 9

dwellings, community care facilities, pre-schools, primary, secondary, tertiary or other education institutions and hospitals.

1.36 Proposed subsection 71A(3) defines 'aviation educational facility' and 'community care facility'.

1.37 Section 81 relates to the approval of a draft master plan by the Minister. Item 33 repeals existing subsection 81(5) and substitutes proposed subsection 81(5). An additional period of up to ten business days is added to the existing 50 business day time limit that the Minister specifies in a written notice to the airport-lessee company. After the expiration of this time, the Minister is taken to have approved the draft master plan if he or she has neither approved or refused to approve the draft master plan. Proposed subsection 81(10) provides that if the Minister approves a draft master plan that contains an incompatible development this does not prevent the Minister

from refusing to approve a major development plan for the incompatible development under Division 4 (major development plans).

1.38 Item 35 inserts proposed section 83A which provides for compliance with the environment strategy in the final master plan. Proposed 83A(2) provides that the airport-lessee company must take all reasonable steps to comply with the environment strategy in the master plan. Any other person who carries on activities at the airport must likewise take all reasonable steps to comply with the environment strategy as well (proposed 83A(3)). A contravention, although not an offence under proposed

subsection 83A(4) is a ground for an injunction under proposed 83A(5) under Part 15.

1.39 Section 89 defines a major airport development. Item 45 repeals existing subsection 89(5) and substitutes proposed subsections 89(5) and (6). Proposed subsection 89(5) provides that the Minister may determine in writing that specified developments such as:

• constructing a new passenger terminal;

• extending a passenger terminal;

• constructing a new taxiway that increases the capacity of the airport to handle movements of passengers, freight or aircraft and the cost exceeds $ 2 0 million or a prescribed higher amount; or

• extending a taxiway that likewise increases the capacity of the airport

do not constitute a major airport development. The airport-lessee company may apply to the Minister to consider whether the development constitutes a major development and if the Minister is satisfied on reasonable grounds that the development will not

increase the operating capacity of the airport, change flight paths, change patterns or levels of aircraft noise or unduly increase noise or cause nuisance to the adjacent airport community then a major development plan is not necessary.

Page ΙΟ_____________________________ ,—--------- ------------------------------------------------------------------

Incompatible developments

1.40 Item 46 inserts subdivision B - incompatible developments. Proposed section 89A prohibits a person to carry out or cause or permit an incompatible development, to be carried out unless the Minister approves the preparation of a draft major development plan for the incompatible development. An offence is committed by a person who contravenes proposed subsection 89A(1), the penalty being 400 penalty units ($44,000). Proposed 89A(3) provides that this is a strict liability offence which means that the defence of reasonable mistake is available.

1.41 Proposed subsection 89A(4) provides that an airport-lessee company must apply in writing to the Minister if it wants to prepare a draft major development plan for an incompatible development before it advises the state or territory authorities under subsection 92(1 A).

1.42 Proposed subsection 89A( 5) provides that the application must set out the exceptional circumstances claimed by the airport-lessee company to support the preparation of a draft major development plan for the incompatible development.

1.43 Proposed subsection 89A(6) provides that the Minister must be satisfied that exceptional circumstances exist. The Minister must provide the airport-lessee company with written notice of the decision and reasons for the decision (proposed subsection 89A(7)). Proposed subsection 89A(8) provides that even if the Minister approves the preparation of a draft major development plan, it does not prevent the Minister from refusing to approve a major development plan for the incompatible development.

1.44 Item 47 inserts subdivision C - approval process. Section 91 is concerned with the content of a major development plan. Proposed paragraph 91 (l)(ga) requires details relating to the likely effect of proposed developments on traffic flows in the airport and around the airport, employment levels and the local and regional economy and community as well as an analysis of how the developments fit within local planning schemes for commercial and retail development in the adjacent area.

1.45 Item 48 repeals existing paragraph 91 (1 )(k) and substitutes proposed paragraph 91(1 )(k) which requires the airport-lessee company to set out the exceptional circumstances that justifies the incompatible development.

1.46 Item 49 repeals subsection 91(4) and substitutes proposed subsection 91(4) which in addition to maintaining existing provisions requires that if the major development plan is inconsistent with planning schemes under state law, the justification for the inconsistencies be stated.

1.47 In section 94, the Minister, when approving a major development plan, must have regard to the matters listed. Item 54 proposed paragraph 94(3)(f) inserts provisions relating to an incompatible development:

• whether the exceptional circumstances justify the development;

220

Page 11

• the likely effective of the development on the future use of the airport site for aviation purposes; and

• the likely effect on the ground transport system at and adjacent to the airport.

Schedule 2 - Technical amendment of the A ir p o r ts A c t 1 9 9 6

1.48 Items 1 to 25 are technical and consequential amendments.

Page 12

222

Chapter 2

Key issues

Background

2.1 As discussed in Chapter 1, the Airports Act 1996 regulates leased federal airports. As these airports are operating on Commonwealth land they are subject to Commonwealth law and are not subject to state and local government planning laws.

2.2 Concerns were raised during the National Aviation Policy White Paper (White Paper) process that communities are not always afforded the opportunity for consultation with regard to on-airport developments under the current planning framework. The White Paper also noted that there is insufficient detail provided in master plans and many developments fall outside the criteria that would initiate a major development plan. The White Paper noted calls from state, territory and local

governments for better integration of the planning framework applying on leased federal airports with planning laws applying to neighbouring communities and surrounding regions.

2.3 The committee notes that the bill seeks to respond to these concerns by creating a more transparent regulatory framework that balances the interests of communities with the need for ongoing infrastructure investment on airport land.

S u p p o rt f o r th e b ill

2.4 Throughout the inquiry it has been evident that there is widespread support for strengthening planning arrangements for developments on airport land. As indicated in the previous chapter, issues relating to airport planning and development were

canvassed extensively during the White Paper process. Submitters to the inquiry expressed general support for the outcomes of the White Paper process and appear generally supportive of the broad intent of the bill.

A n a p p ro p ria te le v e l o f regu lation

2.5 The Regulation Impact Statement (RIS) for the bill states that the objective for the airport planning framework identified as a result of the White Paper process is:

Improved planning at Australia's airports to facilitate better integration and coordination with off-airport planning and continued investment in Australia's airport infrastructure and land transport links. 1

,2.6 The RIS outlines four regulatory options for achieving this objective:

] Airports Amendment Bill 2010, Explanatory Memorandum, p. 7.

Page 14

. Option A - the status quo . Option B - tighter regulation of planning and development on leased federal airports to facilitate better integration of on-airport and off- airport planning; . Option C - a balanced approach involving regulatory change to facilitate

investment in aeronautical infrastructure and better integration of on- airport and off-airport planning; and

. Option D - accredit state and territory government planning laws to apply to airports but allow the Commonwealth Minister to exercise decision making power.2

2.7 The RIS notes the following feedback from key stakeholders on each of these proposals:

Airports

• dispute the need for increased involvement of state, territory and local government planning authorities in airport planning;

• dispute the need for more detailed analysis in master plans with regard to inconsistencies between on-airport and off-airport planning;

• support the concept of a consultative forum for airports and off-airport planning authorities and recognise benefit o f such a forum in providing feedback to each party;

• mechanisms for expert advice should not delay approval processes;

• accept notion of requirement for regular consultation with the wider community;

• welcome mechanisms for a reduction in consultation periods for major development plans for specific aeronautical related developments.

Communities

■ limited feedback suggests general support for improved integration of airport planning in the interests of reducing negative impacts on communities and suburban amenity.

Business users

support requirements for improved ground transport planning by airports.

State, territory and local governments

support increased regulatory oversight of airport planning, particularly in relation to non-aeronautical developments on airport land;

Airports Amendment Bill 2010, Explanatory Memorandum, pp 8-11.

224

Page 15

• support stricter requirements for airports to address and justify variances between airport planning strategies and planning frameworks for neighbouring communities;

• have a preference for a formal decision making role in airport planning but welcome the concept of a consultative forum and a means of better coordination of strategic planning;

• support requirement for airports to undertake regular community consultation;

• are not opposed to relaxation of regulatory requirements on aeronautical developments;

• support stricter control of developments on airport sites that are potentially incompatible with airport operations;

• state and territory governments did not lobby for accreditation of state or territory planning processes under the Airports Act;

• other governments accepted that the Commonwealth Minister would retain decision making power and would receive recommendations from Commonwealth public servants in accordance with the terms and provisions of the Airports Act.3

2.8 The RIS concludes that Option C represents the greatest net benefit. The RIS notes that both Option B and Option C would provide for better integration of on- airport and off-airport planning frameworks, with positive flow on effects for suburban amenity and the economies of surrounding regions, particularly through better planning of ground transport links.

2.9 The RIS also concludes that Option C alone will promote additional investment in airport infrastructure. Option C also offsets the introduction of new regulatory requirements in respect of master plans and some non-aeronautical developments with a relaxation of certain of the current regulatory requirements in relation to major development plans.4

2.10 The views expressed by submitters to this inquiry appear to accord with the spectrum of views summarised in the RIS and reflect a general level of acceptance of the regulatory framework proposed in the bill. The committee notes that many submitters recognise that the regime established by this bill is a compromise position between communities' need for greater transparency and consultation and the

expectation of airports and their users for a regulatory environment conducive to investment and continued development.5

3 Airports Amendment Bill 2010, Explanatory Memorandum, pp 14-15.

4 Airports Amendment Bill 2010, Explanatory Memorandum, p. 16.

5 City of Armadale, Submission 5, p. 1.

225

Page 16

2.11 Notwithstanding this, the committee received a significant number of submissions raising concerns with regard to specific aspects of the proposed regulatory framework. For example, a number of local governments expressed a

preference for the tighter regulatory control provided for in Option B. In particular, these councils stressed the desirability of legislated, mandatory formal consultative mechanisms and tighter regulation of non-aeronautical developments on airport land.

2.12 The Australian Mayoral Aviation Council (AMAC) told the committee that:

History provides clear evidence that a voluntary framework has not worked. In any case a voluntary arrangement relies on the goodwill of the parties. It is suggested that, where difficult decisions are to be made on matters with a significant positive or negative consequence for either part, goodwill will almost certainly finish second.* 8

2.13 The City of Belmont proposed that the regulatory framework should be reviewed after 10 years. If the approach contained in the bill is shown to be ineffective, a tighter regulatory approach should be introduced.9

2.14 Conversely, a number of airport corporations expressed concerns about the cost in terms of time and resources imposed by these regulatory changes and the potential impact this would have on the operation and the further development of airports.

2.15 Many submitters expressed some concern regarding the drafting of specific sections of the bill and proposed amendments to address the problems identified. These concerns are discussed in greater detail below.

Consultation on draft legislation

2.16 A number of witnesses and submitters expressed disappointment that they had not been consulted during the drafting of the bill. 10 The Australian Airports Association (AAA) told the committee that it had sought an opportunity to be consulted on the drafting of the bill, but had been advised that the extensive consultation undertaken throughout the Aviation Green Paper and White paper piocess was considered sufficient. The AAA told the committee that in their opinion

South West Group, Submission 6, p. 2; Australian Mayoral Aviation Council, Submission 9, p.

See for example Australian Mayoral Aviation Council, Submission 9, pp 3-4; Camden Council, Submission 6\ Bankstown Council, Submission 27, p. 1.

8 Australian Mayoral Aviation Council, Submission 9, p. 3.

9 City of Belmont, Submission 4, p. 4.

10 Sydney Airport Corporation Limited, Submission 13, p. 4.

226

Page 17

there is a significant difference between consultation on the development of a policy and consultation in the preparation of a legal document. 11

2.17 Mr John Doherty, Executive Director, Aviation and Airports, Department of Infrastructure and Transport, told the committee that while there had not been an exposure draft of the bill released for consultation, the Department had received valuable input throughout the process from the AAA, individual airports and from state and territory governments and local councils. Mr Doherty told the committee:

The decision to release a bill as an exposure draft is one for government, It is not done as a matter of course; it is done where it is seen as adding a value in the particular circumstances. The judgement was made in this case that, after the extended consultation and the likelihood that the comments would pull in different directions because this is a balance, the bill was not released as an exposure draft before introduction. 1 1 12

Requirements for greater detail in airport master plans

2.18 The Airports Act 1996 (the Act) provides for the development of airport master plans. As discussed in Chapter 1, the White Paper notes that as well as being an important element in an airport planning cycle, master plans provide a key opportunity for state and local governments and communities to influence airport planning. The master plan process also provides an opportunity for airports and state

and territory and local governments to work through likely off airport impacts of future airport developments. The White Paper concludes that the provision of greater detail in master plans should inform and enhance this collaboration. 13

2.19 Subsection 71(2) of the Act specifies the detail that must be included in a draft or final master plan. The bill proposes that this list of items be expanded to include:

• a ground transport plan on the landside of the airport;

• proposed developments for purposes not related to airport services;

• the likely effect of proposed developments in the plan on employment levels at the airport and on the local and regional economy and community; and

• an environment strategy. 14

2.20 Many submitters welcomed the requirements for greater detail, particularly in relation to the coordination of on-airport and off-airport airport transport

11 Mr John McArdle, Chairman, Australian Airports Association, Committee Hansard, 3 November 2010, p. 7.

12 Committee Hansard, 3 November 2010, p. 34.

13 Australian Government, Flight Path to the Future, National Aviation Policy White Paper, December 2009 p. 159.

14 Airports Amendment Bill 2010, Explanatory Memorandum, pp. 1 7 - 18.

Page 18

infrastructure. 15 The Northern Territory Department of Lands and Planning told the committee that: The proposed amendments relating to the information to be included in the future into the preparation of masterplans for the airports will aid this

Department in its endeavours to integrate the developments at the airports in the Northern Territory with the development happening around the airports. 16

2.21 Qantas told the committee that the coordination of transport on-airport and off-airport and environmental concerns are of great importance and that the master plan process will benefit from these inclusions.

2.22 The Western Australian Department of Planning expressed concern that the five year planning time frame for the matters outlined in 71(2)(h)(ga) and (gb) and 71(3) (h) (ga) and (gb) is too short. The Department of Planning told the committee

that:

The road network and public transport systems outside the airport are significant infrastructure items. Longer planning time frames will be required to ensure adequate integration with the surrounding networks and the capacity of such networks are developed in a timely manner and not unduly impacted by development at airports. 17

2.23 A number of other submitters raised similar concerns. 18 1 9 AMAC told the committee that, while it may be appropriate to provide detailed plans for ground transport and other proposed non-aviation developments with a five-year horizon, such plans should not be static. AMAC proposed that the requirement should be a

five-year rolling program with adequate opportunity for appropriate consultation and input. The City of Belmont proposed that the detailed information provided in a master plan should be reviewed each time the Master Plan is reviewed.20 2 1 The Perth Airports Municipalities Group Inc (PAMG) suggested that the transport and economic

impacts of a master plan should be reviewed in the same way that environmental matters are to be revisited."1 The City of Belmont expressed concern that it is not clear how these revised requirements will apply to existing master plans.22

15 See for example: City of Belmont, Submission 4, p. 5; Tourism and Transport Forum, Submission 32, p.l; Sydney Airport Corporation Limited, Submission 13, p. 5.

16 Northern Territory Government, Department of Lands and Planning, Submission 22, p. 1.

17 Western Australian Government, Department of Planning, Submission 25, p . l .

18 City of Townsville, Submission 3, p. 1;

19 Australian Mayoral Aviation Council, Submission 9, p. 4.

20 City of Belmont, Submission 4, pp 2-3.

21 Perth Airports Municipalities Group Inc, Submission 20, pp 1-2.

22 City of Belmont, Submission 4, p. 5.

228

Page 19

2.24 A number of submitters expressed concern that the amendments do not go far enough and expressed some doubt regarding the extent to which the amendments would foster greater integration of planning.23

2.25 Submitters also expressed concern that the requirements for consideration of the likely effects of proposed developments should extend beyond the immediate surrounding communities to include the metropolitan and regional implications.24 2 5

2.26 Airport lessees expressed concern at the lack of clarity with regard to the new requirements of a master plan.23 The AAA told the committee:

... it is far from clear what degree of analysis will be required by the Minister to meet the statutory requirement for "detailed information" or exposition of "likely effect". Airports would obviously be concerned if the level of analysis demanded under these new provisions was unreasonably complex. Master Plans are intended to be long-term, predictive and strategic documents, with individual major developments forecast in them requiring separate approval under the Major Development Plan process. It is at that latter stage that more detailed examination is appropriate.26

2.27 Submitters also cautioned against a predisposition to refuse approval for any on-airport development that may have an adverse off-airport effect. The AAA told the committee:

Inefficient off-airport businesses should not be insulated from competing and more efficient businesses simply because they may be located within the boundaries of an airport. Local communities deserve access to competitive and efficient suppliers of goods and services, wherever they may be located.27

In co rp o ra tio n o f a irp o rt en viro n m en t stra teg y in m a ster p la n s

2.28 The bill also proposes the annexure of the airport environment strategy in the master plan. AAA told the committee that it supports this change in principle, recognising that it "offers the opportunity for more efficient and comprehensive and

less expensive consultation between airports, their local communities and relevant Government authorities" .28

23 See for example: Australian Mayoral Aviation Council, Submission 9, Camden Council, Submission 6; Bankstown Council, Submission 27, p. 1.

24 City of Perth, Submission 12, p. 1; Mr Andrew Barr, MLA, ACT Minister for Planning, Submission 28, p. 1.

25 Sydney Airport Corporation Limited, Submission 13, p.5.

26 Australian Airports Association, Submission 15, p. 3.

27 Australian Airports Association, Submission 15, p. 4.

28 Australian Airports Association, Submission 15, p. 3.

229

Page 20__________ ______________________________________ _______________________________

2.29 However, the AAA expressed concern that the inclusion of the environment strategy may lead to delays in the approval of the master plan. AAA told the committee: In particular, we would be very concerned if the incorporation of the

Environment Strategy allowed the Commonwealth Environment Minister to place any conditions or other requirements on the broader Master Plan through their involvement in the Environment Strategy, or if the Environment Department did not afford such matters the same priority as

they receive from the Transport Department, thereby delaying the whole 29 process.

2.30 This view was shared by a number of other submitters.* 30

2.31 However, the committee notes that the City o f Cockbum expressed concern that non-environmental priorities should not cloud judgement regarding scrutiny of the environmental acceptability of proposed developments.31

Regulatory burden .

2.32 Airport lessees also expressed concern that the amendments to the master plan process would result in an increase in the regulatory burden on airports.32

2.33 Submitters observed that this appeared to be contrary to trends toward simplified regulatory structures.33 The AAA submitted that the bill would make the development planning process for affected airports more intrusive, more expensive and more time consuming.34Airport lessees also expressed concern that the amendments signalled a move away from the concept of an airport master plan as a strategic document to a far more detailed and prescriptive plan.

2.34 Airport lessees also expressed concern that some of the new inclusions in a master plan may delay an already lengthy approval process. For example, while airport lessees recognise the benefit of better coordination of on-airport and landside infrastructure, many remain concerned that the reliance on third parties to meet the

A Australian Airports Association, Submission 15, p. 3; Sydney Airport Corporation Limited, Submission 13, p. 4.

30 Tourism and Transport Forum, Submission 32, p. 2.

31 City of Cockbum, Submission 21, p. 2.

jz. See for example. Essendon Airport, Submission 1, pp. 1-2; Hobart Airport, Submission 10, p. 1, Sydney Airport Corporation Limited, Submission 13, p. 4; and Australian Airports Association, Submission 15, p. 3.

33 See for example: Sydney Airport Corporation, Submission 13, p. 4.

34 Australian Airports Association, Submission 15, p. 2.

230

Page 21

expanded requirements of the master plan may delay or compromise approval of the plan in certain circumstances.33

2.35 The AAA noted that airports will need to obtain from state and territory governments details of how and when those governments intend to deliver the landside road and public transport infrastructure and services required to complement growth in aviation activity. The AAA expressed some concern in the event of any unwillingness on the part of a state or territory government to provide necessary landside infrastructure and services. The AAA told the committee it would be concerned if such unwillingness "was interpreted by the Australian Government in such a way as to prejudice the final approval of the Master Plan or, indeed, to invalidate transport assumptions or conclusions post approval" .3 5 36 These concerns were echoed by the Tourism and Transport Forum who expressed concern regarding the cancellation or deferment of major transport projects referred to in a master plan. The Tourism and Transport Forum supports the inclusion of the ground transport plan, but recommended that it be viewed as a guide to future intentions rather than as a fixed requirement.37

2.36 Sydney Metropolitan Airports (SMA), which operates the Bankstown and Camden General Aviation (GA) airports, expressed concern that the bill does not differentiate between larger and smaller airports. SMA expressed concern that the amendments proposed in the bill would increase the cost of running GA airports without increasing the revenue capability and that this would not be sustainable in the longer term. In its submission SMA said:

This approach continues a 25 year old framework of regulation established for airports managed by the Federal Airports Corporation (FAC) as far back as 1986. The one size fits all airport framework was developed at a time when the Australian Government and the FAC subsidised operations at GA airports.38

2.37 SMA illustrated its concerns with a comparison of airport activity levels for Sydney Airport and Camden Airport.39SMA recommends that GA airports should be either excluded from these amendments or measures should be introduced to support GA airports.40

35 See for example: Sydney Airport Corporation Limited, Submission IS, pp. 5-6; Tourism and Transport Forum, Submission 32, p. 3.

36 Australian Airports Association, Submission 15, p. 4.

37 Tourism and Transport Forum, Submission 32, pp 1-2.

38 Sydney Metropolitan Airports, Submission 11, p. 2.

39 Sydney Metropolitan Airports, Submission 11, p. 3.

40 Sydney Metropolitan Airports, Submission 11, p. 2.

231

Page 22

Expanded major development plan requirements

2.38 During the White Paper process, concerns were raised that many developments on airport land that would have required community consultation, had they taken place outside the airport boundary, fail to trigger the requirement for a major development plan.41 The White Paper notes that there is a view that this has led to excessive use of airport land for developments that are not directly related to aviation and which are not consistent with the interests of surrounding communities.

2.39 The bill introduces a series of amendments that are intended to enable public consultation for all airport developments that impact on surrounding areas.

2.40 The bill also contains provisions intended to streamline certain development applications in circumstances where there is little community impact or where a major development plan is aligned with the latest master plan and has therefore already been subject to public scrutiny.

D e v e lo p m e n ts w ith a s ig n ific a n t c o m m u n ity , e c o n o m ic o r s o c ia l im p a c t

2.41 As noted above, The White Paper identified that major development plan triggers fail to capture some non-aeronautical developments on airport sites that potentially have significant community impacts. The White Paper also noted that there

is no general requirement for interested parties to be notified of airport development plans falling outside the master plan and major development plan processes.

2.42 The bill addresses these concerns through the inclusion of a provision that a development of a kind that is likely to have a significant impact on the local or regional community is a major airport development and will require a major development plan. This includes any alteration to a runway, including a runway

alteration that changes flight paths. The Explanatory Memorandum to the bill states that:

As is currently the case with the existing major development plan trigger on significant environmental or ecological impact, proposed developments with significant community impact, regardless of size or cost, will be subject to the optimal level of public comment to enable members of the community and other stakeholders to have input into the proposed developments that may be contentious within the local area.42

-.43 1 he Explanatory Memorandum states that in determining whether a proposed development is likely to have a significant impact on the local or regional community, the following are examples of issues that may be considered:

^ ^!5>ra'’an Government, Flight Path to the Future, National Aviation Wltite Paper, December 2009, p. 156.

42 Airports Amendment Bill 2010, Explanatory’ Memorandum, p. 26.

232

Page 23

• Will the proposed development impact on the amenity of the local or regional community?

• Will the proposed development increase traffic in the immediate surrounds of the airport?

• Will the proposed development likely create increased noise in the area?

• Will the proposed development create areas of risk for individuals within, or adjacent to, the airport?

• Will the proposed development likely cause significant concern by the local or regional community? 43

2.44 The Explanatory Memorandum also states that administrative guidelines on what may constitute 'significant impact on the local or regional community' will be provided to relevant industry stakeholders.44

2.45 The committee received numerous submissions seeking clarification of the scope of these provisions.4" For example, the City of Belmont applauds the intent of these provisions, but notes that there needs to be clear guidelines produced to define what a significant community impact is and how it is triggered. The council considers that the questions set out in the discussion paper are "too vague and open" to aid interpretation and expresses concern that unless the criteria are clarified, substantial problems will be encountered by both airport lessees and the general public in trying to apply this requirement.46

2.46 Qantas notes that major development plans are very costly and time consuming and that it is imperative that there is clarity around whether or not a major development plan is required. Qantas and Australian Pacific Airports Corporation both told the committee that there is a need for further consultation in relation to these provisions and in the formulation of guidelines regarding their application.47

R e q u ire m e n t f o r m a jo r d e v e lo p m e n t p la n s f o r a ltera tio n s to an a irp o rt ru n w ay

2.47 The amendments to the requirements for major development plans in relation to alterations to runways were a source of some concern to a number of airport lessees. The committee notes that these concerns appear to stem from uncertainty regarding routine maintenance of runways. Airport lessees stressed the need for

43 Airports Amendment Bill 2010, Explanatory Memorandum, p. 26.

44 Airports Amendment Bill 2010, Explanatory Memorandum, p. 26.

45 See for example: City of Perth, Submission 12, p. 1; Perth Airports Municipalities Group, Submission 20, p. 2. Qantas, Submission 33, p. 2; Australian Pacific Airports Corporation, Committee Hansard, p. 10; Sydney Airport Corporation Limited, Submission 13, p. 11.

46 City of Belmont, Submission 4, p. 8.

47 Qantas, Submission 33, p. 2; Mr Chris Woodruff, Chief Executive Officer, Australian Pacific Airports Corporation, Committee Hansard, p. 10.

233

Page 24__________ ___________________ _____________________ ____________ ___________________

clarification of the types of runway development activities that would require a major development plans.48 4 9

2.48 The Department told the committee that it was not the government's policy intention that routine runway maintenance would trigger the requirement for a MDP. Mr Doherty told the committee:

We would certainly never envisage routine maintenance as triggering this. I do not see that as an alteration of a runway. The point that has been raised is that it is not in the longer term an alteration of runway, but maybe for the period that you are doing the work it may alter operations.50

2.49 The Department told the committee that the Explanatory Memorandum to the bill has been amended to clarify this point. The committee heard that the Explanatory Memorandum now reads:

The reference to altering a runway, including altering a runway in any way that changes flight paths ... is not intended to capture routine maintenance works, for example patch, repair of runways, taxiways, aprons, crack sealing, runway resurfacing, line marking . . . 51

2.50 The Department undertook to re-examine the provisions in the bill to determine if further clarification of the provisions themselves is necessary. Mr Doherty told the committee that:

... the explanatory memorandum, of course, cannot override the words of the bill itself, so we do still need to make sure that that provision is consistent.52

2.51 In subsequent correspondence to the committee, the Department has clarified that it has not been the government's intention to capture "routine maintenance works such as patch repair of runways, taxiways and aprons, crack sealing, runway resurfacing, line marking, jet blast protection and the repair, maintenance and upgrade

of aviation navigation aids". As the committee notes earlier in this report, the

48 See for example: Hobart International Airport, Submission 10, p. 2; Mr Chris Woodmff, Chief Executive Officer, Australian Pacific Airports Corporation, Committee Hansard, 3 November 2010, p. 17; Sydney Airport Corporation Limited, Submission 13, p. 12.

49 Mr John Doherty, Executive Director, Aviation and Airports, Department of Infrastructure and Transport, Committee Hansard, 3 November 2010, p. 35.

50 Mr John Doherty, Executive Director, Aviation and Airports, Department of Infrastructure and Transport, Committee Hansard, 3 November 2010, pp 35-36.

51 Ms Marlene fucker, Director, Legislative Reforms Section, Airports Branch, Department of Infrasti ucture and Transport, Committee Hansard, 3 November 2010, p. 36.

52 Mr John Doherty, Executive Director, Aviation and Airports, Department of Infrastructure and Transport, Committee Hansard, 3 November 2010, p. 39.

Page 25

Explanatory Memorandum has been amended to clarify this. However, the Department has advised that the intention is now to make this clear in the bill.53 5 4 5 5 *

2.52 The Department has also advised that consideration is also being given to the introduction of a materiality test to provide that only a runway that significantly changes flight paths or the patterns of levels of aircraft noise will require a major development plan. The Department states that this will ensure that essential runway maintenance works which may result in temporary closure of part of a runway are not captured. The Department states that such an approach would align with existing provisions in section 89 of the Airports Act 1996.'4

2.53 The Department confirmed that the Minister, the Hon. Anthony Albanese MP, has given in-principle agreement to these proposed amendments."-0

In co m p a tib le d ev e lo p m e n ts

2.54 The bill inserts a new subdivision into the Act to deal with what are considered to be incompatible developments.

2.55 In 2009, the Airports Regulations 1997 were amended to provide that certain types of developments, which the government considers would normally be incompatible with the operation of an airport as an airport, would constitute 'major airport developments'. Such developments could only be carried out where they have been subject to a public consultation process and a major development plan is approved by the Minister under the Act.""’6

2.56 In the White Paper, the government indicated it would "reinforce this action by introducing legislation to set up a prima facie prohibition of such developments on federal airport sites" .57 Under subsection 71A (1) of the bill, an airport lessee company must identify any proposed incompatible development in the master plan.

Subdivision B provides that an incompatible development is prohibited on leased federal airports, except in exceptional circumstances. If an airport-lessee company wants to prepare a draft major development plan in relation to an incompatible development, the company must first obtain the approval of the Minister.58

53 Department of Infrastructure and Transport, Answer to question on notice, 15 November 2010, p. 1. (received 15 November 2010).

54 Department of Infrastructure and Transport, Answer to question on notice, 15 November 2010, p. 1. (received 15 November 2010).

55 Department of Infrastructure and Transport, Answer to question on notice, 15 November 2010, p. 1. (received 15 November 2010).

• 56 Australian Government, Flight Path to the Future, National Aviation White Paper, December 2009, p. 163.

57 Australian Government, Flight Path to the Future, National Aviation White Paper, December 2009, p. 163.

58 Airports Amendment Bill 2010, Explanatory Memorandum, p. 28.

2.57 A number of submitters expressed the view that there should be a prohibition on certain categories of non-aviation developments on airport land. In its submission the AMAC said: Incompatible developments should be exactly that. Incompatible in this

sense means that there is a conflict between the development activity and airport operations or that either or both will need to modify their behaviour to accommodate the other, often to the detriment of one or both parties.59

2.58 Other submitters told the committee that where there are exemptions from this prohibition, local council should be given an opportunity to comment on the developments.60

2.59 The committee notes that while there appears to be a general acknowledgment of the need for certain developments to be subject to greater scrutiny through a public consultation process and approval by the Minister, there is significant concern regarding the use of the term "incompatible" to describe such developments.

2.60 The committee heard that there is nothing inherently incompatible about any of the developments listed in sub section 71A (2) of the bill. The committee heard that the current drafting of the proposed amendments may deny airports the opportunity to have development proposals dealt with on their merits. 61

2.61 Mr Skehill, Legal Adviser, AAA, told the committee:

We certainly accept that the Commonwealth has a very legitimate interest in ensuring that airport land can continue to operate into the future as an airport. Building warehouses all over airport land will at a point render the

land unusable as an airport. The existing law deals with that by requiring that certain developments be subject to ministerial approval, and the minister can stop that happening. Equally, you could put aviation infrastructure in inappropriate places on airport land and be inconsistent.

There is no reason why you would, but conceivably you could. There are clearly some things that would be incompatible with the operation of an airport, but they are not these things that are listed here in the definition of incompatible development. They might be things that for policy reasons a

minister thinks would be best located off airport. We might disagree with that view but let that question be judged on its merits and not by tagging it with this inappropriate, misleading term ‘incompatible’.62

Page 26______________________________ __________________ _________ ______________________ —

59 Australian Mayoral Aviation Council, Submission 9, p. 4.

60 Camden Council, Submission 17,p. 1; Australian Local Government Association, Submission

61 Australian Airports Association, Submission 15, p. 5.

62 Mr Stephen Skehill, Legal Adviser, Australian Airports Association, Committee Hansard, 3 November 2010, p. 6.

236

Page 27

2.62 Mr John Doherty told the committee that the Minister is keen to send a clear message that the airports sites are primarily for aviation uses. He said:

There is certainly a range of uses which support aviation and are to be encouraged but there are a range of developments which would not normally be compatible with an airport site because of the attraction of traffic, of exposure of people to noise or of limiting the possible flexible use of the site into the future to maximise aviation operations.63

2.63 Mr Doherty explained that the provisions as currently drafted do not preclude the developments listed in proposed new section 71A of the bill. Mr Doherty said the bill sets a range of special procedures and clearly sets the expectation that the exceptional circumstances relating to each development proposal will need to be carefully justified.64

2.64 The committee also heard concerns about the impact of these provisions on currently approved proposals, including tertiary institutions on airport land. Queensland Airports Limited told the committee of its concerns regarding the impact of these provisions on current tertiary educational developments on airport land at Gold Coast Airport by Southern Cross University. The committee heard that Building A was completed and opened in early 2010 and that approval for Building B had been received in October 2009. Both developments are located at some distance from aviation related facilities and received approval after extensive community and industry consultation and the submission of major development plans to the Minister.65

2.65 Ms Elissa Keenan, General Manager Corporate Affairs, Queensland Airports Limited, told the committee that the White Paper had not referred to tertiary institutions but that the airport had since been advised that the term "incompatible development" would include a primary, secondary, tertiary or other such educational institution. Ms Keenan said:

... for us, the retrospective changes to the definition of what constitutes incompatible development are of concern, particularly when the Southern Cross University had planned to continue its expansion on our airport land.66

2.66 Other submitters also expressed concern regarding the lack of clarity regarding the types of developments which might be considered "incompatible". Mr Mark Willey, Executive Manager, Brisbane Airport Corporation (BAC) told the committee that BAC had recently been "subjected to an MDP process for a relatively

63 Committee Hansard, 3 November 2010, p. 33.

64 Committee Hansard, 3 November 2010, p. 35.

65 Queensland Airports Limited, Submission 16, p. 2.

66 Ms Elissa Keenan, General Manager Corporate Affairs, Queensland Airports Limited, Committee Hansard, p.14.

237

minor fit-out works to develop a maritime simulator training facility in an existing building" within a precinct of Brisbane Airport specifically established for that type of use. He said: BAC support the intent of the white paper policy to not place sensitive

receptors such as primary or secondary schools in high-noise or high-risk zones adjacent runway-ins [sic] but contend that this training facility example was not a target of the policy intent.67

2.67 In correspondence to the committee, the Department clarified that an amendment to address concerns over the scope of what constitutes 'other educational institution' in proposed section 71A is under active consideration. The Department advised the committee that:

Whilst clause 41 of the EM seeks to clarify that the intention is not to capture facilities for the purpose of providing training to staff members employed by organisations on the airport, an amendment is being developed to make this clear in the Bill.68

2.68 The Department advised that the Minister has given his in-principle agreement to such an amendment.69

2.69 Mr Willey suggested to the committee that consideration should be given to the use of the terminology "assessable development" to convey that such activities will be subjected to further assessment, such as a major development plan.70 The committee notes that there appears to be some support for this proposal.71 The City of Belmont told the committee that the use of the term "incompatible" is questionable and that the current provisions only serve to increase the administrative burden for airports and exacerbate the belief in the wider community that airports and communities are incompatible. Canberra Airport also submitted that the scope of the term incompatible developments" risks inviting much greater stakeholder opposition

to such developments.72 The City of Belmont suggested that the blanket prohibition on such developments should be removed and replaced with a requirement for a major development plan.73

Page 28_______________________________ __________________ _______________________________

67 Committee Hansard, 3 November 2010, p. 12.

68 Department of Infrastructure and Transport, Answer to question on notice, 15 November 2010, p. 1. (received 15 November 2010).

69 Department of Infrastructure and Transport, Answer to question on notice, 15 November 2010, p. 1. (received 15 November 2010).

70 Committee Hansard, 3 November 2010, p. 12.

71 Tourism and Transport Forum, Submission 32, p. 1.

72 Canberra Airport, Submission 8.

73 City of Belmont, Submission 4, p. 4. See also Perth Airports Municipalities Group, Submission 20, p. 2.

238

Page 29

R ela x a tio n o f m a jo r d e v e lo p m e n t p la n requ irem en ts in certain circu m stan ces

2.70 As noted in Chapter 1, subsection 89(5) of the bill is intended to enable an airport-lessee company to request the Minister to waive the requirement for a major development plan where the Minister is satisfied that the development will not:

• Increase the operating capacity of the airport; or

• Change the flight paths; or

• Change the patterns or levels of aircraft noise; or

• Unduly increase the noise heard by, or unduly cause a nuisance to, the community adjacent to the airport.

2.71 The Explanatory Memorandum clarifies that this exemption can be sought for the following developments specified in subsection 89(5):

• Constructing a new building wholly or principally for use as a passenger terminal where the building's gross floor space is greater than 500 square metres;

• Extending a building that is wholly or principally for use as a passenger terminal where the extension increases the building's gross floor space by more than 1 0%;

• Constructing a new taxiway, where: (i) the construction significantly increases the capacity of the airport to handle movements of passengers, freight or aircraft; and (ii) the cost of construction exceeds $ 2 0 million or such higher amount as is prescribed;

• Extending a taxiway, where: (i) the extension significantly increases the capacity of the airport to handle movements of passengers, freight or aircraft; and (ii) the cost of construction exceeds $ 2 0 million or such higher amount as is prescribed.

2.72 A number of submitters told the committee that, while they supported the proposal to reduce the circumstances in which a master development plan would be required, in reality, many of the triggers would continue to result in simple, routine developments being categorised as major developments.,A

2.73 In correspondence to the committee, the Department advised that it has given consideration to the comments made by representatives of the airports that the inclusion of a requirement that a proposed development would not "increase the operating capacity of the airport" makes provision 89(5) unworkable. The Department told the committee that: 7 4

74 Tourism and Transport Forum, Submission 32, p. 3.

239

Page 30

The Minister has agreed in-principle to an amendment to the Bill removing this requirement to ensure the practical operation of this provision.

Non-legislative changes

2.74 In his second reading speech, the Minister stated that the changes to the Act proposed in this bill are supported by other non-legislative reforms contained in the government's White Paper.7 5 76

2.75 These include the requirement for all leased federal airports to establish and lead Community Aviation Consultation Groups, to give local residents and businesses an opportunity to provide input to airport planning and operations, and Planning Coordination Forums, to improve planning coordination between major airports and all levels of government.

C o m m u n ity A v ia tio n C o n su lta tio n G ro u p s

2.76 Community Aviation Consultation Groups are consultative only and are not decision making bodies. The primary purpose of the groups is to ensure that community views are effectively heard and to give members the opportunity to obtain

information. The White Paper states that:

The work of an ongoing group of community representatives is likely to support an informed dialogue, which is not always possible in one off open forums.77

2.77 The White Paper states that, in recognition of the variety of community and operational contexts that different airports operate within, each lessee company will have the flexibility to define the scope and membership of the Community Aviation Consultation Groups as long as certain core prescribed conditions are met:

• The chair is independent;

• A record of the outcomes of key discussions is published;

A report on the group's work is to be reviewed as part of the annual lease review; and

• The activity is to be funded by airports.

2.78 The Western Australian Department of Local Government considers that the bill does provide for increased consultation and joint planning on issues potentially affecting local government areas adjacent to airports. In its submission to the Green

75 Department of Infrastmcture and Transport, Answer to question on notice, 15 November 2010, p. 2. (received 15 November 2010).

76 The T Ion Mr Anthony Albanese MP, Minister for Infrastructure and Transport, House o f Representatives Hansard, 30 September 2010, pp 262-263.

A^usUalian^Government, Flight Path to the Future, National Aviation Wliite Paper, December

240

Page 31

Paper, the Western Australian Government had proposed that a written bilateral agreement be developed regarding how consultation and joint planning activity would be progressed. In its submission to this inquiry, the Department of Local Government stated that the measures in the bill will allow local governments and communities to make comment on and influence significant future developments.78

2.79 In its submission, AMAC emphasised that effective, meaningful and respectful consultation involving all tiers of government and effected communities remains essential. 79 AMAC told the committee that the "structure, composition, agenda and reporting requirements of the proposed consultative and coordinating committees will be critical in their success as will the mechanisms ensuring their ongoing relevance" .80 AMAC considers that the scope of these mechanisms should be spelt out either in legislation or regulations.81 The committee notes that this position is supported by a number of submitters. 82 The committee also notes that other submitters support legislation as a long term option in the event that the non­ legislative approach fails. 83

2.80 Mr John Doherty told the committee that if necessary, legislation could be introduced. He told the committee:

... we see this as being for the airport to work out what is going to work best with its community, building on the consultation arrangements that most airports already have. As I mentioned earlier on, there is the possibility of backing that with legislation, should it prove necessary. But

we would rather provide the possibility at this stage for airports to adopt what works best.84

2.81 Mr Doherty advised the committee that the Department is proposing to recommend that the Minister issue guidelines relating to the establishment of the consultation groups. Mr Doherty told the committee that the guidelines would set some parameters, including the importance of having an independent chair.85

78 Government of Western Australia, Department of Local Government, Submission 26, p. 2.

79 Submission 9, p. 3.

80 Mr John Patterson, Project Manager, Australian Mayoral Aviation Council, Committee Hansard, p. 22.

81 Australian Mayoral Aviation Council, Submission 9, p. 3.

82 See for example South West Group, Submission 6, p. 2; Camden Council, Submission 17, p. 1.

83 City of Belmont, Submission 4, p. 2.

84 Mr John Doherty, Executive Director, Aviation and Airports, Department of Infrastructure and Transport, Committee Hansard, 3 November 2010, p. 32.

85 Mr John Doherty, Executive Director, Aviation and Airports, Department of Infrastructure and Transport, Committee Hansard, 3 November 2010, p. 38.

Page 32

P la n n in g C o o rd in a tio n F o ru m s

2.82 The White Paper recognises the importance of ongoing strategic engagement between airports, the Commonwealth, and states and territories. The White Paper highlighted the desirability of regular engagement continuing beyond the development

of an airport's master plan to enable an ongoing dialogue and working relationship to develop.86

2.83 The White Paper states that each main capital city passenger airport will be required to establish a Planning Coordination Forum. The White Paper states that the Forums will build on existing mechanisms and are intended to:

... act as a vehicle to lead constructive ongoing dialogue on matters such as Master Plans, the airport's program for proposed on-airport developments, regional planning initiatives, off-airport development approvals, and significant ground transport developments that could affect the airport and

its connections.

2.84 The White Paper also states that, as is the case with the Community Aviation Consultation Groups, there is currently no intention to set prescriptive requirements for the Forums as the preference is to allow flexibility for arrangements to be tailored to the particular circumstances of the parties involved.87

2.85 However, the committee notes that some submitters appear sceptical regarding the likelihood of an ongoing dialogue or working relationship developing without some form of legislative requirement. Bankstown City Council told the committee:

While the provision in [71(2)(ga) ] for a ground transport plan is supported, mere requirements in 71(2)(h)(iv) for detailing "arrangements for working with the State or local authorities ..." is likely to achieve very little or nothing, without any formal mechanism in place to ensure that this will occur, once the master plan is approved and implemented.88

2.86 Bankstown City Council favours a mandatory requirement for airport lessees to meaningfully and effectively" use the input received as a result of working with state or local authorities and for the outcome of such consultation to be included in the master plan.89

86 Australian Government, Flight Path to the Future, National Aviation Policy White Paper, December 2009, p. 158.

87 Australian Government, Flight Path to the Future, National Aviation Policy White Paper, December 2009, p. 158. '

88 Bankstown City Council, Submission 27, p. 2.

89 Bankstown City Council, Submission 27, p. 2.

242

Page 33

2.87 Submissions from other local governments indicated that local governments would like formal provision to be made for local governments to comment on any proposed development within airport land.90

Other issues

A irp o r t co n trib u tio n s to in fra stru ctu re costs

2.88 A significant issue for many submitters is the extent to which airports contribute to the cost of infrastructure, particularly infrastructure for which the airport is a key beneficiary.

2.89 The Australian Local Government Association (ALGA) told the committee that while it is common practice for councils to seek developer contributions toward the upgrading of infrastructure associated with major facilities, there is no requirement for developers on airport land to make such contributions.91 Mr Adrian Beresford- Wylie, Chief Executive, ALGA, told the committee that this anomaly should be addressed through consideration of the scope for charging commercial developers of airport land developer contributions.92 He told the committee:

It seems reasonable to us that there ought to be a mechanism in place to ensure that some of the burdens that are placed on surrounding communities to support aviation developments that occur on those pieces of land, that are to the benefit of the airport owners but in a sense have also been realised as a benefit to the Commonwealth as a result of the lease payments it has received for those airports, are borne by those who are enjoying those benefits. Whether that is the airport owner or indeed the Commonwealth which in some way provides for the gap that has developed between the demands on communities to provide for infrastructure and their ability to recoup the cost of the infrastructure is certainly a point for debate.93

2.90 This sentiment was echoed by a number of submitters.Both the Western Australian Department of Planning and the Western Australian Department of Local Government expressed the view that airport lessee companies should contribute to related off-airport developments of which they are key benefactors.94 The Western Australian Department of Planning submitted that:

90 See for example: City of Townsville, Submission 3, p. 1; South West Group, Submission 6, p. 2.

91 Australian Local Government Association, Submission 18, p. 3.

92 Mr Adrian Beresford-Wylie, Chief Executive, Australian Local Government Association, Committee Hansard, 3 November 2010, p. 19.

93 Mr Adrian Beresford-Wylie, Chief Executive, Australian Local Government Association, Committee Hansard, 3 November 2010, p. 20.

94 Government o f Western Australia, Department of Planning, Submission 25, Government of Western Australia, Department of Local Government, Submission 26.

Page 34

... airport lessee companies and/or the Federal Government should take responsibility for capital and re-current funding agreements for private passenger, public transport and the freight demands they generate. 3

2.91 Mr John Doherty, Executive Director, Aviation and Airports, Department of Infrastructure and Transport, confirmed that "it is a standard provision in airport leases to require rates equivalent payments and that there have been agreements reached with councils". Mr Doherty told the committee that while there had been some

longstanding disputes he was not aware of any remaining disputes of this nature.

2.92 Mr Chris Woodruff, Chief Executive, Australian Pacific Airports Corporation, expressed the view that as the benefits of aviation and tourism are widely shared, he did not believe that airport lessees should take the place of the state in providing access to and from an airport.9 5 9 6 97

R eview o f th e A N E F p r o c e s s

2.93 The committee received evidence regarding the recommendation of the former Rural and Regional Affairs and Transport References Committee in its inquiry into the effectiveness of Airservices Australia's management of aircraft noise that:

... the government revise the current process through which ANEFs are developed to establish an independent body charged with the coordination of the process and the review of the accuracy and reasonableness of the data upon which the forecasts are made.98

2.94 Urban Taskforce Australia expressed concern that amendments to address this recommendation have not been included in this bill. Mr Aaron Gadiel, Chief Executive Officer, Urban Task Force Australia, expressed support for the former committee's proposal that an independent authority be appointed to test the underlying assumptions that are made by an airport in preparing the ANEF contours. He said:

I am all for the airport operator preparing the ANEF contours initially and explaining their assumptions. I am certainly supportive of the idea that they need to be technically checked off in the way that Airservices Australia do. But there is this gap that is unfilled and the legislation needs to fill it because, through litigation by participants in our industry, we have

discovered that Airservices Australia are under no obligation whatsoever to consider these commercial assumptions or accord any procedural fairness

95 Government of Western Australia, Department of Planning, Submission 25, p. 1.

96 Mr John Doherty, Department of Infrastmcture and Transport, Committee Hansard, 3 November 2010, p. 34.

97 Committee Hansard, 3 November 2010, p. 3.

98 Rural and Regional Affairs and Transport References Committee, The effectiveness o f Airservices Australia's management o f aircraft noise, Inquiiy Report, July 2010, p. viii.

Page 35

for any m em ber o f the com m unity who takes issue with the commercial assum ptions."

2.95 Mr Gadiel told the committee that Urban Taskforce Australia considers that the legislative reforms announced in the White Paper and given effect in this bill "dovetail very neatly" with the recommendations of the fonner committee. He drew the committee's attention to statements in the White Paper that government will

"improve the technical processes and independence associated with assessment and scrutiny of ANEFs" and that there would be better planning integration which "will be further supported through strengthening the Minister's access to expert ... advice in the assessment o f ... Master Plans ...". Mr Gadiel noted that despite these statements:

The bill does not introduce a mechanism for the establishment o f a new independent body to ensure that more robust process for the endorsement o f ANEF contours, and it should do so .9 9 100

2.96 Mr Doherty told the committee that the Department is very conscious of the committee recommendation regarding the ANEF process. He advised the committee that a working group of Commonwealth and state officials is considering a range of safeguarding issues around trying to better integrate the planning for areas surrounding airports. He said:

One o f the issues we are looking at in that group is the suite o f noise

metrics and I thought that in the evidence this morning it was quite well stated that the ANEF is an imperfect tool.

So we are looking at the possibility o f additional metrics or improving the system and we would then look at the processes relating to putting those in place.

2.97 AMAC is supportive of the ANEF metric being partnered with other metrics to provide a clearer understanding of the impacts of aircraft noise for the purposes of development on and adjacent to airports. Mr John Patterson, Project Manager, AMAC, told the committee that AMAC has been a long-term critic of ANEF as a

standalone metric in assessing noise impacts. He also agreed that by simply validating the data provided in ANEF forecasts, Airservices Australia is left open to criticism that there is no independent review of the process. 101 Mr Patterson expressed the view that as the Minister for Infrastructure and Transport is responsible for approving the master plan, there should be resources to verify the assumptions in the plan within the

Minister's department. 102

99 Rural Affairs and Transport Legislation Committee, Committee Hansard, pp. 2-3.

100 Mr Aaron Gadiel, Chief Executive, Urban Taskforce Australia, Committee Hansard, pp. 1-2.

101 Rural Affairs and Transport Committee, Committee Hansard, p. 24.

102 Rural Affairs and Transport Committee, Committee Hansard, p. 25.

Page 36

2.98 Mr Doherty told the committee that this is a contested issue as there is a significant amount of pressure around the country in continuing to develop in areas which have a degree of aircraft noise. He said that while the Working Group is trying to move its work forward, they have not yet reached a point where amendments to

legislation could be drafted. 103

Conclusion

2.99 The committee recognises that the planning regime for developments on airport land has been in need of significant reform for some time. The public has a right to better information and consultation with regard to airport development, particularly the impact of such developments on neighbouring communities. This has

been sadly lacking in the past and, as a result, developments on and around airport land have frequently been the focus of significant contention and acrimony.

2.100 At the same time airports are essential community infrastructure and contribute significantly to the economies of their surrounding local community, state and to the nation. It is essential that planning in and around airports is a cooperative

exercise between all tiers of government so as not to compromise that contribution in the long term.

2.101 The committee notes that there is a broad level of support for many of the changes to be implemented by this bill. At the same time, the committee also notes the concerns regarding, on the one hand the potential regulatory burden imposed by these amendments and on the other hand concerns that the bill affords too much flexibility and discretion. The committee recognises the intent of the bill is to balance the needs of all parties to ensure effective community consultation, the integration of airport planning with local, state and territory planning regimes and ongoing investment in

aviation infrastructure. The committee considers that the bill appears to achieve this balance.

C o n su lta tive m e c h a n ism s

2.102 The committee welcomes the provision for greater information regarding airport planning and developments and the establishment of Community Aviation Consultation Groups and Planning Coordination Forums. The committee observed during its previous inquiry into management of aircraft noise the benefits to all parties

when changes on airport land are adequately communicated to the communities who will be impacted by them.

2.103 The committee notes the concerns raised during this inquiry regarding the need for consultative mechanisms to be mandated in the legislation. The committee also notes that, in the event that the government's expectations regarding consultation are not met, it could move to prescribe consultation measures in the future.

103 Rural Affairs and Transport Committee, Committee Hansard, p. 37.

246

____________________________________________________________________________ Page 37

E x p a n d e d m a ster p la n re q u ire m e n ts

2.104 The committee notes the broad support for the requirements for greater detail and analysis in airport master plans, particularly the requirements for the inclusion of a ground transport plan, the identification of proposed non-aeronautical developments and the need to align developments on airport land with state, territory and local government planning laws. However, the committee notes from the evidence received that there is a need for clarification of the level of detail and analysis required.

2.105 The committee considers that clear guidelines are needed to enunciate the expectations placed on airport lessees and to safeguard the interests of all parties to the airport planning process. The committee believes that such clarity is essential to ensure that the cost burden of the expanded requirements is realistic.

Recommendation 1

2.106 The committee recommends that the Department of Infrastructure and Transport develop guidelines in consultation with key stakeholders to clarify the level of detail and analysis to be included in airport master plans in order to satisfy the requirements set out in paragraph 71(2)(h) and 71(3)(h) of the Airports Amendment Bill 2010.

In co m p a tib le d e v e lo p m e n ts I.

2.107 The committee concurs that given that the primary purpose of an airport is the provision of aeronautical services, there are a range of activities that may potentially be at odds with the long-term operation of an airport. The committee supports the intention of the bill that such developments should only be permitted in exceptional circumstances and should be subject to a greater level of scrutiny if they are to proceed.

2.108 However, the committee acknowledges the concerns raised by individual airport operators and by the AAA with regard to these provisions as currently drafted. The committee accepts the argument that proposals for the kinds of projects identified in section 71A should be considered on their individual merit and that this may be compromised by the use of the term "incompatible". The committee notes that there is nothing inherently incompatible about the developments listed and considers that it is really a question of considering the particular circumstances of each such proposal on a case by case basis. In this context the committee is mindful of the concerns raised regarding the Southern Cross University development at the Gold Coast Airport.

2.109 The committee is also persuaded that greater clarity is required regarding the range of developments caught by these amendments. The committee also considers that the introduction of a prima facie prohibition on such projects, coupled with a mechanism for waiving the prohibition, does appear to send a confused message to the community. As a number of submitters have observed, the provisions as currently drafted risk placing consultation around such developments on an unnecessarily adversarial footing.

Page 38_____________________________ ________ _________________ _________ _________________ ■

2.110 The committee welcomes the Minister's in-principle agreement to ^ an amendment to clarify the scope of what constitutes 'other educational institution' in proposed section 71A of the bill.

C h an ges to m a jo r d e v e lo p m e n t p la n r e q u ire m e n ts

2.111 The committee recognises the government's intention to balance the expanded requirements of the master plan process with amendments to streamline development applications in certain circumstances. While the committee notes there is support for the intent of these amendments, further consideration needs to be given to their practical implementation. The committee acknowledges that uncertainty around the interpretation of the provisions as currently drafted has the potential to flow-on to investment confidence. This, together with the costs associated with undertaking major development plans in circumstances where they are not warranted, will

inevitably have some impact on the regulatory costs faced by airport lessees.

2.112 The committee therefore welcomes the Minister's in-principle agreement to amend Item 40 of the bill in relation to the requirement for alterations to a runway to undergo a major development plan to clarify that routine maintenance works are not captured by this provision. The committee also welcomes the Department's advice that consideration is being given to the introduction of a materiality test to provide that only a mnway alteration that significantly changes flight paths or the patterns or levels of aircraft noise will require a major development plan.

2.113 The committee is also pleased to note the Minister's in-principle agreement to an amendment to the bill removing the requirement in new section 89(5) that a proposed development would not 'increase the operating capacity of the airport'.

C o n su ltation on d r a ft b ill

2.114 The committee recognises that the policy positions which underpin these legislative amendments were developed after lengthy consultation during the National Aviation Policy Green and White Paper process. The committee therefore understands the view that further consultation on an exposure draft was not warranted. However, the committee also agrees that many of the concerns raised during this inquiry in

relation to the need for clarification and finetuning of the bill may have been avoided had there been consultation on an exposure draft. The committee welcomes the Minister s in-principle agreement to the drafting of a small number of amendments to the bill to clarify its operation and to avoid unintended consequences. However, the

committee considers that the preferable situation would have been for these drafting inconsistencies to have been identified and clarified in consultation with key stakeholders prior to the bill s introduction into the parliament.

Recommendation 2

2.115 The committee recommends that, subject to the amendments foreshadowed by the Department of Infrastructure and Transport in correspondence to the committee dated 15 November 2010, the bill be passed.

248

Senator Glenn Sterle

Chair

— ■ ---------------------------- —

250

Additional com m ents by Coalition Senators

1.1 Coalition Senators do not oppose the passage of this bill. Coalition Senators welcome the initiatives that are given expression in this bill as an important step toward greater coordination and transparency in relation to development on airport land. However, Coalition Senators are concerned at the lack of clarity in the drafting

of many of the provisions in the bill.

1.2 Coalition Senators note that this bill seeks to respond to concerns raised during the National Aviation Policy White Paper regarding the often poor consultation and engagement with communities regarding on-airport developments and the need for better integration of on-airport and off-airport planning. The policy intent is that the desire to address these concerns should be balanced against the need for ongoing

infrastructure investment on airport land so as not to compromise the operation or viability of these important national and community assets.

1.3 Coalition Senators are aware that this policy is the product of extensive consultation throughout the National Aviation Policy Green Paper and White Paper process and, as a result, is broadly supported by a wide range of key stakeholders.

1.4 Coalition Senators therefore consider that it is extremely disappointing that the bill as currently drafted appears to add a new level of uncertainty around these two key issues of community consultation and transparent and integrated planning. Coalition Senators consider it is regrettable that an exposure draft of the bill was not circulated for comment before the bill was introduced into the Parliament. Had this been done, Coalition Senators are confident that most of the concerns raised during this inquiry would have been resolved. Coalition Senators acknowledge the Minister's

in-principle agreement to make a small number of amendments to the bill and agree that these appear to address some of the issues raised during this inquiry. However Coalition Senators note that these amendments have not been presented for the consideration by this committee prior to the tabling of this report. Similarly, while Coalition Senators note that guidelines are foreshadowed in respect of certain provisions of the bill, these have yet to be drafted and are unlikely to be prior to the passage of the Bill.

Expanded master plan requirements

1.5 Coalition Senators welcome the requirements for greater detail in airport master plans. At the same time, Coalition Senators note the concerns raised by a number of submitters regarding the lack of clarity around the level of detail and analysis that must be provided in order to satisfy the expanded requirements set out in the bill. Coalition Senators recognise that a lack of clarity may result in uncertainty, unrealistic requirements, and increased costs for airport lessees.

1 .6 In particular, Coalition Senators note the concern expressed by airport lessees regarding the extent to which they will need to rely on the cooperation of state and

251

territory governments with regard to transport infrastructure planning and projects. For example, Sydney Airport Corporation Limited (SACL) told the committee that while it sees merit in the preparation of a ground transport plan, the provisions as currently drafted would require the airport to obtain details about how and when off- airport road and public transport infrastructure and services will be provided .SACL

is concerned that a state government may be unwilling or unable to provide an off- airport road network or public transport system that is adequate to accommodate the growth in aviation activity at an airport and that this unwillingness could be

interpreted in such a way as to prejudice final approval of the master plan."

1.7 Coalition Senators concur that the extent to which the approval of master plans may be delayed or compromised as a result of third party actions should be clarified. If an airport of the size and economic impact of Sydney Airport lacks confidence in the ability of the state government to meet the needs of the airport and

the travelling public, Coalition Senators are concerned that smaller airports may face an unreasonable challenge in influencing an appropriate level of integration between off-airport and on-airport transport infrastructure . 3 While Coalition Senators consider that there should be an effective and ongoing dialogue between airport lessees and all

levels of government in regard to the coordination of transport infrastructure, airport lessees should not be penalised for circumstances that are outside their control.

1.8 Coalition Senators agree with the report's finding that clear guidelines are required to clarify the expectations placed on airport lessees by paragraph 71(2) (h) and 71 (3)(h) of the bill. Coalition Senators support the report's recommendation that the Department of Infrastructure and Transport should develop guidelines. Coalition

Senators are not only of the view that such guidelines should be developed in consultation with key stakeholders, but also consider that the guidelines should be tabled in the parliament to allow the parliament an appropriate opportunity to satisfy itself that these concerns have been adequately addressed.

Recommendation 1

1.9 Coalition Senators recommend that the Department of Infrastructure and Transport develop guidelines in consultation with key stakeholders to clarify the level of detail and analysis to be included in airport master plans in order to satisfy the requirements set out in paragraph 71(2)(h) and 71(3)(h) of the

Airpoits Amendment Bill 2010. For the avoidance of doubt, such guidelines should be registered on the Federal Register of Legislative Instruments and subject to the tabling and disallowance requirements of the L e g isla tiv e In stru m en ts A c t 200 3 .

Page 42______ ___________ _____________________________ _____________ ______________________

Sydney Airport Corporation Limited, Submission 13, p. 5.

Sydney Airport Corporation Limited, Submission 13, p. 6.

Sydney Airport Corporation Limited, Submission 13, pp 6.

252

Expanded major development plan requirements

1.10 Coalition Senators also welcome the amendments in this bill designed to enable public consultation for all developments on airport land that will impact on surrounding areas. Coalition Senators consider that these amendments should address a key cause of concern for those communities. However, Coalition Senators are concerned that the threshold test of 'significant impact' in paragraph 89(l)(n) lacks precision.

1.11 Coalition Senators note that there is broad agreement across submitters to this inquiry that the questions set out in the Explanatory Memorandum to the bill to assist in determining if a proposed development is likely to have a significant impact on the local or regional community are too vague and open to effectively aid interpretation. Coalition Senators consider that this is another instance where clear guidelines are necessary to provide certainty to airport lessees and members of the community alike. Coalition Senators also consider that such guidelines should be tabled in the parliament to allow for an appropriate level of parliamentary scrutiny.

Recommendation 2

1.12 Coalition Senators recommend that the Department of Infrastructure and Transport develop guidelines in consultation with key stakeholders to clarify the range of developments that may be considered to be of a kind that is likely to have a significant impact on the local or regional community for the purposes of paragraph 89(l)(n) of the Airports Amendment Bill 2010. For the avoidance of doubt, such guidelines should be registered on the Federal Register of Legislative

Instruments and subject to the tabling and disallowance requirements of the Legislative Instruments Act 2003.

Page 43

Consultative mechanisms

1.13 Coalition Senators welcome the provision for greater engagement between the community and all levels of government around airport planning and development. In particular, Coalition Senators welcome the establishment of Community Aviation Consultation Groups and Planning Coordination Forums.

1.14 Coalition Senators understand the Government's preference to allow flexibility, in the first instance, for these consultation forums to be tailored to the particular circumstances of the parties involved. However, Coalition Senators also recognise the significant concerns raised during this inquiry that, unless these

consultative mechanisms are established on a more formal footing, there is a risk that they will not work to create the ongoing dialogue between the various parties that the Government envisages. In particular Coalition Senators note the concerns raised by a number of submitters that the structure, composition, agenda and reporting requirements of these forums should be spelt out either in legislation or regulations. Coalition Senators note that the Department of Infrastructure and Transport intends to

Page 44

recommend that the Minister issue guidelines relating to the establishment of the consultation groups. Coalition Senators strongly support such a recommendation and consider that such guidelines should be developed in consultation with key stakeholders and subject to parliamentary scrutiny.

Recommendation 3

1.15 Coalition Senators recommend that the Department of Infrastructure and Transport develop guidelines in consultation with key stakeholders to clarify the structure, composition, agenda and reporting requirements of Community Aviation Consultation Groups and of Planning Coordination Forums. For the avoidance of doubt, such guidelines should be registered on the Federal Register of Legislative Instruments and subject to the tabling and disallowance requirements of the L e g is la tiv e I n s tr u m e n ts A c t 2 0 0 3 .

Senator Chris Back Senator Julian McGauran

254

APPENDIX 1 Submissions Received

Submission Number Submitter

1 Essendon Airport Pty Ltd 2 City of Kingston 3 Townsville City Council 4 City of Belmont

5 City of Armadale 6 South West Group 7 City of Moonee Valley 8 Canberra Airport

9 Australian Mayoral Aviation Council (AMAC) 10 Hobart International Airport Pty Ltd 11 Sydney Metro Airports - Bankstown and Camden 12 City of Perth 13 Sydney Airport Corporation Limited (SACL) 14 Adelaide and Parafield Airports 15 Australian Airports Association (AAA) 16 Queensland Airports Limited (QAL)

17 Camden Council 18 Australian Local Government Association (ALGA) 19 Brisbane Airport Corporation Pty Ltd (BAC)

20 Perth Airports Municipalities Group (PAMG) 21 City of Cockbum 22 NT Government Department of Lands and Planning 23 Southern Sydney Regional Organisation of Councils (SSROC)

24 City of Melville 25 WA Government Department of Planning 26 WA Government Department of Local Government

27 Bankstown City Council 28 Mr Andrew Barr MLA 29 Urban Taskforce Australia 30 Australia Pacific Airports Corporation

31 Mr Matt Mushalik 32 Tourism & Transport Forum (TTF)

33 Qantas Airways

34 Professor Robert Freestone, University of New South Wales

Page 46

Additional Inform ation Received

• Received on 3 November 2010, from Mr Chris Fitzhardinge, South West Group. WA Infrastructure report card links requested by the committee on 3 November 2010;

• Received on 8 November 2010, from Australian Airports Association (AAA). Answers to Questions taken on Notice on 3 November 2010;

• Received on 11 November 2010, from the Department of Infrastructure and Transport. Answer to questions taken on Notice on 3 November 2010;

• Received on 15 November 2010, from the Department of Infrastructure and I ransport. Information on the Department's response to comments made by airports at the 3 November 2 0 1 0 hearing.

256

APPENDIX 2

Public Hearings and Witnesses

WEDNESDAY, 3 NOVEMBER 2010 - CANBERRA

• BERESFORD-WYLIE, Mr Adrian, Chief Executive, Australian Local Government Association • DOHERTY, Mr John Robert, Executive Director, Aviation and Airports, Department of Infrastructure and Transport • FITZHARDINGE, Mr Christopher Berkeley, Director,

South West Group • GADIEL, Mr Sean Aaron, Chief Executive Officer, Urban Taskforce Australia • KEECH, Mr Ken, Retiring Executive Director,

Australian Airports Association • KEENAN, Ms Elissa, General Manager Corporate Affairs, Queensland Airports Ltd • McARDLE, Mr John Patrick, Chairman,

Australian Airports Association • McCANN, Ms Kathryn, General Manager Business Development, Hobart International Airport Pty Ltd • PARRY, Mr Rod, General Manager Operations and Planning,

Hobart International Airport Pty Ltd • PATTERSON, Mr John, Project Manager, Australian Mayoral Aviation Council • REISS, Mr Brett, Chief Executive Officer,

Hobart International Airport Pty Ltd • RIJS, Mr Anthony, General Manager, Environmental Sustainability, City of Kingston • SKEHILL, Mr Stephen, Legal Adviser,

Australian Airports Association • TUCKER, Mrs Marlene, Director, Legislative Reforms Section, Airports Branch, Department of Infrastructure and Transport • WILKIE, Miss Caroline, Executive Director,

Australian Airports Association • WILLEY, Mr Mark, Executive Manager Airport Planning, Brisbane Airport Corporation • WOODRUFF, Mr Chris, Chief Executive Officer,

Australia Pacific Airports Corporation

Page48-----------

'

■

258

T H E P A R L IA M E N T O F T H E

C O M M O N W E A L T H O F A U S T R A L IA

PARLIAMENTARY PAPER No. 396 of 2010 O R D E R E D T O BE P R IN T E D

IS S N 0727-4181