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Legislative arrangements to outlaw serious and organised crime groups

CHAIR —I welcome representatives from the Australian Federal Police, Ms Mandy Newton and Mr Tim Morris. I understand you are going to make a brief opening statement and we will then go in camera.

Assistant Commissioner Morris— Firstly, I would like to apologise on behalf of Commissioner Keelty, who is unable to appear today. Ms Mandy Newton and I, as you have heard, are in charge of the Border and International, and Economic and Special Operations portfolios. We welcome the opportunity to appear before the committee and express strong support for the continued monitoring, assessment and development of law enforcement models to ensure that the issue of serious and organised crime is being targeted in the most effective manner and with the most appropriate tools. The criminal environment in Australia is robust and dynamic and we cannot afford to be complacent. We would also like to note that the AFP contributed to the written submission by the Attorney-General’s Department to this inquiry and this submission reflects the primary role of the department in relation to the Commonwealth’s legislation framework.

I will briefly introduce the role of the AFP in the context of this inquiry. The AFP’s responsibilities are legislated under the AFP Act and further detailed in directions issued by the Minister for Home Affairs under the provisions of the act. Under this framework the AFP focuses on transnational crime; international policing; capability building; large-scale fraud and money laundering; key infrastructure, including airports; protection policing and counterterrorism. The AFP has a clear ministerial direction priority to prevent, deter, disrupt and investigate serious and organised crime as well as broader responsibilities relating to community policing, national and international law enforcement, and overseas peacekeeping. The AFP actively monitors its operational and strategic developments in all these areas through dedicated intelligence assessments and more forward-looking environmental scanning.

Organised crime groups continue to be largely motivated by financial gain and exploit vulnerabilities in areas ranging from drug trafficking, to exploiting false and stolen identities and personal information, to large-scale and sophisticated tax fraud and abuse of the complex financial systems. The AFP is focused on targeting the financial basis of criminality. Recent and current enhancements to the proceeds of crime legislation and related legislation provide a robust foundation for this work. The other major crime type that is impacting on Australian society is the increased prominence of terrorism—a criminal activity with very different motivations.

Australia’s criminal environment is dynamic. Criminal groups have proven they are able to adapt to the challenges and adopt new operating models as society develops and law enforcement impacts on criminal behaviour. The AFP’s scanning work suggests that organised crime groups will continue to exploit society’s increasing uptake of technology and the opportunities it provides to make their operations more efficient and secure as well as for the abuse of victims. Technology will continue to enable criminals to conduct existing crimes such as child abuse, pornography and identification crimes in new ways whilst creating new crimes such as hacking.

Preventing crime offshore, before it has an opportunity to harm Australian society, will remain a major focus of the Australian Federal Police. It is also important to note that significant policing efforts in the international deployment group and airport uniform policing also play a role. Robust governance and law enforcement systems in both these initiatives introduced into the region will reduce organised crime opportunities to exploit offshore locations and major transport hubs.

The AFP currently has a broad range of investigative tools available for the investigation of Commonwealth criminal offences. The seriousness of the offence is often a trigger for the use of more intrusive tools. The AFP is able to utilise search warrants, telecommunication interceptions, surveillance devices, controlled operations and assumed identities to investigate serious and organised crime. Further, the AFP has a witness protection program and is able to pursue the proceeds of crime to assist in dismantling and deterring criminal groups and syndicates. Specific tools are being progressed through government policy processes to the satisfaction of the AFP.

The AFP can also access the ACC’s coercive powers and has recently dedicated more resources to improving the identification of potential opportunities for this to occur. The submission from the Attorney-General’s Department noted that legislation specifically targeting serious and organised crime groups is only one of the possible approaches to combating such groups. Intelligence, investigative and operational capabilities, and collaboration both nationally and internationally remain vital to addressing criminal networks.

One area that presents particular legislative, technological and cultural challenges is that of sharing information. It is important that developments or new approaches in this area address the operational complexities of these issues, including critical differences between criminal histories, law enforcement intelligence and national security intelligence. The AFP has been actively assessing the implications of technology on AFP activities and its operating environment. This has involved a comprehensive working group study on technology enabled crime. In response, the AFP has created a specific AFP portfolio to address this issue. It is important that further advances in technology that impact on crime, and our responses that require legislative reform, be dealt with as expeditiously as possible. The lag time between the identification of operational issues and the finalisation of legislative issues continues to remain challenging.

As the committee would appreciate, there are many difficulties in measuring exactly what impact any agency, including the AFP, can make on the criminal environment. A range of qualitative performance indicators can be drawn upon, such as arrests, convictions, seizures and crime rates et cetera, to prove and increase the results and consequent successes or failures. The AFP has worked hard to develop clear reporting models, such as the drug harm index, which generally takes analysis of trends over some period of time to provide any real clarity on the efficiency of given approaches. The development of performance measure frameworks that do this are clearly illustrative of the benefits of investment in this area and will be pursued. The AFP can refer to very clear case studies of recent operational successes under Operation Wickenby, which targeted high-level tax fraud and money laundering, prevented large and increasingly significant amounts of illicit drugs from reaching our shores and streets and dismantled one of the most insidious networks creating and distributing child pornography.

Some commentators may contend that new legislation and powers targeting terrorist activity and additional police resourcing are inconsistent with the likelihood of any direct attack on Australia. However, it is important to note the massive potential impact on Australia social, political and economic systems such an attack may result in. It does not need to be stressed that access to intrusive powers must balance the benefit of potential prosecution or deterrents effect with the resources required for adherence to extremely rigorous accountability and prosecution processes—an intense scrutiny leading sometimes to criticisms, distractions and diversion of critical resources. The AFP will continue to support a firm legislative approach where necessary that enables a flexible but transparent and accountable law enforcement model. The deterrent value or sense of security in society is an approach which serves as a clear disincentive to criminals or potential criminals and cannot always be well measured or reflected in reporting.

In conclusion, the AFP will continue to monitor and analyse national and international developments and new approaches to serious and organised crime, both of the legislative and wider nature, and pursue and implement those strategies where there is clear evidence that they will work. The AFP has been a major supporter of the work undertaken by Dr Schloenhardt in analysing legislative models and their impact on serious and organised crime. It is extremely important to recognise that law enforcement powers are only one aspect of approaching the crime problem, and addressing overall harm requires a more holistic approach. Any new legislative approaches would need to recognise what is and what is not working well now, including a possible deterrent value, and be balanced with the realities of actually achieving prosecutions, which are considered by many as a key indicator of law enforcement performance. For some time the AFP has held the motto ‘To fight crime together and win.’ The AFP will continue to actively engage with partners to ensure a comprehensive approach to preventing and investigating criminal activity and protecting Australians.

CHAIR —Thank you.

Evidence was then taken in camera—

Proceedings suspended from 10.09 am to 10.50 am

Mr HAYES —Earlier we were talking about proceeds of crime legislation and how it applies throughout the Commonwealth. Having regard to the fact that even using proceeds of crime legislation is effectively attacking the business model of crime—reducing the profit et cetera—I am particularly interested in how important it would be for us as a nation to have consistent legislation dealing with unexplained wealth. Would that be a significant net addition to the tools for fighting serious and organised crime in this country?

Assistant Commissioner Newton —Can I say that the AFP would always support consistent legislative arrangements across the country with regard to most crime types because it gives the ability for all jurisdictions to operate complementary arrangements around any type of investigation being undertaken. I think what we do is learn by whose provisions are the most suitable and achieve the best outcome. Over recent years police jurisdictions and ministers have worked very closely together to get that consistency in delivery of legislation.

Mr HAYES —They have not done so well of late. I would imagine that in a number of your joint investigations with state and territory police jurisdictions there would be a call made about what you rely upon. For instance, if you are involved in a joint jurisdictional investigation with either Western Australia or the Northern Territory, I imagine you would use the unexplained wealth legislation as it applies in that state or territory.

Assistant Commissioner Newton —Certainly we use the most applicable legislation to the type of crime that has occurred. In determining the prosecution process and whether or not it is a Commonwealth or state prosecution, the AFP and state jurisdictions are very cognisant of the necessity to look at all legislation and the most appropriate legislation to make charges with. What you may tend to find in our aviation responsibilities, whereby every day we are applying both Commonwealth legislation and state jurisdictional legislation, is that we will have charges that we put forward before the court that are of both a Commonwealth and state nature because there might be five or six different types of offences that have been committed that fall under both legislative requirements.

Mr HAYES —In the opening statement, Assistant Commissioner Morris commented on the fact that one of the things that the AFP are consistently doing is reviewing the effectiveness of legislation as it applies throughout the Commonwealth, whether it be Commonwealth or state or territory based legislation, in assisting to combat serious and organised crime. I am not aware of any particular recommendations that have been made by the AFP in respect of that. Maybe this committee would not be privy to that. What vehicles does the AFP use to recommend changes that would bring about model legislation in those areas?

Assistant Commissioner Morris —Essentially, we go through the Commonwealth Attorney-General’s Department as our primary interlocutor in terms of making recommendations for legislative reform. We are at an interesting time right now in that there are series, both overseas and domestically, of novel or innovative pieces of legislation which offer new approaches to serious and organised crime. We are watching those very closely to see if there is a wider applicability. But our judgement is that for many of them—the legislation in South Australia and the Serious Organised Crime Agency legislation in the UK—it is a little bit too early to make a decision on whether they are effective or not. You would really need two or three years—

CHAIR —Is the UK one the one you are specifically referring to?

Assistant Commissioner Morris —That is right.

CHAIR —Are there any others?

Assistant Commissioner Morris —South Australia has legislation, as well. It has not actually been utilised yet. I think they have had it for three or four months but they have not yet used that legislation.

Mr HAYES —Can I just pause you there. You said that information is fed through the AG’s department.

Assistant Commissioner Morris —That is right.

Mr HAYES —If we wanted to seek your specific recommendations as the Australian Federal Police, being a premier law enforcement agency, about what would be the most contemporary tools necessary to fight serious and organised crime, I do not think we would necessarily want that filtered through other agencies or, with due respect, through the AG’s either. I think we would want to hear from our top cops in that respect.

Assistant Commissioner Morris —I could think immediately of two things—that is, firstly, to provide anything that would assist in harmonising the transfer of information across jurisdictions in Australia; secondly, to revisit, seriously, the unexplained wealth provisions that were originally looked at, I think, in the Sherman report in 2006. I am not sure whether the government has responded to the Sherman report. I think it is up to a place in the process whether the government is yet to make a response.

Mr HAYES —I know the police have not made a specific comment on the Sherman report, put it that way.

Assistant Commissioner Morris —We would be keen to revisit the provisions about unexplained wealth—not dissimilar to Western Australia and New South Wales—and perhaps see their applicability in the Commonwealth arena.

Mr HAYES —I am not going to seek to embarrass anyone in terms of the legislation in South Australia—that is a separate jurisdiction—although I get a bit tired of the ‘let’s suck it and see’ routine we get from everyone who comes before us in terms of law enforcement. I have a general feel for the fact that we cannot get our top law enforcement agencies all around the table—as we do, by the way when they sit on the ACC—and get a real view as to what are the best and most contemporary tools necessary for fighting serious and organised crime. It does annoy me when individual jurisdictions think, ‘We’ll just take one of these things out and everyone else will simply wait and see what happens with that.’ Surely that approach is simply creating legislative gaps in our armoury for fighting serious and organised crime. I am not saying anything derogatory about the legislation, but the one-out aspects of it.

Assistant Commissioner Newton —We tend to find quite often, working at the Commonwealth level, that a lot of the tools that we require, and the methodologies utilised by criminal networks, sit in the international arena, and the Commonwealth government agencies regularly discuss issues associated with how we can close the gaps. We do that in conjunction with state and territory police jurisdictions, but sometimes in dealing with what comes up in front of your face—perhaps outlaw motorcycle gangs and community concern with regard to groups like that—you find that the tools that are required are a little bit different. The technology associated with our high tech crime operations cannot necessarily be sustained in smaller jurisdictions. So the AFP are very keen to continue working on ensuring that our legislative tools are effective in fighting the criminal activities and the methodologies as they change and shift—because once we have a capability they find out we have the capability and they come up with a new methodology. What we see in terms of dealing with legislation specific to organised crime groups is that those crime groups shift and change on a regular basis based on the community or the demand at the time. So it will ebb and flow, create and recreate itself, according to the particular jobs that we might be dealing with. So demand is slightly different and that might be why you see some differences of view from time to time about the priorities.

Mr HAYES —Having regard to our terms of reference in respect of serious and organised crime, would it be right to say that we should be cognisant as to legislation that not only is being proposed in this country but is being applied elsewhere, particularly in the UK in SOCA, to a lesser extent in Canada with its RICO legislation and in the tax regime in Ireland, for instance?

Assistant Commissioner Newton —What I could say is that we have a person placed at SOCA and a member of SOCA placed in the Australian Federal Police as well. We work very closely together and have joint groups that come together on a regular basis across the world to discuss new technologies, new crimes and internet related or non-financial-transaction types of crimes and how we counter those, including legislation across countries, and we monitor each other’s successes in those areas. Mr Morris might want to comment in terms of our international liaison officer network that is linked into that.

Assistant Commissioner Morris —That is exactly right. Besides predominately working on operational matters, part of their brief is the strategic engagement with like-minded agencies. That does include monitoring legislation and novel approaches to serious and organised crime. I understand the committee has received information on the British approach. It is quite innovative and quite novel, but from where we sit the jury is still out on whether this will actually work. As I alluded to previously, in a lot of our crime key players are based offshore. They will never come near Australia. So some of those models really would have limited applicability in the Australian context. That is why we look at them closely. If we can pick out the good bits that we think might have some sort of applicability and relevance to Australia, we will be the first to do it, but they are complex pieces of legislation. I sometimes wonder how much extra resource would need to go in to monitoring some of these pieces of legislation. We have a finite resource in the Australian Federal Police and in most law enforcement agencies. There would have to be a very careful calibration between the expected benefit and the resource that you would put into the back end to get the benefit.

CHAIR —We have come to 11 o’clock, but a number of committee members have questions, some that we need to have on the record. Senator Parry.

Senator PARRY —Assistant Commissioner Morris, that was a nice segue into my question. Assistant Commissioner Newton, without mentioning specifics and numbers, during the in camera session we discussed the New South Wales Crime Commission and their return with proceeds of crime and the Commonwealth return on proceeds of crime. Would you elaborate on the reasons why the dollar value appears lower with the Commonwealth than it does with a smaller entity like the New South Wales Crime Commission.

Assistant Commissioner Newton —With regard to one particular Wickenby investigation, it was determined that the New South Wales Crime Commission was the most appropriate group in the investigation to restrain money, so $47.286 million was restrained by the New South Wales Crime Commission. For the Australian Federal Police, our results were in excess of $2.4 million in proceeds of crime being forfeited for the 2008 period and $11.3 million in taxation assessment of the penalties. I think the overriding issue here is that agencies work together to identify the best way to either restrain assets or use the taxation system as the predominant, most effective way of addressing tax related fraud.

Senator PARRY —Thank you. Would you like to comment on the legislative provisions of the New South Wales Crime Commission legislation in the sense that that is broader and enables a greater collection, if you like, of proceeds of crime.

Assistant Commissioner Newton —Can I say that the legislation that the New South Wales Crime Commission utilises is a little more flexible in being able to restrain assets than what we currently have to be utilised by the Australia Federal Police. The Australian Federal Police have brought that to the attention of the Attorney-General’s Department in terms of what we would like to move forward with in the future through amendments to legislation.

Senator PARRY —A final question: does the AFP or the Commonwealth get any direct benefit from a share in any of the $47-odd million that you mentioned?

Assistant Commissioner Newton —It has been acknowledged that there will be a share that should go to the Commonwealth. It is yet to be finalised—

Senator PARRY —It is not a one for me, one for you sort of thing, is it?

Assistant Commissioner Newton —It just depends on the circumstances of a particular job and who has a predominant investigative role in that job. In this instance it is quite clear that, firstly, the finalisation of the court proceedings have to be completed and, secondly, a determination as to how best that is split between agencies or jurisdictions.

Senator POLLEY —In relation to the outlawed motorcycle gangs—you may have been in the room earlier—we have had varying degrees of evidence in relation to their involvement in organised crime. I was wondering if you could give your view in relation to outlawed motorcycle gangs in this country, and to what extent do they pose a threat through organised crime?

Assistant Commissioner Morris —From the Australian Federal Police perspective their activities to date have predominantly come into light more in the state jurisdictions in terms of drug manufacturing, supply and trafficking, which are all state offences, whether it is intimidation, murder and so on. We have participated in outlawed motorcycle gang task forces and contributed to the intelligence collection plans in that regard.

The major shift that we have seen is that as domestic legislation to block the supply of pseudoephedrine—the main chemical precursor to the clandestine laboratory industry—has become effective we have seen groups involved in that manufacture look offshore to import chemical precursors such as pseudoephedrine. From that we have seen elements of outlawed motorcycle gangs travelling overseas to make those connections or a second group of narcotic entrepreneurs who have seen that there is a need and then go and source these drugs. They are available in any country with a pharmaceutical industry and are quite easy to obtain. They then fill a market need in terms of importing chemical precursors into Australia on behalf of the groups that are involved in these clandestine laboratories.

We have also started to see a very small element of the outlawed motorcycle gangs becoming corporatised and using more sophisticated business structures in their transactions. That is an area where we are moving forward with the ACC and our state counterparts. In the main, it has traditionally been within the state law enforcement jurisdictions and coordinated by the ACC, but we are starting to see a subtle but significant shift into the jurisdiction of the Commonwealth.

Senator POLLEY —In your evidence you suggested that a serious threat comes from international syndicates in relation to organised crime here. But there is organised crime that operates solely within the Commonwealth of Australia. Can you give us an overview as to the sort of crime that is involved there?

Assistant Commissioner Morris —Certainly. Obviously we are interested in the ones that fall within the Commonwealth jurisdiction primarily, but it is not always clear-cut. Traditionally in Australia a lot of organised crime was based on ethnic lines. Particular groups would stay largely within those ethnic groups to conduct their crime, whether it was with an international flavour or with a domestic flavour.

The interesting trend that we are seeing now is that that is breaking down and breaking down rather quickly. The groups are more business driven and will enter into quick and ready partnerships with whoever may be able to do the type of crime business that they need to do. So the traditional models—and we have seen it in the past in documents categorising crime groups along strict ethnic lines—are becoming less and less relevant and are becoming more and more flexible. People are shifting around very, very quickly and flexibly into the most profitable crime types they can find.

Senator POLLEY —So, in relation to the number of targets and operations that can be run, , from the criminal’s point of view in our country, realistically, it is like spinning the roulette wheel; the chances of being caught are diminished because of lack of resources, sophistication and equipment. Would that be correct?

Assistant Commissioner Morris —We are identifying and catching people. I think the two challenges are these: one is that coordination across the federation will always remain a challenge that we have to keep working on, and the second is that the profits are so huge and so lucrative that people will take the risk continually. They are too big to ignore, so we are always going to have players willing to inject themselves into the market no matter what the risk. So I think the ultimate, if you like, endgame for us is to make the Australian market one of the more risky in the world to deal in, so that people will perhaps look at other markets than Australia—this is from an international perspective—to do their business and make their money in.

Senator POLLEY —This is my final question; I am very conscious of the time. I would have to say that it does not matter which level of law enforcement in this country comes before this committee. They all say the same, and you have just said the same thing: there is a challenge in having uniform legislation across this country. I say that to me that is an unacceptable situation considering that the population of the country and the number of states and territories involved is very small if you look at the comparison with Europe or the US. Surely there has to be within this country the will at the senior level to ensure that it happens. It is not just about passing legislation through parliaments; it is also the law enforcement agencies themselves. Have you got a response?

Assistant Commissioner Morris —That is quite right. It is both. It is having the legislation to work with on that common basis, and then it is the responsibility of the operating agencies to make the relevant provisions to then work to that legislation—to exchange the intelligence, to be flexible and to be proactive, not reactive. Absolutely.

Mr WOOD —What budget cuts has the AFP incurred, and how has that affected tackling serious and organised crime?

Assistant Commissioner Newton —In terms of the efficiency dividends that the AFP, like all other government agencies, has had to deal with we are in a position no different from that of any other government agency across the Commonwealth. In terms of our funding arrangements, we have had new policy proposals that have been funded, which allows the AFP to undertake work that is very specific to those funding arrangements that we have, such as Project Wickenby. The AFP, of course, is receiving 500 additional police over a period of five years. The intention with those police is to fall back into what has been classed as our core traditional business in areas like fraud and economic crime as well as drug investigations and also the impacts of counterterrorism. So the AFP has to continually pay the costs associated with our staff cost increases, as well as CPI increases, so it is a constant balance for the organisation moving forward in how we best utilise the resources that we have, acknowledging that a large component of the Australian Federal Police’s funding is specific to national policy proposals and funding arrangements that we cannot shift to other capabilities that we perform.

Mr WOOD —What was the efficiency cut? Was it three per cent?

Assistant Commissioner Newton —An additional two per cent, plus 1.25 per cent, which is the normal efficiency dividend.

Mr WOOD —Did that have an effect? Are there investigations underway where you have had to take staff off to refocus?

Assistant Commissioner Newton —We always operate on a basis of undertaking investigations in the most efficient way we possibly can. Under our model system we do shift investigators to the highest priority work at any particular time, so if we have, say, a counterterrorism investigation then that may take priority over, perhaps, a long-term fraud related investigation, which we can actually stop for one or two months and then continue on with because it will not have as large an impact as some other work.

Mr WOOD —I understand. I suppose this is what I am specifically asking: obviously, if you have a terrorist incident, you would expect that nearly half the AFP would be on that, but at the moment have these so-called efficiency cuts led to investigations, whether fraud or drug related, being on hold or having staff removed from them to meet the budget cuts?

Assistant Commissioner Newton —Overall we have had to reassess some of our corporate support capability in the organisation as well as staff. We have had a number of redundancies in the organisation at the end of last financial year and the beginning of this financial year to ensure that we come within the parameters of our budget allocations for the organisation. A number of those people were investigators.

Mr WOOD —With those investigators, have they taken redundancy packages?

Assistant Commissioner Newton —Yes. Voluntary redundancy packages were offered to employees across the organisation so that we could meet our funding commitments versus our salary and operating costs.

Mr WOOD —How many of those were taken? How many AFP members took those?

Assistant Commissioner Newton —I did not come to this committee with those statistics. We can provide you with the figures as to how many redundancies the AFP had. It was not only investigators; it was also our unsworn support staff. But we will provide you with an up-to-date on that.

CHAIR —Ms Newton, we may also have some other questions which we will flick off to you, bearing in mind the time at the moment.

As there are no further questions, thank you very much with coming along today. We may have some questions to forward to you. The committee will take a break until 11.30.

Assistant Commissioner Newton ——Thank you.

Proceedings suspended from 11.16 am to 11.30 am