Treasury Laws Amendment (Major Bank Levy) Bill 2017 - Commentary on Ministerial Responses [2017] AUSStaCSBSD 227 (21 June 2017)

• Treasury Laws Amendment (Major Bank Levy) Bill 2017
• Reversal of evidential burden of proof 12
• Incorporation of external materials existing from time to time14

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Treasury Laws Amendment (Major Bank Levy) Bill 2017

Purpose	This bill seeks to amend various Acts in relation to taxation to: • set out how to index the levy's $100 billion threshold to growth in nominal Gross Domestic Product; • allow the Australian Prudential Regulation Authority (APRA) to collect the data necessary to calculate the levy; • allow APRA to provide information relating to the major bank levy to the Australian Taxation Office (ATO); • ensure that when the major bank levy is payable to the ATO the ordinary collection and recovery provisions apply; and • introduce an anti-avoidance provision to protect the integrity of the levy
Portfolio	Treasury
Introduced	House of Representatives on 30 May 2017
Bill status	Passed both Houses on 19 June 2017
Scrutiny principles	Standing Order 24(1)(a)(i), (iv) and (v)

2.38 The committee dealt with this bill in Scrutiny Digest No. 6 of 2017. The Treasurer responded to the committee's comments in a letter dated 19 June 2017. Set out below are extracts from the committee's initial scrutiny of the bill and the Treasurer's response followed by the committee's comments on the response. A copy of the letter is at Appendix 1.

Reversal of evidential burden of proof ^[12]

Initial scrutiny – extract

2.39 Section 56(2) of the Australian Prudential Regulation Authority Act 1998 makes it an offence to disclose information acquired without authorisation. The offence carries a maximum penalty of imprisonment for 2 years. Proposed subsection 56(5D) provides an exception (offence specific defence) to this offence, stating that the offence does not apply if the production by a person of a document that was given to the Australian Prudential Regulation Authority (APRA) under section 13 of the Financial Sector (Collection of Data) Act 2001 is to the Commissioner of Taxation for the purposes of the Major Bank Levy Act 2017.

2.40 Subsection 13.3(3) of the Criminal Code Act 1995 provides that a defendant who wishes to rely on any exception, exemption, excuse, qualification or justification bears an evidential burden in relation to that matter.

2.41 At common law, it is ordinarily the duty of the prosecution to prove all elements of an offence. This is an important aspect of the right to be presumed innocent until proven guilty. Provisions that reverse the burden of proof and require a defendant to disprove, or raise evidence to disprove, one or more elements of an offence, interferes with this common law right.

2.42 While in this instance the defendant bears an evidential burden (requiring the defendant to raise evidence about the matter), rather than a legal burden (requiring the defendant to positively prove the matter), the committee expects any such reversal of the evidential burden of proof to be justified. The reversal of the evidential burden of proof in proposed subsection 56(5D) has not been addressed in the explanatory materials.

2.43 As the explanatory materials do not address this issue, the committee requests the Treasurer's advice as to why it is proposed to use an offence-specific defence (which reverses the evidential burden of proof) in this instance. The committee's consideration of the appropriateness of a provision which reverses the burden of proof is assisted if it explicitly addresses relevant principles as set out in the Guide to Framing Commonwealth Offences.^[13]

Treasurer's response

2.44 The Treasurer advised:

In its Scrutiny Digest No. 6 of 2017, the committee noted that proposed subsection 56(5D) in item l of Schedule l to the Treasury Laws Amendment Bill provides a defence to the secrecy provision in section 56 of the Australian Prudential Regulation Authority Act 1998 (APRA Act).
Broadly, subsection 56(2) of the APRA Act provides that a person commits an offence if he or she discloses protected information or a protected document and the disclosure is not made in accordance with one of the defences set out in subsections 56(3) to (7C) of the Act. The penalty for contravening subsection 56(2) is a penalty of imprisonment of up to 2 years.
Item 1 of Schedule 1 to the Treasury Laws Amendment Bill includes proposed subsection 56(5D) which will include another defence to the secrecy provision in section 56. Proposed subsection 56(5D) provides that it is not an offence to provide a document to the Commissioner of Taxation for the purposes of the Major Bank Levy if the information was provided to APRA under section 13 of the Financial Sector (Collection of Data) Act 2001. In establishing the defence, the defendant must satisfy an evidential burden in relation to the facts set out in proposed subsection 56(5D).
The committee has requested advice as to why proposed subsection 56(5D) provides that the defendant must satisfy an evidential burden when seeking to establish the defence.
The Attorney General's Department Guide to Framing Commonwealth Offences provides as follows:
Offence-specific defences reverse the fundamental principle of criminal law that the prosecution must prove every element of the offence. Therefore, a matter should only be included in an offence-specific defence, as opposed to being specified as an element of the offence, where:

• it is peculiarly within the knowledge of the defendant; and

• it would be significantly more difficult and costly for the prosecution to disprove than for the defendant to establish the matter.

The facts relating to the disclosure of protected information or protected documents are matters that will be peculiarly within the knowledge of the defendant. Likewise, it would be more difficult and costly for the prosecution to disprove these matters than for the defendant to establish them. Accordingly, the use of an offence-specific defence is appropriate in the context of proposed subsection 56(5D).
Further, proposed subsection 56(5D) is consistent with the basic principle that confidential taxpayer information should be subject to the strongest secrecy and confidentiality protections. I also note that the information provided to APRA (and then to the A TO) will include information that is commercial in confidence and should be subject to strong secrecy and confidentiality protections.
Finally, I note that the evidential burden in proposed subsection 56(5D) is consistent with the evidential burden in the other defences in section 56 of the APRA Act (for example, see subsections 56(3), (4), (5), (SAA), (5A), (5B), (6), (7), (7A), (7B) and (7C) of that Act).

Committee comment

2.45 The committee thanks the Treasurer for this response. The committee notes the Treasurer's advice that the facts relating to the disclosure 'are matters that will be peculiarly within the knowledge of the defendant' and it 'would be more difficult and costly for the prosecution to disprove these matters than for the defendant to establish them'. The committee also notes the Treasurer's advice that the provision is consistent with the basic principle that confidential taxpayer information should be subject to the strongest secrecy and confidentiality protections and the proposed evidential burden is consistent with existing evidential burdens in the other defences.

2.46 The committee notes that no reasoning was provided as to how the matters in the defence are peculiarly within the defendant's knowledge. It is therefore not clear to the committee how information about the production of a document that was given to APRA is to the Commissioner of Taxation for the purposes of the Major Bank Levy Act 2017 is peculiarly within the knowledge of the defendant. The committee also notes that the fact that there are existing defences that reverse the evidential burden of proof is not, of itself, a justification for including an additional defence which reverses the evidential burden of proof.

2.47 In light of the fact that this bill has already passed both Houses of Parliament the committee makes no further comment on this matter.

Incorporation of external materials existing from time to time^[14]

Initial scrutiny – extract

2.48 Section 13 of the Financial Sector (Collection of Data) Act 2001 provides that APRA may determine in writing reporting standards that are required to be complied with by certain financial sector entities. Proposed subsection 13(2C) provides that a reporting standard may make provision in relation to matters relating to the reporting of amounts for the purposes of the Major Bank Levy Act 2017, by applying, adopting or incorporating any matter contained in any other instrument or writing as in force or existing from time to time. The explanatory memorandum provides no explanation as to what type of instruments or documents may need to be applied, adopted or incorporated in a reporting standard and does not explain why it would be necessary for the material to apply as in force or existing from time to time.

2.49 At a general level, the committee will have scrutiny concerns where provisions in a bill allow the incorporation of legislative provisions by reference to other documents because such an approach:

• raises the prospect of changes being made to the law in the absence of parliamentary scrutiny, (for example, where an external document is incorporated as in force 'from time to time' this would mean that any future changes to that document would operate to change the law without any involvement from Parliament);

• can create uncertainty in the law; and

• means that those obliged to obey the law may have inadequate access to its terms (in particular, the committee will be concerned where relevant information, including standards, accounting principles or industry databases, is not publicly available or is available only if a fee is paid).

2.50 As a matter of general principle, any member of the public should be able to freely and readily access the terms of the law. Therefore, the committee's consistent scrutiny view is that where material is incorporated by reference into the law it should be freely and readily available to all those who may be interested in the law.

2.51 The issue of access to material incorporated into the law by reference to external documents such as Australian and international standards has been an issue of ongoing concern to Australian parliamentary scrutiny committees. Most recently, the Joint Standing Committee on Delegated Legislation of the Western Australian Parliament has published a detailed report on this issue.^[15] This report comprehensively outlines the significant scrutiny concerns associated with the incorporation of material by reference, particularly where the incorporated material is not freely available.

2.52 Noting the above comments, the committee requests the Treasurer's advice as to the type of documents that it is envisaged may be applied, adopted or incorporated by reference under subsection 13(2C), whether these documents will be made freely available to all persons interested in the law and why it is necessary to apply the documents as in force or existing from time to time, rather than when the document is first made.

Treasurer's response

2.53 The Treasurer advised:

In its Scrutiny Digest No. 6 of 2017, the committee noted that section 13 of the Financial Sector (Collection of Data) Act 2001 provides that APRA may determine reporting standards. The committee also noted that proposed subsection 13(2C) of the Treasury Laws Amendment Bill provides that a reporting standard may make provision in relation to matters relating to reporting amounts for the purposes of the Major Bank Levy Act 2017.
The committee has requested advice as to:

• the type of documents that may be incorporated by reference under proposed subsection 13(2C);

• whether such documents will be made freely available to all persons interested in the law; and

• why it is necessary to apply the documents as in force from time to time, rather than when the instrument is first made.

Item 3 of the Treasury Laws Amendment Bill amends the Financial Sector (Collection of Data) Act 2001 and provides that a reporting standard made under proposed subsection 13(2B) of that Act for the purposes of the major bank levy may make provision in relation to a matter by applying, adopting or incorporating any matter contained in another instrument or document as in force from time to time.
This is appropriate because the amounts that are determined or calculated for the purpose of the major bank levy are likely to be based on amounts that are determined by the affected banks for prudential or accounting purposes.
The APRA prudential standards are publicly available and can be obtained from the APRA website. The Australian accounting standards are publicly available and can be obtained from the AASB website.
APRA prudential standards and Australian accounting standards may change from time to time to take into account developments in prudential regulation and accounting principles. Therefore, the approach in the Bill will reduce compliance costs and ensure that it is not necessary to amend the reporting standard each time a change is made to the relevant prudential standards or accounting standards.

Committee comment

2.54 The committee thanks the Treasurer for this response. The committee notes the Treasurer's advice that the amounts to be determined for the purpose of the major bank levy are likely to be based on amounts that are determined by the affected banks for prudential or accounting purposes. The committee notes the advice that both the APRA prudential standards and the Australian accounting standards are publicly available and can be obtained via relevant websites. The committee also notes the Treasurer's advice that it is necessary to apply the documents as in force from time to time as the standards may change and take into account new developments, and so the approach in the bill will reduce compliance costs and ensure it is not necessary to amend the instrument each time a change is made to the relevant standard.

2.55 The committee takes this opportunity to reiterate that it is fundamental principle of the rule of the law that every person subject to the law should be able to freely and readily access its terms. As a result, the committee will have scrutiny concerns when external materials that are incorporated into the law are not freely and readily available to persons to whom the law applies, or who may otherwise be interested in the law. In this instance, the committee welcomes the Treasurer's advice that all material incorporated by legislative instrument will be publicly and readily available.

2.56 The committee also takes this opportunity to highlight the expectations of the Senate Standing Committee on Regulations and Ordinances that delegated legislation which applies, adopts or incorporates any matter contained in an instrument or other writing should:

• clearly state the manner in which the documents are incorporated—that is, whether the material is being incorporated as in force or existing from time to time or as in force or existing at a particular time. This enables persons interested in or affected by the instrument to understand its operation without the need to rely on specialist legal knowledge or advice, or consult extrinsic material (see also section 14 of the Legislation Act 2003); and

• contain a description of the documents and indicate how they may be obtained (see paragraph 15J(2)(c) of the Legislation Act 2003).

2.57 The committee thanks the Treasurer for providing this further information and notes that it would have been useful had this information been included in the explanatory memorandum.

2.58 In light of the information provided and the fact that this bill has already passed both Houses of Parliament, the committee makes no further comment on this matter.

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[12] Schedule 1, item 1, proposed subsection 56(5D). The committee draws Senators' attention to this provision pursuant to principle 1(a)(i) of the committee's terms of reference.

[13] Attorney-General’s Department, A Guide to Framing Commonwealth Offences, Infringement Notices and Enforcement Powers, September 2011, pp 50–52.

[14] Schedule 1, item 3, proposed subsection 13(2C). The committee draws Senators' attention to this provision pursuant to principles 1(a)(iv) and (v) of the committee's terms of reference.

[15] Joint Standing Committee on Delegated Legislation, Parliament of Western Australia, Access to Australian Standards Adopted in Delegated Legislation, June 2016.