Treasury Laws Amendment (Banking Executive Accountability and Related Measures) Bill 2017 [2017] AUSStaCSBSD 384 (15 November 2017)

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Purpose	This bill seeks to amend the Banking Act 1959 to establish the Banking Executive Accountability Regime
Portfolio	Treasury
Introduced	House of Representatives on 19 October 2017
Scrutiny principles	Standing order 24(1)(a)(i)

Reversal of evidential burden of proof^[99]

1.134 Subsection 56(2) of the Australian Prudential Regulation Authority Act 1998 currently makes it an offence for a person who is or has been an officer to disclose, directly or indirectly, protected information or documents to any person or to a court.^[100] The offence carries a maximum penalty of imprisonment for two years.

1.135 Item 5 of Schedule 1 of the bill seeks to introduce three exceptions (offence-specific defences) to this offence, stating that the offence does not apply if the protected information:

1.136 The explanatory memorandum states that these provisions would allow APRA to publicly disclose information about a decision it has taken to disqualify a person under the Banking Executive Accountability Regime.^[104]

1.137 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.

1.138 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.

1.139 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 reversals of the evidential burden of proof in proposed subsections (7D), (7E) and (7F) have not been addressed in the explanatory materials.

1.140 As the explanatory materials do not address this issue, the committee requests the Minister's advice as to why it is proposed to use offence-specific defences (which reverse 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.^[105]

Privilege against self-incrimination^[106]

1.141 Subsection 52F(1) of the Act currently provides that a person is not excused from providing information to APRA under the Act or the Financial Sector (Collection of Data) Act 2001 on the ground that 'doing so would tend to incriminate the person or make the person liable to a penalty.' This provision therefore overrides the common law privilege against self-incrimination, which provides that a person cannot be required to answer questions or produce material which may tend to incriminate himself or herself.^[107] Item 2 of Schedule 2 seeks to expand the scope of this existing abrogation of the privilege against self-incrimination by introducing additional requirements to produce a book, account or document or to sign a record.

1.142 Subsection 52F(2) provides a use immunity with respect to such self-incriminating information. It states that, in the case of individuals, the information provided 'is not admissible in evidence against the individual in criminal proceedings or in proceedings for the imposition of a penalty, other than proceedings in respect of the falsity of the information'. Items 3 to 5 seek to amend the terms of the corresponding use immunity to cover the expanded range of requirements (of producing a book, account or document or signing a record).

1.143 The committee recognises there may be certain circumstances in which the privilege against self-incrimination can be overridden. However, abrogating the privilege represents a serious loss of personal liberty. In considering whether it is appropriate to abrogate the privilege, the committee will consider whether the public benefit in doing so significantly outweighs the loss to personal liberty. The committee will also consider the extent to which the use of self-incriminating evidence is limited by use or derivative use immunity provisions.^[108] The committee notes that section 52F does not contain a derivative use immunity (meaning anything obtained as a consequence of the requirement to produce a document or answer a question can be used against the person in criminal proceedings) in its current form and that the proposed amendments would not introduce such an immunity.

1.144 The statement of compatibility gives a justification for why it is necessary to abrogate the privilege against self-incrimination, noting that the information which would be obtained by APRA is critical in performing its regulatory functions and this material and evidence is likely to only be available from certain individuals.'^[109] The explanatory memorandum acknowledges that a use immunity has been provided but no derivative use immunity, which means that the book, account or documents, or the signed records can be used to gather other evidence against that person. However, it states that it is appropriate not to limit the use of the information, book, account or documents provided, or of the signed record of an examination, because doing so would 'significantly limit APRA's ability to regulate the Banking Act and address matters related to prudential risk.'^[110]

1.145 However, it is not clear to the committee as to why the introduction of a derivative use immunity would undermine APRA's ability to perform its regulatory functions.

1.146 The committee also notes that the use immunity under subsection 52F(2) of the Act is only available if, before giving the information, the person claims that giving the information might tend to incriminate them or make them liable to a penalty'.^[111] As noted above, items 4 and 5 of Schedule 2 seek to amend the wording of this limitation to accommodate the expanded requirement to also sign a record or produce a book, account or document. This has the potential to mean the use immunity could become unavailable simply because a person has not had adequate legal advice prior to an examination and therefore was not aware of the need to make a claim of self-incrimination prior to providing the information.

1.147 The committee notes that the explanatory materials provide no justification for this limitation, despite the bill seeking to expand the scope of both the abrogation and the associated use immunity on which the limitation would operate.

Procedural fairness^[112]

1.149 Proposed section 61E contains provisions concerning who may be present at examinations conducted by APRA and provides powers to the investigator to regulate the conduct of the examinee's lawyer at such examinations. Proposed subsection 61E(4) provides that the examinee's lawyer may, 'at such times during the examination as the investigator determines', address the investigator and examine their client about matters on which the investigator has examined them. Proposed subsection 61E(5) provides that the investigator may require a person to stop addressing the investigator or examining them if, in the investigator's opinion, the person is trying to obstruct the examination by exercising rights under subsection (4). Failure to comply with this requirement would constitute a criminal offence subject to a maximum penalty of 30 penalty units.^[113] The explanatory material does not explain the operation of, or justification for, these proposed measures, beyond restating the powers of the investigator to stop an examination or a line of inquiry if they believe the examinee's lawyer is obstructing the examination.^[114]

1.150 Given the complexity of matters that would be the focus of APRA examinations, it is likely that examinee's would often require legal assistance. The committee is concerned that these provisions appear to grant an investigator a broad discretion to limit the involvement of an examinee's lawyer.

1.151 In addition, following an examination, proposed subsection 61F(2) would allow an investigator to require the examinee to read, or have read to him or her, a written record of any statements made at the examination and the investigator may require the examinee to sign the written record. A signed record would be prima facie evidence in a proceeding and a failure to comply with a requirement to sign the record would be a criminal offence carrying a maximum penalty of 30 penalty units.^[115]

1.152 The committee notes that these provisions make no explicit allowance for an examinee to include in a record of examination, prior to signing it, any objections he or she may have as to its accuracy. The explanatory materials also provide no clarification as to whether this would be allowed.

1.153 Finally, proposed section 62AA addresses the operation of legal professional privilege in circumstances where a lawyer has been required under the Act to give information or produce a book, account or document and complying with such a requirement would disclose a privileged communication.^[116] A lawyer would be entitled to refuse to comply with a requirement to produce information on the grounds that it is a privileged communication, unless the person to whom, or by or on behalf of whom, the communications was made consents to the lawyer complying with the requirement.^[117]

1.154 However, if a lawyer refuses to comply, he or she must provide the name and address, if known, to whom, or by or on behalf of whom, the required communication was made. The lawyer would also be required to provide sufficient particulars to identify the relevant document, book or account in which the communication was made. Failure to comply with these requirements would be a criminal offence carrying a maximum penalty of 30 penalty units.

1.155 The explanatory memorandum does not explain the effect of this provision in detail, merely referring to the fact that it allows a lawyer to refuse to comply with a requirement to give information or provide certain documents if they contain privileged communications.^[118]

1.156 The committee therefore requests the Minister's detailed advice as to:

[99] Schedule 1, item 5, proposed new subsections (7D), (7E) and (7F). The committee draws Senators’ attention to this provision pursuant to principle 1(a)(i) of the committee’s terms of reference.

[100] A number of existing offence-specific defences to this offence are set out in the following subsections of section 56 of the Australian Prudential Regulation Authority Act 1998: (3), (4), (5), (5AA), (5A), (5B), (5C), (6), (7), (7A), (7B) and (7C).

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

[106] Schedule 2, items 2 to 6. The committee draws Senators’ attention to these provisions pursuant to principle 1(a)(i) of the committee’s terms of reference.

[108] A use immunity generally provides that the relevant information or documents produced in response to the statutory requirement will not be admissible in evidence against the person that produced it, in most proceedings. A derivative use immunity generally provides that anything obtained as a direct or indirect consequence of the production of the information or documents will not be admissible in evidence against the person that produced it, in most proceedings.

[112] Schedule 2, item 9, proposed sections 61E, 61F, and item 10, proposed section 62AA. The committee draws Senators’ attention to these provisions pursuant to principle 1(a)(i) of the committee’s terms of reference.

Australian Senate Standing Committee for the Scrutiny of Bills - Scrutiny Digests