Financial Regulator Assessment Authority Bill 2021 [2021] AUSStaCSBSD 107 (16 June 2021)

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Purpose	This bill, along with the Financial Regulator Assessment Authority (Consequential Amendments and Transitional Provisions) Bill 2021, seeks to establish the Financial Regulator Assessment Authority to assess the effectiveness and capability of each of the Australian Prudential Regulation Authority and Australian Securities and Investments Commission
Portfolio	Treasury
Introduced	House of Representatives on 13 May 2021

Tabling of documents in Parliament^[54]

1.53 Clause 12 sets out the functions of the Financial Regulator Assessment Authority (the Authority). Under clause 12 the Authority's functions include assessing and reporting on the effectiveness and capability of APRA and ASIC once in every 2 financial years as well as upon request by the minister. Requests may be made by the minister under paragraph 12(1)(c) and reports prepared in response to such requests are known as 'ad hoc reports'. Other reports prepared under clause 12 are known as 'biennial reports'.

1.54 Clause 17 provides that biennial reports must be tabled in Parliament within 20 sitting days after the report is received by the minister, however, the bill contains no requirement that ad hoc reports be tabled.

1.55 The committee’s consistent scrutiny view is that tabling documents in Parliament is important to parliamentary scrutiny, as it alerts parliamentarians to the existence of documents and provides opportunities for debate that are not available where documents are not made public or are only published online. Tabling reports on the operation of regulatory schemes promotes transparency and accountability. As such, the committee expects there to be appropriate justification for failing to mandate tabling requirements. In this instance, the explanatory memorandum does not provide an explanation as to why reports prepared by the Authority under paragraph 12(1)(c) are not required to be tabled in Parliament.

1.56 Noting the impact on parliamentary scrutiny of not providing for reports to be tabled in Parliament, the committee requests the Treasurer's advice as to whether clause 17 of the bill can be amended to provide that the minister must arrange for a copy of a report prepared under paragraph 12(1)(c) to be tabled in each House of the Parliament within 15 sitting days of the House after the report is given to the minister.

1.57 The committee also requests the Treasurer’s advice as to why clause 17 provides that biennial reports must be tabled in Parliament within 20 sitting days after the report is received by the minister, rather than the standard 15 sitting days.

Legal professional privilege^[55]

1.58 Clause 21 provides that a person is not excused from giving information, producing a document or answering a question on the ground that the material is protected from disclosure by legal professional privilege.

1.59 As recognised by the High Court,^[56] legal professional privilege is not merely a rule of substantive law but an important common law right which is fundamental to the administration of justice. The committee considers that abrogating legal professional privilege may unduly trespass on individual rights, as to do so may interfere with legitimate, confidential communications between individuals and their legal representatives.

1.60 The committee notes that the bill contains some safeguards in relation to legal professional privilege. Subclause 21(2) provides that the operation of subclause 21(1) does not affect a later claim of legal professional privilege that anyone may make in relation to information, documents or records. Further, clause 39 provides that protected information that has not already been lawfully made available to the public must not be included in reports produced by the Authority. Protected information includes information that is protected against disclosure by legal professional privilege.^[57]

1.61 While the committee welcomes the inclusion of these safeguards, the committee reiterates its consistent scrutiny view that legal professional privilege should only be abrogated or modified in exceptional circumstances. Where a bill seeks to abrogate legal professional privilege, the committee expects that a sound justification is included in the explanatory memorandum. In this instance the explanatory memorandum does not contain a justification for abrogating the right to legal professional privilege.

1.62 In light of the above, the committee requests the Treasurer's detailed advice as to the rationale for, and the appropriateness of, abrogating legal professional privilege in the bill.

Reverse evidential burden of proof^[58]

1.63 Clause 40 makes it an offence for an entrusted person to use or disclose protected information if they are not otherwise authorised to do so by the bill. The offence carries a maximum penalty of imprisonment for up to 2 years.

1.64 Clause 40 provides two offence-specific defences to the unauthorised use or disclosure of protected information. Subclause 40(2) provides that it is a defence if the relevant information was already lawfully available to the public. Subclause 40(3) provides that it is a defence if the use or disclosure was either authorised by another Commonwealth law or done in compliance with a requirement of another Commonwealth law. A defendant bears an evidential burden in relation to these defences.

1.65 At common law, it is ordinarily the duty of the prosecution to prove all elements of an offence. Subsection 13.3(3) of the Criminal Code 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. 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.

1.66 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 in the explanatory memorandum. In this instance the explanatory memorandum states that the reversal of the evidential burden of proof is appropriate because:

1.67 From the justification provided, it is unclear to the committee that the defences in subclauses 40(2) and 40(3) are matters that would be peculiarly within the knowledge of the defendant, noting that the elements of each defence seem to relate to matters of public fact or to questions of law. For example, whether disclosure of information is authorised by another Commonwealth law would appear to be a matter that the prosecution could readily ascertain. Moreover, the committee does not consider it sufficient that the relevant matters are 'in many cases' within the knowledge of the defendant. Rather, the committee considers that the matter must be, as a matter of course, peculiarly within the defendant’s knowledge and not available to the prosecution.

1.68 While the committee acknowledges that it may be difficult for the prosecution to establish that a person did not have lawful authority to engage in the conduct set out in the offences, the committee emphasises that the mere fact that it is more difficult for the prosecution to prove a particular matter is not, of itself, a sufficient justification for placing the burden of proof on a defendant.^[60] The committee considers that it does not appear to be appropriate to reverse the evidential burden of proof in relation to these matters.

1.69 The committee requests the Treasurer's more detailed justification as to the appropriateness of including the specified matters as offence-specific defences.

1.70 In addition, from a scrutiny perspective, the committee suggests that it may be appropriate if the bill were amended so that the offence-specific defences in subclauses 40(2) and 40(3) are instead framed as elements of the relevant offence. The committee also requests the Treasurer's advice in relation to this matter.

Immunity from liability^[61]

1.71 Subclause 47(1) of the bill provides that members and staff members of the Authority are protected from civil liability in relation to loss, damage or injury of any kind that results from an act done, or omitted to be done, in good faith in the performance of functions or duties or the exercise of powers under the bill. Subclause 47(2) provides that consultants and contractors are similarly protected in relation to acts done, or omitted to be done, while assisting members or staff members in the performance of functions or duties or the exercise of powers under the bill. Subclause 47(3) further extends immunity from civil liability to members and staff members of cooperating agencies in relation to acts done, or omitted to be done, while giving information, producing documents or answering questions under subclause 20(2) of the bill.

1.72 The immunities provided for under clause 47 would remove any common law right to bring an action to enforce legal rights (for example, a claim of defamation), unless it can be demonstrated that lack of good faith is shown. The committee notes that, in the context of judicial review, bad faith is said to imply a lack of an honest or genuine attempt to undertake the task and that it will involve a personal attack on the honesty of the decision maker. As such, courts have taken the position that bad faith can only be shown in very limited circumstances. The committee expects that, if a bill seeks to confer immunity from liability, particularly where such immunity could affect individual rights, this should be soundly justified in the explanatory materials. In this instance, the explanatory memorandum states that providing immunity from liability:

1.73 The committee considers that a desire for administrative efficiency is not, of itself, sufficient justification for conferring immunity from liability. Moreover, it is not clear to the committee why, or in what circumstances, 'undue concerns' over civil liability will hamper the efficient performance of functions or the exercise of powers by the Authority.

1.74 In light of the above, the committee requests the Treasurer's detailed advice as to why it is considered necessary and appropriate to confer immunity from liability on members and staff members of the Authority and on consultants, contractors, and members and staff members of cooperating agencies.

Delegation of administrative powers^[63]

1.75 Subclause 49(2) of the bill provides that the Authority may delegate its information-gathering powers under subclause 20(2) to a staff member who is classified as Executive Level 2, or equivalent, or who is acting at an Executive Level 2 level.

1.76 The committee has consistently drawn attention to legislation that allows the broad delegation of administrative powers. Generally, the committee prefers to see a limit set on the scope of powers that might be delegated, or on the categories of people to whom those powers might be delegated.

1.77 The committee notes that, in this instance, the scope of the powers that may be delegated has been limited to the information-gathering powers set out in subclause 20(2). However, the committee's preference is that delegates be confined to the holders of nominated offices or to members of the Senior Executive Service. As a result, where broad delegations are provided for, the committee considers that an explanation of why these delegations are considered necessary should be included in the explanatory memorandum. In this instance, the explanatory memorandum does not explain why it is necessary to allow the Authority to delegate its powers under subclause 20(2) to a person below the Senior Executive Service level.

1.78 The committee requests the Treasurer's detailed advice as to why it is considered necessary and appropriate to allow the Authority to delegate its information-gathering powers under subclause 20(2) to Executive Level 2 staff members, rather than restricting the delegation of these powers to members of the Senior Executive Service or to holders of nominated offices.

[54] Paragraph 12(1)(c) and clause 17. The committee draws senators’ attention to these provisions pursuant to Senate Standing Order 24(1)(a)(v).

[55] Clause 21. The committee draws senators’ attention to this provision pursuant to Senate Standing Order 24(1)(a)(i).

[58] Clause 40. The committee draws senators’ attention to this provision pursuant to Senate Standing Order 24(1)(a)(i).

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

[61] Clause 47. The committee draws senators’ attention to this provision pursuant to Senate Standing Order 24(1)(a)(i).

[63] Subclause 49(2). The committee draws senators’ attention to this provision pursuant to Senate Standing Order 24(1)(a)(ii).

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