Treasury Laws Amendment (2022 Measures No 3) Bill 2022 - Commentary on Ministerial Responses [2022] AUSStaCSBSD 95 (26 October 2022)

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Purpose	Schedule 1 to the bill amends the Foreign Acquisitions and Takeovers Act 1975 to double the maximum financial penalties for contraventions of provisions that relate only to residential land. Schedule 2 to the bill amends the Taxation Administration Act 1953 to allow protected information to be disclosed to Australian government agencies for the purpose of administering major disaster support programs approved by the minister. Schedule 3 to the bill amends Schedule 5 of the Coronavirus Economic Response Package Omnibus (Measures No. 2) Act 2020 to extend a temporary mechanism for responsible ministers to make alternative arrangements for meeting information and documentary requirements under Commonwealth legislation, including requirements to give information and produce, witness and sign documents, in response to COVID-19. Schedule 4 to the bill make amendments to reduce the tax rate on certain income earned by foreign resident workers participating in the Pacific Australia Labour Mobility scheme from marginal rates starting at 32.5 per cent to a flat 15 per cent. Schedule 5 to the bill amends the Superannuation Industry (Supervision) Act 1993 to provide for an alternative annual performance test for faith-based products.
Portfolio	Treasury
Introduced	House of Representatives on 8 September 2022
Bill status	Before the House of Representatives

Reversal of the evidential burden of proof^[55]

2.148 Section 365-25 of Schedule 1 to the Taxation Administration Act 1953 currently provides that it is an offence if a person records or discloses protected information, with a maximum penalty of imprisonment for two years. Item 2 of Schedule 2 to the bill seeks to insert a new defence this offence.^[56]

2.149 Proposed subsection 365-25(8) provides that it is a defence to the offence set out under existing section 365-25 if the record is made for, or the disclosure is to, an Australian government agency and the record or disclosure is for the purpose of administering a program declared under section 355-66 to be a major disaster support program. A defendant bears an evidential burden in relation to this defence.

2.150 In Scrutiny Digest 5 of 2022 the committee requested 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.^[57]

2.151 The minister advised that the approach taken in the bill is justified, as the relevant information for matters relevant to the exemptions would be peculiarly within the person's own knowledge and control as the person would be aware of the information they disclosed, the recipient, and the manner and purpose for which it was disclosed. The minister advised that if the prosecution were required to eliminate all possible exemptions beyond reasonable doubt it would likely be difficult, costly and resource intensive. The minister considered that proposed subsection 365-25(8) is consistent with the Guide to framing Commonwealth Offences on this basis.

2.152 In addition, the minister advised that consistency of approach within the framework of the existing offence and exceptions to the prohibition against disclosing or recording protected information is important to support understanding and application of the law.

2.153 The committee thanks the minister for this response. However, it is not clear to the committee from this explanation why the matters set out in proposed subsection 365-25(8) could be said to be peculiarly within the knowledge of the defendant. For example, it appears that the fact that a disclosure was made to a government agency in relation to a section 355-66 program is a matter that the prosecution could readily ascertain

2.154 In addition, while the committee acknowledges the merits of ensuring a consistent approach across Commonwealth offence provisions, the committee notes that consistency with existing legislation is not a valid justification for inappropriately reversing the evidential burden of proof. Provisions which may impact individual rights and liberties should be justified on their own merits and according to the specific circumstances of the case at hand.

2.155 The committee does not consider that the minister's response has adequately addressed the committee's concerns.

2.156 The committee draws its scrutiny concerns to the attention of senators and leaves to the Senate as a whole the appropriateness of reversing the evidential burden of proof in relation to matters which do not appear to be peculiarly within the knowledge of the defendant.

Significant matters in delegated legislation^[59]

2.157 Schedule 2 to the Treasury Laws Amendment (Your Future, Your Super) Act 2021 (Your Future, Your Super Act) requires the Australian Prudential Regulation Authority (APRA) to conduct an annual superannuation performance test for certain superannuation products. Schedule 5 to the bill seeks to amend this process to provide for an alternative supplementary performance test for faith-based superannuation products. Under this new process, if a faith-based product fails the original assessment it is then required to undergo the supplementary faith-based test. A superannuation trustee is only subject to the consequences of a failed performance if it also fails the supplementary test.

2.158 Much of the detail of this new faith-based performance test is left to delegated legislation.

2.159 In Scrutiny Digest 5 of 2022 the committee requested the minister's detailed advice as to:

2.160 The minister advised that the framework for the supplementary test mirrors the framework approach already taken by the original test introduced by Schedule 2 to the Treasury Laws Amendment (Your Future, Your Super) Act 2021. The specific requirements for the original and supplementary test involve setting out various technical matters including specifying complex mathematical formula and assumptions that apply in performing the calculations. The minister advised that the supplementary test will use the same complex mathematical formulas and assumptions, making modifications to allow the input of tailored faith-based indices into the calculations. The minister advised that regulations are the appropriate mechanism for setting out such technical details because they will enable the government to be more responsive in updating relevant assumptions for use in the calculations where there is a change in the investment environment that makes updates appropriate or necessary.

2.161 The minister also advised that regulations are the appropriate mechanism for dealing with administrative details relating to the operation of the supplementary test, such as the timing of APRA conducting the test and the timing of any notifications APRA must give to trustees.

2.162 The bill provides that a faith-based product application must contain a particular declaration by the trustee. The bill allows regulations to prescribe further information for inclusion in an application before APRA decides on faith-based status. The minister advised that this regulation-making power ensures the information supporting an application remains relevant and fit-for-purpose taking into account, for example, changes in the marketplace.

2.163 The minister advised that any regulations dealing with the matters outlined above would, in line with usual government processes, be open to stakeholder input during consultation and remain subject to parliamentary scrutiny through the usual tabling and disallowance process.

2.164 The minister advised that, given the above, he does not propose to amend the bill to incorporate further guidance regarding these matters.

2.165 Finally, the minister advised that proposed subsections 60L(4) and 60N(1) respectively allow APRA to make a determination that a product is a faith-based product and to revoke that determination. The minister clarified that such determinations are non-legislative in nature, as they do not set out an element of the scheme rather, they set out the application of the scheme to a specific product.

2.167 The committee thanks the minister for his advice that determinations under proposed subsections 60L(4) and 60N(1) are not legislative instruments.

2.168 The committee acknowledges that it is often appropriate to set out complex technical matters within delegated legislation. However, in this case, the committee is concerned about the level of detail included within delegated legislation. The committee has longstanding concerns in relation to bills which rely heavily on 'framework provisions' that contain only the broad principles of a legislative scheme while relying heavily on delegated legislation to determine the scheme's scope and operation. The committee considers that this approach considerably limits the ability of Parliament to have appropriate oversight over new legislative schemes.

2.169 The committee requests that an addendum to the explanatory memorandum containing the key information provided by the minister be tabled in the Parliament as soon as practicable, noting the importance of these explanatory materials as a point of access to understanding the law and, if needed, as extrinsic material to assist with interpretation (see section 15AB of the Acts Interpretation Act 1901).

2.170 The committee draws its scrutiny concerns to the attention of senators and leaves to the Senate as a whole the appropriateness of leaving much of the intended operation of the faith-based performance testing scheme to delegated legislation.

2.171 The committee also draws these matters to the attention of the Senate Standing Committee for the Scrutiny of Delegated Legislation.

Availability of merits review^[62]

2.172 Item 2 of Schedule 5 to the bill seeks to insert proposed section 60L into the Superannuation Industry (Supervision) Act 1993. As noted above, Schedule 5 to the bill introduces a new supplementary performance test for faith-based superannuation products. Proposed subsection 60L(4) provides that APRA may determine that a product is a faith-based product for a financial year if a trustee provides APRA with a valid application between 1 February of the prior financial year and 31 January of the relevant financial year. Under proposed subsection 60N(1), APRA may decide to revoke a subsection 60L(4) determination.

2.173 In Scrutiny Digest 5 of 2022 the committee requested the minister's advice as to whether the bill can be amended to provide that independent merits review will be available in relation to a decision made under proposed subsection 60L(4) and proposed subsection 60N(1) of the bill.^[63]

2.174 The minister advised that proposed subsections 60L(4) and 60N(1) were drafted permissively, as APRA may not make a determination or revoke a determination where it reasonably considers that the declarations are false.

2.175 The minister advised that the discretion afforded under proposed subsections 60L(4) and 60N(1) is therefore very limited, allowing APRA to consider the truth of the declaration and supporting evidence. For example, APRA may through its compliance action, become aware that the trustee has provided false or misleading information. As such, the decision is not appropriate for merits review.

2.177 It is not clear to the committee why the minister has advised that it is only open to APRA not to make a determination or revoke a determination where APRA reasonably considers that a declarations is false when there appears to be nothing on the face of the bill requiring this. Moreover, the committee notes that even if the discretion afforded under proposed subsections 60L(4) and 60N(1) were limited, this would not justify removing merits review over a decision made under those subsections. In this regard, the committee notes that there is nothing in the Administrative Review Council's guide, What decisions should be subject to merits review? that suggests decisions with 'limited' discretion should not be subject to merits review.

2.178 In light of the above, the committee requests the minister's further advice as to:

[55] Schedule 2, item 2, proposed subsection 355-65(8). The committee draws senators' attention to this provision pursuant to Senate Standing Order 24(1)(a)(i).

[58] The minister responded to the committee's comments in a letter dated 19 October 2022. A copy of the letter is available on the committee's website: see correspondence relating to Scrutiny Digest 6 of 2022 available at: www.aph.gov.au/senate_scrutiny_digest .

[59] Schedule 5. The committee draws senators' attention to these provisions pursuant to Senate Standing Order 24(1)(a)(iv).

[61] The minister responded to the committee's comments in a letter dated 19 October 2022. A copy of the letter is available on the committee's website: see correspondence relating to Scrutiny Digest 6 of 2022 available at: www.aph.gov.au/senate_scrutiny_digest .

[62] Schedule 5, item 2, proposed subsections 60L(4) and 60N(1). The committee draws senators' attention to these provisions pursuant to Senate Standing Order 24(1)(a)(iii).

[64] The minister responded to the committee's comments in a letter dated 19 October 2022. A copy of the letter is available on the committee's website: see correspondence relating to Scrutiny Digest 6 of 2022 available at: www.aph.gov.au/senate_scrutiny_digest .

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