House of Representatives

Explanatory Memorandum

(Circulated by authority of the Assistant Treasurer, Minister for Housing and Minister for Homelessness, Social and Community Housing, the Hon Michael Sukkar MP)

Chapter 7 - Statement of Compatibility with Human Rights

Prepared in accordance with Part 3 of the Human Rights (Parliamentary Scrutiny) Act 2011

Schedule 1 - Refund of large-scale generation shortfall charge

7.1 Schedule 1 to the Bill is compatible with the human rights and freedoms recognised or declared in the international instruments listed in section 3 of the Human Rights (Parliamentary Scrutiny) Act 2011.

Overview

7.2 Schedule 1 to the Billl amends the ITAA 1997 to make refunds of large-scale generation shortfall charges NANE income for income tax purposes.

Human rights implications

7.3 This Schedule does not engage any of the applicable rights or freedoms.

Conclusion

7.4 This Schedule is compatible with human rights as it does not raise any human rights issues.

Schedule 2 - Industry Code Penalties under Part IVB of the Competition and Consumer Act 2010

7.5 Schedule 2 to the Bill is compatible with the human rights and freedoms recognised or declared in the international instruments listed in section 3 of the Human Rights (Parliamentary Scrutiny) Act 2011.

Overview

7.6 Schedule 2 to the Bill amends the CCA by increasing the maximum amount of penalty units that can be included in regulations that prescribe an industry code, with specific amendments for industry codes relating to the industry of franchising.

Human rights implications

7.7 Schedule 2 to the Bill may, or may not, engage Article 14 of the ICCPR.

7.8 Consideration has been specifically given to the guidance in the Parliamentary Joint Committee on Human Rights' Guidance Note 2: Offence provisions, civil penalties and human rights (Guidance Note 2) and to the Attorney General's Department's A Guide to Framing Commonwealth Offences, Infringement Notices and Enforcement Powers, September 2011 edition.

7.9 Schedule 2 to the Bill provides an industry code of conduct to prescribe a penalty of up to 600 penalty units for body corporates and other persons.

7.10 This Schedule provides that for a person (other than a body corporate), a penalty of $500,000 may be prescribed in an industry code of conduct relating to the industry of franchising. Otherwise, a penalty of up to 600 penalty units may be prescribed.

7.11 Given the civil nature of these penalty provisions, applications to the court for civil penalty orders will be dealt with in accordance with the rules and procedures that apply in relation to civil matters. The penalties in Schedule 2 do not impose a criminal penalty, nor carry a penalty of imprisonment.

7.12 Guidance Note 2 observes that civil penalty provisions may engage criminal process rights under Articles 14 and 15 of the ICCPR, regardless of the distinction between criminal and civil penalties in domestic law.

7.13 The increased penalties contained in Schedule 2 are intended to encourage industry to comply with the code of conduct schemes. In particular, the $500,000 penalty amount is to encourage compliance with the Franchising Code.

7.14 On 22 March 2018 the Senate referred an inquiry to the Parliamentary Joint Committee on Corporations and Financial Services into the operation and effectiveness of the Franchising Code.

7.15 The Committee's report noted that where penalties are insufficient, franchisors are likely to factor the risk of a penalty into the cost of doing business. The Committee's report recommended that the quantum of penalties available for a breach of the Franchising Code be significantly increased to ensure the penalties are a meaningful deterrent from non-compliance.

7.16 Having regard to the specific regulatory context and the nature of the industry being regulated, the severity of the civil penalties that may be imposed on individuals is not sufficiently severe to be considered 'criminal'. The franchising industry which is generally comprised of small businesses as the franchisee, and larger, multinational companies as the franchisor. The Franchising Code aims to improve transparency and fairness within the franchising industry.

7.17 The Committee's report indicated that the current penalties were not strong enough to deter poor conduct as some franchisors incorporated the penalty into the cost of doing business. Therefore, the Committee concluded that increased penalties may further deter parties form breaching the Franchising Code.

7.18 Therefore, the imposition of higher civil penalties on industry participants-who should reasonably be aware of their obligations under the code-will enable an effective disciplinary response to non-compliance.

7.19 For enforcement and compliance, the ACCC is the most common litigant for enforcing breaches under the code. In doing so, the ACCC retains the flexibility to take the most appropriate, and likely to be most effective, administrative action in each individual case.

7.20 Where the ACCC applies for a civil penalty in relation to a breach, the operation of section 76 of the CCA means that the court will continue to have discretion to apply an appropriate penalty up to the maximum amount.

7.21 In ascertaining this amount, the court would consideration of the relevant facts of any given case, and impose a penalty that is proportionate to that conduct, making it unlikely that the maximum penalty would be imposed in every instance. In practice, the maximum amount would only be applied in the most egregious instances of non-compliance.

7.22 Based on the above factors, including the cumulative effect of the nature and severity of the civil penalties in Schedule 2, these penalties are not 'criminal' for the purposes of human rights.

7.23 For the reasons given above, Schedule 2 to the Bill is consistent with the right to a fair trial.

Conclusion

7.24 To the extent that these amendments limit the rights under Article 14 of the ICCPR, they are compatible with human rights as:

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the increased penalty amounts are aimed at deterring non-compliance with the code, and not punitive in nature;

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the maximum penalty amount will only be used in the most egregious instances; and

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the imposition of high civil penalties are on industry participants who should be reasonably aware of their obligations under the code of conduct.

Schedule 3 - Requirement for actuarial certificates for certain superannuation funds

7.25 Schedule 3 to the Bill is compatible with the human rights and freedoms recognised or declared in the international instruments listed in section 3 of the Human Rights (Parliamentary Scrutiny) Act 2011.

Overview

7.26 Schedule 3 to the Bill amends the ITAA 1997 to remove the requirement for superannuation trustees to obtain an actuarial certificate when calculating exempt current pension income, where all members of the fund are fully in retirement phase for all of the income year. This is achieved by permitting such funds to use the segregated method to calculate exempt current pension income.

7.27 The amendment removes a redundant requirement which will reduce costs and remove unnecessary red tape for affected funds.

Human rights implications

7.28 This Schedule does not engage any of the applicable rights or freedoms.

Conclusion

7.29 This Schedule is compatible with human rights as it does not raise any human rights issues.

Schedule 4 - Strengthening industry codes under Part IVB of the Competition and Consumer Act 2010

7.30 Schedule 4 to the Bill is compatible with the human rights and freedoms recognised or declared in the international instruments listed in section 3 of the Human Rights (Parliamentary Scrutiny) Act 2011.

Overview

7.31 Schedule 4 to the Bill amends the Competition and Consumer Act 2010 to provide regulatory certainty for industry participants that are governed by industry codes that apply across various markets prescribed by regulations made under Part IVB of the Act. These amendments are to address unintended ambiguity and to ensure Part IVB industry codes apply across various markets as intended.

Human rights implications

7.32 Schedule 4 does not engage any of the applicable rights or freedoms. Schedule 4 makes amendments to the industry codes framework, which governs the conduct of corporations and does not affect the rights of natural persons.

Conclusion

7.33 Schedule 4 is compatible with human rights as it does not raise any human rights issues.

Schedule 5 - Improving the visibility of superannuation in family law proceedings

7.34 Schedule 5 to the Bill is compatible with the human rights and freedoms recognised or declared in the international instruments listed in section 3 of the Human Rights (Parliamentary Scrutiny) Act 2011.

Overview

7.35 Schedule 5 to the Bill amends the Taxation Administration Act and the Family Law Act to create a new mechanism for sharing superannuation information. The new information sharing mechanism will allow superannuation information to be safely shared with the Registries of the family law courts for the purpose of this information being disclosed to parties to family law proceedings.

7.36 A party to permitted family law proceedings in the Federal Circuit and Family Court of Australia or the Family Court of Western Australia may apply, in the approved form, to the Court Registry, for Registry staff to request the superannuation information of the other party from the Commissioner.

7.37 The amendments will make it harder for parties to hide or under-disclose their superannuation assets in family law proceedings, reducing the time, cost and complexity for parties seeking accurate superannuation information from one or more superannuation funds, and alleviating the need to rely on subpoenas or court orders to obtain the details of their partner's superannuation.

Human rights implications

7.38 Schedule 5 to the Bill engages the following rights:

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the equality of rights and responsibilities of spouses at the dissolution of a marriage of de facto relationship in Article 23(4) of the ICCPR;

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the obligation to ensure the same rights for both spouses in respect of the ownership, acquisition, management, administration, enjoyment and disposition of property in Article 16 of the CEDAW;

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the right to freedom from interference with privacy in Article 17 of the ICCPR; and

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the right to be presumed innocent until proved guilty in Article 14(2) of the ICCPR.

Equality of rights and responsibilities of spouses at the dissolution of a marriage of de facto relationship

7.39 Article 23(4) of the ICCPR states that 'States Parties to the present Covenant shall take appropriate steps to ensure equality of rights and responsibilities of spouses as to marriage, during marriage and at its dissolution.'

7.40 Article 16 of CEDAW asserts the same rights should exist for both spouses in respect of the ownership, acquisition, management, administration, enjoyment and disposition of property, whether free of charge or for a valuable consideration.

7.41 Schedule 5 to the Bill promotes these rights by creating an information sharing mechanism that will facilitate parties' compliance with their existing legal obligation to make full and frank disclosure of financial information in family law proceedings.

7.42 The obligation to make full and frank disclosure of relevant financial information extends to both the applicant and respondent to a family law matter. This duty applies to parties to property matters arising from the breakdown of a marriage or a de facto relationship. Parties are made aware of their obligations with respect to the duty of disclosure when commencing family law proceedings, and they undertake to the Court that they understand their duty of disclosure and they have complied and will continue to comply with that duty.

7.43 Non-disclosure or under-disclosure of superannuation information by one party to proceedings negatively impacts the rights of the other party and can impede resolution of proceedings in a just and timely manner. Enforcing disclosure or attempting to identify the other party's superannuation interests can be time consuming and expensive and can delay settlement of the matter. Existing mechanisms for accessing the other party's superannuation information may be ineffective without, at a minimum, the name of the other party's superannuation fund/s.

7.44 Without information about the identity or value of the other party's superannuation assets, it is more difficult for parties and the Court to make an informed decision about a just and equitable division of property. Individuals may ultimately decide to leave superannuation out of the property pool, or abandon proceedings, which can result in less equitable outcomes.

7.45 The new information sharing mechanism will support more separated couples to divide their property, including superannuation, on a just and equitable basis, and help to alleviate the financial hardship and unequal retirement income outcomes that people, particularly women, can experience after separation.

7.46 Where one party believes the other has not fully disclosed their superannuation information, the amendments will enable that party to make an application to the Court to request the last-reported superannuation information from the Commissioner. The amendments will help minimise the cost, time and difficulty parties currently face in trying to identify that information.

7.47 Schedule 5 to the Bill therefore promotes the right to protection of the family and equality of rights and responsibilities of individuals at the dissolution of a marriage or de facto relationship. It also promotes the same rights for both parties to that relationship in respect of the ownership, acquisition, management, administration, enjoyment and disposition of property.

Right to freedom from interference with privacy

7.48 Schedule 5 to the Bill engages with the right to protection from arbitrary or unlawful interference with privacy in Article 17 of the ICCPR by creating a limited exception to the tax secrecy laws in the Taxation Administration Act.

7.49 The Registries of the Federal Circuit and Family Court of Australia and the Family Court of Western Australia may request superannuation information from the Commissioner on application of a party to family law proceedings. The Commissioner may disclose superannuation information to the requesting Registry to provide to the parties and their lawyers. All disclosures and on-disclosures of the superannuation information must be for the purpose of permitted family law proceedings.

7.50 To be permissible, an interference with privacy must be authorised by law, be for a reason consistent with the ICCPR and be reasonable in the particular circumstances. The United Nations Human Rights Committee has interpreted the requirement of 'reasonableness' to imply that any interference with privacy must be proportional to the end sought and be necessary in the circumstances of any given case.

7.51 The amendments in Schedule 5 to the Bill pursue the legitimate objective of making superannuation assets more visible to parties in family law proceedings. This will support the just and equitable division of property (including superannuation) between couples, helping to alleviate the financial hardship and unequal retirement income outcomes that people, particularly women, can experience after separation.

7.52 The superannuation information disclosed by the Commissioner is information about a person that the person was obligated to disclose to the other party to property proceedings, in line with their duty to make full and frank disclosure of relevant financial information.

7.53 Superannuation information from the Commissioner will enable the Court and the parties to have a more complete understanding of the size of the property pool, and seek accurate valuation information from the trustee/s. This will support a more just and equitable division of property and distribution of superannuation entitlements. There is therefore a rational connection between the information sharing mechanism and the ends sought.

7.54 The limitation on the right to privacy is proportionate as the information sharing mechanism is limited to specific recipients for specific purposes.

7.55 Before a person can apply to the Court Registry to request superannuation information, certain conditions must be met, including that the person:

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is party to permitted proceedings in the Federal Circuit and Family Court of Australia or the Family Court of Western Australia; and

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is requesting the information for the purpose of those proceedings.

7.56 The information can only be requested from the Commissioner by a Registry Manager of the Federal Circuit and Family Court of Australia or the Principal Registrar of the Family Court of Western Australia on application of a party to the proceedings. The Commissioner will disclose the information to the Registry Manager or Principal Registrar through a secure information sharing channel developed by the ATO.

7.57 The Commissioner is prohibited from disclosing a person's address in response to a request for superannuation information from the Registry. Addresses are protected information under section 355-25 of Schedule 1 to the Taxation Administration Act and fall outside the scope of the limited exceptions in Schedule 5 to the Bill (see items 2 and 5). This limitation is particularly important in the context of family law proceedings where family violence may be involved.

7.58 A Registry Manager or Principal Registrar can only on-disclose the superannuation information from the Commissioner to the parties to the proceedings and their lawyers. Use of the information by these recipients is strictly limited to the purpose for which it was disclosed.

7.59 If a Registry official or an applicant uses or discloses the information for a purpose other than permitted family law proceedings, penalties under section 355-155 of Schedule 1 to the Taxation Administration Act may apply.

7.60 Penalties may also apply under section 121 of the Family Law Act, which prohibits the publication or dissemination of an account of family law proceedings that may identify a party, witness or other person associated with the proceedings. An 'account of family law proceedings' includes particulars of any real or personal property in which the person has an interest or with which the person is otherwise associated, that are sufficient to identify that person.

7.61 To the extent that Schedule 5 to the Bill limits the right to freedom from interference with privacy, this limitation is a reasonable, necessary and proportionate means of overcoming non-disclosure of information a party is already obligated to disclose, to ensure more equitable outcomes in family law property settlement proceedings.

Right to be presumed innocent until proved guilty

7.62 Schedule 5 to the Bill engages the right to be presumed innocent until proved guilty in Article 14(2) of the ICCPR.

7.63 Section 355-25 of Schedule 1 to the Taxation Administration Act makes it an offence for taxation officers to disclose protected information such as superannuation information. Schedule 5 to the Bill (see items 2 and 5) creates two new exceptions for taxation officers who disclose superannuation information to:

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a Registry Manager of the Federal Circuit and Family Court of Australia or a Principal Registrar of the Family Court of Western Australia for the purpose of property settlement proceedings relating to separating married and de facto couples across Australia (except for de facto couples in Western Australia); or

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the Principal Registrar of the Family Court of Western Australia for the purpose of certain superannuation splitting and property proceedings involving separating de facto couples in Western Australia.

7.64 These new exceptions engage the right to the presumption of innocence because a defendant who wishes to rely on them bears an evidential burden in relation to that matter (see section 355-65(1) of Schedule 1 to the Taxation Administration Act and subsection 13.3(3) of the Criminal Code Act 1995). If the defendant discharges the evidential burden, the prosecution bears the legal burden of disproving the matter beyond a reasonable doubt (section 13.1 of the Criminal Code Act 1995).

7.65 It is appropriate in these circumstances to place the evidential burden on the defendant. Consistent with the Attorney-General's Department's Guide to Framing Commonwealth Offences, information about the Court Registry's request will be peculiarly within the knowledge of the defendant (the taxation officer), as a person with access to the ATO's systems at the time the information was disclosed. In this case, it would be significantly more difficult and costly for the prosecution to disprove than for the defendant to establish the matter.

7.66 Schedule 5 to the Bill (see items 1 and 4) also engages the right to the presumption of innocence where superannuation information is on-disclosed:

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by Court Registry staff to the parties to the proceedings and their lawyers for the purpose of those proceedings;

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by a party to the proceedings for the purpose of those proceedings - for example, on-disclosure to the trustee of the other party's superannuation fund under sections 90XZB or 90YZR of the Family Law Act.

7.67 On-disclosure of superannuation information is an offence under section 355-155 of Schedule 1 to Taxation Administration Act, unless an exception applies. Relevantly, a person does not commit an offence if the on-disclosure is for the purpose of court proceedings, or the on-disclosure is for the original purpose or in connection with that purpose (see subsections 355-175(1) and (2) of Schedule 1 to the Taxation Administration Act).

7.68 A defendant who wishes to on-disclose superannuation information in reliance on these exceptions bears the evidential burden of proving the exception (see subsection 355-175 of Schedule 1 to the Taxation Administration Act and subsection 13(3) of the Criminal Code Act 1995).

7.69 The reversal of the evidential burden is appropriate in this instance as it is limited to reliance on codified exceptions in the Taxation Administration Act, and not the proving of innocence in and of itself. The defendant must only adduce or point to evidence that suggests a reasonable possibility that the matter exists or does not exist. This evidence will normally be peculiarly within the defendant's knowledge and means to produce, for example, an application to the superannuation trustee under the Family Law Act.

7.70 To the extent that Schedule 5 to the Bill limits the right to the presumption of innocence, these limitations are appropriate and consistent with the Attorney-General Department's Guide to Framing Commonwealth Offences.

Conclusion

7.71 Schedule 5 to the Bill is compatible with human rights because it promotes the protection of human rights, and to the extent that it may limit human rights, those limitations are reasonable, necessary and proportionate.