SERIOUS AND ORGANISED CRIME (UNEXPLAINED WEALTH) BILL

Second Reading

Adjourned debate on second reading.

(Continued from 13 October 2009. Page 3468.)

The Hon. R.D. LAWSON (15:38): I indicate that Liberal members support the principle underlying this bill. We do support appropriate unexplained wealth declarations as a way of attacking organised crime. Contrary to claims frequently made by this government, this initiative is not one that began in South Australia. Both Western Australia and the Northern Territory already have legislation that contains unexplained wealth provisions, and in the United Kingdom and Italy there are also similar provisions.

It is interesting to see that, federally, in June this year, the federal Attorney-General, Robert McClelland, said that organised crime is costing this country some $15 billion a year. He notes that it inflicts substantial harm on the community, business and government, but he notes that, in many cases, people who arranged the crimes and profited from them are able to avoid prosecution, and he suggests that the commonwealth is closely examining legislation to include unexplained wealth provisions.

In August this year, the New South Wales government was pressed on the matter. The Premier there claimed that New South Wales wants a national approach to unexplained wealth laws but, as with all other governments, that government is examining these measures.

As I say, we support the principle of them but very often whilst one supports the principle, the detail by which the government seeks to achieve its aims is complex, and sometimes pitfalls arise, as indeed this government found with its ill-starred legislation in connection with the Serious and Organised Crime Control Act (the so-called 'bikies legislation') which the Full Court by a majority last month held contained a provision—and a central provision, section 14(1)—which was invalid because not merely the section itself but also other provisions of the act collectively compromised the institutional integrity of the court as a repository of federal jurisdiction, thereby invalidating the law.

We are anxious to ensure that this legislation does not contain similar defects. I think it is worth putting on the record what seems to me the essential principle that was applied by the majority—Justice Bleby and Justice Kelly—in reaching the decision they did in the 'bikies case', the correct name of which is Totani & Anor v the State of South Australia.

After very extensive analysis, Justice Bleby referred to the judgment of Chief Justice French in the case of K-Generation Pty Ltd v Liquor Licensing Court. That is a recent decision with which members will be familiar. It is a decision in which the High Court upheld provisions of South Australian law which enable the use of criminal intelligence in relation to applications under the Licensing Act. Justice Bleby quoted Chief Justice French as follows:

The question whether functions, powers or duties cast upon a court are incompatible with its institutional integrity as a court will be answered by an evaluative process which may require consideration of a number of factors. The evaluation process required is not unlike that involved in deciding whether a body can be said to be exercising judicial power.

There are a number of elements of this particular legislation that do require close examination. First, there is the use of criminal intelligence. Secondly, there is a reduced burden of proof. Proceedings for an unexplained-wealth declaration are conducted on the basis of proof on the balance of probabilities, which is of course the ordinary civil onus.

There are many other elements of the legislation that people would regard as questionable. For example, there is no requirement in this legislation that any offence or criminal conduct be proven against anybody. That in itself is a serious matter. Of course, it is easy to couch one's second reading rhetoric in relation to legislation of this kind on the basis that these provisions will only be used against organised criminals—the Mr Bigs, the drug traders and the like. However, the language of the legislation is not couched in that way. It is cast widely, so it is important that we ensure that all the appropriate protections required by law are in fact included.

I might mention by way of a general introduction some of the comparable legislation elsewhere. For example, the United Kingdom's Proceeds of Crime Act 2002 provides for the confiscation and restraint of the proceeds of crime. This is similar in respect of our existing confiscation of criminal assets legislation. In the United Kingdom Proceeds of Crime Act, assets can be either confiscated or restrained. To obtain an order from the court for a person's assets to be restrained, it is only necessary that the person is being investigated and there is a reasonable cause to believe that that person has committed an offence.

The United Kingdom also has a set of offences under the Proceeds of Crime Act which enable the confiscation of assets obtained from a 'criminal lifestyle'. Under section 75 of that act, a person is said to have a criminal lifestyle if they have been convicted of a number of serious offences, mainly drug trafficking offences, if they have been convicted of an offence over a period of at least six months from which they have obtained at least £5000, or if they have been convicted of a combination of offences which amount to a course of criminal activity, which is either a conviction in the current proceedings which are before the court of at least four offences from which they have benefited or a conviction in the current proceedings of one offence from which they have benefited, in addition to a least two other convictions on at least two separate occasions in the past six years.

Where a court has decided that a defendant has a criminal lifestyle, the act contains provisions which enable an assessment to be made as to the financial benefit that they have derived from their criminal lifestyle. The court may make certain assumptions in relation to property and expenditure, which the defendant is then required to disprove, thus reversing the onus of proof in relation to the assets held by those proven to have a criminal lifestyle.

By way of conclusion, in the United Kingdom legislation, the amount recoverable there is an amount equal to the defendant's total benefit from criminal conduct. I mention that because all of the United Kingdom provisions are predicated upon criminal conduct or criminal lifestyle. We do not have a similar stated requirement.

It is also interesting to note that there is a similar type of law in Italy. Italy has developed particular laws in relation to law enforcement to prevent the mafia from using illegally obtained assets to reinvest in further criminal enterprises. The Italian authorities claim that these laws have been very effective.

I mentioned earlier that Western Australia has unexplained wealth provisions, which were introduced in 2000. However, it must be said that the Western Australian legislation, which is much vaunted and supported by police authorities in Australia, has not been as successful as its original proponents might have expected or as some of its other supporters claim. For example, looking at the latest annual report of the Western Australian Office of the DPP, it appears that, whilst in that court they have been very active in relation to confiscation of criminal assets, in relation to obtaining assets on the grounds of unexplained wealth, there was only one case—bearing in mind that these were introduced in 2000—in 2003-04; one in the next year; in the following year 2005-06, there were three cases; none at all in the following year; and two cases in each of 2007-08 and 2008-09—in other words, a total of nine cases.

The number of declarations the Office of the DPP in Western Australia has obtained in relation to criminal assets amounts to some 409 over the same period, so in Western Australia these have been relatively uncommon. In the Northern Territory they have similar provisions and appear to have been rather more successful. Indeed, the relatively small jurisdiction has recovered substantial amounts of money—some $13 million in criminal property forfeiture cases, approximately $5 million actually forfeited to the Crown.

The Northern Territory police told a Senate committee examining the Australian Crime Commission that these laws have been very successful in addressing issues concerning outlaw motorcycle gangs, as well as other criminal groups. The Northern Territory authorities did comment on a point which ought to be understood here. They said that one of the effects of this legislation has been to drive criminals out of the Northern Territory into other states, such as South Australia and New South Wales; so one gets that displacement effect which would not be as serious an effect if we truly had a national approach to these matters.

It is interesting that, when attacked recently about his government's attitude towards an independent commission against corruption, the Premier said that he was not opposed to one in South Australia but he thought it should be a federal commission with national responsibilities. In relation to getting around a particular difficulty there it is convenient that we wait for national action, but in relation to this matter the government has decided to proceed forthwith and alone.

In connection with unexplained wealth declarations it is appropriate to look at its effect on organisations and individuals. In this connection detective superintendent Hollowood of the Victoria Police told the Senate committee that it was the experience in Victoria in relation to outlaw motorcycle gangs that 'it is generally individuals within the clubs who are involved in organised crime as opposed to the whole club or groups within the club conspiring to commit organised criminal offences'. He explained that, while individuals may use their position within the club as leverage to support their organised criminal activity, it is those individuals who directly benefit from organised crime and not the motorcycle club as a whole. He suggested to the Senate committee that unexplained wealth laws may be better adapted to preventing criminal behaviour taking place within motorcycle clubs 'as they target the benefits accumulated by the individuals of greatest concern to law enforcement'.

I think it is also interesting to put on the record the view of the Police Federation of Australia in the same Senate inquiry. Its submission was:

Do Australian police know who is involved in organised and serious crime in Australia? Do we know who they are? The answer is yes. Can we prove beyond reasonable doubt that these criminals are involved directly in those crimes? The answer is no. Are we aware that these criminals possess or have effective control of unexplained wealth? The answer is yes. Can these criminals or those holding the assets and wealth for these criminals explain on the balance of probability that they legally obtained that wealth or assets? The answer is no. We do not have to link anything to a crime. It is about them on the balance of probability explaining that they have got legally obtained wealth...We have not got any legislation in Australia to deal with that at the Commonwealth level...Unexplained wealth is the easiest way as a crime prevention method to stop further crime, because if the individuals who are holding onto those assets cannot explain them...the tendency is to just hand it over because they do not want to get into a debate about whether they are involved in criminality or not.

That encapsulates the police view, and it is a view which police commissioners have been expressing to police ministers conferences over very many years. We support the fact that something is being done, and I do not want to resile from that in any way at all.

It has been mentioned in the debate in relation to this matter that there are within the income tax laws provisions for the Commissioner of Taxation to undertake investigations and to issue an assessment on the basis of usually undeclared rather than unexplained wealth. It used to be termed a 'betterments assessment'. These are not unknown but are certainly not common.

There is a difference between that type of investigation by the Commissioner of Taxation and what is here proposed. In the taxation situation, the taxation authorities have to undertake an investigation under close examination and then to raise an assessment and issue it to the taxpayers on the basis that they cannot explain where their wealth has come from, but there is no capacity in the taxation regime to restrain those assets once they become suspected.

It is important, and it is an important element in this regime that is being considered in this bill, that there is a capacity on the part of the authorities to issue or apply to a court and obtain an order restraining the disposal of suspected assets because, as would be obvious to anybody, if anybody suspects that they are the subject of, or about to be the subject of, proceedings to seize their wealth, they will take immediate action to divest themselves of it and put it beyond the grasp of authorities.

There are some elements of the legislation that do require explanation. Because of the serious consequences of these orders, we think it is appropriate that the court that makes the orders be the District Court and that the power to make an unexplained wealth order is vested in the District Court. That is appropriate. However, some of the other procedures in the act can be undertaken in courts other than the District Court, presumably the Magistrates Court, as I read the legislation.

I ask the minister to indicate in his response the reason why, for example, clause 19, dealing with restraining orders, appears to enable any court, which would appear to include the Magistrates Court, to make such an order. It would be our view that it is more appropriate for the exclusive jurisdiction in relation to these powers to be exercised by the District Court because of the potential consequence for individuals. There is an appeal, which we strongly support, against any order made by the District Court to the Supreme Court.

We question why it is appropriate in South Australia to have the Crown Solicitor as the officer to initiate an unexplained wealth declaration. We notice below that the Attorney-General has said that these are civil proceedings and that it is appropriate that the Crown Solicitor undertake them. We believe it would be more appropriate, given the criminal underlay, for these applications to be made by the Office of the Director of Public Prosecutions. Indeed, in Western Australia it is the office of the DPP that undertakes these applications, and we will move accordingly.

We note also that the criminal intelligence provisions contain the usual protections and that the Commissioner of Police must keep criminal intelligence confidential. It can be divulged to the court, but there is a provision in clause 6 that criminal intelligence may be divulged to the Attorney-General. We query why it is necessary for criminal intelligence to be divulged to the Attorney-General in any circumstances. Obviously as the law provides it can be disclosed to the Crown Solicitor, the officer charged with making the application, and to the court. There is a provision that the Crown Solicitor acts entirely independently and exercises independent discretion. Why then should there been any occasion for the criminal intelligence to be divulged to a political office holder?

On the question of the role of the Crown Solicitor, it is said in clause 7 that the Crown Solicitor is to exercise an independent discretion in relation to his powers or functions, and it announces or proclaims that the Crown Solicitor does not act on the instructions of any other person or body. That is in the language of pronouncement: the Crown Solicitor 'does' not act. We believe a more appropriate formulation is that the Crown Solicitor 'shall' not act on the instructions of any other body or person; in other words, the section ought to be couched in the language of prohibition, because to simply put in a piece of legislation that the Crown Solicitor does not act on the instructions of any other person does not really establish anything but just proclaims the intention of parliament. It does not actually prevent some politician or official seeking to exercise some influence over the exercise of the discretion.

One of the matters that is agitating us closely is the fact that clause 12 of the legislation provides that an order can only be made against a person who has committed a serious offence or is subject to a control order. We know that at the moment the control order provisions of the serious and organised crime act in South Australia (our bikies legislation) have been declared void. No control orders can be issued because section 14(1), which provides that the magistrate must order a control order in certain circumstances, has been declared invalid. Therefore, we have a piece of legislation here which purports to make a control order, one of the elements which activates the court's powers. I ask the minister to explain during the committee stage, or in his summing up, how it is anticipated that this difficulty will be overcome.

I remind members that the powers that can be exercised under this act can only be exercised for the purpose of investigating or restraining the wealth of a person who has been convicted of a serious offence or is the subject of a control order, or in certain other circumstances where the Crown Solicitor reasonably suspects that the person was engaged or had been engaged in serious activity or regularly associates with persons who do engage in serious criminal activity or has been a member of an organisation which is a declared organisation. There is no way of testing the Crown Solicitor's belief in this regard.

So, there are a number of elements in the bill which can be explored during the committee stage to ensure that this legislation will not fall into the same trap that the government's earlier and much proclaimed legislation fell into. As I emphasised at the beginning, we support the principle. We want to ensure that the i's are dotted and the t's are crossed in relation to this matter, so that we have an effective regime.

One other question that I would ask the minister to explain arises under clause 38, which gives immunity from liability for the Attorney-General, the Solicitor-General, the Commissioner of Police or any other person exercising powers or functions under this act. We inquire why it is necessary to give special immunity to the Solicitor-General, because the Solicitor-General is not given any specific powers in relation to this act. Why name him and not the Crown Solicitor, who is the officer who is charged with the principal responsibility of initiating proceedings and pursuing them under this act?

Debate adjourned on motion of Hon. R.P. Wortley.