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Legislative Council - Fifty-Second Parliament, Second Session (52-2)
2013-05-02 Daily Xml
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STATUTES AMENDMENT (DIRECTORS' LIABILITY) BILL

Committee Stage

In committee.

(Continued from 30 April 2013.)

Clause 4.

The Hon. S.G. WADE: Clause 4 raises the issue of criminal liability in regulations. I refer honourable members to clause 4 proposed section 34(5), which reads:

The regulations may make provision in relation to the criminal liability of a member of the governing body, or the manager, of a body corporate that is guilty of an offence against the regulations.

In continuing my remarks on the bill and commenting specifically on clause 4 proposed section 34(5), I would like to restate the concern of the opposition at the imposition of criminal liability by regulation.

Before I do so, I want to clarify remarks that I made in relation to the preparation of amendments. On Tuesday I suggested that reporting progress would be an opportunity to test the council's interest in amendments in relation to criminal liability by regulation and, on the basis of that vote, parliamentary counsel might be spared the need to prepare further amendments. I want to clarify that I was in no way reflecting on parliamentary counsel. Parliamentary counsel has been proactive in ensuring that I have all the amendments I need in a timely fashion. I was merely seeking to ensure that my demands on the office of the parliamentary counsel were frugal and that they were not being put to unnecessary effort.

As we have explored the criminal liability in issues with the government and parliamentary counsel in relation to this bill, a range of issues has arisen that are much broader than this bill itself. If you like, we have encountered something of a Pandora's box and one that requires more thorough consideration than this bill would allow. As I said during the debate in this place on Tuesday, it is the opposition's view that the imposition of criminal liability is a serious matter and can have a serious effect on people's lives. Accordingly, our starting point is that parliament and only parliament should decide when criminal liability should be imposed. A commonly cited legal dictionary describes activities which should be regulated by the criminal law as activities of, and I quote:

such a heinous character that it should be stigmatised as being a crime, or that the criminalisation of the behaviour is the only practical way of regulating it.

Creating criminal offences does in fact stigmatise people and behaviours. Criminalising should be the only practical way of dealing with such behaviours. As a general principle, our view is that criminal liability should be spelt out in the act, not in the regulations. This bill envisages criminal liability in regulations. The creation of such liability deserves the full consideration of parliament.

As I stated on Tuesday, the Australian Institute of Company Directors, the Joint Legislation Review Committee of the CPA Australia Chartered Accountants and Institute of Public Accountants, and the Law Society of South Australia all share the opposition's concerns in relation to this bill and the imposition of criminal liability by regulations.

A number of examples of criminal liability being imposed by regulation have been brought to my attention. One is a clause of a former version of the Lottery and Gaming Regulations 2008. The effect of the regulation was to pierce the corporate veil. Through regulation, it imposed criminal liability on each person who was a member of the board, the chief executive or an employee who was responsible for the conduct of the lottery association or corporation at the time which the lottery association or corporation committed an offence against the regulations. That person or persons was liable for the same penalty as is prescribed for the principal offence.

I am advised that this regulation 'legislated' in a manner which was not authorised by the parent act and which was not contemplated by parliament when it enacted the regulation-making provisions contained in the Lottery and Gaming Act. The executive was legislating beyond its delegations. Regulations were taking on a life of their own. Thankfully the regulation has since been repealed but if it was still in effect it may be true that the regulation would not have survived a court challenge as it goes beyond the head of power contained in the act, but it is unlikely that anyone would have thought to challenge a regulation in the courts. We should not be putting citizens to the expense of keeping the state accountable to act within its power. Those who make the laws should not break the laws. My concern for the future is that unchallenged regulations such as these create a de facto president—sorry, precedent; we certainly do not have a de facto president. The executive may continue to include these types of provisions and regulations and they will continue to be in force until they are challenged.

The growth of this sort of regulation is another example of the increasing arrogance of the executive in relation to the parliament. More and more substantive provisions are finding their way into regulations. The government is frustrated with the democratic oversight of the parliament, particularly this council, and this frustration is manifesting itself in a cabinet which takes on a de facto legislative role that leaves this council with a mere veto power, with little ability to make any contribution or refinement at all.

These issues have previously been discussed—in fact, a couple of times earlier today—but also specifically in the consideration of the debate of my bill on subordinate legislation. Again, the contrast between the views of the government and the opposition is clear. The opposition has come to the view that this parliament needs to be vigilant in monitoring the capacity of the executive to establish criminal liability by way of regulation. While changes are necessary, it is our view that they are best addressed through a broader review of criminal liability and regulation rather than in a piecemeal way through this bill.

One option would be to limit the capacity for the executive to establish criminal liability and regulation through the subordinate legislation bill. My attention has been drawn to provisions in other parliaments which put such limits on the executive.

Another issue raised by this bill is the ongoing use of type 3 liability offences which impose a reverse onus of proof. In our view it is another example of the government's disregard for established legal rights and principles. We in the opposition have significant concerns about such type 3 liability and will be keeping a close watch on the operation of these provisions.

In terms of the current wave of reform, I am informed that 25 of the 50 acts amended by this bill retain provisions reversing the onus of proof. This is high compared with other jurisdictions. Recent reform in this area in New South Wales amended 44 acts and there are no type 3 provisions remaining in any of those acts. A bill before the Victorian parliament will only leave type 3 provisions in four of the acts it proposes to amend.

It is the opposition's view that type 3 offences should be revisited in the future. We want South Australia to be a good place to do business and part of those efforts will be to ensure that more onerous obligations in South Australia will not make it harder for South Australian businesses to attract and retain quality board members and officers, nor to infringe their capacity to attract investment.

In the meantime, I indicate to the council that in spite of my earlier interest in moving amendments to this bill, that is not my intention.

Clause passed.

Clause 5 passed.

Clause 6.

The Hon. I.K. HUNTER: I move:

Page 8, lines 7 to 9 (inclusive)—Delete clause 6 and substitute:

6—Substitution of section 23

Section 23—delete the section and substitute:

23—Offence in relation to obtaining permission to carry out mining operations

(1) A person must not, without the consent of the relevant Minister, give, offer or agree to give a payment or other consideration to another person (not being a payment or consideration otherwise permitted or provided for in this Act) in connection with obtaining the permission of Anangu Pitjantjatjara Yankunytjatjara to carry out mining operations on the lands.

Maximum penalty: $50,000 or imprisonment for 10 years.

(2) In this section—

relevant Minister, in relation to a payment or consideration, means—

(a) if the payment or consideration is in connection with mining operations authorised under the Mining Act 1971—the Minister responsible for the administration of that Act; or

(b) if the payment or consideration is in connection with mining operations authorised under the Petroleum and Geothermal Energy Act 2000—the Minister responsible for the administration of that Act.

With leave I will speak about both this amendment and the other amendment that I will move as they are essentially, I am advised, the same. The bill as passed by the House of Assembly will repeal subsection (2) of section 23 of the APY lands act and subsection (2) of section 25 of the Maralinga Tjarutja act.

These subsections impose vicarious directors' liability on every director if their company gives, offers or agrees to give an authorised payment or other consideration to another person in connection with obtaining the permission of the APY or the Maralinga Tjarutja to carry out mining or petroleum operations upon the land. These are anti-bribery offences. The current maximum penalty is only $2,000. That penalty was set about 30 years ago, I am advised, and at the time the bill was being drafted it had been agreed that the subsections should be repealed to remove vicarious personal criminal liability of directors.

It was also agreed that the penalty should be increased substantially. However, the level to which it should be increased was still subject to consultation and hence the delay until the consideration of the bill here. There has now been further consultation and may I commend the Minister for Agriculture, Food and Fisheries for her excellent consultation with the Minister for Aboriginal Affairs and Reconciliation and my department, with the chair and manager of the APY executive, Maralinga Tjarutja executive and Oak Valley Community Council.

It is considered that there is need for a very strong deterrence of this type of conduct. It has been agreed that the penalty should be increased to the same level as the penalty under these acts for unlawfully supplying regulated substances. The maximum penalties will be $50,000 or imprisonment for 10 years.

The Hon. S.G. WADE: I thank the honourable minister for the explanation. Is he able to tell us how these maximum penalties compare with other bribery offences, such as the CLCA public office type offences?

The Hon. I.K. HUNTER: I would have to look that up. If the member would like to take a moment, I can have my adviser go and try to do that now.

The Hon. S.G. WADE: I am happy to take it on notice.

The Hon. I.K. HUNTER: I will take the question on notice and bring back a response for the honourable member.

The Hon. M. PARNELL: The Greens are happy to support this amendment. It brought to mind the case of John Batman, who apparently bought the land around the city of Melbourne for some beads—I think there were some mirrors thrown in there as well—and 150 years later I think there are mining companies still out there trying the same tricks. I think that an antibribery provision that seeks to entrench the integrity of the official negotiation provisions, rather than having people bribed and bought off, is a good measure. If this is a fix-up that was discovered fairly recently, then I am glad it is being fixed, because it seems to be a very appropriate amendment.

The Hon. I.K. HUNTER: I can advise the chamber in relation to a juror's provision that the case for a body corporate is $25,000, in other cases $10,000 or imprisonment for two years. A more appropriate comparison would be section 249 of division 4—Offences relating to public officers. I thank the Hon. Mr Wade for his support. Maximum penalty imprisonment for 10 years; a similar effect.

The Hon. S.G. WADE: I thank the honourable minister for his answer. Considering that it is comparable with other offences, and I appreciate that a fine might be particularly appropriate in the context, the opposition supports the amendment.

Amendment carried; clause as amended passed.

Clauses 7 to 68 passed.

Clause 69.

The Hon. I.K. HUNTER: I move:

Page 26, lines 6 to 8 (inclusive)—Delete clause 69 and substitute:

69—Substitution of section 25

Section 25—delete the section and substitute:

25—Offence in relation to obtaining permission to carry out mining operations

(1) A person must not, without the consent of the relevant Minister, give, offer or agree to give a payment or other consideration to another person (not being a payment or consideration in discharge or partial discharge of a liability arising under this Act) in connection with obtaining the permission of Maralinga Tjarutja to carry out mining operations on the lands.

Maximum penalty: $50,000 or imprisonment for 10 years.

(2) In this section—

relevant Minister, in relation to a payment or consideration, means—

(a) if the payment or consideration is in connection with mining operations authorised under the Mining Act 1971—the Minister responsible for the administration of that Act; or

(b) if the payment or consideration is in connection with mining operations authorised under the Petroleum and Geothermal Energy Act 2000—the Minister responsible for the administration of that Act.

As I related earlier, it is essentially the same amendment, and I seek the support of the committee.

The Hon. S.G. WADE: It does seem to be rather broad:

A person must not, without the consent of the…Minister, give, offer or agree to give a payment or other consideration to another person…in connection with…mining operations on the lands.

I do not profess to be as well versed in Aboriginal operations on the lands as my honourable colleague Terry Stephens, but I would have thought that that would have picked up a large range of payments, for example, perhaps a day fee in relation to an inspector under the Aboriginal Heritage Act or the like.

The Hon. I.K. HUNTER: My advice is that there are some permitted fees that the act allows, but this is more directed towards instances such as offering a car or a holiday. However, I point out that this amendment is in the same terms as the amendment we just passed, section 23, which is an amendment to the APY act. Section 25 is an amendment to the Maralinga Tjarutja act, and they are identical as far as I know.

Amendment carried; clause as amended passed.

Remaining clauses (70 to 104) and title passed.

Bill reported with amendment.

Third Reading

The Hon. I.K. HUNTER (Minister for Sustainability, Environment and Conservation, Minister for Water and the River Murray, Minister for Aboriginal Affairs and Reconciliation) (18:02): I move:

That this bill be now read a third time.

Bill read a third time and passed.

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