National Integrity Spotlight – April 2023

This edition of the National Integrity Spotlight considers a recent operation into corruption undertaken by the Australian Commission for Law Enforcement Integrity, the appointment of a new Privacy Commissioner specifically focusing on data breaches, the Senate Inquiry into existing Freedom of Information laws, the enlivenment of referendum disclosure obligations, a new consultation on AML/CTF laws, and an update following the 2023-2024 Budget.

ACLEI Operation Calder

On 12 April 2023, the Australian Commission for Law Enforcement Integrity (ACLEI) published Investigation Report for Operation Calder, an investigation into allegations that two Australian Federal Police (AFP) appointees (referred to as Appointee A and Appointee B) colluded to award redundancies to two other AFP appointees, that they were not legitimately entitled to receive.

Factors contributing to the Integrity Commissioner finding that there was no evidence of corrupt conduct by the Appointees A and B include:

(a)           the impugned actions did not result in any benefit to Appointee A or B

(b)           there was evidence that a lack of understanding informed certain decisions rather than a desire to achieve a particular outcome

(c)           while there was evidence of friendship between Appointee B and one of the redundancy recipients, the relevant decisions were made in consultation with a number of people, and at times bypassed Appointees A & B. As such, there was no evidence of collusion.

While Operation Calder was a relatively uncomplicated investigation and no corruption findings were made, it did identify imperfect practices in the AFP’s dealing with restructuring and redundancies, and recommended training in that area for all relevant staff.

Standalone Privacy Commissioner to be appointed in relation to serious data breaches

Australians who have had personal information exposed in cyber hacks and data breaches will be able to complain to a new Privacy Commissioner, dedicated to dealing with the growing threats to data security.

The decision to appoint a standalone Privacy Commissioner restores the Office of the Australian Information Commissioner (OAIC) to the three Commissioner model originally intended. This will mean that the OAIC will have three statutory office holders, being the Australian Information Commissioner (as agency head); a Privacy Commissioner; and a Freedom of Information (FOI) Commissioner.

The role of the Privacy Commissioner is to investigate serious privacy breaches and to ensure government agencies and large organisations are complying with relevant laws when handling personal information. The Privacy Commissioner can seek penalties of up to $50m for the most serious infringements. This was significantly increased from $2.2m following a number of recent high-profile breaches.

Senate Inquiry relating to Freedom of Information laws

A Senate Inquiry has been established to examine the significant backlog[1] of FOI requests following the resignation of former FOI Commissioner, Mr Leo Hardiman, in early March.

In considering the existing FOI system, the Inquiry will consider whether a statutory review deadline (as is in place in the United Kingdom) is necessary to address the lag in turnaround times associated with requests. It will also provide an opportunity for stakeholders to voice any concerns under the protection of parliamentary privilege.

The Inquiry is accepting submissions until 5 June 2023 and is scheduled to report back in early December with its findings. Submissions and feedback can be submitted to the Senate here.

Retrospective disclosure obligations in place for referendum

With the proposed Voice referendum forthcoming, the Australian Electoral Commission (AEC) has advised that relevant financial disclosure requirements have been put in place to promote accountability and transparency in the referendum process. These obligations are particularly applicable to ‘referendum entities’, being people or organisations that incur expenses for the dominant purpose of creating or communicating referendum matter.

Referendum matters are defined in the Referendum Act as a ‘matter communicated or intended to be communicated for the dominant purpose of influencing the way electors vote at a referendum.’[2] In determining whether a matter is for the dominant purpose of influencing the way in which people vote, a referendum entity should consider the accessibility, content, audience and timing of materials that have been communicated and whether voters provided consent to being provided with the information.

To the extent that referendum entities are creating or communicating referendum matters, they are required to disclose any referendum expenditure over the disclosure threshold, currently set at $15,200. Failure to do so will incur penalties of the greater of 60 penalty units (currently equivalent to $16,500) or three times the referendum disclosure not properly disclosed. The new disclosure obligations are retrospective and are now in effect.

Attorney-General announces consultation on AML/CTF laws

• On 20 April 2023, the Commonwealth Attorney General announced the commencement of a consultation process which will bring about major reforms to the Anti-Money Laundering and Counter-Terrorism Financing Act 2006.
• Australia is a founding member of the Global Financial Action Task Force (FATF), being the body that sets international standards to prevent global money laundering and terrorist financing. Australia is currently out of compliance with 16 out of 40 FATF Standards and the Attorney General has expressed the view that, as a result, Australia now risks being ‘grey-listed’ by the FATF.
• In March 2022, the Senate Standing Committees on Legal and Constitutional Affairs launched an inquiry into the adequacy and efficacy of Australia’s anti-money laundering and counter-terrorism financing (AML/CTF) regime. The Committee made four bipartisan recommendations, including that the AML/CTF regime be extended to tranche-two entities. Australia is currently one of only five jurisdictions in the FATF Global Network that does not regulate tranche-two entities.
• These recommendations have been adapted into a consultation paper and consider the simplification and modernisation of the operation of the regime; and the extension of the regime to certain high-risk professions, including lawyers, accountants, and real estate agents.
• More notable proposed changes include:

(a)           lowering the reporting thresholds for the gambling sector

(b)           amending the tipping-off offence

(c)           extending the regulation of digital currency exchanges

(d)           repealing the Financial Transaction Report Act 1988.

• The department has invited public submissions on the proposals discussed in the consultation paper. Submissions and feedback can be submitted to the Attorney General’s Department here. The closing date for submissions is 16 June 2023.

Budget Update

The Federal Government delivered the 2023-2024 Budget on 9 May 2023, with a number of relevant budget items in the corruption and integrity space.

Privacy

The Government has committed to $45.2 million over four years from 2023-24 (and $8.4 million per year ongoing) towards stronger privacy protection and enforcement, with funding including:

• $44.3 million over four years from 2023-24 (and $8.4 million per year ongoing) for the OAIC to appoint a standalone Privacy Commissioner, progress investigations and enforcement in relation to privacy and data breaches, and enhanced data and analytics capability
• $0.9 million over two years from 2023-24 for the Attorney-General’s Department to progress the Government’s response to the recent review of the Privacy Act 1988, and support a separate independent statutory review of Part IIIA of the Act.

AML/CTF funding

The Government has committed to $14.3 million over four years from 2023-24 to support policy and legislative reforms to Australia’s AML/CTF framework, including:

• $8.6 million over three years from 2023-24 to AUSTRAC to develop and consult stakeholders on legislative reforms to modernise Australia’s AML/CTF regime, and support and particulate in the evaluation of the regime against global standards by the Financial Action Taskforce
• $5.6 million over four years from 2023-24 in additional resourcing for the Attorney-General’s Department.

Additional Attorney-General Portfolio resourcing

Funding for the Attorney-General’s portfolio includes, but is not limited to:

• $6.2 million in 2023-2024 to be met from the Confiscated Assets Account under the Proceeds of Crime Act 2002 to continue electronic surveillance legislative reform
• $3.6 million in 2022-23 for Commonwealth representation before the Royal Commission into the Robodebt Scheme
• $3 million over four years from 2023-24 (and $0.8 million per year ongoing) for the Inspector of the National Anti-Corruption Commission to oversee the NACC in accordance with the National Anti-Corruption Commission Act 2022, as set out in the relevant legislation at the time it was passed.

Reform of the Federal Administrative Review

As previously announced, the Government has committed to support a new body to replace the Administrative Appeals Tribunal (AAT) and address the significant AAT backlog. The $89.5 million funding over 5 years from 2022-23 (and $1.5 million per year ongoing) includes:

• $63.4 million over two years from 2023-24 to appoint additional members to address the AAT backlog
• $14.4 million over five years from 2022-23 (and $1.5 million per year ongoing) for the Attorney-General’s department to manage the transition to the new review body
• $11.7 million over two years from 2022-23 to develop a modern case-management system for the new review body.

Anti-Slavery Commissioner

The Government committed to providing $8 million over 4 years from 2023-2024 (and $2 million per year ongoing) to establish an Anti-Slavery Commissioner to work across Government and the private sector to support compliance with the Modern Slavery Act 2018, improve supply chain transparency, and fight modern slavery in Australia and internationally.

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Authored by:
Cinzia Lee Donald, Partner (Lavan)
Kathy Merrick, Partner
Kelly Griffiths, Partner
Daniel Maroske, Director
Phoebe Brosnan, Senior Associate
Anna Fanelli, Associate
Kasia Jaruzelska, Associate
Sarah Maneckshana, Associate
Emma Bolton, Solicitor
Jethro Schoeman, Solicitor
Sophia Liu, Lawyer
Stefani Giangregorio, Lawyer

[1] In March this year, it was revealed that there are nearly 600 active FOI cases that are more than three years old, including 42 that remain unresolved after over five years. In May 2022, about half of all FOI requests had been sitting with the FOI office for over 12 months.

[2] Referendum (Machinery Provisions) Act 1984, s 3AA