Second Reading - Unexplained Wealth Amendment

I rise to speak in support of the Unexplained Wealth Legislation Amendment Bill 2018. This bill, like the bill addressing issues of the black economy, is about ensuring that those people who rort the system and involve themselves in criminal activity don't get the benefit of their activities, because everyone in Australia is penalised by those who try to game the system in their own interests and against us all. For instance, the failure to collect due revenue has serious repercussions for the delivery of government programs that are important to be compassionate to people in our community who need it.

The point of this bill is to ensure that those people who have assets beyond their expected means that are suspected of being derived from criminal activity can be held accountable for that and may be liable to the forfeiture of those assets acquired as a consequence of being involved in crime.

It's interesting to reflect that, back in 1984, Frank Costigan QC in his report into the infiltration of organised crime on the waterfront in Victoria—the Royal Commission into the Activities of the Federated Ship Painters and Dockers Union—noted:

… the most successful method of identifying and ultimately convicting major organised criminals is to follow the money trail.

Justice Moffitt also recognised in the 1980s in his piece called A quarter to midnight, the Australian crisis: organised crime and the decline of the institutions of state that:

… the path to conviction is slow, torturous and expensive … The criminal justice system is not adequate to secure the conviction of many organised crime figures.

Bartels in her review—A review of confiscation schemes in Australia 2010—noted that in the first year of the Commonwealth's non-conviction measures, which was 2003-03, a mere $162,826 was collected from non-conviction measures compared with conviction based measures of $3,125,799. By 2008-09, this had significantly changed and conviction based recovery then amounted to $888,000 while non-conviction measures collected $18,313,516—an excellent demonstration of the success of the approach.

Unexplained wealth laws provide additional and very necessary weaponry in the fight against crime to the established proceeds of crime laws. It's estimated—just to give some sense of its size—that, in the period from 1995 to 1996 through to 2014, the confiscation of money through proceeds of crime actions amounted to some $623 million. This is compared to the estimation in this period by the then Australian Crime Commission, which believed organised crime cost the Australian economy $10 billion a year.

So, what are the general arguments in support of unexplained wealth laws? The Police Federation of Australia, in a submission, identified three objectives with explained wealth laws: firstly, they deter those people who contemplate criminal activity by reducing the possibility that they will gain or keep a profit from their activity, even if they might be later held criminally responsible; secondly, they prevent crime by diminishing the capacity of offenders to finance any future criminal activity that they might be considering engaging in; and, thirdly, they remedy the unjust enrichment of criminals who profit for themselves at society's expense.

The Australian Federal Police has noted that investigations can often be frustrated by a lack of evidence against people with significant wealth and no apparent source of legitimate income. The AFP has also acknowledged in the past that sophisticated criminals organise their arrangements carefully to maintain an arms-length relationship between themselves and the source of illegal income. The capacity to align income to a specific crime in those circumstances can be difficult. Professor Rod Broadhurst of the Australian National University has observed that tainted or unexplained wealth may be the only means to reliably identify criminal entrepreneurs whose involvement in organised crime is usually indirect in terms of actual commission. Unexplained wealth laws are one of the most effective means to investigate and prosecute the otherwise very difficult offences of corruption and bribery, which often facilitate serious crime.

Unexplained wealth provisions have been successfully used in Italy to counter problems with organised crime. The Italian government acknowledged that, while jail time is important, the deprivation of assets that are the products of crime is equally important, particularly when jail time can't ultimately be achieved. Other countries with unexplained wealth legislation include the United States of America, the United Kingdom, New Zealand and Switzerland. The schemes in those countries appear to have been effective.

I have some experience of these matters. Before coming to this place I served as a Commonwealth prosecutor. The Commonwealth Director of Public Prosecutions and the Australian Federal Police often worked together in attempting to seize the proceeds of crime from those who had been engaged in crimes such as drug importation, corporate crime and tax fraud, among other offences. In my view there was a real hobbling of the work of law enforcement. People with illegally obtained money were able to use it either to string out legal proceedings to their own advantage or to out-muscle the criminal justice process.

What will this bill do to make sure that these people who don't do the right thing are penalised? More particularly, how will it help us deal with the problem I have just mentioned? Unexplained wealth regimes allow courts to restrain a person's wealth where there are reasonable grounds to suspect that their lawfully acquired wealth is less than their total wealth. If the suspect cannot prove that their restrained wealth was lawfully obtained, such as through employment or legitimate business activities, they will be required to forfeit that wealth.

Due to constitutional limitations, however, the Commonwealth regime requires authorities to establish a link with a Commonwealth or foreign offence or a state offence with a federal aspect. The bill creates a national cooperative scheme on unexplained wealth, which will involve the states and which will overcome this limitation and enhance the unexplained wealth regimes of all jurisdictions.

What are the key features of this national scheme? The scheme will expand the existing Commonwealth regime. The bill allows the AFP to seize unexplained wealth where there is a connection to a broader range of state and territory offences. This will allow a single unexplained-wealth order to target a national crime syndicate, instead of having to go through a patchwork of orders that have until now been sought by Commonwealth, state and territory authorities separately. It will improve information-gathering powers. Law enforcement agencies in participating jurisdictions can apply for production orders or issue notices to financial institutions. These compel the production of information or documents to unexplained wealth investigators to try and help them get to the bottom of the problem they're trying to solve. It will allow officers in participating jurisdictions to use lawfully intercepted telecommunications information in dealing with unexplained wealth matters. Those participating jurisdictions which contribute to the seizure of property or related criminal matters will generally receive equal shares of the seized assets under these new equitable sharing arrangements. That will provide incentives for national cooperation on this issue. The current operation of state and territory regimes has otherwise been preserved. Under the proposed intergovernmental agreement, jurisdictions must inform one another of operations or legislative changes that may impact upon other jurisdictions. The scheme will be reviewed after four years. That's an important protection, but I note what Senator Brockman put before this chamber only a moment ago—that is, that they are used only rarely and sparingly, and not as a routine breach of privacy.

The jurisdictions which are joining this national scheme include New South Wales, which introduced legislation to refer their power to the Commonwealth on 6 June 2018. The Australian Capital Territory and the Northern Territory will automatically be brought into the scheme on the passage of the bill, not requiring a referral to effect that. Negotiations with the remaining states continue. There's a reasonable question that could be asked: why implement this scheme without having the support from all of the states already signed up? Well, there are some practical answers to that. Negotiations have been ongoing since 2014, and the government wishes to ensure that jurisdictions which are eager to join the scheme are not further delayed. The bill, along with the New South Wales legislation, will allow New South Wales, the Northern Territory, the Australian Capital Territory and the Commonwealth to join the scheme immediately and start to realise its benefits. Other states will continue to be encouraged to join the scheme, of course, to maximise these benefits and to provide a national, strong and united front against serious and organised crime.

A further question that could be asked is: why should we allow the states to determine the offences that will be referred to be dealt with under this scheme? Doing it this way ensures that states can refer offences in way that is consistent with the unexplained wealth powers that already exist within that state. For instance, New South Wales's unexplained wealth orders can only be sought where a property or person can be linked to particular serious offences. New South Wales's referral has been limited to these serious offences to ensure that the Commonwealth doesn't have greater power over New South Wales offences than would exist within the existing New South Wales unexplained wealth regime. Every offence added by the states extends the scope of Commonwealth unexplained wealth orders and increases their effectiveness in nationally addressing inter-jurisdictional criminal conduct.

The scheme has both political and expert support. It was a coalition election commitment in 2013, and I'm pleased to see our government delivering on it. The scheme implements the key recommendations of the February 2014 independent report of the panel on unexplained wealth. Implementation of the scheme was also recommended by the final report of the National Ice Taskforce and endorsed by the COAG process in the National Ice Action Strategy 2015. I'm not alone in saying that our community demands that we do all that is possible to deal with the scourge of ice in our community. The then Labor government in February 2013 agreed to seek a referral of powers from the states and territories for the purpose of legislating for a national unexplained wealth regime in response to the Parliamentary Joint Committee on Law Enforcement inquiry into Commonwealth unexplained wealth legislation arrangements.

To summarise, this bill establishes a national cooperative scheme on unexplained wealth which enables jurisdictions to work together to deprive criminals of wealth irrespective of the jurisdiction in which they operate. The Commonwealth, New South Wales, Northern Territory and ACT will participate in the scheme from the outset, and other jurisdictions will be encouraged to join over time. The bill will strengthen the ability of agencies to crack down on those who have unexplained wealth obtained from the proceeds of criminal activity by allowing the Commonwealth to use unexplained wealth orders in relation to a broader range of offences, including referred state offences and territory offences. It will allow law enforcement agencies and participating jurisdictions to compel persons and financial institutions to provide certain information that is relevant to understanding and advancing unexplained wealth cases. Law enforcement agencies and participating jurisdictions will have the ability to use lawfully intercepted telecommunications information to deal with unexplained wealth matters. It will allow greater coordination of unexplained wealth investigations as between various agencies and the states and territories with the Commonwealth, and it will allow participating jurisdictions to benefit from preferential treatment in the distribution of seized assets under the new equitable sharing arrangements. I support this bill because it sends a strong message to those who engage in criminal activity that the assets they obtain at the expense of our community won't be safe, no matter how well they think they can dodge law enforcement in this country.