Scrutiny of Bills Second Report of 1998
SENATE STANDING COMMITTEE FOR THE SCRUTINY OF BILLS
SECOND REPORT OF 1998
11 March 1998
ISSN 0729-6258
MEMBERS OF THE COMMITTEE
Senator B Cooney (Chairman)
Senator W Crane (Deputy Chairman)
Senator J Ferris
Senator S Macdonald
Senator A Murray
Senator J Quirke
TERMS OF REFERENCE
Extract from Standing Order 24
(1)
(a) At the commencement of each Parliament, a Standing Committee for
the Scrutiny of Bills shall be appointed to report, in respect of the
clauses of bills introduced into the Senate, and in respect of Acts of
the Parliament, whether such bills or Acts, by express words or otherwise:
(i) trespass unduly on personal rights and liberties;
(ii) make rights, liberties or obligations unduly dependent upon insufficiently
defined administrative powers;
(iii) make rights, liberties or obligations unduly dependent upon non-reviewable
decisions;
(iv) inappropriately delegate legislative powers; or
(v) insufficiently subject the exercise of legislative power to parliamentary
scrutiny.
(b) The Committee, for the purpose of reporting upon the clauses of a
bill when the bill has been introduced into the Senate, may consider any
proposed law or other document or information available to it, notwithstanding
that such proposed law, document or information has not been presented
to the Senate.
SENATE STANDING COMMITTEE FOR THE SCRUTINY OF BILLS
SECOND REPORT OF 1998
The committee presents its Second Report of 1998 to the Senate.
The committee draws the attention of the Senate to clauses of the following
which contains provisions that the committee considers may fall within
principles 1(a)(i) to 1(a)(v) of Standing Order 24:
Health Insurance Amendment Act (No. 1) 1997
Insurance Laws Amendment Bill 1997
Health Insurance Amendment Act (No. 1) 1997
Act No. 146, 1997
The Health Insurance Amendment Bill (No. 1) 1997 was agreed to by the
Senate with one Government amendment on 4 September 1997 and received
the Royal Assent on 9 October 1997. Clause 2 of the bill provided for
the Act to commence on the 28th day after it received the Royal Assent.
[Portfolio responsibility: Health and Family Services]
The Act amends the Health Insurance Act 1973 in relation to the
Professional Services Review Scheme. Particularly, it:
- ensures that there is no doubt that judicial power is not being exercised
by the executive under the Scheme;
- brings the class of practitioners in Parts VAA and VA of the Act into
line with definitions contained elsewhere in the Act;
- clarifies the test under which a Committee reports on the conduct
of a practitioner;
- provides a clearer approach to calculating the amounts of Medicare
benefits to be repaid; and
- repeals sampling provisions.
In this report, the committee takes the opportunity, conferred by paragraph
(1)(a) of its terms of reference, to report on the provisions of an Act
of the Parliament.
The committee commented on the bill in Alert Digest No. 6 of 1997 where
it noted that proposed subsection 105A(6), to be inserted by item 9 of
Schedule 1 of the bill, contained an abrogation of the right to silence
in that a person, other than a person under review, was not excused from
producing a document prior to a hearing under the Professional Services
Review Scheme on the ground that production of the document may incriminate
him or her. The committee noted, however, that proposed subsection 105A(7)
would make inadmissible in evidence against the person, in any criminal
proceedings or proceedings for recovery of a pecuniary penalty, the document
and any information obtained as a direct or indirect result of producing
the document. Such inadmissibility was subject to an exception in respect
of a proceeding for an offence under subsection (5) (creating an offence
of knowingly producing a document that contains a statement that is false
or misleading in a material particular without identifying the false or
misleading material). The committee has commented on many such provisions
in the past and, in this case, had no concern with the provision.
Retrospectivity—increased sanctions
At the end of January 1998, the committee received representations from
a firm of solicitors drawing the committee's attention to a possible element
of retrospectivity in the Act. The firm of solicitors noted that section
4 of the Act specifies that the amendments made by certain items in Schedule
1 of the Act do not apply to matters referred under section 86 of the
Health Insurance Act 1973 (referral by the Health Insurance Commission
to the Director of Professional Services Review of conduct by medical
practitioners) before the commencement of the Act. As several items in
the Act increased sanctions for professional misconduct but were not the
subject of a similar application provision, the firm of solicitors sought
the committee's view on whether the Act implied that the increased penalties
applied to matters that had been referred under section 86 of the Health
Insurance Act 1973 but which had not been finalised before the commencement
of the amending Act.
Items 9, 10, 21 and 22 of Schedule 1 of the Act affect sanctions for
overservicing. In particular, items 21 and 22 increase the maximum period
of partial or full disqualification from access to Medicare of a medical
practitioner, in respect of whom a determination has been made that the
practitioner engaged in inappropriate service, from 12 months and 6 months,
respectively, to a maximum period of 3 years for both partial and full
disqualification.
The Act contains no explicit direction that the increased sanctions contained
in items 21 and 22 are to apply retrospectively; that is, to matters which
have been referred for investigation before the commencement of the Act
but which are determined subsequently to the Act's commencement. While
noting that any particular dispute as to the application of penalties
under the Act is ultimately a matter for resolution by the courts, the
committee nonetheless makes the following observations.
Various authorities have written on the subject of the application of
penalties that have been increased after the commission of the relevant
offence.
Kate Warner in chapter 12.3 of The Laws of Australia (ed J A Riordan,
The Law Book Company Limited, Sydney 1996) describes three grounds by
virtue of which a new penalty provision that increases a penalty may not
apply to an offence committed before its commencement. The first of these
is an Interpretation Act provision which has the effect of preserving
the old penalty. The second is a statutory provision that expressly states
that increases in penalty do not apply to offences committed but untried,
while the third is the common law presumption against retrospectivity
(pages 19-20). The Commonwealth Acts Interpretation Act 1901 provides
for the preservation of penalties where Acts or parts of Acts are repealed
(section 8) but does not expressly provide for the effect of amendment
of penalty provisions. The Crimes Act 1914, however, provides as
follows:
4F Effect of alterations in penalties
(1) Where a provision of a law of the Commonwealth increases the penalty
or maximum penalty for an offence, the penalty or maximum penalty as increased
applies only to offences committed after the commencement of that provision.
(2) Where a provision of a law of the Commonwealth reduces the penalty
or maximum penalty for an offence, the penalty or maximum penalty as reduced
extends to offences committed before the commencement of that provision,
but the reduction does not affect any penalty imposed before that commencement.
Of the common law presumption against retrospectivity, Warner says:
The common law presumption that legislation is not to be construed as
having retrospective effect unless such a construction appears clearly
from its terms or arises by necessary implication has been applied to
prevent an increased penalty applying to an offence committed prior to
the increase. However, there appears to be some difference of opinion
as to the strength and effect of the presumption. ...The reasoning in
cases where an increased penalty has been held to apply, based on the
wording of the statute or the premise that since the legislation relates
to future convictions it is not retrospective, is not convincing. To rebut
the presumption against retrospectivity of laws increasing penalties very
clear words are needed, and the presumption is not to be avoided by adopting
a narrow view of retrospectivity. (page 21)
In Statutory Interpretation in Australia (3rd ed 1988), D C Pearce
and R S Geddes write:
The courts generally assume that legislation is not intended to operate
retrospectively.... This presumption is most strictly applied in relation
to Acts creating an offence because of the manifest injustice that the
alternative approach would bring about ... A particular problem in regard
to the application of the presumption against retrospectivity has arisen
where a person is charged with an offence and after that date, but before
the hearing of the charge, the penalty for the offence is increased. Is
the person liable to the penalty applicable at the date of the offence
or at the date of conviction? [cases discussed, including Samuels v
Songaila (1977) 16 SASR 397] ...In essence, the court considered that
to apply the increased penalty would subject the person retrospectively
to an increased liability. Without clear legislative intention this should
not be done. ...Lush J in Bakker v Stewart [1980] VR 17 had no
doubt that an increased penalty was not applicable to offences committed
before its enactment. (pages 171-72)
Andrew Palmer and Charles Sampford express the following view:
There is a general presumption of statutory interpretation that, in the
absence of a clear intention to the contrary, statutes do not have retrospective
operation. Procedural statutes, however, are applied retrospectively to
all actions or proceedings which are not completed at the time of enactment,
no matter when the right to the action accrued. ...On several occasions
the courts have held that a statute conferring on a court a new power
to grant a remedy or make an order is procedural. This is perhaps surprising
as the granting of such a remedy or the making of such an order could
drastically alter the outcome of an action. This is even more obvious
where the penalty for a criminal offence is increased: the cases are divided
as to whether the penalty to be imposed on a convicted person is that
which existed at the date of the offence or that which exists at the date
of conviction. (“Retrospective Legislation in Australia—Looking
back at the 1980s”, (1994) 22 F L Rev, pages 272 and 274)
The committee notes that while the authorities differ, the common ground
between all views is the presumption against retrospectivity in the absence
of a clear intention to the contrary. In the absence of any such explicit
intention to the contrary in respect of the increased sanctions in the
Act, the committee seeks confirmation from the Attorney-General that the
presumption against retrospectivity would be expected to operate in this
case.
Insurance Laws Amendment Bill 1997
This bill was introduced into the House of Representatives on 4 December
1997 by the Parliamentary Secretary (Cabinet) to the Prime Minister. [Portfolio
responsibility: Treasury]
The bill proposes to amend the following Acts:
- Insurance Act 1973 to streamline the processes for form setting
and lodgement of accounts and statements within the Insurance and Superannuation
Commissioner by authorised insurers in Australia;
- Insurance (Agents and Brokers) Act 1984 to:
- make certain technical amendments;
- insert additional definitions; and
- strengthen broker disclosure notification requirements;
- Insurance Contracts Act 1984 to:
- place contracts of insurance over non-commercial marine pleasure
craft owned by individuals within the scope of the Insurance
Contracts Act 1984 and removing them from the ambit of the Marine
Insurance Act 1909;
- amend provisions relating to information flows between contracting
parties; and
- amend provisions relating to the insured's duty of disclosure; and
- Insurance Act 1973, Insurance (Agents and Brokers) Act 1984
and Insurance Supervisory Levies Collection Act 1989 to amend
the prudential supervisory arrangements for Lloyd's of London to improve
the security arrangements for Lloyd's underwriters' Australian policyholders.
The committee dealt with this bill in Alert Digest No. 1 of 1998, in
which it made various comments. The Assistant Treasurer has responded
to those comments in a letter dated 10 March 1998. A copy of that
letter is attached to this report, and relevant parts of the response
are discussed below.
Power of entry and search without warrant
Item 5 of Schedule 2 - proposed subsection 80(1)
In Alert Digest No. 1 of 1998, the committee noted that proposed subsection
80(1), to be inserted in the Insurance Act 1973 by item 5 of Schedule
2 to this bill provides:
Entry on premises
(1) If the Commissioner or the inspector, while investigating the whole
or a part of the affairs of a designated security trust fund, believes
on reasonable grounds that it is necessary for the purposes of the investigation
to enter land or premises occupied by:
(a) the trustee, or a former trustee, of the fund; or
(b) the custodian, or a former custodian, of the fund; or
(c) the investment manager, or a former investment manager, of the fund;
the Commissioner or the inspector may, at all reasonable times, enter
the land or premises and may:
(d) examine books on the land or premises that relate to the affairs
of the trust fund or that the Commissioner or inspector believes on reasonable
grounds relate to those affairs; and
(e) take possession of any of those books for such period as the Commissioner
or inspector thinks necessary for the purposes of the investigation; and
(f) make copies of, or take extracts from, any of those books.
This power of entry and search is not subject to any requirement that
the officer obtain a judicially sanctioned search warrant before entering
the premises.
The committee recognised that, in this respect, subclause 31(1) does
not differ from similar provisions in taxation laws. For example, the
Income Tax Assessment Act 1936 contains a provision (section 263)
of similar effect. Another example occurs in the Superannuation Contributions
Tax (Assessment and Collection) Act 1997.
There would appear, however, to be no basis in principle for giving officers
enforcing insurance laws greater powers than officers enforcing criminal
law where a judicially sanctioned warrant is generally required. The committee
was also interested to receive advice on what might constitute “reasonable
grounds” for exercising the power of entry.
Accordingly, the committee sought the advice of the Treasurer on this
issue.
Pending the advice of the Treasurer, the committee drew Senators' attention
to the provision, as it may be considered to trespass unduly on personal
rights and liberties, in breach of principle 1(a)(i) of the committee's
terms of reference.
The Assistant Treasurer has responded as follows:
I understand the Committee has concerns that proposals contained in Item
5 of Schedule 2 of the ILAB, in particular proposed subsection 80(1) which
contains a power for entry onto premises without a search warrant, may
be considered to trespass unduly on personal rights and liberties. In
response to the Committee's concerns, I draw your attention to the following.
The main purpose of the ILAB is to amend the prudential supervisory arrangements
under the Insurance Act 1973 for Lloyd's of London (Lloyd's) to
improve the security arrangements for Lloyd's underwriters' Australian
policyholders. The amendments set out in this Bill will change the regulatory
requirements for Lloyd's underwriters in Australia so as to accommodate
the initiatives in Lloyd's `reconstruction and renewal' plan while at
the same time substantially enhancing the regulatory protection for Lloyd's
underwriters' Australian policyholders and bringing the supervision of
Lloyd's more into line with that of corporate insurers in Australia. A
key element of the new arrangements is the proposed creation of a series
of designated security trust funds (DSTFs) which will be funded to the
extent of outstanding Australian policyholder liabilities.
Proposed subsection 80(1) allows the Insurance and Superannuation Commissioner
(the Commissioner), or an inspector appointed by the Commissioner, a power
of search and entry over the premises of a trustee, custodian or investment
manager (or former trustee, custodian or investment manager) of a DSTF
when undertaking an investigation of the affairs of such a fund. The proposed
subsection is not subject to a requirement that the Commissioner, or the
duly appointed investigator, obtain a search warrant before entering such
premises.
The proposed subsection 80(1) is consistent with similar powers of the
Commissioner under subsection 54(1) of the Insurance Act 1973,
relating to the investigation of corporate insurers. Moreover, section
140 of the Life Insurance Act 1995 and section 268 of the Superannuation
(Industry) Supervision Act 1993 also give the Commissioner similar
powers. These powers underpin the prudential regulation role of the ISC,
which sometimes requires swift and decisive intervention into the affairs
of insurance companies and superannuation entities in order to safeguard
policyholder or member entitlements. In this regard, proposed subsection
80(1) is consistent with the objective of the Bill to more closely align
the supervision of Lloyd's with that of corporate insurers in Australia
and is consistent with other ISC administered prudential regulation more
generally.
Further, under proposed subsection 68(1), Item 5 of Schedule 2 of ILAB
the Commissioner may, by written instrument, require Lloyd's to ensure
that there are such security trust funds arrangements in existence as
are specified in, or ascertained in accordance with, the instrument. This
instrument is currently being drafted and will require, among other things,
that the Commissioner may only approve a trustee if that trustee is a
corporation. In addition, as a matter of policy, it is likely that the
role of custodian and investment manager (who will only be able to be
engaged with the prior consent of the Commissioner) will be fulfilled
only by corporate entities. Accordingly, the powers of search and entry
will be exercised only upon a limited class of corporations and will not
affect the personal rights and liberties of individuals.
I note that the Committee has also sought information as to what would
constitute `reasonable grounds' for the purposes of entering onto premises
under proposed subsection 80(1). These powers of entry can only be
used in the most serious of circumstances. In particular, only a DSTF
which is under investigation by the Commissioner or by a duly appointed
inspector can be subjected to the power. Proposed section 79 sets out
the circumstances and procedures for instigating an investigation of a
DSTF and under this section, the Commissioner or investigator would need
to be satisfied that the DSTF did not constitute, or is unlikely to constitute,
an adequate security for the class of insurance liabilities secured by
the fund, or that Lloyd's, or the trustee of a DSTF, has contravened a
provision of Part VII of the Insurance Act 1973.
In summary, effective prudential supervision demands an appropriate balance
between the capacity for the prudential regulator to intervene quickly,
and procedural considerations which protect the rights and liberties of
the companies/directors concerned. In an environment of rapid capital
mobility and electronic funds transfers, the need for the Commissioner
to formally apply for a search warrant could delay or unduly impede critical
stages of an investigatory process, and thereby potentially jeopardise
the security of policyholder/member interests. When balanced against the
threshold checks and balances for instigating an investigation in proposed
section 79, the imperatives of prudential supervision and the requirements
that the basis and timing of any entry onto premises or land be `reasonable',
the Government considers that proposed section 80(1) is appropriate.
I trust that the above information is useful in the Committee's deliberations
regarding concerns over specific provisions of the ILAB.
The committee thanks the Assistant Treasurer for this comprehensive response
and notes that several precedents for this type of provision are listed.
The fact that there is precedent for a course of action is a weighy factor
in deciding whether or not the Senate's attention should be drawn to a
matter. But it is not a conclusive factor and other considerations may
lead the committee to comment on a particular piece of legislation.
The committee notes the Assistant Treasurer's comments on how the legislation
is intended to operate and, in particular, the expectation that the roles
of trustee, custodian and investment manager will be filled only by corporate
entities. The committee is concerned, however, that there is no express
limitation in the bill confining the exercise of these powers to corporate
entities. The committee requests the Treasurer to consider the possibility
of an amendment to the bill to limit the exercise of search and seizure
powers to premises other than residential premises, and seeks a response
from the Treasurer on this issue.
Pending the advice of the Treasurer, the committee continues to draw
Senators' attention to the provision as it may be considered to trespass
unduly on personal rights and liberties, in breach of principle 1(a)(i)
of the committee's terms of reference.
Barney Cooney
Chairman
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