Referral
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On 5 February 2020, the Commonwealth Electoral Amendment (Donation Reform and Other Measures) Bill 2020 (the bill) was introduced into the Senate by Senator Jacqui Lambie.
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On 27 February 2020, pursuant to the report of the Senate Selection of Bills Committee, the bill was referred to the Senate Finance and Public Administration Legislation Committee (the committee) for inquiry and report by 30 June 2020.
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The committee subsequently agreed to extend the reporting date to
25 September 2020, and notified the President of the Senate.
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On 3 September 2020, the Senate extended the committee's reporting date to 3 December 2020.
Conduct of the inquiry
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Details of the inquiry, including links to the bill and associated documents, were published on the committee's website.
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The committee directly contacted a number of organisations and individuals to notify them of the inquiry and invite submissions.
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The committee received 24 submissions, which are listed in Appendix 1.
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The committee held a public hearing in Canberra on 12 November 2020. The witness list for the hearing can be found at Appendix 2.
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The committee thanks those persons and organisations who contributed to the inquiry by preparing written submissions and by providing evidence at the committee's public hearing.
Purpose of the bill
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The bill seeks to amend the Commonwealth Electoral Act 1918 (Electoral Act), to improve transparency and accountability in relation to political donations at the Commonwealth level. The bill proposes more frequent and detailed disclosures of donations by recipients and donors; strengthened compliance measures; and enhanced monitoring and investigation powers available to the Australian Electoral Commission (AEC).
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According to the bill's Explanatory Memorandum (EM), the bill is in response to community concern about the influence of donations on the federal political process. This is echoed in Senator Lambie's second reading speech, with the Senator noting that the bill 'contains a lot of…things that Australians have been begging for', and reflects 'a cohesive plan to get the Commonwealth up to speed with community expectations when it comes to donations disclosures'.
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The EM also notes that the provisions of the bill mirror similar laws in the states and territories, and asserts that the bill will bring Commonwealth laws into line with other Australian jurisdictions.
Background to the bill
Regulatory framework for political donations and electoral expenditure
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At the federal level, political finance is regulated under Part XX of the Electoral Act. Political parties, campaigners, members of Senate groups, donors and others must disclose donations, gifts and electoral expenditure to the AEC.
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Relevantly, 'gift' is defined under the Electoral Act as:
[A]ny disposition of property made by a person to another person, otherwise than by will, being a disposition made without consideration in money or money's worth or with inadequate consideration, and includes the provision of a service (other than volunteer labour) for no consideration or for inadequate consideration.
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However, 'gift' does not include payments under Division 3 of Part XX (relating to election funding); annual fees paid for membership with a political party; or visits, experiences or activities provided for the purposes of a political exchange program.
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The disclosure of donations, gifts and electoral expenditure is subject to a minimum disclosure threshold, below which detailed disclosure is not required. The threshold is currently $14 300—subject to indexation.
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Under Part XX of the Electoral Act, registered political parties, political campaigners and associated entities must lodge annual returns with the AEC within 16 weeks after the end of the financial year. Returns must set out the total value of receipts, payments and debts, as well as details of individual receipts exceeding the disclosure threshold. Third parties must also lodge annual returns with the AEC within 20 weeks after the end of the financial year. These must set out electoral expenditure incurred during that year, and provide details of donations or gifts exceeding the disclosure threshold.
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In addition, political candidates and Senate groups must lodge election returns within 15 weeks following polling day. These must set out the number and value of donations and gifts received by the candidate or group. For gifts which exceed the disclosure threshold, the return must set out additional details such as the name, address and other relevant details of the donor.
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Persons and entities who make donations and gifts exceeding the disclosure threshold must also lodge annual and election returns with the AEC. Electoral returns must be lodged within 15 weeks of the polling day, while annual returns must be lodged within 20 weeks after the end of the financial year. Returns must set out the value of each gift, the date on which the gift was made, and the name and address of the recipient.
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Failures to lodge annual and election returns in accordance with the Electoral Act attract civil penalties. The penalties are based on the value of the donations or gifts which are not disclosed to the AEC.
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Election returns must be published on the AEC's Transparency Register within 24 weeks of polling day, while annual returns must be published on the Register by the first business day in the February after the return is lodged.
Other jurisdictions
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The federal regulatory regime for donations, gifts and electoral expenditure is generally considered to be less stringent than regimes in the states and territories. However, the Commonwealth system does not provide federally-registered parties with general administrative funding as some states and territories do, as a corollary for greater restrictions and impositions on private funding.
The disclosure threshold under the Electoral Act is currently $14 300. By contrast, a number of other jurisdictions (for example, New South Wales [NSW], the Australian Capital Territory [ACT], Queensland, and Victoria) set disclosure thresholds at $1 000;
There is no cap on the amount that may be donated under the Electoral Act. By contrast, NSW and Victoria restrict the amount that may be donated by a single donor to a political party at $6 300 and $4 000 respectively.
At the federal level, donations must be disclosed to the AEC through annual and electoral returns. These returns, respectively, must be lodged with the AEC within 20 weeks following the end of the financial year, and within 15 weeks after polling day. By contrast, NSW and Victoria require donations to be disclosed within 21 days after they are made.
Concerns regarding political donations and the political finance regime
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Concerns regarding the influence of donations on democratic processes and institutions have existed for a number of years, and there have been repeated calls for reform to the federal political finance regime. The federal regime has also attracted media scrutiny, which has highlighted perceptions by vocal commentators about donations by vested interests and their potential to influence public policy.
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The committee is mindful to consider whether statements of this nature are merely rhetorical assertions that are popular among political commentators and activists, or whether there is actual evidence – case studies or systemic – of money playing an improper role in the political system.
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These concerns have been raised during a number of parliamentary inquiries. Evidence before these inquiries has also identified potential gaps in the federal funding and disclosure regime, and suggested options for reform.
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Concerns as to the influence of donations on the political process, and potential gaps in the funding and disclosure regime, were also reflected in submissions to this inquiry. Further detail is included in Chapter 2 of this report.
Provisions of the bill
Schedule 1—Disclosing gifts
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Schedule 1 to the bill proposes a series of amendments to the Electoral Act to increase disclosure requirements for political donations and gifts. In particular, the schedule seeks to lower the disclosure threshold from $13 800 to $2 500.
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The schedule also seeks to expand the definition of 'gift' to include amounts paid in relation to fundraising ventures and functions; and annual or other fees paid in respect of a person's membership in a political party.
Disclosure requirements
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Schedule 1 seeks to repeal and replace sections 305A and 305B of the Electoral Act (which relate to annual and election returns by donors).
'Trigger gifts' and 'post‑trigger gifts'
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Proposed replacement section 305A provides for the new terms 'trigger gift' and 'post‑trigger gift'. A 'trigger gift' is a gift made by a person or entity when the sum of all gifts made by that person or entity to the same recipient is greater than or equal to the disclosure threshold for the relevant reporting period. A 'post-trigger gift' is a gift made during a reporting period by a person or entity, where the person or entity has already made a 'trigger gift' during the reporting period.
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The EM provides the following example of a 'trigger gift' and a 'post‑trigger gift', saying that:
…a donor would be making a 'trigger gift' if they donate $600 to a reporting entity and they have already contributed $2,000 to the same reporting entity during the same reporting period. Permitted anonymous donations and donations under $100 are not required to be aggregated for the purposes of calculating whether a gift is a trigger gift. Excepting permitted anonymous gifts and gifts of $100 or less, all subsequent gifts (post-trigger gifts) from the same donor to the same reporting entity must be disclosed until the end of the reporting period.
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Further to the example above, where a 'trigger gift' is the last in a series of gifts, the bill would require a return to include these details for all gifts made to, or received by, the reporting entity for the reporting period.
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With regard to returns, proposed section 305A would provide that:
persons and entities making a 'trigger gift' or 'post-trigger gift' to a reporting entity during a reporting period must lodge a return with the AEC; and
reporting entities which receive a 'trigger gift' or 'post-trigger gifts' within a reporting period must lodge a return for the gift with the AEC.
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The proposed requirements would not apply in relation to gifts made to third parties and political campaigners registered under the Australian Charities and Not-for-profits Commission Act 2012 (Charities Act).
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Proposed section 305A would also provide that a return must include:
the amount of the relevant 'trigger gift' or 'post-trigger gift';
the date on which the gift was made or received; and
the names and addresses of the person or entity that made the gift and the reporting entity that received the gift.
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The bill would require a return to be lodged through the AEC Disclosure Portal within 7 days after the relevant gift is made or received. Failures to provide returns in accordance with the proposed requirements may attract a civil penalty of 60 penalty units ($12 600).
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The Electoral Commissioner would be required to publish each return as soon as reasonably practicable after it is received.
Schedule 2—AEC Disclosure Portal
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Schedule 2 of the bill seeks to strengthen compliance measures relating to the disclosure of donations, including establishing the AEC Disclosure Portal.
AEC Disclosure Portal
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Proposed section 302AB requires the Electoral Commissioner to establish and maintain an AEC Disclosure Portal, and provides that the Portal has the following purposes:
the 'electoral expenditure purpose';
the 'disclosure and reporting purpose'; and
any other purpose prescribed by the regulations.
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The 'electoral expenditure purpose' is to establish a platform that provides the exclusive means by which amounts are given to reporting entities for the purpose of electoral expenditure. The 'disclosure and reporting purpose' is to establish a platform that allows for information relating to reporting entities to be accessible to the public.
Electoral expenditure accounts
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The bill seeks to require the agent or financial controller of a reporting entity to establish and maintain an electoral expenditure account with an Authorised Deposit-taking Institution (ADI). It also provides that reporting entities must ensure that electoral expenditure is only administered through this account.
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Failure to establish and use an electoral expenditure account in accordance with the bill would attract a civil penalty of up to 300 penalty units ($63 000).
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The bill also provides that where electoral expenditure is provided to the AEC through the AEC Disclosure Portal, the AEC must transfer the relevant amount to the reporting entity's electoral expenditure account.
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The EM states that the electoral expenditure account 'acts as a compliance measure, by ensuring… electoral expenditure is funded using receipts that have been properly declared according to [the] Act'.
Schedule 3—Reforming returns
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Schedule 3 of the bill seeks to enhance the regular reporting requirements relating to reporting entities' gifts and other receipts. In this respect, Schedule 3 seeks to repeal and replace Division 5A, Part XX of the Electoral Act (which relates to annual returns by registered political parties and other persons).
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Proposed Division 5A seeks to require reporting entities to provide a return to the AEC within one month after the end of each reporting period (that is, by
1 February and 1 August each year). Returns must be provided through the AEC Disclosure Portal in the approved form, and must set out the receipts, debts, payments and discretionary benefits paid, received or incurred by the entity for the reporting period.
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Where the amount of gifts received or debts incurred by a reporting entity for a reporting period exceeds the disclosure threshold, the entity would also be required to include additional details in its return. However, this requirement does not apply to amounts received by entities registered under the Charities Act, or to amounts received by reporting entities in a personal capacity, so long as the amount is not used for the purposes of electoral expenditure.
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In addition, the bill seeks to amend section 320 of the Electoral Act, to require the Electoral Commissioner to publish returns lodged under Division 5A as soon as practicable after the AEC receives the return.
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The bill also seeks to require the Electoral Commissioner to prepare a report at the end of a reporting period. The report must be accessible via the AEC Disclosure Portal as soon as possible after it is completed, and by no later than three months after the end of the reporting period.
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For each reporting entity, the report would be required to include:
the total amount of gifts and permitted anonymous donations received, and the total amount received in a form other than gifts;
the total amount of gifts that the reporting entity reported in its returns;
the total number of persons or organisations that made gifts to the entity;
the total amount of income received during the reporting period;
the total amount of electoral expenditure incurred; and
any other matter prescribed by the regulations.
Schedule 4—Monitoring and investigation powers
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Schedule 4 of the bill seeks to allow the Electoral Commissioner to appoint inspectors, and bestows additional monitoring and investigation powers on the AEC.
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In this respect, the bill seeks to permit the Electoral Commissioner to appoint members of staff of the AEC as inspectors, if the Electoral Commissioner believes that the person has the knowledge or experience to properly perform that role.
Monitoring and investigation under the Regulatory Powers (Standard Provisions) Act 2014
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The bill seeks to provide that certain provisions of the Electoral Act, and offences under the Crimes Act 1914 (Crimes Act) and the Criminal Code that relate to the Electoral Act, are subject to monitoring and investigation under the Regulatory Powers (Standard Provisions) Act 2014 (Regulatory Powers Act).
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Under the Regulatory Powers Act, an inspector is permitted to enter premises to determine whether a provision that is subject to monitoring has been complied with, or to determine whether information that is subject to monitoring is correct. An inspector would also be permitted to enter premises if they reasonably suspect that there is material on the premises relating to a contravention of a provision subject to investigation. Inspectors are permitted to search premises; seize materials, observe activities; ask questions of the occupier; examine documents and things; and seize relevant materials.
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However, an inspector is only permitted to enter the premises with the consent of the occupier or under a warrant. Warrants may be granted by a magistrate on application by the Electoral Commissioner, if the magistrate is satisfied that the grant of the warrant is reasonably necessary.
Infringement notices
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The bill seeks to provide that the civil penalty provisions in Part XX of the Electoral Act are subject to infringement notices under the Regulatory Powers Act. This would permit an inspector to issue infringement notices in relation to contraventions of those provisions.
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Persons subject to an infringement notice may choose to pay a specified amount as an alternative to court proceedings. The penalty may not exceed
12 penalty units ($2 520) for individuals or 60 penalty units ($12 600) for bodies corporate. If the person does not pay the specified amount, court proceedings may be brought against the person in relation to the relevant contravention.
New civil penalty
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The bill seeks to provide that a person is liable for a civil penalty of 300 penalty units ($63 000) if the person lodges a return under Division 4, 5 or 5A, knowing that the return is false or misleading in a material particular, or knowing that the return omits relevant information.
Schedule 5—Anonymous gifts
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Schedule 5 of the bill would insert a new Division 4A into the Electoral Act, to provide for permitted anonymous gifts.
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The new Division defines several key terms. In particular, 'anonymous gift' is defined as a gift which is not made by a known donor. A gift will be made by a 'known donor' if the donor's name and address are known to the recipient.
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The new Division provides that an anonymous gift received by or on behalf of a person or entity is a 'permitted anonymous gift' if the amount of the gift is $500 or less; the gift is received during a 'general public activity', and the persons involved in the organisation of the activity make a record of the gift according to prescribed requirements.
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A gift may also be a 'permitted anonymous gift' if it is given at a private event. However, additional requirements will apply if the total value of gifts received by the person or entity exceeds $500 multiplied by the number of attendees. In such circumstances, the recipient must, within six weeks of the event, return any excess or, if that is not possible, pay any excess to the Commonwealth.
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Further, if a person makes two or more gifts to a same recipient at a general public activity or private event, and the person involved in the collection or receipt of the gifts knows that the gifts are from the same person and the total value of the gifts exceeds $500, then so much of the value of those gifts as exceeds $500 is not a permitted anonymous gift.
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The bill provides that it is unlawful for a political party or a candidate to receive an anonymous gift, or to receive a gift made using an anonymous gift, in certain circumstances. If a person receives a gift that it is unlawful for the person to receive, the amount or gift is payable to the Commonwealth.
Schedule 6—Transitional provisions
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Schedule 6 seeks to allow the minister, by legislative instrument, to make rules prescribing matters of a transitional nature relating to the measures in the bill.
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Rules made within the transition period (two years after Royal Assent) may modify Commonwealth laws and may apply retrospectively. However, rules may not create offences or penalties; provide for powers of arrest, detention, search or seizure; impose taxes; set amounts to be appropriated from the Commonwealth Revenue Fund; or directly amend the text of the Electoral Act.
Financial impact statement
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The EM states that the measures proposed by the bill will have no financial impact. It also states that any additional expenditure required of the AEC would be met from within existing appropriations, offset against savings related to the automation of disclosures and the simplified reporting regime.
Statement of compatibility with human rights
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The statement of compatibility with human rights asserts that the bill is compatible with human rights and freedoms.
Consideration by other committees
Senate Standing Committee for the Scrutiny of Bills
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The Senate Standing Committee for the Scrutiny of Bills (Scrutiny Committee) commented on the bill in Scrutiny Digest 2 of 2020.
Significant matters in delegated legislation – privacy
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The Scrutiny Committee raised concern that the bill would leave significant aspects of the scope and operation of the proposed AEC Disclosure Portal to delegated legislation, and expressed the view that such significant matters should be included in primary legislation unless a sound justification for the use of delegated legislation is provided. The Scrutiny Committee noted that no such justification is included in the EM.
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The Scrutiny Committee also noted that the nature of the information that may be required to be disclosed through the AEC Disclosure Portal—including personal information—would not be subject to the full range of parliamentary oversight inherent in making primary legislation. The Scrutiny Committee stated that it is therefore difficult to accurately assess whether appropriate safeguards would be in place to ensure that any personal or sensitive information was appropriately managed.
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The Scrutiny Committee drew its concerns to the attention of senators, and left to the Senate as a whole the appropriateness of leaving key aspects of the scope and operation of the proposed Disclosure Portal to delegated legislation.
Broad delegation of investigatory powers
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The Scrutiny Committee noted that the bill seeks to enliven monitoring and investigation powers under the Regulatory Powers Act, and provides that inspectors exercising powers under that Act may be assisted by 'other persons'. The Scrutiny Committee noted that the EM does not explain the categories of 'other persons' who may assist. Further, the bill does not confine the exercise of the powers to persons with particular expertise.
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The Scrutiny Committee drew its concerns to the attention of senators, and left to the Senate as a whole the appropriateness of conferring monitoring and investigation powers on any 'other person' assisting an inspector. It also noted that it may be appropriate to amend the bill to require persons assisting an inspector to have knowledge or expertise appropriate to the power exercised or the function performed.
Parliamentary Joint Committee on Human Rights
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The Parliamentary Joint Committee on Human Rights (PJCHR) considered the bill in its Report 2 of 2020. The PJCHR noted that the bill 'appears to engage and may limit human rights', and stated that it may request further information from the legislation proponent 'should the bill proceed to further stages of debate'.