House of Representatives

Explanatory Memorandum

(Circulated by authority of the Treasurer, the Hon Josh Frydenberg MP)

Chapter 7 - Statement of Compatibility with Human Rights

Prepared in accordance with Part 3 of the Human Rights (Parliamentary Scrutiny) Act 2011

Foreign Investment Reform (Protecting Australia's National Security) Bill 2020 and Foreign Acquisitions and Takeovers Fees Imposition Amendment Bill 2020

7.1 These Bills include a package of reforms to ensure Australia's foreign investment screening framework keeps pace with emerging risks and global developments while remaining a welcoming destination for foreign investment.

7.2 The Bill improves and updates the operation of the framework across national security, compliance monitoring and enforcement, and integrity as well as streamlining requirements and making technical changes to improve the operation of the law.

7.3 The Imposition Bill simplifies the existing fee arrangements.

7.4 The Bill:

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introduces a new national security review and gives the Treasurer as a last resort, the ability circumstance to issue a divestment order where there is no other remedy for a national security risk;

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strengthens the Treasurer and Commissioner's enforcement powers through increased penalties, directions powers and new monitoring and investigative powers;

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improves the integrity of the framework by closing potential gaps in the screening regime;

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expands the information sharing arrangements to assist with the Treasurer and Commissioner's compliance activities and address national security risks;

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establishes a new Register of foreign owned assets to record all foreign interests acquired in Australian land; water entitlements and contractual water rights; and business acquisitions that require foreign investment approval; and

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provides that fees are payable for the new actions included in the FATA.

Overview

National Security Review and Last Resort Power

7.5 Schedule 1 to the Bill establishes a framework to review investments against a national security test. The national security test:

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requires mandatory notification of any proposed direct investment in a sensitive national security business (including starting such a business), proposed investment in Australian land where the location or use of the land could prejudice Australia's national security ('national security land') or an interest in an exploration tenement which is over national security land;

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allows a significant action that has not been notified and certain actions not otherwise captured under the FATA to be 'called-in' for screening on national security grounds;

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allows investors to voluntarily notify of an action that could otherwise be called-in, to obtain certainty about the particular investment and prevent being called-in on national security grounds; and

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allows the Treasurer, in exceptional circumstances, to impose conditions, vary existing conditions, or, as a last resort, force the divestment of any realised investment which was subject to the FATA where national security concerns are identified.

Improving the integrity of the framework

7.6 Schedule 1 to the Bill improves the integrity of the framework by closing potential gaps in the screening regime to:

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provide that some actions may be significant actions without requiring the change in control test to be met where the foreign person already controls the relevant entity or business;

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provide that increases in actual or proportional holdings of securities, including through company share buybacks or unit trust redemptions, may be notifiable actions or significant actions, or both;

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amend the definition of Australian business to include State and Territory business functions;

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expand the tracing rules to unincorporated limited partnerships;

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give the Treasurer the power to extend or further extend the decision period in section 77 of the FATA by up to 90 days;

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ensure the Treasurer can make an order prohibiting a proposal where an earlier purported order is found to be invalid and the decision period has expired; and

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allow for greater information sharing domestically with relevant government agencies and internationally with foreign counterparts.

7.7 Schedule 1 to the Bill also makes a number of minor amendments which clarify the meaning of 'notifiable actions'; the application of fee waivers; and when an agreement is entered into for the purposes of the FATA.

Improving compliance and additional enforcement tools

7.8 Schedule 2 to the Bill provides the Treasurer and the Commissioner with appropriate powers to administer the FATA. Specifically, Schedule 2 to the Bill amends the FATA to:

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expand the infringement notices regime to cover all types of foreign investments and introduce a third tier to allow for a more graduated and proportional approach to enforcement;

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increase the civil and criminal penalties that can be sought for a breach of the FATA to ensure these penalties act as an effective deterrent;

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remedy situations where foreign persons are given a no objection notification or an exemption certificate based on a foreign investment application that makes an incorrect statement or omits an important piece of information;

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require foreign persons who have been issued a no objection notification for a proposed action or an exemption certificate, to notify the Government of certain events, including that the action has occurred;

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provide the Treasurer with the power to give directions to investors in order to prevent or address suspected breaches of conditions or of the foreign investment laws;

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provide the Treasurer with the standard monitoring and investigative powers (in line with those of other business regulators), including access to premises with consent or by warrant to gather information, to improve regulators' capability to monitor investor compliance and/or investigate potential non-compliance; and

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provide the Treasurer with the power to accept enforceable undertakings from foreign persons to manage compliance.

A fairer and simpler framework for foreign investment fees

7.9 Schedule 1 to the Bill and the Imposition Bill establish a new fee framework for foreign investment in Australia.

7.10 The Imposition Bill establishes authority for the Fee Regulation to charge existing and new fees.

7.11 Fees are payable when a person:

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applies for an exemption certificate or a variation of an exemption certificate;

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gives notice of a notifiable action;

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gives a notice about a proposal to take a significant action that is not a notifiable action;

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applies for a variation of a no objection notification; and

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when a person has been given an order or has been provided a no objection notification without giving the Treasurer a notice relating to the action specified in the order or notification.

7.12 Schedule 1 to the Bill provides that new fees are payable for new actions included in the FATA. A fee is payable for a notifiable national security action, for a reviewable national security action that has been notified to the Treasurer or an action that may pose a national security concern. Fees are also payable when a person applies to vary a notice that was given to them imposing conditions.

Register of foreign owned Australian assets

7.13 Schedule 3 to the Bill establishes a new Register of Foreign Ownership of Australian Assets to record all foreign interests acquired in Australian land; water entitlements and contractual water rights; and business acquisitions that require foreign investment approval, including acquisitions reviewed under the national security test.

Human rights implications

National Security Review and Last Resort Power

7.14 Schedule 1 to the Bill and the establishment of the new national security review and last resort powers engage the following human rights:

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the right to justice under Article 14 of the ICCPR;

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the right to freely dispose of natural wealth under Article 1 of the ICCPR; and

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the right to protection from arbitrary or unlawful interference with privacy under Article 17 of the ICCPR.

7.15 The Treasurer's making of orders and the exercise of other last resort powers is constrained under sections 79C and 79F by the requirement to take reasonable steps to negotiate in good faith with the relevant person to reduce the national security risk without giving the order or exercising the powers.

7.16 This obligation provides an important safeguard that embodies the principles that will apply in the wide variety of possible situations where the orders and powers may be considered by the Treasurer. It is sufficiently flexible to accommodate particular circumstances of each national security risk that may be difficult to foresee but remains connected to a well understood common law principle that applies to commercial agreements.

7.17 The incorporation of the common law concept of good faith avoids the creation of a difference between the common law and an alternative concept in legislation that could potentially grow wider as the common law concept is refined by the courts. However, if it becomes necessary to address recurring trends in negotiations with applicants, the application of the concept to particular categories of situations could be clarified by the Treasurer through additional guidance for applicants.

7.18 The good faith concept is frequently used in Commonwealth legislation to impose obligations or standards on persons. This standard will be familiar to the types of entities expected to be affected by these amendments to the FATA. While the negotiations are intended to promote a mutually agreed resolution and forestall any legal proceedings, the good faith obligation is consistent with the Commonwealth's model litigant obligations in the Legal Services Directions 2017.

Right not to be compelled to testify against oneself or to confess guilt

7.19 Paragraph 3(g) of Article 14 of the ICCPR guarantees the right of an individual not to be compelled to testify against oneself or to confess guilt. The privilege against self-incrimination is recognised by the common law and applies unless it is expressly abrogated.

7.20 This right is engaged by the amendments to sections 133 and 135 of the FATA because they expand the circumstances in which the Treasurer may give a person a written notice that requires the person to give information or documents to the Treasurer or a specified person acting on the Treasurer's behalf. An individual is not excused from giving information or producing a document on the ground that to do so might tend to incriminate him or her.

7.21 However, this right is not limited by these amendments because:

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the right applies in relation to criminal proceedings while the request for information by the Treasurer through the giving of the notice is an administrative process and the self-incrimination (if any) would not be occurring in a criminal proceeding; and

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any information that is given or documents that are produced by an individual will not be admissible in criminal proceedings under subsection 133(8) (except where false or misleading information is provided).

7.22 The right to a fair trial in Article 14 of the ICCPR is thus engaged but not limited by these amendments.

Right to freely dispose of natural wealth

7.23 Paragraph 2 of Article 1 of the ICCPR guarantees the right of an individual to freely dispose of their natural wealth and resources. Schedule 1 to the Bill engages this right by expanding the circumstances in which the Treasurer may impose conditions on or restrict the disposal of particular assets in certain circumstances, or in very limited circumstances require a person to dispose of a particular asset.

7.24 In particular, as a result of the amendments made Schedule 1 to the Bill, the Treasurer may, but does not have to, restrict the disposal of assets if the disposal would result in a notifiable national security action or a reviewable national security action occurring. The Treasurer may also require the disposal of assets if the Treasurer exercises the last resort powers introduced by Schedule 1 to the Bill.

7.25 These measures are intended to achieve the legitimate and significant objective of reducing national security risks that may be posed by transactions that would give foreign persons interest in or influence over Australian assets or entities.

7.26 The measures are directly connected to their objective because they enable the Treasurer, if necessary in the circumstances, to prevent the foreign person taking the interest in or acquiring influence that would pose a national security risk.

7.27 The measures are proportionate to the objective because the Treasurer is able to adjust the response to the national security risk by tailoring conditions of approval or the required disposal to the particular circumstances in which the power is exercised. The consequences of allowing a national security risk to persist are potentially grave. The measures are only a limited restriction of the right because they would not prohibit the disposal of assets and only restrict disposal to a particular buyer or group of buyers, leaving the person free to sell it to other purchasers. Where a disposal order is made, it will not prevent a person from receiving a fair market value for their asset in the Australian market.

7.28 For these reasons, to the extent this provision might be considered to limit the right of an individual to freely dispose of their natural wealth and resources, the limitation is reasonable in all the circumstances.

Right to privacy

7.29 Schedule 1 to the Bill engages the right to protection from unlawful or arbitrary interference with privacy under Article 17 of the ICCPR because it requires orders made by the Treasurer to be published on the Federal Register of Legislation.

7.30 Article 17 of the ICCPR prohibits unlawful or arbitrary interferences with an individual's privacy, family, home or correspondence. It also provides that everyone has the right to the protection of the law against such interference or attacks.

7.31 The Human Rights Committee has interpreted the term 'unlawful' to mean that no interference can take place except in cases envisaged by a law which comply with the provisions, aims and objectives of the ICCPR. The Human Rights Committee has also indicated that an interference will not be considered to be 'arbitrary' if it is provided for by law and is in accordance with the provisions, aims and objectives of the ICCPR and is reasonable in the particular circumstances. ^[14]

7.32 The right in Article 17 may be subject to permissible limitations, where these limitations are authorised by law and are not arbitrary. In order for an interference with the right to privacy to be permissible, the interference must be authorised by law, be for a reason consistent with the ICCPR and be reasonable in the particular circumstances. The UN Human Rights Committee has interpreted the requirement of 'reasonableness' to imply that any interference with privacy must be proportional to the end sought and be necessary in the circumstances of any given case.

7.33 Disclosure of personal information and a consequent interference with privacy may occur when orders made under the FATA are registered on the Federal Register of Legislation. This is aimed at achieving the legitimate objective of protecting Australia's national security.

7.34 This public registration is rationally connected to the legitimate objective because it ensures that orders are accessible to all parties that may participate in a given transaction and that there is a public record of instances where the Treasurer exercised his or her powers to make orders under the FATA. The public nature of the orders aids in securing compliance with the order and furthers the legitimate objective of protecting Australia's national security (because orders under provisions inserted or amended by the Act are made for that purpose).

7.35 The requirement for registration is likely to have a relatively minor overall impact on privacy because many applicants are not individuals and because the information contained in the orders will be describing the proposed actions or actions that need to be taken and will not include personal information unless necessary for the effectiveness of the orders. This likely minor privacy impact is counterbalanced by the significant deterrence effect of publicising orders that require compliance or indicate potential involvement with risks to national security. Overall, this means that the requirement to register orders is proportionate to the objective of reducing risks to Australia's national security.

Improving the integrity of the framework

7.36 Schedule 1 to the Bill and the amendments to improve the integrity of the framework and expand the information sharing provisions engage the following human rights:

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the right to justice under Article 14 of the ICCPR; and

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the right to protection from arbitrary or unlawful interference with privacy under Article 17 of the ICCPR.

Right to a fair and public hearing

7.37 The power for the Treasurer to extend the decision period may engage the right to justice under Article 14 of the ICCPR because the Treasurer is not required to consult with the affected person before deciding to extend the decision period. The person is told about the extension through a written notice which must include the reasons for the extension.

7.38 The ability for the Treasurer to extend the decision period enables cases to be processed more efficiently and meet urgent commercial deadlines without potentially being delayed by procedures such as needing to obtain the person's consent to extend the time to make a decision. The person is still afforded natural justice at other times during the decision making process such as before conditions are attached to an approval.

7.39 The rules of natural justice are expressly excluded when making a decision on the extension. Article 14 of the ICCPR states that all persons are entitled to a fair and public hearing in the determination of their legal rights and obligations.

7.40 It is arguable that the Treasurer's ability to extend the decision period does not engage Article 14 of the ICCPR as the effect of the amendment is simply to delay the decision. However, a person's rights may be interfered with where the delay causes an opportunity to be missed.

7.41 Nonetheless, the interference with the person's right is appropriate and proportionate in light of the role the foreign investment framework plays in protecting Australia's national interest, including Australia's national security. The extension allows the Treasurer sufficient time to determine whether the relevant action being considered is contrary to the national interest. It efficiently allows for the processing of sensitive or significant applications by allowing sufficient time for the Treasurer to consider the expert input that informs these applications. For such cases, a longer decision period may be required to allow consultation partners sufficient time to provide their input including where they are developing bespoke conditions.

Right to privacy

7.42 Schedule 1 to the Bill amends the FATA to expand the information sharing provisions. Information obtained through the administration of the FATA is defined as protected information and its disclosure and use is limited.

7.43 Schedule 1 to the Bill expands the information sharing provisions to:

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allow protected information to be shared with a Minister, an officer or employee of the Commonwealth, State or Territory or an officer or employee of a Commonwealth, State or Territory body where information was provided by that party for the purpose of the Treasurer making a decision under the FATA;

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allow protected information to be shared with a foreign government where national security risks may exist;

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allow for information to be shared with the Minister or accountable authority administering the Competition and Consumer Act 2010, Foreign Relations (Effect of State and Territory) Arrangement Act 2020 and the Northern Australia Infrastructure Facility Act 2016 and for the purpose of discharging responsibility for infrastructure, telecommunications and water;

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allow for the Commissioner to share information with members of the Foreign Investment Review Board; and

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allow for the sharing of aggregate information whether or not the information that will be shared is specified in regulations.

7.44 These amendments engage the right to protection from unlawful or arbitrary interference with privacy under Article 17 of the ICCPR.

7.45 The right in Article 17 may be subject to permissible limitations, where these limitations are authorised by law and are not arbitrary. In order for an interference with the right to privacy to be permissible, the interference must be authorised by law, be for a reason consistent with the ICCPR and be reasonable in the particular circumstances. The UN Human Rights Committee has interpreted the requirement of 'reasonableness' to imply that any interference with privacy must be proportional to the end sought and be necessary in the circumstances of any given case.

Sharing information where information assisted in the Treasurer's decision making

7.46 Schedule 1 to the Bill allows the Treasurer to share information across the Commonwealth, states and territories where the particular department or agency provided information for the purposes of the Treasurer making a decision under the FATA.

7.47 When sharing the information, the Treasurer must reasonably believe that the information may assist the recipient in the performance of the recipient's functions or duties or the exercise of the recipient's powers.

7.48 Any interference with the right to privacy where such protected information includes personal information is lawful as the disclosure of information is only authorised to specific people for specific purposes under the legislation. That is, to allow for greater information sharing between Australian governments to promote effective and timely collaboration and allowing them to discharge their statutory responsibilities efficiently and effectively. The amendments do not authorise disclosure of information more broadly or for any other purpose.

Sharing information with a foreign government

7.49 Schedule 1 to the Bill inserts section 123B which allows protected information under the FATA to be shared with foreign governments in limited circumstances where national security risks may exist, where it is not contrary to the national interest and subject to agreements in place between the Commonwealth and the foreign counterpart. In addition, the information can only be shared if it is relevant to the purposes of the FATA or will assist a foreign counterpart in meeting its duties or exercising its powers.

7.50 The Australian Privacy Principles apply to the disclosures to foreign governments for national security purposes. That section authorises cross border disclosure of personal information that complies with Australian Privacy Principle 8.2(c).

7.51 The interference with the right to privacy is lawful as the amendments authorise disclosure of information to specific people for specific purposes under the FATA. That is, to allow for greater information sharing with specified government agencies and foreign counterparts to enhance compliance and address national security risks. The amendments do not authorise disclosure of information more broadly or for any other purpose.

7.52 Information sharing with foreign government entities is also subject to separate individual agreements between the Commonwealth and the foreign government or separate government entity. These agreements will set out mutually agreed standards for the handling of personal information that provides privacy protection and, where relevant, limitations surrounding public disclosure of commercial in confidence information. The agreements will also specify that the information provided can only be used for the purpose for which it was provided - that is, to assist the foreign government to perform a function or duty, or exercise a power of the government or entity. This will provide certainty for regulators and investors and appropriately protect information, including possibly personal or commercial information.

7.53 The amendment to provide for information sharing between Treasurer and foreign governments is consistent with Article 17 of the ICCPR because, to the extent the amendment authorises the disclosure of protected information, it is necessary to regulate foreign investment and ensure that proposed investments are not contrary to Australia' national security.

7.54 The amendments are justified as they enable effective and timely collaboration in relation to cases where a national security risk may be present.

Expanding the prescribed list of Acts and responsibilities

7.55 Under the FATA, protected information is currently able to be disclosed to a person for the purposes of administering a prescribed list of laws included in the FATA or for the purpose of a Minister discharging the Minister's responsibilities for a particular matter. Schedule 1 to the Bill expands the list of prescribed Acts and adds three new matters to the list of matters about which information may be shared.

7.56 This amendment enhances the mechanisms already contained in the FATA that enable effective and timely collaboration between all Commonwealth agencies, in turn enabling them to discharge their statutory responsibilities efficiently and effectively.

7.57 The amendment provides that protected information can be shared with the Minister responsible for the Competition and Consumer Act 2010, Foreign Relations (Effect of State and Territory) Arrangement Act 2020 and the Northern Australia Infrastructure Facility Act 2016 and for the purpose of discharging responsibility for infrastructure, telecommunications and water.

7.58 Under the national interest test, the Treasurer considers the impact of the proposed investment on competition. Under the Northern Australia Infrastructure Facility Act 2016 financial assistance is offered to encourage and assist private sector investment in the Northern Territory. The Minister responsible for the Foreign Relations (Effect of State and Territory) Arrangement Act 2020 may be considering an agreement which is also subject to review under the FATA.

7.59 This amendment enables effective and timely collaboration where a proposed investment may create competition concerns. It also ensures that an applicant's eligibility for financial assistance under the Northern Australia Infrastructure Facility Act 2016 is able to be considered.

7.60 Existing privacy safeguards continue to operate in relation to personal information. Where a particular disclosure includes personal information, Australian Privacy Principle 6.2(b) authorises the disclosure as it is an Australian law authorising the disclosure of personal information. However, other Australian Privacy Principles continue to apply, in particular, Australian Privacy Principle 11.1, which requires that an Australian Privacy Principle entity must take reasonable steps to protect personal information from misuse, interference or loss, and from unauthorised access, modification or disclosure.

7.61 The amendment to provide for greater information sharing is consistent with Article 17 of the ICCPR because, to the extent the amendment authorises the disclosure of protected information, it is necessary to regulate foreign investment and ensure that proposed investments are not contrary to Australia' national interest.

Information sharing between the Commissioner of Taxation and the FIRB

7.62 Under the existing law, the Treasurer can disclose protected information to other Australian government agencies, including the Commissioner, to assist those agencies to perform their functions and exercise their powers.

7.63 Schedule 1 to the Bill streamlines the process by providing a more efficient mechanism for the Commissioner to share protected information with members of the FIRB directly. It will improve the FIRB's ability to advise the Treasurer on proposed investments with high risk tax in a timely manner.

7.64 Under the national interest test, tax risks is one consideration the Treasurer contemplates to ensure proposals are not contrary to the national interest.

7.65 This amendment will enable effective and timely collaboration where a high risk tax may be present. The amendment is a reasonable change as it will allow the Commissioner, Treasurer and FIRB members to more effectively work together to ensure that where a proposed investment poses a high tax risk, conditions can be imposed to mitigate these risks. The amendment is appropriate as it will ensure that the process for sharing information is consistent with existing provisions within the FATA, FATR and tax laws.

7.66 Information that is shared between the Commissioner and FIRB members will remain subject to strict privacy protections. The FIRB members will remain subject to the requirement to take all reasonable measures to protect protected information from any unauthorised disclosure.

7.67 The amendment is consistent with Article 17 of the ICCPR because, to the extent the amendment authorises the disclosure of protected information by the Commissioner to the FIRB, it is necessary to regulate foreign investment and ensure that proposed investments are not contrary to Australia' national interest. The amendment replicates existing information sharing arrangements the Commissioner has with other agencies to ensure consistency and streamlines administrative processes.

7.68 A simpler and more efficient information sharing arrangement between the Commissioner and the FIRB is justified as it will benefit the community by enabling effective and timely collaboration where proposed investments pose a high tax risk.

Sharing aggregate information

7.69 Schedule 1 to the Bill replaces existing section 124 to provide that aggregate information can be disclosed provided that the information does not identify a person or could be reasonably capable of identifying a person.

7.70 Given that the provisions does not allow for the release of personal information or information that could reasonably identify a person it does not engage Article 17 of the ICCPR.

Improving compliance and additional enforcement tools

7.71 Schedule 2 to the Bill provides the Treasurer and Commissioner with an enhanced compliance and enforcement toolkit which engages the following human rights and freedoms:

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the right to be presumed innocent until proved guilty according to law;

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the right to a fair and public hearing;

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the right not to be compelled to testify against oneself or to confess guilt;

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the right to protection from unlawful or arbitrary interferences with an individual's privacy;

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the right to freedom of expression; and

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the right to freedom from discrimination on prohibited grounds.

Right to a fair trial

7.72 Schedule 2 to the Bill engages the right to a fair trial in Article 14 of the ICCPR. Article 14 of the ICCPR ensures that everyone shall be entitled to a fair and public hearing by a competent, independent and impartial tribunal established by law. Schedule 2 to the Bill may be considered to engage the right to a fair and public hearing as it introduces an additional tier of infringement notices (tier 3 infringement notices) and imposes associated penalties.

7.73 However, the right to a fair and public hearing by a competent, independent and impartial hearing is not limited by Schedule 2 because the person may still elect to have the matter heard by a court rather than pay the amount specified in the infringement notice. This right will be stated in any infringement notice.

7.74 The amounts payable under the newly introduced tier 3 infringement notices (300 penalty units for a person) are consistent with The Guide and the general requirement that the amount be one fifth of the amount that a court could impose on the person. To the extent the new infringement notices apply to bodies corporate (1500 penalty units for a corporation), they do not engage any human rights.

7.75 The amounts are also consistent with the increased penalty amounts under the FATA also introduced in Schedule 2 to the Bill.

7.76 Schedule 2 to the Bill amends the FATA to trigger the enforceable undertakings provisions in Part 6 of the Regulatory Powers Act, to enable the Treasurer to accept undertakings from foreign persons to manage compliance with provisions of the FATA.

7.77 As the enforceable undertakings framework applies to the offence provisions of the FATA, the right to a fair and public hearing and the other criminal process rights and minimum guarantees in Article 14 of the ICCPR are engaged. The amendments do not limit the minimum guarantees and other criminal process rights in Article 14 of the ICCPR.

7.78 Under Part 6 of the Regulatory Powers Act, an order enforcing an undertaking that relates to compliance with provisions of the FATA can only be made by a relevant court. The court process regarding enforceable undertakings is already established in the Regulatory Powers Act, and that the amendments simply widen the scope of this process by covering the provisions in the FATA as an 'enforceable action'.

7.79 Substantively, enforceable undertakings in the FATA function as an alternative to civil or administrative action by the Treasurer, thereby providing more options in the process where a foreign person has not met an obligation. Accordingly, the right to a fair and public hearing provided for by Article 14(1) of the ICCPR is not limited.

7.80 The regulatory powers triggered by the amendments are also appropriately limited, by ensuring a narrow scope of who is an authorised person and what is a relevant court. This ensures the powers will only be used in defined circumstances.

Right to justice

7.81 Schedule 2 to the Bill engages the right to justice in Article 14 of ICCPR. The Bill empowers the Treasurer to give directions or interim directions to persons to address or prevent contraventions of provisions of the FATA. Failure to comply with such directions may constitute an offence or attract a civil penalty.

7.82 The power is intended to achieve the legitimate objective of ensuring compliance with the FATA. Since contraventions may have significant and long lasting economic repercussions and affect Australia's national interest (including national security), compliance with the requirements is paramount.

7.83 The directions power allows the Treasurer to require persons to take steps to ensure they comply with the FATA. It is not available unless the Treasurer has reason to believe that the person has engaged or will engage in conduct that constitutes a relevant contravention. This is a clear rational connection between the power and the intended objective of preventing contraventions.

7.84 Since the directions power is a means of ensuring compliance with other provisions of the FATA it is by its very nature proportionate to the objective. The penalties (civil and criminal) for failure to comply with a direction mirror the penalties associated with the primary provisions in the FATA that are supported by the directions power. This correspondence is necessary to ensure that the directions are appropriately effective in supporting compliance with the provisions the person subject to the directions is believed by the Treasurer to have or be about to contravene.

7.85 Thus, to the extent that the directions power in this Bill limits the right to justice in Article 14 of the ICCPR, the limitation is permissible.

Increased penalties

7.86 Schedule 2 to the Bill imposes significantly increased penalties for multiple offences and contraventions of civil penalty provisions. This may be considered to engage the right to justice in Article 14 of the ICCPR, particularly because the penalties are higher than suggested by The Guide.

7.87 These penalties are appropriate given the potential benefits and profits that may be derived from non-compliance with the FATA and the need to create a sufficient deterrent to protect the national interest. The increase in penalties reflects the seriousness of potential non-compliance and aligns with community standards and expectations.

7.88 The new penalty amounts are the maximum that a court can impose.

7.89 Those involved in committing offences under the FATA could receive large financial benefits from their misconduct, or could gain control of assets that may be contrary to the national interest but difficult to reverse once established. To deter such behaviour, and to ensure paying a financial penalty does not become a cost of doing business, the increase in penalties is appropriate. The higher penalty amounts calculated with reference to the value of the relevant transaction are also appropriate to deter engaging in such behaviour and effectively diminish the commercial incentives for misconduct.

7.90 These increases will neutralise any financial benefits or gains obtained from illegal behaviour. This approach is consistent with the penalties imposed with the intent of deterring similar misconduct under the Corporations Act 2001.

7.91 Even though the amendments increase the maximum penalty for offences, they do not amend any of the criminal process or procedural rights that currently exist and are upheld in accordance with Article 14 of the ICCPR. The increased penalties will apply to offences that are committed, or begin to be committed, after the Bill commences, and therefore apply prospectively, therefore upholding article 15 of the ICCPR.

7.92 To the extent the increases in financial penalties apply to bodies corporate, they do not engage any human rights.

Right to justice and retrospective penalties

7.93 Schedule 2 to the Bill engages the right to not be convicted of something that was not a crime when the activity took place in Article 15 of the ICCPR because it introduces changes that allow the Treasurer to revoke an exemption certificate or a no objection notification if a person gave the Treasurer false or misleading documents or information in a material particular at the time of applying for the exemption certificate or no objection notification. Schedule 2 to the Bill also introduces a civil penalty for providing such information.

7.94 However, while the revocation may take into account documents and information that were provided prior to the commencement of these changes, any revocation will not create a retrospective criminal liability. The revocation will only affect future conduct of the person whose exemption certificate or no objection notification has been revoked. The civil penalty has financial consequences but is not a criminal penalty.

7.95 The civil penalty provisions contained in Schedule 2 to the Bill that may be imposed for false or misleading information or documents that were provided prior to the commencement of the provisions are not 'criminal' for the purposes of human rights law. The penalty is not classified as 'criminal' under Australian law, it only applies to persons already subject to the FATA due to their economic activities rather than the general public, and there is no term of imprisonment associated with the penalty. The prescribed upper limits for the pecuniary sanction amounts for contravening the civil penalty provision are appropriate. They are proportionate to the potential benefits to persons and harm to the national interest that could flow from an exemption certificate or no objection notification based on false or misleading documents or information.

7.96 Based on the above factors, the cumulative effect and the nature and severity of the civil penalties in Schedule 2 to the Bill is not 'criminal' for the purposes of human rights law.

7.97 Thus this Bill engages but does not limit the right not to be convicted of something that was not a crime when the activity took place in Article 15 of the ICCPR.

7.98 Right to privacy

7.99 Schedule 2 to the Bill engages the right to protection from unlawful or arbitrary interference with privacy under Article 17 of the ICCPR because it requires directions made by the Treasurer and enforceable undertakings entered into by the Treasurer to be published on a website maintained by the Department as soon as practicable.

7.100 Article 17 of the ICCPR prohibits unlawful or arbitrary interferences with an individual's privacy, family, home or correspondence. It also provides that everyone has the right to the protection of the law against such interference or attacks.

7.101 The Human Rights Committee has interpreted the term 'unlawful' to mean that no interference can take place except in cases envisaged by a law which comply with the provisions, aims and objectives of the ICCPR. The Human Rights Committee has also indicated that an interference will not be considered to be 'arbitrary' if it is provided for by law and is in accordance with the provisions, aims and objectives of the ICCPR and is reasonable in the particular circumstances. ^[15]

7.102 The right in Article 17 may be subject to permissible limitations, where these limitations are authorised by law and are not arbitrary. In order for an interference with the right to privacy to be permissible, the interference must be authorised by law, be for a reason consistent with the ICCPR and be reasonable in the particular circumstances. The UN Human Rights Committee has interpreted the requirement of 'reasonableness' to imply that any interference with privacy must be proportional to the end sought and be necessary in the circumstances of any given case.

7.103 Disclosure of personal information and a consequent interference with privacy may occur when the directions and enforceable undertakings are published on a website maintained by the Department. This is aimed at achieving the legitimate objective of ensuring compliance with the FATA by parties that are subject to it.

7.104 This publication is rationally connected to the legitimate objective because it ensures that orders are accessible to all parties that may participate in a given transaction and that there is a public record of directions and enforceable undertakings made by the Treasurer. The publication of the directions and enforceable undertakings aids in securing compliance with the directions and enforceable undertakings and furthers the legitimate objective of ensuring compliance with the FATA (because counterparties to transactions, or other affected parties, would be less likely to proceed in contravention of a public direction or enforceable undertaking).

7.105 The requirement for publication is likely to have a relatively minor overall impact on privacy because many applicants and relevant persons are not individuals and because the information contained in the orders will be describing the relevant contraventions and actions that need to be taken and will not include personal information unless necessary for the effectiveness of the directions or enforceable undertakings. This likely minor privacy impact is counterbalanced by the significant deterrence effect of publicising directions and enforceable undertakings that promote compliance and alert third parties that transactions they are involved in may be contraventions of the FATA. Overall, this means that the requirement to publish directions and enforceable undertakings is proportionate to the objective of ensuring compliance with the FATA.

7.106 Schedule 2 to the Bill also engages the right to protection from unlawful or arbitrary interference with privacy under Article 17 of the ICCPR because a foreign person issued with a no objection notification or exemption certificate is required to notify the Treasurer where an action covered by the no objection notification or exemption certificate has been taken.

7.107 The requirement to provide information to the Treasurer will engage the person's right to privacy under Article 17 of the ICCPR as some of the information required to be included with the notification may be personal information.

7.108 The right in Article 17 may be subject to permissible limitations, where these limitations are authorised by law and are not arbitrary. In order for an interference with the right to privacy to be permissible, the interference must be authorised by law, be for a reason consistent with the ICCPR and be reasonable in the particular circumstances. The UN Human Rights Committee has interpreted the requirement of 'reasonableness' to imply that any interference with privacy must be proportional to the end sought and be necessary in the circumstances of any given case.

7.109 In this case, the reason is considered reasonable as the information will enable the Treasurer to know all relevant details about members of the population the Treasurer is expected to regulate. There is no uniform notification requirement that otherwise exists under the FATA.

7.110 These amendments are necessary to ensure the Treasurer is notified about significant actions or exemption certificates, regardless of whether conditions to notify were originally imposed. Any interference with an individual's right to privacy is lawful as the requirement is only to provide information to specified people for a specified purpose, that is, to enable the Treasurer to be properly informed about significant actions and events under the FATA.

7.111 The information will be protected information and therefore subject to limitations under the FATA. Any limitation on the right to privacy is therefore reasonable and proportionate to the legitimate objective of the legislation.

7.112 A person required to provide a notification in about a significant action or exemption certificate must do so within 30 days of the action or event taking place, including any details required by regulations and in the manner approved by the Secretary.

Right to work

7.113 Schedule 2 to the Bill engages the right to work under Article 6 of the International Covenant on Economic, Social and Cultural Rights because the Bill gives the Treasurer the ability to issue a direction to a person to cease being a senior officer of a corporation.

7.114 The right to work provides that everyone must be able to freely accept or choose their work, and includes a right not to be unfairly deprived of work. The right to work also requires that state parties provide a system of protection guaranteeing access to employment. This right must be made available in a non-discriminatory manner pursuant to Article 2(1) of the International Covenant on Economic, Social and Cultural Rights.

7.115 Schedule 2 to the Bill also engages the right to freedom of association under Article 22 of ICCPR, which protects the right of all persons to group together voluntarily for a common goal and to form and join an association.

7.116 These rights are engaged because the Treasurer may give directions requiring persons to ensure that specified persons or kinds of persons (such as persons who are not Australian citizens, or who are foreign persons) cease or do not become senior officers of particular corporations. The Treasurer may also give directions requiring persons to ensure that a specified proportion of the senior officers of a corporations is not of a specified kind of person (such as persons who are not Australian citizens, or who are foreign persons).

7.117 The power is intended to achieve the legitimate objective of ensuring compliance with the FATA. Since contraventions may have significant and long lasting economic repercussions and affect Australia's national interest (including national security), compliance with the requirements is paramount.

7.118 The directions power allows the Treasurer to require persons to take steps to ensure they comply with the FATA, including not being senior officers of corporations, where taking such a role would be a contraventions of the FATA. The directions power is not available unless the Treasurer has reason to believe that the person has engaged or will engage in conduct that constitutes a relevant contravention. This is a clear rational connection between the power and the intended objective of preventing contraventions.

7.119 Since the directions power is a means of ensuring compliance with other provisions of the FATA it is by its very nature proportionate to the objective. The penalties (civil and criminal) for failure to comply with a direction mirror the penalties associated with the primary provisions in the FATA that are supported by the directions power. This correspondence is necessary to ensure that the directions are appropriately effective in supporting compliance with the provisions the person subject to the directions is believed by the Treasurer to have contravened or be about to contravene.

7.120 The directions power is limited in the impact it may have on a person's right to work because an order would not necessarily prevent a particular person or kind of person from working. It is more likely to only prevent them from holding a particular position with a particular corporation.

7.121 The limitation on the right to group together voluntarily for a common goal and to form and join an association is also minimal because the directions would be most likely to restrict the taking up of particular offices by individuals and not prevent them from associating or forming alternative associations with similar purposes.

7.122 The balance of the relatively minor limitations on the right to work and the right to freedom of association are more than balanced by the importance of ensuring compliance with the FATA (which is necessary for the protection of Australia's national interest, including national security). Thus, to the extent that the directions power in this Bill limits the right to work in Article 6 of the International Covenant on Economic, Social and Cultural Rights or the right to freedom of association under Article 22 of the ICCPR, the limitation is permissible.

Monitoring and investigative powers

7.123 The FATA is amended to trigger the monitoring and investigative powers in Part 2 and 3 of the Regulatory Powers Act. These powers are necessary to enable the monitoring of compliance with the FATA regime and the collection of evidential material relating to contraventions. The exercise of these powers is constrained in various ways as set out below, ensuring that their use is not arbitrary.

7.124 The regime under the Regulatory Powers Act protects against arbitrary interference with privacy, as the monitoring and investigation powers cannot be exercised without consent being given to the entry into the premises, or prior judicial authorisation in the form of a warrant. Where entry is based on the consent of the occupier, consent must be informed and voluntary and the occupier of premises can restrict entry by authorised persons to a particular period. Additional safeguards are provided through provisions requiring authorised persons and any persons assisting them to leave the premises if the occupier withdraws their consent.

7.125 The Regulatory Powers Act also provides restrictions on the issuing of a monitoring or investigation warrant. For example, in the case of an investigation warrant, an issuing officer may issue an investigation warrant only when satisfied, by oath or affirmation, that there are reasonable grounds for suspecting that there is, or may be within 72 hours, evidential material on the premises. An issuing officer must not issue a warrant unless the issuing officer has been provided, either orally or by affidavit, with such further information as they require concerning the grounds on which the issue of the warrant is being sought. Such constraints on this power ensure adequate safeguards against arbitrary limitations on the right to privacy in the issuing of warrants.

7.126 In addition, an authorised person cannot enter premises under a warrant unless their identity card is shown to the occupier of the premises. If entry is authorised by warrant, the authorised person must also provide a copy of the warrant to the occupier of the premises. This provides for the transparent utilisation of the powers and mitigates arbitrariness and risk of abuse.

7.127 The monitoring and investigation powers may only be exercised in certain circumstances set out in the Regulatory Powers Act. For example, under section 52 of the Regulatory Powers Act, the power to seize evidence of a kind not specified in a warrant may only be exercised where:

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the authorised person finds the thing in the course of searching for material of the kind specified in an investigation warrant, and

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the authorised person believes on reasonable grounds that

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the thing is evidential material of another kind, or

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a related provision has been contravened with respect to the thing, or

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the thing is evidence of a contravention of a related provision, or

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the thing is intended to be used to contravene a related provision, and

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the authorised person believes on reasonable grounds that it is necessary to seize the thing in order to prevent its loss, concealment or destruction.

7.128 These constraints on the exercise of the powers limit their susceptibility to arbitrary use or abuse and ensure that their use is reasonable and proportionate in the circumstances. Accordingly, the monitoring and investigation powers are necessary, proportionate and reasonable in the pursuance of the legitimate objectives of the FATA.

7.129 Triggering the provisions pertaining to monitoring and investigation powers in the Regulatory Powers Act causes offences in that Act to apply in relation to monitoring and investigating. The fair trial rights, minimum guarantees in the determination of a criminal charge and other criminal process rights contained in Article 14 of the ICCPR are engaged. Parts 2 (monitoring) and 3 (investigation) of the Regulatory Powers Act provide questioning powers to authorised persons. Under subsection 24(3) of the Regulatory Powers Act, where entry is authorised by a monitoring warrant, the authorised person may require any person on the premises to answer questions or produce documents relating to information or provisions subject to monitoring. If the person fails to do so, this is an offence under subsection 24(5) of the Regulatory Powers Act. The penalty is 30 penalty units. Similarly, under section 54(3) of the Regulatory Powers Act an authorised person who enters premises under an investigation warrant may require persons on the premises to answer questions or produce documents relating to evidential material of the kind specified in the warrant. If the person fails to do so, this is an offence under subsection 54(5) of the Regulatory Powers Act. The penalty is 30 penalty units.

7.130 These offence provisions do not limit the person's access to a fair trial or limit the other criminal process rights in any way. Sections 17 and 47 of the Regulatory Powers Act make it clear that the privileges against self-incrimination and legal professional privilege have not been abrogated by the monitoring and investigation powers provisions, including the offence provisions. These protections guarantee the criminal process rights protected in paragraphs 14(3)(d) and (g) of the ICCPR. The usual guarantees and criminal process rights will apply to these offences and are not abrogated by any provisions in the Bill or triggered provisions of the Regulatory Powers Act. Accordingly, sections 24 and 54 of the Regulatory Powers Act, as applied in these amendments, are compatible with human rights.

7.131 The monitoring and investigative powers may be considered to be coercive powers as they are powers conferred by statute on government agencies to enable them to obtain information and perform their functions. These include powers to:

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enter and search premises, and seize evidential material;

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arrest, restrain or detain a person; and

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conduct personal search powers.

7.132 The Department would develop guidelines and an internal governance framework for the appropriate use of those coercive powers, outlining matters including, but not limited to:

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how officers will be trained to exercise the powers, and how skills will be maintained;

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how operational risks associated with exercising coercive powers (including encountering violence/resistance in gaining entry to premises, finding evidence of other offences) will be managed; and

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how those exercising the powers will be supported, including through resources such as tools for the forensic analysis of documents and exhibit rooms, and by personnel suitably trained in planning and executing searches and acting as exhibit/property officers.

7.133 The Department will adopt best practice approaches to the use of coercive powers, including:

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keeping written records of decisions to exercise coercive powers, including information on who authorised decisions to exercise the power, and the basis on which the decision was made; and

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regularly publishing information on the agency's use of powers (to the extent that it is appropriate to do so) to engender community confidence and facilitate internal and external scrutiny of the use of the powers (principles 4 and 18).

7.134 The Secretary may appoint a person as an authorised officer, for the purposes of Parts 2 and 3 of the Regulatory Powers Act, who is an APS employee performing the duties of an APS Level 6 position, or an equivalent or higher position, in the Department. In order to prevent possible abuses of power, the Secretary must be satisfied that the person has suitable training or experience to properly perform the functions, or exercise the powers, of an authorised officer. This is consistent with Australian Government policy and is appropriate given authorised officers will exercise coercive powers. Appropriate limitations on coercive powers are also included in the principle legislation requiring the authorised officer to comply with the directions of the Secretary for an authorised officer's exercise of powers or the performance of functions.

Register of foreign owned Australian assets

7.135 Schedule 3 to the Bill establishes a new Register of Foreign Owned Assets. The Register will engage Article 17 of the ICCPR and the right to protection from arbitrary or unlawful interference with privacy.

7.136 The Register will record certain actions about interests acquired, held or disposed of by foreign persons. Foreign persons, and people acting on their behalf, must provide notice of their acquisition or disposal of such interests. Notification must also be given where a person becomes, or ceases to be, a foreign person in relation to such an acquisition or disposal.

7.137 The Register will incorporate the existing Register of Foreign Owned Water or Agricultural Land administered by the Commissioner.

7.138 The requirement to provide information to the Registrar will engage the person's right to privacy under Article 17 of the ICCPR as some of the information required to be included may be personal information.

7.139 The right in Article 17 may be subject to permissible limitations, where these limitations are authorised by law and are not arbitrary. In order for an interference with the right to privacy to be permissible, the interference must be authorised by law, be for a reason consistent with the ICCPR and be reasonable in the particular circumstances. The UN Human Rights Committee has interpreted the requirement of 'reasonableness' to imply that any interference with privacy must be proportional to the end sought and be necessary in the circumstances of any given case.

7.140 The information to be provided for inclusion on the Register is required for the legitimate of objective of complementing existing mechanisms for recording and monitoring details of foreign persons' interests in Australian assets, and is not publicly available. So to the extent there is any interference with the right to informational privacy, it is lawful, necessary and proportional to the legitimate objective of the legislation.

Conclusion

7.141 The Bill and Imposition Bill are compatible with human rights, because to the extent the Bills may limit human rights, those limitations are reasonable, necessary and proportionate.