Senate

Revised Explanatory Memorandum

(Circulated by authority of the Attorney-General, the Hon Mark Dreyfus KC MP)

General outline and financial impact

GENERAL OUTLINE

The NACC Bill would create a new Commonwealth anti-corruption agency, the National Anti-Corruption Commission. The NACC would be an independent agency that would investigate and report on serious or systemic corruption in the Commonwealth public sector, refer evidence of criminal corrupt conduct for prosecution, and undertake education and prevention activities regarding corruption.

The NACC Bill would strengthen corruption prevention across the Commonwealth government, by enabling the NACC to undertake public inquiries and provide advice on corruption risks and vulnerabilities and strategies to address them.

The NACC Bill would establish the Commissioner as the head of the NACC, and provide the Commissioner with broad powers to investigate corruption issues and conduct public inquiries.

The Commissioner's power to deal with corruption issues will sit within a broader Commonwealth integrity framework. Other Commonwealth bodies and frameworks contribute to Australia's multi-faceted integrity framework and provide other avenues to deal with and prevent fraud and corruption in the Commonwealth public sector. For example:

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the Auditor-General supports accountability in the Australian Government sector through its audit and assurance functions;

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the Commonwealth Ombudsman, the Inspector-General of Intelligence and Security, the Australian Information Commissioner, the Independent Parliamentary Expenses Authority, and a number of Inspectors-General all fulfil oversight functions;

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the Foreign Influence Transparency Scheme, the Lobbying Code of Conduct, the freedom of information framework, and the National Archives of Australia fulfil a transparency function, providing and promoting public visibility of government decisions and external influence;

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the Commonwealth Fraud Control and Protective Security Policy Frameworks and the Commonwealth Fraud Prevention Centre fulfil a preventative function-the NACC would also have a complementary preventative and educative function;

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the Australian Federal Police is responsible for investigating the most serious and complex cases of fraud against the Commonwealth, in partnership with regulatory agencies, and State, Territory and international law enforcement agencies; and

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courts and tribunals are able to review government decision-making and provide redress where appropriate to persons adversely affected by government decisions.

Structure of the NACC

The NACC would be led by a Commissioner and up to three Deputy Commissioners, and would also be supported by a Chief Executive Officer appointed under the NACC Bill.

The Commissioner and Deputy Commissioners would have security of tenure, involving appointment for a single term of up to five years for the Commissioner and up to two terms of five years for the Deputy Commissioners, with the termination of their appointments generally requiring an address from each House of the Parliament on the grounds of misbehaviour or incapacity.

The NACC Bill would also provide for a requirement for a Parliamentary Joint Committee to oversee the NACC and approve the Government's nominated appointees for the offices of Commissioner and Deputy Commissioner, as well as the Inspector of the NACC.

Jurisdiction of the NACC and definition of corrupt conduct

The NACC Bill would provide the Commissioner with a broad jurisdiction to investigate Commonwealth Ministers, parliamentarians, persons engaged under the Members of Parliament (Staff) Act 1984, the heads and employees of Commonwealth agencies, government contractors and their employees, members of the Australian Defence Force, statutory office holders and appointees, officers and directors of Commonwealth companies, and people or bodies providing services, exercising powers or performing functions on behalf of the Commonwealth.

The Commissioner would only be able to commence an investigation (whether following a public complaint, agency referral or on their own initiative) in relation to a corruption issue that the Commissioner is of the opinion could involve serious or systemic corrupt conduct. This would include, but would not be limited to, conduct that could constitute a criminal offence-for example, the bribery, abuse of office and related offences contained in Part 7.6 of the Criminal Code.

The NACC Bill would define corrupt conduct to include any conduct of a person (including a public official) that adversely affects, or could adversely affect, the honest or impartial exercise or performance of any public official's powers, functions or duties. Corrupt conduct would also include any conduct of a public official that:

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constitutes or involves a breach of public trust;

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constitutes, involves, or is engaged in for the purpose of abuse of the person's office as a public official; or

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constitutes or involves the misuse of information acquired in the person's capacity as a public official.

The NACC Bill would enable the Commissioner to investigate serious or systemic corrupt conduct that occurred prior to the NACC's establishment, the conduct of former public officials while they were public officials, and the misuse of information by a former public official that was acquired by the former public official in the course of their functions or duties as a public official.

Protection for whistleblowers and persons providing information

The NACC Bill would provide protections for persons who refer allegations or information raising corruption issues. This would include criminal offences for taking, or threatening to take, reprisal action that causes detriment to whistleblowers who provide information to the NACC, and immunity from criminal, administrative and civil liability. These protections would complement existing protections under the PID Act for public officials making disclosures.

Referrals

The NACC Bill would create mandatory and voluntary pathways for the referral of corruption issues to the Commissioner. The NACC Bill would define a corruption issue as an issue of whether a person has engaged, is engaging, or will engage in corrupt conduct.

The NACC Bill would allow any person to refer a corruption issue to the Commissioner. Referrals could also occur because of a public interest disclosure under the PID Act.

The NACC Bill would require agency heads and persons with responsibilities under the PID Act to refer information or allegations involving any corrupt conduct that could be serious or systemic to the NACC as soon as reasonably practicable after becoming aware of the information or allegation. Referrals in relation to intelligence agencies could also be made to the IGIS.

Dealing with corruption issues

The Commissioner would be able to deal with a corruption issue in a number of ways: by investigating the issue when the threshold outlined above is met (either by themselves or jointly with another agency), or referring the issue to an appropriate agency for investigation or consideration-for example, back to the agency within which the conduct occurred to conduct an internal investigation or to another independent investigation agency such as the AFP for its consideration.

The NACC Bill would also provide the Commissioner with a preliminary investigation power, allowing the Commissioner to gather information to confirm the existence or nature of a corruption issue, and to support a decision about how to deal with an allegation of corrupt conduct.

If a corruption issue were to be referred for investigation by the agency within which the conduct occurred, the Commissioner would have the ability to:

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oversee the investigation;

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provide directions to the agency regarding the conduct of the investigation;

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retain visibility of the investigation by requesting progress reports and a final report;

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make comments and additional recommendations on a final report;

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follow-up on the agency's implementation of recommendations; and

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assume responsibility for the investigation where appropriate.

Powers

The Commissioner would be able to exercise a range of powers under the NACC Bill and other legislation to undertake their functions.

The NACC Bill would provide the Commissioner with the power to hold hearings as part of an investigation into a corruption issue or a public inquiry. Hearings would, by default, be held in private. The NACC Bill would provide the Commissioner with the discretion to hold public hearings in relation to an investigation or public inquiry where the Commissioner decides that exceptional circumstances justify holding the hearing in public and it is in the public interest to do so.

The Commissioner would have the ability to compel the production of documents or information, obtain a warrant to enter and search premises, enter certain Commonwealth premises without a search warrant, seize evidence and exercise limited powers of arrest to ensure attendance at a hearing.

The Commissioner would also have covert investigative powers such as telecommunications interception powers and the ability to use surveillance devices. The NACC's warrants and orders under the SD Act and TIA Act would be issued by superior court judges. These arrangements are provided for in the Consequential Bill.

Reporting

The NACC Bill would include a number of reporting requirements, dealing with the preparation of reports on corruption investigations and public inquiries. The NACC Bill would require the tabling of reports in Parliament where a public hearing has been held in the course of an investigation or inquiry, or public submissions were invited on matters that were the subject of a public inquiry.

The NACC Bill would also allow the Commissioner to publish reports and disclose other information relevant to the NACC, if satisfied it is in the public interest to do so.

The NACC Bill would empower the Commissioner to make findings of fact in reports, including findings of corrupt conduct in investigation reports, but not to make determinations of criminal liability. The Commissioner could refer evidence of alleged criminal conduct to appropriate agencies, such as the Commonwealth Director of Public Prosecutions, for further consideration.

The NACC Bill would contain important safeguards around the protection of sensitive information.

The NACC Bill would also ensure the Commissioner would provide procedural fairness to individuals or agencies that are to be the subject of an adverse finding or opinion. Findings would also be subject to judicial review.

Reputational safeguards

The NACC Bill would balance the Commissioner's investigatory purpose with the need to protect against undue reputational damage. This would include a public interest test for the Commissioner to investigate a corruption issue that has already been dealt with by another Commonwealth integrity agency. It would also include provision for the Commissioner to clarify the capacity in which a witness appears at a public hearing, or to make a public statement at any time or a statement in a report where that is appropriate to avoid damage to a person's reputation.

Public inquiries

In addition to dealing with corruption issues, the NACC Bill would also enable the Commissioner to conduct public inquiries into corruption risks, vulnerabilities and measures to prevent corruption in Commonwealth agencies. Public inquiries would focus on broader systemic issues in the Commonwealth public sector rather than a specific corruption issue concerning the conduct of an individual.

The Commissioner would be able to commence a public inquiry on their own initiative and make recommendations for legislative or administrative reform in relation to these inquiries. The Commissioner would be able to exercise powers to invite submissions, hold hearings, and compel the production of documents or information from Commonwealth entities in support of an inquiry.

Oversight of the NACC

The NACC Bill would establish appropriate oversight mechanisms to provide assurance to the Government, the Parliament and the public that the NACC is functioning fairly and effectively. This would include oversight by an independent Inspector and a Parliamentary Joint Committee.

The NACC Bill would provide for the Inspector to be appointed in the same way, and have security of tenure on the same terms, as the Commissioner and Deputy Commissioners. The Inspector would be able to be appointed for up to 10 years to provide consistent oversight across the appointment of multiple Commissioners.

The NACC Bill would confer the Inspector with functions that include the investigation of corruption issues within the NACC and complaints about the conduct of the NACC or its staff, as well as the review of the Commission's conduct in issuing summonses and applying for and executing arrest warrants. The Inspector would have complete discretion in performing their functions and carrying out their duties.

The functions of the Committee would include reviewing and approving the Government's nominated appointees for the offices of Commissioner, Deputy Commissioner and Inspector. The Committee would also be able to review the sufficiency of the NACC's budget and staffing levels.

The Consequential Bill

The NACC Bill would be supported by the Consequential Bill, which would amend various Acts to give effect to the NACC.

Schedule 1 to the Consequential Bill would repeal the LEIC Act. That Act established ACLEI, which would transition to become part of the NACC.

Schedule 1 would also make consequential amendments to other Commonwealth laws, including to confer powers on the Commissioner that are currently conferred on ACLEI's Integrity Commissioner, and to confer on the Commissioner industry assistance powers under Part 15 of the Telecommunications Act 1997.

Schedule 2 to the Consequential Bill would outline the transitional arrangements necessary to support the establishment of the NACC. These arrangements would ensure the effective transition of ACLEI's existing roles and functions to the NACC.

Date of effect

The NACC Bill and Consequential Bill would generally commence on a single day to be fixed by Proclamation, intended to be in mid-2023. However, if they do not commence within the period of 12 months beginning on the day on which the NACC Bill receives Royal Assent, they would commence on the day after the end of that period.

Provisions concerning the Committee would commence on the day following Royal Assent.

FINANCIAL IMPACT

The Government has committed $262.6 million over four years to support the establishment of the NACC, contained in the 2022-23 Budget.