Arch Bevis (Brisbane, Australian Labor Party, Shadow Minister for Homeland Security) Share this | Hansard source

Today’s bill amends the principal act. It represents another step in what has been a long and painful process that only last year resulted in the passage of the original act. In fact, it was barely four months ago that this House and this parliament debated the original act, and here we are now, at the start of this year, amending that legislation to pick up mistakes and errors and to make improvements that were raised with the government during last year’s debate. Once again, we see evidence of the government’s lax approach to this critical area of Australian security. Once again, the government tries to talk tough on protecting Australia, yet its actions let us all down.

Before I begin, I would like to make it clear that Labor supports this bill. In fact, it was Labor’s efforts in highlighting the delays to this process that shamed the government into action on the anti-money-laundering and counterterrorism financing front, and it was Labor’s support for business that ensured that we arrived at a workable model. I spoke at some length about those matters when the original bill was before the parliament at the end of last year.

However, here we are again, trying to correct the government’s legislative drafting errors in an act that is still largely to take effect. It should be pointed out that all of these amendments could have been dealt with last year when we were debating the bill that became the principal act. But the Howard government insisted on shunting the bill through the parliament without that bill being corrected. It is no wonder the Howard government has become the master of red tape. It is a government that operates at only two speeds: lethargy and panic. After the passage of this bill, the AMLCTF Act will accumulate another layer of unwieldy complexity. We will have an act, an amending act, a set of regulations and a set of rules.

The bill before us will introduce a range of technical amendments to the AMLCTF Act. The act itself was passed, finally, last year only after what will be remembered as one of the longest and most drawn-out legislative processes in parliamentary history. The impetus for the act was the recommendations of the Financial Action Task Force. That task force is essentially an international cross-government body which sets out international standards for financial security to fight money laundering and updates these from time to time. These are contained in the FATF’s 40 general recommendations. Since late 2001, the FATF has also developed another set of recommendations relating to counterterrorism financing. These were released in the wake of the September 11 attacks. So, all up, there are 40 general recommendations and nine special recommendations representing an international standard for financial security and the prevention of money laundering for terrorist financing.

Let me be perfectly clear about how important these recommendations and standards are. They are fundamental to a properly coordinated fight against international crime and terrorism. The Minister for Justice and Customs, Senator Chris Ellison, said as much in 2002, when he said:

... criminals and terrorists ... will continue to take advantage of jurisdictions where the law enforcement and regulatory powers are the weakest.

Legislation to bring Australia into line with our international obligations was promised back in 2003. Here we are in 2007, still tidying it up. But, as I have already said in this parliament, this minister’s actions and those of the government have not matched their rhetoric. For years, the government dithered and refused to bring legislation before the parliament to bring Australia’s legislation into line with those international standards. The FATF provided the impetus; the government, sadly, provided the inertia.

In fact, in 2005 two international reports were released which slammed Australia’s tardy response. Firstly, the FATF country report found that under the Howard government Australia had met only 12 of the 40 general recommendations and not a single one of the nine special recommendations. That was in 2005, four years after the September 11 disaster, when every nation was put on notice; four years after the international treaty set down the provisions that all responsible nations should enact in order to restrict the funding of terrorist organisations. Perhaps more embarrassing was the United States Department of State report released in the same year, which was also scathing of Australia’s response. Australia was labelled by the United States Department of State as a major money-laundering country and a country of primary concern. In other words, the United States has labelled the Howard government as a soft touch on money laundering and terrorist financing. What an appalling record of incompetence, mismanagement and lethargy by the Howard government in dealing with critical issues associated with the security of Australians and the protection of all of us from the actions of terrorists and organised criminals.

The scathing international criticism of Australia did have one advantage because, combined with the pressure from Labor—and I have to commend my colleague Senator Joe Ludwig, who has had principal carriage of this matter and who I know fearlessly pursued this matter through that period—finally the Howard government became convinced that it needed to do something about reforms. But still the government’s response in late 2005 and throughout 2006 could best be described as a panic in slow motion. We saw the first raft of bandaid solutions contained in the Anti-Terrorism Act (No. 2) 2005. This introduced a few of the measures that were required to bring us closer to those international standards, but it is still not compliant.

The problem with this bandaid solution, though, was that the Attorney-General’s Department failed to consult properly with the affected industries. During the Senate Standing Committee on Legal and Constitutional Affairs inquiry it was revealed that the government had not shown the final draft to industry. In fact, the affected industries and government strongly disagreed on the critical question: the cost of the new arrangements. So here we had slow lethargy from the government and then, finally, action with the bill but, in the process, a complete failure to consult with those in industry who in fact had to make the system work. With little surprise, industry had a better estimate of the costs. Before the bandaid solutions contained in the Anti-Terrorism Act (No. 2) had even commenced, the government was forced to go back and revise them. It was forced to do this because, to quote directly from the explanatory memorandum to that act:

If the amendment to restrict the application of Division 3A of Part 11 of the FTR Act to ADIs—

that is, authorised deposit-taking institutions—

is not made, then certain legitimate non-bank money remitters assert that they could be put out of business.

We need to understand what that says. This is the government’s own explanatory memorandum of their bill. They needed to make a change, because what they were going to do was put some Australian businesses out of business. That was the product of their incompetence and arrogance in failing to consult with industry. The government were forced to concede that their own legislation had been so poorly drafted that it would have put those businesses out of business altogether had their legislation come into force. This is the low standard of law-making to which the Howard government have declined. We finally saw the completed legislation at the end of last year but, even at the eleventh hour, the government were making last-minute alterations. Explanatory memorandas were written, withdrawn and new ones released.

Even after half a decade of delays, international criticism and bandaid solutions piled upon bandaid solutions, the legislation that was passed by parliament last year does not even contain the full complement of recommendations. The government is still to bring forward a second tranche of reforms to finally bring Australia into line with our international obligations. But, on past performances, none of us would want to hold our breath or hang by our thumbs waiting for the Howard government to bring that legislation forward.

Without the implementation of the full range of recommendations you have, at best, a Maginot line—that is, a wall of seemingly impregnable defences that might look threatening but can be circumnavigated with surprising ease. The legislation we have seen to date delivers only part of what is required.

I now turn to some of the detail in the bill before the House. This legislation continues the government’s piecemeal approach, where legislation is constructed in patchwork—one quick fix at a time. Before us today is the latest attempt by the government to patch up its money-laundering regime. The bill makes a number of changes, the most significant of which I will quickly address. Firstly, the main substantive amendment to the bill is to extend the operation of the AMLCTF Act to the Australian Security and Intelligence Service, or ASIS. It effectively gives ASIS the same access to AUSTRAC information as is currently held by ASIO. In Labor’s view, this is a sensible amendment which will give Australia’s chief foreign intelligence agency the same access to information as Australia’s chief domestic intelligence agency.

To Labor, there does not seem to be any reason not to extend the availability of AUSTRAC’s financial intelligence as proposed in the bill. Labor is in support of the general principle that our intelligence agencies should have the access they need, provided civil liberties are adequately protected. In this case, ASIS is governed by the Intelligence Services Act 2001, which provides for a range of safeguards and oversight mechanisms for ASIS.

Also, a range of technical amendments to the act are being brought in to improve its operation. For instance, the bill will clarify that signatories to a range of types of accounts, rather than simply the holder of the account—as provided for under the current legislation—fall under the aegis of the bill. Similarly, exemptions from certain obligations under the act are extended to merchant terminals. There appears to be a drafting error in the act because the term ‘merchant terminal’ is not defined, although from the explanatory memorandum we can glean that it is intended to refer to EFTPOS and like services, but it does not appear to be defined.

I ask the Attorney-General whether, in his summing-up, he could indicate whether ‘merchant terminal’ was intentionally meant to be read on the plain words, whether it could do with an actual definition, and whether the government has taken into account the possible impact of technology change in this area.

I wish to address the government’s response to a range of recommendations made by the Senate Standing Committee on Legal and Constitutional Affairs, which examined what is now the principal AMLCTF Act. The government has agreed to a number of the recommendations that have been made by the committee and, in some instances, has even gone further. Labor welcomes these improvements.

Unfortunately, there are a range of recommendations that were not picked up by the government but should have been. I foreshadow that Labor will, again, be moving amendments in the Senate to improve the AMLCTF Act. Firstly, I turn to recommendation 4 from the committee report. This recommendation stated that clause 6(7) be deleted from the bill. Briefly, that clause is a Henry VIII clause—a clause which allows regulations to alter the legislation. Clause 6(7) would allow the government to expand the range of products and services to which the act applied merely by regulation. In effect, the government would be able to expand this piece of legislation to include any financial service it wished. Indeed, that is precisely the government’s argument for its retention. Labor does not regard that as acceptable. If there is a need to alter the legislation then a bill should be brought before the parliament and the legislation should be altered in that way. The government, in its response, indicated that these provisions were necessary and gave a commitment that it would not use the power to expand the legislation to include services that were intended to be dealt with in the second tranche of the legislation. But this is beside the point. Whether or not the government intends to expand the operation of the legislation to include tranche 2 services, it still intends to retain the power to expand the legislation to any service it wishes by executive fiat and without adequate parliamentary oversight. Labor do not believe that this is acceptable, and we will be moving amendments in the Senate in line with the committee’s recommendations.

I spoke more extensively about that provision when the original bill was before the parliament at the end of last year. It is inappropriate, in this day and age, to have those sorts of powers to alter the legislation left to the executive arm of government; that is the purpose of the parliament. It is commonly referred to as a Henry VIII power for good reason; it is not something that is best practice for parliaments to adopt, and the government should see good sense and accept the committee’s recommendation on that matter.

The committee made the further recommendation, recommendation 5, that the AUSTRAC CEO be given the power to deregister or refuse registration to an organisation which is seeking registration as a designated remittance service. The government has rejected this with the reasoning that registration did not confer any status on designated remittance providers and existed solely to locate and identify remittance providers. Again, I believe this response from the government misses the point. Quite simply, if there is a repeat offender, then the CEO of AUSTRAC should have the power, as regulator, to refuse to allow it to operate as a designated remittance service provider or to deregister it. Again, Labor will be moving amendments in line with those committee recommendations when this bill is considered in the Senate.

Additional recommendation 1 in the committee report was a recommendation by Labor senators on the committee which went to the oversight of AUSTRAC by the Australian Commission for Law Enforcement Integrity—the ACLEI. At the moment there is no oversight by the Australian Commission for Law Enforcement Integrity because the government claims that it is not required at this stage. This is despite AUSTRAC’s new role as a regulator. Given that AUSTRAC, for the very first time, now holds powers both as a regulator and as a law enforcement intelligence collector, to leave it without effective oversight is not acceptable. So Labor will be calling on the government to rethink its position on this recommendation and will be moving amendments in the Senate to give the Australian Commission for Law Enforcement Integrity oversight of AUSTRAC.

To conclude, we are yet again correcting mistakes in important national security legislation. At some point you have to ask: when will the Howard government actually get it right? The Minister for Justice and Customs likes to talk about security as a work in progress, yet in a large part much of the progress seems to be fixing up the government’s own mistakes. Have no doubt, sloppy legislation is a threat to national security. We have already had parliament recalled to change the drafting of a single word. It is my hope that the Minister for Justice and Customs and the Attorney-General will manage to wake up to themselves and lift their performance. However, notwithstanding the concerns I have raised in this debate, and those raised by my Senate colleagues on the committee, Labor will support this bill as the amendments that are contained within it are appropriate and ones which we agree with. However, in addition, we will be moving amendments to improve the bill and the act. But, I repeat, we will support the bill.

I will turn very briefly to the amendment that has been circulated in my name, moved and seconded. A number of concerns that Labor has are detailed in that amendment. I quickly want to refer to a couple. Point 2 of the amendment:

... notes the Minister for Justice (Senator Ellison)’s statement of June 5 2002 that “criminals and terrorists will continue to take advantage of jurisdictions where the law enforcement and regulatory powers are the weakest” ...

That should be an alarm siren to this government. This government is responsible for dragging the chain in fixing these important areas of law. We need to ensure that terrorist financing is restricted and cut off as much as possible. We certainly should not see Australia branded as an easy touch for terrorists to launder money in, as has been the case as recently as two years ago. These bills go some way to fixing that problem, but, as has already been commented, they fail to close the loopholes completely.

We also note in the amendment that, in the interval between indicating an intention to produce the legislation and tabling the legislation, the government, either through collaboration with the Australian Wheat Board or through the grossest of incompetence, enabled the Wheat Board to fleece the UN of some $300 million in funds and to channel them to the evil Iraqi dictator, Saddam Hussein. In March 2005 we saw the US state department release a report from the Bureau of International Narcotics and Law Enforcement Affairs naming Australia as a major money-laundering country.

Again, in April 2005, the minister created a new anti-money-laundering task force but incredibly left off AUSTRAC, the nation’s prime anti-money-laundering agency. The second reading amendment also notes that important antiterrorism legislation was drafted incorrectly and the parliament had to be recalled at substantial expense to fix sloppily drafted legislation by changing a single word. I note that the government decided to announce that there had to be a special sitting of the parliament and that one word had to be changed on the day that their extremely controversial and draconian industrial relations laws were introduced into the parliament. Some commentators could have been forgiven for thinking that the timing of that event might have been more than coincidental and that the government were looking for a good story to replace the industrial relations legislation that they were introducing.

The second reading amendment also notes that the Anti-Terrorism Bill (No. 2) 2005 was drafted incorrectly and had to be amended to avoid significant hardship to Australian business. In October 2005, the FATF reported on Australia’s compliance and found that the government had failed to meet the FATF standards, scoring just 12 out of 40 on anti-money laundering, and zero out of nine on counterterrorism financing. This is not a proud record of achievement and performance. It stands in stark contrast with the political spin the Howard government likes to apply to matters of national security.

The simple fact is that this government and many of its ministers, time and again, wish to wrap themselves in the flag, stand beside the men and women of our defence forces and spin a story of political activity in national security, when the truth is wildly different—when their performance in legislating to meet internationally agreed standards ranks us amongst the worst in the world and when we saw ourselves in 2005 listed by the United States as one of those countries that fails to meet the anti-money-laundering requirements agreed to internationally. The Howard government does not have an impressive record in this area.

This bill is an improvement. In 2007 we are amending a piece of legislation that was put through this parliament, I think, in October 2006, dealing with matters that were agreed to in 2002. Indeed in 2002 the government said it was going to do something about this, and here we are five years later still putting bandaids on the bandaids. The government needs to improve its performance in this area. It should spend a bit more time working on practical solutions rather than the political spin that it has sought to play out in national security matters, particularly over the last six years since September 11 2001.

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