CRIMINAL ASSETS CONFISCATION (PRESCRIBED DRUG OFFENDERS) AMENDMENT BILL 18 June 2014

Ms CHAPMAN (Bragg—Deputy Leader of the Opposition) (15:40): I rise to speak on the Criminal Assets Confiscation (Prescribed Drug Offenders) Amendment Bill 2014. This bill was tabled by the Attorney on 7 May, and has an interesting history. It is fair to say that, in the development of the confiscation of assets acquired during, or relevant to, criminal activity as an instrument to break down the opportunity and desire of those to profit from crime, the Liberal Party has in fact consistently promoted and supported legislation to confiscate assets where they have been specifically proceeds of crime, instruments of crime (even if they were lawfully acquired), and for the purpose of unexplained wealth. 

However, this bill seeks to take matters a step further; that is, to seize assets unrelated to a particular crime, even where a person can prove that they have been legally acquired. A similar Northern Territory bill was struck down on constitutional grounds, and it was only in April of this year (two months ago) that a High Court decision removed those constitutional doubts. What we now know is that this type of law is constitutional; we are now looking afresh to see whether in fact it is good law, and whether it could be made better.  

We will be supporting the passage of this bill in this chamber today. Frankly, we are yet to be convinced that the bill, if passed, will be effective at achieving the government's stated goals of deterring major drug offenders but, as I have indicated, we have consistently supported legislation where it has been within the parameters as stated. To open up this new area of exposure to confiscation, we do need to be fully satisfied on a few more matters.  

Let us consider why we are here. Having established in the past few years and supported a number of developments in confiscation laws, which have been consistently applied and developed across the country, we are here because of the government's claims during the 2014 election as to what it would be doing. To consider that, let us look at the Labor Party's 2010 serious crime election policy. Then they stated:  

This proposal will amend the Criminal Assets Confiscation Act and Controlled Substances Act to target persistent or high-level drug offenders to provide for the total confiscation of the property of a 'Declared Drug Trafficker'. This deterrent is an effective way of disrupting and hindering the activities of serious organised crime gangs by removing or reducing profits. New powers will be given to the Director of Public Prosecutions to allow criminal drug dealers who commit three prescribed offences within a span of 10 years to be 'declared' a drug trafficker.  

Under this proposal, which targets high level and major drug trafficking offenders, all of a convicted offender's property can be confiscated, whether or not it is established as unlawfully acquired and whether or not there is any level of proof about property at all. Property and assets could also be restrained pending prosecution of matters before the court.  

The legislation will attack repeat drug offenders. The offences that will attract the declaration if committed 3 or more times within a span of 10 years include:  

Trafficking in controlled drugs;  

Manufacture of controlled drugs for sale; 

Sale of controlled precursor for the purpose of manufacture;  

Cultivation of controlled plants for sale;  

Sale of controlled plants; and  

Any offence involving children and school zones.  

That is what the Australian Labor Party promised in the 2010 election policy. Bills were introduced in the last parliament to implement that policy. The bills, however, went further than the policy in that they allowed confiscation on a first offence and diverted confiscated funds away from the Victims of Crime Fund.  

As a result of Liberal and crossbench opposition in the Legislative Council, the bills were not passed, so the only group supporting this extended application of legislation, far beyond the policy even announced in the 2010 election, was the Australian Labor Party. It is fair to say, therefore, that the Liberal opposition was not alone in this. There were concerns raised by other members of this parliament and, accordingly, they failed.  

The Labor Party then had further election policies for the election in March this year. In this year's election policy, the Labor Party said that they would continue to pursue the criminal asset confiscation changes and 'in addition, we will give the court the power to prevent the offender from owning property for up to five years'. Now we were to have their original position plus this additional restriction on certain offenders not being able to own anything for five years.  

Let's look at the history of what is happening with the legislation so far. The first bill on this matter was introduced on 18 May 2011 in this house. On 27 September 2011, it passed through the Legislative Council with amendments, which the government did not accept, and subsequent to that, there was the prorogation of the parliament. Then there was the second bill on 14 February 2012. The government suspended standing orders in this house to reintroduce the bill. The next day it passed this house. On 15 March, again, it was passed by the Legislative Council with the amendments that they had promoted and supported.  

Then, again, on 3 and 4 April that year, in the House of Assembly, the government rejected the amendments and, that was transmitted to the Legislative Council. The result was that the bill was withdrawn. Then we have the third bill. On 4 October 2012, the Attorney-General wrote to the then shadow attorney in another place (Hon. Stephen Wade) to advise him that he intended to suspend standing orders in the House of Assembly to introduce two new bills on 16 October 2012 to supersede the Criminal Assets Confiscation (Prescribed Drug Offenders) Amendment Bill 2012.  

On 16 October, as indicated, the prescribed drug offenders bill passed this house. On the same date, the miscellaneous Criminal Assets Confiscation Act amendments passed this house. Then, on 31 October 2012, the miscellaneous provisions were passed by the Legislative Council, and on 12 November 2012 the miscellaneous provisions received assent. On 14 November 2013, the prescribed drug offenders bill reached the end of the second reading stage in the Legislative Council, and again that bill followed the fate of the previous two bills presented in 2011 and early in 2012, respectively.  

What essentially occurred at that point was that the government put some matters which were uncontentious, and which we supported as having some merit, into a bill which I have referred to as the 'miscellaneous Criminal Assets Confiscation Act amendments', and they followed through the passage of success in being approved by this parliament. The offensive aspects that were in the second bill, of course, met their fate as indicated. Now we have, of course, the fourth attempt, by introduction to the House of Assembly last month of this bill.  

The bill does what? It proposes to allow the confiscation of commercial and repeat drug offenders' assets to the point of bankruptcy, even where those assets have been lawfully acquired, as I have indicated. That is all consistent with what the government announced in 2010. Under the bill, if an offender has committed a single commercial drug offence, or three or more specified drug offences within 10 years, they would be liable to be declared a declared drug trafficker and subject to the confiscation regime.  

The prescribed offences are to include trafficking in controlled drugs, manufacture of controlled drugs for sale, sale of controlled precursor for the purpose of manufacturer, cultivation of controlled plants for sale, sale of controlled plants, and any offence involving children in a school and school zones. Each of those were as published in the 2010 Labor Party policy. The Western Australian and Northern Territory jurisdictions have schemes similar to this. In the last seven or eight years of the scheme in Western Australia, as I understand it, nearly 600 declarations have been made and over $35 million confiscated. Given that these figures also include the proceeds of crime confiscated in those cases—so it is a total amount—the average confiscation is only $59,000. I think it is reasonable, therefore, to deduce that a number of relatively minor operators are being affected, if we are to rely on the data coming out of Western Australia. There are a number of primary offences under South Australian law that already carry a fine of up to $500,000 and life imprisonment. I will not repeat them all, but a number of those already have a very significant penalty.  

During the second reading contribution to the bill in 2012, the Attorney-General emphasised the capacity for forfeiture to be varied if drug offenders have cooperated with law enforcement agencies. Such a scheme runs the real risk that, if the authorities become the extorting party, accused persons will be threatened with bankruptcy if they do not comply with the demands of the state, and that raises some serious matters.  

As I have indicated, questions of constitutionality were raised in the previous debates. The original concerns, which have been resolved by more recent determinations (and one only this year), were raised by a number of stakeholders, including the opposition, during the previous debates because the fundamental question was whether the legislation offended the Kable principle. Again, the Attorney-General, in his second reading on this bill in the House of Assembly when it was presented some months ago, said:  

The idea that all of the property of certain drug offenders (described in the Bill as prescribed drug offenders) should be confiscated, whether or not it has any link to crime at all and whether or not legitimately earned or acquired, originated in the Western Australian Criminal Property Forfeiture Act 2000.  

He went on to say:  

The Northern Territory Criminal Property Forfeiture Act contains very similar provisions, obviously  modelled on the Western Australian Act.  

At that time, the Law Society was of the view that the bill may infringe the Kable principle by attempting to compel the court to comply with an administrative decision made without court consideration. In doing so, the administrative decision-maker exercises powers usually reserved by the court. On 17 October 2012, the Supreme Court brought down its decision in Bell v Police, in which the hoon driving legislation was impugned. On 29 October of the same year, the then former shadow attorneygeneral wrote to the Attorney-General in the following terms:  

I note the Chief Justice's comments in relation to the constitutional validity of laws which impinge on the judicial integrity principle. In particular, his comments at paragraph 78 of the judgement:  

'Questions of incompatibility of the judicial integrity implication loom larger when the legislative scheme, instead of proscribing specified conduct and providing for penalties or other orders in the case of breach, authorises, in prescribed circumstances, executive and judicial action to derogate from the otherwise lawful freedom of action, or property rights of individuals.'  

The letter to the Attorney goes on to say:  

The opposition is concerned that both the Criminal Assets Confiscation (Prescribed Drug Offenders Assets) Amendment Bill 2012 and the Criminal Assets Confiscation (Misc) Amendment Bill 2012 may impinge on the judicial integrity principle. Following discussions in the Liberal Party Party Room, I write to seek an assurance from the Government that Crown Law's advice is that neither of these bills infringe the judicial integrity principle.  

On 28 March 2013, the Northern Territory Court of Appeal, in the case of Emmerson v The Director of Public Prosecution & Ors (2013) NTCA 04, held that the Northern Territory acts impermissibly compromise the independence of the Supreme Court, attracting the principle of Kable v The Director of Public Prosecutions. The acts were held to be unconstitutional and, as I noted earlier, the government has said that these laws we are debating today are very similar to the Northern Territory scheme. On 11 October 2013, the High Court gave special leave for an appeal on the case, and the appeal was heard early this year. Finally, in April this year, the High Court confirmed the constitutionality of the legislative scheme.  

I will not go into the review of the judgement, but it is fair to say that up until that time the Liberal opposition was not alone in its concerns raised in regard to this. The government has a history of jumping into legislation without being clear on the constitutionality, as we faced with bikie legislation, and the humiliation that I think fell upon this parliament as a direct result of the government's insistence on prosecuting a series of legislation. We of course then became the butt of taunts by the bikie community, and that is not an acceptable situation for me, and I do not think it should be for members of this parliament. We do expect the government to provide its best efforts to getting things right and, if it does not or will not or cannot present support for the basis of the challenge with some legal underpinning, then we are entitled to raise our concerns.  

The second issue for us, aside from the constitutionality which has now passed as an impediment to this type of legislation progressing, was the whole question of fairness. In the second issue one needs to remember that the bill is aimed to confiscate assets of certain drug offences to the brink of bankruptcy, even if a person could prove that the assets were legally acquired and that they were unrelated to crime. This bill is fundamentally different from current confiscation laws, because it entitles the state to confiscate assets even if the citizen can demonstrate that they were lawfully acquired. Accordingly, the confiscation is more in the nature of a fine and could significantly exceed the penalty for the particular offence. If the government contemplates penalties for an offence which are the subject of this type of approach, then we say that the appropriate course is to increase the penalties. Let's have the debate on that.  

Let's consider the data to date for drug offence fines under the Criminal Assets Confiscation Act 2005, which is the early legislation covering confiscation of assets associated with the crime itself. Back in 2005-06 the amount deposited to the Victims of Crime Fund was $807,299; for 2006-07, $1,222,116; for 2007-08, $1,686,520; for 2008-09, $1,408,372; for 2009-10, $924,728; for 2010-11, $2,219,598; for 2011-12, $2,275,170; and for 2012-13, $2,320,296.  

Under the Criminal Assets Confiscation Act 1996, the revenue then received—a different ultimate deposit—in 2003-04 was $1,502,615, and in 2004-05 it was $1,009,485. The levying of fines and monetary penalties in the years preceding that in 2002-03 were $666,786 and in 2001-02, $678,674.  

Over the lifetime of this government, we have had the original levying of fines which still apply but which we now have supplementing the 1996 Criminal Assets Confiscation Act and the effect of that for the first few years of this government, then the Criminal Assets Confiscation Act 2005 and the years subsequently.  

To date, if one looks at that data, it is fair to say that governments of all persuasions have avoided income-related fines; that is, they are fixed amounts. Obviously, the financial circumstances of the defendant can be taken, and usually is, into account, but they are not initially set based on the certain disclosed or taxable income of the offender.  

The circumstance of the offender, therefore, can be taken into account in sentencing, and the law should not discriminate between people on the basis of their income or assets. That has been the general principle to date. Applying criminal assets confiscation to the seizure of lawfully obtained assets, therefore, is effectively another form of taxation. In dealing with crime, bankrupting offenders may drive offenders deeper into crime and increase the prospects that their children will be embittered and also embrace a criminal career.  

That is the downside of this. It always sounds good to think that we are going to come on tougher and harder, and that when you have reached a certain threshold you should be labelled as someone for the purposes of then attracting a whole lot of other penalties. It all might sound good in the heat of an election, but one always has to consider the downsides. It is fair to say that the Law Society had also looked very seriously at this matter and expressed its opposition to the bill 'in the strongest possible terms'. The society said:  

The bill is inimical to a free society which applies the rule of law and encourages the citizen to be selfsufficient. To say that it is draconian only tells a fraction of the story. A citizen should not be deprived of his or her lawfully acquired assets because he commits an offence. 

They raise a number of concerns in relation to the bill, obviously the question of legality, and we have canvassed that, and the recent High Court decision deals with that. Again, in their submissions they raised, unsurprisingly, the embarrassment we faced as a result of pushing through with bikie legislation only to get egg on our face.  

The second area of concern for them was a lack of nexus between the offence and the assets seized. There are lots of consequences, some of which I have canvassed in the views of the opposition and our concerns. The third is the additional punishment. The scheme, they say, provides for a punishment over and above that for the actual offending. Again, I think that is consistent, but expressed slightly differently in our position and that is, if the penalties are not tough enough then we should have a serious discussion and debate about that.  

The fourth area was discriminatory. They felt that it was discriminatory against citizens who are legally industrious and acquire wealth. There is some continuity with our view, but it would not be of itself a matter for us to not support the legislation. However, here is where a major concern is raised, and that was when they raised the question of innocent parties, 'where the seizure of assets may deprive a citizen's family of assets regardless of whether they are dependants'. As Justice Gageler, in the Emmerson case said:  

Difficult issues might arise as to the effect of forfeiture on interests of other persons. Those issues can be put to one side. For present purposes, it is sufficient to focus on the most straightforward operation of the provisions to forfeit property wholly owned by the person who is declared to be a drug trafficker.  

That has also been referred to at some length in the contribution of the Attorney. The sixth concern for the Law Society was the due process, the current legislation entitling citizens facing confiscation to appeal to a court, and there was no provision in that bill for that right to occur.  

The scope of the bill was to cover both the convicted drug trafficker as a repeat offender, who is convicted on a third or more offence, for nominated offences within a period of 10 years. The second area is the convicted drug trafficker who is a major offender, whether they are repeated or not. So, if it is a really, really serious drug crime, then you only have to do it once, and in that situation if a major offender is caught in the definition, if he or she is convicted of a commercial drug offence, the offence could be a first offence, as I have said, and what the Law Society called 'low level offending'. So the legal stakeholders advise that the bill would catch a much lower level of offenders than currently applies in the Western Australian legislation.  

Under the Criminal Property Confiscation Act 2000 in Western Australia, a person declared to be a drug trafficker under section 32A(1) of the Misuse of Drugs Act 1981, is liable to have all property that the person owns, effectively controls or gave away before the declaration was made, confiscated. Under section 32A(1) of the Misuse of Drugs Act 1981, drug traffickers are those who have committed two or more serious drug offences or a single serious drug offence in respect of a prohibited drug in a quantity more than the prescribed amount or have committed a relevant drug offence and is a member of a declared organisation. A relevant offence includes intending to sell, manufacturing or selling prohibited drugs, cultivating or selling a prohibited plant and possessing more than a prescribed quantity of category 1 or 2 drugs, and there is a table of those that are to be applied. The third is the absconding accused. 

I suppose the first question, really, that we need to raise is, if we are going to have this type of punitive treatment towards assets, even if lawfully acquired, of people who have committed a serious drug offence or, at a lower level, multiple repeat drug offences, why is this legislation not being applied to white collar crime or serious personal assaults or murders or child sex offences? There is any number of serious crimes which also attract up to life imprisonment for which we do not seem to have any explanation as to why only this category is captured.  

The provisions in respect of the bankruptcy level are similar to those in Western Australia. The key difference between the proposed South Australian and the existing Western Australian models is that all property under the Western Australian system is confiscated, such as everything from washing powder to clothes, etc., whereas the South Australian bill only confiscates all property which would be usually taken if a person were to be declared bankrupt.  

Those who are expert in bankruptcy law will know there is some provision for keeping certain essential chattels, tools of trade and a motor vehicle. I am not sure what is currently accepted as being within that broad principle, but the government has referred to Regulation 6.03 of the commonwealth Bankruptcy Regulations of 1996 which take as a broad principle:  

Subsection 116(1) of the Act does not extend to household property (including recreational and sports equipment) that is reasonably necessary for the domestic use of the bankrupt's household, having regard to current social standards.  

I am not sure what that is currently applied to. I only ever did one bankruptcy case in the 20 years of legal practice I had and that was to oppose the bankruptcy of a poor lady who had a shoe shop. Anyway, we managed to settle for about 10¢ in the dollar for some poor hapless creditors and her reputation was saved and she did not become bankrupt. As best I can recall, these are obviously tools of trade, domestic beds, basic domestic appliances, etc., that are necessary for basic living.  

A lot could be said about the general application of the law, and it is sometimes not until these things are implemented that there is an exposure of often inadvertent and unintentional capture or consequence, which is only highlighted after some poor person or family have nearly had their lives destroyed. Unfortunately, this is exactly the sort of legislation where not only can it happen but it has happened. Whilst the government says that they are modelling legislation on what has been applicable in Western Australia, it is important for the house to understand that, in Western Australia, there was a case where an elderly couple, aged 81 and 77, lost their home that they had built 40 years prior to an occasion where their son had hidden cannabis in that property.  

So, here is a couple who built their home, lived in it for 40 years, then their son hides cannabis in it and, as a consequence of that legislation—that legislation which we are modelling on here in South Australia—this couple, aged 81 and 77, were the subject of a seizure confiscation of that property. Is that fair? Is this what we are seriously trying to do to try to avert and deter people from engaging in crime, that we would make laws that would be cast so widely that we would capture people like that? I do not think so. You could ask anyone in the street in South Australia, 'Would you expect this legislation to capture senior people who had legally bought their home, built it, lived in it for their married life and then have a son who has obviously used it to store his cannabis supply?'  

We on this side of the house have demonstrated that we will support the seizing of criminal assets, but we also need to make sure that law-abiding South Australians do not get caught up by dragnet laws. How do we, therefore, ensure that we target the criminals? There are some other aspects that we are considering.  

On the question of unexplained wealth generally, a review of the execution of powers under the Serious and Organised Crime (Unexplained Wealth) Act 2009 by Mr Alan Moss indicated that no powers had been used under the act between 2010 and 2012. Mr Moss recommended that the act be amended to overcome serious obstacles inhibiting effective use of the act. Amendments were made in 2013 and certain powers under the act were used between 2012-13, including:  

SAPOL's identification of persons convicted of a serious criminal offence, one of the triggers enabling the use of the investigative powers—that is section 12 of the act;  

suspects narrowed to individuals suspected of being involved in the manufacture/dealing with illegal drugs or who are otherwise suspected of being involved in organised crime. A smaller number of individuals have ultimately been targeted;  

extensive searches of corporate affairs, business names, internet and social media (all public information). Large number of 'notice to deposit holders' issued to financial institutions requiring disclosure of information about financial accounts held by individuals—section 13 of the act. Small numbers of warrants issued to financial institutions (that is under section 16) authorising seizure of documents and articles relevant to identifying, locating, tracing and valuing a person's wealth.  

Let us see if they work: five years after Labor has enacted its outlaw motorcycle gang laws and a string of High Court challenges, not one gang has been declared outlawed. In 2008, the then Prime Minister said that Labor had given South Australia the world's toughest anti-gang laws. Now we have more gangs, more gang members and not one clubhouse has been bulldozed. I think a blow-up playpen application under a licensing court came before—  

Mr Pederick: Mongols.  

Ms CHAPMAN: From the Mongol club the other day. So, they are alive and well; they are even building playgrounds for children, it seems.  

The third issue is the victims themselves. One clear outcome of Labor's proposed confiscation laws is that victims will lose. Labor's bill here before us would stop the proceeds of asset confiscation going into the Victims of Crime Fund and redirect them  to fund government services, through a justice resources fund.  

If ever there was ever a backflip on all the rhetoric I have heard in this parliament in the last 12 years on commitment to victims of crime—the need to prioritise their plight,
to be listened to, to have a right to make submissions and be heard, to have any reasonable compensation when they are left in a financially parlous circumstance or where there has been some unfair offence to them or loss to their property—it is on victims of crime. The government has even appointed a Victims of Crime Commissioner to protect the interests of victims of crime.  

I recall that the former attorney, now Speaker of the house, was passionate about this matter. Quite often, we had statements by him in the public arena where he would point out the significance of legal reform and policy announcements of the government that would have a direct beneficial impact on victims. I think that it is fair to say that the public expected that there would be some focus on victims.  

I am deeply and bitterly disappointed to today that the current government has not followed through with all the rhetoric by making a speedy provision for those who have been victims of sexual assault in institutional care, after the very painful inquiry by the late Justice Mullighan, and the slow come kicking and screaming approach of the government to even consider lifting the cap of $50,000 on claims from the Victims of Crime Fund, while they watch the fund swell into a balance of over $100 million. So, the statements, unfortunately, have not translated to the direct benefit of those the government purports to be plaintively supporting.  

It is of great concern that this Attorney, in bringing the third tranche of confiscationtype legislation to the parliament this time in this form for the fourth time that he persists in robbing victims of crime of what has been otherwise a priority of support. These moneys have been, I think, since the 2005-06 year, paid into the Victims of Crime Fund and not into general revenue. We have had considerable time (eight or so years) where this money has flowed into the Victims of Crime Fund.  

Now the government wants to persist with a bill to take away that money and put it into general revenue. How disgraceful that it should be transferred to try to camouflage their own financial mismanagement and incompetence in balancing the rest of their books. We have consistently opposed the diversion of proceeds away from the victims of crime.  

The other aspect raised is that the Director of Public Prosecutions (DPP) is proposed to be the body that will be in charge of enforcing this new law. The DPP is an office that has already had previous directors make statements about their incapacity to fulfil their obligations in light of budget cuts; some have been more outspoken than others, and some have been and gone in the time of this government. Nevertheless, the current director faces the fact that 10 Director of Public Prosecutions officers are set to lose their jobs by the end of this month under the current cuts that have been announced.  

Clearly, the budget cuts make it hard enough to pursue the criminal charges, let alone chase down the assets under these laws. If the government is going to expect that the enforcement of this legislation will continue to be through the DPP's office (which will attract, in theory, more claims), then we will need to consider whether that is going to be achievable, or whether in fact the prosecution of criminals in their other principal role will be weakened or undermined as a result of taking on this new responsibility. It is disappointing that the Attorney-General has grandstanded on these new laws in the
lead-up to the election while the Treasurer, who sits close to him on the front bench, is making deep cuts into the agency responsible for making those laws work.  

The other matter on which we do need some answers—and perhaps we will have this in the committee stage—is why this bill, now brought to us for the fourth time covering this law, does not include the statements made by this Attorney in the 2014 election. I do not understand why the government made this extra promise during the heat of the 2014 election, which included that there would be a court-based discretion to ban the holding of property for five years—not only would you be confiscating lawful assets under this but, remember, they also made a promise in the 2014 election that they would have a five-year prohibition on being able to own property. It does raise some questions about why they have abandoned that election policy, and I look forward to hearing the government's answer.  

In addition, the Victims of Crime Fund being the recipient, or the compensation at least flowing to victims of crime directly in some manner, of course may well be the basis of further amendment, and we are certainly still considering that. So, there will be a number of questions we need to ask during the committee stage but, as I have indicated, we will not hold up the passage of the legislation in this house. With that, I look forward to the committee stage.