Daryl Melham (Banks, Australian Labor Party) Share this | Hansard source

I rise to say a few words on the Trade Practices Amendment (Cartel Conduct and Other Measures) Bill 2008. At the outset I want to quote from the second reading speech of the Minister for Competition Policy and Consumer Affairs because I think it quite neatly sums up what the bill is about:

Cartels are widely condemned as the most egregious forms of anticompetitive behaviour. At its heart, a cartel is an agreement between competitors not to compete. Cartel conduct harms consumers, businesses and the economy by increasing prices, reducing choice and distorting innovation processes.

This bill makes much needed changes to the Trade Practices Act, because it will bring Australia into line with its major trading partners and developed nations. The Dawson review into this matter recommended the introduction of criminal penalties in Australia. That is a big but very important step, as people who engage in this conduct should be subject to criminal penalties and not civil penalties alone because of the cost of that conduct to the general community.

Interestingly, the Dawson review also recognised that there is growing international experience showing that criminal sanctions are effective in deterring serious cartel conduct. The deterrence effect of a penalty is often quoted in court but, in relation to these particular matters, it is now recognised and stated in the Dawson review that criminal penalties can, in effect, deter this sort of conduct and stop it from happening. Of course, those engaged in it obviously do not like the prospect of going to jail. If it is a civil penalty they might be able to pay their way out. So weighing up a civil penalty, if caught, against the conduct and what it reaps might be an option for them. Labor did commit, in the lead-up to the 2007 federal election, that it would introduce this legislation, and extensive consultation has occurred over the past 12 months.

The matters that I want to concentrate on go to penalties. The government gave extensive consideration to the appropriate jail term. Originally, the maximum term stated in the draft exposure bill in January was five years imprisonment. However, in this bill it has been increased to a 10-year jail term, which, as the minister said in his second reading speech, ‘better reflects the seriousness of the crime’. His speech also stated:

A maximum 10-year prison sentence already exists for directors who wilfully defraud or deceive a body corporate, or for directors who fraudulently appropriate the property of a body corporate. The proposed 10-year jail term will also put Australia on par with the United States as having the world’s longest jail terms for this serious crime.

In relation to civil penalties there is also a maximum $500,000 penalty for individuals and a penalty consistent with the maximum criminal fine for corporations. I think 10 years is appropriate for this sort of conduct. When I was appearing as a legal aid solicitor and legal aid barrister in New South Wales, I can tell you that break, enter and steal offences attracted much more serious maximum penalties than this—and for quite small amounts. So, if you actually go to the criminal statute books, I think you will see that 10 years is about the right balance in relation to this. That does not mean to say that you have to send people to jail for 10 years; that is the maximum penalty. I note that, if there is a penalty under this bill of 12 months or less, it can be substituted for a fine in relation to the matter.

I also want to talk about some of the things that were consulted on in terms of the powers that are allowed to be used to, in effect, detect cartels. I go to the Parliamentary Library’s briefing paper in relation to this, the Bills Digest, because, again, it gives a good summary. On page 10 it says:

The amendments to the TPA proposed by this Bill would make a cartel offence a relevant offence under the Surveillance Devices Act.

Although the ACCC is not a law enforcement officer under the Surveillance Devices Act, the amendments in this Bill would allow the Australian Federal Police to obtain a surveillance device warrant to aid in the investigation of alleged cartel conduct by, for example, monitoring conversations between cartelists, and to communicate the information obtained under the warrant to the ACCC.

Further, it says:

The proposed amendments to the Telecommunications (Interception and Access) Act 1979 (TIAA) will enable the ACCC to request the Australian Federal Police to obtain a telecommunications intercept warrant to investigate criminal cartel offences. The rationale for the amendments was elucidated in the submission to Treasury of the Law Council of Australia as follows:

Cartels are by their nature secretive. There are particular evidentiary difficulties with cartel offences as cartel participants generally seek to avoid documenting their arrangements, and endeavour to conceal cartel communications. Telecommunication systems (including the Internet) are an increasingly common and prevalent method of communication.

Interception warrants, particularly used in conjunction with an informant, could be a useful resource in ongoing cartel offence investigations, in those cases where cartel communications are predominately made over telecommunications systems including in relation to the implementation phase.

When it was first introduced, the Telecommunications (Interception and Access) Act applied to a very small range of offences—the most serious of offences on the statute book—and there were assurances that it would be limited in its use. But there is no doubt that as time has passed more and more offences have come under that particular statute. In this instance, it was a big call by the Law Council of Australia to concede that it is appropriate to use the act to stop cartel activity.

There is a recognition that in terms of intercepts per person—and I remember producing some figures when I was shadow minister for justice—Australia is probably the most intercepted country in the world, certainly more so than the United States of America. Interception is now a cheap way for law enforcement agencies to monitor activity and obtain evidence that can be used in court. It also means that you do not necessarily require an informant in the first instance or someone who can be discredited. Interception is another method that, once this bill is passed and it is communicated that interception is out there, will in my opinion act as a deterrent, because those who have engaged in this activity will not be able to do anything other than be apprehensive that their conversations can be recorded and used in direct evidence against them in proving this particular conduct.

When it comes to the criminal offence—and I will finish on this because I did not particularly want to speak for the full 20 minutes—in relation to fault elements, section 5.1(1) of the Criminal Code provides that:

A fault element for a particular physical element may be intention, knowledge, recklessness or negligence.

What we are doing here in moving to the Criminal Code is picking up the standard criminal definitions in relation to whether a matter constitutes criminal conduct. We are not talking about strict liability or anything like that. It goes to intention, knowledge, recklessness or negligence. In my considered opinion, this sort of conduct fits squarely within conduct that can be classed as criminal, and it should be dealt with as such. We as a parliament should not resile from the fact that at times we do bring ourselves to situations where we create new offences that carry prison terms because the conduct cannot be sanctioned or treated with kid gloves. For too long this sort of conduct has retained its identity as a civil offence when quite frankly it is a criminal offence. It is greed, it is manipulating the community and it should be dealt with as a crime. So I applaud the minister for bringing this material forward. This bill will go a long way to hopefully stopping this sort of conduct or putting these people on notice that if you do this then you are going to end up with a criminal conviction and everything that flows with it.

See this speech in context