September 2014 – Chris Berg

The Redundancy Of New Anti-Terrorism Laws

Incitement to violence is against the law. It’s always been against the law.

Every Australian state penalises incitement. The Commonwealth makes it unlawful to incite the commissioning of any criminal offence, not just violence.

This legal framework has developed over centuries. The prohibition on incitement has ancient common law roots. It is robust. It is coherent. It is a long-established and very well-founded limit on free speech.

So here’s a question: with the rich and robust law against incitement, why is the Abbott Government introducing the new offence of “advocating terrorism”?

Last week the Counter-Terrorism Legislation Amendment (Foreign Fighters) Bill 2014 was introduced into Parliament. Like the first national security bill that preceded it, it is dense and complex – a mix of sensible change mixed in with redundancy and extraordinary overreach.

I argued in The Drum a few weeks ago that the foreign fighter threat is both genuine and pressing. We’ve seen over the last fortnight how events in distant Iraq have materially changed the security environment in Australia. Many proposed legislative changes – particularly to foreign evidence laws and passport confiscation powers – make sense.

But the new bill goes much further than that.

The bill makes it illegal to visit some parts of the world without proving to a court that you visited for family or humanitarian reasons. It extends the control order regime and expands detention powers held by customs.

And it makes it illegal to advocate – counsel, promote, encourage, or urge – the doing of a terrorist act or the commission of a terrorist offense. (The section in the new bill is 80.2C.)

On its face this is extraordinary. The word terrorism is a term of art. A lot of people call Israel a terrorist state. Others respond that Palestine is terroristic.

More concretely, the Commonwealth Criminal Code defines a terrorist act as any action that a) causes or threatens harm to life, property, risk to health, or disruption of electronic infrastructure; b) is motivated by a political, religious or ideological cause; and c) is intended to intimidate the government or the public in general. (See section 100.1 of the Commonwealth Criminal Code here.)

The definition is broad because it has to be. What we describe as “terrorism” is really a collection of offenses. Every part of a terror plot is potentially prosecutable under laws that have been around for centuries. These include the most obvious – murder and attempted murder – down to things like conspiracy and weapons possession.

Indeed, as Bret Walker, the former Independent National Security Legislation Monitor, told the Australian Human Rights Commission’s free speech conference in August: “One of the best arguments against the counter-terrorist laws is that we didn’t need any of them, because we’ve long criminalised murder, conspiracy to murder, and incitement to murder.”

There are, certainly, some conceptual distinctions between traditional crime and terrorism. The latter is primarily intended to create fear. And governments hope to prevent terrorist acts rather than just punish them after the fact. Those differences perhaps justify some distinct anti-terror legislation.

But since September 11 governments have seemed intent on severing the concept of terrorism from its constituent parts – cleaving it off into a distinct body of law. This has created, as Bret Walker pointed out, massive redundancy, complication and confusion. The real winners from this decade of security hyper-legislation are lawyers.

Just how much redundancy has been piled into our anti-terror laws?

Well, in 2005 the Howard government passed sedition law reform that, in the words of the then-attorney general, Philip Ruddock, was intended to prohibit “any conduct or advocacy that is likely to encourage somebody to carry out a terrorist act”. Sound familiar?

It’s striking how little justification the Government has offered for the new advocating terrorism offense – let alone an account of why existing incitement or the 2005 sedition laws are inadequate.

But it appears the advocating terrorism offence isn’t just one of the dozens of new crimes and security powers in the Government’s voluminous anti-terror bills.

No, it seems to be the key to whole thing. It has deep political significance.

Think back to August, when the Government announced its turn towards national security. That announcement was made at a press conference where Tony Abbott also said he was abandoning the promise to repeal section 18C of the Racial Discrimination Act. We were told this was a matter of clearing the decks so everybody could get behind Team Australia.

Yet last week Fairfax reported Abbott shelved free speech reform so section 18C could be used against Islamic hate preachers.

This makes the August press conference even more disingenuous than it appeared at the time.

It seems the Government believes advocating terrorism and offending, insulting, humiliating or intimidating on the basis of race or ethnic origin are two sides of the same coin.

The promised reforms to section 18C weren’t a “complication”. They were directly contrary to the Government’s desire to suppress speech that would otherwise be free.

The Unspoken Benefits Of Tax Avoidance

Few things excite a treasurer more than tax avoidance.

The idea conjures up fantasies of great pots of untaxed money – money the government is morally entitled to but for one reason or another (the weakness of previous administrations, probably) is being denied.

No surprise then, as his budget savings fade away into nothingness, Joe Hockey has turned his mind to the old corporate tax avoidance chestnut.

On the weekend in Cairns the G20 finance ministers agreed to tackle “base erosion and profit shifting … to make sure companies pay their fair share in tax”. Our very own Hockey, as G20 host, is leading the charge.

Profit shifting refers to the fear that multinational firms are structuring themselves to route profits through lower-taxing countries.

Base erosion is the fear that this profit shifting is eroding the tax base, starving governments of funds.

The Organisation for Economic Co-operation and Development (OECD) started focusing on base erosion and profit shifting last year, pushing it to the front of the G20’s agenda.

They’ve been amply backed up by breathless newspaper stories about the complex tax structures of firms like Apple that have divisions in Ireland and the Netherlands.

All very interesting except for one thing. The profit shifting problem isn’t that much of a problem.

It’s true that in the 1990s, when economists and policymakers first turned their mind to how multinational firms plan their tax liabilities, they looked at aggregate country-level data and concluded (as one of the first major studies said) “companies locate a sizable fraction of their foreign activity in tax havens”.

This early work implied profit shifting was both real and substantial.

But now economists are working with more fine-grained data specifying how firms structure their internal debt around global affiliates. And as they look closer at those affiliates, the evidence is telling a very different story.

A 2014 overview of the empirical literature by one of the major scholars of global tax avoidance, Dhammika Dharmapala, concludes “in the more recent empirical literature, which uses new and richer sources of data, the estimated magnitude of (base erosion and profit shifting) is typically much smaller than that found in earlier studies”.

There is even, as Dharmapala points out, some evidence to suggest profit shifting has been declining in the last decade, not increasing.

We’re now talking about multinational corporations shifting somewhere between 2 per cent and 4 per cent of their profits to tax havens.

Two to 4 per cent is not nothing, of course.

But these lower numbers help resolve the big profit shifting puzzle. If the corporate tax base is being eroded, then why is revenue from corporate tax going up?

Between 1965 and 2007 corporate income tax revenue increased from 2.2 per cent of GDP to 3.8 per cent of GDP in OECD countries. (Revenue fell somewhat during the Global Financial Crisis but is on the rebound.) This despite the fact that corporate tax rates have been lowered over the last 40 years.

Even the OECD, in its 2013 paper Addressing Base Erosion and Profit Shifting, thinks the stability of corporate tax revenue is a bit odd (see here, page 16).

Perhaps the answer is simple: profit shifting isn’t as big a deal as newspapers and treasurers think.

At least, if nothing else, those facts ought to engender some scepticism about whether there really is a profit shifting crisis. Let alone one that requires urgent, internationally coordinated action.

So where is that scepticism?

We’ve seen how quickly commentators look for self-interested political motivations behind government pronouncements on national security and foreign policy. This is healthy. But all that valuable distrust seems to disappear when we talk about crackdowns on corporate tax – a field where political self-interest is blindingly obvious.

Hockey admitted earlier this month Australia has “amongst the strongest anti-avoidance laws in the world”.

Like many other countries, Australia has a general anti-avoidance rule, a catch-all law that allows a court to override any scheme it believes is designed primarily to produce a tax advantage.

Our anti-avoidance rule is incredibly broad and creates enormous uncertainty. But it is also extremely powerful. If there was really a tax avoidance problem in Australia the authorities would be well equipped to handle it.

Multinational corporations have to make choices when deciding where they should base themselves. Different countries have different labour costs, workforce skills, levels of infrastructure, protection of the rule of law, and, of course, different tax rates.

The G20’s real gripe is that they are being forced to compete for the tax affections of the world’s biggest companies.

You can understand why the treasurers of the world think tax competition is harmful. They want to maximise their government’s revenue.

It’s not obvious why we should share their concern.

At the end of the day, consumers and workers benefit when corporate tax rates are low and attractive. Anything that pressures our governments to keep those rates low is a good thing.

Will We Kill Civilians In An Effort To Save Them?

The humanitarian intervention problem is that the following two propositions are both equally true.

First, there is a moral imperative to prevent humanitarian tragedies. Any notion of state sovereignty has no force when that state is murdering its own citizens. And “it’s none of my business” is not an appropriate response to foreign atrocities.

But second, military interventionism is unlikely to be effective at anything more than achieving immediate, short-term goals. It is certain to have unanticipated and unintended consequences.

At best the results of intervention will be unpredictable. Preventing tragedies in one time and place may indirectly contribute to tragedies in another time and place. At worst we end up killing civilians in an effort to save them.

Neither of these two propositions ought to be controversial. The former is an obvious moral truth. The latter has unfortunately been demonstrated over and over again.

It’s easy to think of instances where military intervention has been ineffective or counterproductive. It’s less easy to recall examples of clear success. The successful reconstruction of Germany and Japan after World War II seem more like mysterious outliers than models to emulate.

Despite this sad record, there is an emerging doctrine in international law and relations called the “responsibility to protect”. The idea is that while states have the ultimate responsibility to look after their citizens, those that fail to do so are liable for foreign intervention – from gentle diplomatic suasion right up to military action.

Known informally as “R2P”, this doctrine was first acted upon in 2011 with the military intervention in Libya.

Few dictators deserved to be overthrown more than Muammar Gaddafi. But three years later Libya is in chaos. Just last month Human Rights Watch was reporting war crimes in the ongoing battle for control of Tripoli. There are a quarter of a million militia fighters in Libya.

So unless R2P advocates only care about the very short term, it is fantasy to describe the Libyan intervention as a success.

Yes, it is possible that Western military action prevented something worse. But that counterfactual is impossible to test. The measure of humanitarian intervention can’t be simply whether we can defeat third world dictators in battle. We can. What happens after the initial intervention matters too.

I’m sure the legal validity of R2P has been carefully worked out by international lawyers and scholars. But as a guide for policy, it is a triumph of hope over experience.

It is sometimes claimed that the 2003 invasion of Iraq would have been a clear success if Barack Obama hadn’t withdrawn troops in 2011. Like Gaddafi, Saddam Hussein deserved his fate. Perhaps if coalition troops had stayed then we wouldn’t be facing the Islamic State problem now. (See, for instance, this recent piece in the Washington Post.)

However, if the success of the 2003 Iraq war was really dependent on a never-ending military commitment, then it was hopeless from day one. Domestic political constraints make permanent occupation impossible. The public tolerance for casualties and deficits is finite. Eventually voters turn against war. This domestic reality has to be factored into intervention planning.

And yet … it is simply impossible to watch overseas tragedy unfold without wanting to prevent it. One 2010 book put this way:

Even those who are deeply suspicious of armed humanitarian intervention and deeply sceptical about its prospects of success may still admit that it might, in theory, be justified when a humanitarian crisis is sufficiently serious.
That intervention has failed in the past does not mean it inevitably fails in the future. No doubt there are some Libyans alive because of Western action.

But what’s not acceptable is the “it’s the thought that counts” school of humanitarian intervention which washes its hands of long-term consequences in order to bray about quick military victories and our altruism-by-force.

Take, for instance, this Guardian piece after the Libyan intervention: “No large-scale military intervention ever comes free of moral hazard.”

Or this one by the former US State Department official Anne-Marie Slaughter, proclaiming the moral goodness of intervention and Western values and all that, then casually admitting at the end that “Libya could disintegrate into tribal conflict or Islamist insurgency, or split apart or lurch from one strongman to another”.

Overseas atrocities present a genuine and tragic dilemma. The case for protecting civilians against IS is unimpeachable.

But Tony Abbott told ABC radio yesterday that he could not “promise perfect success”. This is not a good sign. And the mission’s goals are already hopelessly confused.

Attorney-General George Brandis says IS is an “existential threat” for Australia. Yet, on the other hand, we’re also being told what’s planned is “a humanitarian operation to protect millions of people in Iraq from the murderous rage of the ISIL movement”.

So which is it? Are we at war to defend Australia or to protect Iraqis? The distinction isn’t minor. Is our goal to contain the threat or to destroy it?

Contrary to what the Prime Minister has said, fighting IS is hardly a “specific and clear objective”. It seems like the exact opposite: vague and open-ended. Maybe we’ll defeat IS. Or maybe, in Obama’s words, we’ll just “degrade” it.

The truth is of course we are only returning to Iraq as part of an American coalition. That the mission is unclear is a reflection on the Obama administration rather than the Abbott Government.

Either way, the question that policymakers have to confront is not whether we have a responsibility to protect Iraqis and Kurds from the IS menace. The real question is whether we are capable of doing so.

Romanticising Reform: We’ve Set The Bar Too High

Is major economic reform no longer possible?

That’s the conclusion Paul Kelly draws in his recently released history of the Rudd and Gillard governments, Triumph and Demise: The Broken Promise of a Labor Generation.

Yet it’s a strange conclusion, because the story Kelly tells over 500 pages is one of near-constant ineptness and dysfunction by Kevin Rudd and the architects of Julia Gillard’s 2010 coup.

If Kelly’s narrative is correct then surely getting rid of those characters would allow reform to pick up again.

Of course there’s much more to a political system than politicians. If Australia is unreformable then it must be for institutional reasons. Not simply because we’ve had a rubbish bunch of recent leaders.

Kelly offers a few institutional explanations for why political culture has changed. First, the pace of personal and social life has intensified. Second, social fragmentation and technology mean that “sectional interests have more power than before”.

These aren’t really answers though. Why has the pace of personal and social life intensified? And surely sectional interests were more powerful when – for instance – the major parties specifically represented sectional interests, as the Labor Party did for trade unions and the Country Party did for the agricultural sector?

The last major reform success Kelly identifies was John Howard’s GST in 1998. The question is what has changed since. There are a few possibilities. For instance, Australia is richer and more populous. But it’s hard to see why that would make us less open to reform.

Technological change is one obvious institutional explanation. As technology has destroyed the business models of the big news outlets, it has also undermined the clubbish nature of Australian politics.

In the past policymakers were able to call up a handful of key journalists and media owners and they’d be virtually guaranteed press gallery support for their agenda. The cramped quarters of Old Parliament House meant that journalists and politicians lived on top of each other.

When a journalist tried to break out of the club – as Max Newton did when he left The Australianin 1965 and set up his own publishing outlets – it was scandalous. (The story is best told by a press gallery insider who opposed his reintroduction to the gallery, Alan Reid, in the 1969 book The Power Struggle.)

Now the mastheads are collapsing and the gallery is starting to be populated by outsiders. TakeCrikey and the Guardian, for instance. Political commentators – as opposed to gallery journalists – are even more diverse and uncontrollable.

There are more outlets, those outlets that exist have fewer staff, and digitisation means those staff can be spread around the country.

It’s now entirely impossible to line up the press behind a major new policy with charm alone.

This is a good thing though. If it is hard for politicians to railroad through reform because our democracy is richer and more vibrant, well, too bad for reform.

There are two popular technological explanations for our political malaise that we need to rule out: social media and the 24-hour news cycle.

Social media has democratised political debate but it would be hard to blame Twitter for Kevin Rudd abandoning his emissions trading scheme or the lack of consensus on Joe Hockey’s GP co-payment.

Anyway, social media is hardly the first time the political class has faced media democratisation. Talkback radio was a virtual revolution when it was legalised in 1967. Talkback delivered passionate, virtually instant political feedback. Politicians and parties struggled to adjust their campaign and communications strategies accordingly.

But they managed. As they will with Twitter and Facebook. It’s easy to forget how recent any of this stuff is. In 2007 merely posting a video on YouTube – as John Howard did during the campaign – was remarkable.

And the 24-hour news cycle? Yes, 24-hour television is a relatively recent innovation in Australia. But nobody really watches it. We’ve had 24-hour radio for decades. We certainly had it during the great reform era of the 1980s.

Too often the political class is deluded into thinking voters care about day-to-day politics. “Winning the day”, as Kevin Rudd tried to do, means nothing for those people who tune into the political news at most a few times a week.

In other words, the problem is less the technologies that govern politics but the way political strategists adapt themselves to those technologies.

If the world has changed, the political class is just going to have to learn how to change with it. They’re in the middle of this process. They haven’t yet reached a comfortable equilibrium.

Nor is it clear that the technological empowerment of activists and corporate interests presents a roadblock to reform.

Take the now iconic example of resistance to government policy – the anti-mining tax campaign in 2010. This campaign was actually as traditional as they come. An industry peak body took out television ads.

In practice this campaign was not much different from the anti-bank nationalisation campaign run by the banks nearly 70 years ago.

One year into the Abbott Government and it’s easy to think the worst of the political system. But over-rating the past in order to reflect poorly on the present is an old human pastime.

Kelly more than anyone has created the hero story of Australian political history. His 1992 book End of Certainty made Paul Keating and Bob Hawke out as larger-than-life figures whose decisions were confident, epoch-defining, and Australia-changing. (The contrast between Kelly’s bombastic End of Certainty, and Laura Tingle’s gloomier Chasing the Future, published just two years later, is striking.)

Our political class has imbibed a thoroughly romantic interpretation of the 1980s and early 1990s.

Against it, any modern leader would fall short.

Don’t Rush To Act On Terrorism Threat

Specific policy problems demand specific policy solutions.

So the Abbott Government has done us a favour by being very specific about the new terrorist threat: Australian residents fighting in Syria and Iraq who come home even more radical and potentially violent.

These “foreign fighters” are a specific threat that demand specific legislative change. It does not demand an overall increase in broad and adaptable police and national security powers.

Let’s start, as all policy discussion should, by being clear about the problem.

One in every nine jihadists who travel overseas to fight in foreign conflicts return to attempt terrorist attacks in the West, according to the best estimate we have.

Considering there could be more than 100 Australians fighting in Syria and Iraq, that ratio is worrying.

The one-in-nine figure was assembled by Thomas Hegghammer and published in the American Political Science Review in February 2013. It’s based on jihadists from the West between 1990 and 2010.

The Syrian conflict started in 2011, outside Hegghammer’s analysis. In an excellent piece in the Age in August, Andrew Zammit detailed some instances of Syrian returnees going on to plot domestic attacks.

One-in-nine is hardly an iron law of terrorism, of course.

Fighting in foreign wars is a very old phenomenon – think George Orwell in the Spanish Civil War – and the motivations for fighting in foreign wars and conducting domestic terrorist attacks differ enormously.

Terrorism remains an extremely low probability event.

But one thing we could say about foreign fighters is that they’ve done law enforcement agencies a huge favour – they’ve self-identified as security threats. As Hegghammer points out, experience in jihad overseas is the biggest predictor of future terrorist intent. So they’re good candidates for close monitoring.

Or good candidates for immediate prosecution. It is illegal under Australian law to engage, or intend to engage, in hostile activity in foreign states. An exception is joining the armed forces of a foreign state. (Australians can’t join Syria’s pro-Assad military, though – we have sanctions prohibiting that.)

Here’s where Parliament can get to work. This law was originally developed to prevent mercenary activity in Angola and Rhodesia in the 1970s. Today it is not particularly fit for purpose.

Bret Walker, until recently the Independent National Security Legislation Monitor, has repeatedly argued for reform of the law governing foreign fighters. Walker’s last annual reportexposes a number of inconsistencies and concerns that the Abbott Government needs to fix.

For instance, it’s hard to prosecute foreign fighters in Australian courts. Laws governing the collection of evidence overseas require the cooperation of foreign states, but what if the offence occurred in a region with no functioning or cooperative government? This is a problem in both Syria and Islamic State-controlled Iraq.

In these very limited circumstances it might be necessary to relax some of the restrictions on what evidence can be admitted into court.

One popular argument is that we should just let foreign fighters go – better they fight and die for jihad overseas than plot terror attacks in Australia. But not all do die.

This New York Times piece points out that many foreign fighters plan to stay in Syria and Iraq for good. Some show their dedication by symbolically burning their Western passports. Yet plans can change.

Anyway, why should we be any more tolerant of those who travel to train and fight in Syria or Iraq than we were of the previous generation of jihadists who joined training camps in Afghanistan? Zammit points out that many of them intended to fight in regional conflicts before being recruited by Al Qaeda to attack the West.

Regardless, it’s probably best that Australia does not act as a staging base for terrorist attacks on foreign civilians. There is no fundamental human right to wage sectarian war.

Walker has identified some serious inconsistencies between the criminal code and the foreign fighter laws.

In large part this is because successive governments have piled terrorism offense-upon-offense into the statute books, rather than systematically reviewing what sort of conduct is already criminalised. George Williams calculated that after the September 11 attack the Howard government introduced new anti-terror legislation every 6.7 weeks.

The Abbott Government is heading down the same path.

The Attorney-General George Brandis has proposed reversing the onus of proof for Australians who travel to dangerous parts of the world – the prove-you’re-not-a-terrorist proposal. Undermining the presumption of innocence is an incredibly ham-fisted way to tackle a genuine evidentiary issue.

The foreign fighter threat doesn’t justify the dangerously broad restrictions on reporting security operations contained in the legislation introduced to Parliament in July.

Nor do a few dozen Australians waging jihad in Syria go anywhere near justifying – for instance – a mandatory data retention scheme, which, by requiring internet service providers to create a database of information solely for the purpose of law enforcement, would treat all Australians as potential criminals.

Taking the foreign fighter threat seriously justifies some legislative change; minor change, yes, but important.

It is not the case that any legislative change will do.

Submission to Australian government Online Copyright Infringement Discussion Paper

The law governing copyright infringement in Australia is characterised by uncertainty and complexity. Technological change has exacerbated these problems, enabling large scale copyright infringement, which in turn has exposed a lack of social agreement on the desirability of copyright protection.

This submission argues that the Commonwealth government’s proposed reforms to copyright law do nothing to tackle the underlying dynamics that have led to these developments. Instead, they seek to tip the balance in favour of copyright holders. The proposed reforms:

Will do little to prevent copyright infringement;
Have an unacceptable impact on freedom of speech;
Increase, rather than decrease, the underlying uncertainties of copyright law in Australia, particularly while Australia lacks a ‘fair use’ exception;
Give the government the power to create new copyright frameworks by regulation; and
Constitute an attempt to shift the costs of copyright protection from copyright holders to internet service providers.
Furthermore, while the proposal to extend the safe harbour provisions in the Copyright Act is welcome, it helps illustrate the underlying uncertainties of Australia’s copyright regime.

This submission first outlines the principles by which copyright law reform must be judged.

Copyright is not an unlimited right – it is granted by the government in order to provide incentives for the production of creative work. As such, copyright law has to strike a balance between the interests of monopoly rights-holders and other users of creative works. The political bargain sustaining copyright is inherently unstable, and the instability is further exacerbated by unpredictable technological change.

In Australia, the imbalance of copyright is represented most obviously by the lack of a fair use exception for copyright infringement. This creates a great deal of uncertainty in its own right, but in the context of the government’s proposed reforms, weighing the copyright balance further in favour of copyright holders without introducing a fair use exception will substantially increase that uncertainty.

The submission concludes by outlining specific problems with the government’s proposals.

Available in PDF here.