31 March 2017


Pierre Schlag (University of Colorado Law School) has posted 'Hohfeldian Analysis, Liberalism and Adjudication (Some Tensions)' by Pierre Schlag in Shyam Balganesh, Ted Sichelman and Henry Smith (eds) The Legacy of Wesley Hohfeld: Edited Major Works, Select Personal Papers, and Original Commentaries (Cambridge University Press, 2018) comments 
Wesley Newcomb Hohfeld’s 1913 article, “Fundamental Legal Conceptions as Applied in Judicial Reasoning,” is in some ways a stunning success. It has played an important role in shaping a variety of schools of thought—analytical jurisprudence, legal realism, law and economics, critical legal studies, and property theory. At the same time, Hohfeld’s platform, has been largely ignored among the judiciary and among those legal academics who embrace judicial or doctrinal discourse.
In this chapter, I immediately put aside the easy and obvious explanations (without prejudice) for a deeper account—namely, the suggestion that there are ongoing tensions between the Hohfeldian platform on the one hand and liberalism as well as liberal forms of adjudication on the other. The Hohfeldian platform enables us see in liberalism and its forms of adjudication certain aspects that neither endeavor might otherwise want to recognize and address.
The chapter closes with an entreaty that, in this particular moment of political and legal uncertainty, legal thinkers move beyond the cloistered comforts of liberal thought and consider the organization of state and civil society in broader, even if more challenging, theoretical terms.


'Brexit and the British Bill of Rights' by Tobias Lock, Tom Daly, Ed Bates, Christine Bell, Kanstantsin Dzehtsiarou, David Edward, Murray Hunt, Kagiaros Dimitrios, Fiona de Londras, Cormac Mac Amhlaigh, Christopher McCrudden and Anne Smith considers 'the mechanism and consequences of the United Kingdom’s exit from the European Union (‘Brexit’) and the plan to establish a British Bill of Rights'.

Its key points are:
  • The issue of consent regarding the initiation of Article 50 of the Treaty on European Union (TEU) to formally trigger the Brexit process under EU law is highly complex, relating to five cross-cutting dimensions: 
    (i) the involvement of the UK Parliament in the Brexit negotiations; 
    (ii) the consent of the Norther n Ireland Assembly to Brexit; 
    (iii) the consent of the Scottish Parliament; 
    (iv) the need for unanimous agreement by all EU Member States should the UK wish to reverse the triggering of Article 50; and 
    (v) the possible need to obtain the consent of the Republic of Ireland to Brexit as a fundamental alteration of the Good Friday Agreement. 
  • Brexit presents a clear reduction in formal protection of fundamental rights in the UK through discontinued application of the EU Charter of Fundamental Rights and Freedoms; 
  • Whether this reduction in rights protection can be addressed by other measures at the national level, particularly the inclusion of ‘lost’ EU Charter rights in a British Bill of Rights, is questionable; 
  • Brexit, a BBR, and other related policy pledges seeking to reduce the application of international human rights law to UK actors, taken within the current context and their likely consequences, represent a weakening of the human rights protection framework as a whole – a certain ‘disentrenchment’ of human rights, reversing the decades-long trend toward incremental expansion in the right protection afforded to individuals across the UK. 
  • Various existing government policy proposals aimed at ‘freeing’ the UK from intervention of the European Court of Human Rights appear to be rooted in misconceptions concerning the nature of the ECHR and international human rights law more generally. 
  • Regarding plans to repeal the Human Rights Act (HRA) and its replacement by a British Bill of Rights (BBR), this would not free the UK from its obligations to comply with the judgments of the European Court of Human Rights in cases where the UK is a respondent party. In fact, it might lead to an increase in the number of successful applications to the Strasbourg Court, diminish the possibility for meaningful dialogue between the Strasbourg Court and the British courts, and thereby amplify rather than lessen the impact of Strasbourg case-law. The only viable way to remove such obligations is for the UK to denounce (leave) the European Convention on Human Rights (ECHR). 
  •  Repeal of the HRA, its replacement with a BBR, and other related policy pledges seeking to reduce the application of international human rights law to UK actors, all ultimately appear to set a path toward withdrawal from the ECHR.
  • In this connection, it was noted that UK withdrawal from the ECHR system would be likely to lead to withdrawal from the Council of Europe, which would significantly undermine the UK’s reputation as a state that cares about human rights protection. The UK would be only the second country in Europe which is not a member of the Council of Europe; the other being Belarus with its very problematic human rights record. 
  • Withdrawal by the UK would rep resent the first time a long-established Western democracy has left a major international human rights regime. Such a move would place the UK in the company of Greece under military rule in December 1969, when it left the ECHR system and Council of Europe, or more recently, Venezuela under Hugo Ch├ívez, which denounced the American Convention on Human Rights in 2012 in order to leave the jurisdiction of the Inter-American Court of Human Rights. 
  • Brexit poses real threats to the fragile peace in Northern Ireland, given that EU membership is central to the Good Friday Agreement, and given that EU law is dominant in areas that are clear ‘flash points’ for discord between the parties in the consociational government, such as equality legislation. 
  • Plans for repeal of the HRA, its replacement by a BBR, and other related policy pledges, pose threats not only to rights protection in the UK, but also to the rights protection (albeit limited) provided by the ECHR system in other states of the Council of Europe, given that UK withdrawal from the ECHR would be likely to trigger withdrawal by other states, such as Russia and Azerbaijan. 
  • The most fundamental conclusion from the workshop is that the current governmental approach to Brexit and a British Bill of Rights does not adequately appreciate, or address, the extraordinary complexity of human rights protection in the UK, which enmeshes protections across the international, EU, State, devolved, and bilateral planes. Until, and unless, policy formation begins to fully grapple with this complexity, serious rule of law and legitimacy questions will hang over the solutions presented by the Conservative government to the current constitutional entanglement

29 March 2017

Innovation in the Legal Profession

The latest NSW Law Society Future of law and Innovation in the Profession (aka FLIP) report is unlikely to strike some readers as profoundly original, incisive or useful.

The report finds that
  • Consumers of legal services are seeking value and competition is increasing . 
  • New ways of working are proliferating. 
  • Inhouse corporate lawyers are driving change, seeking client-focussed service , using legal technology, re-engineering work processes and monitoring costs. 
  • Changing cultures, consumer pressure and lower prices are driving increased use of legal technology . 
  • New areas of work and new roles are likely to emerge with technology. Artificial intelligence raises regulatory and ethical issues that require investigation and guidance for solicitors. 
  • There is an urgent need for funding for legal assistance and a role for technology and innovation to aid access to justice . 
  • The law graduate of the future needs a range of new skills and knowledge. Change can enhance personal wellbeing if its introduction is appropriately supported. 
  • A variety of emerging, flexible work arrangements (eg freelancing) could promote diversity. 
  • Connectivity and globalisation raise new and great opportunities and threats for lawyers. Globalisation is challenging domestic law reform. 
  • Innovation and changing consumer behaviour require practical guidance for solicitors and raise regulatory questions that require further investigation. 
Recommendations are
  •  Help solicitors share information about new ways of working. 
  • Establish a centre for legal innovation projects to research and support change. 
  • Investigate setting up an incubator for tech-enabled innovation. 
  • Sponsor an annual hackathon for community legal assistance. 
  • Advocate for appropriate funding for community legal assistance. 
  • Empower solicitors to better plan and implement change within practices. 
  • Integrate wellbeing into CPD, and change and innovation projects. 
  • Promote diversity and monitor impacts of flexible work arrangements. 
  • Offer CPD on practical topics in private international law. 
  • Seek ALRC reference on laws that affect cross-border disputes. 
  • Research efficacy of online legal documents and investigate regulating legal information. 
  • Raise awareness of the value of legal advice. 
  • Draft guidance for lawyers as entrepreneurs and businesspeople. 
  • Continue supporting solicitors and innovation by investigating how to reduce regulatory barriers. 
The report is summarised as follows
 CHAPTER 1: DRIVERS OF CHANGE: CLIENTS’ NEEDS AND EXPECTATIONS • Consumers across the market for legal services are increasingly seeking value for money and expecting lawyers to be competent users of technology. • Larger inhouse practices are driving change, seeking greater value from external firms and reducing legal spend. These teams are: • streamlining work processes • seeking and using improved legal technology and • rewarding client-centred service. • Many inhouse teams’ changing work processes and their use of external law firms and service providers rely on dividing work into discrete jobs (unbundling) which are shared between the internal team and external providers. As budgets shrink and competition grows, clients value timeless qualities in their lawyer: clarity, practicality, an understanding of their motives and objectives, a preparedness to work collaboratively. 
CHAPTER 2: LEGAL TECHNOLOGY • Legal practices are increasingly interested in and engaging with legal technology. • Interest in technology is being driven by the availability of increased computing power at lower costs, cloud computing, devices and the internet (mobility and connectivity) and consumer behaviour. • Smaller firms are benefitting from the reduced costs of technology. • Lawyers are benefitting by applying metrics to analyse business practices (eg for costing work) and learning how data fuels machine learning and other advanced computing applications. • New areas of work and new roles are likely to emerge as legal technology develops and matures. • Lawyers’ levels of skill and interest in technology across the profession is uneven and some lawyers require encouragement and support. • Artificial intelligence raises ethical and regulatory issues that require investigation and guidance. 
CHAPTER 3: NEW WAYS OF WORKING • I n New South Wales today there is evidence of various ways of working, including ways of pricing, structuring practices, managing projects, and engaging with clients. These include: • paperless practices • networks of firms • inhouse practices, outsourcing and “insourcing” work • single principals with panels of freelance lawyers • chambers practices • legal “hubs” or “marketplaces” • p art law firm/part technology companies • online and virtual firms • “ alternative fee arrangement”/time-based billers • multidisciplinary practices. • New ways of working are being adopted not only by inhouse practices but in community legal centres, by traditional law firms looking to innovate and by small practices whose agility can be a great advantage. 
CHAPTER 4: COMMUNITY NEEDS AND FUNDING • There is a high level of unmet need for legal services in the community. • The foreshadowed reductions of Commonwealth Government funding from 1 July 2017 will significantly impede the already constrained ability of legal assistance providers to supply necessary legal services to vulnerable people in the community. • The cost or perceived cost of legal services is a significant barrier to obtaining legal advice or representation. • There are many ways that technology can facilitate access to justice provided that solutions are created with expertise and oversight and ethics and design principles at their core. • There are many examples of innovation among community legal assistance providers but the sector is in urgent need of funding. • A technology gap threatens to separate corporate and wealthy Australia, and disadvantaged people with legal problems. 
CHAPTER 5: THE COURTS AND TRIBUNALS • Fiscal constraints and community behaviours and expectations are driving innovation in courts and tribunals. • Delays in court proceedings can cause serious societal ills and in recent years, not all courts have been consistently resourced to meet pressing demand. • Technology is being used to streamline court services. • T here is a growing interest in online dispute resolution. 
CHAPTER 6: LEGAL EDUCATION • I n a changing environment, the skills and areas of knowledge likely to be of increasing importance for the graduate of the future include: • technology • practice-related skills (eg collaboration, advocacy/negotiation skills) • business skills/basic accounting and finance • pro ject management • international and cross-border law • interdisciplinary experience • resilience, flexibility and ability to adapt to change. • Further consideration and research has been identified as being necessary to determine how these skills and knowledge areas could be taught within existing curricula. 
CHAPTER 7: MANAGING CHANGE AND NEW PROCESSES • Innovation has the potential to significantly enhance the personal wellbeing of members of the profession if the introduction of change is supported appropriately. • Change should be incremental and take place within an environment of psychological safety. •  firms as well as sole practitioners will need support and may need expert assistance with strategic planning and the implementation of change. 
CHAPTER 8: DIVERSITY • A cross the profession there are many excellent initiatives under way that are designed to reduce relative disadvantage within the profession. • S ome lawyers continue to be excluded from full participation in professional life and advancement due to discrimination, sometimes operating through unconscious bias. • T he new environment of innovation and heightened competition among firms within the profession appears to be resulting in a greater availability of flexible work. • A key challenge is to ensure that strategies to achieve diversity and innovation reinforce one another. 
CHAPTER 9: GLOBALISATION • Technology, trade and people are crossing national borders more frequently than ever before. This brings risks and opportunities and requires lawyers to adapt as certain skills and knowledge become more important. • Blockchain is a technology in its infancy which could have significant impacts on various parts of the economy and eliminate and create areas of work for solicitors. • Cyber risks are constantly evolving and the preparedness of small to medium-sized firms in the broader economy is poor. Solicitors have a role to play in maintaining their own and others’ cyber security. • A n increase in cross-border transactions and disputes mean that a knowledge of private international law is increasingly important to the practice of law. • T he approach taken by law-makers to their increasingly frequent engagement with laws of other jurisdictions and with international instruments has been inconsistent and the process of law reform ad hoc, presenting areas for improvement. 
CHAPTER 10: REGULATION OF THE LEGAL PROFESSION • Innovation and changing consumer behaviour are raising questions that are of interest to the Law Society as co-regulator. These include the use by consumers of low-cost, fully or partly automated online services and the unbundling of legal work. • T he quality of emerging offerings in online legal information was not established. • Regulators’ experiences overseas offer useful insights into consumer and market behaviour. 
 The Society's recommendations are -
1 That the Law Society actively facilitate information sharing across all sectors of the profession about developments in legal technology, work process improvement and client-focussed service. 
2 That the Law Society establish a centre for legal innovation projects. The centre should: • actively facilitate innovation in legal technology and engage with the development of emerging technologies, such as blockchain • conduct and present research into the ethical and regulatory dimensions of innovation and technology, including unbundling of legal services and solicitor duties of technological competence, in close collaboration with the Professional Standards Department and the Legal Technology Committee of the Law Society • research and design, in close collaboration with the Law Society’s Professional Development Department, continuing legal education programs that assist lawyers to build core competencies in existing and emerging technologies relevant to the delivery of legal services • foster innovation cultures by creating and participating in networks for professionals and producing guidance for solicitors as to the legal technology market • foster partnerships including by actively working with the legal technology sector and legal assistance sectors to seek opportunities to secure help from appropriate technology providers for community legal services • raise awareness of justice-related innovation and of any consultations with courts, tribunals and community stakeholders as to innovations including online dispute resolution • develop strategies to increase solicitors’ aptitude for cyber management (cyber security). 
3 That the Law Society consider establishing an incubator in New South Wales dedicated to technology-enabled innovation in the law. 
4 That the Law Society: • consult more widely with professionals working in novel ways, co-regulators and community stakeholders to increase the level of engagement with new ways of working • continue to raise awareness throughout the profession of new ways of working through the centre for legal innovation projects and Law Society publications. 
5 That the Law Society sponsor an annual hackathon to harness enthusiasm and expertise to help legal assistance providers find innovative solutions to specific problems. 
6 That the Law Society: • continue to advocate in the strongest terms for the reversal of the foreshadowed reductions of Commonwealth funding for the legal assistance sector due to take effect on 1 July 2017 • press the Commonwealth Government to consult with the sector on appropriate levels of interim funding and the development of a robust funding model for future funding allocations. 

Unhappy PhDs

‘Work organization and mental health problems in PhD students’ by Katia Levecque, Frederik Anseel, Alain De Beuckelaer, Johan Van der Heyden and Lydia Gisle in (2017) 46 Research Policy 868 comments
Research policy observers are increasingly concerned about the potential impact of current academic working conditions on mental health, particularly in PhD students. The aim of the current study is three- fold. First, we assess the prevalence of mental health problems in a representative sample of PhD students in Flanders, Belgium ( N = 3659). Second, we compare PhD students to three other samples: (1) highly educated in the general population ( N = 769); (2) highly educated employees ( N = 592); and (3) higher education students ( N = 333). Third, we assess those organizational factors relating to the role of PhD students that predict mental health status. Results based on 12 mental health symptoms (GHQ-12) showed that 32% of PhD students are at risk of having or developing a common psychiatric disorder, especially depression. This estimate was significantly higher than those obtained in the comparison groups. Organizational policies were significantly associated with the prevalence of mental health problems. Especially work- family interface, job demands and job control, the supervisor’s leadership style, team decision-making culture, and perception of a career outside academia are linked to mental health problems. 
The authors note
Mental health concerns at universities
In recent years, journalists, research policy observers and academics have voiced concerns about the potential impact of research conditions in universities on mental health problems (e.g. The Economist, 2012; Schillebeeckx et al., 2013; Shaw and Ward, 2014; Philips and Heywood-Roos, 2015 ). These concerns are often related to recent shifts in the organization of academic research, such as increased workloads, intensification and the pace of change (e.g. Petersen et al., 2012; Shen, 2015 ). For example, across OECD countries, the number of new PhDs (i.e. recipients of doctorate degrees). grew from 158,000 in 2000–247,000 in 2012, a rise of 56% (OECD, 2014 ). Encouragement by government policy, both at the national and international levels, has led to increased participation rates in the PhD production process ( Robotham, 2008 ). An unfavorable shift in the labor-supply demand balance, a growing popularity of short-term contracts, budget cuts and increased competition for research resources may paint a bleak picture of academic careers for prospective PhD students (e.g. Biron et al., 2008; Petersen et al., 2012; Walsh and Lee, 2015 ).
Although universities were traditionally regarded as low stress environments, research on occupational stress among academics indicates that it is alarmingly widespread and on the rise (Bozeman and Gaughan, 2011; Reevy and Deason, 2014 ). Some studies suggest that stress is more prevalent in younger academics (see e.g. Kinman, 2001 ), a group that typically faces high levels of job insecurity. As a result, the media increasingly reports testimonies of depression and anxiety, burnout and emotional exhaustion. How- ever, the prevalence of mental health problems as shown in official registries remains low. National figures in 2012 for higher education in the UK, for example, show that approximately one in 500 individuals disclosed a mental health problem to their university (Shaw, 2015 ). Reluctance to seek help is often caused by fear of stigma, retaliation or the expected negative impact on one’s future career (OECD, 2015 ).
Why is the mental health of PhD students important for research policy?
While a genuine concern for individual well-being is probably the most important reason why policymakers should pay attention to mental health problems, we argue that mental health of PhD students should be of concern for three additional main reasons. First, the work of PhD students themselves constitutes a major source of scientific advancement, as a doctoral dissertation requires an original contribution to the scientific knowledge base. Furthermore, the publication of dissertation results is a prerequisite for an academic career (Roach and Sauermann, 2010 ), making dissertation work a major contributor to academic output (Hagen, 2010; Miller, 2013 ). Given the compelling evidence for the effects of mental health problems on individuals’ research output (Danna and Griffin, 1999 ), it is to be expected that a sizable cohort of PhD students suffering from mental health problems may affect the overall quality and quantity of individuals’ research output.
Second, as most PhD students are part of larger research teams, whose composition determines scientific impact (Lee et al., 2015 ), PhD students with mental health issues may pose a considerable cost to research institutions and teams. To date, research policy efforts seemed to have focused more on ‘hard outcomes’ such as publications, impact factors and patents, while ignoring the health effects of ‘soft’ policy outcomes, such as stress. However, soft out- comes may create serious financial costs for research institutions, and they will impact the functioning of the larger research teams that the individual researchers are part of, thus also determining ‘hard’ outcomes (see e.g. Goh et al., 2015a,b ).
Third, mental health problems of PhD students impact both the supply and entrance to the research industry. Organizational policies that are linked to mental health problems will lead individuals to quit their PhD studies or leave the research industry altogether (Podsakoff et al., 2007). Several studies of PhD students suggest that the dropout numbers range from 30 to 50 percent, depending on the scientific discipline and country (Stubb et al., 2012 ). Such high turnover will make it difficult for the industry to attract new talent (Lievens and Highhouse, 2003), thus threatening the viability and quality of the academic research industry. Because economic competition between countries is heavily dependent on the nation’s scientific advancement and cognitive ability (Rindermann and Thompson, 2011 ), the prospects of having trained academic researchers not further pursuing a research career because of mental health problems should be a major concern for research policy.
In sum, given the potential importance of mental health problems for research policy, there is an urgent need for systematic empirical data rather than anecdotal information on their prevalence and the organizational policies that are linked to them. Given the current lack of an empirical basis for mental health concerns and solutions, the current study has three aims. First, we aim to inform research policy by assessing mental health prevalence in a large-scale representative sample of PhD students in Flanders, Belgium. Second, to assess the scope of the problem, we compared the mental health of PhD students with that of three other samples, a group of highly educated adults in the general population, a group of highly educated employees and a group of higher education students. Third, with the aim of better understanding how research and organizational policies may relate to mental health, we examined PhD students’ perceptions of the academic environment and linked them to mental health problems

DNS Territorialisation

'Territorialization of the Internet Domain Name System' by Marketa Trimble in (2017) 45 Pepperdine Law Review comments 
A territorialization of the internet – the linking of the internet to physical geography – is a growing trend. Internet users have become accustomed to the conveniences of localized advertising, have enjoyed location-based services, and have witnessed an increasing use of geolocation and geoblocking tools by service and content providers who – for various reasons – either allow or block access to internet content based on users’ physical locations. This article analyzes whether, and if so how, the territorialization trend has affected the internet Domain Name System (“DNS”). As a hallmark of cyberspace governance that aimed to be detached from the territorially-partitioned governance of the physical world, the DNS might have been expected to resist the territorialization trend – a trend that seems antithetical to the original design of and intent for the internet as a globally distributed network that lacks a single point of control. However, the DNS has never been completely detached from physical geography, with which it has many ties, and the article shows that the territorialization trend is detectable in the DNS as well. The article contemplates what impact, if any, the trend will have on the future of the DNS – a future that is challenged by the role of internet search engines, whose predominant use by internet users could render the DNS, as we know it today, obsolete.


The Productivity Commission draft report comments
In Australia’s superannuation system, most risks — in relation to the level of contributions, investment returns, fees and ultimately the benefit in retirement — lie with the individual. And yet the superannuation system hasn’t always afforded or encouraged individual decision making. Some is well intentioned paternalism, reflecting the compulsory and complex nature of superannuation, while other arrangements are merely a historical overhang. Both elements coexist in Australia’s arrangements for allocating default superannuation members to products (‘default arrangements’). In many ways default arrangements can be beneficial to members and are common around the world in retirement savings systems. But they can also stifle competition and innovation that would otherwise occur when consumers make active decisions, and discourage individuals learning about a sizeable asset held on their behalf. Striking the right balance between these benefits is imperative for a system that collectively compels large mandated savings and affords individual responsibility (and with it risk), and an economy where job mobility is the norm.
The Commission has been asked to develop alternative workable models for a formal competitive process to allocate default superannuation members to products. These new alternative models could be implemented by the Australian Government if deemed desirable following the Commission’s future review of the efficiency and competitiveness of the superannuation system — to be undertaken sometime after 1 July 2017.
This Inquiry represents the second of three related pieces of work on superannuation to be undertaken by the Productivity Commission. These stem from the Australian Government’s response to the recommendations of the 2014 Financial System Inquiry (FSI). The FSI found that the superannuation system was not operationally efficient due to a lack of price based competition in the superannuation default market.
Importantly, the Commission’s task in this Inquiry (stage 2) is to develop new competitive models for future consideration by the Australian Government. The Commission is not tasked in this Inquiry to form a view on whether alternative models are better or worse than the current default arrangements, nor on the merits of the current default arrangements. This is core to the overall competitiveness and efficiency of the superannuation system and will therefore be examined as part of the stage 3 review of the competitiveness and efficiency of the superannuation system.
The draft's key points are
  • Superannuation has evolved much since compulsory superannuation was first introduced a quarter of a century ago. Today’s default arrangements evolved historically within the workplace relations system, and provide a safety net for employees that don’t or cannot make a decision in a world of compulsion. 
  • So after 25 years, this Inquiry is a timely opportunity to look at potential ways to introduce more competition into a system that benefits from a large flow of mandated superannuation contributions, and much of that from disengaged members. 
  •  Complementary policy action (including to extend genuine member choice to all employees) is needed to deliver the full potential benefits of member driven competition under the models we identify and even under current default arrangements. The freedom to make choices is necessary to realise the benefits of competition. 
  •  Two thirds of members stick with their default fund. If the system is going to rely on defaults, it needs to guide members to products that at a minimum seek to maximise long term net returns. 
  • In this draft report the Commission has developed four alternative models that are likely to outperform a baseline of ‘no defaults’ on member benefits and competition. 
    • They try to address the core problem in superannuation — the sheer complexity of decision making coupled with compulsion — by increasing the availability and quality of information or nudging choice to a smaller set of high quality products. 
    • But these interventions come at a cost, and each model has different relative strengths and weaknesses. 
  • Members who do not exercise choice should be allocated to a default product only once. The current system’s propensity to create multiple accounts is an egregious systemic failure. It warrants more than the incremental remediation to date. 
    • This approach would result in a smaller pool of employees being defaulted each year, but it should be sufficient to generate competitive dynamics. 
  • There should be a government run centralised online information service, with universal participation by employees and employers, to facilitate more efficient allocation of default members to products. 
  • A centralised clearing house (akin to New Zealand’s), while a more ambitious undertaking, would have wider and more enduring member benefits.
  • Member outcomes would also benefit from more transparent disclosure by funds regarding merger considerations, to hasten the exit of underperforming funds. 
  • Certain reforms indicated in this report will be examined further in the stage 3 review. 
It notes
Competition can promote better outcomes for consumers, such as lower prices, improved service quality and product innovation. There are several reasons why these competitive ideals may not be realised in the superannuation market.
First and foremost, superannuation in Australia is based on compulsion, which can limit the demand side pressure exerted by members. Member passivity and disengagement are further compounded by the complexity of retirement saving decisions, long time horizons, various behavioural and cognitive biases, and the costs of active involvement. At their core, these are information problems — incomplete information or asymmetric information — exacerbated by cognitive constraints.
The absence of strong member engagement can dull competitive pressure on superannuation funds, regardless of the presence of many funds in the market. Moreover, the information problems can create a risk of unhealthy and wasteful competition, such as excessive advertising and product proliferation.
Policy intervention can potentially improve on these outcomes by helping members make better choices, or via default selection processes reducing risk as members opt out of choice. Policymakers can also intervene on the supply side to steer competition and trustee behaviour to more beneficial aspects.

27 March 2017

Forgetting Again

'Not Just One, But Many ‘Rights to Be Forgotten’. A Global Status Quo' by Geert van Calster, Elsemiek Apers and Alejandro Gonzalez Arreaza comments
Since being first developed through the case law of the European Court of Justice, the Right to be Forgotten (RTBF) has continued to rapidly evolve and has recently moved beyond its European borders. In recent times, the RTBF has started to be hotly debated and litigated in Latin America. This paper describes the wide spectrum of interpretations the RTBF has had across countries and data protection authorities. This paper does not discuss European or Latin American judgments themselves, but analyses and compares the relevant cases within each jurisdiction by looking at four key variables. The analysis of the cases showed that there is no unified or coordinated approach to the RTBF. This is especially true at the level of the defendants involved, that is, whether it involved the local subsidiary or the parent company, and whether the order of removal had local or 'global' effects, meaning the removal of content or access was addressed to local domains or from the global domain. This last issue is paramount, since it will determine whether a order of removal would leave content available and accessible for anyone outside of the jurisdiction of the authority who orders the removal, or whether the content becomes inaccessible to everyone everywhere.

Bachelor Taxes

 'Taxing Bachelors in America: 1895-1939' by Marjorie Kornhauser (in (2013) 6 Studies in the History of Tax Law comments 
Bachelor taxes have existed across the globe and throughout millennia. In modern income taxes, they occur only indirectly, as by-products of favorable exemptions and tax rates for married couples. However, in prior centuries—even the 20th century—bachelor taxes existed as direct, explicit taxes levied on bachelors as bachelors. From 1895 through 1939, American municipalities and states proposed these taxes with surprising frequency and newspapers consistently reported on them as well as on foreign bachelor taxes.
Although often greeted with hilarity and rarely passed, explicit bachelor taxes during this period were motivated by serious concerns. The need for revenue was one reason these taxes were proposed. It was not, however, the only—or even the major—reason. This paper suggests that social unease was the primary motivation for American bachelor taxes in this period. Decades of industrialization, urbanization, immigration, and increased consumerism had created social tensions and dislocations by radically altering everyday living patterns and basic social institutions. The bachelor tax proposals and discussions during this period expressed many people’s discomfort with the changes. Since they believed marriage was the foundation of society and American democracy, they perceived any threat to marriage as threatening the fabric of America. Consequently, they viewed bachelor taxes as a remedy for the moral decay of the nation. In actuality, the taxes were mainly expressive in nature. Not only did most of them fail to pass, but even if they did pass, they were largely ineffective methods to increase marriages, as some contemporaries noted.
The demise of explicit bachelor taxes did not end concerns about marriage and the moral state of society. These same concerns were part of the debates about mandatory joint returns in the late 1930s and early 1940s. Similarly, they remain an important element of recent debates about marriage penalties and the tax treatment of families. Keywords: tax, bachelors, history, immigration, marriage, politics, population Suggested Citation:

Finance Regulation

The Senate Economics References Committee's report 'Lifting the fear and suppressing the greed’: Penalties for white-collar crime and corporate and financial misconduct in Australia addresses a November 2015 referral regarding evidentiary standards and penalties for corporate and financial misconduct or white-collar crime.

The Committee's salient key recommendations are that:
  • the government consider making infringement notices available to ASIC in relation to breaches of the financial services and managed investments provisions of the Corporations Act; 
  • the current level of civil penalties under the Corporations Act 2001 (Cth) be increased, both for individuals and bodies corporate; 
  • civil penalties be set as a multiple of the benefit gained or loss avoided; 
  • disgorgement powers for ASIC in relation to non-criminal matters be introduced; 
  • the government consider reforms to clarify the evidentiary standards and rules of procedure in civil penalty proceedings;
  • ASIC consider ways to enhance the accessibility and usability of the banned and disqualified register. 
The report is an instance of 'once more, with feeling', following the
  •  March 2014 ASIC report Penalties for corporate wrongdoing (Report 387), noting  that overseas civil penalties  were higher, and that there were differences between the types and size of penalties for similar wrongdoing in the current legislation; 
  • June 2014 Senate Economics References Committee report Performance of the Australian Securities and Investments Commission recommending review of penalties for contraventions of the legislation administered by ASIC; 
  •  December 2014 Financial System Inquiry (FSI) Final Report recommending that the maximum civil and criminal penalties for contravening ASIC legislation should be substantially increased, and that ASIC should be able to seek disgorgement of profits earned as a result of contravening conduct; 
  • December 2015 ASIC Capability Review 
  • October 2016 terms of reference for an ASIC Enforcement Review Taskforce, including the adequacy of civil and criminal penalties for serious financial system contraventions, the need for alternative enforcement mechanisms and the adequacy of existing penalties for serious contraventions, including disgorgement of profits. 
Unsurprisingly the Senate Committee noted inadequacies and inconsistencies in the penalty framework, in  particular
  • failure to increase the maximum civil penalties under the Corporations Act for individuals and corporations ($200,000 and $1 million respectively) since the introduction of those penalties over than 10 years ago, 
  • inconsistencies in the penalties available for similar types of offence, 
  • inconsistencies arising from the introduction of new legislative instruments (penalties provided for in recent legislation being considerably higher than those available in relation to similar conduct under older legislation).