Commonwealth inhouse and external legal spending

The Commonwealth Office of Legal Services Coordination (OLSC) has released a brief report  on  egal services expenditure across the Commonwealth for the 2016-17.

The report seeks to:

• provide an overview of legal services expenditure across the Commonwealth for the 2016-17 financial year, and 

• where possible, identify and report on trends and changes in legal services spend compared with previous financial years.

Its basis is  information reported to the OLSC by

• Commonwealth entities, as required by subparagraph 11.1(da) and paragraph 12.3(f) of the Legal Services Directions 2017 (the Directions), and 

• legal service providers on the Legal Services Multi-Use List (LSMUL), who are also required to report to OLSC on the value of Commonwealth legal work they receive.

Entities are required to report legal services expenditure data using a standard template to facilitate consistency in reporting and to enable a clear break down of data across the Commonwealth.

Salient information is

Total legal services expenditure 

Since 2013-14, legal expenditure has been reported on a GST exclusive basis to ensure more accurate comparisons between external and internal expenditure. Staff costs, which make up the majority of internal expenditure, do not attract GST. 

In 2016-17, the total legal services expenditure reported by Commonwealth agencies was $825.51m, from $792.40m in 2015-16. 

The total expenditure reported by Non-Corporate Commonwealth Entities (NCCE) was $745.86m, from $712.29m in 2015-16. 

The total expenditure reported by Corporate Commonwealth Entities (CCE) was $79.65m, from $80.11m in 2015-16. 

Internal legal services expenditure 

Internal legal services expenditure refers to the total cost of in-house practices in Commonwealth agencies. 

In 2016-17, Commonwealth agencies reported internal legal services expenditure of $408.45m, from $392.50m in 2015 16. 

NCCEs reported internal legal services expenditure of $368.54m, from $352.30m in 2015-16. 

CCEs reported internal legal services expenditure of $39.92m, from $40.20m in 2015-16.   

External legal services expenditure 

External legal services expenditure refers to all legal services purchased external to the entity, including professional fees and disbursements paid to law firms, as well as briefs to counsel. 

In 2016-17, Commonwealth entities reported total external legal services expenditure of $417.06m, from $399.89m in 2015-16. 

NCCEs reported external legal services expenditure of $377.33m, from $359.98m in 2015-16. 

CCEs reported external legal services expenditure of $39.73m, from $39.91m in 2015-16. 

Professional fees 

Commonwealth entities reported $306.63m in professional fees paid to legal services providers. In 2015-16, Commonwealth entities reported $290.22m. 

Briefs to counsel 

In 2016-17, Commonwealth entities reported $67.74m in fees paid to counsel, from $60.90m in 2015-16. There was an increase in the number of direct briefs to counsel, with 1,366 direct briefs to counsel in 2016-17 and 1,280 in 2015-16. The distribution of the value of briefs to female counsel increased. In 2016-17, female counsel received 26.23% of the value of counsel briefs, from 25.71% in 2015-16

The report notes

OLSC, which is part of the Civil Justice Policy and Programs Division of AGD, is tasked with strategic coordination of Commonwealth legal work. This role includes ensuring that Commonwealth entities receive consistent and well coordinated legal services that are of a high standard, uphold the public interest, and are sensitive to whole of government interests. 

Pursuant to subparagraph 11.1(da) and paragraph 12.3A of the Directions, NCCEs and CCEs are required to report to OLSC about their legal services expenditure. 

Under the Directions, there are three methods by which Commonwealth agencies may engage legal services:

• from a legal services provider (ie a law firm), which must be included on the LSMUL, unless the agency was granted an exemption from the requirement to use the LSMUL 

• from a barrister, either engaged through a legal services provider or directly briefed by the agency, and 

• internally within the agency from an internal legal services provider (an in-house legal practice).

Expenditure incurred through all three methods must be reported. Fees paid to external legal services providers are recorded under ‘professional fees’ and are also broken down by provider. Disbursements paid to legal services providers are also reported. Barrister fees are reported under ‘counsel’ and are also broken down into total number of briefs, number of briefs which are direct to counsel rather than through a legal services provider (ie a law firm), and value of briefs by gender. The total costs of in-house legal practices are reported under ‘internal legal services expenditure’. 

Consistent with the Australian National Audit Office’s 2006 Better Practice Guide, Legal Services Arrangements in Australian Government Agencies, the full cost of an in-house legal practice is to include:

• direct salary costs 

• indirect salary costs (superannuation, leave entitlements) 

• direct overhead (costs of desks, stationary, computers etc) 

• indirect overhead (apportioned electricity, rent etc) 

• legal unit overhead (specialist software, licences, cost of law library), and 

• learning and development overhead, including training in legal and non-legal skills. 

Where is the money going? One indication is a list of providers (by value)

Australian Government Solicitor 35% 

Clayton Utz 12% 

Sparke Helmore 8% 

Minter Ellison Lawyers 5% 

Ashurst 5% 

DLA Piper 4%

King and Wood Mallesons 4% 

Corrs Chambers Westgarth 3% 

HWL Ebsworth Lawyers 2% 

Mills Oakley Lawyers 2% 

Other 20% 

And who is spending? Another indication ($)-

Administrative Appeals Tribunal 4,083,472

Asbestos Safety and Eradication Agency 27,429

Attorney-General's Department 27,442,760

Australian Aged Care Quality Agency 109,709 

Australian Building and Construction Commission 13,435,207 

Australian Bureau of Statistics 388,824

Australian Centre for International Agricultural Research 23,494 

Australian Commission for Law Enforcement Integrity 750,373  

Australian Communications and Media Authority 3,699,213  

Australian Competition and Consumer Commission 33,049,043   

Australian Criminal Intelligence Commission 5,377,073

Australian Electoral Commission 1,303,210   

Australian Federal Police 25,683,303  

Australian Financial Security Authority 875,251 

Australian Fisheries Management Authority 782,549   

Australian Human Rights Commission 1,121,734   

Australian Institute of Family Studies 22,509

Australian Law Reform Commission 7,557   

Australian National Audit Office 121,327 

Australian Office of Financial Management 13,285  

Australian Pesticides and Veterinary Medicines Authority 1,399,083 

Australian Prudential Regulation Authority 5,273,619 

Australian Public Service Commission 710,277  

Australian Radiation Protection and Nuclear Safety Agency 411,704 

Australian Research Council 147,496 

Australian Securities and Investments Commission 87,901,849 

Australian Skills Quality Authority 2,158,911   

Australian Sports Anti-Doping Authority 922,154   

Australian Taxation Office 86,465,170

Australian Trade and Investment Commission 1,347,892 

Australian Transaction Reports and Analysis Centre 3,123,225  

Australian Transport Safety Bureau 256,658  

Bureau of Meteorology 1,058,334 

Cancer Australia 101,201 

Clean Energy Regulator 2,035,610 

Department of Agriculture and Water Resources 8,248,145 

Department of Communications and the Arts 4,866,739 

Department of Defence 99,425,104   

Department of Education and Training 10,373,930   

Department of Employment 19,633,225   

Department of Finance 38,762,012 

Department of Foreign Affairs and Trade 17,722,494  

Department of Health 20,791,193   

Department of Human Services 41,512,648   

Department of Immigration and Border Protection 79,128,991 

Department of Industry, Innovation and Science 9,700,537  

Department of Infrastructure and Regional Development 12,370,952

Department of Parliamentary Services 1,103,666  

Department of Prime Minister and Cabinet 6,591,129  

Department of Social Services 8,373,179 

Department of the Environment and Energy 9,654,506

Department of the House of Representatives 61,061 

Department of the Senate 32,282 

Department of the Treasury 3,862,687

Department of Veterans' Affairs 10,268,726 

Digital Transformation Agency 272,919

Fair Work Commission 2,758,541  

Fair Work Ombudsman and Registered Organisations Commission Entity 10,417,093 

Federal Court of Australia Entity 155,159 

Future Fund Management Agency 3,418,058  

Geoscience Australia 258,041  

Great Barrier Reef Marine Park Authority 2,975,328 

Independent Hospital Pricing Authority 26,860  

Independent Parliamentary Expenses Authority 53,115

Inspector-General of Taxation 21,621

IP Australia 2,023,560

Murray-Darling Basin Authority 1,759,954

National Archives of Australia 819,141 

National Blood Authority 255,996

National Capital Authority 152,223 

National Competition Council 250,564

National Health and Medical Research Council 488,322  

National Health Funding Body 31,828

National Mental Health Commission 15,430

National Offshore Petroleum Safety and Environmental Management Authority 713,535

Office of National Assessments 85,467  

Office of Parliamentary Counsel 25,176  

Office of the Australian Accounting Standards Board and Office of the Auditing Assurance Standards Board 62,973   

Office of the Australian Information Commissioner 725,140 

Office of the Commonwealth Ombudsman 598,702 

Office of the Director of Public Prosecutions 151,620   

Office of the Inspector-General of Intelligence and Security 80,581

Office of the Official Secretary to the Governor-General 8,481  

Organ and Tissue Authority 25,953   

Parliamentary Budget Office  358 

Productivity Commission 16,615  

Professional Services Review Agency 1,562,822

Royal Australian Mint 153,812 

Safe Work Australia 610,211 

Tertiary Education Quality and Standards Agency 762,475

Workplace Gender Equality Agency 13,670

Digital Wills

'What Is an “Electronic Will”? Chapter Four - Developments in the Law' in (2018) 131 Harvard Law Review 1790 comments

It is a truth universally acknowledged that “[t]he organizing principle of the American law of donative transfers is freedom of disposition.” That is, “[p]roperty owners have the nearly unrestricted right to dispose of their property as they please.”  As the right to dispose of property extends beyond death, one way that a testator can make her wishes known is, of course, by creating a will that lays out her estate plan in detail. To ensure the authenticity of the wills that are presented to probate, however, a testator must follow a set of “formalities” in creating and executing a will (traditionally, these are writing, signature, and attestation). More Formalities help ensure that only valid wills are admitted to probate by creating a standard form and method for will creation and execution, cautioning the testator of the gravity of the step she is about to take, and protecting the testator from those who may attempt to take advantage of her. 

For centuries, the formalities associated with wills underwent little modification. However, the rise of technology in recent years is likely to bring with it a flurry of previously unforeseen circumstances for probate courts to confront. American probate courts are slowly being asked to judge the validity of “electronic wills” — wills that have been written, signed, and/or attested using an electronic medium. Testators’ use of electronic media for wills is hardly surprising given a trend of increasing personal data storage on electronic devices and in “the cloud”: one popular cloud storage service, Dropbox, reported reaching 500 million users in 2016, for example. 

Although scholarship on electronic wills remains limited, scholars and practitioners have suggested a variety of options for courts and legislatures dealing with electronic wills.  These run the gamut from continuing to interpret wills as requiring a handwritten document,  to creating a centralized database regulated by the government that would store all electronic wills,  to using existing wills doctrines to authenticate electronic wills on a case-by-case basis,  to laying out a statutory regime that would allow for presumptively valid electronic wills in some situations. 

However, since scholars typically use the term “electronic will” to encompass a variety of situations that pose vastly different questions about validity, scholarly proposals on whether electronic wills should generally be considered valid or invalid — and under what standard — are hard to assess. As used today, an electronic will could mean any writing along a broad spectrum from a will simply typed into a word-processing program by the testator on a computer and stored on its hard drive. This Chapter suggests that such a broad view obscures the critical distinctions between different situations in which a will is created and/or executed electronically. This Chapter therefore attempts to organize the discussion of electronic wills by providing an analytical framework for weighing their validity. 

This Chapter disaggregates the one-size-fits-all term “electronic will” into three distinguishable categories of electronic wills: offline electronic wills, online electronic wills, and qualified custodian electronic wills. Offline electronic wills are those that are simply typed (or “handwritten” via a stylus) onto an electronic device by the testator herself, signed by way of the testator typing her name or putting another signatory mark into the electronic document, and stored on the electronic device’s local hard drive — they are typically never printed, traditionally attested, or uploaded onto a website. By contrast, online electronic wills are those that incidentally bring another private actor (a technology company, a cellphone service provider, etc.) into the mix — for example, where a testator logs into an existing social media account and creates a post that is intended to serve as the testator’s will. Such wills are those typically stored on the private actor’s servers or in “the cloud,” subjecting them to statutes regulating the management and retention of personal data as well as the private actor’s own policies — but also ensuring that a neutral third party is able to provide objective evidence on critical questions such as when a document was created. Electronic wills of the third type are created where a company becomes a “qualified custodian” that would create, execute, and store the testator’s will, subject to rules and regulations put forth by a state. In addition to identifying these three electronic will categories as separate and distinct, this Chapter suggests that each category raises unique evidentiary and other functional issues that create special concerns for courts and policymakers to keep in mind when regulating electronic wills. 

Section A provides an initial overview of will formalities, the functions they serve, and the compliance standards that are currently used by American courts. Section B discusses each proposed category of electronic wills (offline, online, and qualified custodian) in turn, highlighting the practical disputes that are likely to arise under each category as well as, where possible, how courts in other countries have attempted to deal with such issues. Section C concludes by connecting the issues discussed in this Chapter to a general trend of increasing personal data storage online, emphasizing one last time the need for — and importance of — a clear, predictable framework for electronic wills.

Consumer Data Consent

'Protecting Financial Consumer Data in Developing Countries: An Alternative to the Flawed Consent Model' by Katharine Kemp and Ross P. Buckley in (2017) 18(3) Georgetown Journal of International Affairs 35-46 comments

“Big data” analytics and other data-driven innovations have recently been promoted as important tools for advancing digital financial inclusion in developing countries, permitting financial services providers to offer credit to consumers without a formal credit history and design products which meet local consumers’ needs. However, these new data practices also create significant risks, including data theft, fraud, and potentially financial exclusion. Nonetheless, many providers and standard-setting bodies consider that data practices can be justified if consumers provide their informed consent to the relevant collection, use, sharing, and storage of their data. 

We argue that this traditional “informed consent” model for consumer data protection has real weaknesses in effectively protecting the privacy of consumers in developing countries. This model may make services more accessible but also significantly increases the likelihood of private information being exposed. 

We propose an alternative approach to financial consumer data protection, which takes account of the modern dynamics of digital data collection, use, sharing and storage, and the limitations of consumers individually negotiating acceptable levels of data protection. This alternative approach would be for regulators, industry and scholars to: recognize that the problem of consumer data protection is not solved by consumers supposedly providing consent to data practices; reframe the discourse to avoid euphemisms and assumptions which unjustifiably favor provider interests; recognize that data protection and innovation need not be a zero-sum game; and more broadly, challenge the validity of the dominant “privacy self-management” paradigm in the context of developing countries.

Pharma Data Exclusivity, Transparency and Gatekeeping

'The (Re)Newed Barrier to Access to Medication: Data Exclusivity' by Srividhya Ragavan in (2017) 51 Akron Law Review 1163-1196 comments

This Article is set in the background of the consequences of the WTO’s prescriptions on patenting of life-saving medications which has largely contributed to the morphing of patents on life-saving medication into a luxury. Remarkably, there has been a transformation of the role of patents in the context of pharmaceutical innovation into a strategic business tool leading to a larger interest in creation and sustenance of regulatory rights. The biggest global development in this area is an increased effort to strengthen exclusivity using regulatory protections for all chemicals, and even, biologics, involved in all stages of drug development. Consequently, pharmaceutical companies have expertly navigated this confluence of patents with regulatory data protection to leverage themselves in a manner effectively creating high protection and financial rewards for what materials that could otherwise be susceptible for generic competition. This Article concerns itself with the regulatory regime that effectively provides for exclusivity of clinical trial data. The focus of the Article will be on how and why data exclusivity works for the pharmaceutical industry to promote and/or protect market exclusivity globally. Thus, the Article examines what data exclusivity is, the international trade obligations relating to providing data exclusivity, and the impact of the data exclusivity obligations on access to medication issues, with a specific focus on developing countries while keeping the U.S. regime as the vantage point to examine these issues. The Article outlines how the data exclusivity regime can operate in parallel with the patent regime to add a layer of protection for the data, thus adding to the protection regime for chemical or biologic data. In doing so, this Article will address some of the more controversial issues that have arisen globally with reference to data exclusivity within the larger access to medication debate.

'Payers’ experiences with confidential pharmaceutical price discounts: A survey of public and statutory health systems in North America, Europe, and Australasia' by Steven G. Morgan, Sabine Vogler and Anita K. Wagner in (2017) 121(4) Health Policy 354-362 comments

Institutional payers for pharmaceuticals worldwide appear to be increasingly negotiating confidential discounts off of the official list price of pharmaceuticals purchased in the community setting. We conducted an anonymous survey about experiences with and attitudes toward confidential discounts on patented pharmaceuticals in a sample of high-income countries. Confidential price discounts are now common among the ten health systems that participated in our study, though some had only recently begun to use these pricing arrangements on a routine basis. Several health systems had used a wide variety of discounting schemes in the past two years. The most frequent discount received by participating health systems was between 20% and 29% of official list prices; however, six participants reported their health system received one or more discount over the past two years that was valued at 60% or more of the list prices. On average, participants reported that confidential discounts were more common, complex, and significant for specialty pharmaceuticals than for primary care pharmaceuticals. Participants had a more favorable view of the impact of confidential discount schemes on their health systems than on the global marketplace. Overall, the frequency, complexity, and scale of confidential discounts being routinely negotiated suggest that the list prices for medicines bear limited resemblance to what many institutional payers actually pay.

'Payments by US pharmaceutical and medical device manufacturers to US medical journal editors: retrospective observational study' by Jessica J Liu, Chaim M Bell, John J Matelski, Allan S Detsky and Peter Cram in (2017) 359 BMJ comments

Journal editors play a crucial role in scientific discourse. Editors triage new manuscript submissions and decide on those that warrant external review. For manuscripts that undergo external assessment, editors typically synthesise comments and decide which papers will be published. Based on concerns about lapses in integrity and unintentional bias associated with industry funding authors are now required to comprehensively report financial relations with industry to editors early in the publication process. However, compared with author conflict of interest, editorial conflict of interest has been infrequently studied. 

For authors, publication in top tier journals plays a crucial role in obtaining grant funding and career advancement. For industry, publication in high impact journals bestows academic prestige and global attention to research and may speed regulatory approval, boost sales, and increase stock price. Journal editors wield enormous power; they are the individuals who determine a substantial amount of the content and conclusions of what appears in their journals, including article selection, article content, and which articles have accompanying editorials. Despite efforts to improve transparency, the peer review process often seems opaque to those on the outside. 

In recent years, journal editors have responded to concerns by publishing more information related to the publication process, including authors’ financial disclosures (eg, International Committee of Medical Journal Editors (ICJME) authorship forms), study protocols, statistical codes, and even source data. Certain journals have moved to an open review process in which external peer review critiques, editorial comments, and author responses are published online to maximise transparency of the review process. 

Improvements notwithstanding, the inner workings and decision making processes of editors remain a mystery to readers, authors, and the public. Authors have been expected to disclose financial relations using ICMJE conflict of interest forms at most reputable journals since 2010; however, financial disclosure requirements for editors remain highly variable. Professional societies such as the ICMJE, the World Association of Medical Editors (WAME), and the Committee on Publication Ethics (COPE) have published recommendations on editorial conflicts of interest. However, only 30-50% of high impact biomedical journals have clear editorial conflicts of interest policies in place.  

Even when journals have editorial policies for conflicts of interest, studies estimate that only 12% of journals have published such policies and only 30% of policies have clear requirements for editorial recusal. Such lack of standardisation could create a perception that editors fail to adhere to the very conflicts of interest requirements they have appropriately developed for authors. 

As part of the Affordable Care Act the US Centers for Medicare and Medicaid Services (CMS) have made available all payments by pharmaceutical and medical device manufacturer to doctors and other clinicians publicly available through the Open Payments database. We used this database to examine industry payments to journal editors at 52 influential US medical journals during 2014.

Their finding was 

Of 713 eligible editors, 361 (50.6%) received some (>$0) general payments in 2014, and 139 (19.5%) received research payments. The median general payment was $11 (£8; €9) (interquartile range $0-2923) and the median research payment was $0 ($0-0). The mean general payment was $28 136 (SD $415 045), and the mean research payment was $37 963 (SD $175 239). The highest median general payments were received by journal editors from endocrinology ($7207, $0-85 816), cardiology ($2664, $0-12 912), gastroenterology ($696, $0-20 002), rheumatology ($515, $0-14 280), and urology ($480, $90-669). For high impact general medicine journals, median payments were $0 ($0-14). A review of the 52 journal websites revealed that editor conflict of interest policies were readily accessible (ie, within five minutes) for 17/52 (32.7%) of journals.

The conclusion is 

Industry payments to journal editors are common and often large, particularly for certain subspecialties. Journals should consider the potential impact of such payments on public trust in published research.

RCEP

"The RCEP Negotiations and Asian Intellectual Property Norm Setters' by Peter K Yu in Liu Kung-Chung and Julien Chaisse (eds.) The Future of Asian Trade Deals and Intellectual Property (Hart, 2019) comments

This chapter closely examines the negotiations on the Regional Comprehensive Economic Partnership (RCEP) and the Asian countries' recent efforts to set regional intellectual property norms. The RCEP negotiations are particularly important to Asian intellectual property developments because the RCEP remains the first and only mega-regional agreement that Asian countries have negotiated without the participation of either the European Union or the United States. 

The chapter begins with a brief discussion of the evolution of the RCEP negotiations, noting the initial rivalry between the Trans-Pacific Partnership (TPP) and the RCEP, the United States' withdrawal from the former and the adoption of the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP). 

This chapter then highlights the different intellectual property provisions in the draft RCEP intellectual property chapter, focusing on the four main branches of intellectual property law as well as the areas of intellectual property enforcement and pro-development measures. Although this chapter analyses the only publicly available text of that chapter, which was dated October 2015, it takes into account the CPTPP partners' suspension of a significant number of TPP intellectual property provisions as well as the time elapsed since the development of the draft text. 

The chapter concludes by outlining the role of each Asian norm setter in the RCEP negotiations – namely, the Association of Southeast Asian Nations (ASEAN), China, India, Japan and South Korea. Except for China, all of these negotiating parties have advanced draft negotiating texts for the development of the RCEP intellectual property chapter.

Goop

The Santa Clara (California) District Attorney's Office has announced a settlement with Goop, Inc over three 'Wellness Products'

 Goop, Inc. has settled a consumer protection lawsuit filed by Santa Clara County District Attorney Jeff Rosen and nine other state prosecutors alleging that Gwyneth Paltrow’s wellness empire sold a series of women’s health products whose advertised medical claims were not supported by competent and reliable science.

The suit was based on unsupported attributes for Goop’s Jade Egg, Rose Quartz Egg, and Inner Judge Flower Essence Blend.

Goop advertised that the Jade and Rose Quartz eggs — egg-shaped stones designed to be inserted vaginally and left in for various lengths of time — could balance hormones, regulate menstrual cycles, prevent uterine prolapse, and increase bladder control. Goop advertised that the Inner Judge Flower Essence Blend, a blend of essential oils meant be taken orally or added to bathwater, could help prevent depression.

“The health and money of Santa Clara County residents should never be put at risk by misleading advertising,” District Attorney Jeff Rosen said. “We will vigilantly protect consumers against companies that promise health benefits without the support of good science…or any science.”

Goop has offered to refund the full purchase price to any consumer who purchased the Jade Egg, Rose Quartz Egg, and/or Inner Judge Flower Essence Blend on or between January 12, 2017 and August 31, 2017. ...

The judgment includes provisions prohibiting Goop from: (1) making any claims regarding the efficacy or effects of any of its products without possessing competent and reliable scientific evidence that substantiates the claims; and (2) manufacturing or selling any misbranded, unapproved, or falsely advertised medical devices. Under the terms of the stipulated judgment, Goop agreed to pay $145,000 in civil penalties.

Goop and its counsel worked cooperatively with prosecutors throughout the settlement process.

Responsible Blockchain and Reintermediation in FinTech

Not-So-Smart Blockchain Contracts and Artificial Responsibility' by Adam J. Kolber in (2018) Stanford Technology Law Review comments

The first high-profile decentralized autonomous organization formed in 2016. Called “TheDAO,” it used smart contracts on a bitcoin-style blockchain to allow strangers to come together online to vote on and invest in venture capital proposals. Newspapers raved about the $160 million it quickly raised, even though it purported to have no central human authority, including no managers, executives, or board of directors.

Technologists have grand plans for smart contracts and autonomous organizations. Rather than staying at traditional hotels with elaborate human staff, we may pay for hotel rooms using bitcoin (or another cryptocurrency) which will automatically unlock the room door. If the toilet breaks, the room itself will contract with a plumber to fix it. Similarly, a smart contract may allow us to hire a self-driving car. The car will not only drive passengers around but arrange for its own routine maintenance.

TheDAO itself, however, is now a cautionary tale. A bug in its smart contract code was exploited to drain more than $50 million in value. Some purists denounced efforts to mitigate the problem, arguing that the alleged hacker simply withdrew money in accordance with the organization’s agreed-upon contractual terms in the form of computer code. Since the “code is the contract” in their minds, the alleged hacker did nothing wrong.

I defend two related claims. First, contra the purists, I argue that the code does not reflect the entirety of the parties’ agreement, and so the “code is the contract” slogan does not resolve whether TheDAO exploitation should have been mitigated. I take no position on whether mitigation was appropriate except to say that the matter depends on many considerations aside from smart contract code itself.

Second, I point to a broader danger lurking in the code-is-the-contract view. TheDAO had tremendous “artificial responsibility” in that we gave it considerable control that couldn’t be easily revoked or reined in. Not-so-smart contracts in the future may prove even more dangerous: hotel guests might be locked out of their rooms, and self-driving cars might drive off bridges. I argue that unadulterated commitment to the code-is-the-contract slogan increases artificial responsibility and its associated risks.

Given Australia's move to a Consumer Data Right it is interesting to sight comments in 'Reintermediation in Fintech: Evidence from Online Lending' by Tetyana Balyuk and Sergei A. Davydenko. They argue 

The peer-to-peer loan market was designed to allow borrowers and lenders to interact online without banks as middlemen. Yet we document that P2P lending platforms over time have evolved from trading venues into new credit intermediaries. Lenders now overwhelmingly outsource all decision-making to the platforms' software and adopt passive investment strategies. The dominant role of lending platforms with little skin in the game makes the market vulnerable to moral hazard, checked by the threat of institutional investors' withdrawal. Our findings suggest that the absence of private information spurs reintermediation as the platform's expertise in loan evaluation crowds out that of investors.

Public Media Inquiry

The Government's response to the Senate Select Committee on Public Interest Journalism Future of Public Interest Journalism report states

R 1: The committee recommends that the ABC and SBS be funded adequately, so that they can deliver on their charter obligations, support rural and regional service provision and have a strong fact checking capacity. 

The Government agrees in principle to this recommendation. The Government will always ensure that our national broadcasters are appropriately resourced. Base funding represents the vast bulk of Commonwealth funding provided to the Australian Broadcasting Corporation (ABC) and the Special Broadcasting Service Corporation (SBS). At $3.1 billion and $814.2 million, respectively, over three years (from financial year 2016-17) for the current funding triennium, this represents a significant investment in national broadcasting. Base funding enables the continued operation and transmission of TV, radio and online services for the national broadcasters. The Government also provides additional funding to the ABC and SBS to support their services, particularly those located outside the capital cities, including: local news and current affairs; multilingual, multicultural and Indigenous media services; and delivery of news content across digital and mobile platforms. While funded by Government, both the ABC and SBS have legislated independence in relation to content and editorial matters to ensure that what is broadcast is free of political interference. The ABC and SBS have each developed Editorial Polices/Guidelines to assist content makers and the public to understand the editorial and ethical principles that are fundamental to the ABC and SBS. These policies take into account the requirements of current regulation and seek to reflect the standards that audiences can reasonably expect of the national broadcasters.   

R2: •The committee recommends that the Commonwealth provide additional surety in future funding for the community broadcasting sector beyond the forward estimates, in particular what component will be set aside for training and education, and ensure that the sector is fully consulted in the national rollout of digital services. 

The Government notes this recommendation. The Australian Government supports community broadcasting and recognises that it provides a valuable service to groups in the community that are not specifically served by commercial, subscription or national broadcasters. Community broadcasting also contributes to the overall diversity of Australia’s media landscape. The Government has a long record of supporting community broadcasting, primarily through the Community Broadcasting Program (CBP). The CBP provides annual funding of approximately $15.5 million to the sector, which helps support content development, industry training, transmission, online services and Australian music. Portions of the CBP’s funds are also targeted to support radio for the print handicapped, Indigenous and ethnic services. In the Mid-Year Economic and Fiscal Outlook 2017-18, the Government allocated an additional $12.0 million (GST exclusive) for community radio broadcasting, to be administered through the existing CBP. Of this funding, $4.0 million will be allocated in 2019-20 and 2020-21 to assist community digital radio with the cost of continuing services in metropolitan areas and extending services to regional areas. To support the capacity, skills and competencies of the community radio sector’s workforce and volunteer base, an additional $0.6 million per annum over four years will be allocated to the National Training Program—supplementing an approximate $0.6 million of existing annual funding for the National Training Program. These funds will focus on enhancing the management and small business skills of the sector. The Digital Radio Report released by the Australian Government in 2015 recommended establishing a Digital Radio Planning Committee for Regional Australia (the Committee). The Committee was formed in 2015, is chaired by the Australian Communications and Media Authority (ACMA), and focuses on the rollout of digital radio in regional areas that are most likely to be commercially viable. Members of the Committee include the Community Broadcasting Association of Australia, among other key industry stakeholders. The Committee developed planning principles for the rollout of digital radio services, which informed the ‘Planning principles for the expansion of digital radio in regional Australia’ released by the ACMA in 2016. The ACMA consults with all eligible digital radio broadcasters, including community broadcasters, when developing digital radio channel plans for the rollout of digital radio services in new licence areas. The ACMA also consults on decisions to ‘deem’ community broadcasters, a process which enables a community broadcaster, for which the licence area is different to the relevant commercial licence area, to provide digital radio services.   

R3:  The committee recommends that the Commonwealth work with the states and territories through the Council of Australian Governments to determine how areas of the Australian Curriculum may be improved regarding digital media awareness and media literacy. 

The Government notes this recommendation. Media literacy is currently covered in a number of areas across the Australian Curriculum including the English, Arts and Humanities, Social Sciences learning areas and the Critical and Creative Thinking general capability. Media literacy is specifically addressed in the 'Media Arts' subject of the Arts learning area. Through the Curriculum, students are supported to develop the knowledge, skills and critical thinking capability to interpret and use language confidently including the capacity to understand, analyse and evaluate information. While media literacy is included as part of the Australian Curriculum, implementation of the Curriculum, including decisions about the resources used, is a matter for state and territory governments and non-government education authorities as well as individual schools. There will be a review of the Australian Curriculum in 2020 and this may provide an opportunity to revisit how media literacy is taught through the Curriculum. State and territory education authorities as well as other interested stakeholders, will be given the opportunity to participate in the review.   

R4: The committee recommends that the Commonwealth develop and implement a framework for extending deductible gift recipient (DGR) status to not-for-profit news media organisations in Australia that adhere to appropriate standards of practice for public interest journalism. 

The Government does not support this recommendation. Organisations providing public interest journalism already have the ability to seek deductible gift recipient (DGR) status under the existing legislative framework. Media organisations can seek DGR status if they meet the requirements of one of the established general categories or through specific listing in the income tax law. More broadly, the Government has implemented a number of tax measures to support Australian entities, including those undertaking public interest journalism. Some of the key tax measures include reducing the corporate tax rate for small and medium-sized businesses; increasing the unincorporated small business tax discount; lifting the small business entity turnover threshold from $2 million to $10 million; and the $20,000 instant asset write-off.   

R5: The committee recommends that the Treasury undertake cost-benefit modelling on extending the tax deductible status of news media subscriptions to all Australians, not just those who can already claim the cost of subscriptions through existing income tax arrangements, for subscriptions to news media organisations in Australia that adhere to appropriate standards of practice for public interest journalism. 

The Government does not support this recommendation. Under the tax system, deductions are allowed for losses and outgoings to the extent they are incurred in gaining or producing assessable income. News media subscriptions are deductible if there is a sufficient nexus with the taxpayer’s current employment. Deductions are not allowed where expenses are of a capital, private or domestic nature. The Government does not consider the tax law should be amended to extend the tax deductibility status of news media subscriptions. If some private expenses were made tax deductible, it would create pressure for deductibility for a range of other private expenses. As a direct investment in public interest journalism, and as part of the reforms to Australia’s media laws, the Government has announced it will provide support to regional and small publishers through the $60 million Regional and Small Publishers Jobs and Innovations Package. This includes the $50 million Regional and Small Publishers Innovation Fund; the Regional and Small Publishers Cadetship Program, which will support 200 cadetships; and 60 regional journalism scholarships. These programs were opened in June 2018 by the Department of Communications and the Arts and the Australian Communications and Media Authority.   

R6: The committee recommends that the Australian Law Reform Commission conduct an audit of current laws that impact on journalists reporting on matters that touch on or focus on national security and border protection, to identify and analyse unjustifiably harsh or draconian laws, inconsistencies in the law and any lack of clarity in the law regulating the work of journalists in this context, and to consider whether further reform is needed to achieve an appropriate balance between the need to preserve national security and the need for journalists to be able to carry out their work in the public interest. 

The Government notes this recommendation. The Australian Law Reform Commission (ALRC) is only funded to undertake two inquiries concurrently, because it can only fund the President and one additional Commissioner position at any one time. Given that the ALRC is currently conducting two inquiries, being the Litigation Funding Inquiry (due to report by 31 December 2018) and the Review of the Family Law System (due to report by 31 March 2019), it has no capacity to embark on a third at least until 2019. However, the Future of Public Interest Journalism may be referred to the Attorney-General for consideration as a potential topic for a future inquiry.   

R7: The committee recommends that the Commonwealth work with state and territory jurisdictions through the Council of Australian Governments to complete a review of Australian defamation laws, and subsequently develop and implement any recommendations for harmonisation and reform, with a view to promoting appropriate balance between public interest journalism and protection of individuals from reputational harm. 

The Government notes this recommendation. Defamation law is regulated by states and territories, which agreed to a uniform national defamation law regime in January 2006 through the Standing Committee of the Attorney-General. The Government will bring this recommendation to the attention of states and territories and invite them to consider it.   

R8: The committee recommends that the Commonwealth look at ways to expand whistle-blower and shield law protections, and to harmonise those laws between the Commonwealth and state and territory jurisdictions, noting the work in this area already underway. 

The Government notes this recommendation. The Government currently has legislation before Parliament which will strengthen whistleblower protections - the Treasury Laws Amendment (Enhancing Whistleblower Protections) Bill 2017. The Bill enhances existing corporate sector whistleblower protections and creates a new tax whistleblower protection regime in the Taxation Administration Act 1953. The Parliamentary Joint Committee on Corporations and Financial Services tabled a report titled “Whistleblower protections” in September 2017. This report included a recommendation that “The Commonwealth, states and territories harmonise whistleblowing legislation across Australia.” The Government is considering the recommendations and will release its response to each of the Parliamentary Joint Committee report recommendations in due course.