Hayne Royal Commission findings

The introduction to the damning final report from the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry (aka Hayne Royal Commission) offers a view of systemic misbehaviour in the finance sector and deeply disquieting incapacity on the part of regulators.

Hayne comments

First, in almost every case, the conduct in issue was driven not only by the relevant entity’s pursuit of profit but also by individuals’ pursuit of gain, whether in the form of remuneration for the individual or profit for the individual’s business. Providing a service to customers was relegated to second place. Sales became all important. Those who dealt with customers became sellers. And the confusion of roles extended well beyond front line service staff. Advisers became sellers and sellers became advisers. 

The conduct identified and condemned in this Final Report and in the Interim Report can and should be examined by reference to how the person doing the relevant acts, or failing to do what should have been done, was rewarded for the conduct. 

Rewarding misconduct is wrong. Yet incentive, bonus and commission schemes throughout the financial services industry have measured sales and profit, but not compliance with the law and proper standards. Incentives have been offered, and rewards have been paid, regardless of whether the sale was made, or profit derived, in accordance with law. Rewards have been paid regardless of whether the person rewarded should have done what they did. 

Second, entities and individuals acted in the ways they did because they could. Entities set the terms on which they would deal, consumers often had little detailed knowledge or understanding of the transaction and consumers had next to no power to negotiate the terms. At most, a consumer could choose from an array of products offered by an entity, or by that entity and others, and the consumer was often not able to make a well informed choice between them. There was a marked imbalance of power and knowledge between those providing the product or service and those acquiring it. 

Third, consumers often dealt with a financial services entity through an intermediary. The client might assume that the person standing between the client and the entity that would provide a financial service or product acted for the client and in the client’s interests. But, in many cases, the intermediary is paid by, and may act in the interests of, the provider of the service or product. Or, if the intermediary does not act for the provider, the intermediary may act only in the interests of the intermediary. 

The interests of client, intermediary and provider of a product or service are not only different, they are opposed. An intermediary who seeks to ‘stand in more than one canoe’ cannot. Duty (to client) and (self) interest pull in opposite directions. 

Chapter 7 of the Corporations Act 2001 (Cth) (the Corporations Act), and the National Consumer Credit Protection Act 2009 (Cth) (the NCCP Act) (but not the Superannuation Industry (Supervision) Act 1993 (Cth) – the SIS Act), speak of ‘managing’ conflicts of interest. But experience shows that conflicts between duty and interest can seldom be managed; self interest will almost always trump duty. The evidence given to the Commission showed how those who were acting for a client too often resolved conflicts between duty to the client, and the interests of the entity, adviser or intermediary, in favour of the interests of the entity, adviser or intermediary and against the interests of the client. Those persons and entities obliged to pursue the best interests of clients or members too often sought to strike some compromise between the interests of clients or members and their own interests or the interests of a related third party (such as the person’s employer, or the entity’s owner). A ‘good enough’ outcome was pursued instead of the best interests of the relevant clients or members. (Notions of best interests and conflicts between duty and interest are further examined below in connection with mortgage brokers, financial advice and superannuation.) 

Fourth, too often, financial services entities that broke the law were not properly held to account. Misconduct will be deterred only if entities believe that misconduct will be detected, denounced and justly punished. Misconduct, especially misconduct that yields profit, is not deterred by requiring those who are found to have done wrong to do no more than pay compensation. And wrongdoing is not denounced by issuing a media release. 

The Australian community expects, and is entitled to expect, that if an entity breaks the law and causes damage to customers, it will compensate those affected customers. But the community also expects that financial services entities that break the law will be held to account. The community recognises, and the community expects its regulators to recognise, that these are two different steps: having a wrongdoer compensate those harmed is one thing; holding wrongdoers to account is another. 

Some may see what has emerged from the work of the Commission only through the lens of public accountability for what has happened. And public accountability is critically important. But it cannot be the only focus. It is necessary to look to the future as well as to the past. 

The responses and recommendations made in this Report will attract varied responses. Those who oppose change will appeal to real or supposed difficulty in altering present arrangements. Reference will be made to change bringing ‘unintended consequences’. That argument is easily made because it has no content; the ‘consequences’ feared are not identified. 

But choices must now be made. The arrangements of the past have allowed conduct of the kinds and extent described here and in the Interim Report of the Commission. The damage done by that conduct to individuals and to the overall health and reputation of the financial services industry has been large. Saying sorry and promising not to do it again has not prevented recurrence. The time has come to decide what is to be done in response to what has happened. The financial services industry is too important to the economy of the nation to allow what has happened in the past to continue or to happen again.

Who was responsible

 Primary responsibility There can be no doubt that the primary responsibility for misconduct in the financial services industry lies with the entities concerned and those who managed and controlled those entities: their boards and senior management. Nothing that is said in this Report should be understood as diminishing that responsibility. Everything that is said in this Report is to be understood in the light of that one undeniable fact: it is those who engaged in misconduct who are responsible for what they did and for the consequences that followed. Because it is the entities, their boards and senior executives who bear primary responsibility for what has happened, close attention must be given to their culture, their governance and their remuneration practices.

Hayne goes on to comment

Key questions 

In its written submission in response to the Interim Report, Treasury identified the key questions emerging from the Interim Report as:

• To what extent can the law be simplified so that its intent is met, rather than merely its terms being complied with, and how can this be done? 

• Should the approach to addressing conflicts of interest change from managing conflicts to removing them, either by banning all or some forms of conflicted remuneration and sales or profit based remuneration and/or changing industry structures? 

• What can be done to improve compliance with the law (and industry codes), and the effectiveness of the regulators, to deter misconduct and ensure that grave misconduct meets with proportionate consequences? 

Treasury submitted that a fourth key question should be added:

• What more can be done to achieve effective leadership, good governance and appropriate culture within financial services firms so that firms ‘obey the law, do not mislead or deceive, are fair, provide fit for purpose service with care and skill, and act in the best interests of their clients’?

Treasury submitted that answers to these four questions ‘would form the pillars of any comprehensive policy response to what the Commission has publicly exposed’.

I agree. These are the pillars of the policy responses to be made. And, as is explained in the body of the Report, some particular changes to the law are necessary to improve protections for consumers against misconduct, to provide adequate redress and to address asymmetries of power and information between entities and consumers.

Access and Secrecy

'Access to legal records by children leaving State care: The experience of young people in NSW' by Brooke Greenwood, Julia Mansour and Celia Winnett in (2019) Alternative Law Journal comments 

For those who have been in the care of the State as children, access to records can be critical to securing justice and redress for past wrongs. This article outlines the arguments made in recent litigation undertaken by the Public Interest Advocacy Centre (PIAC) on behalf of young people who requested access to legal audits conducted on their files by the New South Wales (NSW) Department of Family and Community Services (FACS). It documents the policy change that was achieved as a result of the litigation and makes recommendations for further reform to better realise the rights of children in care to access their records. 

The authors state

 For those who have experienced institutional care as children, access to records can be critical to securing justice and redress for past wrongs. The importance of such records has been thrown into sharp relief by a series of inquiries including, most recently, the Royal Commission into Institutional Responses to Child Sexual Abuse. These inquiries have also exposed the difficulties faced by young people and adults leaving care in accessing their records, both historically and under current State and Commonwealth schemes for the release of information. In 2017, the Public Interest Advocacy Centre (PIAC) represented a number of young people who had been refused access to records of legal advice sought in respect of their files by the NSW Department of Family and Community Services (FACS) during their time in State care. Julia Mansour and Brooke Greenwood of PIAC were the instructing solicitors in the lead proceeding brought in the NSW Civil and Administrative Tribunal (NCAT), with Celia Winnett of the NSW Bar acting as pro bono counsel. The cases raised the novel legal question of whether the State can rely on legal professional privilege to deny a person access to legal advice sought about that person’s rights and entitlements while a child in State care. In this respect, they raised an important children’s rights issue. 

The cases were ultimately settled by the release of the relevant information and, as a result, FACS has reviewed and changed its policy regarding reliance on legal professional privilege in such circumstances. Drawing from the written submissions filed in the proceeding, this article provides an overview of the legal arguments advanced by the authors on behalf of the young people, including the meaning of the word ‘client’ in the context of the privilege, the application of ‘joint’ or ‘common interest’ privilege, and waiver of privilege. While those arguments were closely tied to the legislative scheme for release of government information in NSW, similar issues may arise for care leavers across Australia seeking access to their records. The article concludes that, in PIAC’s view, to meet the obligations of the State to young people in care, a legal audit should be conducted for – and the results made available to – all young people leaving State care.

Schedule 2 of the National Security Legislation Amendment (Espionage and Foreign Interference) Act 2018 (Cth), now in effect, replaces sections 70 and 79 of the Crimes Act 1914 (Cth) in regarding disclosure of confidential information by Commonwealth officers. Section 70 criminalised unauthorised disclosure by current and former ‘Commonwealth officers’, including disclosure by contractors performing services for or on behalf of the Commonwealth, a Territory or a Commonwealth public authority. 

Part 5.6 (Secrecy of information) of the amended Criminal Code, effective 30 December last year, provides ‘general secrecy offences’ for the ‘communication of’ or ‘dealing with’ various types of information (including opinions) that results in harm or likely harm. 'Commonwealth officer' is defined as including APS employees, members of the Australian Defence Force, members of the Australian Federal Police; officers or employees of a Commonwealth authority; an individual who is a contracted service provider for a Commonwealth contract; and officers or employees of a contracted service provider that is providing services for the purposes of the Commonwealth contract. 

Offences in section 122.4A apply to people who are not Commonwealth officers in relation to information they communicate or deal with which was made or obtained by another person by reason of that other person being, or having been, a Commonwealth officer or otherwise engaged to perform work for a Commonwealth entity. 

Section 122.4A offences arise if the non-Commonwealth officer communicates or otherwise deals with information and (among other things) the information is security classified, or communication of it interferes with or prejudices enforcement of Commonwealth criminal law, or harms the health or safety of the Australian public. 

The notion of 'inherently harmful information' is problematical, as is reference to 'causing harm to Australia’s interests' or 'likely to cause harm to Australia’s interests' Section 122.3 provides for an aggravated offence, imposing additional imprisonment terms, for example if the commission involves a record marked 'for Australian eyes only'. 

Section 90.1 of the Criminal Code defines information to mean 'information of any kind, whether true or false and whether in a material form or not', including an opinion and a report of a conversation'. There is some reassurance through defences set out in section 122.5, for example that the information was already public or was communicated or otherwise dealt with

• by the person in the course of exercising a power or performing a function as a public official or a person who is otherwise engaged to perform work for a Commonwealth entity 
• in the course of communicating to an integrity agency (for example the Commonwealth Ombudsman,  the Inspector General of Intelligence and Security, Australian Commission for Law Enforcement Integrity) or the Australian Information Commissioner 
• for the purposes of communicating the information in accordance with the Public Interest Disclosure Act 2013 (Cth) or the Freedom of Information Act 1982 (Cth) 
•  in order to report a criminal offence 
•  for the purpose of communicating to a court or tribunal 
•  in order to obtain or give legal advice 
•  by a person engaging in a business reporting news who reasonably believed that communicating the information was in the public interest. 

 The penalties range from imprisonment for 2 years to 10 years for aggravated offences.

Nagoya

'An international approach to establishing a Competent Authority to manage and protect traditional knowledge' by Fiona Martin, Ann Cahill, Evana Wright and Natalie Stoianoff in (2019) Alternative Law Journal comments

This article discusses the establishment of a Competent Authority in accordance with the Nagoya Protocol to ensure that traditional knowledge of Indigenous communities is accessed subject to free, prior and informed consent and the fair and equitable sharing of benefits arising out of such use. It builds on research expressing the view that the design and development of a Competent Authority should take a grass roots approach. It analyses the authorities established in the Cook Islands and Vanuatu that include significant Indigenous voice and concludes with comments on the attributes of each system and its limitations. 

 The authors state

The purpose of the ‘Nagoya Protocol on Access to Genetic Resources and the Fair and Equitable Sharing of Benefits Arising from their Utilization to the Convention on Biological Diversity’ 2010 (the Nagoya Protocol) is to implement one of the three main objectives of the Convention on Biological Diversity 1992 (CBD). The Protocol focuses on the fair and equitable sharing of benefits arising from the utilisation of genetic resources. Article 13 of the Nagoya Protocol sets out criteria for the establishment of what is termed a ‘Competent Authority’. A Competent Authority is recommended by the United Nations to ensure that Indigenous communities are properly consulted and can provide free, prior and informed consent when their traditional knowledge is accessed and that they are able to take advantage of fair and equitable benefits when this occurs. 

This article provides insights into what is meant by a Competent Authority at the international level, and by two countries that have established competent authorities that are separate to their governments. It builds on the work of other researchers in this area, highlighting the fact that for a Competent Authority to function effectively its design, development and operation must incorporate participation from Indigenous Australians. The authors have examined the legislation of 69 different countries that have Indigenous populations and determined that 20 of these countries have legislation providing for a Competent Authority regulating access and benefit sharing in relation to traditional knowledge. On further examination of the legislation it has been found that only two countries out of the 20 – the Cook Islands and Vanuatu – have established Competent Authorities that are separate to government. The article examines the approaches taken in each of these countries and concludes with thoughts about the effectiveness of the Cook Islands and Vanuatu processes.

Misery

'Graduate Student Mental Health: Lessons from American Economics Departments' by Paul Barreira, Matthew Basilico and Valentin Bolotnyy􏰀 argues that "The prevalence of depression and anxiety symptoms among Economics PhD students is comparable to the prevalence found in incarcerated populations".

The authors state

We study the mental health of graduate students at Economics PhD programs in the U.S. Using clinically validated surveys, we 􏰂find that 18% of graduate students experience moderate or severe symptoms of depression and anxiety - more than three times the population average - and 11% report suicidal ideation in a two-week period. The average PhD student reports greater feelings of loneliness than does the average retired American. Only 26% of Economics students report feeling that their work is useful always or most of the time, compared with 70% of Economics faculty and 63% of the working age population. Depression and symptoms of anxiety increase with time in the program: 25% of students in years 5+ of their programs experience moderate or severe symptoms of depression or anxiety compared with 14.5% of 􏰂1st-year students. Many students with signi􏰂cant symptoms of mental distress are not in treatment. We provide recommendations for students and faculty on ways to improve student work conditions, productivity, and mental health. 

The paper comments

The objectives of the study were to (1) understand the prevalence and severity of mental health issues in Economics PhD programs; (2) understand what students are thinking, feeling, and experiencing during their programs; (3) understand how the thoughts, feelings, and experiences are related to student mental health; and (4) make recommendations on steps programs can take to improve student mental health. The 8 programs participating in the study were: Columbia University, Harvard University, University of Michigan, Massachusetts Institute of Technology (MIT), Princeton University, UC Berkeley, UC San Diego, and Yale University. Below, we summarize our main 􏰂ndings for each objective. 

1.1 Prevalence and Severity of Mental Health Issues 

• About 18% of students are experiencing moderate to severe symptoms of depression and anxiety. The comparable national rate for depression is 5.6% and 3.4-3.6% for those aged 25-34 (Kocalevent et al. (2013)). A study of the German population found the comparable national rate for anxiety to be 5% (Lowe et al. (2008)). 

• 11% of students (56 people) reported having suicidal thoughts on at least several days within the last two weeks. 

• 25% of students have at some point in their lives been diagnosed with a mental health issue by a professional. 13% were diagnosed before starting the PhD program, 12% were diagnosed after. 

• Of those experiencing moderate to severe symptoms of depression, only 27% are currently receiving treatment for depression. 21% of those experiencing moderate to severe symptoms of anxiety are receiving treatment for anxiety, and only 27% of those who have contemplated suicide in the last 2 weeks are receiving any form of mental health treatment. 

• The prevalence of depression and anxiety symptoms among Economics PhD students is comparable to the prevalence found in incarcerated populations. 

• Loneliness and isolation are major issues. The average Economics PhD student feels considerably lonelier and more isolated than a retired American. 

• Women and international students have a higher prevalence of mental health issues than men and U.S. students, respectively. 

• The majority of those who are currently receiving mental health treatment are not experiencing moderate or severe symptoms of anxiety or depression. In other words, contrary to social stigma, seeing a mental health professional is not the same thing as having poor mental health. Many of those who seek help are doing better than those who do not. 

• Although students generally have a good understanding of whether their own mental health is good or poor, they overestimate how well they are doing relative to other students. For example, of those who reported suicidal thoughts in the last two weeks, 26% thought their mental health was better than average.

1.2 Student Experiences in Their Programs

• Economics students have biggest regrets about how they organize their time and how they engage with their studies. This is in contrast to natural science PhD students, whose biggest regrets are their area of study and their advisers. 

• Only 26% of Economics students report feeling like their work is useful always or most of the time, compared to 70% of Economics faculty and 63% of the entire working age population. Only 19% of Economics students feel that they have opportunities to make a positive impact on their community or society compared to 58% of faculty and 53% of the population. 

• 62% of students worry always or most of the time about work when not working, compared to 60% of faculty members. 20.5% of students 􏰂find themselves too tired for activities in private life always or most of the time, compared to 23% of faculty. 

• 13% of students said they seriously contemplated quitting the PhD program once in the past 2 weeks, with an additional 9.5% considering doing so over two or more days. 

• While 96% of students say they met with their main adviser at least once in the last 2 months, students report fear of making a bad impression, doubt about the quality of their thoughts and ideas, and lack of progress since the previous meeting as the biggest impediments to meeting with advisers more frequently. 

• Many students report being unable to be honest and open with their advisers about the di􏰄culties they are experiencing. Ordered by the gap between desired honesty and actual honesty, from largest to smallest, the top 5 issues are: (1) non-academic career options, (2) preparing for the job market, (3) research progress, (4) issues with other advisers, (5) issues arising from co-authorship with the faculty member. 

• Few students feel comfortable raising their hand in a seminar setting. Only 19% of women would be comfortable doing so, compared to 35% of men. No gap exists between U.S. and international students. 

• There is a lack of options for students when they are experiencing an issue with advising. Only 42% say they would know where to turn for help with advising if an issue arose. 

• 16% of students have experienced some form of sexual harassment in their department since becoming a PhD student. 

• 21.5% of women have experienced sexual harassment compared to 13% of men; 21% of U.S. students, compared to 11% of international students. 

• 62.5% of the instances of sexual harassment were perpetrated by another graduate student, while 19% came from a professor. 

1.3 Mental Health and Student Experiences 

• Older cohorts have worse mental health than younger cohorts. 14.5% of the 􏰂1st-year students are experiencing moderate to severe symptoms of depression and anxiety, compared to 25% of those who are in years 5+ in their program. Similarly, 7% of the 􏰂1st-year students report contemplating suicide in the last 2 weeks, compared to 13% of those in years 5+. 

• 27% of those who said they regret doing the PhD and 20% of those who regret their choice of advisers report contemplating suicide in the last 2 weeks. In contrast, those who wish they had engaged more with their studies and organized time more e􏰁ectively have substantially lower rates of suicidal ideation (11%). 7% of students who said they have no regrets about graduate school contemplated suicide in the last 2 weeks. 

• Students who perceive their peers as competitive, who do not have very good friends in the department, and who in general do not have many people with whom they can openly discuss their private feelings without having to hold back have worse mental health. 

• The size of one's problem set group in the 􏰂1st year and whether or not a student co- authors with other students or faculty are not correlated with our measures of depression or anxiety. Students who have larger study groups and who do co-author are, though, less likely to feel lonely and isolated. 

• Mental health issues do not appear to be a􏰁ecting students with di􏰁erent values in life di􏰁erently. In particular, students who believe that tenure at an academic institution is very important for their success in life are not more or less likely to have mental health issues than students who believe that income or recognition or a family are very important for success in life. 

• Having sources of meaning and usefulness appears to be crucial to mental health. Those who have goals to aspire to, feelings of doing useful work, sense of accomplishment, and opportunities to make a positive impact on their surroundings have better mental health than those who do not. At the same time, when work fatigue and worries negatively a􏰁ect activities in private life, mental health is worse as well. 

• Those with worse mental health also have worse performance. They are less likely to voice a thought in a seminar, slightly more likely to have worse 􏰂1st-year grades, and substantially more likely to be seriously contemplating leaving the program. They are also more pessimistic about how well they have done and will do in their courses, teaching, presentations, and research. 

• Students who talk to faculty that care about their success and care about them as a person have better mental health than students who do not. 

• The frequency with which students meet with their main adviser or with faculty more broadly is not correlated with mental health. 

• Students who say they avoid meetings with faculty because those meetings are unpleasant have worse mental health than students who do not feel that meetings are unpleasant. Students for whom fear of the consequences of a bad impression, or doubt about the quality of their work, or lack of progress since the previous meeting are viewed as big impediments to talking to faculty also have worse mental health than those students who do not have such impediments. 

• While students who cannot honestly and openly discuss mental health with their adviser have worse mental health, it is also true that students who cannot openly discuss problems with presentations, teaching, research progress, preparing for the job market, considering non-academic jobs, etc. also have worse mental health. 

• Whether a student went straight through from his or her undergraduate program into graduate school or whether a student took many or few math courses before graduate school has no bearing on that student's mental health. 

• A student's level of engagement with social media, measured in the number of times he or she checks Facebook per day, is also unrelated to mental health. 

1.4 Recommendations for Improvement 

• Encourage students to take on research or activities that provide a sense of meaning and usefulness to them in the short term. Help students hedge against failure. 

• Provide continuous engagement, making clear to students that someone cares about their success in the program. 

• Measure success in di􏰁erent ways to lessen feelings of job insecurity. Support students in preparing the best possible job market paper and dissertation regardless of the students' ambitions or career preferences. 

• Communicate with students clearly and frequently. 

• Encourage and empower student initiatives to improve work conditions and collegiality. 

• Make the coursework years as useful and relevant to the research years as possible. 

• Destigmatize conversations about failures, big and small. Destigmatize getting help. 

• Create a channel through which faculty can receive constructive feedback on advising. Encourage students and advisers to have conversations about the kind of advising relationship they would like to have. 

• If sensing that a student is having trouble, be patient, supportive, and empathetic. Follow up with the student to show you care and to ensure that the student is getting the support he or she needs. Know what resources are out there and help the student access them. 

• Discuss failure with advisees early on and commit to being their supportive adviser fi􏰂rst and their evaluator second. 

• Use the data in this study to encourage students to access mental health resources. Partner with your university's counseling center to educate students and faculty and to publicize clinical services. Let students know that their mental health and wellbeing is a priority for you and should be a priority for them.

SA report on Surrogacy Law Reform

The South Australian Law Reform Institute's   Surrogacy: A Legislative Framework A review of Part 2B of the Family Relationships Act 1975 (SA) report states that the Institute was asked on 26 December 2017 to inquire into and report on certain aspects of the present law regulating surrogacy in South Australia, contained in Part 2B of the Family Relationships Act 1975 (SA), and to suggest a suitable regulatory framework for surrogacy for South Australia.

The terms of reference were

 1. To review Part 2B of the Family Relationships Act 1975 (SA), in particular the changes brought about by the Family Relationships (Surrogacy) Amendment Act 2015 (SA) (the ‘2015 Act’) and proposed by the Family Relationships (Surrogacy) Amendment Bill 2017 (SA) (the ‘2017 Bill’). 

2. To consult with relevant experts, and other interested parties as considered suitable by the Institute, and to consider best practice from other jurisdictions in relation to the regulation of surrogacy arrangements. 

3. To make recommendations on best practice and legislative changes as a result of the investigations. 

4. To be guided by the principle that surrogacy arrangements are private arrangements between individuals with the State setting the parameters of what must and must not be agreed to, rather than taking a direct and ongoing role in the establishment and maintenance of individual arrangements. 

5. To consider the impact of the decision of 1 September 2017 of the Full Court of the Family Court of Australia in Bernieres v Dhopal (2017) 324 FLR 21; and make recommendations in respect of the issues identified in the decision if so necessary.

The report states

The option of a regulated system of commercial surrogacy favoured by some parties in consultation was not within SALRI’s terms of reference. Equally the option of banning or precluding any form of surrogacy favoured by some parties in consultation was not within SALRI’s terms of reference. The rationale of the present law throughout Australia is to allow or facilitate lawful surrogacy within Australia and deter or discourage recourse to unlawful surrogacy within both Australia and overseas, especially offshore commercial surrogacy (though how effective the present law has proved in this regard is open to debate). SALRI notes and adopts the explanation of the Hon John Dawkins MLC in introducing the 2015 Act to the South Australian Parliament as an accurate rationale of the current law: the [aim of the] current law in South Australia is to secure the welfare of children born through surrogacy, to try to make accessibility of surrogacy arrangements in this jurisdiction wider, to limit overseas use of the commercial surrogacy process, and to ensure that commercial surrogacy remains banned in South Australia. ... 

. Surrogacy is a complex and sensitive subject that raises many ethical, legal and other issues and implications. It is a topic that attracts strong and often conflicting views. Much of the research into the effects of surrogacy is both incomplete and conflicting and the long-term effects of surrogacy on the parties are still not fully known. SALRI acknowledges the sincerity of the many and often conflicting views that it has received in this reference. SALRI has had careful regard to all the views it received in consultation, but it is ultimately impossible to reconcile these views. SALRI reiterates that both options of a commercial system of regulated surrogacy and banning or precluding any form of surrogacy in South Australia are not within its terms of reference. SALRI also notes that the result of both its consultation and research supports an intermediate approach within these two polarised views as the most appropriate way forward. SALRI does not support either a system of regulated commercial surrogacy in South Australia in light of the well-documented concerns that commercial surrogacy gives rise to. Nor does SALRI support seeking to preclude or ban surrogacy in South Australia. Any such option is both inappropriate and unrealistic. SALRI notes that the complexities and national and international implications of surrogacy are such that the preferable solution to this issue is a national and uniform scheme co-ordinated between the States and Territories and the Commonwealth and the referral of State power to the Commonwealth. This option has been supported by the Chief Magistrate, Judge Eldridge of the Youth Court of South Australia and Chief Justice Pascoe of Family Court (speaking in a personal capacity). However, this is likely to prove a long-term process and in the interim it is crucial that the State regulatory framework for surrogacy is as effective as possible. 

SALRI supports a suitable regulatory framework for South Australia that maintains the (admittedly often tenuous) distinction between commercial and noncommercial surrogacy and clarifies and improves the current system to most appropriately allow and facilitate lawful domestic surrogacy within Australia for South Australians but discourages and deters recourse to unlawful surrogacy, especially offshore commercial surrogacy. It is unrealistic, in light of the diversity of modern families and the dramatic advances in reproductive technology, to expect that the law can cover every conceivable surrogacy situation that might arise. Nevertheless, SALRI considers that the framework which it has recommended is the most effective and appropriate to recognise and respect the interests of all parties, but crucially to protect the best interests of a child born as a result of surrogacy. This must always be the primary or paramount factor of any scheme.

 SALRI’s findings include:

1. The value of a uniform national framework for surrogacy and the potential future referral as part of such a scheme of the State’s role with respect to surrogacy to the Commonwealth. 

2. The Family Court is the preferable court to deal with surrogacy (both domestic and international) given its specialised role, expertise and processes. 

3. The need for South Australia to have the most appropriate framework possible for a noncommercial system of surrogacy, whilst working towards national consistency (given that any national surrogacy framework will be a long-term process). 

4. The benefit, for clarity and accessibility, of a standalone Surrogacy Act. 

5. The current distinction between commercial and non-commercial surrogacy be retained and commercial surrogacy should remain prohibited in South Australia. 

6. Any surrogacy framework must recognise the human rights and interests of all parties, namely the child, surrogate mother and the intending parents, but the best interests of the child (including the child’s right to know their full history and family) is the primary or paramount factor. This should apply throughout the process at both the pre-birth and post-birth stages. 

7. Any court order to transfer the parentage of a surrogate child to the intending parents should be based on the child’s best interests. 

8. Given the complexities in this area and emerging research and international developments, there should be a statutory review of the operation of any new Surrogacy Act five years after commencement. 

9. The Surrogate Register, the State Framework and the Attorney-General’s role with respect to surrogacy set out in the 2015 Act are well-intentioned but impractical and should be removed. 

10. The existing offences against commercial surrogacy should be clarified to focus on commercial introduction or brokerage or commercial adverting but allow social online advertising and discussion so as not to impede the potential parties to a surrogacy arrangement getting in touch. 

11. A specific extraterritorial application in respect of commercial surrogacy offences as exists in New South Wales, the Australian Capital Territory and Queensland is ineffective and inappropriate and should not be adopted. 

12. The benefit of a website from the Commonwealth and/or State to provide comprehensive, reliable and impartial advice to the parties about surrogacy and its various implications. 

13. Any new Surrogacy Act should contain various general principles to apply throughout the process at both the pre-birth and post-births stages. These general principles are designed to protect the interests of all parties but, above all, protect the best interests of the child. These general principles include protecting all parties from exploitation, the need for an early focus under any regulatory framework at the outset of the process and before any fertility treatment and certainly before the child is born and the entitlement of the surrogate mother to manage and maintain her own medical autonomy and that, as far as practicable, surrogacy arrangements should be a private matter between the parties without State involvement. 

14. All parties to a lawful surrogacy arrangement (as well as the partner of the surrogate mother, if any) should have access to appropriate, high quality, specialist and independent counselling services prior to a lawful surrogacy arrangement (and the option to seek counselling during and after any arrangement). The role of this counsellor, an ‘Accredited Independent Counsellor’, includes assessing or screening the suitability of the parties (the surrogate mother, her partner and the intending parents) to enter into a lawful surrogacy arrangement and the counsellor must certify they have covered certain important areas with the party(s) as part of their role. This counsellor cannot be employed by a fertility provider. 

15. Any surrogacy framework should be governed by public health principles of best practice and linked to the NHMRC ART Guidelines. 

16. The surrogate mother and the intending parties must obtain appropriate, high quality and independent legal advice prior to entering into a lawful surrogacy arrangement and the lawyer, as part of such advice, must certify they have covered certain important areas with their client. 

17. The surrogacy agreement must be signed and in writing and the part relating to costs should be legally enforceable. 

18. Mediation is to be strongly encouraged for the parties to resolve any dispute, but it is not mandatory. 

19. The threshold criteria to proceed with a lawful surrogacy agreement are that the intending parents are ordinarily resident in South Australia, the surrogate mother and the intending parents are 25 years or over, the intending parents are effectively infertile, and the surrogate mother is an Australian citizen or permanent resident. 

20. There should be the full and frank exchange of information between the parties to a lawful surrogacy agreement (that is the surrogate mother, her partner (if any) and the intending parents) and with the Accredited Independent Counsellor(s), prior to a surrogacy agreement being entered into so that all parties can properly assess whether or not to enter such an agreement and/or the agreement is appropriate and will be in the best interests of the child. As part of this process, each party should (if possible) obtain and provide to the other parties and the Accredited Independent Counsellor(s) either a Working with Children Check (though SALRI notes there may well be difficulties at this stage with such a requirement) or a national criminal history check. 

21. The present restriction on single persons accessing lawful surrogacy is unsound and should be removed. 

22. The concept of a ‘team baby’ (where there is no genetic link between the intending parents and the child) raises sensitivities (especially where the surrogate mother proposes to provide her own ovum) but the present approach in South Australia should be retained to permit such arrangements if the intending parent(s) are effectively infertile and the arrangement is approved by the Accredited Independent Counsellor. 

23. A flexible and realistic approach to jurisdiction within Australia is necessary to recognise the interstate aspects of surrogacy whilst discouraging forum shopping. Part of this is a mutual recognition scheme to comparable surrogacy processes to South Australia within Australia. 

24. The child’s right to know his or her full family and birth history is, consistent with ART and donor conception, vital and changes to law and practice are appropriate so that a child is entitled to access such information at age 16 and that a neutral indication on the birth certificate will alert the holder that there is private material behind the public record to which they are entitled. 

25. In relation to the allowable costs of a surrogate mother, greater clarity and content to the present law is necessary. The guiding principles should be that no valuable consideration should be provided for the act of becoming (or trying to become) pregnant and carrying a child for another person, a surrogate mother should not be financially disadvantaged as a result of taking part in a surrogacy arrangement and should be able to recover any costs actually incurred as a direct result. 

26. The surrogate mother should remain the legal parent of the child unless, and until, legal parentage is transferred by an order from a court of competent jurisdiction to the intending parents. 

27. Two incidental aspects in relation to paternity should be referred to the Commonwealth or recognised at a State level to diminish needless complexity and duplication. 

28. It is inappropriate for reasons of both policy and practice for a State to seek to resolve the ‘gap’ to recognise parentage from international surrogacy arising from Full Court of the Family  Court of Australia’s decision in Bernieres v Dhopal (2017) 324 FLR 21. This is an issue to be resolved at a national level. 29. SALRI proposes to complete a short spin off report into various consequential civil law issues and implications raised in a surrogacy context. Such a Report need not delay any new Surrogacy Act as any recommendations will relate to other Acts. ...

The specific recommendations are -

PART 3 - TERMINOLOGY 

Recommendation 1 SALRI recommends that any legislative reform to accompany a new surrogacy framework should use the opportunity to move towards national consistency and, as part of this process, that problematic terms such as ‘commissioning parent’ (to be replaced with ‘intending parent’) and, as far as practicable, the term ‘altruistic’, should be replaced or avoided. 

PART 4 – STATE VS NATIONAL 

Recommendation 2 SALRI recommends that, in light of the likely delay of uniform (or at least consistent) national laws being developed, South Australia should, as far as practicable, revise its laws in relation to surrogacy until national laws are formulated, to ensure the State’s laws are as effective as possible. 

Recommendation 3 SALRI recommends that South Australia, along with other States and Territories, resume efforts towards a national consensus on this issue and to formulate a national uniform scheme as a matter of the highest priority. 

Recommendation 4 SALRI recommends that, where necessary to give effect to Recommendation 3 above, South Australia should refer the jurisdiction of its powers in respect of surrogacy to the Commonwealth and allow the Family Court to exercise jurisdiction in respect of all aspects of surrogacy at its earliest opportunity. 

PART 5 – THE NEED FOR A STANDALONE SURROGACY ACT 

Recommendation 5 SALRI recommends that, for ease of reference and application and accessibility, the current scheme for surrogacy contained in Part 2B of the Family Relationships Act 1975 (SA) be excised and replaced with a standalone Surrogacy Act for South Australia. 

Recommendation 6 SALRI recommends that any new Surrogacy Act should draw on Part 2B of the Family Relationships Act 1975 (SA) and the Family Relationships (Surrogacy) Amendment Bill 2017, notably as to the provisions set out in Part 5 of this Report. To this end, SALRI suggests that any new Surrogacy Act should be subject to the further recommendations set out below, namely recommendations 8, 9, 10, 11, 12, 13, 14, 15, 16, 20, 21, 22, 23, 24, 26, 27, 28, 29, 30, 31, 32, 39, 40, 41, 43, 44, 45, 46, 47, 48, 51, 52, 53, 54, 56, 57, 59, 60, 61, 62, 63, 64, 65, 66 and 69. 

PART 6 – COMMERCIAL SURROGACY AND ITS IMPLICATIONS 

Recommendation 7 SALRI recommends that the practice of commercial surrogacy should remain illegal in South Australia, but that domestic, non-commercial surrogacy agreements should be permissible in certain specified circumstances. 

PART 7 – HUMAN RIGHTS IMPLICATIONS 

Recommendation 8 SALRI recommends that, under any Surrogacy Act and surrogacy framework, the interests and human rights of all parties, namely the child born as a result of surrogacy, the surrogate mother and her partner and the intending parents must be recognised and respected, but confirms that the primary or paramount consideration, both before and after birth, should be the best interests of the child. 

Recommendation 9 SALRI recommends that any Surrogacy Act should provide that the court must be satisfied that the making of any parentage order in respect of a child born as a result of surrogacy is in the best interests of the child and this should be a necessary precondition to the making of a parentage order. 

Recommendation 10 SALRI recommends that there is a review of the operation and effectiveness of any new Surrogacy Act five years after its commencement, given the complexities and rapid advances in the area of surrogacy (both research wise and internationally). 

PART 9 – SPECIFIC LAW REFORM ISSUES 

Recommendation 11 SALRI recommends that any new Surrogacy Act should contain the following statutory guiding principles to apply in any decision in relation to surrogacy, at both a pre-birth and post-birth stage: 1. That the best interests of the child are paramount and should be protected (including the child’s safety and well-being and the child’s right to know about their family and origins). 2. That the surrogate mother is able to make a free and informed decision about whether to act as a surrogate. 3. That sufficient regulatory protections are in place to protect the surrogate mother and the intending parents from exploitation. 4. That there is legal clarity about the parent-child relationships that result from the arrangement. 5. The intervention of the law and the State in people’s private lives, with regards to surrogacy, should be kept to a minimum. 6. Any model should ensure that, at the outset, all parties are fully aware of their rights and responsibilities (particularly in relation to the child) and such a model should seek to avoid and resolve any legal dispute (if arising) between the parties. 8 7. That the surrogate mother has the same rights to manage her pregnancy and birth as any other pregnant woman. 

PART 10 – HOW ACTIVE SHOULD THE STATE BE? 

Recommendation 12 SALRI recommends that the current role of the State Attorney-General introduced by the Family Relationships (Surrogacy) Amendment Act 2015 (SA) with respect to surrogacy (including both the Framework and to approve individual surrogacy agreements (including international surrogacy agreements)) is inappropriate and should be removed. 

Recommendation 13 SALRI recommends that the Framework introduced by the Family Relationships (Surrogacy) Amendment Act 2015 (SA) with respect to surrogacy be removed. 

Recommendation 14 SALRI recommends that the State Register of potential surrogate mothers introduced by the Family Relationships (Surrogacy) Amendment Act 2015 (SA) be removed. 

PART 11 – CONNECTING SURROGATES AND INTENDING PARENTS 

Recommendation 15 SALRI recommends that the present law should be clarified to provide that any offence covering the act of commercial surrogacy itself should include offering, encouraging, inducing or assisting such an act. This would capture commercial introduction and brokerage and commercial advertising, but not frustrate communication and negotiation between the parties in a non-commercial aspect, which is essential. 

Recommendation 16 SALRI recommends that the Surrogacy Act (or relevant Act) should include an offence that ‘a person must not publish any advertisement, statement, notice or other material that seeks to introduce people for a reward or other inducement with the intention that those people might enter into a surrogacy arrangement (whether non-commercial or commercial)’. 

PART 12 – EXTRATERRITORIAL OFFENCE 

Recommendation 17 SALRI recommends that, in light of their ineffectual nature, the extraterritorial offences relating to commercial surrogacy as exist in the Australian Capital Territory, New South Wales and Queensland should not be introduced in South Australia. 

PART 13 – AVAILABILITY OF SURROGACY-RELATED RESOURCES AND INFORMATION 

Recommendation 18 SALRI recommends that a website should be developed which provides advice and information for Australians considering domestic surrogacy and should include: 1. Clear advice on the role of Commonwealth Government support and service provision for intending parents, surrogates and children including Medicare, social security and welfare payments, child support and paid parental leave; 2. Clear advice on the surrogacy legislation in each Australian State and Territory; 3. Clear advice on the support and services funded and provided for by each Australian State and Territory including relevant health, counselling and legal services available; and 4. Best practice guidelines and other information for health care providers including hospitals, obstetricians, paediatric care, employers and others dealing with surrogates. In this context, SALRI encourages the Commonwealth to implement Recommendation 6 of the House of Representatives Standing Committee on Social Policy and Legal Affairs, Parliament of Australia, Inquiry into the Regulatory and Legislative Aspects of International and Domestic Surrogacy Arrangements (2016) for the Commonwealth Government to develop such a website. 

Recommendation 19 In the event that the Commonwealth does not set up such a website, in the alternative, or in addition to Recommendation 18 above, SALRI recommends that an appropriate agency or agencies in South Australia such as SA Health or the Legal Services Commission prepares a suitable page on their own site to provide reliable and impartial information. 

PART 14 – THRESHOLD ISSUES 

Recommendation 20 SALRI recommends that any Surrogacy Act should confirm that a surrogacy arrangement should not proceed or be undertaken in South Australia unless, and until, the parties have in place a legal agreement that satisfies the relevant legislative requirements such as legal and counselling advice. 

Recommendation 21 SALRI recommends that the current concept of infertility to access lawful surrogacy in South Australia should be retained but that, to clarify and update the relevant terminology, the present definition of infertility in s 10HA(2a)(e) of the Family Relationships Act 1975 (SA) should be removed and replaced in the new Surrogacy Act or other relevant Act with the following definition of medical or social need to access lawful surrogacy based on s 30(2) the Surrogacy Act 2010 (NSW): ‘(2) There is a medical or social need for a surrogacy arrangement if: (a) there is only one intended parent under the surrogacy arrangement and the intended parent is a man or an eligible woman, or (b) there are 2 intended parents under the surrogacy arrangement and the intended parents are: (i) a man and an eligible woman, or 10 (ii) 2 men, or (iii) 2 eligible women. (3) An eligible woman is a woman who: (a) is unable to conceive a child on medical grounds, or (b) is likely to be unable, on medical grounds, to carry a pregnancy or to give birth, or (c) is unlikely to survive a pregnancy or birth, or is likely to have her health significantly affected by a pregnancy or birth, or (d) if she were to conceive a child: (i) is likely to conceive a child affected by a genetic condition or disorder, the cause of which is attributable to the woman, or (ii) is likely to conceive a child who is unlikely to survive the pregnancy or birth, or whose health would be significantly affected by the pregnancy or birth.’ 

Recommendation 22 SALRI recommends that all references to ‘husband’ and their accompanying definitions in Part 2B of the Family Relationships Act 1975 (SA) should be removed and replaced in any new Surrogacy Act with ‘spouse’ to be more inclusive of surrogate mothers and intending parents in same-sex relationships. 

Recommendation 23 SALRI recommends that any Surrogacy Act should provide that a surrogate mother must be at least 25 years of age in order to be a party to a lawful surrogacy agreement in South Australia, unless the Accredited Independent Counsellor, as part of the counselling (and screening) process, is satisfied that there are exceptional circumstances to support a woman under the age of 25 years acting as a surrogate mother. 

Recommendation 24 SALRI recommends that any Surrogacy Act should provide that the intending parents must be at least 25 years of age in order to be a party to a lawful surrogacy agreement in South Australia, unless the Accredited Independent Counsellor, as part of the counselling (and screening) process, is satisfied that there are exceptional circumstances to support a person under the age of 25 years acting as an intending parent. 

Recommendation 25 SALRI recommends that there should be no legislative requirement for a surrogate mother to have previously carried a pregnancy and given birth to a live child in order to access a lawful surrogacy agreement in South Australia, on the basis that this consideration should be addressed as part of the counselling (and screening) process. 

PART 15 – SINGLES ACCESS TO SURROGACY 

Recommendation 26 SALRI recommends that the current prohibition in South Australia on single people accessing surrogacy is discriminatory and inappropriate and should be repealed. 

PART 16 – TEAM BABY 

Recommendation 27 SALRI recommends that any Surrogacy Act should clarify the present law regarding surrogacy arrangements involving a child with no genetic link to either of the intending parents, namely that the intending parents can enter into a lawful surrogacy agreement in South Australia but only if a medical practitioner is satisfied that both of the intending parents appear to be infertile or there is medical reason why it would be preferable not to use such human reproductive material to achieve the pregnancy. However, this aspect of the law should be reviewed in five years (or five years after commencement for any new Surrogacy Act) as further research is available about the development and implications of donor-conceived individuals in adolescence and adulthood. 

PART 17 - JURISDICTION 

Recommendation 28 SALRI recommends that South Australian law should recognise surrogacy related processes that occur in analogous and comparable Australian jurisdictions which contain key features and safeguards of the South Australian legislative regime. 

Recommendation 29 SALRI recommends that any Surrogacy Act should provide that, for a lawful surrogacy arrangement in South Australia to be legally recognised, the intending parent(s) must ordinarily reside in South Australia prior to the agreement being entered into. SALRI recommends that where the surrogate mother resides and where the fertility treatment occurs should be irrelevant to any such agreement. 

Recommendation 30 SALRI recommends that any Surrogacy Act should provide that the surrogate mother and an intending parent/s must be either an Australian citizen or an Australian permanent resident to be eligible to access a lawful surrogacy agreement in South Australia. 

Recommendation 31 SALRI recommends that any Surrogacy Act (or other relevant Act) should allow the mutual recognition of interstate surrogacy orders. 

PART 18 – RISK ASSESSMENT 

Recommendation 32 SALRI recommends that any Surrogacy Act should require the full and frank exchange of information between the parties to a lawful surrogacy agreement (that is the surrogate mother, her partner (if any) and the intending parents) and the Accredited Independent Counsellor(s), prior to a surrogacy agreement being entered into so that all parties can properly assess whether or not to enter such an agreement and/or the agreement is appropriate and will be in the best interests of the child. Included in the information exchanged should be any information that will enable the other parties to the lawful surrogacy agreement, and the Accredited Independent Counsellor(s), to consider whether or not a party might pose a risk to the child or another party. As part of this process, each party should (if possible) obtain and provide to the other parties and the Accredited Independent Counsellor(s) either a Working with Children Check (though SALRI notes there may well be difficulties at this stage with such a requirement) or a National Criminal History Check. Any check must be obtained prior to accessing any surrogacy related fertility procedure AND prior to entering into a surrogacy agreement. The parties should be advised of this requirement as part of their independent legal advice obtained in the process of receiving their lawyer’s certificate. 

PART 19 – HEALTH BEST PRACTICE 

Recommendation 33 The regulatory framework governing surrogacy arrangements in South Australia should be consistent with a public health approach and with the public health principles set out in sections 5 to 16 of the Public Health Act 2011 (SA). 

Recommendation 34 SALRI recommends that information about Chapter 8 of the National Health and Medical Research Council’s Ethical Guidelines on the Use of Assisted Reproductive Technology in Clinical Practice and Research should be accessible to all potential parties to surrogacy agreements and be provided as a matter of course to all clients of registered fertility clinics considering surrogacy as an option. 

Recommendation 35 SALRI recommends that the relevant Chapters of the National Health and Medical Research Council’s Ethical Guidelines on the Use of Assisted Reproductive Technology in Clinical Practice and Research should be subject to public consultation and review on a regular basis, in addition to the existing processes for expert review by the NHMRC and its relevant committees. 

Recommendation 36 SALRI recommends that practical information and guidance (for example in the form of Fact Sheets or Guidelines) should be developed by SA Health in consultation with surrogate mothers, intending parents, relevant South Australian hospitals, maternal health service providers, fertility providers, counsellors and obstetricians on how to provide high quality and sensitive care to surrogate mothers and intending parents in the context of a lawful surrogacy agreement. 

Recommendation 37 SALRI recommends that fertility clinics should provide potential parties to a lawful surrogacy arrangement with information about the circumstances in which fertility treatment will be provided to either the surrogate mother or the intending parent/s prior to and during the surrogacy arrangement. This would allow parties to a lawful surrogacy arrangement to consider including, in the surrogacy arrangement, an undertaking by the intending parent/s not to continue to receive fertility treatment once a viable pregnancy has been achieved by a surrogate mother in accordance with the surrogacy arrangement. 

PART 20 – COUNSELLING 

Recommendation 38 SALRI recommends that all parties to a lawful surrogacy arrangement (as well as the partner of the surrogate mother, if any) should have access to appropriate, high quality and specialist counselling services by an Accredited Counsellor as required prior to, during and following a lawful surrogacy arrangement. 

Recommendation 39 SALRI recommends that any Surrogacy Act should provide that all parties to a South Australian lawful surrogacy arrangement (as well as the partner of the surrogate mother, if any) must obtain a counselling certificate (which includes screening as to the suitability of the parties to enter into a surrogacy agreement) by an Accredited Independent Counsellor prior to any lawful surrogacy arrangement or related fertility treatment. 

Recommendation 40 SALRI recommends that, to give effect to Recommendation 39, the Surrogacy Act (or elsewhere) should include the following legislative changes to improve the present counselling (and screening) process: 1. Retaining the current requirements in s 10HA of the Family Relationships Act 1975 (SA) for all parties to the surrogate agreement, and the surrogate mother’s partner, to obtain counselling prior to the lawful surrogacy agreement by an Accredited Independent Counsellor. 2. Amending s 10HA(3)(ab) to require each person referred to in s 10HA(2a)(g) to receive independent counselling, whether provided by the same counsellor or not. 3. Amending s 10HA(3)(b)(i) to require a counselling certificate to be issued by an Accredited Independent Counsellor which states that the person to whom it relates has received counselling about the full range of relevant matters which includes: i. The potential long-term psychosocial implications for each individual and each family involved, including the surrogate child and any other child/ren within the family unit(s) who may be affected by that birth. ii. The reason(s) why the potential surrogate mother wants to become involved in a surrogacy agreement. iii. The need for the surrogate mother’s free, voluntary and informed agreement to enter into a lawful surrogacy agreement. iv. The surrogate mother’s right to make informed decisions about their own medical care, including before and during the pregnancy and birth. v. The possibility that the surrogate mother may need medical and/or psychological assistance during any attempts to become pregnant, during the pregnancy and following the birth and that the pregnancy may affect the surrogate mother’s own health. vi. The potential significance of the gestational connection and the right of a child born as a result of surrogacy to know the details of their birth and background, and the benefits of early disclosure. 14 vii. The possibility that a child born as a result of surrogacy may learn about the circumstances of their birth from sources other than the intending parents (for example from other family members) and may independently access information about their birth. viii. The possibility that a child born as a result of surrogacy may attempt to make contact with the surrogate mother in the future. ix. The impact of the potential surrogacy agreement on the surrogate mother’s partner and other children, and on the couple’s relationship and/or the family unit. x. The impact of the potential surrogacy agreement on the intending parents’ other children, and on the couple’s relationship and/or the family unit. xi. The implications for all parties, if it is proposed that the surrogate mother will provide her own ovum for use within a surrogacy arrangement. xii. The exceptional circumstances present, which would deem it allowable for any party (the surrogate mother and/or intending parents) to participate in a surrogacy arrangement under the age of 25 years. xiii. The need for the Accredited Independent Counsellor conducting the counselling and screening to confirm that the surrogate mother, her partner (if any) and/or the intending parents are suitable to take part in a lawful surrogacy agreement. xiv. The need for the Accredited Independent Counsellor conducting the counselling and screening to confirm that the proposed surrogacy agreement will be in the best interests of any child already existing and any child born as a result of the surrogacy agreement. Recommendation 41 SALRI recommends that any Surrogacy Act (or accompanying Regulations) provide that full membership of, or eligibility for full membership of, the Australian and New Zealand Independent Counsellors Association, is a necessary prerequisite to act in South Australia as an Accredited Independent Counsellor and carry out the counselling (and screening) role in relation to a lawful surrogacy agreement. 

Recommendation 42 SALRI recommends that registered fertility clinics should adopt internal processes to ensure that an individual providing the counselling (and screening) to each person referred to in Recommendations 39 and 40 (see also s 10HA(2a)(g) of the Family Relationships Act 1975 (SA)) is in a position to provide independent counselling (and screening) to each client (though also note Recommendation 43 below). 

Recommendation 43 SALRI recommends that any Surrogacy Act should make it clear that an Accredited Independent Counsellor responsible for the issue of a counselling certificate (including determining the suitability of a party or parties to enter into a lawful surrogacy agreement) cannot be employed by a fertility clinic or be a ‘contractor’ (in the sense of receiving a commission, bonus or any form of valuable consideration from the clinic as a result of the surrogacy arrangement). 

Recommendation 44 SALRI recommends that it should not be mandatory for the parties to undergo counselling during the surrogate mother’s pregnancy. Rather, SALRI recommends that any Surrogacy Act should require that a lawful surrogacy agreement states that the intending parents will take reasonable steps to ensure that the surrogate mother and her partner (if any) are offered 15 counselling (at no cost to the surrogate mother or her partner) during any attempts to become pregnant (even if a pregnancy is not achieved) and during any pregnancy to which the agreement relates. 

Recommendation 45 SALRI recommends that any Surrogacy Act should provide that it is mandatory for the surrogate mother to undergo one session of counselling with an Accredited Counsellor of the surrogate mother’s choice after the birth of a child (with any cost to be met by the intending parents). The counsellor (who need not be an Accredited Independent Counsellor) as part of this session should prepare a short post birth report to guide the court as to whether a more detailed report may be necessary to assist the court in determining if any order is in the best interests of the child. Any Surrogacy Act should include an express power for the court to order a more detailed report from an Accredited Counsellor or suitable other expert of the court’s choice if the court considers it appropriate and/or in the best interests of the child. 

PART 21 – LAWYERS ADVICE AND CERTIFICATE 

Recommendation 46 SALRI recommends that any Surrogacy Act provide that both the surrogate mother and the intending parent(s) must have a certificate from an Australian lawyer certifying that they have received appropriate independent legal advice on the surrogacy agreement and its various implications. 

Recommendation 47 SALRI recommends that more detail and clarity should be added by any Surrogacy Act to the type of legal advice that has to be provided to the parties. In this regard, SALRI recommends that the form of a surrogacy agreement should meet certain legal requirements in order to be valid, and should include (at a minimum) the following criteria: (a) the agreement is signed by all parties; and (b) before signing the agreement, each party is to be provided with independent legal advice from a legal practitioner about the effect of the agreement on the rights of that party and about the advantages and disadvantages, at the time that the advice was provided, to that party of making the agreement; and (c) either before or after signing the agreement, each party is to be provided with a signed statement by the legal practitioner stating that the advice referred to in paragraph (b) was provided to that party (whether or not the statement is annexed to the agreement); and (d) a copy of the statement referred to in paragraph (c) be provided to the other party or to a legal practitioner for the other party; and (e) the agreement is a contract of which the proper law of the contract is South Australian law; and (e) the agreement has not been terminated and has not been set aside by a court. 

Recommendation 48 For the purposes of Recommendation 47 above, SALRI recommends that the present law be extended in any Surrogacy Act to provide that the content of the legal advice provided to the parties should include information dealing with the rights and responsibilities for the child, particularly regarding the authority to make decisions relating to health care (both pre and post birth), and upon the making of an order as to parentage by a court of competent jurisdiction, the effects of the agreement on matters of succession and estate planning and the categories of costs recoverable (see Recommendations 51–54 below). 

Recommendation 49 SALRI recommends that the Youth Court (or any other relevant court) should be provided with the counsellor’s certificates, any initial counselling reports in respect of the parties, the Working with Children Checks (or the national criminal history checks) and the lawyers’ certificates in respect of their advice to the parties. This material should be lodged with the Youth Court or any other relevant court prior to any order being made transferring the legal parentage of the child. 

PART 22 - MEDIATION 

Recommendation 50 SALRI, noting the value of mediation in a surrogacy context, recommends that: (a) the parties have the right, although not compulsory, to access mediation services through an experienced family law mediator to assist in negotiating the surrogacy agreement between them and this should not constitute an offence by the mediator or facilitating service under the relevant provision (see Recommendations 15 and 16 above); (b) in the event of a dispute about the terms of the surrogacy agreement during the life of the agreement, the parties can attend mediation to attempt to resolve the dispute and, if this fails, either party can request the mediator to act as arbitrator in order to resolve the dispute, following which, any decision of an arbitrator is binding on the parties. Note: The aim of mediation should be to try to prevent any disputes arising. The use of mediation and/or arbitration is strictly voluntary, and the parties retain the right, in the alternative, to make an application to a court of competent jurisdiction, however, the aim should be to keep the costs of litigation as low as possible. 

PART 23 – RECOVERABLE COSTS 

Recommendation 51 SALRI recommends that any Surrogacy Act should provide that the part of the surrogacy agreement relating to costs and expenses should be legally enforceable. 

Recommendation 52 SALRI recommends that, in relation to costs, the guiding principles should be set out in any Surrogacy Act and should be that: (i) No valuable consideration should be provided for the act of becoming pregnant and carrying a child for another person; and (ii) A surrogate mother should not be financially disadvantaged as a result of taking part in a surrogacy arrangement and should be able to recover any costs actually incurred as a direct result of the pregnancy and birth. 

Recommendation 53 SALRI recommends that any Surrogacy Act should provide that all costs ‘directly related’ to the lawful surrogacy agreement (including the process of getting pregnant, the pregnancy and birth of the child) should be recoverable by the surrogate mother under a lawful surrogacy arrangement. The scope of these costs should be set out in the parties’ individual surrogacy agreements. However, such costs should be permitted to include: (a) Medical costs related to a pregnancy (including any attempt to become pregnant) that is the subject of the agreement. (b) The birth or care of a child born as a result of that pregnancy. (c) Counselling provided in connection with the agreement (including after the birth of a child). (d) Medical services provided in connection with the agreement (medical services provided prior to achieving a pregnancy, and medical care provided during the pregnancy and after the birth of a child). (e) Legal services provided in connection with the agreement (including after the birth of a child). (f) Any premium paid for health, disability or life insurance which would otherwise not have been taken out, but for the agreement; (g) Loss of income of the surrogate mother as a result of leave during the pregnancy or immediately after the pregnancy when the surrogate mother was unable to work on medical grounds. Recoverable loss of income should be limited to a period of two months. Loss of income should be recoverable regardless of the surrogate mother’s access to alternative sources of paid leave during the same period (such as paid parental leave), provided the leave was required on medical grounds. (h) Travel and accommodation costs of the surrogate mother (and her dependents) related to the pregnancy (including any attempt to become pregnant). (i) Reasonable out of pocket expenses (including childcare related expenses and loss of domestic services expenses) incurred by the surrogate mother in respect of the agreement. (j) Any other costs directly related to the surrogacy agreement as prescribed by the Regulations. 

Recommendation 54 SALRI recommends that the present law relating to recoverable costs should be amended in any Surrogacy Act to provide that: (a) The scope of recoverable costs should be set out in the parties’ individual surrogacy agreement, but must include all relevant medical costs and the provision of independent legal advice and counselling to the surrogate mother and her partner prior to, during and after the term of the surrogacy agreement; (b) Costs recoverable are those that have been actually incurred by the surrogate mother; and (c) The provisions in the lawful surrogacy agreement relating to costs are legally enforceable between the parties (for example through the small claims process). 

Recommendation 55 SALRI recommends that information setting out the typical range of costs recoverable under a lawful surrogacy agreement be made publicly available, for example in the form of a Table or Schedule of Surrogacy Costs, or as a questionnaire, to prompt potential parties to surrogacy agreements to turn their mind to the full range of potential costs recoverable under a lawful surrogacy agreement in South Australia pursuant to Recommendations 52–54 above. Such information could be prepared with the assistance of legal experts and published by a relevant Government department or other body that currently disseminates general legal information on family law matters such as the Legal Services Commission or Relationships Australia. 

Recommendation 56 SALRI recommends that any Surrogacy Act should include an express incidental power to enable the relevant court to determine any outstanding issue such as an unresolved dispute about costs under a surrogacy agreement when it considers transferring the legal parentage to the intending parents. Section 24 of the Surrogacy Act 2012 (Tas) is an example of such a provision in this context. 

PART 24 – BIRTH CERTIFICATES 

Recommendation 57 SALRI recommends that the process in South Australia for obtaining a birth certificate with respect to a child born as a result of a lawful surrogacy agreement includes mandatory requirements at the stage of notification of birth, registration of birth and issue of birth certificate for the collection of information about the child’s intending parents and any donors of human reproductive material. The collection of such information should not affect the legal parentage of the child, which should remain with the surrogate mother (and her partner/spouse as is the current position under the Family Relationships Act 1975 (SA)), unless, and until, an order for transfer of legal parentage is made by the Youth Court. 

Recommendation 58 SALRI recommends that the current process for re-issuing a birth certificate upon a declaration of legal parentage by the Youth Court remain and that the Register of Births retains the name of the surrogate mother in its historical records. 19 

Recommendation 59 SALRI recommends that a birth certificate for a child born as a result of a surrogacy arrangement should, upon any transfer of legal parentage, include a brief notation such as an asterix or the term ‘reissue’ to indicate that there are relevant historical records which can be sought. The note of the existence of the historical record should appear on the face of the birth certificate but it should not provide specific detail of the type of record held. The details as to the surrogate mother and/or any donors of genetic material should not appear on the face of the birth certificate given the privacy of such material and other legitimate concerns. 

Recommendation 60 SALRI recommends that a child born as a result of a surrogacy arrangement should be formally entitled, under the relevant Act, to obtain a certificate (or similar documentary record) certifying all relevant entries in the Register of Births, including details of the surrogate mother and/or any donors of genetic material, once the child attains the age of 16 years. In addition, provision should be made in the Registrar’s Access Policy to allow the Registrar to exercise his or her discretion to grant a child born as a result of a surrogacy arrangement access to a certificate certifying all relevant entries in the Register of Births regardless of the child's age, provided that the Registrar is satisfied that such access would not be harmful to the welfare of the child. The Registrar may request that a counselling certificate or similar documentation be provided to assist in their assessment.     

PART 25 – PARENTAGE ORDERS AND THE FAMILY COURT 

Recommendation 61 SALRI recommends that, consistent with existing law and practice, legal parentage should remain with the surrogate mother until a court of appropriate jurisdiction makes a parentage order to the contrary. 

Recommendation 62 SALRI recommends that any Surrogacy Act provide that a court should have the discretion to be able to extend the period in which an application to transfer legal parentage can be made. When exercising a discretion to extend, the court should consider all relevant circumstances as to the reason for the delay in making the application and determine whether an extension of time is in the best interests of the child. 

Recommendation 63 SALRI recommends that any Surrogacy Act provide that a court should have a discretionary power to make a parentage order notwithstanding that one or more of the conditions otherwise applicable for the making of such an order is not satisfied. When exercising this discretion, the court should consider all relevant circumstances, including the nature and extent of the non-compliance with such conditions, the circumstances of non-compliance including whether the non-compliance was deliberate or inadvertent, and the best interests of the child. 

Recommendation 64 SALRI recommends that South Australia should refer a power (consistent with the referrals from New South Wales, Queensland, Tasmania and Victoria) which provides that the Family Court may make a determination of parentage ‘whether or not the determination of the child’s parentage is incidental to the determination of any other matter within the legislative powers of the Commonwealth’ and upon receiving the referral of power from South Australia, the Commonwealth Government should amend s 69VA of the Family Law Act 1975 (Cth) to reflect these referrals. 

Recommendation 65 SALRI recommends that South Australia introduce a conclusive statutory presumption of parentage on the basis of a finding of parentage made by another State, Territory or Commonwealth court, as is the situation in the Australian Capital Territory, New South Wales and Queensland. 

Recommendation 66 SALRI recommends that an interstate order relating to parentage of a child of a surrogacy arrangement be able to be given effect as if it was made in South Australia, in addition to recognising Commonwealth orders as to parentage. 

PART 26 – INTERNATIONAL COMMERCIAL SURROGACY: THE BERNIERES GAP 

Recommendation 67 SALRI recommends that it is an issue at the national level (whether for the Commonwealth or the Commonwealth, States and Territories jointly) to resolve the effect and implications of Bernieres in relation to both international commercial and non-commercial surrogacy arrangements. 

27 – INCIDENTAL ISSUES 

Recommendation 68 SALRI recommends that it examine the various consequential civil law issues and implications such as succession law and medical care raised in a domestic surrogacy context as part of a short spin off Report. 

Recommendation 69 SALRI recommends that the opportunity of formulating a new Surrogacy Act should be utilised to include a number of worthwhile provisions (drawing on interstate models such as the Surrogacy Act 2010 (NSW) or the Surrogacy Act 2012 (Tas)) lacking in the present law in South Australia (or not within the Family Relationships (Surrogacy) Amendment Bill 2017).

Hohfeld

'Hohfeld vs The Legal Realists' by David Frydrych in (2018) 24(4) Legal Theory 291-344 comments

2018 marked the centenary of Wesley Hohfeld’s untimely passing. Curiously, in recent years quite a few legal historians and philosophers have identified him as a Legal Realist. This article argues that Hohfeld was no such thing, that his work need not be understood in such lights either, and that he in fact made a smaller contribution to jurisprudence than is generally believed. He has nothing to do with theories of official decision-making that identify, among other things, ‘extra-legal’ factors as the real drivers of judicial decision-making, nor must his schema of jural relations advance a ‘Realist’ political agenda. Distinguishing Hohfeld from the Realists will help to correct some misunderstandings about his work and point to its utility in many more contexts than a Realist reading of it allows. €

Facebeast and wellbeing

Irrespective of Facebook's disrespect for your privacy, withdrawing your attention might make you a little happier. 'The Welfare Effects of Social Media' by Hunt Allcott, Luca Braghieri, Sarah Eichmeyer, and Matthew Gentzkow argues

The rise of social media has provoked both optimism about potential societal benefits and concern about harms such as addiction, depression, and political polarization. We present a randomized evaluation of the welfare effects of Facebook, focusing on US users in the runup to the 2018 midterm election. We measured the willingness-to-accept of 2,844 Facebook users to deactivate their Facebook accounts for four weeks, then randomly assigned a subset to actually do so in a way that we verified. Using a suite of outcomes from both surveys and direct measurement, we show that Facebook deactivation (i) reduced online activity, including other social media, while increasing offline activities such as watching TV alone and socializing with family and friends; (ii) reduced both factual news knowledge and political polarization; (iii) increased subjective well-being; and (iv) caused a large persistent reduction in Facebook use after the experiment. We use participants’ pre-experiment and post-experiment Facebook valuations to quantify the extent to which factors such as projection bias might cause people to overvalue Facebook, finding that the magnitude of any such biases is likely minor relative to the large consumer surplus that Facebook generates.

The authors state

 Social media have had profound impacts on the modern world. Facebook, which remains by far the largest social media company, has 2.3 billion monthly active users worldwide (Facebook 2018). As of 2016, the average user was spending 50 minutes per day on Facebook and its sister platforms Instagram and Messenger (Facebook 2016). There may be no technology since television that has so dramatically reshaped the way people communicate, get information, and spend their time. Speculation about social media’s welfare impact has followed a familiar trajectory, with early optimism about potential benefits giving way to widespread concern about possible harms. At a basic level, social media dramatically reduce the cost of connecting, communicating, and sharing information with others. Given that interpersonal connections are among the most important drivers of happiness and well-being (Myers 2000; Reis, Collins, and Berscheid 2000; Argyle 2001; Chopik 2017), this could be expected to bring widespread improvements to individual welfare. Many have also pointed to wider social benefits, from facilitating protest and resistance in autocratic countries, to encouraging activism and political participation in established democracies (Howard et al. 2011; Kirkpatrick 2011). 

More recent discussion has focused on an array of possible negative impacts. At the individual level, many have pointed to negative correlations between intensive social media use and both subjective well-being and mental health.1 Adverse outcomes such as suicide and depression appear to have risen sharply over the same period that the use of smartphones and social media has expanded.2 Alter (2018) and Newport (2019), along with other academics and prominent Silicon Valley executives in the “time well-spent” movement, argue that digital media devices and social media apps are harmful and addictive. At the broader social level, concern has focused particularly on a range of negative political externalities. Social media may create ideological “echo chambers” among like-minded friend groups, thereby increasing political polarization (Sunstein 2001, 2017; Settle 2018). Furthermore, social media are the primary channel through which fake news and other types of misinformation are spread online (Allcott and Gentzkow 2017), and there is concern that coordinated disinformation campaigns can affect elections in the US and abroad.

In this paper, we report on a large-scale randomized evaluation of the welfare impacts of Facebook, focusing on US users in the run-up to the November 2018 midterm elections. We recruited a sample of 2,844 users through Facebook display ads, and elicited their willingness-to-accept (WTA) to deactivate their Facebook accounts for a period of four weeks ending just after the election. We then randomly assigned the 58 percent of these subjects with WTA less than $102 to either a Treatment group that was paid to deactivate, or a Control group that was not. We verified compliance with deactivation by regularly checking participants’ public profile pages. We measured a suite of outcomes using text messages, surveys, emails, direct measurement of activity on Facebook and Twitter, and administrative records on voting and electoral contributions. Less than two percent of the sample failed to complete the endline survey, and the Treatment group’s compliance with deactivation exceeded 90 percent.

Our study offers the largest-scale experimental evidence available to date on the way Facebook affects a range of individual and social welfare measures. We evaluate the extent to which time on Facebook substitutes for alternative online and offline activities, with particular attention to crowd out of news consumption and face-to-face social interactions. We study Facebook’s broader political externalities via measures of news knowledge, awareness of misinformation, political engagement, and political polarization. We study the impact on individual utility via measures of subjective wellbeing, captured through both surveys and text messages. Finally, we analyze the extent to which behavioral forces like addiction and misprediction may cause sub-optimal consumption choices, by looking at how usage and valuation of Facebook change after the experiment.

Our first set of results focuses on substitution patterns. A key mechanism for effects on individual well-being would be if social media use crowds out face-to-face social interactions and thus deepens loneliness and depression (Twenge 2017). A key mechanism for political externalities would be if social media crowds out consumption of higher-quality news and information sources. We find evidence consistent with the first of these but not the second. Deactivating Facebook freed up 60 minutes per day for the average person in our Treatment group. The Treatment group actually spent less time on both non-Facebook social media and other online activities, while devoting more time to a range of offline activities such as watching television alone and spending time with friends and family. The Treatment group did not change its consumption of any other online or offline news sources and reported spending 15 percent less time consuming news.

Our second set of results focuses on political externalities, proxied by news knowledge, political engagement, and political polarization. Consistent with the reported reduction in news consumption, we find that Facebook deactivation significantly reduced news knowledge and attention to politics. The Treatment group was less likely to say they follow news about politics or the President, and less able to correctly answer factual questions about recent news events. Our overall index of news knowledge fell by 0.19 standard deviations. There is no detectable effect on political engagement, as measured by voter turnout in the midterm election and the likelihood of clicking on email links to support political causes. Deactivation significantly reduced polarization of views on policy issues and a measure of exposure to polarizing news. Deactivation did not statistically significantly reduce affective polarization (i.e. negative feelings about the other political party) or polarization in factual beliefs about current events, although the coefficient estimates also point in that direction. Our overall index of political polarization fell by 0.16 standard deviations. As a point of comparison, prior work has found that a different index of political polarization rose by 0.38 standard deviations between 1996 and 2018 (Boxell 2018).

Our third set of results looks at subjective well-being. Deactivation caused small but significant improvements in well-being, and in particular on self-reported happiness, life satisfaction, depression, and anxiety. Effects on subjective well-being as measured by responses to brief daily text messages are positive but not significant. Our overall index of subjective well-being improved by 0.09 standard deviations. As a point of comparison, this is about 25-40 percent of the effect of psychological interventions including self-help therapy, group training, and individual therapy, as reported in a meta-analysis by Bolier et al. (2013). These results are consistent with prior studies suggesting that Facebook may have adverse effects on mental health. However, we also show that the magnitudes of our causal effects are far smaller than those we would have estimated using the correlational approach of much prior literature. We find little evidence to support the hypothesis suggested by prior work that Facebook might be more beneficial for “active” users—for example, users who regularly comment on pictures and posts from friends and family instead of just scrolling through their news feeds.

Our fourth set of results considers whether deactivation affected people’s demand for Facebook after the study was over, as well as their opinions about Facebook’s role in society. As the experiment ended, participants reported planning to use Facebook much less in the future. Several weeks later, the Treatment group’s reported usage of the Facebook mobile app was about 12 minutes (23 percent) lower than in Control. The Treatment group was more likely to click on a post-experiment email providing information about tools to limit social media usage, and five percent of the Treatment group still had their accounts deactivated nine weeks after the experiment ended. Our overall index of post-experiment Facebook use is 0.61 standard deviations lower in Treatment than in Control. In response to open-answer questions several weeks after the experiment ended, the Treatment group was more likely to report that they were using Facebook less, had uninstalled the Facebook app from their phones, and were using the platform more judiciously. Reduced post-experiment use aligns with our finding that deactivation improved subjective well-being, and it is also consistent with the hypotheses that Facebook is habit forming in the sense of Becker and Murphy (1988) or that people learned that they enjoy life without Facebook more than they had anticipated. Deactivation caused people to appreciate Facebook’s both positive and negative impacts on their lives. Consistent with our results on news knowledge, the Treatment group was more likely to agree that Facebook helps people to follow the news. The great majority of the Treatment group agreed that deactivation was good for them, but they were also more likely to think that people would miss Facebook if they used it less. In free response questions, the Treatment group wrote more text about how Facebook has both positive and negative impacts on their lives. The opposing effects on these specific metrics cancel out, so our overall index of opinions about Facebook is unaffected.

Our work also speaks to an adjacent set of questions around how to measure the economic gains from free online services such as search and media.

In standard models with consumers who correctly optimize their allocation of time and money, researchers can approximate the consumer surplus from these services by measuring time use or monetary valuations, as in Brynjolfsson and Oh (2012), Brynjolfsson, Eggers, and Gannamaneni (2018), Corrigan et al. (2018), and others. But if users do not understand the ways in which social media could be addictive or make them unhappy, these standard approaches could overstate consumer surplus gains. Sagioglu and Greitemeyer (2014) provide suggestive evidence: while their participants predicted that spending 20 minutes on Facebook would make them feel better, it actually caused them to feel worse.

To quantify the possibility that a period of deactivation might help the Treatment group to understand ways in which their use had made them unhappy, we elicited WTA at three separate points, using incentive-compatible Becker-DeGroot-Marschak (1964, “BDM”) mechanisms. First, on October 11th, we elicited willingness-to-accept to deactivate Facebook between October 12th and November 8th, which we loosely call “month 1.” We immediately told participants the amount that they had been offered to deactivate ($102 for the Treatment group, $0 for Control), and thus whether they were expected to deactivate over that period. We then immediately elicited WTA to deactivate Facebook for the next four weeks after November 8th, which we call “month 2.” When November 8th arrived, we then re-elicited WTA to deactivate in month 2. The Treatment group’s change in valuation for month 2 reflects a time effect plus the unanticipated effect of spending time off of Facebook. The Control group’s parallel valuation change reflects only a time effect. Thus, the difference between how Treatment vs. Control change their WTAs for deactivation in month 2 reflects projection bias, learning, and similar unanticipated experience effects, which we collectively call “misprediction.”

After weighting our sample to match the average US Facebook user on observables, the median and mean willingness-to-accept to deactivate Facebook for the initial four weeks were $100 and $180, respectively. These valuations are larger than most estimates in related work by Brynjolfsson, Eggers, and Gannamaneni (2018), Corrigan et al. (2018), Mosquera et al. (2018), and Sunstein (2019). Aggregated across an estimated 172 million US Facebook users, this could be interpreted to mean that Facebook generates several hundred billion dollars of consumer surplus per year in the US alone. Consistent with our other results that deactivation reduced demand for Facebook, deactivation caused month 2 WTA to drop by 13 percent, although this may be an upper bound on misprediction for reasons we discuss later. While such misprediction may be substantial in absolute terms, it would not reverse the conclusion that Facebook generates enormous flows of consumer surplus.

Our results should be interpreted with caution, for several reasons. First, effects could differ with the duration or scale of deactivation. A longer period without Facebook might have less impact on news knowledge as people find alternative news sources, and either more or less impact on subjective well-being. Furthermore, a larger-scale experiment in which a greater share of the population deactivated could have a different impact due to network effects and equilibrium adjustments. Second, our sample is not fully representative. Our participants are relatively young, well-educated, and left-leaning compared to the average Facebook user, and we included only people who reported using Facebook more than 15 minutes per day. In addition, although we went as far as possible to avoid telegraphing the experimental design and research questions, deactivation could have different effects on the average Facebook user than on the type of person who was willing to participate in our experiment. Third, many of our outcome variables are self-reported, adding scope for both measurement error and experimenter demand effects. This latter concern is mitigated somewhat by the fact that the non-self-reported outcomes we measure (e.g., post-experiment Facebook use) paint a similar picture to the survey responses.

The causal impacts of social media have been of great interest to researchers in economics, psychology, and other fields. We are aware of 12 existing randomized impact evaluations of Facebook.6 The most closely related is the important paper by Mosquera et al. (2018), which was made public the month before ours. They also use Facebook deactivation to study news knowledge and well being, finding results broadly consistent with those reported here. Appendix Table A1 details these experiments in comparison to ours. Our deactivation period is substantially longer and our sample size an order of magnitude larger than most prior work, including Mosquera et al. (2018). We measure impacts on a relatively comprehensive range of outcomes, and we are the only one of these randomized trials to have submitted a pre-analysis plan. Given the effect sizes and residual variance in our sample, we would have been unlikely to have sufficient power to detect any effects if limited to the sample sizes in previous experiments.

Sections 2 and 3 detail the experimental design and empirical strategy. Section 4 presents the impact evaluation, and Section 5 presents measurements of the consumer surplus generated by Facebook.