Australia: ALRC Report On Australian Privacy Laws

Last Updated: 18 August 2008
Article by Richard Smith

On 11 August 2008, the Australian Law Reform Commission (ALRC) published its final report (Report) on its review of privacy laws in Australia.

The Report, titled For your information: Australian Privacy Law and Practice (ALRC 108), is around 2,700 pages long and recommends substantial changes to Australia's existing privacy laws and practices. The recommended changes include:

  • Mandatory notification for certain data protection breaches.
  • The removal of exemptions in relation to employee records and small business.
  • New requirements for cross-border data flows.
  • A consistent national framework of privacy legislation.

Background

Privacy in Australia is currently regulated by State, Territory and Commonwealth legislation.

The Federal Privacy Act 1988 (Cth) (Act) establishes and regulates a national scheme for the collection, use, transfer and disclosure of 'personal information' by the private sector and the Federal and ACT Governments. In addition, each State and Territory has their own privacy legislation or administrative regimes (State Legislation). While this primarily regulates State/Territory Governments and agencies and their treatment of personal data, Victoria, NSW and the ACT also have health privacy legislation regulating the private sector.

On 31 January 2006, the Australian Attorney-General requested that the ALRC conduct an inquiry into the extent to which the Act and State Legislation provide an effective framework for the protection of privacy in Australia. The ALRC carried out a substantial review with extensive public and industry consultation considering Australian privacy law and practice as well as trends in other jurisdictions, particularly the USA and Europe. The ALRC Report recommends sweeping reforms to Australian privacy law.

Historically, nearly 80% of the ALRC reports are substantially or partially implemented by the Government. This means that the recommendations have a high likelihood of becoming law and therefore should be carefully considered by business.

If the recommendations of the Report subsequently become law they will have significant consequences for Australian business and how they treat the personal information of and interact with their customers, employees and suppliers. It will also affect the way that Governments and agencies carry out their functions and interact with the public.

Below is a high level summary of some key recommendations of the Report.

Key recommendations of the ALRC

1. Data breach notification

Currently the Act and State Legislation do not impose a mandatory obligation on organisations and agencies to report instances where personal information is disclosed or compromised through a data breach. The ALRC considered legislative trends in other jurisdictions as well as the increasing public concern about data theft and identity fraud. The ALRC has recommended the introduction of a mandatory data breach notification requirement. The Report notes that its primary rationale for the introduction of the requirement is that '...notifying people that their personal information has been breached can help to minimise the damage caused by the breach'.

The ALRC proposes that:

  • An agency or organisation be required to notify the Privacy Commissioner and the affected individual when a data breach has occurred that may give rise to 'a real risk of serious harm to any affected individual'.
  • The notification only be required in respect of 'specified personal information' which will be narrower in scope than normal 'personal information'.
  • Civil penalties apply for failures to report breaches.

2. Uniform Privacy Principles

The ALRC recommended the consolidation of the existing National Privacy Principles (NPPs), which are primarily applicable to business, and the Information Privacy Principles (IPPs), which are primarily relevant to government, into a single set of privacy principles to be known as the 'Uniform Privacy Principles' (UPPs). The suggested model UPPs will encompass the original National Privacy Principles and incorporate numerous amendments arising from the Report. The Report recommended that the UPPs should apply to both public and private sectors.

3. Cross-border data flows

Business process outsourcing and other business activities that rely on trans-border data flows are becoming an increasingly common part of the Australian economy. The Report recognises the public concerns that arise from sending personal data to other jurisdictions where privacy laws may be less robust.

The existing NPP 9 sets out certain requirements where an organisation wishes to transfer personal information about an individual overseas. The ALRC proposes that this NPP 9 be replaced by a new UPP 11, with a focus on the entity sending the data overseas remaining accountable for that data, save in circumstances where:

  • There is reasonable belief that the information recipient is subject to a law, scheme or contract which upholds substantially similar privacy requirements (the ALRC wants detailed guidance on this issue to be published).
  • The affected individual consents, after being expressly advised that the sender will no longer remain accountable for the individual's personal information once sent off-shore.
  • The sender is required or authorised under a law to transfer the data.

The ALRC recommends that this principle should apply to all agencies and organisations, including the public sector (currently NPP 9 Transborder Data Flows does not apply to government agencies).

The ALRC also recommends that the Office of the Privacy Commissioner should develop and publish guidelines on this principle, specifically including: (i) contractual issues; and (ii) the outsourcing of government services to off-shore providers.

4. Consistent laws in States and Territories

As regards the laws of the States and Territories, the ALRC has recommended the creation of a consistent national framework of privacy laws. To achieve this it has been recommended that the Act should apply to the Federal and ACT public sector and to the private sector to the exclusion of State and Territory laws. Further, it has recommended that an intergovernmental co-operative scheme be established to enact State and Territory legislation which:

  • Provides that personal information is handled by State agencies consistent with the UPPs.
  • Contains provisions that are consistent with the Act.

5. Certain exemptions from the Act to be removed

The ALRC recommends that a number of current exemptions from the Act, most notably the 'small business' exemption and the 'employee records' exemption, be removed.

Small business

Currently businesses with a turnover of $3 million dollars or less are generally exempt from the Act (there are a few exceptions such as businesses who provide health services and hold health information, business who are related to larger businesses etc.). The ALRC proposes that this exemption be removed and cites various reasons including: (i) reducing inconsistency and fragmentation in privacy regulation; and (ii) facilitating trade with the European Union (EU). This exemption is one of the key outstanding issues preventing Australian privacy laws from being recognised as compatible with EU privacy law.

To overcome compliance costs the ALRC has proposed that the Office of the Privacy Commissioner (OPC) provide assistance to the small business sector through a national hotline, educational materials and templates to assist in preparing privacy policies.

Employee records

Private sector employers are currently exempt from the application of the Act in relation to certain 'employee records'. The ALRC proposes that the Privacy Act be amended to remove this exemption and that the OPC develop specific guidance on the application of the UPPs to employees, including guidance on when it is appropriate to disclose to an employee third party complaints about that employee.

The ALRC considered arguments that these exemptions were necessary to allow employers to deny their employees access to 'evaluative material' (such as employee reports for disciplinary action). However, the ALRC believe that employers will have sufficient protection under the recommendations relating to 'access' and 'correction' enabling them to deny access to requests for information in certain circumstances.

6. Statutory cause of action for serious invasion of privacy

While Australian Courts are slowly recognising a common law right for the invasion of privacy, to ensure a consistent national position and approach, the ALRC proposes the introduction of a statutory cause of action for the invasion of privacy. If this is accepted, the ALRC recommends that similar common law actions for invasion of privacy be abolished. The ALRC has suggested a three tiered test in order to establish this proposed statutory cause of action:

(a) The two elements of the cause of action must be satisfied, namely: (i) there must be a reasonable expectation of privacy; and (ii) the act or conduct is highly offensive to a reasonable person.

(b) The relevant 'circumstance of invasion' must exist, (eg a person must demonstrate interference with their home life, the disclosure of sensitive information about their private life or unauthorised surveillance).

(c) That in the circumstances, the public interest in maintaining the individual's privacy outweighs other matters of public interest.

7. Increased penalties

The ALRC also considered the adequacy of existing remedies available to the Privacy Commissioner to enforce compliance with the Act. While the ALRC recognised that the Privacy Commissioner had existing mechanisms available to it to ensure compliance (such as the power to make determinations), it has recommended the strengthening of the enforcement powers of the Privacy Commissioner, including being able to:

  • Impose a civil penalty where there is a serious or repeated interference with the privacy of an individual.
  • Enforce undertakings to ensure compliance with the Act.

Next steps

According to the Cabinet Secretary Senator Faulkner, the Government will consider the ALRC recommendations in stages. Firstly, the Government proposes to respond to the recommendations relating to the UPPs, health, credit reporting and education in relation to new technologies. In the second stage, the Government will consider the recommendations relating to the removal of exemptions, data breach notices and the statutory cause of action for a serious invasion of privacy. It is expected that, if accepted, the Government will enact the first stage of reforms within the next 12 to 18 months.

We believe that many of the recommendations in the report will be adopted by the Government in the near future. In particular, we believe that the proposals for mandatory reporting of breaches, toughening the restrictions on cross-border data flows, and the removing of the small business and employee records exceptions are high priorities. The adoption of these proposals will bring Australian privacy laws more in line with their European and American equivalents and facilitate the transfer of personal data between these jurisdictions.

The release of the Report provides an opportunity for organisations to consider their own data privacy practices and to consider what processes they may need to change on, or in readiness for, the adoption of these recommendations. Please do not hesitate to contact us if we can be of assistance.

Phillips Fox has changed its name to DLA Phillips Fox because the firm entered into an exclusive alliance with DLA Piper, one of the largest legal services organisations in the world. We will retain our offices in every major commercial centre in Australia and New Zealand, with no operational change to your relationship with the firm. DLA Phillips Fox can now take your business one step further − by connecting you to a global network of legal experience, talent and knowledge.

This publication is intended as a first point of reference and should not be relied on as a substitute for professional advice. Specialist legal advice should always be sought in relation to any particular circumstances and no liability will be accepted for any losses incurred by those relying solely on this publication.

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