Australia: The Greatest Happiness

Last Updated: 16 July 2002
Article by Lionel Docker

The new privacy legislation in Australia evidences on the part of legislators a lack of appreciation of the conceptual and symbolic issues involved on a scale equal to the debate concerning the Aboriginal ‘stolen generation’. Ironically, it is possible that online retailers may have a champion in the unlikely person of Professor Allan Fels, Chairman of the Australian Competition and Consumer Commission.

The preserved body of the great English utilitarian philosopher Jeremy Bentham (1748-1832) can be seen on the Internet. Mr Bentham’s remains sit in a glass case in the foyer of University College London where a video camera pointed at his etiolated corpse updates images on to the Internet every five minutes for the world to see. Only those who know that Mr Bentham was the inventor of the Panopticon would appreciate the ironic significance of this macabre spectacle.

Utilitarianism’s simple objective and mantra was to achieve ‘the greatest happiness of the greatest number’. In pursuit of that goal, Mr Bentham turned his mind to the problem of crime and punishment in nineteenth century England. He invented a prison system which he called the Panopticon. The Panopticon was a prison with cells built around a central control tower manned by a guard. Each prisoner was entirely isolated from the others, but could be constantly observed by the prison authorities and members of the public.

Bentham’s thesis was that constant surveillance is the most effective form of rehabilitation. He believed that it would ensure that prisoners could never engage in any type of activity which might be inimical to their chances of eventually leading normal and useful lives. They would not be able to indulge in bad habits or discuss criminal activities with each other, nor would they be exposed to any external corrupting influence, including the prison guards themselves. Their lives would be totally transparent. They would be forced to constantly behave in an acceptable way until that pattern of acceptable and respectable behaviour had become ingrained and the old habits and patterns of criminal behaviour had been forgotten.

The real utility and sheer genius of Mr Bentham’s grand scheme lay in its economic attributes. The circular design of the Panopticon allowed one guard to keep twenty prisoners under surveillance at the same time. This would be impossible in a traditional prison building where cells are arranged in rows. In a conventional layout, it would be necessary to have one guard for every two prisoners to achieve the same result.

In fact, one guard in the Panopticon could not be observing all twenty prisoners at the same time, but that was not relevant. The beauty of the Panopticon was that prisoners thought they were under constant surveillance. The critical factor for the success of the scheme relied on the uncertainty principle. Even the least intellectually gifted prisoners could work out that no prison authority was going to pay a guard to watch them individually for twenty-four hours of the day. It was feasible, however, that the prison authority might pay one guard to watch twenty prisoners and that guard could watch an individual prisoner for at least three minutes of each hour of the day. The key to the success of the Panopticon was that each prisoner did not know which three minutes of each hour was devoted to them, so they would have to assume that, at any point in time, they were being watched.

The Panopticon was never embraced by the British prison authorities because the initial trials provide to be a disaster. Lack of privacy led to a decline in the mental health of prisoners at a much faster rate than simple solitary confinement ever had. It literally drove prisoners mad.

Mr Bentham’s notion that constant surveillance would have a positive remedial effect on the behaviour of prisoners proved to be completely misconceived. However, his discovery of the profoundly negative psychological effects of privacy deprivation and the power of the uncertainty principle have ever since been of significant value to the police forces of totalitarian regimes.

In his discourse, Crime and Punishment, the famous contemporary French philosopher, Michel Foucault, pointed out that the asymmetry of seeing-without-being-seen is the very essence of power, because ultimately the power to dominate rests on the differential possession of knowledge.

The uncertainty principle is exploited to the most devastating effect by the stalker, who can reduce a victim to a terrified, dribbling mess merely by letting the victim know that someone is out there watching him. The stalker could be an eighty five year old num who wants nothing more than a friend, but the victim will always assume that it is Hannibal Lecter or Laurie Oakes. Our survival instinct makes us assume the worst.

The Internet is the most sophisticated and insidious surveillance system yet invented. Cookies and web bugs allow marketing companies, political organisations, governments and cyber stalkers to find out everything they want to know about users from their height and weight to their political, religious and breakfast cereal preferences. Every time a user logs on, an electronic trace of their activities can be recorded, collated, assessed and manipulated to create profiles and databases. We don’t know precisely who may be doing it or for what purpose, but we know that it’s happening or could be happening. It makes the least paranoid of us disconcerted.

We are constantly annoyed by the receipt of junk mail from people with whom we have no connection whatsoever addressed to us as though we were old school friends, but we have generally become accustomed to it. We have become accustomed to or we are blissfully ignorant of the fact that we are being filmed as we make our way through department stores and down city streets and along motorways. We have generally accepted the security risks involved in credit card transactions. However, we have not become overwhelmed by the impression that the most invasive aspects of the 'Big Brother' state described in George Orwell's 1984 (not to be confused with the study in banality on Channel Ten) have become a reality. It is more the case that each little invasion of privacy has subtly and unobtrusively become a part of our lives over a long period of time.

The internet is bringing together in one dramatic, revolutionary, confrontational package, every one of these little invasions of privacy and crystallising every concern about privacy we ever had. Very few of us actually know precisely what is going on or what is possible in cyberspace, but we do know t hat every electronic move we make can be observed. The same technocratic masters of the universe who have succeeded in convincing us of the omnipotence of the internet are now asking us to trust the monster they have created. The very marketing hyperbole which has created the internet phenomenon of the last five years is now contributing to the biggest problem for the future of online retailing, the uncertainty principle.

It is one of the great paradoxes of the internet that, while it expedites commercial transactions by bringing people together and providing a more efficient mechanism for their conclusion, a simple cash transaction is far more information intensive online than off. Even the purchase of a newspaper or a toothbrush requires a comprehensive exchange of personal information.

As online retailers close their shops all over cyberspace, anxious questions resound around the bricks and mortar of their owners. What is the problem? What has caused the massive gap between the forecasts and the results? The reasons are numerous and complex, but one of them seems to stand out like canine reproduction equipment. Privacy and security concerns are the main reasons for the reluctance of internet users to engage in online transactions.

The Australian government appears to appreciate this point. it stated as much in its Explanatory Memorandum to the Privacy Amendment (Private Sector) Bill 2000.

"This Bill is part of the Commonwealth Government's commitment to enacting balanced privacy legislation for the private sector to ensure that full advantage may be taken of the opportunities that electronic commerce presents for Australian business within Australia and overseas.

The Australian public has expressed concern about doing business online, and this concern could frustrate the growth of electronic commerce. The Government acknowledges that user confidence in the way personal information is handled in the online environment will significantly influence consumer choices about whether to use electronic commerce.

When the Privacy Amendment (Private Sector) Act 2000 ('Act') came into effect on 21 December 2001, it was greeted with some discomfort by most organisations to which it applies and has since been largely ignored. This is bad news for online retailers, but it is entirely understandable. Given the stated intention of the legislation, its form is quite remarkable in the exceptions it incorporates and the lack of sanctions it imposes. Broadly, the Act implements the National Principles for the Fair Handling of Personal Information ('National Principles') which were developed by the Federal Privacy Commissioner as a basis for businesses to develop practices to ensure that the privacy of individuals is protected. The National Principles set out minimum standards in relation to the collection, use, disclosure and security of personal information.

However, the Act does not apply to individuals in a non-business capacity, small businesses with a turn-over of less than A$3 million per year, organisations acting under Commonwealth or State Government contracts, employee records, media organisations 'in the course of journalism' or political acts and practices. In the event that an organisation breaches the Act, there are no fines or sanctions of any kind. The organisation is merely obliged to apologise and undertake not to do it again. There is a vaguely worded provision which empowers the Federal Privacy Commissioner to take legal action in the Federal Court against a defaulting organisation only in circumstances where all else has failed.

The problem of online privacy is about dealing with the uncertainty principle. It is about minimising uncertainty and creating a perception that invasions of personal privacy are a serious matter and will not be tolerated. The internet may be a law unto itself, but there are aspects of its operation which governments acting co-operatively around the world can regulate. For privacy regulations to achieve anything, however, they must apply to everyone with virtually no exceptions and must contain onerous sanctions. There can be no doubt that small businesses are likely to be the main offenders when it comes to invasions of privacy. Large companies will be less likely to risk the public opprobrium associated with breaches of privacy, because it might affect their share price. Furthermore, they will be more inclined to be concerned about the reputation of the Australian marketplace from an international point of view because they will have global interests to consider.

This unsatisfactory situation has not escaped the notice of Australia’s highest profile and boldest civil servant, the Chairman of the Australian Competition and Consumer Commission, Professor Allan Fels. On 12 March 2002, a Memorandum of Understanding to facilitate co-operation and co-ordination between the Australian Competition and Consumer Commission (‘ACCC’) and the Office of the Federal Privacy Commission was signed. Professor Fels merely commented that "The standards interact with some of the existing fair trading rules". What this will mean is practice is not yet clear, but it offers a glimmer of hope for online retailers.

It would definitely add some teeth to the privacy legislation if breaches of privacy constituted misleading and deceptive conduct under the Trade Practices Act and if the ACCC were to take an active role in policing such breaches.

What is clear is that something must be done to further strengthen the privacy regime if Australia is to take "full advantage of the opportunities that electronic commerce presents". The excepted categories must be dramatically circumscribed and serious fines imposed for breaches of privacy. Mr Bentham’s utilitarian principles should apply to the drafting of the privacy legislation, as to any legislation. The Act extends to small businesses who trade in personal information as from 21 December 2002, but the application of this provision is likely to be very limited. Having an exception for small businesses at all is like introducing tough new stalking laws which apply to everybody except single men aged between 18 and 65 with previous convictions for sex offences.

Lionel Docker is a Sydney lawyer who specialises in technology law.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Mondaq Advice Centre (MACs)
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.