Financial crime has a devastating impact on victims and white collar criminals should face jail because it does work as a deterrent, a top investigator has told a senate inquiry.
Tax dodgers, fraudsters and insider traders are often greedy or lazy but jailing them is a waste of money because it doesn't work as a deterrent, law academic Mirko Bagaric told a white collar crime penalties inquiry in Melbourne on Tuesday.
However that was refuted at the public hearings by Australian Securities and Investments Commission special counsel Rowan Davis who says prison time does prey on the minds of white collar criminals.
Based on 22 years of investigating and prosecuting criminals, jail was a definite deterrent, Mr Davis said.
"From seeing contemporaneous evidence of people in the process of committing crimes, including telephone intercepts, emails, etc ... the fear of prison will actually be spoken about," he said.
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White collar criminals were "greedy and quite often lazy", Professor Bagaric told the senators.
But at a cost of more than $100,000 a year per prisoner, putting such criminals behind bars also made them "an utter burden on the taxpayer", he said.
"The harshest penalties in our criminal justice system need to be reserved for people we are scared of, not who we're angry at," Prof Bagaric said.
Prof Bagaric, now at Swinburne University, and Deakin academic Theo Alexander suggested community service orders or professional disqualification orders could be among alternative punishments.
Mr Davis told the senators Prof Bagaric's view risked "underestimating the impact that financial crime can have on victims."
"In my experience it's devastating," he said.
Australian Federal Police assistant commissioner Ian McCartney also described jail as a "highly effective deterrent".
University of Sydney business law lecturer Juliette Overland argued for a minimum six-month imprisonment for insider trading.
However, Shane Kirne from the office of the Commonwealth Director of Public Prosecutions, talked down such sentences.
If mandatory minimum sentences were enforced, fewer people would make plea deals because no matter what their mitigating circumstances, they would go to jail, Mr Kirne said.
"From the community's perspective that means a lot more expensive trials," he said.
Law Council of Australia's Greg Golding was supportive of a deferred prosecution agreement system being introduced.
He said such a system would allow corporations to enter guilty pleas but avoid prosecution, reducing the cost on the justice system.
The senate inquiry is investigating, among other things, the use of custodial sentences and the value of monetary penalties.
