The Attorney-General notes that this is apparently inconsistent with both the right to freedom of speech and the right to be free from unreasonable search and seizure. Their solution is to add a clause, similar to those in the Statistics Act, stating that no information gained using this power may be used as evidence in a prosecution (it is unclear whether it would prohibit it from being the subject of a second demand under the IRDs existing power to demand evidence for enforcement purposes). That might fix the narrow legal problem the Attorney-General has highlighted, but I think there's a bigger underlying one - namely, is it really reasonable that IRD be able to seize documents on pain of prosecution simply to do its policy homework? Is allowing government agencies to forcibly outsource their policy development in this way really "an important public purpose"?
I don't think it is, sorry. Which means that the proposed fix doesn't address the underlying issue. Instead, the only way of doing that is to remove the clause from the Bill entirely.