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Thursday, 21 August 2003
Page: 19280


Mr McCLELLAND (11:33 AM) —I rise to speak in this cognate debate on the Legislative Instruments Bill 2003 and the Legislative Instruments (Transitional Provisions and Consequential Amendments) Bill 2003. By implication from its title, one would consider that the Legislative Instruments (Transitional Provisions and Consequential Amendments) Bill 2003 was rather a dry piece of legislation, but it has significant practical benefits. The bill establishes a regime for the making, registration, scrutiny and sunsetting of Commonwealth legislative instruments. The ultimate source of this bill was a 1992 report of the Administrative Review Council entitled Rule making by Commonwealth agencies, which was followed by three previous versions of the bill introduced into the parliament in 1994, 1996 and 1998. So a lot of work has been done in this area by the previous government and, in fairness to him, the current Attorney-General. We are aware that in reintroducing the bill, the government has sought to address some concerns previously voiced by the opposition, as well as concerns expressed by Commonwealth agencies about the consultation requirements contained in those earlier bills. The opposition continue to support this legislation and were pleased the Senate supported a motion to refer the bill to the Senate Standing Committee on Regulations and Ordinances to run a final ruler over the bill and ensure it meets outstanding concerns.

As this legislation has been extensively debated before, I will not detain the committee longer than is necessary to comment on what have been controversial aspects of previous bills and the broader issues raised by the current bill. As a fundamental issue, the initial point is about the range of instruments covered by the bill. The bill applies to all instruments of a legislative character made in the exercise of a power delegated by parliament except instruments expressly excluded by legislation. In the case of uncertainty, the Attorney-General is given the power to certify whether or not an instrument is legislative. However, the certificate is subject to judicial review and is itself a legislative instrument subject to the act but not subject to parliamentary disallowance.

There has been extensive debate about this mechanism in the other place on whether this provides an adequate check on the Attorney-General's exercise of discretion. In the spirit of compromise, the opposition are prepared to accept the mechanism of judicial review, recognising that the Federal Court has considerable experience in answering the legal question which arises in various contexts of whether something is legislative or administrative in character. The Attorney-General's decision under this legislation to seek judicial review on the ground of error of law would effectively be to ask the Federal Court to conclusively answer this question of law. If the court were to disagree with the Attorney-General, it is difficult to see how the Attorney-General on a reconsideration of the matter could reach a different legal conclusion from that which the court had indicated.

The area of consultation is an important area but one that is in further contention. The main concerns were not so much those of the parliament as those of government agencies, which were concerned that the mandatory consultation process in previous versions of the bill would have exposed important legislative instruments to legal challenge on the basis, of course, of arguments that appropriate consultation had not occurred. To avoid that, the new bill provides that, while an absence of consultation does not affect the validity or enforceability of a legislative instrument, before a rule maker makes a legislative instrument they must, nonetheless, be satisfied that all appropriate and reasonably practicable consultations have been undertaken. They must do so particularly where the proposed instrument is likely to:

(a) have a direct, or a substantial indirect, effect on business; or

(b) restrict competition;

The aim of the bill is that the rule maker should, among other things, ensure that persons likely to be affected by the instrument have an adequate opportunity to comment on its proposed content. The government must table and register an explanatory statement describing these consultation processes. The Attorney-General has said that this is already government policy and that the government does consult before making legislative instruments. The implication is that this bill reflects existing government policy, culture and practice. However, it is worth testing that in reality and I refer to a recent, albeit controversial, instance that demonstrates why this bill is necessary. As an example, I take the Excise Tariff Proposal No. 4 (2002), made under the Excise Tariff Act 1921, and the Customs Tariff Proposal No. 3 (2002), made under the Customs Tariff Act 1995, which are both legislative instruments that in future, if this bill is passed, would be subject to the Legislative Instruments Act.

The legislative instruments that I have referred to were tabled in the House of Representatives on 16 September 2002 and they came into effect at 12 a.m. on 18 September 2002, a matter of a little over 48 hours. They implemented a policy change announced without warning, it appears, by the Howard government just four days earlier, on 12 September, that excise and customs duty would be imposed on ethanol. I ask: did the government comply with the principles expressed in the Legislative Instruments Bill in respect of appropriate consultation? On any view, I think it should be accepted that the government's package of changes had a direct effect on business and restricted competition, to use the language of the Legislative Instruments Bill, to which I have earlier referred.

It directly damaged businesses in Australia seeking to import ethanol, and in particular Neumann Petroleum and Trafigura Fuels, which were waiting on a shipment of ethanol from Brazil, and directly benefited the Manildra Group of Companies which has, as I understand the position, a near monopoly on domestic ethanol production. But who did the Howard government consult before making these two significant legislative instruments? We know that they consulted Mr Dick Honan. There was, apparently, quite frenzied contact and correspondence between the Howard government and the Manildra Group before these instruments were made but they did not, it would seem, consult with Neumann or Trafigura, who stood to lose and indeed, as we understand the position, did lose hundreds of thousands of dollars on their shipment of ethanol as a result of these legislative instruments—that is, unless you view the apparently, again, substantial and quite frantic calls from the Australian embassy in Brazil to Trafigura inquiring about the planned ethanol shipment as consultation.

Regrettably, it seems that embassy officials forgot to mention the impending legislative instruments to which I have referred. Likewise, the Australian Customs Service, which prepared the Customs Tariff Proposal No. 3 instrument, on 14 May this year, in answer to a question on notice from Senator O'Brien, admitted:

Customs was not involved in consultations with companies or industry organisations prior to the imposition of the new duty rate on ethanol.

Again, that is contrary to the principle of consultation which will now be legislatively entrenched in the Legislative Instruments Bill. But returning to the example, if, as the Attorney-General claims, the Howard government does have a policy of consulting before making legislative instruments, it appears that it was completely ignored by the Prime Minister and indeed literally every other minister during what has become known as the Manildra scandal. Not surprisingly, Mr Paul Moreton, the Chief Executive Officer of the Australian company Neumann Petroleum was quoted in the Sydney Morning Herald on 16 August this year as describing the process leading to the making of these legislative instruments as:

... pernicious and treacherous. The way that they did it was absolutely meant to punish Trafigura and Neumann's. They weren't just changing the law to protect Manildra, but were setting out to cause us a financial loss.

Mr Moreton, I believe, was particularly justified in feeling aggrieved as he had in fact accompanied the Minister for Trade on a trip to Teheran in early September last year, during which time no mention was made of the impending legislative instruments. In a letter to the Prime Minister on 18 September last year, literally when the instruments came into effect, Mr Moreton wrote:

There was plenty of time to warn us of your intended action. Had we been advised, we would not have made the decision to import, which I may add was made in good faith and intended to develop a blended fuel market in Australia.

In summary, while I appreciate that that example was controversial, it starkly demonstrates why the Legislative Instruments Bill 2003 is sorely needed to raise what appears in this case to be an appalling standard with respect to consulting with affected interests before making significant delegated legislation. As I have indicated, hopefully this bill will avoid another Manildra-type scandal from arising.

Another area of contention in previous debates has related to the exemptions in the bill from the consultation requirements. The terrain of this debate is somewhat different now that the government has replaced the mandatory consultation processes with the mechanisms in the current bill. We note that the bill now proposes an indicative list of circumstances in which a rule maker may be satisfied that consultation may be inappropriate. We would expect that rule makers would not make a practice of justifying a failure to consult by including a bare reference in their explanatory statement to one of the paragraphs in clause 18 of the bill. To again use the controversial ethanol example, it would have been unacceptable in our view to simply have referred to clause 18(2)(b)—that the instrument was required as a matter of urgency—to justify the failure to consult before making those legislative instruments imposing excise and customs duty on ethanol. This is what happened—the Howard government was obviously intent on helping out Manildra by sabotaging the ethanol shipment from Brazil before it arrived, but plainly such a contrived urgency should not be used to justify a failure to consult other Australian businesses who are about to sustain economic damage because of the Howard government's decision to introduce those legislative instruments.

In relation to the drafting of legislative instruments, the bill requires the secretary of the Attorney-General's Department to cause steps to be taken to promote the legal effectiveness, clarity and intelligibility of legislative instruments. The secretary must also cause steps to be taken to prevent the inappropriate use of gender specific language and the parliament must be notified of any occasion where existing instruments are found to contain inappropriate gender specific language. We are pleased that the government has picked up that recommendation of the Senate.

The bill also formally established the federal register of legislative instruments which will be publicly accessible via the Internet and will be maintained by the Attorney-General's Department. In reality, the department has maintained a federal legislative instruments database for some years which will now be significantly enhanced and given a statutory foundation. Any legislative instrument made after the commencement of the bill must be registered to be enforceable and the register must also contain explanatory statements and compilations of legislative instruments. There is also a mechanism for back capturing existing legislative instruments for inclusion in the register. Effectively a one-stop shop will be created for legislative instruments making it much easier for individuals, businesses and of course advisers to access the relevant law as set out in these instruments.

The bill also provides that all registered legislative instruments must be tabled in parliament and are subject to substantially the same disallowance regime as currently applies to regulations and disallowable instruments under the Acts Interpretation Act 1901. The bill provides for a number of exemptions to the disallowance regime. I note that the Attorney-General has undertaken that no new exemptions from disallowance are however created by this bill. The bill provides for sunsetting or automatic repeal of legislative instruments after 10 years, again to avoid our system being clogged by irrelevancies that can only cloud the community's understanding of legal obligations. However, there are a number of exemptions. This mechanism was previously objected to on the ground that it gave no automatic capacity to the parliament to extend the life of instruments that should endure beyond the sunset period.

The new bill requires the Attorney-General to table in each house of parliament a list of each instrument scheduled to sunset 18 months ahead of the sunsetting date. While that will impose some understandable administrative burdens on relevant departments, it is significant. It will enable either house of parliament by resolution to exempt further nominated legislative instruments from sunsetting. Again, we record our appreciation that the government has responded to the concerns of the parliament about those sunsetting provisions. Finally and appropriately, the bill provides for a review of legislation after three years and a review of sunsetting provisions after 12 years.

I would like to make some comments on the issue of scrutiny of legislation generally. It has been more than a decade since the Administrative Review Council recommended an improved federal regime for delegated legislation. I suspect that after extensive debate and amendment we are almost there. While this legislation deals with scrutiny of delegated legislation, it is a good opportunity to look to the future and ask what should be done about scrutiny of legislation generally. I note that this government—and I have previously praised the initiative—has created what is known as the treaties committee, which effectively undertakes a role of scrutinising proposed treaty action before Australia commits itself to a treaty. I believe that committee has been tremendously valuable not only in ensuring that treaty action is in the interests of the country but also in involving members of the public in the process of treaty action by inviting them to present submissions and often inviting them to attend hearings to give evidence as to how they, their interests, their community or their organisation will be affected by proposed treaty action. In a sense it is a form of participatory democracy, with the treaties committee hearing from the public before making a recommendation.

That system, as a result of initiatives of former Senator Murphy and the development of the committee system—in particular in the Senate and in the parliament more generally—is evolving into what is increasingly becoming a consultative mechanism in respect of crucial bills. I believe that is also an encouraging thing for democracy and something that over time, if implemented genuinely, will result in the public being involved again in the legislative process at least in respect of crucial pieces of legislation that are frequently referred to a committee process by one of the houses of parliament.

The Australian Labor Party sees these steps towards greater transparency in executive rule-making as part of a necessary movement towards greater transparency and accountability in law-making more broadly in those instances that I have referred to—both treaties and, in some instances, legislation. All members of the House would be acutely aware that, more than ever, Australians feel alienated from the political and parliamentary processes. I believe the health of our democracy would be greatly improved by policies to re-engage the public in the legislative process as a general rule, rather than in respect of specific or controversial pieces of legislation. It would ensure that, in particular, people's fundamental human rights are genuinely observed in the development of legislation.

I am not simply talking about rights which are of the nature of freedom to a fair trial. I am also talking about fundamental rights such as access to the highest reasonably attainable levels of both physical and mental health care, in terms of appropriate levels of housing, social security, access to infrastructure and the like. These are rights that very much go to all Australians' living standards, which, I think it is fair to say, each and every member of parliament is committed to enhancing and improving. In this respect the Stanhope government of the ACT is to be congratulated for its initiative in establishing a consultative committee to examine whether the ACT should adopt a form of bill of rights. Following extensive consultations with the ACT community, the committee reported in May this year and recommended the adoption of new human rights legislation. One important aspect of this proposal was for greater scrutiny of proposed legislation before it is enacted by the parliament. The committee proposed that a statement be tabled with all legislation introduced into the ACT parliament concerning its compatibility with specified fundamental human rights and that a parliamentary committee be established to scrutinise that compatibility.

This mirrors one aspect of the United Kingdom's Human Rights Act, which requires a ministerial statement of compatibility. The UK parliament has also established the Joint Committee on Human Rights, which has published over 30 reports on compliance of proposed legislation with the Human Rights Act and significant human rights instruments and has persuaded the government on several occasions to amend draft legislation to improve and advance human rights within Great Britain. Even after a relatively short period of operation, views are being expressed that the Human Rights Act has had a significant and positive impact on the legislative culture of the United Kingdom.

Indeed since 1969 the national platform of the Australian Labor Party has included a commitment to a bill of rights. In 2000 the platform was amended to enshrine the objective of a legislative charter of citizenship and aspirations, picking up this notion of involving a dialogue between the parliament and the people as to how their rights will be affected by legislation. We saw that as a first step in improving the observance of human rights in the political process. Previous proposals for a bill of rights in Australia have foundered, partly because it is argued that it is something which expands judicial power at the expense of parliamentary sovereignty. However, this completely ignores the sophisticated mechanisms that can be put in place within the parliament itself to improve scrutiny of legislation from that significant human rights perspective, not simply from the point of view of protecting esoteric or inane concepts but from the point of view of actually advancing the living standards of citizens before legislation is made. I believe that now, as we are putting in place a better regime to scrutinise delegated legislation which is far more sophisticated in approach than that which has previously occurred—as demonstrated by my reference to the Manildra issue, which I believe is very relevant in comparing what is inappropriate to what is appropriate—it is time that we as a parliament look forward and consider other reforms to open up legislative and parliamentary processes to greater scrutiny and, indeed, involving of the public in a form of participatory democracy, as opposed to simply electoral democracy. Having made those points, I commend this bill to you, and I look forward to the report of the Senate committee.