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Thursday, 16 May 1985
Page: 2105

Senator CHANEY (Leader of the Opposition)(5.35) —The Opposition will support the passage of the Customs and Excise Legislation Amendment Bill 1985 which makes a series of amendments to the customs and excise legislation of the Commonwealth. However, we will be seeking a number of amendments to it. I will, in the course of my speech at the second reading stage, give some indication of the areas of concern to the Opposition. The Bill does a number of things which are, apparently, unexceptionable and that is why we are supporting it. It amends the Customs Act 1901, the Excise Act 1901, the Distillation Act 1901, the Spirits Act 1906 and the Coal Excise Act 1949 in a number of ways.

The principal amendments to the Customs Act are changes to the provision governing tender quota allocations, which will add flexibility to the existing provisions and also allow tariff concession orders to be revoked in a number of specified circumstances. The principal amendments to the Customs Act and the Excise Act seek to provide more effective control over aircraft and ship stores, especially excisable products, and to impute to a body corporate a state of mind of its directors, servants and agents acting within the scope of actual or apparent authority where that state of mind is relevant to an excise prosecution of the corporation. They also seek to index automatically the rate of rebate for duty paid on diesel for what might be described generally as off-road purposes. The principal amendments to the Excise Act, the Distillation Act, the Spirits Act and the Coal Excise Act will increase the level of penalties and update the prosecutions provisions in those Acts.

The proposed amendments to the tender quota provisions to which I have referred lift from the Act the present restriction which requires the quota to be tied to a particular year. It can be readily imagined that that gives very little flexibility to those who are operating under quota. From the point of view of those who are commercially involved in the importation of goods, clearly there could be very real difficulties because of the strict time restriction. However, perhaps more importantly, the change which is being sought by the Government is necessary if it is to be able to implement part of the car industry plan which envisages that quotas will be established over a period of four years-the last four years of the first five years of the plan. That general scheme has the support of the Opposition. We would not wish to place any barrier in the way of the Government implementing that aspect of the car plan.

There are also some other changes to the tender quota arrangements but I do not think there is any point in my detailing those. I am sure they are understood by those who are concerned with this industry. They are not matters which are of concern to the Opposition in the sense that we would wish to change anything. We are happy to support the general changes which are proposed with respect to the quota system. Therefore, I will offer no further comment on that aspect of the Bill.

However, the change which is proposed to the tariff concession arrangements will need more attention from this chamber. Mr Acting Deputy President, you would be very familiar with the concerns which have been expressed because they were the subject of consideration by the Senate Standing Committee for the Scrutiny of Bills which you chair. It is still a matter of concern to Opposition senators that on our reading of the proposed sections as they stand, after amendment by the Government in the House of Representatives following representations from various quarters, it would still be possible to read them in a way which would permit the retrospective operation of a revocation by the Minister.

We are concerned about that because it would be quite possible for an importer to act on the faith of a published tariff concession, to import goods, to have a finding by the Minister or by his Department that perhaps the concession ought not have been issued and therefore ought be revoked, to have it revoked back to the date of the making of the concession and to have at least an argument that duty was payable on goods that were imported after the date of the making of the concession order, before the date of the revocation, but with the revocation being back-dated to the original date. Because that is a matter of concern to the Opposition and because the Government has, I think, indicated that it does not wish this section to have retrospective operation, it is the intention of the Opposition to move an amendment-an amendment which the Government might argue is a bit of a belts and braces job-which would place beyond doubt any question of the revocation having a retrospective application with the imposition of charges or the payment of tariff on goods that were imported during a period when it was apparent that the concession order was in force. I hope that there will not be anything particularly controversial about that proposal. It does appear to me that the Act in its present form at least arguably leaves the possibility of a retrospective revocation open and we ought not pass the legislation with that possibility still there.

The changes being made to the Customs and Excise Act, which are designed to more effectively control imports of excisable product, are not changes which appear to the Opposition to give rise to any particular difficulties. They appear to be aimed at meeting concerns about effective control in this area and the Opposition will not oppose those provisions. Certainly in the inquiries we have made, we have not been able to find any users or people who are involved in the importation of goods who regard the changes as giving rise to any particular difficulties. Therefore, these changes will have our support.

Perhaps one of the most important provisions in the legislation is the Government's move to index diesel fuel rebates. That is a matter which I am sure will give rise to some debate in the Committee stage. The Government is moving in this legislation to partially cure a defect which was introduced by this Government in the changes it made to the excise arrangements in the 1983 Budget.

I think it is worth going through the history of that matter so that the position of the Opposition can be clearly understood. Prior to the Budget in 1982, the arrangement was that certain users were exempt from excise duty and, as I recall the arrangement, users obtained certificates of exemption and were able to purchase fuel without paying the excise. There was a system in place which permitted those users who were exempt from excise to purchase their fuel without the excise, of course at a lower rate or at a lower purchase price than applied to other users.

There were concerns at that time-and I think those concerns were also the concerns of the then Opposition-that the method of providing for exemption did permit some abuse. There were suggestions that there was quite widespread abuse of the purchase of exempt fuel for purposes which were not legitimate in terms of giving rise to the right to claim the exemption.

For that reason, there was a switch announced in the 1982 Budget that as from that date all diesel fuel would bear the full rate of excise duty irrespective of its end use, and the then government, the Fraser Government, contemporaneously introduced a system to allow users to claim rebates of the excise in respect of certain categories of off-road end use. Broadly, that was domestic use, hospitals, nursing and convalescent homes and in the agricultural, mining, fishing and forestry industries. I might say that in a sense it is a mercy that the precision with which those categories can be drawn is not a matter for debate under this legislation because inevitably in these circumstances wherever we place the category, there is a new point at which there is discontent because a user is just outside it. I am sure that the Minister for Industry, Technology and Commerce (Senator Button) will be pleased to know that it is not the intent of the Opposition to move an amendment that would go to the question of categories, because I am sure we could have a wonderful few days debating that.

The arrangements were then effectively changed by the new Government. Although it left in place the situation where the user had to pay the full price for fuel, including the excise, and subsequently claim the rebate, it made two changes in its first Budget which affected the amount of excise which was payable by users. First, it indexed the excise and by that means, of course, it guaranteed that twice yearly there would be adjustment to the amount of excise payable and in the same Budget, quite apart from the introduction of the indexation element, it increased the excise on motor spirit and diesel fuel by 1.5c per litre.

It is at this point that the difficulty arises that the Government's own amendment partially seeks to remedy and which we seek to remedy fully because what the Government did was to leave the rebate of excise on diesel fuel at the level of the excise which had applied prior to the increases that were brought about by the 1983 Budget. In other words, the rebate remained in place. The same users had the right to claim the rebate, but the amount of rebate they could claim was fixed at the level of excise up to the point of the 1983 Budget. The 1.5 per cent adjustment and the indexation adjustment-the two increases to the excise introduced pursuant to that Budget-were not included as part of the rebate. This left a gap of a couple of cents between the amount of excise payable by exempt users and the amount they could actually claim back.

With the Government's determination to ensure that it retains the flow of revenue from excises and the indexation provisions, that gap proceeded to grow. In the next six months, following an indexation change, the amount of excise not subject to rebate was increased. It was increased again by the adjustment that was due because of indexation. At the time of the 1984 Budget there was a third indexation adjustment to excise with the rebate being fixed. In the 1984 Budget the Government announced a partial response to the complaints which it had received, not surprisingly, from those people who were entitled to the rebate. It announced in the 1984 Budget that the rebate, which was still at the rate of 7.155c per litre, would become subject to six-monthly indexation, with the first indexation adjustment to the rebate in February 1985.

At first blush that might appear to have remedied the problem, but of course it did not because it did not take into account the three indexation changes which occurred-the one at the time of the 1983 Budget, the one half way through the year and the one at the time of the 1984 Budget-and it did not take into account the 1.5c per litre increase in the excise which was laid down by the Government in the 1983 Budget. Indeed, given the indexation of the total excise, what the Government's announced intention will bring about is simply a narrowing of the gap for the time being between the amount of the rebate and the amount of the excise. However, on my understanding of the arithmetic involved, because of the continued indexation of the whole of the excise the gap will continue to grow-so that there will be a number of cents-and that will increase at six-monthly intervals, which would not be subject to rebate.

It is hard to see why in logic if one takes the decision that certain users should receive a rebate, that that rebate should be partial and that the extent of the rebate should vary on a sort of constant basis every time there is an indexation adjustment every six months. I think the arrangement that the Government proposes to put in place really is quite illogical and silly.

I remind the Senate that the following people are entitled to a rebate under section 78A of the Excise Act: People who are in mining operations or primary production, otherwise than for the purpose of propelling a road vehicle on a public road; people at residential premises who provide food and drink, lighting, heating, air-conditioning, hot water and similar amenities and who meet other domestic requirements of residents of the premises; and people at hospitals, nursing homes or other institutions which provide medical or nursing care or at a home for aged persons. As I say, I do not wish to open up the argument about whether those categories are all cut off at the point of perfection because I am sure we could have an endless discussion about that. I simply put the proposition that the Opposition's view is that those persons who are entitled to the rebate of duty ought be entitled to the full amount of the rebate which is payable rather than be given a partial rebate, the percentage of the total rebate varying at six-monthly intervals. That to me and to the Opposition seems to be a quite ludicrous situation. We propose to seek amendments in Committee to restore the amount of the rebate to the full amount of the excise payable.

I must say that, for a fairly small technical Bill, the proposals that the Government has put forward seems to have attracted a great deal of interest and attention. I note that both the fourth and sixth reports of the Senate Standing Committee for the Scrutiny of Bills made comments on the Bill. The sixth report contains responses from the Minister. I have no doubt that the Minister, like the Opposition, has received a lengthy submission from the Law Council of Australia. The Opposition wishes to move amendments which touch on the concerns which have been raised by the Committee. I acknowledge that the Senate Standing Committee for the Scrutiny of Bills does not recommend amendments, but it has drawn matters to the attention of the Senate. The Opposition wishes to respond in respect of a number of areas.

I wish to refer to the sixth report of the Committee which was brought down in the last few days. The Opposition is concerned about the provisions of clause 16 which relates to the unauthorised use of cameras. The Government proposes in this legislation to insert a new offence section in the Customs Act which, to quote the report:

. . . would prohibit a person (including a disembarking passenger) from operating a camera or using an appliance which records or transmits sound except by authority-

That is, where that person is at a place where a sign is displayed and so on. The Committee has expressed concern that it would not appear necessary, as the section is at present worded, that the person prosecuted had seen the sign or had even been aware that the place was one where the unauthorised use of cameras or sound recorders was prohibited. The report goes on:

. . . it would not appear necessary that the person prosecuted had been aware that the personal baggage of passengers was being examined in the vicinity.

The Opposition concurs with the Committee's expressed view that one of the paragraphs was cast far more broadly than was necessary. Although we accept that the intention of the Government in preventing people from taking action which would reduce the efficiency of the Customs in policing the importation of goods, we are concerned that innocent parties could well be caught up quite unfairly in a prosecution and in the circumstances of the sort which, on the correspondence which the Committee had had with the Minister, is not really the sort of conduct which the Minister and the Government are seeking to catch.

It is the intention of the Opposition, therefore, to move an amendment which would be in one of the forms suggested by the Committee. I would like to make it clear that in putting forward amendments to this legislation the Opposition is essentially concerned, except on the excise question, with technical questions of law and with the fair application of the law to the citizen. I would like to make it quite clear that we would be happy to reconsider any amendments we put forward in light of drafting comments or, indeed, alternatives put forward by the Government to meet the problems which are suggested. I do not suggest that there is any high policy in the amendments in this area, rather there is a need to protect the liberty of the subject. I must say that certainly we are not at all prepared to go along with the suggestion that the Minister made that we simply allow the legislation to pass in the existing form, on the basis of an undertaking by him that the Act would then be amended in the next session of Parliament. I make it quite clear in our rejection of that suggestion from the Minister that we do not impugn his bona fides in his suggestion that he would bring forward the legislation.

Senator Button —I am sorry, but I missed the start of the point you are making.

Senator CHANEY —I was just saying that the Opposition is not prepared to go along with a suggestion that, according to the report that the Minister made to the Committee, the clause be passed in its present form on the basis that subsequent legislation would be brought on in the next session of Parliament to remedy the defect. I really do not think that that is an appropriate way for this Parliament to deal with legislation. I just want to make clear that we are not impugning the Minister's bona fides. I am not wishing to suggest that the Minister would not honour the undertaking that he gave. However, all Ministers are temporary, not to a greater or lesser extent. We just do not know when the period of office is going to end. All governments are temporary and parliaments tend to get very crowded. Legislative programs get very difficult.

Senator Button —I am sorry to interrupt but we will not be adopting that course. We will accept your amendment.

Senator CHANEY —I thank the Minister for that interjection. I simply would like to make it clear to Senator Button that, as I say, I mean no disrespect. I am sure that he would honour that undertaking but a lot of things can intervene to prevent that occurring.

I wish to refer to a more difficult matter on which I am still receiving advice from the Law Council of Australia. I disagreed with some of the advice that it gave to the Opposition. I am sure that it gave the same advice to the Government. As a result I raised some queries with it. Quite frankly, I would prefer that the Committee stage of this Bill be dealt with next week because that would give both the Government and ourselves the chance to consider further the points that the Law Council has made just in the last few minutes. Clause 17 raises the issue of vicarious liability. Again, the Scrutiny of Bills Committee has commented on that matter. The report states that the Committee:

. . . raised for the consideration of the Senate whether it was just that a natural person in particular should be made criminally liable for the acts of servants or agents of which that person had no knowledge and for which that person had given no express authorisation.

In addition, the Committee drew attention generally to the clause. The Law Council of Australia was much more critical than the Scrutiny of Bills Committee. I suppose that the Council is free to be more critical. The Council put in a submission which very strongly argues that the sort of provision which is being sought here has no place in the criminal law. I think that is an expression which is used. The Council is particularly concerned about the application of the proposal to individuals.

The Council also raised the question of whether it is fair and just for a company to have the views of its director, servant or agent acting within the real or apparent scope of his authority attributed to the company. I understand from a recent conversation with Mr Hawke, the Secretary-General of the Law Council of Australia, that there is particular concern that a director, servant or agent acting within the apparent scope of his authority but perhaps acting against the express instructions of a corporation, might still render a corporation liable and that a dissatisfied servant might actually be able to do enormous damage to an employer company by wilfully getting the company into breach of the excise legislation.

The Opposition naturally wants to consider very carefully the views of the Law Council and, like the Scrutiny of Bills Committee, is concerned to see that the liberty of the subject is protected. I do have some difficulty with some of the views which the Law Council has put forward. I have looked at a number of references. I know that we should avoid becoming too tied up in trying to give legal opinions in this place. On the other hand, we have to try to pass legislation which will work. I must say that in the few authorities to which I have been able to turn I find the proposition that we should not impute the intentions of the director, servants and agents of the corporation to the corporation is a rather difficult one to sustain. I find it hard to see how we could ever prove an offence by the corporation, if we do not have a provision of the sort which the Government is proposing. I would have thought that in the absence of the clause a similar rule would apply; in other words, the clause is really making more definite what I think the law might well be in any event.

I do not wish to spend too much time on legal matters but I welcome the chance to raise the matter today because I would like the Minister and his advisers to consider very carefully, as we have tried to do, the propositions put forward by the Law Council. I give notice that I am particularly concerned about the concern it expressed about the position of the individual human being whose servants' and agents' intentions are imputed to him. But I am less concerned about corporations for the sorts of reasons that are reflected in the third edition of Colin Howard's book entitled Criminal Law. At page 390 under the heading 'Corporations' it makes the point generally that the commercial world is dominated by the institution of the registered company. It then makes the following point:

Australian courts have had no difficulty in trying corporations on charges of crime. The only problem of substance peculiar to the trial of a corporation derives from its need to act through human beings, for some test has to be adopted to decide when the actions of an employee are to be attributed to the corporation for the purposes of the criminal law and when they are not. In Australia this problem has been solved by borrowing from the civil law the notion of scope of employment: E's-

that is the employees's-

actions are those of the corporation if they may reasonably be regarded as within the scope of his employment.

At the bottom of page 390 it states:

The scope of E's employment for this purpose is not necessarily limited by what he has express authority to do, for if it were, at least in the case of junior employees, it frequently would be possible to exclude the operation of the criminal law by arguing that E had no authority to commit an unlawful act.

However, it continues:

On the contrary, it has been held that the knowledge of a junior employee may be the knowledge of the corporation, even though he has been forbidden by a senior employee to act in the manner to which the knowledge relates.

In trying to visualise the factual circumstances in which this clause might be applied, the Opposition at present finds it difficult to support the view of the Law Council that it is unreasonable to impute to a corporation the proven intention. I think it is important to note that the clause still requires proof of the intention on the part of the director, servant or agent. We find it difficult to see how that clause could be administered if that proven intention could not be regarded as the intention of the corporation on whose behalf the act was carried out.

No doubt we can canvass these matters in greater detail at the Committee stage. I acknowledge the reply which the Minister gave to the Committee for the Scrutiny of Bills, which deals with other aspects of the fact that these convictions are not regarded as criminal. I must say that that was a novel matter as far as I was concerned. I would be interested to hear more from the Minister on that point. Certainly, the scheme of the Act and so on certainly seems to me to be normal regime of criminal matters. It seems to me to be a rather technical matter to suggest that Customs Act offences are not criminal offences. However, that may be another reason for not going along with the view of the Law Council of Australia that these things have no place in the criminal law. As I say, having read Howard and at least one other text book, I find that a little hard to sustain.

I wish I could say that I wish the Bill a speedy passage. On this occasion I merely say that I wish it a passage in this session. I hope that we can iron out some of the technicalities which I do think afflict this legislation. We believe it can be improved. I think it is a good example of a Bill that would have been better dealt with by sending it to a committee, but I do not propose that that course be followed on this occasion.