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Judiciary Amendment Bill 1998
Bills Digest No. 99 1998-99
This Digest was prepared for debate. It reflects the legislation as introduced and does not canvass subsequent amendments. This Digest does not have any official legal status. Other sour ces should be consulted to determine the subsequent official status of the Bill.
Judiciary Amendment Bill 1998
To establish the Australian Government Solicitor ('the AGS') as a statutory body, to make various arrangements regarding the operatio n of AGS and to implement provisions by which the Attorney-General can direct the Commonwealth's legal work.
The Bill has been introduced to implement the recommendations of the Report of the Review of the Attorney-General's Legal Practice, March 1997 ('the Logan Report'). Many of the measures in this Report's recommendations have already been implemented administratively, however the Attorney-General's Department awaits the passage of this Bill before making some final adjustments.
The Logan Review was given its Terms of Reference by the current Attorney-General in 1996 and reported in early 1997. It was conducted by a committee of three: Basil Logan, a prominent New Zealand businessman with experience in New Zealand government reviews, David Wicks, QC, a member of the South Australian Bar and counsel assisting the Royal Commission into Commercial Activities of the Western Australian Government and Stephen Skehill, then Secretary of the Attorney-General's Department, now a partner with Mallesons Stephen Jacques a private sector law firm with a growing government law practice.(1)
The Terms of Reference given by the Attorney-General directed the Review to consider a wide range of factors, including:
- the Liberal and National Parties' Law and Justice Policy Statement of February 1996
- the Commonwealth Competitive Neutrality Policy Statement of June 1996
- the 'Privatisation Principles -- A Privatisation Decision Tree for Retention and Divestment of Commercial Businesses' of July 1996
- the role of the Attorney-General
- the Commonwealth's need for expert, extensive, diverse, independent, confidential, consistent, co-ordinated and accountable legal services, and
- the community service obligations and other public interest functions and considerations relevant to the provision of legal services to the Commonwealth such as:
- the requirements of government policy in administration
- the need for the Commonwealth and its agencies to be a model litigant, and
- the need for consistency and fairness towards the citizen.
Th e Review developed four options which it felt deserved consideration:
- The Status Quo with Competitive Neutrality
- The Status Quo with Competitive Neutrality and Greater Contestability(2)
- A Public Sector Provider Separated from the Department with Greater Contestability and Transparency, and
- No Public Service Provider.(3)
It decided option 3 was the best option because it had come to the conclusion that:
- there is a strong and necessary public interest in maintaining a central legal service provider
- this central legal service provider should, however, be established so as to ensure competitive neutrality, to enable it to compete effectively with the private sector, and to be transparent and accountable
- the services this central provider provides should by [sic] subject to increased contestability, and
- [it] maximises choice for Commonwealth purchasers of legal services.(4)
From the Review's consideration's of the issues it is apparent that, while there is no immediate intention to privatise AGS, and while the At torney-General said in his Second Reading Speech that '[T]he Government has firmly concluded for the reasons outlined by the committee that [the commercial parts of the Legal Practice] should be retained within government ownership,' the option of selling off elements or all of the AGS will remain a possibility. The current change in structure would make this option more easily achievable.
The debate regarding the pros and cons of privatisation has been well rehearsed in regard to other matters before the Parliament and does not need to be explored further here.
The major changes in the Bill are the establishment of the AGS as a government b usiness enterprise which will be able to 'charge fees at market rates'(5) and will be able to employ staff and consultants outside the usual public service regime. Principles of 'competitive neutrality' will also be implemented. These are designed to ensure that the AGS does not enjoy any net competitive advantage over its private sector competitors by virtue of its public ownership. Thus it may pay dividends to the Commonwealth and will be required to pay an amount equivalent to the taxation it would have paid were it a private sector company. These measures are said by the Attorney-General to be necessary to ensure that the AGS remains competitive and 'cost-effective.'
It must be noted that, due to what the Attorney refers to as 'constitutional limitations' the AGS client base will be restricted to clients which have a Governmental nature, that is, they are either elements of government (Commonwealth, State or Territory) or they are statutory authorities or other quasi-governmental institutions.(6) This limitation on the AGS client base may have various effects on its competitive capacity and long term viability.
These various measures raise a number of questions, including whether making the AGS subject to the same regimes as private sector law firms will actually bring down legal costs for the Commonwealth, whether the AGS staff will benefit from being outside the public service employment regime and whether the limited client base will impact on the application of the competitive neutrality principles.
With respect to the question of whether the AGS staff will benefit from no longer being within the public service employment regime it should be noted that, while staff at the higher end of the salary spectrum, i.e. those in positions equivalent to partners in private law firms, could expect to earn significantly more if paid according to private sector expectations, lawyers at the lower end of the pay scale currently receive greater financial rewards under the public sector regime.(7) Public sector lawyers may have specifically chosen the public sector as an expression of their commitment to servicing the public interest. The changes being proposed in this Bill could change the nature of the commitments that have previously been made.
The introduction of the Legal Services Directions, which allows the Attorney-General to give the binding directions about the conduct of Commonwealth matters no matter who is acting for the Commonwealth, recognises what seems to be a widely held view that there are certain risks inherent in decentralising the provision of the Commonwealth's legal services, including the possibility that legal services could be inconsistent or lack co-ordination, they could fail to identify and appropriately deal with 'whole of government and public interest issues'(8) or they could ignore the need for the Commonwealth to act as a model litigant. There are some areas where this risk will be avoided, because some core areas of government legal work 'primarily Cabinet, constitutional and national security matters'(9) will be specifically kept to be dealt with by the AGS. However the Legal Services Directions will allow the Attorney-General to try to avoid the above mentioned potential difficulties in other areas.
Items 1 & 2 change the definitions of the AGS previously provided to refer to the new legislative provisions. Item 3 inserts a definition of legal practitioner, being those who are entitled to practice under State or Territory legislation.
Item 4 inserts new sections which deal with 'Attorney-General's lawyers' who are defined as lawyers within the Attorney-General's Department ( proposed section 55G ). Proposed sub-sections 55E(2) and (3) gives Attorney-General's lawyers the rights and privileges of practising as a Barrister and/or Solicitor under State or Territory laws but exempts them from State or Territory legislation which regulates that legal practice generally, although they are subject to specific provisions regarding the rights, duties and obligations of lawyers with respect to their clients and the courts, and the Attorney-General's lawyers can be subjected to disciplinary proceedings for misconduct. There is provision made for regulations to be made to exempt Attorney-General's lawyers from such State or Territory laws ( proposed sub-section 6 ). Proposed section 55Q also deals with this issue (see p. 5 of this Digest).
Proposed section 55F ensures that, if the Attorney-General approves, either specifically or generally, an Attorney-General's lawyer may act for two or more parties with conflicting interests.
Item 5 inserts two new parts into the Judiciary Act 1903 ('the Principle Act') which regulate the AGS ( proposed Part VIIIB ) and the rules about Legal Services Directions ( proposed Part VIIIC ).
Divisions 1 & 2 - Definitions and Establishment and functions of the Australian Government Solicitor
Proposed Divisions 1 and 2 deal with definitions and the establishment of the AGS. Proposed section 55K defines the functions of the AGS to be the provision of legal, and related, services to the Commonwealth and to bodies or people the Commonwealth has power to make laws for. It can also provide legal and related services to the States and Territories, including Norfolk Island or other external Territories.
Proposed sections 55L , 55M and 55P define the incidental powers of the AGS and provide that the AGS is a body corporate which may sue and be sued, and that it may charge fees for services provided and disbursements made.
Proposed section 55N allows the AGS to provide services to the Commonwealth, its Ministers, individuals being sued or suing on behalf of the Commonwealth, statutory authorities or employees of the Commonwealth, statutory office holders, members of the Defence Force or companies which the Commonwealth has a controlling interest in. A similar list applies to State and Territory regimes. It is to be noted that, in the normal course of events, proposed section 55N would exclude private individuals or bodies from the list of entities which the AGS may work for. While there are provisions made for the list of entities which the AGS may work for to be extended by the Attorney-General or the CEO of the AGS, any such extension must fall within the 'functions of the AGS' as defined by proposed section 55K , which restricts the functions to situations which are governmental in nature.
Division 3 - Capacity of AGS and AGS lawyers to act
Proposed section 55Q ensures that AGS lawyers are entitled to practice in all States and Territories with the relevant rights and privileges attaching to their work, although they are exempted from the general regulatory framework of the State or Territory regarding legal practitioners, other than the rights, duties ad obligations that lawyers owe to their clients and the courts. This proposed section also provides exceptions to the standard rules regarding working for clients with conflicting interests. There is also provision made for taking into account a 'lawyer's position as an employee of the AGS' when considering the nature of the rights, duties and obligations of an AGS lawyer to a client. This is an interesting provision, the ramifications of which do not seem to have been explored in the explanatory memorandum, which simply states that not all duties and obligations of a private practitioner to the court and their clients will be relevant to the practice of law by lawyers of the AGS. One of the explicit differences in the considerations is that, provided the Attorney-General has generally or specifically allowed it, lawyers with the AGS may act for two or more parties even when they have conflicting interests in a matter.
Division 4 - Appointment and terms and conditions of CEO and staff
Proposed section 55S , 55T and 55U establish a Chief Executive Officer (CEO) of the AGS and specify the means and terms of appointment. The appointee must be a lawyer with practising rights, and the appointment, which must be on a full time basis for up to 5 years, must be approved, not only by the Attorney-General but also by the Minister for Finance and Administration ('the Finance Minister'). The terms and conditions of the CEO's appointment are to be set out in the instrument of appointment and the Remuneration Tribunal can provide advice on these terms and conditions to the Attorney-General and the Finance Minister.
Resignation by the CEO must be in writing ( proposed section 55V ) and the appointment may also be terminated at any time by the Attorney-General and the Finance Minister in writing ( proposed section 55W ). No outside employment may be taken by the CEO without written permission from the two Ministers ( proposed section 55Y ). Proposed section 55X establishes a requirement that the CEO advice the Attorney-General and the Finance Minister in writing of any (including non-pecuniary) interest that he or she acquire which could conflict with their role as CEO.
There are standard provisions made for the appointment of an acting CEO ( proposed section 55Z ). The provisions for the CEO to employ staff and consultants ( proposed section 55ZB ) and to delegate his or her powers to an employee ( proposed section 55ZA ) would remove the need for the CEO to comply with the employment conditions established by the Public Service Act 1922 .
Division 5 - Money
While proposed section 55ZC exempts the AGS from State and Territory taxation regimes, proposed section 55ZD introduces provisions for it to make an equivalent payment to the Commonwealth. The sum to be paid is set by the Attorney-General and the Finance Minister and is to be determine to ensure 'the AGS does not enjoy net competitive advantages over its competitors' because of its taxation exemption. Similarly the Ministers may require the AGS to pay a dividend or engage in other 'corporate governance arrangements' ( proposed section 55ZE ). Once again the dividend payments would be to ensure the AGS did not enjoy a net competitive advantage over its competitors.
Part VIIIC - Attorney-General's Legal Services Directions
This part introduces an important tool for the management of Commonwealth legal services. The Commonwealth has traditionally regarded itself as bound to act as a model litigant -- to 'act with complete propriety, fairly, and in accordance with the highest professional standards.'(10)
The Attorney-General is given the power to issue Legal Services Directions regarding either general Commonwealth legal work or the conduct of specific matters ( proposed section 55ZF ). These Legal Services Directions have a statutory force under proposed section 55ZG , although compliance is only enforceable through the Attorney-General, and non-compliance with a Legal Services Direction may only be raised by, or on behalf of, the Commonwealth.
The Legal Services Directions over-ride legal professional privilege and other duties of confidence, although it does not mean that privilege is waived when documents are disclosed under such a direction ( proposed section 55ZH ).
The Attorney-General and those who act in reliance on a Legal Services Directions are not liable to actions for what they have done (or not done) in order to comply with the Direction. The Explanatory Memorandum comments that this is to prevent the Attorney-General being subjected to an action or proceedings arising from the performance of his functions.
The provision in this Schedule are technical in nature and simply provide for t he current AGS to become the new AGS, so that the latter is the 'successor in law' of the former and the business transfers over ( item 3 ). It also provides that the Attorney-General has the power to transfer Commonwealth assets ( item 4 ) and liabilities ( item 5 ) and that the Secretary of the Attorney-General's Department can transfer AGS records ( item 6 ).
Item 7 provides for the making of regulations both for the purposes of transitional matters and more broadly under the proposed Act.
This Schedule amends a number of Acts which had previously referred to Officers whose role will have changed under the new legislation. These amendments could be seen to represent examples where the role of Attorney-General's officers is being wound back. The legislation which is being affected in this way is the:
Aboriginal Councils and Associations Act 1976
Aboriginal Land (Lake Condah and Framlingham Forest) Act 1987
Lands Acquisition Act 1989
Lands Acquisition (Northern Territory Pastoral Leases) Act 1981
National Parks and Wildlife Conservation Act 1975; and the
Northern Territory (Self-Government) Act 1978.
The Defence (Visiting Forces) Act 1963 is amended so as to allow the Attorney-General to delegate his powers and functions to an Senior Executive Service Officer in the Attorney-General's Department.
The Director of Public Prosecutions Act 1983 has various minor consequential amendments and the AGS is exempted from the operations of the Freedom of Information Act 1982 and the Administrative Decisions (Judicial Review) Act 1977 .
1. National Goals and Priority Setting by Government Science and Technology Agencies, December 1994, Paper prepared for the Coordination Committee on Science and Technology, p. 3.
2. The principles of 'competitive neutrality' are designed to ensure that the AGS does not enjoy any net competitive advantage over its private sector competitors by virtue of its public ownership.
3. Review of the Attorney-General’s Legal Practice, p. 5-6 & Chapter 9.
4. Ibid., p. 6.
5. Second Reading Speech, p. 3.
6. See Nick Sedden and Stephen Bottomley, ‘Commonwelath Companies and the Constitution’, Federal Law Review, v. 26(2) 1998, pp. 271-307.
7. Lawyers at the lower end of the pay scale within Attorney-Generals currently earn between $31,793-$61,350 (Legal 1) and $67,275-70,331 (Legal 2). In Victoria, for example, the median gross salary for private sector solicitors in a large CBD practice is between $35,000-$45,359 and between $25,500-$38,914 in a country firm: Law Institute of Victoria, Law Institute Journal, February 1997, p. 13.
8. Second Reading Speech, p. 7.
9. Second Reading Speech, p. 4.
10. Legal Services for the Commonwealth , Ian Govey, Director, Office of Legal Services Coordination, June 1998, p. 7.
3 February 1999
Bills Digest Service
Information and Research Services
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