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Community Affairs Legislation Committee
25/07/2012

BRENNAN, Mr Sean, Director Indigenous Legal Issues Project, Gilbert and Tobin Centre of Public Law

[11:55]

Evidence was taken via teleconference—

CHAIR: Welcome. Thank you for making your time available to us. We really value your input. I know that you know all about parliamentary privilege and the protection of witnesses. I now invite you to make an opening statement and then we will go to questions.

Mr Brennan : The submission I am giving primarily relates to legal and particularly constitutional features of the Low Aromatic Fuel Bill 2012. If that is all the information that is required, will I now proceed to an opening statement?

CHAIR: Go ahead and then we will go to questions.

Mr Brennan : First of all, can I thank the committee for the opportunity to contribute to its deliberations on the bill. I am making a submission in my capacity as a member of the Gilbert and Tobin Centre. I am solely responsible for its contents and I did upload only last evening—and I apologise to the committee—a written submission to the committee as well, for which I am solely responsible. But I have had the chance to confer with a number of colleagues and seek their comments and advice.

I guess I can summarise the main points of the submission I am making in point form before we get to questions. Before I get to that, this is the second opportunity I have had to appear in front of the committee. Members might remember at a hearing in Alice Springs, for its 2009 report, we made a submission which included coverage of a similar issue, which essentially was the constitutional capacity of the Commonwealth to make a law mandating the stocking of Opal fuel. I would like to take the opportunity to congratulate all of those who have been involved to date with the voluntary rollout of Opal. It appears to be universally unacknowledged that, as a demand-reduction measure, the rollout of Opal has been a real success story.

Things have reached a particular stage with the resistance of a small number of people in the retail supply chain and that is what has brought about this bill and the inquiry. Many of the people, particularly the ones the committee has heard from working on the ground with these really tough issues, will be hoping that the committee's deliberations can produce a solution to that longstanding problem concerning a small number of suppliers.

My submission is essentially this: firstly, on the face of it, the approach of the bill as far as it goes appears to me to be legally sound. Secondly, the existing reliance on the corporations power as the constitutional basis for the bill is likely to be effective in regulating the conduct of at least a very high proportion of fuel suppliers in a given area in Australia. Thirdly, given that the prime motivation for the legislation is to regulate the conduct of a minority of suppliers who are resisting the rollout of low aromatic fuel, consideration should be given to extending the constitutional basis of the bill. I believe that if there are commercial suppliers of fuel which are not trading corporations for the purposes of the Constitution, the bill could regulate them if it were extended to rely on other Commonwealth powers in the Constitution and I am happy to expand on that in questions.

CHAIR: Yes, please.

Mr Brennan : Fourthly, in extending the constitutional basis of the bill beyond the corporations power a policy question does arise about the extent to which the bill regulates supply by entities and/or persons which are not trading corporations. Any extension of that kind does require some caution and some careful drafting. The recommendation I would make in my submission is that, if the constitutional basis of the bill is extended to incorporate reliance on, for example, the territories power and the races power, the targets for legal regulation be confined to a commercial business or retail setting. I say that because I think it would be consistent with the cautious and incremental approach to the rollout of low-aromatic fuel that has been taken to date, particularly for the issue of introducing a legislative mandate.

The final point of my introductory statement concerns attributing criminal responsibility or responsibility under the offence provisions for the offences where they are committed by employees or agents. It may be that a bit more attention could be paid to that in the existing bill. Further attention would need to be paid if there were an extension of the bill to apply to non-corporate entities and holding them responsible for contraventions of the Act.

To explain what that possibly-obscure-sounding point is: the principles of criminal liability are not my primary area of expertise, although I did have an opportunity to look at some documents, including the major Commonwealth policy document on framing Commonwealth offences, and talked to a colleague in that area. I think it is appropriate to flag these issues for the committee's attention. It particularly concerns the question of strict liability because, if a strict liability offence is created under Commonwealth law, it has to be done so explicitly, and that does not appear in the bill at the moment. It may be that imposing a standard of strict liability on corporations for offences that are committed by their employees or agents is an appropriate means of achieving the objects of this bill. There is for completely understandable reasons reluctance in a general sense to creating strict liability in the area of criminal law, but there are always well-recognised exceptions to that principle, and those are set out in this Commonwealth policy document about framing offences. I think this context does present as one that could well come within that exceptional category. There is no penalty of imprisonment in the bill. It is likely to enhance the deterrence regime and the integrity of a public health measure, and the corporations involved would receive plenty of advanced notice of the legislation. So in those circumstances having a standard of strict liability apply for the acts of employees and agents might well be worth the committee having a look at. That is the end of my initial submissions.

CHAIR: Thank you. We do have your submission; thank you very much. We will get lawyers to read it! Senator Siewert has some questions.

Senator SIEWERT: Although we are talking about a small number of suppliers in the central area, as the rollout of Opal expands there is the potential that we will also need to look at where other suppliers that are less well known to us at the moment may also start refusing to stock non-sniffable fuel. So I also have an eye to the future as we are trying to roll out Opal further. I am asking, therefore, whether the points you have made would still be appropriate for a broader range of suppliers bearing in mind what legal entities they are?

Mr Brennan : That is right. I framed this submission with the knowledge that already the Commonwealth has gone into other states on the voluntary rollout and that the Commonwealth has the intention that the rollout, having been successful so far, is something it wants to proceed with. Therefore, it makes sense at this point, with the bill before a Senate committee to look at the question of the viability of a Commonwealth law mandating supply in places well beyond the Central Australian region of the Northern Territory.

Senator SIEWERT: Okay. So your comments around the territory power in particular are obviously only going to apply to the NT.

Mr Brennan : I would say it applies in two geographical areas. It applies in the Northern Territory and, because of the breadth of that power according to the High Court, there is no doubt in my mind that a law of this kind applies to corporations in the Territory, regardless of whether or not they are trading corporations for the purposes of Section 51(xx). A law like this as applied to corporations in the Territory is a law for the government of the Territory under section 122. So I think that, where the conduct occurs inside the Northern Territory border, this bill can be made to apply in that area and would just be a fairly straightforward task of drafting to ensure that result. You would then get that extension inside the Territory borders beyond strictly trading corporations.

But the High Court has also looked at the territories power before and acknowledged that a law that regulates conduct in a state can affect the government of the Territory, and for that reason I have submitted in the present written submission and in our last one in 2008 that you could support the regulation of fuel supply and the incidental measures even if the suppliers are located at sometimes significant distances potentially, interstate.

Senator SIEWERT: If that were coming into the NT? For example, there is the case where we have two suppliers over the Queensland border that are affecting Lake Nash in the NT. You could use those powers to regulate those two servos?

Mr Brennan : I have seen the media coverage of that situation. I understand we are talking about a distance of something like 20 kilometres across the border—not a very large distance across the Queensland border. Is that right?

Senator SIEWERT: Yes.

CHAIR: It is fairly close. It is a bit more than 20.

Mr Brennan : A bit further than that? Right. In principle I think that if there is a demonstrable connection between the sniffing that occurs inside the Territory and the existence of supply across the border then a law based on the territories power could regulate a petrol supplier in Queensland. To explain that principle very quickly, I put it this way: what you need is a sufficient connection between the government of the Territory and the operation of a law inside Queensland. In the immediate context we are talking about here that means regulating fuel supply in that part of Queensland is practically relevant to the effectiveness of a supply restriction in the Territory. I think from the kinds of coverage of that situation that appear in the media that it must be possible to make a strong case about the impact of at least near-border places supplying when across the border it is not possible to obtain sniffable fuel and near those cross-border suppliers there is a problem with sniffing. It is a matter of evidence in the end; the court would have to be persuaded there is a connection between the two, and it would get down to the facts, but in my view there is a legal principle backing up the evidence which shows that if you can show that connection then the law will be supported even though it is not inside the Territory borders.

Senator SIEWERT: Thank you. Outside the NT and which is clearly not connected to the NT—for example, in WA—you cannot use those powers? You would only be able to regulate trading corporations? Do I understand what you are saying correctly?

Mr Brennan : It is close, but I would say there are three main powers you could be looking at in a situation where the location is, let's say, several hundred kilometres from the Northern Territory border. The first is the extended operation of a Territory law. The only reason I am pointing that out is that the case where this principle was established involved TAA flights from Perth to Darwin. This was in the old days, when the government owned the airline. The court found that a stop-off by TAA in Port Hedland, many hundreds of kilometres from Darwin, under Commonwealth legislation was a valid exercise of the territories power because it ensured the efficiency of air transport links to the Territory. So, depending on the circumstances, you can have quite distant places regulated under the territories power, according to the High Court. That may not be the case with a terrestrial situation of the kind we are talking about once you start moving many kilometres away, but that is the first thing—the territories power.

The second one is, as you say, the corporations power. We assume, and all the studies that we have been reading in relation to this inquiry and what preceded it suggest, that most of the fuel suppliers would be trading corporations for the purposes of the Constitution, and that makes sense. So in most parts of Western Australia, for example, fuel suppliers probably answer the description of a trading corporation. That power is very broad, according to the High Court. Its most recent important decision in that area was the Work Choices case and it says it is a very broad power. We are confident that the kinds of provisions contained in this bill would be supported by the corporations power where it targets a trading corporation.

But what if you have a partnership or a sole trader in Western Australia where you cannot show a connection to supply into the Northern Territory? That is where we have gone to a third option, and I have to say it was not without some hesitation that we contemplated the races power. It is now 2012, and the difference between 2012 and 2008 is that we have had the benefit of the recent debate, which senators will be very familiar with, about amending the Australian Constitution. The expert panel delivered its report to the government in January. Lots of people made submissions to that panel and there has been lots of public debate surrounding it. There is a very strong consensus in support of the continuation of a national power to make Indigenous-specific laws, laws with respect to Aboriginal and Torres Strait Islander people. The panel recommended that that power be disciplined, as should the whole Constitution, by a non-discrimination principle, a non-discrimination clause. Personally, I agree with that position.

The virtue of that debate is that, in my view, if the constitution were changed tomorrow along the lines that the panel recommended, the extension you could have of this bill to rely on the existing races power could be possible under that power. If it were able to draw support from that amended power recommended by the panel, I think that would make it an appropriate present-day use of what we have, which is the races power. I can go into a bit more detail about that, but that would be the third option that I think is worth considering in this context.

Senator SMITH: I have a couple of general queries. In the Australian newspaper, the minister has remarked that forcing petrol station owners to sell Opal would be a 'legal minefield'. Based on your research and the submission that you have provided to us, do you think there is any basis for the minister's comment?

Mr Brennan : I do not know what lies behind the minister's view. Obviously the Commonwealth has been a driving force in the successful rollout of Opal to date. It has the benefit of resorting to expert Commonwealth legal advice. Obviously I have not seen that advice. I can only comment on the face of the bill that I have seen to the extent of my own expertise.

What I say about the bill is that it seems to me to have a range of features that make it legally sound. It is subjected to periodic review. All of the ministerial discretions that are created under the bill refer back to the key object of the bill, which is to reduce the harm from petrol sniffing. So I think the discretions that are created are controlled. There is a requirement to consult with the community before the minister takes the key decisions—for example to determine that an area is a low-aromatic fuel area or a fuel control area. The act preserves compatible state and territory legislation. I understand that Minister Snowdon has been very frustrated about the holdouts as well, and he said some pretty strong things about that in public as well. I understand the negotiations have gone on for years with retailers who will not cooperate. Also, it is easy to understand that in a federal system, where so much has been achieved to date under a cooperative way of working—with states and territories, with retailers, with communities—there is a lot of attractiveness to that approach. The legislation changes the tenor of things. But I guess we have reached this point and the question is: what to do about the outlets which are resisting the introduction of Opal fuel?

From my point of view—where I see the bill making a contribution—the bill creates leverage to ensure that this supply reduction measure can be as effective as possible. It is something that the minister is not required to exercise. The minister's discretions are controlled. There is a consultation requirement. It is not a blanket imposition and compatible state and territory laws can continue to exist. I think he is right in that state and territory governments could legislate in this area, but I think that what has brought about this inquiry and this bill is the sense from a lot of community organisations that the non-legislative approach has not a solution achieved to date. As far as we can tell, we believe there is constitutional power to support the bill as it stands. We also believe that it could be extended, as I just explained in our submission. It could be extended so that it would be more effective across more regions and, on the face of it, we see it as having a number of sound legal features as well.

Senator SMITH: So there is nothing obvious to you, with your legal experience, that would leave you to concur with the minister that it was a legal minefield?

Mr Brennan : All I can say is that we have looked at the bill closely and we have tried to come up with an analysis of its features and its constitutional basis. These issues are complicated. We understand that constitutional law is a complicated area. We are just not aware of the advice the Commonwealth might have. Hopefully the committee process can be a way—I heard Senator Siewert say this herself—of ventilating the problems there may be at a constitutional level or a legal level with the existing proposal for a bill. Let us hope that whatever path is taken, whether it is the Commonwealth bill or another one, the solution is found, because the underlying message that I know this committee is very aware of, and I know the minister is very aware of this, is: people on the ground really want a supply reduction solution that helps them combat the really destructive effects of sniffing.

Senator SMITH: Moving on to your submission, at the end of page 4 and the beginning of page 5 you talk about section 122 and the use of the territory power. I am particularly interested in the opinion of the Western Australian state government to the use of that. We can ask them, of course, but I am just curious to know, again with your experience: do you have any indication about how the Western Australian government might react to the use of that power with regard to this particular bill?

Mr Brennan : I do not have direct knowledge of what the Western Australian government's reaction would be. I guess this is where some of the sentiments being expressed by the minister might come from. Obviously, federal relations are a continuous matter of negotiation and a voluntary rollout depends on relationships. The bill currently before the committee is proposing a fairly targeted legal intervention to alter the calculus of negotiations a little bit, particularly, hopefully, to alter the calculus of thinking in suppliers who are resisting the rollout of low aromatic fuels. I imagine in the end it will depend on the situation and on the particular area. I understand from other submissions—I do not have first-hand knowledge of this—that some states and territories, maybe Western Australian and Northern Territory, have gone on public record making supportive comments about a federal mandate, essentially, for Opal. I do not know whether that has been recently validated by those governments. I think it does depend issue by issue and I understand that the minister himself has written to the states and territories to ascertain their views about a federal mandate. I do not think there is any kind of automatic answer to these questions. Can Commonwealth powers be used legitimately in the eyes of states? Sometimes the answer is yes because the state sees the virtue of having a single national law and perhaps we are looking at that situation here, but as I said, I do not have first-hand knowledge of the Western Australian government's position on it.

Senator SMITH: As a result of your research, are you aware of any alternative opinions about the constitutionality of the law? I have been able to identify only one comment—that is, the minister's comment about the legal minefield. Through your research have you been able to identify any other individuals or groups who might have concerns about its constitutionality?

Mr Brennan : I have seen opinions to the committee in the present inquiry. They seem to be supportive of the constitutional validity of the bill. I am also aware, as the committee no doubt is, of the cost-benefits analysis carried out I think in 2010 at the University of Adelaide. That included contributions from some lawyers on constitutional issues, among other things. To be fair to the discipline I work in, there is acknowledgement that it is pretty hard to get clear-cut answers in advance on constitutional validity. So it is a matter of best informed assessments in advance about validity. Overall, the tenor of that report also supported the idea of Commonwealth legislation being valid.

Senator SMITH: What would be the disadvantages of trying to encourage state and territory governments to come at their own legislative response, even if they were similar, as opposed to a single Commonwealth response? Is it just one of timeliness?

Mr Brennan : Time is a factor and I think that issue was referred to in the South Australian

Centre for Economic Studies report on the cost-benefit analysis. The other issue, if there is an individual regulation, is the possibility of some inconsistency across the border between the forms of regulation that are used. I should say I have not referred in the written submission to another possibility—which to some extent bridges these two sentiments of states and territories preserving greater say over these matters and on the other hand in the virtue of a single uniform law regulating the field—which is the possibility of the referral of powers.

Another basis upon which the Commonwealth can make a law is where one or more states and/or territories have referred power either to make a particular law that is spelt out in full detail, like this one, or a power over a subject matter, such as the regulation of unleaded fuel or something like that where a very sure basis for legislating can be created at a national level but it is done on a voluntary and consensual basis by the states and territories. That is also an option that has been discussed in the past.

One of the issues that arise with referrals of power is similar to the one about having individual states and territories legislate; it slows to the pace of the slowest moving state or territory in order to achieve the overall legislative outcome that you want. The virtue of the Commonwealth approach is that passage through a single parliament is sufficient to bring the law into being.

Senator SMITH: Thank you very much.

Senator SIEWERT: Mr Brennan, I have a couple more questions. I just want to follow up where you left off. One of my concerns with that would be the slowness of response and, particularly with the states doing their own laws, the incompatibility, where some of them are slightly different.

Mr Brennan : That is right. So there is the potential delay in achieving the legislative outcome you want and, secondly, there is the question of maintaining the necessary consistency between laws across borders. There may be somewhat different approaches taken in different jurisdictions, but compatibly. But an issue particularly arises if there are changes over time to one state or territory's laws, which creates a bit of inconsistency across the border with the law in another place.

Senator SIEWERT: I want to go back to the minefield issue. I would have thought something like Work Choices would have been a much bigger minefield than this bill, for example. Would that be a fair statement?

Mr Brennan : I do not know. It is hard for me to compare those two fields. In a sense, the comparison between them would be that there is a primary focus on the corporations power, a power that before and, particularly, after has been acknowledged to be one of very wide scope. That is partly because the High Court gives it a very wide reading and partly because there are so many parts of our economy that are constituted by trading corporations. There is a great similarity in that sense. But every issue has its own complexity.

One reason I feel a little hesitant in commenting directly on the comparison is the complexity that no doubt has attended the process to date in achieving the rollout in a tri-state area or beyond and the nature of those intergovernmental relations. But, on the other hand, it has to be said—and I think this is what you, Senator Siewert, in particular have acknowledged—that things have reached a point where a non-legislative approach to the holdout problem just has not yielded a solution after protracted negotiations. At this point, some sort of decisive action seems necessary to deal with that problem.

Senator SIEWERT: Thank you.

CHAIR: Mr Brennan, I have a more general question—and I am not across law greatly—about compensation. I have read the bill and it talks about the decision being made by the federal government.

But we know that at this stage the bill is being directed because of a number of people who have held out on the voluntary basis of making a change. So, if we then go into a mandated process, what would be the process for compensation liability?

Mr Brennan : I will give you my immediate response—not a considered response to that question. My immediate response is that that would be at two levels. At the first level, the Commonwealth can decide just as a matter of legislation that it will compensate people who experience an adverse impact from the introduction of new legislation. That is a policy decision that the Commonwealth can make at any time. But, at the second level, does the Constitution require the Commonwealth to compensate people? The answer is that in some situations it does, because section 51(xxxi) of the Constitution says that an acquisition of property has to be made on just terms, and if the Commonwealth does not provide just terms then the law is invalid. So that is something the Commonwealth drafters cater to all the time in legislation, by creating a safeguard against that risk of invalidity. I guess it is not obvious to me in this instance what is the acquisition of property suffered by a petrol supplier who is provided with a Commonwealth subsidy for supplying a product that is supplied to consumers by all other acquisition of in the same area and is an entirely equivalent product in all material respects. So it is not clear to me what the property is that a retailer in a zone that was subjected to these laws is experiencing.

Even if it could be demonstrated that there is an acquisition of property in this bill, the next issue the High Court talks about in those situations is essentially that they are not compensable if it can be shown that the law is a reasonable regulation in the public interest on many occasions. That is a very difficult standard and test to anticipate the answer to in advance, but it is pretty clear to me that there is a public health objective here. The fuel suppliers are not being denied the right to trade fuel under their licence, which could empty out the economic value of having the licence to sell fuel. They are simply being told that the kind of fuel they can sell under that licence is of a particular technical configuration, and to me it is not obvious why that would be an acquisition of property that would attract any compensation liability. As I say, that is an off-the-top-of-the-head response, but that would be my view.

CHAIR: Thank you, Mr Brennan. It is very useful. Thank you for your evidence and your submission. If we have any follow-up questions, we will be in contact with you.

Mr Brennan : Thanks.

Proceedings suspended from 12:33 to 13:01