Bills Digest no. 128 2007–08
Wheat Export Marketing Bill 2008
WARNING:
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 sources should be consulted to determine
the subsequent official status of the Bill.
CONTENTS
Passage history
Purpose
Background
Financial implications
Main provisions
Concluding comments
Contact officer & copyright details
Passage history
Wheat Export Marketing Bill 2008
Date introduced: 29
May 2008
House: House
of Representatives
Portfolio: Agriculture,
Fisheries and Forestry
Commencement: Sections
1 and 2 on the day of the Royal Assent; sections 3 to 90 on 1 July
2008.
Links: The relevant
links to the Bill, Explanatory Memorandum and second reading speech
can be accessed via BillsNet, which is at http://www.aph.gov.au/bills/. When Bills
have been passed they can be found at ComLaw, which is at http://www.comlaw.gov.au/.
The purpose of the Bill is to establish a system for
regulating the export of bulk wheat by companies which are accredited
by Wheat Exports Australia (WEA) under the wheat exporter accreditation
scheme (the Scheme).
The agricultural policy landscape at both State and Federal level was
once well populated by statutory trading monopolies and other legislated
arrangements for the marketing of farm products. However, reforms in
both agricultural policy and the broader economic agenda over the last
couple of decades have transformed agricultural marketing in Australia
to the point where the monopoly over wheat exports is the only remaining
such arrangement effective at the national level.
Currently the Australian domestic and export wheat markets operate very
differently. The Australian domestic wheat market was completely
deregulated in 1989, and has operated free of specific government regulation
since that time. Growers are able to directly sell their wheat to domestic
traders and consumers, or to deliver their wheat into ‘pools’.
The Australian export wheat market is directed through a single
exporter of bulk wheat – Australian Wheat Board International Limited
(AWB International). This is known as the ‘single desk’. The statutory
regulator, the Export Wheat Commission, manages the export of non-bulk
wheat (that is, bagged or container wheat).
The Wheat Marketing Amendment Act 2006, which was passed in December
2006, gave effect to temporary changes to the Wheat Marketing Act 1989.
The changes transferred the right to veto bulk wheat export applications
from AWB International to the Minister for Agriculture, Fisheries and
Forestry until 30 June 2007. Further background to the temporary arrangements
including a short history of Australian wheat marketing is provided in
the Bills
Digest prepared for the Wheat Marketing Amendment Act 2006 which
was enacted as a result of the Volker
report into the UN Oil-for-food program and the subsequent Cole inquiry instituted by the Commonwealth
Government.
The Wheat Marketing Amendment Act 2007, provided, amongst other
things, that the temporary transfer of the power of veto over bulk wheat
from AWB International to the Minister would be extended to 30 June 2008.
That power of veto is due to end shortly.
This Bill sets out proposed major changes to the manner in which bulk
wheat is to be exported.
This Bills Digest should be read in conjunction with the Bills Digest
for the Wheat Export Marketing (Repeal and Consequential Amendments) Bill
2008.
Exposure Drafts of the Wheat Export Marketing Bill 2008 and the Wheat
Export Marketing (Repeal and Consequential Amendments) Bill 2008 (the
bills) were tabled in the Senate on 11 March 2008.
On 12 March 2008 the Bills were referred to the Senate Standing Committee
on Rural and Regional Affairs and Transport (the Senate Committee) for
inquiry and report by 11 April 2008. On 13 March 2008, the Senate moved
to extend the reporting date for the inquiry to 24 April 2008.
The inquiry was widely advertised in metropolitan and rural newspapers.
In addition the Senate Committee wrote to a number of individual growers,
grower groups and peak bodies inviting written comment. The Senate Committee
received 48 written
submissions in relation to the inquiry.
The final
report was issued on 30 April 2008.
The Senate Committee made three recommendations. The major recommendation
suggested amendments be made as follows:
- clarification of WEA’s objectives
- clarification and guidance in relation to the powers and discretions
available to WEA
- clarification and guidance in relation to the process for renewal
of accreditation
- clarification of the process for review of decisions and
- legislative provision for review of the legislation.[1]
Additional comments to the formal report were provided by
Liberal Senators.[2] The Liberal Senators concluded from discussions
and meetings with all industry players that there is an acceptance and
anticipation, albeit a reluctant one by some, that a multi-licensing system
in one form or another will be introduced.[3]
The Liberal Senators expressed the view that the proposed
Bills should be supported with amendments which would ensure that the
legislation operates to produce optimal outcomes for wheat growers.[4]
In addition to those recommendations made in the main body of the report
by the Senate Committee, the Liberal Senators proposed the following:
- that individual wheat growers who wish to directly export their own
wheat to a third party should be exempted from the provisions of the
Act[5]
- that minimum standard trading terms should be established[6]
- a mechanism to improve the position of wheat growers as unsecured
creditors in relation to pool products[7]
- the application of the access test to ‘up country’ storage facilities
either under Part IIIA of the Trade Practices Act 1974 or by way of
mandatory industry code[8]
- the provision of timely information about grain stocks[9] and
- clarification of the external audits which can be undertaken by WEA.[10]
A dissenting report was lodged by the Nationals’ Senators.[11]
They made two recommendations. The major recommendation was that the
legislation be withdrawn on the grounds that the draft bills have not
taken into consideration that the majority of Australian wheat growers
want the retention of a grower owned and controlled wheat marketing system.[12] The second recommendation was
that the AWBI maintain the management of the single desk for the forthcoming
year with power of veto to remain with the Minister. In the meantime
the Bills should be redrafted to include a number of matters which would
fully address the concerns which had been expressed in the written and
oral submissions to the Senate Committee.[13]
Whilst there appears to be general support for
the Bill by the Liberal party[14] there is strong resistance to the dismantling of the single
desk wheat exporting arrangements by the Nationals. Senator Ron Boswell
contends that:
Growers will no longer have the relationship that
they currently enjoy with the single desk entity and there is nothing
to compel a licence holder to develop markets, provide price and market
information or even pay them.[15]
John Forrest MP summarised the Nationals’ concerns about the Bill as
follows:
The Bill has many weaknesses apart from scuttling
the single desk. It does not recognise the need for a national pool
subject to prudential requirements; it does not provide for a buyer
of last resort; it provides no regulatory restrictions against predatory
practices in the export market place; and provides no arrangements on
quality control (which has been Australia’s huge advantage); and there
is no veto on the issuing of export licences to any company which has
a bad reputation in the market place.
In addition, there is no regulatory measures [sic]
in place to police anti competitive behaviour in transport and handling
in ports.[16]
It has been reported that the Liberals and Nationals have publicly split
over wheat export policy and appear set to vote against each other on
the new laws.[17] The
substance of the debate on the Bill in the House of Representatives on
3 June 2008 confirmed the differing views of the opposition parties on
the matter of the demise of the single desk. Of the ten ‘no’ votes for
the second and third reading of the Bill, eight were by Nationals members.
The other two ‘no’ votes were by Independent members.[18]
It remains to be seen whether the same voting pattern will apply in the
Senate in relation to the amendments which have been foreshadowed by the
Hon. Dr. Nelson, Leader of the Opposition which are addressed in the body
of this digest.
Funding of WEA will be provided through application fees under the Scheme
as well as the Wheat Export Charge. Funds currently held by the Export
Wheat Commission will be transferred to WEA.
The government has stated that it will provide up to $9.37 million for
transitional measures to aid implementation of the new arrangements.
Up to $4.37 million of this cost will be offset from the funding appropriated
to the Department of Agriculture, Fisheries and Forestry.[19]
There are two key issues arising from the Bill:
- whether individual farmers should be permitted to sell their own
wheat without having to become accredited wheat exporters and
- the requirement that an accredited wheat exporter which is also the
owner or port terminal facilities must have in place formal access arrangements
for those facilities under Part IIIA of the Trade Practices Act 1974
(TPA).
The exposure draft bill contained a requirement that an accredited wheat
export be a ‘trading corporation’ under the Corporations Act 2001.
The Senate Committee received evidence in support of the accreditation
of co-operatives and of individual growers who wish to bulk export wheat
grown on their properties.[20]
The Senate Committee did support the inclusion of co-operatives in the
legislation, but stopped short of recommending that individual farmers
should be allowed an exemption from the new legislative scheme.[21]
The Government does not believe it is necessary to extend accreditation
rights to individuals, as prudent managers would operate as a company
to reduce their exposure to risks associated with shipping what are expected
to be high-value tonnages.[22]
However the Hon. Dr Nelson, Leader of the Opposition, has stated that
the Liberals ‘would be moving an amendment to allows individual wheat
growers who wish to directly bulk export their wheat to an international
purchaser to be exempt from the system’.[23]
One of the key issues is the requirement for a formal access regime in
respect of port terminal facilities. Currently bulk handling and storage
facilities are owned and controlled by a very small number of companies.
Concerns were raised before the Senate Committee that, in the event that
some or all of these companies became accredited exporters under the proposed
legislation, they may be in a position to limit access to these facilities
by other exporters.[24]
For example, the submission by the NSW Farmers Association states:
The Association believes fair and open access to port
facilities is an essential requirement for wheat export marketing …
If this access is not closely scrutinised it will provide an unfair
advantage in an environment which is attempting to stimulate competition.[25]
Similarly, the submission by the Institute of Public Affairs states:
The draft bills mandate an access regime for port
infrastructure owners who also want to become accredited wheat exporters.
The ostensible reason for this is to prevent port infrastructure owners
from acting as monopolists to the disadvantage of potential competing
exporters. The apparent fear embodied in the draft bills is that Graincorp,
CBH and ABB will deny other exporters equal access to their bulk handling
port facilities.[26]
Clause 24 of the Bill provides for an access test in respect of
two periods. The first period will operate up to and including 30 September
2009. The second period will operate after 1 October 2009, at which time
formal access under either Division 2A or Division 6 of Part IIIA of the
Trade Practices Act 1974 (TPA) will have to be in place.
States and Territories are entitled to proclaim their own access regimes
for essential facilities if they wish to do so. Section 44M of the TPA
sets out the process by which States and Territories can ascertain
whether or not an access regime they introduce is an effective regime
for the purposes of the TPA.
The practical consequence of a State or Territory regime being regarded
as an effective regime is that the National Competition Council (NCC)
cannot make a recommendation that a service be ‘declared’ under Division
2 of Part IIIA if that service is already the subject of an effective
regime.
The process is a relatively simple one:
- the State or Territory prepares an access regime which will normally
be given effect by specific legislation
- the regime is submitted to the NCC by the responsible State or Territory
Minister
- the NCC reviews the regime in a public process by which it seeks
and considers submissions made by the State or Territory as well as
by interested members of the public
- the NCC publishes a draft report and invites and considers submissions
on it
- the NCC forwards a final report to the federal Treasurer with a recommendation
on whether or not, in its opinion, the regime is an effective one and
- the federal Treasurer then makes a decision on the recommendation
and publishes that decision.
The NCC has made a number of access declarations
in respect of state gas, electricity and rail access regimes.
The tests used by the NCC in determining whether an access
regime is an ‘effective regime’ are those set out in the Competition
Principles Agreement.
An alternative method of achieving the same result is for the facility
owner to lodge an ‘access undertaking’ with the Australian Competition
and Consumer Commission (ACCC). This is dealt with by section 44ZZA of
the TPA which enables the ACCC to accept access undertakings from any
person who owns infrastructure to which a third party might seek access.
The process to be followed by the ACCC in assessing proposed undertakings
is essentially a public process:
- on receipt of an application the ACCC publishes the application and
seeks submissions on it
- once the submissions have been assessed the ACCC will prepare and
publish a draft decision. The ACCC often retains experts in the particular
area to assist it in its consideration of the matter. Any one affected
by the matter is entitled to make a submission on the draft decision.
- the ACCC considers all the submissions and makes a final decision.
In considering whether or not to accept an undertaking,
the ACCC takes into account a number of matters including any pricing
principles promulgated by the Minister. The disadvantage of using this
model is that the issue of ‘price’ looms large in any consideration.
The submission by the Institute of Public Affairs to the Standing Committee
states:
the imposition of an access regime is by definition
designed to force infrastructure owners to provide access at lower prices
than would occur through voluntary contract.[27]
The Independent Committee of Inquiry into National Competition (known
as the Hilmer Report after the Chairman, Fred Hilmer) recommended the
implementation of a national competition policy for Australia.[28]
Amendments to the TPA[29]
which came into effect in 1995 established ‘a new legal regime under which
firms could be given a right of access to ‘essential facilities’[30] owned by another firm, when
the provision of such a right meets certain public interest criteria.’[31]
That regime is contained in Part IIIA of the TPA.
It does appear that the system of access regimes, so strongly endorsed
by the Hilmer report, has been in operation in Australia for over a decade.
It has been the cornerstone of the deregulation of the electricity and
gas industries. As the possibility that some industry stakeholders may
limit access to their port terminal facilities by other exporters was
raised before the Senate Committee, the requirement for formal access
arrangements will go some way to assuage these concerns.
As an alternative to a formal access regime Graincorp, CBH and ABB suggested
that a Supply Chain Code of Conduct would provide a commercially based
solution to guaranteeing new bulk wheat exporters access to both port
terminals and upcountry grain accumulation facilities. The companies proposed
that the Code would become an integral part of the accreditation scheme,
would be enacted with the agreement of all signatories and subject to
the final approval of the Minister.[32]
In response, the Standing Committee considered that a Code of Conduct
could be an affective alternative to the question of access, subject to
the following qualifications:
- The legislation should be amended to require exporting companies
to comply with an ‘industry code’ as a requirement of accreditation.
Industry would be given a set period of time to come up with such a
code
- The Code would apply to those companies which have obligations under
the Code and would not be limited to Bulk Handling Companies
- The Code would be registered by the ACCC under the TPA and subject
to acceptance by WEA.[33]
The Bill does not make any provision for a Code of Conduct as an alternative
to formal access.
However, the Government has signalled that if any problems are identified
in relation to access to up country storage facilities, it will take steps
to remedy the situation, including by way of the development of a Code
of Conduct.[34]
Part IIIA of the TPA establishes a national legislative regime to facilitate
third party access to the services of certain facilities of national significance.
In addition to the two voluntary access regimes in Divisions 2A
and 6, it contains a third regime in Division 2 by which a third party
may apply to the NCC asking it to recommend that a service be ‘declared’.
This part operates when a third party has sought access and that has been
denied.
The effect of this is that, in the absence of the formal access regime
contained in clause 24 of the Bill, owners of bulk handling facilities
may find themselves the subject of an application for ‘declaration’ under
section 44F of the TPA by a party seeking access if access has been denied.
This does not mean that such a declaration would be made, just that a
facility which is operating as a monopoly could be the subject
of an application.
Clause 3 contains the objects of the proposed Act as follows:
- to promote the development of a bulk wheat export marketing industry
that is efficient, competitive and responsive to the needs of wheat
growers
- to provide a regulatory framework in relation to participants in
the bulk wheat export marketing industry.
There was no objects clause in the original exposure draft.
A number of submitters to the Senate inquiry stated their desire for the
objectives of the Bill to be made clear.[35]
The Senate Committee received a number of submissions in
relation to the definitions in the exposure draft. Clause 5 of
the Bill contains relevant definitions, a number of which have been altered.
Of particular note are the following:
- ‘Company’ is defined to include co-operatives. As already
stated, the definition was expanded in accordance with the Senate Committee
recommendations.
- ‘Designated sanitary or phytosanitary measure’ means a measure
applied by or under a law of a foreign country to protect human, animal
or plant life or health from certain risks or prevent of limit other
damage from the entry and/or establishment of pests to the extent to
which the measure relates to the importation into the foreign country
of barley, canola, lupins, oats or wheat. The Senate Committee received
submissions that the requirement should be compliance with the standard
imposed by Australian law or, if a higher standard, those expressly
required by the terms and conditions of the particular export contract.[36]
In addition, the Emerald Group believed that provision should be made
in the Bill for bulk handling companies to accept contractual or legislative
liability for failure to meet the measures.[37]
However the provision in the Bill is in the same terms as in the exposure
draft of the Bill.
- ‘Executive officer of a company’ means director, chief executive
officer, chief financial officer or secretary. The definition appears
to have been expanded in response to submissions put to the Senate Committee.
[38]
- ‘Port terminal facility’ means a ship loader that is
at a port and capable of handling wheat in bulk and includes an intake/receival
facility, a grain storage facility, a weighing facility and a shipping
belt. According to the Standing Committee report in addition to controlling
the nine grain handling ports, over 600 upcountry silos are owned and
operated by the three main grain handling companies and a further 22
upcountry silos are owned by AWB.[39]
None of the upcountry facilities have been included in the definition.
- ‘Port terminal service’ means a service (within the
meaning of Part IIIA of the Trade Practices Act 1974) provided
by means of a port terminal facility, and includes the use of a port
terminal facility.
Clause 6 defines the term ‘involved in a contravention’ which
is used throughout the Bill. It is an expansive term which provides that
a person will have been involved in a breach of the Act if they
- aided, abetted, counselled or procured the contravention or
- induced, whether by threats or promises, the contravention
- were, directly or indirectly, knowingly concerned in or party to
the contravention
- conspired with other person to effect the contravention.
Subclause 7(1) provides that wheat can only be exported by an
accredited wheat exporter, unless the wheat is exported in a bag or container
that is capable of holding not more than 50 tonnes of wheat. Where a
person who is not an accredited wheat exporter breaches this prohibition
or where a person is ‘involved in a contravention’ of the prohibition,
subclause 7(5) provides for civil penalties.[40]
Clause 8 provides that WEA may, by legislative instrument, formulate
the wheat export accreditation scheme. Section 5 of the Legislative
Instruments Act 2003 defines a ‘legislative instrument’ as an instrument
of a legislative character that is, or was, made under a delegation of
power from Parliament’. All legislative instruments must be recorded
on the Federal Register of Legislative Instruments.[41]
The terms of the Scheme will be subject to tabling and disallowance by
the Parliament.
Although it is for WEA to establish the Scheme, the framework for the
minimum requirements of the Scheme is contained in this part of the Bill.
The Scheme may allow WEA to, amongst other things grant, renew,
suspend, cancel or consent to the surrender of an accreditation. In addition
WEA may impose conditions on the accreditation and, in relevant circumstances
revoke or vary the conditions: subclause 9(2).
Subclause 9(4) is one of the minimum requirement provisions which
must be included in the final form of the Scheme created by WEA
under clause 8. It requires that WEA consults a company before making
decisions to refuse the company’s application for accreditation, or to
cancel, suspend accreditation. In addition WEA must consult with a company
before imposing conditions on the accreditation, or to revoke or vary
an accreditation condition: subclause 9(4). This subclause was
not included in the exposure draft of the Bill. Its inclusion may be
in response to Senate Committee recommendation that the WEA should not
impose new conditions on an accredited exporter without due process.[42]
Another feature of the wheat export accreditation scheme is that application
fees may apply: clause 10. According to the Explanatory Memorandum
this would include applications for accreditation, renewal or surrender
of accreditation, or the variation, addition or cancellation of conditions
of accreditation.[43] The Senate Scrutiny of Bills Committee has drawn attention
to this provision on the grounds that it provides for the rate of a fee
or levy to be set by regulation. The Committee noted that the exercise
of this power is limited by proposed subclause 10(2).[44]
Once WEA determines that accreditation will be granted it must specify
the duration of the accreditation in the instrument of accreditation:
clause 12. The Bill makes no reference to the period of a grant
of accreditation, nor to the process or period of renewal. These details
will, presumably, be contained in the legislative instrument referred
to in clause 9.
Clause 13 is one of the minimum requirement provisions which must
be included in the final form of the Scheme created by WEA under clause
8. It sets out the eligibility criteria which WEA must consider in assessing
applications for accreditation. According to clause 13 the Scheme
must provide that a company is not eligible for accreditation unless
all of the following are satisfied:
- the company is a registered company under the Corporations Act
2001 or a co-operative and the company is a trading corporation
to which section 51(xx) of the Constitution applies[45]
- WEA is satisfied that the company is a fit and proper company having
regard to the following matters:[46]
- the financial resources available to the company: subparagraph
13(1)(c)(i)
- the company’s risk management arrangements: subparagraph 13(1)(c)(ii)
- the company’s business record: subparagraph 13(1)(c)(iii)
- the company’s record in situations requiring trust and candour:
subparagraph 13(1)(c)(iv)
- the business record of each executive officer of the company:
subparagraph 13(1)(c)(v)
- the experience and ability of the executive officer: subparagraph
13(1)(c)(vi)
- the record in situations requiring trust and candour of each
executive officer of the company: subparagraph 13(1)(c)(vii)
- whether the company, or an executive officer of the company,
has been convicted of an offence against an Australian law or a
foreign law, where the offence relates to dishonest conduct: subparagraph
13(1)(c)(viii)
- whether the company, or an executive officer of the company,
has been convicted of an offence against an Australian law or a
foreign law, where the offence relates to the conduct of a business:
subparagraph 13(1)(c)(ix)
- whether an order for a pecuniary penalty has been made against the
company, or an executive officer of the company, under section 1317G
of the Corporations Act 2001[47]
or section 76 of the TPA:[48]
subparagraph 13(1)(c)(x)
- if the company is, or has been, accredited under the Scheme – whether
the company has contravened a condition of the company’s accreditation:
subparagraph 13(1)(c)(xi)
- whether an executive officer of the company has been involved in
a contravention of a condition of an accreditation under the Scheme:
subparagraph 13(1)(c)(xii)
- whether the company, or an executive officer of the company, has
been convicted of an offence under sections 136.1, 137.1 or 137.2
of the Criminal Code:[49]
subparagraph 13(1)(c)(xiii)
- whether the company, or an executive officer of the company, has
been involved in repeated contraventions, or a serious contravention,
of a designated sanitary or phytosanitary measure: subparagraph
13(1)(c)(xiv)
- whether the company, or an executive officer of the company, has
committed or been involved in a contravention of a United Nations
sanctions provision:[50]
subparagraph 13(1)(c)(xv)
- whether the company, or an executive officer of the company, has
committed or been involved in a contravention of an Australian law
or a foreign law, where the contravention relates to trade in barley,
canola, lupins, oats or wheat: subparagraph 13(1)(c)(xvi)
- WEA is satisfied that the company is not an externally-administered[51]
body corporate.
- If the company, or an associated entity, is the provider of one or
more port terminal services – WEA is satisfied that the company or associated
entity, as the case may be, passes the access test in relation to each
of those services.[52]
- If the Scheme specifies one or more other eligibility requirements
– WEA is satisfied that those requirements are met.
When WEA is determining whether an applicant company is ‘fit and proper’
under paragraph 13(1)(c) it can only take into account the applicant’s
conduct in the five years immediately prior to the applicant first becoming
accredited. Where the applicant has never been accredited, the five year
period is the period immediately prior to the application for accreditation
being received by WEA: subclause 13(2). This means that for applications
for accreditation lodged on 1 July 2008, the period will be from 1 July
2003 to 30 June 2008.
Subclauses 13(3) to (5) relate to the conduct or record of executive
officers or applicant companies. In deciding the question of ‘fit and
proper’ the conduct or record is relevant whether it occurred before or
after the person became an executive officer of the applicant company.
Matters relevant to an application for accreditation under clause 13
extend to those which have occurred or exist outside Australia: subclause
13(8).
It is important to note that the Wheat Export Marketing (Repeal and Consequential
Amendments) Bill 2008 amends the Criminal Code Act 1995 to extend
the offence of making a false or misleading statement in, or in connection
with, an application for accreditation under the Scheme. The maximum
penalty for such an offence is 12 months imprisonment.[53]
Clauses 14 to 18 set out the conditions of accreditation. Clause
14 is one of the minimum requirement provisions which must
be included in the final form of the Scheme created by WEA under clause
8. It requires that accreditation as a wheat exporter is subject to:
- compliance with the provisions of clause 25(2)[54] and clause 31(1)[55]
- conditions under sections 15 to 17[56] and
- any other conditions specified in the Scheme.
According to clause 18 civil penalty provisions apply to an accredited
wheat exporter who has contravened a condition of accreditation or a person
involved in a contravention of a condition of accreditation.[57]
Clauses 19 to 21 deal with the circumstances which could lead
to the cancellation of wheat export accreditation.
Clause 19 is one of the minimum requirement provisions which must
be included in the final form of the Scheme created by WEA under clause
8. It sets out those circumstances under which wheat export accreditation
must be cancelled and those where cancellation is discretionary.
Paragraphs 19(1)(a) to (e) are in the same terms as the eligibility
criteria in clause 13. Essentially if any of the matters which
are necessary for eligibility are negatived, then wheat export accreditation
must be cancelled. This particularly applies to an accredited
wheat exporter who has failed to provide sufficient access to port terminal
facilities. Subclause 19(4) of the Bill provides that in determining
issues of ‘fit and proper’ any acts, omissions, matters or things that
occurred prior to five years from the date of first accreditation are
not taken into account.
Subclause 19(2) provides that WEA has discretion whether to cancel
wheat export accreditation of a company where the company comes under
external administration at a time after accreditation is granted. However
it should be noted that under clause 9 WEA has the option of suspending
accreditation.
Clause 20 provides wheat export accreditation may be cancelled
for non-compliance of an accreditation condition, even where a civil penalty
order has been made and a civil penalty order can be made even if a company’s
accreditation has been cancelled.
Clause 22 is one of the minimum requirement provisions
which must be included in the final form of the Scheme created
by WEA under clause 8. Subclause 22(1) provides that an accredited
wheat exporter may apply to WEA for consent to surrender its accreditation
but that WEA may attached certain conditions to the surrender, including
the requirement that certain reports are delivered to it.
Clause 24 provides that an accredited wheat exporter which owns,
operates or controls port terminal facilities must provide access to those
facilities to other accredited wheat exporters. Subclause 24(1)
sets out the test for the period up to 30 September 2009. A body corporate
will pass the access test in this period in one of two ways:
- either it publishes its willingness to provide access to accredited
wheat exporters on the Internet, along with the terms and conditions
of that access or
- it is part of a State or Territory access regime in place in accordance
with Division 2A of Part IIIA of the TPA.
Subclause 24(2) sets out the access test from 1 October 2009.
A body corporate will pass the second period of the access test in relation
to a port terminal service if:
- either it is part of a State or Territory access regime in
place in accordance with Division 2A of Part IIIA of the TPA or
- there is in operation, under Division 6 of Part IIIA of the TPA,
an access undertaking relating to the provision to accredited wheat
exporters of access to the port terminal service for purposes relating
to the export of wheat.
The Hon. Dr Nelson, Leader of the Opposition, has foreshadowed that the
Liberals will seek to amend the Bill in relation to the issue of access.
He stated:
As the legislation stands, bulk-handling companies
will operate entirely under their own terms for a period of 16 months
in relation to port access. Why should [they] then be subjected to
heavy handed regulation under Part IIIA of the Trade Practices Act if
no problems have arisen with the system?
The bulk-handling companies should be given the opportunity
to prove themselves in the new bulk wheat exporting environment. If
no problems arise then there is no need to impose heavy handed regulation
upon them, and I ask the government to seriously consider the broad
merit of the amendment I foreshadow.[58]
Part 3 contains provisions about the information gathering and audit
powers of WEA.
Clauses 25 to 28 outline the powers of WEA to obtain information
and documents from accredited wheat exporters.
Under subclause 25(2), WEA may give written notice to a company
that is, or has been, an accredited wheat exporter requiring it to provide
information and/or documents which are relevant to WEA’s functions or
powers. The period in which the company has to comply with the notice
must not be less than 14 days after the notice is given: subclause
25(3). A company must comply with the terms of the notice: subclause
25(5). This is a civil penalty provision.[59]
In addition, the failure to provide information as requested could lead
to cancellation of accreditation on the grounds that the company is not
‘fit and proper’ under clause 19(1)(c).
WEA has the right to retain possession of a document produced under subclause
25(2). According to subclause 28(2) the owner of the document
is entitled to be provided with a certified true copy of the document.
The certified true copy is to be received in all courts and tribunals
as evidence as if it were the original: subclause 28(3).
Clauses 29 and 30 outline the powers of WEA to request information
and documents from persons who are not accredited wheat exporters but
whom WEA believes on reasonable grounds have information or a document
that is relevant to its powers and functions. There is no penalty provision
for failure to comply.
Clause 31 sets out the powers of WEA to direct that an external
audit of an accredited wheat exporter takes place. The essential features
of WEA’s power are:
- it can specify which external auditor is to undertake the audit:
paragraph 31(1)(a)
- it can specify the matters which are to be audited such as the accuracy
of information or statements which have been provided by an accredited
wheat exporter: paragraph 31(1)(b)
- both WEA and the accredited wheat exporter are to be given a copy
of the audit report: paragraphs 31(1)(c) and (d)
- where an accredited wheat exporter has engaged an external auditor
in response to a direction by WEA, then WEA must reimburse any reasonable
expenses incurred in complying with the direction: subclause 31(6).
- an accredited wheat exporter which contravenes this clause or a person
who is involved in a contravention of this clause will incur a civil
penalty[60]: subclause
31(9).
Part 4 of the Bill is about the investigations which can be undertaken
by WEA at the request of the Minister.[61]
According to clause 33, where the Minister believes that it is
in the public interest,[62]
the Minister can direct WEA to investigate matters which involve a function
or power conferred on WEA or a suspected or alleged contravention of a
condition of accreditation. In those circumstances, WEA must provide
a written report of the investigation to the Minister in the terms set
out in clause 34.
Under subclause 34(4), if the report, or part of the report, relates
to any alleged or suspected contravention of any Australian law, WEA may
give a copy of the report, or part of the report, to:
- the Australia Federal Police
- the police force of a State or Territory
- the Australian Securities and Investments Commission
- the Australian Prudential Regulation Authority
- the Commissioner of Taxation
- the Australian Competition and Consumer Commission or
- a prescribed agency.
Part 5 of the Bill provides for the establishment of WEA and its functions,
powers and liabilities. According to the Senate Committee report, a number
of submitters suggested that the Bill should ‘contain a statement of the
broad priorities and objectives of the regulator, including a clear definition
of who the regulator is responsible to, who it reports to and what its
regulatory priorities are’.[63]
However the Senate Committee did not support the inclusion of such a provision.
The body corporate known as the Export Wheat Commission is continued
in existence under the new name of Wheat Export Australia under clause
35. WEA is empowered to do all things necessary and convenient to
be done for the performance of its functions, including entering into
contracts: clause 37. Under clause 38 any financial liabilities
of WEA are taken to be liabilities of the Commonwealth.
WEA consists of a Chair and at least three but not more than five, other
members: clause 40. Members are appointed by the Minister: subclause
41(1). A person is not eligible for appointment unless the Minister
is satisfied that the person has substantial experience or knowledge and
significant standing in at least one of the fields of expertise listed
in subclause 41(2).
Clause 46 requires a WEA member who has an interest in a matter
being considered, or about to be considered by WEA to disclose the nature
of the interest at a meeting of WEA. Under subclause 46(4) the
WEA member must neither be present during any deliberation of the matter
nor take part in any decision about the matter, unless WEA determines
otherwise.
The Minister may terminate the appointment of a WEA member for the following
reasons:
- misbehaviour or for physical or mental incapacity: subclause 49(1)
- bankruptcy or insolvency: paragraph 49(2)(a)
- a failure, without reasonable excuse, to provide a written disclosure
of interest to the Minister, or a potential conflict of interest to
WEA: paragraph 49(2)(b)
- absence, without being given formal leave of absence, from three
consecutive WEA meetings: paragraph 49(2)(c).
Clause 51 provides that WEA is to hold such meetings as are necessary
for the performance of its function.
Clause 57 allows WEA to delegate, in writing, any or all of its
functions and powers (other than the powers conferred in clause 8
and paragraph 69(2)(c))[64]
to a WEA member or a person who is a member of WEA staff, an SES employee
or an acting SES employee.
Clause 58 establishes the Wheat Exports Australia Special Account
which is a Special Account for the purposes of the Financial Management
and Accountability Act 1997. The purpose of the account is to meet
expenses incurred in connection with the operation of WEA, the payment
of remuneration to members and staff, payment for copies of documents[65] and payment of expenses incurred
by an accredited wheat exporter for a WEA audit[66]:
clause 60.
Clauses 63 to 65 set out the planning and reporting obligations
of WEA including the requirement to prepare a corporate plan at least
once in each three year period for the Minister and to keep the Minister
informed about and changes to the plan. Clause 64 requires WEA
to, prepare and give to the Minister, a report on its operations after
the end of each financial year. The Minister presents that report to
the Parliament. Clause 65 requires WEA to prepare and publish
a report for growers each marketing year in relation to the operation
of the Scheme during that year.
Part 6 of the Bill sets out the manner by which a decision of WEA under
the Scheme may be reviewed.
A person affected by a WEA decision under the Scheme may make an application
to WEA to reconsider the decision: clause 68. The application
must be made in writing, in an approved form and accompanied by any relevant
fee: subclause 69(2). The time limit for seeking reconsideration
is 28 days from the date that the applicant was informed of the decision.
However, this period can be extended by WEA: subclause 69(3).
When WEA is reconsidering its decision, it must not take into account
any new information. It must consider only the information which was
available when the original decision was made, unless there are ‘special
circumstances’: subclause 70(2). The term ‘special circumstances’
is not defined in the Bill and there is no guidance either in the Explanatory
Memorandum or in the Senate Committee report about the circumstances in
which further information will be considered or the nature of that information.
WEA must make its decision on reconsideration within 30 days of receiving
the application. If it fails to do so, WEA is deemed to have made a decision
that the original decision is to stand: clause 71. Having made
a new decision, WEA has a further 28 days in which to provide the applicant
with a written statement of reasons for the decision: subclause 70(5).
Clause 72 provides that a person who is aggrieved by the reconsideration
decision of WEA, including a ‘deemed’ decision under clause 71, may seek
a review of that decision by the Administrative Appeals Tribunal (AAT).
The review by the AAT is a ‘merits review’ which is a review of the fact
finding, and often the policy choices involved in the decision under review
as distinct from its lawfulness.[67]
Part 7 relates to the protection of confidential information.
Clause 73 lists the information which is ‘confidential information’.
It relates to information provided to WEA in relation to the Scheme where
the person providing the information claims that it is ‘commercial in
confidence’ information and where disclosure of the information could
either reasonably be expected to cause financial loss or detriment
to a person or body corporate or to directly benefit a competitor
of the person or body corporate.
Subclause 74(1) provides that an ‘entrusted public official’
(in the context of the Bill) is a person who is or was:
- a WEA member, a WEA staff member or a person assisting WEA[68]
- the Minister or
- a person employed as a member of staff of the Minister under the
Members of Parliament (Staff) Act 1984.
It is an offence for an ‘entrusted public official’ to disclose ‘protected
confidential information’ to another person: subclause 74(2).
However there are exceptions to this general prohibition which are listed
in subclause 74(3). These include:
- where the disclosure is with the consent of the person: paragraph
74(3)(a) or under a court order: paragraph 74(3)(b)
- the disclosure is to the Minister: paragraph 74(3)(d)
- where the disclosure is to a person in the course of their duties
such as employee of the Australian Quarantine and Inspection Service:
paragraph 74(3)(g), a Customs officer: paragraph 74(3)(h)
or a member of the Australian Federal Police: paragraph 74(3)(i)
- where disclosure is to a regulatory body such as the Australian Securities
and Investments Commission: paragraph 74(3)(k), the Commissioner
of Taxation: paragraph 74(3)(m), or the Australian Competition
and Consumer Commission: paragraph 74(3)(n).
Part 8 of the Bill relates to civil penalty orders.
Under subclause 76(1) the Federal Court may order a person who
has contravened a civil penalty provision of the Act to pay a pecuniary
penalty to the Commonwealth. The order is a ‘civil penalty order’.[69]
The Federal Court must have regard to the matters listed in subclause
76(3) in setting the amount of the penalty including:
- the nature and extent of the contravention
- the nature and extent of any loss or damage suffered
- the circumstances in which the contravention took place and
- whether the person has previously been found to have engaged in similar
conduct.
Subclause 76(4) sets out the maximum amount of penalty payable
by a body corporate. These range from 3,000 penalty units[70] ($330 000) where a company which
is not an accredited wheat exporter has exported wheat, to 150 penalty
units ($165 000) where, for example, a company has failed to comply with
the conditions of accreditation, and 1,000 penalty units ($110 000) where,
for example, a company has failed to comply with the reporting conditions.
Subclause 76(5) sets out the maximum amount of penalty payable
by an individual. These are set at 600 penalty units ($66 000), 300 penalty
units ($33 000) and 200 penalty units ($22 000) for a similar range of
offences as those in subclause 76(4).
Only WEA may apply for a civil penalty order: clause 77. The
application for a civil penalty order must be commenced within 6 years
of the contravention: clause 79.
Where both criminal proceedings and civil penalty proceedings have been
commenced in respect of conduct which is substantially the same, the civil
penalty proceedings will be stayed: subclause 82(1). Proceedings
for a civil penalty order may only be recommenced if the person is not
convicted of an offence: subclause 82(2).
Even if a civil penalty order has been made, criminal proceedings may
be started against a person in respect of the same conduct: clause
83. However, the evidence given by the person in the civil penalty
proceedings is not admissible in criminal proceedings against the person,
unless the evidence given was false: clause 84.
It is a defence in civil penalty proceedings that a person
was under a mistaken but reasonable belief about the facts leading to
the contravention of the civil penalty provision: subclause 85(1).
In that case the evidential burden in relation to the matter lies
with the person who wishes to rely on the defence: subclause 85(3).
There is, entrenched in section 51(xxxi) of the Constitution,
a guarantee which stipulates that property acquired by the Commonwealth
Government must be acquired ‘on just terms’.
Clause 88 refers to an acquisition otherwise than on just terms
in the context of section 51(xxxi) of the Constitution but then
provides that the Commonwealth is liable to pay a 'reasonable amount of
compensation'. It should be noted that this subsection:
- does not specifically apply paragraph 51(xxxi) Constitution to the
acquisition
- does not require ‘just terms’
- provides that the Commonwealth is liable to pay a ‘reasonable amount
of compensation’, as distinct from ‘just terms’.
It should be noted, however, that use of such a provision
is commonplace, for example, section 152AQC of the Trade Practices
Act 1974 and in section 60 of the Northern Territory Emergency
Response Act 2007.
Clause 89 provides that before 1 January 2011 the
Productivity Commission must begin to conduct a review of the Act and
the operation of the Scheme. The Bill does not provide for a finish date
for the review. The Productivity Commission must provide a written report
to the Minister who must, within 15 sitting days of receiving the report,
table copies of it in each House of the Parliament.
It should be noted here that
the Senate Committee received submissions about a range of matters relevant
to wheat export marketing but which were not covered by any provision
in either the exposure draft bill or this Bill. These comments reflected
a perception about the adverse effects of the demise of the single desk
including:
- the operation of regional pools which growers perceived could close
at any time leaving those who harvest later, or who have not committed
to a pool be unable to sell their wheat and so forced into costly storage
options[71]
- a reduction in financial security and access to finance without the
security of payment and finance offered under the single desk[72]
- the absence of a ‘receiver of last resort’ which was of particular
importance to smaller growers who might not have the capacity to store
excess grain[73]
- a concern by growers about how banks and other financial institutions
will respond to this major change in the market[74]
- the absence of a body to undertake ‘industry good functions’[75] such as market development and
promotion, and plant breeding, potentially undermining Australia’s competitive
advantage in the world market[76] and
- a lack of access to timely information about grain stocks through
the supply chain so as to manage both supply and risk.[77]
There is little doubt that if any or all of these adverse perceptions
become a reality they will be communicated to the Productivity Commission.
The comments by Brett Roberts, former Chair of the South Australian Farmers
Federation Grain Council are worthy of note. He says:
I think we’ve got to take a lesson from other parts
of the world. When you look at the reforms of the Common Agricultural
Policy and the redirection of the US Farm program, they move away from
politicising commodities [to] more generic things, like the environment,
for example. The politicising of specific commodities was done years
ago and I think wheat is one of the last ones to move away from that…
… Growers may well think that things are happening
too fast, but quite simply I think that’s a catch up because we’ve hung
on to the old legacies for too long.[78]
[61]. Under section 19A of the Acts
Interpretation Act 1901 the reference is a reference to the Minister
for Agriculture, Fisheries and Forestry.
Paula Pyburne
10 June 2008
Bills Digest Service
Parliamentary Library
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