Bills Digest 97 1996-97 Productivity Commission Bill 1996


Numerical Index | Alphabetical Index

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

Productivity Commission Bill 1996

Date Introduced: 4 December 1996
House: House of Representatives
Portfolio: Treasury
Commencement: The legislation commences immediately after the commencement of the Productivity Commission (Repeals, Transitional and Consequential Amendments) Act 1996. The latter was introduced into the House of Representatives on 4 December 1996 and commences on Royal Assent.

Purpose

The Productivity Commission Bill 1996 (the Bill) provides for the establishment of the Productivity Commission (the Commission) and enumerates its functions, powers, activities and other related matters.

Background

The Productivity Commission is being formed through a merger of the Industry Commission (IC), the Bureau of Industry Economics (BIE) and the Economic Planning Advisory Commission (EPAC). The Commission will come within the Treasury portfolio while the home departments of the three present organisations are, respectively, Treasury, the Department of Industry, Science and Tourism and Prime Minister and Cabinet. The Treasurer, Hon Peter Costello, has announced that Mr Bill Scales, currently Chairman of the Industry Commission, will become the Chairman of the Commission. In addition, the Commission will be based in Melbourne, where the IC is presently located. Staff of the BIE and EPAC will be moved to Melbourne.

The Industry Commission has a long history, as the Industries Assistance Commission before 1990, and before 1973 the Tariff Board. Since the early 1960s it has had a reputation of giving consistent anti-protection, anti-government and free market advice. Its critics allege that the IC's work often reflect its bias rather than being the outcome of well-reasoned analysis. Possibly in response to those perceptions of the IC, the 1993 decision to move the IC to Melbourne was to enable it to 'be closer and more accessible to industry.(1)The BIE and EPAC are more recent creations and have offered competing views. The merger of the IC, BIE and EPAC could well be seen as limiting competition in the market place for ideas. In the future the policy/research areas of the Department of Industry, Science and Tourism may have to be boosted to compensate for the vacuum caused by the abolition of the BIE.

The Commission has been described as the Governments principal advisory body on all aspects of microeconomic reform.(2) Among other things, it will focus on:

  • areas which impact on Australias international competitiveness;
  • labour market practices that retard productivity;
  • areas of Commonwealth, Territory and State responsibility that affect industry efficiency and competitiveness;
  • the investigation of complaints about the implementation of competitive neutrality arrangements in relation to Commonwealth government businesses and business activities.

Another view of the establishment of the Productivity Commission can be found in an article entitled 'Treasury and the IC take over the world' by the Sydney Morning Herald commentator, Ross Gittins.(3)

Main Provisions

Part 1 - Preliminary

Clause 4(2) states that the Crown is not liable to prosecution for an offence against the legislation. However, this protection does not apply to a Commonwealth authority (clause 4(3)). A Commonwealth authority is defined in clause 3 as a body established for a public purpose under a Commonwealth or Territory law or a company or other body corporate in which the Commonwealth, a Territory or a body established for a public purpose under a Commonwealth or Territory law has a controlling interest.

Part 2 - Establishment and functions of Productivity Commission

The functions of the Productivity Commission are set out in clause 6 of the Bill. With respect to matters relating to industry and productivity', the Commission can:

  • hold inquiries and report to the Minister on matters referred to it by the Minister;
  • provide advice when requested to do so by the Minister;
  • conduct research on its own initiative.

The Commission can also receive, investigate and report to the Minister on 'competitive neutrality complaints' about Commonwealth Government businesses and business activities (see below). Of competitive neutrality, a press release from the Treasurer said:

... the operation of competitive neutrality will assist Government decision making when the Government has a choice between public or private sector providers. Competitive neutrality will also improve economic efficiency and the allocation of resources. Mr Costello has noted that there is still a role for government business activities. However, where Government businesses compete with private businesses they need to compete on their own merits and not through unfair advantages provided by government ownership.(4)

The expression matters relating to industry and productivity is defined in clause 6(2). It includes the productivity performance of industry or the economy, anything affecting productivity including labour market practices, and action by the Commonwealth, a State, a Territory or a local government body that might affect the productivity performance of industry or the economy.

Clause 8 provides that in performing its functions, the Productivity Commission must take into account certain matters - including the improvement of economic performance through higher productivity as a means of achieving higher living standards, facilitating adjustment to structural economic change and easing resulting social and economic hardship, reducing industry regulation in certain circumstances, and recognising the social and environmental consequences of measures proposed by it.

Clause 10 sets out the annual reporting requirements of the Productivity Commission and the content of those reports. An annual report must be made to the Minister as soon as practicable after the end of each financial year. The annual report must be tabled in each House of Parliament by the Minister within 15 sitting days of the Minister receiving it.

Part 3 - Inquiries

Division 1 - Reference to Commission for inquiry and report

Clause 11 provides that when the Minister refers a matter to the Productivity Commission for inquiry, he or she may require the Commission to do certain things - such as hold hearings, report within a certain time, and make its draft report public. Clause 11(2) provides that the Commission must make a written report to the Minister unless he or she withdraws the reference to the Commission. Clause 11(4) provides that when the Commission receives a reference from the Minister, the Commission may also inquire into and make recommendations on anything it considers relevant to the reference.

Clause 12 provides that the Commission's report on an inquiry must be tabled in Parliament within 25 sitting days of the Minister receiving it. However, if the Commission recommends that the tabling of the whole or part of its report be delayed for a specified period, the report must be tabled within 25 sitting days from the end of that period.

Division 2 - Conduct of inquiries

Clause 13 requires the Commission to publish a notice of inquiry when the Minister has referred a matter to it for inquiry. Clause 14 provides that if the Minister requires the Commission to hold inquiry hearings, the Commission must publish notice of those hearings. In either case, the Commission decides how notices will be published.

Clause 15 sets out how Commission inquiry hearings are to be held. They must be in public unless the Commission is satisfied that, for reasons of confidentiality the hearing or part of the hearing, should be held in private. Where a hearing is held in private the Commission can decide who can be present at the hearing.

Clause 16 provides that where a person gives written evidence or a document to a Commission hearing, that material must be made public unless the person objects to its publication and the Commission would have taken the information in private if it had been given orally at a hearing.

Part 4 - Other functions of the Commission

Division 1 - Advice, research and secretariat functions

Clause 17 sets out how the Commission is to respond to a Ministerial request for advice.

Clause 18 enables the Minister to publish advice given to him or her by the Commission. Clause 18(3) provides that if, in the public interest, the Minister publishes advice with deletions, the Minister must also publish the fact that the advice is so published.

Clause 20 enables the Commission to undertake research for persons or bodies other than government bodies, if the Minister consents in writing.

Division 2 - Competitive neutrality complaints

From 1 July 1997, complaints can be lodged with the Commission that Government businesses or Government business activities:

  • are not meeting competitive neutrality arrangements; or
  • that such arrangements should be applied to them (clause 21).

Competitive neutrality arrangements are referred to in the Commonwealth's Competitive Neutrality Policy. The Policy aims to ensure that '... significant public sector business activities do not enjoy net competitive advantage over their competitors by virtue of their public sector ownership.'(5)

A fee may be required in relation to complaints made to the Commission (clause 22). Fees will be set by regulation.

Where the Commission receives a competitive neutrality complaint, it must be investigated to determine whether there is a strong possibility that the particular government business or business activity is not being conducted in accordance with competitive neutrality arrangements or whether it should be required to apply competitive neutrality arrangements to its business (clause 23).

If the Commission determines that a strong possibility exists, then it must make a written report to the Minister. If the Commission determines that a strong possibility does not exist, it must give the complainant a written report (clause 23(2)).

The Commission can also recommend that the complaint be the subject of a section 11 inquiry or that the Minister take other action over the complaint (clause 23(4)).

Clause 24 provides that if the Minister receives a section 23 report, then within 90 days of receiving the report, the report and the Minister's response to it must be published and copies given to the complainant. The report and the response must also be tabled in Parliament by the Minister.

The Commission may decide not to investigate a competitive neutrality complaint - if the complaint is frivolous or vexatious, was not made in good faith, the complainant does not have sufficient interest in the subject matter of the complaint, or an investigation is not warranted in all the circumstances (clause 26).

Part 5 - Constitution and operation of the Commission

Division 1 - Structure of the Commission

The structure of the Commission is set out in Division 1 of Part 5. It will consist of a full-time Chairman and between four and 11 other Commissioners. The other Commissioners may be appointed on a full-time or part-time basis. Commissioners are appointed by the Governor-General. There is also provision for Associate Commissioners who are appointed by the Minister following consultations with the Chairman.

Clause 31(1) provides that the Chairman, full-time Commissioners and full-time Associate Commissioners cannot engage in outside paid employment without Ministerial consent. Clause 31(2) provides that a part-time Commissioner or Associate Commissioner cannot engage in outside paid employment if, in the Ministers view, it would conflict with the proper performance of his or her duties.

Clause 39 sets out the circumstances in which the appointment of a Commissioner(6) or Associate Commissioner can be terminated. The Governor-General may terminate a Commissioner's appointment for misbehaviour or physical or mental incapacity (clause 39(1)). The Governor-General must terminate a Commissioner's appointment in certain circumstances. These circumstances are set out in clause 39(2) and include bankruptcy, absence from duty without reasonable excuse for a certain period, engagement in paid employment while a full-time Commissioner without the Minister's consent, and engaging in employment while a part-time Commissioner which conflicts with the proper performance of duties. Similar provisions relating to Associate Commissioners are set out in clause 39(4).

Division 2 - Operation of the Commission

Clause 43(1) provides that the Chairman is to convene meetings of the Commission when he or she thinks is necessary. Clause 43 also sets out the powers and responsibilities of the Chairman at Commission meetings.

Clause 44 enables the Chairman to establish a Division of the Commission to perform a function of the Commission. By virtue of clause 44(6), 2 members constitute a quorum when a Division of the Commission consisting of three or more members is meeting. However, in exceptional circumstances - if only one member is available for a meeting and the other members are unavailable for reasons beyond their control - a Division meeting may be held with only one member present (clause 45(1)).

Clause 47 deals with disclosure of interests. Clause 47(1) requires the Chairman to give the Minister written notice of all direct and indirect pecuniary interests he or she has in a business. Clause 47(2) provides that if the Chairman has or acquires an interest that could conflict with a performance of his or her functions, that interest must be disclosed in the ways specified. This includes disclosure in a Commission report - if a report results from the performance of the particular function. Clause 47(3) provides that if a member of the Commission has or acquires an interest, including a pecuniary interest, that could conflict with the performance of his or her functions, the interest must be disclosed to the Chairman. If the Chairman considers that a Commission member has an interest which could conflict with the performance of the member's function, then the Chairman must act in accordance with clause 47(4). Such action includes giving a direction to the member that he or she not perform that function.

Part 6 - Staff and consultants

Commission staff are employed under the Public Service Act 1922 (clause 48(1)). The Chairman may engage consultants under contract and negotiate the terms of those contracts (clause 49).

Part 7 - Offences

It is an offence to hinder a Commission member who is performing his or her functions or to disrupt a Commission hearing (clause 50). Under clause 51, a person must not threaten, intimidate or coerce another person or cause damage, loss or disadvantage to another person because that person gives information, evidence or assistance to the Commission.

If the Commission holds an inquiry hearing or an inquiry in relation to a competitive neutrality complaint and believes that a person can provide it with relevant information or documents, then the Commission can require the person by written notice to provide the information or documents within a specified period of time (clause 52). It is an offence to intentionally fail to comply with such a requirement.

Clause 53 enables the Commission Chairman to summon a person to appear at a hearing and give evidence or produce documents. It is an offence to intentionally fail to appear when summoned.

A person appearing at a hearing must answer questions or produce documents as required (clause 54). However, clause 55 provides that a person who is required to provide information or a document under clause 52 or to answer a question or produce a document under clause 54 can rely on the privilege against self-incrimination. However, a person can choose to waive his or herright to the privilege.

It is an offence to give false or misleading information to a Commission inquiry or to give evidence at a hearing which is false or misleading or send the Commission in response to a section 52 notice information which is false or misleading (clause 56).

If a Commission hearing is partly or wholly conducted in private, the Commission can direct that publication of evidence or documents given to the hearing is prohibited or restricted. Contravention of such a direction is an offence (clause 57).

The maximum penalty is six months' imprisonment for an offence under Part 7. Under the Crimes Act 1914 (Cwlth), a court may impose a fine instead of or in addition to imprisonment.

The Commission's powers to give notice to give evidence or produce documents (clause 52), its powers of summons (clause 53), its power to require a witness to answer questions (clause 54(a)), its directions on the publication of evidence (clause 57) and its powers to possess documents (clause 58) are limited by clause 60. Those powers can only be exercised in relation to:

  • a person holding an office or appointment under a Commonwealth or Territory law (clause 60(2)(a));
  • a Commonwealth authority (clause 60(2)(b));
  • any person - where the Commission is holding an inquiry 'to the extent that the subject matter of the inquiry relates to a subject of Commonwealth power' (clause 60(3)).

Clause 60(4) provides that clause 60(3) does not enable a power to be exercised to the extent that it would impair the capacity of a State to exercise its constitutional power. Clause 60(4) appears to be framed with the implied constitutional immunity of the States from Commonwealth legislation in mind. There are two arms to the implied immunity. They were described by Mason J (as he then was) in Queensland Electricity Commission v. Commonwealth as:

(1) the prohibition against discrimination which involves the placing on the States of special burdens or disabilities (the limitation against discrimination) and (2) the prohibition against laws of general application which operate to destroy or curtail the continued existence of the States or their capacity to function as governments.(7)

Part 8 - Miscellaneous

Clause 61 gives Commission members and others protection from civil proceedings in certain circumstances.

Clause 63 deals with conduct by directors, employees or agents in proceedings for offences against the legislation. For example, clause 63(1) provides the state of mind of a body corporate can be established by showing that proscribed conduct was engaged in by a director, employee or agent of the body corporate within the scope of their authority and that the director, employee or agent had that state of mind.

Concluding Comments

Language

While the Productivity Commission Bill 1996 refers to Commission office holders as 'his or her', the Commission's principal office holder is called the 'Chairman' rather the gender neutral 'Chairperson.' This is a change in terminology from that found in the Industry Commission Act 1989.It would be interesting to know whether this change reflects the drafting instructions of the originating Department or any new Office of Parliamentary Counsel guidelines relating to gender specific language.

Endnotes

  1. Hon George Gear, Assistant Treasurer, 'Minister Opens New IC Headquarters,' Press Release, 14 December 1993.
  2. Second Reading Speech, Productivity Commission Bill 1996, p.1.
  3. Sydney Morning Herald, 29 July 1996.
  4. 'Policy statement on competitive neutrality', Press Release (Treasurer), 39, 27 June 1996, p.1.
  5. Second Reading Speech, Productivity Commission Bill 1996, p.4.
  6. The expression 'Commissioner' includes the Chairman of the Commission - see clause 3.
  7. (1985) 159 CLR 192 at 217.

Contact Officer and Copyright Details

Jennifer Norberry & David Richardson
5 February 1997
Bills Digest Service
Information and Research Services

This Digest does not have any official legal status. Other sources should be consulted to determine whether the Bill has been enacted and, if so, whether the subsequent Act reflects further amendments.

IRS staff are available to discuss the paper's contents with Senators and Members and their staff but not with members of the public.

ISSN 1323-9031
Commonwealth of Australia 1996

Except to the extent of the uses permitted under the Copyright Act 1968, no part of this publication may be reproduced or transmitted in any form or by any means, including information storage and retrieval systems, without the prior written consent of the Parliamentary Library, other than by Members of the Australian Parliament in the course of their official duties.

Published by the Department of the Parliamentary Library, 1997.

This page was prepared by the Parliamentary Library, Commonwealth of Australia
Last updated: 24 March 1997

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