Bills Digest no. 123 2005–06
Australian Trade Commission Legislation Amendment Bill 2006
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
Main Provisions
Concluding Comments
Endnotes
Contact Officer & Copyright Details
Passage History
Australian
Trade Commission Legislation Amendment Bill
2006
Date introduced: 30 March 2006
House: House of
Representatives
Portfolio: Trade
Commencement: Sections 1 to 3 commence on Royal Assent. The main
provisions - those changing Austrade's governance structure -
commence on Proclamation, or failing that six months after Royal
Assent. Commencement of the provisions relating to the export
market development grants scheme depend on when the Export Market
Development Grants Legislation Amendment Bill 2006 comes into
force.
The purpose of the Bill is to amend the Australian Trade
Commission Act 1985 in order to implement changes to the
governance structure of the Australian Trade Commission
(Austrade).
Austrade is the Australian Government statutory authority
responsible for helping Australian businesses to succeed in export
and international business. It does this through the provision of
advice, market intelligence and ongoing support to Australian
businesses preparing, commencing, and undertaking export
activity.
Austrade maintains 17 offices and 52 TradeStart offices across
Australia and a network across the globe that includes 130 offices
in over 60 countries. At the basic level it provides mentoring,
informational seminars and training in export activity. At a more
advanced level it identifies export opportunities and potential
partnership opportunities, and provides in-country support such as
advocacy and research. Austrade also administers the Export Market
Development Grants (EMDG) scheme, which provides partial
reimbursement of approved marketing expenses in export
activity.
Austrade also contributes to the wider Australian community
through the development of an export culture. It hosts the annual
Australian Export Awards and plays an active role in developing
community understanding of the benefits of exporting through
publications, seminars and community displays.
In recent years, Austrade has been instrumental in promoting the
Government initiative to double the number of exporters by 2006 and
in promoting trade opportunities arising from Free Trade Agreements
concluded with Singapore, Thailand, and the United States.
Austrade has also had some involvement in the Iraqi 'Oil for
Food' issue in respect of its assistance to the Australian Wheat
Board's exports to Iraq.
As a statutory authority under the Commonwealth Authorities
and Companies Act 1997, Austrade is governed by a board, whose
members are drawn from business and government, and reports
directly to the Minister for Trade.
The current Bill will transition Austrade from a statutory
authority under the Commonwealth Authorities and Companies Act
1997, to a statutory agency subject to the Public Service
Act 1999 and the Financial Management and Accountability
Act 1997, as part of the Government s response to the Review of
Corporate Governance of Statutory Authorities and Office
Holders, also known as the Uhrig Review.
The Uhrig Review recommended that two templates be applied to
ensure good governance of statutory authorities: agencies should
either be managed by a Chief Executive Officer (CEO) or by a board
structure. Both templates detail measures for ensuring the
boundaries of responsibilities are better understood and the
relationship between Australian government authorities, Ministers
and portfolio departments are made clear.(1)
Uhrig recommended that the selection of the management template
and financial frameworks to be applied should be based on the
governance characteristics of a statutory
authority:(2)
- The Financial Management and Accountability Act 1997
should be applied to statutory authorities where it is appropriate
they be legally and financially part of the Commonwealth and do not
need to own assets. This includes Budget-funded authorities. Uhrig
recommended that these organistions should be governed by a
CEO.
- The Commonwealth Authorities and Companies Act 1997
should be applied to statutory authorities where it is appropriate
that they be legally and financially separate from the
Commonwealth. Uhrig recommended that these organizations should be
governed by a board.
In general, agencies which exclusively manage Commonwealth
appropriations should be represented and governed by a CEO. A board
structure is favoured if there is a strong commercial focus to the
organisation, or if the agency is intergovernmental.
The Financial Management and Accountability Act 1997
applies to budget-funded authorities managed by a Chief Executive
Officer (CEO). The Financial Management and Accountability Act
1997 establishes various management and reporting
responsibilities for the CEO (sections 44 46, 49 and 51), as well
as allowing the Minister to give guidelines to the CEO (s.
64).(3) Furthermore, the Financial Management and
Accountability Act 1997 provides an accountability framework
for CEOs to manage agency resources.
As part of its response to the Uhrig Report, the Government
advised that:
Ministers will assess the statutory authorities
and similar bodies within their portfolios against the governance
templates [ie the regulatory regimes outlined above]. Selection of
the appropriate template, whether executive management or board
will be based, as recommended in the report, on the degree to which
each body has been delegated full power to act.(4)
Austrade is currently governed by a Board and is subject to the
Commonwealth Authorities and Companies Act 1997. Under the
amendments proposed in the Bill, the Austrade Board will be
replaced by a CEO appointed by the Minister and the governing Act
will change from the Commonwealth Authorities and Companies Act
1997 to the Financial Management and Accountability Act
1997. Staff will be employed under the Public Service Act
1999. According to the Minister for Trade, this change comes
about because:
The government has assessed Austrade s existing
governance structure against the recommendations and principles of
the Uhrig review and identified that the executive management
template is more suitable to Austrade s role as the government s
trade facilitation agency.(5)
Arguments in favour of retaining the current structure focus on
the credibility and market awareness that the maintenance of a
board entails. The Austrade board was established in 1985 in part,
due to the fact that the majority of Austrade s stakeholders were
in the private sector exporters and those seeking to export. This
remains the case and the maintenance of a board would ensure that
stakeholders continue to have input at the highest levels,
regardless of the preference of the Trade Minister or any future
Trade Minister, for consultative mechanisms. As noted by Bob
McMullan MP:
the Board of Austrade has often added a commercial
awareness, a market focus and a business credibility to Austrade s
very important activities to assist and encourage Australian firms
to export, or to export more successfully. (6)
However, in a submission to the Senate Foreign Affairs, Defence
and Trade Legislation Committee Inquiry into the Bill, Warren Truss
MP notes:
A range of non legislated mechanisms for
consultation with industry continue to operate. These include the
Free Trade Agreement Export Advisory Panel and Trade Promotion
Advisory Committee. The amendments proposed do not impact these
consultation mechanisms, or the capacity to modify or establish
additional or revised processes as
required.(7)
Schedule 1 amends the Australian Trade
Commission Act 1985.
Item 2 of Schedule 1 repeals definitions no
longer required under arrangements enacted by the Bill, including
definitions of the Board and Board members. It also creates a new
definition of CEO.
Item 3 of Schedule 1 repeals provisions that
relate to activities or powers that were conferred on Austrade as a
body corporate under the Commonwealth Authorities and Companies
Act 1997.
Item 5 of Schedule 1 removes ambiguity in other
Acts to employees of Austrade.
Item 8 of Schedule 1 provides for the
establishment and functions of the statutory office of CEO.
Item 17 of Schedule 1 confers the functions and
powers of the CEO under the Act, including the provision that the
Minister retains the power to issue direction in writing with
respect to the performance of the CEO s functions and exercise of
power.
Item 26 of Schedule 1 sets the terms
surrounding the appointment of the CEO.
Schedule 2 relates to consequential amendments
of the Export Market Development Grants Act 1997.
Items 127 to 177 of Schedule 2 relate to
amendments contingent upon the coming in to force of the Export
Market Development Grants Act Legislation Amendment Act 2006.
Schedule 3 covers other consequential
amendments.
Item 6 of Schedule 3 removes redundant
references to employees of Austrade in the Public Service Act
1999.
Concluding comments
The Bill fulfils the objective of implementing the Government
response to the Uhrig Review. The amendments are operational and
enabling in nature, and arguably will not affect Austrade s
functions and the delivery of export promotion and facilitation
services in the short-term. However, they could potentially impact
Austrade s functions and services in the long-term if appropriate
mechanisms are not put in place to obtain similar high-level input
from business and industry leaders that current and past board
members have provided.
- N. Minchin (Finance Minister), Australian Government Response
to Uhrig Report , media release 57/04, 12 August 2004:
http://www.finance.gov.au/scripts/Media.asp?Table=MFA&Id=550
- ibid., p. 12, point 6.
- R. Grant, loc. cit.
- Australian Government response to the recommendations of the
review of the corporate governance of statutory authorities and
office holders.
- Mark Vaile, Minister for Trade, Second reading speech:
Australian Trade Commission Legislation Amendment Bill 2006 , House
of Representatives, Debates, 30 March 2006, p. 1.
- Bob McMullan, Why Austrade needs a board , Labor e-Herald, 24
January 2006, accessed 30 April 2006 at: http://eherald.alp.org.au/articles/0106/magopine24-01.php
- Warren Truss MP, Submission to the Foreign Affairs, Defence and
Trade Legislation Committee Inquiry into the Austrade Legislation
Amendment Bill 2006.
Jeffrey Robertson
Foreign Affairs, Defence and Trade Section
9 May 2006
Bills Digest Service
Information and Research Services
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Australian Parliament using information available at the time of
production. The views expressed do not reflect an official position
of the Information and Research Service, nor do they constitute
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ISSN 1328-8091
© Commonwealth of Australia 2006
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Published by the Parliamentary Library, 2006.
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