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 facilitymeans 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 servicemeans 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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