2.1
The Export Market Development Grants Amendment Bill 2014 sought to amend
the Export Market Development Grants Act 1997 to:
2.3
The bill was subsequently passed by both Houses and received Royal Asset
on 9 April 2014.
2.4
The committee intends to write to the Minister for Trade and Investment
to seek further information on the compatibility of the bill with the right to
privacy and reputation, particularly the justification for the fit and proper
person measure, including:
Objective of the provision
The EMDG scheme is the only significant financial assistance
program for Australian small exporters. The total amount payable under the
scheme is capped. Any grant that is paid on the basis of false information
reduces the amount available to other applicants. Also, the amounts spent on
monitoring and investigating claims reduces the overall amount available. It is
not feasible for Austrade to fully verify every application (approximately 3000
applications each year). It is important that the EMDG scheme be able to
operate on the basis that applications are honest.
EMDG consultants advise applicants on claims under the EMDG
scheme. These consultants usually work on a success fee basis, essentially a 1O
per cent commission on grants obtained for their clients, which can be a very
substantial amount. Approximately 50 per cent to 60 per cent of claims are
prepared by consultants.
The Government, applicants and EMDG consultants all share an
interest in the EMDG scheme maintaining broad public support. This public
support depends upon public confidence in the probity of the scheme. EMDG
consultants are a significant part of the scheme. They are publically linked to
the scheme, undertake significant promotion of the scheme, manage the majority
of applications to the scheme, and earn fees from the scheme, usually on a
commission basis. The probity and good public image of EMDG consultants
therefore has a significant impact on public perception of the EMDG scheme and
the Government's management of it. It is therefore appropriate that just as
applicants are required to be fit and proper to receive a grant, so should
consultants meet a similar standard. If the scheme were to be withdrawn due to
negative public perception it would cause disruption and damage to thousands of
businesses.
Connection between the limitation and its objective
The "fit and proper person" test for applicants,
that has been in place since 2004, provides an incentive for them to act honestly.
The new provisions appropriately extend this requirement to consultants who
prepare applications, often for applicants who themselves have little or no
knowledge or experience of the scheme requirements. Because consultants' fees
are a percentage of the grant received, there is an incentive for consultants
to maximise the amount claimed. The current Bill is intended to provide a
further incentive to consultants not to make false claims, and an incidental
incentive to applicants not to use consultants with a poor record for financial
probity.
EMDG consultants are not subject to the disciplinary rules of
any professional or industrial body. The only control the government has over
the conduct of consultants in the preparation of claims is through the mechanism
of preventing them from preparing and lodging further claims, as proposed in
the Bill. If a criminal offence (such as fraud or attempted fraud) can be
proved in a particular case, a criminal prosecution can be brought, and in that
case they will be automatically disqualified under s78 of the EMDG Act from
preparing applications for a period of at least 5 years. However, this will
occur after the claim has been lodged, possibly after a grant has been paid and
certainly after damage to the public reputation of the export grants scheme and
the government's management of the scheme.
The proposed provisions will therefore protect taxpayers'
funds from fraudulent or excessive claims, ensure the proper operation of the
scheme and, importantly, maintain public confidence in the scheme.
Limitation proportionate to its objective
I recognise that the making of a finding that a consultant is
a not fit and proper person is significant and therefore it is appropriate that
such a finding should be subject to administrative law. Consultants will
therefore have access to merits review by the Administrative Appeals Tribunal
(AAT) of an adverse decision under s79A. In addition, consultants would be
entitled to judicial review under the Administrative Decisions (Judicial Review)
Act 1977 as well as under the common law. Judicial review would consider
the lawfulness of a decision under s79A of the EMDG Act, in particular, in
relation to whether the decision complied with the rules of administrative law.
It is also important to note that s79A operates in relation to each individual
application lodged by the consultant.
If, in relation to one application, Austrade's CEO forms the
opinion that the consultant who prepared it is not a fit and proper person, the
application in question is taken not to have been made. However, it does not
automatically affect other applications. If the same consultant later prepares
a new application, that new application will be taken not to have been made
only if the CEO again forms the opinion that the consultant is not a fit and
proper person. In doing so, the CEO will have to take into account any relevant
submissions by the consultant and any change in the circumstances, such as a
successful appeal against a conviction and the lapse of time since any adverse
event.
Consultants will be permitted to continue to lodge claims on
behalf of their clients whilst being investigated, and only when a not fit and
proper determination has been made and communicated to the consultant will they
be precluded from lodging further applications. There will therefore be no
disadvantage to consultants when a not fit and proper decision is delayed, as
they will be permitted to continue to lodge grant applications on behalf of
their clients until an adverse decision is determined.
It is important to note that a decision by the CEO that a
consultant is not a fit and proper person does not operate indefinitely into
the future. An excluded consultant may apply in writing to the CEO of Austrade
for the CEO to revoke a not fit and proper determination and the CEO must
revoke such a determination if the excluded consultant has made this
application and the CEO is satisfied that the circumstances that resulted in
the determination no longer exist, and the CEO is not aware of any other reason
for the determination to remain in force.
I consider that, in light of these various safeguards, s79A
and the related provisions proposed in the Bill are a reasonable and
appropriate measure to give effect to the aim pursued. Moreover, I do not
consider that they breach, or limit, a consultant's right to be protected from
unlawful attacks on their reputation.[1]