House debates

Thursday, 16 August 2007

International Trade Integrity Bill 2007

Second Reading

12:57 pm

Photo of Bruce BairdBruce Baird (Cook, Liberal Party) Share this | Hansard source

I am pleased to support the International Trade Integrity Bill 2007. I believe it is a significant piece of legislation. It is about Australia’s trade integrity and reputation overseas, and it is important that we see this House support it. Certainly we have had much focus in this House on the events that occurred a few years ago in relation to the breaching of UN requirements, and I am very pleased to see that the Attorney-General has brought forward legislation which addresses this issue.

I heard the shadow minister for trade say that the events related to the AWB have seriously damaged Australia’s reputation. As the leader of a trade delegation that recently visited Mexico, I think that is a little short of the case. In fact, the International Relations Committee, which is a bipartisan independent group, presented us with research when we visited that country. They had surveyed the attitudes of Mexicans to 25 countries around the world, and Australia was in the top three in terms of its reputation. So much for damage to our reputation. In fact, it remains strong. It is unfortunate that those events occurred—there is no doubt of that—and the AWB has paid a high price. The responsibility of the officials from that organisation is clearly questioned.

During the long debates that related to this whole incident, the opposition were looking for the silver bullet that would link ministers to these events. Of course, despite their efforts in this House, it was never established. It was never established because it never occurred. The Cole inquiry that was established found that there was no evidence of ministerial involvement in any of these breaches. We need to put to rest all of the allegations that have occurred in this House, including the shadow minister’s imputation about the conduct of the ministers in relation to these events.

When 2,000 companies from 66 countries were named in the Volcker report, only two countries set up further independent inquiries and one of them was Australia. This government moved quickly to establish the Cole commission—an independent, open inquiry, which had all the powers of a royal commission. There is something the majority of countries named could have pursued, and that is simply to do nothing, but we set up a totally independent body that was able to find what they could and make recommendations. This legislation implements the findings of the Cole royal commission. I believe it was a very good inquiry in the way it was conducted. There was the independence of the commissioner, and the recommendations that were produced were in line with the general views in the community. During that whole time, the Labor Party attempted to blame the government and questioned the integrity of ministers, but, at the end of the day, there was really no substance to what was being alleged.

This government is extremely serious about maintaining Australia’s trade integrity and ensuring that businesses understand the laws of trade with UN-sanctioned regimes. My former role, well before coming to this House, was as a trade commissioner. The focus of those involved in trade activities is to get the orders. They would regard the niceties of what they need to do and, as part of the general background of events, what needs to occur. If they are involved in breaking UN sanctions, then we want to know about it. We do not care whether it relates to increasing our balance of payments or whether they are likely to get a big order or a bonus. In terms of this legislation, we say, ‘If you breach these requirements, you will pay the penalty’—that is, both the companies and the individuals concerned.

This bill implements recommendations 1 to 3 in the report of the inquiry into certain Australian companies in relation to the UN oil for food program, which of course was the Cole inquiry, but it goes further. It relates not only to this particular issue but across the board in terms of UN trade activities where sanctions apply. Where the UN has decided to impose sanctions it is appropriate because there are significant human rights abuses or issues in the international scene which require the world body to implement sanctions which would indicate to that particular regime: ‘The way you are conducting a business is inappropriate.’ How else can you achieve the kinds of outcomes that we would like to see?

The bill will make changes to foreign bribery offences and tax deductibility of payments to foreign officials. Overall, the bill will improve Australia’s ability to monitor and enforce UN sanctions and combat foreign bribery so that companies act within the guidelines and do not jeopardise Australia’s highly regarded trade reputation. Through this bill the government will continue to protect Australia’s highly regarded trading reputation. Because of the importance of international trade to Australia’s economy, it is important that we do all that we can to ensure the integrity of not only the government but all those who participate in international trade, particularly where there is UN involvement.

The bill introduces a new offence to the Charter of the United Nations Act 1945 for contravening a Commonwealth law that enforces UN sanctions, recommended by Commissioner Cole. It introduces separate criminal offences. Companies and their officers must certify the accuracy of information provided in connection with trading activities subject to UN sanctions—it is not enough to say: ‘Sorry, we’ve met our obligations. We put it in.’ It is up to them, according to this legislation, to certify the accuracy. What have they done to ensure that it is all as they have declared? False or misleading information will be grounds for invalidating any authorisation to conduct business under a UN sanctioned regime. Not only would they lose out in the business but criminal consequences can apply as well. Agencies that administer UN-sanctioned regimes in Australia will be granted an information-gathering power to investigate whether companies are complying with UN sanctions, so the resources will be there to carry out this information-gathering activity.

In terms of achieving that through the legislation provided, the Customs Act 1901 will introduce new offences for individuals or companies who import or export prohibited goods without proper authorisation. These offences carry identical penalties to the new offences in the Charter of the UN Act. The aim is to effectively deter organisations who may be considering contravening the sanctions. The applications for authorisation to import or export UN-sanctioned goods will be made on approved forms and, again, penalties will apply to false or misleading information.

There is the question of the bribery of foreign officials. It is an issue and a challenge for everyone operating in the international marketplace and particularly as it relates to particular countries. The bill amends the Criminal Code Act 1995 to clarify the circumstances in which a payment to a foreign public official is not a bribe. In future a payment to a foreign official will be allowed only if that payment is required or permitted in the law of the place or country that governs the foreign official. This will be so regardless of the outcome of the payment or whether it was purported to be necessary for any other reason. Every exporter is put on notice by this requirement. It is no longer enough to say: ‘That’s what they all did. If you wanted to get your goods through, that’s what you had to pay.’ It is saying it has to be required by law that this payment is necessary in order to trade. It makes it a clear criterion.

There is also a change to the Income Tax Assessment Act 1997 to provide that an amount paid to a foreign public official is not a bribe only in circumstances where it was required or permitted by the written law that governs the foreign public official. The failure to obtain the advantage sought by the bribe will not be relevant to determining whether a benefit paid is a bribe to a foreign official. That also closes any loophole that exporters may be trying to use.

The definition of ‘facilitation payment’ in the Income Tax Assessment Act 1997 will also be aligned with the definition in the Criminal Code Act 1995. Facilitation payments are tax deductible and are not a bribe to a foreign public official. This will clarify the current law by ensuring that a benefit paid to a foreign public official will be considered a facilitation payment only if it is minor in value and for the sole or dominant purpose of securing a routine government action of a minor nature. There is clarification under the law of what is regarded as a bribe and this must be complied with or penalties will apply. This is in line with the Cole recommendations. I am sure all members of the House would approve of and support this clarification.

In conclusion, it is clear the government has moved to continue to ensure that Australia’s international trade reputation remains strong, that our integrity is not impugned and that we are seen as being a first-rate country in terms of trading integrity. We have made the changes to the tax act, the Customs Act and the Criminal Code Act 1995. This will ensure that we define ‘bribery’, clarify the penalties imposed when UN sanction requirements are not complied with, clarify the legal written requirements of applications, clarify the responsibility of companies and individuals to check all the facts so that there are no breaches, and apply criminal sanctions for breaches. It is all on the table from here on in. Every exporter will know that, if they are involved in the UN sanction area, they have to comply or be subject to significant penalties.

It is important that we inform the public about these changes so that exporters will know. I heard a cynical comment by the shadow minister for trade. But the reality, having operated in this area and dealt with exporters, is that it is important that they all know about these changes. If you are going to introduce pretty harsh changes in responsibility and legal sanctions for noncompliance, it is appropriate that you very clearly let exporters know what is involved. There will be sufficient time for this consultation to take place with the businesses importing and exporting goods and services. Amendments will commence on a day to be fixed, by proclamation or six months after the bill receives royal assent. I am sure we would all agree with the time for consultation to ensure that information is out there so that people can comply. Legislation alone cannot accomplish this. It provides the necessary penalties, but it is up to every exporter to understand the spirit of the law. The spirit of the law is that we want all exporters to comply to ensure that Australia maintains a first-rate reputation for its trading integrity. I commend the bill to the House.


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