Senate debates

Wednesday, 26 March 2014


Export Market Development Grants Amendment Bill 2014; Second Reading

10:40 am

Photo of Nick XenophonNick Xenophon (SA, Independent) Share this | Hansard source

I will confine my remarks on the Export Market Development Grants Amendment Bill 2014 to the fit-and-proper-persons test because I have been contacted by a number of good people in this industry who advocate for and prepare export market development grants applications and they cannot see the benefit of such a test. They cannot see that it will be dealt with equitably. They are concerned that it is simply too vague, and they worry about its effectiveness. They worry about it being abused and that it will be a retrograde step.

I want to outline that briefly in the course of this contribution, and I have a number of questions to ask the government in relation to this. If the government is about reducing red tape, I cannot see the underlying rationale for this particular test in relation to fit and proper persons. Of course, we expect that anyone dealing with export grants does so with probity and ethics, and there are a number of other sanctions under criminal law that will provide protection to the scheme for those seeking grants. But I cannot see the benefit of what is being proposed here, and I am worried that it will be abused in the way that it has been set out.

I broadly support what is proposed in this bill, apart from the fit-and-proper-persons test. I am concerned that the small exporters, those that are emerging as exporters, will be disadvantaged by what is being proposed. Clause 3.6 of the Export Market Development Grants (Associate and Fit and Proper Person) Guidelines 2004 requires that Austrade, when making a determination as to who is not fit and proper:

… have regard to any matter, not mentioned in section 3.2, 3.3, 3.4 or 3.5, that it considers relevant to the personal, commercial, financial or professional character, status or reputation of the person or associate.

My question to the government is: how on earth will you develop it, how on earth will that be dealt with and what are the criteria in respect of that? There are some regulations I am seeking to disallow, which I am concerned are simply too vague and imprecise and will cause a lot of concern amongst those who have to work on very small margins in this industry when advocating for those seeking a grant.

What has been put to me by those who work in the industry is that this is quite different from other areas where a fit-and-proper-person test is appropriately required. If you are a customs agent, for instance, you have a certain amount of trust placed in you for the clearance of material goods coming into this country, and it is important that you pass a fit-and-proper-persons test so that you are not allowing narcotics or other prohibited substances or goods into the country. If you are a tax agent, you get certain privileges from the tax office with respect to the late lodgement of returns and the like. There is an element of trust placed in you by the tax office by virtue of your being a tax agent, so I can understand the need for a fit-and-proper-person test with respect to that. But in relation to an export grants scheme, where these people act as agents, prepare applications and submit the applications, there does not seem to be any privileges attached as there is for a tax agent or a customs agent.

The explanatory memorandum to the Export Market Development Grants Amendment Bill 2004—this bill—states that consultants must be excluded for 'behaviour considered inconsistent with accepted community standards'. What does that mean? It may appear on the surface to be reasonable; it has the potential to become unreasonable when applied to the ministerial determination that will accompany the legislation.

Procedural fairness may not be achieved if what constitutes unacceptable action is not sufficiently defined or if external review provisions are manifestly inadequate. The requirement that administrators observe natural justice is protected at a federal level. In relation to that we need to refer to the Administrative Decisions Review Act, but it is my view that the necessary safeguards for that to be achieved are not present in this legislation. Where are the safeguards?

The coalition says it is about reducing red tape and making it easier for businesses to get on with their legitimate work but there are many landmines—so many pitfalls—in this particular test, which is something that the previous government put up. I am surprised that this government is embracing what I think is a bad element of this legislation. How do you determine behaviour considered 'inconsistent with accepted community standards'? Where is the procedural fairness?

My fear is that somebody may be subject to a capricious action under the scheme: 'We don't think you're a fit and proper person; we will therefore make that ruling.' That person could end up losing their livelihood for the next two or three years pending a judicial review. We know what it costs to run a judicial review. Access to justice in this country is a sad joke. When you consider how much money it costs to bring an application in the Federal Court, to retain a solicitor and to obtain counsel to argue the case, you could be looking, at the very least, at tens of thousands of dollars for a simple judicial review application. And that will take a considerable period of time. If there is an appeal to the Federal Court it would cost tens of thousands of dollars more.

The concern is that these export grant agents are not making a killing. They are making a pretty modest living and some of them are eking out a living—particularly in relation to the small exporters that they advocate for. So, I do not understand why the government would embrace this test when there appears to be a vagueness that accompanies it and where there appears to be a potential of abuse of power in relation to its use.

In the explanatory memorandum to the bill in respect of the 'consultants not fit and proper persons' provisions it is stated that this will 'provide the CEO of Austrade a mechanism to deal responsively to the variety and diversity of yet unknown circumstances and behaviours that may arise'. What on earth does that mean? What does it mean to talk about the 'yet unknown and circumstances and behaviours that may arise'? It seams incredibly vague and dangerous to me to be putting that in a piece of legislation or in a legislative instrument.

These undefined obligations may place Austrade in an untenable position. Our system of justice puts the onus on the accuser to establish its case. Under the ministerial determination, however, once an allegation has been made Austrade are obliged to accept the allegation as material and allow the litigation to run its course. The defendant must be presumed guilty until proven innocent. How is that fair in terms of procedural fairness? How is that fair in terms of natural justice? How is that fair to these agents who act for small exporters—the future of this economy when you consider the importance of encouraging small exporters to become medium and bigger exporters and the enormous benefit exports have to our nation?

Those are, in essence, my concerns. My understanding is that under the 'fit and proper person' provisions of this bill once any allegation of impropriety is made against an agent, in the press or otherwise, Austrade must apply to 'fit and proper person' provisions. In the case of a consultant the effect on their livelihood and on their clients would be dramatic. If an applicant has a grant payment denied or delayed this is bad enough; a consultant, on the other hand, may lose everything. For instance, if a start-up company successfully launches a new patented lure for catching large game fish such as marlin, then demonstrates the attributes of the lure and shows that it qualifies for support under the export grant scheme, it would budget accordingly. If an allegation is made that the agent is in some way not a fit and proper person—any allegation can be made—that company can be held up in terms of their grant.

That is the sort of thing that I am concerned about. There are other examples that I could give. For instance, what happens with an EMDG application if someone is charged with something unrelated to fraud or dishonesty—if they are charged with an assault, for instance? Does that mean that they would be held over, under the 'fit and proper person' test? I think that is unfair. You are punishing a person two or three times as a result of that.

There are other examples that have been put to me. I do not want to raise those examples for fear of identifying any of the people that have come forward to me to express their genuine concerns. My appeal to the government is to put this on hold with respect to the 'fit and proper persons' test. I think it has been ill-considered. If you look at the fine details of the test as it is intended to apply and the circumstances in which it is intended to apply and the whole background of what these agents do, compared to what a customs agent or a tax agent does—in fact they would be better referred to as 'consultants' rather than 'agents'—then you would find that it is very dangerous.

To rely on insufficiently defined administrative powers will cause enormous damage to this sector, particularly to small and medium exporters. I think the cost of consultants will go up. Fewer consultants will want to be involved in this and a lot of consultants will say, 'That's hanging over our head—that we can lose our livelihood overnight with an allegation that cannot be sufficiently dealt with or will have to go through the courts.' That is dangerous as well. I would like to hear from the government in relation to why it is proceeding with this ill-considered part of the legislation in terms of the fit and proper person test, which is so ill-defined and so open to administrative abuse.


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