Senate debates

Wednesday, 26 March 2014


Export Market Development Grants Amendment Bill 2014; In Committee

11:08 am

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

I have a number of questions further to Senator Birmingham's contribution. I am grateful for his outlining of the position of both the government and the department. Of course I want there to be the highest standards of probity when we deal with these grants; it is taxpayers' money that is at stake. But I am concerned that there are insufficient safeguards in place in relation to what is proposed for the fit and proper person test and that it could be subject to abuse. I want to get a handle on the existing fit and proper person test that applies to applicants for grants. How many fit and proper person determinations have there been since it has been in place?

11:10 am

Photo of Simon BirminghamSimon Birmingham (SA, Liberal Party, Parliamentary Secretary to the Minister for the Environment) Share this | | Hansard source

I regret that I cannot give an exact number. However, I am advised that it is a very small number over the 10-year-period in which that provision has been in place for applicants. As I indicated in my remarks, no concerns have been raised during that time by consultants about the way in which that test on applicants is applied. In relation to your specific question, I am advised that it is a very small number. I take that to mean only a handful, but we can try to get a quick answer back from the department. The officials present do not have that exact number to hand.

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

That is entirely unsatisfactory. My amendment, which seeks to knock out this particular clause because of the concerns I have outlined, has been tabled. The department are on notice; they are aware of it. How can they not give us such basic information, because it is supposed to be a continuation, if you like, or an additional feature of the legislation, given the fit and proper person test that has been in place for applicants? If there has only been a handful, isn't that something the department can tell us fairly easily? I would be very grateful if, in the course of this committee stage, we could get that information. I would have thought it was something that the department ought to have been aware of in order to advise Senator Birmingham. I am not being critical of Senator Birmingham, but it seems to me that the department should have been able to provide that information to the government.

Can I continue, pending that information. At the moment, if a consultant becomes subject to a 'not a fit and proper person test' inquiry, what happens to the files of his clients?

11:12 am

Photo of Simon BirminghamSimon Birmingham (SA, Liberal Party, Parliamentary Secretary to the Minister for the Environment) Share this | | Hansard source

I am advised that normal government provisions in relation to confidentiality would apply there and that a client's files would be sealed and not available for any other purposes—if that is the nature of the information you are seeking. Obviously, an applicant working through a consultant would, I am sure, have the opportunity if their consultant were deemed not to be a fit and proper person to then work through another consultant if they so choose or to pursue an application themselves. The fact that a consultant may be deemed not to be a fit and proper person would not necessarily impinge on a company's capacity to pursue an application, unless of course under the already existing terms of the act that applicant were themselves deemed to also not be a fit and proper person.

11:13 am

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

I have raised this issue and have put up this amendment because of concerns that have been put to me by a number of people, whom I consider to be quite reasonable. I am constrained in giving specific, identifiable examples because they are concerned for a number of reasons in terms of client confidence and the potential ramifications for them if such a broad test is incorporated. My understanding is that, currently, if an applicant—the client, if you like, of consultants—is the subject of a 'not a fit and proper person' inquiry, then the files basically go into limbo or the abyss. I have to be a bit careful here not to identify the parties, but I understand that some of these 'not a fit and proper person' investigations can take a number of years and keep applications in limbo. If that information is wrong, I would be very pleased to hear that from the minister, and to hear what the department can tell us. That is one question.

The other question is that I would have thought the department could tell us—ought to tell us, given what is involved here—how many applications there have been under the fit and proper person test by the department, and how long those applications have taken. It is only a handful; surely they can tell us: how long do these applications actually take to be dealt with one way or the other?

11:15 am

Photo of Simon BirminghamSimon Birmingham (SA, Liberal Party, Parliamentary Secretary to the Minister for the Environment) Share this | | Hansard source

Thank you, Senator Xenophon; I have asked to get the exact number you have requested. I am advised it is a small number of negative determinations in relation to the fit and proper person test, but we will try to get you the specific details. The process, under the existing terms in relation to applicants and as it is proposed in this bill in relation to consultants, is that if there are concerns the Austrade CEO may seek information from the applicant or, under this bill, from the consultant. The historical information I have been provided with is that the length of time it takes to make a final determination, where there is some question or examination of these issues, ranges from weeks to months; that there are not instances of that being a matter that goes on for years; and, in this regard, that the length of time it takes for an applicant to provide information when requested also has some impact—so, clearly, it is not just a case of how long it takes Austrade to fulfil its end of the bargain. If Austrade requests information from an applicant as a result of a query about their status as a fit and proper person, then of course it is up to that applicant as to how long it takes them to provide that information. But, in the relatively small number of instances where this provision has come into play in relation to applicants, I am advised that it is a matter of weeks or months.

I understand your constraints in relation to examples or information being provided to you on a confidential basis, Senator Xenophon, but I think it is important to acknowledge that, if somebody has been found under the existing arrangements not to be a fit and proper person as an applicant for a grant, then obviously their application would be put on hold. That is the nature of these provisions. So when you ask what happens to a file or whether a file is active or otherwise, clearly, if somebody is found not to be a fit and proper person, it is the very intent of these provisions that that person then does not receive a grant under the scheme. If the person continued to dispute that over a long period of time, I can see how some matters might continue over a longer period of time. Of course, they have the administrative and judicial appeals processes that I outlined available to them to seek recourse and rectification if they believe that the Austrade CEO has made a wrongful determination.

11:18 am

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

I would just like to make it clear that the Exports Consultants Group have brought this to my attention. They have given me a fair bit of information. They want the scheme to work. They say they are subject to criminal laws, like everyone else, so that, if someone is involved in a fraudulent grant or other behaviour that could easily be addressed within the criminal code, then these matters can be dealt with in that way.

I have been told that there is a 'not a fit and proper person' investigation, in relation to a 2009-10 application, which is now into its fourth year. I do not know whether the department can confirm that. I do not think that would breach any confidentiality. But the issue is that if the chief executive of Austrade says, 'We don't think you are a fit and proper person,' then in order to deal with that you have to make an application for judicial review in the Federal Court. These guys—and I say that generically; these people—just do not have the funds to do that, by and large. They do not have tens of thousands of dollars to do that. I am concerned as to how it will operate.

The guidelines say that Austrade must 'have regard to any matter that it considers relevant to the personal, commercial, financial or professional character, status or reputation of the person or associate'. What happens if you are a consultant, and you have a black sheep in the family who has been convicted of some serious offences, relating to fraud or organised crime, for instance? Does that mean you would be caught up in and be responsible for the sins of someone else in your family, or someone that you know, even though you have no commercial relationship with them—or no relationship at all with them? It has been put to me that what is being proposed here imposes an obligation which is unduly dependent on insufficiently defined administrative powers. That is my real concern.

11:21 am

Photo of Simon BirminghamSimon Birmingham (SA, Liberal Party, Parliamentary Secretary to the Minister for the Environment) Share this | | Hansard source

Senator Xenophon, in relation to some of the concerns you are expressing here, I think a level of faith needs to be had in the public officials who are empowered to make sure that they are applying the spirit as well as the intent of the legislation. Clearly, the idea that just because there is a black sheep in the family somebody might be excluded is something that I cannot imagine occurring under any circumstances. The word 'associate' obviously has certain understood meanings in that regard.

One would expect that, for somebody to be deemed not a fit and proper person based on an associate, that would relate to somebody who was directly involved in their business activities and dealings and that that association had an impact on the direct trustworthiness of dealing with that consultant or business. I refer you to the explanatory memorandum, which states in relation to item 6 that:

In applying the assessment criteria to be set out in the Guidelines, it is expected that the CEO of Austrade would only form an opinion that a consultant was not a fit and proper person where there was a concern with that person’s capacity or trustworthiness to act as a consultant in the best interests of both their applicant client and the public funds from which EMDG grants are paid.

The EM is making relatively clear there the narrowing of some of the broader scope of possible applications of this that you have expressed concerns about. The only basis on which you would expect the CEO of Austrade to deem somebody not a fit and proper person via the guidelines is where that person's capacity or trustworthiness to act as a consultant in the best interests of both their client and the taxpayer was in some question. That is where we bring the detail back to in this regard.

I am advised that the department and Austrade are not aware of an unsettled or outstanding claim that dates back to 2009, as you have indicated. As I said, it is of course possible that somebody from 2009 who was at some point along the way deemed not a fit and proper person may still be aggrieved or dissatisfied by that. They may have chosen not to go with the options of appeal that are available to them. But I am advised that there has not been an outstanding matter of determination since 2009.

You highlighted that you have been provided with some information by the Export Consultants Group. I appreciate that. The government and Austrade would obviously welcome hearing their concerns in relation to any of the particular guidelines in play. But, as I noted in my concluding remarks in the second reading debate, they provided evidence to the Senate Foreign Affairs, Defence and Trade Legislation Committee on 7 June last year and indicated their broad support for a 'fit and proper person' test for consultants that aligned broadly with the test that has been in place for clients and applicants since 2004. Certainly it is our understanding that their support for the broad nature of these provisions is not in doubt. But if they have concerns about the detail of how the provisions will operate then we would be happy to work through those concerns sensibly as those provisions are finalised.

I have been given some information about the number of determinations from the department. I am advised that there have been 11 in the 10-year period since 2004-05. In that 10-year period there have been 11. That is noting that there are somewhere between 3,000 and 5,000 applications for grants per annum. So 11 businesses or individuals have been deemed not to be fit and proper persons in recent times. There was one determination in this financial year, four in 2012-13 and none, I believe, in 2011-12. In total, there have been just 11 in the 10 years of the operation of that test for applicants.

11:26 am

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

I am grateful to Senator Birmingham for providing further information, but can he advise how long some of those matters have taken to be dealt with? How many of those matters took more than 12 months to determine, for instance? Whatever support there may have been previously for the general principle of a 'fit and proper person' test, the concern is the way that it has been set out. The way that it has been set out under the regulations raises real concerns about administrative and procedural fairness. If I could get some further information from Senator Birmingham in relation to that, I would be grateful.

11:27 am

Photo of Simon BirminghamSimon Birmingham (SA, Liberal Party, Parliamentary Secretary to the Minister for the Environment) Share this | | Hansard source

As I flagged before, I am told that the general time line is weeks or months, not years. On the specific case you highlighted before with the suggestion that there was someone outstanding since 2009, that is not the understanding of the department. I do not believe there is a problem here of delayed justice being denied justice, as such. I equally do not believe that there is a problem of excessive use of these powers or provisions in relation to how they have applied historically. Obviously the data I gave before indicates that they have been used very discreetly by officials.

You indicated in earlier remarks that, 'If people do the wrong thing, the government has the recourse of legal proceedings that would apply to people who might be defrauding the Commonwealth.' That is true. But what we seek to do with provisions like this is prevent those problems happening in the first place and thereby eliminate the costs that would accrue to government in having to investigate, pursue, recover and prosecute for misdeeds or wrongdoing.

Ultimately, we need to remember that we are talking about a government grants scheme. It is a scheme that provides people with financial assistance to market their export activities overseas. It is a gift from the taxpayer to certain businesses and individuals, because there is a general acceptance that that gift provides overall economic benefits to the entire country. But it is important that, where the taxpayers' funds are being given, we have confidence that it is occurring with the highest standard and nature.

As I highlighted in my earlier remarks, in a sense it is not possible for Austrade to go through extensive scrutiny of every single application in terms of its complete compliance. Obviously, they do an outstanding job and are doing the best they can in ensuring that everything is above board and compliant. But it is important that we have faith that the records and applications are sound. It has been a 10-year accepted principle that Austrade should have the right to make determinations on the nature of an applicant and whether they are a fit and proper person. With around 60 per cent of applicants utilising the services of a contractor to act on their behalf, it does seem inherently logical to extend that same test with similar provisions to those contractors.

You indicated that support for the principle that I have just enunciated is strong. I am pleased with that and I welcome that. If there are particular concerns about the way provisions as outlined and drafted will be applied then I would be happy to do my best, based on the advice of officials, to work through those concerns and see if we can provide satisfactory comfort to those with concerns to make sure that they are satisfied that the application of this test will meet the intention of the government, which is that it not be used as an impediment to consultants.

We recognise the value of the consultants' work in assisting applicants. We recognise that they have developed skills in ensuring the compliance of applicants with the scheme and making it easier for applicants to access it. So we want to make sure they have continued involvement in supporting as many small businesses and medium-sized enterprises as possible to access this scheme. We need to make sure that it works properly. If there are particular provisions that they have concerns about, which we can try to provide some comfort on during this debate, then I would be happy to deal with them.

11:32 am

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

I understand where the numbers are on this. Both the government and the opposition do not support the amendment, but—as a matter of completeness—I should formally move the amendment standing in my name on sheet 7469 revised, which seeks to oppose the fit and proper person test in the form that it has been put.

I move:

(1) Schedule 1, item 6, page 3 (line 16) to page 5 (line 31), to be opposed.

(2) Schedule 1, item 8, page 6 (lines 5 to 8), to be opposed.

(3) Schedule 1, item 9, page 6 (lines 9 to 13), to be opposed.

(4) Schedule 1, item 10, page 6 (lines 24 to 28), to be opposed.

I would be grateful if Senator Birmingham could give an undertaking to provide details of the current not a fit and proper person test applications that have been made by the department. What was the average time of resolution, how have they been resolved and were they appealed against or what actually became of those. I get the feeling that a lot of export consultants will think, 'We cannot afford this, so we may as well do something else for a living,' even if that creates a stain on their reputation. In order to clear their reputation, they are going to have to mortgage their homes in many cases.

I wonder why the government did not consider some form of independent adjudicator? This is not a criticism of the CEO of Austrade in any way, but why would Austrade not have not independent adjudicator to look at these matters, rather than having to be a judge, jury and executioner on these sorts of things? I just wanted to raise these issues so that we can wrap this up.

The concerns that have been expressed to me are that the time frame for assessment of the fit and proper person test can be measured in years; that applicants have complained to ministers in the past about their treatment at the hands of Austrade; that there are unrealistic demands for information under section 72, in terms of those provisions; and that there is no right of review in relation to section 72, so that if the CEO of Austrade asks the applicant for further information which they cannot reasonably obtain because it is not within their purview, within their knowledge or within their power to obtain that then that could prejudice that person. These are some of the issues that have been raised.

I understand that my amendment will not be successful. I am grateful for the broad support of Senator Whish-Wilson of the Australian Greens. I know that Senator John Madigan from the DLP has also expressed concerns about these provisions. They are the issues that I raise. I do it genuinely, with a real concern that this may have a number of unintended consequences. My concern is that if a demand for information under section 72—in the context of a not a fit and proper person test matter—is made, it is not subject to any appeal. If you cannot provide that information for whatever reason, even though you may have a good reason, you are pretty well stuffed—to put it colloquially. The applicant may be unable to provide or the consultant may not be able to provide information because they simply cannot access that information. It is not within their purview to do so. So they are the broad concerns; I think I have raised them sufficiently.

I advise the government that I will continue to advocate on behalf of these people, who I think want to do the right thing but are concerned that they could be tied up in administrative actions which could destroy their livelihood unfairly and that there are not sufficient safeguards in the regulations, as they exist. That is why I am seeking to strike out this test in its current form in this bill.

11:36 am

Photo of Simon BirminghamSimon Birmingham (SA, Liberal Party, Parliamentary Secretary to the Minister for the Environment) Share this | | Hansard source

Senator Xenophon, I appreciate the genuine concerns you bring to the chamber and the way in which you have put them in this debate. I will be happy to ask Austrade, through the minister for trade, to provide some information to you in relation to the history of determinations that applicants are not fit and proper persons. There are, of course, only 11 such instances, as we have discussed during this debate. I do not know that we will be able to provide a detailed history for all 11, given that they go back a decade. I will be very happy to make sure that information is made available to you in relation to those decisions taken over the last few years—the one in the 2013-14 financial year and the four in the 2012-13 financial year—as well as any other information that Austrade are able to provide about the time line for those determinations.

I would also ask, if you wish, that a private briefing with Austrade be facilitated for you. Obviously, it would seem that you have an aggrieved constituent or two in relation to some matters. Within proper handling of matters of confidentiality that go to people's business dealings and the like I would be more than happy to encourage Austrade to provide you with a private briefing and discussion in which you might be able to get to the bottom of some of those individual instances and concerns that you have raised during this debate.

In relation to the issue you have raised of whether information that may be requested by the CEO of Austrade under proposed section 79A(2) regarding information requested that an applicant could not reasonably be expected to provide, one would expect that the applicant would be able to make that clear to the CEO of Austrade and make clear the reasons why such information could not be provided. I would trust that the CEO of Austrade would take into consideration in their final determination that, clearly, it is unreasonable to expect somebody to provide something that cannot be provided if it is held by other government agencies, for example, or subject to other matters that require it to be kept private or confidential for some legal or other reason. I would, again, want to provide assurance that it is certainly the government's intention in relation to this legislation before us that the CEO would not be using that provision as a capacity to block people from participating and working as consultants by virtue of the CEO making unreasonable requests or demands for information that, obviously, people would be unable to provide.

It is important to note in the legislation that, yes, the CEO can take into consideration a failure to provide information in making a determination that somebody is not a fit and proper person, but the simple failure to provide information does not automatically result in somebody's determination as a fit and proper person. So, were a request made, and for legitimate and reasonable grounds the person came back and said, 'I can't provide this information, but I can provide other information that might address this,' then there would be no reason why that could not lead to a satisfactory resolution of any complaint within the matter.

As I flagged before we will attempt to come back to you in relation to your request for a more detailed breakdown on the history of determinations that have been made in relation to applicants and the time lines, in particular, for resolution of those matters, whether there have been any appeals and whether there are any that are pending or outstanding. Indeed, we are happy to make sure that that information is provided to you. As well, the offer is there, if you wish, for us to facilitate a personal briefing where you can raise, direct with Austrade, any confidential grievances that individuals may have.

11:42 am

Photo of Glenn SterleGlenn Sterle (WA, Australian Labor Party) Share this | | Hansard source

Senator Xenophon, you are opposing various items in the bill. I shall put the question in the form that the items stand as printed. To oppose the items you would vote no when I put the question. The question is that schedule 1, items 6, 8, 9 and 10, stand as printed.

Question agreed to.

Bill agreed to.

Bill reported without amendment; report adopted.