Thursday, 4 February 2021
Customs Amendment (Product Specific Rule Modernisation) Bill 2019; In Committee
I must address comments made yesterday during the committee stage related to this bill. Bluster and rhetoric delivered with disconcerting force do not alter the facts and do not bother me. We read Labor's amendment, I listened to the debate and I spoke with the crossbench. I then examined the history of harmonisation and asked questions of the department. I say again: I responded to Senator Carr's and Senator Ayres's comments in previous debate, and we went and got our facts. The result from getting our facts and consulting all those people was a clear understanding that this amendment from Labor is pointless and counterproductive. I did seek, through the questions I asked, to indicate to Labor, to the crossbench and to the many Australians listening to parliament that Labor's amendment was predicated on a thorough misunderstanding of the bill. It became clear, in looking at the history of the bill, that Labor had previously been in support, and I pointed that out. Senator Carr said yesterday, 'You can quote Hansard all you like,' and, yes, I did reference the senator's words in Hansard back to him. The purpose was not to upset the senator. The purpose was to ask—and I thought this was clear from my questions—what has changed? How do you get from being a strong supporter of the bill to being a strong critic, with no change in the fundamentals behind that decision, no change in the facts?
This bill is identical to one in 2018 amending another group of free trade agreements in the same way as this bill does. I recall that Labor voted in support of free trade agreements with this same harmonised system only last year, those agreements being the Indonesia, Peru and Hong Kong free trade agreements. What has changed in these few short months? Well, nothing. Harmonising industry definitions and descriptions makes it easier for exporters to export. Instead of dealing with 15 sets of rules, they only need to deal with one. If a rule change by the World Customs Organization results in a material change to a free trade agreement—a change in commitments which means we lose money or opportunities or control as a result of that change—then the Joint Standing Committee on Treaties are required to examine the change and recommend yes or no, and then parliament can scrutinise their finding, which is presented as a legislative instrument. This is the same procedure that Labor is trying to introduce with this amendment. Labor is introducing a measure that already exists. Labor can huff and puff all they like, but this is a pointless amendment that has the effect of cancelling a system that they voted for only a few months ago. It will make it harder for our exporters to export. It will not protect our industries or workers any more than they are protected now; in fact, it will make things harder for them.
I have no idea what election or social media messaging Labor was trying to set up with this amendment, but I can't see it as an honest one. One Nation remains opposed to Labor's hollow, grandstanding amendment. One Nation remains opposed to free trade agreements that the Liberal-National coalition and Labor pass together, as a duopoly. Yet, as always, we will work honestly with anyone who wants to improve on the mess that the Liberals, the Nationals and Labor jointly create with their free trade agreements. That's why, in this case, we support legislation that reduces bureaucracy, makes it easier for Australian producers to export, minimises the cost to taxpayers and still retains parliamentary oversight.
I'd like to make a brief contribution to this debate in the committee stage. I understand that Senator Roberts and One Nation are very new to this trade debate. Senator Carr gave a very considered overview yesterday of his many years in this chamber and as a minister working in the trade area. I'd like to point out that the Greens too are very aware that the fundamental principle at stake here is one of executive power—more executive power—being wrestled off parliament, of more decisions being outsourced to the bureaucracy. The Greens, back in 2014-15, initiated an inquiry into our treaty-making process. We believe that the trade- and treaty-making process in this place is broken and needs to be revisited. We had a very interesting and long Senate inquiry into that. I then introduced a private member's bill into this place, to reform the trade treaty process.
Parliament has always been aware that the executive holds the power in trade negotiations. This is a hangover of the old Westminster system. It goes back hundreds of years, to when governments negotiated treaties, to when the British Empire conquered countries and negotiated treaties. It really hasn't changed that much. What the government did back in the seventies and eighties, when debate started on this, was to introduce the JSCOT process. I've sat on JSCOT for many years, as have my colleagues. What Senator Roberts doesn't understand is that it is a government dominated committee and a rubber stamp process. The trade negotiations that set the rules and regulations that go into the treaties that we ratify in parliament—and I underline that word 'ratify'—are done in secret. Essentially, DFAT, in the process of trade negotiations, is a black box. Having sat for many years with my colleagues, trying to ask questions about decisions around, for example, the TPP, I can tell Senator Roberts and One Nation that we have virtually no say in what goes into these trade agreements.
If you listen to the senators across the chamber, you might think this is about farmers exporting more products. Trade is about that, but these trade treaty processes have been almost completely overwhelmed by trade in services and a whole range of other exports and imports. The kinds of trade treaty processes we are negotiating in this day and age are extremely complex and ubiquitous across every aspect of our life in this country. They affect everything we do—everything—and yet this parliament only gets to ratify them. If you want to change a trade treaty process and you raise those issues in JSCOT, they will be rejected, because it's a government run committee. If you come in here and ask to amend a trade treaty process, you can't, even if they're entirely sensible amendments, because those decisions have been made by bureaucrats and stamped by the executive. Before it even comes to parliament and to JSCOT, it's already been signed; I bet Senator Roberts didn't know that. These things have already been signed before they even come to us. You can reject it and vote against it—as, I'm very proud to say, the Greens have done on a number of trade deals—but you cannot change it. Our preference would be to amend them and change them, but that option is not available to us as parliamentarians.
The last thing we should be doing is giving more power to the executive and to bureaucrats, and removing our role of oversight in this chamber as senators. It's almost like there is a parallel economic system and governance system in this country and around the world in the context of globalisation—that is, through the trade and treaty process where executives of countries negotiate this. May I say: the people who actually do know what's going on in these very complex trade and treaty processes are mostly big pharmaceutical companies and big corporations. Civil society, including the unions, might get invited to a couple of shallow presentations and given some detail, but they're not invited into the trade and treaty process. I would urge One Nation to reject this bill and, more importantly, fundamentally reject the principle of giving more power to the executive and removing the power that we have as senators of oversight of these critically important matters.
In looking at these amendments, I'm going to declare that, unfortunately, until yesterday I wasn't really across the subtleties of them. With that in mind, I'm going to ask the minister some questions to try and clarify in my mind exactly what is happening here. I apologise; it's subtle but nonetheless important. I share the view of people on this side of the chamber that we always want to make sure that the parliament is doing its job in conducting scrutiny. I've listened, and I re-read last night's Hansard for Senator Keneally's contribution and Senator Carr's contribution. I just want to get an understanding from the minister, from her perspective, of the amendments that Labor are proposing and where she says they cause harm. I'd appreciate it if you could help me through that.
Senator Patrick, just before I call the minister, there's no need to apologise. This is Committee of the Whole, and this process is for every senator who wishes to fully interrogate the bill that the Senate is discussing. It is your absolute right to ask whatever questions you have in relation to the bill, so there is no need to apologise.
Senator Patrick, thank you very much for those questions. I will answer them in two parts. First of all I'll go through the reasons why the government doesn't support the amendments, and then I'll clarify what this bill is about and what it's not about, because there are some things that the government doesn't agree will impact in some of those areas.
First of all, we don't support the proposed amendments because we believe that they would render the bill ineffective. They would break the mechanism incorporating the PSR changes by reference to the updated annex of the relevant FTAs. The intent of the bill is to enable the Customs Act to automatically incorporate periodic PSR updates by referring to the agreed updated PSR schedule in the relevant free trade agreement, rather than requiring a duplicative regulatory amendment to that to accomplish this. The proposed amendments would require those duplicative regulations to still be produced for these last six FTA agreements that are under consideration here today. We also think that the proposed amendments would also defeat the intent of aligning Australia's FTA practice for all of our FTAs. One of the key principles of this is to make sure that all of our 15 FTAs are fully aligned in terms of process. That is currently not the case; we've done nine of them this way and we now want to bring the remaining six into the same framework. Specifically, the bill seeks to align, as I said, these six FTAs. We believe continuing to use the old practice, which still applies to these particular six FTAs, is burdensome and also unnecessary. It's very difficult for traders and for industry to have two different processes in place. I would point out that the Australian parliament has already approved the automatic incorporation practice for nine of Australia's 15 FTAs and in 2018 the parliament passed, with opposition support at the time, as we discussed at some length yesterday, the amendment to the Customs Amendment (Product Specific Rule Modernisation) Act. The 2018 act has the identical impact of this bill; there is no difference, because we're seeking to align and harmonise all of these FTAs.
All other FTAs that have been implemented since 2017 have also included this automatic referral mechanism. So this is the third time that this mechanism has now come to this place. Again, as I said, it's all about harmonising and having all of our FTAs under the same rules. A practical consequence of failing to bring the last six FTAs into alignment with our broader practice is that not only will it create that additional regulatory burden that we don't have for the nine FTAs who have this provision but also it will be incredibly challenging for traders who are trading across many of these FTAs. So, in answer to that first part of your question, that is the reason why we are doing this: to bring them all into alignment in a way that we have already done twice in this place—in exactly the identical way.
You referred to some of our colleagues' comments and contributions yesterday. I will just address a couple of what I'll politely call myths that were brought into the debate. This bill does not introduce a new process to deal with these FTA amendments. It is exactly what we've done twice before. It does not affect JSCOT and the parliament's ability to scrutinise. It does not introduce any new procedures. When the World Customs Organization makes these changes every five years for harmonisation, the process for us to work through the FTA agreements and take any of those amendments through JSCOT is exactly the same; there is no change to that. Yesterday one of our colleagues referred to this bill as somehow relating to antidumping. This is not an antidumping measure and doesn't impact any of our antidumping measures.
So, what is it? It's the same as the identical bill in 2018 for our FTAs with China, Japan, ASEAN, New Zealand and Singapore. It basically streamlines our arrangements with Thailand, Malaysia, the United States, the Republic of Korea, China and New Zealand to align with those other nine so that they are all treated the same. And it also reduces, of these agreements, 3,000 pages to 80 pages, which makes them simpler and cleaner to administer and also to understand. Again, as I said yesterday, this exact same measure was endorsed as uncontroversial and administrative in nature, as Senator Carr said two years ago. In fact, he stated on this exact same bill two years ago that this was simple and administrative. Yesterday he said that the facts have changed. Well, the government would state very strongly that these are exactly identical circumstances.
I will just come back to you with my apology. It's worth saying this because people watching wonder if this is all just politicking. I can absolutely assure you I will end up making my decision on the floor on the basis of the debate that I've heard and the answers that are coming, so it is an important process. My apology really is for my ill preparedness personally in respect of this, having been originally of the understanding that it wasn't controversial, so that's where my apology rests. I do like the process, and, for people who are watching, this is quite a genuine process.
In relation to your answer, Minister, the area I have particular concern over is the reduction of scrutiny, where something that would require a regulation no longer requires a regulation; it simply becomes an automatic process. And I take what you said about previous passings of the bill. But when I read the committee report last night it became obvious that attention came to this in some sense accidentally through a Bills Digestsomeone raised a concern. I think Labor have responded to that concern, which is why they've changed their position. We all know that sometimes in this place not everything's perfect, and it does rely on the different gateways a bill goes through. So, I'm not particularly persuaded in this instance about what's happened in the past. I really just want to get to the point of perhaps a new understanding about a scrutiny element.
As I understand it, when we're dealing with these PSRs, they're associated with harmonised codes, with which I am familiar from a previous life. It was put to me by the department this morning—and I thank you for organising the briefing that you did—that the bill that's before us today only changes the harmonised code and the mapping of harmonised codes to PSRs. Harmonised codes are changed every five years. You might have a harmonised code—I'll use the example that might be associated with some sort of food-related oil—and then five years comes along. I'm using this as a hypothetical, so I'm not going to get technical on you. But say you have an oil as a harmonised code and then some country decides they want to break that up into palm oil and olive oil. So, now we end up with two harmonised codes that map to a PSR or to the PSRs. My understanding is that this legislation, if I were to take what the department told me at face value, deals only with the mapping of the harmonised codes to the PSRs; it doesn't deal with changes to the PSR itself.
My first question is: is that the case? Is that your view? My second question is: the department put to me that, if there is to be a change to the PSR itself—and it's a different story to what's been told to me in this chamber and outside the chamber—that still requires a regulation. I just want to confirm that. So, first question: this bill is dealing only with the mapping of harmonised codes to PSRs. Second question: in order to change a PSR, that has to be done by way of regulation, if I understand this correctly.
Thank you, Senator Patrick, for your comments about the briefing. I'll answer the first question as yes, and I'll just walk you through the example you've used—oils. In that hypothetical example, if a future revision of the HS tariff code reclassifies olive oils, as in your example, as a new category of goods, distinct from its previous category of food oils, it will be necessary to update Australia's free trade agreement itself to accept and to acknowledge this change of classification. So, the update process would apply to the PSR treatment agreed by both parties for food oils to make it the new category of olive oils, for example, in the updated PSR schedule.
Neither the process of updating the PSRs for olive oils, for example, and food oils nor incorporating this change into domestic law—which is what we're talking about here today—would undermine the original FTA commitment or the treaty-making process itself.
So, just going to the second limb of your answer—and I think we're getting close, and I now understand that this is only about the harmonised codes and mapping them to PSRs—say you change the text of a PSR. PSRs are instructions about a third country that is not a party to an agreement and sends a product to, say, China, who has an FTA with us. There are rules associated with when that product that came from the third country is considered to be a Chinese product for the purposes of the FTA. That's a pretty important definition, and I would have concerns if that weren't subject to some scrutiny. So I'm just wondering about the process associated with a change to a PSR. My question is: does that require a change in regulation that is brought to this parliament and is disallowable?
There's a difference between JSCOT examining something and the parliament being presented with a disallowable regulation. I appreciate it does go to JSCOT. My question is: if you change a PSR does the characterisation of what needs to happen before it's considered to be, in this case, a Chinese product coming to Australia under the ChAFTA require a change in regulation, and is that disallowable?
I'm just getting some technical advice here, because we're really now drilling down into the technical aspect of the bill. The clarification I've had on that point is that if it were a change of definition, it would go to JSCOT, but if it were a change in the calculation of the methodology, as you were describing, that would still come back to regulation but it would cover all of the FTAs, not one by one. In short, from the technical explanation I've just had, yes, it would come into regulation if it were a change of calculation. I might have to consult with the officials, given the level of granularity of that question, to make sure that's correct, but my understanding is that if it's a change in calculation, yes it is.
Thank you, that is helpful. Again, thank you for the brief. This question flowed from the brief. The department haven't really answered my question; they took it on notice, but it's only been an hour. They did provide an answer, but it wasn't sufficient for me. That's why we're drilling down so deep into the details. I'm not trying to ambush you in any way. The question you didn't answer in your response just then was: you've established that a modification requires a regulation, but is that regulation disallowable?
Senator Patrick, so I don't mislead you, if you can indulge me for a minute, given the importance of that particular piece of granularity, we will just get confirmation and I'll get straight back to you. My answer stands, Senator Patrick. If there's any more information I can provide on that issue, we'll come straight back.
You didn't really respond to my question, and it is one of the critical elements. This is important to me because it's about scrutiny of the executive in the stewardship of their execution of the law, so it is an important question that I'd like answered. We're talking about that particular process, but—whilst I want the answer to that—I also need to understand if that part is affected by this bill or if I am talking about something, which I think is an important issue, that is not related to this bill?
As we discussed and as I mentioned several times, this bill is introducing nothing new; it has exactly the same arrangements that we have for our other nine free trade agreements—arrangements which we've taken through this chamber twice now. All of the arrangements for these six FTAs are exactly the same; there is no change to the situation that we currently have. What we are doing with this bill is harmonising them so that we have one system and one approach for all of these FTAs. As I've confirmed, JSCOT's role has not changed at all. What has changed is that we're bringing these six into alignment with our other nine FTAs so that they are simpler to administer, they are cleaner and they are also much easier for our traders. That is really the heart of this. There is no difference in this bill and in the arrangements from what we've already had twice through this chamber.
Minister, I'd ask you to confirm this advice from the Law and Bills DigestSection of the Parliamentary Library:
If the PSR Annexes in these FTAs are to be directly referenced, without the need for a regulation under the Customs Act to prescribe the PSRs, then this would mean that the prescription of PSRs may not be subject to tabling and disallowance.
Is that correct?
Senator Carr, you can ask me the same question over and over and the answer will be the same. This is exactly the same as that for the other nine. You can keep asking me the same question but the answer is the same, Senator Carr—through you, Chair.
I put this to you as well: the Australian Border Force submission to the Senate inquiry told us:
…the domestic process includes referring FTA amendments to the Joint Standing Committee on Treaties (JSCOT) as a Category 3 (minor) treaty action.
What's the consequence of having a 'category 3 (minor) treaty' inquiry through JSCOT?
I've given you the answer—the definition of minor and what that triggers. The ones not deemed to be minor trigger a JSCOT inquiry. So again the answer will be the same: this is the same as what we do for nine other free trade agreements. The system is working and, as I understand it, none of these regulations have ever been disallowed, because they are minor and incredibly technical, as you yourself acknowledged two years ago, Senator Carr.
Minister, I understand that you're trying to align this with the previous changes and how we deal with previous trade agreements. I appreciate that. As I indicated, it appears from the Bills Digest that this new issue has been raised. It might be a case where, had we had our time again, we might not have changed the previous legislation, but that's by the bye. I have before me a piece of legislation that I understand is similar or identical to past legislation relating to new treaties. If it got missed last time, that doesn't excuse me, now that it's been drawn to my attention, from examining, perhaps, an otherwise unappreciated consequence. It's in that context that I'm still trying to get an answer as to whether or not the regulation to change the PSR is disallowable and whether or not this bill alters that part of the process. That's fundamental to my question, and it's fundamental to the way in which I will vote.
Thank you, Senator Patrick—through you, Chair. As I've said, this is exactly the same as what we've already implemented for the first nine, and that system is working well. Of course, if there is no regulation—because these changes do not generate a regulation—then that is not disallowable, because there is no regulation, because it's a different process. Again, it's a process that's working very well, and it has worked very well since we passed it in this chamber two years ago. So I really have nothing more to add, because it was very clear when we passed those new FTAs through this chamber and when we brought the 2018 bill in. Again, as Senator Carr said, it was a simple administrative process, and it remains that.
Because it's similar to the previous bill in 2018, that means there is no reduction in Senate power, Senate authority and Senate oversight. I want to respond to Senator Whish-Wilson's comments, because this bill simply makes it easier, as did the 2018 bill, for Australian producers to export. It does not change the Senate's power. The Labor Party amendment duplicates what is already in place, so it's superfluous.
I want to comment, though, that we welcome the Greens' statement and their position on the free trade agreements in general, and I would welcome the opportunity for One Nation to talk with the Greens about future free trade agreements that come into this chamber with regard to coming up with a strategy to stop these agreements going through, because, once we have Labor and Liberal and the Nationals together, it is hard for nine plus two to beat that number. We have to come up with a strategy, because the free trade agreements that Labor and the Liberals push through the Senate are destroying this country. So we are with the Greens party on that. We acknowledge that they've been on that for a while, and so have we, and we want to do something about that, despite the numbers.
Minister, these are the conclusions that we came to as a result of discussions with the crossbenchers and the representatives from the department: if a rule change by the World Customs Organization results in a material change to a free trade agreement, that's a change in our country's commitment, which means that we lose money or opportunities or we lose control as a result of that change, and then the Joint Standing Committee on Treaties is required to examine the change and recommend yes or no, and then the parliament can scrutinise their finding, which is presented as a legislative instrument. Is that correct?
Thank you—through you, Chair—to Senator Roberts and to Senator Patrick. Just to clear up any confusion, for each FTA there still will be a regulation that is disallowable. This is an important point and I think it comes to the heart of what Senator Patrick and Senator Roberts were talking about. Each FTA will still have a regulation, but what this does is if it is a minor change, for example a definitional change, then it doesn't go to JSCOT—definitional change, as we discussed, is from one label to another. However, if it is a formula change, so it is a material change, then that will absolutely still go to JSCOT under existing processes, but what it will not do under this is trigger another regulation to the original regulations. So every five years when the World Trade Organization does these recalculations it will not result in a new regulation because—again, my advice is—none of those technical regulations have ever been challenged, so this actually means you will still have a regulation for each of the FTAs but it will not be updated every five years in this way.
Can I urge those senators who are claiming some interest in this matter to actually read the amendment? I know this is a shockingly militant approach to take towards the legislative process, but read the amendment. The amendment that the Labor Party is proposing in the name of Senator Keneally actually refers to the point of the regulations that are under discussion. It actually says, 'We are seeking to retain regulations, retain the power of the Senate.' Again and again and again it is pointed out on the sheet that has been distributed in the chamber.
Labor's concern about this bill is the fact that the level of transparency that the government is now pursuing is to reduce the power of the Senate and to reduce the capacity of the parliament to hold the Public Service accountable. Their argument is: 'Well, you did it in the past, so you should do it now.' The argument is: 'Well, you might've made an error in the past but you should keep on doing it.' The argument seems to be: 'We haven't had cause for corrections in the past and we don't need do it in the future.' It's like a person sitting in the middle of a bushfire zone saying, 'We don't need insurance policies, because we've never actually had our house burn down.' That's the logic that we are being presented with. You've got parliamentary scrutiny. You've got JSCOT—a rubber stamp committee dominated by the government in which these matters will be treated on the evidence presented to the Senate committee as minor matters, not subject to proper capacity for this chamber to say no to, presented as a fait accompli. We are told, 'You should accept that because you've accepted it in the past.' That's the line of logic we've been told is now the standard by which we should accept.
My problem is this: I've been here a long time and, yes, I've sat down the front bench and, yes, I have read out the Labor Party position on these things—freely read it out—and argued a case, as your job is to do, but I've now had the capacity to undertake other work. As a result of the work done through the committee on delegated legislation and scrutiny of bills, and proper Senate inquiry processes gathering research and proper evidence, we do this far too often. Of some 2,000 bills a year now we're passing—tick and flick, unread—up to 50 per cent of those bills contain legislative instruments, which are effectively delegated legislation, where we pass over our responsibilities to someone else, and in one in five of those cases without the capacity of the Senate to say no if the Public Service makes a mistake.
I suppose you're going to tell me the Public Service never made a mistake in this country. I suppose you're going to tell me that, in trade matters, there's never been a definition that the Public Service has got wrong. I suppose you're going to tell me that there's never been a rort pulled when it comes to the transhipment of goods in free trade agreements. I suppose you're going to tell me now that there aren't countries out there that seek to manipulate free trade agreements for their national advantage and to our national disadvantage. And I suppose you're going to tell me there aren't public servants who go along with it. You can tell me all of those fairytales. It's a bit like all the modelling that we've seen time and time again—well, we haven't actually seen it, because we don't get to see it. We get told about it. We are told that this magnificent bonanza is coming our way. We never actually get to see it before the documents are signed. We don't actually get to debate the agreements before they're signed; it's always post facta.
So we're asked to buy this fairytale and not have an insurance policy, which we currently do have. That's what the Senate has with these five agreements; we still have that insurance policy. We're being asked to rip up that insurance policy. That's the point of these amendments—to protect the right of the Senate to actually have a look and to make a judgement on the decisions being made by public servants. And let's be clear: it's not ministers who sit around and write definitions for trade agreements. It's the Public Service that does it. And who are the biggest advocates for delegated legislation? The public servants. They don't want to have the confusion, the administrative burden, and the stresses and strain of having to deal with elected representatives, because they know better than the rest of us. They don't want to be subject to public scrutiny. JSCOT doesn't even have to have a public inquiry. It can all be done in secret. It can all be done under the counter.
If we've learned anything in trade policy, it's that the world consensus on how the trade system works really should be subject to a bit of public debate and public scrutiny, not to mention these technical definitions. You will say to me: 'It's too complicated for you mere mortals as politicians. It should be left to the experts—the unelected, faceless experts'. I have this advantage that I've been here for coming up to 28 years in March, so I've seen it come and go. I've sat on both sides of the chamber. I've played many different roles in this place, and I get presented with the evidence. Fifty per cent of our legislation is now being shovelled out the door to someone else, and in relation to 20 per cent of that, we then say, 'We want to hear no more about it'—until there's a political problem. We hear about it then, because the Public Service doesn't want to know about it then. 'That's the government's problem,' or 'It's the opposition's problem.' The real issue here is that it's the problem of the people who suffer. We fail in our proper duties to protect the interests of Australians and protect the interests of Australian workers and Australian companies because we've handed it over to some expert.
I don't expect much from One Nation, but they've sunk to new depths where they've just become some lapdog for the Liberal Party, just some incredible—
An opposition senator: Lickspittles.
Well, yes. 'Lickspittle' is the appropriate word here. Their idea of research is pressing a button and getting their instructions from the minister's office. They claim to be representing ordinary Australians, but if only those ordinary Australians knew. They've put up a proposition that is reducing the power of the Senate—their power, their capacity, their insurance policy to say: 'Hang on, you can get this wrong. You have got this wrong in the past, and it is our job to say enough's enough.' That's what these amendments do. They're pretty straightforward. They retain regulations. Schedule 1, item 5, page 3 'retain regulations'. Schedule 1, items 19 to 21, page 10 'retain regulations'. Schedule 1, items 27 and 28, page 15, 'retain regulations'. Schedule 1, items 34 and 35, page 19, 'retain regulations'. Schedule 1, items 41 and 42, page 24 'retain regulations' and so on. That's to retain your capacity as senators to do your job, to fulfil the obligations for which you were elected and not to shove it off to someone else and claim you know nothing about it! (Time expired)
Can I be very, very clear: if there is a substantive change—that is, a change in the formula or the calculation—it absolutely goes through JSCOT. They will have a hearing and make recommendations about legislative change, which of course comes back to this chamber. So that, Senator Carr, is the fact. No amount of rhetorical flourish, which was very eloquent—very rude about colleagues, but very elegant—will change the fact that if there is a substantive change, one that is not minor in nature, such as a label change, as we've discussed here today, it goes through JSCOT. JSCOT have a hearing and it comes back to the parliament. So we still have the same abilities that we have for the other nine FTAs, as we will for these six that are subject to the bill today.
Senator Whish-Wilson, I think you and everybody in this chamber knows the composition of all of the committees. Again, as I say, there is no change to JSCOT procedures. Anything major that involves a change of formula, which goes to the heart of what Senator Patrick was asking about today, goes to JSCOT. There is a hearing about it and it comes back to the chambers to amend the bills. There is no change to that. It still comes back to this place.
I've got no problem with JSCOT and the great work they do, Minister—I've been on that committee for many years—but it's a rubber stamp for the government if you want to get these changes through. JSCOT have an inquiry, they collect the evidence, there's potential for senators to dissent, but essentially the recommendation that comes back here, that will be debated in parliament, is a government controlled recommendation. It's essentially you putting up what you want. There's no chance for us to amend that. Is that correct?
Thank you for clarifying that, if there is a substantive change, it goes to JSCOT. They may make recommendations, but, ultimately, any change is effected by way of legislation. Indeed, the department has now provided me with an example of that regulation. The bit that's still not clear to me is whether or not this is disallowable. I have people working in the background trying to find if it's the regulations act or the Customs Act that might give remedy to the mystery.
Just to be clear, if there is a change every five years to the FTA, we discuss that with the relevant nations and we agree on what needs to be updated under the free trade agreement. If it is minor in nature, then we now won't need a regulation. So, as you said in that oil example, it won't—a name change—but for anything more significant than that it does still trigger going to JSCOT for a hearing and then making changes to the bill itself. So, for each FTA, when it comes into effect, there is still a regulation. But what this does is that instead of every five years for these technical amendments we don't have fresh regulations. Again, that is why it is highly technical in nature, which is why previously those amendments have been supported by both sides of the chamber, to actually reduce that regulatory burden for a very technical process. But anything that triggers, as a part of that five-yearly process, a change in formula, in calculation, then that of course goes to JSCOT, and it is treated as major, which triggers the inquiry. It triggers recommendations of changes to legislation, which then come back to both chambers to pass or not to pass as this chamber sees fit on the day.
You're now talking about a change to the legislation, as opposed to a regulation. Legislation comes back and we vote on legislation. Regulations can be brought to this place simply by a tabling from the minister. The example that has been provided to me by the department is in fact a regulation. I still haven't got an answer to the question about whether it's allowable or disallowable. It's not a debating point; it's simply a question of fact. I don't understand what the answer to that is. I'm desperately trying to find that answer, and you could assist me. My default is that if I don't get the answer I'll end up supporting Labor's amendments.
Again, just to be very clear, this doesn't change the processes. When we enter into an FTA there are two bills plus a regulation that comes through this place. So, that's regulation at that time, which, like all regs, is disallowable. But what this does for the other nine FTAs is that when, every five years, they are updated, if it's minor then we don't need go through the reg changes. But if it's major, it goes to JSCOT. They consider it and make recommendations for the bill itself. So, every five years, for these six, we still have to then update the regs. But they have never been challenged, because they are very technical. So, for nine FTAs, we don't have to do that technical regulatory updating. Again, nothing has changed from how we do those other nine. There is still that original reg—which of course is disallowable—but we don't have to update all of them every five years.
In your answer you said that it comes to the chamber and like all local regulations it is disallowable. Minister, that's not actually correct. There are some regulations that are not disallowable. So they do get tabled. They're not disallowable. I'm not accusing you of misleading; I'm just pointing out that that's what you said. So, there are disallowable instruments, and there are instruments that are not disallowable. An example of that is the Commonwealth Procurement Rules, which are a legislative instrument and are not disallowable. I'm just trying to get clarity as to whether or not a regulation such as the Customs (Singaporean Rules of Origin) Regulations 2017 made under the Customs Act 1901 is a disallowable instrument or not a disallowable instrument.
To be very clear, when the FTA is enacted and passed through this chamber, that reg is, of course, disallowable. What will not be disallowable are these changes that come through every five years. They're updated in the schedules of the bill instead of actually going through new disallowable instruments, which, of course, will not exist, because they go into the schedules of the Customs Act itself.
In terms of the potential JSCOT process and something coming back to parliament, who gets to decide whether it's a minor or a substantial change? Is the government the one that decides that? Is it a process where DFAT provide advice to you that they don't believe this needs to go through a political or a parliamentary process? Putting aside what you said about changes to the formula, can you step us through some examples of what might be minor or substantial processes? I'd be really interested in this. It sounds very subjective to me, so I'd like to be convinced on this.
I keep coming back to the point that there is no change to any of the processes with JSCOT and it is exactly the same as for the first nine. Just to be clear, instead of going to regulations, those changes go into the annexes of each of the treaties. I don't think I can be any clearer about the process.
I'm actually struggling to follow this, to be honest, Minister, and maybe that's a reflection on me. You did say there was a process and you gave us an example of how a change to the formula on tariff or quota would automatically trigger a JSCOT process. You have given one example of what would be a substantial change that would require this coming back for a parliamentary process and would give some kind of parliamentary oversight or scrutiny. Can you give us an example of what a minor change that doesn't need to go through that process would be? Who decides this? Is it DFAT providing advice to you that it doesn't require a JSCOT or parliamentary process? Is it the government or the ministerial office who decides, or do you discuss this in some other forum or process?
We've discussed this at some length already with Senator Patrick, and so it's in Hansard. An example of a minor would be a name change from 'oil' to 'olive oil'. So it's a nomenclature change, and that is minor. Anything that impacts on the formula itself absolutely is major and goes to JSCOT.
I did hear the oil example, Minister, but, having seen some of the barneys we've had in this country over nomenclature, I'm sure you understand—for example, the naming of areas in the wine industry. We've also had this issue with honey. I have sat through two Senate inquiries that looked at exactly this issue around trade and imports, including the use of names. I would say—and I know Senator Carr touched on this yesterday—some of these things are very big issues for our industry and our business. As to the idea that that might be considered minor and might not go out to a process which could involve consultation with stakeholders, perhaps internally DFAT have their own process where they might be speaking with stakeholders in this country about these kinds of things, but I would have thought it was very important that that also goes through a parliamentary process.