ADMINISTRATIVE REVIEW COUNCIL - Attorney-General's …38+-+word+version.pdf · Social Security Appeals, 1980 ... This report was adopted at a meeting of the Administrative Review

ADMINISTRATIVE REVIEW COUNCIL

REPORT TO THE MINISTER FOR JUSTICE

GOVERNMENT BUSINESS ENTERPRISES AND COMMONWEALTH ADMINISTRATIVE LAW

Report No. 38

Australian Government Publishing Service Canberra 1982

ADMINISTRATIVE REVIEW COUNCIL DR SUSAN KENNY PRESIDENT Our Reference: 94/72 Your Reference: 23 February 1995 The Hon Duncan Kerr MP Minister for Justice Parliament House CANBERRA ACT 2600 Dear Minister I have pleasure in submitting to you the Administrative Review Council’s report, Government Business Enterprises and Commonwealth Administrative Law. Yours sincerely

Dr Susan Kenny President

Postal address: GPO Box 3222, CANBERRA ACT 2601 5th Floor, Canberra House, 40 Marcus Clarke Street, Canberra

Telephone (06) 247 5100 Facsimile (06) 257 6121

ii

Reports of the Administrative Review Council 1. Administrative Decisions (Judicial Review) Act 1977 - Exclusions under Section 19, 1978 2. Repatriation Appeals, 1979 3. Review of Import Control and Customs By-Law Decisions, 1979 4. Administrative Appeals Tribunal Act 1975- Amendments, 1979 5. Defence Force Ombudsman, 1979 6. Entry to Cocos (Keeling) Islands and Christmas Island, 1979 7. Citizenship Review and Appeals System, 1980 8. Social Security Appeals, 1980 9. Administrative Decisions (Judicial Review) Amendment Bill 1980,1980 10. Shipping Registration Bill, 1980 11. Student Assistance Review Tribunals, 1981 12. Australian Broadcasting Tribunal Procedures, 1981 13. Commonwealth Employees’ Compensation Tribunal, 1981 14. Land Use in the ACT, 1981 15. Australian Federal Police Act 1979: Sections 38 and 39,1982 16. Review of Decisions under the Broadcasting and Television Act 1942,1982 17. Review of Taxation Decisions by Boards of Review, 1983 18. Compensation (Commonwealth Government Employees) Act 1971-Amendments, 1983 19. Rights of Review under the Migration Act 1958 and Related Legislation - Interim

Report on the Constitution of the Administrative Appeals Tribunal, 1983 20. Review of Pension Decisions under Repatriation Legislation, 1983 21. The Structure and Form of Social Security Appeals, 1984 22. The Relationship between the Ombudsman and the Administrative Appeals

Tribunal, 1985 23. Review of Customs and Excise Decisions: Stage Two, 1985 24. Review of Customs and Excise Decisions: Stage Four - Censorship, 1985 25. Review of Migration Decisions, 1985 26. Review of Administrative Decisions (Judicial Review) Act: Stage One, 1986 27. Access to Administrative Review: Stage One- Notification of Decisions and Rights of

Review, 1986 28. Review of Customs and Excise Decisions: Stage Three - Anti-Dumping and

Countervailing Duty Decisions, 1987 29. Constitution of the Administrative Appeals Tribunal, 1987 30. Access to Administrative Review: Provision of Legal and Financial Assistance in

Administrative Law Matters, 1988 31. Review of Decisions under Industry Research and Development Legislation, 1988 32. Review of the Administrative Decisions (Judicial Review) Act: The Ambit of the Act,

1989 33. Review of the Administrative Decisions (Judicial Review) Act: Statements of Reasons

for Decisions, 1991 34. Access to Administrative Review by Members of Australia’s Ethnic Communities,

1991 35. Rule Making by Commonwealth Agencies, 1992 36. Environmental Decisions and the Administrative Appeals Tribunal, 1994 37. Administrative Review and Funding Programs, 1994

iv

ADMINISTRATIVE REVIEW COUNCIL

FUNCTIONS AND POWERS Section 51 of the Administrative Appeals Tribunal Act 1975 sets out the functions and powers of the Council as follows:

(1) The functions of the Council are:

(a) to ascertain, and keep under review, the classes of administrative decisions that are not the subject of review by a court, tribunal or other body;

(b) to make recommendations to the Minister as to whether any of those classes of decisions should be the subject of review by. a court, tribunal or other body and, if so, as to the appropriate court, tribunal or other body to make that review;

(c) to inquire into the adequacy of the law and practice relating to the review by the courts of administrative decisions and to make recommendations to the Minister as to any improvements that might be made in that law or practice;

(d) to inquire into the adequacy of the procedures in use by tribunals or other bodies engaged in the review of administrative decisions and to make recommendations to the Minister as to any improvements that might be made in those procedures;

(e) to make recommendations to the Minister as to the manner in which tribunals engaged in the review of administrative decisions should be constituted;

(f) to make recommendations to the Minister as to the desirability of administrative decisions that are the subject of review by tribunals other than the Administrative Appeals Tribunal being made the subject of review by the Administrative Appeals Tribunal; and

(g) to make recommendations to the Minister as to ways and means of improving the procedures for the exercise of administrative discretions for the purpose of ensuring that those decisions are exercised in a just and equitable manner.

(2) The Council may do all things necessary or convenient to be done for or in connection with the performance of its functions.

v

This report was adopted at a meeting of the Administrative Review Council held in Canberra on 9 December, 1994. The members of the Council at the date of that meeting were: Dr Susan Kenny (President) Justice Jane Mathews Alan Rose AO Philippa Smith George Haddad Stuart Hamilton Dr Allan Hawke Sheila O’Sullivan Tim Pallas Clare Petre Alan Robertson Stephen Skehill Greg Wood The members of the Council’s Government Business Enterprises committee, which was responsible for overseeing this project, were: Dr Susan Kenny (Chair) Stuart Hamilton Clare Petre Alan Robertson Alan Rose AO Philippa Smith The Council thanks John Atwood, (the Council’s Deputy Director of Research) who was responsible for this project. The Council also thanks Philippa Lynch (the Council’s Director of Research), Marguerite Saw (an Attorney-General’s Department legal officer who contributed to drafting and proof reading) and the support staff in the Council’s Secretariat. In this report the law is stated as at 9 December 1994.

vi

TABLE OF CONTENTS EXECUTIVE SUMMARY ................................................................................................................... xi CHAPTER ONE.................................................................................................................................... 1

INTRODUCTION............................................................................................................................. 1 THE ADMINISTRATIVE REVIEW COUNCIL........................................................................ 1 THE COUNCIL’S PROJECT ON GOVERNMENT BUSINESS ENTERPRISES .................. 1

Background ............................................................................................................................... 1 Scope of the report.................................................................................................................... 2

Focus on development of general principles................................................................ 2 Appropriateness of Government policy on commercialisation/privatisation not discussed............................................................................................................................ 2 Not all accountability mechanisms dealt with ............................................................. 2 The Freedom of Information Act 1982 inquiry ................................................................. 3

The discussion paper and consultation process....................................................................... 3 The report ...................................................................................................................................... 4

CHAPTER TWO ................................................................................................................................... 5

CRITERIA FOR IDENTIFYING GBES....................................................................................... 5 Introduction: the need for criteria to identify GBEs ................................................................ 5 Examples of statutory definitions of ‘GBE’............................................................................... 5 The characteristics of GBEs ......................................................................................................... 7

Introduction....................................................................................................................... 7 Government control ......................................................................................................... 8 Commercial activities..................................................................................................... 10 Separate legal personality ............................................................................................. 12 Illustration of the application of the Council’s criteria for identifying GBEs ........ 13 Summary.......................................................................................................................... 14

CHAPTER THREE ............................................................................................................................. 16

THE CURRENT APPLICATION OF COMMONWEALTH LAW TO GOVERNMENT BUSINESS ENTERPRISES............................................................................................................. 16

COMMONWEALTH ADMINISTRATIVE LAW .................................................................. 16 Introduction................................................................................................................................. 16 The changing role of government, and of the administrative law package....................... 17 The objectives of administrative law ....................................................................................... 18 THE CURRENT APPLICATION OF COMMONWEALTH ADMINISTRATIVE LAW TO GBES............................................................................................................................ 20

Commonwealth Ombudsman .............................................................................................. 20 Introduction..................................................................................................................... 20 Definition of prescribed authority ............................................................................... 20 Matter of administration ............................................................................................... 22 Ombudsman’s discretion not to investigate............................................................... 22 Summary.......................................................................................................................... 23

Freedom of Information ........................................................................................................ 23 Introduction..................................................................................................................... 23 Current application ........................................................................................................ 23

vii

The review of the FOI Act ............................................................................................. 24 Privacy ..................................................................................................................................... 24 Archives ................................................................................................................................... 25 Judicial Review ....................................................................................................................... 25

Introduction..................................................................................................................... 25 AD(JR) Act ....................................................................................................................... 26 Reasons requirements under the AD(JR) Act............................................................. 28 Constitution..................................................................................................................... 28 Other judicial review jurisdiction ................................................................................ 31 Summary.......................................................................................................................... 32

AAT merits review................................................................................................................. 32 SUMMARY.............................................................................................................................. 33

CHAPTER FOUR................................................................................................................................ 35

EXEMPTING PARTICULAR ACTIVITIES OF GBES FROM COMMONWEALTH ADMINISTRATIVE LAW STATUTES........................................................................................ 35

INTRODUCTION: GBES AND THE ACCOUNTABILITY DILEMMA............................. 35 EXEMPTING PARTICULAR ACTIVITIES OF GBEs FROM COMMONWEALTH ADMINISTRATIVE LAW STATUTES.................................................................................... 36

Commonwealth administrative law statutes and GBEs ................................................... 36 Introduction..................................................................................................................... 36 Past Council views on the application of Commonwealth administrative law statutes to GBEs....................................................................................................... 37 Submissions..................................................................................................................... 38 Analysis............................................................................................................................ 39 The ‘burden’ argument.................................................................................................. 40 Exemption limited to particular activities of GBEs ................................................... 41 The model business argument...................................................................................... 41 The private sector ........................................................................................................... 41 Summary of general principles .................................................................................... 42

MODIFICATION OF THE APPLICATION OF COMMONWEALTH ADMINISTRATIVE LAW STATUTES TO GBES .................................................................. 42

Introduction............................................................................................................................. 42 Ombudsman............................................................................................................................ 43

General recommendations ............................................................................................ 43 Transitional...................................................................................................................... 44 Ombudsman’s jurisdiction under section 35A of the Ombudsman Act ................ 44

Archives Act 1983 ..................................................................................................................... 44 General recommendations ............................................................................................ 44 Transitional...................................................................................................................... 46

The Administrative Decisions (judicial Review) Act 1977.......................................................... 47 Introduction..................................................................................................................... 47 The High Court’s judicial review jurisdiction............................................................ 47 Transitional arrangements ............................................................................................ 48

AAT Merits Review................................................................................................................ 48

viii

APPENDIX A...................................................................................................................................... 50

ADVERTISEMENT: PUBLICATION OF THE COUNCIL’S DISCUSSION PAPER ............ 50 APPENDIX B....................................................................................................................................... 51

PERSONS AND ORGANISATIONS WHO MADE SUBMISSIONS ...................................... 51 APPENDIX C ...................................................................................................................................... 52

BACKGROUND TO COMMONWEALTH ADMINISTRATIVE LAW ................................. 52 COMMONWEALTH OMBUDSMAN .................................................................................... 55

Scope of the Ombudsman Act 1976........................................................................................ 56 Functions of the Ombudsman ...................................................................................... 56 Jurisdiction ...................................................................................................................... 57 “A prescribed authority”............................................................................................... 57 A matter of administration............................................................................................ 58

FREEDOM OF INFORMATION.............................................................................................. 59 Background and Objectives .................................................................................................. 59 Scope of the FOI Act............................................................................................................... 61

Persons and bodies bound by obligations under the Act ......................................... 61 Exemptions from the scope of the Act......................................................................... 61

Obligations imposed by the Act ........................................................................................... 63 THE PRIVACY ACT 1988 .......................................................................................................... 64

General ..................................................................................................................................... 64 Scope and application ............................................................................................................ 65

THE ARCHIVES ACT 1983........................................................................................................ 66 JUDICIAL REVIEW.................................................................................................................... 66

Background and Objectives .................................................................................................. 66 Scope of Judicial Review ....................................................................................................... 69

The grounds for obtaining Judicial Review................................................................ 69 The Constitution ............................................................................................................. 69 AD(JR)Act........................................................................................................................ 70 Judiciary Act 1903 ............................................................................................................ 72 Other jurisdictions.......................................................................................................... 72

MERITS REVIEW BY THE ADMINISTRATIVE APPEALS TRIBUNAL........................... 73 Background ............................................................................................................................. 73 Scope......................................................................................................................................... 74

APPENDIX D...................................................................................................................................... 76

THE OPERATING ENVIRONMENT OF GBES ........................................................................ 76 Legal and commercial accountability .................................................................................. 76

Crown immunity ............................................................................................................ 76 Regulatory bodies........................................................................................................... 78

Political accountability........................................................................................................... 80 Introduction..................................................................................................................... 80 Ministerial accountability and policy direction ......................................................... 80 Parliamentary Committees ........................................................................................... 81 Auditor-General ............................................................................................................. 82 Stock market, government guarantees and perceived government guarantee..... 83

ix

Global limits and the Loan Council ............................................................................. 84 APPENDIX E....................................................................................................................................... 85

BACKGROUND TO GOVERNMENT POLICY ON GBES ...................................................... 85 History ..................................................................................................................................... 85 A brief history of recent government policy....................................................................... 86

Prime Minister’s statement on review of Commonwealth functions - 1981 .......... 86 The Walsh Statement - 1987 .......................................................................................... 86 Department of Finance - 1993 ....................................................................................... 87

Competition policy................................................................................................................. 89 Regulatory bodies................................................................................................................... 90 Changing legislative environment....................................................................................... 90

GLOSSARY.......................................................................................................................................... 93 INDEX.................................................................................................................................................. 96

x

EXECUTIVE SUMMARY Over recent years the Government has pursued a program of economic reform of the public sector. One aspect of this has been the creation of business enterprises to undertake the commercial activities of Government which were previously undertaken by departments or statutory authorities. As these reforms have been implemented, debate has arisen as to how these business enterprises should be made accountable for their operations. One important aspect of that debate is the extent to which such business enterprises should be made subject to Commonwealth administrative law. The purpose of this report is to provide the Australian Government with principles for determining the application of the administrative law package to government business enterprises (‘GBEs’). An enterprise will be subject to the principles set out in this report if: • the Government controls the body; • the body is principally engaged in commercial activities; and • the body has a legal personality separate from Government.

It is the characteristic of Government control which distinguishes a GBE from a privately owned body. Further, it is this characteristic which in many circumstances provides a sufficient nexus between the Government and an enterprise to justify subjecting the enterprise to the Commonwealth administrative law statutes. As a general principle, however, the Council recognises that the commercial activities of GBEs undertaken in a competitive market should not be subject to statutory administrative law regimes. This is principally because the Council considers that, in this context, the objectives of the administrative law package are inappropriate, or they can be achieved as effectively by other more suitable mechanisms. The principles outlined in this report are likely to be of particular relevance during the reform of the structure and ownership of a government body and particularly when issues arise as to whether that body should remain subject to the administrative law package. The Council illustrates how these general principles should be implemented in relation to the following Commonwealth administrative law statutes: • the Administrative Appeals Tribunal Act 1975; • the Ombudsman Act 1976; • the Administrative Decisions (judicial Review) Act 1977; • the Archives Act 1983.

The Council, in conjunction with the Australian Law Reform Commission, is currently conducting an inquiry into the scope and operation of the Freedom of Information Act 1982 (the FOI Act inquiry), which includes an inquiry into that Act’s application to GBEs and the private sector. In light of this inquiry (which may also impinge on the Privacy Act 1988), the Council makes no recommendation as to how the Freedom of Information Act 1982 or the Privacy Act 1988 should be amended. The principles outlined by the Council in this report will be considered in the ongoing FOI Act inquiry.

xi

xii

CHAPTER ONE

INTRODUCTION

THE ADMINISTRATIVE REVIEW COUNCIL

1.1. The Administrative Review Council (the Council) was established under the Administrative Appeals Tribunal Act 1975 (the AAT Act), and is responsible for providing specialist policy advice to the Minister for Justice on strategic and operational issues affecting Commonwealth administrative decision making, particularly processes for the review of government decisions. The Council is concerned both with general issues of administrative policy that apply across all government portfolios, and specific issues that are relevant to particular portfolios. 1.2. Section 51 of the AAT Act sets out the statutory charter of the Council, and is reproduced at page v. Further information about the Council and its work programs may be found in the Council’s annual reports.

THE COUNCIL’S PROJECT ON GOVERNMENT BUSINESS ENTERPRISES

In this section, the Council sets out the background to its project on Government business enterprises, and indicates those matters that do not fall within the scope of the project.

Background

1.3. As the Government’s program of corporatisation, commercialisation and privatisation1 of its business activities has developed and been implemented2, difficult issues have arisen about how government business enterprises (GBEs)3 should be made accountable for their operations. Much of this debate centres on the degree to which private sector and public sector forms of accountability should apply to GBEs. The significance of some of these issues of accountability did not become apparent until some time after the Government’s program had commenced.

1 The terms coportisation, commercialisation and privatisation are defined in the Glossary. 2 Appendix D gives a brief account of Government policy on government business enterprises. 3 In Chapter Two, at paragraphs 2.6-2.29, the Council discusses criteria for identifying GBEs for the purpose of the application of Commonwealth administrative law statutes. The Council notes that a variety of terms are used to describe businesses in which a government has a significant ownership interest: for example, ‘public trading enterprise’, ‘state-owned corporation’, ‘government-owned enterprise’. For convenience, the term ‘government business enterprise’ is used throughout this report.

1

Scope of the report

Focus on development of general principles

1.4. The purpose of this report is to recommend to the Government general principles for determining how Commonwealth administrative law should apply to GBEs. 1.5. When the Government began its program of public sector economic reforms through the commercialisation and corporatisation of government business and the creation of GBEs, it did not specify principles for determining how Commonwealth administrative law should apply to those entities. From time to time amendments have been made to the schedules of Commonwealth administrative law statutes to accommodate the circumstances of particular GBEs4, but these amendments have been made in the absence of any guiding general principle. This report provides those guiding principles to the Government. Appropriateness of Government policy on commercialisation/privatisation not discussed

1.6. The questions of whether a government activity should be commercialised, corporatised or privatised and, if so, how and when this should be achieved, are questions for the Government. This report is not concerned with examining the appropriateness of the Government’s policies on commercialisation, corporatisation and privatisation. Rather, the Council’s recommendations relate to the appropriateness of applying the administrative law package to government business activities that have been subject to the processes of commercialisation, corporatisation and privatisation.

Not all accountability mechanisms dealt with

1.7. The scope of the Council’s report is limited to examining the application of Commonwealth administrative law to GBEs. The Council acknowledges that there is a range of other laws, mechanisms and standards that apply to GBEs and which are designed to make them accountable to the Government. For example, the Government maintains a supervisory role in relation to the strategic direction of most GBEs by requiring that they produce annual reports to the Minister responsible for their activities. Another example is the Auditor-General’s mandate to undertake efficiency audits of public authorities of the Commonwealth and, in certain circumstances, of Commonwealth-controlled companies.5

1.8. There are also regulatory bodies that regulate markets in which GBEs participate. These regulatory bodies include the Australian Telecommunications Authority, the Trade Practices Commission and the Australian Securities Commission.

4 For example, Qantas Airways Limited is excluded from part (b) of the definition of ‘prescribed authority’ in subsection 3(1) of the Ombudsman Act 1976. 5 Audit Act 1901, Part VI, Division 2.

2

1.9. However, it is beyond the scope of this report to provide a detailed examination of these other accountability mechanisms.6 In fact, there are some discrete parts of the Acts that make up the administrative law package that are not primarily concerned with the government accountability objectives of the administrative law package, and which apply equally to public and private sector entities. One example is the credit reporting provisions of the Privacy Act 1988, which apply equally to government-owned and privately owned providers and receivers of credit reporting information. The principles discussed in this report are not intended to cover such parts of the administrative law package. The Freedom of Information Act 1982 inquiry

1.10. In July 1994 the Acting Attorney-General, Duncan Kerr MP, asked the Council, in conjunction with the Australian Law Reform Commission (the ALRC), to undertake an inquiry into the scope and operation of the Freedom of Information Act 1982 (the FOI Act). The terms of reference ask that the Council and the ALRC report on a number of matters concerning the operation of the FOI Act, including: • whether the ambit of the FOI Act should be extended to cover private sector

bodies; and • whether the ambit of the FOI Act should be extended to cover GBEs.

1.11. In September 1994, the Council and the ALRC published an issues paper7 that sets out the issues relevant to the inquiry. The final report, which is due to be provided to the Attorney-General in December 1995, will make recommendations about the application of the FOI Act to GBEs and to the private sector. 1.12. In light of this ongoing project, it would be inappropriate for this report to make specific recommendations about the application of the FOI Act to GBEs. The general principles set out in this paper will be taken into account in the course of the Council’s and the ALRC’s deliberations.

The discussion paper and consultation process

In this section, the Council describes the consultation process that was undertaken as part of this project, and which included the preparation and distribution of a discussion paper.

1.13. In February 1993, the Council published a discussion paper, Administrative Review of Government Business Enterprises - Discussion Paper (the discussion paper).8 The discussion paper outlined the Council’s preliminary views on a range of issues about how Commonwealth administrative law should be applied to GBEs. 1.14. Over one thousand copies of the discussion paper were distributed. Copies of the paper were sent to persons and organisations on the Council’s project mailing list, as well as to persons and organisations known by the Council to have a

6 Some of the other accountability mechanisms are briefly outlined in Appendix D, ‘The Operating Environment of GBE’s’. 7 Administrative Review Council, Australian Law Reform Commission Freedom of Information (Issues Paper) Australian Law Reform Commission, Sydney, 1994 (ALRC Ref: ALRC IP 12). 8 Administrative Review Council Administrative Review of Government Business Enterprises-Discussion Paper Australian Government Publishing Service, Canberra, 1993.

3

particular interest in the issues covered by the project. In order to maximise awareness of the publication of the paper, an advertisement in the Weekend Australian of 6 March 1993 promoted the publication and availability of the paper. A copy of that advertisement is reproduced in Appendix A.

1.15. On 29 April 1993, the Council convened a public forum in Canberra. The forum was held principally to enable the Council to receive comments on the preliminary views outlined in the discussion paper. The forum also provided the Council with an opportunity to explain the preliminary views. 1.16. The discussion paper also invited interested persons to make submissions on the issues raised in it. Twenty-two submissions had been received at the time of the publication of this report. Appendix B contains a list of submissions received. A number of other persons provided information and research material to the Council. 1.17. The Council thanks all persons and organisations who contributed to the consultation process. The submissions received and the discussions at the public forum have greatly assisted the Council’s consideration of the issues raised in the discussion paper.

The report

This section briefly describes the subject matter of the other chapters of the report.

1.18. The remainder of this report is divided as follows:

• Chapter Two sets out criteria for identifying a GBE for the purpose of applying Commonwealth administrative law statutes;

• Chapter Three sets out the current application of Commonwealth administrative law statutes to GBEs;

• Chapter Four sets out principles for determining the application of the administrative law package to GBEs.

1.19. The appendixes are listed in the Table of Contents. 1.20. The glossary at page 91 gives the meaning of technical terms that are used in the report.

4

CHAPTER TWO

CRITERIA FOR IDENTIFYING GBES

In this chapter the Council sets out the criteria that should be used to determine what is a ‘GBE’ for the purposes of Commonwealth administrative law.

CRITERIA FOR IDENTIFYING GBES

Introduction: the need for criteria to identify GBEs

This section explains why it is necessary to have criteria for identifying GBEs.

2.1. To what types of bodies do the recommendations in this report apply? Broad, general characteristics of GBEs are not difficult to identify. It is generally accepted that GBEs are government-owned (or partly government-owned) business undertakings engaged in commercial activities. They have characteristics that may be shared with private sector bodies (for example, selling goods or services commercially for financial returns), as well as characteristics that distinguish them as belonging to the public sector (for example, government ownership, or a requirement to operate in accordance with government policy objectives). 2.2. The Council considers that it is important that this report provide the Government with criteria for identifying GBEs. There are two reasons for this: • to distinguish GBEs (and other government bodies in respect of which the

administrative law package may or should apply) from private sector bodies (in respect of which the administrative law package does not currently apply);9 and

• in the case of bodies subject to the administrative law package, to identify those bodies to which the special provisions discussed in Chapter Four apply.

Examples of statutory definitions of ‘GBE’

This section gives some examples of how some current Commonwealth enactments define ‘GBEs’.

2.3. There are recent examples of Commonwealth legislation that define the terms ‘government business enterprise’ and ‘GBE’: however, these definitions typically refer to a schedule that lists bodies that are GBEs, without spelling out criteria for the identification of those bodies for inclusion in such a schedule. For example, subsection 4(1) of the Proceeds of Crime Act 1987 defines ‘GBE’ to mean a ‘prescribed government business enterprise’ (that is, a GBE that is prescribed in regulations as

9 The Council notes that an issue being considered in its inquiry into the Freedom of Information Act 1982 is whether freedom of information principles should apply in the private sector: see Chapter One at paragraphs 1.10-1.12.

5

being a GBE for the purposes of the Act). And the Legislative Instruments Bill 1994 proposes that a ‘Government Business Enterprise’ is defined to mean a body whose name is included in Schedule 310: Schedule 3 lists nine bodies.11

2.4. Similarly, the Commonwealth Authorities and Companies Bill 1994 defines ‘GBE’ or ‘government business enterprise’ to mean a Commonwealth authority or Commonwealth company that is prescribed by the regulations for the purpose of the definition.12 The explanatory memorandum to that Bill does, however, provide some guidance on the type of body that it is intended should fall within this definition. It says:

In general, ‘GBEs’ or ‘government business enterprises’ should satisfy three criteria: they are commercial, trade outside the public sector, and are not primarily regulatory bodies.

2.5. One legislative definition of ‘GBE’ that is relatively detailed appears in subsection 5(1) of the Occupational Health and Safety (Commonwealth Employees) Act 1991. It provides that the term ‘Government business enterprise’ includes:

• a body corporate established for a public purpose by or under a law of the Commonwealth or a Territory (other than the Northern Territory or Norfolk Island) that is either specified in the Schedule, or declared by the Minister to be a Government business enterprise;

• a body corporate that is incorporated under the law of the Commonwealth or a State or Territory, and in which the Commonwealth has a controlling interest;13

• a body corporate that is incorporated under the law of the Commonwealth or a State or Territory, which is declared to be a Commonwealth authority for the purposes of the Act, and in which the Commonwealth has a substantial interest.14

10 Legislative Instruments Bill 1994, subclause 3(1). 11 The nine bodies listed are ANL Limited, Australian Maritime Safety Authority, Australian National Railways Commission, Australian Postal Corporation, Civil Aviation Authority, Federal Airports Corporation, National Railway Corporation Limited, Qantas Airways Limited and Telstra Corporation. 12 Commonwealth Authorities and Companies Bill 1994, clause 5. 13 The term ‘controlling interest’ is broadly defined to include, in relation to a body corporate, an interest that enables a person to control the composition of the board of directors of the body corporate, to cast (or control the casting of) more than one half of the maximum number of votes that might be cast at a general meeting of the body corporate, or control more than one half of the issued share capital of the body corporate. The term is defined also to include an interest in another body corporate that constitutes a controlling interest in that body corporate. See Occupational Health and Safety (Commonwealth Employees) Act 1991, subsection 5(1). 14 The term ‘substantial interest’ is defined to mean, in relation to a body corporate, an interest (other than a controlling interest) in the body corporate that enables the person holding the interest to cast, or control the casting of, a number of votes at a general meeting of the body corporate that is equal to or greater than the number of votes which may be cast, or whose casting may be controlled, by any other single person. See Occupational Health and Safety (Commonwealth Employees) Act 1991, subsection 5(1).

6

The characteristics of GBEs

In this section, the Council sets out the characteristics that should be used to identify GBEs for the purpose of applying the principles recommended in this report. The three characteristics that should be used to identify GBEs are: • the Government controls the body; • the body is principally engaged in commercial activities; and • the body has a legal personality separate to a department of government. The Council then examines several existing bodies to illustrate how the characteristics might be applied.

Introduction

2.6. For the purposes of applying the principles set out in this report, the Council considers that the Government should use the following three characteristics to identify GBEs: • the Government controls the body; • the body is principally engaged in commercial activities; and • the body has a legal personality separate to the Government. 2.7. Each of these characteristics is discussed below. However, it is useful firstly to make some general observations about the identification of GBEs according to these characteristics. 2.8. If a body does not satisfy the first-mentioned characteristic (government control), not only is it not a GBE for the purposes of the principles outlined in this report, but it should also be outside the scope of the administrative law package. That is, in determining the appropriate application of Commonwealth administrative law statutes, bodies that do not satisfy the criterion of government control should be treated in the same manner as other privately owned entities. 2.9. The practical purpose of the other two characteristics (‘principally commercial functions’; ‘separate legal personality’) is to distinguish GBEs from the other government-controlled bodies to which Commonwealth administrative law statutes apply. This distinction is necessary because the Council has recommended that the administrative law package apply to GBEs in a special way.15 2.10. The practical result is that for the purpose of applying Commonwealth administrative law statutes, a body that is not government-controlled should not be considered to be a GBE; those statutes should not apply to such a body. 2.11. A body that is government-controlled, but which does not display either of the other characteristics, should also not be considered to be a GBE. The administrative law package will apply in full to such a body, but as it is not a GBE, it will not be

15 In Chapter Four, the Council sets out recommendations for modifying the way in which Commonwealth administrative law statutes apply to GBEs.

7

able to benefit from the special provisions that the Council recommends (in Chapter Four) should apply in relation to GBEs.

Government control

2.12. The Council considers that the characteristic that distinguishes a GBE from a privately owned business enterprise is government control. 2.13. It is government control which establishes the nexus with the Government that gives rise to the justification for the application of government accountability mechanisms16 such as the administrative law package. The Council therefore affirms the preliminary view expressed in its discussion paper17 that government control is the chief factor calling for some form of public accountability. In the discussion paper the Council said:

4.15 The Council’s preliminary view is that government control is the chief factor calling for some form of public accountability. This is because when the government has control, its political branch will be held responsible for, and may (and sometimes must) decide outcomes. 4.16 The core of the public sector is made up of government departments, which are subject to direct ministerial control and, on the whole, funded by the budget on a recurrent basis. On the continuum between the public and private sectors falls a broad range of bodies with a variety of characteristics. Statutory authorities, for example, usually have a measure of independence from direct ministerial control but are usually budget funded. GBEs, especially those that are incorporated under the Corporations Law, generally are directed by government as shareholder rather than through any formal direct ministerial control and generally represent an investment of public monies, even if they are required to be financially self-sufficient in a recurrent sense. 4.17 In the Council’s view, the existence of government control and direction by being the sole or majority shareholder and the investment of public monies in GBEs as a result of government ownership are both sufficient nexus with the public sector to require that GBEs be subject to public sector accountability mechanisms. Both of these features give the public an interest in GBEs.18

2.14. Most submissions received by the Council during the consultation process did not question the appropriateness of this preliminary view. One submission questioned whether a GBE that was only partially government-owned (as opposed to wholly government-owned) enjoyed a public sector nexus sufficient to justify application of Commonwealth administrative law statutes, yet acknowledged that if total government ownership were required the application of those statutes would

16 Various government accountability mechanisms are discussed in Appendix D. 17 Administrative Review Council Administrative Review of Government Business Enterprises - Discussion Paper Australian Government Publishing Service, Canberra, 1993. 18 Administrative Review Council Administrative Review of Government Business Enterprises - Discussion Paper Australian Government Publishing Service, Canberra, 1993, at 45.

8

be able to be avoided through partial privatisation. Another submission argued that the focus of this discussion should be on extending accountability mechanisms to private sector bodies rather than attempting to define when the application of public sector accountability mechanism is or is not appropriate; this issue is discussed below at paragraph 2.19.

2.15. In the Council’s view, government control of a body will be established if the

Commonwealth Government has an ownership interest in the body of at least fifty per cent. Further, in the case of a body corporate or a company incorporated under the Corporations Law, government control will be established where the Commonwealth Government has a controlling interest in the company. A controlling interest is an interest of the Commonwealth Government that enables it:

• to control19 (whether directly or through its ownership interest in other bodies)

the composition of the board of directors of the body corporate or company; • to cast (or control the casting of) more than one-half of the maximum number of

votes that might be cast at a general meeting of the body; or • to control more than one-half of the issued share capital of the body.

2.16. In respect of some business activities undertaken by the Government, the Government is pursuing a policy of privatisation pursuant to which the ownership of the business will eventually move from the Government to the private sector. Upon ceasing to be government-controlled, the body will cease to be a GBE and cease to be subject to the administrative law package. However, in the Council’s view, decisions made while the body was government-controlled should continue to be subject to review. The Council therefore considers that the Government should put in place appropriate transitional arrangements to ensure that the administrative law package continues to apply in an appropriate manner to decisions and activities that relate to the period when a body no longer controlled by the Government was a GBE. This is discussed in Chapter Four.20 2.17. The Council notes that in the case of GBEs providing services on a commercial basis, the relationship between the Government (the GBE) and consumers of its services is multifaceted, incorporating elements of both a traditional ‘government/citizen’ relationship, as well as a ‘supplier-for-profit/consumer’ relationship. However, the fact that the relationship between a GBE and the customers of its services may incorporate aspects of a ‘supplier-for profit/consumer’ relationship should not, of itself, affect the threshold principles governing the prima facie application of the administrative law package. This is because the Government maintains a nexus with the GBE through its effective control of the GBE, so the application of public sector accountability mechanisms remains prima facie appropriate. Indeed, the government has for many years maintained a relationship of supplier/consumer in respect of public utility services. Examples include the Government’s participation in public utility services such as postal and

19 The references to control are references to control that is direct or indirect, including control that is exercisable as a result of, or by means of, arrangements or practices, whether or not having legal or equitable force, and whether or not based on legal or equitable rights. 20 In relation to the Ombudsman Act 1976, see paragraphs 4.33-4.39; in relation to the Archives Act 1983, see paragraphs 4.40-4.46; in relation to the Administrative Decisions (Judicial Review) Act 1977, see paragraphs 4.47-4.54.

9

telecommunications services, as well as the Government’s long history of investment in commercial air services through its ownership of Qantas Airways Limited and the former Australian Airlines.21

2.18. The Council does, however, acknowledge that there may be particular circumstances in which the fact that a GBE undertakes commercial activities in a competitive market may reduce the value of the benefits arising from the application of Commonwealth law statutes to those activities of the GBE. This is discussed in Chapter Four. 2.19. The Council also notes that it is beyond the scope of this paper to consider extending the scope of the operation of Commonwealth administrative law statutes to private sector bodies (that is, bodies that are GBEs because they are not under government control). However, as part of its ongoing reform program the Council will examine the application of particular elements of Commonwealth administrative law statutes to the private sector as appropriate. For example, as noted in Chapter One,22 the Council is currently undertaking an inquiry into the Freedom of Information Act 1982, and an issues paper has been published.23 One of the issues covered in the paper is the appropriateness of applying freedom of information principles in the private sector.24

Commercial activities

2.20. Commonwealth administrative law statutes currently contain various exemptions for certain government bodies: these exemptions are discussed in Chapter Three, and in Appendix C. The Council notes that while these exempt bodies are involved principally in business and commercial activities, others are not. 2.21. In the Council’s view, another criterion that should be used by the Government for the identification of a GBE is whether the relevant body is principally involved in commercial activities. If the body is not principally involved in commercial activities, it should not be considered to be a GBE. ‘Commercial activities’ refers to the sale of goods or services for financial return in an open market, that is, in a market where the consumers of the goods or services are not limited to government budget-funded bodies.

2.22. It is also the Council’s view that a body whose functions relate principally to regulation or policy development should not be considered to be a GBE, even if it undertakes some ancillary commercial activities. However, the Council acknowledges that the process of commercialisation of government business activities is transitional, and that some government businesses will not only undertake commercial activities, but will also have regulatory, policy or

21 A brief history of government investment in public utility services is given in Appendix E at paragraphs E.1-E.5. 22 At paragraphs 1.10-1.12 23 Administrative Review Council, Australian Law Reform Commission Freedom of Information (Issues Paper) Australian Law Reform Commission, Sydney, 1994 (ALRC Ref: ALRC IP 12). A discussion paper will be published in May 1995. 24 Administrative Review Council, Australian Law Reform Commission Freedom of Information (Issues Paper) Australian Law Reform Commission, Sydney, 1994 (ALRC Ref: ALRC IP 12), at 104-114.

10

‘community service obligation’ (CSO)25 functions. The question of whether these bodies satisfy the ‘commercial activities’ criterion should depend upon whether the bodies’ commercial activities are the dominant or principal part of its total functions. This will be a question of fact in each case.

2.23. For example, the principal function of Telstra Corporation Limited26 (Telstra) is to supply telecommunications services in Australia and to carry on business activities related to the supply of telecommunications.27 Telstra also has community service obligations: in particular, the universal service obligation under the Telecommunications Act 1991 to provide a reasonably accessible standard telephone service to all people in Australia.28 The supply of telephone services on a commercial basis is, however, the principal focus of Telstra’s activities, and Telstra has little or no regulatory function.29 The Council therefore considers that Telstra would satisfy the ‘commercial activities’ criterion. 2.24 Another example is the Civil Aviation Authority (CAA), a statutory body established under the Civil Aviation Act 1988. 2.25. The functions of the CAA include the following: • to conduct safety regulation of civil air operations in Australia and the safety regulation

of Australian aircraft operating outside Australian territory; • to provide air route and airway facilities; • to provide air traffic control services and flight services for surface traffic of aircraft and

vehicles on the manoeuvring area of aerodromes;

25 Community service obligations (CSOs) are obligations imposed by the Government on some government-owned commercial bodies to supply services at less than the cost of producing them. These are services that would not have be provided (or provided at the price) if market conditions applied. Examples of CSOs include flat rate postal and local telephone call rates for rural areas: if market conditions applied, the price of these services in rural areas would, it has been said, be considerably higher than for comparable services provided in large urban areas. For example, Part 13 of the Telecommunications Act 1991 provides for a ‘universal service obligation’: the reasonable accessibility to all people in Australia of a standard telephone service. The legislative intention of the requirement is that all people in Australia, wherever they reside or carry on business, will continue to have reasonable access, on an equitable basis, to standard telephone services and pay phones. The legislation provides for one of the holders of a general communications licence to be the ‘universal service carrier’ responsible for fulfilment of the universal service obligation (Telecommunications Act 1991, section 290). Currently this is Telstra Corporation Limited. Other holders of general telecommunications licences are required to contribute to the cost of the universal service obligation through the payment of a levy: Telecommunications Act 1991, Divisions 3-6; and Telecommunications (Universal Service Levy) Act 1991. 26 Telstra Corporation Limited was formerly known as the Australian and Overseas Telecommunications Corporations Limited (AOTC), a company comprising the merged Telecom and OTC Limited. On 13 April 1993, AOTC changed its name under the Corporations Law to Telstra Corporation Limited. Telstra Corporation Limited trades in Australia as Telecom Australia, and overseas as Telstra OTC Australia. 27 Australian Telecommunications Corporation Act 1989, sections 14, 15, 16. 28 See footnote 25 above. 29 The economic and technical regulation of the Australian telecommunications industry is now the responsibility of the Australian Telecommunications Authority (AUSTEL). See Telecommunications Act 1989, Part 2; Telecommunications Act 1991, Part 4.

11

• to provide a rescue and fire fighting service, a search and rescue service, and an

aeronautical information service; • to provide consultancy and management services; • to provide services to the Bureau of Air Safety Investigation in relation to aircraft

accidents and incidents; • to develop, ensure compliance with and implement standards (including implementation

by means of certificates, licences, registrations and permits) relating to: - flight crews engaged in the operations of aircraft, - the design, construction, maintenance, operation and use of aircraft and related

equipment; - the personnel engaged in the maintenance of aircraft and related equipment; - the planning, construction, establishment, operation and use of aerodromes; and - the planning, establishment, maintenance, operation and use of air route and airway

facilities, rescue and fire fighting services and search and rescue services, and any construction associated with those facilities and services.30

2.26. In the Council’s view, the CAA’s activities are principally regulatory. The CAA has a commercially orientated management structure: it has a board which is responsible for developing a corporate plan, and financial plans, with performance indicators and financial targets. Despite this, the CAA’s functions are principally devoted to a wide range of regulatory activities (for example, air traffic control, designating air routes and airways, issuing aircraft design standards, certificates of registration of aircraft and certificates of airworthiness). Therefore, the Council considers that the CAA does not satisfy the ‘commercial activities’ criterion. 2.27. Applying the principles set out in this paper, the consequence is that the CAA (which is Government controlled) should be subject to Commonwealth administrative law statutes but it should not have the benefit of any special exemptions made available to GBEs (these special exemptions are discussed in Chapter Four). Separate legal personality 2.28. In the Council’s view, if a body is to be described as a GBE it should have a legal personality separate to the Government. That is, a GBE should be more than an organisational division or subdivision of a government department: it should be a company, a statutory authority, or some other distinct legal entity. 2.29. The Council acknowledges that there may be organisational divisions or subdivisions within government departments that undertake commercial activities. Although these divisions or subdivisions would not be ‘GBEs’, in practice, many of their commercial activities would not be subject to review under the Commonwealth administrative law statutes because of the exemptions relating to ‘commercial activities’ provided in these statutes (see Appendix C).

30 Civil Aviation Act 1988, sections 9 and 10.

12

Illustration of the application of the Council’s criteria for identifying GBEs 2.30. The Council has selected a number of bodies to illustrate how the above criteria for identifying GBEs would be applied to identify GBEs. They are set out below. AEROSPACE TECHNOLOGIES OF AUSTRALIA PTY LTD: Aerospace Technologies of Australia Pty Ltd would be considered to be a GBE because: • it is under government control: it is wholly-owned by the Commonwealth Government; • its functions are principally commercial functions: the development and manufacture of

aerospace and aircraft components and services; and • it has a legal personality separate to the Government: it is a company incorporated under

the Corporations Law. ATTORNEY-GENERAL’S DEPARTMENT LEGAL PRACTICE: The Attorney-General’s Department Legal Practice would not be considered to be a GBE because it is an organisational division of the Attorney-General’s Department; it does not have a legal personality separate to the Government. AUSTRALIAN MARITIME SAFETY AUTHORITY: The Australian Maritime Safety Authority (AMSA) would not be considered to be a GBE because its functions are principally regulatory: combating pollution in the marine environment and providing a search and rescue service.31 The functions of AMSA also include the provision of services to (and at the request of) the maritime industry on a commercial basis, but this function is ancillary to AMSA’s regulatory functions. DEFENCE HOUSING AUTHORITY The Defence Housing Authority would be considered to be a GBE because: • it is under Government control: it is wholly owned by the Commonwealth Government; • its functions are principally commercial functions: the provision to the Australian

Defence Force, at commercial rates, of housing for members, officers and employees of the Australian Defence Force, and their families;32 and

• it has a legal personality separate to the Government: it is a statutory body corporate.33 FEDERAL AIRPORTS CORPORATION The Federal Airports Corporation would be considered to be a GBE because: • it is under government control: the Federal Airports Corporation is wholly owned by the

Commonwealth government; • its functions are commercial: they include the provision of airport services and facilities

to aircraft (attracting aeronautical charges),34 retailing trading concessions and franchises (let by way of lease or trading licence to businesses such as duty free shops, retail outlets, car rental companies and food and beverage outlets) and the leasing of land and buildings to tenants; and

31 Australian Maritime Safety Authority Act 1990, subsection 6(1). 32 Defence Housing Authority Act 1987, subsection 5(1). 33 Defence Housing Authority Act 1987, subsection 11(1). 34 Federal Airports Corporation Act 1986, section 56.

13

• it has a legal personality separate to the Government: it is a statutory corporation.35 NATIONAL RAIL CORPORATION LIMITED The National Rail Corporation Limited would be considered to be a GBE because: • it is under government control: the Commonwealth Government owns over 70% of the

shares in National Rail Corporation Limited (the other shareholders are the governments of New South Wales and Victoria);

• its functions are principally commercial functions: the conduct of rail freight operations in Australia on a commercial basis; and

• it has a legal personality separate to the Government: it is a company incorporated under the Corporations Law.

QANTAS AIRWAYS LIMITED: Leaving aside the provisions of the Qantas Sale Act 1992, Qantas Airways Limited (Qantas) would be considered to be a GBE because: • it is under government control: the Commonwealth Government owns 75% of the shares

in Qantas; • its functions are commercial: the operation of international and domestic commercial air

services; and • it has a legal personality separate to the Government: it is an incorporated company. The Council notes that on an application of the principles discussed in Chapter Four, Qantas would in practice be exempt from the application of the administrative law package, because all of its activities are commercial and are undertaken in a competitive market. The Council further notes that this result has in fact already been achieved. Subsection 37(1) of the Qantas Sale Act 1992 provides that except for the purpose of certain specified Commonwealth laws, Qantas Airways Limited is not to be taken to be a company in which the Commonwealth has a controlling interest, nor a company in which the Commonwealth owns a majority of the shares. Subsection 37(1) came into force on the `substantial minority sale day’ (Qantas Sale Act 1992, subsection 4(1)).36 Summary 2.31. In summary, the Government should use the following criteria to identify GBEs: • whether the Government controls the body; • whether the body is principally engaged in commercial activities; and • whether the body has a legal personality separate from the Government.

35 Federal Airports Corporation Act 1986, section 5. 36 The substantial minority sale day was the day on which a 25% interest in Qantas was acquired by British Airways. However, after the substantial minority sale day, the Commonwealth retained a 75% ownership interest in Qantas Airways Limited.

14

2.32. The Council notes that the significance of these criteria for identifying GBEs is that: • a body that is not government-controlled should not be subject to Commonwealth

administrative law statutes; and • a body that is government-controlled should be able to take the benefit of special

provisions applying to GBEs only if the body is also: - principally engaged in commercial activities; and - has a legal personality separate from the Government.

2.33. In Chapter Four the Council sets out its recommendations for the modification of Commonwealth administrative law statutes in their application to GBEs.

15

CHAPTER THREE

THE CURRENT APPLICATION OF COMMONWEALTH LAW TO GOVERNMENT BUSINESS ENTERPRISES

This chapter provides a brief outline of the Commonwealth system of administrative law,

and its current application to GBEs.

COMMONWEALTH ADMINISTRATIVE LAW

Introduction

This section provides a brief introduction to the Australian system of administrative law. Appendix C contains additional background information, together with information on the general scope and operation of the Commonwealth administrative law statutes.

3.1. Administrative law may be broadly described as the body of principles that govern the exercise of, and review of the exercise of, powers and duties by public authorities and public bodies. There are several sources for these principles. For example, the Constitution gives the High Court jurisdiction in all matters in which a prerogative writ is sought against an officer of the Commonwealth.37 The principles for issuing prerogative writs derive from the common law. Prerogative writs enable a person affected by a government decision to challenge the legality of that decision (that is, whether the decision was made without infringing any of the legal requirements that applied to the making of the decision). 3.2. The common law generally does not provide for rights to review the merits of government decisions or action, nor for rights of access to information about government decision making. However, in particular areas of government decision making (such as taxation and veterans’ entitlements) statutory rights to merits review of government decisions have been in existence for many decades. 3.3. Another form of review is review by the Parliament. A member of Parliament may pursue the case of a constituent affected by the decision of a Minister or a Minister’s department, and either question the Minister about the decision in the Parliament or write to the Minister seeking clarification of the decision or further information about it. 3.4. In the mid-1970s, the Commonwealth Government commenced implementing the recommendations of several reports on administrative law38 with a series of statutory reforms

37 Constitution, section 75(v). 38 The reports are: • Commonwealth Administrative Review Committee Report Australian Government Printing Office, Canberra,

1971 (the Kerr Committee Report); • Committee on Administrative Discretions Final Report of the Committee on Administrative Discretions The

Dominion Press, North Blackburn, 1973 (the Bland Committee Report); and • Committee of Review of Prerogative Writ Procedure Report Parliamentary Paper No. 56 of 1973 (the Ellicott

Committee Report).

16

designed to consolidate and improve existing Commonwealth administrative law. These statutory reforms became known as the ‘administrative law package’, and included the enactment of the following statutes: • the Administrative Appeals Tribunal Act 1975, which establishes the Administrative

Appeals Tribunal (the AAT), the function of which is to review the merits of certain decisions of the Commonwealth Government;

• the Ombudsman Act 1976 (the Ombudsman Act), which establishes the Commonwealth Ombudsman, who has jurisdiction to investigate actions that relate to matters of administration;

• the Administrative Decisions (Judicial Review) Act 1977 (the AD(JR) Act), which provides simplified procedures for obtaining judicial review;

• the Freedom of Information Act 1982 (the FOI Act), which provides for rights of access to government documents;

• the Archives Act 1983 (the Archives Act), which regulates the control of, access to, disposal of, custody and preservation of the records of the Commonwealth and authorities of the Commonwealth; and

• the Privacy Act 1988 (the Privacy Act), which imposes on Commonwealth government agencies and other bodies obligations relating to the retention and disclosure of personal information.

3.5. Appendix C sets out the background and operation of each of these statutes.

The changing role of government, and of the administrative law package

This section briefly describes the changing role of government, and of the administrative law package, in the years since the Kerr Committee report was tabled.

3.6. It is over twenty-three years since the Kerr Committee report39 was tabled in the Parliament. In that time, the role of government in Australia has continued to develop, and there has been significant change in the way that government provides, and regulates the provision of, services to the public. Over the past decade in particular, there has been an increasing trend towards: • exposing government services to competition; • corporatising the sections of government that deliver services; • establishing regulatory bodies to oversee markets in which the Government participates

alongside the private sector; and • funding private persons to provide government services (as opposed to having a

government department or agency itself provide those services). 3.7. The administrative law package has itself developed in light of trends in government and, in particular, trends in the delivery of government services. For example, the jurisdiction of the Ombudsman has been extended to cover certain activities of contracted case managers in the employment services field. And the Council is currently undertaking

39 Commonwealth Administrative Review Committee Report Australian Government Printing Office, Canberra, 1971.

17

an inquiry into the scope and operation of the FOI Act, which will examine the appropriateness of applying freedom of information principles in the private sector. 3.8. As a result of the trends in the delivery of government services, the relationship between the Government and citizens is becoming increasingly diverse and complex. It is therefore timely to examine the application and role of the administrative law package to government businesses.

The objectives of administrative law

This section sets out some of the main themes and objectives of administrative law.

3.9. In order to provide a basis for the Council’s principles for the application of the administrative law package to GBEs, it is useful to identify some of the main themes and objectives of administrative law. These are briefly set out below. 3.10. The principal objective of administrative law is to ensure that the Government acts within its lawful powers: that is, to ensure that in exercising the decision-making powers conferred by Parliament, the Government does not exceed those powers, and uses only lawful procedures when exercising them. This objective is achieved through several components of the administrative law system, most particularly through the availability of judicial review to challenge the lawfulness of government decisions. Merits review and Parliamentary review may also play a part in checking the legality of government decisions. 3.11. Another objective of administrative law is ensuring that when the Government exercises discretions under statute, the correct and preferable decision is made. This is achieved principally through merits review, which involves an independent body, with the power to substitute its decision for that of the original decision maker, undertaking a review of the facts and law of the decision. Investigations by the Ombudsman also assist in achieving this objective. 3.12. Open information and promotion of the individual citizen’s ‘right to know’ is another important theme in administrative law: providing citizens with the means to obtain information about government decisions and decision-making processes. This theme underlies the access provisions of the FOI Act (that Act also provides a right for persons to amend errors in government-held records containing information about themselves). Provisions in merits review and judicial review legislation that confer a right to obtain reasons for administrative decisions are a more specific manifestation of this theme. The Privacy Act provides an important counterbalance by protecting the privacy of information relating to the personal affairs of persons. 3.13. Administrative law also enhances the quality of democratic participation, by making government decision-making processes more accountable and transparent. This is achieved in many ways, ranging from quite specific avenues for questioning or challenging government decisions or procedures (for example, through Ombudsman review or merits review) to more general rights (such as freedom of information) and obligations (such as the

18

obligation to archive Commonwealth government documents). Through this greater accountability and transparency, the quality of public administration improves.

19

THE CURRENT APPLICATION OF COMMONWEALTH ADMINISTRATIVE LAW TO GBES

This section sets out how Commonwealth administrative law currently applies to GBEs. Appendix C contains additional information about the general scope and application of administrative law. Persons unfamiliar with administrative law and Commonwealth administrative law statutes may find it useful to refer to Appendix C to assist their reading of this section.

Commonwealth Ombudsman Introduction 3.14. General background information about the Ombudsman is provided in Appendix C at paragraphs C.12-C.22. 3.15. There is no general answer to the question: does the Ombudsman have jurisdiction to investigate an action of a GBE? Subsection 5(1) of the Ombudsman Act provides that the Ombudsman may investigate action, being action that relates to a matter of administration, taken by a Department or by a prescribed authority. The question of whether the Ombudsman has jurisdiction to investigate action of a GBE will therefore principally depend upon whether that GBE is a “prescribed authority” for the purposes of the Ombudsman Act. The action must also relate to a “matter of administration”. Section 6 of the Ombudsman Act further provides that the Ombudsman may, in her or his discretion, decide not to investigate a complaint in certain circumstances.40 Definition of prescribed authority 3.16. The definition of “prescribed authority” is provided in subsection 3(1) of the Ombudsman Act, and has several parts. The relevant parts are discussed below. The application of the provisions of section 6 of the Act are also discussed.

BODIES CORPORATE AND INCORPORATE 3.17. Part (a) of the definition of “prescribed authority” includes a body corporate or an unincorporated body that is established for a public purpose under an enactment. GBEs established pursuant to specific statutory provisions will fall prima facie within this part of the definition. However, the definition excludes an incorporated company or association. Therefore, a GBE that is incorporated under the Corporations Law, or a Commonwealth State or Territory enactment governing the incorporation of associations, will fall outside this aspect of the definition. 3.18. Part (a) of the definition also excludes bodies that, under subsection 3(2) or the Regulations are not to be taken to be a prescribed authority for the purposes of the Act. Subsection 3(2) relates to bodies, councils and committees established to assist, or perform

40 For example, subsection 6(1)(b)(iii) of the Ombudsman Act 1976 provides that the Ombudsman may decide not to investigate action, or not to investigate the action further, if, in the opinion of the Ombudsman, an investigation, or further investigation, of the action is not warranted having regard to all the circumstances.

20

functions associated with, a prescribed authority. Schedule 1 to the Ombudsman Regulation lists fourteen bodies that are not to be taken to be prescribed authorities for the purposes of the Act. They include the Commonwealth Savings Bank of Australia and the Commonwealth Development Bank of Australia.41

OTHER BODIES 3.19. Part (b) of the definition of “prescribed authority” extends to include certain Commonwealth-controlled companies (other than Qantas Airways Limited or a subsidiary of that company). 3.20. A Commonwealth-controlled company is an incorporated company in which the Commonwealth has an interest enabling it to control the composition of the board of directors, or to cast more than one half of the maximum votes that might be cast at a general meeting, or to control more than one half of the issued share capital of the company.42 Many GBEs that are incorporated companies would satisfy this criteria. 3.21. However, a Commonwealth-controlled company will not be within the definition of “prescribed authority” if: • it is declared in the regulations not to be a prescribed authority

- Schedule 1 to the Ombudsman Regulations, noted at paragraph 3.18 above, lists a number of bodies that are not to be a prescribed authority for the purposes of the Act; or

• it was both a Commonwealth-controlled company, and not a prescribed authority for the purposes of the Act, immediately prior to 15 March 1994, and is not declared in the regulations to be a prescribed authority - Schedule 2 to the Ombudsman Regulations lists the bodies that are declared to be

prescribed authorities for the purposes of the Act (and therefore outside this limited definition) - they include the Australian and Overseas Telecommunications Corporation Limited (now Telstra Corporation Limited).43

41 The bodies listed in Schedule 1 are: Advisory Council for Inter-government Relations, Australian Security and Intelligence Organisation, Coal Industry Tribunal, Cocos (Keeling) Islands Council, Commonwealth Bank Officers Superannuation Corporation, Commonwealth Development Bank of Australia, Commonwealth Grants Commission, Commonwealth Savings Bank of Australia, Defence Force Remuneration Tribunal, Industrial Appeals Tribunal of Christmas Island, National Debt Commission, Pharmaceutical Benefits Remuneration Tribunal, Remuneration Tribunal and Security Appeals Tribunal. 42 Ombudsman Act 1976, subsection 3(1) (definition of ‘Commonwealth-controlled company’). 43 The bodies listed in Schedule 2 are: Aboriginal Hostels Limited, Anutech Pty Limited, Australian and Overseas Telecommunications Corporation Limited, Australian Institute of Sport, Barker House Pty Limited, Coal Mines Insurance Pty Limited, Croydon Investments Pty Limited, East Australian Pipeline Corporation Limited, Edwards River Crocodile Farm Pty Limited, Fawns and McAllan Pty Limited, Law Courts Limited, National Health and Medical Research Council, New Guinea Resources Prospecting Company Limited, Phosphate Mining Company of Christmas Island, and Rotary Tabletting Corporation Pty Limited.

21

3.22. Part (ba) of the definition of “prescribed authority” includes any body corporate or unincorporated body that is established by the Governor General or a Minister and is declared by the regulations to be a prescribed authority.44 3.23. Part (e) of the definition of “prescribed authority” extends the meaning of that term to mean an “eligible case manager”. That term is defined to mean an entity (within the meaning of the Employment Services Act 1994) that is or has been a contracted case manager (within the meaning of that term as used in the Employment Services Act 1994) and that is not a Department, or a “prescribed authority” for the purposes of the other parts of the definition. Matter of administration 3.24. The phrase “matter of administration” is not defined in the Ombudsman Act, and its meaning has not yet been considered by a federal court. The Victorian courts have interpreted a similar phrase in Victoria’s Ombudsman Act 1973 to extend to actions that might be regarded as reasonably incidental to the performance of executive or administrative functions.45 Although other cases have held that the phrase contemplates a division between administrative actions on the one hand and judicial, quasi-judicial and policy matters on the other, in the 1976 Victorian Supreme Court case of Booth v Dillon (No 2) ,46 Dunn J said:

[no] demarcation exists between what is involved in policy and what is involved in administration.47

3.25. The Commonwealth Ombudsman has not taken a restricted view of the expression “matter of administration” nor of the scope of the jurisdiction conferred by the Act.48 Ombudsman’s discretion not to investigate 3.26. Section 6 of the Ombudsman Act lists circumstances in which, although the Ombudsman has jurisdiction to investigate a complaint, the Ombudsman may decide not to investigate it. Two of these circumstances may be particularly relevant to GBEs:

• subsection 6(12) provides that where the action in respect of which a complaint has been made relates to a commercial activity of a Department or prescribed authority, the Ombudsman may decide not to investigate the complaint or to cease investigating the complaint; and

44 These bodies are listed in Schedule 2 to the Ombudsman Regulations, noted at footnote 43, above. 45 Booth v Dillon (No 3) (1977] VR 143; Glenister v Dillon (No 2) [1977] VR 151. 46 [19761 VR 434. 47 Booth v Dillon (No 2) [1976] VR 434, at 439. 48 D C Pearce and M N Allars (Eds) The Australian Administrative Law Service Butterworths, Sydney, at paragraph 508. See also the Commonwealth Ombudsman and Defence Force Ombudsman Annual Report 1986-87 Australian Government Publishing Service, Canberra, 1987, at Chapter Four; Commonwealth and Defence Force Ombudsman Annual Report 1989-90 Australian Government Publishing Service, Canberra, 1990, at 13-14; and Commonwealth and Defence Force Ombudsman Annual Report 1990-1991 Australian Government Publishing Service, Canberra, 1991, at 8-9.

22

• subsection 6(13) provides that if the Ombudsman forms the opinion that the complaint relates to action taken by a Department or a prescribed authority and that the complaint could be more conveniently or more effectively dealt with by the industry ombudsman for a particular industry, the Ombudsman may decide not to investigate the action, or not to investigate the action further, and to transfer the complaint to the relevant industry ombudsman.

Summary 3.27. In summary, the Ombudsman has jurisdiction to investigate action relating to a matter of administration of: • a body corporate or an unincorporated body (excluding an incorporated company or

association) established for a public purpose by an enactment; • a body listed in Schedule 1 of the Ombudsman Regulations;49 and • certain Commonwealth-controlled companies. Freedom of Information Introduction 3.28. General background information on the operation of the FOI Act is contained in Appendix C at paragraphs C.23-C.36. Current application 3.29. Leaving aside the question whether a document falls within a specific exemption, the application of the FOI Act to a GBE will depend upon a number of factors including: • whether the GBE falls within the definition of ‘prescribed authority’:50 this will depend

upon the facts of each case, although it is clear from the definition that if a GBE is a company incorporated under the Corporations Law it will not be covered by the FOI Act unless it has been declared in the regulations to be a ‘prescribed authority’ (there are currently only two bodies that are prescribed in the regulations),51 and is a company over which the Commonwealth is in a position to exercise control;

• whether the GBE is specified in Part I of Schedule 2 (if so, it is deemed not to be a prescribed authority);

• whether the GBE is specified in Part II of Schedule 1, so that it is exempt from the operation of the Act in respect of the class ‘of documents identified in the schedule (for example, documents relating to commercial activities); and

49 The bodies that are listed in Schedule 1 of the Ombudsman Regulations are listed at footnote 41, above. 50 The phrase ‘prescribed authority’ is defined in subsection 4(1) of the Freedom of Information Act 1982. 51 The two prescribed bodies are the Australian and Overseas Telecommunications Corporation Limited and the National Media Liaison Service.

23

• whether the GBE is specified in Part III of Schedule 2 (if so, then it is exempt from the operation of the Act in relation to documents in respect of its commercial activities).

The review of the FOI Act 3.30. As noted in Chapter One,52 the Council, in conjunction with the Australian Law Reform Commission, is currently undertaking an inquiry into the scope and operation of the FOI Act. The terms of reference for that inquiry cover a range of issues relevant to the application of the FOI Act to GBEs. They include the issue of whether the ambit of the Act should be extended to cover GBEs and private sector bodies. As noted above, the Act does apply to some GBEs in certain circumstances, but its application to GBEs is determined by complex definitions and discrete exceptions. The possible extension of the Act to cover GBEs is an issue that is discussed in the FOI issues paper.53 3.31. The final report on the review of the FOI Act, which is due to be provided to the Attorney-General in December 1995, will make recommendations about the application of the FOI Act to GBEs and to the private sector. Privacy 3.32. General background information on the operation of the Privacy Act is contained in Appendix C at paragraphs C.37-C.43. 3.33. Some obligations imposed by the Privacy Act apply to public and private sector bodies alike. These include privacy obligations with respect to tax file numbers and credit information. These obligations will apply to a GBE regardless of the level of Commonwealth Government ownership of, or participation in the activities of, the GBE. 3.34. Whether the other obligations imposed by the Privacy Act will apply to a GBE will depend in a particular case upon two factors:

• whether the GBE falls within the definition of ‘agency’54 - a GBE that is an incorporated company is unlikely to fall within the definition of ‘agency’, because an incorporated company will only be an ‘agency’ if it was established or appointed by the Governor-General or a Minister otherwise than by or under a Commonwealth enactment;55

• whether the relevant actions of the GBE fall within the definition of ‘act or practice’ - that definition, which is provided in section 7 of the Act, is linked to exemptions in the FOI Act which exempt types of agencies and bodies (not particular acts or practices), and therefore has a narrow application with respect to GBEs.56

52 At paragraphs 1.10-1.12. 53 Administrative Review Council, Australian Law Reform Commission Freedom of Information (Issues Paper) Australian Law Reform Commission, Sydney, 1994 (ALRC Ref: ALRC IP 12), at 100-103. 54 ‘Agency’ is defined in subsection 6(1) of the Privacy Act 1988: see Appendix C at paragraph C.42. 55 Privacy Act 1988, subsection 6(1). 56 That is, if a GBE is a body of a type mentioned in one of the relevant FOI Act exemptions that GBEs ‘acts or practices’ will fall outside the scope of the Privacy Act 1988.

24

Archives 3.35. General background information on the operation of the Archives Act is contained in Appendix C at paragraphs C.44-C.46. 3.36. The question of whether the obligations imposed by the Archives Act apply to a GBE will depend primarily upon whether the GBE falls within the definition of ‘authority of the Commonwealth’. Many GBEs would fall within that definition. For example, the definition of ‘authority of the Commonwealth’ includes: • an authority, body, tribunal or organisation, whether incorporated or unincorporated,

established for a public purpose: - by, or in accordance with the provisions of, an Act, regulations made under an Act

or a law of a Territory other than the Northern Territory; or Norfolk Island; - by the Governor General; or - by, or with the approval of, a Minister;

• the holder of a prescribed office under the Commonwealth; or • a prescribed company or association over which the Commonwealth is in a position to

exercise control.57 3.37. Regulation 2A of the Archives Regulations provides that the following companies are prescribed companies for the purpose of the Regulations: • Australian and Overseas Telecommunications Corporation Limited; • a company that is a subsidiary of AOTC; • Commonwealth Funds Management Limited; • each company that is a subsidiary of Commonwealth Funds Management Limited.58 Judicial Review Introduction 3.38. The rule of law assumes that the Government is, like citizens, subject to the law. The courts have jurisdiction at common law to determine, in actions properly brought before them, whether the Government’s purported exercise of a power is authorised by law. If the power upon which the decision purports to be made does not exist, or its scope has been exceeded, the purported exercise of the power is ultra vires and void. If a power is abused or exercised unreasonably, or if the principles of procedural fairness apply and are not observed, the purported exercise of the power is unlawful and the courts can declare the

57 Archives Act 1983, subsection 3(1). 58 Archives Regulations, regulation 2A.

25

action void and set it aside.59 This review jurisdiction of the courts is referred to as judicial review. 3.39. In Australia, judicial review of the exercise of powers by the Commonwealth Government is available in a number of ways. Under section 75 of the Constitution the High Court has original jurisdiction in all matters in which a writ of mandamus or prohibition, or an injunction, is sought against an officer of the Commonwealth,60 or in which the Commonwealth, or a person suing or being sued on behalf of the Commonwealth, is a party.61 Pursuant to subsection 39B(1) of the Judiciary Act 1903, the Federal Court also has original jurisdiction with respect to any matter in which a writ of mandamus or prohibition or an injunction is sought against an officer or officers of the Commonwealth.62 The Federal Court also has original jurisdiction to determine applications for review made under the AD(JR) Act. And there may be some limited scope for State courts to undertake judicial review of bodies exercising public functions. 3.40. The application to GBEs of each of these bases for judicial review is discussed below. Appendix C contains a general discussion of the background and operation of the various mechanisms for judicial review. AD(JR) Act 3.41. Judicial review under the AD(JR) Act is available in respect of a ‘decision’ to which the Act applies.63 Judicial review is also available in respect of conduct related to the making of a decision64 and the failure to make a decision.65 The definition of each of these concepts is linked to fine definition of the term ‘decision’.

3.42. ‘Decision’ is defined in subsection 3(1) of the AD(JR) Act to mean a “decision of an administrative character made... under an enactment”. Court decisions have established principles concerning the meaning of ‘decision... under an enactment’ which limit the application of the AD(JR) Act. In particular:

• for the purpose of the AD(JR) Act, a reviewable decision is one: - for which provision is made by or under a statute: this will generally be a

decision which is final or operative or determinative in a practical sense of the issue of facts falling for consideration and determination;66 and

- which is a substantive determination;67

59 O. Hood Phillips and P Jackson O. Hood Phillips’ Constitutional and Administrative Law - Sixth Edition, Sweet and Maxwell, London, 1978 at 595-596. 60 Constitution, section 75(v). 61 Constitution, section 75(iii). 62 This original jurisdiction is subject to the limitation that the reference in subsection 39B(1) of the Judiciary Act 1903 to ‘officer or officers of the Commonwealth’ does not include a person holding office under the Industrial Relations Act 1988, a person holding office under the Coal Industry Act 1946, or a Judge or Judges of the Family Court of Australia: Judiciary Act 1903, subsection 39B(2). 63 Administrative Decisions (Judicial Review) Act 1977, subsection 5(1). 64 Administrative Decisions (Judicial Review) Act 1977, section 6. 65 Administrative Decisions (Judicial Review) Act 1977, section 7. 66 Australian Broadcasting Tribunal v Bond (1990) 170 CLR 321 per Mason C J at 337. 67 Australian Broadcasting Tribunal v Bond (1990) 170 CLR 321 per Mason C J at 337.

26

• ‘decision... under an enactment’ means an ultimate or operative determination

which has force and effect by virtue of an enactment. For example, a contract entered into by a corporation under a general power to enter into contracts is not given force and effect by that power (the empowering statute merely confers capacity to contract, while the validity and effect of the contract is determined by the ordinary laws of contract).68

3.43. Therefore, where a GBE makes an administrative decision and the making of the decision is provided for by a statute, it is likely that the decision will be prima facie reviewable under the AD(JR) Act. However, most day to day decisions made by a GBE, particularly commercial decisions (such as decisions concerning or made under contracts) are unlikely to fall within the definition of ‘decision... under an enactment’ in the AD(JR) Act because they are made pursuant to general powers (such as a power to enter contracts) rather than a specific statutory power to undertake the transaction in question. 3.44. For example, in General Newspapers Pty Ltd v Telstra Corporation,69 General Newspapers Pty Ltd sought review under the AD(JR) Act of decisions made by Telstra Corporation (Telstra) relating to the contracting of the printing of telephone directories. The Australian Telecommunications Corporation Act 1989 conferred on Telstra a general power to enter into contracts. General Newspapers Pty Ltd argued that decisions made by Telstra about the contracts for printing telephone directories (including decisions as to the process by which the printing arrangements would be decided) were ‘decisions’ made ‘under an enactment’ and were subject to review under the AD(JR) Act. The Full Federal Court rejected this argument. In the joint judgement of justice Davies and Justice Einfeld, their Honours held that the AD(JR) Act is concerned with decisions which, being authorised or required by an enactment, are given force or effect by the enactment or by a principle of law applicable to the enactment.70 In this case, the capacity of Telstra to enter into contracts was conferred by statute: however, the validity and effect of contracts was left to be determined under the laws applying generally to contracts. Consequently there was no order or decision on the part of Telstra that was amenable to review. The Court declined to follow earlier Federal Court authorities71 that had held that commercial decisions (such as entering into contracts) made in the discharge of administrative functions ultimately involved an exercise of power conferred by statute, so that such decisions could be regarded as decisions of an administrative character made under an enactment.

68 See General Newspapers Pty Ltd v Telstra Corporation (1993) 117 ALR 629 per Davies and Einfeld JJ at 636-637. See also: General Newspapers Pty Ltd (trading as Hannaprint) v Australian and Overseas Telecommunications Corporation Ltd (1993) 117 ALR 135, per Wilcox J at 167-171; and Federal Airports Corporation v Makucha Developments Pty Ltd (1993) 115 ALR 679, per Davies J at 695. 69 (1993) 117 ALR 629. 70 General Newspapers Pty Ltd v Telstra Corporation (1993) 117 ALR 629 per Davies and Einfeld JJ at 636. 71 Australian Capital Territory Health Authority v Berkely Cleaning Group Pty Ltd (1985) 7 FCR 575; James Richardson Corporation Pty Ltd v Federal Airports Corporation (1993) 117 ALR 277.

27

Reasons requirements under the AD(JR) Act 3.45. The AD(JR) Act also imposes an obligation on decision makers to provide reasons for decisions that are made by them and which are reviewable. The application of that obligation to GBEs is fairly limited because the obligation will not apply to decisions that: • are not within the definition of subsection 3(1) of ‘decision to which this Act applies’

- as noted above, most day to day decisions made by a GBE are unlikely to fall within the definition; or

• are within the class of decisions set out in Schedule 2 - Schedule 2 lists a wide range of decisions, including some internal management

decisions, and the decisions of a number of bodies and authorities relating to the commercial activities.

3.46. Accordingly, GBEs are generally not required to provide reasons for most (if not all) of their commercial decisions, and several other types of decision. Constitution

SECTION 75(v) 3.47. Decisions and actions of GBEs not susceptible to review under the AD(JR) Act may nevertheless be subject to judicial review by the High Court72 and the Federal Court73 if the decision was made, or the action undertaken, by an ‘officer of the Commonwealth’. That term has been interpreted broadly to include officers of public service departments, ministers and persons holding judicial office in the Commonwealth. However, the precise criteria for determining whether a person is an ‘officer of the Commonwealth’ have not been settled. Professor Lane has noted that the cases yield two definitions: • a person appointed, paid, controlled and removable by the Commonwealth; or • a person appointed by the Commonwealth to exercise some function of the

Commonwealth.74 3.48. It seems clear that a GBE would not itself come within the definition of an officer of the Commonwealth: this is because an ‘officer of the Commonwealth’ is a natural person, not a corporate entity.75 However, it would be possible to seek review, under section 75(v) of the

72 Constitution, section 75(v). 73 Judiciary Act 1903, section 39B. 74 P H Lane Lane’s Commentary on the Australian Constitution The Law Book Company Limited, Sydney, 1986 at 416; P H Lane Sixth Cumulative Supplement to Lane’s Commentary on the Australian Constitution The Law Book Company Limited, Sydney, 1994 at 183-184. 75 In R v Murray and Cormie and others; ex parte the Commonwealth (1916) 22 CLR 437, Isaacs J said, at 452, that “an ‘officer’ connotes an ‘office’ of some conceivable tenure, and connotes an appointment, and usually a salary.” The following statutory corporations have been held to fall outside the definition of ‘officer of the Commonwealth’ in section 75(v) of the Constitution (or section 39B of the Judiciary Act 1903) on the basis that a body corporate cannot be an ‘officer of the Commonwealth’: • the National Companies and Securities Commission (Broken Hill Proprietary Co Ltd v National Companies and

Securities Commission (1986) 61 ALJR 124, particularly per Dawson, J at 127); • Australian Telecommunications Commission (Businessworld Computers Pty Ltd v Australian

Telecommunications Commission (1988) 82 ALR 499); and • Australian Postal Commission (Australia Post) (Post Office Agents Association Ltd v Australian Postal

Commission (1988) 84 ALR 563).

28

Constitution, of the decisions or actions of an officer of a GBE where that officer is also an officer of the Commonwealth. Whether an officer of a GBE is an officer of the Commonwealth will depend in each case upon factors such as whether the person is appointed, paid, controlled, and removable by the Commonwealth, or is appointed by the Commonwealth to exercise a function of the Commonwealth.76

SECTION 75(III) 3.49. Section 75(iii) of the Constitution provides that the High Court has original jurisdiction in all matters in which ‘the Commonwealth, or a person suing or being sued on behalf of the Commonwealth, is a party.’ An application for a prerogative writ may attract the jurisdiction of section 75(iii).77 It may therefore be possible to obtain judicial review against decisions of a GBE if the GBE is ‘suing or being sued on behalf of the Commonwealth’. 3.50. The general principle for determining whether the jurisdiction conferred by section 75(iii) is attracted (that is, whether there is a body ‘suing or being sued on behalf of the Commonwealth’) was stated by Kitto J in Inglis v Commonwealth Trading Bank of Australia78 as whether the Commonwealth has exhibited an intention that the Commonwealth shall operate in a particular field through a corporation or body created for that purpose. His Honour said:

The decisive question is not whether the activities and functions with which the respondent is endowed are traditionally governmental in character, though their possession of a traditional or generally accepted governmental character may well help in the ascertainment of the legislative intention. The question is rather what intention appears from the provisions relating to the respondent in the relevant statute: is it, on the one hand, an intention that the Commonwealth shall operate in a particular field through a corporation created for the purpose; or is it, on the other hand, an intention to put into the field a corporation to perform its functions independently of the Commonwealth, that is to say otherwise than as a Commonwealth instrument, so that the concept of a Commonwealth activity cannot realistically be applied to that which the corporation does?79

76 (1969) 119 CLR 334. 77 R v Murray and Cormie and others; ex parte the Commonwealth (1916) 22 CLR 437 (prohibition); R v Registrar of Titles for Victoria; ex parte the Commonwealth (1915) 20 CLR 379 (mandamus); R v Davey and others; ex parte Freer (1936) 56 CLR 381 (habeas corpus); and R v Collins; ex parte ACTU-Solo Enterprises Pty Ltd (1976) 56 ALJR 471 (certiorari). 78 (1969) 119 CLR 334. 79 Inglis v Commonwealth Trading Bank of Australia (1969) 119 CLR 334 at 337-338.

29

3.51. The criteria under section 75(iii), which are less strict than the criteria required to be satisfied in order to establish a ‘shield of the Crown’ relationship,80 focus on four elements: • the degree of control that the Commonwealth has over the body - that is, for example,

whether the body is subject to political and governmental direction,81 whether the accounts and financial records of the body are subject to inspection and audit by the Auditor-General82 and whether membership, appointments and dismissals are Commonwealth-controlled;83

• the purpose for which the body is established - that is, for example, whether the body carries out a ‘government function’;84

• the Commonwealth’s property interest in the body;85 and • the absence of corporators (that is, non-government members).86 3.52. It is clear that the decisions and actions of some GBEs may be subject to judicial review in proceedings commenced in the High Court’s jurisdiction under section 75(iii).87 Whether a particular GBE may be a ‘person suing or being sued on behalf of the Commonwealth’ is a question that will in each case be decided by reference to the particular legal structure and circumstances of the GBE: for example, it would seem that a statutory corporation, the functions of which are not focused on commercial objectives, is more likely to fall within that description than a GBE that is a company with a corporate structure and commercial objectives and functions. It also seems clear that a GBE that is incorporated as a company under the Corporations Law would not fall with that description. In the 1953 High Court decision in Commonwealth v Bogle,88 a wholly-Commonwealth-owned company formed

80 Maguire v Simpson (1977) 139 CLR 362, per Mason J at 398. 81 Bank of New South Wales v The Commonwealth (1948) 76 CLR 1 at 274, 322 and 367. 82 Inglis v Commonwealth Trading Bank of Australia (1969) 119 CLR 334 at 339-341. 83 Goodfellow v Commissioner of Taxation (1971) 51 ALJR 437 at 442. 84 Repatriation Commission v Kirkland (1923) 32 CLR 1; Steele v Defence Forces Retirement Benefits Board (1955) 92 CLR 177; Bank of New South Wales v The Commonwealth (1948) 76 CLR 1. 85 Repatriation Commission v Kirkland (1923) 32 CLR 1, at 20. 86 State Bank of New South Wales v Commonwealth Savings Bank of Australia [No 2] (1986) 161 CLR 639, at pages 644-645 where the Court referred to Kitto J in Inglis v Commonwealth Trading Bank of Australia (1969) 119 CLR 334 at 337-338. 87 Some Commonwealth bodies that have been held to be within the jurisdiction of section 75(iii) are: • the Repatriation Commission (1923) (Repatriation Commission v Kirkland (1923) 32 CLR 1); • the Commonwealth Bank of Australia (1948) (Bank of New South Wales v The Commonwealth (1948) 76 CLR 1); • the Commercial Trading Bank of Australia (1969) (Inglis v Commonwealth Trading Bank of Australia (1969) 119

CLR 334); • the Defence Forces Retirement Benefits Board (1955) (Steele v Defence Forces Retirement Benefits Board (1955) 92

CLR 177); and • the Australian Atomic Energy Commission (1977) (Kathleen Investments (Aust) Ltd v Australian Atomic Energy

Commission (1977) 139 CLR 117). 88 (1953) 89 CLR 229.

30

under Victorian companies legislation was held not to be ‘the Commonwealth’ or to be in the same position as the Commonwealth as regards presumptions of statutory construction and constitutional immunities from State legislation.89 In the 1992 High Court decision in Deputy Commissioner of Taxation v State Bank of New South Wales90 the High Court said that the words ‘or person suing or being sued on behalf of the Commonwealth’ were included in section 75(iii) in order to ensure that the jurisdiction conferred extended to cases in which the Commonwealth itself was not the nominal plaintiff or defendant.91 Other judicial review jurisdiction 3.53. Prior to the enactment of section 9 of the AD(JR) Act, the State Supreme Courts were vested with much of the jurisdiction of the High Court’s original jurisdiction in relation to judicial review of officers of the Commonwealth and actions of the Commonwealth. Subsection 39(2) of the Judiciary Act 1903 provides, in part:

39. (2) The several Courts of the States shall within the limits of their several jurisdictions, whether such limits are as to locality, subject-matter, or otherwise, be invested with federal jurisdiction, in all matters in which the High Court has original jurisdiction or in which original jurisdiction can be conferred upon it, except as provided in section 38...

3.54. Section 38 of the Judiciary Act provides that the High Court shall have exclusive jurisdiction in relation to, amongst other things, “matters in which a writ of mandamus or prohibition is sought against an officer of the Commonwealth or the Federal Court”.92 The State Supreme Courts nevertheless retained jurisdiction in relation to other judicial review matters involving an officer of the Commonwealth. 3.55. However, section 9 of the AD(JR) Act substantially limited the jurisdiction of the State Supreme Courts in relation to judicial review of Commonwealth activities. The effect of section 9 is that a State Supreme Court does not have jurisdiction to review:

• a decision of an administrative character made under an enactment (including most decisions that are listed in Schedule 1),93 conduct in relation to such a decision, or a failure to make such a decision;

89 Commonwealth v Bogle (1953) 89 CLR 229, per Fullagar J at 266-268. 90 (1992) 174 CLR219. 91 Deputy Commissioner of Taxation v State Bank of New South Wales (1992) 174 CLR 219, at 232. 92 Judiciary Act 1903, subsection 38(e). 93 However, the definition of “decision to which this section applies”, in subsection 9(2) of the Administrative Decisions (Judicial Review) Act 1977, has the effect of retaining within the jurisdiction of the State Supreme Court jurisdiction to review: • decisions of the National Companies and Securities Commission made in the performance of a function, or

the exercise of a power, conferred, or expressed to be conferred, upon it by any State Act or law of the Northern Territory; and

• decisions of the Ministerial Council for Companies and Securities established by Part VII of the agreement between the Commonwealth and the States a copy of which is set out in the Schedule to the National Companies and Securities Act 1979.

31

• any decision given, or any order made, by an officer of the Commonwealth or any

other conduct that has been, is being, or is proposed to be, engaged in by an officer of the Commonwealth, including a decision, order or conduct given, made or engaged in, as the case may be, in the exercise of judicial power.94

3.56. The State Supreme Courts would nevertheless have jurisdiction in respect of activities and decisions that are not excluded by section 9 of the AD(JR) Act; this jurisdiction may cover judicial review of action by private bodies that undertake ‘public functions’,95 although the position is not free from doubt.96 Summary 3.57. In summary, decisions of a GBE that are commercial decisions or decisions made other than pursuant to specific statutory powers are unlikely to be reviewable under the AD(JR) Act, although judicial review of those decisions may be available in limited circumstances under the Constitution or in State Supreme Courts. AAT merits review 3.58. The background to the AAT Act, and its general scheme of operation, is set out in Appendix C at paragraphs C.70-C.78. It is noted there that whether a decision is subject to AAT merits review depends upon there being a legislative provision providing for merits review of decisions made under the relevant decision-making power.97

94 Subsection 9(3) of the Administrative Decisions (Judicial Review) Act 1977 provides, in effect, that any decision or conduct made or engaged in by a member, member of staff or delegate of the National Companies and Securities Commission in performance of a function conferred, or expressed to be conferred, upon the Commission by a State Act or a law of the Northern Territory shall be deemed not to be a decision given, or an order made or conduct that has been, is being or is proposed to be, engaged in, as the case may be, by an officer of the Commonwealth. 95 R v Panel on Take-overs and Mergers; ex parte Datafin Plc and another [1987] 1 QB 815; R v Jockey Club; ex parte Aga Khan [1993] 1 WLR 909; Mercury Energy Limited v Electricity Corporation of New Zealand Limited [1994] 1 WLR 521. 96 In R v Chief Rabbi of the United Hebrew Congregations of Great Britain and the Commonwealth; ex parte Wachman [1992] 1 WLR 1036, Simon Brown J of the English High Court noted, at 366-367, that where the actions of non-governmental bodies have been held to be subject to judicial review, those bodies have generally been operating as an integral part of a regulatory system which, although non-statutory, was supported by statutory powers and penalties clearly indicative of government concern. More recently, in the decision of an English Divisional Court in R v Insurance Ombudsman; ex parte Aegon Life Insurance Ltd [1994] COD 426, it was held that the Insurance Ombudsman bureau was not amenable to judicial review. The bureau is a non-statutory body in a contractual relationship with its members, acting as a complaints register under the English Financial Services Act 1986. 97 Subsection 25(1) of the Administrative Appeals Tribunal Act 1975 provides that an enactment may provide for review of decisions made in the exercise of powers conferred by that enactment or for review of decisions made in the exercise of powers conferred, or that may have been conferred, by another enactment having effect under that enactment. Subsection 25(4) of the Administrative Appeals Tribunal Act 1975 provides that the AAT has power to review any decision in respect of which application is made to it under any enactment.

32

3.59. The Council’s guidelines for the appropriateness of merits review98 focus on the character of the decision, not the character of the decision maker. Nevertheless, very few decisions of GBEs are currently subject to merits review. In particular, as noted in the discussion paper, there is no current AAT jurisdiction for merits review of decisions of a commercial nature made by a body or person operating in a competitive market place.99 This is at least partly due to the fact that many GBEs do not have statutory powers, and therefore do not make decisions under statutes. 3.60. It should be noted, however, that there are a few discrete decision-making powers, subject to AAT merits review, which may be exercised by some GBEs, or by officers of GBEs. For example, the Safety Rehabilitation and Compensation Act 1988 defines ‘rehabilitation authority’, in relation to a employee, to include: • if the employee is employed by a licensed corporation, the principal officer of that

corporation; and • where the employee is employed by a Department or a Commonwealth authority (other

than an exempt authority), the Secretary of the Department or the principal officer of the Commonwealth authority, as the case may be.100

3.61. Under the Act, a rehabilitation authority is empowered to make certain decisions. For example, a rehabilitation authority may make a determination that an employee who has suffered an injury resulting in an incapacity for work or an impairment should undertake a rehabilitation program.101 An employee about whom such a determination is made may apply to the ‘determining authority’ (defined to mean a person who made the relevant determination)102 for review of the determination.103 A claimant may then apply to the AAT for review of the decision.104 SUMMARY 3.62. In summary, despite some recurring themes (such as exemptions that take into account ‘commercial activities’), there is no general rule or principle that determines the extent to which a GBE is affected by the operation of the administrative law package, or any element of it. This is perhaps partly due to the differing structure and objectives of each element of the package. This is exemplified by the use in some elements of the package of jurisdictional provisions and definitions that extend (or limit) the application of the relevant Act to certain bodies specified in a Schedule to the Act, without providing criteria for

98 As part of its ongoing work in advising the Government on whether the exercise of particular decision powers is appropriate for merits review, the Council has developed guidelines that are used by the Council in its consideration of these issues. The guidelines are consolidated and published from time to time. The guidelines were most recently published in the Administrative Review Council’s Seventeenth Annual Report 1992-93 Australian Government Publishing Service, Canberra, 1993, at Chapter Seven. 99 Administrative Review Council Administrative Review of Government Business Enterprises-Discussion Paper Australian Government Publishing Service, Canberra, 1993, at 48 (paragraph 4.31). 100 Safety Rehabilitation and Compensation Act 1988, subsection 4(1). 101 Safety Rehabilitation and Compensation Act 1988, subsection 37(1). 102 Safety Rehabilitation and Compensation Act 1988, subsection 60(1). 103 Safety Rehabilitation and Compensation Act 1988, section 62. 104 Safety Rehabilitation and Compensation Act 1988, section 64.

33

determining which bodies should or should not be placed on the Schedule. The result is that a GBE exempt under one Act may not be exempt under another. 3.63. The processes of commercialisation and privatisation of government business were much less common at the time of the enactment of the Commonwealth administrative law statutes than they are today. And there were fewer GBEs than today. It is therefore appropriate to review the specific issue of whether the administrative law package should be modified in its application to GBEs. The Council’s recommendations on how this may be done is set out in Chapter Four.

34

CHAPTER FOUR

EXEMPTING PARTICULAR ACTIVITIES OF GBES FROM COMMONWEALTH ADMINISTRATIVE LAW STATUTES

In this chapter, the Council sets out the exemptions from the application of

Commonwealth administrative law statutes that should be available to GBEs.

INTRODUCTION: GBEs AND THE ACCOUNTABILITY DILEMMA

This section introduces the discussion as to how Commonwealth administrative law statutes should be modified in their application to GBEs.

4.1. The purpose of this report is to recommend to the Government general principles for determining how Commonwealth administrative law should apply to GBEs. In Chapter Two, the Council set out its view that the administrative law package should apply to all government-controlled bodies, including GBEs.105 However, in Chapter Two the Council also indicated that it may be appropriate to modify the application of the administrative law package in its application to a GBE’s commercial activities undertaken in a competitive market:106 that issue is considered in this chapter. 4.2. As part of a trend to improve efficiency in the public sector, the Commonwealth Government is increasingly requiring agencies to operate more commercially. Financial, managerial and corporate reforms, together with the introduction of competition into some markets in which the Government undertakes commercial activities, raise questions about the application of the administrative law package to GBEs. That is, as GBEs become increasingly commercial, and subject to the accountability mechanisms that operate in the commercial sector (in particular, competition), to what extent should they continue to be made subject to public sector accountability mechanisms? 4.3. The submissions received by the Council demonstrated the diversity of views as to how administrative law mechanisms should be applied to GBEs. Some suggested that to require GBEs to comply with administrative law mechanisms, in addition to regulations applying generally to all participants in the market, would detract from the ability of GBEs to participate in competitive markets, and give their competitors an unfair advantage. Others suggested that the application of the administrative law package is not made less valuable merely because a GBE operates according to commercial objectives or in a competitive market: the nexus that the GBE has with the Government is sufficient to justify the continued application of the administrative law package. 4.4. As noted in the discussion paper, the Commonwealth administrative law statutes are likely to be of maximum benefit when they are applied to organisations that are under little pressure to manage themselves well or to improve the quality of their services, and in relation to which the public has little or no choice to go elsewhere for the services they

105 See Chapter Two at paragraphs 2.8-2.11. 106 See Chapter Two at paragraphs 2.8.

35

provide.107 Public sector reforms (including the introduction of competition in some sectors) have introduced commercial performance as one measure of the performance of some GBEs. Issues arise as to how the benefits of the administrative law package relate to the benefits to be derived from participation in commercial markets. 4.5. The resolution of these issues requires careful consideration of the role and operation of the administrative law package, and of the nature and functions of GBEs. In Chapter Two, the Council put forward its view that Commonwealth administrative law statutes should prima facie apply to government-controlled bodies. The Council considers, however, that the application of the administrative law package to GBEs should be modified in certain circumstances. How it should be modified is discussed in this chapter. 4.6. As noted in Chapter One, it is not within the scope of the Council’s project to examine the merits of the Government’s policies in relation to commercialisation, corporatisation or privatisation of government activities. The report takes as its starting point the fact that these processes are now a feature of the way that the Government has decided that services are to be delivered.

EXEMPTING PARTICULAR ACTIVITIES OF GBEs FROM COMMONWEALTH ADMINISTRATIVE LAW STATUTES

In this section, the Council sets out its recommendations for the principles that it considers the Government should adopt in considering the application of Commonwealth administrative law statutes to GBEs.

Commonwealth administrative law statutes and GBEs Introduction 4.7. The objectives of administrative law are discussed in Chapter Three, and include: ensuring that the Government acts within its lawful powers; ensuring that when the Government exercises discretions under statute that the correct and preferable decision is made; and promotion of the individual citizen’s ‘right to know’. 4.8. The issue that arises for GBEs is whether, in relation to the activities of a GBE in a competitive market, the commercial accountability pressures that apply are such that the continued application of Commonwealth administrative law statutes to the GBE cannot be justified.

107 Administrative Review Council Administrative Review of Government Business Enterprises - Discussion Paper Australian Government Publishing Service, Canberra, 1993, at 43.

36

Past Council views on the application of Commonwealth administrative law statutes to GBEs

REPORT NO 32 4.9. In its Report No 32108 on the ambit of the Administrative Decisions (Judicial Review) Act 1977 (the AD(JR) Act), the Council briefly examined the issue of the application of the AD(JR) Act to commercial decisions of GBEs. In that report the Council expressed the view that review of decisions of GBEs should continue to be available under the AD(JR) Act.109 In relation to the commercial decisions of those GBEs that are not created by statute but which are incorporated under companies legislation, the Council noted that those decisions might not be able to be characterised as ‘decisions made under an enactment’ and may not therefore be amenable to review under the AD(JR) Act110 The Council concluded:

The Council considers that the controls imposed by the requirements of company law provide in this case a sufficient substitute for control through the judicial review jurisdiction of the courts.111

4.10. The Council notes that these comments were limited to the application of the AD(JR) Act to commercial decisions of non-statutory GBEs, and to the extent that they are not consistent with the principles and recommendations set out in this report, the latter should take precedence.

THE DISCUSSION PAPER 4.11. In the discussion paper, the Council expressed the preliminary view that the application of the administrative law package to GBEs that face real competition should be modified to take account of the effects of the commercial accountability pressures that would arise by virtue of that competition. The Council explained the basis for this preliminary view in the following way:

4.18 As noted, the benefits of the administrative law package are: the provision of a mechanism for ensuring that the government acts within its lawful powers, the provision of mechanisms for achieving justice in individual cases, the provision of feedback to decision makers, which thereby improves the quality of public administration, and a contribution to the accountability system for government decision making. These benefits are of particular value to the public in relation to institutions in respect of which there is no possibility to “shop

108 Administrative Review Council Report to the Attorney-General -Report No 32 - Review of the Administrative Decisions (Judicial Review) Act: The Ambit of the Act Australian Government Publishing Service, Canberra, 1989. 109 Administrative Review Council Report to the Attorney-General -Report No 32 - Review of the Administrative Decisions (Judicial Review) Act: The Ambit of the Act Australian Government Publishing Service, Canberra, 1989 at 98-99. 110 Administrative Review Council Report to the Attorney-General -Report No 32 - Review of the Administrative Decisions (Judicial Review) Act: The Ambit of the Act Australian Government Publishing Service, Canberra, 1989 at 100. 111 Administrative Review Council Report to the Attorney-General -Report No 32 - Review of the Administrative Decisions (Judicial Review) Act: The Ambit of the Act Australian Government Publishing Service, Canberra, 1989 at 100.

37

elsewhere” and little incentive for the institutions to improve the quality of its services. Traditionally, government businesses have provided goods and services in markets where they were the sole supplier. One of the key reasons for the government undertaking its GBE reforms has been to improve the performance of its businesses. The introduction of competition has been seen as the best way of ensuring that government businesses do improve.

4.19. The Council’s preliminary view is that the benefits that flow from the administrative law package will not be as valuable in relation to GBEs that have competitors that are strong enough to provide real competition, so that the GBEs are forced to improve to remain commercially viable. This is so because, in relation to the provision of a mechanism for ensuring that the government acts within its lawful powers, a GBE that faces true competition would not possess government powers or immunities and thus would be as susceptible to private law as its competitors. In relation to the provision of mechanisms for individual justice, members of the public could shop elsewhere or rely upon private law remedies. In relation to improving the quality of administration, market mechanisms will tend to achieve the same improvement, although they may not work as effectively to achieve “fairness”. In relation to accountability for government decision making, a GBE that faces competition should not be in a position to make government decisions. Decisions made about GBEs by the government would continue to be subject to the administrative law package in accordance with the normal principles.112

Submissions 4.12. The submissions received offered varied responses to this preliminary view. Some submissions accepted the Council’s preliminary view that the benefits of the administrative law package were less valuable in relation to GBEs when there was competition, because people have the capacity to shop elsewhere, and because market forces would tend to improve the quality of a GBE’s services. Other submissions put the view that GBEs that were otherwise operating in an openly competitive market would be disadvantaged if they, but not their competitors, were subject to the administrative law package. Some submissions went further and argued that the administrative law package should not apply to a GBE that operated in a market that was ‘potentially’ competitive. 4.13. However, other submissions questioned the value judgement inherent in the Council’s preliminary view, and offered a variety of reasons for this. These included that it was unlikely that GBEs would be affected by significant market forces, because it is unlikely that the Government would ever permit a GBE to fail; and that the capacity to shop elsewhere and the availability of private law remedies would not always be sufficient to provide-justice in individual cases.

112 Administrative Review Council Administrative Review of Government Business Enterprises – Discussion Paper Australian Government Publishing Service, Canberra, 1993 at 46.

38

Analysis 4.14. The Council accepts that the benefits flowing from the administrative law package will not be as valuable in relation to a GBE’s commercial activities undertaken in a market where there is real competition, and that, as a general principle, Commonwealth administrative law statutes should not apply to GBEs in relation to activities of that type. 4.15. There are several reasons why the administrative law package is made less valuable in relation to a GBE’s commercial activities in a competitive market. These reasons relate to the objectives of administrative law, which are set out in Chapter Three at paragraphs 3.9-3.13. 4.16. First, in relation to the objective of ensuring that the Government acts within its lawful powers,113 a GBE that faces real competition would not possess government powers or immunities, and in relation to its commercial activities would be as susceptible to private law as its competitors. In this respect bodies with a legal personality distinct from Government are more likely than other Government-owned enterprises to face real competition in respect of their commercial activities. In the Council’s view, a GBE could not be subject to real competition unless its participation in a market is free of any special government immunities or protections. The Council notes that the Hilmer report

the

114 recommended that government businesses should not enjoy any net competitive advantage by virtue of their ownership when competing with other businesses.115 4.17. Second, in relation to the objective of providing mechanisms for individual justice,116 consumers of goods or services provided by a GBE would be able to direct their custom elsewhere (that is, to the GBE’s competitors). They would also be able to rely upon private law remedies. The Council acknowledges, however, that private law remedies, including industry ombudsman schemes,117 are unlikely to be as accessible as the administrative law package in all circumstances and for all consumers. 4.18. Third, in relation to improving the quality of public administration,118 competitive market forces may achieve a similar improvement although, as the Council noted in the discussion paper, they may not work as effectively to achieve fairness.119

113 See Chapter Three at paragraph 3.10. 114 National Competition Policy Review National Competition Policy - Report by the Independent Committee of Inquiry Australian Government Publishing Service, Canberra, 1993. 115 National Competition Policy Review National Competition Policy - Report by the Independent Committee of Inquiry Australian Government Publishing Service, Canberra, 1993, at 308, 309. For a brief summary of the relevant aspects of the report, see Appendix E at paragraphs E.14-E.17. 116 Mechanisms for individual justice under the administrative law package include independent merits review and access to information about government decisions: see Chapter Three at paragraphs 3.11-3.12. 117 In relation to industry ombudsman schemes, the Council notes that industry ombudsman are subject to several limitations, such as an inability to require the production of information otherwise protected by professional privilege or to make statements in the public interest. The Commonwealth Ombudsman is not subject to such limitations. 118 See Chapter Three at paragraph 3.13. 119 Administrative Review Council Discussion Paper - Administrative Review of Government Business Enterprises Australian Government Publishing Service, Canberra, 1993 at 46.

39

4.19. And in relation to accountability for government decision making, to the extent that a GBE undertakes commercial activities in a competitive market, it is generally not in a position to make government decisions. 4.20. The Council therefore considers that, as a general principle, the commercial activities of a GBE, undertaken in a market where there is real competition, should be exempt from the administrative law package. In the next section of this chapter, the Council sets out what changes to Commonwealth administrative law statutes should flow from the adoption of this general principle. The ‘burden’ argument 4.21. Some submissions to the Council noted that GBEs participating in a competitive market will be subject to the range of regulatory mechanisms (including private law) that apply generally in that market. These submissions advanced the view that to require a GBE to be subject to Commonwealth administrative law statutes would place the GBE at a competitive disadvantage. This is because the GBE’s private sector competitors are not required to comply with the obligations of those statutes. 4.22. The Council considers that, in light of the general principle set out above, this argument can have little force. The argument focuses upon a comparison between the regulatory ‘burdens’ to which GBEs and their competitors are subject. According to the argument, a direct comparative ‘burden’ could arise only where activities of a GBE which are subject to Commonwealth administrative law statutes are undertaken in competition with the activities of a body which are not subject to those statutes. However, under the principles recommended by the Council, such a comparative burden is unlikely to arise, because the Council has recommended that a GBE’s commercial activities undertaken in a competitive market should, as a general principle, be exempt from the administrative law package. Thus, no comparative ‘burden’ would arise. 4.23. The Council notes that arguments might be raised that a GBE undertaking both commercial and non-commercial activities might be subject, indirectly, to competitive burdens: that is, the cost of compliance with Commonwealth administrative law statutes in relation to a GBE’s non-commercial activities might affect the cost of the GBE’s overall operations, and thus indirectly effect the GBE’s capacity to compete effectively in relation to its competitive activities. Although such indirect competitive burdens are theoretically possible, the Council notes that this argument does not address the advantages that may potentially flow from the application of Commonwealth administrative law statutes (these advantages could be utilised to attract customers). In any event, any potential for an indirect competitive burden is a symptom of the fact that some GBEs are vested with both commercial and non-commercial functions, and difficulties arising as a result of this raise much broader issues with little bearing upon the application of the administrative law package.

40

Exemption limited to particular activities of GBEs 4.24. The Council further notes that it considers that any exemption should be limited in its operation to certain decisions or activities of a GBE, and should not apply, as a matter of course, to all of a GBE’s activities, or to a GBE generally. That is, activities of a GBE that are not commercial activities undertaken in a competitive market should continue to be subject to Commonwealth administrative law statutes. And decisions made by the Government about GBEs will remain subject to the application of the administrative law package. The model business argument 4.25. In the discussion paper, the Council raised the issue of whether GBEs should be under a special obligation to operate as ‘model’ businesses: that is, according to the highest standards of fairness. The Council noted that a benefit that competition could not provide, but that the administrative law package could provide, was a mechanism for achieving the highest level of fairness and ethical standards.120 4.26. Most submissions supported the principle that GBEs should operate according to high standards of fairness. However, the responses varied as to how this should affect the application of Commonwealth administrative law statutes, particularly the Ombudsman Act 1976 (the Ombudsman Act) and the Freedom of Information Act 1982 (the FOI Act). Some suggested that the FOI Act and the Ombudsman Act should, in general, continue to apply to GBEs in order to maintain community confidence in public accountability. Others argued that, in the case of a GBE facing real competition and participating in the market on a ‘level playing field’, high standards of ethics and fairness would be achieved through the operation of broadly-applicable regulatory regimes such as the Trade Practices Act 1974 and the Prices Surveillance Authority.121 4.27. The Council does not consider that GBEs should be under any special obligation to operate as ‘model’ businesses in respect of their commercial activities undertaken in a competitive market. Instead the Council considers that the standards of fairness governing these activities should be the same as those that apply throughout the market place. The private sector 4.28. The Council notes that it is beyond the scope of this paper to consider the extension of the operation of Commonwealth administrative law statutes to private sector bodies (that is, bodies that are not within the definition of ‘GBE’ because they are not under government control). However, the Council will examine the application of particular Commonwealth administrative law statutes to the private sector as appropriate. For example, as noted in

120 Administrative Review Council Discussion Paper - Administrative Review of Government Business Enterprises Australian Government Publishing Service, Canberra, 1993 at 56-57. 121 The Council notes that the Hilmer report on national competition policy has recommended the establishment of an Australian Competition Commission to administer relevant aspects of competition policy. It will be formed from the existing Trade Practices Commission and Prices Surveillance Authority: National Competition Policy Review Committee of Inquiry National Competition Policy - Report by the Independent Committee of Inquiry Australian Government Publishing Service, Canberra, 1993, at 313-340.

41

Chapter One,122 the Council is currently undertaking an inquiry into the FOI Act, and an issues paper has been published.123 One of the issues covered in the paper is whether freedom of information principles should apply in the private sector.124 Summary of general principles 4.29. In summary: • Commonwealth administrative law statutes should prima facie apply to bodies that are

government-controlled, including GBEs; and • GBEs should be exempt from the operation of Commonwealth administrative law

statutes in relation to their commercial activities undertaken in a market where there is real competition.

In the following section, the Council illustrates how its recommendations might be implemented by the Government.

MODIFICATION OF THE APPLICATION OF COMMONWEALTH ADMINISTRATIVE LAW STATUTES TO GBEs

In this section, the Council illustrates how the general principles set out by the Council should be applied by the Government.

Introduction 4.30. The purpose of this report is to set out general principles to be used by the Government in determining the application of Commonwealth administrative law statutes to GBEs. The principles are therefore likely to be of particular use when the structure and ownership of an individual government body are undergoing reform, and particularly when issues arise as to whether that body should remain subject to Commonwealth administrative law statutes. 4.31. The Council makes recommendations as to how some Commonwealth administrative law statutes should be amended to reflect the principles set out in this report. It does not, however, make any recommendations as to how the FOI Act or the Privacy Act should be amended. 4.32. As noted in Chapter One,125 the Council (in conjunction with the Australian Law Reform Commission) is currently undertaking an inquiry into the scope and operation of the FOI Act. In light of this ongoing inquiry the Council does not propose making final recommendations in this report about the application of the FOI Act or the Privacy Act 1988 (the Privacy Act) to GBEs. This is because the terms of reference for the FOI Act inquiry require consideration as to whether the ambit of that Act should be extended to cover private

122 At paragraphs 1.10-1.12. 123 Administrative Review Council, Australian Law Reform Commission Freedom of Information (Issues Paper) Australian Law Reform Commission, Sydney, 1994 (ALRC Ref: ALRC IP 12). 124 Administrative Review Council, Australian Law Reform Commission Freedom of Information (Issues Paper) Australian Law Reform Commission, Sydney, 1994 (ALRC Ref: ALRC IP 12), at 104-114. 125 At paragraphs 1.10-1.12.

42

sector bodies and GBEs. The report of the FOI Act inquiry will be presented to the Minister for Justice in December 1995. Because the application of the Privacy Act to GBEs depends to some extent on the FOI Act, the Council also considers it inappropriate to make recommendations concerning the application of those Acts to GBEs. Ombudsman General recommendations 4.33. As noted in Chapter Three,126 the Ombudsman has jurisdiction to investigate certain activities of departments and ‘prescribed authorities’. The effect of the definition of ‘prescribed authority’ is to exclude from the Ombudsman’s jurisdiction a number of bodies, including: • a Commonwealth-controlled company that is prescribed under the regulations as a body

that is to be taken not to be a prescribed authority for the purposes of the Act; • a body corporate or unincorporated body (other than an incorporated company or

association, a body with judicial or quasi-judicial powers, or a Royal Commission) that is established for a public purpose or in accordance with the provisions of an enactment; and

• a body corporate or unincorporated body that is established by a Minister and declared by the regulations to be a prescribed body.

4.34. The Council considers that the Ombudsman should prima facie have jurisdiction over all Commonwealth-controlled bodies. Whilst the Council notes that there may be reasons why it would be inappropriate for the Ombudsman’s jurisdiction to extend to bodies undertaking particular types of functions (for example, national security functions or judicial or quasi-judicial functions), it considers that no body should be excluded from the definition of ‘prescribed authority’ on the basis that some or all of its activities are commercial. 4.35. Nonetheless, in the Council’s view, the general principle that the administrative law package should not apply to the commercial activities of a GBE undertaken in a truly competitive market applies equally to the Ombudsman Act: The Ombudsman’s jurisdiction to investigate these kind of activities should be amended accordingly. The Council notes, however, that it will be for the Ombudsman to make the initial decision as to whether the relevant commercial activities of a GBE are in fact performed in a truly competitive market. The Ombudsman should retain jurisdiction to investigate the commercially competitive activities of prescribed authorities that are not GBEs.

126 At paragraph 3.15.

43

Transitional 4.36. The Council considers that the Ombudsman’s jurisdiction should extend to investigate action that relates to a matter of administration of a former GBE where the relevant action was undertaken at a time when the body was still a GBE. Legislation should be introduced to confer jurisdiction on the Ombudsman to investigate the action of a GBE that relates to a matter of administration undertaken in a non-competitive environment, even though the GBE has since entered into full competition. Ombudsman’s jurisdiction under section 35A of the Ombudsman Act 4.37. In its discussion paper, the Council noted that GBEs may be concerned about the Ombudsman’s discretion under the Ombudsman Act to release information, including commercial information or documents.127 Subsection 35A(1) of the Ombudsman Act provides:

35A. (1) Nothing in this Act shall be taken to preclude the Ombudsman from disclosing information, or making a statement, to any person or to the public or a section of the public with respect to the performance of the functions of, or an investigation by, the Ombudsman under this Act if, in the opinion of the Ombudsman, it is in the interests of any Department, prescribed authority or person, or is otherwise in the public interest, so to disclose that information or to make that statement.

4.38. The Council also noted that a safeguard against such release should be incorporated into the Ombudsman Act by requiring the Ombudsman, when considering the release of information relating to a body, to consider not only the public interest but also the commercial interests of the body. The Council’s intention was to clarify the operation of section 35A: that is, to make it clear that in deciding whether to disclose information under section 35A, the Ombudsman was to consider not only the public interest factors favouring disclosure, but also the commercial interests of a particular body whose interest might be affected by disclosure. 4.39. Upon further consideration, the Council now considers that, in determining whether disclosure would be in the public interest, the Ombudsman would in any event be obliged to have regard to the commercial interests that are affected by the disclosure and that it is, therefore, unnecessary to amend section 35A in the manner proposed earlier. Archives Act 1983 General recommendations 4.40. Obligations under the Archives Act 1983 (the Archives Act) apply to ‘Commonwealth records’. That phrase is defined in subsection 3(1) of the Archives Act to include a record that is the property of the Commonwealth or of a ‘Commonwealth institution’.

127 Administrative Review Council Discussion Paper - Administrative Review of Government Business Enterprises Australian Government Publishing Service, Canberra, 1993 at 50.

44

‘Commonwealth institution’ is defined in subsection 3(1) to include an ‘authority of the Commonwealth’. That term is defined to include: • an authority, body, tribunal or organisation, whether incorporated or unincorporated,


or a law of a Territory other than the Northern Territory or Norfolk Island; - by the Governor-General; or - by, or with the approval of, a Minister; and

• a prescribed company or association over which the Commonwealth is in a position to exercise control.

4.41. In the Council’s view, the Archives Act should prima facie apply to the records of all Commonwealth-controlled bodies, subject to special provisions dealing with records relating to commercial activities undertaken in a competitive market (discussed below). The Council is also aware that the Act’s definition of ‘authority of the Commonwealth’, which requires companies or associations over which the Commonwealth has control to be prescribed by regulations if they are to be within the definition, has resulted in the past in inadvertent exclusions from the definition and the ambit of the Act. Although there may be reasons to exclude bodies from the definition of ‘authority of the Commonwealth’ (for example on the basis that they are undertaking judicial or quasi-judicial functions), the Council considers that: • the fact that a body is undertaking commercial activities does not justify any exemption

from the ambit of the Act; and • exemptions from the definition should be prescribed in the Act or regulations. 4.42. Accordingly the Council recommends that: • the ambit of the Act be extended to cover any Commonwealth-controlled body - any

exemptions of a body from the ambit of the Act should only be justified on a basis other than that the body undertakes commercial activities (for example, that the body has national security functions, or exercises judicial or quasi-judicial powers); and

• the definition of ‘authority of the Commonwealth’ in subsection 3(1) of the Archives Act be amended so that in order for a body that would prima facie be within the definition to fall outside the definition, it must be listed in either the regulations or, preferably, in a Schedule to the Act.128

128 The Council notes that the Archives Amendment Bill 1994 proposes amendments to the Archives Act 1983 of similar effect. For example, clause 3 of the Bill proposes that the definition of “authority of the Commonwealth” in section 3 of the Archives Act 1983 be amended to include a Commonwealth-controlled association or a Commonwealth-controlled company. The proposed definition of “Commonwealth-controlled company” is “an incorporated company over which the Commonwealth is in a position to exercise control, but does not include a company that is declared by the regulations not to be a Commonwealth-controlled company.” The Council notes, however, that this definition would not result in the Act containing a list of the companies declared not to be Commonwealth-controlled companies; they will merely be listed in the regulations, so that the ambit of the Act will not be fully apparent on the face of the Act.

45

4.43. Subject to what is said in paragraph 4.44 below, the Council considers that Commonwealth GBEs should generally be subject to all of the obligations under the Archives Act, particularly the obligations in Division 2 of Part V relating to the prohibition on the destruction, disposal, transfer, damage or alteration of Commonwealth records, and the obligations to transfer records to the Australian Archives for archiving. The Council notes that many of the archival services of the Australian Archives are provided free of charge (on the basis that they ultimately serve the public interest) and that most private businesses have records management systems for accounting and auditing purposes. 4.44. Division 3 of Part V of the Archives Act relates to access to Commonwealth records, including access by the public. The Council considers that it would be inappropriate for the records of a GBE that relate to its commercial activities in a competitive market to be made available for public access. In particular, it might lead to a GBE’s competitors being provided with an unfair competitive advantage. Accordingly, the Archives Act should provide that records relating to a GBE’s commercial activities undertaken in a competitive market should be exempt from the disclosure requirement. Transitional 4.45. The Council considers that it is important that Commonwealth control over records not be lost merely because a body that was previously within the definition of ‘authority of the Commonwealth’ now falls outside that definition: for example, in the case of a GBE, where the Government has lost control over it. 4.46. Accordingly, the definition of Commonwealth records should be extended to include a record of a body, that was formerly an authority of the Commonwealth, which record was the property of that body at the time that it ceased to be an authority of the Commonwealth.129

129 The Council notes that an amendment of similar effect is proposed in the Archives Amendment Bill 1994. Clause 5 of the Bill proposes that a new section 28A be inserted into the Archives Act 1983. The proposed section 28A states: 28A. If a company or association that is an authority of the Commonwealth ceases, on a particular day, to be

such an authority of the Commonwealth, then, despite the company or association so ceasing: (a) the records of the company or association that were in existence prior to that day continue to be

Commonwealth records; and (b) the Archives may make arrangements with the company or association to enable those records of the

company or association to be dealt with in accordance with the provisions of this Part in the same manner as if the company or association had not ceased to be an authority of the Commonwealth.

46

The Administrative Decisions (Judicial Review) Act 1977

Introduction 4.47. The current amenability of GBEs to judicial review is discussed in Chapter Three at paragraphs 3.38-3.57. In summary, the current position is that decisions of a GBE that are commercial decisions, or decisions made other than pursuant to specific statutory powers, are unlikely to be reviewable under the AD(JR) Act, although review may be available in limited circumstances under the Constitution or in State Supreme Courts. 4.48. On a prima facie application of the Council’s principles for the application of the administrative law package to GBEs, judicial review under the AD(JR) Act should not be available in relation to decisions of a GBE relating to its commercial activities in a competitive market. As noted in Chapter Three at paragraphs 3.43-3.44, the AD(JR) Act has been interpreted in such a way that a commercial decision is unlikely to be a ‘decision of an administrative character made...under an enactment’ within the meaning of that phrase in section 3 of the AD(JR) Act. The High Court’s judicial review jurisdiction 4.49. There are additional matters to consider in relation to judicial review of decisions of a GBE. This is principally because of the High Court’s judicial review jurisdiction, which jurisdiction is entrusted to the High Court by section 75 of the Constitution. This jurisdiction, which is described in Chapter Three at paragraphs 3.47-3.52 and in Appendix C at paragraphs C.56-C.59, can only be amended by referendum. 4.50. Section 75(iii) of the Constitution provides that the High Court has original jurisdiction in respect of all matters (including matters in which prerogative relief is sought) in which the Commonwealth, or a person suing or being sued on behalf of the Commonwealth, is a party. To the extent a GBE is within section 75(v) or section 75(iii), the GBE (or its employees and others acting for it) would be amenable to the High Court’s original jurisdiction under that section, even though that GBE is not amenable to review under the AD(JR) Act. 4.51. The Council has previously expressed its view that the ambit of the AD(JR) Act should, as far as possible, parallel the ambit of the High Court’s constitutionally prescribed judicial review jurisdiction, and has already made a number of recommendations accordingly.130 They include amending the AD(JR) Act jurisdiction to include jurisdiction to review decisions of an administrative character made’ or proposed to be made by an officer of the Commonwealth under a non-statutory scheme or program, the funds of which are authorised by an appropriation made by the Parliament for the purpose of that scheme or

130 Administrative Review Council Report to the Attorney-General - Report No 32 - Review of the Administrative Decisions (Judicial Review) Act: The Ambit of the Act Australian Government Publishing Service, Canberra, 1989.

47

program.131 The effect of this recommendation is that decisions made:

• by an officer of the Commonwealth; and • under a non-statutory scheme that is funded out of monies appropriated by

Parliament specifically for the purpose of that scheme, would be subject to judicial review under the AD(JR) Act. 4.52. The Council notes that, if implemented, the AD(JR) Act would then extend to provide for review of decisions:

• made by officers of GBEs who are within the definition of ‘officer of the Commonwealth’; and

• made by the relevant person in her or his capacity as an officer of the Commonwealth.

As already noted, it is unlikely that a GBE would itself be found to be an officer of the Commonwealth.132 Transitional arrangements 4.53. Because jurisdiction under the AD(JR) Act attaches to types of decisions rather than decisions of particular types of bodies, it is not necessary to make special provision for bodies which cease to be GBEs between the making of the decision and an application for judicial review. The Council considers that if a GBE makes a decision that is subject to AD(JR) Act review, the fact that since the making of the decision the constitution of the GBE has changed (for example, it has been privatised) should not affect the availability of review. In any event, the Council notes that this issue is unlikely to arise in practice, not only because of the relatively limited scope for AD(JR) Act review of decisions of GBEs, but also because applications for review under the AD(JR) Act must generally be made within a limited time period.133 4.54. In relation to decisions made by ‘officers of the Commonwealth’ (see the recommendation at paragraph 4.51 above), the Council recommends that the issue of whether a person is an officer of the Commonwealth should be determined having regard to the circumstances at the time the decision was made. AAT Merits Review 4.55. The Administrative Appeals Tribunal (the AAT) provides independent review on the merits of the exercise of statutory discretions. Consistent with the principles outlined earlier in this Chapter, the Council considers that decisions made by a GBE under an enactment, which relate to the commercial activities of a GBE in a competitive market, should not be subject to independent merits review by the AAT. 131 Administrative Review Council Report to the Attorney-General - Report No 32 - Review of the Administrative Decisions (Judicial Review) Act: The Ambit of the Act Australian Government Publishing Service, Canberra, 1989 at 36, 40-41. 132 See Chapter Three at paragraph 3.48. 133 Section 11 of the Administrative Decisions (Judicial Review) Act 1977 sets out the requirements for making an application for an order of review under the Act. The time for making an application will vary according to the circumstances of the case, but most time limits are set as being within twenty-eight days of the occurrence of a given event (such as the day on which a document setting out the decision is furnished to the applicant).

48

4.56. The Council notes that the AAT’s jurisdiction to review a decision made under an enactment is not conferred directly by the Administrative Appeals Tribunal Act 1975 (the AAT Act) itself, but by the Act under which the decision is made. Accordingly, in order to implement the general principles in relation to the AAT merits review, amendment of the various Acts under which relevant decision might be made would be required. The Council notes, however, that in practice GBEs will not ordinarily exercise statutory discretions in the course of undertaking commercial activities.134 Although a GBE may, in the course of its commercial activities, be required to fulfil statutory obligations of general application (for example, accounting and reporting obligations under the Corporations Law), or to make commercial decisions where the ultimate (but not immediate) source of the decision-making power is statutory, these decisions are not subject to AAT merits review.135 4.57. Of course, GBEs may on occasions exercise statutory decision-making powers that are subject to AAT merits review. One example arises under the Safety Rehabilitation and Compensation Act 1988, where the decision of a relevant Commonwealth authority as to an employee’s ability to undertake a rehabilitation program is subject to merits review. This is discussed in Chapter Three at paragraphs 3.60-3.61. In these cases, where an Act of the Commonwealth Parliament confers upon the decision-making body the special statutory decision-making functions, it is appropriate that the decision be subject to merits review if the decision is otherwise appropriate for merits review according to the Council’s guidelines. These decisions almost invariably relate to the exercise of administrative discretions according to statutory criteria, rather than commercial or business discretions.

134 See Chapter Three at paragraph 3.59. 135 The AAT has jurisdiction only to review decisions in respect of which application is made to it under an enactment: subsection 25(4) Administrative Appeals Tribunal Act 1975. Further, subsection 25(1) that Act provides that the AAT has jurisdiction to review decisions made in the exercise of powers conferred by an enactment, where the enactment expressly provides for those decisions to be subject to merits review. It has been held that the AAT has no jurisdiction to review decisions where no enactment empowers the making of the application to the Tribunal: Re Qantas Airways Ltd and Deputy Commissioner of Taxation (WA) (1979) 2 ALD 261. Further, decisions in the judicial review area have indicated that the courts will require a fairly direct nexus between a decision and the statutory decision-making power before a commercial decision of a GBE will be held to be a decision made “under an enactment”: see the cases referred to in Chapter Three at paragraphs 3.43-3.44. Although the jurisdictional test for the AAT is different, it is likely that the Tribunal and the courts will require a similarly direct nexus before holding that the commercial decision of a GBE is made in the exercise of powers conferred by an enactment. Indeed, as noted above at paragraph 4.56, this issue is unlikely to arise in practice, as GBEs do not exercise statutory discretions in the course of undertaking commercially competitive activities.

49

APPENDIX A

ADVERTISEMENT: PUBLICATION OF THE COUNCIL’S DISCUSSION PAPER Reproduced below is the advertisement that appeared in the Weekend Australian on 6 March 1993, advertising the publication and availability of the Council’s discussion paper on the Government business enterprises project.

50

APPENDIX B

PERSONS AND ORGANISATIONS WHO MADE SUBMISSIONS Submissions were received from the following persons and organisations: AeroSpace Technologies of Australia Limited

Australian Archives

Professor Enid Campbell

Civil Aviation Authority

Department of the Arts and Administrative Services

Department of Finance

Department of Industrial Relations

Department of Primary Industries and Energy

Department of Transport and Communications

Ron Fraser

Professor John Goldring

Law Council of Australia

Law Institute of Victoria

Law Society of the Australian Capital Territory

Law Society of South Australia

Medibank Private

Mervyn Morris

Pipeline Authority

Chris Shanahan

Snowy Mountains Hydro-Electric Authority

Telecom

Trade Practices Commission

51

APPENDIX C

BACKGROUND TO COMMONWEALTH ADMINISTRATIVE LAW

This appendix provides background information on Commonwealth administrative law. C.1. Prior to the reforms of administrative law that commenced in the mid-1970s, there were two principal methods for reviewing government action: review by Parliament, and court review (or ‘judicial review’) of the legality of government decisions. C.2. Each of these methods had significant shortcomings. The effectiveness of review by Parliament rests on the notion of ministerial responsibility. That is, a member of Parliament is able to take up the case of a constituent affected by the decision of a Minister or a Minister’s department, and either question the responsible Minister about the decision in the Parliament, or write to that Minister seeking clarification of the decision or further information about it. However, whether a constituent’s concerns are adequately addressed may depend upon a number of factors outside the constituent’s control, such as: • the political implications of the issue - a Member of Parliament may be less inclined to

pursue an issue actively if it has no political significance; • in practice, a Member of Parliament can do little more than urge the Minister to examine

the matter - the decision cannot generally be overturned by Parliament except by the passage of legislation;

• the inability of the political process to deal adequately with the growth in potential complaints by persons affected by government decision making.

C.3. In 1971, the Kerr Committee Report136 noted limitations to the effectiveness of Parliamentary review of government actions. The Committee said:

Parliamentary procedures and ministerial responsibility provide a valuable safeguard to the rights of citizens. Parliamentary question time, representations by Members of Parliament and perhaps the activities of Parliamentary Committees provide a means whereby the aggrieved citizen can, in some cases, obtain relief. However, Parliament through its own procedures is unable to deal with all cases in which a citizen feels aggrieved. Furthermore, the success of such parliamentary procedures and representations depends on the administration conceding that it has erred. They do not provide any means whereby the administrative decision is subjected to independent review.137

136 Commonwealth Administrative Review Committee Report Australian Government Printing Office, Canberra, 1971. 137 Commonwealth Administrative Review Committee Report Australian Government Printing Office, Canberra, 1971, at paragraph 363.

52

C.4. The power of the courts to review actions of the Commonwealth Government arises under the common law and the Constitution. The Constitution provides that the High Court has original jurisdiction to hear matters in which a writ of mandamus or prohibition or an injunction is sought against an officer of the Commonwealth.138 Review by the courts of a government decision, known as judicial review, provides a means by which a person affected by the decision can have the legality or lawfulness of the decision checked: that is, whether the decision was made according to law and without exceeding the powers of the decision maker. C.5. However, there are several limitations on the effectiveness of judicial review:

• when undertaking judicial review of a decision, a court may only concern itself with the question of whether the decision was made according to law and without exceeding the decision-maker’s powers - the court cannot concern itself with the merits of the decision (that is, with the issue of whether the decision, although made according to law, was the preferable decision to make in all of the circumstances);

• at common law, a person seeking judicial review of a decision must ask the court for the appropriate remedy, the remedies available on judicial review have complicated procedural rules, and different rules as to the sort of interest in the decision that a person must have before being able to obtain that remedy from the court; and

• judicial review may be quite expensive. C.6. The Kerr Committee Report made the following comments about judicial review at common law:

It is generally accepted that this complex pattern of rules as to appropriate courts, principles and remedies is both unwieldy and unnecessary. The pattern is not fully understood by most lawyers; the layman tends to find the technicalities not merely incomprehensible but quite absurd. A case can be lost or won on the basis of choice of remedy and the non-lawyer can never appreciate why this should be so. The basic fault of the entire structure is, however, that review cannot as a general rule, in the absence of special statutory provisions, be obtained ‘on the merits’ - and this is usually what the aggrieved citizen is seeking.139

C.7. Prior to the reforms of the mid-1970s, a number of specialist tribunals conducted merits review of government decision making in a range of areas. These tribunals included the Board of Appeal established under the Income Tax Assessment Act 1922, Boards of Inquiry established under the Commonwealth Public Service Act 1902, and War Pensions Entitlement Appeal Tribunals established under the Australian Soldiers Repatriation Act 1920. These tribunals provided citizens affected by decisions within their respective jurisdictions with a mechanism for obtaining merits review of those decisions. However, there were several problems with this ‘system’. These included a tendency to create specialist tribunals to undertake review of discrete areas of government decision making, inconsistent practices

138 Constitution, section 75(v). 139 Commonwealth Administrative Review Committee Report Australian Government Printing Office, Canberra, 1971, at paragraph 58.

53

and procedures for hearing cases, and lack of a clear, consistently-applied principle as to which decisions could be subject to tribunal review. Further, the High Court has interpreted the separation of powers required by the Constitution to mean that an administrative tribunal could not finally determine questions of law that arise in matters coming before it.140 This places restrictions on the type of bodies that could be established to review administrative decisions, and the jurisdiction of such bodies. C.8. The Kerr Committee Report commented on the system of tribunal review:

...The Commonwealth Parliament has, of course, recognised the need for review of administrative decisions and has made provision for the review of many decisions by specialist tribunals and in some cases by a court ...However, at the present time review of administrative decisions by a special tribunal on appeal is by no means a general rule, for in the vast majority of instances no provision is made by Commonwealth legislation for an appeal on the merits from an administrative decision to a special tribunal or a court. In those instances in which a citizen has no right of appeal to a tribunal or a court against a decision which is adverse to him, his legal right to a review of that decision is restricted for he must be able to bring his case within the confines of the prerogative writs or within the scope of the remedies by way of declaratory order or injunction. As will be seen, the limitations attaching to these traditional procedures are significant with the consequence that they do not offer a comprehensive means of review.141

C.9. The Kerr Committee Report was tabled in the Parliament in October 1971. Key recommendations of the report included:

• the establishment of a general administrative review tribunal for the review on the merits of government decisions;

• the appointment of a general counsel for grievances (an ombudsman); • reform of the judicial review system and, in particular, simplification of the

procedures for applying for remedies on judicial review and the creation of a specialist review court.142

C.10. The Government subsequently referred individual recommendations of the Kerr Committee for further consideration by two committees: the Bland Committee143 and the Ellicott Committee.144

140 R v Kirby; ex parte Boilermakers’ Society of Australia (1956) 94 CLR 254. 141 Commonwealth Administrative Review Committee Report Australian Government Printing Office, Canberra, 1971, at paragraph 17. 142 Commonwealth Administrative Review Committee Report Australian Government Printing Office, Canberra, 1971, at 112-117. 143 This Committee published two reports: Committee on Administrative Discretions Interim Report, Government Printer of Australia, 1973 and Committee on Administrative Discretions Final Report of the Committee on Administrative Discretions The Dominion Press, North Blackburn, 1973. 144 Committee of Review of Prerogative Writ Procedure Report (Parliamentary Paper No. 56 of 1973).

54

C.11. Not all of the recommendations of the Kerr Committee Report were ultimately adopted by the Government. Further, although the Kerr Committee Report was an important impetus for administrative law reform in Australia, not all aspects of the administrative law package can be traced back to recommendations of the report: for example, the Kerr Committee made no recommendations concerning the introduction of freedom of information legislation. Also, the administrative law package is intended to complement, but not replace, the mechanisms for review that existed prior to the introduction of the administrative law package (such as review by the Parliament and judicial review at common law and under the Constitution).

COMMONWEALTH OMBUDSMAN

C.12. The Ombudsman is an independent person appointed to: • investigate complaints about the administrative actions of Commonwealth

government departments and prescribed authorities; and • improve the quality of public administration by encouraging agencies to remedy

identified defective administration. C.13. In 1971, the Kerr Committee recommended the establishment of a general counsel for grievances.145 In 1973, the Bland committee recommended the establishment of an Ombudsman.146 Pursuant to these recommendations, the Ombudsman Act 1976 (the Ombudsman Act) was enacted, and the Commonwealth Ombudsman’s Office opened on 1 July 1977. C.14. In its Report on the Office of the Commonwealth Ombudsman, the Senate Standing Committee on Finance and Public Administration described, at page 12, the objectives of the Ombudsman:

The traditional ombudsman role assigned to the Commonwealth Ombudsman is more concerned with the resolution of particular grievances than with systematic reform of the administration or with coordination of the whole of the system of administrative review. The main focus of the Ombudsman’s operations in the core jurisdictions of the office can be summarised as: • processing individual complaints, through contact, frequently informal,

with the agencies that are the subject of complaints; • transmission of information in both directions between complainants and

the agencies about which they have complained; • attempting to bring complaints to a resolution in which both sides agree on

the facts of the complaint and on the fairness of whatever final decision is made by the agency following the Ombudsman’s intercession.

145 Commonwealth Administrative Review Committee Report Australian Government Printing Office, Canberra, 1971, at paragraph 313. 146 Committee on Administrative Discretions Interim Report Government Printer of Australia, Canberra, 1973, at 14-15.

55

Scope of the Ombudsman Act 1976 Functions of the Ombudsman C.15. Subsection 5(1) of the Ombudsman Act sets out the primary functions of the Ombudsman:

5. (1) Subject to this Act, the Ombudsman: (a) shall investigate action, being action that relates to a matter of administration, taken either before or after the commencement of this Act by a Department, or by a prescribed authority, and in respect of which a complaint has been made to the Ombudsman; and (b) may, or his or her own motion, investigate any action, being action that relates to a matter of administration, taken either before or after the commencement of this Act by a Department, or by a prescribed authority; and (c) with the consent of the Minister, may enter into an arrangement under which the Ombudsman will perform functions of an Ombudsman under an Ombudsman scheme established in accordance with the conditions or licences or authorities granted under an enactment.

C.16. Investigations are carried out impartially and independently to determine: • whether the action or decision complained about:

- was unreasonable, unjust, or oppressive or improperly discriminatory; - appears to be contrary to law; - was in accordance with a rule of law, legislative provision or practice, but the rule

was unreasonable, unjust, oppressive or improperly discriminatory; or - was in all the circumstances wrong;

• whether, in the course of the taking of action, a discretionary power has been exercised for an improper purpose or on irrelevant grounds.147

C.17. The Commonwealth Ombudsman’s annual report for 1992-93148 describes the purpose of an Ombudsman investigation:

The purpose of an Ombudsman investigation is to determine whether an action or decision, or the process associated with taking an action or decision, is defective. To achieve this, I am given wide powers under section 9 of the Ombudsman Act to question officials and other persons, to inspect documents, and to enter Commonwealth premises. In most cases, agencies cooperate with the Ombudsman’s request and the use of formal powers are not necessary...

147 Ombudsman Act 1976, subsection 15(1); Commonwealth Ombudsman Annual Report 1992-93 Australian Government Publishing Service, Canberra, 1993. 148 Commonwealth Ombudsman Annual Report 1992-93 Australian Government Publishing Service, Canberra, 1993.

56

If investigation reveals that there was defective administration, I may, under section 15 of the Ombudsman Act, recommend to the agency concerned that it take appropriate corrective measures, such as providing a remedy for the affected person. I have no power, however, to overturn an agency’s decision or to require it to substitute another.

If an agency declines to accept my recommendations, I may take the matter further by reporting to the Prime Minister under section 16 and to Parliament under section 17 of the Ombudsman Act.

I also have a legislative discretion to make public statements on a matter in certain circumstances.149

Jurisdiction C.18. There are two main limitations on the Ombudsman’s jurisdiction. “A prescribed authority” C.19. Section 5 of the Ombudsman Act authorises the Ombudsman to investigate action taken by a Department, or by a ‘prescribed authority’. The term ‘prescribed authority’ is defined in subsection 3(1) of the Ombudsman Act to extend to: • a body, whether incorporated or not, that is established under an enactment for a public

purpose, other than: - an incorporated company or association; - a body that has the power to take evidence on oath or affirmation and that may be

constituted by a justice or judge of a court created by the Commonwealth Parliament;

- a body declared by the Regulations not to be a prescribed authority; and - a Royal Commission;

• certain Commonwealth controlled companies; • certain executive action of a court or tribunal; • a body corporate or an unincorporated body established by the Governor General or by a

Minister and declared by the Regulations to be a prescribed authority; • a person holding an office established by an enactment, other than:

- the chief executive officer of a court or tribunal or a person who, for the purposes of the Act, is to be taken to be a member of the staff of the chief executive officer of a court or tribunal; or

- a person who is not to be taken to be a prescribed authority for the purposes of the Act.150

149 Commonwealth Ombudsman Annual Report 1992-93 Australian Government Publishing Service, Canberra, 1993, at 2. 150 The regulations list seven persons who are not to be taken to be a prescribed authority for the purposes of the Act. Subsection 3(3) provides that a person shall not be taken to be a prescribed authority by virtue of holding, or performing the duties of: an office whose duties the person performs as an employee of a department or as a member of a prescribed authority, an office as a member of a body, or an office established by an enactment for the purposes of a prescribed authority. The seven persons listed in the regulations are the Auditor-General, the Chairman of the Defence Force Remuneration Tribunal, the Chairman of the Remuneration Tribunal, the Christmas Island Arbitrator, the Director-General of Security, the Inspector-General of Intelligence and Security and the President of the Security Appeals Tribunal.

57

C.20. Subsection 5(2) of the Ombudsman Act provides that the Ombudsman is not authorised to investigate certain action, including: • action taken by a Minister; • action that constitutes proceedings in Parliament for the purposes of section 16 of the

Parliamentary Privileges Act 1987; • action taken by any body or person with respect to persons employed in the Australian

Public Service or the service of a prescribed authority, being action taken in relation to that employment, including action taken with respect to the promotion, termination or appointment or discipline of a person so employed or the payment of remuneration to such a person; or action taken by a justice or Judge of a court created by the Parliament.151

matter of administration

, and its

ight e

e other, in the 1976 Victorian Supreme Court case of Booth v Dillon (No 2),153 une J said:

ts between what is involved in policy and what is involved

in administration.154

ion “matter of administration” nor of the scope of the jurisdiction conferred by the Act.155

A C.21. The phrase "matter of administration" is not defined in the Ombudsman Actmeaning has not yet been considered by a federal court. The Victorian courts have interpreted a similar phrase in Victoria’s Ombudsman Act 1973 to extend to actions that mbe regarded as reasonably incidental to the performance of executive or administrativfunctions.152 Although other cases have held that the phrase contemplates a division between administrative actions on the one hand and judicial, quasi-judicial and policy matters on thD

[no] demarcation exis

C.22. The Commonwealth Ombudsman has not taken a restricted view of the express

151 The other action mentioned in subsection 5(2) of the Ombudsman Act 1976 in respect of which the Ombudsman is not authorised to investigate is:

• action taken by the chief executive officer of a court; • action taken by a magistrate or coroner for the Australian Capital Territory, the Territory of the Christmas Island or the Territory of Cocos (Keeling) Islands or by a person who holds office as a magistrate in a State or the Northern Territory in the performance of the functions of a magistrate conferred on him or her by or under any Act; or • action taken by a Department or by a prescribed authority with respect to the appointment of a person to an office established by or under an enactment, not being an office in the Australian Public Service or an office in the service of a prescribed authority.

152 Booth v Dillon (No 3) [1977] VR 143; Glenister v Dillon (No 2) [1977) VR 151. 153 [1976] VR 434. 154 Booth v Dillon (no 2) [1976] VR 434 at 439. 155 Ombudsman Annual Report 1986-87 Australian Government Publishing Service, Canberra, 1987, at Chapter Four; Commonwealth and Defence Force Ombudsman Annual Report 1989-90 Australian Government Publishing Service, Canberra, 1990, at 13-14; and Commonwealth and Defence Force Ombudsman Annual Report 1990-1991 Australian Government Publishing Service, Canberra, 1991, at 8-9.

58

FREEDOM OF INFORMATION

Background and Objectives C.23. Prior to the commencement of the Freedom of Information Act 1982 (FOI Act) there was no general right to gain access to government documents and information. Such documents and information were generally released only at the discretion of the Government. The FOI Act provides a general right of access to documents held by the Government, subject to several specified exemptions. C.24. The significance of freedom of information legislation was described by the Electoral and Administrative Review Commission in its report, Report on Freedom of Information FOI legislation is a means of achieving greater public participation in the decision-making processes of government. It is also a means of ensuring that government agencies are more accountable for decisions that they make, particularly in respect of decisions affecting individual rights or interests, and that such decisions are based upon proper information.156 C.25. As the objects of the FOI Act make clear, the Act attempts to balance the interests in increased government openness and accountability with considerations of cost and confidentiality. The objects of the Act are stated in subsection 3(1) of the Act as follows:

The object of the Act is to extend as far as possible the right of the Australian community to access to information in the possession of the Government of the Commonwealth by -

(a) making available to the public information about the operations of departments and public authorities and, in particular, ensuring that rules and practices affecting members of the public in their dealings with departments and public authorities are readily available to persons affected by those rules and practices; and

(b) creating a general right of access to information in documentary form in the possession of Ministers, departments and public authorities, limited only by exceptions and exemptions necessary for the protection of essential public interests and the private and business affairs of persons in respect of whom information is collected and held by departments and public authorities; and

156 Electoral and Administrative Review Commission Report on Freedom of Information Electoral and Administrative Review Commission, Brisbane, December 1990, at 11.

59

(c) creating a right to bring about the amendment of records containing personal information that is incomplete, incorrect, out of date or misleading.

C.26. On 8 July 1994 the Acting Attorney-General, the Hon Duncan Kerr MP, requested the Council in conjunction with the Australian Law Reform Commission to conduct an inquiry into the operation and scope of the FOI Act. The terms of reference for the inquiry are:

• whether the basic purposes and principles of the freedom of information legislation in Australia (including the external territories) ...have been satisfied and whether they require modification;

• whether the Act should be amended to achieve those purposes better, in particular: - whether the objects clause fully reflects the purpose of the Act; - whether the ambit of the application of the Act should be extended to cover:

- private sector bodies; - Government Business Enterprises;

- to what extent the existing exemption provisions of the Act should be amended to improve public access to government held information, in particular:

- whether any existing ground for exemption should be removed or amended; - which exemptions, if any, should be subject to a public interest test and

whether that test should be standardised for each exemption to which it applies; and

- whether conclusive certificates are justified or whether they should no longer be provided for;

- whether the interest of the applicant can be a relevant consideration in granting access to the applicant’s own personal information;

- the appropriateness of, and need for, the existing regime of fees and charges; - whether external review of decisions should be conducted by a specialist tribunal

or an independent person (for example, an Information Commissioner) and, if so, whether that person should be the Privacy Commissioner; and

- the need, if any, for alternative mechanisms for the disclosure of particular categories of information, in particular, environmental information;

• whether the structure and wording of the Act can be simplified to make it more easily understood by the public; and

• any related matter. C.27. A joint steering committee has been established to run the inquiry. An issues paper was published in September 1994.157 The final report of the inquiry will be delivered to the Attorney-General by December 1995.

157 Administrative Review Council, Australian Law Reform Commission Freedom of information (issues Paper) Australian Law Reform Commission, Sydney, 1994 (ALRC Ref: ALRC IP 12).

60

Scope of the FOI Act Persons and bodies bound by obligations under the Act C.28. Section 11 of the FOI Act provides that every person has a legally enforceable right to obtain access in accordance with the Act to:

• a document of an "agency" (other than an exempt document); or • an official document of a Minister, other than an exempt document.

C.29. Section 11 also provides that a person’s right of access is not affected by any reasons the person gives for seeking access, or the agency’s or Minister’s belief as to what are his or her reasons for seeking access. C.30. “Agency” is defined in section 4 of the FOI Act to include a Department of the Australian Public Service or a “prescribed authority”. “Prescribed authority” is defined in section 4 to include:

• a body corporate or an unincorporated body established for a public purpose by, or in accordance with the provisions of, an enactment or an Order-in-Council, other than: - an incorporated company or association; - the legislative assemblies of the Australian Capital Territory, the Northern

Territory and Norfolk Island, and the Executive Council of the Northern Territory;

- a Royal Commission; • any other body, whether incorporated or not, declared by the regulations to be a

prescribed authority for the purposes of the Act, being- - a body established by the Governor-General or a Minister; or - an incorporated company or association over which the Commonwealth is in a

position to exercise control.158 C.31. The Freedom of Information (Miscellaneous Provisions) Regulations lists bodies that, for the purpose of the definition of ‘prescribed authority’ are declared to be prescribed authorities. Two bodies are listed:

• Australian and Overseas Telecommunications Corporation Limited; and • National Media Liaison Service.

Exemptions from the scope of the Act C.32. Section 7 of the FOI Act provides various ways in which an agency may be exempted from the scope of the Act. They are set out below.

• Subsection 7(1) of the Act provides that a body specified in Part I of Schedule 2, and a person holding and performing the duties of an office specified in the schedule, are to be deemed not to be prescribed authorities for- the purposes of the Act. This means that unless such a body falls within the definition of ‘agency’ in section 4, it will be

158 The definition of ‘prescribed authority’ also extends to include a person holding or performing the duties of an appointment declared by the regulations to be an appointment the holder of which is a prescribed authority, being an appointment made by the Governor-General or a Minister, other than an appointment made under an enactment or an Order-in-Council.

61

excluded from the ambit of the Act. Part I of Schedule 2 lists a number of bodies that are deemed to be exempt agencies. They include the Australian Industry Development Corporation, the Australian National Railways Commission, the Commonwealth Trading Bank and the Pipeline Authority.159

• Subsection 7(2) of the Act provides that the bodies and Departments specified in Part II of Schedule 2 are exempt from the operation of the Act in relation to documents referred to in that Schedule in relation to them. Part II of Schedule 2 lists a number of bodies, and documents, in respect of which those bodies are exempt from the operation of the Act. For example, bodies exempt in respect of documents relating to their ‘commercial activities’ (the definition of this term is discussed below) include the Aboriginal and Torres Strait Islander Commercial Development Corporation, the Albury-Wodonga Development Corporation, the Attorney-General’s Department, the Australian Government Solicitor, the Australian Pork Corporation, the Australian and Overseas Telecommunications Corporation Limited, the Australian Postal Corporation, the Department of the Treasury,160 the Federal Airports Corporation,161 and the Health Insurance Commission.162

159 The full list of exempt agencies is set out in Part I of Schedule 2 of the FOI Act. It is as follows: • Aboriginal Land Councils Trusts; • Auditor-General; • Australian Industry Development Corporation; • Australian National Railways Commission; • Australian Secret Intelligence Service; • Australian Security Intelligence Organisation; • Commonwealth Bank Officers Superannuation Corporation; Commonwealth Trading Bank; Commonwealth

Savings Bank; Commonwealth Development Bank; • Housing Loans Insurance Corporation; • Inspector-General of Intelligence and Security; • National Debt Commission; • National Labour Consultative Council; • Office of National Assessments; • Pipeline Authority. 160 The exemption is in relation to documents in respect of activities of the Australian Loan Council and in respect of the commercial activities of the Royal Australian Mint. 161 The exemption is in relation to documents in respect of the Federal Airport Corporation’s commercial activities and in respect of determinations of aeronautical charges under the Federal Airports Corporation Act 1986. 162 Other bodies listed in Part II of Schedule 2 are: • the Australian Broadcasting Corporation, in respect of its program material; • the Australian Trade Commission, in relation to documents concerning the carrying out, in whole or in part,

of overseas development projects; • the Department of Defence, in relation to documents in respect of activities of the Defence Signals Directorate

and the Joint Intelligence Organisation; • the Export Finance and Insurance Corporation, in relation to documents concerning anything done by it

under Part 4 or S of the Export Finance and Insurance Corporation Act 1991; • the National Health and Medical Research Council, in relation to documents in the possession of members of

the National Health and Medical Research Council who are not officers, or employees, within the meaning of the Public Service Act 1922;

• the Reserve Bank of Australia, in relation to documents in respect of its banking operations (including individual open market operations and foreign exchange dealings) and in respect of exchange control matters; and

• the Special Broadcasting Service Corporation, in relation to its program material.

62

• Subsection 7(2AA) of the Act provides that a body corporate established by or under an Act specified in Part III of Schedule 2 is exempt from the operation of the Act in relation to documents in respect of the ‘commercial activities’ of the body corporate. Part III of Schedule 2 lists thirteen such Acts.163

• Subsection 7(2A) of the Act provides that an agency is exempt from the operation of the Act in relation to a document that has originated with, or has been received from, certain listed security bodies (for example, the Australian Secret Intelligence Service and the Australian Security Intelligence Organisation).

C.33 Some of these exemptions use the term ‘commercial activities’. That term is defined to mean:164

• activities carried on by an agency on a commercial basis in competition with persons other than governments or authorities of governments; or

• activities carried on by an agency that may reasonably be expected in the foreseeable future to be carried on by an agency on a commercial basis in competition with persons other than governments or authorities of governments.

Obligations imposed by the Act C.34. The FOI Act creates for every person a right to obtain access to non-exempt documents of agencies and non-exempt official documents of Ministers, irrespective of the person’s reasons for seeking access.165 C.35. While the FOI Act requires that an applicant’s request for access must be in writing and must contain information that will enable the identification of the document, an obligation is also cast on the agency to take reasonable steps to assist the applicant to make the request in a manner that complies with the Act.166 A document is available unless it falls into any one or more of the exemptions specified in the FOI Act. The categories of exemptions include:167

• documents affecting national security, defence or international relations; • documents affecting relations with States; • Cabinet documents;

163 The Acts listed are: Australian Horticultural Corporation Act 1987, Australian Meat and Live-stock Corporation Act 1977, Australian Wine and Brandy Corporation Act 1980, Australian Wool Corporation Act 1980, Australian Wool Realisation Commission Act 1991, Dairy Produce Act 1986, Fishing Industry Research and Development Act 1987, Honey Marketing Act 1988, Horticultural Research and Development Act 1987, Meat Research Corporation Act 1985, Primary Industries and Energy Research and Development Act 1989, Rural Industries Research Act 1985, and the Wheat Marketing Act 1989. 164 Freedom of Information Act 1982, subsection 7(3). 165 Freedom of Information Act 1982, section 11. 166 Freedom of Information Act 1982, subsection 15(2). 167 Freedom of Information Act 1982, sections 32-47.

63

• Executive Council documents; • internal working documents, including documents containing opinions or advice

prepared in the course of the deliberative processes involved in the functions of an agency;

• documents affecting enforcement of law and protection of public safety; • documents affecting the financial or property interests of the Commonwealth; • documents affecting personal privacy; • documents subject to legal professional privilege; • documents relating to business affairs, including documents that contain trade secrets

or any other information having a commercial value that would be destroyed if they were disclosed;

• certain documents relating to research; • documents affecting the national economy; • documents the release of which would be an actionable breach of confidence; and • documents the disclosure of which would be contempt of Parliament or contempt of

court. C.36. The FOI Act also creates a right to amend or annotate personal records. Where a person claims that a document of an agency, to which access has been provided, contains personal information about that person that is incomplete, incorrect, out of date or misleading, and the document has been used or is available for use by the agency, the person may apply to the agency for an amendment or annotation of that document.168

THE PRIVACY ACT 1988

General C.37. The Privacy Act 1988 (the Privacy Act) is concerned with aspects of the gathering, processing and dissemination of information about individuals. The Privacy Act establishes detailed Information Privacy Principles (IPPs) which govern the handling of personal information by Commonwealth Departments and agencies. In particular, section 16 of the Privacy Act requires that an ‘agency’ shall not ‘do an act, or engage in a practice’ that breaches an IPP. C.38. The Act also regulates the use of consumer credit information, and provides for the Privacy Commissioner (the Commissioner) to issue guidelines for the collection, storage and use and security of tax file number (TFN) information. The credit and TFN information rules apply to both private sector bodies and public bodies, including commercially competitive enterprises (regardless of whether publicly or privately owned). C.39. The Act establishes the office of the Privacy Commissioner. The Privacy Commissioner is empowered:

168 Freedom of Information Act 1982, sections 48-51E.

64

• to investigate an act or practice of an agency that may breach an IPP, and where the Commissioner considers it appropriate to do so, to endeavour, by conciliation, to effect a settlement of the matters that gave rise to the investigation; • to examine proposed enactments that would require or authorise acts or practices of

an agency that might interfere with the privacy of individuals; • in relation to tax file numbers, to investigate acts or practices of tax file number

recipients that may breach guidelines issued by the Commissioner; • in relation to credit reporting, to investigate an act or practice of a credit reporting

agency or credit provider that may constitute a credit reporting infringement. C.40. The Act also provides that an individual may complain to the Privacy Commissioner about an act or practice that may be an interference with the privacy of the individual, and for the Commissioner to investigate that complaint. Scope and application C.41. The scope and application of the general provisions of the Act are limited by two key phrases: “agency” and “act or practice”. C.42. “Agency” is defined in subsection 6(1) of the Act to include: • a Minister; • a department; • a body (whether incorporated or not) or a tribunal established or appointed for a public

purpose by or under a Commonwealth enactment, other than an incorporated company; • a body established or appointed by the Governor-General or by a Minister otherwise

than by or under a Commonwealth enactment. C.43. ‘Act or practice’ is defined by subsection 7(1) of the Act to include: • an act done or a practice engaged in by an agency, other than an agency specified in

Schedule 1 or Schedule 2 of the FOI Act;169 • an act done or a practice engaged in by an agency specified in Schedule 1 to the FOI Act

(being an act done, or a practice engaged in, in respect of a matter of an administrative nature);

• an act done, or practice engaged in, by an agency specified in Part II of Schedule 2 of the FOI Act, other than an act or practice in relation to a record in relation to which the agency is exempt from the operation of the FOI Act;

• except in relation to the IPPs and the performance of the Commissioner’s functions under section 27 of the Act (that is, in relation to interference with privacy), an act or practice by an agency specified in Schedule 2 to the FOI Act.

169 Schedule 1 of the Freedom of information Act 1982 lists courts and tribunals that are exempt from the FOI Act in respect of non-administrative matters, and Schedule 2 contains an extensive list of agencies that are either fully exempt from the Freedom of Information Act 1982, or exempt in respect of particular documents. Schedule 2 is noted above at paragraph C.32.

65

THE ARCHIVES ACT 1983

C.44. The Archives Act 1983 (the Archives Act) regulates public access to non-current Commonwealth Government records, and the management of current Commonwealth Government records. For the purposes of the Act, a ‘Commonwealth record’ includes a record that is the property of a Commonwealth institution.170 The phrase ‘Commonwealth institution’ is defined in subsection 3(1) to include an ‘authority of the Commonwealth’. That phrase is, in turn, broadly defined to include: • an authority, body, tribunal or organisation, whether incorporated or unincorporated,


or a law of a Territory other than the Northern Territory or Norfolk Island; - by the Governor General; or - by, or with the approval of, a Minister;

• the holder of a prescribed office under the Commonwealth; or • a prescribed company or association over which the Commonwealth is in a position to

exercise control. C.45. Regulation 2A of the Archives Regulations provides that the following companies are all prescribed companies for the purpose of the Regulations: • Australian and Overseas Telecommunications Corporation Limited; • a company that is a subsidiary of AOTC; • Commonwealth Funds Management Limited; • each company that is a subsidiary of Commonwealth Funds Management Limited. C.46. Principal obligations imposed by the Act include a qualified prohibition on the destruction or disposal, transfer of custody, transfer of ownership, or damage or alteration of Commonwealth records (section 24), and a requirement that all Commonwealth records in the open access period (that is, records over 30 years old)171 be made available for public access.

JUDICIAL REVIEW

Background and Objectives C.47. The rule of law assumes that the Government is, like citizens, subject to the law. The courts have jurisdiction at common law to determine, in actions properly brought before them, whether the Government’s purported exercise of a power is authorised by law. If the power upon which the decision purports to be made does not exist, or its scope has been exceeded, the purported exercise of the power is ultra vires and void. If a power is abused or

170 Archives Act 1983, subsection 3(1). 171 Section 37 of the Archives Act 1983 provides for the purposes of the Act, a record is in the open access period if a period of 30 years has elapsed since the end of the year ending on 31 December in which the record came into existence.

66

exercised unreasonably, or if the principles of procedural fairness apply and are not observed, the purported exercise of the power is unlawful and the courts can declare the action void and set it aside.172 This review jurisdiction of the courts is referred to as judicial review. C.48. However, the common law rules governing the procedures and remedies for judicial review of administrative decisions and actions were thought to be arcane and extremely technical, having developed over many centuries on a case by case basis. In particular, the common law developed a remedy-orientated approach to judicial review. The Administrative Decisions (Judicial Review) Act 1977 (the AD(JR) Act) was enacted to overcome these difficulties. In the Second Reading Speech on the Bill, the Hon R J Ellicott QC, then Attorney-General, said:

What the present Bill seeks to do is to establish a single simple form of proceeding in the Federal Court of Australia for judicial review of Commonwealth administrative actions as an alternative to the present cumbersome and technical procedures for review by way of prerogative writ, or the present actions for a declaration or injunction.173

C.49. The remedies provided in the AD(JR) Act largely replicated those already existing in the common law, but were made more easily accessible in most cases.174 L J Curtis summarised the advantages of the AD(JR) Act in these terms:

The significant contribution made by the Judicial Review Act is that the grounds of review can be considered independently of the remedy. Traditional review has been seen as review by way of prerogative writ, injunction or declaration, and the substantive law has developed around the remedies... The nature of the remedy still dominates much thinking about judicial review, and has left its legacies in debates on such matters as whether an error of law is to be regarded as jurisdictional or non-jurisdictional in a particular case... The major step taken by the Judicial Review Act is that it has done away with the need to start from the character of the remedies sought. Of course, the effect of the remedy is still significant, but the court is free to consider the substance of the grievance before it turns its attention to the appropriate remedy. The focus has moved from the remedies sought or the procedure necessary to obtain that remedy to the substantive law involved, to the question whether a particular ground of review exists. Thus, the Act has not merely brought about a simplification of procedures.175

C.50. The common law developed special public law remedies because the available private law remedies were not capable of adequately dealing with unlawful administrative action. For example, where a government agency exceeded its power a remedy was required that would invalidate the action taken. The development of special public law remedies was also needed because, historically, the courts refused to award some kinds of relief available

172 O. Hood Phillips and P Jackson O. Hood Phillips’ Constitutional and Administrative Law -Sixth Edition Sweet and Maxwell, London, 1978 at 595-596. 173 Second Reading Speech of the Administrative Decisions (Judicial Review) Bill 1977, Parliamentary Debates, 30th Parliament, 2nd Session at 1394-96 on 28 April 1977. 174 L J Curtis ‘Judicial Review of Administrative Acts’ (1979) 53 Australian Law Journal 530. 175 L J Curtis ‘Judicial Review of Administrative Acts’ (1979) 53 Australian Law Journal 530, at 531.

67

under private law against the Government even when it had acted unlawfully. For example, an award of damages was not available to people who were harmed when the Government exceeded its own powers. Thus, public law remedies complemented private law remedies. C.51. Wade describes the development of prerogative remedies in the following terms:

... [prerogative remedies] are remedies which, if not always designed from the first for the control of governmental duties and powers, have long been in use for that purpose especially. Their hallmark is that they are granted at the suit of the Crown, as the title of every case indicates. They are ‘prerogative’ because they were originally available only to the Crown and not to the subject. By obtaining orders of the court in the form of mandamus, certiorari or prohibition, the Crown could ensure that public authorities carried out their duties, and that inferior tribunals kept within their proper jurisdiction. These were essentially remedies for ensuring efficiency and maintaining order in the hierarchy of courts, commissions and statutory authorities of all kinds.176

C.52. The AD(JR) Act also effected a substantial reform to the rights of individuals entitled to judicial review by providing a right to have the decision maker provide reasons for the disputed decision. There is no general rule of the common law, or principle of natural justice, requiring reasons to be given for administrative decisions.177 The then Attorney-General explained the rationale behind this reform in his Second Reading Speech:

...a person who is aggrieved by a decision usually has no means of compelling the decision-maker to give his reasons for the decision or to set out the facts on which the decision is based. Lack of knowledge on these matters will often make it difficult to mount an effective challenge to an administrative decision even though there may be grounds on which that decision can be challenged in law. Accordingly, one of the principal elements of the present Bill is a provision that will require a decision-maker to give to a person who is adversely affected by his decision the reasons for that decision and a statement of findings on material questions of fact, including the evidence or other material on which those findings were based...

No longer will it be possible for the decision-maker to hide behind silence.178

176 HWR Wade Administrative Law (Sixth Edition) Clarendon Press, Oxford, 1988, at 616. 177 Public Service Board of NSW v Osmond (1986) 159 CLR 656. 178 Second Reading Speech of the Administrative Decisions (judicial Review) Bill 1977, Parliamentary Debates, 30th Parliament, 2nd Session at 1394-96 on 28 April 1977.

68

C.53. One objective of the requirement that decision makers provide reasons for their decisions is to make judicial review more accessible, by assisting members of the community affected by an administrative decision to understand the basis for the decision, and to make an informed decision whether to seek review of the decision. Further, by bringing decision making into the open, the obligation to provide reasons encourages better decision making and makes decision makers more accountable. C.54. Judicial review of .administrative actions is available in superior courts such as the High Court, the Federal Court of Australia and the Supreme Courts of the States and Territories. Scope of Judicial Review The grounds for obtaining Judicial Review C.55. The grounds for which judicial review is available under the AD(JR) Act broadly mirror the grounds for judicial review by the High Court and at common law. They are that: • a breach of the rules of natural justice has occurred; • procedures required by law to be observed were not observed; • the person who purported to make the decision did not have jurisdiction to make the

decision; • the decision was not authorised by the enactment in pursuance of which it was

purported to have been made; • the making of the decision was an improper exercise of power conferred; • the decision involved an error of law; • the decision was induced or affected by fraud; • there was no evidence or other material to justify the making of the decision; and • the decision was otherwise contrary to law. The Constitution C.56. Section 75 of the Constitution says, in part:

75. In all matters- (iii) in which the Commonwealth, or a person suing or being sued on behalf of the

Commonwealth, is a party: (v) in which a writ of Mandamus or prohibition or an injunction is sought against an

officer of the Commonwealth: the High Court shall have original jurisdiction. C.57. Thus, judicial review pursuant to the jurisdiction conferred on the High Court by section 75(v) of the Constitution is available against ‘an officer of the Commonwealth’. Decisions and actions of GBEs not susceptible to review under the AD(JR) Act may

69

nevertheless be subject to judicial review by the High Court179 and the Federal Court180 if the decision was made, or the action undertaken by an ‘officer of the Commonwealth’. That term has been interpreted broadly to include officers of public service departments, ministers and persons holding judicial office in the Commonwealth. However, the precise criteria for determining whether a person is an ‘officer of the Commonwealth’ have not been settled. Professor Lane has noted that the cases yield two definitions: • a person appointed, paid, controlled and removable by the Commonwealth; or • a person appointed by the Commonwealth to exercise some function of the

Commonwealth.181 C.58. Although the phrase ‘officer of the Commonwealth’ does place a limitation upon the availability of a writ of Mandamus or prohibition or an injunction in the High Court’s original jurisdiction under section 75(v), the High Court does have original jurisdiction in all matters in which the Commonwealth, or a person or body suing or being sued on behalf of the Commonwealth, is a party.182 This jurisdiction extends to cases in which the prerogative relief is sought.183 C.59. Finally it should be noted that by virtue of subsection 39B(1) of the Judiciary Act 1903, the Federal Court of Australia is also vested with original jurisdiction with respect to any matter in which a writ of mandamus or prohibition or an injunction is sought against an officer or officers of the Commonwealth (see below at paragraphs C.65-C.68). AD(JR)Act C.60. By subsection 5(1) of the AD(JR) Act, an application may be made to the Federal Court for judicial review by a person aggrieved by a ‘decision to which this Act applies’.184 That phrase is defined in subsection 3(1) of the AD(JR) .Act as follows:

“decision to which this Act applies” means a decision of an administrative character made, proposed to be made or required to be made as the case may be (whether in the exercise of a discretion or not) under an enactment, other than a decision by the Governor-General or a decision included in any of the classes of decisions set out in Schedule 1.

179 Constitution, section 75(v). 180 Judiciary Act 1903, section 39B. 181 P H Lane Lane’s Commentary on the Australian Constitution The Law Book Company Limited, Sydney, 1986 at 416; P H Lane Sixth Cumulative Supplement to Lane’s Commentary on the Australian Constitution The Law Book Company Limited, Sydney, 1994 at 183-184. 182 Constitution, section 75(iii). 183 See Chapter Three at paragraph 3.49. 184 Section 6 of the Administrative Decisions (Judicial Review) Act 1977 provides that an application for judicial review may be made for review of conduct for the purpose of making a “decision to which this Act applies”. Section 7 provides that an application for judicial review may be made in respect of the failure to make a decision, being a decision “to which this Act applies” and which a person has a duty to make.

70

C.61. Unlike judicial review under the Constitution, the availability of which is related to the nature of the decision-making body (‘officer of the Commonwealth’), judicial review under the AD(JR) Act is primarily related to the character and source of the decision-making power. C.62. The AD(JR) Act also imposes on decision makers a general obligation to give a statement of reasons for a decision to a person who requests such a statement and who is entitled under the Act to seek judicial review of the relevant decision.185 There are two major qualifications to this general obligation. First, the obligation to provide reasons for decisions applies only to decisions to which section 13 of the Act applies. Subsection 13(11) provides that decisions listed in Schedule 2 to the Act are not decisions to which section 13 of the Act applies. The categories listed in Schedule 2 include the decisions of a number of specified authorities in respect of their commercial activities. Therefore any decision that falls within Schedule 2 is not subject to the requirement to provide reasons. Second, section 13(A) of the AD(JR) Act provides that the obligation to provide reasons does not extend to certain categories of information. The categories of information listed in section 13(A) include: information that relates to the personal affairs or business affairs of a person, information that was supplied in confidence and information that was furnished in compliance with a duty imposed by an enactment. C.63. Section 9 of the AD(JR) Act limits the jurisdiction of State courts to undertake judicial review of Commonwealth administrative action. It provides that a State court does not have jurisdiction to undertake judicial review of a decision to which the AD(JR) Act applies, or of any other decision or order of an officer of the Commonwealth (‘officer of the Commonwealth’ has the same meaning here as it does in section 75(v) of the Constitution). C.64. Subject to the operation of the cross-vesting legislation, this leaves a State court with very narrow jurisdiction in respect of Commonwealth administrative action. G A Flick186 describes the jurisdiction of the State courts as follows:

Where liability is imposed by reason of a statutory provision rather than by the conduct of a decision-maker a State Supreme Court may assume jurisdiction to grant a declaration: Nomad Industries (Rust) Pty Ltd v FCT [1983) 2 NSWLR 56; Clyne v Deputy Federal FCT [1983] 1 NSWLR 110.

Similarly, a State Supreme Court has jurisdiction where the decision sought to be reviewed is judicial in nature rather than administrative: Appliance Holdings Pty Ltd v Lawson [1983] 1 NSWLR 246.

Notwithstanding the fact that s9 may preclude an issue being raised in Supreme Court proceedings, it may nevertheless be an abuse of process to seek to challenge that matter in later Federal Court proceedings: R v Balfour; Ex parte Parkes Rural Distributions Pty Ltd (1987) 17 FCR 26.187

185 Administrative Decisions (Judicial Review) Act 1977, subsection 13(1). 186 G A Flick Federal Administrative Law - 2nd Ed The Law Book Company Limited, Sydney, 1988. 187 G A Flick Federal Administrative Law - 2nd Ed The Law Book Company Limited, Sydney, 1988, at paragraph 1565.

71

Judiciary Act 1903 C.65. As a result of the limitation of the availability of judicial review under the AD(JR) Act,188 sections 39B and 44(2A) of the Judiciary Act 1903 (the Judiciary Act) were enacted to extend the jurisdiction of the Federal Court of Australia. C.66. Section 39B of the Judiciary Act confers original jurisdiction on the Federal Court of Australia in terms parallel to the, jurisdiction conferred on the High Court by section 75(v) of the Commonwealth Constitution. The Federal Court’s original jurisdiction includes “....jurisdiction with respect to any matter in which a writ of mandamus or prohibition or an injunction is sought against an officer or officers of the Commonwealth.”189 C.67. Section 44(2A) provides for actions commenced within the High Court’s section 75(iii) jurisdiction (in respect of matters in which the Commonwealth, or a person suing or being sued on behalf of the Commonwealth is a party) to be remitted, if they are to be remitted, to the Federal Court. C.68. It appears that section 39B goes some way to fill the gap in the availability of judicial review of administrative actions as a result of the range of decisions excluded from review under the AD(JR) Act, and that Act’s limitation on the jurisdiction of State Supreme Courts to review Commonwealth administrative action. Other jurisdictions C.69. The Supreme Court of each State, the Northern Territory and the Australian Capital Territory are superior courts of general jurisdiction. As superior courts, their inherent powers of supervisory jurisdiction over inferior courts, tribunals and other state administrators include the issue of prerogative writs, declarations and injunctions. However, since the enactment of the ADQR) Act, their jurisdiction to review federal administrative action has been largely removed.190

188 Under the Administrative Decisions (Judicial Review) Act 1977, judicial review is limited to decisions of an administrative character (as defined in subsection 3(1)), and the jurisdiction of State Courts to review decisions to which the Administrative Decisions (Judicial Review) Act 1977 applies is substantially excluded by section 9 of the Administrative Decisions (Judicial Review) Act 1977. See the discussion by Margaret Allars Introduction to Australian Administrative Law Butterworths, Sydney, 1990, at paragraphs 2.65 and 3.27. 189 Subsection 39B(2) of the Judiciary Act 1903 excludes the decisions of a person holding office under the Industrial Relations Act 1988 or the Coal Industry Act 1946, and judges of the Family Court of Australia. 190 For an example where the Supreme Court of New South Wales has considered the effect of section 9 of the Administrative Decisions (Judicial Review) Act 1977 on its jurisdiction to grant an injunction sought by the plaintiff, see Clamback.& Hennessy Pty Ltd v Commonwealth of Australia (1985) 62 ALR 233.

72

MERITS REVIEW BY THE ADMINISTRATIVE APPEALS TRIBUNAL

Background C.70. Merits review of an administrative decision involves the reconsideration of the decision by a body that can substitute its own decision for the original decision. It differs from seeking review by a court (judicial review) because a court may only decide whether a decision was made according to law, and may neither overturn a decision on the basis that it was not the preferable decision, nor substitute its own decision. C.71. In the period prior to the enactment of the Administrative Appeals Tribunal Act 1975 (the AAT Act), there was no unified approach to making available external merits review of Commonwealth administrative decisions. In particular, although merits review of administrative decisions was available in discrete areas of Commonwealth administrative decision making (for example taxation decisions, promotion and disciplinary decisions concerning public servants, veterans’ benefits decisions), there were many areas of decision making for which no such review was available. C.72. The Kerr Committee noted:

The subject of administrative review is one which requires to be considered in its entirety because it has been universally accepted that judicial review by the courts standing alone, by the prerogative writs, declaration or injunction under the existing law, cannot provide for an adequate review of administrative decisions. It has been the uniform experience of the common law countries, including the United Kingdom, the United States of America and New Zealand, that the traditional supervision by the courts of the administrative process must be supplemented by provision for review on questions of law or on the merits of administrative decisions affecting the rights and property of the citizen. There have already come into existence under Commonwealth law many independent tribunals whose function it is to make a decision which affects the right of the citizen, or, at the instance of an aggrieved citizen, to review on the merits a decision made by the administration. We have therefore considered in detail, in arriving at our recommendations on the first term of reference, the question whether jurisdiction to review administrative decisions on the merits should as a general rule be conferred on a court, or whether such jurisdiction should be exercised by some other tribunal and, if so, what type of tribunal. This in turn has raised the question whether the true function of the courts in relation to administrative review is to be complementary either to a system of general administrative review by a single review authority existing apart from the courts, or to a system of specialised review tribunals existing apart from the courts, or to a combination of both-systems.191

191 Commonwealth Administrative Review Committee Report Australian Government Printing Office, Canberra, 1971, at paragraph 5.

73

C.73. The committee concluded:

The basic fault of the entire structure [of judicial review] is, however, that review cannot as a general rule, in the absence of special statutory provisions, be obtained ‘on the merits’ - and this is usually what the aggrieved citizen is seeking.192

C.74. A primary objective of the AAT Act was to establish a single, independent tribunal with the purpose of dealing with appeals against administrative decisions on the widest possible basis. The advantages of providing an extensive system of merits review of government administrative decisions are various. In the Electoral and Administrative Review Commission’s Report on Review of Appeals from Administrative Decisions193 several of these advantages were noted. They include: • merits review is the most efficient and effective way in which citizens may manage their

own challenge to an administrative decision and achieve a fair result; • the extension of merits review cannot do other than improve the quality of legislation,

the quality of decision making, the quality of policy and the quality of merits review generally;

• merits review contributes with other reforms to opening up the public sector and reducing the opportunity for public sector abuses or corruption;

• merits review may indirectly lead to a strengthening of Parliament vis a vis the executive, and of accountability generally, which means a strengthening of democratic government; and

• a system of external merits review must heighten the independence of any review.194 C.75. The principal external review body for Commonwealth decisions is the Administrative Appeals Tribunal (the AAT). There are also several specialist review tribunals that review decisions in discrete areas: for example, the Veterans Review Board reviews decisions relating to benefits for veterans and their dependents, and the Refugee Review Tribunal conducts independent merits review of decisions relating to applications for refugee status.195 Scope C.76. Review of a decision by the AAT is possible only if the AAT Act or the statute under which the decision was made expressly provides for AAT review of decisions of that type. That is, there is no general right to merits review by the AAT. An Act of Parliament must specifically provide for such review rights. Therefore, the issue of whether a particular decision should be subject to AAT merits review is determined by the Parliament.

192 Commonwealth Administrative Review Committee Report Australian Government Printing Office, Canberra, 1971, at paragraph 58. 193 Electoral and Administrative Review Commission Report on Review of Appeals from Administrative Decisions Queensland Government Printer, Brisbane, 1993. 194 Electoral and Administrative Review Commission Report on Review of Appeals from Administrative Decisions Queensland Government Printer, Brisbane, 1993, at paragraph 2.146. 195 Other specialist review bodies include-the--Immigration Review Tribunal, the Social Security Appeals Tribunal and the Student Assistant Review Tribunal.

74

C.77. One of the statutory functions of the Council is to make recommendations to the Minister for justice as to the classes of administrative decisions that should be the subject of review by the AAT. In the Council’s Seventeenth Annual Report 1992-93,196 the Council published the guidelines that it uses to assist it in providing this advice to the Minister. In summary, the Council’s prima facie test for determining whether a decision made in the exercise of a statutory decision-making power is appropriate for review on the merits is satisfied if the decision will, or is likely to, affect the interests of a person. However, decisions of a legislative nature that are not directed towards the circumstances of particular persons or groups and which apply generally to the community are considered inappropriate for merits review. C.78. Further details about the operation of the AAT, including a list of all decisions subject to AAT merits review, may be found in the annual reports of the AAT.

196 Administrative Review Council Seventeenth Annual Report 1992-93 Australian Government Publishing Service, Canberra, 1993.

75

APPENDIX D

THE OPERATING ENVIRONMENT OF GBES This appendix sets out background information on some aspects of the operating environment of

GBEs. Legal and commercial accountability Crown immunity D.1. In the past, an important matter relating to the legal accountability of government bodies, including GBEs, was the doctrine of Crown immunity. That doctrine provides that a statute will only bind the Crown if the Crown is expressly made subject to the statute, or was intended by Parliament to be bound by the statute. D.2. For the two reasons set out below, GBEs are now unlikely to enjoy any special protection under the doctrine of Crown immunity. • It is only bodies that come within the definition ‘the Crown’ that enjoy protection under

this doctrine. Factors relevant to this question include the level of control able to be exercised over the day to day operations of the GBE by the Minister. In particular, a company incorporated under the Corporations Law is unlikely to be considered to be a part of ‘the Crown’ for the purposes of the doctrine of Crown immunity.

• The doctrine of Crown immunity represents a presumption used by the courts in determining the Parliament’s intention as to the bodies to whom a statute should apply. In recent years the ambit of the presumption has, been significantly narrowed.197

D.3. The Council also notes that the National Competition Policy - Report by the Independent Committee of Inquiry (the Hilmer Report )198 recommended that the doctrine of crown immunity be repealed in so far as it applies to commercial transactions between government businesses in competition with private firms.199 The Trade Practices Act 1975 D.4. In the commercial environment, the most important statute or regulatory mechanism of broad application is the Trade Practices Act 1974 (the TPA). D.5. The TPA is the principal Commonwealth statute regulating the conduct of corporate trading activity, particularly competitive practices and consumer protection. Although the obligations imposed by the TPA fall principally upon trading and financial corporations, foreign corporations and corporations incorporated in a Territory, special provisions extend the scope of the Act so that many Commonwealth authorities are bound by its obligations.

197 Bropho v Western Australia (1990) 171 CLR 1. 198 National Competition Policy Review National Competition Policy - Report by the Independent Committee of Inquiry Australian Government Publishing Service, Canberra, 1993. 199 National Competition Policy Review National Competition Policy - Report by the Independent Committee of Inquiry Australian Government Publishing Service, Canberra, 1993, at 120-121.

76

D.6. The TPA establishes a legal regime to regulate aspects of commercial activity of bodies, including GBEs, that are within the scope of the Act. That regime covers: • restrictive trade practices (for example, anti-competitive practices and arrangements,

boycotts, misuse of market power, exclusive dealing arrangements and price discrimination practices);

• consumer protection (including prohibitions on certain unfair practices, such as misleading or deceptive conduct); and

• unconscionable conduct. D.7. The application of the TPA to Commonwealth GBEs is potentially quite broad. Subsection 2A(1) of the Act provides that the Act binds the Crown in right of the Commonwealth in so far as it carries on a business, either directly or by an authority of the Commonwealth. Subsection 2A(2) provides that the Act applies to each authority of the Commonwealth (regardless of whether it is acting as an agent of the Crown in right of the Commonwealth) in so far as it carries on a business. The definition of ‘business’ in subsection 4(1) is broad, and includes a business not carried on for profit. The term ‘authority of the Commonwealth’ is broadly defined by subsection 4(1) to mean: • a body corporate established for a purpose of the Commonwealth by or under a law of

the Commonwealth or a law of a Territory; or • an incorporated company in which the Commonwealth, or a body corporate referred to

above has a controlling interest. D.8. There is some uncertainty as to the precise extent of the notion of ‘business’, despite the fairly broad definition of that term. For example, it is not clear whether the definition includes business transactions between two Commonwealth agencies.200 The Hilmer Report has recommended that the TPA be amended to remove any doubts as to the application of the Act to commercial transactions between Commonwealth businesses in competition with private firms.’201 Although subsection 172(2)(c) of the TPA provides that regulations made under that Act may exempt from the application of the Act prescribed conduct engaged in the course of a business carried on by the Commonwealth or by a prescribed authority of the Commonwealth, that exemption has been used only once. The Hilmer Report also recommended that subsection 172(2)(c) be repealed.202 D.9. The TPA also establishes the Trade Practices Commission, which is discussed below.

200 This issue concerns arguments about the ‘indivisibility of the Crown’. Because a transaction requires two parties, intra-governmental transactions arguably do not amount to be ‘business activities’. See National Competition Policy Review National Competition Policy - Report by the Independent Committee of Inquiry Australian Government Publishing Service, Canberra, 1993, at 119-120. 201 National Competition Policy Review National Competition Policy - Report by the Independent Committee of Inquiry Australian Government Publishing Service, Canberra, 1993, at 120-121. 202 National Competition Policy Review National Competition Policy - Report by the Independent Committee of Inquiry Australian Government Publishing Service, Canberra, 1993, at 126.

77

Regulatory bodies D.10. There are a range of regulatory bodies that govern or regulate aspects of the marketplace. In general, the jurisdiction of these regulatory bodies extends to cover GBEs that compete in the marketplace. In fact, an important feature of the Government’s policy of increased efficiencies in its business activities has been organisational restructuring, for example, by divesting GBEs of regulatory functions and establishing independent regulatory bodies to regulate the industry in which the GBE participates alongside privately-owned enterprises. D.11. The following section discusses some of these regulatory bodies.

THE TRADE PRACTICES COMMISSION D.12. The Trade Practices Commission (the TPC) is an independent statutory corporation investigating and, when necessary, taking enforcement action against anti-competitive practices, and unfair trading practices and breaches of the consumer protection provisions. The TPC also examines and reports to the Minister on consumer protection laws and disseminates consumer information .to the public.203 D.13. The Hilmer Report recommended the creation of an Australian Competition Commission, to assume the administrative responsibilities currently performed by the TPC and the Prices Surveillance Authority.204

THE AUSTRALIAN SECURITIES COMMISSION D.14. The Australian Securities Commission (ASC) is the regulatory body which administers the national Corporations Law scheme established by the Corporations Law, and the securities and futures markets in Australia. It reports to the Attorney- General, who in turn answers to the Commonwealth Parliament.205 D.15. The ASC was established as a statutory body under the Australian Securities Commission Act 1989 (ASC Act). Most of its powers and functions are provided by the ASC Act and the Corporations Law. It has the power to conduct investigations, examine persons and inspect books, initiate proceedings and conduct hearings.

AUSTRALIAN TELECOMMUNICATIONS AUTHORITY D.16. As part of its reforms to the telecommunications industry, the Government has established a regulatory body, the Australian Telecommunications Authority (AUSTEL). AUSTEL is an independent statutory corporation that commenced operations in mid-1989, and which regulates the telecommunications industry. This industry includes Telstra. D.17. AUSTEL’s functions are many and varied, and include:

203 Trade Practices Act 1974, section 28; see further Trade Practices Commission Annual Report 1990-91 Australian Government Publishing Service, Canberra, 1991. 204 National Competition Policy Review National Competition Policy - Report by the Independent Committee of Inquiry Australian Government Publishing Service, Canberra, 1993, at 339. 205 Australian Corporation Law -Principles and Practice 1 Butterworths, Sydney, 1991, at paragraphs 1.1.110 and 1.1.150.

78

• responsibility for economic and technical regulation of the Australian telecommunications industry;

79

• protecting the integrity of the telecommunications networks, facilities and services; • protecting the supplies of competitive facilities and services from unfair practices of

carriers, and generally promoting fair and efficient market conduct in relation to the supply of competitive facilities and services; and

• protecting telecommunications consumers from unfair practices of carriers and other persons.

Political accountability Introduction D.18. The Government’s recent emphasis of corporatisation and commercialisation has made GBEs more independent of government than other parts of the public sector, with greater management control and commercial flexibility. Despite the similarities in terms of legal and commercial accountability, a significant distinction between GBEs and private sector bodies is that GBEs operate in a political environment. D.19. This political context principally relates not to commercial results, but to the fulfilment of government objectives and the fulfilment of the community’s expectation in GBEs maintaining the highest possible social and ethical standards. Set out below are some of the significant aspects of the political environment affecting Commonwealth GBEs. Ministerial accountability and policy direction

GOVERNMENT POLICY AND PERCEPTIONS OF GOVERNMENT INFLUENCE D.20. The growth in the size of government, the areas of government activity, and the number and independence of GBEs has reduced the effectiveness of ministerial responsibility as an accountability mechanism for Parliament. However, there are other ways in which GBEs may be subject to political accountability. D.21. Despite the fact that GBEs have been given autonomy and are in control of their daily management, portfolio ministers remain responsible for ensuring that GBEs comply with broad government policy. In relation to some GBEs, decisions such as asset sales, dividend payments and large investment schemes require the approval of several cabinet ministers. Generally, despite the growing similarities between government businesses and private sector companies resulting from the process of corporatisation and commercialisation, there remains a difference in the commercial risks (or the perception of the commercial risks) faced by public sector companies because the shareholder of a GBE is the government. This is because there is a perception that if a GBE encounters commercial difficulties the Government will be held politically accountable and will, at the end of the day, intervene to resolve those difficulties. D.22. Further, there is a perception that despite claims of commercial independence, GBEs (even those that are incorporated) will, through government ownership, be subject to influence by the government for the implementation of the government’s strategic objectives (for example by influencing management decisions on pricing, employment and purchasing), and thereby possibly influence the longer term commercial health of the GBE. D.23. The Commonwealth Authorities and Companies Bill 1994, provides that the responsible Minister may notify the directors of a wholly-owned Commonwealth

80

company206 or a Commonwealth authority in writing of general policies of the Commonwealth Government that are to apply to the company or authority. The directors are required to ensure that the policies are carried out.207

COMMUNITY SERVICE OBLIGATIONS

D.24. Community service obligations (CSOs) are obligations imposed on a GBE to supply a service at a price less than the cost of supplying the service. If market conditions applied, these services would probably not be provided at the price that they are, and perhaps would not be provided at all. CSOs are usually imposed on GBEs so that the government may achieve its social policy objectives. D.25. Examples of CSOs include the provision of subsidised postal or telephone rates for rural areas. In most cases, the relevant CSO formed part of the GBE’s statutory functions prior to the corporatisation and commercialisation process. Information on the costs of the delivery of CSOs is provided in the annual reports of GBEs. Means of funding CSOs delivered by a GBE include: a levy on all market participants;208 cross subsidies internal to the GBE; the acceptance by the government of lower rates of return (through lower agreed financial targets and reduced dividends from the GBE, and direct payment to the GBE from the government budget.’209 Parliamentary Committees D.26. Despite changes in the effectiveness of the doctrine of Ministerial responsibility as a means of reviewing government decision making, there are other means of Parliamentary scrutiny and oversight of executive government and its operations that improve government policy making. In particular, Parliamentary committees composed of members of either the House of Representatives or the Senate, or both, are established by their respective Houses of Parliament to investigate matters that Parliament delegates to them. D.27. As an extension of the parliamentary process, parliamentary committees perform a significant investigatory role in relation to policy review. Their powers include the power to engage expert consultants and to summons and protect witnesses. They receive and analyse evidence in the form of written submissions and, if appropriate, testimony at public hearings.

206 A ‘wholly-owned Commonwealth company’ is defined to mean a Corporations Law company in which no shares are beneficially owned by any person other than the Commonwealth: Commonwealth Authorities and Companies Bill 1994, clause 34. 207 Commonwealth Authorities and Companies Bill 1994, clause 42. 208 Telstra recoups some of the cost of its universal service obligations under a levy collection arrangement with other telecommunication carriers. A levy is imposed on the other non-universal service obligation participating carriers in proportion to their share of timed telecommunications traffic under the Telecommunications Act 1991. 209 Department of the Treasury Financial Monitoring of Government Business Enterprises: An Economic Framework - Treasury Economic Paper Number 14 Australian Government Publishing Service, Canberra, 1990, at 41-42.

81

D.28. This parliamentary system of inquiry has been, and continues to be, used to monitor GBEs. For example, the functions of the Joint Parliamentary Committee on Public Works include considering ‘public works’.210 ‘Public works’ are defined to include works carried on by an authority of the Commonwealth’,211 and that term is defined to include bodies corporate established for public purposes by enactments and incorporated companies over which the Commonwealth is in a position to exercise contro1.212 Prima facie, this definition is broad enough to include most GBEs. However, subsection 6A(3) of the Public Works Committee Act 1969 provides that the Governor-General may exempt from the definition of ‘authority of the Commonwealth’ any authority of the Commonwealth that engages in trading, or provides services, in competition with other bodies or persons. D.29. Also relevant is the role of the Standing Committee on Finance and Public Administration. The Committee compiles and publishes a list of Commonwealth bodies in an attempt to identify and categorise the extent of government activity outside the departmental framework of administration. This work is performed under the authority of standing references from the Senate to the Committee to undertake the continuing oversight of the establishment, operation, administration and accountability of: • statutory authorities; • non-statutory bodies; and • incorporated companies and incorporated associations owned by the Commonwealth or

in which the Commonwealth holds a major or substantial interest. D.30. In its most recent published report of June 1993213 the Committee expressed its long-standing concern at the difficulty of identification of Commonwealth bodies outside the departmental framework. In particular, the Committee noted that it believed that because bodies outside the departmental structure frequently have less direct links to ministers than do departments, there is obvious scope for non-departmental bodies to be missed in the processes of parliamentary accountability.214 Auditor-General D.31. Although GBEs typically have considerable control over their day-to-day financial management and business decisions, the Government maintains a supervisory role in relation to the strategic direction of most GBEs. D.32. For example, Government policy generally requires that annual reports be provided by Commonwealth public enterprises. The Auditor-General has a mandate to audit such enterprises, unless in a particular instance the Minister for Finance has exempted it.

210 Public Works Committee Act 1969, section 17. 211 Public Works Committee Act 1969, section 5. 212 Public Works Committee Act 1969, section 6A. 213 Senate Standing Committee of Finance and Public Administration List Of Commonwealth Bodies Department of the Senate, Canberra, 1993. 214 Senate Standing Committee of Finance and Public Administration List Of Commonwealth Bodies Department of the Senate, Canberra, 1993 at v.

82

D.33. Under a package of three Bills recently introduced in the Parliament, the role of the Auditor-General (including the role of the Auditor-General in relation to GBEs) will change. These Bills (the Commonwealth Authorities and Companies Bill 1994, the Financial Management and Accountability Bill 1994 and the Auditor-General Bill 1994) are intended to replace the Audit Act 1901. D.34. The Auditor-General Bill provides for the Auditor-General’s functions to include the audit of the financial statements of Commonwealth authorities and Commonwealth companies. The Auditor-General may also conduct a performance audit: that is, an audit other than an audit designed to form an opinion on the financial statements of a body or person. However, that power does not extend to a GBE.215 Under that Bill, the Auditor-General may conduct a performance audit on a GBE if both Houses of Parliament resolve to request such an audit or if the responsible Minister so requests.216 Stock market, government guarantees and perceived government guarantee D.35. Unlike many large private sector companies, most GBEs are not listed on stock exchanges, and do not operate under the scrutiny and pressure of the share quotation system (an indicator of market performance). However, there is evidence that public enterprises are perceived to enjoy an implied government guarantee, and may find it considerably easier to attract debt funding from financial institutions.217 If a company listed on the stock exchange performs below potential (or is perceived to be performing below potential), this may be reflected in the market through shareholders selling their shares in the company. This creates pressure on the management of the company to channel investment funds into their most profitable uses.218 Public enterprises, however, are not subject to the same market pressures, although the responsible Minister (representing the Commonwealth as shareholder) may be able to dismiss under-performing directors. D.36. Government ownership might significantly influence the level of debt funding received by public enterprises from financial institutions, rather than having debt funding solely assessed on the basis of the enterprises’ credit-worthiness.219

215 Auditor-General Bill 1994, subclause 14(1). 216 Auditor-General Bill 1994, subclause 14(3). 217 M Keating, Secretary to the Department of Finance, The Significance of Privatisation on Government Finances, Deloitte Ross Tohmatsu Partnership Conference Dinner, 14 February 1991, at 12. 218 Department of the Treasury Financial Monitoring of Government Business Enterprises: An Economic Framework - Treasury Economic Paper Number 14 Australian Government Publishing Service, Canberra, 1990, at 2. 219 Department of the Treasury, Financial Monitoring of Government Business Enterprises: An Economic Framework, at 2. However, note in regard to banks’ capital adequacy, that for the Reserve Bank of Australia’s capital adequacy requirements, “a 100 per cent risk weight is applied to claims held by banks on Australian public trading enterprises which have corporate status, or are required to operate on a commercial basis. An exception occurs if the claim is guaranteed by a government or a bank, in which case the weight applied is that appropriate to the guarantor. Claims on all other public sector entities carry a 20 per cent risk-weighting.”

83

D.37. In so far as government ownership enlivens an implied guarantee and amounts to immunity from stock market pressures, GBEs are in a substantially different position from that of any private sector enterprises with which they may compete. Global limits and the Loan Council D.38. The Loan Council, whose members consist of the Commonwealth Treasurer and the Premier or Treasurer of each State, is a cooperative arrangement for limiting the level of Australia-wide public sector borrowings. The ‘public sector’ for this purpose includes government owned or controlled businesses, with the principal exceptions being public financial enterprises and statutory marketing authorities. D.39. The Loan Council agreed in May 1991 that the Global Approach (a voluntary agreement between the Council’s members on total borrowing limits), be changed to exclude government trading enterprises that are subject to the discipline of a private sector operating framework. This would exclude from total borrowing limits government trading enterprises that operate in competition with private sector firms or in contestable markets and deal with parent governments or other government bodies on an arms length basis. In addition, where such government trading enterprises: • have substantial private sector equity (of the order of 40 per cent or more) - they must

have a demonstrated commitment to meet fully certain commerciality criteria; • are without substantial private ownership - they must have a demonstrated track record

of fully meeting these criteria. D.40. At present, no Commonwealth government trading enterprises that were then subject to the global borrowing limits have been excluded under these arrangements. D.41. The Loan Council agreed in December 1992 to introduce new procedures for reporting and monitoring public sector borrowings. These procedures will supersede the Global Approach after a transition of some 2-3 years. The exemption criteria for exclusion of government trading enterprises from the Global Approach will continue to apply under the new procedures.

84

APPENDIX E

BACKGROUND TO GOVERNMENT POLICY ON GBES This appendix sets out a brief history of government policy on GBEs.

History E.1. The concept of the Government engaging in business activities is not new. Public investment in infrastructure and service industries has been a feature of the Australian economy since colonial times. Examples of infrastructure and service industries in which the Government has a long history of investment include: • the postal service - the first official postmaster was appointed in 1809 in the colony of

New South Wales; and • telecommunications - the first telegraph service was opened in 1854 over a line between

Melbourne and Williamtown.220 E.2. In 1992 in Deputy Commissioner of Taxation v State Bank of New South Wales,221 the High Court noted this long history of investment:

The activities of government are carried on not only through the departments of government but also through corporations which are agencies or instrumentalities of government. Such activities have, since the nineteenth century, included the supply on commercial terms of goods and services by government owned and controlled instrumentalities with independent corporate personalities. Railways are a notable example.222

E.3. The Court went on to note that banking activities were also conducted by corporations under legislation enacted by the colonial legislatures before Federation,223 and that colonial governments in Australia carried on a wide range of governmental functions which were not ‘traditional and inalienable’.224 E.4. The need for public investment in many industries (particularly service industries) has arisen because, given the relatively small Australian population spread over a large area, private participation in these industries is unable to make a financial return sufficient to justify investment. It is generally believed, for example, that it is not possible to provide telephone services in remote communities at an accessible price. E.5. Further, the issue of how governments should be made accountable for public utility investment is not new: it arose in colonial times. For example, in 1888 the New South Wales Parliament introduced a system of requiring a joint parliamentary committee (the Committee on Public Works) to investigate and report on works proposals before their legislative authorisation. And the Government’s liability for wrongs arising from the conduct of its

220 Report of the Commission of Inquiry into the Australian Post Office - Volume 1 Australian Government Publishing Service, Canberra, 1974, at 11. 221 (1992) 174 CLR 219. 222 Deputy Commissioner of Taxation v State Bank of New South Wales (1992) 174 CLR 219, at 230-231. 223 Deputy Commissioner of Taxation v State Bank of New South Wales (1992) 174 CLR 219, at 231. 224 Deputy Commissioner of Taxation v State Bank of New South Wales (1992) 174 CLR 219, at 232.

85

utility and service enterprises was also established by colonial courts.225 However, the Government’s recent program of public sector economic reform has raised new issues about how a government should be made accountable for its investment in business enterprises. A brief history of recent government policy Prime Minister’s statement on review of Commonwealth functions - 1981 E.6. On 30 April 1981 the Prime Minister, the Hon Malcolm Fraser MP, made a statement to the Parliament on the review of Commonwealth functions.226 The statement announced a number of reforms designed to open certain commercial activities of government to greater influence from consumers and to the disciplines of competition. In particular, a program of commercialisation and privatisation was announced.227 The Walsh Statement – 1987 E.7. The recent interest in public investment in the economy stems principally from the current Commonwealth Government’s desire to make such investment more profitable, commercially efficient and responsive. The management structures and practices of privately owned companies are seen as the appropriate model for some areas of public investment, and the Government has set out to emulate such companies through the commercialisation of statutory authorities, and in some cases the corporatisation of statutory authorities or parts of departments. E.8. In October 1987, the issue of commercialisation of government businesses was given significant impetus with the release of a major policy statement by the then Minister for Finance, Senator Walsh. The statement, Policy Guidelines for Commonwealth Statutory Bodies and Government Business Enterprises (the Walsh statement)228 noted that a major aim of the Government’s reforms in relation to the restructuring of the government businactivities was to achieve the highest levels of operational and financial efficiency. The statement noted that the government business sector provided a significant proportion of the infrastructure on which the rest of the Australian economy depends, and that the degree to which the efficiency of that sector could be enhanced would have a major bearing on the success of the Government’s program to improve Australia’s international competitiveness. The statement provides guidelines for the establishment, structure, management and review of statutory authorities, as well as providing guidelines covering issues specific to GBEs.

ess

225 See generally P Finn Law and Government in Colonial Australia Oxford University Press, Melbourne, 1987. 226 Prime Minister’s Statement to the Parliament - Thursday 30 April 1981 - Review of Commonwealth Functions Australian Government Publishing Service, Canberra, 1981. 227 Prime Minister’s Statement to the Parliament - Thursday 30 April 1981 - Review of Commonwealth Functions Australian Government Publishing Service, Canberra, 1981 at 6-10. 228 Parliament of the Commonwealth Policy Guidelines for Commonwealth Statutory Authorities and Government Business Enterprises - A Policy Information Paper issued by the Minister for Finance, Senator the Hon. Peter Walsh (Parliamentary Paper No. 333/1987) Australian Government Publishing Service, Canberra, 1987.

86

These guidelines relate to matters such as the removal of central controls and a greater emphasis on commercial performance. E.9. The Walsh statement also addressed the issue of accountability of government businesses with guidelines and statements on matters such as Ministerial responsibility, Ministerial powers of direction, annual reports and financial reporting. However, it did not refer to administrative law, apart from the following reference to freedom of information:

16. The Freedom of Information legislation where it applies provides a further important mechanism for accountability of new statutory authorities and government business enterprises.229

E.10. Since 1987, the framework of reforms outlined by the Walsh statement has been applied to a number of government business enterprises (GBEs), such as Telecom and Australia Post. E.11. The process of reform of the government business sector was an important feature of the Council of Australian Governments (COAG) agenda following the Walsh statement. COAG has agreed that the establishment of an effective national competition and legal framework, encompassing GBEs, is crucial to the enhancement of economic performance, and has continued to coordinate national reform efforts in the electricity, gas and water industries. The maritime sector was added to this agenda in February 1994.230 Department of Finance – 1993 E.12. In June 1993 the Department of Finance released a policy document, Accountability and Ministerial Oversight Arrangements for Commonwealth Government Business Enterprises (the 1993 Statement)231 which sets out the Government’s policy on accountability of GBEs. The 1993 Statement affirms the principles underlying the Walsh Statement (that responsible Ministers exercise strategic control consistent with their accountability to the Parliament and the public, while the Boards of GBEs develop the business strategies and handle the day-to-day management policies), but aims to reinforce those principles by setting out six further principles. Some of the main points from the 1993 Statement’s six principles are set out below. The statement makes no mention of the application of administrative law to GBEs.

MANDATE AND OBJECTIVES

In providing GBEs with a clear mandate and set of objectives, responsible Ministers will ensure that the objectives include requirements to meet explicitly stated Government social and economic objectives, that community service obligations are specified with an objective for the GBE to meet these at a minimum cost, and that the costs of community service obligations be transparent, with new community service obligations normally financed from the Budget.

229 Parliament of the Commonwealth Policy Guidelines for Commonwealth Statutory Authorities and Government Business Enterprises -A Policy Information Paper issued by the Minister for Finance, Senator the Hon. Peter Walsh (Parliamentary Paper No. 333/1987) Australian Government Publishing Service, Canberra, 1987, at 10. 230 Industry Commission Annual Report 1993-94 Australian Government Publishing Service, Canberra, 1994, at 125. 231 Department of Finance Accountability and Ministerial Oversight Arrangements for Commonwealth Government Business Enterprises Department of Finance, Canberra, 1993.

87

GBE BOARDS GBE Boards should comprise people with an appropriate mix of skills, who are to be appointed on the basis of their individual capacity to contribute to an appropriate balance of relevant skills on the Board and achievement of the GBE’s objectives. Proposed appointees will be selected having regard to whether their skills and experience in the commercial, financial, accounting, legal, marketing, industrial relations or management fields would ensure that the Board has an appropriate balance of such skills. Boards are to have absolute responsibility for the performance of the GBE, and are to be fully accountable for this to the responsible Minister.

CORPORATE PLANS

Corporate plans, covering a three to five year horizon, should be updated at least annually and be provided to the responsible Minister who will provide a copy to the Minister for Finance to facilitate consultation. The corporate plan should include information on objectives (including Ministerially-agreed financial targets, assumptions about the business environment, business strategies, investment and financing programs (including strategies for managing financial exposure), financial projections, dividend policy, non-financial performance information, community service obligations (including strategies for minimising costs), review of performance against past plans and targets, analysis of critical factors most likely to affect achievement of targets, or expose the GBE or its shareholders to significant risk, pricing/service quality controls in the case of monopoly provided services, and major human resources and industrial relations strategies. Information on any material variations to the corporate plan, and any other changes in circumstances, which would require disclosure along the lines of Australian Securities Commission or Australian Stock Exchange requirements, should be reported immediately to the responsible Minister.

REPORTS

Confidential six-monthly reports will be provided to the responsible Minister (who will provide a copy to the Minister for Finance to facilitate consultation), on progress against, and any changes to, the corporate plan. The financial statements associated with such reports are to be in a form approved by the Minister for Finance. All GBEs will continue to produce an annual report.

REMEDIAL ACTION

In the event that a GBE is not performing satisfactorily, the responsible Minister is to initiate prompt remedial action, in consultation with the Minister for Finance. In the first instance, that action will normally comprise requests to the Board to explain the under-achievement and to update or amend its corporate plan, and/or to report more often than quarterly or six monthly on progress against the corporate plan.

88

LOAN COUNCIL GBEs that are performing well will be given greater long-term surety of access to Loan Council borrowings, with a system of forward estimates of proposed out-year borrowings for well performing GBEs to be developed.

INDUSTRIAL RELAT1ONS AND SUPERANNUATION The current superannuation guidelines will be replaced with a more general reporting system in the GBE’s annual report. Subject to compliance with the principles decided by the Australian Industrial Relations Commission from time to time, GBEs are free to manage their industrial relations within the scope of specific guidelines.

AUDITOR-GENERAL The Auditor-General will remain the sole external auditor for all Commonwealth owned or controlled entities, including GBEs. The Minister for Finance may approve exemptions.

E.13. Many of the reforms outlined in the 1993 Statement are taken up in the package of three Bills, discussed below from paragraph E.20. Competition policy E.14. The report National Competition Policy - Report by the Independent Committee of Inquiry232 (the Hilmer report) examined the theoretical basis underlying much of the Government’s public sector reform agenda, and considered possible systemic distortions to competition that can arise when government businesses participate in competitive markets. It argued that Australian governments should agree to a set of principles aimed at addressing the distortions that can arise when government businesses compete with other firms. It recommended that: • government businesses should not enjoy any net competitive advantage by virtue of their

ownership when competing with other businesses; and • government businesses competing against other firms should be subject to measures that

effectively neutralise any net competitive advantage flowing from their ownership - this could be achieved through corporatisation and/or the application of effective pricing directions.233

E.15. The report also recommended the creation of an Australian Competition Commission, to assume the administrative responsibilities currently performed by the Trade Practices Commission and the Prices Surveillance Authority.234 E.16. In February 1994, the meeting of the Council of Australian Governments (COAG) gave in-principle endorsement to the competition policy principles of the Hilmer report, although many implementation details were left to be resolved. Subsequently, in 232 National Competition Policy Review National Competition Policy - Report by the Independent Committee of Inquiry Australian Government Publishing Service, Canberra, 1993. 233 National Competition Policy Review National Competition Policy - Report by the Independent Committee of Inquiry Australian Government Publishing Service, Canberra, 1993, at 308-309. 234 National Competition Policy Review National Competition Policy - Report by the Independent Committee of Inquiry Australian Government Publishing Service, Canberra, 1993, at 338-340.

89

August 1994, COAG agreed, in general, to a package of competition policy reforms and transitional arrangements. Following public consultation, it agreed to finalise a legislative package at its February 1995 meeting, with the aim of bringing the new competition policy arrangements into effect on 1 July 1995.235 E.17. Some of the main features of the competition policy reforms agreed to by COAG include: • the revision of the conduct rules of the trade practices legislation, and their extension to

cover State and local government GBEs and unincorporated business; • competitive neutrality between the public and private sectors where they compete; and • the establishment in each jurisdiction of a system to carry out surveillance of prices

charged by utilities and other corporations with high levels of monopoly power and a regime to provide access to essential facilities (such as electricity grids and rail networks).236

Regulatory bodies E.18. Over recent years, an important additional feature of the Government’s policy of increased efficiencies in its business activities has been organisational restructuring, for example, by divesting GBEs of regulatory functions and establishing independent regulatory bodies to regulate the industry in which the GBE participates alongside privately-owned enterprises. In the marketplace today, there is a range of regulatory bodies that govern or regulate aspects of the market, or the conduct of bodies that participate in the market. In general, the jurisdiction of these regulatory bodies extends to cover GBEs that compete in the marketplace. They include: • the Trade Practices Commission, an independent statutory corporation investigating and,

when necessary, taking enforcement action against anti-competitive practices (Part IV), and unfair trading practices and breaches of consumer protection provisions (Part V) under the Trade Practices Act 1974;

• the Australian Securities Commission, the regulatory body which administers the national Corporations Law scheme established by the Corporations Law, and the securities and futures markets in Australia;

• the Australian Telecommunications Authority, an independent statutory authority responsible for economic and technical regulation of the Australian telecommunications industry (including protecting telecommunications consumers from unfair practices of carriers and other persons).

Changing legislative environment E.19. Consistent with the principles enunciated in Walsh statement, the Government maintains a supervisory role in relation to the strategic direction of most GBEs. For example, statutes establishing Commonwealth public enterprises typically require that annual reports

235 Industry Commission Annual Report 1993-94 Australian Government Publishing Service, Canberra, 1994, at 6. 236 Industry Commission Annual Report 1993-94 Australian Government Publishing Service, Canberra, 1994, at 5-7.

90

be provided. The Auditor-General has a mandate to audit such enterprises, unless in a particular instance the Minister for Finance has exempted it. These mechanisms work together to provide a general picture of the activities and performance of GBEs. It would appear that the requirements imposed upon GBEs by these mechanisms are not dissimilar to the reporting and auditing requirements imposed upon companies under the Corporations Law. E.20. Under a package of three Bills recently introduced in the Parliament, the role of the Auditor-General (including the role of the Auditor-General in relation to GBEs) will change. The three Bills, which are intended to replace the Audit Act 1907, are: • the Commonwealth Authorities and Companies Bill 1994; • the Financial Management and Accountability Bill 1994; and • the Auditor-General Bill 1994. For example, the Auditor-General Bill 1994 provides for the Auditor-General’s functions to include auditing the financial statements of Commonwealth authorities and Commonwealth companies. However, although the Bill proposes that the Auditor-General may at any time conduct a performance audit (that is, arr audit other than an audit designed to form an opinion on the financial statements of a body or person) of a Commonwealth authority or Commonwealth company, that power does not extend to conducting a performance audit at any time on a GBE. Instead, the Auditor-General may conduct a performance audit of a GBE if both Houses of the Parliament resolve to request such an audit or if the responsible Minister so requests.237 E.21. A GBE will also be required to prepare a corporate plan at least once a year for submission to the responsible Minister under the Commonwealth Authorities and Companies Bill 1994. The plan must cover a period of 3-5 years, and the directors must keep the Minister informed about changes to the plan. The plan must provide details of several matters, including: • the business strategies of the GBE; • the investment and financing programs of the authority, including strategies for

managing financial risk; • community service obligations of the GBE; • price control and quality control strategies for goods or services supplied by the

authority under a monopoly. E.22. In relation to the requirement for GBEs to supply a corporate plan (clause 17), the explanatory memorandum to the Bill says:

The corporate plan is a key element in the Government’s accountability arrangements applying to Government Business Enterprises (GBEs). The plan is a vehicle for GBEs to inform responsible Ministers about the strategic direction proposed by the GBEs, as well as providing a record of performance against previous plans. The intention of this clause is to ensure that the directors of each GBE prepare, annually, a corporate plan for provision to the responsible Minister and that the plan includes certain minimum information specified in sub-clause (6). The clause would replace the equivalent provisions in the enabling

237 Auditor-General Bill 1994, subclause 14(3).

91

legislation of existing GBEs. It is intended that, in the normal course, the responsible Minister will consult with the Finance Minister on such things as financial targets and dividend policies.

Clause 17 does not address action arising from responsible Ministers’ consideration of corporate plans. Any comments or directions in relation to the contents of corporate plans would be made by responsible Ministers having regard to the provisions, where relevant, of enabling legislation.

E.23. Clause 43 of the Commonwealth Authorities and Companies Bill 1994 provides that the directors of a wholly-owned Commonwealth company238 must establish and maintain an audit committee. The functions of the audit committee include: • helping the company and its directors comply with obligations under the Corporations

Law and the Commonwealth Authorities and Companies Act 1994; and • providing a forum for communication between the directors, the senior managers of the

company and the internal and external auditors of the company. E.24. The Commonwealth Authorities and Companies Bill 1994 also provides that the responsible Minister may notify the directors of a wholly-owned Commonwealth company239 or a Commonwealth authority in writing of general policies of the Commonwealth Government that are to apply to the company or authority. The directors are required to ensure that the policies are carried out.240 E.25. The Financial Management and Accountability Bill 1994 proposes a significant revision to the Commonwealth Fund accounting structure with the establishment of two new purpose based funds. The two new funds are intended to enhance the visibility and accuracy of the accounting systems of bodies that are financially, agents of the Commonwealth. These bodies include Departments and statutory authorities whose enabling legislation does not give them legal ownership of money or property separately from the Commonwealth. Further, any body, organisation or group of persons may be prescribed as an Agency on the basis of its dealing with and managing public money or public property on behalf of the Commonwealth. On that basis, a GBE that is wholly controlled by the Government may be prescribed as an Agency for the purposes of this Bill and thereby, have its accounting structure subject to the provisions of the Bill.

238 A ‘wholly-owned Commonwealth company’ is a Corporations Law company in which no shares are beneficially owned by any person other than the Commonwealth: Commonwealth Authorities and Companies Bill, clause 34. 239 As noted at footnote 238, a ‘wholly-owned Commonwealth company’ is defined to mean a Corporations Law company in which no shares are beneficially owned by any person other than the Commonwealth: Commonwealth Authorities and Companies Bill, clause 34. 240 Commonwealth Authorities and Companies Bill 1994, clause 42.

92

GLOSSARY This glossary provides definitions of terms used in the discussion paper. Words in italics are themselves defined in this glossary. In Chapter Two the Council discusses the characteristics that should be used to identify GBEs; this glossary does not contain an entry for the term ‘government business enterprises’. Administrative Appeals Tribunal (AAT)

An independent tribunal established by the Commonwealth Government to undertake merits review of decisions of Commonwealth departments and agencies.

Administrative Appeals Tribunal Act 1975 (AAT Act)

The Act established the Administrative Appeals Tribunal, and which provides the principles and procedures for merits review by the Administrative Appeals Tribunal.

Administrative Decisions (Judicial Review) Act 1977 (AD(JR) Act)

The Act that establishes simplified grounds and procedures for obtaining judicial review of Commonwealth Government decisions in the Federal Court of Australia.

Administrative law package

A term commonly used to describe the legislative reforms to Commonwealth administrative law that were introduced from the mid-1970s. The principal Acts in the package are: the Administrative Appeals Tribunal Act 1975; the Ombudsman Act 1976; the Administrative Decisions (Judicial Review) Act 1977; and the Freedom of Information Act 1982. The Archives Act 1983 and the Privacy Act 1988 are also commonly considered to be part of the package because of their relationship to the themes of administrative law.

Administrative Review Council

An independent body established by the Administrative Appeals Tribunal Act 1975 to monitor the operation of the Commonwealth system of administrative law, and to provide specialist policy advice to the Minister for Justice on strategic and operational issues affecting Commonwealth administrative decision making.

Archives Act 1983 (Archives Act)

The Act that regulates public access to non-current Commonwealth Government records and the management of current Government records.

Certiorari

An order of a superior court that quashes the decision of a court or tribunal.

93

Commercialisation

The process of public bodies adopting management practices of private sector businesses (for example, by setting commercial and profit goals as the -basis of decision making and accountability).

Common law

The body of law that is derived from judgements of courts.

Commonwealth Constitution

A document setting out the fundamental principles according to which Australia is governed.

Community Service Obligations (CSOs)

Obligations that the Government may require to be fulfilled by bodies that it controls. The fulfilment of a community service obligation typically requires a body to provide a service that would not be provided, or that would only be provided at a higher cost to consumers, if market conditions prevailed.

Conduct Rules

A term used to describe rules that are found in most modern market economies and which are intended to ensure that there is fair competition in the market place. In Australia, generally applicable conduct rules are contained in Part IV of the Trade Practices Act 1974. These rules prohibit a range of anti-competitive practices.

Corporatisation

A term used to describe the process of transforming the structure and organisation of Government departments and statutory authorities so that the structure and organisation resembles that of companies.

Freedom of Information Act 1982 (FOI Act)

The Act that gives person a right to access a range of documents held by the Commonwealth Government.

Injunction

An order made by a Court which requires the person or persons to whom it is directed to do a particular act, or to refrain from doing a particular act.

Judicial review

The review by a court of a government decision, with the object of determining whether, in the making of the decision, any errors of law were made.

Mandamus

An order issued by a Court which directs a public body to do something that the body is under a duty to do.

94

Merits Review

The process whereby a review body that is not a court (for example, an independent tribunal) reviews a government decision to determine what is the correct or preferable decision. Merits review differs from judicial review in that it involves a full reconsideration of the decision (including relevant facts) and the review body may substitute the decision with its own on the basis that the original decision was not the preferable decision.

Natural justice

A principle of law that provides that fair procedures must be adopted in the making of administrative decisions.

Ombudsman Act 1975 (the Ombudsman Act)

The Act that established the Commonwealth Ombudsman, an officer who is empowered to investigate defective administration in government.

Prerogative Writs

Writs that, historically, were issued by a Court only at the request of a king or queen, but which were later made more readily available. Prerogative writs include certiorari, mandamus, prohibition and habeas corpus.

Privacy Act 1988 (Privacy Act)

The Act that sets out principles to protect private information from disclosure in the gathering, processing and dissemination of information by Commonwealth Departments and agencies.

Private law

The principles of law governing the relationship of individuals to each other (as distinct from the principles of public law which govern the relationship of individuals and the Government).

Privatisation

A process whereby the ownership of a body moves from the Government to the private sector.

Prohibition

An order of a court that prohibits a person either from doing something that would be contrary to law, or from continuing to do something that is contrary to law.

Public law

A term used to describe the principles of law governing the relationship between the Government and individuals (as distinct from private law which governs the relationship of individuals to each other).

95

INDEX Except where otherwise indicated, references are to paragraph numbers. To assist in locating particular sections of the report, reference should also be made to the Table of Contents. Administrative Appeals Tribunal Act 1975 background C.70-C.75 current application to GBEs 3.58-3.61 general 1.1, 1.2, 3.4 recommendations for application to GBEs 4.55-4.56 scope C.76-C.78 Administrative Decisions (Judicial Review) Act 1977 background C.47-C.54 current application to GBEs 3.38-3.46 general 3.4, 3.47, 3.53, C.60-C.65 grounds for obtaining judicial review C.55 jurisdiction of State Supreme Courts 3.55-3.57, C.65, C.68-C.69 past Council views 4.9-4.10, 4.50-4.51 recommendations for application to GBEs 4.47-4.54 Administrative Review Council 1.1, 1.2 Aerospace Technologies of Australia Pty Ltd 2.30 Archives Act 1983 current application to GBEs 3.35-3.37 general 3.4, C.44-C.46 recommendations for application to GBEs 4.40-4.46 Attorney-General’s Department Legal Practice 2.30 Auditor-General audit of GBEs D.31-D.32 changing role D.33-D.34 Auditor-General Bill 1994 D.33, E.20 Australian Maritime Safety Authority 2.30 Australian Securities Commission 1.8, D.14-D.15, E.18 Australian Telecommunications Authority 1.8, D.16, D.17, E.18 AUSTEL see Australian Telecommunications Authority Civil Aviation Authority 2.24-2.27

96

Commonwealth Authorities and Companies Bill 1994 definition of a GBE 2:4 changing legislative environment E.20 E.24 the operating environment of GBEs D.23, D.33 Commonwealth administrative law background 3.1-3.5, C.1-C.11 changing role of 3.6-3.8 current application to GBEs 3.14-3.63 objectives of 3.9-3.13 Community service obligations in corporate plans of GBEs E.12, E.21 of GBEs 2.22, D.24-D.25 of Telstra Corporation Limited 2.23 Constitution judicial review 3.39 current application to GBEs 3.47-3.52 Council, The see Administrative Review Council Crown immunity D.1-D.3 Defence Housing Authority 2.30 Federal Airports Corporation 2.30 Freedom of Information Act 1982 background C.23-C.25 current application to GBEs 3.29 exemptions C.32-C.33 general 3.4 obligations C.34-C.36 persons and bodies bound C.28-C.31 Freedom of Information Act 1982 inquiry background and scope 1.10-1.12, 2.19, 3.30-3.31, 4.28 inter-relationship with GBEs project 4.32 terms of reference C.26-C.27 Financial Management and Accountability Bill 1994 revised Commonwealth Fund accounting E.25 role of Auditor-General D.33, E.20 GBEs see Government business enterprises Government business enterprises, application of Commonwealth administrative law statutes to accountability 4.1-4.6 ‘comparative burden’ argument 4.21-4.23

97

extension to private sector 4.28 limitation of exemptions to particular activities 4.24 ‘model business’ argument 4.25-4.27 past Council views 4.7-4.11 principles for determining exemptions 4.14-4.20 Government business enterprises, criteria for identifying commercial activities 2.20-2.27 criteria 2.6-2.11 examples 2.23, 2.24-2.27, 2.30 government control 2.12-2.19 separate legal personality 2.28-2.29 Government business enterprises, government policy and changing legislative environment E.19-E.25 competition policy E.14-E.17 Department of Finance statement (1993) E.12-E.13, E.20 history E.1-E.13 Prime Minister’s statement (1981) E.6 regulatory bodies E.18 Walsh statement (1987) E.7-E.11 Government business enterprises project background 1.3 consultation process 1.13-1.17 discussion paper 1.13 inter-relationship with Freedom of Information Act 1982 inquiry 1.10-1.12, 4.32 submissions 1.16,1.17, page 50 (Appendix B) scope of report 1.4-1.9 Hilmer Report 4.16, D.3, D.8, D.13, E.14-E.17 Judicial review background C.47-C.54 grounds, under Administrative Decisions (Judicial Review) 1977 Act C.60-C.64 grounds, under Constitution C.56, C.59 grounds, under Judiciary Act 1903 C.65-C.68 other jurisdictions C.69 Kerr Committee report 3.4, 3.6, C.3, C.6, C.8-C.11, C.13, C.72, C.73 Legislative Instruments Bill 1994 2.3 Loan Council, GBEs and D.38-D.41, E.12 Ministerial accountability of Government enterprises community service obligations D.24-D.25 government policy and influence D.20-D.23 parliamentary committees D.26-D.30

98

99

National Rail Corporation Limited considered to be a GBE 2.30 Occupational Health and Safety (Commonwealth Employees) Act 1991 2.5 Ombudsman Act 1976 recommendations for application to GBEs 4.33-4.39 background C.12-C.14 current application to GBEs 3.14-3.27 functions of Ombudsman C.15-C.17 general 3.4 jurisdiction C.19-C.22 ‘matter of administration’ C.21-C.22 ‘prescribed authority’ C.19-C.20 Parliamentary Committees D.26-D.30 see also Ministerial accountability of Government business enterprises Privacy Act 1988 current application to GBEs 3.32-3.34 general 3.4, C.37-C.40 scope and application C.41-C.43 Proceeds of Crime Act 1987 2.3 Qantas Airways Limited considered to be a GBE 2.30 Submissions list of page 50 (Appendix B) application of administrative law to GBEs 2.14, 4.3, 4.12-4.13, 4.21, 4.26 see also Government business enterprises project Telecom E.10 see also Telstra Corporation Limited Telecommunications Act 1991 2.23 Telstra Corporation Limited 2.23, 3.21, 3.44, D.16, E.10 Trade Practices Act 1974 D.4-D.9 Trade Practices Commission D.12-D.13, E.18 Walsh statement (1987) E.7-E.11

Documents

ADMINISTRATIVE REVIEW COUNCIL - Attorney-General's …38+-+word+version.pdf · Social Security Appeals, 1980 ... This report was adopted at a meeting of the Administrative Review