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Australian Senate Standing Committee for the Scrutiny of Bills - Scrutiny Digests |
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Purpose
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This bill seeks to amend the Competition and Consumer Act 2010 and
the Australian Information Commissioner Act 2010 to introduce a consumer
data right for consumers to authorise data sharing and use
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Portfolio
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Treasury
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Introduced
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House of Representatives on 24 July 2019
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1.88 The committee commented on a similar bill in the previous Parliament in Scrutiny Digest 2 of 2019 and reiterates the following concerns in relation to the current bill.
1.89 The bill seeks to introduce a consumer data right (CDR) to provide individuals and businesses with a right to access specified data which relates to them and is held by businesses, and to authorise secure access to this data by accredited third parties. The bill establishes a framework to enable the CDR to be applied to various sectors of the economy over time by allowing the minister, by legislative instrument, to designate a sector of the Australian economy as a sector to which the CDR applies.[77] Key elements of the CDR framework will be governed by consumer data rules. The consumer data rules are to be made by the Australian Competition and Consumer Commission (the ACCC), and apply to a range of elements of the CDR system, including the disclosure, use, storage and security of CDR data.[78]
1.90 Generally, the committee's view is that significant matters, such as key elements of what sectors the CDR applies to and how the framework will be governed, should be included in primary legislation unless a sound justification for the use of delegated legislation is provided. The committee notes that a legislative instrument, made by the executive, is not subject to the full range of parliamentary scrutiny inherent in bringing proposed changes in the form of an amending bill.
1.91 In this instance the explanatory memorandum explains that, as it is intended to apply the CDR to sectors of the economy over time, it is necessary to have a designation process that is flexible,[79] and it is important to be able to tailor the consumer data rules to different sectors.[80] The committee acknowledges the need for flexibility in a context that will be changing and adapting as the CDR is rolled out across various sectors. Proposed sections 56AD, 56AE, 56AF and 56AG impose extensive consultation obligations and matters that must be considered before a sector is designated by the minister. In addition, before the ACCC makes consumer data rules, emergency rules or recognises an external dispute resolution scheme, proposed subsections 56BQ(1), 56BS(1) and 56DA(4) set out consultation requirements that apply. The committee considers that these consultation obligations, and requirements to consider specified matters before instruments are made, assist in justifying including what amounts to significant matters in delegated legislation.
1.92 However, proposed section 56AH and subsections 56BQ(2), 56BS(2) and 56DA(5), provide that a failure to comply with these requirements before an instrument is made does not invalidate that instrument. A legislative provision that indicates that an act done or decision made in breach of a particular statutory requirement or other administrative law norm does not result in the invalidity of that act or decision, may be described as a 'no-invalidity' clause.
1.93 The committee's view is that where the Parliament delegates its legislative power in relation to significant regulatory schemes it is appropriate that specific consultation requirements (beyond those in section 17 of the Legislation Act 2003) are included in the bill and that compliance with these requirements is a condition of the validity of the legislative instrument. Providing that the instrument remains valid and enforceable even if there is a failure to comply with these requirements undermines including such obligations in the legislation.
1.94 As for the procedural requirements (aside from consultation) that apply to the minister making a designation instrument, the committee notes that those requirements are intended to provide assurance that certain matters will be taken into account by the minister when making the instrument. The committee's view is that the inclusion of the no-invalidity clause undermines that assurance.
1.95 The explanatory memorandum provides no justification for why a failure to comply with the procedural requirements that apply to the making of a designation instrument should not lead to invalidity. This is also the case in relation to the consultation requirements imposed by proposed section 56DA.
1.96 In relation to proposed section 56BQ, the explanatory memorandum states:
A failure to consult will not invalidate the consumer data rules. However, the consumer data rules are disallowable instruments so the Parliament has the capacity to intervene and disallow the rules.[81]
1.97 The committee notes this explanation provided in relation to proposed section 56BQ. However, the committee's view is that the instrument being disallowable is not, of itself, a sufficient justification for providing that a failure to comply with consultation requirements should not lead to invalidity. Although the instrument may be disallowable, it may be difficult for parliamentarians to determine whether appropriate consultation has taken place within the timeframe for disallowance.
1.98 In relation to proposed section 56BS, which allows the ACCC to make consumer data rules in an emergency, the committee notes that a failure to consult with the Information Commissioner as required by that section will mean that those rules will cease to be in force 6 months after the day those rules are made.[82] However, the consultation required by proposed section 56BS is limited to the Information Commissioner and the explanatory memorandum does not make clear why a failure to engage in that limited consultation should not lead to immediate invalidity.
1.99 The committee requests the Treasurer's advice as to the rationale for including a number of no-invalidity clauses in relation to consultation requirements in the bill.
1.100 Proposed subsection 56DA(1) provides that the ACCC may recognise an external dispute resolution scheme, by notifiable instrument, for the resolution of certain disputes relating to the CDR scheme. The explanatory memorandum states that the rules may require data holders, accredited data recipients or designated gateways to have internal or external dispute resolution processes, and that there are a variety of dispute resolution schemes available which may be chosen when appropriate, for example existing ombudsman schemes or independent commercial arbitrators.[85]
1.101 The committee notes that 'notifiable' instruments, unlike 'legislative' instruments, are not subject to tabling, parliamentary disallowance or scrutiny by the Senate Standing Committee on Regulations and Ordinances, nor are they subject to sunsetting after 10 years.[86] Notifiable instruments are designed to cover instruments that are not legislative in character.[87] The Legislation Act 2003 sets out the general test as to when an instrument will be legislative in character; namely if a provision of the instrument determines the law or alters the content of the law and has the direct or indirect effect of affecting a privilege or interest, imposing an obligation or creating a right or varying or removing an obligation or right.[88] It is not clear that determining the type of external dispute resolution scheme that will be available in relation to disputes regarding consumer data rights would not be legislative in character. Given the impact on parliamentary scrutiny of not making such an instrument a legislative instrument, the committee would expect the explanatory materials to provide a justification for the use of a notifiable instrument. However, there is no detail in the explanatory memorandum as to why it is proposed that the recognition of the scheme, and the specification of conditions relating to that recognition, is to be done by notifiable instrument, rather than legislative instrument.
1.102 In addition, proposed section 56FA provides that the Data Standards Chair may make data standards, which could relate to the disclosure and the collection, use and deletion of CDR data. Proposed subsection 56FA(4) provides that the data standards are not legislative instruments, and as such will not be subject to any parliamentary control or scrutiny.
1.103 A data standard does not appear to have any legal effect unless the data standard is specified to be a binding data standard. A data standard is a binding standard if the consumer data rules require that the standard specify that it is binding. Proposed sections 56FD and 56FE give legal effect to binding data standards by doing the following:
• proposed section 56FD creates a contract between certain persons in which those persons agree to comply with those standards; and
• proposed section 56FE allows, in relation to a failure by a person to meet an obligation to comply with a binding data standard, that an application may be made to the Federal Court by the ACCC or a person aggrieved by the failure.
1.104 The explanatory memorandum states that:
The data standards will be largely in the nature of specifications for how information technology solutions must be implemented to ensure safe, efficient, convenient and interoperable systems to share data. They will only describe how the CDR must be implemented in accordance with the rules which will set out the substantive rights and obligations of participants.[89]
1.105 Although the explanatory memorandum explains that the data standards will cover largely technical matters, the committee notes that the power to make such standards is not so limited: the data standards could potentially cover a number of significant matters relating to the management of CDR data. The committee expects that a sound justification be provided for the use of non-disallowable standards, especially where those standards may potentially be addressing significant matters and could affect large classes of persons (as the standards may do as a result of proposed sections 56FD and 56FE). The explanatory memorandum provides no such justification.
1.106 The committee requests the Treasurer's more detailed advice as to why it is considered necessary and appropriate to allow potentially significant matters to be included in instruments or standards that would not be subject to any parliamentary control or scrutiny.
1.107 Proposed subsection 56BN(1) makes it an offence for a person to engage in conduct that the person knows is misleading or deceptive and the conduct has the effect of making another person believe a person is a CDR consumer or is acting in accordance with a valid request or consent from a CDR consumer.[91] Proposed subsection 56BN(2) provides an exception (offence-specific defence) to this offence, stating that the offence does not apply if the conduct is not misleading or deceptive in a material particular. This reverses the evidential burden of proof in relation to this defence.[92] The offence, if committed by a body corporate, attracts a maximum fine of $10,000,000.[93] Otherwise, the offence carries a maximum penalty of 5 years imprisonment, a fine of not more than $500,000, or both.[94]
1.108 At common law, it is ordinarily the duty of the prosecution to prove all elements of an offence. This is an important aspect of the right to be presumed innocent until proven guilty. Provisions that reverse the burden of proof and require a defendant to disprove, or raise evidence to disprove, one or more elements of an offence, interferes with this common law right.
1.109 The committee notes that the Guide to Framing Commonwealth Offences[95] provides that a matter should only be included in an offence-specific defence (as opposed to being specified as an element of the offence), where:
• it is peculiarly within the knowledge of the defendant; and
• it would be significantly more difficult and costly for the prosecution to disprove than for the defendant to establish the matter.[96]
1.110 The explanatory memorandum states that the reversal of the burden is appropriate as:
Placing the burden on the person seeking to rely on the defence is appropriate as the material will be within the person’s knowledge. A person disclosing information will need to meet certain record keeping requirements, and would, for example be able to demonstrate that the correct consent documents had been received and that the recipient was listed on the accreditation register. Being able to produce this material should place no additional burden on the person. Such materials may not be available to the person who is alleging they have been misled or deceived.[97]
1.111 However, the explanation in the explanatory memorandum does not explain how the defendant knowing that the conduct is not misleading or deceptive is a matter that is peculiarly within the knowledge of the defendant. In this regard, it appears to the committee that the existence of the correct consent documents, while not available to a person who is alleging they have been misled or deceived, would be accessible to the prosecution. In addition, the committee notes that explanatory memorandum does not address whether it would be significantly more difficult or costly for the prosecution to disprove, as set out in the Guide to Framing Commonwealth Offences.
1.112 The committee requests the Treasurer's detailed justification as to the appropriateness of including the specified matters as an offence-specific defence. The committee suggests that it may be appropriate if proposed subsection 56BN(2) was amended to be included as an element of the offence. The committee requests the minister's advice in relation to this matter.
1.113 Proposed section 56GB provides that certain delegated legislation may make provision in relation to a matter by applying, adopting or incorporating any matter contained in any other instrument or writing as in force or existing from time to time.
1.114 At a general level, the committee will have scrutiny concerns where provisions in a bill allow the incorporation of legislative provisions by reference to other documents because such an approach:
• raises the prospect of changes being made to the law in the absence of parliamentary scrutiny, (for example, where an external document is incorporated as in force 'from time to time' this would mean that any future changes to that document would operate to change the law without any involvement from Parliament);
• can create uncertainty in the law; and
• means that those obliged to obey the law may have inadequate access to its terms (in particular, the committee will be concerned where relevant information, including standards, accounting principles or industry databases, is not publicly available or is available only if a fee is paid).
1.115 As a matter of general principle, any member of the public should be able to freely and readily access the terms of the law. Therefore, the committee's consistent scrutiny view is that where material is incorporated by reference into the law it should be freely and readily available to all those who may be interested in the law.
1.116 The issue of access to material incorporated into the law by reference to external documents such as Australian and international standards has been an issue of ongoing concern to Australian parliamentary scrutiny committees. Most recently, the Joint Standing Committee on Delegated Legislation of the Western Australian Parliament has published a detailed report on this issue.[99] This report comprehensively outlines the significant scrutiny concerns associated with the incorporation of material by reference, particularly where the incorporated material is not freely available.
1.117 The explanatory memorandum provides a justification as to why materials need to be incorporated from time to time, stating that it is important to have the flexibility to refer to or incorporate instruments or standards that may exist from time to time, noting that a consumer data rule may seek to refer to a particular standard of the International Organisation for Standardisation (IOS) as part of the criteria to obtain accreditation.[100] However, the committee notes that IOS standards are often only available for purchase and may not be made freely available. The explanatory memorandum does not explain whether any incorporated standards would be made freely available to persons interested in the terms of the law.
1.118 The committee requests the Treasurer's more detailed advice as to whether the relevant IOS standards will be made freely available to all persons interested in the law.
1.119 Proposed section 56GD provides that the ACCC may, by written notice, exempt a person from all or specified provisions of the new consumer data right scheme in proposed Part IVD, any regulations made for the purposes of that Part and the consumer data rules.
1.120 Similarly, proposed section 56GE allows for regulations to be made that would exempt a person, or a class of persons, from the same provisions, or declare that those provisions apply as if specified provisions were omitted, modified or varied.
1.121 Proposed section 56GD would therefore appear to grant a broad discretionary power for the ACCC to exempt persons from the operation of primary and delegated legislation. The explanatory memorandum states that the provisions provide the ACCC with the ability to ensure the new system 'does not operate in unintended or perverse ways in exceptional circumstances' and provides the ACCC with scope to ensure the system 'works in the best way possible for consumers and the designated industry'.[103]
1.122 However, the committee notes that while there is a right for a person to apply to the Administrative Appeals Tribunal (AAT)[104] for review of a decision exempting, or refusing to exempt the person, there is no criteria in the bill setting out the basis on which the ACCC is to exercise this power or any conditions that must be satisfied before such powers are exercised.
1.123 Additionally, proposed section 56GE grants a broad power for the regulations to exempt persons and classes of persons from the operation of primary and delegated legislation and to modify how that legislation is to operate. The committee has concerns about such provisions as provisions of this kind may have the effect of limiting parliamentary scrutiny (as delegated legislation is not subject to the same level of scrutiny as primary legislation). Consequently, the committee expects a sound justification for the use of such provisions. In this instance, the explanatory memorandum states that:
The regulations will only seek to declare that provisions of the [consumer data right] are modified or varied in exceptional circumstances. However, it is important to include the ability to modify the [consumer data right] regime via regulation in order to ensure that the system is dynamic and able to adapt quickly to a changing economy and the varied sectors within it. Regulations are disallowable instruments and the Parliament will have appropriate oversight over any regulation made under the [consumer data right] regime.[105]
1.124 The committee notes that the explanatory memorandum does not explain what it meant by 'exceptional circumstances' that would justify making such regulations, nor is such a limitation included on the face of the bill. Nor does the bill set out any matters that the minister must be satisfied of before regulations are made and there is no explanation of why it is necessary to enable the regulations to exempt specified individuals, noting that an exemption provided in the regulations is not subject to the same review rights before the AAT as an exemption made by the ACCC.
1.125 Additionally, where Parliament delegates its legislative power in relation to significant legislative schemes (including the power to modify and exempt entities from the operation of primary legislation), the committee considers that it is appropriate that specific consultation obligations (beyond those in section 17 of the Legislation Act 2003) apply to the making of legislative instruments, and that compliance with those obligations is a condition of the relevant instruments' validity. The committee notes that no such requirements are currently set out in the bill in relation to proposed section 56GE.
1.126 The committee requests the Treasurer's more detailed advice as to why it is considered necessary and appropriate to allow the ACCC and the regulations to provide exemptions from the operation of the new consumer data right scheme.
[76] Schedule 1, item 1, proposed section 56AH and subsections 56BQ(2), 56BS(2) and 56DA(5). The committee draws senators' attention to these provisions pursuant to Senate standing order 24(1)(a)(iii), (iv) and (v).
[77] Explanatory memorandum, p. 11.
[78] Explanatory memorandum p. 31. See also Schedule 1, item 1, proposed section 56BB.
[79] Explanatory memorandum, p. 11.
[80] Explanatory memorandum p. 32.
[81] Explanatory memorandum, p 41.
[82] See proposed subsection 56BT(3).
[83] Schedule 1, item 1, proposed section 56DA. The committee draws senators’ attention to this provision pursuant to Senate Standing Order 24(1)(a)(iv) and (v).
[84] Schedule 1, item 1, proposed section 56FA. The committee draws senators’ attention to this provision pursuant to Senate Standing Order 24(1)(a)(iv) and (v).
[85] Explanatory memorandum, p 52.
[86] See Legislation Act 2003.
[87] Office of Parliamentary Counsel, Drafting Direction No. 3.8: Subordinate legislation, p. 19.
[88] Subsection 8(4) of the Legislation Act 2003.
[89] Explanatory memorandum, p. 48.
[90] Schedule 1, item 1, proposed subsection 56BN(2). The committee draws senators’ attention to this provision pursuant to Senate Standing Order 24(1)(a)(i).
[91] Proposed subsection 56BO(1) provides a civil penalty for the same conduct and proposed subsection 56BO(2) provides the same defence as proposed subsection 56BN(2). The maximum amount of the civil penalty is $500,000; see Schedule 1, item 21, proposed paragraph 76(1B)(ab).
[92] Subsection 13.3(3) of the Criminal Code Act 1995 provides that a defendant who wishes to rely on any exception, exemption, excuse, qualification or justification bears an evidential burden in relation to that matter.
[93] Schedule 1, item 1, proposed subsection 56BN(3).
[94] Schedule 1, item 1, proposed subsection 56BN(5).
[95] Attorney-General's Department, A Guide to Framing Commonwealth Offences, Infringement Notices and Enforcement Powers, September 2011, pp 50-52.
[96] Attorney-General's Department, A Guide to Framing Commonwealth Offences, Infringement Notices and Enforcement Powers, September 2011, p. 50.
[97] Explanatory memorandum, p 69.
[98] Schedule 1, item 1, proposed section 56GB. The committee draws senators’ attention to this provision pursuant to Senate Standing Order 24(1)(a)(v).
[99] Joint Standing Committee on Delegated Legislation, Parliament of Western Australia, Access to Australian Standards Adopted in Delegated Legislation, June 2016.
[100] Explanatory memorandum, p. 79.
[101] Schedule 1, item 1, proposed section 56GD. The committee draws senators’ attention to this provision pursuant to Senate standing order 24(1)(a)(iv) and (v).
[102] Schedule 1, item 1, proposed section 56GE. The committee draws senators’ attention to this provision pursuant to Senate standing order 24(1)(a)(iv) and (v).
[103] Explanatory memorandum, p. 81.
[104] Schedule 1, item 1, proposed subsection 56GD(5).
[105] Explanatory memorandum, p. 81.
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URL: http://www.austlii.edu.au/au/other/AUSStaCSBSD/2019/67.html