Payment Times Reporting Bill 2020 - Commentary on Ministerial Responses [2020] AUSStaCSBSD 123 (6 August 2020)

• Payment Times Reporting Bill 2020
• Broad delegation of investigatory powers 27
• Reversal of the evidential burden of proof30
• Incorporation of external materials existing from time to time32
• Significant matters in delegated legislation33

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Payment Times Reporting Bill 2020

Purpose	This bill seeks to introduce a new Payment Times Reporting Scheme which requires large businesses and government enterprises with an annual total income of over $100 million to publicly report on their payment terms and practices for their small business suppliers
Portfolio	Employment, Skills, Small and Family Business
Introduced	House of Representatives on 13 May 2020
Bill status	Before the Senate

Broad delegation of investigatory powers ^[27]

2.88 In Scrutiny Digest 7 of 2020 the committee requested the minister's advice as to why it is necessary to confer investigatory powers on any 'other person' to assist an authorised person, and whether it would be appropriate to amend the bill to require that any person assisting an authorised person have the knowledge and expertise appropriate to the function or power being carried out (as is the case with authorised officers under subclause 35(2) of the bill).^[28]

Minister's response^[29]

2.89 The minister advised:

The Bill does not confer or delegate any investigatory powers to the ‘person assisting’. Instead, under subsections 31(4) and 32(3) it provides that an authorised person may be assisted by ‘other persons’ in that authorised person’s exercise of investigatory powers.
These provisions are drawn directly from the Regulatory Powers (Standard Provisions) Act 2014 (the Regulatory Powers Act). As the Explanatory Memorandum for that Act explains, under paragraph 53(1)(a) of that Act, the role of a person assisting an authorised person is to undertake assistance tasks at the direction of an authorised person. Further, an ‘other person’ can only assist if it is necessary and reasonable to do so. The assisting person must act under the direction of the authorised person and any valid actions of the person assisting will be taken to be those of the authorised person.
The intent of these provisions is that a person assisting an authorised person does not themselves exercise any powers or functions delegated or conferred under the Act but operates under direction and it is the authorised person who would be exercising the investigatory powers under the Act.
In the case of the Payment Times Reporting scheme, it is necessary and reasonable for an authorised person exercising monitoring and investigation powers to be assisted by another person, for example, for administrative or practical assistance with evidential material on the premises. It is envisaged that a person assisting an authorised person would be undertaking (at the direction of an authorised person) tasks such as assisting to make copies of voluminous records or documents and carrying evidential material seized from the premises.
Given a ‘person assisting’ does not exercise any delegated or conferred powers or functions under the Act, it is not necessary for the Bill to be amended to require that a person assisting must have the appropriate knowledge and expertise.

Committee comment

2.90 The committee thanks the minister for this response. The committee notes the minister's advice that a person assisting an authorised person is not intended to exercise powers or functions under the bill and must act under direction of the authorised person exercising the investigatory powers. The committee also notes the minister's advice that it is envisaged that a person assisting an authorised person would be undertaking (at the direction of an authorised person) tasks such as assisting to make copies of voluminous records or documents and carrying evidential material seized from the premises.

2.91 The committee further notes the minister's advice that it is unnecessary for the bill to be amended to ensure that a 'person assisting' has the appropriate knowledge and expertise.

2.92 While the committee acknowledges the minister's advice as to how it is intended this power will be exercised, there is nothing on the face of the bill to limit it in the way set out in the response. The committee reiterates its consistent scrutiny view in relation to the exercise of coercive or investigatory powers is that persons authorised to use such powers should have appropriate training and experience.

2.93 The committee draws its scrutiny concerns to the attention of senators and leaves to the Senate as a whole the appropriateness of allowing authorised officers who are exercising monitoring and investigation powers to be assisted by other persons with no requirement that the other person has appropriate training or experience.

Reversal of the evidential burden of proof^[30]

2.94 In Scrutiny Digest 7 of 2020 the committee requested the minister's advice as to why it is proposed to use an offence-specific defence (which reverses the evidential burden of proof) in this instance. The committee's consideration of the appropriateness of a provision which reverses the burden of proof is assisted if it explicitly addresses relevant principles as set out in the Guide to Framing Commonwealth Offence.^[31]

Minister's response

2.95 The minister advised:

Subsection 46(1) provides that an entrusted person will commit an offence if the person uses or discloses protected information in an unauthorised way. Subsection 46(2) creates a defence to the offence in subsection 46(1), if the use or disclosure of protected information was done in good faith and in purported compliance with Part 5 of the Act relating to protected information, or with the Rules.
The rationale for the use of an offence-specific defence in section 46 of the Bill is consistent with the relevant principles set out in the Guide to Framing Commonwealth Offences. As explained in that Guide, it is reasonable and necessary for the burden of proof to be placed on the defendant where the facts in relation to the defence are 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.
In the case of a defence to an offence under subsection 46(1), the defendant is best placed to explain why they should be considered to be acting in good faith and purported compliance with the Act. This is because the defendant is best placed to explain their motivations when engaging in the relevant conduct as to how and why they should be considered to be acting in good faith and in purported compliance with the Act when they disclose protected information. It would also be unnecessary and significantly costly if the prosecution was required to disprove these factors given the prosecution would not have ready access to evidence going to the defendant’s state of mind and motivations.

Committee comment

2.96 The committee thanks the minister for this response. The committee notes the minister's advice that the use of an offence-specific defence in clause 46 is consistent with the relevant principles set out in the Guide to Framing Commonwealth Offences. The committee also notes the minister's advice that the defendant is best placed to evidence their motivations and why they should be considered to be acting in good faith and in compliance with the Act.

2.97 The committee further notes the minister's advice that it would also be unnecessary and significantly costly if the prosecution was required to disprove these factors given the prosecution would not have ready access to evidence going to the defendant’s state of mind and motivations.

2.98 The committee requests that an addendum to the explanatory memorandum containing the key information provided by the minister be tabled in the Parliament as soon as practicable, noting the importance of these explanatory materials as a point of access to understanding the law and, if needed, as extrinsic material to assist with interpretation (see section 15AB of the Acts Interpretation Act 1901).

2.99 In light of the detailed information provided, the committee makes no further comment on this matter.

Incorporation of external materials existing from time to time^[32]
Significant matters in delegated legislation^[33]

2.100 In Scrutiny Digest 7 of 2020 the committee requested the minister's advice as to whether documents incorporated by reference into the rules will be made freely available to all persons interested in the law.^[34]

Minister's response

2.101 The minister advised:

As outlined in the Explanatory Memorandum to the Bill, subsection 58(3) specifies that the definition of a small business in the Rules may apply, adopt or incorporate any matter in an instrument or writing from time to time.
The Payment Times Reporting Small Business Identification Tool (Identification Tool) is an element of the definition of small business contained in subsection 5(1) of the Rules.
The Identification Tool is designed to identify small businesses with an annual turnover of less than $10 million. The data contained in the Identification Tool will be regularly updated, for example, as small businesses are created, close or their turnover increases to more than $10 million.
The Identification Tool will reduce the compliance burden for reporting entities by automating the small business identification process. As part of the Identification Tool, a large business will be able to enter supplier information, with the tool identifying whether they need to report payment times for each of their suppliers.
The Identification Tool will be made available on a website. Access to the Identification Tool will be broadly available, subject to appropriate verification and security protocols to ensure that commercially sensitive information contained in the Identification Tool is used for appropriate purposes. The framework by which the Identification Tool will determine which businesses are in or out of scope for the purposes of reporting will be publicly and freely available.
The underlying data for the Identification Tool, including the outcomes of a search by a reporting entity, will only be available to that entity and the Regulator. This is appropriate given the sensitivity of accessing private commercial data, the broader objectives of the scheme, and that we will be giving small businesses the option of opting out of the Identification Tool identifying them as a small business.

Committee comment

2.102 The committee thanks the minister for this response. The committee notes the minister's advice that the Payment Times Reporting Small Business Identification Tool (Identification Tool) will be an element of the definition of small business contained in subsection 5(1) of the Rules. The Identification Tool will be designed to identify small businesses with an annual turnover of less than $10 million.

2.103 The committee also notes the minister's advice that the Identification Tool will be available online with access restricted by security and identification checks to protect commercially sensitive information. The committee further notes the minister's advice that the framework by which the tool will identify small businesses within the scope of the rules will be publicly and freely available.

2.104 The committee notes that it is unclear on the information provided how limited the access to the Identification Tool would be, including whether members of the public will be able to access it. The committee takes this opportunity to reiterate that it is a fundamental principle of the rule of the law that any member of the public should be able to freely and readily access the terms of the law.

2.105 The committee draws this matter to the attention of senators and leaves to the Senate as a whole the appropriateness of subclause 58(3), which will allow the incorporation into the law of external material not readily and freely available to members of the general public.

2.106 In addition, from a scrutiny perspective, the committee is concerned that the meaning of 'small business' for the purposes of the bill is left to be set out in the rules (delegated legislation). As a result, changes to the definition of 'small business' will not be subject to the full range of parliamentary scrutiny inherent in bringing proposed changes in the form of an amending bill. The definition of 'small business' is central to the operation of the proposed Payment Times Reporting Scheme and has the potential to have a wide impact on the business community. This is emphasised by the fact that the objects of the Act, as set out in clause 3 of the bill, include:

• providing for large businesses and certain other entities to report information on their payment terms and practices in relation to their small business suppliers; and

• making this information publicly available in order to enable small businesses to make more informed decisions about potential customers.

2.107 The committee's view is that significant matters, such as definitions which are central to the operation of a new regulatory scheme, should be included in primary legislation unless a sound justification for the use of delegated legislation is provided. The committee notes that section 5 of the draft Payment Times Reporting Rules 2020 (the draft rules) provides that an entity is a 'small business' if:

• it is described as a small business in the Payment Time Small Business Identification Tool; and

• the entity's annual turnover for the previous income year was less than $10 million.

2.108 While the committee notes that this definition relies on the incorporation of external material into the law, the committee considers that if this definition is to be retained it should be set out on the face of the primary legislation.

2.109 The committee therefore requests the minister's advice as to whether the definition of 'small business' set out in section 5 of the draft Payment Times Reporting Rules 2020 can instead be included on the face of the bill, to ensure appropriate parliamentary oversight of this definition which is central to the operation of the proposed Payment Times Reporting Scheme.

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[27] Clauses 31 and 32. The committee draws senators’ attention to this provision pursuant to Senate Standing Order 24(1)(a)(ii).

[28] Senate Scrutiny of Bills Committee, Scrutiny Digest 7 of 2020, pp. 22-23.

[29] The minister responded to the committee's comments in a letter dated 26 June 2020. A copy of the letter is available on the committee's website: see correspondence relating to Scrutiny Digest 9 of 2020 available at: www.aph.gov.au/senate_scrutiny_digest

[30] Clause 46. The committee draws senators’ attention to this provision pursuant to Senate Standing Order 24(1)(a)(i).

[31] Senate Scrutiny of Bills Committee, Scrutiny Digest 7 of 2020, pp. 23-24.

[32] Clause 58. The committee draws senators’ attention to this provision pursuant to Senate Standing Order 24(1)(a)(v).

[33] Clause 5, definition of small business. The committee draws senators’ attention to this provision pursuant to Senate Standing Order 24(1)(a)(iv).

[34] Senate Scrutiny of Bills Committee, Scrutiny Digest 7 of 2020, pp. 24-25.