Australia's Foreign Relations (State and Territory Arrangements) Bill 2020 [2020] AUSStaCSBSD 169 (16 October 2020)

• Chapter 1
• Comment bills
• Australia's Foreign Relations (State and Territory Arrangements) Bill 2020
• Broad discretionary power1
• Broad delegation of legislative power—exempt arrangements12
• Significant matters in delegated legislation15
• Procedural fairness17
• Retrospective application20

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Chapter 1

Comment bills

1.1 The committee comments on the following bills and, in some instances, seeks a response or further information from the relevant minister.

Australia's Foreign Relations (State and Territory Arrangements) Bill 2020

Purpose	This bill seeks to establish a legislative scheme for Commonwealth engagement with arrangements between State or Territory governments and foreign governments, to foster a systemic and consistent approach to foreign engagement across all levels of Australian government
Portfolio	Foreign Affairs and Trade
Introduced	House of Representatives on 3 September 2020

Broad discretionary power^[1]

1.2 The bill seeks to establish a legislative scheme to ensure that the Commonwealth is able to protect and manage Australia's foreign relations by ensuring that any arrangement between a State/Territory entity and a foreign entity:

• does not, or is unlikely to, adversely affect Australia's foreign relations; and

• is not, or is unlikely to be, inconsistent with Australia's foreign policy.^[2]

1.3 Subclause 5(2) provides that 'Australia's foreign policy' includes policy that the minister is satisfied is the Commonwealth's policy on matters that relate to Australia's foreign relations or things outside Australia. The policy does not have to be written or publicly available or have been formulated, decided upon, or approved by any particular member or body of the Commonwealth. The explanatory memorandum states:

The breadth and inclusivity of this definition reflects that, under this Act, the Minister may take into account a range of matters relating to Australia’s foreign policy when assessing a particular proposed negotiation or arrangement, some of which may not be written or formalised. The range of negotiations and arrangements that are likely to come before the Minister necessitate this level of flexibility and discretion.^[3]

1.4 The bill provides the minister with a number of decision-making powers including to approve the commencement of negotiations of core foreign arrangements,^[4] or approve parties entering into core foreign arrangements.^[5] In approving negotiations or the entering of arrangements, the minister must be satisfied that the proposed negotiation or proposed arrangement would not adversely affect Australia's foreign relations and would not be inconsistent with Australia's foreign policy. Similarly, the minister may also make declarations about non-core foreign arrangements which provide that State/Territory entities must not start or continue negotiations,^[6] or must not enter arrangements.^[7]

1.5 The committee notes the explanation provided in the explanatory memorandum and acknowledges that the range of considerations which may be relevant to Australia's foreign policy is broad and may change over time. However, the committee has scrutiny concerns that the breadth of the discretionary power provided to the minister may make it very difficult for relevant entities to enter into negotiations for an arrangement and to consider whether a declaration is likely to be made because it will be difficult for entities to assess whether a proposed arrangements is likely to be inconsistent which such a broadly defined concept of Australia's foreign policy.

1.6 Additionally, the committee's scrutiny concerns about this broad discretionary power are heightened by a number of factors, including the exclusion of procedural fairness,^[8] the exclusion of the operation of the Administrative Decisions (Judicial Review) Act 1977,^[9] and the exclusion of any form of merits review for affected parties. In this context, the committee considers that judicial review of a decision by the minister under section 39B of the Judiciary Act 1903 would have limited practical utility as a mechanism to diminish the scope for arbitrary exercise of the power. In this regard the committee notes that while clause 51 provides that the minister must take a number of matters into account when making a declaration in relation to non-core arrangements, without a requirement to provide reasons for making a declaration it would be very difficult for a failure to consider these matters to be proven in a court.

1.7 The committee's scrutiny concerns are furthered heightened by:

• the very broad scope of 'arrangements' covered by the bill,^[10]

• the fact that the minister's powers under the bill may be extended by a broad power to expand key definitions in the rules,^[11] and

• the fact that the bill applies to entities that are not conventionally understood to be associated with government policy programs, such as universities.

1.8 As a result, at a general level, the committee considers that the bill provides the minister with what may be characterised as an unfettered discretionary power.

1.9 Noting the committee's scrutiny concerns outlined above, including in relation to the exclusion of both procedural fairness and merits review and the limitation on judicial review, the committee requests the minister's more detailed advice regarding why it is necessary and appropriate to provide the minister with such broad discretionary powers under the bill.

1.10 The committee also requests the minister's advice as to the appropriateness of omitting paragraph 5(2)(d) from the bill to narrow the scope of the definition of 'Australia's foreign policy' so that such policy does not explicitly include policy that has not 'been formulated, decided upon, or approved by any particular member of body of the Commonwealth'.

Broad delegation of legislative power—exempt arrangements^[12]

1.11 Clause 4 of the bill provides that 'exempt arrangement' means an arrangement of a kind that is prescribed by the rules to be an exempt arrangement. The explanatory memorandum states:

For example, the Minister's power to prescribe exempt arrangements may include prescribing:

• thematic types of arrangements, such as research arrangements;

• arrangements entered into during particular time periods, such as arrangements;

• entered into prior to a certain date; and

• arrangements necessary to address emergency situations, such as arrangements in relation to disaster management or urgent public health matters.^[13]

1.12 Additionally, clause 13 of the bill provides that the bill applies in relation to a variation of an arrangement in the same way it applies for an arrangement. Subclause 13(4) provides that the rules may prescribe that variations of arrangements of a kind are exempt, even if the rules do not prescribe that arrangements of that kind are exempt. The explanatory memorandum states:

This subsection therefore enables the rules to prescribe certain types of variations to be exempt where it might not be necessary to exempt the type of arrangements they vary. For example, the rules could prescribe that variations to correct minor errors in foreign arrangements are exempt from the application of this Act.^[14]

1.13 In the view of the committee, the definition of exempt arrangement in clause 4 and the ability to exempt variations of arrangements in subclause 13(2) appear to confer a broad power on the minister to exempt arrangements from the application of the law. This is therefore akin to a Henry VIII clause, which enables delegated legislation to alter or override the operation of primary legislation. The committee has significant concerns with Henry VIII-type clauses, as such clauses have the potential to impact on levels of parliamentary scrutiny and may subvert the appropriate relationship between Parliament and the Executive.

1.14 In this instance, the committee acknowledges that clause 4 and subclause 13(2) do not enable delegated legislation to modify primary legislation, but rather enable the minister to override the usual operation of the primary legislation in particular circumstances. However, the committee remains concerned about the breadth of the proposed power, and its potential impact on parliamentary scrutiny.

1.15 In light of these matters, the committee would expect a sound justification for the power conferred on the minister under clause 4 and subclause 13(2) to be provided in the explanatory memorandum. The committee notes that the explanatory memorandum does not directly provide such a justification, but instead outlines the circumstances in which such an exemption may be made.

1.16 In light of the above, the committee requests the minister's more detailed advice as to:

• why it is proposed to confer on the minister the broad power to exempt arrangements from the application of the law; and

• whether the bill could be amended to include at least high-level guidance regarding the circumstances where it will be appropriate for the minister to exempt an arrangement from the operation of the bill.

Significant matters in delegated legislation^[15]

1.17 Clause 4 provides the definition of the circumstances in which a party is considered to 'give effect to' an arrangement for the purposes of the bill. Paragraph (c) of the definition provides that a party gives effect to an arrangement if they do anything of a kind prescribed by the rules. Paragraph 4(f) provides that the definition does not include doing anything of a kind prescribed by the rules.

1.18 In addition, clause 4 sets out the definition of 'regulated Australian party'. Paragraph (e) of the definition provides that this includes any other entity prescribed by the rules to be a regulated Australian party. Clause 4 further provides that the definition does not include an entity prescribed by the rules as not being a regulated Australian party.

1.19 Clause 7 sets out the definition of what will be considered to be a State/Territory entity. Paragraph 7(f) provides that this includes an entity that is prescribed by the rules to be a State/Territory entity. Conversely, paragraph 7(i) provides that the definition does not include an entity that is prescribed by the rules as not being a State/Territory entity.

1.20 Clause 8 sets out the definition of what will be considered to be a foreign entity. Paragraph 8(1)(i) provides that a foreign entity includes a university that is located in a foreign country and does not have 'institutional autonomy'. Subclause 8(2) provides that a university does not have institutional autonomy if, and only if, the rules prescribe circumstances in which a university is taken not to have institutional autonomy and those circumstances exist in relation to that university.

1.21 In addition, paragraph 8(1)(j) provides that this includes an entity that is external to Australia and is prescribed by the rules to be a foreign entity. Conversely, paragraph 8(1)(l) provides that the definition does not include an entity that is prescribed by the rules as not being a foreign entity.

1.22 Subclause 10(4) sets out when a foreign entity will be a core foreign entity. Paragraph 10(4)(b) provides that this will include an entity that is external to Australia and is prescribed by the rules to be a core foreign entity.

1.23 Clause 12 provides that an arrangement is a subsidiary arrangement of a foreign arrangement if the arrangement is entered under the auspices of the foreign arrangement and the arrangement is not a foreign arrangement. Paragraph 12(2)(c) provides that an arrangement is entered under the auspices of a foreign arrangement if the arrangement is entered at the same time, or after, the foreign arrangement is entered, and the arrangement and the foreign arrangement have a relationship of a kind prescribed by the rules.

1.24 The committee's view is that significant matters, such as key definitions regarding the scope of the bill, should be included in the primary legislation unless a sound justification for the use of delegated legislation is provided. In relation to each of the above clauses, the explanatory memorandum states that setting out the scope of key definitions in delegated legislation is necessary to provide sufficient flexibility.^[16]

1.25 While noting this explanation, the committee has generally not accepted a desire for administrative flexibility to be a sufficient justification, of itself, for leaving significant matters to delegated legislation. The committee notes that allowing the rules to expand the definition of key terms provides the minister with a broad power to expand the types of entities and arrangements subject to the provisions of the bill. It is unclear to the committee why at least high-level guidance in relation to these matters cannot be provided on the face of the bill.

1.26 In light of the above, the committee requests the minister's advice as to:

• why it is considered necessary and appropriate to allow delegated legislation to determine the scope of key definitions in the bill; and

• whether the bill can be amended to include at least high-level guidance on the face of the primary legislation regarding the criteria or considerations that the minister must take into account before altering the scope of key definitions in the bill.

Procedural fairness^[17]

1.27 Clause 58 provides that the minister is not required to observe any requirements of procedural fairness in exercising a power or performing a function under the bill. The committee notes that the right to procedural fairness has two basic rules. It requires that decision-makers are not biased and do not appear to be biased, and requires that a person who may be adversely affected by a decision is given an adequate opportunity to put their case before the decision is made. The committee considers that the right to procedural fairness is a fundamental common law right and it expects that any limitation on this right be comprehensively justified in the explanatory memorandum. In this instance, the explanatory memorandum states:

It is appropriate to fully exclude procedural fairness (in terms of both the hearing and bias rules) in the context of this legislative scheme as its object and purpose is to enable the Minister to protect and manage Australia's foreign relations and ensure all Australian government entities act consistently with Australia's foreign policy.
The Minister's decision-making powers and functions under this Act relate to this purpose and involve considerations entirely within the Commonwealth's and, by proxy the Minister's, responsibility and discretion. Australia's foreign relations and foreign policy evolve with time and in response to international events and circumstances, and are not always appropriate to be made public or shared with State/Territory entities, courts or the public at large. This is strengthened by the fact that the Minister's decisions in relation to core foreign arrangements must be personally exercised.
In addition, as this Act predominately regulates the conduct of State or Territory governments, the exclusion of procedural fairness will not unduly trespass on personal rights and liberties.
Given the nature of decisions made under this Act, the Minister's impartiality (or appearance of impartiality) is not relevant to the exercise of his or her decision-making powers. This is because the Minister's decisions will be based on considerations of foreign policy and foreign relations, as determined by the Commonwealth and promulgated through the Minister. For example, whether an arrangement is approved or subject to a Ministerial declaration under this framework is dependent on whether the Minister is satisfied that the arrangement does not adversely affect Australia's foreign relations and is not inconsistent with Australia's foreign policy.
In addition, as the Minister is not required to observe any requirement of procedural fairness, the Minister is not required to afford persons an opportunity to be heard before exercising powers or performing functions under this Act.
This recognises that, in certain circumstances, the provision of reasons itself could adversely affect Australia's foreign relations, especially to the extent that the decision may be based upon classified information. As such, affording a hearing in these circumstances would defeat the object of the Act, which is to protect and manage Australia’s foreign relations.^[18]

1.28 While acknowledging the explanation provided in the explanatory memorandum, the committee notes that the decisions made under the bill would potentially affect universities, prescribed entities and possibly natural persons. Additionally the committee notes that, at common law, corporations are also entitled to a fair hearing, not merely individual persons.

1.29 The committee also notes that although clause 51 provides that the minister must take a number of matters into account when making a decision to make a declaration in relation to non-core arrangements, there is no requirement that the minister consider the interests of State/Territory entities.

1.30 The committee considers that it may be appropriate, given the nature of the decision-making involved, for the rule against bias to be excluded to the extent that it might be applied in relation to the expression of or appearance of pre-judgement in relation to particular foreign entities or countries. However, it is unclear to the committee why other bases for the application of the rule need be excluded. This is especially so in relation to decisions made by delegates of the minister as the operation of the rule against bias would not frustrate the exercise of the power (given it need not be exercised personally by the minister).

1.31 The committee also notes that the application of the rule against bias will not invalidate a decision merely on the basis that the decision implements a lawful policy.^[19] Moreover, the courts have adopted a restrained approach to the exercise of their judicial review jurisdiction in the context of decisions which have been based on considerations and policy relevant to foreign relations.

1.32 Noting the scrutiny concerns outlined above, the committee requests the minister's more detailed justification regarding why it is necessary and appropriate to remove the requirement to observe any requirements of procedural fairness in exercising any power or performing any function under the bill.

Retrospective application^[20]

1.33 Clause 9 of the bill provides that 'arrangement' means any written arrangement, agreement, contract, understanding or undertaking, whether or not it is legally binding, made in Australia or entered before, on or after the commencement day. Schedule 1 to the bill sets out the transitional requirements relating to pre-existing foreign arrangements, including the consequences of a failure to meet minimum notification requirements in relation to pre-existing arrangements.

1.34 The committee has long-standing concerns about provisions that apply retrospectively, as such an approach challenges a basic value of the rule of law that, in general, laws should only operate prospectively. The committee has particular concerns where legislation will, or might, have a detrimental effect on individuals.

1.35 The committee considers that the minister's power to make declarations about pre-existing arrangements that are currently in operation and were entered into prior to the commencement of the bill has the capacity to upset reasonable expectations of the validity of arrangements as assessed at the time the arrangements were entered into. As such, individuals who may be a party to subsidiary arrangements may be taken by surprise. The committee notes that while the explanatory memorandum states that it is important for the minister to be in a position to have visibility of all arrangements in operation at the commencement of the bill,^[21] the explanatory memorandum does not contain a specific justification as to why it is appropriate that the bill apply to arrangements that have already entered into force.

1.36 Noting the committee's scrutiny concerns, the committee requests the minister's advice as to why it is considered necessary and appropriate to apply the measures in the bill to agreements that have already entered into force and whether there may be any detrimental effect on individuals.

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[1] General comment. The committee draws senators attention to this bill pursuant to Senate Standing Order 24(1)(a)(ii).

[2] Subclause 5(1).

[3] Explanatory memorandum, p. 32.

[4] Subclause 17(2).

[5] Subclause 24(2).

[6] Clause 35.

[7] Clause 36.

[8] See paragraphs 1.27–1.32.

[9] See pages 10–11 in relation to the Australia’s Foreign Relations (State and Territory Arrangements) (Consequential Amendments) Bill 2020.

[10] Clause 9.

[11] See paragraphs 1.17–1.26.

[12] Clauses 4 and 13. The committee draws senators' attention to these provisions pursuant to Senate Standing Order 24(1)(a)(iv).

[13] Explanatory memorandum, p. 20.

[14] Explanatory memorandum, p. 50.

[15] Clauses 4, 7, 8, 10 and 12. The committee draws senators' attention to these provisions pursuant to Senate Standing Order 24(1)(a)(iv).

[16] Explanatory memorandum, pp. 23, 27, 34–35, 39–40, 44 and 47.

[17] Clause 58. The committee draws senators' attention to this provision pursuant to Senate Standing Order 24(1)(a)(iii).

[18] Explanatory memorandum, pp. 167-168.

[19] See Minister for Immigration and Multicultural Affairs v Jia (2001) 205 CLR 507.

[20] Clause 9 and Schedule 1. The committee draws senators' attention to these provisions pursuant to Senate Standing Order 24(1)(a)(i).

[21] Explanatory memorandum, p. 171.