Export Market Development Grants Legislation Amendment Bill 2020 - Commentary on Ministerial Responses [2020] AUSStaCSBSD 219 (2 December 2020)

• Export Market Development Grants Legislation Amendment Bill 2020
• Broad delegation of administrative power21
• Significant matters in delegated legislation24
• Merits review26

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Export Market Development Grants Legislation Amendment Bill 2020

Purpose	This bill seeks to establish a grant program which is administered by the Australian Trade and Investment Commission. The grant is provided to Australian small and medium enterprise exporters as a reimbursement for up to 50 per cent of their export-related marketing expenses
Portfolio	Foreign Affairs and Trade
Introduced	House of Representatives on 7 October 2020
Bill status	Before the House of Representatives

Broad delegation of administrative power^[21]

2.49 In Scrutiny Digest 15 of 2020 the committee requested the minister's advice as to:

• why it is considered necessary to allow for the delegation of any or all of the CEO's functions or powers to officers at any level; and

• whether the bill can be amended to provide some legislative guidance as to the scope of powers that might be delegated, or the categories of people to whom those powers might be delegated.^[22]

Minister's response^[23]

2.50 The minister advised:

The Committee has requested advice on Item 3 of Schedule 1 of the Bill which revises section 90 of the Australian Trade and Investment Commission Act 1985 (the Austrade Act), dealing with delegations by the Minister and CEO of the Australian Trade and Investment Commission (Austrade). In particular, the Committee has requested advice as to why it is considered necessary to allow for the delegation of any or all of the CEO of Austrade's functions or powers to officers at any level. The Committee also asks whether it would be appropriate to amend the Bill to provide some legislative guidance as to the scope of powers that might be delegated, or the categories of people to whom those powers might be delegated.
In relation to this delegation power, the revised section 90 updates the language, but does not change the substance of the existing power of the CEO in current subsection 90(2) to delegate his or her powers and functions under the Austrade Act to an Austrade staff member.
The substantive change made by the Bill is to add a new delegation power to allow the CEO to delegate any of his or her functions or powers under the EMDG Act to an APS employee in a non-corporate Commonwealth entity. The category of person to whom that power may be delegated is established at APS Executive Level 1 (EL1) or higher. Subsection 90(4) limits the scope of the delegation by requiring that, in performing any delegated power, the delegate must comply with any written directions of the CEO (subsection 90(4)). This change would allow a decision to be made by the Australian Government to use whole of government arrangements to manage EMDG grants. Regardless of where the program administration is undertaken, responsibility for EMDG policy will continue to rest with Austrade, and subsection 90(4) will enable Austrade to effectively exercise this policy responsibility.
I note the Committee's preference to limit delegation powers to Senior Executive Officers. In this instance, enabling delegations to be made to EL1 APS officials and above provides for decision-making at an appropriate level for a grants scheme, and continues current business practices. It ensures the program delegations will be exercised by experienced and qualified APS officers and it aligns with decision-making in other Commonwealth grants programs of similar value, most notably those managed by the Commonwealth's grants hubs, which operate in non-corporate Commonwealth entities.

Committee comment

2.51 The committee thanks the minister for this response. The committee notes the minister’s advice that the bill does not change the substance of the existing power of the CEO to delegate his or her powers and functions under the Austrade Act to an Austrade staff member. In relation to delegation to APS employees in a non-corporate Commonwealth entity, the minister advised that enabling delegations to be made to Executive Level 1 APS officials and above provides for decision-making at an appropriate level for a grants scheme, and continues current business practices. The minister also advised that the delegation ensures the program delegations will be exercised by experienced and qualified APS officers and aligns with decision-making in other Commonwealth grants programs of similar value.

2.52 While the committee notes this advice, the committee’s scrutiny view is that consistency with existing practice alone is generally not a sufficient justification for the broad delegation of administrative powers without guidance as to the categories of people to whom those powers might be delegated. It remains unclear to the committee why legislative guidance as to the scope of powers that might be delegated, or further limitations on the categories of people to whom those powers might be delegated cannot be provided for on the face on the bill.

2.53 The committee reiterates its preference that delegations of administrative power be confined to the holders of nominated offices or members of the Senior Executive Service or, alternatively, that a limit is set on the scope and type of powers that may be delegated.

2.54 The committee draws its scrutiny concerns to the attention of senators and leaves to the Senate as a whole the appropriateness of allowing the CEO of Austrade to delegate all or any of their functions or powers to staff of the Commission at any level, or to Executive Level 1 or 2 employees in a non-corporate Commonwealth entity.

Significant matters in delegated legislation^[24]

2.55 In Scrutiny Digest 15 of 2020 the committee requested the minister's advice as to:

• why it is considered necessary and appropriate to leave most of the elements of the export market development grants scheme to delegated legislation; and

• whether the bill can be amended to include at least high-level guidance in relation to these matters on the face of the primary legislation.^[25]

Minister's response

2.56 The minister advised:

Noting my initial comments that few grants programs are established through legislation, I also advise that the Bill details the core elements of the EMDG program, providing that guidance. For example, while section 15 of the Bill provides for eligible kinds of persons to be prescribed in the rules, this is only to ensure the Minister can include those eligible persons operating outside traditional exporting business structures, such as bodies that represent industry, as well as ensuring new business structures can be added if they arise. Section 15 lists the most of the eligible persons, and captures all of the different legal entities which are envisaged as current exporting businesses operating in Australia.
With the Bill establishing the core principles of the EMDG program, the Bill also provides for the Rules to prescribe a range of matters which operationalise those core principles, including:
(a) the definition of ready to export
(b) the terms and conditions of a grant
(c) requirements in relation to the payment of a grant or instalment
(d) eligible kinds of persons for a grant
(e) conditions for eligible persons
(f) eligible products for a grant
(g) eligible expenses of a person, and
(h) the methods for calculating the amount of a grant.
These matters are purely operational and are not appropriate to be included in primary legislation. Details of each are provided in the following paragraphs.
(a) Definition of ready to export
The term 'export' is defined in the Bill. Understanding a person's readiness to undertake the exporting is an operational matter relating to the grant application assessment processes. It will consider things like training undertaken or plans which will demonstrate an exporter's readiness.
(b) Terms and conditions of a grant
The ability to make Rules in relation to the terms and conditions for grants operationalises the grant agreement. As stated in the Bill's Explanatory Memorandum, the EMDG program will rely on other relevant Commonwealth legal requirements in relation to grant administration where possible, and not seek to duplicate them in the EMDG Act.
This includes the terms and conditions for grant agreements. The EMDG program will rely on the terms and conditions for all Commonwealth grants as provided by the Department of Finance and publicly available through the Department's website. Should the need arise to include a specific term or condition for the EMDG program in the Rules, the Bill provides the power for the Minister to do so.
(c) Requirements in relation to the payment of a grant or instalment
The method for calculating the amount of a grant, also an operational matter, enables the total appropriation for the EMDG program to be managed, along with the upper limits for the different types of grants. In ongoing Commonwealth grant programs the upper limit of a grant is an operational question which can change in response to a variety of factors such as inflation and the cost of doing business overseas. As well as not being appropriate to set out in primary legislation, these factors will vary and including them in primary legislation would require frequent amendments to the Act.
(d) Eligible kinds of persons for a grant
The conditions applicants must also satisfy to be eligible for a grant (section 16) are part of operational detail of the program that underpin program administration. As outlined in the Explanatory Memorandum these may include requirements like having an Australian Business Number, not being under insolvency administration, or not having received an EMDG grant for a total of eight or more years.
(e) Eligible products for a grant
The Bill appropriately outlines the core requirements for eligible products being:

• They must be products in the ordinary sense of the word, i.e. a thing to be sold; and

• They be substantially of Australian origin (subsection 17(3)).

The Rules will prescribe in detail what products are eligible including goods, services and intellectual property, providing a responsive mechanism to evolving products and different ways they can be sold.
(f) Eligible expenses of a person
The Bill appropriately outlines the core requirements for eligible expenses in subsection 18(2), which provides they must be:
(a) Expenses of the eligible person; and
(b) In respect of
a. promotional activities or
b. training activities; and
(c) Undertaken for the purpose of marketing
a. eligible products
b. in foreign countries.
The Rules will provide detail of those requirements, for example, that promotional activities can include activities such as website development, trips overseas by marketing teams, and market research. The Rules also provide a responsive mechanism to prescribe new tools for marketing and promotion as they arise...
I note that in considering framework Bills, the Committee has consistently expressed concern that the detail of the delegated legislation is not available when the Parliament is considering the Bill. I propose that the draft Rules will be publicly released for consultation before the Bill is debated which will assist Parliament when considering the Bill.

Committee comment

2.57 The committee thanks the minister for this response. The committee notes the minister's advice and detailed explanation regarding the operational nature of the matters to be included in the rules. The committee also acknowledges the minister’s proposal that the draft rules will be publicly released for consultation before the bill is debated which will assist Parliament when considering the bill.

2.58 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).

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

Merits review^[26]

2.60 In Scrutiny Digest 15 of 2020 the committee requested the minister's advice as to why merits review will not be available in relation to decisions made by the CEO under proposed subsections 102(3) and 102(6), noting that the committee's consideration of this matter would be assisted if the minister's response identified established grounds for excluding merits review, as set out in the Administrative Review Council's guidance document, What Decisions Should be Subject to Merit Review?.^[27]

Minister's response

2.61 The minister advised:

The Committee has requested detailed advice as to why merits review will not be available in relation to decision made by the CEO of Austrade under proposed subsections 102(3) and 102(6), with reference to the Administrative Review Council's (ARC) guidance document, "What Decisions Should Be Subject to Merit Review?".
Proposed section 102 provides a power to the CEO to require grantees to provide information or statements within specified timeframes, but not less than 14 days. The failure to respond within those timeframes requires the CEO to decide not to pay the grant or an instalment. There is no provision for merits review of the timeframe decision in proposed section 102.
At Chapter 3 of the ARC's guidance document, the ARC sets out decisions that are generally unsuitable for merits review. At paragraphs 3.8 to 3.12, the ARC discusses automatic or mandatory decisions. The decisions contained in subsections 102(3) and 102(6) of the Bill are mandatory decisions. They require the CEO not to pay the grant or instalment if the grantee has failed to provide information or statements requested within a specified timeframe. There is therefore a statutory obligation for the CEO to act in a certain way. Effectively, there are no merits to consider with respect to the decision.
This mandatory decision follows other decisions that have an element of discretion. They include the decision of the CEO to issue a notice requiring the provision of information or statements (subsections 102(1) and 102(4)), and then a decision whether to agree to a later date (paragraph 102(3)(b)) or agree to other arrangements for the provision of the statement (paragraph 102(6)(b)). However, these types of decisions should be regarded as preliminary or procedural decisions, as referred to at paragraphs 4.3 to 4.7 of the ARC's document. They lead to, or facilitate, the making of a substantive decision. The substantive decision is to not pay the grant or an instalment, and if the grantee has provided information or statements within the requested timeframes, the decision not to pay does not automatically follow.
Paragraphs 4.6 and 4.7 of the ARC's document refers to refusals to grant extensions of time. However, this is with reference to statutory deadlines. Proposed section 102 of the Bill does not contain any statutory deadlines. Rather, any deadlines are set by the CEO at the time of issuing the notice. The issue of the notice is a preliminary or procedural step which may or may not lead to the substantive decision.
As referred to by the ARC at paragraph 4.7, a refusal to grant an extension of time (putting aside that the deadlines in proposed section 102 are not statutory), would likely affect a grantee's rights. However, decisions allocating finite resources between competing applicants are also considered unsuitable for merits review (see paragraphs 4.11 to 4.19 of the ARC' s document). Although the decisions in proposed section 102 may relate to the ongoing management of a grant to the extent it may result in the non-payment of an instalment, they also relate to decisions to require further information or statements to inform the decision to pay the grant. In circumstances where there may be a number of entities competing for, or accessing, the same finite pool of funding, it would not be suitable to have a decision not to pay the grant to an applicant who has failed to provide requested information or statements subject to merits review. Other applicants who have complied with requests may have already received the grant, and any latter review decision overturning a refusal decision may not be able to be implemented if the funding resources are already allocated to other applicants.

Committee comment

2.62 The committee thanks the minister for this response. The committee notes the minister's advice that the decisions in proposed section 102 are mandatory decisions, requiring the CEO not to pay the grant or instalment if the grantee has failed to provide information or statements requested within a specified timeframe, and that, effectively there are no merits to consider with respect to the decision.

2.63 The committee further notes the minister’s advice that while the decisions in proposed section 102 may relate to the ongoing management of a grant, they also relate to decisions to require further information or statements to inform the decision to pay the grant. The minister advised that, in circumstances where there may be a number of entities competing for, or accessing, the same finite pool of funding, it would not be suitable to have a decision not to pay the grant to an applicant who has failed to provide requested information or statements subject to merits review.

2.64 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).

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

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[21] Schedule 1, item 3, proposed section 90. The committee draws senators’ attention to this provision pursuant to Senate Standing Order 24(1)(a)(ii).

[22] Senate Scrutiny of Bills Committee, Scrutiny Digest 15 of 2020, pp. 20-21.

[23] The minister responded to the committee's comments in a letter dated 25 November 2020. A copy of the letter is available on the committee's website: see correspondence relating to Scrutiny Digest 17 of 2020 available at: www.aph.gov.au/senate_scrutiny_digest

[24] Schedule 1, item 4, definition of 'ready to export', Schedule 1, item 5, proposed sections 10, 11, 15–18, and 21. The committee draws senators’ attention to these provisions pursuant to Senate Standing Order 24(1)(a)(iv).

[25] Senate Scrutiny of Bills Committee, Scrutiny Digest 15 of 2020, pp. 21-23.

[26] Schedule 1, item 10, proposed subsections 102(3) and 102(6). The committee draws senators’ attention to these provisions pursuant to Senate Standing Order 24(1)(a)(iii).

[27] Senate Scrutiny of Bills Committee, Scrutiny Digest 15 of 2020, pp. 23-24.