Investment Funds Legislation Amendment Bill 2021 [2021] AUSStaCSBSD 195 (1 September 2021)

• Investment Funds Legislation Amendment Bill 2021
• Instruments not subject to parliamentary disallowance16
• Parliamentary scrutiny—section 96 grants to the states26

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Investment Funds Legislation Amendment Bill 2021

Purpose	This bill seeks to amend the Future Fund Act 2006 to enact a new employment framework for staff of the Future Fund Management Agency. The new employment framework reinforces the independence of the Future Fund Board from the Australian government and better aligns the framework with norms in the financial services industry. The bill also amends the Freedom of Information Act 1982 to provide a partial exemption for documents handled by the Future Fund Board and the Agency in respect of the Board’s investment activities. The Bill also makes further amendments to the Medical Research Future Fund Act 2015, to streamline the administration of the Medical Research Future Fund, including making state and territory governments eligible to receive funding directly from the Medical Research Future Fund special account. The Bill also amends the Emergency Response Fund Act 2019 to transfer the administrative responsibility for expenditure from the Emergency Response Fund to the National Recovery and Resilience Agency.
Portfolio	Finance
Introduced	House of Representatives on 25 August 2021

Instruments not subject to parliamentary disallowance^[16]

1.26 Item 4 of Schedule 1 to the bill seeks to insert proposed sections 79B and 79C into the Future Fund Act 2006 to provide that the Future Fund Chair must determine a Code of Conduct for the new Future Fund Management Agency (the Agency) and a set of Agency Values.

1.27 Proposed subsections 79B(5) and 79C(6) respectively provide that the Code of Conduct and the Agency Values are not legislative instruments.

1.28 The committee notes that, as instruments made under proposed sections 79B and 79C are specified to not be legislative instruments, they will not be subject to the tabling, disallowance or sunsetting requirements that apply to legislative instruments. As such there is no parliamentary scrutiny of non-legislative instruments. Given the impact on parliamentary scrutiny, the committee expects the explanatory materials to include a justification for why instruments made under proposed sections 79B and 79C are not considered to be legislative in character. In this instance, the explanatory memorandum states in relation to proposed subsection 79B(5) that:

New subsection 79B(5) would clarify that the Agency Code of Conduct is not a legislative instrument. This is because it has an administrative rather than a legislative character.^[17]

1.29 An almost identical explanation is provided for proposed subsection 79C(6).^[18] It is not clear to the committee from these explanations why the determinations are administrative in character rather than legislative. It would appear that a broad power to make a Code of Conduct or a set of Agency Values may determine or alter the content of the law and therefore be of legislative character. For example, the committee notes that proposed 79C(3) provides that employees of the Agency must uphold the Agency Values.

1.30 Further, from a scrutiny perspective, the committee considers, that given the potentially significant nature of the determinations, it is important to allow for additional parliamentary scrutiny and oversight of instruments made under proposed sections 79B and 79C. In this regard, the committee notes that equivalent Codes of Conduct for the Australian Public Service,^[19] and the Australian Parliamentary Service,^[20] as well as equivalent Values for the Australian Public Service,^[21] and the Australian Parliamentary Service,^[22] are set out in primary legislation. It is therefore unclear to the committee why the Code of Conduct and Agency Values for the Future Fund Agency are not subject to any level of parliamentary scrutiny.

1.31 This issue has been highlighted recently in the committee's review of the Biosecurity Act 2015,^[23] the inquiry of the Standing Committee for the Scrutiny of Delegated Legislation into the exemption of delegated legislation from parliamentary oversight,^[24] and a resolution of the Senate on 16 June 2021 emphasising that delegated legislation should be subject to disallowance and sunsetting to permit appropriate parliamentary scrutiny and oversight unless there are exceptional circumstances.^[25]

1.32 The committee therefore requests the minister's more detailed advice regarding:

• why it is considered necessary and appropriate that the Code of Conduct and Agency Values made under proposed sections 79B and 79C are not legislative instruments; and

• whether the bill could be amended to provide that these determinations are legislative instruments to ensure that they are subject to appropriate parliamentary oversight.

Parliamentary scrutiny—section 96 grants to the states^[26]

1.33 Item 16 of Schedule 3 to the bill seeks to amend section 24 of the Medical Research Future Fund Act 2015 (the Act) to provide that it is a purpose of the Medical Research Future Fund Special Account to make grants to a state or territory or an authority of a state or territory. Section 27 of the Act provides that the terms and conditions on which financial assistance is to be granted is to be set out in a written agreement between the Commonwealth and the grant recipient. Item 21 of Schedule 3 to the bill seeks to amend section 27 to clarify that the section applies to grants to a state or territory.

1.34 The committee notes that section 96 of the Constitution confers on the Parliament the power to make grants to the states and to determine the terms and conditions attaching to them.^[27] Where the Parliament delegates this power to the executive, the committee considers it appropriate for the exercise of the power to be subject to at least some level of parliamentary scrutiny, particularly noting the terms of section 96 and the role of senators in representing the people of their state or territory.

1.35 In this instance, however, neither the bill nor the Act contains any guidance as to the terms and conditions on which financial assistance may be granted. In addition, there is no requirement to table the written agreements between the Commonwealth and the states and territories in the Senate to ensure that senators are at least made aware of, and have an opportunity to debate, any agreements made under section 27 of the Act. In this context, the committee notes that the process of tabling documents in Parliament alerts parliamentarians to their existence and provides opportunities for debate that are not available where documents are only published online.

1.36 The committee therefore requests the minister's advice as to whether the bill can be amended to:

• include at least high-level guidance as to the terms and conditions on which financial assistance may be granted; and

• include a requirement that written agreements with the states and territories about grants of financial assistance relating to medical research made under section 27 of the Act are:

• tabled in the Parliament within 15 sitting days after being made; and

published on the internet within 30 days after being made.

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[16] Schedule 1, item 4, proposed 79B and 79C. The committee draws senators’ attention to these provisions pursuant to Senate Standing Order 24(1)(a)(iv) and (v).

[17] Explanatory memorandum, p. 13.

[18] Explanatory memorandum, p. 13.

[19] Public Service Act 1999, section 13.

[20] Parliamentary Service Act 1999, section 13.

[21] Public Service Act 1999, section 10.

[22] Parliamentary Service Act 1999, section 10.

[23] Scrutiny Digest 7 of 2021, chapter 4, pp. 33-44.

[24] Senate Standing Committee for the Scrutiny of Delegated Legislation, Inquiry into the exemption of delegated legislation from parliamentary oversight: Interim report, December 2020; and Inquiry into the exemption of delegated legislation from parliamentary oversight: Final report, March 2021.

[25] Journals of the Senate, 16 June 2021, pp. 3581–3582.

[26] Schedule 3, item 16, proposed paragraphs 24(e) and 24(f). The committee draws senators’ attention to these provisions pursuant to Senate Standing Order 24(1)(a)(v).

[27] Section 96 of the Constitution provides that: '...the Parliament may grant financial assistance to any State on such terms and conditions as the Parliament thinks fit'.