George Brandis (Queensland, Liberal Party, Shadow Attorney-General) Share this | Link to this | Hansard source

by leave—The opposition opposes items 1, 2 and 6 of schedules 1 and 2 in the following terms:

(1)    Schedule 1, items 1 to 2, page 3 (lines 1 to 16), items TO BE OPPOSED.

(3)    Schedule 1, item 6, page 4 (lines 8 and 9), item TO BE OPPOSED.

(4)    Schedule 2, items 1 and 2, page 5 (lines 6 to 16), item TO BE OPPOSED.

(6)    Schedule 2, item 6, page 6 (lines 8 and 9), item TO BE OPPOSED.

These relate to the question of the Birdsville amendment. They appear on the grey running sheet in the first bracket of amendments. For the reasons indicated in my speech on the second reading, the opposition will be opposing those clauses of the bill.

Nick Xenophon (SA, Independent) Share this | Link to this | Hansard source

Can I get clarification from Senator Brandis that those amendments relate to the issue of the Federal Magistrates Court.

George Brandis (Queensland, Liberal Party, Shadow Attorney-General) Share this | Link to this | Hansard source

The Birdsville amendments.

Nick Xenophon (SA, Independent) Share this | Link to this | Hansard source

Okay. I want to restate my position that I support the opposition’s position in relation to that.

Nick Sherry (Tasmania, Australian Labor Party, Minister for Superannuation and Corporate Law) Share this | Link to this | Hansard source

Could I raise a matter I am not sure about, and it would be useful if Senator Brandis could clarify this. The opposition’s two amendments we are dealing with here will remove one of the key benefits of the government’s bill in relation to treatment of recoupment by the courts. The bill clarifies the role of recoupment in predatory pricing cases under section 46(1AA). At present section 46 does not expressly provide whether it is necessary to prove recoupment in order to establish a case in predatory pricing. Submissions to the 2004 Senate inquiry raised concerns about this lack of clarity and its impact on the effectiveness of section 46, and in particular they expressed concerns that it may be necessary to prove recoupment in order to establish a predatory pricing case. I wanted to clarify whether it is actually the opposition’s intention to change this provision.

George Brandis (Queensland, Liberal Party, Shadow Attorney-General) Share this | Link to this | Hansard source

The opposition’s intention is as I have indicated.

Nick Sherry (Tasmania, Australian Labor Party, Minister for Superannuation and Corporate Law) Share this | Link to this | Hansard source

I understand it is the opposition’s intention as you have indicated, but I am not sure whether it is your intention to actually change this particular aspect. Our contention is that you are perhaps inadvertently changing this and we are surprised, frankly, that this is part of your amendments. We understand your position, but I am advised that inadvertently this would be to the detriment.

George Brandis (Queensland, Liberal Party, Shadow Attorney-General) Share this | Link to this | Hansard source

The reason that the opposition will be opposing the repeal and substitution of section 46(1AB) is that by the structure of the section as it would be proposed it only operates upon section 46(1AA). The opposition opposes the amendments to section 46(1AA). It wishes to leave section 46(1AA) alone. It therefore opposes the repeal of 46(1AB) in its existing form. So section 46(1AB) as it appears in the current act would stand.

Barnaby Joyce (Queensland, National Party) Share this | Link to this | Hansard source

I would like to ask the minister if he can guide us all to where recoupment is ever an issue as determined by legislation which is actually written down or whether it was just in fact a case of a court’s interpretation that was subsequently dealt with last year in the explanatory memorandum, which explicitly stated that recoupment was not to be an issue of consideration in the determination of cases. So really what the minister might be giving us is something that has already been dealt with.

Nick Sherry (Tasmania, Australian Labor Party, Minister for Superannuation and Corporate Law) Share this | Link to this | Hansard source

The government’s position has been that it is a key and fundamental benefit to put it into the bill rather than allow the courts to deal with it. It is much stronger to have it defined and set out.

Barnaby Joyce (Queensland, National Party) Share this | Link to this | Hansard source

Do you agree with the fact that it has already been dealt with in the explanatory memorandum of the previous Trade Practices Act pertaining to, and surrounding, the Birdsville amendment? This issue has already been dealt with by the Senate in that it is part of the explanatory memorandum of the legislation, which I have no doubt would be read and interpreted by the courts as being the will of the government.

Nick Sherry (Tasmania, Australian Labor Party, Minister for Superannuation and Corporate Law) Share this | Link to this | Hansard source

It is in the supplementary explanatory memorandum; it is not actually in the act.

Barnaby Joyce (Queensland, National Party) Share this | Link to this | Hansard source

Would you also confirm that recoupment, as you describe, has never actually been legislated? There is nowhere in the legislation where it says that recoupment was ever required?

Nick Sherry (Tasmania, Australian Labor Party, Minister for Superannuation and Corporate Law) Share this | Link to this | Hansard source

True; that is why we are putting it in.

Nick Xenophon (SA, Independent) Share this | Link to this | Hansard source

I would like to get some clarification from Senator Brandis in relation to this and indeed from Senator Sherry. My position is that I support the Birdsville amendment. I do not want to see that tampered with, because I believe that it provides an alternative remedy for small businesses in predatory pricing cases. But I also support the existing section 46—given the decision in the Boral and other cases—insofar as it makes it clear that there is no requirement for recoupment, because that would not be inconsistent with the provisions of the Birdsville amendment. I would be grateful if Senator Brandis could clarify that for me.

George Brandis (Queensland, Liberal Party, Shadow Attorney-General) Share this | Link to this | Hansard source

It is not inconsistent with the requirements of the Birdsville amendment. The position that Senator Joyce has outlined in his questions to the minister is an accurate representation of the legal position. In order to protect the Birdsville amendment, in the opposition’s view, the existing section 46(1AA), in its current form, and the existing section 46(1AB), in its current form, should remain.

Nick Sherry (Tasmania, Australian Labor Party, Minister for Superannuation and Corporate Law) Share this | Link to this | Hansard source

What we are saying is that undercutting for a substantial period of time, and the impact of that on small business, is not acceptable. We are putting that in the law. What we are arguing here is that the opposition’s amendments—that is, the two amendments we are dealing with—are, perhaps inadvertently, weakening what we are proposing to do in ensuring that recoupment is clearly contained within the bill. It is not there at the present time.

Barnaby Joyce (Queensland, National Party) Share this | Link to this | Hansard source

Recoupment obviously is not something that small businesses want. Let us just go through recoupment. Recoupment means that you have to prove that it is the intention of the person who put you out of business, after he put you out of business, to recoup his losses. I can see abundant reasons why we do not want to put that provision in the bill. It has been left out for a deliberate reason, and I ask the minister about this. We are dealing with an interpretation of the court that put recoupment in. Recoupment was removed by the explanatory memorandum in the previous Trade Practices Act at the end of last year. For the Labor Party to now start talking about recoupment does nothing more than bring recoupment back in again.

Nick Sherry (Tasmania, Australian Labor Party, Minister for Superannuation and Corporate Law) Share this | Link to this | Hansard source

If we go back to the Senate inquiry we will see that it recommended that section 46 be amended to clarify that it was not necessary to prove recoupment when establishing a breach of section 46 in relation to predatory pricing. The government’s bill gives effect to that recommendation. We argue that that strengthens the position of small businesses which have been attacked as a consequence of this behaviour. Our concern with your amendment is that whatever your position on Birdsville—and we know what that position is—you are preventing, perhaps inadvertently, a stronger and tougher position, which is to the advantage of a business, presumably a smaller business, that is being preyed on. Recoupment may be an indicator of such behaviour but it is not an essential precondition. We argue that the effect of what you are doing—by the form in which you are opposing the government in this amendment—is to return section 42 to uncertainty and an undesirable position resulting from the High Court’s Boral decision. That is what we are arguing.

George Brandis (Queensland, Liberal Party, Shadow Attorney-General) Share this | Link to this | Hansard source

In response to what the minister has said, I am afraid that the minister misunderstands that recoupment, as the term is used in the cases, is an incident of market power. The concept that section 46(1AA) operates on is market share. Now, I can see the logic of the government amending section 46(1AB) in the manner indicated if section 46(1AA) were also amended to remove the Birdsville amendment so that section 46(1AA) operates not on market share but on market power. But for so long as section 46(1AA) operates on the concept of market share and not market power—and that is the essence of the Birdsville amendment, which the government is seeking to remove from the Trade Practices Act—then the proposed amendments to section 46(1AB) just do not make logical sense, because, as I said a moment ago, recoupment is understood as an incident of market power, not as an incident of market share. So section 46(1AA) is about market share. Section 46(1AB) cannot be about market power.

Nick Sherry (Tasmania, Australian Labor Party, Minister for Superannuation and Corporate Law) Share this | Link to this | Hansard source

Notwithstanding your logic, Senator Brandis, we still contend that you are in effect, by the change in the design of the amendments you are moving, making it more difficult for business to recoup losses. That is the impact that, I am advised, will occur as a consequence. We know what your position is with respect to Birdsville and if you had worded the amendments differently that would have maintained the integrity of Birdsville, as you argue. But the way they are worded, we would argue, will be detrimental with respect to recoupment for small business, which should not have to go through that process and prove it.

George Brandis (Queensland, Liberal Party, Shadow Attorney-General) Share this | Link to this | Hansard source

Minister, with respect, you are wrong. The one section that nobody has spoken about so far in this discussion, which is still the governing section of section 46, is section 46(1), which is unaffected by any of your amendments. If you wanted to introduce recoupment, you would deal with the matter by reference to section 46(1), not a newly worded section 46(1AA), which eliminates from consideration market share—which, as I was at pains to point out a moment ago, is the concept upon which the Birdsville amendment operates. So even on the basis of your own analysis, with respect, Minister, the proposed section 46(1AB) is inapt.

Barnaby Joyce (Queensland, National Party) Share this | Link to this | Hansard source

Once more, on the question of whether recoupment is now to become an issue: recoupment is not in legislation. There is no legislation about recoupment, and any inference that it was in legislation was dispelled at the time of the previous trade practices amendment bill at the end of last year, which specifically dealt with the issue in the explanatory memorandum, saying that it was not an issue to be considered. The only way it could come into place would be in a further interpretation of a court or in some part in the future that would be completely against what is currently in 46(1AA). To bring back recoupment now is to do no more than to bring into the legislation something that does not exist or to deal with something that is no longer deemed to be a problem because it is excluded by the concept of market share and, prior to that, was also excluded by the explanatory memorandum on the previous bill. It would mean that a court found an interpretation of market share that has not in any way, shape or form been indicated by this piece of legislation in 46(1AA) or in the previous explanatory memorandum. So where does the minister believe this infusion of recoupment is actually going to come from?

Nick Sherry (Tasmania, Australian Labor Party, Minister for Superannuation and Corporate Law) Share this | Link to this | Hansard source

I think we are starting to go over the same terrain again. I have stated our concern. We believe it is appropriate to have this provision in this area. My advice is that we do not agree with the consequential impact of your amendments—whether it would be inadvertent or not, we are not sure. However, we just do not believe it is appropriate that we should put a further burden on small business to recover their losses in this area.

George Brandis (Queensland, Liberal Party, Shadow Attorney-General) Share this | Link to this | Hansard source

If I may contribute one last observation on this matter, the effect of the government amendment to section 46(1AB) is not merely to introduce the concept of recoupment into the legislation for the first time but also to repeal the existing section 46(1AB). So what would be repealed from the act is the requirement that for the purposes of proving up a case brought under the Birdsville amendment—that is, brought under the ‘share of market power’ test—the court may have regard, for the purpose of determining whether a corporation has a substantial share of a market, to the number and size of competitors of the corporation in the market.

The government’s proposed amendment to section 46(1AB) has a double effect: it introduces this foreign concept into the act which, for the reasons Senator Joyce has explained, should not be there; but, secondly, it removes the guidance to the court in the existing section 46(1AB) as to what the court may have regard to. Presumably it does that because the words in the existing section 46(1AB) are premised upon market share rather than market power. So the government may think that, logically, if market share goes out of section 46(1AA) then that guidance to the courts about the determination of market share should go from section 46(1AB). But it is not right to say, with respect, Minister, that 46(1AB) or the changes to section 46(1AB) are unlinked from or not logically contingent upon the Birdsville amendment. They are. And if the integrity of the Birdsville amendment were to be respected then section 46(1AB) should be left as it is in the bill and section 46(1AA) should be left as it is in the bill.

If you wanted to introduce recoupment, which conceptually you could, you could introduce it as a further or additional subsection. Perhaps the inadvertence is on, with all due respect, the government’s part, and we could have that argument as a freestanding argument. But at the moment what you are doing by introducing this new section 46(1AB)—that is, the recoupment element—through the repeal of the existing section 46(1AB) is depriving a court seized of a case under the Birdsville amendment, in which the court has to consider market share, of the guidance the statute gives it. Section 46(1AB) in its existing form is, in other words, integral to section 46(1AA) in its existing form.

Barnaby Joyce (Queensland, National Party) Share this | Link to this | Hansard source

I just want to clearly put on the record, for all those who are driving off the road and getting confused at the moment: you cannot repeal something that does not actually exist. So to talk about getting rid of recoupment is an oxymoron, because it does not exist. With 46(1AA), market share came into place. Market share means that you do not have market power. Recoupment is a section of market power. Also, it has already been dealt with in an explanatory memorandum, but you would have to go to another section of the bill and specifically say that, if in the future a court ever found recoupment to be an issue, we have pre-empted that by saying it will never ever be considered. And if you go down that path you might start to consider a whole range of other things that courts may or may not consider and start repealing them—and we will be here till tomorrow night.

Nick Sherry (Tasmania, Australian Labor Party, Minister for Superannuation and Corporate Law) Share this | Link to this | Hansard source

You are right, Senator Joyce; you cannot repeal something that does not exist. But we want it to exist and that is why we are a little surprised that the wording of your amendments will prevent what you apparently believe should exist. They will not allow it to exist. But we will move to the vote.

Barnaby Joyce (Queensland, National Party) Share this | Link to this | Hansard source

You are dead right—we do not want recoupment to be a test that exists. Therefore, consideration and discussion of recoupment as has been played out in section 46(1AB) is acknowledgement of something that we have already dealt with. The coalition has already dealt with this issue. It is done, dusted and finished. It finished last year with an explanatory memorandum and when the coalition moved to the market share test. What you are in essence doing is bringing this monster back into the room. You are not getting it out; you are bringing it back in.

George Brandis (Queensland, Liberal Party, Shadow Attorney-General) Share this | Link to this | Hansard source

Senator Joyce is right. The proposed new section 46(1AB) creates an exception to a presently non-existent category. Once you say that the court does not have to have regard to recoupment you are implying that but for section 46(1AB) it would have to and even on the existing words of the proposed new section 46(1AB) it may have to. So Senator Joyce is right that section 46(1AB) raises a false issue.

Nick Xenophon (SA, Independent) Share this | Link to this | Hansard source

I am grateful to Senator Brandis’s explanation of how this operates. This is very complex. It is not a question of criticising one party or the other for being inadvertent. If there were an issue in respect of recoupment, with respect to the market power test—and I think Senator Joyce said that it was dealt with in the context of the explanatory memorandum last year—then I think the government could go down that path. I defer to Senator Brandis’s position on this, but I am more than willing to talk to the government if they say that there is an alternative mechanism for dealing with what, I believe, they are intending to do. But I do not want to throw the baby out with the bathwater in terms of the adverse impact it will have on the Birdsville amendment.

Nick Sherry (Tasmania, Australian Labor Party, Minister for Superannuation and Corporate Law) Share this | Link to this | Hansard source

Relying on something in an EM is not as strong as relying on something that is actually written in the legislation.

Nick Xenophon (SA, Independent) Share this | Link to this | Hansard source

I acknowledge what Senator Sherry has said but, given the way it would interact with the various subsections we have been discussing, I am concerned that there would be unintended consequences. That is why my position is to support the opposition. But I note the comments of Senator Brandis that there could be scope to clarify what has been a risk of unintended consequences with the government’s position.

George Brandis (Queensland, Liberal Party, Shadow Attorney-General) Share this | Link to this | Hansard source

There are two main problems here and Senator Xenophon has addressed one of them. The inadvertence is on the part of the government, with respect. What you have done, presumably inadvertently, is to mix up the repeal of the statutory guidance to the courts in applying the Birdsville amendment with the notion of recoupment. The Birdsville amendment and the issue of whether market share should be a test for entry into section 46, and should be the criteria that guide courts in applying that test, is one issue. Recoupment is a different issue. What you have done, by the way in which you have gone about the proposed new section 46(1AB), is to run the two things together in a manner that is confusing. Senator Xenophon, you are absolutely right in your apprehension that by voting for section 46(1AB) you would defeat the effect of what the opposition is trying to do to preserve the Birdsville amendment.

The second issue, which is the issue Senator Joyce alluded to, is that by introducing into section 46—even if it were not inadvertently mixed up with the substantial market share issue—this notion of recoupment expressed in this way as negative guidance to a court, you are creating, as I said before, an exception to a non-existent issue. It is an issue that does not arise on the face of the act at the moment and may very well have the unintended consequences, opposite to the expressed intention of the government, of which Senator Joyce has quite rightly warned.

Steve Fielding (Victoria, Family First Party) Share this | Link to this | Hansard source

I think the issue does need to be clarified. The government wants to put beyond doubt that you do not have to prove that you need to have recoupment as the basis of actually proving predatory pricing. I think that is the absolute clarity of the issue and I can understand why the government has put in:

A corporation may contravene subsection (1AA) even if the corporation cannot, and might not ever be able to, recoup losses incurred by supplying the goods or services at a price less than the relevant cost to the corporation of the supply.

To speed up things, I am wondering whether we should have the vote on the issue of whether the section should stand as printed. Then, if that is defeated or, to put it in other words, is repealed, the government may want to put forward an amendment that inserts into the legislation this issue of making sure beyond doubt that you do not have to prove recoupment to be able to prove predatory pricing. This is an issue, as it is in the explanatory memorandum and we had this debate some time ago. I think some senators were arguing at the time that it should be in the legislation. The government is honouring that by putting into the legislation that the recoupment issue is beyond doubt. But we are confusing the market share issue with the recoupment issue and I think, for clarity, the government should genuinely move each in its own right as an addition to the Trade Practices Act.

Question put:

That Schedule 1, items 1, 2 and 6, and Schedule 2, items 1, 2 and 6 stand as printed.

George Brandis (Queensland, Liberal Party, Shadow Attorney-General) Share this | Link to this | Hansard source

by leave—The opposition opposes item 3 of schedules 1 and 2 and items 1 to 4 and 9 to 11 of schedule 3:

(2)    Schedule 1, item 3, page 3 (lines 17 and 18), item TO BE OPPOSED.

(5)    Schedule 2, item 3, page 5 (lines 17 and 18), item TO BE OPPOSED.

(7)    Schedule 3, items 1 to 4, page 7 (lines 5 to 12), items TO BE OPPOSED.

(8)    Schedule 3, items 9 to 11, page 8 (lines 1 to 6), items TO BE OPPOSED.

This is the part of the Trade Practices Legislation Amendment Bill 2008 which proposes to vest the Federal Magistrates Court with jurisdiction to hear section 46 cases. If I might briefly repeat what I said in my speech on the second reading, it is said on behalf of the government that this is a desirable course of action because it will reduce the cost of such proceedings. As I understand it, that is the only basis put forward by the government to argue that it is desirable to extend the jurisdiction of the Federal Magistrates Court in this respect. It is very simple: the assertion that by transferring the forum in which these cases are heard you will reduce the cost of the cases is simple-minded and indeed ludicrous.

It does not matter whether the case is being litigated in the Federal Court or in the Federal Magistrates Court: these cases, under section 46—and if I may say so, I suspect that I am the only person in the Senate to have run one or more of them—are very complex cases. It is not as if there are two categories of section 46 cases, the hard ones and the easy, low-budget ones.

The legal issues are complex. The factual issues are complex. Unlike most legal proceedings, they involve not only difficult issues of law but also difficult issues of economics and they necessarily involve extensive evidence from forensic economists about market definition and issues such as market share, barriers to entry and so on. It is simple-minded to think that you could have an easy section 46 case that can be knocked over in a couple of days in the Federal Magistrates Court and the harder section 46 cases that might take several weeks in the Federal Court. They are all long cases; they are all complex cases. The complexity of the issues is common, regardless of the monetary value at stake, as a matter of fact, because the issues of market definition, market share, barriers to entry and the other aspects of the economic evidence in particular do not change. So the complexity of the proceedings is unaffected by the forum. The length of the proceedings is unaffected by the forum. On the cost of the proceedings, to the extent to which most of the costs incurred in conducting litigation are the professional costs of counsel, solicitors and expert witnesses, the professional costs are going to be the same, regardless of what forum you conduct those proceedings in.

The risk that I see, were this amendment to be passed, is that section 46 cases might be commenced in the Federal Magistrates Court in the mistaken view that perhaps they would be swifter there, whereas in fact they could potentially be longer. The reason that they could potentially be longer is that the Federal Court now has a body of experience and expert knowledge in this particularly arcane area of the law and it also has long experience in conducting complex trials.

The Federal Magistrates Court, with all due respect to the federal magistrates, who are all good men and women, has no such body of expertise in this area and has no such equivalent body of experience in conducting complex commercial litigation. Eighty-five per cent of the work of federal magistrates is in fact Family Court work. In the entire federal magistracy, I can think of one federal magistrate who has a background in this field.

As a matter of commonsense, most people would understand that, if you have a complex matter dealt with by a jurisdiction with no experience and familiarity with its complexities, it is going to take longer and therefore be more costly than if you have that matter dealt with by a specialist, expert court which knows how to do it because it is practised in dealing with such arcane and complex matters. If the argument put forward by the government is that it will save money—which is the argument put forward by Senator Sherry—it will not. It will cost the litigants more. That is why the opposition opposes these measures.

Nick Sherry (Tasmania, Australian Labor Party, Minister for Superannuation and Corporate Law) Share this | Link to this | Hansard source

There has been a fair amount of discussion on this matter. I just want to go to the opposition opposing schedules 1, 2 and 3. In respect of schedules 1 and 2, we do not overstate the case, Senator Brandis. I do not believe that it would be correct to say that—

George Brandis (Queensland, Liberal Party, Shadow Attorney-General) Share this | Link to this | Hansard source

I am not saying that you are overstating the case. But to the extent to which you make the case, you are wrong.

Nick Sherry (Tasmania, Australian Labor Party, Minister for Superannuation and Corporate Law) Share this | Link to this | Hansard source

We would argue that you are too bleak in your outlook, Senator Brandis. Perhaps it is all those appearances in the Federal Court that have led you to the conclusion that costs cannot be saved anywhere at any time.

George Brandis (Queensland, Liberal Party, Shadow Attorney-General) Share this | Link to this | Hansard source

You should just trust my cynicism.

Nick Sherry (Tasmania, Australian Labor Party, Minister for Superannuation and Corporate Law) Share this | Link to this | Hansard source

I am not suggesting that you are being cynical. Why not give it a go. We are not suggesting that there will be widespread massive savings, but why not at least attempt to have some provision that would permit some savings perhaps? We are not gilding the lily in terms of claims that costs will come down across the board, because that will not happen. But we really do not see why it is not unreasonable to actually attempt to do this. If the opposition’s amendments are carried, we do not even get to first base—we do not even attempt to do it. The arguments have been well put.

The other comments that I want to go to concern specifically schedule 3. We do think that this may be an opposition error in respect of schedule 3. The opposition’s refusal to accept the government’s amendments to the ASIC Act in schedule 3 of the bill, which these amendments deal with, fails to recognise the existing jurisdiction of the Federal Magistrates Court. The Federal Magistrates Court already has jurisdiction in relation to claims of unconscionable conduct in financial services. It already has that jurisdiction and that jurisdiction was conferred on the Federal Magistrates Court by the now Liberal opposition when they were in government. So they are reversing something that they in fact did, and we find that approach difficult to understand.

George Brandis (Queensland, Liberal Party, Shadow Attorney-General) Share this | Link to this | Hansard source

Senator Sherry, upon consideration, you are right about that matter. The opposition therefore will not be opposing schedule 3. Our concern about section 46 cases being dealt with in the Federal Magistrates Court is sufficiently expressed by our opposition to item 3 of schedules 1 and 2. So I just correct myself and apologise to Senator Sherry. We will not be opposing items 1 to 4 and 9 to 11 in schedule 3.

Nick Sherry (Tasmania, Australian Labor Party, Minister for Superannuation and Corporate Law) Share this | Link to this | Hansard source

I just take your guidance, Mr Temporary Chairman. My understanding is that we had by leave been dealing with schedules 1, 2 and 3 together. Perhaps in terms of process—

George Brandis (Queensland, Liberal Party, Shadow Attorney-General) Share this | Link to this | Hansard source

I seek leave to have us deal with schedules 1 and 2 together and foreshadow that we will abandon our opposition to schedule 3.

Leave granted.

Barnaby Joyce (Queensland, National Party) Share this | Link to this | Hansard source

We will divide the question. The question that is now before the chair is that schedule 1, item 3, and schedule 2, item 3, stand as printed.

Nick Xenophon (SA, Independent) Share this | Link to this | Hansard source

I requested these things of the government. Firstly, in relation to changing the jurisdiction, allowing the section 46 case to be brought in the Magistrates Court, what plans were there on the part of the government to provide assistance or resources to small businesses to bring such cases? The second issue relates to the amendment in my name that I will be moving. The ACCC is precluded from bringing an action in the Federal Magistrates Court. That is something that does concern me. I do not understand why that is the case given that they can bring actions in the Federal Court and given how expensive these actions are, as Senator Brandis has pointed out.

Thirdly, a matter for the minister to consider: there is the Semple review on the jurisdiction of federal courts, including the Magistrates Court, which I understand has not yet been released. I understand that there is some speculation that the Magistrates Court may well be amalgamated or turned into another entity in the not-too-distant future. Can the government provide us with details on that, because what we are doing here then becomes quite academic in the context of the Federal Magistrates Court?

Nick Sherry (Tasmania, Australian Labor Party, Minister for Superannuation and Corporate Law) Share this | Link to this | Hansard source

The assistance that would effectively be provided to business through use of the Federal Magistrates Court is that they can use findings of fact that have already been established by the commission. We have appointed a full-time Commissioner for Small Business, who will be involved in providing that level of support, findings of fact, to a business. That is the form of assistance that can be extended through use of the Federal Magistrates Court. That cannot be provided if the alternative is used, which is the Federal Court. So that is the area of assistance.

In respect of your amendment, you sought guidance. We cannot support your amendment because the purpose of the amendments we are currently considering is to provide better access—and we have discussed and debated that. Your amendment goes beyond the scope of the bill. Section 86 covers parts IVA, IVB, VA and others of the act. Returning to my earlier comments, the ACCC, we believe, is well-resourced as a regulator, particularly with the improvements we have made to it, and it ought to continue to bring matters in the Federal Court. Therefore, we would not support your amendment. Your second question I did not get—perhaps you could repeat it and I will cover it.

Nick Xenophon (SA, Independent) Share this | Link to this | Hansard source

Before I get to the next question, is Senator Sherry saying that the government would be sympathetic to the concept being sought by this amendment—that is, that section 46 cases can be brought in the Federal Magistrates Court by the ACCC? My understanding is, and I will stand corrected if I am wrong, that they cannot be brought by the ACCC, whereas the ACCC has the ability to bring actions in the Federal Court.

Nick Sherry (Tasmania, Australian Labor Party, Minister for Superannuation and Corporate Law) Share this | Link to this | Hansard source

Your understanding is correct: the ACCC cannot currently do that. I understand you are proposing to allow it to access the Federal Magistrates Court—that is a consequence of your amendment. We cannot accept it. It has a range of consequences as to who else could be represented in the Magistrates Court because of the status of the ACCC there. There would be others who may need to be given status. That is why we will not support your amendment. There are some issues to consider about who would be permitted representation. We do not want to turn the Magistrates Court into the Federal Court.

George Brandis (Queensland, Liberal Party, Shadow Attorney-General) Share this | Link to this | Hansard source

That is what you are doing in section 46, Senator Sherry.

Nick Sherry (Tasmania, Australian Labor Party, Minister for Superannuation and Corporate Law) Share this | Link to this | Hansard source

I would argue that we are not. Anyway, that is the reason why we cannot support your amendment, Senator Xenophon.

Nick Xenophon (SA, Independent) Share this | Link to this | Hansard source

I raised another query in relation to this: I understand that the Semple review is looking at the whole issue of the jurisdiction of the various federal courts. I think Senator Brandis may have greater knowledge than me on this but, as I understand it, the Semple review of the jurisdiction of the various federal courts, including the Federal Magistrates Court, may well be recommending that the Federal Magistrates Court be amalgamated or no longer be in its current form. Is that something that the government can enlighten us on?

Nick Sherry (Tasmania, Australian Labor Party, Minister for Superannuation and Corporate Law) Share this | Link to this | Hansard source

I am aware that the Attorney-General has asked the department, working closely with courts, to review the optimal structure of the Family Court and the Federal Magistrates Court. The government is concerned to effectively and efficiently deliver family law services through the Family Court and the Magistrates Court. I cannot give you a specific response because I would be pre-empting any outcome of that examination, which is not currently concluded.

Nick Xenophon (SA, Independent) Share this | Link to this | Hansard source

I will go back to Senator Sherry’s response—and I thank him—in relation to why the ACCC cannot bring an action in the Magistrates Court. Given that response I cannot support this amendment in its present form. Whether there is scope for the government to further consider its position, or whether they believe there are other ways of dealing with that concern, I am not sure, but I am concerned that the absence of allowing the ACCC to bring these cases for section 46 may well be counterproductive to what is being proposed. The other thing that needs to be said is in the context of party-party costs. As I understand it, awards with respect to a Magistrates Court matter would be lower than in the Federal Court, which would mean a higher solicitor-client gap for litigants, particularly small business litigants. So I do have concerns as to the consequences of this particular amendment in the absence of the ACCC being able to instigate such cases.

Barnaby Joyce (Queensland, National Party) Share this | Link to this | Hansard source

The question is that schedule 1, item 3 and schedule 2, item 3, stand as printed.

Question negatived.

Nick Xenophon (SA, Independent) Share this | Link to this | Hansard source

I move:

(1)    Schedule 3, page 8 (after line 13), after item 13, insert:

13A  Subsection 86(1A)

Omit “or the Commission”.

George Brandis (Queensland, Liberal Party, Shadow Attorney-General) Share this | Link to this | Hansard source

The opposition supports Senator Xenophon’s amendment, the effect of which will be to enable the ACCC to commence proceedings in the Federal Magistrates Court under part IVA—that is, the unconscionable conduct provisions of the act; part IVB, which deals with industry codes; and part V, which deals with consumer protection. With all due respect to Senator Sherry, in moving the amendments—which have just been defeated—to confer jurisdiction on the Federal Magistrates Court in respect to section 46 cases and now opposing Senator Xenophon’s sensible amendment to give the commission the capacity to instigate proceedings under part IVA, part IVB or part V of the Trade Practices Act in the Federal Magistrates Court, the government has got it precisely around the wrong way. The government’s position could not be more illogical if it tried. As Senator Sherry said a moment ago, you cannot transform the Federal Magistrates Court into the Federal Court, which is what he says Senator Xenophon’s amendment would do. Senator Sherry, the Federal Magistrates Court under section 86(1A) is already seized of these matters at the suit of private litigants. If it is already seized of these matters at the suit of private litigants, why is it not appropriate that the same cases should be dealt with in the same court at the suit of the ACCC, which is the principal institutional litigant? The government’s opposition to Senator Xenophon’s amendment is quite illogical. Rather than keep part IV cases, the complex antitrust cases, in the specialist Federal Court and open up the Federal Magistrates Court to proceedings initiated by the commission in the more straightforward consumer protection and unconscionable conduct cases, the government misunderstands in a black-and-white fashion the appropriate jurisdictional home of these different causes of action.

Nick Sherry (Tasmania, Australian Labor Party, Minister for Superannuation and Corporate Law) Share this | Link to this | Hansard source

I have stated our case. For the record, we oppose the amendment.

Progress reported.