Our Ref: SEC0004927
Mr Colin Neave AM
President
Administrative Review Council
Access to Justice Division
Attorney-General’s Department
3-5 National Circuit
BARTON ACT 2600
Dear Mr Neave
Administrative Review Council’s Inquiry into Judicial Review in
Australia
Thank you for your letter of 20 April 2011 to Mr David Tune PSM, Secretary of the
Department of Finance and Deregulation. I am replying on his behalf.
The Department of Finance and Deregulation (Finance) welcomes the opportunity to
provide comments on the consultation paper as part of the inquiry into judicial review
across the Commonwealth administrative law system. Finance considers that the current
regime of judicial review has had, and will continue to have a normative impact on
government administration through improved decision making.
Our comments (see Attachment 1) relate to Finance’s role in improving government
administration and operations. Judicial review, and in particular the Administrative
Decisions Judicial Review Act 1977, have had a positive effect by encouraging the
legitimate exercise of authority and enabling challenges to the exercise of authority where
it is flawed.
Finance would be pleased to meet with you or members of the Council to discuss any
issues raised in the comments. Please contact Dr Guy Verney on (02) 6215 2555.
Yours sincerely
Ms Jan Mason
Deputy Secretary
Asset Management and Parliamentary Services
July 2011
John Gorton Building, King Edward Terrace, Parkes ACT 2600  Telephone 02 6215 2555  Facsimile 02 6215 3774
Internet www.finance.gov.au
Submission by the Department of Finance and Deregulation to the Administrative Review
Council’s inquiry into judicial review in Australia – July 2011.
Attachment 1
Introduction
Good government depends on decision making which is based on the ideals of openness,
fairness, participation, accountability, consistency, rationality and access to review.
Judicial review stimulates sound public administration through improved administrative
decision making. The current system of judicial review strikes an appropriate balance
between fairness, administrative efficiency and cost.
Finance considers the current regime encourages better administrative decision making.
Department of Finance and Deregulation (Finance)
Finance’s role is to provide:
 Informed decisions on Government finances and continuous improvement in
regulation making through: budgetary management and advice; transparent
financial reporting; a robust financial framework; and best practice regulatory
processes.

Improved Government administration and operations through systems, policy and
advice on: procurement; Commonwealth property management and construction;
government enterprises; risk management; and application of information and
communication technology.

Support for Parliamentarians, others with entitlements and organisations as
approved by Government through the delivery of entitlements and targeted
assistance.
Normative Effect of Review and Complaint Mechanisms in Legislation
Better decision making is encouraged by the normative effect of existing judicial review
and complaint mechanisms.
At the Commonwealth level, there are three options for judicial review which include the
Administrative Decisions (Judicial Review) Act 1977 (ADJR Act), judicial review under
section 39(b) of the Judiciary Act 1903, the constitutionally protected right to judicial
review (a construction of the Constitution and the common law right to judicial review)
and specific statutory schemes for judicial review, for example, under Part 8 of the
Migration Act 1958.
Finance’s decision making
Of these three mechanisms, Finance has been involved with the ADJR Act, noting that it
provides a clearly articulated process for judicial review. This has occurred with respect
to discretionary compensation decisions.
The ADJR Act allows a person who has standing to challenge a decision by Finance
and/or the Minister for Finance and Deregulation (Finance Minister) in relation to
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Submission by the Department of Finance and Deregulation to the Administrative Review
Council’s inquiry into judicial review in Australia – July 2011.
decisions made pursuant to sections 33 and 34 of the Financial Management and
Accountability Act 1997 (FMA Act). These sections of the FMA Act vest in the Minister
the power to make act of grace payments and waive debts. This is further explained in
Finance Circular 2009/09 –
Discretionary Compensation and Waiver of Debt Mechanisms (Attachment A) and
Finance’s Submission to the Senate Legal and Constitutional Affairs References
Committee’s Review of Government Compensation Payments (Attachment B).
An aggrieved person can obtain a statement of reasons in respect of the decision under
section 13 of the ADJR Act and, under section 5, may request the Federal Court of
Australia or the Federal Magistrates Court consider the legality of the decision.
In Finance’s experience, the prospect of a review of a decision or decisions under the
ADJR Act has led to a focus on the grounds for judicial review as elements of sound
decision making. Specific examples of this are as follows – have the party or parties been
accorded procedural fairness (natural justice), that is, have the party or parties been given
a hearing and was the hearing fair; has there been bias and was the decision maker
impartial; has any statutory requirement been breached; have irrelevant considerations
been taken into account; was there a failure to take relevant considerations into account;
is the decision unreasonable; did the decision maker fulfil the duty to inquire into all
relevant material; was there evidence for the decision; has government policy
restricted/fettered the decision maker from exercising their discretion and making a
decision in favour of the person were it not for the policy; and a Minister cannot dictate
the decision to be reached.
In addition to scrutiny under the ADJR Act, Finance’s decisions on discretionary
compensation under the FMA Act are also subject to review by the Ombudsman pursuant
to the Ombudsman Act 1976. Under section 5 of that Act, the Ombudsman is empowered
to investigate claims, both at the request of a claimant and under its own motion. Both of
these channels of potential scrutiny – the Courts and the Ombudsman – encourage rigour
in ensuring processes are followed in accordance with relevant legislation. In the
interests of procedural fairness, Finance provides each claimant with information about
their review options when a decision is made not to make an act of grace payment and/or
waive a debt.
In relation to proceedings under the ADJR Act related to discretionary compensation,
they have been rare: there have been 13 instances of litigation under the ADJR Act since
2001. This represents 0.24% of claims. During that period, Finance has received 5,401
claims for act of grace payments and/or waivers of debt, 99 requests for statements of
reasons (1.83% of total claims), and 46 investigations by the Ombudsman (0.85% of total
claims).
Of the 13 litigated claims, three are ongoing, one resulted in a decision being set aside
and the remainder were either dismissed or discontinued – in no case has a claimant been
successful in a subsequent claim for compensation following litigation.
The current arrangements for judicial review and scrutiny by the Ombudsman continue to
have a normative effect in improving administrative decision making without imposing
onerous costs in the management and operation of the discretionary powers of the FMA
Act.
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Submission by the Department of Finance and Deregulation to the Administrative Review
Council’s inquiry into judicial review in Australia – July 2011.
Executive Schemes
The authority for the establishment and management of executive schemes relies on
section 61 of the Constitution which provides that the executive power of the
Commonwealth “extends to the execution and maintenance of the Constitution, and of the
laws of the Commonwealth”. The section does not define the power.
In general, executive schemes are targeted at large groups of stakeholders, such as
members of a particular industry or region. They are subject to judicial review under the
Constitution and section 39(b) of the Judiciary Act 1903. The schemes offer speed and
flexibility in order to meet the requirements of the Executive, but as the Ombudsman has
noted, there can be an increased risk to accountability.1
There are a considerable number of executive schemes dealing with a diverse array of
areas in public life2, for example, the F-111 deseal/reseal program administered by the
Department of Veterans’ Affairs (DVA) and the liquid petroleum gas vehicle scheme
administered by the Department of Innovation, Industry, Science and Research (DIISR)3.
Finance has policy responsibility for an executive scheme, the Scheme for Compensation
for Detriment caused by Defective Administration (the CDDA Scheme)4. The CDDA
Scheme enables Government portfolio Ministers and authorised officials in FMA Act
departments/agencies to compensate individuals or other bodies who have experienced
losses caused by a department’s/an agency’s defective administration. The Finance
Minister is responsible for the scheme, although individual Ministers are the relevant
decision-makers within their portfolios.
Current arrangements working
Under the CDDA Scheme, decisions are made at the discretion of the decision maker and
payments are approved on the basis that there is a moral, rather than a legal, obligation to
the person or body concerned. Each case is determined on its own merits. The principles
of procedural fairness are applied to CDDA matters and applicants must be treated
equitably.
Finance conducts reviews of the operation of the scheme as well as providing policy
advice. Finance first reviewed the CDDA scheme in 2004, and found that generally the
scheme was operating effectively, although there was room for further guidance by
Finance in the day-to-day processing of claims. Finance responded by updating its
guidance material in Finance Circular 2006/05.
1
Commonwealth Ombudsman, Executive schemes, 2009, Canberra, 1.
Commonwealth Ombudsman, Executive schemes, 2009, Canberra, 2.
3
Other schemes include the scheme administered by the Department of Education, Employment and
Workplace Relations (DEEWR) for payment of employee redundancy benefits in cases of financial
collapse; the DEEWR programs that provide incentives for engagement of apprentices; various grants
administered by the Department of Agriculture, Fisheries and Forestry (DAFF); a programme that provides
a one-off payment to certain carers, administered by Centrelink on behalf of the Department of Families,
Housing, Community Services and Indigenous Affairs (FaHCSIA); and the financial case management
scheme that provides emergency assistance to certain Centrelink clients.
4
Department of Finance and Deregulation, Finance Circular No 2009/09 – Discretionary Compensation
and Waiver of Debt Mechanisms, 2009, Canberra.
2
9
Submission by the Department of Finance and Deregulation to the Administrative Review
Council’s inquiry into judicial review in Australia – July 2011.
Finance has just completed a further survey of agencies’ views on the operation of the
scheme, including in relation to the Ombudsman’s suggestion of the creation of an
advisory or review panel dealing with sensitive or disputed claims. In response,
departments and agencies generally suggested that the Ombudsman’s current role and
exercise of its powers is addressing the needs of stakeholders.
The Ombudsman has noted “the survival of the CDDA scheme probably depends upon it
remaining an administrative scheme under which decisions are not routinely subject to
court or tribunal review.”5 The Ombudsman has developed advice and information on
decision making, particularly in relation to the operation of executive schemes.6
The extension of the purview of the ADJR Act to CDDA would change the nature of the
ADJR Act, since it deals with decisions made ‘under an enactment’. It also has the
potential to set a precedent for the application of the ADJR Act to decisions outside an
enactment. Under the separation of powers in the Constitution between the legislature
and the judicature, the focus by the courts is on the legality and enforcement of a decision
and not its merits.7
Finance supports the continuation of the current arrangements for the review of decisions
in executive schemes. Executive schemes provide the executive with flexibility in
dealing with administrative challenges arising from the diversity of its activities. As
noted in the discussion paper, the ADJR Act does not enable judicial review of decisions
unless they are made under an enactment. 8 The role of the Ombudsman is well suited to
the review of decisions made under executive schemes, noting that the option of judicial
review can be exercised through s 39 (b) Judiciary Act 1903 and the Constitution.
Extension of the ADJR Act to Procurement Decisions
Under current arrangements, officials comply with a legislative framework that ensures
procurement decisions and processes are transparent, accountable, in-line with
government policy and achieving value for money. As part of this framework, a range of
mechanisms are available for reviewing the procurement process itself and the
administrative decisions relating to a particular procurement. These include discussions
between an agency and the tenderer or supplier through to possible review by the
Australian Government Procurement Coordinator, Commonwealth Ombudsman or
ultimately the civil legal system. An additional external avenue is the ability to make
Ministerial representations through a local member of the Commonwealth Parliament.
This scaled approach provides a balance between scrutiny of administrative decisions and
enabling agencies to achieve the Government’s policy, programme and service delivery
outcomes in a timely and efficient manner.
To date, there has been no indication provided to Finance, either from agencies, suppliers
or interested third parties, that the current process requires review or that the ADJR Act
should cover procurement decisions. The current arrangements ensure that procurement
processes are efficient and decisions are made and justified in a manner commensurate
with the needs of the procurement. Any expansion of the ADJR Act to include
5
Commonwealth Ombudsman, 2009, Putting things right: compensating for defective administration, 20.
Commonwealth Ombudsman, 2009, Executive schemes, Canberra, 27-29.
7
Administrative Review Council, 2011, Judicial Review in Australia, Canberra, 37.
8
Administrative Review Council, 2011, Judicial Review in Australia, Canberra, 61.
6
9
Submission by the Department of Finance and Deregulation to the Administrative Review
Council’s inquiry into judicial review in Australia – July 2011.
procurement decisions is likely to increase compliance costs for both agencies and
suppliers, reduce the flexibility of the existing framework and cause delays to
procurement outcomes while potentially unmeritorious claims are considered through the
ADJR Act process.
Exclusions from the ADJR Act
Exemptions to the operation of a statute have the potential to reduce its coverage and
overall impact. An issue is whether the classes of decisions excluded from the operation
of the ADJR Act reduces its normative effect in promoting better administrative decision
making.
Some areas of Finance’s responsibilities are excluded from the ADJR Act by its
schedules. They are:



Schedule 1(zb): relating to Snowy Hydro Limited (SHL). This is appropriate as
SHL operates in a commercial environment and the Commonwealth has a
minority interest;
Schedule 2(h): relating to section 27 of the FMA Act, relating to drawing rights;
and
Schedule 2(y): relating to the employment and termination of Members of
Parliament (Staff) Act 1984 (MOP(S) Act) employees and consultants. This
remains appropriate as such employment decisions are not based on a merit
selection process and the Fair Work Act 2009 provides grounds for review of
termination and relations with consultants can be addressed through a contract of
service.
Finance does not consider that there exists a policy rationale for change to these
exemptions.
The reference in paragraph (q) of Schedule 1 to the ADJR Act is to a non-existent Part
IIIA of the Commonwealth Electoral Act 1918 (the CE Act). Prior to 1983, Part IIIA of
the CE Act dealt with redistributions. Those provisions are now contained in Part IV of
the CE Act. Accordingly, the reference to Part IIIA in paragraph (q) of Schedule 1 to the
ADJR Act appears to be superfluous.
Dispute Management Capabilities in the Commonwealth, including
Alternative Dispute Resolution
Any consideration of potential changes to the current system of judicial review needs to
take into account the range of dispute management capabilities available at the
Commonwealth level,9 which may mitigate against the need for judicial review. The
onus is on a department/agency to manage a dispute using the available capabilities,
including alternative dispute resolution and seek to resolve a dispute efficiently. The
available capabilities may lead to the early resolution of a dispute and avoid the costs of
litigation.
The extension of judicial review may have an unintended consequence. It may detract
from the exercise of available dispute management capabilities in the Commonwealth and
9
This matter is elaborated on in a letter from Department of Finance and Deregulation to Professor the Hon
Murray Kellam AO, 29 March 2010, (Attachment C).
9
Submission by the Department of Finance and Deregulation to the Administrative Review
Council’s inquiry into judicial review in Australia – July 2011.
militate against the development of broader administrative capability in the development
of better administrative decision making.
Extension of the CDDA Scheme to CAC Act bodies and third parties
In its report Review of Government Compensation Arrangements, the Senate Legal and
Constitutional Affairs Reference Committee recommended that Finance consider the
extension of the CDDA Scheme to bodies covered by the Commonwealth Authorities and
Companies Act 1997 (CAC Act) and to third parties performing functions or providing
services on behalf of the Australian Government.10 Finance is currently investigating this
recommendation.
Ex gratia payments
The basis for ex gratia payments emanates from s 61 of the Constitution. The ex gratia
mechanism provides flexibility to the Government in responding urgently to events, for
example, financial relief to persons affected by the floods in Katharine, Northern
Territory, in 1998 and to families who needed to visit an injured member after the
bombings in Bali in 2002. Ex gratia payments are reported in the relevant portfolio
Annual Report and in Portfolio Budget Statements. The Council’s comments on the
appropriateness of the current accountability framework of ex gratia payments would be
useful and welcome.
ARC’s non-legislative option
As the discussion paper notes, the codification of principles of good decision making in
the ADJR Act has simplified judicial review and provided improved access for the public
in the review of administrative decisions.11 The proposal for the development of policy
principles by the Council to guide judicial review of government decisions would be a
continuation of this process in line with the advice and information promulgated by the
Ombudsman’s Office in relation to decision making, and the guidance provided by
Finance on the operation of the discretionary compensation mechanisms. As noted
above, the principles enshrined in the ADJR Act underpin good decision making, and
their formulation in a policy document could be a useful addition, in the interests of
sound public policy.
There may be merit in the production and dissemination by the Council of such a
guidance document for all officials involved in administrative decision making, whether
under legislation or under an executive scheme. It could build upon section 5 of the
ADJR Act and elicit the principles which underpin the ADJR Act.
Conclusion
10
Senate Legal and Constitutional Affairs References Committee 2010, Review of Government
Compensation Payments, Canberra.
11
Administrative Review Council, 2011, Judicial Review in Australia, Canberra, 37.
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Submission by the Department of Finance and Deregulation to the Administrative Review
Council’s inquiry into judicial review in Australia – July 2011.
In summary, Finance considers that the existing regime of judicial review strikes an
appropriate balance between administrative efficiency on the one hand, and on the other
fairness for the citizen and the positive normative impact on administrative decision
making that judicial review brings.
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Submission by the Department of Finance and Deregulation to the Administrative Review
Council’s inquiry into judicial review in Australia – July 2011.
Bibliography
Legislation
Administrative Decisions (Judicial Review) Act 1977
Commonwealth Of Australia Constitution Act
Financial Management and Accountability Act 1997
Judiciary Act 1903
Policy
Finance Circular 2009/09 - Discretionary Compensation and Waiver of Debt
Mechanisms (Attachment A).
Reports and submissions
Administrative Review Council, 2011, Judicial Review in Australia, Canberra.
Commonwealth Ombudsman, 2009, Executive schemes, Canberra.
Commonwealth Ombudsman , 2009, Putting things right: compensating for defective
administration, Canberra.
Department of Finance and Deregulation, 2010, Department of Finance and Deregulation
Submission to the Legal and Constitutional Affairs References Committee into
Government Compensation Payments, Canberra. (Attachment B)
Miscellaneous
Letter from Department of Finance and Deregulation to Professor the Hon Murray Kellam
AO, 29 March 2010 (Attachment C).
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