Senate

Second Reading Speech

Senator Scullion (Minister for Indigenous Affairs and Leader of The Nationals in the Senate)

I present the explanatory memoranda and I move:

That this bill be now read a second time.

I seek leave to have the second reading speeches incorporated in Hansard.

The Courts Administration Legislation Amendment Bill, will merge the corporate services functions of the Federal Court of Australia with those of the Family Court of Australia and the Federal Circuit Court of Australia, and bring the courts together as a single administrative entity.

But in doing this, the Bill will set the scene for achieving a vital public policy outcome: placing the courts on a sustainable funding footing over the longer term, leaving them far better placed to deliver services to litigants. This is because savings arising from the efficiencies will be reinvested in the courts. This is an important point. These are not savings to be extracted and returned to Government. Savings will be retained by the courts to benefit the courts.

As the Bill solely deals with the administration of the courts, it will have no impact on the judicial and functional independence of each court. The Bill maintains and supports the separate standing of each of the courts concerned.

The imperative to merge corporate services

The merger of the courts' corporate services was central to the package of measures announced by the Government as part of its 2015-16 Budget Streamlining and Improving the Sustainability of Courts.

The pressing need for efficiencies forecast from the merger is manifest. The Family Court and Federal Circuit Court, in particular, are facing significant budgetary pressures and ongoing deficits. The serious financial circumstances of the family courts triggered the need for the Government to consider and implement this reform.

The community understands the fundamental importance of the courts' independence and impartiality to ensure integrity and transparency in the judicial system. However, the community also demands the efficient and effective use of taxpayers' funds, particularly in the current tight fiscal environment. All arms of government are currently expected to operate within these constraints.

Constitutional protections, of course, are in place for the courts to preserve the separation of powers and ensure their independence. Appropriately, however, the Executive Government and the Parliament retain oversight of the courts' operating budgets.

At the time of the Budget, the family courts were projecting over $44 million in operating losses over the forward estimates. The Government could not allow these losses to continue unabated.

Without the merger implemented by the Bill, alternative and much less palatable measures would need to be explored to allow budgets to be met. Because access to the courts is a fundamental tenet upon which our justice system is based, the Government was anxious to ensure budget rectitude did not result in frontline court services being cut.

The performance, funding and operation of the courts has been considered in many reviews and reports. These provided a strong evidence base for the Government's decision.

The 2012 Skehill Strategic Review of Small and Medium Agencies in the Attorney-General's Portfolio considered there was merit in the idea of amalgamating the corporate services functions of the federal courts.

Most recently, amalgamation was recommended by the 2014 National Commission of Audit Report, Towards Responsible Government, and the 2014 KPMG review into the performance and funding of the federal courts.

The KPMG review also highlighted the necessity to address the unsustainable financial position of the federal courts as it found that the courts were on track for a deficit of almost $75 million by 2017-18.

Further independent analysis conducted by Ernst & Young in 2015 identified potential savings and efficiencies to be gained from a merger model.

Merging the courts' corporate functions is projected to deliver efficiencies to the courts of $9.4 million over the six financial years to 2020-21 and result in ongoing annual efficiencies of $5.4 million from this time.

In turn, this will create potential for further organisational agility through economies of scale and improvements in the long term financial sustainability of the courts.

Importantly, the savings and ongoing efficiencies generated are to be reinvested into the federal courts to support the delivery of their core business of providing justice for Australian litigants.

Corporate services efficiency

Currently, the Family Court and Federal Circuit Court maintain separate corporate administrative structures to the Federal Court. More effective and efficient services will be delivered through the sharing of financial, human resources, information technology, property and operational corporate services.

There is increasing recognition that, although courts are specialised institutions, they share characteristics with other large public organisations with many staff and large systems.

Courts' administration, therefore, can benefit from increased collaboration, organisational streamlining and centralised corporate services, within appropriate frameworks.

With ever-growing caseloads and the current tight fiscal environment facing all arms of government, more efficient administration provides scope to relieve some of the administrative burden on our federal courts.

This is consistent with Government's commitment to reduce inefficiencies in public administration by removing unnecessary duplication.

Staff of the single administrative entity will have new opportunities to share their knowledge and expertise with a larger group of colleagues.

Working groups consisting of key corporate services representatives from each court have already been established, collaborating to complete the essential implementation planning for a 1 July 2016 commencement.

Merged model and maintaining courts' independence

The Bill is directed to the organisation and administration of the courts. It, of course, maintains the protection of the judicial and functional independence of the courts in accordance with the Constitution, while promoting their effective management.

Access to justice for court users will not be affected. Each court will maintain its separate and distinct judiciary, with no changes made to the courts' jurisdiction. Therefore, there will be no loss of family law or general federal law expertise across the courts.

The Bill consists of a carefully designed governance structure to preserve the autonomy of the heads of jurisdiction in relation to their own courts. Heads of jurisdiction will retain responsibility for managing the administrative affairs of their respective courts (excluding corporate services).

The separate and independent standing of each court will be further supported through replacing the position of joint Chief Executive Officer (CEO) of the Family Court and Federal Circuit Court with separate CEOs for each court. This will ensure each head of jurisdiction has a dedicated CEO to assist in managing the administrative affairs of their respective court.

To facilitate this amalgamation, the courts will be designated as a single entity under the Public Governance, Performance and Accountability Act 2013 (the finance law) and a single statutory agency under the Public Service Act 1999 from 1 July 2016.

The Bill will place control of corporate services in the hands of the Federal Court CEO. The Federal Court CEO will also hold the roles of accountable authority under the finance law and agency head under the Public Service Act.

This does not mean that the Federal Court will be 'taking over' the running of the Family Court and Federal Circuit Court. Each court will remain independent in their core functions and will not be subject to the control of another court.

The Federal Court CEO's pivotal role in delivering shared corporate services is key to generating the expected savings from the amalgamation. Mr Warwick Soden OAM, renowned for his sound financial management, will continue in the role.

Mechanisms exist in the Bill to ensure consultation between the Federal Court CEO and heads of jurisdiction and the other CEOs for decisions relating to corporate services matters.

The Bill contains provisions to ensure the Federal Court CEO makes relevant delegations to the Family Court CEO and the Federal Circuit Court CEO, in relation to the administrative affairs of their respective courts. The Federal Court CEO will be under a general statutory duty to ensure the other two CEOs have the necessary powers and functions to fulfil their roles.

Further detail in relation to these matters will be set out in a Memorandum of Understanding between the courts.

The Bill also contains provisions to safeguard the allocated budget of each court within the single administrative entity.

Merging the courts into a single administrative entity with shared corporate service is not a new idea. In many ways, it is consistent with the historical administration of the courts by the Attorney-General's Department prior to the courts becoming self-administering in the latter part of the last century. This is still the approach taken in many state jurisdictions.

There is an important difference: the corporate services to be provided to the courts are to be provided by a court and not a government department. It is entirely consistent with the Government's view that the courts, as an entity, are self-administering within the legislative and budgetary obligations placed on government entities.

Key features of the Bill

Schedules 1 to 3 of the Bill will facilitate the establishment of the single administrative entity under the finance law through amendments to the legislation governing the Federal Court, Family Court and Federal Circuit Court.

Schedule 1 of the Bill amends the Federal Court of Australia Act 1976 to support the merger. It provides for the courts to become a single entity under the finance law and a single statutory agency under the Public Service Act.

Powers and functions relevant to the finance law and the Public Service Act, including appointment powers, are centralised in Schedule 1. These powers are given to the Federal Court CEO, with delegations to be given to the other CEOs in relation to the administrative affairs of their respective courts. The position of the Federal Court CEO will be retitled.

The Bill clearly delineates what is within corporate services and these items are excluded from the administrative affairs of the courts. Corporate services are defined as including communications, finance, human resources, information technology, library services, procurement and contract management, property, risk oversight and management, and statistics. Critical security functions will remain within the administrative affairs of the courts.

Schedule 2 and 3 of the Bill contain amendments to the Family Law Act 1975 and the Federal Circuit Court of Australia Act 1999, respectively, to support the changes, including defining corporate services and repealing provisions that will be centralised in the Federal Court Act.

A separate position of Federal Circuit Court CEO will be established and the position of Family Court CEO retitled, to effect the separation of this role into a CEO for both courts. Each CEO will also hold the position of Principal Registrar, with the combined Family Court CEO and Principal Registrar role to take effect from 1 January 2018.

Schedule 4 of the Bill amends the Native Title Act 1993 to reflect the amalgamation and update references to position titles.

Schedule 5 of the Bill consists of consequential and other amendments to a number of Acts to change and update relevant titles and references.

Schedule 6 of the Bill provides for transitional arrangements to ensure the courts can continue their administrative and corporate services functions without disruption at the date of the merger. There is also a rule making power to respond to further areas where clarity in transitional arrangements is required.

Conclusion

The Courts Administration Legislation Amendment Bill signals a significant reform in the approach taken to the management and administration of Australia's federal courts.

The merger will facilitate not only short term savings but also substantial scope for longer term efficiencies, all to be reinvested in the courts to ensure their financial viability. The Bill implicitly upholds the key features underlying our federal courts system, such as independence and impartiality.

As a lynchpin to ensuring the financial sustainability of the federal courts into the future, the merger will enable the courts to continue to deliver core judicial services to litigants without compromising access to justice.