Patrick and Secretary, Department of Prime Minister and Cabinet (Freedom of information)
[2020] AATA 4964
•9 December 2020
Patrick and Secretary, Department of Prime Minister and Cabinet (Freedom of information) [2020] AATA 4964 (9 December 2020)
Division:FREEDOM OF INFORMATION DIVISION
File Number(s): 2019/2805
Re:Senator Rex Patrick
APPLICANT
AndSecretary, Department of Prime Minister and Cabinet
SECRETARY
DECISION
Tribunal:Deputy President Britten-Jones
Date:9 December 2020
Place:Adelaide
The decision under review dated 7 December 2018 and amended on 30 June 2020 is set aside and substituted with a decision that:
(1)the document in issue to which the applicant sought access by letter dated 22 October 2018 is not exempt under s 31B of the Freedom of Information Act 1982; and
(2)the applicant is given access to that document except for those parts as agreed between the parties.
...........................[sgnd]..........................................
Deputy President Britten-Jones
CATCHWORDS
FREEDOM OF INFORMATION – audit report from Auditor-General - exemptions claimed under ss 33(a)(ii) (damage to defence of the commonwealth), 47C (deliberative processes), 47D (effect on financial interests of the Commonwealth) and 47G(1)(a) (affect lawful business, commercial or financial affairs) of the Freedom of Information Act 1982 - majority of report publicly disclosed - given the extent of the disclosure and other publicly available information there are no grounds to maintain a claim for exemption from disclosure – the causative elements of ss 33, 47D and 47G(1)(a) are not satisfied – the disclosure of the audit report would not disclose deliberative matter under s 47C(1) - the document is not exempt under s 33 and is not conditionally exempt under ss 47C, 47D or 47G(1)(a) – the decision refusing access to part of the audit report is set aside
LEGISLATION
Freedom of Information Act 1982
Auditor-General Act 1997
CASES
Attorney-General’s Department v Cockcroft (1986) 10 FCR
Commonwealth v Hittich (1994) 53 FCR 152
Department of Foreign Affairs and Trade v Whittaker [2005] FCAFC 15
Kioa v West (1985) 159 CLR 550
Kline v Official Secretary to the Governor-General (2013) 249 CLR 645.
Re Marnotta Pty Ltd and Secretary, Department of Health and Ageing [2004] AATA 800
Re James and Australian National University (1984) 6 ALD 687
Re JE Waterford and Department of Treasury (No 2) [1984] AATA 67
Secretary, Department of Prime Minister and Cabinet and Summers [2019] AATA 5537
Secretary, Department of Foreign Affairs and Trade v Whittaker (2005) 143 FCR 15
SECONDARY MATERIALS
The FOI Guidelines under s 93A of the Freedom of Information Act 1982
REASONS FOR DECISION
Deputy President Britten-Jones
9 December 2020
On 6 September 2018, the Auditor-General completed an audit report with respect to the acquisition by the Department of Defence of a fleet of vehicles described as ‘protected mobility vehicles – light’ and known as the Hawkei. The report was not released publicly, but was provided to the Prime Minister under s 37(5)(b) of the Auditor-General Act 1997 because of a certificate issued by the Attorney-General under s 37(1)(b) of that Act in which he opined that disclosure of the report would be contrary to the public interest. The applicant, Senator Patrick, sought access to the report from the Department of Prime Minister and Cabinet under the Freedom of Information Act 1982 (the FOI Act). That access was refused by a decision dated 7 December 2018 and Senator Patrick has applied to the Tribunal for a review of that decision. By consent of the parties on 30 June 2020, the Tribunal amended the decision of 7 December 2018 pursuant to s 26(1)(b) of the Administrative Appeals Tribunal Act 1975 so that the applicant was granted access to further parts of the report.
The majority of the report has been publicly disclosed as is apparent from the copy of the report with redactions which was tendered as an exhibit at the hearing.[1] I will refer to the report as redacted as the Redacted Report. The dispute is confined to those paragraphs of the report (the Disputed Material)[2] which the Secretary claims are exempt from disclosure under ss 33(a)(ii), 47C, 47D and 47G(1)(a) of the FOI Act.[3]
[1] Exhibit 2, Auditor General Report – redacted.
[2] See the terms of the consent direction made by the Tribunal on 30 June 2020.
[3] A claim under s 45 of the FOI Act was resolved by agreement during the course of the hearing.
I heard evidence and submissions from the parties on 23 and 24 July 2020. A few days after the hearing, in accordance with the procedure discussed between the parties and s 58E of the FOI Act, the Secretary provided the Tribunal with a copy of the unredacted report containing the Disputed Material. The hearing continued on 4 September 2020 when the parties made further submissions in response to some issues that arose from me having read the Disputed Material for the first time. On 10 November 2020, the Tribunal wrote to the Inspector-General of Intelligence and Security requesting that he appear personally and give evidence as required by s 60A of the FOI Act. In response, the Inspector-General advised that he was not appropriately qualified to give evidence on the issue of what harm, if any, may be caused by the disclosure of the Disputed Material.
The primary submission of the applicant is that, given the extent of the disclosure of the Redacted Report and other publicly available information, there are no grounds to maintain a claim for exemption from disclosure. For the reasons that follow, I accept that submission and would grant Senator Patrick access to the Disputed Material.
Statement of Agreed facts
A statement of facts agreed between the parties provided some background:
[9] On 11 March 2017 the Auditor-General commenced a performance audit into the procurement of Hawkei light protected mobility vehicles from Thales Australia Limited (Thales) by the Department of Defence.
[10] By about December 2017 the Auditor-General held a draft report substantially in the form in which he intended to table it in Parliament. Both Thales and Defence were aware of the content of the draft report as it stood at that time.
[11] On 5 January 2018 Thales applied to the Attorney-General for a certificate under paragraph 37(1)(b) of the [Auditor-General] Act in respect of certain content in the draft report, on the basis that publication of this content would be contrary to the public interest because it would unfairly prejudice Thales’s commercial interests.
[12] On 29 January 2018, Thales initiated proceedings in the Federal Court of Australia seeking review of the Auditor-General’s decision to include certain material in the public report.
[13] The Originating Application filed by Thales stated, inter alia:
… The Hawkei is designed and manufactured by Thales under a contract with the Commonwealth of Australia, pursuant to which the Commonwealth owns intellectual property in the Hawkei.
The vehicle cost-comparison in the Impugned Paragraphs is highly prejudicial to the commercial interests of Thales, the Commonwealth of Australia, and Australian entities in the supply chain for the production of the Hawkei. The vehicle cost-comparison in the Impugned Paragraphs purports to benchmark the cost and capability of the Hawkei and JLTV,[4] in a way that implies that the JLTV is comparable and commensurable to the Hawkei, but approximately half the price. This would prejudice Thales, the Commonwealth of Australia, and Australian entities in the supply chain for the production of the Hawkei because it would detrimentally impact the marketability, and therefore the export prospects, of the Hawkei.
[4] I will adopt in these reasons the abbreviation of JLTV which stands for the joint light tactical vehicle manufactured in the United States.
The commercial prejudice identified at [5] above would be "unfair" within the meaning of s 37(2)(e) of the Auditor-General Act because the vehicle cost-comparison in the Impugned Paragraphs is itself unfair, does not comply with applicable Auditing Standards, and is of no probative value. That is because the comparison involves comparing vehicles which have relevantly different characteristics and qualities, using public domain material (in relation to the JLTV) which does not disclose the full terms of the transactions, and the comparison fails to take into account benefits to the Commonwealth which it would not obtain on a purchase of the JLTV. The vehicle cost comparison has little or no value in explaining the performance of the audited entity in achieving its purposes.
…
The Decision is contrary to the interests of Thales.
The Originating Application is a publicly accessible document.
[15] On 28 June 2018 the Attorney-General issued a certificate under paragraph 37(1)(b) of the [Auditor-General] Act which stated that in his opinion inclusion of certain information contained in the public report would be contrary to the public interest for one or both of the following reasons:
a. it would prejudice the security, defence or international relations of the Commonwealth (paragraph 37(2)(a)); and
b. it would unfairly prejudice the commercial interests of anybody or person (paragraph 37(2)(e)).
[16] On 9 July 2018 the Federal Court made orders by consent dismissing the proceeding.
[17] On 20 August 2018 Thales made a second application to the Attorney-General for a further certificate under paragraph 37(1)(b) of the [Auditor-General] Act in relation to additional information proposed to be included in the public report.
[18] The Attorney-General did not issue a certificate on this occasion as the Auditor General agreed to remove that information from the report.
[19] On 11 September 2018 a redacted audit report was published by the Australian National Audit Office.
[20] On 6 September 2018 the Auditor-General wrote to the Prime Minister attaching a report prepared under subsection 37(5) of the [Auditor-General] Act. This report contained the content of the public report subject to the Attorney-General’s certificate (which included the ‘Impugned Paragraphs’ referred to in Thales’ Federal Court Originating Application). It also included the additional information which Thales had raised an objection to in August 2018.
The Legislative Framework
The High Court considered the legislative framework of the FOI Act in Kline v Official Secretary to the Governor-General[5] and said:
.… The statutory scheme is complex in achieving a balance between the exposure of some government processes and activities to increased public participation and scrutiny, by making information freely available to persons on request, and exempting other government processes and activities from public participation and scrutiny, in order to secure a competing or conflicting public interest in non-disclosure.
[5] [2013] HCA 52; (2013) 249 CLR 645 at [37] per French CJ, Crennan, Kiefel and Bell JJ.
The general objects of the FOI Act are set out in s 3 as follows:
(1)The objects of this Act are to give the Australian community access to information held by the Government of the Commonwealth, by:
(a) requiring agencies to publish the information; and
(b) providing for a right of access to documents.
(2)The Parliament intends, by these objects, to promote Australia’s representative democracy by contributing towards the following:
(a) increasing public participation in Government processes, with a view to promoting better-informed decision-making;
(b) increasing scrutiny, discussion, comment and review of the Government’s activities.
(3)The Parliament also intends, by these objects, to increase recognition that information held by the Government is to be managed for public purposes, and is a national resource.
(4)The Parliament also intends that functions and powers given by this Act are to be performed and exercised, as far as possible, to facilitate and promote public access to information, promptly and at the lowest reasonable cost.
In furtherance of the object in s 3(1)(b) of the FOI Act, s 11(1) provides that:
(1)Subject to this Act, every person has a legally enforceable right to obtain access in accordance with this Act to:
(a) a document of an agency, other than an exempt document; or
(b) an official document of a Minister, other than an exempt document.
Section 11A(3) provides that where a person makes a request in accordance with s 15(2) to an agency or Minister for access to a document and pays the required charge, the agency or Minister must give the person access to the document in accordance with the Act ‘subject to this section’. Section 11A(4) provides that the agency or Minister is not required to give the person access to the document if the document is an exempt document. Section 11A(5) provides that the agency or Minister must give access to the document if it is conditionally exempt unless access to the document would be contrary to the public interest.
The term “exempt document” is relevantly defined in s 4(1) to include: ‘a document that is exempt for the purposes of Part IV (exempt documents) (see section 31B)’. Section 31B provides that:
A document is exempt for the purposes of this Part if:
(a) it is an exempt document under Division 2; or
(b) it is conditionally exempt under Division 3, and access to the document would, on balance, be contrary to the public interest for the purposes of subsection 11A(5)
Section 33 in Division 2 of Part IV of the FOI Act provides that:
A document is an exempt document if disclosure of the document under this Act:
(a) would, or could reasonably be expected to, cause damage to:
(i) the security of the Commonwealth;
(ii) the defence of the Commonwealth; or
(iii) the international relations of the Commonwealth; or
(b) would divulge any information or matter communicated in confidence by or on behalf of a foreign government, an authority of a foreign government or an international organization to the Government of the Commonwealth, to an authority of the Commonwealth or to a person receiving the communication on behalf of the Commonwealth or of an authority of the Commonwealth.
Note: See also subsection 4(10).
In Secretary, Department of Prime Minister and Cabinet and Summers[6] Perry J said with respect to s 33 of the FOI Act:
[33] First, as the Full Court held in Commonwealth v Hittich (1994) 53 FCR 152 at 154, s 33(a)(iii) (then s 33(1)(a)(iii)) “does not provide any basis for a public interest criterion extending beyond the terms of the section. Either a document is within the section, in which case it is an exempt document, or it is not … . Equally, the strong personal interest which an applicant may have in obtaining access to the document in question is irrelevant … .
[34] Secondly, the criteria prescribed by s 33(a) and (b) do not turn upon an assessment of the reasonableness of the Department’s claims. Rather, they turn upon cause and effect which can reasonably be anticipated … .
[35] Thirdly, the Full Court observed in Secretary, Department of Foreign Affairs and Trade v Whittaker [2005] FCAFC 15; (2005) 143 FCR 15 ; (Whittaker) that the relevant time for considering damage that might be caused by disclosure for the purposes of s 33(a) is the time at which disclosure is to occur, in contrast to s 33(b). As the Court explained:
26.… That is to say, disclosure of a document at the time of its creation might cause damage, but if at the time when access is sought disclosure would not cause damage, the document will not be exempt under s 33(1)(a)(iii). On the other hand, if disclosure of a document, whenever the disclosure is made, would divulge any matter communicated in confidence, the document will be exempt under s 33(1)(b), even if that matter is no longer confidential at the time when access is sought.
[36] Finally, it is clear from s 58(2) that the Tribunal has no discretion to permit disclosure once satisfied that the ground of exemption in s 33(a) or (b) is established even though an agency may permit access in accordance with other laws and practices … .
[6] [2019] AATA 5537 at [32]–[36] removing some citations.
The words ‘would, or could reasonably be expected to’ in s 33 should be given their ordinary meaning:[7]
That is to say, they require a judgment to be made by the decision-maker as to whether it is reasonable, as distinct from something that is irrational, absurd or ridiculous, to expect that those who would otherwise supply information of the prescribed kind to the Commonwealth or any agency would decline to do so if the document in question were disclosed under the Act. It is undesirable to attempt any paraphrase of these words. In particular, it is undesirable to consider the operation of the provision in terms of probabilities or possibilities or the like. To construe s 43(1)(c)(ii) as depending in its application upon the occurrence of certain events in terms of any specific degree of likelihood or probability is, in our view, to place an unwarranted gloss upon the relatively plain words of the Act. It is preferable to confine the inquiry to whether the expectation claimed was reasonably based: see Kioa v West [(1985) 159 CLR 550] per Mason J and per Gibbs CJ.
[7] Attorney-General’s Department v Cockcroft (1986) 10 FCR 180 at 190.
The Tribunal is required by s 93A of the FOI Act to have regard to any guidelines issued by the Information Commissioner. The FOI Guidelines with respect to exemptions provides at [5.17]:
The use of the word “could” in this qualification is less stringent than “would”, and requires analysis of the reasonable expectation rather than certainty of an event, defect or damage occurring. It may be a reasonable expectation that an effect on has occurred, is presently occurring, or could occur in the future.
Division 3 of Part IV provides for public interest conditional exemptions including ss 47D and 47G(1)(a). There is a causative element in these sections requiring the disclosure of the Disputed Material to have a certain impact:
(a)Section 47D provides that a document is conditionally exempt if its disclosure would have a substantial adverse effect on the financial or property interests of the Commonwealth or of an agency.
(b)Section 47G(1)(a) provides that a document is conditionally exempt if its disclosure would disclose certain business or professional affairs information and which disclosure would, or could reasonably be expected to, unreasonably affect that person adversely in respect of his or her lawful business or professional affairs or that organisation or undertaking in respect of its lawful business, commercial or financial affairs.
Division 3 of Part IV also includes s 47C on which the Secretary relies to refuse access to the Disputed Material on the basis that it is conditionally exempt. The general rule under s 47C(1) is that a document is conditionally exempt if its disclosure would disclose matter (deliberative matter) in the nature of, or relating to, opinion, advice or recommendation obtained, prepared or recorded, or consultation or deliberation that has taken place, in the course of, or for the purposes of, the deliberative processes involved in the functions of an agency, a Minister or the Government of the Commonwealth.
The FOI Guidelines provide some guidance with respect to a ‘deliberative process’ and a ‘deliberative matter’:
6.58 A deliberative process involves the exercise of judgement in developing and making a selection from different options:
The action of deliberating, in common understanding, involves the weighing up or evaluation of the competing arguments or considerations that may have a bearing upon one’s course of action. In short, the deliberative processes involved in the functions of an agency are its thinking processes – the processes of reflection, for example, upon the wisdom and expediency of a proposal, a particular decision or a course of action.
6.59 ‘Deliberative process’ generally refers to the process of weighing up or evaluating competing arguments or considerations or to thinking processes – the process of reflection, for example, upon the wisdom and expediency of a proposal, the particular decision or a course of action.
6.66 Material that is not deliberative matter … would include … the decision or conclusion reached at the end of the deliberative process.
Public Interest
As stated above, ss 47C, 47D and 47G(1)(a) provide for public interest conditional exemptions. Section 31B(b) provides that a document is exempt if it is conditionally exempt and access to the document would be contrary to the public interest. A document will only be exempt from disclosure under s 31B(b) if both limbs are satisfied. In these reasons, I will first consider whether the Disputed Material is conditionally exempt under the relevant provisions in Division 3 of part IV. If the Disputed Material is conditionally exempt, then I will go on to consider the public interest. If not conditionally exempt, then there is no need to consider the public interest because s 31B(b) requires both of its limbs to be satisfied.
Support for this approach comes from the structure of the FOI Act which provides in Division 3 of Part IV certain public interest conditional exemptions. These are exemptions that are conditional on access to the document being contrary to the public interest i.e. the document will be exempt from disclosure, and access will not be provided, if its disclosure would be contrary to the public interest or, putting it another way, the document will not be exempt, and access will be provided, if its disclosure would not be contrary to the public interest. The first step is to consider whether the document (in this case) is conditionally exempt under s 47C, s 47D or s 47G(1)(a). If the document satisfies the statutory requirements for being conditionally exempt, then the next step is to consider whether its disclosure is contrary to the public interest. These two steps are expressed in item 2 of the table in s 31A which says that if a document is a conditionally exempt document under Division 3 (first column of the table) then access to the document is required to be given, unless it would be contrary to the public interest (second column of the table). This suggests that the first consideration is as to whether the document is a conditionally exempt document and then, only if satisfied of this, does one go on to consider the public interest.[8]
[8] See also s 11A(5).
Both s 11(5) and s 31B(b) apply to a document that is conditionally exempt under Division 3 of Part IV. If giving access to such a document would not be contrary to the public interest, then s 11(5) requires that access be given. If giving access to such a document would be contrary to the public interest, then s 31B(b) operates to disentitle access i.e. the document is exempt from disclosure. It follows that access to a conditionally exempt document depends on whether the access would be contrary to the public interest or not.
The Auditor-General report[9]
[9] Exhibit 2, Auditor General Report - redacted.
In order to understand the contention of Senator Patrick that the Disputed Material is not exempt from disclosure, it is necessary to consider the extent and content of the information made publicly available by the disclosure of the Redacted Report. Whilst conscious of the need to consider the Redacted Report as a whole and to read the Disputed Material in its context, I highlight the following statements which appear in the preliminary section of the Redacted Report entitled ‘summary and recommendations’:
[4] The object of the audit was to assess the effectiveness and value for money of Defence’s acquisition of light protected vehicles.
…
[12] … The 2011 decision to discontinue the Australian financial participation in the JLTV Program eroded Defence’s ability to benchmark its procurement of the Hawkei against a comparable vehicle. In the absence of reliable benchmark information, there was a reduction in Defence’s ability to evaluate whether procurement of the Hawkei clearly represented value for money.
[13] Defence did not provide robust benchmarking of the Hawkei and Joint Light Tactical Vehicle options to the Government at Second Pass, to inform the Government’s decision in the context of a sole-source procurement. At Second Pass, Defence advised the Government that the Hawkei would be approximately 23% more expensive to acquire than the Joint Light Tactical Vehicle but would also be more capable. Without robust benchmarking of cost and capability, Defence was also unable to apply competitive pressure in its negotiations with Thales.
The Redacted Report contains the following in the main body of the report:
3. Conclusion
… The 2011 decision to discontinue Australian financial participation in the JLTV program eroded Defence’s ability to benchmark its procurement of the Hawkei against the comparable vehicle. In the absence of reliable benchmark information, there was a reduction in Defence’s ability to evaluate whether procurement of the Hawkei clearly represented value for money.
3.33 At Interim Pass, the Department of Finance’s advice to the Government noted that the Hawkei target costs were three times those of the Joint Light Tactical Vehicle, and that the Hawkei was the least developed of the Manufactured and Supported in Australia options, having come last in the technical assessment. Finance recommended delaying Interim Pass until the status of the JLTV Program became clearer.
3.36 …
Defence calculations based on information provided by the JLTV Program Office in November 2011, showing that the Hawkei was 1.3 times the cost of the Joint Light Tactical Vehicle; and
Finance calculations based on a Congressional Research Service publication dated March 2011, showing that the Hawkei was nearly 3 times the cost of the Joint Light Tactical Vehicle.
4. Conclusion
Defence did not provide robust benchmarking of the Hawkei and Joint Light Tactical Vehicle options to the Government at Second Pass, to inform the Government’s decision in the context of a sole-source procurement. At Second Pass, Defence advised the Government that the Hawkei would be approximately 23% more expensive to acquire than the Joint Light Tactical Vehicle but would also be more capable. Without robust benchmarking of cost and capability, Defence was also unable to apply competitive pressure in its negotiations with Thales.
4.13 To assist with its value for money assessments, Defence engaged Deloitte in November 2014 to conduct a benchmarking analysis. Deloitte’s analysis, which relied on publicly available data, compared the Hawkei design against a 2011 Joint Light Tactical Vehicle concept design and to military off-the-shelf vehicles. According to the benchmarking, the Hawkei was “judged to be the second cheapest, but most compliant vehicle when assessed against the ADF capability requirements”.
4.14 … The cost assessment, which estimated the Hawkei is 23% more expensive to acquire than the Joint Light Tactical Vehicle, was based on 2011 information because Defence was no longer a JLTV Program partner.
4.17 At the final meeting of Defence’s Tender Evaluation Board on 21 January 2015, there was general consensus among Board members that there was not enough comparative evidence to indicate that the Thales tender response provided value for money.
4.34 Defence advised the Government that the benchmarking study it had commissioned from Deloitte indicated that, while the Hawkei would be 23% more expensive to acquire than the Joint Light Tactical Vehicle, a number of comparison points favoured the Hawkei over the Joint Light Tactical Vehicle.
4.36 … Oshkosh (a major United States truck manufacturer) was awarded a US$6.7 billion contract for 17 000 vehicles over eight years.
(A footnote referred to an article in the United States Army News Service dated 26 August 2015 and a media release dated 25 August 2015 entitled ‘U.S. Army Awards $6.7 Billion Joint Light Tactical Vehicle Contract to Oshkosh Corporation’.)
The purpose of setting out these extracts from the Redacted Report is to show the extent of information that is publicly available with respect to the Hawkei procurement project.
Evidence
Gary Hines is the Programme Director at Thales who has the primary responsibility to oversee the supply of the Hawkei to the Australian Government and who has had involvement in the research, development, construction, production and commercialisation of the Hawkei. He gave evidence by affidavit and orally about the Land 121-4 program conducted by the Department of Defence and the JLTV Program conducted by the United States Department of Defense. Thales is the lead contractor on the Hawkei project and has a contract with the Commonwealth valued at $1.3 billion. Thales is also pursuing export opportunities for Hawkei in six countries and is supported by the Commonwealth which would receive a licence fee on any foreign sales.
Mr Hines gave evidence about the likely effect of disclosure of the Disputed Material on the market for the Hawkei:
[29] I expect that if the information in question were disclosed, it would be relied on by prospective purchasers considering the Hawkei as an option for their protected mobility needs. Those parties would use the report as part of their decision−making as to firstly, whether to include the Hawkei in the range of options it was considering, and secondly, assuming the Hawkei passed through this first stage, in their evaluation of the Hawkei as an option relative to other options.
[30] Thales operates in a highly competitive environment, both in general and specifically in relation to mobility protected vehicles. As I indicated above, when the first phase of the MSA process was undertaken, there were 7 vehicles in the trial (including the Hawkei and the JLTV). In my experience, potential purchasers of the Hawkei will likely, first, determine what base model offerings are available to it, of which there are several. There are a number of companies based in the United States of America, the United Kingdom and elsewhere who are actively engaged in the production and supply of Protected Light Mobility Vehicles. Potential purchasers will then discuss with potential producers the design and functionality particular to its needs.
[31] In such an environment, decision−makers actively seek out information that might assist them to assess and rank prospective tenderers, in order to aid in their decision−making. When presented with a half dozen possible options, decision−makers need to be able to point to factors that allow them to short list options in order to make the acquisition process manageable. Information in public reports may be relied on as a basis for making a simple assessment that allows some products to be excluded, simplifying the rest of the tender process.
[32] In the context of protected mobility vehicles, this is a particular risk in my view. This is because it is very difficult to do a like−for−like comparison on the face of a particular proposal. As an example, what Thales might present as the 'base model' Hawkei will not have the same functionality as what Oshkosh might present as the 'base model' JLTV. Where there is a public report which compares those two vehicles, then it is very tempting for a decision−maker to rely on that report as a means of simplifying the decision−making process, particularly at the early culling / short listing stage of the process. If the report were used as a basis for the Hawkei to be excluded from a tender process at an early stage, Thales will lose the opportunity to demonstrate the superiority of the Hawkei or to have the decision−maker engage in the more complex comparison process that the Hawkei would otherwise have been included in.
[33] The chances of the Report being relied on in this way are high, in my view. This is because it is a Report of the Auditor−General of Australia. The Report will be seen by potential purchasers as an official report written by a senior and independent official of the government who sponsored the development. In addition, at this time Australia is the sole user of the Hawkei. For these reasons, a government decision−maker will feel justified in relying on it as a basis for making decisions about the potential acquisition of the Hawkei.
[34] I can say this with confidence because I have seen it happen in other cases. I have seen it in relation to official reports written about the Bushmaster, another Australian Defence Force vehicle. I have also seen it in relation to the JTLV, by reference to US Government publications relating to that vehicle. In both of those cases I have overheard, or received directly, comments from potential purchasers of military vehicles making assessments about the relative merits of those vehicles by reference to public reports written about them.
[35] In my assessment, a reader of the information in question would likely take a negative impression about the Hawkei from that information. I explain this in my confidential affidavit. Obviously this is harmful to the Hawkei's prospects in the market, and Thales' (and Defence's) commercial interests in the commercial success of the Hawkei.
It was put to Mr Hines in cross examination that the Federal Court proceedings brought by Thales referred to information that implies the JLTV is comparable and commensurable to the Hawkei but approximately half the price. In response, Mr Hines said:[10]
The concern was that it was an invalid comparison, so that the Hawkei and the JLTV are different things, have different performance characteristics and different specifications and therefore that a cost comparison is invalid because they are not the same, nor similar.
[10] Transcript dated 23 July 2020, p 43.
Mr Hines accepted that the comparison came in at approximately half the price.[11]
[11] Transcript dated 23 July 2020, pp 43–44.
As to how to deal with any adverse commentary or the purportedly erroneous nature of the Auditor-General’s analysis, Mr Hines said that it is better to focus on the needs of the customer itself, what they are seeking from the product and then help them match the Hawkei to that.
Paul Harris, the director of product line and marketing of protected vehicles at Thales, gave evidence by affidavit and orally. He gave evidence that his approach to selling the Hawkei is to demonstrate that the Hawkei is the premier technical capability in its class and to differentiate the Hawkei from its competitors. It is essential that he can effectively demonstrate the technical superiority of the Hawkei because some potential buyers may be inclined to exclude the Hawkei without considering its performance characteristics. He gave an example of a senior acquisition officer in a Western defence force who told him at a trade show that they were not going to consider his offer and that they were going to buy the JLTV because it was so cheap.[12]
[12] Exhibit 6, Affidavit of Paul Harris dated 15 July 2020 at [32].
Mr Harris said that in the course of marketing the Hawkei that no procurement officer involved in the consideration of a prospective purchase of the Hawkei has raised with him either the existence or content of the Thales Federal Court proceedings, the public version of the Redacted Report or the relevant media articles.[13]
[13] Exhibit 6, Affidavit of Paul Harris dated 15 July 2020 at [45].
Mr Harris said that the disclosure of the Disputed Material had the potential to significantly and adversely affect the view of any procurement officer responsible for deciding whether to choose between the JLTV and the Hawkei. He formed that opinion because the Redacted Report is prepared by an arm of the Commonwealth of Australia and appears credible and it presents the JLTV and the Hawkei as functionally equivalent. He considers that if the Redacted Report were disclosed in full, Thales would be put at a considerable disadvantage when marketing the Hawkei.
I consider further the evidence of Mr Harris below.
Major-General Andrew Bottrell, head of Land Systems Division within the Capability Acquisition and Sustainment Group of the Australian Defence Force, gave evidence by affidavit which included the following:
[12] The Hawkei will deliver an entirely new capability for the Australian Army, providing a level of protection comparable to the Thales Bushmaster at around half the weight. The vehicle will provide a high level of protection for soldiers against blast and ballistic threats, with significantly improved mobility which will enable it to operate in high risk areas. The Hawkei has already successfully completed ballistic and blast testing in accordance with the ADF’s requirements for protection.
…
[15] The Hawkei has been co-developed by the Commonwealth and Thales specifically to meet the ADF’s capability requirements.
[16] the Commonwealth has commercial interests in the Hawkei. The Commonwealth has Intellectual Property ownership rights in the vehicle and will receive a royalty payment from any sales. The revenue for those royalty payments is determined in large part by the number of Hawkei vehicles sold. In simple terms, the more vehicles that are sold, the more revenue the Commonwealth earns from its intellectual property rights in the Hawkei.
[17] A sustainable and sovereign Australian defence industry is critical to the security and defence of the Commonwealth of Australia. It ensures that the Commonwealth’s defence capability is not dependent on or beholden to other nations, and gives the ADF better operational flexibility (because, for example, it allows the ADF to develop, modify and adapt capabilities as required).
…
[19] Improving the capability and capacity of the Australian defence industry requires, among other things, the development of an export base for Australian manufactured capabilities. Developing an export base strengthens the supply chain, and encourages investment in this supply chain to foster research and development.
[20] The Hawkei is a designated Sovereign Industrial Capability. The manufacturing capabilities, and the skills of Thales’s Bendigo workforce, are an important national security capability. Maintaining an indigenous vehicle capability allows the ADF to work directly with the manufacturer to implement design changes onto the vehicle to adapt to the contemporary operating environment.
…
[23] It is strongly in Australia’s defence interests that the Hawkei is seen by Australia’s partners and allies as an attractive vehicle for them to consider purchasing.
[24] My assessment is that disclosure of the Disputed Material is likely to have a negative impact on the defence interests I have described above.
[25] In summary, my view is that the disclosure of the Disputed Material is likely to have a prejudicial impact on the ability of Thales and the Commonwealth to export the Australian-made Hawkei capability to our security partners.
Under cross examination, Major-General Bottrell said:
The Bushmaster was introduced into service with a poor reputation and it took an awful long time and a really hard earned reputation of operations because it started to save lives.… We don’t want Hawkei to be introduced with the same poor reputation that we then need to claw back because we know that it will be successful in operations.[14]
So while there has been discussion and commentary out there, the ANAO is an authoritative source which is, I think, very different from speculation amongst media and journalists and occasional commentary around the edge of various parliamentary processes.[15]
… the royalty payments are very much a secondary consideration in this issue. Yes, there is a benefit to Australia from royalty payments for any sales overseas but my primary interests are about the evolution and the future development of a capability.[16]
[14] Transcript dated 23 July 2020, p 37.
[15] Transcript dated 23 July 2020, p 38.
[16] Transcript dated 23 July 2020, p 40.
Senator Patrick swore an affidavit exhibiting relevant media articles and deposing:
[5] I only ask the Tribunal to appreciate that there is a significant amount of material in the public domain which an overseas defence procurement agency would find and could draw a “negative impression about the Hawkei” in the manner described by Mr Gary Hines in paragraphs 29 through 35 of his affidavit.
[6] Whilst I do not accept that the effects of disclosure of the disputed material in this matter go anywhere near the threshold required to support the FOI exemptions claimed (for reasons explained in my submissions), to the extent it could cause any damage, that damage was done the moment Thales Australia Pty filed their Federal Court originating application.
The media articles exhibited to the Patrick affidavit referred to findings in the report from the Auditor-General that:
a.criticised the deal to provide Australia with 1,100 locally built Hawkei light protected vehicles;
b.criticised Australia’s decision to stop considering a rival bid from the United States, because it left Thales without competitive pressure on the government without a benchmark for the work;
c.Australia could have paid half the amount for its new $1.3 billion combat vehicle fleet after pressure from a multinational arms manufacturer;
d.Australia could have saved hundreds of millions of dollars had it gone to the United States to buy its new fleet of light protected army vehicles, instead of buying 1,100 of Thales’s locally built Hawkeis.
Mark Baker gave affidavit and oral evidence about his experience in defence procurement. He drew attention to numerous publicly available US Government Agency reports on the JLTV and media reports which contained adverse and negative statements and said that despite these statements, the JLTV has been selected by the United Kingdom, Slovenia and Montenegro.
Refusal to issue summons to the Auditor-General – reasons for interlocutory decision
Senator Patrick requested that a summons be issued for the Auditor-General to give evidence. Prior to this hearing I refused to issue that summons because I failed to see the relevance of his proposed testimony given the inclusion of statements and correspondence from the Auditor-General in the Statement of Agreed Facts. Further, I considered that the report authored by the Auditor-General would speak for itself and that there was nothing of relevance that the Auditor-General could add. The calling of evidence from the Auditor-General could not reasonably have been expected to throw light on any of the issues,[17] hence my decision to refuse to issue the summons.
[17] See Re Marnotta Pty Ltd and Secretary, Department of Health andAgeing [2004] AATA 800 at [42].
Is the Disputed Material Exempt under s 33(a)(ii) of the FOI Act?
Contentions of the parties
The Secretary contends that the Disputed Material is exempt under s 33(a)(ii) because disclosure would, or could reasonably be expected to, cause damage to the defence of the Commonwealth. More particularly, the Secretary contends that its disclosure would harm the prospects of Thales and the Australian Army exporting the Hawkei, which would have a negative flow on consequence for the sustainment of the capability of the Hawkei for use by the Australian Army.[18]
[18] Transcript dated 23 July 2020, Respondent’s opening and closing addresses, pp 10, 115.
Senator Patrick contends that there are two issues to be considered:
(i)Would the export prospects of the Hawkei be reasonably expected to be damaged as a result of disclosure of the Disputed Material; and
b.If the answer to the above question is yes, would a failure to export reasonably be expected to cause damage to the development and maintenance of Australia’s sovereign defence capability.
Senator Patrick says that the answer to both questions is no. He refers to publicly available information that could reasonably be assumed to have been sought by those interested in the Hawkei. He lists the sources of that information as follows:
(i)The redacted audit report;
(ii)Thales’ originating application in the Federal Court;
(iii)Media articles;
(iv)Records of a public inquiry into the executive intervention following the tabling of the report in the Parliament.
Whilst Senator Patrick has not seen the Disputed Material, he contends that the publicly available information discloses all there is to know about the Hawkei and that therefore the Disputed Material could have no additional causative effect.
The Secretary accepts that the critical contest between the parties is whether the disclosure of the Disputed Material could result in the harms contended by the Secretary, when contrasted with the information that is already publicly available.[19] The Secretary accepts that there is publicly available information from which negative inferences or impressions might be drawn about the Hawkei, but says that the information in the Disputed Material is different in material respects.[20] The Secretary also made the appropriate concession that if the Tribunal is not satisfied that disclosure would, or could reasonably be expected to, cause damage to the export prospects of the Hawkei, then it follows that the Tribunal could not be satisfied that disclosure would, or could reasonably be expected to, cause damage to the defence capability aspect.[21]
What is the Publicly Available Information about the Hawkei?
[19] Respondent’s written submissions dated 10 July 2020 at [2].
[20] Transcript dated 23 July 2020, Respondent’s closing submissions, p 119.
[21] Transcript dated 23 July 2020, Respondent’s closing submissions, p 115.
As a result of the disclosure of the Redacted Report there is publicly available information which includes the following:
(i)an assessment of the value for money of the Department of Defence’s acquisition of the Hawkei from Thales by considering the procurement process and whether there was appropriate benchmarking against comparable vehicles and in particular the JLTV;
(ii)some comparative analysis between the cost of the Hawkei and the cost of the JLTV that was applicable as at late 2011 and early 2012. For example, the audit referred to:
(a)the Department of Finance’s advice that the Hawkei target costs were three times those of the JLTV;[22]
[22] Exhibit 2, Auditor General Report - redacted, para 3.33.
(b)the Department of Defence calculations showing that the Hawkei was 1.3 times the cost of the JLTV;
(c)Finance calculations showing that the Hawkei was nearly three times the cost of the JLTV;
(d)advice from the Department of Defence to the Minister that the continued observation of JLTV will provide cost, capability and schedule benchmarks for MSA [the manufactured and Supported in Australia option] and allow us to assess JLTV’s viability as an alternative to the Hawkei during the next critical development period.
(iii)benchmarking analysis from Deloitte which relied on publicly available data and compared the Hawkei design against a 2011 JLTV concept design and two military off-the-shelf vehicles. The cost assessment estimated the Hawkei as 23% more expensive to acquire than the JLTV;[23]
(iv)at the final meeting of the Department of Defence’s Tender Evaluation Board on 21 January 2015, there was general consensus among Board members that there was not enough comparative evidence to indicate that the Thales tender response provided value for money;[24]
(v)the advice from the Department of Defence in August 2015 to the Government that the benchmarking study it had commissioned from Deloitte indicated that, while the Hawkei would be 23% more expensive to acquire than the JLTV, a number of comparison points favoured the Hawkei over the JLTV.[25]
(vi)the announcement from the United States Army on 25 August 2015 that Oshkosh had been awarded a US$6.7 billion contract for 17,000 joint light tactical vehicles over eight years. A reference for this information was provided at footnote 50 of the Redacted Report referring to an article from the United States Army News Service dated 26 August 2015 and another media release dated 25 August 2015.
(vii)the advice from the Department of Defence to the Minister on 24 September 2015 that the United States had awarded a contract for the JLTV. It was noted in the Redacted Report that the Department of Defence did no analysis of whether the price, schedule or capability of the JLTV materially affected the decision to acquire the Hawkei. It was noted further that at the very least, this analysis would have provided an opportunity for the Department of Defence to develop, in consultation with the Minister, a negotiation strategy to achieve an improved value for money outcome from Thales.[26]
(viii)a report from the “lead negotiator” engaged by the Department of Defence that:
Defence’s decision to seek government second pass approval prior to completion of negotiations undermined the strategy to get the best deal… Consequently the negotiated position is not as attractive as it could have been.
(ix)the recommendation from the lead negotiator that the Department of Defence continue contract negotiations in order to achieve an improved value for money position and that it delay contract signature. It was noted in the Redacted Report that those recommendations were not accepted by the Department of Defence who entered into the acquisition contract with Thales on 5 October 2015.
[23] Exhibit 2, Auditor General Report - redacted, para 4.14.
[24] Exhibit 2, Auditor General Report - redacted, para 4.17.
[25] Exhibit 2, Auditor General Report - redacted, para 4.34.
[26] Exhibit 2, Auditor General Report - redacted, para 4.36.
In summary, the key focus of the information disclosed in the Redacted Report was the process adopted by the Department of Defence to obtain a competitive price for the Hawkei. It was the failure to benchmark against the JLTV which drew the negative comments. There was very little said about the capabilities of the Hawkei and no analysis of any particular features or performance criteria of the Hawkei. It is for this reason that the Secretary accepted that the disclosure of the Disputed Material would not result in any tactical advantage to an enemy on the battlefield.[27]
[27] Transcript dated 23 July 2020, Respondent’s opening address, p 14.
In addition to the information that was publicly available directly from the Redacted Report, Thales made available to the public further information when it commenced its Federal Court proceedings in January 2018. Thales confirmed in the Court documents that the report from the Auditor-General provided a cost comparison between the Hawkei and the JLTV and said further that the cost comparison in the Disputed Material ‘purports to benchmark the cost and the capability of the Hawkei and the JLTV, in a way that implies that the JLTV is comparable and commensurable to the Hawkei, but approximately half the price.’ This statement was widely reported in the press; for example, by the Guardian,[28] which reported that Thales ‘wanted six paragraphs in particular struck from the report’ and that:
Those six paragraphs found that Australia could have got a similar vehicle for half the price through the US joint light tactical vehicle (JLTV) program, according to Thales’ court documents.
[28] Exhibit 10, Affidavit of Senator Patrick dated 24 June 2020, p 14 of annexure RP-1.
I consider that this publicly available information would be of interest to any potential purchasers of the Hawkei and would be considered by them as part of their decision-making process.
Consideration
I accept the contention from both parties that it is critical to consider the disclosure of the Disputed Material in the context of the above information about the Hawkei that is publicly available. If the information in the Disputed Material is largely similar to the publicly available information then that will be an important factor in my consideration as to whether the Disputed Material would, or could reasonably be expected to, cause damage to the defence of the Commonwealth. It is axiomatic that if the Disputed Material discloses information that is already publicly available then it would not have, or could not reasonably be expected to have, the required causative effect. However, I accept the Secretary’s submission that the Disputed Material must be seen in its context and that the information in the Disputed Material is not all of the same character. Ultimately, as Perry J said in Secretary, Department of Prime Minister and Cabinet v Summers,[29] the criteria prescribed by s 33(a) and (b) turn upon cause and effect which can be reasonably anticipated if the Disputed Material is disclosed.
[29] [2019] AATA 5537 at [34].
It is apparent from reading the publicly available Redacted Report that it discloses information that compares the cost of the Hawkei with the JLTV in a way that is unfavourable to the Hawkei. The statement that the Hawkei would be 23 per cent more expensive to acquire than the JLTV appears in the Redacted Report on eight separate occasions on pages 7, 9, 41, 43, 46 (2 times), 47 and 54. However, there is a clear qualification, namely ‘but would also be more capable’ (or words to that effect), in five of those eight statements. The unfavourable, but qualified, comparison is best illustrated in the conclusion of the summary in the first section of the Redacted Report which says:
[12] … The 2011 decision to discontinue the Australian financial participation in the JLTV Program eroded Defence’s ability to benchmark its procurement of the Hawkei against a comparable vehicle. In the absence of reliable benchmark information, there was a reduction in Defence’s ability to evaluate whether procurement of the Hawkei clearly represented value for money.
[13] Defence did not provide robust benchmarking of the Hawkei and Joint Light Tactical Vehicle options to the Government at Second Pass, to inform the Government’s decision in the context of a sole-source procurement. At Second Pass, Defence advised the Government that the Hawkei would be approximately 23% more expensive to acquire than the Joint Light Tactical Vehicle but would also be more capable. Without robust benchmarking of cost and capability, Defence was also unable to apply competitive pressure in its negotiations with Thales.
This unfavourable comparison was confirmed by Thales in its Federal Court proceedings which summarised the effect of the Disputed Material by saying that it ‘implies that the JLTV is comparable and commensurable to the Hawkei, but approximately half the price.’ It is apparent from the Federal Court proceedings that Thales disagrees with the cost comparison and considers it is unfair and of no probative value, but nevertheless, it is Thales itself that has made public the effect of the Disputed Material by referring to it in the Federal Court proceedings. This statement by Thales in the Federal Court of what is contained in the Disputed Material went further than the statements that were publicly available in the Redacted Report and had the effect of providing the media and the public with a neat summary of the information that Thales did not want disclosed.
The Redacted Report also discloses the award in August 2015 of a US$6.7 billion contract for 17,000 Joint Light Tactical Vehicles but criticises the lack of analysis as to whether the price or capability of the JLTV materially affected the decision to buy the Hawkei.
The information now available to the public includes statements that:
(i)the Hawkei is 23 per cent more expensive than the JLTV but is more capable; and
(ii)the JLTV is comparable to the Hawkei but approximately half the price.
I accept the evidence of Mr Hines that Thales operates in a highly competitive environment in which decision−makers actively seek out information that might assist them to assess and rank prospective tenderers and to allow them to short list options in order to make the acquisition process manageable. In this environment a potential customer would consider the Redacted Report and the Federal Court proceedings and would use the information therein.
Mr Hines expressed his concern in evidence that the Disputed Material in the Redacted Report would likely be relied upon in the decision making process of a potential customer, but I consider it to be equally likely that the publicly available information in the Redacted Report and the Federal Court proceedings would be relied upon. Mr Hines said[30] that in his assessment, a reader of the information in question (the Disputed Material) would likely take a negative impression about the Hawkei from that information. I do not disagree, but I consider that a reader of the publicly available information would take a similar negative impression about the Hawkei.
[30] Exhibit 3, Affidavit of Gary Hines dated 31 October 2019 at [35].
One would expect that the publicly made statement that the JLTV was comparable to the Hawkei but approximately half the price would be relied upon and would be damaging to the marketing campaign of the Hawkei. I note that Mr Harris gave evidence that in the course of marketing the Hawkei that no procurement officer involved in the consideration of a prospective purchase of the Hawkei has raised with him either the existence or content of the Thales Federal Court proceedings, the public version of the Redacted Report or the relevant media articles;[31] but it does not follow that those procurement officers were not in fact relying on that publicly available information.
[31] Exhibit 6, Affidavit of Paul Harris dated 15 July 2020 at [45].
Mr Harris gave oral evidence that he was aware of the adverse commentary on the Hawkei available publicly by way of the generally negative tone of the vehicle in the Redacted Report. He was also aware of the media articles but said that they had not been brought to his attention by any customer. When asked in cross examination about the publicly available information compared to the Disputed Material, Mr Harris said that ‘the information in the audit report is of a more enduring nature and damaging as a consequence.’[32] He said that the redacted material amplifies the non-redacted material into a consolidated view and that it contains a summary or conclusion that pulls it all together.[33] Further, Mr Harris said:[34]
There is more detail in the redacted area, that is, that I couldn’t find, frankly, publicly, that has been put into this report and it’s packaged up neatly and presented to any competitor to allow them to understand how to compete with me better and as a commercial entity, we put a lot of effort into gathering authoritative data like this and it’s hard to find and the information in the redacted section would be very helpful for my competitor in supporting their campaign against the Hawkei.
[32] Transcript dated 23 July 2020, p 67.
[33] Transcript dated 23 July 2020, p 71.
[34] Transcript dated 23 July 2020, p 73.
I reject the contention of Mr Harris that the information in the Disputed Material is of a more enduring nature and damaging as a consequence. His contention that disclosure of the Disputed Material would be damaging is simply his opinion and, with respect, is self-serving. It is not the type of evidence which would be required to sustain a claim for exemption.[35] For the same reason, I am unable to accept the opinion of Major-General Bottrell that disclosure of the Disputed Material is likely to have a negative impact on the defence interests of Australia.[36]
[35] See Re Ewer and Australian Archives (1995) 38 ALD 789 at [19].
[36] Exhibit 5, Affidavit of Major General Bottrell dated 4 November 2019 at [24]–[25].
Having read the Disputed Material, I consider that the information found within the Disputed Material is not of a materially different nature compared to the publicly available information.
First, I note that the Disputed Material contains a significant number of references to publicly available information and on numerous occasions simply repeats information that is found elsewhere in those parts of the Redacted Report that are available to the public. In this way, there is a significant overlap between what is contained in the Disputed Material and what is publicly available. Examples of the overlap and the repeated references include:
(i)information (including specific media articles in footnote 50 of the Redacted Report) about the US$6.7 billion contract awarded in the United States of America to Oshkosh for 17,000 Joint Light Tactical Vehicles;
(ii)information that the Hawkei is 23 per cent more expensive than the JLTV but is more capable;
(iii)details of the 2015 Deloitte study;
(iv)statements about an absence of robust benchmarking;
(v)the information in footnote 46 of the Redacted Report.
It follows that there is an inconsistency in the approach of the Secretary as to what should be disclosed and what should be withheld. There is no entitlement to deny access to references to media articles when those media articles are publicly available and are referred to elsewhere within the Redacted Report.
Second, I note that the Disputed Material contains restatements of the effect of what is contained in the publicly available parts of the Redacted Report, sometimes extending to a conclusion drawn from, or a summary of, the publicly available information. Thales has expressed a concern in these proceedings that the Disputed Material draws together the material otherwise disclosed in the Redacted Report in a way that could and would be used by its competitors or potential customers in a negative way. I accept that the bringing together of information and making conclusions so as to complete the jigsaw puzzle or join the dots may result in the presentation of information of a fundamentally different nature to the information derived from different sources; but this is not the effect of the Disputed Material. So much information has already been disclosed that any conclusion or summary found in the Disputed Material would be obvious to the reader, particularly where that reader is a sophisticated investor operating in the defence industry. There are very few dots to join.
Third, it is expressly stated by the author within the Disputed Material that some information relied upon has been sourced from the public domain. Details of some of the sources are footnoted within the Disputed Material. As set out above, some of these footnotes in the Disputed Material provide a reference to material that is included elsewhere in the publicly available parts of the Redacted Report. Again, there is no entitlement to deny access to material that is already publicly available.
I note that the Auditor-General considered and agreed to some requests from the Department of Defence and Thales to remove sensitive information from drafts of the report that were provided to them. The Auditor-General said in a letter to the Prime Minister that:
The treatment of sensitive information arises regularly in the context of Defence auditing. I welcome and review all Defence and contractor advice on such matters. In this audit … [t]he omission of information considered to raise security issues was acknowledged by Defence in correspondence to me of 12 December 2017. On 18 April 2018, Defence requested the removal of additional information, which I also agreed to.[37]
[37] Exhibit 11, Statement of Agreed Facts at [21].
In appendix 2 of the Redacted Report, the Auditor-General expressly states that the ‘audit report contains an analysis (at paragraphs 4.48 to 4.53 of the report) of publicly available information’ (my emphasis). The content of these paragraphs on its own makes it apparent that publicly available information was being disclosed and analysed. I do not consider that this analysis is of a materially different nature to the information that is publicly available. Despite being drawn from publicly available information, Senator Patrick has been refused access to all those paragraphs.
In light of the information that is publicly available, I am not satisfied that disclosure of the Disputed Material would, or could reasonably be expected to, cause damage to the export prospects of the Hawkei. It follows that I am not satisfied that the disclosure of the Disputed Material would, or could reasonably be expected to, cause damage to the defence of the Commonwealth. The extent of the disclosure of information about the Hawkei in the Redacted Report and the Federal Court proceedings and the associated media articles means that the disclosure of the Disputed Material would have no material additional causative effect. The information about the comparative cost of the Hawkei, which is disclosed by the Redacted Report and the Federal Court proceedings and the associated media articles, would be of interest to potential purchasers for the same reasons that the Disputed Material would be of interest, but a potential purchaser’s negative view of the Hawkei from the publicly available information would not be materially worsened by the disclosure of the Disputed Material.
It was contended by Senator Patrick that even if it were found that disclosure of the Disputed Material would, or could reasonably be expected to, cause damage to the export prospects of the Hawkei, that I should not be satisfied that the disclosure would, or could reasonably be expected to, cause damage to the defence of the Commonwealth. I make no finding about that because it is unnecessary.
It follows that the Disputed Material is not exempt from disclosure under s 33. I will now consider whether the Disputed Material is exempt under s 31B(b) on the basis that it is conditionally exempt under any of ss 47C(1), 47D or 47G(1)(a) in division 3 of Part IV and access would be contrary to the public interest.
Is the Disputed Material Conditionally Exempt under s 47G(1)(a) of the FOI Act?
Section 47G contains a causative element which is not satisfied for the same reasons set out above with respect to s 33. The disclosure of the Disputed Material would not, or could not be expected to, have an adverse impact on Thales. In particular, in light of the disclosure of information about the Hawkei in the Redacted Report and the Federal Court proceedings and the associated media articles, the prospects of Thales exporting the Hawkei are not materially impacted by the disclosure of the Disputed Material.
Is the Disputed Material Conditionally Exempt under s 47D of the FOI Act?
Section 47D contains a causative element which is not satisfied for the same reasons set out above with respect to s 33. The disclosure of the Disputed Material would not, or could not be expected to, have a substantial adverse impact, or any impact, on the financial interests of the Commonwealth. In particular, in light of the disclosure of information about the Hawkei in the Redacted Report and the Federal Court proceedings and the associated media articles, the prospects of Thales exporting the Hawkei are not materially impacted by the disclosure of the Disputed Material; and it follows that disclosure would not, or could not be expected to, have any adverse impact on the financial interests of the Commonwealth.
Is there Disclosure of a Deliberative Matter under s 47C of the FOI Act?
The Secretary contends that disclosure of the Disputed Material would disclose deliberative matter in the nature of, or relating to, opinion and advice recorded in the course of, or for purposes of, the deliberative processes involved in the functions of the Auditor-General. The Secretary relies upon the broad interpretation of “deliberative material” in Re James and Australian National University[38] namely that, with respect to deliberative process documents, Parliament has cast the net very wide and that the words of the section should be accorded their natural and ordinary meaning and not given a narrow or pedantic construction.
[38] (1984) 6 ALD 687 at [65].
The Secretary contends that the Disputed Material records the opinion and advice of the Auditor-General and accordingly contains “deliberative material” for the purposes of s 47C(1).
Consideration
The focus of s 47C(1) is on deliberative processes. It is not enough to come within s 47C(1) that an opinion, advice or recommendation is merely obtained, prepared or recorded; it must be obtained, prepared or recorded in the course of, or for the purposes of, the deliberative processes involved in the functions of the agency, Minister or government.
As stated in the FOI Guidelines at [6.58], a deliberative process involves the exercise of judgement in developing and making a selection from different options. The decision of Re JE Waterford and Department of Treasury (No 2) [39] is cited:
The action of deliberating, in common understanding, involves the weighing up or evaluation of the competing arguments or considerations that may have a bearing upon one’s course of action. In short, the deliberative processes involved in the functions of an agency are its thinking processes – the processes of reflection, for example, upon the wisdom and expediency of a proposal, a particular decision or a course of action. … Only to the extent that a document may disclose matter in the nature of or relating to deliberative processes does s 36(1)(a) come into play.[40]
[39] [1984] AATA 67.
[40] Re JE Waterford and Department of Treasury (No 2) [1984] AATA 67 at [58].
An example of the documents potentially shielded from disclosure is given in Re JE Waterford and Department of Treasury (No 2) [1984] AATA 67 at [60]:
It is documents containing opinion, advice, recommendations etc. relating to the internal processes of deliberation that are potentially shielded from disclosure - documents that might, perhaps, have been more aptly described in the headnote as 'Internal Thinking Documents'.
With respect to the functions being exercised in this matter, the Auditor-General, as an independent officer of the Parliament, had functions as specified in the Auditor-General Act including to conduct a performance audit under s 17(1) of that Act. It was an agreed fact that:
A performance audit can examine a program, activity or sub- program or sub-activity which is part of, or administered by a body or person. The aim of the performance audit to the Parliament is to examine and report on the economy, efficiency and effectiveness of the operations of the administration of the Commonwealth and to recommend ways in which these may be improved.[41]
[41] Exhibit 11, Statement of Agreed Facts referencing the Explanatory Memorandum to the Auditor-General Bill 1996 at [22].
The aim of this particular audit was to assess the effectiveness and value for money of the Department of Defence’s acquisition of light protected vehicles under Defence project Land 121 Phase 4.[42] The Auditor-General selected this project for audit because of the materiality of the procurement, the adoption of a sole-source procurement strategy, the time taken to select a vehicle, and the risk involved in manufacturing a relatively small run of vehicles when the United States was beginning a similar but much larger program.[43] The audit method involved fieldwork at sites operated by the Department of Defence and by Thales; an analysis of information from the Department of Defence; and interviews with Department of Defence project personnel and contractors.[44] The Redacted Report set out the audit findings with respect to the procurement process and the governance and contracting arrangements.
[42] See Auditor General Report – redacted at [4].
[43] See Auditor General Report – redacted at [3].
[44] See Auditor General Report – redacted at [5].
The act of assessing the conduct of the Department of Defence with respect to the relevant procurement project as set out above does not involve a deliberative process in the sense discussed in the authorities or the FOI Guidelines. It does not involve the weighing up or evaluation of competing arguments. It does not involve the exercise of a judgment in developing and making a selection from different options. In so far as the Redacted Report disclosed an opinion (for example that the Department of Defence did not provide robust benchmarking of the Hawkei and the JLTV) that opinion was not obtained, prepared or recorded in the course of, or for the purposes of, any deliberative processes involved in the functions of the Auditor-General. As stated above, those functions were to conduct a performance audit and prepare an audit report. The preparation of the Reacted Report was not part of any deliberative process. The Redacted Report is a statement of factual findings and an assessment of the effectiveness and value for money of a procurement project. It was a final statement of the Auditor-General exercising his statutory function to provide information to Parliament. Rather than disclosing a deliberative process, the Redacted Report discloses a final conclusion based on an analysis of factual findings. I note that the FOI Guidelines at [6.66] says that the decision or conclusion reached at the end of the deliberative process is not deliberative matter.
Section 47C does not operate to disallow access to a report of this nature generated by an independent officer of the Parliament exercising his statutory functions. The Disputed Material is not conditionally exempt under s 47C(1) of the FOI Act.
Public Interest
I have found that the Disputed Material is not a conditionally exempt document so for the reasons set out above there is no need to consider the public interest and I will not do so.
Conclusion
I have found that the Disputed Material is not exempt from disclosure as claimed by the Secretary. The audit report of 6 September 2018 (which includes the Disputed Material) is not an exempt document under s 33 of Division 2 of the FOI Act and is not conditionally exempt under ss 47C, 47D or 47G(1)(a) of Division 3 of the FOI Act. Consequently, s 31B does not operate to deny access. Senator Patrick is entitled to access the Disputed Material under the general rule of s 11A(3).
DECISION
The decision under review is set aside and is substituted with a decision that:
(a)the Disputed Material is not exempt from disclosure under the FOI Act; and
(b)Senator Patrick is given access to the Disputed Material.
I certify that the preceding eighty-one [81] paragraphs are a true copy of the reasons for the decision herein of Deputy President Britten-Jones.
..................[sgnd]..............................
Administrative Assistant Legal
Dated 9 December 2020
Dates of hearing: 23 and 24 July and 4 September 2020
Applicant’s Representative: Self-represented
Respondent’s Representative: J Davidson of counsel, instructed by Australian Government Solicitor
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