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Farrell and Department of Immigration and

Border Protection (No. 3) [2014] AICmr 122(11 November 2014)

Decision and reasons for decision of

Privacy Commissioner, Timothy Pilgrim

Applicant: Paul Farrell

Respondent: Department of Immigration and Border Protection

Other parties: Serco Australia Pty Ltd

Decision date: 11 November 2014

Application number: MR13/00140

Catchwords: Freedom of informationWhether disclosure

would unreasonably affect person in respect of

lawful business or professional affairs(CTH)

Freedom of Information Act 1982s 47G

Contents

Summary ........................................................................................................................ 2

Background .................................................................................................................... 2

Decision under review ................................................................................................... 3

Third party consultation................................................................................................. 3

Business exemption (s 47G) ........................................................................................... 3

Information in respect to business affairs ................................................................. 4

Would or could unreasonably adversely affect ......................................................... 4

Submissions ....................................................................................................................... 4

Considerations ................................................................................................................... 5

Findings ...................................................................................................................... 7

Decision .......................................................................................................................... 7

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Summary

1. I set aside the access refusal decision of the Department of Immigration and

Border Protection1(the Department) of 11 April 2013, and substitute my

decision granting access to the documents requested, under s 11A(3) of the

Freedom of Information Act1982 (the FOI Act).

Background

2. On 2 March 2011, Mr Farrell applied to the Department for access to:

[A]ll documents and correspondence relating to Sercos tendering and retention

of the Immigration Detention Centre contract, including the contract itself.

[A]ll reports complied by any government agency or independent organisation or

corporation of Sercos management of any detention centre, including but not

limited to all reports of deaths in detention.

[A]ll documents relating to subcontractors employed by Serco, including but not

limited to MMS security and Resolve FM.

[A]ll documents relating to any changes to the monetary amount or duration of

the immigration detention centre contract.

3. Mr Farrell entered into discussion with the Department over the scope of the

request. On 21 February 2013, Mr Farrell emailed the Department confirming

that the scope of the request was reduced to:

The following reports from Northern Immigration Detention Centre in 2010:

March 2010 JFAT Report

1sthalf 2010 training of security staff report

March 2010 Joint executive report

4. On 11 April 2013, the Department advised that it had identified one document,

the March 2010 Joint Facility Audit Team (JFAT) report (the report) containing

34 pages, falling within scope of the request. The Department decided to

release the report to Mr Farrell in part. In making its decision, the Department

relied upon the business affairs conditional exemption (s 47G). TheDepartment refused Mr Farrell access to the training of security staff report

and the March 2010 joint executive reporton the grounds that the

documents do not exist (s 24A).

5. On 21 April 2013, Mr Farrell sought IC review of the decision to refuse him

access to the report under s 54L of the FOI Act. Mr Farrell did not seek review

of the decision to refuse him access to the documents that the Department

found do not exist.

1 The Department was the Department of Immigration and Citizenship at the time of the FOI

request that is the subject of this IC review.

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Decision under review

6. The decision under review is the decision of the Department on 11 April 2013

to refuse Mr Farrell access to the report.

Third party consultation

7. On 23 April 2014, the Office of the Australian Information Commissioner

undertook third party consultation with Serco Australia Pty Ltd under s 27 of

the FOI Act. Section 27 provides for consultation with affected third parties

before the disclosure of documents in response to an FOI application. Under

s 27, a person, organisation, or proprietor of an undertaking can contend that a

document should be exempt from disclosure under s 47 (commercially

valuable information) or conditionally exempt under s 47G (business affairs)

and that disclosure would be contrary to the public interest, before a decision

is made on the FOI application.

Business exemption (s 47G)

8. Section 47G relevantly provides:

Public interest conditional exemptionsbusiness

(1) A document is conditionally exempt if its disclosure under this Act would

disclose information concerning a person in respect of his or her business

or professional affairs or concerning the business, commercial or financial

affairs of an organisation or undertaking, in a case in which the disclosureof the information:

(a) 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

9. For a document to be conditionally exempt under s 47G(1)(a) I must be

satisfied of two things. Firstly, the document must contain information

concerning a person in respect of his or her business or professional affairs or

concerning the business, commercial or financial affairs of an organisation orundertaking, and secondly, that 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.

10. The Guidelines explain:

The operation of the business information exemption depends on the effect of

disclosure rather than the precise nature of the information itself. Nevertheless,

the information in question must have some relevance to a person in respect of

his or her business or professional affairs or to the business, commercial orfinancial affairs of an organisation or undertaking

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[I]t is intended to protect the interests of third parties dealing with the

government.2

Information in respect to business affairs

11. The Department decided that the report is exempt in part under s 47G(1)(a) of

the FOI Act. The material the Department found to be exempt relates to

penalties imposed on SERCO under the detention centres contract where

SERCO has failed to meet certain key performance indicators (KPIs).

12. I have examined an unedited copy of the report. The material the Department

found to be exempt consists of:

percentage weightings of KPIs;

abatement percentage;

penalty amounts in dollars; and

the number of abatable non-compliance incidents.

13. This is clearly information with respect to SERCOs lawful business, commercial

or financial affairs.

14. I am satisfied that in this IC review, the first limb of the test in s 47G(1) has

been met, disclosing the report to Mr Farrell would disclose information

concerning SERCO with respect to SERCOs lawful business, commercial or

financial affairs.

Would or could unreasonably adversely affect

15. Section 47G(1) will apply only where an unreasonable adverse effect would,

or could reasonably be expected to occur. In relation to the test of

reasonableness, the Guidelines explain:

[t]he test of reasonableness applies not the claim of harm but to the objective

assessment of the expected adverse effect.3

16.

In relation to the test of unreasonableness and the business affairs exemptionin general, Mr Farrell, the Department and SERCO have provided the following

submissions.

Submissions

17. Mr Farrell submits:

The decision maker has not provided any evidence that disclosure of the

information would have an unreasonable affect on Serco. While the information

could be damaging to Serco, that does not automatically render it unreasonable.

2 Guidelines [6.162].

3 Guidelines[6.166].

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18. On 6 March 2014, the Department submitted:

The abatements and related information were redacted under s.47G to protect

the business affairs of Serco in respect of its lawful business s.47G(1)(a).

Information concerning the abatements, including the quantum of those

abatements, are considered commercial in confidence, and directly identifies thepenalties imposed on Serco in managing the contract and meeting their required

performance standards. The details concerning the abatements are not publicly

known and would disadvantage the agency in respect of future tenders both in

relation to DIBP and other public tenders. Knowledge of the abatements could

allow competitors to exploit perceived performance failures of Serco to obtain a

competitive advantage. This may harm Sercos ability to tender competitively in

the future. As Serco is a publicly listed company, there is potential for the

release of this information to directly impact the share price of the company if

released

19.

On 26 March 2014, the Department further submitted inter alia:

The penalties applied to Serco in relation to the performance against the

contract are not significant that it would be a material amount. Generally

accepted accounting principles (GAAP) indicate that the materiality, as a guide,

could represent an amount greater than % of total revenue. As the contract

amount is almost $3b, this would equate to a material amount being greater

than $15m. As the amount of the abatements is less than this, the department

does not believe the amount to be material and therefore not in the public

interest.

20. SERCO submits:

With respect to the second limb, we reiterate the Departments submission that

such disclosure would reveal to our competitors areas of performance failure,

which those competitors could then utilise to obtain a competitive advantage by

ensuring that future tenders for immigration detention centre contracts focused

on these areas of performance failure. Given that Serco and other organisations

are currently in the process of responding to a request for tender for the

provision of onshore immigration detention services, the likelihood of the

information being used in this manner is particularly high. Serco would, in turn,

necessarily be placed at a commercial disadvantage and thereby unreasonably

affected in respect of its lawful business, commercial or financial affairs. In this

regard, we submit that Serco would be unreasonably affected because we can

identify no reasonable need for the disclosure the information; it does not, for

example, reveal that Serco is engaged in practices that are adverse to public

safety.

Considerations

21. I agree with Mr Farrell that releasing information that could cause damage to a

business does not necessarily render disclosure unreasonable.

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22. The objects of the FOI Act include promoting Australias representative

democracy by contributing towards increasing scrutiny, discussion, comment

and review of Governments activities.4

23. The welfare of detainees and the provision of adequate services within the

Australian detention centre network is currently a matter of significant publicscrutiny and debate. I believe that the Australian public have a right to know

how the operators of these centres are performing with respect to the

contracted KPIs and what penalties are being imposed on them when they fail

to meet those KPIs.

24. In my view, in this IC review, for disclosure of the report to be unreasonable

the affects on SERCOs business, professional, commercial or financial affairs

would need to be substantial.

25.

In relation to the Departments submissions, these appear inconsistent. On onehand the Department is contending that disclosing the Information concerning

the abatements, including the quantum of those abatements may harm

SERCOs ability to tender competitively in the future, to the extent of impacting

the SERCO share price, while on the other the Department is contending that

the penalties are not, in accounting terms, material.

26. The Australian Information Commissioner addressed this issue in relation to

SERCO and the business affairs conditional exemption in McKinnon and

Department of Immigration and Citizenship,5where the Australian Information

Commissioner said:

The Department has stated that disclosure of the letters could diminish Sercos

ability to generate an effective tender when the current contract expires in 2014,

by providing Sercos competitors with an unfair competitive advantage. This

argument is hard to understand. If the information is disclosed, Serco will be in

the same position as other tenderers. In fact, it is arguable that disclosure of the

information will lead to a more transparent and competitive tendering process.

27. I believe this applies equally in this IC review.

28. Given that the Department considers the penalties imposed on SERCO to be

immaterial and that disclosing the quantum of those penalties, and the KPIfailures they relate to would only put other tenderers in the same position as

SERCO, I do not agree with the Department that the publicly listed SERCO

Groups6share price could or would be affected by disclosure.

29. In relation to SERCOs submissions, as I discussed above, I do not accept that

disclosure of the report would place SERCO at a commercial disadvantage. At

4 FOI Act, Objects s 3(2)(b).

5

[2012] AICmr 34 [56].6 Serco Group Plc, listed on the London Stock Exchange. SERCO Australia Pty Ltd is only one part of

the group.

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worst (from SERCOs point of view), disclosure would place other tenderers on

a level playing field with it.

30. SERCO contends that there is no need for the information to be disclosed.

However, under the FOI Act, the reason or need for information is not a

relevant consideration to me as a decision maker. Further, the FOI Act has apro-disclosure policy, under which every person has a legally enforceable right

to obtain access to a document of an agency, other than an exempt document,

in accordance with the FOI Act.7

31. I am not satisfied that the second limb of the test has been met. According to

the Department, the value of the financial penalties is not material to the value

of the detention centres contract. In my view, disclosing which KPI failures led

to what penalty could not reasonably be expected to commercially

disadvantage SERCO during the next tendering process, and could not

reasonably be expected to affect SERCOs business, commercial or financialaffairs in general.

Findings

32. The report is not conditionally exempt under s 47G.

33. Since I have found that the report is not conditionally exempt, it is not

necessary for me to consider whether access should be given to conditionally

exempt document by applying the public interest test in s 11A(5).

Decision34. Under s 55K of the FOI Act, I set aside the Departments decision of

11 April 2013 and decide, in substitution of that decision that the report is not

exempt.

35. An unedited copy of the report should now be provided to Mr Farrell.

Timothy Pilgrim

Privacy Commissioner11 November 2014

7 Section 11(1)(a), see also Guidelines[14.11] in relation to disclosure log publication.

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Review rights

If a party to an IC review is unsatisfied with an IC review decision, they may apply under s 57A of the

FOI Act to have the decision reviewed by the Administrative Appeals Tribunal. The AAT provides

independent merits review of administrative decisions and has power to set aside, vary, or affirm an

IC review decision.

An application to the AAT must be made within 28 days of the day on which the applicant is given theIC review decision (s 29(2) of theAdministrative Appeals Tribunal Act 1975). An application fee may

be payable when lodging an application for review to the AAT. The current application fee is $861,

which may be reduced or may not apply in certain circumstances. Further information is available on

the AATs website (www.aat.gov.au) or by telephoning 1300 366 700.