FINANCIAL FRAMEWORK (SUPPLEMENTARY POWERS) AMENDMENT (CLIMATE CHANGE, ENERGY, THE ENVIRONMENT AND WATER MEASURES NO. 1) REGULATIONS 2023 (F2023L00276) EXPLANATORY STATEMENT

Details of the Financial Framework (Supplementary Powers) Amendment

(Climate Change, Energy, the Environment and Water Measures No. 1) Regulations 2023

Section 1 - Name

This section provides that the title of the Regulations is the Financial Framework (Supplementary Powers) Amendment (Climate Change, Energy, the Environment and Water Measures No. 1) Regulations 2023.

Section 2 - Commencement

This section provides that the Regulations commence on the day after registration on the Federal Register of Legislation.

Section 3 - Authority

This section provides that the Regulations are made under the Financial Framework (Supplementary Powers) Act 1997.

Section 4 - Schedules

This section provides that the Financial Framework (Supplementary Powers) Regulations 1997 are amended as set out in the Schedule to the Regulations.

Schedule 1 - Amendments

Financial Framework (Supplementary Powers) Regulations 1997

Item 1 - In the appropriate position in Part 4 of Schedule 1AB (table)

This item adds four new table items to Part 4 of Schedule 1AB to establish legislative authority for government spending on certain activities that would be administered by the Department of Climate Change, Energy, the Environment and Water (the department).

New table item 589 establishes legislative authority for government spending on the Carbon Farming Outreach Program (the program) to empower Australian farmers and land managers, including First Nations peoples, to participate in carbon markets and integrate low emission technologies and practices in their operations.

The program will equip the agriculture and land sectors to contribute to the Government's commitment to reduce Australia's greenhouse gas emissions by 43 per cent by 2030 and to net zero emissions by 2050. It will also assist farmers to identify and take opportunities to diversify their income, increase farm productivity and climate resilience. These opportunities will support increased profitability, employment opportunities and economic growth in rural and regional areas.

Specifically, the program will aim to:

support Australian farmers and land managers to make informed decisions about how to reduce emissions and sequester carbon;
provide Australian farmers and land managers with access to trusted information, resources and tools on carbon farming and low emission technologies and practices; and
build the capacity of independent agricultural advisors to deliver advice and training on emissions management.

Grant funding of up to $17.5 million will be provided to agricultural advisers to deliver online and in-person training package, tools and advice to farmers and land managers across Australia, focusing on:

farm and land emissions and carbon storage;
options to reduce emissions and sequester carbon;
carbon markets and certifications;
benefits and trade-offs;
legal and financial implications;
interactions with natural capital markets and schemes; and
relevant international context.

The department will develop the training package in consultation with industry, government agencies and technical experts, and with the assistance of a service provider engaged through open tender. The consultation will inform the details of the training package, including existing tools and resources to be included. All training materials, tools and resources developed by the service provider will be publicly available online.

The program will adopt a train-the-trainer model. Grant recipients will receive training from the service provider engaged by the department, and leverage their existing knowledge and industry connections to extend that information on the ground. Grant recipients will recruit participant farmers and land managers in their region and/or sector and tailor delivery of the training and advice to their needs. For instance, training and advice may be extended through avenues such as shed meetings, farm days, show day expos and formal training programs. Potential grant recipients include rural service providers, natural resource management organisations, First Nations land management groups, and outreach and extension organisations and agencies.

The program will be delivered via grants to eligible applicants. It will be governed by the appropriate frameworks including the Commonwealth Grants, Rules and Guidelines 2017 (CGRGs) through an open competitive selection process. The program will be delivered by the Business Grants Hub, part of the Department of Industry, Science and Resources, with policy responsibility resting with the department. Grants will be administered consistent with the CGRGs.

The Minister for Climate Change and Energy is responsible for the program. An independent expert panel will be engaged to assess grant applications and make recommendations. Final approval of individual grants will be formally delegated to a departmental official. The delegate will be a Senior Executive Service officer of the department who would have the relevant expertise in, and understanding of, carbon farming and land sector emissions reduction matters and is able to perform relevant functions in accordance with the Commonwealth resource management framework.

Information about the program, including grant opportunity guidelines and grant recipients will be made available at business.gov.au.

Independent merits review of funding decisions made in connection with the grants would not be considered appropriate because the decisions relate to an allocation of a finite resource between competing applicants and an allocation already made to a party would be affected by overturning the original decision. The Administrative Review Council (ARC) has recognised that it is justifiable to exclude merits review in relation to decisions of this nature (see paragraphs 4.11 to 4.19 of the guide, What decisions should be subject to merit review? (ARC guide)).

In addition, the review and audit process undertaken by the Australian National Audit Office (ANAO) provides a mechanism to review Australian Government spending decisions and report any concerns to the Parliament. These requirements and mechanisms help to ensure the proper use of Commonwealth resources and appropriate transparency around decisions relating to making, varying or administering arrangements to spend relevant money.

Further, the right to review under section 75(v) of the Constitution and review under section 39B of the Judiciary Act 1903 may also be available. Persons affected by spending decisions would also have recourse to the Commonwealth Ombudsman where appropriate.

The department has undertaken preliminary consultation with stakeholders in the early stages of developing the program. This includes targeted consultation with First Nations carbon farming representatives, industry bodies, and State and Territory agriculture and environment agencies. The department has consulted widely with Federal Government agencies. Feedback has been supportive and focused on ensuring the program is well aligned with existing initiatives to avoid duplication and stakeholder confusion. Implementation of the program will involve continued consultation, including in-depth consultation to ensure the training package meets industry and government needs.

Total funding of $20.3 million for the program was included in the October 2022-23 Budget under the measure 'Carbon Farming Outreach Program' for a period of four years commencing in 2022-23. Details are set out in Budget 2022-23, Budget Measures, Budget Paper No. 2 at page 57.

Funding for this item will come from Program 1.1: Reducing Australia's greenhouse gas emissions, which is part of Outcome 1. Details are set out in the Portfolio Budget Statements 2022-23, Budget Related Paper No. 1.3, Climate Change, Energy, the Environment and Water Portfolio at page 36.

Noting that it is not a comprehensive statement of relevant constitutional considerations, the objective of the item references the following powers of the Constitution:

the external affairs power (section 51(xxix));
the executive power (section 61);
the power to grant financial assistance to the States (section 96); and
the Territories power (section 122).

External affairs power

Section 51(xxix) of the Constitution empowers the Parliament to make laws with respect to 'external affairs'. The external affairs power supports legislation implementing Australia's international obligations under treaties to which it is a party.

Australia has obligations under the Kyoto Protocol to the United Nations Framework Convention on Climate Change (Kyoto Protocol); the Paris Agreement and the United Nations Framework Convention on Climate Change (UNFCCC). Australia has the following relevant obligations under these agreements.

Kyoto Protocol

Article 10(b) of the Kyoto Protocol obliges contracting parties to formulate, implement, publish and regularly update national and, where appropriate, regional programmes containing measures to mitigate climate change and measures to facilitate adequate adaptation to climate change:

such programs would, inter alia, concern the energy, transport and industry sectors as well as agriculture, forestry and waste management. Furthermore, adaptation technologies and methods for improving spatial planning would improve adaptation to climate change (article 10(b)(i)); and
Parties shall submit information on action under this Protocol, including national programmes; and other Parties shall seek to include in their national communications, as appropriate, information on programmes which contain measures that the Party believes contribute to addressing climate change and its adverse impacts, including the abatement of increases in greenhouse gas emissions and enhancement of and removals by sinks, capacity building and adaptation measures (Article 10(b)(ii)).

Paris Agreement

The Paris Agreement [2016] ATS 24 was entered into by the parties to the UNFCCC to enhance its implementation. Under the Paris Agreement, Australia has a 'nationally determined contribution' of a 2030 emissions reduction target of 26 to 28 per cent below 2005 levels. Relevantly, Article 4.2 of the Paris Agreement provides that '[e]ach Party shall prepare, communicate and maintain successive nationally determined contributions that it intends to achieve. Parties shall pursue domestic mitigation measures, with the aim of achieving the objectives of such contributions'.

The program will provide funding to train farmers and land managers about opportunities to adopt low emissions technologies and practices. The delivery of emissions reductions in the agricultural and land sectors supported by the program will therefore contribute to Australia's obligations to reduce greenhouse gas emissions under these treaties.

UNFCCC

Article 4 of the UNFCCC obliges contracting parties to:

formulate, implement, publish and regularly update national and, where appropriate, regional programmes containing measures to mitigate climate change by addressing anthropogenic emissions by sources and removals by sinks of all greenhouse gases not controlled by the Montreal Protocol, and measures to facilitate adequate adaptation to climate change (Article 4.1(b));
promote and cooperate in the development, application and diffusion, including transfer, of technologies, practices and processes that control, reduce or prevent anthropogenic emissions of greenhouse gases in all relevant sectors including the energy, transport, industry, agriculture, forestry and waste management sectors (Article 4.1(c)); and
adopt national policies and take corresponding measures on the mitigation of climate change, by limiting its anthropogenic emissions of greenhouse gases and protecting and enhancing its greenhouse gas sinks and reservoirs (Article 4.2(a)).

Executive power

Section 61 of the Constitution supports activities that form part of the ordinary and well-recognised functions of government and execution and maintenance of the Constitution and laws of the Commonwealth.

The program provides funding to support participation in the Emissions Reduction Fund, which is supported by the Carbon Credits (Carbon Farming Initiative) Act 2011. To the extent that the expenditure provides support for participation in the Emissions Reduction Fund, the expenditure would be related to the execution and maintenance of that legislation.

Power to grant financial assistance to States

Section 96 of the Constitution empowers the Parliament to 'grant financial assistance to any State on such terms and conditions as the Parliament thinks fit'.

The program provides funding to train farmers and land managers about opportunities to adopt low emissions technologies and practices. This may include funding to States to develop or deliver the proposed training and tools.

Territories power

Section 122 of the Constitution empowers the Parliament to 'make laws for the government of any territory'.

The program provides funding to train farmers and land managers about opportunities to adopt low emissions technologies and practices. This may include funding to Territories to develop or deliver the proposed training and tools.

New table item 590 establishes legislative authority for government spending on the Delivering the Basin Plan Program (the program), which aims to fund the recovery of environmental water from the Murray-Darling Basin water resources, including through the purchase of water access entitlements and the provision of grants to organisations to purchase land and water parcels.

The program responds to the Government's election commitment Labor's Plan to Future-Proof Australia's Water Resources, which includes a commitment to work with Basin governments and stakeholders to deliver on water commitments, including on increasing the volume of water resources available for environmental use by 450 gigalitres (GL) per year.

The program will further the outcomes specified in Chapter 5 and Schedule 5 of the Basin Plan 2012 by recovering water for the environment. The Basin Plan 2012 restricts the amount of water that can be taken from the Basin each year to leave enough for the environment, known as their Sustainable Diversion Limits (SDLs). Each of the 29 surface water areas and 80 groundwater areas has their own limit. The Australian Government recovers water through various mechanisms to meet these targets.

It also reflects the 12 October 2022 Murray-Darling Basin Ministerial Council (the Council) commitment to work, as a matter of priority, with relevant communities and Basin states on options to bridge the remaining gap in water recovery, including through strategic purchase, and to carefully consider opportunities to achieve the 450 GL. The communique is available at mdba.gov.au/news-media-events/newsroom/media-centre/murray-darling-basin-ministerial-council-communique.

The program will be a voluntary program delivered through strategic procurements of water entitlements and land and water parcel acquisition. Funding will not be used for any compulsory acquisitions nor for payments under section 77 of the Water Act 2007 (which relates to payments for water access entitlement holders). Funding will only be expended where the transaction will result in a water entitlement from the Murray-Darling Basin being transferred to the Commonwealth Environmental Water Holder.

A Strategic Water Purchasing Framework has been developed that identifies where water recovery is still needed to bridge the gap to the SDLs set out in the Basin Plan 2012. This framework also provides the principles that will apply for water acquisitions.

Strategic procurements of water entitlements

Both open tenders and limited tenders may be used for voluntary strategic purchases of water entitlements according to the water recovery task in particular catchments.

Open tenders will be used in a targeted manner where appropriate, such as limited to a particular catchment or water entitlement types. Limited tenders may also be used where they represent a more efficient and effective means to acquire the entitlements compared to an open tender.

In some instances, incidental infrastructure works will be required to ensure the Commonwealth secures the water and maximises the benefit of the water flows. Examples of this include decommissioning storage infrastructure that may otherwise intercept the overland flow of water.

The program may also support expenditure incidental to the strategic purchase of water entitlements.

Land and water parcel acquisition

The program may also support the recovery of water through land and water parcels. This may be delivered through either grants to organisations, or national partnership agreements with Basin states.

Acquisitions of land and water from willing sellers could provide a range of benefits not accessible from water purchasing alone (such as First Nations outcomes, water management benefits and broader environmental benefits).

Land and water parcels must result in the transfer of all or part of the water entitlements acquired in the parcel being transferred to the Commonwealth Environmental Water Holder. However, voluntary acquisition of these parcels must not result in the Commonwealth:

* acquiring any interest in the land; and

* having any liability or obligation to provide ongoing funding for the maintenance, rehabilitation or upkeep of the land, structures or environmental assets upon it.

In general, it would be expected that the land and water parcels would further one or more of the following outcomes:

* the conservation and protection of biodiversity and native plant and animal species, including species and ecological communities listed under the Environment Protection and Biodiversity Conservation Act 1999;

* the protection of rivers or wetlands;

* the protection of listed migratory species and their habitats;

* the sustainable management or conservation and enhancement of water resources;

* improving the spiritual, cultural, environmental, social and economic health and
well-being of First Nations persons and country by working in partnership on place-based solutions that encompass cultural flows; and

* addressing socio-economic effects of the Basin Plan 2012.

Where funding is provided to Basin states through a national partnership agreements it will be made in accordance with the Federal Financial Relations Act 2009 and the COAG Reform Fund Act 2008.

Where funding is provided through procurement to deliver the strategic procurements of water entitlements component, this will be made in accordance with the Public Governance, Performance and Accountability Act 2013 (PGPA Act) and the Commonwealth Procurement Rules (CPRs). Governance and oversight will be established to manage the procurements, including engagement of probity advisors, development of a monitoring, evaluation, reporting and improvement framework and a value for money framework.

The department will examine a range of financial and non-financial factors in determining whether a procurement achieves value for money. The criteria and the assessment methodology will be specified in the relevant tender documentation.

Tender documents and sample contracts will be published on AusTender (tender.gov.au) as required. The department will also publish information on its website as necessary at dcceew.gov.au/water/policy/mdb/commonwealth-water-mdb.

Decisions about purchases will be made by a delegate within the department in accordance with the relevant expenditure limit for that delegation. The delegate will be a Senior Executive Service officer of the department who would have the relevant expertise in, and understanding of, water matters and is able to perform relevant functions in accordance with the Commonwealth resource management framework.

Where funding is provided through a grant to deliver the land and water parcel acquisition component, this will be made in accordance with the PGPA Act and the CGRGs.

The department will undertake an assessment of proposals against the selection criteria. The assessment may be supplemented by First Nations experts and/or experts from the natural resource management sector, and other Commonwealth officers with relevant specialist expertise. Any expert or advisor, who is not a Commonwealth Official, will be required to perform their duties in accordance with the CGRGs.

Grant opportunity guidelines, including eligibility and assessment criteria will be prepared and made publicly available as required under CGRGs. Details of grants will also be listed on the GrantConnect website (grants.gov.au). Grants will be administered by the Business Grants Hub.

The department will provide advice to the decision maker, the Minister for the Environment and Water, on the merits of a proposal. The Minister will then decide which proposals are successful, informed by this advice and any further information that may become known, including the availability of grant funds.

Funding decisions made in connection with grants and procurements under the program will not be subject to merits review. Independent merits review would not be appropriate because these decisions will relate to the allocation of finite resources between competing applicants from which all potential claims for a share of the resource cannot be met. Additionally, an allocation already made to a party would be affected by overturning the original decision. The ARC has recognised that it is justifiable to exclude merits review in relation to decisions of this nature (see paragraphs 4.11 to 4.19 of ARC guide).

In addition, the review and audit process undertaken by the ANAO also provides a mechanism to review Australian Government spending decisions and report any concerns to the Parliament. These requirements and mechanisms help to ensure the proper use of Commonwealth resources and appropriate transparency around decisions relating to making, varying or administering arrangements to spend relevant money.

The remaking of a procurement decision after entry into a contractual arrangement with a successful provider is legally complex and could result in delays to providing services under the project. The Government Procurement (Judicial Review) Act 2018 enables suppliers to challenge some procurement processes for alleged breaches of certain procurement rules. This legislation might provide an additional avenue of redress (compensation or injunction) for dissatisfied providers or potential providers, depending on the circumstances.

In its 12 October 2022 Communique, the Council stated:

"As a matter of priority, the Commonwealth will work with relevant communities and Basin states on options to bridge the remaining gap in water recovery, including through strategic purchase, and to consider carefully opportunities to achieve the 450 GL."

Membership of the Council is made up of the Minister responsible for water from each Basin jurisdiction (Australian Capital Territory, New South Wales, Queensland, South Australia and Victoria).

The Basin Officials Committee has also been consulted on the Strategic Water Purchasing Framework and input from basin jurisdictions has been incorporated wherever possible.

The department has been working with stakeholders in the Condamine-Balonne catchment in Queensland on options to recover water from that region for over 12 months and has recently commenced limited and introductory engagement in the Namoi catchment in New South Wales. These discussions are exploring all opportunities to recover water to securing the initial 49 GL recovery target to bridge the gap.

Funding for the program is included in the 2022-23 October Budget under the measure 'Murray-Darling Basin - delivering on water commitments'. Details are set out in Budget October 2022-23, Budget Measures, Budget Paper No. 2 at page 65. The funding amount for the program is not for publication due to commercial-in-confidence sensitivities. It is the intent of the Government to inform the Parliament of the funding amount expected to be expended once contracts are awarded.

Funding for this item will come from Program 4.1: Water Reform, which is part of Outcome 4. Details are set out in Portfolio Budget Statements 2022-23, Budget Related Paper No. 1.3, Climate Change, Energy, the Environment and Water Portfolio at page 70.

Noting that it is not a comprehensive statement of relevant constitutional considerations, the objective of the item references the following powers of the Constitution:

the race power (section 51(xxvi)); and
the external affairs power (section 51 (xxix)).

Race power

Section 51(xxvi) of the Constitution empowers the Parliament to make laws with respect to 'the people of any race for whom it is deemed necessary to make special laws'.

The program may support the acquisition of land and water parcels directed at the improvement of spiritual, cultural, environmental, social and economic health and well-being of First Nations persons and country by working in partnership on place-based solutions that encompass cultural flows. It therefore provides particular benefits to First Nations persons who are members of a 'race' for the purposes of section 51(xxvi).

External affairs power

Australia has relevant obligations under the treaties referred to in the definition of relevant international agreement in subsection 4(1) of the Water Act 2007 which are relevant to the program. In particular, Australia has the following obligations:

Convention on Wetlands of International Importance especially as Waterfowl Habitat (Ramsar Convention)

The Ramsar Convention obliges Parties to formulate and implement their planning so as to promote the conservation of the wetlands included in the List of Wetlands of International Importance, and as far as possible the wise use of wetlands in that country (Article 3(1)). It also obliges Parties to endeavour through management to increase waterfowl populations on appropriate wetlands (Article 4(4)).

The program would support the procurement of water entitlements and the acquisition of land and water parcels. It is expected that the expenditure will result in increased environmental water flows and broader environmental benefits, including the protection of rivers and wetlands in the Murray-Darling Basin.

Convention on Biological Diversity (CBD)

The CBD obliges Parties to promote the protection of ecosystems, natural habitats and the maintenance of viable populations of species in natural surroundings (Article 8(d)). It also obliges Parties to rehabilitate and restore degraded ecosystems and promote the recovery of threatened species, through the development of plans and other management strategies (Article 8(f)).

The program would support the procurement of water entitlements and the acquisition of land and water parcels. It is expected that the expenditure will result in increased water resources available for the environment with broad environmental benefits such as the conservation and protection of biodiversity and native plant and animal species in the Murray-Darling Basin, including species and ecological communities listed under the Environment Protection and Biodiversity Conservation Act 1999.

New table item 591 establishes legislative authority for government spending on the energy efficiency grants for small and medium enterprises (the grants program) to support small and medium-sized enterprises to improve energy efficiency and reduce energy costs, including by upgrading or replacing equipment with new lower-emissions technologies.

The grants program will support small and medium sized businesses to increase the uptake of energy efficient technologies, manage their energy usage and costs, and reduce greenhouse gas emissions. The grants program will contribute to the Government's commitment to reduce Australia's greenhouse gas emissions by 43 per cent by 2030 and to net zero emissions by 2050.

The grants program delivers on the Government's election commitment as published in the Plan for a Better Future. It also aligns with the Government's priorities identified by the Powering Australia plan and the National Reconstruction Fund. The National Reconstruction Fund seeks to help industry to become more productive and take advantage of opportunities in a net zero economy, with one of the priority funding areas being renewables and low emissions technologies. Priorities in the Powering Australia plan include creating jobs, cutting power bills, and reducing emissions by boosting renewable energy.

The grants will fund eligible activities, such as:

* equipment replacement or upgrades that improve energy efficiency, such as replacing gas boilers with more efficient heat pumps;

* investment in energy and emissions monitoring and management systems to better manage energy use; and

* energy management plans, feasibility studies and energy audits.

The grants program will be delivered over two funding rounds, with $16 million in grants delivered in round one, and $40 million in grants delivered in round two. A full list of eligibility criteria and eligible activities will be released in the guidelines for each grant round.

Grant applications will be assessed on a demand-driven basis, using eligibility criteria only. Subject to applicant eligibility, grants will be applied on a first-come, first-served basis. The grant period will run from the opening of applications until each round's allocation is exhausted. Eligible applicants are not limited to a particular industry or sector.

The first round of grants will be for eligible small and medium enterprises with 1 to 199 employees, with individual grants of up to $25,000. It is expected that approximately 700 grants will be delivered in the first round.

The second round of grants will open for applications in the 2023-24 financial year. The Government may update the design for the second round of grants based on any lessons from the first round. This would also allow a level of flexibility, for example, to potentially focus on targeting larger energy efficiency projects.

The grants program will be delivered via demand driven grants to eligible small and medium enterprises. It will be governed by the appropriate frameworks including the CGRGs through an eligibility-based assessment process. The grants program will be delivered by the Business Grants Hub, with policy responsibility resting with the department. Grant opportunity guidelines will be developed. Grants will be administered consistent with the CGRGs.

Information about the grants program and how applicants can assess their eligibility to apply will be advertised on business.gov.au (https://business.gov.au), energy.gov.au (https://energy.gov.au) and GrantConnect (https://www.grants.gov.au). Applicants will need to set up an account to access the business.gov.au online portal.

The Assistant Minister for Climate Change and Energy is responsible for the grants program. Approval of individual grants will be formally delegated to an official of the Business Grants Hub in due course. The delegate will be an officer who has appropriate financial delegations and relevant expertise in, and understanding of, grant administration and who is able to perform relevant functions in accordance with the Commonwealth resource management framework.

Independent merits review of funding decisions made in connection with the grants would not be considered appropriate because the decisions relate to an allocation of a finite resource between competing applicants and an allocation already made to a party would be affected by overturning the original decision. The ARC has recognised that it is justifiable to exclude merits review in relation to decisions of this nature (see paragraphs 4.11 to 4.19 of the ARC guide).

In addition, the review and audit process undertaken by the ANAO provides a mechanism to review Australian Government spending decisions and report any concerns to the Parliament. These requirements and mechanisms help to ensure the proper use of Commonwealth resources and appropriate transparency around decisions relating to making, varying or administering arrangements to spend relevant money.

The first grant round is being developed and designed by having regard to the lessons learned through the implementation of the Energy Efficient Communities Program. Following the series of sector-focused grant opportunities provided through the Energy Efficient Communities Program, the department is now seeking to provide support to small businesses across all sectors to improve their energy efficiency.

In addition, the department is consulting closely with the Business Grants Hub to implement appropriate assurance processes to ensure projects are delivered in accordance with grant agreements. The department will also consult with government agencies, including the Department of the Prime Minister and Cabinet and the Department of Finance, during the development of grant opportunity guidelines. The Round One guidelines have been based on experience with previous programs and industry responses to them. Specific consultation with industry may be undertaken in planning Round Two.

Funding of $59.9 million was included in the October 2022-23 Budget under the measure 'Energy Efficiency Grants for Small and Medium Sized Enterprises' for a period of three years commencing in 2022-23. Details are set out in Budget October 2022-23, Budget Measures, Budget Paper No. 2 at page 60.

Funding for this item will come from Program 1.3: Supporting reliable, secure and affordable energy, which is part of Outcome 1. Details are set out in the Portfolio Budget Statements 2022-23, Budget Related Paper No. 1.3, Climate Change, Energy, the Environment and Water Portfolio at page 23.

Noting that it is not a comprehensive statement of relevant constitutional considerations, the objective of the item references the external affairs power (section 51(xxix)) of the Constitution.

External affairs power

The Kyoto Protocol includes obligations on Australia to take action to reduce emissions, such as Articles 3 and 10(b). Article 3 imposes obligations to ensure that Australia's greenhouse gas emissions during a commitment period do not exceed its assigned amount. Article 10(b) imposes obligations to formulate, implement and report upon climate change mitigation and adaptation programs.

The Paris Agreement was entered into by the parties to the UNFCCC to enhance its implementation. Under the Paris Agreement, Australia has a 'nationally determined contribution' of a 2030 emissions reduction target of 43 per cent below 2005 levels. Relevantly, Article 4.2 of the Paris Agreement provides that '[e]ach Party shall prepare, communicate and maintain successive nationally determined contributions that it intends to achieve. Parties shall pursue domestic mitigation measures, with the aim of achieving the objectives of such contributions'.

The UNFCCC includes a range of obligations on Australia to take domestic actions that reduce Australia's emissions of greenhouse gases. The UNFCCC relevantly provides that Australia shall:

formulate, implement, publish and regularly update national and, where appropriate, regional programs containing measures to mitigate climate change by addressing anthropogenic emissions by sources and removals by sinks of all greenhouse gases not controlled by the Montreal Protocol, and measures to facilitate adequate adaptation to climate change (Article 4.1(b));
promote and cooperate in the development, application and diffusion, including transfer, of technologies, practices and processes that control, reduce or prevent anthropogenic emissions of greenhouse gases in all relevant sectors including the energy, transport, industry, agriculture, forestry and waste management sectors (Article 4.1(c)); and
adopt national policies and take corresponding measures on the mitigation of climate change, by limiting its anthropogenic emissions of greenhouse gases and protecting and enhancing its greenhouse gas sinks and reservoirs (Article 4.2(a)).

Under the program, funding will be distributed to small and medium sized enterprises to upgrade or replace equipment and technologies, thereby reducing energy consumption and improving energy efficiency. The effect of the program will therefore be to reduce greenhouse gas emissions, contributing to Australia's efforts to meet its obligations under international treaties including those described above.

New table item 592 establishes legislative authority for government spending on the Landcare Rangers Program (the program) to support the employment and upskilling of landcare rangers and establish and support landcare facilitators.

The program responds to the Government's election commitment to employ and upskill landcare rangers, announced by the Minister for the Environment and Water, the Hon Tanya Plibersek MP, on 25 October 2022 (https://minister.dcceew.gov.au/plibersek/media-releases/environment-back-under-albanese-government).

The program aims to provide practical, local on-ground action to improve the protection, conservation and management of Australia's biodiversity, environmental and heritage values of national significance, grow the professional capacity and capability of the environment sector and enhance community involvement in conservation activities.

Funding will be provided to employ and upskill up to 1,000 full time equivalent landcare rangers and to the landcare facilitator commitment. Landcare ranger positions will be open to all applicants of working age with a right to work in Australia. Eligibility requirements for the landcare facilitators will be determined as part of the design process.

It is envisaged that landcare rangers will undertake a range of activities including but not limited to revegetation, habitat restoration, eradication and management of pests and weeds, and community engagement. The landcare facilitators will coordinate community landcare activities and improve knowledge sharing by providing national coordination and engagement for the environmental management sector.

The program will enable existing conservation and natural resource management (NRM) organisations to offer paid landcare ranger roles, creating pathways into careers in the environment sector. Participants will be paid in accordance with the Fair Work Act 2009 and be provided on-the-job learning and training opportunities.

To maximise program uptake and successful delivery of environmental outcomes, the department will consider a range of procurement and grant delivery mechanisms to seek suitable host organisations in areas where employment needs and national environmental priorities overlap.

The program supports the delivery of the Government's Threatened Species Action Plan 2022-2026 and Australia's Strategy for Nature 2019-2030. The program will conserve, restore and improve habitat, forge stronger partnerships with collaboration with NRM organisations and other land management organisations, and facilitate community leadership and engagement in conservation activities.

The department is undertaking an initial design phase to undertake analysis of economic and labour market needs across regions, overlaid with national environmental priorities, and consultation with stakeholders and experts to ensure the program is invested into areas of labour need and does not unduly compete with other jobs initiatives. The design phase is also taking into account the outcomes of the 2022 Jobs and Skills summit and the Full Employment White Paper due for release in 2023.

It is expected that program implementation will commence after 1 July 2023.

Through analysis and stakeholder consultation, the department will identify the most appropriate and cost-effective delivery model, which is likely to include a mix of grants and procurements to service providers such as NRM organisations, conservation non-government organisations (NGOs) and State and Territory governments.

The Minister for the Environment and Water will be responsible for deciding on the program design parameters and the program delivery model and the department will be responsible for the delivery of the program.

Spending activities under procurements would be undertaken in accordance with the CPRs. It is expected that any services will be procured through either open tender, limited tender consultancies (including using departmental panel arrangements) or through initiatives under the next phase of the Natural Heritage Trust. The Minister for the Environment and Water will be responsible for deciding on successful tenderers and the amounts to be allocated for each procurement. Details of the tenders will be published on AusTender at www.tender.gov.au as required.

If a portion of funding is delivered through grants, grants will be administered in line with the CGRGs. Guidelines containing eligibility and assessment criteria will be developed and will be available on GrantConnect at www.grants.gov.au as required. Grants Hub will be used to facilitate the process as appropriate. Grant recipients will have to demonstrate their proposal meets the relevant criteria before receiving a grant. The department will make recommendations to the Minister for the Environment and Water on the merits of each proposal and the Minister will make the final determination on funding.

Funding decisions made in connection with grants and procurements will not be subject to merits review. Independent merits review would not be considered appropriate as they are decisions relating to the allocation of a finite resource, from which all potential claims for a share of the resource cannot be met. In addition, any funding that has already been allocated would be affected if the original decision was overturned. The ARC has recognised that it is justifiable to exclude merits review in relation to decisions of this nature (see paragraphs 4.11 to 4.19 of the ARC guide).

Further, the right to review under section 75(v) of the Constitution and review under section 39B of the Judiciary Act 1903 may be available. Persons affected by spending decisions would also have resource to the Commonwealth Ombudsman where appropriate.

Through stakeholder consultation, the department will gain a clearer understanding of current on-ground needs that could be met through the program and explore delivery model options and potential service providers.

Initial targeted consultation commenced following the October 2022-23 Budget and will continue as program design evolves. Australian Government agencies consulted include the Department of Agriculture, Forestry and Fisheries, Department of Employment and Workplace Relations, National Indigenous Australians Agency and Services Australia.

External stakeholders consulted include national and regional NRM organisations, national conservation and national landcare organisations, and some State and Territory government agencies.

Funding of $90 million for the program was included in the October 2022-23 Budget under the measure 'Next Phase of Natural Heritage Trust Funding' for a period of five years commencing in 2022-23. Details are set out in Budget October 2022-23, Budget Measures, Budget Paper No. 2 at page 68.

Funding for this item will come from Program 2.1: Sustainable Management of Natural Resources and the Environment, which is part of Outcome 2. Details are set out in Portfolio Budget Statements 2022-23, Budget Related Paper No. 1.3, Climate Change, Energy, the Environment and Water at page 53.

Noting that it is not a comprehensive statement of the relevant constitutional considerations, the objective of the item references the following powers of the Constitution:

* the race power (section 51(xxvi));

* the external affairs power (section 51(xxix));

* the power to grant financial assistance to States (section 96); and

* the Territories power (section 122).

Race power

Section 51(xxvi) of the Constitution empowers the Parliament to make laws with respect to 'the people of any race for whom it is deemed necessary to make special laws'.

Some of the activities undertaken by the landcare rangers supported by the program may be directed at the conservation and protection of First Nations cultural heritage sites.

External affairs power

Australia has relevant obligations under the Convention Concerning the Protection of the World Cultural and Natural Heritage, in particular:

* a duty to ensure the identification, protection, conservation, presentation and transmission to future generations of its cultural and natural heritage (Article 4);

* to ensure that effective and active measures are taken for the protection, conservation and presentation of its cultural and natural heritage (Article 5).

Australia has relevant obligations under the Convention on Biological Diversity, particularly to:

* identify and monitor components of biological diversity important for its conservation and sustainable use, and identify processes and activities which could have significant adverse impacts on the conservation and sustainable use of biological diversity (Article 7);

* rehabilitate and restore degraded ecosystems and promote the recovery of threatened species, inter alia, through the development and implementation of plans or other management strategies, prevent the introduction of, control or eradicate those alien species which threaten ecosystems, habitats or species, and other in-situ conservation measures (Article 8);

* adopt measures for the recovery and rehabilitation of threatened species and for their reintroduction into their natural habitats under appropriate condition and undertake other ex-situ conservation measures (Article 9);

* integrate consideration of the conservation and sustainable use of biological resources into national decision-making, and adopt measures relating to the use of biological resources to avoid or minimise adverse impacts on biological diversity (Article 10);

* promote and encourage understanding of conservation of biological diversity through educational programs (Article 13).

Australia has relevant obligations under the Convention on Wetlands of International Importance especially as Waterfowl Habitat (Ramsar Convention), particularly to:

* formulate and implement planning so as to promote conservation and wise use of wetlands (Article 3);

* promote the conservation of wetlands and waterfowl by, inter alia, management of wetlands, encouraging research and exchange of data and publications, and training of personnel on such matters (Article 4).

Australia has relevant obligations under the United Nations Framework Convention on Climate Change, particularly to address climate change and its impacts including by:

* formulating, implementing, publishing and regularly updating national and, where appropriate, regional programs containing measures to mitigate climate change by addressing anthropogenic emissions by sources and removals by sinks of all greenhouse gases not controlled by the Montreal Protocol, and measures to facilitate adequate adaptation to climate change (Article 4.1(b));

* promoting sustainable management and promoting and cooperating in the conservation and enhancement, as appropriate, of sinks and reservoirs of all greenhouse gases not controlled by the Montreal Protocol (Article 4.1(d));

* adopting national policies and taking corresponding measures on the mitigation of climate change, by limiting its anthropogenic emissions of greenhouse gases and protecting and enhancing its greenhouse gas sinks and reservoirs (Article 4.2(a));

* promote and facilitate educational and public awareness campaigns, public access to information on, and public participation in addressing, climate change and its effects (Article 6).

The program will support the employment and on-going training of landcare rangers who will undertake a range of activities directed at the protection, conservation and restoration of Australia's biodiversity, environmental and heritage values. Such activities may include revegetation, habitat restoration, eradication and management of pests and weeds, and community engagement. The program will also establish and support landcare facilitators to improve knowledge sharing by providing national coordination and engagement for the landcare sector to ensure efforts to protect and restore Australia's environment and heritage are coordinated.

Power to grant financial assistance to States

Section 96 of the Constitution empowers the Parliament to 'grant financial assistance to any State on such terms and conditions as the Parliament thinks fit'.

Funding may be provided to State governments to enable relevant State government agencies to offer paid landcare ranger roles and to create pathways into careers in the environment sector.

Territories powers

Section 122 of the Constitution empowers the Parliament to 'make laws for the government of any territory'.

Funding may be provided to Territory governments to enable relevant Territory government agencies to offer paid landcare ranger roles and to create pathways into careers in the environment sector.

Statement of Compatibility with Human Rights

Prepared in accordance with Part 3 of the Human Rights (Parliamentary Scrutiny) Act 2011

Financial Framework (Supplementary Powers) Amendment (Climate Change, Energy, the Environment and Water No. 1) Regulations 2023

This disallowable legislative instrument is compatible with the human rights and freedoms recognised or declared in the international instruments listed in section 3 of the Human Rights (Parliamentary Scrutiny) Act 2011.

Overview of the legislative instrument

Section 32B of the Financial Framework (Supplementary Powers) Act 1997 (the FF(SP) Act) authorises the Commonwealth to make, vary and administer arrangements and grants specified in the Financial Framework (Supplementary Powers) Regulations 1997 (the FF(SP) Regulations) and to make, vary and administer arrangements and grants for the purposes of programs specified in the Regulations. Schedule 1AA and Schedule 1AB to the FF(SP) Regulations specify the arrangements, grants and programs. The powers in the FF(SP) Act to make, vary or administer arrangements or grants may be exercised on behalf of the Commonwealth by Ministers and the accountable authorities of non-corporate Commonwealth entities, as defined under section 12 of the Public Governance, Performance and Accountability Act 2013.

The Financial Framework (Supplementary Powers) Amendment (Climate Change, Energy, the Environment and Water Measures No. 1) Regulations 2023 amend Schedule 1AB to the Principal Regulations to establish legislative authority for government spending on certain activities administered by the Department of Climate Change, Energy, the Environment and Water (the department).

This disallowable legislative instrument adds the following table items to Part 4 of
Schedule 1AB:

table item 589 'Carbon Farming Outreach Program;
table item 590 'Delivering the Basin Plan Program;
table item 591 'Energy efficiency grants for small and medium enterprises'; and
table item 592 'Landcare Rangers Program'.

Table item 589 - Carbon Farming Outreach Program

Table item 589 establishes legislative authority for government spending on the Carbon Farming Outreach Program (the program), which will provide funding for the development and delivery of training, advice and tools to support farmers and land managers to engage in carbon markets and adopt low emission technologies and practices in the agriculture and land management sectors.

The program will equip the agriculture and land sectors to contribute to the Government's commitment to reduce Australia's greenhouse gas emissions by 43 per cent by 2030 and net zero emissions by 2050.

farm and land emissions and carbon storage;
options to reduce emissions and sequester carbon;
carbon markets and certifications;
benefits and trade-offs;
legal and financial implications;
interactions with natural capital markets and schemes; and
relevant international context.

Human rights implications

Table item 589 does not engage any of the applicable human rights or freedoms.

Conclusion

Table item 589 is compatible with human rights as it does not raise any human rights issues.

Table item 590 - Delivering the Basin Plan Program

Table item 590 establishes legislative authority for government spending on the Delivering the Basin Plan Program (the program), which aims to fund the recovery of environmental water from the Murray-Darling Basin water resources, including through the purchase of water access entitlements and the provision of grants to organisations to purchase land and water parcels.

The program will further the outcomes specified in Chapter 5 and Schedule 5 of the Basin Plan 2012 by recovering water for the environment.

The program also responds to the Government's election commitment Labor's Plan to Future-Proof Australia's Water Resources, which includes a commitment to work with Basin governments and stakeholders to deliver on water commitments, including on increasing the volume of water resources available for environmental use by 450 gigalitres per year.

Human rights implications

Table item 590 does not engage any of the applicable human rights or freedoms.

Conclusion

Table item 590 is compatible with human rights as it does not raise any human rights issues.

Table item 591 - Energy efficiency grants for small and medium enterprises

Table item 591 establishes legislative authority for government spending on the energy efficiency grants for small and medium enterprises (the grants program) to support small and medium-sized enterprises to improve energy efficiency and reduce energy costs, including by upgrading or replacing equipment with new lower-emissions technologies.

Grant funding of $59.9 million over three years from 2022-23 will be provided to fund eligible activities, such as:

* equipment replacement or upgrades that improve energy efficiency, such as replacing gas boilers with more efficient heat pumps;

* investment in energy and emissions monitoring and management systems to better manage energy use; and,

* energy management plans, feasibility studies and energy audits.

Human rights implications

Table item 591 does not engage any of the applicable human rights or freedoms.

Conclusion

Table item 591 is compatible with human rights as it does not raise any human rights issues.

Table item 592 - Landcare Rangers Program

Table item 592 establishes legislative authority for government spending on the Landcare Rangers Program (the program) to support the employment and upskilling of landcare rangers and establish and support landcare facilitators.

The program aims to provide practical, local on-ground action to improve the protection, conservation and management of Australia's biodiversity, environmental and heritage values of national significance, grow the professional capacity and capability of the environment sector, and enhance community involvement in conservation activities.

Funding will be provided to employ and upskill up to 1,000 full time equivalent landcare rangers and engage one or more new landcare facilitators. Landcare ranger positions will be open to all applicants of working age with a right to work in Australia.

Funding of $90 million over five years from 2022-23 will be available for the program.

Human rights implications

Table item 592 engages the following human right:

* the right to work - Article 6 of the International Covenant on Economic, Social and Cultural Rights (ICESCR), read with Article 2.

Right to work

Article 2 of the ICESCR provides that each State Party undertakes to take steps to the maximum of its available resources with a view to achieving progressively the full realisation of the rights recognised in the Covenant, by all appropriate means.

Article 6 of the ICESCR recognises the right to work, including the right of everyone to the opportunity to gain their living by work which they freely choose or accept. Steps to be taken to achieve the full realisation of this right include providing technical and vocational guidance and training programs, policies and techniques to achieve steady economic, social and cultural development and full and productive employment.

Table item 592 promotes the right to work by providing opportunities for careers in the environment and environmental management sector and providing training and knowledge sharing in the protection and restoration of Australia's environment and heritage.

Conclusion

Table item 592 is compatible with human rights because it promotes the protection of human rights.

Senator the Hon Katy Gallagher

Minister for Finance

Commonwealth Numbered Regulations - Explanatory Statements