Details of the Financial Framework (Supplementary Powers) Amendment (Industry, Science, Energy and Resources Measures No. 1) Regulations 2022

 

Section 1 - Name

 

This section provides that the title of the Regulations is the Financial Framework (Supplementary Powers) Amendment (Industry, Science, Energy and Resources
Measures No. 1) Regulations 2022.

 

Section 2 - Commencement

 

This section provides that the Regulations commence immediately 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 a new table item to Part 4 of Schedule 1AB to establish legislative authority for government spending on an activity administered by the Department of Industry, Science, Energy and Resources (the department).

 

New table item 551 establishes legislative authority for the Government to provide humanitarian support to Ukraine in the wake of the Russian invasion.

 

The Australian Government will assist the government and people of Ukraine in relation to threats to their security, including through the supply of at least 70,000 tonnes of thermal coal to support the ongoing supply of energy to Ukraine.

 

On 20 March 2022, the Minister for Resources and Water, the Hon Keith Pitt MP, announced the Australian Government will donate at least 70,000 tonnes of thermal coal in response to a direct request from the Ukrainian Government to provide continued energy security and ensure continued energy supply to homes and industry. The media release is available at https://www.minister.industry.gov.au/ministers/pitt/media-releases/whitehaven-assist-ukraine-request-provide-energy-security.

 

The initiative forms part of the broader 'Additional support to Ukraine' package, announced by the Government on 20 March 2022 (https://www.pm.gov.au/media/additional-support-ukraine), which includes defensive military assistance for Ukrainian Armed Forces, emergency humanitarian assistance focusing on protecting women, children, the elderly and disabled, and supply of thermal coal and other supports.

 

This is an opportunity for Australia to directly support Ukraine at a time of its greatest need. It will also highlight Australia as a secure and reliable supplier of energy. Specifically, the provision for thermal coal will help keep the country's coal-fired power generators operating and supplying electricity to country's power grid, supporting the Ukrainian people by keeping lights on, homes heated, and factories running during this very difficult time.

 

The department will engage a specialist coal trader, who will purchase the coal on behalf of the Commonwealth and arrange for its transportation. The coal delivery mechanisms are still being developed and will be provided as part of the tender process to procure a service provider.

 

The provider will be engaged through a limited tender process due to the specialist expertise required to deliver the initiative, and the urgency to provide the support to Ukraine in a timely fashion. The department will administer the contract in accordance with the Commonwealth resource management framework, including the Public Governance, Performance and Accountability Act 2013 (PGPA Act) and the department's Accountable Authority Instructions.

 

The Secretary of the department (as the relevant Accountable Authority) has made a determination under paragraph 2.6 of the Commonwealth Procurement Rules (CPRs) to disapply Divisions 1 and 2 of the CPRs to the proposed procurement for the purchase and delivery of coal and all incidental or related matters. This is necessary for the maintenance or restoration of international peace and security, protection of human health and the protection of essential security interests. Accordingly, the requirement to publish the details of the proposed procurement on AusTender as set out in the CPRs will not apply. However, the department will act consistently with the CPRs to the extent possible in the circumstances.

 

The department's Chief Financial Officer (CFO) will be responsible for the decision to enter into an agreement with the provider. The CFO is a delegate of the Secretary of the department, who is the Accountable Authority for the purposes of the PGPA Act pursuant to the department's general financial framework delegations.

 

Funding decisions made in connection with the procurement are not considered appropriate for merits review as they relate to the allocation of finite resources between potentially competing applicants. Funding will be provided as a one-off payment to engage a service provider and there would be no effective remedy if another potential supplier were to seek review of the 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 4.16  to 4.19 of What decisions should be subject to merit review? (ARC guide)).

 

In addition, merits review would not be appropriate for spending decisions on the initiative because it would affect the ability to deliver the initiative in a timely fashion, which in turn would affect Australia's relations with other countries. Given the high political consequence of this funding decision, as well as the impact this funding decision will have on Australia's relationship with other countries, including but not limited to the Government of Ukraine, it is appropriate that the decision is not subject to merits review. The ARC has recognised that it is justifiable to exclude merits review in relation to decisions of this nature (see paragraphs 4.22 to 4.23 of the ARC guide).

 

The department will provide an opportunity for potential suppliers to make complaints if they wish, and to receive feedback. These complaints and inquiries can be made at any time during the procurement process, and will be handled in accordance with probity requirements. Procurement decisions will be based on value for money, including capability and capacity to deliver, and price and risk considerations.

 

Finally, the re-making 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. 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.

 

The donation of thermal coal is a direct response to the Ukrainian Government's request for assistance, supported by the Government of Poland and discussions with other European partners. The department has consulted with the Australian coal industry to source supplies, including Australia's leading producer of premium-quality thermal coal - Whitehaven Coal. Whitehaven Coal is supportive of the initiative and will contribute to Australia's package of humanitarian assistance to Ukraine through supply of a shipment of thermal coal to support Ukrainian energy security and independence.

 

The initiative will be included in the 2022-23 Budget and the Portfolio Budget Statements for the Industry, Science, Energy and Resources portfolio. Funding for the initiative will be
not-for-publication due to commercial sensitivity.

 

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

 

Section 51(xxix) of the Constitution empowers the Parliament to make laws with respect to 'external affairs'. The external affairs power supports legislation with respect to matters or things outside the geographical limits of Australia, and with respect to matters concerning Australia's relations with other nations.

 

The initiative involves the provision of assistance (in the form of a donation of thermal coal, and potentially other forms) to another country. This will have positive impacts both on Australia's relationship with Ukraine, and Australia's standing in the international community generally.

 

 

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 (Industry, Science, Energy and Resources Measures No. 1) Regulations 2022

 

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 (Industry, Science, Energy and Resources Measures No. 1) Regulations 2022 amend Schedule 1AB to the FF(SP) Regulations to establish legislative authority for the Government to provide humanitarian support to Ukraine in the wake of the Russian invasion. The initiative will be administered by the Department of Industry, Science, Energy and Resources.

 

The Australian Government will assist the government and people of Ukraine in relation to threats to their security, including through the supply of at least 70,000 tonnes of thermal coal to support the ongoing supply of energy to Ukraine.

 

The initiative forms part of the broader 'Additional support to Ukraine' package, announced by the Government on 20 March 2022, which includes defensive military assistance for Ukrainian Armed Forces, emergency humanitarian assistance focusing on protecting women, children, the elderly and disabled, and supply of thermal coal and other supports.

 

This is an opportunity for Australia to directly support Ukraine at a time of its greatest need. It will also highlight Australia as a secure and reliable supplier of energy. Specifically, the provision for thermal coal will help keep the country's coal-fired power generators operating and supplying electricity to country's power grid, supporting the Ukrainian people by keeping lights on, homes heated, and factories running during this very difficult time.

 

Human rights implications

 

This disallowable legislative instrument engages the following rights:

*         the right to self-determination - Article 1 of the International Covenant on Civil and Political Rights (ICCPR) and Article 2 of the International Covenant on Economic, Social and Cultural Rights (ICESCR);

*         the right to physical and mental health - Article 12 of the ICESCR and Article 25 of the Convention on the Rights of Persons with Disabilities (CRPD); and

*         the right to an adequate standard of living - Article 11 of the ICESCR and Article 28 of the CRPD.

 

Right to self-determination

 

This disallowable legislative instrument engages the right to self-determination primarily through Article 1 of the ICCPR and Article 2 the ICESCR.

 

Article 1(1) and (2) of the ICCPR and ICESCR states that:

 

1. All peoples have the right of self-determination. By virtue of that right they freely determine their political status and freely pursue their economic, social and cultural development.

 

2. All peoples may, for their own ends, freely dispose of their natural wealth and resources without prejudice to any obligations arising out of international economic co-operation, based upon the principle of mutual benefit, and international law. In no case may a people be deprived of its own means of subsistence.

 

This disallowable legislative instrument supports the government and people of Ukraine's right to self-determination. Commonwealth assistance to Ukraine in relation to threats to the nation and people's security supports its people's right to have control over their destiny. This includes peoples being free to pursue their economic, social and cultural development.

 

Right to physical and mental health

 

This disallowable legislative instrument engages the right to physical and mental health primarily through Article 12(1) of the ICESCR and Article 25 of the CRPD.

 

Article 12(1) of the ICESCR states the States Parties to the present Covenant recognize the right of everyone to the enjoyment of the highest attainable standard of physical and mental health.

 

Article 25 of the CRPD states that States Parties recognize that persons with disabilities have the right to the enjoyment of the highest attainable standard of health without discrimination on the basis of disability.

 

This disallowable legislative instrument positively affects the right to physical and mental health through the provision of assistance to Ukraine. In particular, the provision of thermal coal will support Ukraine's electricity grid and provide energy to homes. This will support Ukraine's health care system to ensure they can respond to new and emerging health crises and will provide heating to the people of Ukraine.

 

Right to an adequate standard of living

 

This disallowable legislative instrument engages the right to an adequate standard of living primarily through Article 11(1) of the ICESCR and Article 28(1) of the CRPD.

 

Under Article 11(1) of the ICESCR, States Parties recognize the right of everyone to an adequate standard of living for himself and his family, including adequate food, clothing and housing, and to the continuous improvement of living conditions.

 

Under Article 28(1) of the CRPD, States Parties recognize the right of persons with disabilities to an adequate standard of living for themselves and their families, including adequate food, clothing and housing, and to the continuous improvement of living conditions.

 

This disallowable legislative instrument positively affects the right to an adequate standard of living through the support to the people of Ukraine that will provide and promote strategies and measures to improve and protect the living standards of Ukraine's population and that will contribute to improving an individual's standard of living, including individuals with disabilities.

 

Conclusion

 

This disallowable legislative instrument is compatible with human rights because it promotes the protection of human rights.

 

 

 

 

Senator the Hon Simon Birmingham

Minister for Finance