National Vocational Education and Training Regulator (Charges) Amendment (Annual Registration Charge) Bill 2017 - Commentary on Ministerial Responses [2017] AUSStaCSBSD 204 (14 June 2017)

• National Vocational Education and Training Regulator (Charges) Amendment (Annual Registration Charge) Bill 2017
• Significant matters in delegated legislation 37

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National Vocational Education and Training Regulator (Charges) Amendment (Annual Registration Charge) Bill 2017

Purpose	This bill seeks to amend the National Vocational Education and Training Regulator (Charges) Act 2012 to impose a National VET Regulator annual registration charge as a tax
Portfolio	Education and Training
Introduced	House of Representatives on 30 March 2017
Bill status	Before House of Representatives
Scrutiny principles	Standing Order 24(1)(a)(iv)

2.117 The committee dealt with this bill in Scrutiny Digest No. 5 of 2017. The Minister responded to the committee's comments in a letter dated 23 May 2017. Set out below are extracts from the committee's initial scrutiny of the bill and the Minister's response followed by the committee's comments on the response. A copy of the letter is at Appendix 1.

Significant matters in delegated legislation ^[37]

Initial scrutiny – extract

2.118 The purpose of this bill is to impose a National VET Regulator (NVR) annual registration charge as a tax. The explanatory memorandum states that because the Australian Skills Quality Authority's (ASQA's) regulatory activities have broadened, there is a risk that the annual registration fees it has been collecting may now be characterised as a tax and therefore, to comply with section 55 of the Constitution, they need to be collected under separate tax legislation.^[38]

2.119 Proposed section 6B provides that the amount of the charge is to be determined by the Minister in a legislative instrument. No guidance is provided in the bill as to the method of calculation nor is a maximum charge specified. However, before determining a charge the Minister must get the Ministerial Council's agreement to the amount of the charge.^[39] The explanatory memorandum justifies this approach as follows:

As the NVETR legislative framework is based on a constitutional referral of power from the states and territories, the amount of the National VET Regulator annual registration charge must be agreed by the states and territories in accordance with Ministerial Council processes. For this reason, the method of calculating the amount of the National VET Regulator annual registration charge is not specified in the NVETR (Charges) Act as this would restrict the ability of the states and territories to provide agreement to the amount of the charge at a particular time. This approach provides the necessary flexibility for states and territories to have the authority to provide genuine and considered agreement which takes into account ASQA’s regulatory priorities and what may be appropriate for ASQA to perform its functions and enhance the transparency and accountability of the VET sector.^[40]

2.120 The committee notes this explanation, however, the committee emphasises that one of the most fundamental functions of the Parliament is to levy taxation.^[41] The committee's consistent scrutiny view is that it is for the Parliament, rather than makers of delegated legislation, to set a rate of tax. The fact that the amount of taxation in this instance is to be agreed between Commonwealth and State and Territory executive governments does not negate the fact that this provision represents a very significant delegation of the Parliament's legislative powers.

2.121 In order to address these scrutiny concerns, the committee's preferred option would be for the bill not to proceed in its current form and instead a bill imposing the NVR annual registration charge as a tax should be introduced into the Parliament each year following agreement by the Ministerial Council.

2.122 However, if this is not agreed, the committee at least considers that some guidance in relation to the method of calculation of the charge and a maximum charge should be provided on the face of the primary legislation.^[42]

2.123 In addition, the committee notes that it would be possible to provide for increased parliamentary oversight of the levying of the NVR annual registration charge as a tax by:

• requiring the positive approval of each House of the Parliament before a new instrument comes into effect;^[43]

• providing that the instruments do not come into effect until the relevant disallowance period has expired;^[44] or

• a combination of these processes.^[45]

2.124 The committee requests the Minister's advice in relation to:

• whether consideration can be given to amending the bill in line with the committee's comments above; and

• other examples of Commonwealth legislation which allow the method and amount of taxation to be determined by legislative instrument (without any guidance as to the method of calculation and/or a maximum limit).

Minister's response

2.125 The Minister advised:

The Committee has sought a response to its concerns regarding parliamentary oversight of the annual registration charge being determined by myself as the Minister in a legislative instrument. I note that the Committee also recognised the additional scrutiny provided by the requirement that the amount of the charge must be agreed by the Ministerial Council.
Having given due consideration to the Committee's request to consider amendments to the bill, I will be proposing the government amend the bill in the Senate to include provisions in relation to the setting of a maximum charge on the face of the primary legislation. The method for calculation and the setting of the actual charge will remain in a legislative instrument.
As noted by the Committee, the National Vocational Education and Training Regulator legislation is based on constitutional referral of power from the states and territories with fees and charges amounts agreed by the Ministerial Council. I am confident that this process, combined with the amendments proposed by the Committee, will ensure cost recovery charging mechanisms are transparent, appropriate and comply with current legislative practice.

Committee comment

2.126 The committee thanks the Minister for this response. The committee welcomes the Minister's commitment to amend the bill to include provisions in relation to the setting of a maximum charge on the face of the primary legislation. The committee notes the Minister's advice that the process of agreeing to the amount of the charge with the States and Territories, combined with the foreshadowed amendment, 'will ensure cost recovery charging mechanisms are transparent, appropriate and comply with current legislative practice'.

2.127 The committee takes this opportunity to reiterate that one of the most fundamental functions of the Parliament is to levy taxation.^[46] The committee's consistent scrutiny view is that it is for the Parliament, rather than makers of delegated legislation, to set a rate of tax. The fact that the amount of taxation in this instance is to be agreed between Commonwealth and State and Territory executive governments does not negate the fact that this provision represents a very significant delegation of the Parliament's legislative powers.

2.128 Noting the fact that the government has foreshadowed amendments which provide some level of parliamentary oversight by setting a maximum charge on the face of the primary legislation, the committee leaves to the Senate as a whole the appropriateness of allowing the method and amount of taxation to be determined by legislative instrument in this instance.

2.1

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[37] Schedule 1, proposed section 6B of the National Vocational Education and Training Regulator (Charges) Act 2012.

[38] Explanatory memorandum, p. 2.

[39] Proposed subsection 6B(2).

[40] Explanatory memorandum, pp 9–10.

[41] This principle has been a foundational element of our system of governance for centuries: see, for example, article 4 of the Bill of Rights 1688: 'That levying money for or to the use of the Crown by pretence of prerogative without grant of Parliament for longer time or in other manner than the same is or shall be granted is illegal'.

[42] Should this need to be amended following discussions with the States and Territories another bill can be brought before the Parliament to consider the necessary amendments.

[43] See, for example, section 10B of the Health Insurance Act 1973.

[44] See, for example, section 79 of the Public Governance, Performance and Accountability Act 2013.

[45] See, for example, section 198AB of the Migration Act 1958 and sections 45–20 and 50–20 of the Australian Charities and Not-for-profits Commission Act 2012.

[46] This principle has been a foundational element of our system of governance for centuries: see, for example, article 4 of the Bill of Rights 1688: 'That levying money for or to the use of the Crown by pretence of prerogative without grant of Parliament for longer time or in other manner than the same is or shall be granted is illegal'.