Industrial Chemicals Charges (General) Bill 2017 - Commentary on Ministerial Responses; Industrial Chemicals Charges (Customs) Bill 2017 - Commentary on Ministerial Responses; Industrial Chemicals Charges (Excise) Bill 2017 - Commentary on Ministerial Responses [2017] AUSStaCSBSD 257 (9 August 2017)

• Industrial Chemicals Charges (General) Bill 2017
• Industrial Chemicals Charges (Customs) Bill 2017
• Industrial Chemicals Charges (Excise) Bill 2017
• Charges in delegated legislation56

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Industrial Chemicals Charges (General) Bill 2017
Industrial Chemicals Charges (Customs) Bill 2017
Industrial Chemicals Charges (Excise) Bill 2017

Purpose	These bills seek to allow for the imposition of a charge on a person introducing chemicals under the Industrial Chemicals Bill 2017
Portfolio	Health
Introduced	House of Representatives on 1 June 2017
Bills status	Before House of Representatives
Scrutiny principle	Standing Order 24(1)(a)(iv)

2.161 The committee dealt with these bills in Scrutiny Digest No. 6 of 2017. The Assistant Minister responded to the committee's comments in a letter dated 28 June 2017. Set out below are extracts from the committee's initial scrutiny of the bills and the Assistant Minister's response followed by the committee's comments on the response. A copy of the letter is available on the committee's website.^[55]

Charges in delegated legislation^[56]

Initial scrutiny – extract

2.162 These bills provide for the imposition of an annual registration charge on persons introducing chemicals into Australia (by import or manufacture) in accordance with the Industrial Chemical Bill 2017. The bills enable regulations to describe the methods of working out the annual registration charge applicable to each introducer of industrial chemicals.

2.163 Subclause 7(1) states that the amount of charge payable by a person is the amount:

(a) prescribed by the regulations; or

(b) worked out in accordance with a method prescribed by the regulations.

2.164 Subclause 7(2) provides that the regulations may also prescribe different charges or methods depending on the value of industrial chemicals.

2.165 Where charges are able to be prescribed by regulation the committee generally considers that some guidance in relation to the method of calculation of the charge and/or a maximum charge should be provided on the face of the primary legislation, to enable greater parliamentary scrutiny.

2.166 The explanatory memorandum suggests that the charges are to be imposed for the purposes of cost recovery:

It is anticipated that the amount of the charge will be determined having regard to the value of the industrial chemicals introduced by the introducer in the registration year. Prior to the introduction of any regulations prescribing the charge, the proposed approach will be documented in a cost recovery implementation statement (consistent with the Australian Government Cost Recovery Guidelines) and subject to public consultation.^[57]

2.167 However, no guidance is provided on the face of the bill as to the method of calculation (for example, there is no provision limiting the charge to cost recovery) nor is a maximum charge specified.

2.168 The committee requests the Assistant Minister's advice as to why there are no limits on the charge specified in primary legislation and whether guidance in relation to the method of calculation of the charge and a maximum charge can be specifically included in each of the proposed Industrial Chemical Charges bills.

Assistant Minister's response

2.169 The Minister advised:

Specifying the amount of a charge or the method for calculating the amount of a charge in regulations, as opposed to the Act itself, ensures that there is appropriate flexibility to change the amount of a charge or the method for calculating the amount of a charge over time. This helps to avoid over or under recovery and will eliminate the need to amend primary legislation as necessary changes to cost recovery arrangements evolve because the efficient administrative costs of the new scheme become more evident.
AICIS will undertake a detailed annual consultation process (in accordance with the Public Governance and Accountability Act 2013, the Australian Government Charging Framework and the Australian Government Cost Recovery Guidelines), in order to inform the value of the charge included in the regulations for each registration class.
Consistent with current practice, AICIS will publish an annual Cost Recovery Implementation Statement (CRIS) that will detail AICIS activities that are cost recovered, the cost recovery model (outputs and business processes, costs of the activity and design of the cost recovery charges), as well as options for cost recovery. The CRIS will include detailed information about financial estimates and performance, and the rationale for the proposed fees and charges for the coming year.
This approach is compliant with the Australian Government Cost Recovery Guidelines which also provide that, where a cost recovery levy is being imposed (via a Taxation Act), the relationship between the charges and the costs should reflect the efficient overall costs of the activity where revenue generated for the activity approximates the expenses incurred in providing the activity (and this is also reflected in the annual CRIS).
There are two additional controls that govern the extent of cost recovery from the regulated industry:

• Fees and charges are set by regulation, which requires them to be proposed to the Executive Council by the responsible Minister. The Minister would therefore need to be satisfied that the fees and charges are not excessive prior to proposing the regulations.

• Regulations must be tabled in the Senate, and are subject to motions of disallowance. This Parliamentary scrutiny of fees and charges provides another safeguard against over-recovery.

This provides a high degree of accountability and transparency to stakeholders regarding the annual registration charge, such that the need to include a maximum charge in the bills is reduced.
Further, an arbitrary maximum has not been included in the bills because:

• any maximum described in the bills would necessarily be higher than the maximum amount charged (misrepresenting the amount payable by any registrant). This would be confusing for stakeholders and is likely to lead to criticism;

• it would misrepresent the amount likely to be payable by most registrants. Under current arrangements, the amount of registration charge payable by a registrant varies between $138 and $24,800 per year, based on the value of the chemical introduced by the registrant in a registration year. In 2016-17, only around 5% of registrants are expected to pay the highest amount. Under the new legislation, the registration charges will also be tiered (based on brackets of introduction values). If the bills were to set a maximum charge, it would misrepresent the magnitude of charge likely to be payable by most registrants (reducing transparency); and

• there is minimal risk that the charge would be characterised as a general taxation (increasing the necessity for a maximum to be set in the bills). Rather, the charge is clearly a cost recovery levy, earmarked to fund activity that relates to the group of persons being charged (namely registrants introducing industrial chemicals into Australia in a registration year). As detailed in the Australian Government Cost Recovery Guidelines, this is an appropriate circumstance in which to apply the guidelines to determine the relevant charge.

For these reasons, the bills do not set an upper limit for the charge and instead rely on the general cost recovery rules to provide the necessary assurances and transparency to stakeholders.

Committee comment

2.170 The committee thanks the Assistant Minister for this detailed response. The committee notes the Assistant Minister's advice that specifying the amount of a charge or the method for calculating the amount of a charge in regulations, as opposed to the Act itself, ensures that there is appropriate flexibility to change the amount of a charge or the method for calculating the amount of a charge over time. The committee also notes the Assistant Minister's advice that the Australian Industrial Chemicals Introduction Scheme (AICIS) will undertake a detailed annual consultation process, in order to inform the value of the charge included in the regulations for each registration class. The committee further notes the Assistant Minister's advice that the extent of cost recovery from the regulated industry will be subject to executive and parliamentary scrutiny through the Executive Council and the parliamentary disallowance process. Finally, the committee notes the Assistant Minister's advice that a maximum level of charge has not been included in the bills because 'any maximum described in the bills would necessarily be higher than the maximum amount charged (misrepresenting the amount payable by any registrant)' and 'there is minimal risk that the charge would be characterised as a general taxation (increasing the necessity for a maximum to be set in the bills)'.

2.171 The committee welcomes the Assistant Minister's indication that AICIS will undertake a detailed annual consultation process in relation to the value of the charge and the fact that the regulations setting the amount of charge payable will be subject to executive and parliamentary scrutiny.

2.172 However, the committee takes this opportunity to reiterate that one of the most fundamental functions of the Parliament is to levy taxation.^[58] 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. Therefore, where there is any possibility that a charge could be characterised as general taxation, the committee considers that guidance in relation to the level of a charge should be included on the face of the primary legislation. The committee does not consider that including a maximum limit on the face of the bill would cause confusion as to the amount of charge payable as it would be clear that such a limit would simply represent an upper limit on the amount of the charge that could be levied without amendment of the primary legislation. In addition, if setting a maximum limit is not considered appropriate, guidance as to the method of calculation of the charge (for example, a provision explicitly limiting the charge to cost recovery) could still be provided on the face of the primary legislation.

2.173 The committee requests that the key information provided by the Assistant Minister be included in the explanatory memorandum, noting the importance of these documents as a point of access to understanding the law and, if needed, as extrinsic material to assist with interpretation (see section 15AB of the Acts Interpretation Act 1901).

2.174 The committee also draws this matter to the attention of the Senate Standing Committee on Regulations and Ordinances for information.

2.175 The committee draws its scrutiny concerns to the attention of Senators and leaves to the Senate as a whole the appropriateness of allowing regulations to determine the amount of a charge payable without any guidance being provided on the face of the bill as to the method of calculation or the maximum amount of the charge.

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[55] See correspondence relating to Scrutiny Digest No. 8 of 2017 available at: www.aph.gov.au/senate_scrutiny_digest.

[56] Clause 7. The committee draws Senators' attention to this provision pursuant to principle 1(a)(iv) of the committee's terms of reference.

[57] Explanatory memorandum, p. 4.

[58] 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'.