Treasury Laws Amendment (2020 Measures No 4) Bill 2020 [2020] AUSStaCSBSD 199 (20 November 2020)

• Treasury Laws Amendment (2020 Measures No. 4) Bill 2020
• Significant matters in delegated legislation83
• Power for delegated legislation to modify the operation of primary legislation (akin to Henry VIII clause)86

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Treasury Laws Amendment (2020 Measures No. 4) Bill 2020

Purpose	Schedule 1 of this bill seeks to amend the income tax law to ensure that no tax is payable on refunds of large-scale generation certificate shortfall charges Schedule 2 of this bill seeks to facilitate the closure of the Superannuation Complaints Tribunal and any associated transitional arrangements Schedule 3 of this bill seeks to enable the government to establish a more effective enforcement regime to encourage greater compliance with the franchising code by increasing the maximum civil pecuniary penalty available for a breach of an industry code, and increasing the civil pecuniary penalties for breaches of the franchising code accordingly Schedule 4 of this bill seeks to extend the operation of a temporary mechanism put in place during the coronavirus pandemic, to respond to the ongoing challenges posed by social distancing measures and restrictions on movement and gathering in Australia and overseas
Portfolio	Treasury
Introduced	House of Representatives on 28 October 2020

Significant matters in delegated legislation^[8]

1.89 Item 1 of Schedule 3 seeks to amend existing subsection 51AE(2) of the Competition and Consumer Act 2010 (the Act) to increase the existing reference to '300 penalty units' to '600 penalty units'. This amendment would allow for any industry code prescribed under Part IVB of the Act to prescribe a maximum civil penalty of up to 600 penalty units.

1.90 The committee's view is that significant matters, such civil penalty provisions with high penalties, should be included in primary legislation unless a sound justification for the use of delegated legislation is provided. In this instance, the explanatory memorandum explains that the changes to penalties for breaching industry codes have been made in response to a report of the Parliamentary Joint Committee on Corporations and Financial Services as part of its inquiry into the operation and effectiveness of the Competition and Consumer (Industry Codes – Franchising) Regulation 2014.^[84] The explanatory memorandum explains:

The amendments in Schedule 3 to the Bill allow for any industry code prescribed under Part IVB of the CCA to prescribe a maximum civil penalty of up to 600 penalty units. This amount is less than the amount recommended in the Committee’s final report.
As per the Guide, serious pecuniary penalties are most appropriately placed in primary Acts of Parliament rather than subordinate legislation. The penalties in industry codes are prescribed in regulations. As such, an increase to 600 penalty units balances the recommendations in the Committee’s report to significantly increase penalties in industry codes to ensure they are a meaningful deterrent, with the principles set out in the Guide.^[85]

1.91 In light of the information provided in the explanatory memorandum, the committee leaves to the Senate as a whole the appropriateness of allowing civil penalty provisions with penalties of up to 600 penalty units to be included in delegated, rather than primary, legislation.

Power for delegated legislation to modify the operation of primary legislation (akin to Henry VIII clause)^[86]

1.92 Existing item 1 of Schedule 5 to the Coronavirus Economic Response Package Omnibus (Measures No. 2) Act 2020 (the Act) provides that a responsible minister for an Act or a legislative instrument that requires or permits certain matters, such as the giving of information and the signing, production and witnessing of documents, may temporarily vary these requirements or permissions by delegated legislation in response to circumstances relating to COVID-19. These provisions are akin to Henry VIII clauses as they provide for the power for delegated legislation to modify the operation of primary legislation. When the Act was introduced these measures were intended to be temporary and were time-limited to 31 December 2020.^[87] The committee commented on these provisions in Scrutiny Digest 6 of 2020.^[88]

1.93 Items 1 and 2 of Schedule 4 to the bill would have the effect of extending these measures in schedule 5 of the Act to either 31 March 2021 or a later date. Proposed subitem 1(7) provides that a determination made under existing subitem 1(2) has no operation after this item is repealed under proposed subitem 1(8). Proposed subitem 1(8) provides that this item is repealed at the end of either 31 March 2021^[89] or a later day if so determined under proposed subitem 2(1).^[90] Proposed subitems 2(1), (2) and (3) would provide that the designated minister^[91] may, by legislative instrument, determine a day for the purposes of paragraph 1(8)(b).^[92] Such a determination cannot be made unless the minister is satisfied that it is in response to circumstances relating to COVID-19.^[93]

1.94 The committee has significant scrutiny concerns with enabling delegated legislation to override or modify the operation of legislation which has been passed by Parliament as such clauses impact on the level of parliamentary scrutiny and may subvert the appropriate relationship between the Parliament and the Executive. As such, the committee expects a sound justification for the use of such provisions to be provided in the explanatory memorandum.

1.95 In this instance, the explanatory memorandum states:

Schedule 5 of the Coronavirus (Measures No. 2) Act was implemented to address the difficulties created by the Coronavirus restrictions in meeting information and documentary requirements under Commonwealth legislation.
The social distancing measures and the restrictions on movement and gathering introduced in Australia and overseas in response to the Coronavirus pandemic are expected to continue to cause difficulties with meeting information and documentary requirements under Commonwealth legislation. In recognition of the importance of continued business transactions and government service delivery during the Coronavirus pandemic, the extension of Schedule 5 of the Coronavirus (Measures No. 2) Act, and the mechanism for further extension, provide continued flexibility to enable necessary temporary adjustments to legal obligations.
With the uncertainty surrounding restrictions in response to the Coronavirus pandemic in Australia and overseas, it is prudent to include a mechanism to extend the operation of Schedule 5 of the Coronavirus (Measures No. 2) Act beyond 31 March 2021, should it be required based on challenges posed by the Coronavirus circumstances. This mechanism allows for further extensions in response to the Coronavirus, to occur more flexibly and in a timely manner.
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The extension of Schedule 5 of the Coronavirus (Measures No. 2) Act and the mechanism to extend it further if required is necessary to respond flexibly to the unpresented challenges of the Coronavirus pandemic, particularly the challenges posed by social distancing measures in Australia and overseas.^[94]

1.96 While the committee acknowledges this explanation, from a scrutiny perspective, the committee is concerned that proposed item 2 of Schedule 5 would allow the minister to extend the operation of the modification power beyond 31 March 2021, without the need to amend the primary legislation. The committee does not consider that a desire for flexibility is a sufficient justification for such an approach, particularly noting that Parliament has resumed a regular sitting schedule which would enable a bill to extend the operation of the modification provision to be considered by the Parliament in a timely manner.

1.97 In light of the above, the committee requests the Assistant Treasurer's advice as to whether the bill could be amended to remove the ability of the minister to, by legislative instrument, extend the operation of the modification power in Schedule 5 of the Act beyond 31 March 2021.

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83 Schedule 3, item 1, proposed subsection 51AE(2). The committee draws senators’ attention to this provision pursuant to Senate Standing Order 24(1)(a)(iv).

[84] Explanatory memorandum, p. 19.

[85] Explanatory memorandum, p. 20.

[86] Schedule 4, item 1, proposed subitems (7) and (8) of section 1 of Schedule 5, and item 2, proposed subsections 1, 2 and 3 of Schedule 5, section 1. The committee draws senators’ attention to these provisions pursuant to Senate Standing Order 24(1)(a)(iv).

[87] Explanatory memorandum to the Coronavirus Economic Response Package Omnibus

(Measures No. 2) Bill 2020, p. 69.

[88] Senate Standing Committee for the Scrutiny of Bills, Scrutiny Digest 6 of 2020, 13 May 2020, pp. 11–12.

[89] Proposed paragraph 1(8)(a).

[90] Proposed paragraph 1(8)(b).

[91] The minister administering the Electronic Transactions Act 1999 as per proposed subitem 2(3).

[92] Proposed subitem 2(1).

[93] Proposed subitem 2(2).

[94] Explanatory memorandum, pp. 67–68.