Treasury Laws Amendment (2020 Measures No 4) Bill 2021 - Commentary on Ministerial Responses [2021] AUSStaCSBSD 100 (12 May 2021)

• Treasury Laws Amendment (2020 Measures No. 4) Bill 2021
• Significant matters in delegated legislation23

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Treasury Laws Amendment (2020 Measures No. 4) Bill 2021

Purpose	Schedule 1 to 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 to this bill seeks to facilitate the closure of the Superannuation Complaints Tribunal and any associated transitional arrangements Schedule 3 to 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 to 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
Bill status	Before the House of Representatives

Significant matters in delegated legislation^[23]

2.61 The committee previously commented on this bill in Scrutiny Digest 16 of 2020,^[24] and Scrutiny Digest 1 of 2021.^[25] On 25 March 2021, the Assistant Treasurer (Mr Sukkar) presented a supplementary explanatory memorandum, the House of Representatives agreed to three Government amendments, and the bill was read a third time.

2.62 In Scrutiny Digest 6 of 2021, regarding these amendments, the committee requested the Assistant Treasurer's advice as to why it is considered necessary and appropriate to allow provisions with civil penalties of up to $500,000 for a person who is not a body corporate to be included in delegated, rather than primary legislation.^[26]

Assistant Treasurer's response^[27]

2.63 The Assistant Treasurer advised:

Schedule 3 to the Treasury Laws Amendment (2020 Measures No. 4) Bill 2020 amends the Competition and Consumer Act 2010 to increase the maximum amount of penalty units that can be included in regulations that prescribe an industry code from 300 to 600 penalty units. The Committee has requested my advice as to why it is considered necessary and appropriate to allow provisions with civil penalties of up to $500,000 for a person who is not a body corporate to be included in delegated, rather than primary, legislation.
Section 51 AE(2) of the Competition and Consumer Act 2010 allows penalties to be prescribed by regulations. This penalty provision was inserted in 2014 in order to penalise contraventions of key provisions of an industry code (which are prescribed in regulations). Treasury Laws Amendment (2020 Measures No. 4) Bill 2020 increases the maximum penalties that can be prescribed by regulations.
The industry code provisions are aimed at regulating the conduct of corporations and businesses engaged in trade and commerce. The new maximum penalty of $500,000 for persons other than corporations would only apply to persons engaging in trade and commerce within the franchising industry, as regulated by the Franchising Code of Conduct. For corporations, the new maximum penalty is the greater of: $10 million; three times the value of the benefit gained from the contravention; or 10 per cent of the annual turnover of the corporation. These maximum penalty amounts – for both corporations and non-incorporated persons – are in line with other penalty provisions in the Competition and Consumer Act 2010.
These increased maximum penalties have been included following the Parliamentary Joint Committee on Corporations and Financial Services inquiry into the operation and effectiveness of the Franchising Code of Conduct. The Committee's report recommended that the quantum of penalties available for a breach of the Franchising Code be significantly increased to align with penalties under the Australian Consumer Law and ensure the penalties are a meaningful deterrent for non-compliance. Poor conduct in the franchising industry has led to serious harm to franchisees. This amendment enables regulations to prescribe penalties that will deter persons from serious and egregious breaches of the franchising code. As the Franchising Code is the key piece of legislation regulating behaviour between franchisors and franchisees, the regulations are the most appropriate place for these increased penalties to be included.
Any regulations made under the new provision will be a legislative instrument and subject to disallowance by either house of the Parliament. I consider that this provides the Parliament with sufficient and appropriate oversight of the regulation making process.

Committee comment

2.64 The committee thanks the Assistant Treasurer for this response. The committee notes the Assistant Treasurer's advice that the increased penalties have been prescribed following a recommendation from the Parliamentary Joint Committee on Corporations and Financial Services that penalties within the Franchising Code of Conduct be increased to align with penalties under the Australian Consumer Law. As a result, the proposed new penalties are comparable with other penalty provisions in the Competition and Consumer Act 2010.

2.65 The Assistant Treasurer further advised that poor conduct within the franchising industry has previously led to serious harm to franchisees and that implementing the recommendation of the Parliamentary Joint Committee on Corporations and Financial Services will ensure there is a meaningful deterrent to this kind of conduct occurring again in the future. The Assistant Treasurer advised that the regulations are the most appropriate place to include these increased penalties because the Franchising Code of Conduct is the key piece of legislation regulating behaviour between franchisors and franchisees.

2.66 In light of the detailed information provided, the committee makes no further comment on this matter.

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[23] Schedule 3, items 1 and 2. The committee draws senators’ attention to this provision pursuant to Senate Standing Order 24(1)(a)(iv).

[24] Senate Scrutiny of Bills Committee, Scrutiny Digest 16 of 2020, pp. 25–28.

[25] Senate Scrutiny of Bills Committee, Scrutiny Digest 1 of 2021, pp. 75–77.

[26] Senate Scrutiny of Bills Committee, Scrutiny Digest 6 of 2021, p. 38.

[27] The Assistant Treasurer responded to the committee's comments in a letter dated 5 May 2021. A copy of the letter is available on the committee's website: see correspondence relating to Scrutiny Digest 7 of 2021 available at: www.aph.gov.au/senate_scrutiny_digest.