Fuel Security Bill 2021 - Commentary on Ministerial Responses [2021] AUSStaCSBSD 138 (23 June 2021)

• Fuel Security Bill 2021
• Significant matters in delegated legislation4
• Fees in delegated legislation8

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Fuel Security Bill 2021

Purpose	This bill seeks to establish a minimum stockholding obligation to ensure industry holds minimum qualities of key transport fuels to guarantee a baseline level of stock at all times, and to enable a production payment for refinery operators to provide an adjustable payment to refineries in return for a commitment to continue refining until at least 30 June 2027
Portfolio	Energy
Introduced	House of Representatives on 26 May 2021
Bill status	Finally passed both Houses

Significant matters in delegated legislation^[4]

2.11 In Scrutiny Digest 8 of 2021 the committee requested the minister's advice as to:

• why it is considered necessary and appropriate to leave significant matters related to the requirements of the minimum stockholding obligation to delegated legislation; and

• whether the bill can be amended to include at least high-level guidance regarding these matters on the face of the primary legislation.^[6]

Minister's response^[7]

2.12 The minister advised:

The Fuel Security Bill 2021 establishes two important measures that aim to improve Australia's national fuel security into the future: the Fuel Security Services Payment (FSSP) and the minimum stockholding obligation (MSO).
Australia's fuel market is susceptible to global events, international oil conditions, as well as natural disasters and market disruptions that can directly impact Australia's fuel security. As the global reliance on liquid fuels is dynamic, fluctuating as result of major events such as the COVID-19 pandemic, the liquid fuel market in Australia and the policy settings in this legislation must also be able to withstand an evolving security environment.
The Bill strikes a balance between setting policy parameters in the primary legislation and giving sufficient flexibility in subordinate legislation. This balance will allow the Government to quickly respond to emerging shifts in the global and domestic fuel markets to protect our national security.
Notwithstanding the requirement to maintain this administrative flexibility, I am of the view this Bill provides an appropriate level of clarity to industry and the public about its measures.
Holding stocks of diesel, gasoline and jet fuel is crucial to addressing future fuel security challenges. At times of a threat or disruption, the release of MSO fuel to the market may be needed depending on the specific situation at the time and this flexibility has been built into the policy.
The Bill sets out a clear framework for regulated entities (importers or refiners) to become subject to the MSO and be set an MSO quantity for different fuel types. Clause 14 clearly sets out the process for the Minister to set the target cover of days for each fuel type, including with reference to Australia's international obligations.
The powers of suspension and exemption need to be flexible to deal with security issues as they emerge. The powers must also be able to address any unintended competition impacts. This flexibility will ensure that the exemption process can work effectively, for example, by ensuring an entity can be quickly exempt without needing to amend the primary legislation.
The detail around these provisions are being developed in consultation with industry. Any necessary legislative rules on these matters are disallowable by Parliament in accordance with the ordinary processes. Importantly, merits review is also available for key decisions.
While I note the matters raised by the Committee, I consider the Bill adequately defines the key components of the MSO framework and provides certainty of how the scheme would operate.

Committee comment

2.13 The committee thanks the minister for this response. The committee notes the minister's advice that the approach set out in the bill is necessary to respond to a dynamic, fluctuating market in liquid fuels. The minister advised that flexibility is needed to ensure that the release of minimum stockholding obligation (MSO) fuel to the market can be ensured at times of threat or disruption.

2.14 In relation to the calculation of MSO quantities, the committee notes the minister's advice that the bill sets out a clear framework for importers or refiners to become subject to the MSO and be set an MSO quantity for different fuel types.

2.15 In relation to the powers of suspension and exemption, the committee notes the minister's advice that these provisions are necessary to ensure flexibility so as to deal with security issues and to deal with potential unintended competition impacts. The minister advised that the flexibility provided by including the relevant matters within delegated legislation will ensure that the exemption process can work effectively, for example, by ensuring an entity can be quickly exempt without needing to amend the primary legislation.

2.16 The committee also notes the minister's advice that the details to be prescribed in the rules are being developed in consultation with industry, that any instrument made under the relevant provisions would be disallowable, and that merits review is available for key decisions made under the bill.

2.17 While acknowledging the minister's advice, the committee reiterates its view that a desire for administrative flexibility is generally not a sufficient justification for including significant matters in delegated legislation. In this context, the committee does not consider that sufficient guidance in relation to the determination of these significant matters is set out on the face of the primary legislation.

2.18 The committee continues to have scrutiny concerns regarding provisions of the bill that allow for the inclusion of significant matters in delegated legislation. However, in light of the fact that the bill has already passed both Houses of the Parliament, the committee makes no further comment on these matters.

2.19 The committee draws this matter to the attention of the Senate Standing Committee for the Scrutiny of Delegated Legislation.

Fees in delegated legislation^[8]

2.20 In Scrutiny Digest 8 of 2021 the committee requested the minister's advice as to whether the bill can be amended to provide at least high-level guidance regarding how the application fee in paragraph 74(2)(c) will be calculated, including, at a minimum, a provision stating that the fee must not be such as to amount to taxation.^[9]

Minister's response

2.21 The minister advised:

The application for reconsideration provision is a standard template provision that is used in a number of Commonwealth schemes. The Government does not have any plans to prescribe any fees for reconsideration of decisions and no money has been budgeted in relation to such fees. Should a future government decide to impose fees, the power in the Bill to set the fees would only allow for such fees to be a fee for service.
There are a number of legal constraints on the imposition of fees for service that would need to be met should the government wish to consider this, as well as taking into account the Australian Government Cost Recovery Guidelines. Because of these safeguards, I do not consider it necessary to amend the Bill to state that the fees must not be such as to amount to taxation.
The passage of this Bill before 1 July 2021 is critical. The Morrison Government has secured in-principle agreement from the Ampol refinery in Brisbane and the Viva Energy refinery in Geelong to operate until at least mid-2027. This agreement is conditional on the Bill's passage, as the temporary refinery production payment will cease on 30 June 2021. Without this Bill, it is very likely that Australia's remaining refineries will close within the next five years, leaving our country 100 per cent dependent on international oil supply chains, risking our national security.

Committee comment

2.22 The committee thanks the minister for this response. The committee notes the minister's advice that there is currently no intention to prescribe any fees for reconsideration of decisions and that no money has been budgeted in relation to such fees.

2.23 The committee further notes the minister's advice that, should a fee be prescribed, the power to set the fees would only allow for such fees to be a fee for service. The minister also advised that the prescription of any fee will take into account the Australian Government Cost Recovery Guidelines.

2.24 While noting this advice, the committee reiterates its scrutiny concerns regarding the inclusion of a fee-making power within delegated legislation where no guidance is included on the face of the bill as to how a fee will be calculated.

2.25 The committee reiterates its comments that it is common for bills allowing for the charging of fees within delegated legislation to include a provision noting that the fee must be not be such as to amount to taxation.^[10] While there is no legal need to include such a provision, the committee considers that it is nonetheless important to include to avoid confusion and to emphasise the point that the amount calculated under the regulations will be a fee and not a tax. In addition, as set out in OPC Drafting Direction No. 3.1,^[11] such a provision is useful as it may warn administrators that there is some limit on the level and type of fee which may be imposed.

2.26 The committee continues to have scrutiny concerns regarding the appropriateness of allowing delegated legislation to prescribe the amount of a fee in circumstances where there is no guidance on the face of the bill as to how the amount of any fee will be calculated. However, in light of the fact that the bill has already passed both Houses of the Parliament, the committee makes no further comment on these matters.

2.27 The committee draws this matter to the attention of the Senate Standing Committee for the Scrutiny of Delegated Legislation for information.

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^[4]5 Subclause 10(3), clause 12, subclauses 15(3) and 18(6). The committee draws senators’ attention to these provisions pursuant to Senate Standing Order 24(1)(a)(iv).

[6] Senate Scrutiny of Bills Committee, Scrutiny Digest 8 of 2021, pp. 25–27.

[7] The minister responded to the committee's comments in a letter dated 22 June 2021. A copy of the letter is available on the committee's website: see correspondence relating to Scrutiny Digest 9 of 2021 available at: www.aph.gov.au/senate_scrutiny_digest.

[8] Clause 26. The committee draws senators’ attention to this provision pursuant to Senate Standing Order 24(1)(a)(iv).

[9] Senate Scrutiny of Bills Committee, Scrutiny Digest 9 of 2021, pp. 27–28.

[10] See, for example, subsection 399(3) of the Export Control Act 2020 and subsection 32(4) of the Hazardous Waste (Regulation of Exports and Imports) Act 1989.

[11] Office of Parliamentary Counsel, Drafting Direction No. 3.1 Constitutional law issues, September 2020, para 24.