Offshore Electricity Infrastructure (Regulatory Levies) Bill 2021 [2021] AUSStaCSBSD 217 (21 October 2021)

• Offshore Electricity Infrastructure (Regulatory Levies) Bill 2021
• Levies in delegated legislation71

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Offshore Electricity Infrastructure (Regulatory Levies) Bill 2021

Purpose	The Offshore Electricity Infrastructure (Regulatory Levies) Bill 2021 provides for an offshore electricity infrastructure levy to be imposed on offshore electricity infrastructure licence holders or those engaging in offshore infrastructure activities set out in regulations. The amount of the levy or method to calculate the levy will be set out in regulations.
Portfolio	Industry, Science, Energy and Resources
Introduced	House of Representatives on 2 September 2021

Levies in delegated legislation^[71]

1.124 The bill seeks to establish the framework for the imposition of an offshore electricity infrastructure levy. The bill includes a number of regulation-making powers. Subclause 8(1) of the bill seeks to provide that an offshore electricity infrastructure levy is imposed on an offshore electricity infrastructure licence holder or a person who engages in an offshore infrastructure activity of a kind prescribed by the regulations. Subclause 8(2) of the bill provides that the regulations may prescribe different kinds of offshore electricity infrastructure levy that may be imposed on licence holders. Clause 9 of the bill seeks to provide that the amount of the levy is the amount prescribed by the regulations or worked out in accordance with a method prescribed by the regulations.

1.125 In relation to clause 8, the explanatory memorandum states:

Prescribing additional offshore infrastructure activities that will be subject to the imposition of an offshore electricity infrastructure levy in subordinate legislation is intended to provide scope for the licensing scheme that is required to be established by subclause 29(1) of the Main Bill to fully develop in response to the growth of the new offshore industry. The ability to prescribe additional matters that will attract a levy in delegated legislation will enable the Commonwealth (including the Registrar) and the Regulator to be adequately resourced through cost recovery as the industry develops. Parliamentary oversight of any additional offshore infrastructure activities that are prescribed will be available given any regulations would be subject to disallowance.
Offshore infrastructure activities will almost always occur under a licence, and charges will be applicable to a licence holder. However, certain remedial actions can also apply to former licence holders, to conduct activities, where it may be appropriate to charge. The ability to prescribe additional matters that will attract a levy in delegated legislation gives flexibility to ensure the regulatory costs are recovered for activities which are more likely to occur as the regime grows, matures and enters different operational stages.^[72]

1.126 In relation to clause 9, the explanatory memorandum states:

The amount of the levy will be set out in regulations to ensure it is appropriately calibrated to cover the costs for regulating and administering the offshore electricity infrastructure regime as the offshore industry develops. The amount of the levy will be subject to change over time as the industry develops and matures. As well, calculation mechanisms will require periodic review to account for changes to pricing indexes, as occurs for review of offshore petroleum and greenhouse gas storage levies.^[73]

1.127 One of the most fundamental functions of the Parliament is to impose taxation.^[74] 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, the committee considers that guidance in relation to the amount of a levy should be included on the face of the primary legislation. In this instance, no guidance is provided on the face of the bill limiting the imposition of the levy, for example to cost-recovery level, nor are maximum amounts specified. Where levies are to be prescribed by regulation the committee considers that, at a minimum, some guidance in relation to the method of calculation of the levy and/or a cap on the amount of levy should be provided on the face of the primary legislation, to enable greater parliamentary scrutiny.

1.128 In addition, the committee has generally not considered a desire for flexibility to be a sufficient justification for including significant matters in delegated legislation. The committee is therefore concerned that the explanatory memorandum fails to adequately justify why it is necessary and appropriate to leave virtually all of the details of the imposition of the offshore electricity infrastructure levy to delegated legislation. This includes the possible expansion of the levy to new persons who engage in offshore infrastructure activities and the prescription of different kinds of levy. The committee notes that similar schemes, such as the Offshore Petroleum and Greenhouse Gas Storage (Regulatory Levies) Act 2003, contain significantly more guidance in relation to the kinds of levy that may be imposed within the primary legislation than this bill.

1.129 From a scrutiny perspective, the committee considers that further guidance in relation to the circumstances in which the offshore electricity infrastructure levy will be imposed should be included on the face of the primary legislation. If it is necessary to change the scope of the levy in the future the committee considers that this should be done through the introduction of new primary legislation into the Parliament.

1.130 The committee therefore requests the minister’s further advice as to:

• why it is considered necessary and appropriate to leave the persons on whom the offshore electricity infrastructure levy will be imposed, the kinds of levy that may be imposed and the amount of any levy to delegated legislation; and

• whether the bill can be amended to prescribe at least high-level guidance in relation to these matters on the face of the primary legislation, including whether the bill can be amended to include, at a minimum, guidance in relation to the method of calculation of the levy and/or a cap on the amount of levy.

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[71] Clauses 8 and 9. The committee draws senators’ attention to these provisions pursuant to Senate Standing Order 24(1)(a)(iv).

[72] Explanatory memorandum, p. 7.

[73] Explanatory memorandum, p. 8.

[74] 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'.