Treasury Laws Amendments (2021 Measures No 6) Bill 2021 - Commentary on Ministerial Responses [2021] AUSStaCSBSD 227 (21 October 2021)

• Treasury Laws Amendment (2021 Measures No. 6) Bill 2021
• Significant matters in delegated legislation87
• Retrospective validation95

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Treasury Laws Amendment (2021 Measures No. 6) Bill 2021

Purpose	Schedule 1 to the bill amends the Income Tax Assessment Act 1997 to make refunds of large-scale generation shortfall charges non-assessable non-exempt income for income tax purposes. Schedule 2 to the bill amends the Competition and Consumer Act 2010 by increasing the maximum amount of penalty units that can be included in regulations that prescribe an industry code, with specific amendments for industry codes relating to the industry of franchising. Schedule 3 to the bill amends the Income Tax Assessment Act 1997 to remove the requirement for superannuation trustees to provide an actuarial certificate when calculating exempt current pension income using the proportionate method, where all members of the fund are fully in retirement phase for all of the income year. Schedule 4 to the bill seeks to amend the Competition and Consumer Act 2010 to provide regulatory certainty for industry participants that are governed by industry codes prescribed by regulations made under Part IVB of the Act. Schedule 5 to the bill amends the Taxation Administration Act 1953 and the Family Law Act 1975 to create a new mechanism for sharing superannuation information for family law proceedings.
Portfolio/Sponsor	Treasury
Introduced	House of Representatives on 11 August 2021
Bill status	Received the Royal Assent on 13 September 2021

Significant matters in delegated legislation^[87]

2.183 In Scrutiny Digest 13 of 2021^[88] the committee requested the Assistant Treasurer's advice as to:

• why it is considered necessary and appropriate to leave the matters set out at proposed subsection 51AE(1A) to delegated legislation; and

• whether the bill can be amended to include further guidance regarding those matters on the face of the primary legislation, particularly in relation to the conferral of functions and powers relating to monitoring compliance with industry codes,^[89] conducting investigations,^[90] granting exemptions,^[91] and reviewing the operation of industry codes.^[92]

Assistant Treasurer's response^[93]

2.184 The Assistant Treasurer advised:

The Committee has asked why it is considered necessary and appropriate to leave the matters set out at proposed subsection 51AE(1A) in item 4 of Schedule 4 to the Bill to delegated legislation. It is appropriate that an industry code may confer certain functions and powers on persons or bodies, including, among other things, the power to monitor compliance with a code, to conduct investigations in relation to a code and to provide exemptions from a code.

• This is because the prescription of these powers and functions by regulations allows the Government to respond efficiently and effectively to issues as they arise within relevant industries. This helps to ensure that markets are well-functioning and serve consumers and industry participants. There are currently, nine industry codes made under the regulation making power of the CCA.

The Committee has asked whether the Bill can be amended to include further guidance regarding those matters on the face of the primary legislation, particularly in relation to the conferral of functions and powers relating to monitoring and compliance with industry codes (51AE(1A)(a)), conducting investigations (51AE(1A)(d)), granting exemption (51AE(1A)(e)), and reviewing the operation of industry codes (51AE(1A)(f)). The Committee suggested including examples of when it may be appropriate to exercise investigation powers or by including high-level guidance in relation to the circumstances in which an exemption may be granted.
• The Legislation Act 2003 (the Act) requires legislative instrument to be registered with an explanatory statement ((section 15G) instruments are not enforceable unless they are registered (section 15K(1)).
• Given the bespoke arrangement for separate industry codes, placing the guidance and any examples in the explanatory statement for the regulations, as opposed to the primary law, allows for the examples to be tailored to the specific industry context in which they are expected to be exercised. This is likely to be more helpful to the regulated community.
• Existing industry codes that confer such functions and powers, and the accompanying explanatory statements, already provide examples of when it may be appropriate to exercise the powers and functions provided for by the amendments.
• The amendments are designed to complement the existing regulatory framework under the CCA. Relevantly, the CCA provides for the ACCC's powers, and limitations on the exercise of those powers, including those related to monitoring and compliance and investigation. Under the amendments the existing common law privilege against self-incrimination will continue to apply as the amendments do not expressly abrogate that right.
• The explanatory memorandum to the Bill explains constraints on the exercise of the exemptions power. This includes that the exemptions power is to be conferred on a more limited group of third parties (being the ACCC, Australian Energy Regulator (AER), and a Minister that is responsible for administering an industry code). It also provides that the exemption power is expected to be exercised reasonably and in accordance with criteria specified in the industry code.

Committee comment

2.185 The committee thanks the Assistant Treasurer for this response. The committee notes the Assistant Treasurer's advice that it is appropriate to leave the matters set out at proposed subsection 51AE(1A) in item 4 of Schedule 4 to the bill to delegated legislation because the prescription of those powers and functions by regulations allows the government to respond efficiently and effectively to issues as they arise within relevant industries. The Assistant Treasurer advised that this helps to ensure that markets are well-functioning and serve both consumers and industry participants.

2.186 The Assistant Treasurer further advised that, given the bespoke arrangement for separate industry codes, placing guidance in the explanatory statement for the regulations, as opposed to the primary law, allows for the examples to be tailored to the specific industry context in which they are expected to be exercised. The Assistant Treasurer advised that this is likely to be more helpful to the regulated community. The Assistant Treasurer further advised that guidance is already included within explanatory statements to existing industry codes as well as within the explanatory memorandum to the bill. Moreover, the Assistant Treasurer advised that both the common law and the Competition and Consumer Act 2010 contain a number of limitations on the exercise of relevant powers, including relating to monitoring and investigation powers.

2.187 While acknowledging this advice and noting the existing guidance within the bill, explanatory memorandum and existing industry codes, it is not clear to the committee from this explanation why it would not be possible to include further high‑level guidance in relation to the powers set out at proposed subsection 51AE(1A). For example, the bill could provide that an exemption should only apply in exceptional circumstances or in special commercial circumstances.^[94]

2.188 The committee continues to have scrutiny concerns regarding 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 this matter.

Retrospective validation^[95]

2.189 In Scrutiny Digest 13 of 2021 the committee requested the Assistant Treasurer's advice as to:

• why it is considered necessary and appropriate to retrospectively validate industry codes made, or purportedly made, under Part IVB of the Competition and Consumer Act 2010; and

• whether any persons are likely to be adversely affected by the retrospective validation of the industry codes, and the extent to which their interests are likely to be affected, noting that individuals and entities should not be required to comply with laws that were invalidly made.^[96]

Assistant Treasurer's response^[97]

2.190 The Assistant Treasurer advised:

Item 10 of Schedule 4 to the bill seeks to validate earlier regulations prescribing industry codes that were made, prior to the commencement of the Bill. The Bill also seeks to retrospectively validate acts or things done, or purportedly done, under the earlier regulations.
• It is considered necessary and appropriate to validate existing industry codes made, or purportedly made, under Part IVB of the CCA, as the amendments are not meant to change how the law was intended and been understood to govern the relationships between participants and consumers and other third parties.
• Given that these amendments to the CCA are aimed at clarifying the law as it was intended and has been understood to operate, we would not expect any individual to be adversely affected by the validation of existing determinations or exemptions purportedly made under section 51AE.
• However, a reading down provision has been included to provide that the amendments do not have effect to the extent that they give rise to an acquisition of property risk (within the meaning of paragraph 51(xxxi) of the Constitution). As the Commonwealth is not privy to the agreements between private entities it is difficult to assess the scale of this risk. The reading down provision is aimed at reducing the likelihood that the Commonwealth, or others, are exposed to liability for an unknown quantum, following these amendments.

Committee comment

2.191 The committee thanks the Assistant Treasurer for this response. The committee notes the Assistant Treasurer's advice that the amendments are aimed at clarifying the law as it was intended to operate and that, therefore, the Assistant Treasurer does not expect any individual to have been adversely affected by the validation of existing determinations or exemptions purportedly made under section 51AE.

2.192 While acknowledging this explanation, the committee notes that, while the intention of the bill may be to restore the position (and associated legal rights and obligations) that was intended when the original determinations were made, from a rule of law perspective, individuals and entities should not be required to comply with laws that were invalidly made. The committee considers that any departure from this position must be comprehensively justified. In light of this, the committee does not consider that the Assistant Treasurer's response adequately addresses whether any persons are likely to be adversely affected by the retrospective validation of the industry codes.

2.193 The committee continues to have scrutiny concerns regarding the retrospective validation of industry codes made, or purportedly made, under section 51AE of the Competition and Consumer Act 2010. However, in light of the fact that the bill has already passed both Houses of the Parliament, the committee makes no further comment on this matter.

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^[87] Schedule 4, item 4, proposed subsection 51AE(1A). The committee draws senators’ attention to this provision pursuant to Senate Standing Order 24(1)(a)(iv).

^[88] Senate Scrutiny of Bills Committee, Scrutiny Digest 13 of 2021, pp. 14-16.

^[89] Schedule 4, item 4, proposed paragraph 51AE(1A)(a).

^[90] Schedule 4, item 4, proposed paragraph 51AE(1A)(d).

^[91] Schedule 4, item 4, proposed paragraph 51AE(1A)(e).

^[92] Schedule 4, item 4, proposed paragraph 51AE(1A)(f).

^[93] The minister responded to the committee's comments in a letter dated 9 September 2021. A copy of the letter is available on the committee's website: see correspondence relating to Scrutiny Digest 16 of 2021 available at: www.aph.gov.au/senate_scrutiny_digest.

^[94] See, for example, section 52 of the Export Control Act 2020 which provides high-level guidance as to the circumstances in which an exemption may be granted alongside a general rule-making power.

^[95] Schedule 4, item 10. The committee draws senators’ attention to this provision pursuant to Senate Standing Order 24(1)(a)(i).

^[96] Senate Scrutiny of Bills Committee, Scrutiny Digest 13 of 2021, pp. 16-17.

^[97] The minister responded to the committee's comments in a letter dated 9 September 2021. A copy of the letter is available on the committee's website: see correspondence relating to Scrutiny Digest 16 of 2021 available at: www.aph.gov.au/senate_scrutiny_digest.