Treasury Laws Amendment (Energy Price Relief Plan) Bill 2022 [2023] AUSStaCSBSD 13 (8 February 2023)

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Purpose	Schedule 1 to the bill seeks to establish a new legislative framework to enhance the welfare of Australians through the regulation of the Australian gas market, and in particular, limitation of increases in gas prices. Schedule 2 to the bill seeks to amend the Federal Financial Relations Act 2009 to introduce a new type of payment to the States and Territories to support temporary and targeted relief on energy bills for eligible households and small businesses.
Portfolio	Treasury
Introduced	House of Representatives on 15 December 2022

Significant matters in delegated legislation^[123]

1.221 Schedule 1 to the bill seeks to introduce new Part IVBB into the Competition and Consumer Act 2010 to establish a new legislative framework to regulate the Australian gas market. It seeks to do this by limiting increases in gas prices and introducing a mandatory gas market code of conduct on wholesale gas suppliers and purchasers. The mandatory code of conduct will be a legislative instrument.

1.222 The committee is concerned that Schedule 1 to the bill is characterised by 'framework provisions' which contain only the broad principles of a legislative scheme while relying heavily on delegated legislation to determine the scheme's scope and operation. The committee has longstanding concerns with framework provisions because they considerably limit the ability of Parliament to have appropriate oversight over new legislative schemes.

1.223 Many of the provisions set out in Schedule 1 leave significant elements of the new framework to the regulations. For example, proposed subsections 53D(2) and (3) and paragraph 53D(1)(e) provide that regulations may prescribe who is or is not a 'gas market participant'. This is an operative part of who is subject to the proposed framework and yet is entirely subject to executive decision-making. The committee's concerns about the use of delegated legislation are heightened in this case by the inclusion of penalties for failure to comply with matters set out in instruments in proposed section 53ZJ, and the coercive search and seizure powers that may be exercised by the Australian Competition and Consumer Commission (ACCC) for contraventions of gas market instruments as set out in proposed section 154, section 154A and paragraph 154V(2)(a).

1.224 The committee's position is that significant matters should be included within primary legislation unless a sound justification for the use of delegated legislation is provided. Where substantial elements of the scope and operation of a legislative scheme are proposed to be left to delegated legislation, the committee's already significant concerns will be further heightened.

1.225 In this instance, the explanatory memorandum outlines a number of safeguards on the making of gas market instruments, including that:

1.226 The committee welcomes the inclusion of these safeguards. The committee also acknowledges that it is sometimes appropriate to include certain administrative and technical matters within delegated legislation. For example, highly technical scientific information may be appropriate for inclusion within delegated legislation on the basis that the law-making process in relation to those matters should include considerable input from experts within the executive. However, in this instance, while acknowledging some of the safeguards that exist in the making of delegated legislation, it appears that substantial elements of the scope and operation of the legislative scheme proposed to be introduced by Schedule 1 to the bill will be left to delegated legislation, including key definitions and the introduction of civil penalties and coercive measures.

1.227 The committee is further concerned about the inclusion of fees in delegated legislation. Proposed section 53ZC provides that gas market instruments can provide for the charging of a fee for anything done by or in relation to the Commonwealth, ACCC or any other person or body in relation to a gas market instrument, and this can include setting the amount of the fee, including a method for working out the amount of the fee, fee waivers, who is liable to pay the fee and consequences for not paying the fee.

1.228 The committee considers that it is for the Parliament, rather than the makers of delegated legislation, to set rates of tax. At a minimum, some guidance in relation to the amount of a fee that may be imposed in delegated legislation should be included in the enabling Act. Where a bill leaves the setting of the rate of a fee to delegated legislation, the committee expects the explanatory memorandum to the bill to address why it is appropriate to leave the setting of the rate of a fee to delegated legislation and if there is no limit on the amount of the fee that may be imposed, why it would not be appropriate to include such a limitation on the face of the bill.

1.229 The explanatory memorandum explains the operation of section 53ZC and also clarifies that, as outlined in section 53ZH, such a fee must not be such as to amount to taxation.^[125] However, the explanatory memorandum does not justify why it is considered appropriate to leave the setting of the rate of a fee to delegated legislation and why there is no limit on the amount of the fee that may be imposed on the face of the bill.

1.230 The committee considers that, given the substantial elements of the scope and operation of the legislative scheme proposed to be introduced by Schedule 1 to the bill, it would be more appropriate to include this information within the primary legislation to allow an appropriate level of parliamentary oversight.

1.231 The committee considers that substantial elements of the scope and operation of the legislative scheme, including the imposition of fees, have been left to delegated legislation without sufficient justification in the explanatory memorandum.

1.232 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.

Broad discretionary power
Section 96 Commonwealth grants to the states^[126]

1.233 Item 4 of Schedule 2 to the bill seeks to insert proposed section 15E into the Federal Financial Relations Act 2009 (FFR Act). Under proposed subsection 15E(2) the minister must determine that an amount is to be paid to a state for the purpose of making a grant of financial assistance. A grant of financial assistance is to be done in accordance with the temporary energy bill relief agreement.

1.235 The committee notes that section 96 of the Constitution confers on the Parliament the power to make grants of financial assistance to the states and to determine the terms and conditions attaching to them. Where the Parliament delegates this power to the executive, the committee considers it appropriate for the exercise of the power to be subject to at least some level of parliamentary scrutiny, particularly noting the terms of section 96 and the role of senators in representing the people of their state or territory. More generally, the committee's view is that, where it is proposed to allow the expenditure of a potentially significant amount of public money, the expenditure should be subject to appropriate parliamentary scrutiny and oversight.

1.236 In this regard, the committee is concerned that the bill contains only limited guidance on its face as to how the broad power to make grants of financial assistance is to be exercised, and does not contain any information as to the terms and conditions of the grants, other than that they must be set out in the temporary energy bill relief agreement. Where a bill provides for a broad discretionary power to make an arrangement for granting financial assistance to the states, the committee expects that the inclusion of these powers will be justified in the explanatory memorandum. In this instance, the explanatory memorandum contains no justification for the breadth of the discretion afforded to the minister.

1.237 The committee is also concerned that there appears to be no requirement to table temporary energy bill relief agreements in the Senate to ensure that senators are at least made aware of, and have an opportunity to debate, such an agreement. In this context, the committee notes that the process of tabling documents in Parliament alerts parliamentarians to their existence and provides opportunities for debate that are not made available through other means, for example, by being published online.

1.238 The committee is of the view that it would have been more appropriate to include at least high-level guidance on the face of the bill as to the terms and conditions on which financial assistance may be granted and in relation to the circumstances in a which financial assistance may be granted.

1.239 The committee also considers that it would have been more appropriate to include a more detailed justification within the explanatory memorandum for the bill setting out why it is considered necessary and appropriate to confer a broad power to make grants of financial assistance in circumstances where there is limited guidance on the face of the bill as to how that power is to be exercised.

1.240 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.

Exemption from disallowance^[128]

1.241 As outlined above, proposed subsection 15E(2) provides that the minister must determine an amount to be paid to a state for the purpose of making a grant of financial assistance. Proposed subsection 15E(3) provides that a determination made under subsection (2) is not subject to disallowance.

1.242 Disallowance is the primary means by which the Parliament exercises control over the legislative power that it has delegated to the executive. Exempting an instrument from disallowance therefore has significant implications for parliamentary scrutiny. In June 2021, the Senate acknowledged these implications and resolved that delegated legislation should be subject to disallowance unless exceptional circumstances can be shown which would justify an exemption. In addition, the Senate resolved that any claim that circumstances justify such an exemption will be subject to rigorous scrutiny, with the expectation that the claim will only be justified in rare cases.^[129]

1.243 The Senate's resolution is consistent with concerns about the inappropriate exemption of delegated legislation from disallowance expressed by this committee in its recent review of the Biosecurity Act 2015,^[130] and by the Senate Standing Committee for the Scrutiny of Delegated Legislation in its inquiry into the exemption of delegated legislation from parliamentary oversight.^[131]

1.244 In light of these comments and the resolution of the Senate, the committee expects that any exemption of delegated legislation from the usual disallowance process should be fully justified in the explanatory memorandum. This justification should include an explanation of the exceptional circumstances that are said to justify the exemption and how they apply to the circumstances of the provision in question. In this instance the explanatory memorandum states that:

1.245 The committee does not consider that the fact that a particular scheme is an intergovernmental scheme is a sufficient justification, of itself, for exempting an instrument from the usual parliamentary disallowance process. Although negotiations between governments may be frustrated by the possibility of disallowance of an intergovernmental agreement, the committee does not consider that this concern is enough to justify removing democratic oversight over intergovernmental agreements.

1.246 The committee considers that it would have been more appropriate to provide that determinations made under proposed subsection 15E(2) are subject to the usual parliamentary disallowance process.

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

1.248 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.

[123] Schedule 1. The committee draws senators’ attention to these provisions pursuant to Senate standing order 24(1)(a)(iv).

[126] Schedule 2, item 4, proposed subsection 15E(2). The committee draws senators’ attention to this provision pursuant to Senate standing order 24(1)(a)(ii) and (v).

[128] Schedule 2, item 4, proposed subsection 15E(3). The committee draws senators’ attention to this provision pursuant to Senate standing order 24(1)(a)(v).

[129] Senate resolution 53B. See Journals of the Senate, No. 101, 16 June 2021, pp. 3581–3582.

Australian Senate Standing Committee for the Scrutiny of Bills - Scrutiny Digests