Nature Repair Market Bill 2023 [2023] AUSStaCSBSD 77 (10 May 2023)

• Nature Repair Market Bill 202369
• Significant matters in delegated legislation70
• Exemption from disallowance81
• Tabling of documents in Parliament89
• Immunity from civil liability92

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Nature Repair Market Bill 2023^[69]

Purpose	This bill seeks to provide a framework for a voluntary national market that delivers improved biodiversity outcomes. This framework would facilitate private investment in biodiversity, including where carbon storage projects have biodiversity co-benefits.
Portfolio	Climate Change, Energy, the Environment and Water
Introduced	House of Representatives on 29 March 2023

Significant matters in delegated legislation^[70]

1.125 This bill sets out the framework for the new nature repair market. The nature repair market allows for eligible landholders to undertake projects to enhance or protect biodiversity through a tradeable certificate scheme and creates a public register to track biodiversity projects and certificates.

1.126 Much of the detail of how the nature repair market will operate is not set out within the bill but is instead left to delegated legislation. Details that are left to delegated legislation include several matters which appear to relate directly to the scope and operation of the scheme. For example, Part 4 of the bill establishes a framework for the minister to, via legislative instrument, make, vary or revoke methodology determinations, which set out requirements on how registered biodiversity projects are to be carried out.^[71] Part 4 also establishes a framework for making, varying or revoking biodiversity assessment instruments which set out requirements for how methodology determinations measure and assess biodiversity.^[72]

1.127 Other examples of matters left to delegated legislation include:

• the definition of 'excluded biodiversity projects';^[73]

• an assessment of whether a person is a fit and proper person;^[74]

• rules relating to what information is included in the Biodiversity Market Register (which records biodiversity projects);^[75] and

• rules relating to the disclosure of certain information in the Biodiversity Market Register.^[76]

1.128 The committee is concerned that the bill is characterised by the inclusion of 'framework provisions' which contain only the broad principles of a legislative scheme and rely 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 an appropriate oversight over new legislative schemes.

1.129 In relation to the framework nature of the bill, the explanatory memorandum explains:

The Bill would establish a flexible framework to allow for market innovation and enable new issues to be addressed as the market evolves. It would allow all landholders to participate, including Aboriginal persons and Torres Strait Islanders, and would enable certificates to be issued for a wide range of project types. This would recognise that landholders have different circumstances, interests and aspirations, and would encourage participation and increase supply.
...
The Bill would allow elements of the scheme, such as the information on biodiversity certificates and the different methods for undertaking projects, to be detailed in subordinate legislation. Legislative instruments for these purposes would be made by the Minister, informed by close consultation with stakeholders and across government. It is intended that project methods would be co-designed with stakeholders, including Aboriginal persons and Torres Strait Islanders. The Minister would be responsible for making, varying or revoking methods, appointing Committee members and making rules to support the administration of the scheme.^[77]

1.130 Elsewhere, the explanatory memorandum justifies individual delegated legislation making powers. For example, in relation to the power to prescribe eligibility criteria for the registration of a biodiversity project within the rules, the explanatory memorandum states:

It is appropriate that the rules be able to prescribe additional eligibility criteria to allow the scheme to tailor the criteria to different kinds of projects (where appropriate) and to be able to respond to changing circumstances (including technological advances and changes in the environment).^[78]

1.131 The committee acknowledges that it is sometimes appropriate to include certain administrative and technical matters within delegated legislation, particularly when establishing new legislative schemes. However, the committee is concerned that much of the detail of the nature repair market scheme itself is being left to delegated legislation. The committee does not consider that the explanatory memorandum has sufficiently justified the framework nature of the bill. While some individual delegated legislation making powers may be justified on the basis of a need for flexibility in the face of ongoing technological advances, this does not justify the overall framework nature of the bill.

1.132 The explanatory memorandum notes that the bill is at least partly modelled on the Carbon Credits (Carbon Farming Initiative) Act 2011.^[79] The committee notes that this Act has also been criticised for its framework nature,^[80] and that a desire for consistency with the model established by that Act is therefore likely not a sufficient justification for the framework nature of the bill.

1.133 In light of the above, the committee requests the minister's detailed advice as to:

• why it is considered necessary and appropriate to leave much of the information relating to the scope and operation of the nature repair market scheme to delegated legislation; and

• whether the bill can be amended to include further detail in relation to the scheme on the face of the primary legislation.

Exemption from disallowance^[81]

1.134 Clause 55 of the bill provides that the Climate Change Minister may, by legislative instrument, direct the Nature Repair Market Committee to have regard to one or more specified matters in giving advice about the making, variation, or revocation of a methodology determination. A note under clause 55 clarifies that a direction given by the Climate Change Minister is not subject to the usual parliamentary disallowance or sunsetting procedure due to the operation of regulations made for the purposes of paragraphs 44(2)(b) of the Legislation Act 2003.^[82]

1.135 A similar power is set out at clause 65A of the bill. Clause 65A seeks to provide that a direction made by the Climate Change Minister is exempt from disallowance or sunsetting.

1.136 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.^[83]

1.137 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,^[84] and by the Senate Standing Committee for the Scrutiny of Delegated Legislation in its inquiry into the exemption of delegated legislation from parliamentary oversight.^[85]

1.138 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.

1.139 In this instance, the explanatory memorandum provides no justification in relation to both clauses 55 and 65A, merely restating the effect of the provisions and noting they are exempt from disallowance because of the operation of the Legislation (Exemptions and Other Matters) Regulation 2015.^[86]

1.140 Generally, the committee does not consider the fact that an instrument will fall within one of the classes of exemption in the Legislation (Exemptions and Other Matters) Regulation 2015 is, of itself, a sufficient justification for excluding parliamentary disallowance.^[87] The committee agrees with the comments of the Senate Standing Committee for the Scrutiny of Delegated Legislation that 'any exclusion from parliamentary oversight...requires that the grounds for exclusion be justified in individual cases, not merely stated'.^[88]

1.141 In light of the above, the committee requests the minister's detailed advice as to:

• why it is considered necessary and appropriate to provide that directions made under clauses 55 and 65A are not subject to disallowance; and

• whether the bill could be amended to provide that these directions are subject to disallowance to ensure that they are subject to appropriate parliamentary oversight.

Tabling of documents in Parliament^[89]

1.142 Clause 172 provides that the Clean Energy Regulator (the Regulator) must, as soon as practicable after the end of a financial year, publish on its website a report about the activities of the Regulator during the financial year.

1.143 Similarly, clause 175 provides that the Secretary may publish on the Department's website a report, for a financial year, on certain matters pertaining to biodiversity certificates purchased by the Commonwealth and biodiversity conservation contracts.

1.144 The bill does not require the above reports to be tabled in the Parliament. The committee’s consistent scrutiny view is that tabling documents in Parliament is important to parliamentary scrutiny, as it alerts parliamentarians to the existence of documents and provides opportunities for debate that are not available where documents are not made public or are only published online. Tabling reports on the operation of regulatory schemes promotes transparency and accountability. As such, the committee expects there to be appropriate justification for not requiring documents to be tabled.

1.145 In relation to clause 172, the explanatory memorandum states that the purpose of publishing reports about activities of the Regulator is to ensure that the Regulator provides regular and accurate information to the market about the issuing of biodiversity certificates but does not explain why it is appropriate not to require the reports to be tabled.^[90]

1.146 The explanatory memorandum provides a similar explanation in relation to clause 175, stating that such reports would assist in providing transparency in relation to biodiversity certificates purchased by the Commonwealth and biodiversity conservation contracts.^[91]

1.147 The committee requests the minister's advice as to why it is appropriate not to include a requirement that reports written under clauses 172 and 175 be tabled in the Parliament.

Immunity from civil liability^[92]

1.148 Clause 228 provides that certain persons listed at paragraphs 228(a) to (l) are protected from civil liability for damages for, or in relation to, an act or matter done, or omitted to be done, in good faith in the performance of functions or the exercise of powers under the bill.

1.149 This has the effect of removing any common law right to bring an action to enforce legal rights (for example, a claim of defamation), unless it can be demonstrated that lack of good faith is shown. The committee expects that if a bill seeks to provide immunity from civil liability, particularly where such immunity could affect individual rights, this should be soundly justified.

1.150 The explanatory memorandum states that:

This provision would ensure that persons with functions or powers under the legislation are able to perform their functions or exercise their powers without fear of legal action being taken against them, as long as they act in good faith when doing so.^[93]

1.151 While acknowledging this explanation, the explanatory memorandum does not provide any information on what recourse, if any, affected persons may have to bring an action to enforce their legal rights.

1.152 If an affected person is barred from commencing civil proceedings in accordance with clause 228, the committee further considers that it would have been more appropriate had the explanatory materials addressed the limited nature of the 'good faith' safeguard and why providing the immunity is nevertheless justified in light of this limited nature. The committee notes that in the context of judicial review, bad faith is said to imply the lack of an honest or genuine attempt to undertake a task. Proving that a person has not engaged in good faith will therefore involve personal attack on the honesty of a decision-maker. As such the courts have taken the position that bad faith can only be shown in very limited circumstances.

1.153 The committee's concerns are also heightened in this instance given the broad range of persons upon whom immunity is conferred under clause 228 and as such the committee expects the explanatory materials to address why it is necessary and appropriate for such a broad class of persons to be protected from civil liability for damages.

1.154 In light of the above, the committee requests the minister's more detailed advice as to why it is considered necessary and appropriate to confer immunity from liability for damages on such a broad class of persons, such that affected persons have their right to bring an action to enforce their legal rights limited to situations where a lack of good faith is shown.

1.155 The committee's consideration of this issue will be assisted if the minister's advice addresses what, if any, alternative protections are afforded to an affected individual given that the normal rules of civil liability have been limited by the bill.

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[69] This entry can be cited as: Senate Standing Committee for the Scrutiny of Bills, Nature Repair Market Bill 2023, Scrutiny Digest 5 of 2023; [2023] AUSStaCSBSD 77.

[70] The committee draws senators’ attention to the framework nature of the bill pursuant to Senate standing order 24(1)(a)(iv).

[71] Part 4, division 2.

[72] Part 4, division 4.

[73] Clause 33.

[74] Part 8, paragraphs 97(1)(k), 97(2)(c), 98(1)(l), 98(2)(d), 99(1)(j), 99(2)(c), 99A(1)(j), 99A(2)(c). If found not to be a fit and proper person, the affected person may not hold a biodiversity certificate and is therefore effectively banned from participation in the scheme.

[75] Clause 167.

[76] Clause 168.

[77] Explanatory memorandum, p. 3.

[78] Explanatory memorandum, p. 22.

[79] Explanatory memorandum, p. 2.

[80] See, for example, comments by the Australian Law Reform Commission: ALRC, 'Examples of laws that delegate legislative power' in Traditional Rights and Freedoms—Encroachments by Commonwealth Laws (ALRC Report 129) 2016, pp. 453–456.

[81] Clauses 55 and 65A. The committee draws senators’ attention to these provisions pursuant to Senate standing order 24(1)(a)(iv).

[82] See table item 2, section 9 of the Legislation (Exemptions and Other Matters) Regulation 2015.

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

[84] See Chapter 4 of Senate Standing Committee for the Scrutiny of Bills, Review of exemption from disallowance provisions in the Biosecurity Act 2015: Scrutiny Digest 7 of 2021 (12 May 2021) pp. 33–44; and Scrutiny Digest 1 of 2022 (4 February 2022) pp. 76–86.

[85] Senate Standing Committee for the Scrutiny of Delegated Legislation, Inquiry into the exemption of delegated legislation from parliamentary oversight: Interim report (December 2020); and Inquiry into the exemption of delegated legislation from parliamentary oversight: Final report (March 2021).

[86] Explanatory memorandum, pp. 72 and 86.

[87] The committee further notes that the Senate Standing Committee for the Scrutiny of Delegated Legislation has recommended that the blanket exemption of instruments that are 'a direction by a Minister to any person or body' should be abolished. See Senate Standing Committee for the Scrutiny of Delegated Legislation, Inquiry into the exemption of delegated legislation from parliamentary oversight: Final report (16 March 2021) p. 101.

[88] Senate Standing Committee for the Scrutiny of Delegated Legislation, Inquiry into the exemption of delegated legislation from parliamentary oversight: Final report (16 March 2021) pp. 75–76.

[89] Proposed sections 172 and 175. The committee draws senators’ attention to these provisions pursuant to Senate standing order 24(1)(a)(v).

[90] Explanatory memorandum, p. 173.

[91] Explanatory memorandum, p. 175.

[92] Clause 228. The committee draws senators’ attention to this provision pursuant to Senate standing order 24(1)(a)(i).

[93] See explanatory memorandum, p. 209.