Australian Renewable Energy Agency Amendment (2020-21 Budget Programs) Regulations 2021 [F2021L00590]; Australian Renewable Energy Agency (Implementing the Technology Investment Roadmap) Regulations 2021 [F2021L01043]-Instruments raising significant scrutiny concerns [2021] AUSStaCSDLM 131 (11 August 2021)

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Australian Renewable Energy Agency Amendment (2020-21 Budget Programs) Regulations 2021 [F2021L00590]

Australian Renewable Energy Agency (Implementing the Technology Investment Roadmap) Regulations 2021 [F2021L01043]

FRL No.	F2021L00590 and F2021L01043^[1]
Purpose	F2021L00590: To expand the operating remit of the Australian Renewable Energy Agency and permit the agency to invest in a wider range of clean energy technologies to deliver programs announced in the 2020-21 Budget. F2021L01043: To expand the operating remit of the Australian Renewable Energy Agency to permit it to invest in a wider range of technologies for the deployment of initiatives announced in the 2020-21 Budget.
Authorising legislation	Australian Renewable Energy Agency Act 2011
Portfolio	Industry, Science, Energy and Resources
Disallowance	15 sitting days after tabling (tabled in the Senate on 3 August 2021).

1.1 The Australian Renewable Energy Agency Amendment (2020-21 Budget Programs) Regulations 2021 [F2021L00590] (the first ARENA instrument) sought to amend the Australian Renewable Energy Agency Regulation 2016 to allow the Australian Renewable Energy Agency (the ARENA) to provide financial assistance in relation to the following programs announced in the 2020-21 Budget:

1.3 On 29 July 2021 the Australian Renewable Energy Agency (Implementing the Technology Investment Roadmap) Regulations 2021 [F2021L01043] (the second ARENA instrument) was registered on the Federal Register of Legislation. This instrument amends the Australian Renewable Energy Agency Regulation 2016 to allow the Australian Renewable Energy Agency (the ARENA) to provide financial assistance in relation to the following programs announced in the 2020-21 Budget:

1.4 It also confers functions on the ARENA in relation to priority low emissions technologies.

Australian Renewable Energy Agency Amendment (2020-21 Budget Programs) Regulations 2021 [F2021L00590]

1.5 The committee wrote to the Minister for Energy and Emissions Reduction on 17 June 2021 to set out the below scrutiny concerns in relation to the first ARENA instrument.

1.6 Senate standing order 23(3)(a) requires the committee to scrutinise each instrument as to whether it is in accordance with its enabling Act.

1.7 The instrument was made under the Australian Renewable Energy Agency Act 2011 (the Act). Section 74 of the Act provides the Governor-General with the power to make regulations under the Act. Section 8 prescribes the functions of the ARENA. These functions relate to research and development of renewable energy technologies.

1.8 Paragraph 8(f) provides that further functions can be prescribed via regulations made under the Act. The explanatory statement to the instrument noted that the legislated functions of the ARENA are limited to supporting renewable energy technologies and that the instrument 'provides ARENA with the necessary authority to deliver any non-renewable elements of the programs, supporting emissions reductions through broader clean energy technologies such as energy efficiency and non-renewable low-emission technologies.'

1.9 From a scrutiny perspective, the committee was concerned that the instrument was expanding the remit of the ARENA beyond what was envisaged by Parliament when the Act was passed. The committee noted that the object of the Act is to improve the competitiveness and supply of renewable energy in Australia. The committee further noted that there is nothing in the explanatory memorandum to the bill preceding the Act to suggest that it was contemplated that the ARENA would have the ability to foster anything other than renewable energy technologies.

1.10 The committee's view is that statutory provisions must be read in context^[2] and that the terminology used in section 8 to provide the ARENA's functions in relation to renewable energy indicates there are limits on the power to prescribe further functions by regulation. In addition, the committee considers that in general, delegated legislation can fill out the detail of an Act but cannot extend it. Where the power to extend the operation of an Act is claimed, it would need to be clear that the enabling provision is a Henry VIII power. In this instance, it did not appear to the committee that this is the case.

1.11 Senate standing order 23(3)(j) requires the committee to consider whether an instrument contains matters more appropriate for parliamentary enactment, which should be included in primary, rather than delegated, legislation. As a matter of technical scrutiny, the committee is required to scrutinise each legislative instrument as to whether it contains matters more appropriate for parliamentary enactment.

1.12 The committee raised concerns that the instrument dealt with the significant matter of expanding the jurisdiction of the ARENA from investing in renewable energy technologies to programs relating to energy efficiency and low-emissions technology. Given the scope and impact of the measures, from a scrutiny perspective, it was the committee's view that they are more appropriate for parliamentary enactment.

1.13 In this regard, the explanatory statement did not indicate why it is considered necessary and appropriate to leave these matters to delegated legislation, rather than primary legislation.

1.14 Senate standing order 23(3)(d) requires the committee to scrutinise each instrument as to whether persons likely to be affected by the instrument, including relevant experts, were adequately consulted in relation to the specific instrument.

1.15 Section 17 of the Legislation Act 2003 (Legislation Act) requires that, prior to an instrument being made, the rule-maker must be satisfied that appropriate consultation was undertaken. In determining whether any consultation undertaken is appropriate, the rule-maker may have regard to the extent to which the consultation ensured that persons likely to be affected by the instrument had an adequate opportunity to comment on its proposed content, as per paragraph 17(2)(b) of the Legislation Act.

1.16 The committee therefore expects explanatory statements to instruments to provide details of any consultation undertaken with persons likely to be affected by the instrument. If no consultation was undertaken with persons likely to be affected, the committee expects the explanatory statement to explain why no such consultation was undertaken.

1.17 In this instance, the explanatory statement to the instrument stated that exposure drafts of the instrument were circulated for consultation with government stakeholders including the Department of Finance, the Department of Prime Minister and Cabinet, and the ARENA. The explanatory statement further explained that 'public consultation was not necessary, as the Regulations only addresses machinery issues relating to the administration of announced Government programs. ARENA will undertake appropriate consultation on the implementation of the programs consistent with its statutory framework and responsibilities.'

1.18 While noting this explanation, the committee considered that the measures provided for in the instrument are more than machinery in nature, given that they substantially expand the jurisdiction of the ARENA to invest public funds. As such, from a scrutiny perspective, it is the committee's view that stakeholders and experts should have been consulted in relation to the instrument.

1.19 The Senate disallowed the first ARENA instrument on 22 June 2021, and the second ARENA instrument was registered on 29 July 2021.

Compliance with authorising legislation

1.20 The minister responded to the committee’s letter in relation to the first ARENA instrument on 3 August 2021. This response addresses the committee’s scrutiny concerns in relation to the first instrument while noting that the advice provided is of relevance to the second ARENA instrument.

1.21 The minister made several arguments in support of both the first and second ARENA instruments’ compliance with the Act.

1.22 First, the minister advised that section 3 of the Act sets out the main object of the Act, as opposed to the sole object. This drafting, he advised, provides the flexibility for secondary objects of the Act beyond the purpose of renewable energy.

1.23 Secondly, the minister advised that the object of the Act must be read in conjunction with the Act’s constitutional basis, being a measure towards meeting Australia’s international obligations under the United Nations Framework Convention on Climate Change and the Paris Agreement. This would permit objects beyond investment in renewable energy.

1.24 Thirdly, the minister advised that the wording of paragraphs 8(f) and (g) do not limit the prescription of additional functions to the ARENA to those concerning renewable energy as they are set out in broad terms to be ‘any other functions that are prescribed’. The minister also noted that if Parliament had intended for regulations conferring additional functions on the ARENA to be limited to renewable energy then this would have been made clear in the Act or the accompanying explanatory memorandum.

1.25 Fourthly, the minister advised that the regulations do not expand the operation of the Act but confer functions under a power to do so and can be seen as ‘filling out the detail’ of the ARENA Act as opposed to extending its operation.

1.26 Finally, the minster advised that regulations expanding the remit of ARENA were made in 2016 and the then-Regulations and Ordinances Committee did not raise any scrutiny concerns at that time and have been in place without challenge for over five years.

Consultation with persons affected
Significant matters in delegated legislation

1.27 The minister also provided detailed information in relation to the consultation that was undertaken on the measures. He further advised that the measures are suited to delegated legislation to provide for prompt delivery of government commitments, and as the programs are time limited and will need to be amended over time.

1.28 The committee thanks the minister for his detailed advice of 3 August 2021. However, the committee remains concerned that the second ARENA instrument is expanding the remit of the ARENA beyond what was envisaged by Parliament.

1.29 The committee considers that the second ARENA instrument, like the first instrument, deals with the significant matter of expanding the jurisdiction of the ARENA to provide it with functions relating to low emissions technologies. Given the scope and impact of the measures, and the committee’s view that they go beyond filling out the detail of the Act, the committee retains its position that the measures in the second ARENA instrument appear more appropriate for parliamentary enactment.

1.30 While noting the minister’s advice about the drafting of section 3 of the Act in relation to the ‘main’ object, it is the committee’s view that the Act has been drafted in such a way as to limit the purpose of the Act to renewable energy objectives. Both paragraphs of section 3 refer to renewable energy, indicating that the Act is intended to be so limited, and it does not appear to refer to any additional or secondary objects. The committee’s view is that no additional objects can be implied from the Act and the objects clause cannot be interpreted in a way as to render the objects of the Act unlimited.

1.31 In addition, while the Act may, in part, rely on the external affairs power, the committee’s view is that section 14 of the Act appears to operate as a limitation on the functions of the ARENA, not as an avenue to expand these functions beyond functions relating to renewable energy.

1.32 From a scrutiny perspective, the committee remains of the view that the second ARENA instrument is expanding the remit of the ARENA beyond what was envisaged by Parliament when the Act was passed. The committee reiterates its views that there is nothing in the explanatory memorandum to the bill preceding the Act to suggest that it was contemplated that the ARENA would have the ability to foster anything other than renewable energy technologies. The committee notes that the minister’s position is that the absence of a clearly drafted legislative limit or an express statement in the explanatory memorandum that the ARENA is limited to renewable energy indicates that Parliament did not intend the ARENA to be so limited. Respectfully, the committee does not accept this, and considers that the express references to renewable energy in the Act and the explanatory memorandum are a clear indication of Parliament’s intent.

1.33 The committee also considers that the lack of comment in relation to the 2016 instrument by the then-Regulations and Ordinances Committee has no bearing on this committee’s concerns. In this context, the committee notes that its standing orders in relation to scrutiny of delegated legislation have been amended twice by the Senate since 2016.

1.34 Finally, the committee notes that section 48 of the Legislation Act provides that a legislative instrument that is the same in substance as a legislative instrument that has been disallowed must not be made within 6 months after the day of disallowance. It is unclear to the committee whether the second ARENA instrument may be considered to be the 'same in substance' as the first ARENA instrument and therefore invalid. The minister's letter of 3 August 2021 stated that the advice set out in that letter is relevant to both the first and second ARENA instruments, which implies similarity between the instruments.

1.35 In light of the matters outlined above, the committee remains of the view that the Australian Renewable Energy Agency (Implementing the Technology Investment Roadmap) Regulations 2021 [F2021L01043] expands the scope of the Australian Renewable Energy Agency beyond the scope what was envisaged by the Parliament when it passed the Australian Renewable Energy Agency Act 2011. The committee also maintains its view that these measures go beyond filling out the detail of the Act and that they therefore appear more appropriate for parliamentary enactment.

1.36 The committee therefore requests the minister's further advice as to whether there is any additional evidence, beyond that already provided to the committee, that Parliament intended that functions not relating to renewable energy could be conferred on the ARENA.

1.37 The committee also requests the minister's advice as to why the second ARENA instrument should not be considered to be the 'same in substance' as the first ARENA instrument.

[2] As per Project Blue Sky v Australian Broadcasting Authority [1998] HCA 28, para [69].

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Australian Senate Standing Committee for the Scrutiny of Delegated Legislation - Monitor

Compliance with authorising legislation

Consultation with persons affected Significant matters in delegated legislation

Consultation with persons affected
Significant matters in delegated legislation