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Australian Senate Standing Committee for the Scrutiny of Delegated Legislation - Monitor |
Australian Renewable Energy Agency Amendment (2020-21 Budget Programs) Regulations 2021
Australian Renewable Energy Agency (Implementing the Technology Investment Roadmap) Regulations 2021
FRL No.
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Purpose
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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.
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Authorising legislation
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Portfolio
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Industry, Science, Energy and Resources
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Disallowance
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F2021L01043: 15 sitting days after tabling (tabled in the Senate on
3 August 2021).
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Overview
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:
• Freight Energy Productivity Program;
• Future Fuels Fund;
• Industrial Energy Transformation Studies Program;
• Regional Australia Microgrid Pilots Program; and
• Technology Investment Roadmap.
1.2 The first ARENA instrument was disallowed by the Senate on 22 June 2021.
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.[2] This instrument enables the ARENA to provide financial assistance in relation to the following programs announced in the 2020-21 Budget:
• Freight Efficiency Assistance Grants;
• Freight Energy Productivity Trial Program;
• Future Fuels Fund;
• Industrial Energy Transformation Studies Program; and
• Regional Australia Microgrid Pilots Program.
1.4 It also confers functions on the ARENA in relation to priority low emissions technologies.[3] Both instruments are made under the Australian Renewable Energy Agency Act 2011 (the ARENA Act).
Scrutiny concerns
1.5 In Delegated Legislation Monitor 12 of 2021 the committee set out its detailed scrutiny concerns in relation to whether the instruments comply with their authorising legislation and provide for significant matters more appropriate for parliamentary enactment. The committee requested further information from the minister in relation to these scrutiny concerns.
1.6 The committee also requested advice from the minister as to how the second ARENA instrument differs from the disallowed ARENA instrument in substance.
1.7 The committee set out its concluding comments on the adequacy of consultation undertaken in relation to each ARENA instrument.
Minister’s response
1.8 The minister responded to the committee’s concerns in a letter dated 8 September 2021, and this response is addressed in relation to the relevant scrutiny concerns below.
1.9 The minister pointed to the explanatory statement to the second ARENA instrument which advises it makes ‘material changes to the nature and scope of the new functions and programs intended to be supported by ARENA, as well as changing aspects of the context in which they will be deployed and reported on’. The minister also advised that in addressing the committee’s concerns in relation to both ARENA regulations in one letter, the intention was not to draw comparisons between the actual content of the regulations but to rather highlight the fact that the instruments were made under the same legislative head of power.
1.10 The minister advised that the use of regulations in this instance is similar to the way regulations under the Financial Framework (Supplementary Powers) Act 1997 and the Industry Research and Development Act 1986 empower Commonwealth spending.
1.11 The minister also reiterated that the measures are suited to delegated legislation to provide for prompt delivery of government commitments to reduce greenhouse gas emissions, and that the ARENA is the most appropriate vehicle to deliver these measures due to its expertise.
1.12 The minister reiterated his advice that the ARENA instruments are made in compliance with the ARENA Act. The minister set out his view that there is nothing in the regulation-making power in paragraph 8(f) of the ARENA Act which limits delegated legislation to prescribing additional functions relating only to renewable energy. The minister suggested that, as there is no reason to depart from the plain meaning of the provision, section 15AB of the Acts Interpretation Act 1901 (which deals with the use of extrinsic material in the interpretation of an Act) is not engaged.
1.13 In his response, the minister explained that the terms of the Act provide a wider scope for the ARENA to have functions beyond those related to renewable energy and that this is “demonstrated by the extended definition given to the term ‘renewable energy’” as supported by the constitutional basis of the Act and the inclusion of a broad regulation making power.
1.14 The minister also advised that the context of the bill’s passage through the Parliament supports this view, as the second reading speech made on 12 October 2011 confirms that the purpose of the Act is to support clean energy including broader emissions reduction technology.
1.15 Further, the minister pointed to the fact that the definition of ‘renewable energy’ in the ARENA Act includes hybrid technologies and technologies that are related to renewable energy technologies. The minister advised that ‘it could be argued that at least some of the ‘non-renewable’ technologies in the first and second 2021 Regulations are better understood as hybrid, enabling or related technologies in the wider context of renewable energy supply and security in Australia’.
Committee comment
1.16 The committee thanks the minister for his constructive engagement with the committee in relation to this instrument. However, the committee retains significant concerns regarding the instrument.
1.17 As the committee has been unable to resolve these technical scrutiny concerns with the minister, the committee has resolved to draw some further remarks to the attention of the Senate. The committee’s comments with regard to these unresolved concerns are outlined below.
1.18 The committee notes the minister’s advice that the two ARENA instruments are not the same in substance. As noted in Odgers’ Australian Senate Practice,[4] the expression ‘the same in substance’ has been judicially construed by the High Court to refer to ‘any regulation which is substantially the same ... in the sense that it produces substantially, that is, in large measure, though not in all details, the same effect’.[5] However, in 2015, a single Federal Court judge gave the term a narrower construction, requiring that for an instrument to be invalid, ‘it be in substance or legal effect, identical to the previously disallowed measure’.[6]
1.19 The committee acknowledges that the two ARENA instruments are not identical; however, at a broad level, both instruments permit the ARENA to invest in non-renewable technologies and are designed to support the delivery of programs announced in the 2020-21 Budget. As relatively few cases have considered this matter, the committee considers that this issue is ultimately a matter that could only be resolved by judicial consideration.
1.20 In relation to the inclusion of significant matters in delegated legislation, the committee maintains its view that the measures in the ARENA instrument go beyond filling out the detail of the Act and therefore appear more appropriate for parliamentary enactment. The committee does not generally consider that consistency with existing legislative arrangements, the need for operational flexibility, or a need to promptly deliver government policies are sufficient justifications for including significant matters in delegated legislation.
1.21 The committee therefore reiterates its concerns that the instrument deals 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 is the committee's view that they are more appropriate for parliamentary enactment.
1.22 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 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.
1.23 The purpose of the ARENA Act is made clear in the title of the Act itself, and in section 3 which sets out the objects of the Act. Section 15AA of the Acts Interpretation Act 1901 provides that in interpreting a provision of an Act, the interpretation that would best achieve the purpose or object of the Act (whether or not that purpose or object is expressly stated in the Act) is to be preferred to each other interpretation. In this regard, the committee’s position is that the interpretation that would best achieve the purpose or object of the Act is one that limits the functions of the ARENA to investing in renewable energy technologies.
1.24 While the committee welcomes the minister’s advice in relation additional evidence to support the view that Parliament intended that functions not relating to renewable energy could be conferred on the ARENA, it remains that case, as acknowledged by the minister, that there is no reason to depart from the plain meaning of the text of the provisions of the Act.
1.25 The committee recognises that the definition of ‘renewable technology’ in section 4 of the ARENA Act includes hybrid technologies. However, for the instrument to be empowered under this definition of hybrid technologies in the ARENA Act, the committee’s view is that the instrument would need to be redrafted to make it clear that non-renewable aspects are connected to renewable aspects. As the instrument is currently drafted this does not appear to be the case.
1.26 Finally, the committee has consistently stated its view that its scrutiny concerns go beyond any one provision of the instrument and focus on whether the instrument as a whole is authorised by the ARENA Act. In addition, as noted above, the committee is concerned that the measures in the instrument as a whole are more appropriate for parliamentary enactment.
1.27 In light of the comments above, the committee draws the attention of the Senate to the committee’s significant scrutiny concerns regarding the inclusion of significant matters in delegated legislation in the second ARENA instrument and the compliance of the instrument with its authorising legislation.
1.28 Noting the significance of its technical scrutiny concerns, the committee recommends that the Senate disallow the instrument.
On 18 October 2021 the committee intends to give notice of a motion to disallow the instrument, to be moved 15 sitting days after that day. Based on the current sitting pattern this would mean that the motion would be moved on the fourth sitting day in 2022 to provide the Senate with additional time to consider the instrument and the committee’s recommendation that the instrument be disallowed.
[2] The priority low emissions technologies relate to aluminium and steel technologies, carbon capture and storage technologies, clean hydrogen technologies, energy storage technologies and soil carbon technologies.
[3] Delegated Legislation Monitor 12 of 2021 stated that the second ARENA instrument amends the Australian Renewable Energy Agency Regulation 2016 (the 2016 Regulation). However, as reflected in the comments above, while the first ARENA instrument sought to amend the 2016 Regulation, the second ARENA instrument is in fact a standalone instrument.
[4] Rosemary Laing (ed.), Odgers’ Australian Senate Practice, 14th ed, 2016, p. 444.
[5] Victorian Chamber of Manufactures v Commonwealth [1943] HCA 21; (1943) 67 CLR 347, 364.
[6] Perrett v Attorney-General of the Commonwealth of Australia [2015] FCA 834, [29].
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URL: http://www.austlii.edu.au/au/other/cth/AUSStaCSDLM/2021/155.html