BILLS DIGEST NO. 4, 2012–13

14 August 2012

Greenhouse and Energy Minimum Standards Bill 2012

Anita Talberg, Science, Technology, Environment and Resources Section
Ian McCluskey, Law and Bills Digest Section

Date introduced:  30 May 2012

House:  House of Representatives

Portfolio:  Climate Change and Energy Efficiency 

Commencement: Sections 1 and 2 commence upon Royal Assent while sections 3 to 16 and sections 18 to 177 commence on 1 October 2012. Section 17 commences on 1 October 2013.

Links: The links to the Bill, its Explanatory Memorandum and second reading speech can be found on the Bill's home page, or through http://www.aph.gov.au/Parliamentary_Business/Bills_Legislation. When Bills have been passed and have received Royal Assent, they become Acts, which can be found at the ComLaw website at http://www.comlaw.gov.au/.

Purpose

The Greenhouse and Energy Minimum Standards Bill 2012 (the Bill) establishes a national framework for regulating the energy efficiency of electrical equipment supplied or used in Australia. It does this in such a way as to also meet its secondary purposes, which are to allow for expansion of the framework to include products using energy other than electricity and products affecting energy use in general.

The framework will both give effect to certain obligations that Australia has under the United Nations Framework Convention on Climate Change (UNFCCC) and promote the development and use of products that: use less energy or produce fewer greenhouse gases; or help reduce the energy used or the greenhouse gases produced by other products.[1]

Background

Australia’s commitment to reducing emissions

The Australian Government has committed to reducing national greenhouse gas emissions by at least five per cent on 2000 levels by 2020 and 80 per cent by 2050.[2] A number of measures have been implemented to meet these commitments. Key policies include the Renewable Energy Target (RET) scheme, which aims to increase to 20 per cent the use of renewable energy sources in the production of electricity, and the Clean Energy Future (CEF) package, which uses a range of mechanisms to create incentives for reducing greenhouse gas emissions intensive activities.

In 2007 the Australian Bureau of Agricultural and Resource Economics and Sciences estimated that 55 per cent of Australia’s emissions reduction target to 2050 could be met through energy efficiency improvements.[3] And this could be at a net benefit to society, rather than a cost.[4] Internationally and in Australia, energy efficiency is recognised as the ‘low hanging fruit’ of emissions reduction efforts.[5] Yet neither the RET scheme nor the CEF package is specifically targeted at energy efficiency (although both do ultimately assist in some ways).

Improving energy efficiency

The challenge of energy efficiency improvement is that while it is an economical and logical choice for reducing emissions in the long run, the immediate changes required make it difficult to implement. It faces a number of barriers, which have become the subject of extensive literature. Such barriers include:

•       information asymmetry, where the consumer does not understand the products sufficiently to make informed decisions about their usage, and the manufacturer is blind to the way products are utilised by the end-user

•       split incentives, where the manufacturer or supplier—as distinct from the user—has no ongoing financial incentive to improve the operational efficiency of a product

•       cultural factors, such as the norms of income and social status. Studies show that ‘income is the most important factor influencing the number of appliances households are equipped with...[6]’

•       a lack of skills, information and training in energy management.[7]

At the Commonwealth level there have been attempts to overcome or avoid some of these barriers through the implementation of household energy efficiency schemes. The Home Insulation Plan, the Green Loans Program and the proposed Green Start program are examples of such measures. Unfortunately, these attempts were marred by design and implementation problems which led to early closure of the programs followed by costly and very public corrective measures.[8] The media attention given to these programs was such that any reticence by the Government to renew household energy efficiency improvement efforts would be understandable.[9]

E3 Program

The proposed Greenhouse and Energy Minimum Standard (GEMS) scheme, while still targeting residential energy use, seeks to regulate businesses, particularly manufacturers and suppliers. Until now, that role has been filled by the Equipment Energy Efficiency (E3) Program[10] administered by the Australian Government, state and territory governments and the New Zealand Government. The E3 Program is a state-based program which coordinates minimum energy performance standards and mandatory labelling of electrical appliances. Analysis from 2009 estimated that E3 measures already in place would ‘reduce household electricity use in 2020 by about 13% compared with business as usual (BAU), and measures currently planned could bring about a further reduction of nearly 15%.’[11]

This Bill aims to make the E3 Program a federal scheme and to ‘address the inconsistencies that have arisen in the E3 Program while simultaneously enabling expansion of the Program to drive even greater energy efficiency, in line with Australia’s commitments and environmental goals.’[12] One of these commitments is identified in the Bill’s Explanatory Memorandum as the requirement under the UNFCCC to implement national programs that reduce greenhouse gas emissions.[13]

The Trans-Tasman aspect

Since 1983 Australia and New Zealand have collaborated under the Australia New Zealand Closer Economic Relations Trade Agreement (ANZCERTA); and in 1996 the two nations agreed to the Trans‑Tasman Mutual Recognition Arrangement (TTMRA).[14] In the spirit of these agreements, Australia and New Zealand strive to minimise business costs between the two countries. As such, there is trans-Tasman collaboration on energy labelling and standards under the E3 Program. The proposed GEMS scheme continues this tradition by seeking to align legislation in Australia and New Zealand.

Basis of policy commitment

As mentioned, the regulation and labelling of energy efficiency for electrical products has historically been a state matter. However, a lack of coordination by jurisdictions has resulted in a number of inconsistencies and conflicts between state legislation covering products with national markets.[15]

A GEMS scheme was initially announced as a Labor election promise in 2007.[16]

In July 2009, the Council of Australian Governments (COAG) published the National Strategy on Energy Efficiency (NSEE), which included the requirement to ‘Establish national legislation for Minimum Energy Performance Standards (MEPS) and labelling, and over time move to add Greenhouse and Energy Minimum Standards (GEMS).’[17]

Consistent with the above, the aims of establishing a national GEMS framework for the supply and commercial use of products that use energy, or affect the energy used by another product, are to:

•       simplify and harmonise the current state based legislative arrangements and

•       increase overall effectiveness by implementing a robust, comprehensive and coordinated regime that builds upon the E3 program.

Consultation process

Shortly after the NSEE was released, the Government published a discussion paper outlining the broad objectives of a national GEMS scheme.[18] Public meetings were held around the country.[19] Having identified various legislative options, in January 2010 the Government published a Regulation Impact Statement (RIS) and held a further six public information sessions.[20] This was followed by a Supplementary Discussion Paper focussing specifically on compliance obligations and enforcement measures. Another consultation period ensued.[21] In August 2011 the Draft GEMS Bill was released and submissions were accepted over a two-week period.[22] Reacting to concerns from stakeholders the Government published a consolidated response to the main issues raised.[23] The Draft proposed that the final Bill be introduced into Parliament in late 2011 for a start date of 1 July 2012.[24] In fact the Bill was introduced into Parliament in May 2012, as anticipated in the 2012–13 Budget, and proposes a start date of 1 October 2012.[25]

Regulation Impact Statement

The RIS, published in January 2010, identified three legislative options for rectifying inconsistencies and inefficiencies within the E3 Program and for expanding its scope. The first option sought to maintain state-based legislation but to try to minimise variations between jurisdictions. The second proposed that either a state or territory, or the Commonwealth, lead co-regulation requiring all jurisdictions to enact identical legislation. The third option proposed:

Commonwealth regulation, either through a referral of power (option 3a) or use of the constitutional power of the Commonwealth, with the responsible minister bound by Ministerial Council on Energy (MCE) or Council of Australian Governments (COAG) decisions (3b), or with the minister not bound (3c).[26]

The third option was deemed the most streamlined and effective, with sub-option 3c (constitutional power is used and the Minister is not bound by COAG or MCE decisions) being the preferred way to proceed.

The proposed GEMS scheme

Outline of the GEMS framework

The Bill lays out a framework for governing and expanding the E3 Program. It establishes a GEMS Regulator and GEMS Inspectors. It creates the requirement for products to be registered under GEMS and sets the minimum standards to be achieved. It allows the Minister to make determinations by way of legislative instruments, each covering a product class. These determinations will prescribe standards, relevant test methods, labelling requirements, whether it is a category A or B product, and any other requirements.[27] Category A and B products are differentiated by their level of impact on energy use. Those products in category B are considered to have a high impact on energy use or greenhouse gas emissions, and will result in stronger penalties if used in contravention of the proposed GEMS scheme. Category A is lower impact and is expected to encompass the majority of GEMS products. [28]

Product terminology

New product classes will be covered on a case-by-case basis with the creation of new determinations. The Bill defines new product terminology for the proposed GEMS scheme:

•       A GEMS model refers to all units possessing:

–      identical technical specifications in relation to the GEMS requirements set out in the relevant determination

–      the same brand or trademark (or, if there is no brand or trademark, the units have the same manufacturer) and sharing a unique model identifier; note: a model or family of models (for registration purposes) may differ in cosmetics but not technical specifications.

•       A GEMS product class splits up product types according to different operational parameters (features, configurations, et cetera). Each product class will have its own requirements, for example, in relation to MEPS or labelling. GEMS determinations will specify one or more product classes

•       A GEMS family of models can bring together two or more product models. In this case a GEMS determination can be made to cover the family of models. The ability to register a ‘family of models’ is expected to assist registrants, so that they can have products that are superficially different but not be required to register each one individually

•       A GEMS product type refers to and is based on the product’s primary function (air conditioner, television, et cetera)

•       A GEMS category, which is either A or B:

–      Category A product types are small energy consuming items (lights, household heaters, et cetera)

–      Category B product types are large energy consuming items (industrial chillers, distribution transformers, et cetera).

GEMS determinations

Between them, the Commonwealth, the states and the territories can agree on a method for obtaining consent to proposed determinations. Consent must then be obtained following that method before the Commonwealth Minister may make a GEMS determination. If there is no such agreement in place, the Minister must receive approval from at least two-thirds of participating jurisdictions. The Commonwealth is counted as a participating jurisdiction. It is assumed that the Commonwealth would always agree to its own proposed determinations, and as such, consent is required from at least five states or territories (clause 33 of the Bill). Once the determination is made, it comes into force 12 months later, unless otherwise specified (clause 34 of the Bill). Mostly, if a product has been manufactured or imported before a GEMS determination comes into force, the product may be sold or supplied indefinitely. However, the GEMS determination may include a limited grandfathering period beyond which any supply of the product is banned (clauses 31 and 34 of the Bill). This is to avoid suppliers stockpiling products that no longer meet specified requirements.[29]

In part to keep track of stockpiling issues, but also to build a comprehensive picture of how appliance energy efficiency is progressing in Australia, the Bill requires companies to provide product sales data. The type of data to be reported would include numbers of imported, exported, supplied and manufactured items (clause 56(1) of the Bill). All information is to be treated as commercially sensitive in its collation and potential disclosure (clauses 169 to 171 of the Bill).

Committee consideration

Committee referral

As a result of concern that the GEMS scheme may increase costs and ‘green tape’, the Bill was referred to the House of Representatives Standing Committee on Climate Change, Environment and the Arts for inquiry and report.[30] Details of the inquiry are at http://www.aph.gov.au/Parliamentary_Business/Committees/House_of_Representatives_Committees?url=ccea/gaems/index.htm

For the same reasons, the Bill has also been referred to the Senate Standing Committee on Environment and Communications for inquiry and report by 15 August 2012.[31] Details of the inquiry are at: http://www.aph.gov.au/Parliamentary_Business/Committees/Senate_Committees?url=ec_ctte/ghouse_energy_2012/info.htm.[32]

On 4 July 2012 the House Standing Committee resolved that it would not proceed to advertise for submissions at this stage but:

...given the significant and important legislation before the House, and the current inquiry of the Senate Committee, the House Committee ... awaits with interest the outcome of the Senate inquiry.  The Committee will pay particular attention to any observations made by Senators regarding the concern noted by the House Selection Committee in the recommendation of its
31 May report: ‘that the scheme may increase costs and green tape for those involved’.  At the conclusion of the inquiry currently being conducted by the Senate Committee, therefore, the House Committee may seek to take further action.[33]

Senate Scrutiny of Bills Committee

The Senate Scrutiny of Bills Committee raised the following issues in relation to the Bill in Alert Digest 06/12[34]:

•       delegation of legislative power (clause 23 of the Bill)

•       broad discretionary power (clause 45 of the Bill)

•       undue trespass-natural justice (clauses 49 and 54 of the Bill)

•       strict liability (clauses 16-19 and 144 of the Bill)

•       reversal of onus (clauses 16-19 of the Bill)

•       insufficiently defined administrative powers-delegation (clause 80 of the Bill) and

•       undue trespass on personal rights and liberties-privacy (clause 162 of the Bill).[35]

In relation to the:

•       delegation of legislative power, ‘in the circumstances, the Committee makes no further comment on this matter’

•       broad discretionary power of the GEMS Regulator to impose written conditions on a product model’s registration, the Committee ‘seeks the Minister’s advice as to whether consideration has been given to including in the legislation a requirement that conditions be ‘reasonably adapted and appropriate’ and ‘pending the Minister’s reply the Committee draws Senators’ attention to the provisions, as they may be considered … in breach of principle 1(a)(ii) of the Committee’s terms of reference’

•       undue trespass – natural justice - clauses 49 and 54 of the Bill provide for the suspension and cancellation of a product model’s registration. The Committee noted that while these decisions are reviewable, the clauses ‘do not expressly provide for procedural fairness (i.e. natural justice) prior to the exercise of these powers’. While recognising that these decisions would need to be made in accordance with common law requirements for fair and impartial hearings, the Committee ‘requests the Minister’s consideration to including’ .. [a statement to this effect]  ‘in the explanatory memorandum’. Pending the Minister’s reply the Committee ‘draws Senators’ attention to the provisions, as they may be considered … in breach of principle 1(a)(i) of the Committee’s terms of reference’

•       other identified issues, the Committee left the approach to be taken ‘to the Senate as a whole’.

A number of these issues are further considered under ‘Key provisions’.

Policy position of non-government parties/independents

At the time of writing, no Coalition, Greens or Independent spokesperson had publicly expressed a view in relation to the final version of the Bill.

Position of major interest groups

Throughout the consultation process, industry and energy businesses have been generally supportive of the intent of the Bill, primarily because it simplifies the current legislative situation.[36] Nonetheless, there were concerns raised during the consultation process over a number of issues especially with regard to costs and the potential for confusion with existing codes or standards. These issues are elaborated further under ‘Main issues’.

It is interesting to note that even though there was a high level of stakeholder interest during the consultation stages, the Senate Standing Committee on Environment and Communications received only two submissions to its inquiry.

There has been no public commentary from environmental or community groups.

The New Zealand Government has not made a statement in relation to the proposed Australian legislation.

Financial implications

The Explanatory Memorandum states that:

The Australian Government committed $37.1 million over four years in the 2012―2013 Budget to fund the Australian Government’s share of the cooperative E3 Program. This funding will be supported by contributions from New Zealand and Australian state and territory jurisdictions that participate in the E3 Program.[37]

In the 2012–13 Budget papers, the Government explained that the total cost of establishing the GEMS framework was expected to be $59.8 million over four years. The additional costs will be met from other sources including product registration fees and ‘contributions from other jurisdictions, which are being sought as part of negotiations on a new intergovernmental agreement.’[38]

Main issues

The main issues arising in relation to this Bill concern requirements imposed by the new scheme and whether the proposed national framework will increase ‘green tape’ and costs for those involved.

These issues, as well as options for the future expansion of the scheme, are further outlined below.

Other issues that arise in relation to the nature and effect of the proposed regulatory regime are outlined under ‘key provisions’ and (as noted above) include the issues identified by the Senate Scrutiny of Bills Committee in its Alert Digest No. 6 of 2012.[39]

Duplication and confusion with existing codes and standards

As noted above, the reason for referral of the Bill to the two Committees was ‘concern that the scheme may increase costs and green tape’.[40] In response to the Draft Bill, many industry groups expressed discontent that the proposed scheme may introduce duplication and create confusion if not properly aligned with existing codes and standards. In particular, there was apprehension that the Minister may have the ability to override Standards Australia when creating a determination.[41] This, industry groups believe, could exclude industry and the community from decision making, and reduce the transparency of the process.[42] The Australian Industry Group (Ai Group) believes that:

The technical experts who can best estimate what is possible to achieve with new technology and new efficiency levels are the manufacturer engineering managers who sit on appropriate Standards Australia technical committees.[43]

It is likely that some GEMS determinations will apply to appliances already regulated via the Water Efficiency Labelling and Standards (WELS) Act 2005, the Building Code of Australia (BCA) and other existing standards. Where there is perceived conflict between these, there could be confusion within the affected industry.[44]

In its response to submissions on the Draft Bill, the Government identified two separate issues in relation to current industry regulation: the first issue relates to transparency of the determination‑making process, and the second concerns the ability to bypass Standards Australia. The Government addressed concerns regarding transparency by reminding stakeholders that each determination will be a disallowable instrument underwritten by a public and consultative Regulation Impact Assessment. On the second issue, the Government explained that the Minister would have the ability to ‘call up’ existing Standards Australia documents granting them legal status.[45]

Industry also requires some assurance that new determinations will not add yet another layer of potentially contradictory bureaucracy:

...to address inconsistencies and inefficiencies, we request an alignment of the energy efficiency and water efficiency schemes as soon as practicable.[46]

In relation to the BCA, the Government has specified that ‘GEMS determinations will be aligned with the Building Code to avoid discrepancies’.[47] However, it is not clear whether the proposed GEMS scheme will align itself with, for example, the Standards Australia definition for product families.[48]

Ai Group supports the Standards Australia technical committee determining families of models and stating this in Australian Standards:

This would align with state electrical safety regulators definitions for a product family listed under the one product approval. There should be a cost to add models to family approvals as per state electricity safety regulations so that models are not added endlessly (as with the WELS Scheme).[49]

The Government has indicated that it intends to be flexible in the application of family groupings and the setting of fees in relation to these.[50]

Unilateral state action

As well as a risk of misalignment between new GEMS standards and those of existing schemes, there is also a risk of inconsistency between states and territories. This is despite the fact that the main purpose of the proposed scheme is to harmonise existing state laws. The proposed legislation explicitly states that state and territory laws may operate concurrently with GEMS as long as they impose a more stringent set of requirements and do not conflict in any way with the federal legislative instrument (clause 9 of the Bill).

As noted above, absent an agreement that provides an alternative method, in order for a determination to be made the Minister needs to obtain consent from two‑thirds of the participating jurisdictions: in practice this will be the Commonwealth and five states or territories (clause 33 of the Bill). Assuming two states find the requirements of a proposed determination insufficient, they may be powerless to hinder its passage into law. These states are likely to establish their own stricter standards. There are precedents for this type of action.

In 2009 the Queensland Government unilaterally adopted higher MEPS levels for some classes of air conditioner, to apply in that state only... In December 2009 the South Australian Government also gazetted requirements for air conditioners to be sold in SA from 1 January 2010, that differ from the nationally agreed program. A Fact Sheet announcing the changes states that ‘From 1 January 2010, South Australia will have the highest energy efficiency standards for window wall, split system and ducted air conditioners in the country.[51]

Some industry groups are calling for determinations to be made only where there is unanimous agreement.[52]

Driving up costs

Another major concern from industry is the potential for the proposed scheme to increase operational costs. The Government has indicated that initial fees for registration are likely to range from $250 to $650 and will be reviewed every three years.[53] Glenco Manufacturing, which produces air compressors, has said that these fees are excessive and should be no more than $100.[54] In contrast, the Gas Appliance Manufacturers Association Australia (GAMAA) has said that the proposed fees are reasonable.[55]

Fears over cost are relative to the size and nature of the actual products. The Lighting Council of Australia (LCA), which is the peak body for Australia’s lighting industry, is worried about the need to register all light models. An expansive range of low-cost lights and lighting equipment exists; each with slight changes to technical specifications. Under the proposed GEMS scheme, a multitude of registrations would be required. This could become costly for the industry and may result in decisions to limit the range of products sold in Australia. ‘Lighting companies already limit product availability in the Australian market as it is not worth the registration cost to supply some lower volume, specialised lamp types.’[56]

A different cost concern was raised by the Ai Group. The proposed GEMS labelling requirements, specifically for motors, are additional to existing safety and other labelling requirements and, the Ai Group argues, could have a disproportionate impact on costs. Currently, motors are required to carry a nameplate bearing information such as voltage, frequency, phase, et cetera.

...it has almost got to the point that some motors will require a second rating plate to cover all labelling... This is all an extra cost to Australian importers that has to be passed onto industry.[57]

A final point on costs is that there have been claims from industry that the criminal sanctions, as outlined in the Draft Bill (and reflected in this Bill), are disproportionate to the offences they relate to.[58] This is discussed in more detail and from a legal perspective in ‘Key provisions’.

Notice periods and grandfathering

The Draft Bill proposed a three-month statutory notice period before a GEMS determination comes into force.[59] Industry was strong to react on this, calling for a minimum 12-month notice period. The Bill takes on board the suggestion from industry.[60] Nonetheless, for some companies the twelve‑month notice period may still not be sufficient.

In the US, Europe and Japan this timeframe varies from between three to ten years. AREMA [Air conditioning and Refrigeration Equipment Manufacturers Association of Australia] believes a minimum of three years should be provided for the re-design, testing and manufacture of equipment.[61]

The Draft Bill also proposed a sunset clause (or grandfathering measure) of two years. Products manufactured in or imported into Australia before a new determination could be sold without complying with the determination for a two-year period only. The measure was aimed at reducing the risk of stockpiling. In a stockpiling situation, retailers choose to accumulate a large inventory of cheaper but soon-to-be-obsolete products for sale beyond the start date of a new determination. While the two–year sunset clause does resolve the stockpiling issue, it introduces a new problem.

According to industry responses to the Draft Bill consultation document, appliance retailers often return unsold products for a complete refund. At the end of a grandfathering period a manufacturer could be obliged to accept returns from all its retailers. As such, the sunset clause posed a financial risk to the industry. The Government has thus removed the mandatory grandfathering provision and has instead made it optional. A determination may include a ban on the sale of non-compliant products and the terms of that ban. It is hoped that the data collection powers of the Bill will allow the Government to become aware of any stockpiling issues that may require consideration. [62]

Transitional arrangements

In its consultation paper, the Government flagged that a separate Bill would deal with transitioning products already registered under the E3 Program:

The Transitional Arrangements Bill will create an Act of limited life to deal with matters in the transition from the current scheme based on state and territory laws to one based on Commonwealth law. The most substantial of those matters will be the transfer of existing registrations to Commonwealth registrations.[63]

No such transitional arrangements Bill has been released. It appears that instead of issuing a separate piece of legislation, the Government will treat the transition through a purely administrative process. Clause 17 of the Bill, which deals with the supply of unregistered GEMS products, has a delayed start date of 1 October 2013—one year after the commencement of the scheme. It appears that the delay in the commencement of this provision is to allow time for products registered under the E3 Program to be registered under GEMS. What is not clear is to what extent products registered under the E3 Program will be recognised under GEMS.

Privacy concerns

The Australian Information Industry Association (AIIA) is amongst many industry groups raising concern over the Bill’s requirement for companies to provide Government with sales data.

Industry is ... concerned that this type of information must always be safeguarded; it is critical competitive data and if it falls into competitors’ possession the government’s credibility in managing sensitive and commercial information will be severely compromised.[64]

A solution proposed by AIIA (and others) is for the Government to request data for those sectors of interest only, on a case-by-case basis:

Rather than applying a broad-brush approach to all industry sectors, if the Government wishes to have information about the number of products sold into the market; beyond what would otherwise have been available through customs and the ABS data, then the requirements should be discussed with each specific industry sector.[65]

The Bill in fact does just that. It empowers the GEMS Regulator to request information on manufacture, import, supply and export (clause 56(1) of the Bill). The Bill also describes the offences related to sharing of such information if it could be of detriment to the commercial interest of a party (clause 169 of the Bill). Some disclosures of information are permitted under the Bill. The Senate Standing Committee for the Scrutiny of Bills found no breach of personal rights in this matter.[66]

As well as the potential breach of privacy, industry is concerned that the collection of data will add unreasonable costs to companies.[67]

Expanding the scheme

An important element of the Bill is its ability to allow for future expansion. The Explanatory Memorandum explains that the Bill will ‘allow the expansion of energy efficiency regulation in the future to cover a wider range of products’.[68]

In the first place the proposed GEMS scheme could regulate equipment that uses energy other than electricity, such as diesel or petrol generators. This is where the ‘greenhouse’ part of the ‘Greenhouse and Energy Minimum Standards’ would come into play.

Eventually it could also cover products that do not directly use energy but affect energy use such as windows and insulation. This aspect is less straight forward. How a window affects energy use is, of course, related to the materials of which it is composed and the quality of fabrication. However, it is also very strongly related to how it is installed and the overall design of the building. A double-glazed window is poor at maintaining internal temperatures if it is surrounded by a gaping hole, for example. This is why such products have historically been assessed and/or regulated through building codes and holistic rating systems, such as the Green Star from the Green Building Council Australia (GBCA).[69]

Nevertheless, the proposed GEMS labelling on energy-use affecting products would be a useful tool in differentiating between products. As such, the Australian Glass & Glazing Association, SmartGlass company CSR, and GBCA support the intent of the Bill.[70] GBCA calls for the proposed GEMS scheme to align with Green Star and other existing systems.[71] To help with the transition, the Air Conditioning and Mechanical Contractors' Association calls for increased training:

Greater investment in training will be required if the industry is subject to standards associated with non-energy consuming products and the link with the BCA performance requirements.[72]

Structure of the Bill

The Bill is divided into 11 parts.  Clause 3 of the Bill -Guide to this Act outlines the key elements of each part of the Bill and each part itself has its own guide.

•       Part 1 sets out preliminary information including the objects of the Act, definitions and interpretative provisions and information about the application of the Act (clause 3)

•       Part 2 outlines key concepts including GEMS products, GEMS determinations, product classes and models (clause 10 of the Bill)

•       Part 3 prescribes the rules that govern the supply and commercial use of GEMS products in compliance with GEMS determination and registration requirements.  This part also provides for exceptions to these rules and determines the criminal and civil penalties that may be imposed for a breach (clause 15 of the Bill)

•       Part 4 sets out the process and requirements for making and replacing GEMS determinations (by legislative instrument) and prescribes the requirements which are imposed by determinations as well as any exemptions that may apply (clause 22 of the Bill)

•       Part 5 establishes the GEMS register, prescribes the registration process, including variation and cancellation of registrations, and imposes other (notification, information and product testing) requirements on registrants (clause 38 of the Bill)

•       Part 6 establishes the office of the GEMS Regulator, defines the functions and powers of the Regulator and enables state and territory laws to confer powers on this office (clause 69 of the Bill)

•       Part 7 ensures compliance with the Act through monitoring and investigations powers.  It authorises GEMS inspectors, appointed under the legislation, to exercise these powers, it prescribes the process for the issuing of warrants and it sets out the rights and responsibilities of occupiers (clause 81 of the Bill)

•       Part 8 deals with enforcement provisions-civil and criminal proceedings and penalties, infringement notices, enforceable undertakings and injunctions. It also allows the Regulator to publicise certain offences, contraventions and adverse decisions (clause 128 of the Bill)

•       Part 9 determines the reviewable decisions under the Act and establishes the processes and eligibility criteria for internal review and for applications for review made to the Administrative Appeals Tribunal (clause 163 of the Bill)

•       Part 10 makes it an offence to disclose protected information that is commercially sensitive where the disclosure is not authorised under the Act (clause 168 of the Bill) and

•       Part 11 governs miscellaneous provisions including recovery of fees, compensation for the acquisition of property, annual reporting, review of the operation of the Act and the making of regulations (clause 172 of the Bill).

Key provisions

The GEMS Bill runs to 154 pages and consists of 177 clauses. A summary of the key provisions are noted below.  For a more detailed explanation of each provision, please refer to the Explanatory Memorandum.[73]

As noted above, clause 3 of the Bill provides a Guide to the Bill.  The objects of the Bill are set out in clause 4 and the Dictionary in clause 5 defines various terms.

Clause 9 preserves state and territory laws whose operation overlaps with this Bill in situations where the state or territory law imposes more stringent requirements.

Division 2 of Part 2 describes the key concepts. Put simply, under clause 11 of the Bill, ‘GEMS determinations’ can be made which apply to ‘product classes’, which are made up of separate ‘GEMS products’. Each GEMS product may be available in different ‘models’, which unless specifically exempted, must be registered in relation to that product class (clause 12) against a specific GEMS determination (clause 13). Products are to be either category A products or category B products. Where the Minister is satisfied that a product has a high impact on energy usage or greenhouse gas production it will be specified as category B (subclause 29(2)). 

Subclause 11(1) defines ‘GEMS products’ to be those which (i) either use energy or affect energy usage by other products, and (ii) are in a product class covered by a GEMS determination. 

‘GEMS determinations’ may be made by the Minister under clause 23 and are to specify product classes, as well as GEMS level (clause 25) and labelling (clause 26) requirements for products in those classes. A single product may be in more than one product class, in which case it is to comply with requirements set out in all relevant GEMS determinations (subclause 11(3)). GEMS determinations are to be made by legislative instrument, and are open to disallowance.[74] 

Comment

The definition of ‘GEMS product’ does not directly specify products which produce greenhouse gasses or which affect greenhouse gas production by other products. However, it appears that they may be included by way of the GEMS level requirements which must be specified in a GEMS determination.[75]

The most significant provisions in the Bill are as follows:

Penalty provisions and onus of proof

Division 2 of Part 3 of the Bill deals with ‘supplying GEMS products’ and Division 3 of Part 3 of the Bill deals with ‘using GEMS products for commercial purposes’. For both supply and commercial use, clauses 16 and 18 outline the requirements for ‘complying with GEMS determinations’ and clauses 17 and 19 address the situation when a model is not registered.

Subject to certain exceptions, GEMS products are only to be supplied if they comply with the relevant GEMS determination and its requirements (subclause 16(1)). 

GEMS products are not to be supplied where the model is not registered, in circumstances where it should have been – that is, there is a GEMS determination covering the product class which encompasses the model (subclause 17(1)). Clauses 16 and 17 do not apply to second hand products or exempt products.[76]

Non-compliant GEMS products are not to be used for commercial purposes (subclause 18(1)).  However, this only applies if, at the time of the first use of the product for a commercial purpose, the product does not comply with all relevant GEMS requirements. This is so that subsequent changes in GEMS standards do not impact upon existing GEMS products. There are similar exemptions as in clauses 16 and 17.

GEMS products are not to be used for commercial purposes where the model is not registered in circumstances where it should have been (subclause 19(1)).  As with clause 18, this is confined to the first use of the product. 

A contravention of the rules under  Division 2 or Division 3 of this Part 3 of the Bill amounts to a criminal offence of strict liability (that is, state of mind is irrelevant) attracting a financial penalty. However, the defence of honest and reasonable mistake of fact is available for strict liability offences:

The imposition of strict liability will not criminalise honest errors and no person … can be held liable if he or she had an honest and reasonable belief that they were complying with relevant obligations.[77]

For category A products (that is, lower impact products) the maximum penalty is 60 penalty units.  For category B products, the maximum is twice this amount.[78]

The Bill also provides for civil penalties.  The maximum penalties are the same as for the criminal penalties - 60 penalty units (currently $6600) for category A products and 120 penalty units (currently $13 200) for category B products.[79] Clause 144 provides that, in proceedings for a civil penalty order, it is not necessary to prove a person’s state of mind. Clause 143 provides that ‘mistake of fact’ can be a defence in the civil penalty context.[80] These provisions create consistency between the criminal and civil remedies that are provided for under the Act.[81] The Explanatory Memorandum states:

Providing criminal and civil remedies allows flexibility to respond to contraventions of the Act, with remedies proportionate to the seriousness of the conduct.[82]

Comment

As noted above (under Committee Consideration) the Senate Scrutiny of Bills looked closely at the approach taken to the offences established by clauses 16-19 of the Bill, the operation of clauses 143 and 144 (civil penalty proceedings) and the reversal of the onus of proof under clauses 16-19 (where a person asserts a particular factual matter).  The Committee held that:

In light of the comprehensive justification of the proposed approach’ to strict liability offences in the Explanatory Memorandum to the Bill and ‘as the justification offered’ for the reversal of onus of proof (in relation to proving that a product is second hand or that it was supplied in Australia) ‘is consistent with the Guide to Framing Commonwealth Offences the Committee leaves the question of whether these approaches are appropriate to the Senate as a whole.[83]

GEMS determinations

Clause 33 sets out requirements that the Minister must meet before making a GEMS determination. If an agreement between the Commonwealth and the states and territories specifies a method for obtaining the consent of participating jurisdictions to proposed determinations, consent must be obtained as agreed before the Commonwealth Minister may make a GEMS determination. If there is no such agreement the Minister must obtain consent from two-thirds of ‘participating jurisdictions’, one of which is the Commonwealth and the remainder are the states and territories which have joined the scheme.  The participating parties can agree to modify the ‘two-thirds requirement’.  In the event that insufficient consents were received and the Minister purported to make a GEMS determination, that determination would be invalid.  If a state or territory wants more stringent standards it is free to impose them.  In certain cases a state or territory may consider that a proposed GEMS determination is excessive - it will have to go along with it unless it can find sufficient jurisdictions to oppose it (with all states and the two internal territories as participants, such a participant will need to find three others to successfully overcome a new initiative).  GEMS determinations come into force twelve months after they are made unless the determinations specify otherwise (clause 34).

The Bill provides for the replacement of determinations as updates become necessary (clauses 35 and 36). It also provides for the exemption of some models from determinations (clause 37). 

Comment on the delegation of legislative power

As referred to above, the Senate Scrutiny of Bills Committee examined the delegation of legislative power to the Minister to make a GEMS determination and noted that clauses 24 to 27 of the Bill provide statutory guidance as to the nature of the requirements to be included in a GEMS determination and that this approach is currently used in the existing E3 Program and ensures that appropriate requirements are adopted for each product class. As a result the Committee made no further comment.[84]

In addition, the consent provisions under clauses 33 and 35 of the Bill (which apply for both the making and replacement of determinations) ensure that the Minister must obtain consent to the terms of the determinations in accordance with any agreed method and from at least two-thirds of participating jurisdictions. These requirements would appear to improve the robustness of this process.

Registering models of GEMS products (Part 5 of the Bill)

Once a GEMS determination is made, an interested party (a manufacturer, importer and/or supplier) will aim to register models of each GEMS product on the GEMS Register.  The GEMS Regulator operates the GEMS Register (clause 39 of the Bill). The Act sets out information which may be registered and information which must be registered (clause 40 of the Bill).

The GEMS Regulator must approve a registration application unless (i) the Regulator is not satisfied the requirements of the GEMS determination have been met or (ii) the Regulator is not satisfied the applicant has sufficient connection with the product (for example, not an importer, manufacturer or supplier) or (iii) there are refusal grounds under clause 66 – non-compliance with administrative requirements and certain misbehaviour on the part of applicants (clause 43 of the Bill).

A model’s registration will generally be in force for five years (subclause 48(3) of the Bill).

Registrations may be suspended and cancelled (clauses 49-54 of the Bill). The reasons for suspension and cancellation include such things as: non-compliance of the model with the GEMS determination; provision of incorrect information; a breach of a condition or exemption attached to registration; or non-compliance with a notice issued under the Act. 

Broad discretionary power of the GEMS Regulator

Clause 45 provides that the GEMS Regulator may impose conditions on registration and that a registrant must comply with those conditions.  There is no express limit on the GEMS Regulator’s powers under this clause. 

Comment

This is wide-ranging power which, if not exercised reasonably and appropriately, could have a serious impact upon stakeholders.  It may be preferable if at least some limitation or oversight mechanism were set out.  As noted above, the Senate Standing Committee for the Scrutiny of Bills expressed similar concerns and has requested further advice from the Minister on this point.[85]

The GEMS Regulator (Part 6 of the Bill)

Clause 70 provides that the position of GEMS Regulator is to be within the relevant Department.  The GEMS Regulator is to be an SES officer.  The functions of the office are set out in clause 71.  Essentially, these are to: administer the Act; maintain the GEMS register; assist the Minister in the making of GEMS determinations, including by commissioning research; advise the broader public about the GEMS scheme; monitor and enforce compliance with the Act; and review and evaluate the Act’s operation. 

Conferral of functions (Division 4 of Part 6 of the Bill)

A law of a state or territory may confer powers or functions, or impose duties, on the GEMS Regulator within constitutional limits (clause 72). The legislative process by which duties can be imposed on the Regulator by state and territory laws is dealt with under clauses 73 and 74.[86]

The GEMS Regulator has power to do all things necessary or convenient for the performance of the Regulator’s duties (clause 75). The GEMS Regulator may charge for services (clause 77), enter into arrangements with other agencies (clause 78) and engage consultants (clause 79).[87] 

The GEMS Regulator is afforded wide ranging powers of delegation under clause 80 of the Bill, and may delegate to Commonwealth, state and territory officers. The GEMS Regulator is not confined to delegating to SES officers. However a delegate will have no power to sub-delegate functions or powers.[88] This approach has been adopted to ensure that all of the work required of this office can be undertaken in each Australian jurisdiction. As the GEMS Regulator has the power to delegate to any appropriate public service officer (and not just SES officers) the power is limited by preventing further sub-delegation.[89]

Monitoring and Investigation powers (Part 7 of the Bill)

The GEMS Regulator may appoint GEMS inspectors from Commonwealth, state and territory agencies (clause 82 of the Bill).

Certain inspection powers are set out in clause 86 of the Bill and extend to allowing GEMS inspectors without a warrant to enter public areas of business premises to perform certain limited functions, such as inspect GEMS products, purchase GEMS items available for sale to the public, inspect information that is publicly available, discuss features of GEMS products and observe goings on.  Subclause 86(3) clarifies that the right of an occupier to refuse to allow an inspector to enter and remain on the premises is not affected by clause 86. 

Higher level monitoring powers can be exercised by GEMS inspectors under clause 87 of the Bill if the occupier of the premises consents or if the inspector has a ‘monitoring warrant’. They include the power to: search, examine and observe activities conducted on the premises; examine and inspect items (such as GEMS products); take photos; and inspect and copy documents (clause 88 of the Bill). This also extends to information stored electronically. However, they do not include the power to seize evidence. Monitoring warrants are issued under clause 94 of the Bill by an issuing officer, which is defined in clause 5 of the Bill to be either a magistrate or a Federal Magistrate or a Federal Court justice. Such warrants are to specify the premises and the purpose for which they were issued (subclause 94(4) of the Bill).

Higher level investigation powers are also provided for. If a GEMS inspector reasonably suspects there may be ‘evidential material’ on premises, he or she may enter the premises and use investigation powers so long as the occupier consents or the inspector has an ‘investigation warrant’ (clause 95 of the Bill). Evidential material is defined in clause 5 to be material relevant to offences and civil penalty provisions under the Act. Investigation powers include the power to search, inspect items, take pictures and bring in testing equipment, and if there is an investigation warrant, the power to search the premises and seize evidential material (clause 96 of the Bill).The powers extend to electronically-stored information (clause 97 of the Bill). As with monitoring warrants, investigation warrants can be issued by an issuing officer, being either a magistrate or Federal Magistrate or a Federal Court justice (clause 107 of the Bill).

Giving GEMS information to GEMS inspectors (Division 7 of Part 7 of the Bill)

The Bill defines ‘a person who has GEMS information’ to be a person the GEMS Regulator reasonably believes to have information relevant to a possible contravention of, or relating to, the GEMS Act (clause 122 of the Bill). The GEMS Regulator may require such persons to provide information and produce documents set out in specified notices (clause 123 of the Bill). Failure to comply can amount to an offence with a maximum penalty of 6 months in prison or 30 penalty units or both (subclause 123(4) of the Bill).[90] The GEMS Regulator can also require ‘a person who has GEMS information’ to appear before a GEMS inspector to answer questions and/or produce documents (clause 124 of the Bill).Non-compliance can amount to an offence with a maximum penalty of six months imprisonment or 30 penalty units or both (subclause 124(5) of the Bill.[91]

Comment

The ‘coercive power’ granted to the GEMS Regulator under clause 124 of the Bill would appear not to abrogate the common law privilege against self-incrimination.[92] However, it is interesting to note that the Explanatory Memorandum to the Bill is silent on this point.[93] In contrast, the Explanatory Memorandum clearly states that failure to comply with a request by a GEMS inspector who enters premises under a warrant to provide information or documents (under clause 118 of the Bill) does not impinge this privilege.[94]

In both circumstances, it would appear from the rationale outlined in the Explanatory Memorandum that the powers granted to the GEMS inspector are reasonable, proportionate and necessary for the effective regulation of the scheme. However, this approach represents a delicate balance between effective enforcement and the protection of individual rights.

Enforcement (Part 8 of the Bill)

The GEMS Regulator can apply for civil penalty orders within six years of the alleged contravention (clause 130 of the Bill).

In addition, GEMS inspectors can hand out ‘infringement notices’ setting out details of the alleged infringement, and provide for an amount payable (clause 146 of the Bill). An infringement notice can only be given within 12 months of the alleged contravention (subclause 146(2) of the Bill). If the amount is paid within 28 days neither criminal nor civil penalty proceedings will be brought (paragraph 150(1)(b) of the Bill). Payment is not to be taken as an admission of guilt (paragraph 150(1)(c) of the Bill). Criminal penalties are not enforceable via infringement notices (clause 145 of the Bill).

The Bill also provides for a person to make enforceable undertakings to a GEMS Regulator (clause 154 of the Bill). If breached, the Regulator may seek enforcement in a court (clause 155 of the Bill).

Courts also have power to grant restraining injunctions, performance inunctions, consent injunctions and interim injunctions to promote behaviour in accordance with the provisions of the Bill
(clause 157 of the Bill).

The GEMS Regulator may publicise certain offences, contraventions and adverse decisions
(clause 162 of the Bill).

Comment

As referred to above (under Committee Consideration) clause 162 of the Bill attracted the attention of the Senate Scrutiny of Bills Committee.  The Committee noted that the justification for clause 162 is to promote transparency, inform other regulated persons and consumers and increase deterrence.  The Committee left the question on the use of publicity as a regulatory tool to the consideration of the Senate as a whole.[95]

Reviewing Decisions (Part 9 of the Bill)

There is to be the possibility of internal review followed by review in the Administrative Appeals Tribunal in relation to a number of decisions made by the GEMS Regulator and set out in clause 164 of the Bill. These relate to GEMS registration issues.

Comment

Also as referred to above (under Committee Consideration) this provision attracted the attention of the Senate Scrutiny of Bills Committee. The Committee requested the Minister to include information in the Explanatory Memorandum to ensure that procedural fairness would not be excluded from any process which may result in a ‘reviewable decision’.[96]

Protecting Information (Division 2 of Part 10 of the Bill)

Offences are prescribed in relation to the mishandling of commercially sensitive information in clause 169.

Summary of the establishment and implementation of the Scheme

The legislative scheme set up under the Bill could take effect in the following sequence of events:

•       The legislation is passed and the GEMS Regulator and GEMS inspectors are appointed.  The GEMS register is established.

•       GEMS determinations are made.

•       Models are then registered against the determinations.

•       GEMS inspectors, exercising their monitoring and enforcement powers, come across situations where the regulatory system has not been complied with.

•       The GEMS Regulator determines the appropriate enforcement proceedings – for example, an infringement notice may be issued, or civil or criminal proceedings could be commenced.

•       The possibility of civil penalties and prosecution provides an added incentive to manufacturers, importers and suppliers of GEMS products to comply with the regulatory scheme.

•       If the scheme works as intended, energy usage, and therefore greenhouse gas emissions, are lower than they would otherwise have been.

Statement of Compatibility with Human Rights

The Explanatory Memorandum to the Bill states that:

This Bill is compatible with the human rights and freedoms recognised or declared in the international instruments listed in section 3 of the Human Rights (Parliamentary Scrutiny) Act 2011.

It further outlines that:

Specifically, the GEMS Bill engages the right to the presumption of innocence, the right not to be compelled to confess guilt; and the right not to have one’s privacy, family, home or correspondence, arbitrarily or unlawfully interfered with.[97]

The Explanatory Memorandum then provides a detailed description of how the Bill is compatible together with the rationale for these provisions which impact on human rights. In conclusion the Explanatory Memorandum notes that:

The GEMS Bill is compatible with human rights because, while it may limit certain human rights, those limitations are reasonable, necessary and proportionate, justified by the legitimate needs and objectives of the E3 Program and accompanied by appropriate safeguards.[98]

The Senate Scrutiny of Bills Committee also noted the comprehensive justification of the approach taken to the offences established by clauses 16-19 of the Bill in Alert Digest 6/12.[99]

From the Committee response and taking into account the rationale provided to justify the approach taken it would appear that the Bill is compatible with human rights.

Concluding comments

The proposed GEMS scheme has been a long time coming. Industry is generally supportive of what the Bill aims to achieve. As a framework Bill, the legislation leaves much of the detail to the forthcoming determinations, where the real success of the proposed scheme will be measured. There is concern that the overall structure may increase green tape and compliance costs, despite the fact that it aims to simplify the existing patchwork of state-based legislation and fees. This will ultimately depend on the ability of the Commonwealth and state and territory governments to cooperate in the overall strategy and the creation of determinations.

Members, Senators and Parliamentary staff can obtain further information from the Parliamentary Library on (02) 6277 2421.

© Commonwealth of Australia

Creative Commons

With the exception of the Commonwealth Coat of Arms, and to the extent that copyright subsists in a third party, this publication, its logo and front page design are licensed under a Creative Commons Attribution-NonCommercial-NoDerivs 3.0 Australia licence.

In essence, you are free to copy and communicate this work in its current form for all non-commercial purposes, as long as you attribute the work to the author and abide by the other licence terms. The work cannot be adapted or modified in any way. Content from this publication should be attributed in the following way: Author(s), Title of publication, Series Name and No, Publisher, Date.

To the extent that copyright subsists in third party quotes it remains with the original owner and permission may be required to reuse the material.

Inquiries regarding the licence and any use of the publication are welcome to webmanager@aph.gov.au.

Disclaimer: Bills Digests are prepared to support the work of the Australian Parliament. They are produced under time and resource constraints and aim to be available in time for debate in the Chambers. The views expressed in Bills Digests do not reflect an official position of the Australian Parliamentary Library, nor do they constitute professional legal opinion. Bills Digests reflect the relevant legislation as introduced and do not canvass subsequent amendments or developments. Other sources should be consulted to determine the official status of the Bill.

Feedback is welcome and may be provided to: web.library@aph.gov.au. Any concerns or complaints should be directed to the Parliamentary Librarian. Parliamentary Library staff are available to discuss the contents of publications with Senators and Members and their staff. To access this service, clients may contact the author or the Library‘s Central Entry Point for referral.

ISSN 1328-8091

[1].               Greenhouse and Energy Minimum Standards Bill 2012, clause 4.

[2].               Department of Climate Change and Energy Efficiency (DCCEE), ‘Reducing Australia's emissions’, DCCEE website, viewed 26 June 2012, http://www.climatechange.gov.au/en/government/reduce.aspx

[3].               Australian Bureau of Agricultural and Resource Economics (ABARE), Technology: toward a low emissions future, research report 07. 16, report prepared by A Gurney, M Ford, K Low, C Tulloh, G Jakeman and D Gunasekera, ABARE, Canberra, September 2007, viewed 26 June 2012, http://adl.brs.gov.au/data/warehouse/pe_abare99001392/rr07_16_low_emissions.indd.pdf

[4].               ClimateWorks Australia, Low carbon growth plan for Australia, ClimateWorks Australia, Clayton Victoria, March 2010, viewed 26 June 2012, http://www.climateworksaustralia.com/Low%20Carbon%20Growth%20Plan.pdf

[5].               C Steven, ‘Energy efficiency is not just low-hanging fruit; it is fruit that is lying on the ground’, New Scientist, vol. 202, no. 2710, 30 May 2009, p. 8, viewed 26 June 2012, http://web.ebscohost.com/ehost/detail?vid=4&hid=21&sid=bcd2db67-3c05-499b-b2b5-b3d9f6768a1d%40sessionmgr13&bdata=JnNpdGU9ZWhvc3QtbGl2ZQ%3d%3d#db=aph&AN=41019260

[6].               OECD, Greening household behaviour: the role of public policy, OECD Publishing, 2011, viewed 26 June 2012, http://dpl/Books/2011/OECD_GreeningHouseholdBehaviourRolePublicPolicy.pdf

[7].               Prime Minister’s Task Group on Energy Efficiency, Report of the Prime Minister’s task group on energy efficiency, DCCEE, Canberra, July 2010, viewed 26 June 2012, http://www.climatechange.gov.au/~/media/submissions/pm-taskforce/report-prime-minister-task-group-energy-efficiency.pdf

[8].               Australian National Audit Office (ANAO) Auditor-General, Home insulation program: Department of the Environment, Water, Heritage and the Arts, Department of Climate Change and Energy Efficiency, Medicare Australia, ANAO Auditor-General Audit Report, no. 12, 2010–11 Performance Audit, ANAO, Canberra, 15 October 2010, viewed 26 June 2012, http://www.anao.gov.au/~/media/Uploads/Documents/2010%2011_audit_report_no_12.pdf and ANAO Auditor-General, Green loans program: Department of the Environment, Water, Heritage and the Arts, Department of Climate Change and Energy Efficiency, ANAO Auditor-General Audit Report, no. 9, 2010–11 Performance Audit, ANAO, Canberra, 29 September 2010, viewed 26 June 2012, http://www.anao.gov.au/~/media/Uploads/Documents/2010%2011_audit_report_no_9_.pdf

[9].               M Priest, ‘Stand and deliver... or the policy gets it’, Australian Financial Review, 20 October 2010, p. 6, viewed 13 July 2012, http://parlinfo.aph.gov.au/parlInfo/download/media/pressclp/299087/upload_binary/299087.pdf

[10].               Australian Government, ‘Equipment Energy Efficiency Program (E3)’, E3 website, viewed 26 June 2012, http://www.energyrating.gov.au/programs/e3-program/

[11].               G Wilkenfeld and Associates, Prevention is cheaper than cure: avoiding carbon emissions through energy efficiency: projected impacts of the equipment energy program to 2020, January 2009, p. 4, viewed 26 June 2012, http://www.energyrating.gov.au/wp-content/uploads/Energy_Rating_Documents/Library/Equipment_Energy_Efficiency_Program_%28E3%29/200901-projected-impacts.pdf

[12].               Explanatory Memorandum, Greenhouse and Energy Minimum Standards Bill 2012, p. 2, viewed 26 June 2012, http://parlinfo.aph.gov.au/parlInfo/download/legislation/ems/r4841_ems_1e02a482-2a91-4d59-8704-2e39338db02a/upload_pdf/369026.pdf

[13].               Ibid., p. 1.

[14].               Australia New Zealand Closer Economic Relations Trade Agreement, opened for signature 28 March 1983, ATS[1983] No. 2 (entered into force 1 January 1983); and Trans-Tasman Mutual Recognition Act 1997.

[15].               Dr G Wilkenfeld & Associates, National regulation of energy labelling & minimum energy performance standards, February 2010, viewed 26 June 2012, http://web.archive.org/web/20100923115753/http:/energyrating.gov.au/pubs/2010-labelling-meps-wilkenfeld.pdf

[16].               C Evans, Securing a sustainable energy supply for Australia’s future, Australian Labor Party policy document, Election 2007, viewed 26 June 2012, http://parlinfo.aph.gov.au/parlInfo/download/library/partypol/RM0P6/upload_binary/rm0p62.pdf

[17].               Council of Australian Governments (COAG), National strategy on energy efficiency, COAG, Canberra, July 2009, p. 18, viewed 26 June 2012, http://www.coag.gov.au/sites/default/files/National_strategy_energy_efficiency.pdf

[18].               Department of the Environment, Water, Heritage and the Arts (DEWHA), Discussion paper on proposed national legislation for Minimum Energy Performance Standards (MEPS) and Energy Labelling, GEMS Legislation Taskforce, Attorney-General’s Department, Canberra, August 2009, viewed 26 June 2012, http://www.energyrating.gov.au/wp-content/uploads/Energy_Rating_Documents/Library/General/National_Legislation/200908-meps-labelling-discussion.pdf

[19].               DCCEE, National legislation for MEPS and energy labelling: Draft Greenhouse and Energy Minimum Standards (GEMS) Bill: industry consultation paper, August 2011, Attorney-General’s Department, Canberra, 2011, viewed 27 June 2012, http://www.climatechange.gov.au/government/submissions/~/media/submissions/gems/industry-exposure-draft-of-bill-consultation-paper-pdf.pdf

[20].               DEWHA, Consultation regulation impact statement: national legislation for appliance and equipment: Minimum Energy Performance Standards (MEPS) and energy labelling: January 2010, report 2010/01, report prepared by G Wilkenfeld and Associates with Winton Sustainable Research Strategies, Sydney, January 2010, viewed 27 June 2012, http://www.energyrating.gov.au/wp-content/uploads/2011/04/201001-consultation-ris-national-MEPS-labelling.pdf and DEWHA, GEMS Legislation Team, Expanded national legislation for appliance energy efficiency: now open for legislation, viewed 27 June 2012, http://web.archive.org/web/20100130112804/http:/www.energyrating.gov.au/library/details201001-ris-national-MEPS-labelling.html

[21].               DCCEE, Supplementary discussion paper on compliance obligations and enforcement measures for the proposed national legislation for Minimum Energy Performance Standards (MEPS) and energy labelling: July 2010, Report 2010/05, Attorney-General’s Department, Canberra, 2010, viewed 27 June 2012, http://www.energyrating.gov.au/wp-content/uploads/2011/02/201005-meps-supplementary-paper-compliance.pdf

[22].               DCCEE, National legislation for MEPS and energy labelling, op. cit.

[23].               DCCEE, Responses to issues raised in August 2011 consultation on the Draft Greenhouse and Energy Minimum Standards (GEMS) Bill, viewed 27 June 2012, http://climatechange.gov.au/government/submissions/closed-consultations/~/media/government/submissions/GEMS-responses-to-major-consultation-issues-pdf.pdf

[24].               DCCEE, National legislation for MEPS and energy labelling: Draft Greenhouse and Energy Minimum Standards (GEMS) Bill, op. cit.

[25].               Australian Government, Budget measures: budget paper no. 2: 2012-2013, Commonwealth of Australia, Canberra, 2012, 27 June 2012, http://www.budget.gov.au/2012-13/content/bp2/download/bp2_consolidated.pdf

[26].               DEWHA, Consultation regulation impact statement, op. cit., p. 5

[27].               DCCEE, National legislation for MEPS and energy labelling: draft Greenhouse and Energy Minimum Standards (GEMS) Bill: industry consultation paper, op. cit.

[28].               Explanatory Memorandum, Greenhouse and Energy Minimum Standards Bill 2012, p. 17.

[29].               DCCEE, Responses to issues raised in August 2011 consultation on the draft Greenhouse and Energy Minimum Standards (GEMS) Bill, op. cit.

[30].               House of Representatives Selection Committee, Report, House of Representatives, Canberra, 31 May 2012, viewed 13 July 2012, http://parlinfo.aph.gov.au/parlInfo/genpdf/chamber/hansardr/10837263-363d-4f9e-9020-2bdf266fb589/0177/hansard_frag.pdf

[31].               Senate Selection of Bills Committee, Report, Senate, Canberra, 21 June 2012, viewed 13 July 2012, http://parlinfo.aph.gov.au/parlInfo/genpdf/chamber/hansards/27335b46-4cb2-4de8-a0f4-e310b6fbbc72/0029/hansard_frag.pdf

[32].               A Burke, ‘Speech: Selection Committee Report no. 55’, House of Representatives, Committees, 31 May 2012, viewed 27 June 2012: http://parlinfo.aph.gov.au/parlInfo/genpdf/chamber/hansardr/10837263-363d-4f9e-9020-2bdf266fb589/0177/hansard_frag.pdf

[33].               T Zappia, Chair of the House of Representatives Standing Committee on Climate Change, Environment and the Arts letter to the Senate Environment and Communications Committee, ‘Greenhouse and Energy Minimum Standards Bill 2012, Greenhouse and Energy Minimum Standards (Registration Fees) Bill 2012’, viewed 9 July 2012, http://www.aph.gov.au/Parliamentary_Business/Committees/House_of_Representatives_Committees?url=ccea/gaems/index.htm

[34].               Senate Standing Committee for the Scrutiny of Bills, Alert Digest, no. 6 of 2012, 20 June 2012, viewed 2 July 2012, http://www.aph.gov.au/Parliamentary_Business/Committees/Senate_Committees?url=scrutiny/alerts/2012/index.htm

[35].               ‘The role of Senate Scrutiny of Bills Committee is to examine and assess proposed primary legislation against a set of specific accountability standards. These minimum administrative law standards are set out in the Committee’s terms of reference (standing order 24). The Committee is required to report, in respect of the clauses of bills introduced into the Senate and, in respect of Acts of the Parliament, whether such bills or Acts, by express words or otherwise:
(i) trespass unduly on personal rights or liberties;
(ii) make rights, liberties or obligations unduly dependent upon insufficiently defined administrative powers;
(iii) make rights, liberties or obligations unduly dependent upon non-reviewable decisions;
(iv )inappropriately delegate legislative powers; or
(v) insufficiently subject the exercise of legislative power to parliamentary scrutiny.’
Source: Senate Standing Committee for the Scrutiny of Bills, Inquiry into the future direction and role of the Scrutiny of Bills Committee: final report, 10 May 2012, pp. 5-6, http://www.aph.gov.au/Parliamentary_Business/Committees/Senate_Committees?url=scrutiny/future_direction_2011/report/index.htm

[36].               Australian Industry Group (AIG), Submission to Department of Climate Change and Energy Efficiency, Draft Greenhouse and Energy Minimum Standards Bill 2011, 22 August 2011, viewed 27 June 2012, http://climatechange.gov.au/government/submissions/closed-consultations/~/media/government/submissions/GEMS-14-Ai-Group-20110822-PDF.pdf and Energy Networks Association, ibid., 18 August 2011, viewed 27 June 2012, http://climatechange.gov.au/government/submissions/closed-consultations/~/media/government/submissions/GEMS-05-Energy-Networks-Association-20110818-PDF.pdf

[37].               Explanatory Memorandum, op. cit., p. 2.

[38].               Australian Government, Budget measures: budget paper no. 2: 2012-2013, op. cit.

[39].               Senate Standing Committee for the Scrutiny of Bills, Alert Digest, no. 6 of 2012, op. cit., pp. 28-32.

[40].               A Burke, ‘Speech: Selection Committee Report no. 55’, House of Representatives, op. cit.

[41].               AIG, Submission to Department of Climate Change and Energy Efficiency, op. cit.

[42].               Fan Manufacturers Association – Australia and New Zealand (FMA-ANZ), Submission to Department of Climate Change and Energy Efficiency, Draft Greenhouse and Energy Minimum Standards Bill 2011, 29 August 2011, viewed 27 June 2012, http://climatechange.gov.au/government/submissions/closed-consultations/~/media/government/submissions/GEMS-20-Fan-Manufacturers-Assoc-ANZ-20110828-PDF.pdf and Gas Appliance Manufacturers Association of Australia (GAMAA), Submission to Department of Climate Change and Energy Efficiency, Draft Greenhouse and Energy Minimum Standards Bill 2011, 16 August 2011, viewed 27 June 2012, http://climatechange.gov.au/government/submissions/closed-consultations/~/media/government/submissions/GEMS-03-Gas-Appliance-Manufacturers-Association-of-Australia-20110816-PDF.pdf

[43].               AIG, op. cit.

[44].               Housing Industry Association (HIA), Submission to Department of Climate Change and Energy Efficiency, Draft Greenhouse and Energy Minimum Standards Bill 2011, 17 August 2011, viewed 27 June 2012, http://climatechange.gov.au/government/submissions/clos`ed-consultations/~/media/government/submissions/GEMS-11-Housing-Industry-Association-20110817-PDF.pdf

[45].               DCCEE, Responses to issues raised in August 2011, op. cit.

[46].               Consumer Electronics Suppliers Association, Submission to Department of Climate Change and Energy Efficiency, Draft Greenhouse and Energy Minimum Standards Bill 2011, viewed 27 June 2012,  http://climatechange.gov.au/government/submissions/closed-consultations/~/media/government/submissions/GEMS-17-Consumer-Electronics-Suppliers-Assocation-20110818-PDF.pdf

[47].               DCCEE, Responses to issues raised in August 2011, op. cit.

[48].               AIG, op. cit.

[49].               Ibid.

[50].               DCCEE, Responses to issues raised in August 2011, op. cit.

[51].               DEWHA, Consultation regulation impact statement, op. cit.

[52].               GWA Heating and Cooling, Submission to Department of Climate Change and Energy Efficiency, Draft Greenhouse and Energy Minimum Standards Bill 2011, 20 August 2011, viewed 27 June 2012, http://climatechange.gov.au/government/submissions/closed-consultations/~/media/government/submissions/GEMS-15-GWA-Heating-and-Cooling-20110820-PDF.pdf and Rheem Australia, Submission to Department of Climate Change and Energy Efficiency, Draft Greenhouse and Energy Minimum Standards Bill 2011, 18 August 2011, viewed 27 June 2012, http://climatechange.gov.au/government/submissions/closed-consultations/~/media/government/submissions/GEMS-07-Rheem-20110818-PDF.pdf

[53].               DCCEE, Responses to issues raised in August 2011, op. cit, and Australian Government, Budget measures: budget paper no. 2: 2012-2013, op. cit.

[54].               Glenco Manufacturing, Submission to Department of Climate Change and Energy Efficiency, Draft Greenhouse and Energy Minimum Standards Bill 2011, 16 August 2011, viewed 27 June 2012, http://climatechange.gov.au/government/submissions/closed-consultations/~/media/government/submissions/GEMS-02-Glenco-Manufacturing-20110816-PDF.pdf

[55].               GAMAA, Submission to Department of Climate Change and Energy Efficiency, Draft Greenhouse and Energy Minimum Standards Bill 2011, op. cit.

[56].               Lighting Council Australia (LCA), Submission to Department of Climate Change and Energy Efficiency, Draft Greenhouse and Energy Minimum Standards Bill 2011, August 2011, viewed 27 June 2012, http://www.climatechange.gov.au/government/submissions/closed-consultations/~/media/government/submissions/GEMS-09-Lighting-Council-Australia-20110818-PDF.pdf

[57].               AIG, op. cit.

[58].               LCA, op. cit., and FMA-ANZ, op. cit.

[59].               DCCEE, National legislation for MEPS and energy labelling, op. cit.

[60].               DCCEE, Responses to issues raised in August 2011, op. cit.

[61].               AREMA, Submission to Department of Climate Change and Energy Efficiency, Draft Greenhouse and Energy Minimum Standards Bill 2011, n.d., viewed 27June 2012, http://climatechange.gov.au/government/submissions/closed-consultations/~/media/government/submissions/GEMS-13-AREMA-20110818-PDF.pdf

[62].               DCCEE, Responses to issues raised in August 2011, op. cit., pp. 1–2.

[63].               DCCEE, Supplementary discussion paper on compliance obligations and enforcement measures for the proposed national legislation for Minimum Energy Performance Standards (MEPS) and energy labelling: July 2010, op. cit., p. 6.

[64].               Australian Information Industry Association, Submission to Department of Climate Change and Energy Efficiency, Draft Greenhouse and Energy Minimum Standards Bill 2011, 24 August 2011, viewed 27 June 2012, http://climatechange.gov.au/government/submissions/closed-consultations/~/media/government/submissions/GEMS-19-Australian-Information-Industry-Association-20110824-PDF.pdf

[65].               Ibid.

[66].               Senate Standing Committee for the Scrutiny of Bills, Alert Digest No. 6 of 2012: 20 June 2012, viewed 27 June 2012, http://www.aph.gov.au/Parliamentary_Business/Committees/Senate_Committees?url=scrutiny/alerts/2012/index.htm

[67].               AIG, op. cit.

[68].               Explanatory Memorandum, op. cit., p. 9

[69].               HIA, op. cit.

[70].               Australian Glass & Glazing Association, Submission to Department of Climate Change and Energy Efficiency, Draft Greenhouse and Energy Minimum Standards Bill 2011, 23 August 2011, viewed 27 June 2012, http://climatechange.gov.au/government/submissions/closed-consultations/~/media/government/submissions/GEMS-16-Australian-Glass-and-Glazing-Association-20110823-PDF.pdf and CSR, Submission to Department of Climate Change and Energy Efficiency, Draft Greenhouse and Energy Minimum Standards Bill 2011, 18 August 2011, viewed 27 June 2012, http://www.climatechange.gov.au/government/submissions/closed-consultations/~/media/government/submissions/GEMS-10-CSR-20110818-PDF.pdf and Green Building Council Australia (GBCA), Submission to Department of Climate Change and Energy Efficiency, Draft Greenhouse and Energy Minimum Standards Bill 2011, 25 August 2011, viewed 27 June 2012, http://climatechange.gov.au/government/submissions/closed-consultations/~/media/government/submissions/GEMS-18-Green-Building-Council-of-Australia-20110825-PDF.pdf

[71].               GBCA, op. cit.

[72].               Air Conditioning & Mechanical Contractors’ Association of Australia, Submission to Department of Climate Change and Energy Efficiency, Draft Greenhouse and Energy Minimum Standards Bill 2011, 18 August 2011, viewed 27 June 2012, http://climatechange.gov.au/government/submissions/closed-consultations/~/media/government/submissions/GEMS-08-AMCA-20110818-PDF.pdf

[73].               Explanatory Memorandum, op. cit.

[74].               Subsection 5(1) of the Legislative Instruments Act 2003 (Cth) (the Act) defines a legislative instrument as an instrument of a legislative character that is, or was, made under a delegation of power from Parliament. An instrument has a legislative character if it determines or alters the content of the law rather than applying the law in a particular case; and if it affects a privilege or interest, imposes an obligation, or creates, varies or removes a right (subsection 5(2) of the Act). Under section 42 of the Act, a disallowable legislative instrument may cease to have effect if either a Senator or Member of the House of Representatives moves a motion of disallowance within 15 sitting days of the date upon which the legislative instrument is tabled. The motion to disallow must be resolved or withdrawn within a further 15 days of the date upon which the notice of motion is given.
Source: Harris, IC, House of Representatives Practice, fifth edn, Chapter 10, http://www.aph.gov.au/About_Parliament/House_of_Representatives/Powers_practice_and_procedure/practice

[75].               GEMS level requirements (under clause 25 of the Bill) which must be specified in a GEMS determination (made under clause 23 of the Bill) may include requirements relating to ‘the amount of greenhouse gases resulting from products in that product class’ [emphasis added] (paragraph 25(a)(ii) of the Bill). This is further explained in paragraph 86 of the Explanatory Memorandum to the Bill which states that: ‘GEMS level requirements may establish mandatory minimum standards relating to the amount of energy used by a product, or to the amount of greenhouse gas emissions a product produces while it operates [emphasis added]……For example ….’. Promoting the development and adoption of products that produce fewer greenhouse gases or contribute to reducing the amount of greenhouse gases produced by other products are clearly set out as objects of the Act under clause 4 of the Bill.

[76].               The requirement that GEMS products comply with the relevant GEMS determination does not apply to (i) second‑hand products, (ii) products exempted by the GEMS Regulator under clause 37, and (iii) products imported before the GEMS determination took effect.

[77].               Explanatory Memorandum, op. cit., p. 20, paragraph 45. For an offence of strict liability created under a law there are no fault elements for any physical elements of the offence and the defence of mistake of fact is available.  See sections 6.1 and 9.2  of the Criminal Code Act 1995 (Cth) at http://www.comlaw.gov.au/Details/C2012C00547/Html/Text#_Toc325033902

[78].               A penalty unit is currently $110 - see section 4AA of the Crimes Act 1914 (Cth) http://www.comlaw.gov.au/Details/C2012C00416. This amount is indexed from time to time for inflation.

[79].               Under subsection 130(5) of the Bill a civil penalty order made by a court can impose a pecuniary penalty on a body corporate that is up to five times the penalty specified. This accords with the position relating to criminal penalties, where a court can (unless the contrary intention appears) impose a pecuniary penalty on a body corporate convicted of a commonwealth offence that is five times the penalty that can be imposed on an individual (subsection 4B(3) of the Crimes Act).

[80].               The effect of clauses 143 and 144 is that in proceedings for civil penalty orders, it is not necessary to prove the person’s knowledge, intention, recklessness or negligence – it is enough that the event took place. However, the ‘mistake of fact defence’ is open to those who mistakenly but reasonably believe certain facts to exist which, if true, would have shielded them from liability.

[81].               A criminal offence must be proved ‘beyond reasonable’ doubt and results in a criminal record, whereas contravention of a civil penalty provision is proved on the ‘balance of probabilities’ and does not result in a criminal conviction.

[82].               Explanatory Memorandum, op. cit., p. 22, paragraph 56.

[83].               Senate Standing Committee for the Scrutiny of Bills, Alert Digest No. 6 of 2012, op. cit., p. 29.

[84].               Senate Standing Committee for the Scrutiny of Bills, Alert Digest, no. 6 of 2012, op. cit., p. 30.

[85].               Senate Standing Committee for the Scrutiny of Bills, Alert Digest, no. 6 of 2012: 20 June 2012, viewed 2 July 2012, http://www.aph.gov.au/Parliamentary_Business/Committees/Senate_Committees?url=scrutiny/alerts/2012/index.htm

[86].               The Explanatory Memorandum to the Bill (at page 45) states that the drafting of these clauses has been informed by Part 10 of Drafting Direction 31 by the Office of Parliamentary Counsel and is intended to ensure that any duties conferred on the GEMS Regulator do not exceed each jurisdiction’s legislative powers and accord with constitutional restrictions.

[87].               The Greenhouse and Energy Minimum Standards (Registration Fees) Bill 2012 enables the Regulator to charge fees for the registration of certain applications made under this Bill. This is distinguished from the ability of the Regulator to charge fees for services related to the performance of its functions under clause 77 of this Bill which must not amount to taxation.

[88].               Explanatory Memorandum, op. cit., p. 47, paragraph 218.

[89].               Explanatory Memorandum, op. cit., pp. 46-47.

[90].               A penalty unit is currently $110 - see section 4AA of the Crimes Act 1914 (Cth) http://www.comlaw.gov.au/Details/C2012C00416. This amount is indexed from time to time for inflation.

[91].               Ibid.

[92].               ‘The common law privilege against self-incrimination will protect a natural person complying with a notice to disclose information or documents under a notice to produce or attend, unless the privilege is expressly or impliedly overridden’ by legislation. ‘The privilege is relevant for regulatory schemes because it entitles a person to refuse to answer a question put to him or her by an authorised officer under a regulatory scheme on the basis that he or she may incriminate him or herself: Pyneboard Pty Ltd v Trade Practices Commission (1983) 152 CLR 328.’
Legislation should clearly specify if the privilege is to be overridden and if it is removed then at a minimum a ‘use’ immunity provision should be included as some form of protection.
If a person claims a ‘use’ immunity, no information or evidence given by them can be directly used against them.
Source: Commonwealth of Australia, ‘A guide to framing Commonwealth offences, Infringement Notices and Enforcement Powers’, September 2011 edition, p.23

[93].               Explanatory Memorandum, op. cit., p. 58, paragraph 288.

[94].               Explanatory Memorandum, op. cit., p. 57, paragraph 279. However it would appear that this paragraph of the Explanatory Memorandum incorrectly refers to clause 108 rather than clause 118.

[95].               Senate Standing Committee for the Scrutiny of Bills, Alert Digest, no. 6 of 2012, op. cit., p. 32. It is also noted that the ability to ‘publicly name’ is available to other agencies with investigation and enforcement powers. For example the Australian Sports Anti-Doping Authority may enter the name of an athlete who commits an anti-doping rule violation on the public register of findings under the Australian Sports Anti-Doping Authority Act 2006 (Cth), http://www.comlaw.gov.au/Details/C2006A00006/Download

[96].               Ibid., p. 31. For example, the original decision to suspend or cancel a registration (clauses 49 and 54 of the Bill) do not expressly require procedural fairness before the decision to suspend or cancel is made. The processes for internal and external review occur after the decision is made.

[97].               Explanatory Memorandum, op. cit., p. 9. For example, the criminal offence, civil penalty and enforcement provisions of the Bill engage these rights.

[98].               Explanatory Memorandum, op. cit., p. 10.

[99].               Senate Scrutiny of Bills Committee, Alert Digest No. 6 of 2012, op. cit.