Introductory Info
Date introduced: 2 December 2021
House: House of Representatives
Portfolio: Environment
Commencement: See details under the subheading ‘Commencement details’ in this Digest.
The Bills Digest at a glance
Background
- Australia
is a party to the Montreal
Protocol on Substances that Deplete the Ozone Layer (the Montreal
Protocol), which was signed in 1987 and entered into force in 1989. The
‘ozone layer’ provides important protection for life on earth by absorbing
ultraviolet radiation (UV-B) from the sun. The Montreal Protocol aims to
protect the ozone layer by reducing the production and consumption of ozone
depleting substances such as chlorofluorocarbons (CFCs) and
hydrochlorofluorocarbons (HCFCs).
- In
2014, the Government announced a review of the federal Ozone Protection and
Synthetic Greenhouse Gas Management Program (OPSGG Program) which controls the
manufacture, import, export and uses of ozone depleting substances in
Australia.
- In
2017, amendments to the Ozone Protection
and Synthetic Greenhouse Gas Management Act 1989 (OPSGG Act)
implemented Australia’s international commitment to phase-down the import,
export and production of HFCs from 1 January 2018 under the 2016 amendment to
the Montreal Protocol (the Kigali
Amendment), and added two new synthetic greenhouse gas gases (nitrogen
trifluoride and PFC-9-1-18) to the OPSGG Program. The amendments also made
changes to licensing and reporting requirements.
Purpose of
the Bills
- The
Main Bill implements the second tranche of proposed measures stemming from the
2014 review of the OPSGG Program.
- The
Main Bill amends the OPSGG Act to allow the Minister to suspend a
person’s licence, clarify the licence and exemption requirements, increase the
time allowed for submitting reports and paying levies, and reform the existing
compliance and enforcement provisions by triggering the standard provisions of
the Regulatory
Powers (Standard Provisions) Act 2014.
- The
Import Levy Amendment Bill and Manufacture Levy Amendment Bill (Levy Amendment
Bills) make minor amendments to the Ozone Protection
and Synthetic Greenhouse Gas (Import Levy) Act 1995 and Ozone Protection
and Synthetic Greenhouse Gas (Manufacture Levy) Act 1995 to allow the
administration of the OPSGG Program to be cost recovered.
- The
Levy Amendment Bills make amendments to the respective Acts to remove the caps
on the rate at which levies can be set and allow the rate to be prescribed in
the Regulations and remove the existing levy on the import of ozone depleting
substance equipment.
List of
abbreviations
Purpose of
the Bill
The purpose of the Ozone Protection and Synthetic
Greenhouse Gas Management (Miscellaneous Measures) Amendment Bill 2021 (the
Main Bill) is to amend the Ozone Protection
and Synthetic Greenhouse Gas Management Act 1989 (OPSGG Act) to:
- update
the OPSGG Act’s objectives to include a reference to the Paris
Agreement[1]
- introduce
a new licence for the import and manufacture of scheduled substances for use as
a feedstock
- introduce
new mandatory licence conditions for specific licences
- consolidate
and expand the existing matters the Minister must consider in determining
whether a person (including a body corporate) is a fit and proper person when
making a decision to grant, renew, transfer, suspend or cancel a licence
- allow
the Minister to suspend a person’s licence in certain circumstances
- increase
the time allowed for industry to submit reports to the Minister and to pay levies
- reform
the existing compliance and enforcement provisions, including adopting the
standard provisions of the Regulatory Powers
(Standard Provisions) Act 2014 (the Regulatory Powers Act)
with minor modifications and introduce new information-gathering powers
- modernise
the existing offence and penalty provisions
- introduce
an internal review mechanism for reviewable decisions and
- allow
and regulate the use or disclosure of information in certain circumstances.[2]
The Ozone Protection and Synthetic Greenhouse Gas (Import
Levy) Amendment Bill 2021 (the Import Levy Amendment Bill) and Ozone Protection
and Synthetic Greenhouse Gas (Manufacture Levy) Amendment Bill 2021 (the Manufacture
Levy Amendment Bill) make minor amendments to the Ozone Protection
and Synthetic Greenhouse Gas (Import Levy) Act 1995 and Ozone Protection
and Synthetic Greenhouse Gas (Manufacture Levy) Act 1995 respectively
to allow the administration of the Ozone
Protection and Synthetic Greenhouse Gas Program (OPSGG Program) to be cost
recovered as appropriate.
The Levy Bills make amendments to the respective Acts to:
- remove
the caps on the rate that levies can be set
- remove
the existing levy on the import of ozone depleting substance equipment and
- make
other minor and machinery changes to improve the operation of the Acts and to
modernise and update the drafting style.[3]
Structure of
the Bill
The Main Bill is comprised of one Schedule with two Parts:
- Part
1 contains the main amendments to the OPSGG Act:
- Item
1 amends the objectives of the Act to insert a reference to Australia’s
obligations under the Paris
Agreement
- Items
2 to 49 insert clarifying provisions relating to the application of the Criminal Code Act
1995 and the Regulatory
Powers (Standard Provisions) Act 2014, as well as ‘simplified outline’
and interpretation provisions, and add, repeal or amend definitions used in the
Act
- Items
50 to 51 repeal an existing exemption relating to the import and
manufacture of feedstocks and update the existing provisions relating to ship
stores
- Items
52 to 54 and 111 amend the existing prohibitions on dealing with
scheduled substances and the discharge of scheduled substances
- Items
55 to 83 amend the mandatory licence conditions and make minor clarifying
amendments to the licence application and renewal processes
- Items
84 to 95 allow the Minister to suspend a licence, with a number of other
items clarifying the application of existing provisions relating to a licence that
has been suspended
- Items
112 to 119 make minor amendments to reporting requirements
- Items
120 to 145 adopt the standard provisions of the Regulatory Powers Act,
with some modifications, and provide for information sharing and internal
review of decisions
- Items
157 to 163 repeal and replace Parts I to XII of Schedule 1, specifying scheduled
substances and their ozone depleting potential, and repeal Schedule
4
- Part
2 (Items 164 to 186) deals with the application of the proposed
amendments and transitional provisions.
The Import Levy Amendment Bill contains one Schedule which
amends the Import Levy Act to remove the cap on levies and allow the prescribed
rate of levies to be set, or worked out in accordance with a method
prescribed, in the Regulations.
The Manufacture Levy Amendment Bill contains one Schedule which
makes minor amendments to the Manufacture Levy Act to remove the cap on
levies and allow the prescribed rate of levies to be set, or
worked out in accordance with a method prescribed, in the Regulations.
Commencement
details
Sections 1 to 3 of the Main Bill commence on Royal Assent,
while Schedule 1 commences on proclamation or six months after Royal Assent,
whichever is earlier.
Sections 1 to 3 of the Import Levy Amendment Bill commence
on Royal Assent. Schedule 1 commences at the same time as Schedule 1 of the
Main Bill, however the provisions do not commence at all if that Schedule does
not commence.
Sections 1 to 3 of the Manufacture Levy Amendment Bill
commence on Royal Assent. Schedule 1 commences at the same time as Schedule 1
of the Main Bill, however the provisions do not commence at all if that Schedule
does not commence.
Background
The ozone layer is a gaseous layer of naturally occurring
ozone (O3) molecules in the earth’s upper atmosphere (the
stratosphere), 15 to 35 kilometres above the earth’s surface.[4]
This ‘ozone layer’ absorbs ultraviolet radiation, known as UV-B, from the sun,
thereby protecting life on earth. UV-B is linked to skin cancer, genetic
damage, and immune system suppression in living organisms, as well as reduced
productivity in agricultural crops and the food chain.[5]
In 1974, it was discovered that some human-produced
chemicals could lead to the depletion of the ozone layer.[6]
These ozone depleting substances (ODSs)
include chlorofluorocarbons (CFCs), halons, carbon tetrachloride (CCl4),
methyl chloroform (CH3CCl3), hydrobromofluorocarbons
(HBFCs), hydrochlorofluorocarbons (HCFCs), methyl bromide (CH3Br),
and bromochloromethane (CH2BrCl).[7]
These substances are (or were) used in refrigerators, air conditioners, fire
extinguishers, foam, as aerosol propellants, agricultural fumigants, and as
solvents for cleaning electronic equipment.[8]
The Department of Agriculture, Water and the Environment (the
Department) notes that the ozone layer becomes depleted in two ways:
Firstly, the ozone layer in the mid-latitude (e.g. over
Australia) is thinned, leading to more UV radiation reaching the earth. Data
collected in the upper atmosphere have shown that there has been a general
thinning of the ozone layer over most of the globe. This includes a five to
nine per cent depletion over Australia since the 1960s, which has increased the
risk that Australians already face from over-exposure to UV radiation resulting
from our outdoor lifestyle. Secondly, the ozone layer over the Antarctic, and
to a lesser extent the Arctic, is dramatically thinned in spring, leading to an
'ozone hole'.[9]
It was later discovered that synthetic greenhouse gases (SGGs),
introduced as replacements for ODSs because they do not damage the ozone layer,
had significant global warming potential (GWP). GWP is a measure of how much heat
a greenhouse gas traps in the atmosphere over a specific time compared to a
similar mass of carbon dioxide (CO2).[10]
For example, compared to carbon dioxide, which is used as the base figure with
a GWP of 1, the most commonly used SGG in Australia, HFC-134a, has a GWP of
1,430.[11]
The GWP of other SGGs is even higher: the GWP of perfluorocarbons (PFCs) is
between 6,500–9,200, while the GWP of sulfur hexafluoride (SF6) is
22,800.[12]
International
commitments
The Montreal
Protocol on Substances that Deplete the Ozone Layer (the Montreal
Protocol) was designed to reduce the production and consumption of ODSs,
thereby protecting the Earth’s ozone layer. The Montreal Protocol was signed
in 1987 and entered into force in 1989.[13]
The Montreal Protocol sets binding progressive
phase-out obligations for developed and developing countries for all major ODSs,
including CFCs, halons and HCFCs. The Montreal Protocol has been amended
six times to bring forward phase-out schedules and add new ozone depleting
substances to the list of controlled substances.[14]
The most recent of these, the Kigali
Amendment (which entered into force on 1 January 2019),[15]
seeks to implement a global phase down of 80 per cent of HFCs by
2047.[16]
The Montreal Protocol is generally regarded as ‘one
of the most successful and effective environmental treaties’.[17]
Scientists predict that if the international community continues to meet its obligations
under the Montreal Protocol, the ozone hole would close over the mid-latitudes
(which includes Australia) by 2050 and over the Antarctic by 2065.[18]
In 2016, scientists reported the first signs of healing in the ozone hole over the
Antarctic.[19]
The ozone hole is recovering due to the Montreal Protocol and
subsequent amendments banning the release of harmful ozone-depleting chemicals
called chlorofluorocarbons or CFCs. If atmospheric chorine levels from CFCs
were as high today as they were in the early 2000s, this year’s ozone hole
would likely have been larger by about 1.5 million square miles (about 4
million square kilometers) under the same weather conditions.[20]
Australia’s
regulatory regime
The OPSGG Act and related Acts[21]
implement Australia’s obligations under the Montreal Protocol. The
Department administers the OPSGG Program which controls the manufacture,
import, export and major end-uses of ODSs in Australia.
The specific ODSs currently controlled under the OPSGG
Act are CFCs, HBFCs, HCFCs, halons (1211, 1301 and 2402), carbon
tetrachloride, methyl chloroform, methyl bromide, and bromochloromethane.[22]
However, the OPSGG Act also regulates SGGs. The
SGGs that are controlled under the OPSGG Act are HFCs, perfluorocarbons
(PFCs), sulfur hexafluoride and nitrogen trifluoride (NF3).[23]
SGGs account for around two per cent of Australia’s greenhouse gas emissions.[24]
This aspect of the regime also implements Australia’s obligations under the United
Nations Framework Convention on Climate Change (UNFCCC)[25]
and corresponding Kyoto
Protocol.[26]
The greenhouse gases covered by the Kyoto Protocol are carbon dioxide,
methane (CH4), nitrous oxide (N2O), HFCs, PFCs and sulfur
hexafluoride.[27]
The Doha
Amendment to the Kyoto Protocol, agreed in 2012, amended this list
to add nitrogen trifluoride (NF3).[28]
Australia ratified the Doha Amendment in 2016.[29]
Together, ODSs and SGGs are referred to as ‘controlled
substances’ under the OPSGG Program. The import, export and manufacture of
controlled substances, and the import and manufacture of certain products or
equipment containing (or designed to contain) some of these substances, is
prohibited in Australia unless the correct licence or exemption is held.[30]
There are four types of import/export licences under the OPSGG Act:[31]
- Equipment licences: allow for the import of equipment that contains SGGs
and certain air conditioning and refrigeration equipment that contain a HFC or
HCFC.[32]
- Controlled substances licences: allow for the import, export and
manufacture of bulk SGGs, HCFCs and methyl bromide.[33]
- Essential uses licences: allow for the import, export and manufacture of
CFCS, halons, methyl chloroform, carbon tetrachloride, and BCMs. These are only
available for uses which meet a strictly limited range of essential use
criteria approved by the parties to the Montreal Protocol, including
laboratory and analytical uses.[34]
- Used substances licences: allow for the import and export of used or
recycled CFCs, halons, carbon tetrachloride, methyl chloroform, methyl bromide,
HCFCs, HBFCs, bromochloromethane, HFCs, PFCs, sulfur hexafluoride and nitrogen
trifluoride.[35]
There are some limited exemptions under the OPSGG Act,
including for low volume importers of equipment, import of personal equipment,
and medical or veterinary products.[36]
Licence holders are required to pay levies and to provide
a report to the Department every six months detailing the type and amount of
ODSs and SGGs manufactured, imported and/or exported, including in equipment.[37]
An annual report on the operation of the OPSGG Act
is required to be prepared by the Minister and is included in the Department’s annual reports.[38]
As at 30 June 2021, there were 686 import licences.[39]
The Department’s 2020-21
Annual Report did not report separately on the amount of levies and
fees received under the OPSGG Act, as had been done in previous years. The
2019-20
Annual Report indicates that no levies or licence fees were collected
by the Department in 2019-20,[40]
while the 2018-19
Annual Report indicates that $1.314 million in levies and $0.58 million
in licence fees were collected in 2018-19.[41]
Review of
the Ozone Protection and Synthetic Greenhouse Gas Management Program
On 23 May 2014, the then Minister for the Environment,
Greg Hunt, announced ‘a comprehensive review of Ozone Protection and Synthetic
Greenhouse Gas legislation’.[42]
The review had two objectives, being to identify
opportunities to:
- reduce
emissions of ODSs and SGGs in line with international efforts and
- improve
and streamline the operation of the program, including reducing regulatory
compliance costs.[43]
On 7 October 2015, Minister Hunt released an Options
Paper, following an initial round of public consultation.[44]
Fifty-seven
submissions were received.[45]
A final review report does not appear to have been publicly released. However,
a Government
Statement was issued on 5 May 2016, along with a list of Measures
to achieve Emissions Reduction and Efficiency and Effectiveness gains in the
Ozone Protection and Synthetic Greenhouse Gas Management Programme.[46]
Some of the key regulatory measures on this list included:
- an
85 per cent phase-down of HFC imports, commencing on 1 January 2018, with the
85 per cent phase-down being reached on 31 December 2036
- provision
for bans on the import and manufacture of specified equipment containing
specified high global warming potential HFCs and
- compliance
powers being strengthened.[47]
Key ‘streamlining and effectiveness’ measures proposed by
the review to ‘reduce the burden on business’ included:
- increase
the low volume import exemption for HFC equipment from 10 to 25 kilograms
- extend
the maximum duration of end use licences and permits from two to three years
- introduce
licence renewals
- reduce
reporting requirements from quarterly to twice yearly (while retaining
flexibility for more frequent reporting if licence holders prefer to do so) and
- waiver
of small levy debts up to $330.[48]
Several of these measures were implemented in 2017,
following amendments
to the OPGGS Act, Import Levy Act and Manufacture Levy Act.
For more information, see the Parliamentary Library’s Bills
Digest which considered those amendments.[49]
According to the Assistant Minister’s second reading speech
for the Main Bill, the ‘bill introduces most of the remaining measures
announced following the review of the program’.[50]
Committee
consideration
Selection of
Bills Committee
At its meeting on 1 December 2021, the Selection of Bills
Committee deferred consideration of the Bills until its next meeting.[51]
Senate
Standing Committee for the Scrutiny of Bills
The Senate Standing Committee for the Scrutiny of Bills made
comments in relation to several provisions in the Main Bill and requested
further advice from the Minister on a number of issues.[52]
The Committee had no comment in relation to the Levy Amendment Bills.[53]
At the time of writing this Digest, the Minister was yet to respond. The
Committee’s comments are discussed further in relation to the relevant
provisions in the ‘Key issues and provisions’ section of the Digest.
Policy
position of non-government parties/independents
At the time of writing, non-government parties and
independents do not appear to have commented directly on these Bills.
Position of
major interest groups
Major interest groups do not appear to have commented directly
on these Bills.
Numerous stakeholders, including peak industry bodies such
as the Air-Conditioning & Refrigeration Equipment Manufacturers Association
of Australia (AREMA), Australian Refrigeration Mechanics Association, Fire
Protection Association of Australia and the National Fire Industry Association,
commented on the Options Paper released in October 2015 during the review of
the OPSGG Program.[54]
Many of their concerns and comments related to the then-proposed phase down of
HFCs and end use licences, and were addressed by the Government in the 2017
amendments to the OPGGS Act.
For more information on the 2017 amendments, see the Bills
Digest.
Financial
implications
According to the Explanatory Memorandum to the Main Bill,
the Main Bill ‘will have no financial impact on the Australian Government
Budget’.[55]
According to the Explanatory Memorandum to the Levy Amendment
Bills, there will ‘be no immediate financial impact from the proposed
amendments’, although the Department intends to review the OPGGS Program cost
recovery model following amendment of the legislation.[56]
The Assistant Minister noted in his second reading speech
for the Levy Amendment Bills that the capped levy rate had been in place since
2003 and no longer reflected the current cost of administering the OPSGG
Program.[57]
The Government has stated that ‘any change to the levy rate made through Regulations
would take place after the review of cost recovery arrangements and would be
consistent with the Australian Government Charging Framework’.[58]
Statement of Compatibility with Human Rights
As required under Part 3 of the Human Rights
(Parliamentary Scrutiny) Act 2011 (Cth), the Government has assessed the
Bills’ compatibility with the human rights and freedoms recognised or declared
in the international instruments listed in section 3 of that Act.
The Statement of Compatibility prepared for the Main Bill
states that the Bill engages the following human rights:
The Government considers that the Main Bill is compatible
because it promotes the right to health and to the extent to which it may limit
the other human rights set out above, those limitations are reasonable,
necessary and proportionate to achieving the legitimate aims of the Bill.[61]
The Government considers that the Import Levy Amendment
Bill and the Manufacture Levy Amendment Bill are compatible because they do not
raise any human rights issues.[62]
Parliamentary
Joint Committee on Human Rights
The Parliamentary Joint Committee on Human Rights
considered the Bills and had no comment.[63]
Key issues
and provisions
Main Bill
Updated
objectives of the Act
Section 3 of the OPSGG Act sets out the objectives
of the Act. Paragraph 3(d) states that the OPSGG Act provides controls
on the manufacture, import, export and use of SGGs for the purpose of giving
effect to Australia’s obligations under the UNFCCC and the Kyoto
Protocol. Item 1 of the Main Bill proposes to amend paragraph 3(d)
to recognise that Australia also has obligations to reduce greenhouse gas
emissions under the Paris
Agreement.[64]
The Paris Agreement is a legal instrument adopted
by the Conference of Parties to the UNFCCC and aims to ‘strengthen the global
response to the threat of climate change’.[65]
Its stated goal, in Article 2 of the Agreement, is to limit the increase in the
global average temperature to ‘well below 2 °C’ above pre‑industrial
levels.[66]
Removal of exemption and new feedstock licence
Section 12A of the OPSGG Act has the effect that
the import or manufacture of a scheduled substance used exclusively for feedstock
is not regulated by the OPSGG Act, other than for reporting and
record-keeping purposes.[67]
A feedstock is an intermediate substance used to manufacture
other chemicals;[68]
it is generally entirely consumed or transformed in the manufacturing of the
new substance and is not emitted to the atmosphere.[69]
The Explanatory Memorandum notes that there is ‘sometimes
a factual issue as to whether the intended use of the scheduled substances is
indeed feedstock use … and there is a need for assurance that the new chemical
being manufactured is not itself a scheduled substance’.[70]
The Explanatory Memorandum states that ‘it is now
considered appropriate that this exemption be removed’, and that this ‘would
assist Australia to accurately meet the reporting requirements in Article 7 of
the Montreal Protocol, and in responsibly managing scheduled substances
so as to minimise emissions and impact on the atmosphere’.[71]
Item 50 repeals existing section 12A. Item 53
inserts proposed subsection 13A(5) which introduces a new licence for
the import and manufacture of scheduled substances for use as a feedstock.
The Explanatory Memorandum notes that it is not
anticipated that there would be an application fee for a feedstock licence,
quota requirements would not apply (for HFCs and HCFCs), and the import and
manufacture of feedstock would not be subject to a levy.[72]
Mandatory
and additional licence conditions
Section 18 of the OPSGG Act deals with the
conditions imposed on licences granted under section 16 of the Act by the
Minister. A table in subsection 18(1) contains mandatory licence conditions
that apply to different types of licences, while subsection 18(4) allows the
Minister to impose additional licence conditions on a case-by-case basis. Subsection
18(6) sets out examples of the kinds of conditions that the Minister may impose
under subsection 18(4).
Items 64 and 67 amend the table in subsection 18(1),
adding new mandatory licence conditions for:
- a
controlled substances licence that allows a licensee to manufacture, export or
import methyl bromide (Item 1A of the table)
- a
licence (other than an equipment licence) that allows the licensee to import a
scheduled substance (Item 7 of the table) and
- a licensee whose licence has been suspended (Item 8
of the table).
Item 68 amends subsection 18(6) to add proposed
paragraph 18(6)(ca) to provide, as an example, that the Minister can impose
a condition on licences requiring the licensee to enter into an arrangement for
the recovery, recycling or destruction of scheduled substances with a person
approved by the Minister.
Fit and
proper person test
The OPSGG Act contains provisions requiring the
Minister to be satisfied that a person (including a body corporate) is a fit
and proper person before making certain decisions, such as the grant[73]
or transfer of a licence.[74]
The Minister may also cancel a licence if satisfied that a person (including a
body corporate) is no longer a fit and proper person.[75]
Item 54 of the Main Bill inserts proposed
section 13B which sets out the matters the Minister must consider in
determining whether a person (including a body corporate) is a fit and proper
person when making a decision whether to grant, transfer, suspend or cancel a
licence. While proposed section 13B largely consolidates the existing
matters that must be considered as currently set out in subsections 16(5) and
20(2), it adds ‘a person’s history in relation to environmental matters’[76]
and extends the considerations to each executive officer of the body corporate.[77]
Proposed section 13B does not limit the matters the Minister may take into
account when choosing to grant, transfer, suspend or cancel a licence.[78]
Licence
suspension
Item 84 of the Main Bill inserts proposed
section 19D which would allow the Minister to suspend a licence ‘in the
event of minor breaches, or where it is felt that the licensee may be able to
return to compliance’.[79]
Proposed subsection 19D(1) sets out the circumstances in which the
Minister can suspend a licence:
- if the licensee is no longer a fit and proper person
- if the licensee has breached a condition of the
licence or
- if the licensee is uncontactable.
Proposed subsection 19D(4) clarifies that although
a licensee is not able to undertake an activity that the licence would allow
while the licence is suspended, the licence remains in force, thus ensuring
that the licensee is required to comply with other obligations under the OPSGG
Act.
The Main Bill proposes to make a number of consequential
amendments to the OPSGG Act in relation to the new power of the Minister
to suspend a licence. These include amendments to subsections 20(1) and
21(1) (Items 85 and 88) which ensure that references to a
licence include a reference to a suspended licence, thereby allowing
cancellation or surrender of a suspended licence.[80]
Proposed amendments to the Import Levy Act and Manufacture
Levy Act similarly provide for the continuing liability of a holder of a
licence that has been suspended, such that the holder of a suspended licence
still has to pay the levy in respect of any imports or manufacturing occurring
before or during that suspension.[81]
Consolidation
of prohibition provisions
Section 13 of the OPSGG Act currently prohibits the
manufacture, import and export of HCFCs, methyl bromide, HBFCs, and other ODSs
and SGGs, as well as equipment containing ODSs and SGGs. Item 52 repeals
section 13 and replaces it with proposed sections 13, 13AA, 13AB and 13AC
to ‘consolidate all prohibitions on unlicensed import, manufacture or export of
scheduled substances or equipment in the same Part of the Act to streamline and
reduce the complexity of the Act’.[82]
As is the case with the existing provisions, the proposed sections allow
exemptions to the prohibitions to be prescribed in the Regulations.[83]
Item 155 repeals section 69G, which provides for the
Regulations to prohibit or regulate equipment that contains or uses scheduled
substances. Item 163 repeals Schedule 4, which contains provisions which
prohibit equipment that contains or uses scheduled substances. These matters
are incorporated into proposed sections 13, 13AA, 13AB and 13AC.
Addition of
fault-based offences for prohibitions and increased penalties
The OPSGG Act currently imposes a number of
requirements on industry with respect to holding a licence, the import,
manufacture and discharge of scheduled substances, and reporting. A
contravention of any of these requirements is an offence of strict liability;
it is sufficient to prove that the person breached the requirement without
needing to prove fault.[84]
The Main Bill contains numerous proposed amendments,
including in Items 52, 69, 132 and 145, which introduce new fault-based
offences for the contravention of certain provisions.[85]
The physical elements of the offence are set out in the relevant proposed
sections. Exemptions are provided in the relevant proposed sections or may be
provided for in Regulations; these are consistent with existing exemptions
provided for in the OPSGG Act. A person wishing to rely on a relevant
exemption bears an evidential burden in relation to the matter; that is, the
person must adduce or point to evidence that suggests a reasonable possibility that
the exemption applies in their circumstances.[86]
If a defendant discharges his or her evidential burden, the prosecution must
then discharge its legal burden to disprove the relevant matters beyond
reasonable doubt.[87]
The Explanatory Memorandum states:
The reversal of the burden of proof is appropriate as the
matter to be proved is a matter that would be peculiarly in the knowledge of
the defendant...
In the event of a prosecution, it would be significantly more
difficult and costly for the prosecution to disprove all possible circumstances
than it would be for a defendant to establish the existence of one potential
circumstance or purpose.[88]
The maximum penalty for breach of a fault-based provision
is generally 500 penalty units ($111,000), with the maximum penalty for
unauthorised use or disclosure of protected information (in proposed sections
65U and 65V) two years imprisonment or 180 penalty units ($39,960), or both.[89]
Separate provisions accompanying each of these fault-based
offences provide that the person will also be committing an offence of strict
liability, with a maximum penalty of 60 penalty units ($13,320).[90]
Additional provisions establish mirror civil penalty provisions and provide for
a maximum pecuniary (or civil) penalty of between 300 and 600 penalty units for
individuals.[91]
Body corporates are liable for a maximum penalty of five
times the stated penalty unit amount.[92]
The maximum pecuniary (or civil) penalties are generally 100
penalty units ($22,000) higher than those currently provided for in the OPSGG
Act.[93]
However, the maximum pecuniary penalty for the manufacture, import or export of
an SGG or the import of SGG equipment are substantially reduced.[94]
The Explanatory Memorandum sets out the Government’s
justification for these amendments:
The combination of fault-based offence, strict liability
offence and civil penalty provision would provide an adequate deterrent from [a
(sic)] person [breaching the relevant provision], which has the
potential to cause significant harm. It is also appropriate to include both
civil and criminal penalties in order to provide flexibility for the
Commonwealth to enforce the prohibition appropriately without always needing to
pursue criminal penalties… . It is expected criminal proceedings would be
brought for conduct that is at the more serious end of the spectrum or that
involves a high degree of malfeasance.
The size of the maximum penalty for both the fault-based
offence and the civil penalty provision is appropriate as a deterrent. It
reflects the seriousness of [breaching the relevant provision], which could in
turn result in harm to human and environmental health. Such conduct may
undermine the integrity of the regulatory framework provided for by the Act.
This conduct may also result in the breach of Australia’s obligations under the
Montreal Protocol and other relevant international treaties which could damage
Australia’s international relations.
The maximum civil penalty of 600 penalty units is higher than
the maximum penalty available for the criminal offence. This is intended to
ensure that it will act as a deterrent, particularly for body corporates, and
also recognises that being found liable to pay a civil penalty does not attract
imprisonment or a criminal conviction.[95]
Proposed subsection 63(1) (inserted by Item 138)
triggers the standard provisions of Part 5 of the Regulatory Powers Act which
deal with the issuing of infringement notices, meaning that all strict
liability offences and all civil penalty provisions in the OPSGG Act and
the Regulations will be subject to an infringement notice scheme.
Scrutiny
concerns
The Senate Scrutiny of Bills Committee commented on the
proposed reversal of the evidential burden of proof in proposed subsections
13(2), 13(4), 13(6), 13AA(2), 13AA(6), 13AA(7), 13AA(8), 13AA(9), 13AB(2),
13AB(4), 13AB(6), and 65U(2). The Committee observed that the Bill
seeks to establish several defences which reverse the evidential burden of
proof, with the elements of offence-specific defences prescribed by the
regulations in some instances.[96]
The Committee noted that ‘at common law, it is ordinarily the duty of the
prosecution to prove all elements of an offence’,[97]
and continued:
While in this instance the defendant bears an evidential
burden (requiring the defendant to raise evidence about the matter), rather
than a legal burden (requiring the defendant to positively prove the matter),
the committee expects any such reversal of the evidential burden of proof to be
justified.[98]
As noted above, the Explanatory Memorandum states that
‘the reversal of the burden of proof is appropriate as the matter to be proved
is a matter that would be peculiarly in the knowledge of the defendant’.[99]
However, it was not clear to the Committee how this was the case, and the
Committee ‘draws its scrutiny concerns to the attention of senators and leaves
to the Senate as a whole the appropriateness of reversing the evidential burden
of proof’ in the proposed provisions.[100]
The Committee raised scrutiny concerns that significant
matters, including the key details of offence-specific defences, were proposed
to be included in delegated legislation. The Committee stated its view that
significant matters should be included in primary legislation unless a sound
justification for the use of delegated legislation is provided. The Committee
considered a desire for flexibility, as outlined in the Explanatory Memorandum,
to be an insufficient justification and also draws this to the attention of
senators.[101]
The Committee raised a similar concern with respect to proposed
subsection 45C(3), a strict liability offence provision relating to the use
of an HCFC that was manufactured or imported on or after 1 January 2020 and the
use of which is not for a purpose prescribed by the regulations. The Committee
reiterated its view and observed that ‘the [E]xplanatory [M]emorandum does not
provide a justification for leaving this significant matter to delegated
legislation’.[102]
The Committee requested the Minister provide a detailed justification as to:
•
why it is considered necessary and
appropriate to leave the prescription of permitted uses of HCFCs for the
purposes of offence and civil penalty provisions to delegated legislation; and
• whether the bill can be amended to include at least
high-level guidance regarding this matter on the face of the primary
legislation.[103]
Compliance
and enforcement
Part VIII of the OPSGG Act concerns
compliance and enforcement. Section 49 of the OPSGG Act allows the
Minister to appoint inspectors. Item 123 of the Main Bill amends subsection
49(1) to substitute references to the Minister with references to the
Secretary. Item 151 inserts proposed section 67AA which would
allow the Secretary to delegate their powers under the Act or the Regulations to
an SES level employee in the Department.
Items 127, 128 and 138 of the Main Bill replace a
number of Divisions within Part VIII of the OPSGG Act with the standard
provisions of the Regulatory Powers Act, with some modifications aimed
at providing a comprehensive compliance regime given the subject matter of the OPSGG
Act.[104]
The Regulatory Powers Act commenced on 1 October
2014 and ‘provides for a standard suite of provisions in relation to monitoring
and investigation powers, as well as enforcement provisions through the use of
civil penalties, infringement notices, enforceable undertakings and
injunctions’.[105]
The Regulatory Powers Act only has effect where
Commonwealth Acts are drafted or amended to trigger its provisions.
The Attorney-General’s Department advises that:
New or amending Acts that require monitoring, investigation
or enforcement powers of the kind available under the Regulator Powers Act
should be drafted to trigger the relevant provisions of the Act, unless there
are compelling policy reasons to the contrary.[106]
The Explanatory Memorandum states:
Items 120 to 138 would amend the compliance and
enforcement regime of the Act by adopting the standard suite of provisions
under the Regulatory Powers Act, inserting new notice to produce powers
and aligning the Act with Commonwealth regulatory best practice. The new
compliance and enforcement regime would consist of monitoring and investigation
powers, as well as enforcement provisions through the use of civil penalties,
infringement notices, enforceable undertakings and injunctions.[107]
The Explanatory Memorandum provides a table setting out
the existing powers in the OPSGG Act, indicating how the existing powers
would be retained by, or aligned with, the standard provisions in the Regulatory
Powers Act, or where modifications would be made to the standard provisions
to retain existing powers.[108]
The Explanatory Memorandum states that these
modifications:
Would ensure that the regulatory powers in the Act are
appropriately adapted to provide effective regulation in the context of
non-compliance in relation to the import, export, manufacture and end use of
ozone-depleting substances and synthetic greenhouse gases, and equipment
containing those substances, consistent with Australia’s international obligations.[109]
For example, the following proposed amendments to the OPSGG
Act modify how provisions of the Regulatory Powers Act apply to compliance
and enforcement activities undertaken under the OPSGG Act:
- proposed
subsections 51(2) and 53(2) provide for the following monitoring and
investigation powers, which are additional to those set out in Parts 2 and 3 of
the Regulatory Powers Act: (a) the power to take samples; (b) the power
to remove, test and analyse such samples; (c) the power to secure premises
entered under Part 2 or 3 of the Regulatory Powers Act; (d) the power to
secure things on those premises for the purpose of sampling, testing or
analysing those things; (e) and the power to secure a container on those
premises that contains a thing where it is not reasonably practicable to secure
a thing without also securing the container
- proposed
subsection 53(5) modifies the investigation powers in Part 3 of the Regulatory
Powers Act to allow for the operation of electronic equipment on
premises entered under Part 3 of the Regulatory Powers Act and the use
of a disk, tape or storage device that is on those premises to determine
whether that equipment, disk, tape or storage device contains evidential
material
- proposed
subsections 51(3) and 53(7) allows the use of necessary and reasonable
force against things (for example, to open a cabinet) when executing a
monitoring warrant under Part 2 of the Regulatory Powers Act or an
investigation warrant under Part 3 of the Regulatory Powers Act.
Extension of
time for reporting requirements and payment of levy
Subsection 46(1) of the OPSGG Act requires a person
who engages in certain activity during a reporting period (for example,
manufacturing, importing, exporting or destroying a scheduled substance) to
give a report to the Minister. Item 114 of the Main Bill repeals and
replaces subsection 46(1) ‘to simplify reporting obligations for industry
and more closely align with Australia’s Montreal Protocol obligations’.[110]
Specifically, proposed subsection 46(1) will now
only require a person who engages in the following activities to prepare a
report to the Minister:
- manufacturing,
importing or exporting a scheduled substance or
- manufacturing,
importing or exporting equipment under an equipment licence.
The reporting obligation no longer applies to a person who
destroys a substance or imports, exports or manufactures equipment where no
licence is required.[111]
Item 115 amends subsection 46(1A), extending
the reporting timeframe by 16 days (from 15 days to 31 days).
Section 69 of the OPSGG Act provides that licence
levies are due and payable 60 days after the end of a reporting period (subject
to Ministerial extension). Item 152 of the Main Bill amends paragraph
69(1)(a), extending the period in which licence levies are due and payable
from 60 days to 90 days.
Information
sharing
Item 145 of the Main Bill proposes to add new
Part VIIIB to the OPSGG Act concerning information sharing. Proposed
Part VIIIB is divided into four Divisions, with Division 2
concerning the use and disclosure of information by the Minister, Division 3
concerning the use and disclosure of information by entrusted persons,
and Division 4 containing prohibitions on the use and disclosure of
protected information.
Item 15 inserts the following definition of entrusted
person in section 7 of the OPSGG Act: ‘the Minister, the
Secretary, an APS employee in the Department, or any other person employed in,
or engaged by, the Department’.[112]
Item 36 amends section 7 to provide that protected
information means information of any of the following kinds obtained by
an entrusted person:
- information
the disclosure of which by the entrusted person could reasonably be expected to
found an action by a person (other than the Commonwealth) for breach of a duty
of confidence
- information
the disclosure of which could reasonably be expected to prejudice the effective
working of government
- information
the disclosure of which could reasonably be expected to prejudice the
prevention, detection, investigation, prosecution or punishment of one or more
offences
- information
the disclosure of which could reasonably be expected to endanger a person’s
life or physical safety
- information
the disclosure of which could reasonably be expected to prejudice the
protection of public safety or the environment.
Division 2 of proposed Part VIIIB inserts proposed
sections 65F to 65K which allow the Minister to disclose relevant
information to a Commonwealth entity, State or Territory government body, and
law enforcement body in certain circumstances, and also allows the Minister to
disclose information if they have a reasonable belief that the disclosure is
necessary to reduce serious risk to human health or to the environment.
The Explanatory Memorandum provides that the vesting of
this disclosure power in the Minister, rather than an entrusted person,[113],
is appropriate because the authorisation involves either:
- disclosure
for the purpose of another entity’s function or powers; or
- a
matter of public interest with a high bar to satisfy and that is only likely to
be applicable in exceptional circumstances.[114]
Division 3 comprises of proposed sections
65L to 65T which allow entrusted persons to use or disclose
information, including protected information, for specified purposes.
Division 4 establishes two offence provisions, proposed
sections 65U and 65V, which prohibit the unauthorised use or disclosure of protected
information by current or past entrusted persons or
current or past officials of a Commonwealth entity.
The Explanatory Memorandum states that while ‘it is not
expected that relevant information would generally include personal information
within the meaning of the Privacy Act’,[115]
the provisions of Divisions 2 and 3 of proposed Part VIIIB are
intended to constitute an authorisation for the purposes of the Australian
Privacy Principle 6.2 (see Schedule 1 to the Privacy Act 1988).[116]
Review of
decisions
Section 66 of the OPSGG Act allows for applications
to be made to the Administrative Appeals Tribunal (AAT) for the review of certain
decisions made by the Minister.[117]
Item 145 of the Main Bill adds proposed Part VIIIC to the OPSGG
Act which allows for internal merits review of certain decisions (listed in
proposed section 65X) made under the OPSGG Act.
The Explanatory Memorandum states:
Reviewable decisions would need to be reviewed internally
before they could be reviewed externally by the Administrative Appeals
Tribunal, unless the original decision was made personally by the Minister.[118]
Where the original decision was made personally by the
Minister, the applicant or licensee is barred from seeking internal review of
the decision and must instead appeal to the AAT (proposed subsection 65Z(1)).
Following internal review by the Minister or their
delegate of a reviewable decision, an applicant or licensee may then apply to have
the decision reviewed by the AAT (proposed section 65ZC).
Scrutiny
concerns
The Senate Scrutiny of Bills Committee commented on proposed
subsections 65Y(3) and 65ZB(3) which provide that a failure to provide a
written notice of a decision, including the reasons for the decision and the
details of person’s right to have the decision reviewed, would not affect the
validity of the original reviewable decision or a reconsideration decision.
These are known as ‘no-invalidity’ clauses.
The Committee noted that there ‘are significant scrutiny
concerns with no-invalidity clauses, as these clauses may limit the practical
efficacy of judicial review to provide a remedy for legal errors’.[119]
The Committee advised that it ‘expects a sound justification for the use of
no-invalidity clause to be provided in the [E]xplanatory [M]emorandum’[120]
and further indicated that it considered the explanation provided
(administrative certainty) insufficient. The Committee requested more detailed
advice from the Minister as to why it is considered necessary and appropriate
to include the no-invalidity clause in the Bill.[121]
Expanded regulation
making power
Section 45A of the OPGGS Act allows regulations to
make provision for matters outlined in subsection 45A(1). This includes
regulating the sale, purchase or disposal of scheduled substances, regulating
the storage, use or handling of scheduled substances, labelling requirements,
and the conferral of relevant functions on persons or bodies. Item 107
proposes to insert proposed paragraph 45A(1)(ba) to allow the
regulations to make provision for prohibiting or regulating the recovery,
recycling or destruction of scheduled substances. The Explanatory Memorandum provides:
This would allow the regulations to include, for example, a
mechanism for the Minister to approve arrangements for the recovery, recycling
or destruction of scheduled substances and ensure scheduled substances are
disposed of in an environmentally sound manner when they reach their
end-of-life.[122]
Item 110 proposes to insert new subsections
45A(3), 45A(4) and 45A(5). Proposed subsection 45A(3) would allow
the regulations to make provision for regulating something by providing for it,
or anything relating to it, to be determined by the Minister, including by
legislative instrument. The Explanatory Memorandum gives as an example a
requirement for a person holding certain permits to have specific
qualifications and comply with specific standards. These are currently listed
in the regulations. The Explanatory Memorandum explains:
The purpose of this amendment is to allow the Minister to
decide to list relevant qualifications or standards that must be met by permit
applicants or holders in a legislative instrument when it is considered
appropriate, rather than regulations.[123]
Proposed subsection 45A(4), overriding subsection
14(2) of the Legislation
Act 2003, would ‘allow regulations made for the purpose of subsection
45A(1) to make provision in relation to a matter by applying, adopting or
incorporating any matter contained in an instrument or other writing as in
force or existing from time to time’.[124]
The Explanatory Memorandum explains that the purpose of
this amendment is to allow the regulations concerning the end use of scheduled
substances to incorporate documents (such as standards and qualifications) as
existing from time to time. The Explanatory Memorandum describes the following
distinction between the two proposed subsections:
It is anticipated that [proposed subsection 45A(4)] would be
used where the relevant standards or qualifications remain in regulations and
are updated on a regular basis (rather than in a legislative instrument under
new subsection 45A(3), which is expected to be used to add new standards or
qualifications quickly as needed).[125]
Proposed subsection 45A(5) provides that the
regulations made for the purpose of section 45A must be consistent with
Australia’s international obligations.
Scrutiny
concerns
The Senate Scrutiny of Bills Committee commented on proposed
subsection 45A(4). The Committee outlined general scrutiny concerns where
provisions in a Bill allow the incorporation of legislative provisions by
references to other documents because of the prospect of changes being made to
the law in the absence of Parliamentary scrutiny, and the potential for limited
access to the incorporated documents. The Committee described a ‘consistent
scrutiny view that where material is incorporated by reference into the law it
should be freely and readily available to all those who may be interested in
the law’.[126]
This is of particular relevance in the case of Australian Standards which are often
only accessible on payment of a fee.
The Committee requested the Minister’s ‘advice as to
whether standards and any other documents incorporated into the regulations
will be made freely available to all persons interested in the law'.[127]
Import Levy Amendment
Bill
Levy on
import of ODS equipment removed
Item 19 of the Import Levy Amendment Bill repeals
section 4B of the Import Levy Act which imposes a levy on the import of
ODS equipment under an equipment licence.
The Explanatory Memorandum states:
Imposing this levy is no longer considered appropriate as
licences for the import of ODS equipment are only able to be granted under the
OPSGG Act in very limited circumstances (such as where the equipment is
essential for medical, veterinary, defence, industrial safety, public safety or
scientific purposes, and no practical alternative exists). It is not considered
appropriate to impose a levy on the import of ODS equipment in such
circumstances.[128]
Relatedly, the long title of the Import Levy Act is
amended by Item 1, removing the reference to ‘ODS equipment’.
Removal of
levy caps
Under the Import Levy Act, a levy is imposed on holders
of certain licences who import specified scheduled substances.[129]
In each instance, a cap (maximum) on the prescribed rate of the
levy is provided.[130]
Items 8, 12, 15 and 17 of the Import Levy Amendment Bill
propose to amend the definition of prescribed rate to remove the
current caps and allow the prescribed rate to be an amount
prescribed in the Regulations.[131]
For example, items 11 and 18 relating to the levy
on the import of bulk scheduled substances and the import of SGG equipment
respectively, insert proposed subsections 3A(12) and 4A(8) to prevent
the Governor-General making Regulations which determine the prescribed
rate unless the Minister is satisfied that the prescribed rate
would recover no more than the Commonwealth’s likely costs of administering the
OPSGG Program (and would therefore not amount to a tax).[132]
In each case, the Explanatory Memorandum states that:
The cap has been in place since the levy was instituted in
2003. As such it does not reflect the current cost of administering the OPSGG
Program. Removing the cap would allow the levy to be adjusted periodically so
that activities under the OPSGG Act and regulations are able to be fully cost
recovered.[133]
Additional
considerations to exempt import of SGGs from requirement to pay a levy
Existing provisions in the Import Levy Act prescribe
matters that the Minister must be satisfied of before making a recommendation
to the Governor-General to make Regulations exempting the import of SGGs and
SGG equipment from the import levy.[134]
The matters the Minister must be satisfied of are whether the imposition of the
levy is impractical, or the prescribed purpose is a medical, veterinary, health
or safety purpose.
For example, subsection 3A(3) allows the Minister
to exempt the importer of SGGs from paying the levy where the SGG is to be used
for purposes prescribed by the Regulations, while subparagraph 3A(9)(b)(v)
allows the Minister to exempt a licensee from paying the levy if satisfied that
the SGG is to be used for a purpose prescribed by the Regulations. Item 11
repeals existing subsections 3A(12) and 3A(13) and inserts proposed subsection
3A(12). This proposed subsection sets out in table format the existing
matters set out in the Import Levy Act that the Minister must be
satisfied of before recommending that the Governor-General make Regulations concerning
the import of SGGs.[135]
Manufacture
Levy Amendment Bill
Removal of
levy cap on manufacture of SGGs, HCFCs and methyl bromide
Under the Manufacture Levy Act, a levy is imposed
on the holders of a controlled substances licence who manufacture SGGs, HCFCs
or methyl bromide.[136]
A cap (maximum) on the prescribed rate of the levy is provided.[137]
Items 6 and 12 of the Manufacture Levy Amendment
Bill amend the definition of prescribed rate to remove the
current caps and allow the prescribed rate to be an amount
prescribed in the Regulations, or an amount worked out in accordance with a
method prescribed in the Regulations.
As per the levies imposed by the Import Levy Act,
the Explanatory Memorandum states:
The cap has been in place since the levy was instituted in
2003. As such, it does not reflect the current cost of administering the OPSGG
Program. Removing the cap allows the levy to be adjusted periodically so that
activities under the OPSGG Act and regulations are able to be fully cost
recovered.[138]
Items 9 and 12 also amend the Manufacture Levy
Act to prevent the Governor-General from making Regulations setting the prescribed
rate unless the Minister is satisfied that the prescribed rate
will recover no more than the Commonwealth’s likely costs of administering the OPSGG
Program (and would therefore not amount to a tax).[139]
Additional
considerations for exemption from levy for manufacture of SGGs
The Manufacture Levy Act prescribes matters that
the Minister must be satisfied of before making a recommendation to the
Governor-General to make Regulations exempting the manufacture of SGGs from the
manufacture levy.[140]
Subsection 3A(3) allows the Minister to exempt the manufacture of SGGs
for prescribed purposes, while subparagraph 3A(7)(b)(v) allows
the Minister to exempt a licensee from paying the levy if satisfied that the
SGG is to be used for a purpose prescribed by the Regulations. The matters the
Minister be satisfied of are whether the imposition of the levy is impractical,
or the prescribed purpose is a medical, veterinary, health or safety purpose.
Item 9 repeals subsections 3A(9) and 3A(10) and
inserts proposed subsection 3A(10), setting out in table format the
existing requirements that must be satisfied before the Minister can make a
recommendation to the Governor-General.