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.

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]

1. 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]
2. Controlled substances licences: allow for the import, export and manufacture of bulk SGGs, HCFCs and methyl bromide.[33]
3. 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]
4. 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 right to health in Article 12(1) of the International Covenant on Economic, Social and Cultural Rights (the ICESCR)[59]
• the right to a fair trial and fair hearing in Article 14(1) of the International Covenant on Civil and Political Rights (the ICCPR)[60]
• the right to the presumption of innocence in Article 14(2) of the ICCPR
• the right to privacy in Article 17 of the ICCPR and
• the right to freedom of expression in Article 19(2) of the ICCPR.

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:

1. a controlled substances licence that allows a licensee to manufacture, export or import methyl bromide (Item 1A of the table)
2. a licence (other than an equipment licence) that allows the licensee to import a scheduled substance (Item 7 of the table) and
3. 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:

1. if the licensee is no longer a fit and proper person
2. if the licensee has breached a condition of the licence or
3. 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:

1. 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
2. information the disclosure of which could reasonably be expected to prejudice the effective working of government
3. information the disclosure of which could reasonably be expected to prejudice the prevention, detection, investigation, prosecution or punishment of one or more offences
4. information the disclosure of which could reasonably be expected to endanger a person’s life or physical safety
5. 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.