CHAPTER 5
INAPPROPRIATE DELEGATION OF LEGISLATIVE POWER
Application of criterion set out in Standing Order 24(1)(a)(iv)
5.1 Criterion (iv) requires the Committee to draw the Senate's attention
to legislation where Parliament's power to make laws may have been delegated
inappropriately.
5.2 In considering this criterion, a threshold question sometimes arises:
is the power proposed to be delegated legislative in nature? At times
it is difficult to determine whether the instruments which Parliament
empowers another body or person to make are legislative in character.
Such instruments might be ministerial guidelines, codes of practice, codes
of conduct or practice statements. They are often described as made under
a power to direct, determine, notify, order, instruct, declare, issue
or publish.
5.3 Examples of provisions which may inappropriately delegate legislative
power include those which:
- enable subordinate legislation to amend an Act of Parliament (often
called a Henry VIII clause);
- provide that matters which should be regulated by Parliament are to
be dealt with by subordinate legislation;
- provide that a levy or a charge be set by regulation;
- give to the Executive the unfettered control over whether and when
an Act passed by the Parliament should come into force.
`Henry VIII' clauses
5.4 An express provision which authorises the amendment of either the
empowering legislation, or any other legislation, by means of delegated
legislation is called a `Henry VIII' clause. The Macquarie Dictionary
of Modern Law defines a `Henry VIII' clause as “a clause in an
enabling Act providing that the delegated legislation under it overrides
earlier Acts or the enabling Act itself; so named because of its autocratic
flavour”. [1] Since its establishment,
the Committee has consistently drawn attention to such clauses.
5.5 For example, during the 38th Parliament the Committee noted that
proposed subsections 7(2) and (3) of the Carriage of Goods by Sea Amendment
Bill 1997 would enable the Principal Act to be amended by regulation.
The Explanatory Memorandum, after noting the nature of international conventions,
stated that “the modifications to the amended Hague Rules to make
the proposed changes were technically complex and lengthy”:
Given the need not to overburden Parliament's business agenda and recognising
that the resources of the Office of Parliamentary Counsel are under pressure,
it is quite appropriate that such technical matters be handled by regulation
…
Such clauses are used in Commonwealth laws regularly, and enable the
expeditious passage of legislation. The regulations are, of course, subject
to disallowance, and will be required by the Act to be made only after
consultation with relevant industry stakeholders. [2]
5.6 The Committee did not accept that a busy Parliamentary agenda or
insufficient resources in the Office of Parliamentary Counsel were valid
reasons for inappropriately delegating the legislative function of the
Parliament.
5.7 The Minister responded that the bill and proposed regulations were
intended to implement a comprehensive package of amendments which had
been developed by industry. The regulation-making power in the bill had
been very precisely defined and tightly drafted to enable the complete
implementation of what was termed a “delicate industry compromise”.
In addition, regulations were often used by the Parliament “to enact
detailed matters into law”. Examples of this included section 92A
of the Corporations Law, section 10 of the Agricultural and
Veterinary Chemicals Act 1994, section 55 of the Airports (Transitional)
Act 1996 and section 20 of the Archives Act 1983. Finally,
the bill required the Minister to consult with representatives of shippers,
ship owners, carriers, cargo owners, marine insurers and maritime law
associations before any regulations were made, and the Minister undertook
to circulate drafts of proposed regulations for comment as part of this
process.
5.8 The Committee thanked the Minister for this response which allayed
its concerns.
Determination of important matters by regulation
5.9 The Committee also draws attention to provisions which inappropriately
delegate legislative power of a kind which ought to be exercised by Parliament
alone. One example of such a provision (from a previous Parliament) was
a clause which conferred power on the Executive to define a word or phrase
in an Act. The definition determined the way in which the Act was to operate.
[3] In such circumstances, the Committee will
argue that the defining of the word or phrase is too crucial a matter
to be left to subordinate legislation, and should be undertaken by the
Parliament.
5.10 An example of such a provision which arose during the 38th Parliament
involved consideration of the Health Insurance Amendment Act (No 2)
1996. This Act was introduced against a background of a perceived
oversupply of medical practitioners. In Alert Digest No 10 of 1996,
the Committee expressed concern at the use of regulations to specify which
Fellows of the Royal Australian College of General Practitioners (RACGP)
would ultimately gain full recognition for the purposes of the Medicare
system, and at the use of regulations to establish a Register of Approved
Placements. The Committee sought the Minister's advice on how these regulations
would be worded to bring about reductions in the number of doctors without
discrimination.
5.11 The Minister replied that, in each case, regulations were needed
to ensure the ability to quickly respond to changes in the detailed arrangements
involved in implementing the legislation. It was intended “that the
regulations will reflect the current arrangement by requiring that Fellows
of the RACGP, wishing to retain full access to Medicare, should meet the
requirements of the RACGP for taking part in continuing education and
quality assurance”. The Minister suggested that the use of regulations
would enable any changes in terminology used by the RACGP to be reflected
in a timely way.
5.12 With regard to the Register of Approved Placements, the Minister
noted that its purpose was to ensure that “full access to Medicare
is continued for post graduate trainees of the various medical colleges
as well as access for doctors working in areas of particular need”.
The Minister suggested that the use of regulations was necessary given
the dynamic nature of these programs, and the possibility of regular additions
and changes to the list of bodies administering them.
5.13 The Minister went on to indicate that changes to the regulations
would be made in response to, or after consultation with, the relevant
bodies, and would be disallowable by Parliament. However, while generally
acknowledging the convenience of using regulations in these circumstances,
the Committee continued to express its concern at the width of the legislative
power proposed for delegation. In the Committee's view, this power could
be circumscribed by including in the bill some limitation or description
of the general nature of eligibility criteria.
If, as the Minister states, it is intended that Fellows of the RACGP
in order to retain access to Medicare should meet the requirements of
the RACGP for taking part in continuing education and quality assurance,
the bill could state that the regulation making power with respect to
eligibility is restricted to such matters.
Further the Committee notes the Minister's intention that `changes to
the regulations would be made in response to or after consultation with
the relevant bodies'. Perhaps such a practice could be put into the bill
as a pre-condition for making regulations. [4]
5.14 Similar considerations applied to the Register of Approved Placements.
While paragraph 3GA(5)(a) set out some details indicating the nature of
the regulations to be made, paragraph (b) gave “complete carte blanche
to the rule maker to determine eligibility”. Given these circumstances,
the Committee continued to draw attention to these provisions.
5.15 Unfortunately, this legislation was passed by both Houses, and had
received Royal Assent, before the Committee received the Minister's response.
Setting the rate of a `levy' by regulation
5.16 The Committee has consistently drawn attention to legislation which
provides for the rate of a `levy' to be set by regulation. This creates
a risk that the levy may, in fact, become a tax. It is for Parliament,
rather than the makers of subordinate legislation, to set a rate of tax.
Providing a statutory maximum rate or a rate-setting formula
5.17 Where the rate of a levy needs to be changed frequently and expeditiously,
this may be better done through amending regulations rather than the enabling
statute. If a compelling case can be made for the rate to be set by subordinate
legislation, the Committee seeks to impose some limit on the exercise
of this power. For example, the Committee will seek to have the enabling
Act prescribe either a maximum figure above which the relevant regulations
cannot fix the levy, or, alternatively, a formula by which such an amount
can be calculated. The vice to be avoided is delegating an unfettered
power to impose fees.
5.18 In its consideration of the Classification (Publications, Films
and Computer Games) Charges Bill 1997, the Committee queried the failure
to prescribe a statutory maximum charge or charging formula. The Minister
responded that the Government's preferred approach was to include such
a formula or ceiling, but “given that the revenue to fund the operations
of the [Office of Film and Literature Classification] must be obtained
from a broad range of application based charges, no satisfactory formula
could be devised to set the tax rate nor could any realistic figures be
arrived at to put a ceiling on that tax”. Were the bill to specify
a statutory maximum charge, “this would involve including an artificially
high figure and would send quite the wrong message to the industry”.
[5]
5.19 In its consideration of the Australian Radiation Protection and
Nuclear Safety (Licence Charges) Bill 1998, the Committee again queried
a failure to prescribe a statutory maximum charge. The Minister responded
that the charges proposed in this bill would apply only to Commonwealth
entities; they would be set at an amount necessary to recover the cost
of the additional functions described in the bill; and before any upper
limit could be set it was necessary to assess these additional functions
and determine the number of licences that would be held. The Minister
stated that the Commonwealth had engaged independent consultants to establish
a fees and charges regime, and “any move to set an upper limit at
this time would be arbitrary and contrary to the consultative approach
taken to date”. [6]
5.20 Even where a bill sets a maximum amount, the Committee may seek
further advice where there is a marked difference between the rate set
and the specified maximum rate. For example, in its Eighth Report of
1996, the Committee considered the Cattle Export Charges Amendment
(AAHC) Bill 1996, and the Cattle Transaction Levy Amendment (AAHC) Bill
1996. These bills provided for amounts raised by way of levy to be paid
to the Australian Animal Health Council (AAHC). The bills set a rate of
5 cents per head of cattle exported, but specified a maximum rate of 50
cents per head to which the levy could be raised. The Committee noted
that the set rate under these bills was one tenth of the maximum rate
allowed. However, under the Laying Chicken Levy Amendment (AAHC) Bill
1996, the set rate was two thirds of the maximum rate. The Committee sought
the advice of the Minister on the reasons for such a difference in bills
dealing with levies for similar purposes.
5.21 The Minister advised that the set rate and the maximum rate had
been imposed at the request of the cattle industry, which had indicated
that, over time, it intended using the AAHC as a mechanism for funding
a number of cattle specific programs. Hence there was a need to provide
for significant funding increases in the future. In addition, under the
legislation, the recommendation of the industry which would pay the charge
had to be considered before a set rate could be varied.
Example: Radiocommunications (Spectrum Licence Tax) Bill 1997
5.22 In Alert Digest No 11 of 1997, the Committee noted that clause
7 of this bill would allow the Australian Communications Authority (ACA)
to determine the amount of the tax imposed by this bill, with no upper
limit specified in the bill itself.
5.23 The Explanatory Memorandum stated that this approach had been adopted
“because of the nature of spectrum licensing and the possibility
of a single licensee holding a large proportion of the spectrum in a given
band and therefore paying a proportionally larger amount of spectrum maintenance
charge”. It also noted that “the licence tax will be calculated
as a sum divided by all licensees in a given band having regard to the
licensee's share on a `Megaherz/population' basis on a given date”.
5.24 The Committee was not convinced that these reasons warranted the
delegation by Parliament of an unfettered power to tax. The Committee
also pointed out that, even though a determination of an amount of tax
was disallowable by either House of the Parliament, disallowance was an
imperfect solution. A disallowance motion represented an `all-or-nothing'
mechanism, giving neither House scope to amend the determination. The
disallowance was effective only from the date it occurred. Accordingly,
the taxation liability would accrue at the determined amount during the
period from commencement of the regulation to its disallowance. Further,
those whose licence tax fell due during that period would be required
to pay it at the rate determined because the subsequent disallowance would
give them no relief.
5.25 The Committee asked the Minister whether the matters determining
the amount of the tax might be reduced to a formula which could be included
in the bill, and whether a review process of the operation of the tax
might be included.
5.26 The Minister responded that the ACA operated on the basis of full
cost recovery. Spectrum maintenance charges were intended to fully cover
the ongoing costs of spectrum management once a licence had been issued.
These costs included international co-ordination, domestic planning, interference
investigation and policy development, and were not attributable to any
single radiocommunications user. Currently, spectrum maintenance costs
were recovered from apparatus licence holders under a formula produced
by the Spectrum Management Agency (now the ACA). The Bill proposed to
recover them from holders of spectrum and apparatus licences on a proportionate
basis.
The factors affecting each licensee's contribution will be reviewed annually
(in consultation with industry through the Radiocommunications Consultative
Council), in accordance with usual ACA practice … The annual amount
paid by individual licensees will vary according to factors such as variations
in the level of costs associated with providing these services and changes
in the number of licensees. Specification of the formula and weighting
factors in detail, in legislation, would constrain flexibility in this
process …
I would also like to draw the Committee's attention to the fact that
there is currently under way a review of the Radiocommunications Act 1992
and related legislation. [7]
5.27 For the Committee, the issue remained that this bill authorised
a rate of tax to be set by a statutory authority with no provision to
limit that authorisation in such a way as to make the delegation appropriate.
While noting the reasons put forward for flexibility in the setting of
this tax, the Committee reaffirmed the principle that, in these circumstances,
an enabling Act should prescribe either a maximum figure or a formula
by which such an amount could be calculated. The Committee noted that,
previously, the Spectrum Management Agency had published such a formula
in the Apparatus Licence Fee Schedule.
5.28 The Committee also noted the Minister's statement that these charges
were not intended to raise revenue in excess of costs. However, the Committee
saw a danger that the nexus between the charges and the costs might become
obscure over time. It preferred to see the legislation providing for a
safeguard rather than a statement of the Government's intention to act
appropriately. For these reasons, the Committee continued to draw the
Senate's attention to the provision.
5.29 Ultimately, the Bill was passed by the Senate on 25 September 1997
without amendment or debate.
Commencement by Proclamation: Office of Parliamentary Counsel Drafting
Instruction No 2 of 1989
5.30 The Committee is wary of provisions which enable legislation to
commence on a date “to be proclaimed” rather than on a determinable
date. Where a Bill (or part of a Bill) is expressed to commence on proclamation,
the date proclaimed should be no later than 6 months after the Parliament
passes the relevant measure.
5.31 The Committee takes the view that Parliament, as the elected holder
of Federal legislative power, is responsible for determining when the
laws it makes are to come into force. In taking this view, the Committee
is conscious of Drafting Instruction No 2 of 1989 issued by the Office
of Parliamentary Counsel. This provides, in part:
3. As a general rule, a restriction should be placed on the time within
which an Act should be proclaimed (for simplicity I refer only to an Act,
but this includes a provision or provisions of an Act). The commencement
clause should fix either a period, or a date, after Royal Assent, (I call
the end of this period, or this date, as the case may be, the "fixed
time"). This is to be accompanied by either:
(a) a provision that the Act commences at the fixed time if it has not
already commenced by Proclamation; or
(b) a provision that the Act shall be taken to be repealed at the fixed
time if the Proclamation has not been made by that time.
4. Preferably, if a period after Royal Assent is chosen, it should not
be longer than 6 months. If it is longer, Departments should explain the
reason for this in the Explanatory Memorandum. On the other hand, if the
date option is chosen, [the Department of the Prime Minister and Cabinet]
do not wish at this stage to restrict the discretion of the instructing
Department to choose the date.
5. It is to be noted that if the "repeal" option is followed,
there is no limit on the time from Royal Assent to commencement, as long
as the Proclamation is made by the fixed time.
6. Clauses providing for commencement by Proclamation, but without the
restrictions mentioned above, should be used only in unusual circumstances,
where the commencement depends on an event whose timing is uncertain (eg
enactment of complementary State legislation). [8]
5.32 Where the rules set out in the Drafting Instruction are not followed,
the Committee prefers to see the reason for this departure set out in
the Explanatory Memorandum. For example, where a 6 month period is said
to be impractical, the Committee likes to see another period – such
as a period of 12 months – specified, rather than no period at all.
Some examples
5.33 In its consideration of the Electoral and Referendum Amendment Bill
(No 2) 1998, the Committee queried an open-ended commencement provision
for amendments relating to electoral enrolment applications. The Minister
responded that the delay in commencement would enable consultation and
discussion with State and Territory governments, giving them the opportunity
to enact complementary legislation. Without complementary legislation,
the joint electoral roll arrangements would become irrelevant, with electors
required to complete separate applications to become enrolled on Commonwealth
and State or Territory rolls. [9]
5.34 In its consideration of the Migration Legislation Amendment (Strengthening
of Provisions Relating to Character and Conduct) Bill 1997, the Committee
queried another open-ended commencement provision. The Minister responded
that it was desirable, “for reasons of administrative efficiency
and public convenience”, that this bill commence at the same time
as other legislation amending the Migration Act, yet the measures it proposed
were sufficiently important to justify an earlier commencement date should
the bill be the first passed. In addition, the new administrative procedures
required by the bill would significantly affect the operations of the
Department and the Administrative Appeals Tribunal. Consequently, “the
best possible level of service to the public will not be possible unless
these new procedures are fully developed and in place when the legislation
commences.” [10]
5.35 In its consideration of the Australian Meat and Livestock Industry
Bill 1997, the Committee queried an automatic commencement period of 9
months after Royal Assent. The Minister responded that this longer period
was necessary given the complexities entailed in restructuring the red
meat industry and moving from a number of government statutory corporations
to producer-owned service delivery companies. Additional time was also
needed to complete the winding up and transfer of activities relating
to contracts, assets, liabilities and staffing entitlements.
5.36 In its consideration of the Taxation Laws Amendment Bill (No 5)
1997, the Committee noted that various amendments made by that bill were
to apply to dealings on or after a date to be prescribed by regulation.
It seemed to the Committee that such a process was akin to legislation
commencing on an unspecified date to be determined by the choice of the
Executive.
5.37 The Treasurer responded that this bill had been deliberately designed
to allow flexibility with regard to its commencement. The operation of
Divisions 3 and 4 depended on a system of accreditation of people who
bought and sold personal computers and other goods. Accreditation involved
making an application to the Commissioner of Taxation, and approval given
to that application. It was expected that there would be several thousand
such applications. There would need to be a preliminary public education
campaign. Application forms would have to be distributed. Most of this
work could take place only after Royal Assent. In addition, computer systems
necessary to support the new law would need to be in place before it could
commence.
5.38 It was estimated that at least three months would be needed to complete
all preliminary steps, and it was intended that that a commencement date
would be prescribed shortly after this. However, given the uncertainties,
it was not desirable to specify a commencement time with more particularity.
Footnotes
[1] See also Pearce DC, Delegated Legislation
in Australia and New Zealand (Butterworths, Sydney, 1977).
[2] Scrutiny of Bills Committee, First to
Nineteenth Reports of 1997, p 262.
[3] See, for example, Alert Digest No 7 of
1992, commenting on the Commonwealth Electoral Amendment Bill 1992;
and Alert Digest No 14 of 1992, commenting on the Student Assistance
Amendment Bill 1992.
[4] Scrutiny of Bills Committee, First to
Nineteenth Reports of 1997, p 40.
[5] Scrutiny of Bills Committee, First to
Eleventh Reports of 1998, pp 43-4.
[6] Scrutiny of Bills Committee, First to
Eleventh Reports of 1998, pp 153-4.
[7] Scrutiny of Bills Committee, First to
Nineteenth Reports of 1997, pp 278-9.
[8] Senate, Hansard, 12 April 1989, pp
1464-1465.
[9] Scrutiny of Bills Committee, First to
Eleventh Reports of 1998, pp 161-162.
[10] Scrutiny of Bills Committee, First
to Eleventh Reports of 1998, p 75