House of Representatives

Explanatory Memorandum

Circulated By the Authority of the Minister for Climate Change and Energy Efficiency, the Honourable Greg Combet Am MP

Amendments to other legislation

7.1 This chapter addresses amendments to be made to the following Acts and Regulations consequential to the Clean Energy Bill 2011 and other Bills contained in the Clean Energy Legislation Package:

•

Renewable Energy (Electricity) Act 2000

•

Financial Management and Accountability Regulations 1997

•

Competition and Consumer Act 2010

•

Corporations Act 2001

•

Australian Securities and Investments Commission Act 2001

•

Evidence Act 1995

•

Anti-Money Laundering and Counter Terrorism Financing Act 2006

•

Taxation Administration Act 1953.

7.2 Amendments to the Renewable Energy (Electricity) Act 2000 are needed to clarify the inspections process for small generation units in relation to the process for registering certificates, including small-scale technology certificates, to enable the Climate Change Authority to conduct reviews under that Act, and as a consequence of the establishment of the Clean Energy Regulator.

7.3 Amendments to the Financial Management and Accountability Regulations 1997 are needed as a consequence of the establishment of the Clean Energy Regulator, and the Climate Change Authority. Amendments to the NGER Act relating to the transfer of functions are described in Chapter 1 of this explanatory memorandum.

7.4 Amendments to the Trade Practices Act 1974 and the Australian Securities and Investments Commission Act 2001 are needed to ensure appropriate exchange of information between regulators.

7.5 Amendments to the Competition and Consumer Act 2010 and the Australian Securities and Investments Commission Act 2001 are needed to implement the decision to make carbon units financial products.

7.6 Amendment of the Anti-Money Laundering and Counter Terrorism Financing Act 2006 is needed to address the risk of money laundering through trading in carbon units.

7.7 An amendment to the Evidence Act 1995 will allow quarterly reports by manufacturers, importers and exporters of SGGs, ODS equipment and SGG equipment to be classified as Commonwealth documents.

7.8 An amendment to the Taxation Administration Act 1953 provides for appropriate exchange of information between the Australian Taxation Office and the Regulator.

Detailed explanation of new law

Renewable Energy (Electricity) Act 2000

7.9 The Clean Energy Regulator, established by the proposed Clean Energy Regulator Act 2011, will administer the Renewable Energy (Electricity) Act 2000. References to the Renewable Energy Regulator and his or her staff are therefore deleted and references to the new Regulator and its staff substituted . [Schedule 1, Part 1, item 195, 199-204, 207-212]

7.10 A new definition of 'official of the Regulator' is also included . [Schedule 1, Part 1, item 196]

7.11 The Clean Energy Regulator Bill includes provisions relating to secrecy (Part 3). For this reason, overlapping provisions (and relevant definitions) in the Renewable Energy (Electricity) Act 2000 are repealed . [Schedule 1, Part 1, item 197-198, 205-206]

Reviews

7.12 With the establishment of the Climate Change Authority by the proposed Climate Change Authority Act 2011, reviews of the Renewable Energy (Electricity) Act 2000 will now be undertaken by the Authority. References to the appointment of a person to undertake the reviews and to that person are therefore removed and replaced with references to the new Authority and its staff . [Schedule 1, Part 2, item 451A] Consistent with the Government's intent that the Renewable Energy Target will be consistent with the operation of the carbon pricing mechanism, the Authority's recommendations must not be inconsistent with the objects of the Renewable Energy (Electricity) Act 2000.

7.13 In order to achieve consistency with other reviews undertaken by the Authority, provisions providing for the procedure of the reviews and subsequent report have been inserted . [Schedule 1, Part 2, item 451A]

7.14 The Authority must publish the report of a review on its website at the time of providing it to the Minister . [Schedule 1, Part 2, item 451A]

7.15 A report of a review may set out recommendations to the Government but in formulating a recommendation that the Government should take particular action, the Authority must analyse the costs and benefits of the proposed action. This requirement, however, does not prevent the Authority from taking into account other matters when formulating a recommendation. Consistent with the Government's policy that the Renewable Energy Target is complementary to the carbon pricing mechanism, the Authority, in undertaking the reviews, must not make recommendations that are inconsistent with the objects of the Renewable Energy (Electricity) Act 2000. The Authority must set out its reasons for any recommendations in its report . [Schedule 1, Part 2, item 451A]

7.16 If recommendations are made, the Minister must, on behalf of the Government, prepare a response to each of the Authority's recommendations as soon as practicable after receiving the report and must table copies of the response in each House of the Parliament within 6 months of receiving the report. The Government's response may have regard to the views of the Authority and any other person the Minister considers relevant. It is expected that the document will outline the Government's reasons for each response . [Schedule 1, Part 2, item 451A]

Small generation units

7.17 Schedule 3 of the Bill commences the day after the Bill receives Royal Assent. It clarifies the close relationship between the inspections process for small generation units provided for under section 23AAA of the Renewable Energy (Electricity) Act 2000 and the process for registering certificates, including small-scale technology certificates (STCs), under section 26 of that Act. The inspection scheme for installations of small generation units has an important role as part of the quality assurance framework for registration of STCs. For example, the information and intelligence gained through inspections would be used to inform pre-registration assessments by the Office of the Renewable Energy Regulator as part of determining whether STCs, created on-line by applicants for particular small generation units, are eligible for registration.

7.18 Reports of inspections of new installations of small generation units in accordance with regulations made under section 23AAA may include, without limitation, conclusions, recommendations or other material relevant to the certificate registration process set out under section 26. The note clarifies that the inspections may be relevant to determining whether or not certificates are eligible for registration under section 26, as well as providing an indication of the effectiveness of the certificate registration process . [Schedule 3, Item 2]

7.19 In determining the eligibility of a certificate under section 26, the Renewable Energy Regulator must have regard to relevant conclusions, recommendations or other material in the inspection reports provided in accordance with regulations made under section 23AAA , without limiting matters that may be considered in this determination . [Schedule 3, Item 3]

7.20 A fee prescribed by regulations made under subsection 26(3A) for the registration of a certificate must be reasonably related to the expenses incurred by the Commonwealth in:

•

executing the Renewable Energy Regulator's functions and powers under section 26;

•

carrying out inspections provided for under subsection 23AAA to the extent they are relevant to the Renewable Energy Regulator in executing the functions and powers under section 26; and

•

preparing inspection reports provided for under section 23AAA to the extent they include conclusions, recommendations or other material relevant to the Renewable Energy Regulator in executing the functions and powers under section 26.

7.21 Fees prescribed by regulations in relation to certificate registration are not to be a tax . [Schedule 3, Item 4]

Registration of persons

7.22 Section 11 of the Renewable Energy (Electricity) Act 2000 provides for approval or refusal by the Regulator of an application for registration under that Act. An application must be refused if the applicant has previously been registered, but properly made applications must be approved. Sections 30 and 30A of the Renewable Energy (Electricity) Act 2000 provide for the suspension of registration only in relation to offences, civil penalties or improperly obtained registration under that Act.

7.23 The amendments allow, in addition, the Regulator to refuse an application on a ground to be specified in regulations. The Regulator may also suspend a person's registration, by written notice, for any period the Regulator determines, on a ground to be specified in regulations . [Schedule 3, Item 1] [Schedule 3, Item 5]

7.24 It is anticipated that grounds for refusal or suspension could include objective evidence that the person was not, or was no longer, a fit and proper person. It is envisaged that such grounds could, for example, include the applicant not being accredited under a specified industry scheme, or has contravened other legislation such as the Corporations Act 2001 or the Competition and Consumer Act 2010. Affected persons may seek internal reconsideration of these decisions by the Regulator, followed by review by the Administrative Appeals Tribunal under section 66.

7.25 These provisions apply to applications made after the commencement of the item (the day after Royal Assent) . [Schedule 3, Item 6]

7.26 These changes are not intended to make the Regulator responsible for the marketing, contractual or financial arrangements of persons involved in the installation or generation of renewable energy. These issues are properly regulated outside the Renewable Energy (Electricity) Act 2000 by other Commonwealth, State or Territory regulators.

Financial Management and Accountability Regulations 1997

7.27 The Financial Management and Accountability Act 1997 sets out the financial management, accountability and audit obligations of agencies that are financially part of the Commonwealth. In particular, this Act requires agencies to manage public resources efficiently, effectively and ethically. It also requires that proper accounts and records be maintained for the receipt and expenditure of public money.

7.28 The agencies subject to this Act are prescribed in the Financial Management and Accountability Regulations 1997.

7.29 The Clean Energy Regulator, which is established by the proposed Clean Energy Regulator Act 2011, will administer the Renewable Energy (Electricity) Act 2000, the NGER Act, the proposed Clean Energy Act 2011 and the Carbon Credits (Carbon Farming Initiative) Act 2011.

7.30 The Climate Change Authority is established by the proposed Climate Change Authority Act 2011.

7.31 Both bodies are prescribed in Part 1 of Schedule 1 of the Financial Management and Accountability Regulations 1997. [Schedule 1, Part 1, item 104] [Schedule 1, Part 2, item 261]

7.32 The reference in these Regulations to the Renewable Energy Regulator will be deleted . [Schedule 1, Part 1, item 105][

Competition and Consumer Act 2010

7.33 The Regulator and the Climate Change Authority are to be included in the list of agencies to which the Australian Energy Regulator can disclose information, and the list of agencies to which the Australian Competition and Consumer Commission can disclose certain information if the Chair is satisfied that it would enable or assist them to perform their functions . [Schedule 1, Part 1, item 100-102] [Schedule 1, Part 2, items 258B, 258C, 258D]

7.34 This is important in ensuring the appropriate exchange of information between Commonwealth agencies. Disclosure by the Regulator to the Australian Energy Regulator and the Australian Competition and Consumer Commission will be regulated by clause 48 of the Clean Energy Regulator Bill 2011.

Evidence Act 1995

7.35 Reports under section 46 of the Ozone Act are regarded as Commonwealth documents for the purposes of the Evidence Act. The amendment allows reports required under proposed section 46A to be treated in the same way . [Schedule 1, Part 2, item 260A]

Australian Securities and Investments Commission Act 2001

Corporations Act 2001

Financial products

7.36 Carbon units are to be financial products for the purposes of Chapter 7 of the Corporations Act 2001 [Schedule 1, Part 2, item 259-260] and Division 2, Part 2 of the Australian Securities and Investments Commission Act 2001 ( the ASIC Act) . [Schedule 1, Part 1, item 47]

7.37 They will not, however, be financial products for the purpose of paragraph 12BAB(1)(g) of the ASIC Act . [Schedule 1, Part 1, item 48] In brief, this states that a person provides a financial service if they provide a service that is otherwise supplied in relation to a financial product.

7.38 These amendments will provide a strong regulatory regime to reduce the risk of market manipulation and misconduct. Appropriate adjustments to the regime to fit the characteristics of units and avoid unnecessary compliance costs will be made.

Disclosure of information

7.39 The Regulator and the Climate Change Authority will be added to the list of agencies to which the Australian Securities and Investments Commission (ASIC) may disclose information . [Schedule 1, Part 1, item 49] [Schedule 1, Part 2, item 256A]

7.40 This means that ASIC will, for example, be able to disclose information that it possesses about wrongdoing in connection with trading of carbon units which is also of significance to the Regulator as the operator of the Registry.

Anti-Money Laundering and Counter Terrorism Financing Act 2006

7.41 Item 33 of the table of designated services at section 6 of the Anti-Money Laundering and Counter Terrorism Financing Act 2006 is to be amended to include, in the capacity of agent of a person, acquiring or disposing of carbon units where the acquisition or disposal is in the course of carrying on a business of acquiring or disposing of units in the capacity of an agent . [Schedule 1, Part 1, items 1-3]

7.42 The phrase 'carbon unit' is defined by reference to its meaning in the main bill . [Schedule 1, Part 1, item 1]

7.43 The purpose of this amendment is, particularly, to address the risk of money laundering through trading in carbon units. An example of a person subject to Item 33 is a broker carrying on a business in carbon unit trading, who acquires carbon units on behalf of a client.

Taxation Administration Act 1953

7.44 The Regulator is to be included in the list of agencies to which a taxation officer can disclose information, for the purposes of seeking verification of information provided under the Fuel Tax Act 2006, or for the administration of the Clean Energy Act 2011 or associated provisions. This will allow appropriate information exchange in relation to the Opt-In Scheme in the main bill . [Schedule 1, Part 1, item 212A]