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2019-2020-2021
THE PARLIAMENT OF THE COMMONWEALTH OF AUSTRALIA
HOUSE OF REPRESENTATIVES
FUEL SECURITY (CONSEQUENTIAL AND TRANSITIONAL
PROVISIONS) BILL 2021
EXPLANATORY MEMORANDUM
(Circulated by authority of the Minister for Energy and Emissions
Reduction, the Honourable Angus Taylor MP)
FUEL SECURITY (CONSEQUENTIAL AND TRANSITIONAL
PROVISIONS) BILL 2021
TABLE OF CONTENTS
GLOSSARY 1
OUTLINE 2
REGULATION IMPACT STATEMENT 3
CONSULTATION 3
STATEMENT OF COMPATIBILITY WITH HUMAN RIGHTS 5
Overview of the Bill 5
Conclusion 13
NOTES ON CLAUSES 15
Schedule 1--Consequential amendments 15
Part 1-- Main Consequential amendments 15
Part 2-- Consequential amendments relating to the Federal Circuit and Family
Court of Australia Act 2021 29
Schedule 2--Transitional provisions 29
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FUEL SECURITY (CONSEQUENTIAL AND TRANSITIONAL
PROVISIONS) BILL 2021
GLOSSARY
Abbreviation Definition
Fuel Security Act Fuel Security Act 2021
CC Act Competition and Consumer Act 2010
the Bill/this Bill Fuel Security (Consequential and
Transitional Provisions) Bill 2021
Criminal Code Criminal Code Act 1995
Department The Department that will be
responsible for administering the Bill
(presently, the Department of
Industry, Science, Energy and
Resources)
FCFCA Act Federal Circuit and Family Court of
Australia Act 2021
FQS Act Fuel Quality Standards Act 2000
FSSP Fuel Security Services Payment
Main Bill Fuel Security Bill 2021
Minister The Minister that will be responsible
for administering the Bill (presently,
the Minister for Energy and
Emissions Reduction)
MSO Minimum Stockholding Obligation
POFR Act Petroleum and Other Fuels
Reporting Act 2017
POFR Rules Petroleum and Other Fuels
Reporting Rules 2017
Regulatory Powers Act Regulatory Powers (Standard
Provisions) Act 2014
SES Senior Executive Service
TA Act Taxation Administration Act 1953
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FUEL SECURITY (CONSEQUENTIAL AND TRANSITIONAL
PROVISIONS) BILL 2021
FUEL SECURITY (CONSEQUENTIAL AND TRANSITIONAL
PROVISIONS) BILL 2021
OUTLINE
The Fuel Security (Consequential and Transitional Provisions) Bill 2021
(this Bill) will make limited but necessary amendments to existing legislation
to support the minimum stockholding obligation (MSO) and fuel security
services payment (FSSP) proposed to be implemented under the related Fuel
Security Bill 2021 (the Main Bill).
Part 1 of Schedule 1 to this Bill will establish authority for Government
agencies to share relevant fuel information with the Department to reduce the
regulatory burden for regulated entities. It will also enable the Department to
check the veracity and accuracy of reported data to improve the
implementation, integrity and administration of the MSO and FSSP.
This will be achieved by making consequential amendments to the following
laws:
Competition and Consumer Act 2010 (CC Act)
Taxation Administration Act 1953 (TA Act)
Fuel Quality Standards Act 2000 (FQS Act)
Petroleum and Other Fuels Reporting Act 2017 (POFR Act).
Part 2 of Schedule 1 to this Bill will provide for consequential amendments
to be made to accommodate proposed changes to laws, likely to be made
before early September 2021, which will make machinery changes to merge
the Federal and Family Courts of Australia.
Schedule 2 to this Bill will establish transitional provisions required for the
implementation of the MSO and FSSP measures under the Main Bill, to
ensure the MSO does not take effect before 1 July 2022, and applications for
the FSSP cannot be made until rules prescribing the application and
assessment process have been made under the Main Bill.
FINANCIAL IMPACT STATEMENT
Nil impact.
REGULATION IMPACT STATEMENT
The combined Regulation Impact Statement for this Bill and the Main Bill
has been prepared in accordance with the Australian Government Guide to
Regulation and is attached to the Main Bill (reference numbers: 42904 and
20489).
CONSULTATION
While no external consultation was undertaken specifically in relation to this
Bill, a targeted consultation was conducted for the Main Bill. This
consultation included industry, peak bodies, and government representatives
to determine suitability of the Main Bill.
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FUEL SECURITY (CONSEQUENTIAL AND TRANSITIONAL
PROVISIONS) BILL 2021
STATEMENT OF COMPATIBILITY WITH HUMAN RIGHTS
Prepared in accordance with Part 3 of the Human Rights (Parliamentary
Scrutiny) Act 2011.
Fuel Security (Consequential and Transitional Provisions) Bill 2021
This Bill is compatible with the human rights and freedoms recognised or
declared in the international instruments listed in section 3 of the
Human Rights (Parliamentary Scrutiny) Act 2011.
Overview of the Bill
The Fuel Security (Consequential and Transitional Provisions) Bill 2021
(this Bill) will make limited but necessary amendments to existing legislation
to support the minimum stockholding obligation (MSO) and fuel security
services payment (FSSP) proposed to be implemented under the related Fuel
Security Bill 2021 (the Main Bill).
Part 1 of Schedule 1 to this Bill will establish authority for Government
agencies to share relevant fuel information with the Department to reduce the
regulatory burden for regulated entities. It will also enable the Department to
check the veracity and accuracy of reported data to improve the
implementation, integrity and administration of the MSO and FSSP.
This will be achieved by making consequential amendments to the following
laws:
Competition and Consumer Act 2010 (CC Act)
Taxation Administration Act 1953 (TA Act)
Fuel Quality Standards Act 2000 (FQS Act)
Petroleum and Other Fuels Reporting Act 2017 (POFR Act).
Part 2 of Schedule 1 to this Bill will provide for consequential amendments
to be made to accommodate proposed changes to laws, likely to be made
before early September 2021, which will make machinery changes to merge
the Federal and Family Courts of Australia.
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FUEL SECURITY (CONSEQUENTIAL AND TRANSITIONAL
PROVISIONS) BILL 2021
Schedule 2 to this Bill will establish transitional provisions required for the
implementation of the MSO and FSSP measures under the Main Bill, to
ensure the MSO does not take effect before 1 July 2022, and applications for
the FSSP cannot be made until rules prescribing the application and
assessment process have been made under the Main Bill.
Human rights implications
This Bill engages, or may engage, the following rights:
the rights to an adequate standard of living and to continuous
improvement of living conditions - Article 11 of the International
Covenant on Economic, Social and Cultural Rights (ICESCR)
the right to privacy - Article 17 of the International Covenant on
Civil and Political Rights (ICCPR)
the right to freedom of expression - Article 19 of the ICCPR
the right to a fair trial - Article 14 of the ICCPR
The Bill will primarily regulate entities rather than individuals
As noted at paragraph 1.11 of the Parliamentary Joint Committee on Human
Rights - Guide to Human Rights, published in June 2015, which is a freely
available document that outlines the key human rights that form part of the
Parliamentary Joint Committee on Human Rights' mandate (available at
https://www.aph.gov.au/Parliamentary_Business/Committees/Joint/Human_
Rights/Guidance_Notes_and_Resources):
"Under the UN human rights treaties, human rights belong to
individuals and groups of individuals. The treaties do not confer
rights on companies or other incorporated bodies."
This Bill will consequentially amend legislation such as the POFR Act,
which would place various obligations on "regulated entities", as defined
under section 5(1) of the POFR Act. This term includes corporations, other
bodies corporate and trusts (predominantly where the trustees are all
constitutional corporations)).
Further, as noted above, this Bill will facilitate relevant fuel information
relating to entities that are proposed to be regulated under the Main Bill to be
shared with the Department, to promote the proper administration and
integrity of the proposed MSO and FSSP schemes. As noted in the Statement
of Compatibility accompanying the Main Bill, the classes of "persons" that
will be regulated under the Main Bill include:
"constitutional corporations" as defined under clause 5 together with
paragraph 40(2)(a);
"regulated entities" as defined under clause 5 (e.g. constitutional
corporations, other bodies corporate, trusts (predominantly where the
trustees are all constitutional corporations)); and
"Australian controlling corporations" as defined under clause 5
together with paragraph 8(2)(a).
Given the above, the Bill is unlikely to regulate and limit the human rights of
individuals.
Right to an adequate standard of living - Article 11 ICESCR
Despite the fact the Bill does not generally regulate the conduct of
individuals, it nevertheless engages positively with the right to an adequate
standard of living and to continuous improvement of living conditions.
Article 11 of ICESCR recognises the right of everyone to an adequate
standard of living, including adequate food, clothing and housing, and to the
continuous improvement of living conditions. This Bill helps to promote this
human right by alleviating the risks to fuel supply currently borne by
Government and consumers.
Specifically, by supporting the integrity and administration of the MSO and
FSSP measures under the Main Bill, this Bill will indirectly help to ensure
that domestic fuel stocks can be maintained to meet liquid fuel needs and
increase Australia's resilience during any future disruptions to the supply
chain. In this way, the Bill will also support fuel-dependent and critical
industries as well as Australian households.
Ensuring both the ongoing commercial viability of domestic fuel refiners,
and access to minimum local holdings of key transport fuels, would offer
protection during extreme disruptions to fuel supply to Australia, and protect
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FUEL SECURITY (CONSEQUENTIAL AND TRANSITIONAL
PROVISIONS) BILL 2021
consumers from fuel price increases that would likely ensue if Australia's
remaining oil refineries were to discontinue operations.
The proposed reforms are therefore likely to ensure the availability and
accessibility of the energy resources that are essential to the realisation of the
right to an adequate standard of living. They will also support Australia's
obligation under Article 2.1 of the ICESCR to take reasonable measures
within its available resources to progressively secure broader enjoyment of
this right.
Right to freedom of expression - Article 19 ICCPR
This Bill also engages the right to freedom of expression in Article 19 of the
ICCPR. Among other things, the Bill will consequentially amend the POFR
Act, by inserting new sections 13B-13D relating to auditing of fuel
information reports provided by regulated entities.
Under these new provisions, the POFR Rules may provide in relation to the
auditing of compliance with section 11 of the POFR Act (i.e. mandatory
reporting of fuel information to the Secretary), so far as that section concerns
the giving of reports that relate to the refining of FSSP fuels or compliance
with MSO obligations under the Main Bill.
Further, Ministerial rules may empower the Secretary to require that an audit
be conducted, and prescribe the matters to which an audit may or must relate,
the persons who may conduct the audit, and require reports of audits to be
given to the Secretary. This, together with the existing secrecy provisions
pertaining to "protected information" under Part 4 of the POFR Act,
therefore engages the right to freedom of expression by establishing
measures that may restrict the communication or publication of certain
information collected in the conduct of such audits.
However, the limitations on freedom of expression that may be imposed by
these measures are reasonable and proportionate, as they will ensure that
audits are conducted consistently with international standards and are of
sufficient quality and vigour to provide a meaningful assessment of the
accuracy of data reported by entities. The veracity and accuracy of such data
will be crucial to the integrity of the proposed MSO and FSSP schemes
proposed to be established under the Main Bill.
Article 19(3) of the ICCPR permits restrictions on the freedom of expression
as provided by law and necessary to protect the rights of others and national
security or public order, and this would extend to the right to protection of
sensitive commercial-in-confidence information reported by regulated
entities and/or collected during the course of compliance audits.
Given the above, the restrictions are considered compatible with Article 19
of the ICCPR because they will promote the integrity of the MSO and FSSP
schemes and ensure entities' commercial-in-confidence information is
sufficiently protected when used by the Department to assess their
compliance with the obligations under the Main Bill.
Right to privacy - Article 17 ICCPR
While noting that the consequential amendments proposed to be made by the
Bill will primarily regulate the conduct of, or otherwise impact, entities that
are unlikely to be individuals, out of an abundance of caution, consideration
has been given to the possibility that the Bill engages the right to privacy of
individuals.
As noted above, the Bill will make limited minor consequential amendments
to provisions regulating the disclosure of information under the CC Act, FQS
Act, POFR Act and TA Act. Such amendments will establish lawful
authority for Government agencies, including the ACCC and ATO, as well
as entrusted persons under the POFR Act and inspectors and other officers
involved in administering the FQS Act, to share relevant fuel information
(e.g. types of fuels and volumes refined in and/or imported into Australia,
compliance with relevant fuel standards, etc.) with the Department (e.g.
officers within the Department with responsibilities under the Main Bill).
These amendments will play an important role in enabling the Department to
check the veracity and accuracy of data reported by regulated entities under
the POFR Act and the Main Bill, relating to fuel refining and importing
activities.
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FUEL SECURITY (CONSEQUENTIAL AND TRANSITIONAL
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While the information permitted to be shared with the Department under the
amended provisions will almost solely relate to refinery operations, fuel
production volumes, imports of fuel stocks and other matters relating to the
business of refining and importing fuel, it is nevertheless possible some
personal information about identifiable individuals may be collected under
the provisions proposed to be consequentially amended.
However, any such collection of personal information - to the extent that it
occurs - will be limited to what is necessary to ensure the functional
operation of the legislative scheme, including its enforcement, so that the
intended benefits of the proposed fuel security measures can be realised.
Further, the Bill will make consequential amendments to the definition of
"protected information" (which includes personal information) under section
5 of the POFR Act to ensure that information mandatorily reported under
section 11 of that Act, which also relates to entities' MSO obligations or
refining of FSSP fuels, is handled appropriately and not used or disclosed for
purposes unrelated to the administration of the POFR Act or the Main Bill.
Existing Part 4 (Secrecy and Disclosure) of the POFR Act will also continue
to place appropriate prohibitions and limitations on the manner in which
"protected information" may be used and disclosed, including the significant
limitation that an entrusted person under the POFR Act may only make a
record of, use or disclose protected information if the record is made, or the
information is used or disclosed, in the course of exercising powers, or
performing functions or duties, as an entrusted person (see sections 20 and
21 of the POFR Act). The Bill will make a minor consequential amendment
to section 21 of the POFR Act to insert a note advising that the powers,
functions and duties of entrusted persons are not limited to those conferred or
imposed by the POFR Act. This will remove any doubt that information
reported by regulated entities under the POFR Act may also be used and
disclosed for the limited purpose of administering the MSO and FSSP
schemes under the Main Bill.
Therefore, while the Bill may engage and limit the right to privacy, given the
objects of the proposed fuel security reforms under the Main Bill, the fact
that the vast majority (if not all) regulated entities will not be individuals,
and the protections proposed with respect to the handling of information
reported under existing POFR laws, it is clear that any such limitation will be
reasonable, necessary and proportionate.
Right to a fair trial - Article 14 ICCPR
The Bill potentially also engages the right to the criminal process guarantees
under Articles 14 and 15 of the ICCPR, given the substantial maximum
pecuniary penalties attached to the civil penalty provisions under proposed
new sections 13A, 13C and 13D of the POFR Act (i.e. 250-300 penalty
units) and the fact that the purpose of such penalties is to punish and deter.
However, in a vast majority of (if not, all) cases, the entities that will be
subject to the proposed civil penalty provisions are large, sophisticated
multinational corporations. The measures aren't directed at individuals, and
therefore, it is unlikely the Bill engages any criminal process human rights.
For example, proposed new sections 13A, 13C and 13D of the POFR Act are
anticipated to apply predominantly in relation to entities that are not
individuals, as they will place obligations on:
the "persons" required to report under section 11 of the POFR Act,
where such reports relate to MSO products/activities or the refining
of FSSP fuels (within the meaning of the Main Bill) (see new
sections 13A and 13D of the POFR Act). This will include corporate
refinery operators and/or other owners of refinery stock, importers
and holders of stock relevant to the MSO (all of which are anticipated
to be constitutional corporations).
the "persons affected" by an audit of compliance with the mandatory
reporting obligations under section 11 of the POFR Act (see new
section 13C POFR Act). That is, "regulated entities" (see description
above), Australian controlling corporations of regulated entities,
entities in possession of stocks of MSO products held by a regulated
entity, and other "constitutional corporations".
While it is therefore unlikely the civil penalty provisions to be inserted by
the Bill engage any criminal process human rights, out of an abundance of
caution, consideration has been given to whether the Bill unjustifiably limits
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FUEL SECURITY (CONSEQUENTIAL AND TRANSITIONAL
PROVISIONS) BILL 2021
the right of individuals under Article 14 of the ICCPR, such that the civil
penalty provisions proposed to be established would be regarded as
"criminal" under human rights law.
The new civil penalty obligations relate to the existing requirement of
regulated entities to report fuel-related information under section 11 of the
POFR Act, and will provide that a person must:
not report false or misleading information which relates to whether a
regulated entity is complying with their MSO under the Main Bill or
whether a constitutional corporation is entitled to payment of the
FSSP under the Main Bill (s13A) - maximum 300 penalty units. This
would also be consistent with the analogous civil penalty provision
that will be established under clause 49 of the Main Bill;
provide reasonable facilities and assistance to an auditor conducting
an audit of compliance with section 11 relating to MSO
activities/products by regulated entities or the refining of FSSP fuels
(s13C) - maximum 250 penalty units;
comply with any rules requiring a report of an audit of compliance
with section 11 reporting obligations (s13D(1)) - maximum 250
penalty units; and
give a report of an audit to the Secretary if required by the rules
(s13D(2) - maximum 250 penalty units.
Each of these proposed civil penalties provisions relate to requirements that
operate in a regulatory context - that is, regulation of refinery operators and
importers of fuel to ensure compliance with various reporting obligations
under both the MSO and FSSP aspects of the Main Bill - and will not apply
to the general public.
Further, the primary object of the civil penalty provisions is to ensure the
accuracy of fuel information reported by regulated entities, which data will
be relied on to administer the MSO and FSSP schemes under the Main Bill.
The veracity and integrity of this information is crucial to the success of the
fuel security measures under the Main Bill, and therefore is also essential to
achieving the overarching objectives of improving national fuel security and
assisting in preventing disruptions in fuel supplies.
In light of the above, while substantial maximum penalties may apply under
the civil penalty provisions of the Bill, they are not "criminal" in nature in
the context of international human rights law, given the narrow class of
corporate entities subject to the provisions, the specific regulatory context in
which they apply, and the need to ensure compliance with entities' MSO and
FSSP obligations to promote the national fuel security policy objectives of
the Bill. Therefore, to the extent that the Bill engages and limits the criminal
process rights under Article 14 of the ICCPR, such limitations are
reasonable, necessary and proportionate.
Conclusion
The Bill is compatible with human rights because it promotes the protection
of the rights to an adequate standard of living and to continuous
improvement of living conditions. While there are very few provisions of the
Bill that regulate or engage the human rights of individuals, to the extent that
it may limit human rights, those limitations are reasonable, necessary and
proportionate.
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FUEL SECURITY (CONSEQUENTIAL AND TRANSITIONAL
PROVISIONS) BILL 2021
PART 1-- MAIN CONSEQUENTIAL AMENDMENTS
FUEL SECURITY
(CONSEQUENTIAL AND TRANSITIONAL PROVISIONS) BILL
2021
NOTES ON CLAUSES
Clause 1: Short title
1. This clause provides for the Bill, when enacted, to be cited as the
Fuel Security (Consequential and Transitional Provisions) Act 2021.
Clause 2: Commencement
2. The table in this clause sets out the commencement date for when the
Bill's provisions commence.
3. The effect of this clause is that:
a. clauses 1-3 of the Bill commence upon Royal Assent;
b. Part 1 of Schedule 1, and Schedule 2, to the Bill commence at
the same time as the Main Bill commences (that is, the day
after the Main Bill receives Royal Assent); and
c. Part 2 of Schedule 1 to the Bill commences the later of:
i. immediately after the commencement of the proposed
Federal Circuit and Family Court of Australia Act
2021 (FCFCA Act); and
ii. immediately after the commencement of the Fuel
Security Act 2021.
4. However, if the Main Bill does not commence then none of the
Schedules to this Bill will commence either.
Clause 3: Schedules
5. This clause provides that the Schedules to the Bill amend or repeal
the legislation referred to therein in the manner set out in the
Schedules.
Schedule 1--Consequential amendments
Part 1-- Main Consequential amendments
Competition and Consumer Act 2010
Item 1 - At the end of subsection 95ZPA(1)
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FUEL SECURITY (CONSEQUENTIAL AND TRANSITIONAL
PROVISIONS) BILL 2021
6. This item amends section 95ZPA of the CC Act by inserting a
reference to the Fuel Security Act 2021 (Fuel Security Act).
7. The intention of the proposed amendment to section 95ZPA is to
enable fuel information which is otherwise protected information
under the CC Act to be able to be shared by the ACCC with the
Department, if the Chairperson of the ACCC is satisfied that it will
enable or assist an officer of the Department to perform or exercise
any function or power under the Main Bill. This would be consistent
with, and extend the existing power of, the ACCC Chairperson to
share information with the Department to support the POFR Act.
8. It is envisaged that information related to the ownership, operation,
capacity, throughput and location of fuel storage terminals, which is
collected by the ACCC, will continue to be shared with the
Department. However, this information will be able to be used for -
in addition to the existing purpose of producing information relevant
to evaluating energy security policy under the POFR Act -validating
information received by the Department for the purposes of
administering the FSSP and MSO.
9. In particular, it is envisaged such data may be used to help verify
volumes of FSSP fuel reported as having been refined for a period
under POFR laws and, in the case of discrepancies, to help ascertain
if any overpayments of the FSSP have been made requiring recovery
under clauses 50 and 54 of the Main Bill.
10. It is also envisaged the data will be used to cross-check information
provided for the purposes of administration, compliance and
enforcement of the MSO. Information on fuel storage terminals will
be useful to determine the capacity of the liquid fuel market and
regulated entities.
11. The proposed consequential amendments to section 95ZPA will
enable an entrusted person under the CC Act to disclose protected
information under that Act to the agency responsible for
administrating the Main Bill (i.e. the Department), if the information
enables or assists an officer in the Department to carry out any
function or power under the Main Bill.
12. The Chairperson of the ACCC, or his or her delegate under
subsection 95ZPA(4) of the CC Act, may impose written conditions
PART 1-- MAIN CONSEQUENTIAL AMENDMENTS
when disclosing protected information. For example, the Chairperson
could require that the disclosed information be stored securely or not
be disclosed outside of the receiving agency without the
Chairperson's consent.
13. The Chairperson may delegate his or her power to authorise
disclosure of protected information under this clause to another
member of the Commission, an SES employee or an acting SES
employee of the Commission.
Fuel Quality Standards Act 2000
Item 2 - After subparagraph 67A(b)(ii)
14. This item amends section 67A of the FQS Act by inserting a
reference to the Fuel Security Act.
15. It is intended that one of the requirements to be prescribed under
subclause 20(2) and paragraph 40(2)(c) of the Main Bill will be that
the stocks of MSO product and refined FSSP fuel must comply with
any applicable standards under the FQS Act.
16. Therefore, to properly administer the MSO and the FSSP schemes,
the Department will require information about:
a. whether any MSO product being counted towards an entity's
stockholding obligation meets any fuel quality standards that
may be prescribed by the rules;
b. whether FSSP fuel refined by a refinery for a reporting period
meets any applicable standards under the FQS Act; and
c. whether a refinery has been granted, under section 13 of the
FQS Act, an approval varying a fuel standard or a fuel quality
information standard in a specified way.
17. The proposed consequential amendments to section 67A of the
FQS Act are therefore intended to authorise inspectors and other
officers involved in administering the FQS Act to use or disclose
relevant information to officers of the Department with
responsibilities under the Main Bill (and any rules made under that
Bill for the purpose of monitoring compliance with those laws).
Petroleum and Other Fuels Reporting Act 2017
Item 3 - At the end of section 3
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FUEL SECURITY (CONSEQUENTIAL AND TRANSITIONAL
PROVISIONS) BILL 2021
18. This item amends the objects of the POFR Act to include supporting
the implementation of the Main Bill.
19. This amendment recognises the role the POFR Act will play in
helping to collect and verify information from refinery operators and
importers of fuel products to support the administration of the
proposed MSO and FSSP schemes under the Main Bill.
Item 4 - Subsection 5(1)
20. This item inserts a new definition of the phrase "affected" into the
definitions provision of the POFR Act, which cross-refers to
proposed new subsection 13C(2) of the POFR Act (see related
explanatory note at paragraphs 40-44 below).
Item 5 - Subsection 5(1) (at the end of paragraph (a) of the definition of
fuel information)
21. This item amends paragraph (a) of the definition of "fuel
information" under section 5 of the POFR Act by adding a reference
to holding stocks of covered products that are MSO products.
22. The purpose of this item is to clarify that information related to the
Main Bill could be collected in reports under paragraph 11(4)(a) of
the POFR Act, by specifying that "fuel information" could relate to
"holding" (as defined under the Main Bill) stocks of covered products
that are MSO products (as defined under the Main Bill).
Item 6 - Subsection 5(1) (at the end of the definition of holding stock)
23. This item inserts a note below the definition of the phrase "holding
stock" of a covered product in subsection 5(1) of the POFR Act,
advising the reader to also have regard to new subsection 5(4) of the
POFR Act that will be inserted by this Bill (see related explanatory
note at paragraphs 26-29 below). This is intended to alert the reader
to the meaning of "holding stock" of a covered product that is an
MSO product for the purpose of the Main Bill.
PART 1-- MAIN CONSEQUENTIAL AMENDMENTS
Item 7 - Subsection 5(1) (paragraphs (a), (b) and (c) of the definition of
protected information)
24. This item amends the definition of "protected information" in section
5 of the POFR Act to include information obtained under, or in
accordance with, the Main Bill.
25. This consequential amendment ensures information collected under
the POFR Act that is used to help administer the proposed MSO and
FSSP schemes under the Main Bill is handled consistently with
information collected under the POFR Act for other purposes. This
means that the existing secrecy regime in the POFR Act will apply to
information collected under the Main Bill in addition to information
which is provided in reports under the POFR Act.
Item 8 - At the end of section 5
26. This item inserts new subsection 5(4) into the POFR Act, to further
explain when a person is taken to be "holding stock" of a covered
product that is an MSO product within the meaning of the Main Bill.
27. The new provision specifies that a person is "holding stock" if the
conduct meets the requirements under clause 19 of the Main Bill.
This includes, for example, holding stocks of an MSO product that
are not excluded under clause 20 of the Main Bill and where:
a. the entity exclusively owns, or is entitled to take ownership
of, the stocks and no one else is the holder; or
b. the stocks are held, reserved or quarantined for the entity and
no one else is the holder; or
c. the stocks are feedstock and are taken to be stocks of MSO
product in accordance with clause 25 of the Main Bill.
28. This definition of "holding stock" of a covered product that is an
MSO product will in turn apply under paragraph (d) of the definition
of the phrase "covered activity" under subsection 5(1) of the POFR
Act, as the context requires.
29. This structure recognises that the Main Bill may enable stock to be
held in circumstances that would not constitute the holding of stock
under the existing POFR Act, such as the potential for stock to be
held in certain pipelines. It is likely that stocks only held because of
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FUEL SECURITY (CONSEQUENTIAL AND TRANSITIONAL
PROVISIONS) BILL 2021
new subsection 5(4) would be reported separately from stocks that
would otherwise be held by an entity.
Item 9 - Subsection 11(4) (at the end of note 2)
30. This item amends note 2 to subsection 11(4) of the POFR Act.
Specifically, it inserts advice that new section 13A of the POFR Act
(proposed to be inserted under item 10 of Schedule 1 to this Bill) will
establish a civil penalty for persons providing false or misleading
information in relation to the Main Bill (i.e. the reporting under the
POFR Act of false or misleading information relating to a person's
MSO or entitlement to the FSSP). This expands on the existing note
2, advising that a person may commit an offence under the Criminal
Code if they provide false or misleading information or documents in
respect of their reporting obligations under section 11 of the POFR
Act.
Item 10 - At the end of Part 2
New section 13A Civil penalty for false or misleading information
relating to Fuel Security Act 2021
31. This item inserts a new civil penalty provision (i.e. new section 13A)
into Part 2 of the POFR Act, for entities that report false or
misleading information under the Act, that relates to:
a. whether a person complies with their MSO under the Main
Bill; or
b. entitlement to payment of the FSSP under the Main Bill.
32. Specifically, the civil penalty provision will provide that a person
must not include information in a report under the POFR Act that:
a. relates to whether a person complies with the MSO; or
b. relates to the payment of the FSSP; and
c. is false or misleading, or omits a matter (without which the
information is misleading).
33. The maximum penalty is 300 penalty units, which is consistent with
the penalty amount for the analogous civil penalty proposed to be
included under clause 49 of the Main Bill.
34. The inclusion of a new civil penalty provision under section 13A will
also enable an infringement notice penalty to be issued under Part 5
PART 1-- MAIN CONSEQUENTIAL AMENDMENTS
of the Regulatory Powers Act as an alternative compliance option
(per section 36 of the POFR Act).
35. This provision is important to the integrity of both the FSSP
payments and MSO as fuel volumes held and refined need to be
accurate. Any deliberate under or over reporting has the potential to
provide significant commercial and financial advantages to a reporter
and is appropriately deterred by a civil penalty. Access to information
from other Commonwealth entities, audits and significant compliance
and enforcement powers will help determine whether or not this
provision has been breached. However, the Department's policy will
be to first work with relevant entities to ensure they understand their
obligations and report accurately.
New section 13B Compliance audits relating to the Fuel Security Act
2021
36. This item also inserts new section 13B into the POFR Act to establish
that rules made under the POFR Act (POFR Rules) may require
auditing of POFR reporting requirements to the extent such reporting
relates to MSO products and activities, or the refining of FSSP fuels.
37. New subsection 13B(2) provides that such rules may prescribe
specified matters including who is authorised to conduct an audit,
matters that must be addressed by an audit, and a requirement that
audit reports must accompany other mandatory reporting under
section 11 of the POFR Act (or otherwise be given to the Secretary).
It is appropriate that such complementary details regarding
compliance auditing relating to the Main Bill is able to be provided in
a flexible manner under Ministerial rules.
38. New subsection 13B(3) provides that certain terms (e.g. "FSSP
fuels") used in subsection 13B(1) have the same meaning as in the
Main Bill.
39. It is not intended that every report under the POFR Act would be
audited, but periodic auditing of key reports is likely to be useful to
ensure the integrity of the MSO and the FSSP payments. As those
schemes develop over time, the need for audits can be reassessed to
ensure they are proportionate and do not impose unnecessary costs or
regulatory burden. It is likely that national greenhouse and energy
auditors would be involved in such audits, similar to the audit
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FUEL SECURITY (CONSEQUENTIAL AND TRANSITIONAL
PROVISIONS) BILL 2021
provisions in the Main Bill. The rule making powers help ensure such
audits can be targeted at information of most relevance to the
schemes.
New section 13C Duty to provide reasonable facilities and assistance for
audit
40. This item also inserts new section 13C, which establishes an
obligation on persons who are "affected" by a compliance audit
relating to the Main Bill under proposed new subsection 13B(1) to
provide the audit team leader and any person assisting them with all
reasonable facilities and assistance necessary for the effective
conduct of the audit. This will help ensure that the effectiveness of
audits is not frustrated by withholding information or non-
cooperation.
41. New subsection 13C(2) defines persons who are "affected" by an
audit as:
a. the person being audited;
b. if the audit relates to compliance with reporting obligations
that relate to MSO activities and products by a regulated
entity: the regulated entity; or any Australian controlling
corporation of the regulated entity; or any entity in possession
of stocks of an MSO product that are held by the regulated
entity; or
c. if the audit relates to compliance with reporting obligations
that relate to the refining of FSSP fuels by a constitutional
corporation under the Main Bill: the constitutional
corporation.
42. New subsection 13C(3) provides that certain terms (e.g. "FSSP
fuels") used in subsection 13C(2) have the same meaning as in the
Main Bill.
43. This provision establishes a civil penalty for contravening the
obligation to provide reasonable assistance for an audit and a
maximum penalty of 250 penalty units will apply. This is consistent
with analogous auditing provisions proposed under subclauses 33(4)
and 34(3) of the Main Bill relating to MSO compliance audits. The
penalty is consistent with the existing penalty for not reporting under
subsection 11(2) of the POFR Act.
PART 1-- MAIN CONSEQUENTIAL AMENDMENTS
44. The inclusion of a new civil penalty provision under section 13C will
also enable an infringement notice penalty to be issued under Part 5
of the Regulatory Powers Act as an alternative compliance option
(per section 36 of the POFR Act).
New section 13D Duty to comply with requirements in relation to report
of audit
45. This item also inserts new section 13D into the POFR Act. The new
provision establishes two civil penalty provisions to ensure audit
reports are provided where required.
46. The first civil penalty provision, established under new subsection
13D(1), obliges persons who are required to report under section 11
of the POFR Act to also comply with any rules requiring a report of
an audit to accompany the report under section 11.
47. The second civil penalty provision, established under new subsection
13D(2), obliges persons who are required by the POFR Rules to give
a report of an audit to the Secretary, to give the required audit report
to the Secretary.
48. A maximum penalty of 250 penalty units applies for a single
contravention of either subsection 13D(1) or 13D(2). Alternatively, it
is intended an infringement notice penalty may be issued under Part 5
of the Regulatory Powers Act (per section 36 of the POFR Act) for
an alleged contravention of either provision. The penalty is consistent
with the existing penalty for not reporting under subsection 11(2) of
the POFR Act.
Item 11 - Section 14 (paragraph beginning "Fuel information")
49. This item consequentially amends the second paragraph of the
simplified outline for Part 3 of the POFR Act to clarify that "fuel
information", within the context of that Part:
may relate to various specified matters including the "holding" of
certain covered products, and further clarifies that in the context
of Part 3 "holding" has the meaning given under the Main Bill
(see clause 19 of the Main Bill);
in addition to including contextual information, also includes
metadata describing such data. The timing of the collection of
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FUEL SECURITY (CONSEQUENTIAL AND TRANSITIONAL
PROVISIONS) BILL 2021
data may assist when determining compliance with the obligation
day requirements under the Main Bill.
Item 12 - At the end of section 21
50. This item inserts a note under section 21 of the POFR Act, advising
that the powers, functions and duties of entrusted persons are not
limited to those conferred or imposed by the POFR Act.
51. The purpose of this note is to avoid any doubt that "protected
information" (as defined under section 5 of the POFR Act) reported
by regulated entities under the POFR Act and POFR Rules relating
to:
a. MSO activities undertaken by entities, and specific kinds and
volumes of MSO products produced by those activities, will
be able to be used for the purposes of:
i. determining whether an entity is undertaking an MSO
activity in relation to an MSO product during a prescribed
period;
ii. calculating when an entity's activity exceeds the threshold
for a prescribed period to trigger the MSO (i.e. exceeds
the volume in megalitres proposed to be prescribed by
rules made under the Main Bill for the activity and
product);
iii. assessing the required quantity of MSO product to be held
by a regulated entity; and
iv. verifying reports made (or omitted to be made) regarding
any of the matters required to be reported in relation to an
entity's MSO under the Main Bill; and
b. specific kinds, and volumes, of FSSP fuel refined at a
committed refinery throughout a commitment period, will be
able to be used for the purposes of:
i. determining a refinery operator's quarterly eligibility for
the FSSP;
ii. determining if a refinery operator is obliged to repay any
amount of the FSSP; and
PART 1-- MAIN CONSEQUENTIAL AMENDMENTS
iii. verifying reports made (or omitted to be made) regarding
any of the other matters required to be reported for the
FSSP.
Item 13 - At the end of subsection 31(1)
52. This item amends subsection 31(1) of the POFR Act to allow an
entrusted person (within the meaning of the Australian Border Force
Act 2015) to disclose information to the Department for the purpose
of the Main Bill (in addition to the POFR Act).
53. It is envisaged such information may be used to help verify volumes
of FSSP fuel reported as having been refined for a period under
POFR laws and, in the case of discrepancies, to help ascertain if any
overpayments of the FSSP have been made requiring recovery under
clause 54 of the Main Bill. It will also be used to facilitate
verification of information reported with respect to MSO matters, by
enabling cross-checking of information with import and excise data.
Item 14 - After subsection 33(1)
54. This item inserts a new subsection 33(1A) into the POFR Act to
specify that the offence and civil penalty provisions of the FQS Act
and under the Main Bill are "related provisions" for the purposes of
monitoring compliance with the POFR Act under Part 2 of the
Regulatory Powers Act. This is intended to create efficiencies in
monitoring compliance with each of these Acts by enabling evidence
collected in the course of monitoring compliance with the POFR Act
to also be held and used for the purpose of monitoring compliance
with related offences and provisions of the FQS Act and Main Bill.
Item 15 - Subsection 33(2) (heading) and Item 16 - Paragraph 33(2)(a)
55. These items make minor amendments to update subsection 33(2) of
the POFR Act, consequent upon proposed item 14 above, by deleting
the reference in the subheading to that provision to "Related
provisions" and repealing paragraph 33(2)(a) as there will be no
related provisions under subsection 33(2) and any references to
"related provisions" are therefore redundant.
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FUEL SECURITY (CONSEQUENTIAL AND TRANSITIONAL
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Item 17 - After paragraph 39(1)(c)
56. This item inserts a new paragraph (ca) into subsection 39(1) of the
POFR Act, which extends the power of the Secretary to delegate their
functions or powers to include delegation of any powers or functions
under rules made for the purposes of subsection 13B(1) of the POFR
Act (about compliance audits relating to the Main Bill).
57. It is appropriate for the Secretary to be able to delegate certain
powers and functions under rules anticipated to be made under the
POFR Act for the purpose of auditing compliance with reporting
obligations relating to MSO activities/products of regulated entities
and refining of FSSP fuels, to ensure such audits can be administered
effectively and efficiently. It will not be practical for the Secretary to
personally administer the entire auditing process under proposed new
section 13B of the POFR Act.
58. It is envisaged the power of delegation will apply to the following
powers likely to be provided under the POFR Rules:
a. to require an audit to be conducted (see proposed new
paragraph 13B(2)(a) of POFR Act);
b. to specify the matters to which an audit is to relate (see
proposed new paragraph 13B(2)(b) of POFR Act); and
c. to accept reports of audits that are required to be given to the
Secretary (see proposed new paragraph 13B(2)(e) of POFR
Act).
59. The approach taken to delegations is based on the degree of
discretion involved in the decisions, the nature of the decisions and
the potential impacts on refinery operators and fuel importers. Given
these matters, it is appropriate that the Secretary's powers and
functions under rules made under proposed new section 13B of the
POFR Act are limited to the SES level officers due to the significant
nature of the decisions regarding whether and how to audit
compliance with reporting obligations, the degree of discretion
involved and the consequential impacts on the refinery operators and
fuel importers.
60. Further, existing subsection 39(2) of the POFR Act makes it clear
that, where a delegate is carrying out delegated powers or functions
PART 1-- MAIN CONSEQUENTIAL AMENDMENTS
under subsection 39(1), they must comply with any directions the
Secretary makes.
Taxation Administration Act 1953
Item 18 - Subsection 355-65(8) in Schedule 1 (at the end of the cell at
table item 6A, column headed "and the record or disclosure ...")
61. This item amends item 6A of the table in subsection 355-65(8) in
Schedule 1 to the TA Act to enable records or disclosures relating to
miscellaneous matters to the Secretary of the Department for the
purpose of administering the Main Bill.
62. These amendments are consistent with consequential amendments
previously made to the TA Act with respect to disclosure of
information to the Secretary of the Department for the purpose of
administering the POFR Act. Relevantly, excise information is
relevant to both the FSSP and MSO and will help with the integrity
of those schemes.
Item 19 - Application of amendments
Disclosure of information etc.
63. This item clarifies that the proposed consequential amendments of
the CC Act, FQS Act and TA Act that will be made by Schedule 1 to
this Bill will only authorise disclosures of information (and, in the
case of the FQS Act, authorisations of disclosures of information)
made after the commencement of that Schedule, regardless of
whether the information was obtained before or after commencement.
Information before commencement could be relevant to whether
thresholds for the MSO are met or to check consistency with future
information.
Definition of holding stock
64. This item also provides that the amendments to the definition of
"holding stock" in section 5 of the POFR Act made by Schedule 1 to
this Bill will apply from 1 July 2022.
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FUEL SECURITY (CONSEQUENTIAL AND TRANSITIONAL
PROVISIONS) BILL 2021
PART 1-- MAIN CONSEQUENTIAL AMENDMENTS
Part 2-- Consequential amendments relating to the Federal Circuit and
Family Court of Australia Act 2021
Fuel Security Act 2021
Items 20 - 26
65. These items amend clauses 50(5)(b), 54(4)(b), 60(4)(e)(ii),
61(3)(e)(ii), 62(3)(b), 69(3)(b) and 70(3)(b) of the Main Bill to
update references in the Main Bill to the "Federal Circuit Court of
Australia" contingent upon changes to laws likely to be made in or
before early September 2021 which would merge the Federal Circuit
Court and the Family Court of Australia.
Schedule 2--Transitional provisions
Item 1 - Definitions
66. This item defines the terms "Act" and "rules" for the purpose of
Schedule 2 to the Bill.
Item 2 - Minimum stockholding obligation
67. This item ensures the MSO obligations under Part 2 of the Main Bill
do not apply before 1 July 2022. Specifically, no obligation days (as
defined under clause 5 of the Main Bill) may be prescribed before
that date.
68. Item 2(2) provides that, for the purpose of triggering the MSO under
clause 10 of the Main Bill, rules made under the Main Bill may
prescribe a period before that Bill commences. This will give effect
to the policy intent that the Secretary may refer to records about MSO
activities undertaken by a regulated entity in relation to MSO
products, notwithstanding that such records may predate the
commencement of the Main Bill.
69. Item 2(3) ensures the obligation for regulated entities to notify the
Secretary about MSO activity relating to MSO products in
accordance with clause 30 of the Main Bill, will not apply until after
30 June 2022. This avoids unnecessary reporting obligations before
the start of the MSO.
70. Item 2(4) provides that section 21 of the POFR Act - as it would
apply to entrusted persons exercising powers, or performing
functions or duties, upon the commencement of the Main Bill -
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FUEL SECURITY (CONSEQUENTIAL AND TRANSITIONAL
PROVISIONS) BILL 2021
authorises the making of records of, and using and disclosing,
information made after the commencement of Schedule 2 to the Bill,
whether or not such information was obtained before or after
commencement of that Schedule. This information may be necessary
for the MSO and the FSSP.
Item 3 - Fuel security services payment
71. This item ensures applications for the FSSP cannot be made until the
Minister has made rules required to assess such applications.
However, if any such rules are subsequently repealed, then item 3(2)
of Schedule 2 to the Bill clarifies that applications for the FSSP could
still be made. Importantly, the rules will contain a number of
requirements for applications that need to be specified before
applications can be considered.
72. Item 3(3) establishes that, for the purpose of a determination made by
the Minister under clause 44 of the Main Bill, the Minister may take
into account any consultation undertaken before or after
commencement of the Main Bill. This recognises the extensive
consultation that has already occurred with impacted refineries in
developing the FSSP. It recognises a number of steps the
Government has already taken to afford refinery operators' natural
justice rights in relation to the determination.
31