Commonwealth of Australia Explanatory Memoranda Commonwealth of Australia Explanatory Memoranda[Index] [Search] [Download] [Bill] [Help]
2013-2014
THE PARLIAMENT OF THE COMMONWEALTH OF AUSTRALIA
HOUSE OF REPRESENTATIVES
CLEAN ENERGY LEGISLATION (CARBON TAX REPEAL) BILL 2014
TRUE-UP SHORTFALL LEVY (GENERAL) (CARBON TAX REPEAL) BILL 2014
TRUE-UP SHORTFALL LEVY (EXCISE) (CARBON TAX REPEAL) BILL 2014
CUSTOMS TARIFF AMENDMENT (CARBON TAX REPEAL) BILL 2014
EXCISE TARIFF AMENDMENT (CARBON TAX REPEAL) BILL 2014
OZONE PROTECTION AND SYNTHETIC GREENHOUSE GAS (IMPORT LEVY)
AMENDMENT (CARBON TAX REPEAL) BILL 2014
OZONE PROTECTION AND SYNTHETIC GREENHOUSE GAS
(MANUFACTURE LEVY) AMENDMENT (CARBON TAX REPEAL) BILL 2014
EXPLANATORY MEMORANDUM
(Circulated by the authority of the Minister for the Environment,
the Hon Greg Hunt MP and the Treasurer, the Hon J.B. Hockey MP)
Table of contents
Glossary .................................................................................................. 1
General outline and statements .............................................................. 5
Chapter 1 Repeal of the carbon tax ............................................. 19
Chapter 2 Consequential amendments concerning
emissions and energy reporting, carbon units
and the Clean Energy Regulator ................................. 33
Chapter 3 Consequential taxation amendments ......................... 45
Chapter 4 Amendments to the Competition and Consumer
Act 2010 ...................................................................... 51
Chapter 5 Removal of equivalent carbon price from
taxable fuels ................................................................ 65
Chapter 6 Removal of equivalent carbon price from
synthetic greenhouse gases ....................................... 71
Chapter 7 Specific repeal issues ................................................. 75
Chapter 8 Regulation impact statement ...................................... 81
Index ................................................................................................... 105
Glossary
The following abbreviations and acronyms are used throughout this
explanatory memorandum.
Abbreviation Definition
2013 Carbon Tax Repeal Clean Energy Legislation (Carbon Tax Repeal) Bill
Bills 2013
True-up Shortfall Levy (General) (Carbon Tax
Repeal) Bill 2013
True-up Shortfall Levy (Excise) (Carbon Tax Repeal)
Bill 2013
Customs Tariff Amendment (Carbon Tax Repeal)
Bill 2013
Excise Tariff Amendment (Carbon Tax Repeal) Bill
2013
Ozone Protection and Synthetic Greenhouse Gas
(Import Levy) Amendment (Carbon Tax Repeal) Bill
2013
Ozone Protection and Synthetic Greenhouse Gas
(Manufacture Levy) Amendment (Carbon Tax
Repeal) Bill 2013
ACCC Australian Competition & Consumer Commission
ACCU Australian carbon credit unit
ACL Australian Consumer Law
ANREU Act Australian National Registry of Emissions Units Act
2011
Anti-Money Laundering Act Anti-Money Laundering and Counter Terrorism
Financing Act 2006
ARENA Australian Renewable Energy Agency
ARENA Act Australian Renewable Energy Agency Act 2011
ASIC Australian Securities & Investments Commission
ASIC Act Australian Securities and Investments Commission
Act 2001
ATO Australian Taxation Office
Carbon Tax Repeal Bills Clean Energy Legislation (Carbon Tax Repeal) Bill
2014
True-up Shortfall Levy (General) (Carbon Tax
1
Carbon Tax Repeal Bills
Abbreviation Definition
Repeal) Bill 2014
True-up Shortfall Levy (Excise) (Carbon Tax
Repeal) Bill 2014
Customs Tariff Amendment (Carbon Tax Repeal)
Bill 2014
Excise Tariff Amendment (Carbon Tax Repeal)
Bill 2014
Ozone Protection and Synthetic Greenhouse Gas
(Import Levy) Amendment (Carbon Tax Repeal)
Bill 2014
Ozone Protection and Synthetic Greenhouse Gas
(Manufacture Levy) Amendment (Carbon Tax
Repeal) Bill 2014
CC Act Competition and Consumer Act 2010
CCA Climate Change Authority
CCA Act Climate Change Authority Act 2011
CE Act Clean Energy Act 2011
CE Regulations Clean Energy Regulations 2011
CE Charges Acts Clean Energy (Unit Shortfall Charge --General) Act
2011;
Clean Energy (Unit Issue Charges --Fixed Charge)
Act 2011;
Clean Energy (Unit Issue Charges --Auctions) Act
2011;
Clean Energy (Charges--Excise) Act 2011; and
Clean Energy (Charges --Customs) Act 2011.
Clean Energy Legislation Clean Energy Act 2011;
Clean Energy Regulator Act 2011;
Climate Change Authority Act 2011;
Clean Energy (Consequential Amendments) Act
2011;
Clean Energy (Unit Shortfall Charge - General) Act
2011;
Clean Energy (Unit Issue Charges - Fixed Charge)
Act 2011;
Clean Energy (Unit Issue Charges - Auctions) Act
2011;
Clean Energy (Charges--Excise) Act 2011;
Clean Energy (Charges--Customs) Act 2011; t
Ozone Protection and Synthetic Greenhouse Gas
2
Glossary
Abbreviation Definition
(Manufacture Levy) Amendment Act 2011;
Ozone Protection and Synthetic Greenhouse Gas
(Import Levy) Amendment Act 2011;
Clean Energy (Customs Tariff Amendment) Act 2011;
Clean Energy (Excise Tariff Legislation Amendment)
Act 2011;
Clean Energy (Fuel Tax Legislation Amendment) Act
2011;
Clean Energy (Household Assistance Amendments)
Act 2011;
Clean Energy (Income Tax Rates Amendments) Act
2011;
Clean Energy (Tax Laws Amendments) Act 2011;
Clean Energy Legislation Amendment Act 2012; and
Clean Energy Amendment (International Emissions
Trading and Other Measures) Act 2012.
Corporations Act Corporations Act 2001
Customs Australian Customs & Border Protection Service
Customs Amendment Bill Customs Tariff Amendment (Carbon Tax Repeal)
Bill 2014
Excise Amendment Bill Excise Tariff Amendment (Carbon Tax Repeal)
Bill 2014
Fuel Tax Act Fuel Tax Act 2006
FTCs Fuel tax credits
GST Goods & services tax
GST Act A New Tax System (Goods and Services Tax) Act
1999
ITAA 1997 Income Tax Assessment Act 1997
JCP Jobs & Competitiveness Program
Main Repeal Bill Clean Energy Legislation (Carbon Tax Repeal) Bill
2014
NGERS National Greenhouse & Energy Reporting Scheme
NGER Act National Greenhouse and Energy Reporting Act 2007
Opt-in scheme The Opt-in scheme allows a person to apply to have
the potential emissions embodied in the liquid fuel
that they use directly covered by the carbon tax,
rather than paying an equivalent carbon price through
the fuel tax credits system, or through excise or
excise equivalent customs duty.
3
Carbon Tax Repeal Bills
Abbreviation Definition
Ozone Manufacture Ozone Protection and Synthetic Greenhouse Gas
Amendment Bill (Import Levy) Amendment (Carbon Tax Repeal) Bill
2014
Ozone Import Amendment Ozone Protection and Synthetic Greenhouse Gas
Bill (Manufacture Levy) Amendment (Carbon Tax
Repeal) Bill 2014
Ozone Management Act Ozone Protection and Synthetic Greenhouse Gas
Management Act 1989
Ozone (Import Levy) Act Ozone Protection and Synthetic Greenhouse Gas
(Import Levy) Act 1995
Ozone (Manufacture Levy) Ozone Protection and Synthetic Greenhouse Gas
Act (Manufacture Levy) Act 1995
PRRTA Act Petroleum Resource Rent Tax Assessment Act 1987
Registry Australian National Registry of Emissions Units
Regulator Clean Energy Regulator
Regulator Act Clean Energy Regulator Act 2011
SGG Synthetic greenhouse gas
STP Steel Transformation Plan
STP Act Steel Transformation Plan Act 2011
TAA 1953 Taxation Administration Act 1953
Tax Commissioner Commissioner of Taxation
True-up Shortfall Levy Bills True-up Shortfall Levy (General) (Carbon Tax
Repeal) Bill 2014; and
True-up Shortfall Levy (Excise) (Carbon Tax
Repeal) Bill 2014.
4
General outline and statements
Background
Repealing the carbon tax
The Australian Government has a clear commitment to repeal the carbon
tax to:
· boost Australias economic growth, increase jobs and
enhance Australias international competitiveness;
· remove the cost of living pressures on households resulting
from the carbon tax;
· remove the cost pressures faced by business as a result of the
carbon tax; and
· remove unnecessary, burdensome and costly regulation.
The Government is implementing its commitment to remove the carbon
tax through seven Bills (together the ,,Carbon Tax Repeal Bills) that will
repeal the legislation imposing the carbon tax. The repeal legislation does
this by:
· abolishing the carbon pricing mechanism;
· removing the equivalent carbon price imposed through the
fuel tax credit system, through excise and excise equivalent
customs duties, and through synthetic greenhouse gas (SGG)
levies;
· making arrangements for the management of the last
financial year in which the carbon tax will apply (2013-14)
and the collection of any outstanding carbon tax
liabilities; and
· providing new powers to the Australian Competition &
Consumer Commission (ACCC) to ensure the passing
through of price reductions relating to the carbon tax repeal.
Repealing the carbon tax will reduce wholesale electricity and gas prices,
reduce the cost of taxable fuels for off-road use, and reduce the cost of
SGGs, such as those used for refrigeration and air conditioning. These
cost reductions will flow through to businesses in the form of lower input
costs and to households through lower energy bills and cheaper
retail prices.
The Carbon Tax Repeal Bills replace the 2013 Carbon Tax Repeal Bills
have been rejected twice by the Senate.
5
Carbon Tax Repeal Bills
Clean Energy Legislation (Carbon Tax Repeal) Bill 2014 and related
Bills
The Clean Energy Legislation (Carbon Tax Repeal) Bill 2014 (the Main
Repeal Bill) repeals the legislation that establishes the carbon pricing
mechanism, namely:
· Clean Energy Act 2011;
· Clean Energy (Charges--Customs) Act 2011;
· Clean Energy (Charges--Excise) Act 2011;
· Clean Energy (Unit Issue Charge--Auctions) Act 2011;
· Clean Energy (Unit Issue Charge--Fixed Charge) Act 2011;
and
· Clean Energy (Unit Shortfall Charge--General) Act 2011.
In addition, four technical bills provide for removal of the equivalent
carbon price through excise and excise equivalent custom duties and the
SGG levies.
The abolition of other carbon tax-related initiatives are to be done by other
Bills that are not part of the Carbon Tax Repeal Bills, namely:
· the abolition of the Climate Change Authority (CCA)
through the Climate Change Authority (Abolition)
Bill 2013 [No.2];
· the abolition of the Clean Energy Finance Corporation
through the Clean Energy Finance Corporation (Abolition)
Bill 2014; and
· the cancellation of carbon tax related income tax cuts that
were legislated to commence on 1 July 2015 through the
Labor 2013-14 Budget Savings (Measures No.1) Bill 2014.
The Carbon Tax Repeal Bills, included in this Explanatory Memorandum,
provide, in summary, that:
· 2013-14 will be the last financial year that the carbon tax will
apply, even if the Parliament does not pass the Carbon Tax
Repeal Bills until after 1 July 2014;
· liable businesses and other entities must meet all carbon tax
liabilities incurred up to 30 June 2014 under the carbon
pricing mechanism, the fuel tax credit system, excise or
excise equivalent customs duties, or SGG levies;
· liable businesses and other entities must pay their final
carbon tax compliance obligations at the next payment time
under the current legislated arrangements;
6
General outline and statements
· industry assistance provided under the Jobs &
Competitiveness Program (JCP) and the Energy Security
Fund will continue in 2013-14 for the purpose of meeting
carbon tax liabilities, and will then cease;
· the ACCC will have new powers to monitor prices and take
action against businesses that attempt to exploit other
businesses and consumers by charging unreasonably high
prices or making false or misleading claims about the effect
of the carbon tax repeal on prices;
· the Steel Transformation Plan Act 2011, which provided
carbon tax related assistance to steel industry businesses, will
be repealed and the assistance will cease;
· the funding for the Australian Renewable Energy Agency
(ARENA) will be adjusted;
· the conservation tillage tax offset, which was introduced at
the same time as the carbon tax, will be removed; and
· businesses and other entities with a carbon tax liability are
obliged to comply with current carbon tax compliance and
reporting arrangements for as long as those arrangements
remain law.
The Clean Energy Regulator (the Regulator), the Australian Taxation
Office (ATO), the Australian Customs & Border Protection Service
(Customs) and the Department of the Environment (the Department) will
have the necessary powers to collect any outstanding carbon tax liabilities
for 2012-13 and 2013-14 for as long as is necessary.
Businesses and other entities are obliged to comply with legislated
obligations for as long as those obligations remain law.
The structure of the broader carbon tax repeal package is explained in
Table I.
Table I: Broader Carbon Tax Repeal Package
Bill Description
Clean Energy Legislation The Main Repeal Bill:
(Carbon Tax Repeal) Bill · repeals the CE Act and the CE Charges Acts;
2014 (the ,,Main Repeal · makes consequential amendments to other
Bill) legislation referring to the CE Act and the carbon
pricing mechanism;
· provides for the collection of all carbon tax
liabilities for 2012-13 and 2013-14;
· introduces new powers for the ACCC to take
action to ensure price reductions relating to the
carbon tax repeal are passed on to consumers;
and
7
Carbon Tax Repeal Bills
Bill Description
· makes arrangements for the finalisation and
cessation of industry assistance through the JCP,
the Energy Security Fund and the Steel
Transformation Plan (STP).
True-up Shortfall Levy Technical Bills that provide for recovery of the value
(General) (Carbon Tax of over-allocated free carbon units through a
Repeal) Bill 2014 constitutionally compliant levy.
True-up Shortfall Levy
(Excise) (Carbon Tax
Repeal) Bill 2014
Customs Tariff Amends provisions to remove the equivalent carbon
Amendment (Carbon price imposed through excise equivalent customs
Tax Repeal) Bill 2014 duty on aviation fuel; and
Excise Tariff Amends provisions to remove the equivalent carbon
Amendment (Carbon price imposed through excise duty on aviation fuel.
Tax Repeal) Bill 2014
Ozone Protection and Repeals provisions imposing an equivalent carbon
Synthetic Greenhouse price through levies imposed on the import and
Gas (Import Levy) manufacture of SGGs.
Amendment (Carbon
Tax Repeal) Bill 2014
Ozone Protection and
Synthetic Greenhouse
Gas (Manufacture Levy)
Amendment (Carbon
Tax Repeal) Bill 2014
Climate Change Abolishes the CCA and the Land Sector Carbon &
Authority (Abolition) Biodiversity Board.
Bill 2013 [No.2]
Labor 2013-14 Budget Repeals the personal income tax cuts that were
Savings (Measures No 1) legislated to commence on 1 July 2015, and repeal
Bill 2014 the associated amendments to the low-income tax
offset.
Clean Energy Finance Abolishes the Clean Energy Finance Corporation
Corporation (Abolition) (CEFC).
Bill 2014
Date of effect:
Clean Energy Legislation (Carbon Tax Repeal) Bill 2014
Sections 1, 2 and 3 and anything in the Main Repeal Bill not elsewhere
covered in section 2 commence on the day the Main Repeal Bill receives
the Royal Assent.
8
General outline and statements
Schedule 1, Parts 1 and 2, which repeal the CE Act and the
CE Charges Acts and make consequential amendments resulting from
their repeal, commence on 1 July 2014.
Schedule 1, Part 3, Divisions 1 to 4, which provide transitional provisions
necessary to wind up the carbon tax and provisions to allow the final
compliance process to occur and enable the payment and future
enforcement of carbon tax liabilities relating to 2012-13 and 2013-14,
commence on 1 July 2014.
Schedule 1, Part 3, Division 5, which stops carbon unit auctions from
being conducted, cancels any auctioned units (with refunds) and ends the
requirement for regulations relating to carbon pollution caps and price
ceilings if the legislation is enacted before 1 July 2014, commences on the
day the Main Repeal Bill receives the Royal Assent.
Schedule 1 Part 4, which includes provisions to finalise industry
assistance, commences on:
· 1 July 2014, if the Main Repeal Bill receives the Royal
Assent before 30 June 2014; or
· the day after the Main Repeal Bill receives the Royal Assent.
Schedule 2, which includes provisions to prohibit carbon tax-related price
exploitation and false or misleading representations, and to give the
ACCC additional price monitoring powers, commences on the later of:
· the day after the Main Repeal Bill receives the Royal Assent;
and
· 1 January 2014.
Schedule 3, which repeals the conservation tillage tax offset, commences
the day after the Main Repeal Bill receives the Royal Assent.
Schedule 4, which repeals the Steel Transformation Plan Act 2011,
commences on 1 July 2014.
Schedule 5, which amends the funding for the ARENA, commences the
day the Main Repeal Bill receives the Royal Assent.
True-up Shortfall Levy (General) (Carbon Tax Repeal) Bill 2014
Sections 1 and 2 and anything in the Bill not elsewhere covered in
section 2 commence on the day the Bill receives the Royal Assent.
All other sections commence at the same time that Part 4 of Schedule 1 to
the Main Repeal Bill commences.
9
Carbon Tax Repeal Bills
True-up Shortfall Levy (Excise) (Carbon Tax Repeal) Bill 2014
Sections 1 and 2 and anything in the Bill not elsewhere covered in
section 2 commence on the day the Bill receives the Royal Assent.
All other sections commence at the same time that Part 4 of Schedule 1 to
the Main Repeal Bill commences
Customs Tariff Amendment (Carbon Tax Repeal) Bill 2014
Sections 1, 2 and 3 and anything in the Bill not elsewhere covered in
section 2 commence on the day the Bill receives the Royal Assent.
Schedule 1 commences at the same time that Part 1 of Schedule 1 to the
Main Repeal Bill commences.
Excise Tariff Amendment (Carbon Tax Repeal) Bill 2014
Sections 1, 2 and 3 and anything in the Bill not elsewhere covered in
section 2 commence on the day the Bill receives the Royal Assent.
Schedule 1 commences at the same time that Part 1 of Schedule 1 to the
Main Repeal Bill commences.
Ozone Protection and Synthetic Greenhouse Gas (Import Levy)
Amendment (Carbon Tax Repeal) Bill 2014
Sections 1, 2 and 3 and anything in the Bill not elsewhere covered in
section 2 commence on the day the Bill receives the Royal Assent.
Schedule 1 commences at the same time that Part 1 of Schedule 1 to the
Main Repeal Bill commences.
Ozone Protection and Synthetic Greenhouse Gas (Manufacture Levy)
Amendment (Carbon Tax Repeal) Bill 2014
Sections 1, 2 and 3 and anything in the Bill not elsewhere covered in
section 2 commence on the day the Bill receives the Royal Assent.
Schedule 1 commences at the same time that Part 1 of Schedule 1 to the
Main Repeal Bill commences.
Proposal announced:
The Prime Minister, the Hon Tony Abbott MP, and the Minister for the
Environment, the Hon Greg Hunt MP, announced the Governments plan
to repeal the carbon tax on Tuesday, 15 October 2013, reflecting the
Coalition longstanding and public commitment to this policy.
10
General outline and statements
Financial impact:
The financial impact associated with the repealing the carbon tax is
reflected in the Tables 1 and 2 below.
Table 1: Fiscal balance impact of carbon tax repeal and
carbon-related programs ($ million)
Fiscal balance ($m) 2013-14 2014-15 2015-16 2016-17 Total
Total cost of the removal of the 0.0 -2,220.0 -4,650.0 -6,840.0 -13,710.0
carbon tax
Total business compensation 0.0 984.0 1,829.0 2,499.7 5,312.7
measures
Total energy market compensation -1.4 507.4 -13.4 -17.8 474.7
measures
Total land initiatives and unnecessary 21.5 62.9 34.5 32.1 151.1
bureaucracies
Total other measures 0.6 304.9 335.5 199.1 839.9
Total savings from removal of 20.8 1,859.1 2,185.7 2,713.0 6,778.5
measures
Net Budget impact - Carbon Tax 20.8 -360.9 -2,464.3 -4,127.0 -6,931.5
Package
Table 2: Underlying cash balance impact of carbon tax repeal and
carbon-related programs ($ million)
Underlying cash balance ($m) 2013-14 2014-15 2015-16 2016-17 Total
Net Budget impact - Carbon Tax -556.4 -551.9 -2,327.2 -4,123.0 -7,558.5
Package
The estimates of the fiscal and underlying cash balance impacts of carbon
tax repeal and carbon-related programs have been revised since the carbon
tax repeal package was first introduced in 2013.
11
Carbon Tax Repeal Bills
Regulation Impact Statement
Carbon tax repeal - Regulation impact on business and households
Impact:
The Regulation Impact Statement (RIS) for repeal of the carbon tax was
prepared by the Department of the Environment and is summarised below.
The entire RIS is provided in Chapter 8.
Main points:
Impacts on Business
The primary impact of repealing the carbon tax on businesses is to reduce
the cost of inputs. While the carbon tax is directly applied to a relatively
small number of activities and liable entities, the size and importance of
these activities means that as these costs are passed on through the
economy the carbon tax results in an increase in input costs for the
majority of businesses. The main driver of these cost increases is the
impact of the carbon tax on energy prices - primarily electricity and gas.
Within the services sector, the production of electricity (particularly
coal-fired electricity) was most heavily affected and should benefit most
from the repeal of the carbon tax. In the mining sector, coal mining would
be the major beneficiary. In the manufacturing sector, producers with
emissions- or energy-intensive activities that were unable to access carbon
tax-related assistance would be the main beneficiaries of repeal. There
would be minimal impact on dwelling ownership.
The removal of the carbon tax is expected to reduce annual ongoing
compliance costs for liable entities by $85.3 million per annum.
The avoided costs fall into two categories: administrative costs (including
remaining abreast of changes in carbon pricing legislation, meeting
recording and reporting obligations, negotiating contracts for carbon price
pass-through, and discharging emissions liabilities) and substantive costs
(emissions verification costs for large emitters).
Impact on Households
Household costs will be lower than they otherwise would be under a
$25.40 carbon price. Recent modelling by the Australian Treasury
suggests that the removal of the carbon tax in 2014-15 will reduce the
Consumer Price Index by around 0.7 percentage points than it otherwise
would be in 2014-15. This is based on the currently legislated fixed
carbon price of $25.40 for 2014-15 and the scope intended by the former
government, including fuel use by heavy on-road transport.
Treasury modelling suggests that the removal of the carbon tax in 2014-15
will leave average costs of living across all households (based on existing
expenditure patterns) around $10.50 per week (or around $550 over the
year) lower than they would otherwise be in 2014-15.
12
General outline and statements
Statement of Compatibility with Human Rights
Prepared in accordance with Part 3 of the Human Rights (Parliamentary
Scrutiny) Act 2011.
Clean Energy Legislation (Carbon Tax Repeal) Bill 2014
True-up Shortfall Levy (General) (Carbon Tax Repeal) Bill 2014
True-up Shortfall Levy (Excise) (Carbon Tax Repeal) Bill 2014
Customs Tariff Amendment (Carbon Tax Repeal) Bill 2014
Excise Tariff Amendment (Carbon Tax Repeal) Bill 2014
Ozone Protection and Synthetic Greenhouse Gas (Import Levy)
Amendment (Carbon Tax Repeal) Bill 2014
Ozone Protection and Synthetic Greenhouse Gas (Manufacture Levy)
Amendment (Carbon Tax Repeal) Bill 2014
These Bills are 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 Carbon Tax Repeal Bills
The Carbon Tax Repeal Bills repeal the carbon tax. The carbon tax is
imposed in a variety of ways:
· an obligation on large emitters of greenhouse gases, natural
gas suppliers and liquefied petroleum gas (LPG) and
liquefied natural gas (LNG) importers, manufacturers and
suppliers (liable entities) to pay a unit shortfall charge if they
do not buy and surrender eligible emissions units (mostly
carbon units issued by the Commonwealth) in accordance
with the CE Act and the CE Charges Acts;
· a reduction in the fuel tax credits paid for marine, rail and
off-road taxable fuel use by business (Fuel Tax Act 2006);
· an increase in excise duty and excise equivalent customs duty
on aviation fuel (Excise Tariff Act 1921, Customs Tariff Act
1995); and
· a levy on import and manufacture of synthetic greenhouse
gases and equipment (Ozone Protection and Synthetic
Greenhouse Gas (Import Levy) Act 1995, Ozone Protection
and Synthetic Greenhouse Gas (Manufacture Levy) Act 1995,
Ozone Protection and Synthetic Greenhouse Gas
Management Act 1989).
The Carbon Tax Repeal Bills repeal, with effect from 1 July 2014, all of
the provisions in the various Acts that impose carbon tax liabilities and
make consequential and transitional amendments. This includes
provisions to continue processes and publications under the CE Act until
liabilities that arise before 1 July 2014 are satisfied and to cancel any
13
Carbon Tax Repeal Bills
carbon units held by a person once they are no longer needed for this
purpose.
The True-up Shortfall Levy (General) (Carbon Tax Repeal) Bill 2014 and
the True-up Shortfall Levy (Excise) (Carbon Tax Repeal) Bill 2014
impose a levy on persons who were over-allocated free carbon units as
industry assistance in the 2013-14 financial year and would have had their
2014-15 allocation reduced if the carbon tax had remained in force.
The Carbon Tax Repeal Bills also repeal the provisions of the National
Greenhouse and Energy Reporting Act 2007 (NGER Act) and the
Australian National Registry of Emissions Units Act 2011 (ANREU Act)
that deal with reporting emissions and registering emissions units for the
purposes of the CE Act and, in essence, return those Acts to their
pre-carbon tax form.
The Carbon Tax Repeal Bills also repeal provisions of other Acts that deal
with the tax treatment of carbon units and their regulation as
financial products.
The Carbon Tax Repeal Bills also amend the Competition and Consumer
Act 2010 (CC Act) to prohibit carbon tax-related price exploitation and
false or misleading representations following the carbon tax repeal. It also
provides the ACCC with additional price monitoring powers.
Human rights implications
Right to privacy
The Main Repeal Bill may marginally engage the right to privacy under
Article 17 of the International Covenant on Civil and Political Rights
(ICCPR). Article 17 prohibits unlawful or arbitrary interferences with a
persons privacy. It provides that persons have the right to the protection
of the law against such interference. An interference with privacy will not
be arbitrary if it is not inconsistent with the provisions, aims and
objectives of the ICCPR and reasonable in the circumstances.
Reasonableness, in this context, incorporates notions of proportionality to
the objectives sought to be achieved.
The Carbon Tax Repeal Bills remove almost all requirements that persons
provide information to the Commonwealth for the purpose of
administering the provisions of the Acts which impose the carbon tax, and
that the Regulator publish information related to the carbon tax on
its website.
However, the Main Repeal Bill continues, until 30 June 2015, the
requirement that the Regulator publish information about liable entities on
its website (Schedule 1, item 323, table item 58). It also continues, until
30 June 2015, the requirement that the Regulator publish the OTN
(obligation transfer number) Register and the list of surrendered and
14
General outline and statements
cancelled OTNs (Schedule 1, item 323, table items 12 and 13), both of
which relate to transfer of liability in the natural gas supply chain.
The publication requirements are continued transitionally to allow liable
entities and others (for example, recipients of natural gas supplies) to have
access to information relevant to reporting and finalisation of liabilities for
2013-14, to allow disclosure to the public of the extent of unit shortfall
charges for the year (as in previous years) and to provide public
information relevant to the exercise of the price exploitation and price
monitoring powers of the ACCC (which will also expire on
30 June 2015).
To the extent that an individuals right to privacy is affected by the Main
Repeal Bill, the impact is not arbitrary. It is reasonable, necessary and
proportionate to the achievement of the legitimate objectives of repealing
the carbon tax and making appropriate transitional provisions for that
purpose.
Property rights
The Main Repeal Bill extinguishes rights to hold carbon units
(Schedule 1, item 327). Carbon units are personal property (CE Act,
section 103). However, item 327 does not engage the relevant human
rights obligations.
The cancellation provisions do not involve discrimination on any ground
or denial of access to the courts. Indeed, if the cancellation of a persons
carbon units results in the acquisition of their property on other than just
terms contrary to section 51(xxxi) of the Constitution and the
Commonwealth refuses to pay compensation to the person, the person has
a right to bring proceedings to recover compensation (Schedule 1,
item 345D).
In any case, it is not envisaged that the cancellation provision in item 327
of Schedule 1 to the Main Repeal Bill will need to operate.
Other provisions will cancel carbon units either in the normal course of
finalising 2013-14 liabilities or with a refund for the price paid for the
units.
First, item 323 of Schedule 1 to the Main Repeal Bill allows existing
processes to operate so that carbon units will be cancelled in the
circumstances in which they would have been cancelled even if the carbon
tax had not been repealed:
· Liable entities will acquire fixed charge carbon units to satisfy their
2013-14 liability in the usual way and the units will be cancelled
immediately on purchase in the usual way to satisfy 2013-14
liability (CE Act, section 100(7)).
· Free 2013-14 carbon units will have been issued and dealt with in
the usual way and, in the unlikely event that they are not used to
15
Carbon Tax Repeal Bills
satisfy someones 2013-14 liability, they will be cancelled under the
existing provisions in the usual way (CE Act, section 115).
Secondly, in the event that auctions are held in 2014 and someone buys
units at an auction, a person who holds such a unit on the fifth day after
Royal Assent is given to the Main Repeal Bill will be paid the amount
paid for the unit at auction (Schedule 1, item 343A).
Civil Penalties
Schedule 2 to the Main Repeal Bill contains provisions which prevent a
corporation from engaging in price exploitation in relation to the carbon
tax repeal (Schedule 2, item 3, section 60C, CC Act) and from making
false or misleading representations concerning the effect of the carbon tax
repeal (Schedule 2, item 3, section 60K, CC Act). The existing pecuniary
penalty regime (section 76 of the CC Act) is modified so that it applies to
contraventions of these prohibitions (Schedule 2, items 5, 6 and 7).
While the prohibitions are directed at corporations, rather than
individuals, individuals could become liable for a pecuniary penalty either
through the operation of section 6 of the CC Act (Schedule 2, item 2),
which extends the operation of the CC Act to individuals in the
circumstances described in that section, or on the basis that the individual
has aided or abetted a corporations contravention of these prohibitions
(section 76(1)(c); section 76(1)(d) and (e) might also be relevant). It is
not anticipated that the direct extension of the prohibitions to individuals
through the operation of section 6 of the CC Act will be significant.
Pecuniary penalties are civil, rather than criminal penalties, and the civil
standard of proof applies. Having regard to the nature and severity of the
penalty, however, it is accepted that the penalties should be regarded as
criminal penalties for the purposes of human rights law, including
Article 14 of the ICCPR.
Article 14(2) of the ICCPR provides that a person is entitled to be
presumed innocent until proved guilty according to law. Ordinarily, this
would require that the case against the person be demonstrated to the
criminal standard of proof. The criminal standard of proof is not applied
in relation to pecuniary penalty proceedings. Nevertheless, this is
compatible with Article 14(2) because the pecuniary penalty provisions
have a long and well-litigated history, and it has not been shown that the
failure to apply the criminal standard of proof has resulted in injustice.
Indeed, the courts have on numerous occasions indicated that the gravity
of the allegations being tested in the court will be taken into account, and
that the graver the allegation, the greater the strictness of proof that will be
required. In particular, more than just ,,inexact proofs, indefinite
testimony or indirection references will be required (see, for example,
Australian Competition and Consumer Commission v TF Woolam & Sons
Pty Ltd (2011) 196 FCR 212 at [8]).
16
General outline and statements
In any event, the pecuniary penalty provisions are directed primarily at
corporations, rather than individuals. If it is unnecessary to apply the
criminal standard of proof in relation to corporations, it would be
inappropriate to apply a different standard of proof to individuals, who
would ordinarily only be liable to the extent that they had aided or abetted
the contravening conduct of a corporation. Further, unlike corporations,
individuals have access to the defences set out in section 85 of the CC Act
(Schedule 2, item 15), which allows a court to relieve the individual of
liability if it is satisfied that the individual has acted honestly and
reasonably and, having regard to all the circumstances of the case, ought
fairly to be excused.
It is also relevant that the pecuniary penalty provisions are but one of a
number of enforcement provisions provided in the CC Act, which include
infringement notices (Schedule 2, item 3, Division 5, Part 5, CC Act),
injunctions (Schedule 2, items 9 and 10, section 80, CC Act), orders
limiting prices or requiring refunds of money (Schedule 2, item 11,
section 80A, CC Act), non-punitive orders (Schedule 2, items 16, 17 and
18, section 86C, CC Act), compensation orders (Schedule 2, items 19, 20,
21, 22 and 23, section 87 CC Act) and declarations (Schedule 2, item 26,
section 163A CC Act). The amendments made by the Main Repeal Bill
tap into the existing pecuniary penalty regime, and do not create a new
regime.
Article 14(3)(g) of the ICCPR provides that a person has the right ,,not to
be compelled to testify against himself or to confess guilt in criminal
proceedings. Nothing in the Main Repeal Bill is inconsistent with this
requirement. Indeed the information-gathering powers applicable to the
prohibitions provide that an individual is excused from giving information
or producing a document on the ground that the information or document
might tend to incriminate the individual or expose the individual to
penalty (Schedule 2, item 3, 60H(5), CC Act).
Article 14(7) of the ICCPR provides that no one is to be liable to be tried
or punished again for an offence of which she or he has already been
finally convicted or acquitted. Nothing in the Main Repeal Bill is
inconsistent with this requirement. In particular, criminal proceedings
cannot be brought for substantially the same conduct that gave rise to the
civil proceedings.
Right to work and the right to an adequate standard of living
The Main Repeal Bill includes consequential amendments to remove
carbon units from the definition of a financial product under the
Australian Securities and Investments Commission Act 2001 (ASIC Act)
and the Corporations Act 2001 (Corporations Act) (Schedule 1, items 92,
93, 105 and 106). The effect of this is that Australian financial services
(AFS) licensees will no longer be able to operate a business and derive
revenue with respect to carbon units from the designated carbon unit day.
17
Carbon Tax Repeal Bills
The Australian Securities and Investments Commission (ASIC) will have
the ability to vary a licence to remove a carbon unit authorisation or
cancel a licence where the only authorisation the licensee holds is with
respect to carbon units.
The amendments allow ASIC to vary a licence without providing the
licensee the opportunity to be heard by ASIC and to cancel a licence
without providing reasons for the cancellation (these requirements would
ordinarily be necessary before ASIC could take action) (Schedule 1, items
94 and 95). These requirements were removed as the question of
variation or cancellation is a purely factual one, rather than a discretionary
decision and should have no adverse effect on the licence holder.
However, affected licensees will continue to have the ability to apply to
have ASICs actions reviewed via the Administrative Appeals Tribunal or
the court system.
The amendments to the ASIC Act and the Corporations Act may
marginally engage in the right to earn a living through work and the right
to an adequate standard of living as AFS licensees will no longer be able
to trade in carbon units (Articles 6 and 11 of the International Covenant
on Economic, Social and Cultural Rights. However, the specific
amendments are merely consequential to the removal of the carbon tax
and are necessary for consistency in the law and to maintain an up-to-date
AFS licensing register.
Licensees will only be affected to the extent they hold a carbon unit
authorisation - any other authorisations they hold in relation to other
financial products will not be impacted.
Conclusion
The Carbon Tax Repeal Bills are compatible with human rights because
the only potential limitations on human rights that the Carbon Tax Repeal
Bills impose relate to the right to privacy and criminal process rights and
they are reasonable, necessary and proportionate in achieving the Bills
legitimate policy objectives of repealing the carbon tax and making
appropriate transitional provisions for that purpose.
Greg Hunt
Minister for the Environment
18
Chapter 1
Repeal of the carbon tax
Outline of chapter
1.1 Chapter 1 describes how the carbon tax will be repealed. It also
describes the associated transitional arrangements for the winding-up of
carbon tax liabilities for 2012-13 and 2013-14. The removal of the
equivalent carbon prices applied through the fuel tax credits system,
through excise and excise equivalent customs duties, and through SGG
levies is dealt with in Chapters 5 and 6.
1.2 The Main Repeal Bill includes provisions to:
· repeal the CE Act and the five CE Charges Acts;
· provide continuing powers and transitional provisions so that
liabilities incurred in relation to 2012-13 and 2013-14 may be
collected and obligations enforced by the Regulator;
· ensure that no carbon tax liabilities will be incurred from
1 July 2014; and
· require the Regulator to cancel any remaining carbon units
after the final surrender deadline for 2013-14.
1.3 Chapter 1 also describes the process for ending carbon
tax-related industry assistance:
· The Main Repeal Bill maintains the assistance to eligible
electricity generators under the Energy Security Fund and to
emissions-intensive trade-exposed entities under the JCP for
2013-14 but terminates assistance from the 2014-15 year.
· The Main Repeal Bill makes provisions which, with the
True-up Shortfall Levy (Carbon Tax Repeal) (General) Bill
2014 and the True-up Shortfall Levy (Carbon Tax Repeal)
(Excise) Bill 2014, corrects under- and over-allocations of
2013-14 free carbon units issued under the JCP. It does this
by allowing for issue of extra free carbon units to make up
for under-allocations, and relinquishment of units or payment
of a levy to redress over-allocations.
19
Carbon Tax Repeal Bills
Context of amendments
Repeal of the carbon tax
1.4 The Main Repeal Bill repeals the carbon tax by repealing the
CE Act and the CE Charges Acts from 1 July 2014. The carbon tax is
created by the CE Act, which establishes which entities are directly liable to
pay the carbon tax or pay a carbon tax on the natural gas and gaseous fuels
that they supply (these entities are known as ,,liable entities). In addition
the CE Act:
· establishes the fixed and flexible price periods of the carbon
tax, including setting out how an entity may acquire and
surrender carbon units in each period;
· creates carbon units, which may be used by liable entities to
meet their carbon tax liability;
· provides for the allocation of free carbon units as assistance
to certain affected industries; and
· establishes monitoring, investigation, enforcement and
penalty provisions, and sets out which decisions are
reviewable.
1.5 The Main Repeal Bill makes it clear that the Minister is not
required to make regulations that relate to financial years after 2013-14.
1.6 The Main Repeal Bill also establishes arrangements for:
· managing the over-surrender of ACCUs in 2013-14;
· the cessation of carbon units, providing certainty that carbon
units do not exist after the final surrender deadline for
2013-14; and
· the Regulator to cancel any carbon units sold at an auction
and refund the purchase price to the holder of each unit, in
the event that auctions are held before the Main Repeal Bill
receives the Royal Assent.
Providing a framework for 2012-13 and 2013-14 carbon tax liabilities
1.7 Liable entities must meet all 2012-13 and 2013-14 carbon tax
liabilities. To facilitate this, the Main Repeal Bill includes specific
provisions to preserve elements of the CE Act with some modifications.
1.8 The modifications of the CE Act provisions ensure that no
carbon tax liabilities will be incurred from 1 July 2014, that all
arrangements relating to the flexible price period are removed, and that
reporting and other obligations that do not relate to 2013-14 or 2013-14
liabilities are ceased.
20
Chapter 1: Repeal of the carbon tax
Finalising industry assistance arrangements
1.9 The Main Repeal Bill provides that carbon tax liabilities stop
accruing at the end of 2013-14. Consequently, the Main Repeal Bill also
provides that industry assistance, which compensates for the impact of the
carbon tax, is terminated for 2014-15 and beyond.
1.10 There is one transitional matter relating to industry assistance
that needs to be dealt with by the Carbon Tax Repeal Bills. The JCP is
designed on the basis that there are annual releases of free carbon units.
Recipients of assistance receive free carbon units based on the previous
financial years production and are required to submit verified production
data in the subsequent year. The Regulator compares reported production
data and actual production data for a ,,true-up process and determines
whether it is necessary to correct an allocation of free units. Each years
true-up units are taken into account in determining the subsequent years
allocation of free units.
1.11 With the JCP to be discontinued after 2013-14, a process must
be established to ensure the Regulator receives 2013-14 production data to
do a ,,true-up of the final JCP allocation of free carbon units and that
under- and over-allocations of free carbon units are corrected.
1.12 The Main Repeal Bill, together with the True-up Shortfall Levy
(General) (Carbon Tax Repeal) Bill 2014 and the True-up Shortfall Levy
(Excise) (Carbon Tax Repeal) Bill 2014, establish a broad framework for
a true-up reporting process and for correcting under- and over- allocation
of 2013-14 free carbon units. The details of this process are to be set out
in rules made by the Minister. The rules would be in place by
1 July 2014.
Comparison of key features of new law and current law
New law Current law
The repeal of the carbon tax
The carbon tax will be repealed. No The CE Act provides that the carbon
carbon tax liabilities will be incurred tax will be in place from 1 July 2012,
from 1 July 2014. with a flexible price period to begin
from 1 July 2015.
Detailed explanation of new law
General provisions
1.13 When enacted, the name of the Act will be the Clean Energy
(Carbon Tax Repeal) Act 2014. [clause 1]
21
Carbon Tax Repeal Bills
1.14 All amendments made by the Main Repeal Bill, whether to
primary or subordinate legislation, have effect according to the terms set
out in the Bill. Any amendments made to regulations made by the Bill,
may be further amended or repealed by the Governor-General in Council.
[clause 3]
1.15 Sections 1, 2 and 3 of the Main Repeal Bill commence on the
day that the Governor-General gives the Royal Assent. [clause 2,
table item 1]
Status of legislative instruments
1.16 Any legislative instrument (including regulations, ministerial
determinations, rules or other instruments) made under the CE Act cease
to have effect on the same date on which the provisions conferring the
power on the Minister or the Regulator to make that instrument are
repealed. The Clean Energy Regulations 2011 (CE Regulations), the
Clean Energy (Auctions of Carbon Units) Determination 2013 and the
Clean Energy (Reference Price Method) Determination 2013 all cease to
have effect when the provisions of the CE Act under which they are made
are repealed. To the extent that these instruments are made under
provisions of the CE Act preserved for the purpose of managing
compliance with 2012-13 and 2013-14 obligations, then they continue to
operate for that purpose for as long as those provisions are operative.
Repeal of the carbon tax
1.17 The Main Repeal Bill repeals the CE Act and the five
CE Charges Acts, effective from 1 July 2014. The repeal of the CE Act
and the CE Charges Acts means that no new carbon tax liabilities will
arise for 2014-15 or subsequent years. [Schedule 1, items 1 to 6]
Arrangements to manage 2012-13 and 2013-14 carbon tax liabilities and
end carbon tax-related obligations
1.18 To ensure that liabilities incurred in 2012-13 and 2013-14 are
met and can, if necessary, be enforced, the Main Repeal Bill preserves the
provisions of the CE Act concerning the management of carbon tax
liabilities for 2012-13 and 2013-14.
1.19 To do this, the Main Repeal Bill preserves all of the provisions
of the CE Act with certain deletions and modifications. These changes
limit the preserved provisions of the CE Act to apply only to 2012-13 and
2013-14 and remove provisions that are not required for managing
2012-13 and 2013-14 carbon tax liabilities. [Schedule 1, item 323]
1.20 These transitional provisions ensure that any actions undertaken
by the Regulator before the CE Act is repealed remain valid. [Schedule 1,
item 320]
22
Chapter 1: Repeal of the carbon tax
Recovery of 2012-13 and 2013-14 liabilities
1.21 The purpose of recovering 2012-13 and 2013-14 liabilities is
largely achieved by limiting the meaning of ,,eligible financial year and
,,fixed charge year in the CE Act to the 2012-13 and 2013-14 years.
Together with other minor modifications, this has the effect that the
provisions imposing carbon tax liability do not apply to other years but
continue to apply to those years. [Schedule 1, item 323, table items 3 and 4]
[Schedule 1, item 323, table items 7, 28, 29 and 41]
1.22 In addition, to allow for compliance with 2012-13 and 2013-14
liabilities, the repeal of the CE Charges Acts does not apply to the issue of
carbon units with a vintage year of 2012-13 or 2013-14, or to unit shortfall
charges incurred for those years. [Schedule 1, item 324(1) and (3)]
1.23 The transitional provisions mean that, for 2013-14, a liable
entity will incur a liability, acquire and surrender units and, if it does not
surrender units, incur a unit shortfall charge in the same way as it would
have done for 2012-13. They also preserve the Regulators powers to
recover unit shortfall charges and any associated late payment penalties
that arise in relation to 2012-13 and 2013-14 for as long as these powers
are necessary. [Schedule 1, item 323]
Managing the over-surrender of ACCUs in 2013-14
1.24 The Main Repeal Bill makes one significant adjustment to the
way that the surrender of 2013-14 units will operate. Section 128(7) of
the CE Act currently provides that Australian carbon credit units
(ACCUs) that are surrendered in excess of a liable entitys limit (that is,
5 per cent of total liability for most liable entities) are carried forward and
deemed to be surrendered in the next financial year. As the carbon tax
will be repealed, the Main Repeal Bill includes provisions that make
alternative arrangements for these units in 2013-14.
1.25 Rather than being carried forward, ACCUs that are
over-surrendered in relation to an entitys 2013-14 liability will be
deemed not to have been surrendered and the Regulator will restore the
ACCUs to the entitys Registry account. [Schedule 1, item 323, table item 44]
[Schedule 1, item 328]
1.26 To enable this restoration of ACCUs by the Regulator, the Main
Repeal Bill provides that the Regulator may determine which of the
ACCUs surrendered by the entity were over-surrendered and will be
restored. For the avoidance of doubt, the Main Repeal Bill confirms that a
written notice issued by the Regulator specifying which ACCUs are
restored units is not a legislative instrument. This is because the notice is
administrative in nature, and does not fall within the meaning of section 5
of the Legislative Instruments Act 2003. [Schedule 1, item 328(4)]
23
Carbon Tax Repeal Bills
Immediate cessation of auctions of carbon units
1.27 The Regulator is prohibited from holding auctions of carbon
units after 30 June 2014 or from the day that the Main Repeal Bill
receives the Royal Assent, if it is on or before 30 June 2014. In addition,
any determination made by the Minister under section 113(1) of the
CE Act (for these purposes the Clean Energy (Auction of Carbon Units)
Determination 2013), which sets out the rules and procedures for auctions
of carbon units, ceases to have effect from the relevant date. [Schedule 1,
item 343]
1.28 There is no need for auctions of carbon units to be held after the
Main Repeal Bill receives the Royal Assent as, under section 122 of the
CE Act, carbon units issued at auction may only be surrendered from
2015-16.
1.29 The repeal of the CE Charges Acts does not apply to units issued
as a result of an auction that was conducted before 1 July 2014 so that the
auction charges are validly paid. [Schedule 1, item 324(2)]
1.30 If auctions are held before the Main Repeal Bill receives the
Royal Assent, the Main Repeal Bill includes the requirement that the
Regulator cancel any units that were issued at the auctions. Where there
was an entry in the Registry for a carbon unit issued at auction at 3:00 pm
on the fifth business day after the day that the Main Repeal Bill receives
the Royal Assent, the Regulator must cancel the unit and pay the holder of
the unit the amount that was paid for the unit at the auction. Note that the
refund will be issued to the holder of the unit, who may not necessarily be
the person that purchased the unit at auction. [Schedule 1, item 343A]
1.31 Under Division 420 of the Income Tax Assessment Act 1997
(ITAA 1997), an income tax deduction is provided when an entity
becomes the holder of a registered emissions unit. Therefore, to ensure
these entities do not benefit from both the refund of the auction unit and
an income tax deduction, the amount of the refund is included in the
entitys assessable income under the general income tax recoupment rules
to offset the deduction (see table item 1.27A of section 20-30(1) of the
ITAA 1997).
Final cancellation of carbon units
1.32 Once the final surrender for 2013-14 has taken place (which is to
occur on Monday, 2 February 2015), there will be no further need for a
person to hold carbon units. If there is an entry for a carbon unit in an
entitys Registry account at the start of the ,,designated carbon unit day,
the Regulator is required to cancel the unit and remove the entry from the
Registry account. The Regulator is prohibited from issuing carbon units
after the designated carbon unit day. [Schedule 1, item 325] [Schedule 1,
item 327]
24
Chapter 1: Repeal of the carbon tax
1.33 The Main Repeal Bill specifies that the ,,designated carbon unit
day is either:
· Monday, 9 February 2015 (being 5 working days after
Monday, 2 February 2015); or
· a later day specified in a legislative instrument made by the
Regulator. [Schedule 1, item 321] [Schedule 1, item 322]
1.34 A later day may be specified as the designated carbon unit day
in a legislative instrument by the Regulator, where the Regulator has also
made a legislative instrument under section 142 of the CE Act specifying
that the final surrender date for 2013-14 is a day later than
2 February 2015. Both of these legislative instruments are disallowable
under section 42 of the Legislative Instruments Act 2003. Section 142 of
the CE Act allows the Regulator to extend a surrender deadline where
technical problems mean that two or more entities are prevented from
surrendering units. The Regulators power to specify a later designated
carbon unit day is necessary to reflect any delay in the final surrender date
for 2013-14. [Schedule 1, item 322]
1.35 It may be that the Regulator does not need to cancel any carbon
units on the designated carbon unit day because of the operation of
sections 100(7) and 115 of the CE Act (concerning the cancellation of
fixed charge and free carbon units respectively) and item 343A to the
Main Repeal Bill (concerning the cancellation of auctioned units).
Ending ongoing obligations under the preserved CE Act provisions
1.36 To provide clarity and remove redundant requirements, the Main
Repeal Bill removes the following reporting, notification or administrative
obligations unrelated to 2012-13 or 2013-14:
· reporting and notification requirements under the Opt-in
scheme, which are set out in the CE Regulations; [Schedule 1,
item 329]
· the ability for entities to accept, quote or surrender obligation
transfer numbers; [Schedule 1, item 323, table item 11]
· the requirement that holders of an obligation transfer number
or gaseous fuel suppliers notify the Regulator of changes to
their name or address; [Schedule 1, item 323, table item 16]
· the requirement that joint ventures notify the Regulator if
they cease to be a mandatory designated joint venture or
cease to pass the joint venture declaration test; and [Schedule 1,
item 323, table items 19 and 21]
· the ability for entities to surrender a liability transfer
certificate. [Schedule 1, item 323, table item 26]
25
Carbon Tax Repeal Bills
The Regulators powers and obligations
1.37 The Main Repeal Bill ends the Regulators following powers
and obligations from 1 July 2014:
· the issue and cancellation of obligation transfer numbers;
[Schedule 1, item 323, table items 10 to 11]
· making a declaration that a joint venture passes the joint
venture declaration test or revoking such a declaration; and
[Schedule 1, item 323, table items 20 and 22]
· issuing or cancelling liability transfer certificates. [Schedule 1,
item 323, table items 24 to 26]
1.38 To maintain relevant public information for the 2013-14
compliance process, the Main Repeal Bill retains the Regulators
following information publication obligations until 30 June 2015:
· the publication requirements in Part 9 of the CE Act,
concerning the publication of information about the carbon
pricing mechanism, particularly the Liable Entities Public
Information Database; and [Schedule 1, item 323, table item 58]
· the requirement that the Regulator publish and update
information on obligation transfer numbers, including the
OTN Register and a list of obligation transfer numbers
cancelled or surrendered. [Schedule 1, item 323, table items
12 to15]
Removing references to the flexible price period
1.39 The Main Repeal Bill will remove the following provisions
concerning the flexible price period in the preserved provisions of the
CE Act:
· definitions relating to concepts relevant only in the flexible
price period; [Schedule 1, item 323, table items 2, 5 to 6]
· Part 2, which provides for the making of regulations setting a
carbon pollution cap for compliance years from 2015-16;
[Schedule 1, item 323, table item 8]
· provisions that set out compliance and relinquishment
arrangements and how eligible emissions units are
surrendered in the flexible price period; [Schedule 1, item 323,
table items 42 to 43, 45 to 47, 64 to 65]
· provisions relating to the publication of information in or
about the flexible price period; [Schedule 1, item 323,
table items 59, 61 to 63]
· provisions relating to the purchase of carbon units at a fixed
price in the flexible price period; [Schedule 1, item 323,
table items 30 to 37]
26
Chapter 1: Repeal of the carbon tax
· provisions relating to auctions or issuance of carbon units in
the flexible price period; and [Schedule 1, item 323,
table items 37 and 39]
· the provision that calculates the ,,per-tonne carbon price
equivalent, which sets the equivalent carbon price applied to
certain uses of liquid and gaseous fuels in the flexible price
period. [Schedule 1, item 323, table item 60]
Transitional and other arrangements
Specific transitional provisions
1.40 The Main Repeal Bill includes the following specific transitional
provisions to provide clarity, as a consequence of modifications to the
CE Act or for the avoidance of doubt:
· confirming that no liabilities arise from facilities in the Joint
Petroleum Development Area and Greater Sunrise unit area
(which continues the effect of regulation 3.3 of the
CE Regulations); [Schedule 1, item 323, table item 9]
· removing provisions that include simplified outlines that are
no longer relevant; [Schedule 1, item 323, table items 1, 27, 40
and 48A]
· ensuring that any definitions that are relevant to the repeal
transition are in place from the date of the Royal Assent,
rather than from 1 July 2014; [Schedule 1, item 345C]
· removing now-redundant provisions from the list of
reviewable decisions and civil penalty provisions (noting that
the amendments do not apply to decisions or breaches before
1 July 2014); and [Schedule 1, item 323, table items 67 to 68]
[Schedule 1, item 323(3) and (4)]
· removing references to emissions trading schemes from the
role of the Regulator. [Schedule 1, item 323, table items 70 to 72]
1.41 The Main Repeal Bill also includes two provisions to clarify the
operation of preserved provisions of the CE Act:
· for the avoidance of doubt, the final surrender deadline of
15 June or 1 February will always be a business day, even
when that date falls on a non-business day (in which case the
deadline is taken to be the next business day); and [Schedule 1,
item 345A]
· a minor adjustment to an equation in section 131(3) of the
CE Act addresses an unintended consequence of the original
wording that could be argued to have resulted in an entity
having an excessive surrender obligation. [Schedule 1,
item 345B]
27
Carbon Tax Repeal Bills
1.42 If the Main Repeal Bill receives the Royal Assent before
31 May 2014, then it provides that the requirements for the Minister to
take all reasonable steps to table regulations setting the carbon pollution
cap (section 15(1) of the CE Act) and the price ceiling (section 100(14) of
the CE Act) are explicitly removed. These regulations would relate to the
flexible price period, which commences from 2015-16 and are not
required. [Schedule 1, items 344 and 345]
1.43 There is no continuing need for reviews to be undertaken by the
Climate Change Authority (CCA) under the CE Act. Accordingly,
provisions relating to these reviews are removed from the preserved
provisions of the CE Act. [Schedule 1, item 323, table item 69]For further
information about the abolition of the CCA, please refer to the
Explanatory Memorandum for the Climate Change Authority (Abolition)
Bill 2013 [No.2].
Transitional rule-making power
1.44 The Minister may, by legislative instrument, make rules in
relation to transitional matters arising out of the amendments and repeals
made by Schedule 1 to the Main Repeal Bill. This standard rule-making
power is included to ensure that the Minister may address any
unanticipated transitional matters through rules with legislative force,
thereby ensuring that the specific transitional arrangements are clear to all
relevant parties. These rules would be disallowable by either House of the
Parliament under section 42 of the Legislative Instruments Act 2003.
[Schedule 1, item 342]
Acquisition of property
1.45 To the extent that the operation of Schedule 1 to the Main
Repeal Bill would result in an acquisition of property from a person
within the meaning of section 51(xxxi) of the Constitution, the
Commonwealth is liable to pay a reasonable amount of compensation to
the person. The person may institute proceedings against the
Commonwealth if the person and the Commonwealth are unable to agree
on the sum that should be paid. The Commonwealth does not anticipate
that the operation of Schedule 1 will result in payment of compensation.
[Schedule 1, item 345D]
Finalising industry assistance arrangements
Termination of industry assistance - Energy Security Fund
1.46 The Energy Security Fund is established by Part 8 of the
CE Act. Under section 161 of the CE Act free carbon units are issued in,
and in relation to, particular eligible financial years.
1.47 From 1 July 2014, the meaning of ,,eligible financial year in
section 161 of the CE Act will be limited to the 2012-13 and 2013-14
years. For this reason, from 1 July 2014, the Regulator will not be able to
28
Chapter 1: Repeal of the carbon tax
issue free carbon units under Part 8 of the CE Act. [Schedule 1, item 323,
table item 3]
Termination of industry assistance - Jobs & Competitiveness Program
1.48 The JCP is established by regulations made under Part 7 of the
CE Act. Under clause 103 of Schedule 1 to the CE Regulations, the
Regulator issues free carbon units for specified activities which must be
carried on during an eligible financial year.
1.49 ,,Eligible financial year in clause 103 has the same meaning as
in the CE Act, in accordance with section 13 of the Legislative
Instruments Act 2003. From 1 July 2014, the meaning of ,,eligible
financial year in clause 103 will be limited to the 2012-13 and 2013-14
years. [Schedule 1, item 323, table item 3] For this reason, from 1 July 2014,
JCP activities cannot give rise to an entitlement to free carbon units.
True-up arrangements for the final allocation of free carbon units
under the Jobs & Competitiveness Program
1.50 The Main Repeal Bill provides for a process by which
allocations of free 2013-14 carbon units are subject to a final ,,true-up.
This is designed to correct under- and over-allocations of 2013-14 free
carbon units, by allowing for issue of extra free carbon units or imposition
of a levy if carbon units are not relinquished.
1.51 For the purposes of the true-up process, the Main Repeal Bill
creates a reporting requirement for persons (known as ,,designated
persons) who received 2013-14 free carbon units. A designated person
must comply with this reporting requirement just as they are required to
comply with a reporting requirement under the JCP. The specific details
of the reporting requirement, including what must be reported and when,
will be set out in Ministerial rules. By providing that the reporting
requirement is set out in rules, the Minister may more readily account for
the specific requirements of the affected persons and take account of
matters raised in consultation with them. [Schedule 1, item 351]
Under-allocation of units
1.52 A person will have an under-allocation of free 2013-14 carbon
units if the conditions set out in the Ministerial rules are met. The rules
will also specify the method by which the under-allocation is calculated.
The Regulator will rectify an under-allocation of free 2013-14 carbon
units by issuing a number of additional 2013-14 free carbon units to a
person. This can occur after 1 July 2014 for this purpose. [Schedule 1, item
352 and 353]
Over-allocation of units
1.53 A person will have an over-allocation of free 2013-14 carbon
units if the conditions set out in the Ministerial rules are met. The rules
will also specify the method by which the over-allocation is calculated.
29
Carbon Tax Repeal Bills
A person who has received an over-allocation of free carbon units under
the JCP could relinquish the over-allocated units under section 212 of the
CE Act. If the person does not relinquish at least the number of
over-allocated units, then the person will have a true-up shortfall equal to
the number of units not relinquished. [Schedule 1, items 354 and 355]
1.54 A person who has a true-up shortfall must pay a levy. The
amount of the levy will be worked out using the formula:
number of units in the true-up shortfall x $24.15
1.55 The true-up levy is imposed in two separate Bills to put beyond
doubt that the imposition of the levy complies with section 55 of the
Constitution. [True-up Shortfall Levy (General) (Carbon Tax Repeal) Bill 2014,
clause 8] [True-up Shortfall Levy (Excise) (Carbon Tax Repeal) Bill 2014, clause 8]
When enacted, the names of the Acts will be the True-up Shortfall Levy
(General)(Carbon Tax Repeal) Act 2014 and the True-up Shortfall Levy
(Excise)(Carbon Tax Repeal) Act 2014. [True-up Shortfall Levy (General)
(Carbon Tax Repeal) Bill 2014, clause 1] [True-up Shortfall Levy (Excise) (Carbon Tax
Repeal) Bill 2014, clause 1]
1.56 The true-up shortfall levy must be paid by the date set out in the
Ministerial rules. A late payment penalty will apply if the true-up
shortfall levy is not paid in full by the date prescribed in the rules.
The rate of the late payment penalty is 20 per cent per year, unless a lower
percentage is prescribed in the rules. The Regulator may recover the levy
and late payment penalty on behalf of the Commonwealth. [Schedule 1,
items 356 to 358]
1.57 To ensure that the Regulator has the appropriate powers and
authority to ensure compliance with the true-up shortfall levy, Schedule 1,
Part 4 to the Main Repeal Bill and the True-up Shortfall Levy Bills are
included in the definition of ,,associated provisions under section 5 of the
CE Act. This brings the arrangements for the true-up shortfall levy in line
with the Regulators powers to ensure compliance with the JCP. [Schedule
1, item 358A]
Ministerial Rules
1.58 The true-up provisions contain a standard provision authorising
the Minister to make the rules referred to in the rest of Schedule 1, Part 4
of the Main Repeal Bill (such as the under- and over-allocation rules) and
other rules necessary or convenient for giving effect to the Part by way of
a legislative instrument. The rules will involve complex, technical
drafting which will need to be the subject of consultation with affected
persons and which is therefore suitable for inclusion in subordinate
legislation. The rules would be disallowable by either House of the
Parliament under section 42 of the Legislative Instruments Act 2003.
[Schedule 1, item 359]
30
Chapter 1: Repeal of the carbon tax
General provisions
1.59 The formal provisions in sections 1 and 2 of the True-up
Shortfall Levy Bills commence on the day that the Governor-General
gives the Royal Assent. The operative provisions commence on
1 July 2014 or Royal Assent if earlier. [True-up Shortfall Levy (General)
(Carbon Tax Repeal) Bill 2014, clause 2] [True-up Shortfall Levy (Excise) (Carbon Tax
Repeal) Bill 2014, clause 2]
1.60 Definitions of expressions relating to the true-up process, which
refer to concepts that are expressly defined in the subsequent provisions in
Schedule 1, Part 4 (such as ,,over-allocation of free carbon units) and the
CE Act. The ,,levy is defined by reference to the True-up Shortfall Levy
Bills. [Schedule 1, item 346]
1.61 The True-up Shortfall Levy Bills include definitions of
expressions used in the Bills, namely ,,Joint Petroleum Development
Area, ,,person and ,,true-up shortfall. [True-up Shortfall Levy (General)
(Carbon Tax Repeal) Bill 2014, clause 3] [True-up Shortfall Levy (Excise) (Carbon Tax
Repeal) Bill 2014, clause 3]
1.62 The true-up provisions apply to:
· the Australian States and Territories and Norfolk Island, but
the true-up levy does not apply to the extent (if any) that it
would involve taxing the property of a State; and [Schedule 1,
item 347] [True-up Shortfall Levy (General) (Carbon Tax Repeal) Bill
2014, clauses 4 and 9] [True-up Shortfall Levy (Excise) (Carbon Tax
Repeal) Bill 2014, clauses 4 and 9]
· Australias external territories, exclusive economic zone and
continental shelf and in the Joint Petroleum Development
Area, consistent with the application of the CE Act.
[Schedule 1, items 348 to 350] [True-up Shortfall Levy (General)
(Carbon Tax Repeal) Bill 2014, clauses 5 to 7] [True-up Shortfall Levy
(Excise) (Carbon Tax Repeal) Bill 2014, clauses 5 to 7]
1.63 The Commonwealth cannot tax itself and the true-up provisions
do not apply to the Commonwealth. [Schedule 1, item 347] [True-up Shortfall
Levy (General) (Carbon Tax Repeal) Bill 2014, clause 4] [True-up Shortfall Levy
(Excise) (Carbon Tax Repeal) Bill 2014, clause 4]
Income tax deduction of true-up shortfall levy
1.64 There is no separate provision for the income tax treatment of a
payment of a true-up shortfall levy, as the ordinary income tax deduction
provisions apply to this levy (see section 8-1 of the ITAA 1997). This
results in taxpayers who dispose of their over-allocated units to a third
party being treated broadly in the same way as if they had voluntarily
relinquished their excess units to the Regulator.
1.65 For example, if taxpayers were to relinquish their free units to
the Regulator for no consideration, financially they would be in a neutral
position, having neither received consideration for the relinquishment nor
31
Carbon Tax Repeal Bills
paid for the units. Furthermore, they would not have received a deduction
for the market value of the free units received or have been assessed on
any amount upon relinquishing the units to the Regulator.
1.66 However, if taxpayers were to sell their free units, they would be
liable for a true-up levy. Where the price received for the units is similar
to the true-up levy imposed, taxpayers would be in a similar position had
they relinquished the units to the Regulator for no consideration. This
reflects that any amounts received for the sale of the units would broadly
equate to the levy paid. Furthermore, the amount included in assessable
income would broadly be offset by a deduction for the levy.
1.67 If the levy remains unpaid after the time when it becomes due
for payment, the entity is liable to pay a penalty of 20 per cent per annum
or a lower percentage specified in the rules. Section 26-5 of the ITAA
1997 ensures the entity bears the full cost of this penalty and that the
entity cannot claim an income tax deduction in respect of this penalty.
This outcome is consistent with the income tax treatment that applies
where an entity incurs a late payment penalty where they have not paid
their unit shortfall charge by the required time.
32
Chapter 2
Consequential amendments concerning
emissions and energy reporting, carbon
units and the Clean Energy Regulator
Outline of chapter
2.1 Chapter 2 explains amendments to other legislation that remove
redundant and irrelevant functions and references, consequential on the
repeal of the carbon tax. This legislation existed when the carbon tax was
introduced and was used to support the carbon tax and will continue in
operation after the repeal of the carbon tax to support the Governments
emissions reduction, energy, energy efficiency and other policies.
The amendments are:
· amendments to the NGER Act to remove the reporting
requirements of entities liable under the CE Act and to make
consequential amendments;
· amendments to the ANREU Act to remove carbon units from
the Registry, remove architecture allowing for direct or
indirect linkages with non-Kyoto emissions trading schemes,
and remove references to the CE Act;
· amendments to the Regulator Act to remove the Regulators
functions under the CE Act and to make other amendments
consequential on the repeal of that legislation;
· amendments to the ASIC Act and the Corporations Act to
cease regulation of carbon units as financial products; and
· amendments to the Anti-Money Laundering and Counter
Terrorism Financing Act 2006 (Anti-Money Laundering Act)
to cease its application to carbon units.
Context of amendments
National Greenhouse and Energy Reporting Scheme
2.2 NGERS was implemented by the NGER Act and commenced
operation in 2008. NGERS introduced a single national framework for
reporting and disseminating company information about greenhouse gas
emissions, energy production, energy consumption and other information.
NGERS will continue to:
33
Carbon Tax Repeal Bills
· assist Australia to meet its international reporting
requirements;
· inform the Australian public; and
· inform the development of Government policy.
2.3 From 2012, the objects of the NGER Act included underpinning
the carbon tax, which will be removed.
Australian National Registry of Emissions Units
2.4 The Australian National Registry of Emissions Units
(the Registry) is a secure electronic system designed to accurately track
the location and ownership of emission units. It was established on an
administrative basis in 2008 to support Australias international climate
change obligations. In 2011, the Registry was backed by legislation
through the introduction of the ANREU Act, which was amended from
2012 to support the carbon tax. Given that the Registry existed before
introduction of the carbon tax it will need to continue to deliver its
original functions, supported by the existing legislated framework.
These functions include:
· assisting Australia meet its commitments under the Kyoto
Protocol; and
· underpinning the operation of the Carbon Farming Initiative.
2.5 With the introduction of the carbon tax, and subsequent decision
to link to the European Union Emissions Trading Scheme (EU ETS), a
number of amendments were made to the ANREU Act to recognise
specific emission units issued under these schemes. To ensure clarity and
consistency, references to these units and mechanisms relating to these
units will be removed.
Financial regulation and carbon units
2.6 Repeal of the carbon tax will result in the cancellation of all
carbon units and it is no longer necessary that they be recognised as
financial products. Accordingly, a carbon unit will cease to be a financial
product under the ASIC Act and the Corporations Act.
2.7 Transitional arrangements are provided in relation to the
application of the ASIC Act and Corporations Act on carbon units issued
before the specified date and the form in which the ASIC may vary or
cancel an Australian Financial Services (AFS) licence with a carbon unit
authorisation.
34
Chapter 2: Consequential amendments concerning
emissions and energy reporting, carbon units
and the Clean Energy Regulator
Comparison of key features of new law and current law
New law Current law
Reporting under NGERS
From 2014-15 reporting obligations In addition to reports provided under
only apply to constitutional section 19 of the NGER Act by
corporations and do not extend to constitutional corporations, any
,,persons. person who is liable under the carbon
pricing mechanism is required to
provide reports to the Regulator
under sections 22A and 22AA of the
NGER Act.
Audits under NGERS
From 2014-15 the auditing Large liable entities must have their
arrangements for constitutional reports audited prior to submitting
corporations that existed prior to the them to the Regulator. These audit
introduction of the carbon tax apply. requirements are in addition to the
Mandatory pre-submission audits are audit requirements that existed prior
not required. to the introduction of the carbon tax.
Removal of carbon units as a financial product
Carbon units will no longer be Carbon units are currently classified
classified as a financial product under as a financial product under the ASIC
the ASIC Act and the Corporations Act and the Corporations Act. As a
Act. result, carbon units are subject to the
Transitional arrangements are Corporations Act and the ASIC Act
provided in relation to the application and businesses providing services in
of the ASIC Act and Corporations respect of carbon units are regulated
Act to carbon units issued before the by ASIC.
,,designated carbon unit day and the ASIC currently has the ability to vary
way in which ASIC may vary or or cancel an AFS licence under
cancel an AFS licence with a carbon certain circumstances.
unit authorisation.
Detailed explanation of new law
National Greenhouse and Energy Reporting Scheme
Removal of requirements relating to liable entities
2.8 Liable entities will not be required to provide reports to the
Regulator relating to emissions numbers under sections 22A and 22AA of
the NGER Act after reporting requirements for 2013-14 are met.
The Main Repeal Bill removes the provisions of the NGER Act that create
these obligations and the references to them. [Schedule 1, items 293 to 295,
section 22(1)(a)-(b), 22(2)(a)-(b) and Parts 3A and 3D, NGER Act]
35
Carbon Tax Repeal Bills
2.9 The Main Repeal Bill also removes the requirements in the
NGER Act that liable entities apply to the Regulator to be registered, and
the obligations of the Regulator to register or deregister a person who has
applied, after the end of financial year 2013-14. [Schedule 1, items 288 to 291
and 303, sections 15A, 15AA, 18A, 18B(3)(b) and 25(1), NGER Act]
2.10 Under the existing CE Act and NGER Act, ,,liability transfer
certificates allow liable entities to transfer responsibility for reporting
under the NGER Act to another person, provided certain conditions are
met. As no entities will have liability under the CE Act after 2013-14, this
type of transfer mechanism is not required. However, reporting transfer
certificates, which provide a similar function for NGER purposes, will
continue to function under the NGER Act. The Main Repeal Bill removes
the provisions in the NGER Act relating to liability transfer certificates -
including applications, reporting and accounting. [Schedule 1, items 287, 292
to 295 and 298 to 304, sections 13(4), 19(1)(note 4), 22(1)(a)-(b) and 22(2)(a)-(b), Parts
3A and 3D, sections 24(1AD), (1AE)(a), (1H), (1J), (8), 25(1) and 30(2A), NGER Act]
2.11 The Main Repeal Bill removes from the NGER Act the
requirements for large liable entities emission reports to be audited.
These requirements are redundant once the carbon tax is repealed.
However, the pre-submission audit requirement remains in place for
2013-14. Further, the auditing arrangements that existed prior to the
introduction of the carbon tax will continue to apply. [Schedule 1, item 310,
section 74AA, NGER Act][Schedule 1, item 337]
2.12 The Main Repeal Bill removes the obligation in the NGER Act
for the Regulator to publish information related to reports submitted by
liable entities. However, the publication obligations (as set out in
section 24 of the NGER Act) that existed prior to the introduction of the
carbon tax will continue to apply. A consequential amendment is also
made to section 25 of the NGER Act to remove the ability for reporters to
request that information related to reports submitted by liable entities not
be published. [Schedule 1, items 297 and 303, sections 24(1AA) and 25(1), NGER
Act]
Transitional provisions
2.13 Despite the repeal of the definitions and sections of the
NGER Act detailed above, the Main Repeal Bill preserves key NGER Act
provisions relating to registration, reporting and record keeping so that
liable entities can meet their 2013-14 obligations. These transitional
NGER Act provisions are necessary because obligations relating to
2013-14 must be met during 2014-15, after the aspects of the NGER Act
that relate to the CE Act have been repealed on 1 July 2014. [Schedule 1,
item 337]
2.14 For example, this means that reports under section 22A of the
NGER Act relating to 2013-14 are due by 31 October 2014, despite the
fact that that section is repealed from 1 July 2014. Definitions and
measurement provisions required for entities to submit those reports also
36
Chapter 2: Consequential amendments concerning
emissions and energy reporting, carbon units
and the Clean Energy Regulator
continue. [Schedule 1, item 337] Audit requirements in section 74AA of the
NGER Act will continue to apply for reports relating to 2013-14. [Schedule
1, item 337]
Removal of reporting obligations of ,,persons other than corporations
2.15 The Main Repeal Bill amends the NGER Act to transfer most of
the obligations placed on ,,persons throughout the Act to ,,group entities.
This is because, ongoing reporting obligations only apply to constitutional
corporations and members of their groups and will not extend to ,,persons
more generally.
2.16 A ,,group entity is a new term defined as a corporation that is a
member of a controlling corporations group. A ,,member has the
meaning given by section 8(2) of the NGER Act, and includes the
controlling corporation and its subsidiaries. These new terms are required
to replace the defined term ,,person, which is not required after repeal of
the CE Act. [Schedule 1, item 214, section 7, NGER Act]
2.17 The application of the NGER Act to persons other than
constitutional corporations was required to underpin the operation of the
CE Act. The terms ,,person and ,,persons where they remain in the
NGER Act, have the general meaning given to them by the
Acts Interpretation Act 1901. [Schedule 1, items 224, 243, 246, 248, 250, 251, 253,
255 to 258, 261 to 266, 269, 272, 276, 278 to 279 and 286, sections 7, 11(1), 11A, 11B
and 13(2) and (3), NGER Act]
2.18 With the introduction of the carbon tax, the NGER Act was
amended to include the concept of ,,non-group entity, which is a person
who is not a member of a controlling corporations group. The term
,,non-group entity was used to expand specific provisions to account for a
person who is not a member of a controlling corporations group. The
term is used in provisions relating to:
· facility declarations;
· declarations of operational control; and
· auditing.
2.19 The Main Repeal Bill removes all references to ,,non-group
entity as these entities do not have ongoing obligations under the
NGER Act and are not relevant after repeal of the carbon tax. [Schedule 1,
item 220, section 7, NGER Act]
2.20 The Main Repeal Bill repeals sections 54A and 55A of the
NGER Act, which allowed non-group entities to request the Regulator to
declare a facility or operational control over a facility. Only corporations
may have a facility or operational control declared by the Regulator.
[Schedule 1, items 237, 244, 252, 259, 280 and 305-309, sections 7, 54A, 55A, 56(j)
and 56(k)-(l), NGER Act]
37
Carbon Tax Repeal Bills
2.21 The Main Repeal Bill also removes references to non-group
entities from the auditing provisions for certain entities. These auditing
provisions will continue to apply to the responsible member under
transfers made under section 22X of the NGER Act. [Schedule 1, items 311
and 312, sections 74B(1) and 74C(1), NGER Act]
2.22 Section 22X of the NGER Act allows a controlling corporation
to transfer reporting obligations for a facility to a ,,group entity, where
that group entity has operational control over the facility. It allows
entities flexibility in their reporting arrangements and allows them to
reduce their reporting burden. The Main Repeal Bill removes the
reference to liability transfer certificates in this section, which is
redundant following repeal of the CE Act. This reporting transfer
mechanism will continue to operate in relation to group entities with
operational control. [Schedule 1, item 296, section 22X(1)(a), NGER Act]
Changes to provisions relating to ,,operational control
2.23 The term ,,operational control is fundamental in determining the
entity that has the legal obligation to report under the NGER Act. The
term was adopted under the CE Act for the purposes of assigning liability
under the carbon tax. An entity has 'operational control' over a facility
under sections 11, 11A and 11B of the NGER Act, where the entity has
the authority to introduce and implement operating, health and safety and
environmental policies in relation to the facility. In certain circumstances,
entities can nominate the group entity with operational control over a
facility to the Regulator.
2.24 The Main Repeal Bill removes the requirement for nominations
of operational control to be made in relation to interim emissions numbers
and fixed charge years. Interim emissions numbers and fixed charge years
are only relevant to the carbon tax and these nomination provisions are no
longer required. The Main Repeal Bill also removes references to joint
ventures from the operational control nomination section as these are only
relevant to the operation of the carbon tax. [Schedule 1, item 267, section
11B(7), NGER Act] [Schedule 1, items 270 to 277, sections 11B(15)-(19)
and 11B(15)(b)-(c) and 11B(17)(b)-(c), NGER Act]
2.25 As a consequence of removing reporting obligations for persons
other than constitutional corporations, the operational control test for
trusts is no longer relevant and all references are removed. [Schedule 1,
items 221, 247, 281 and 307, sections 7, 11(4), 11C and 56(aab), (aa), (ga) and (gb),
NGER Act]
2.26 The Regulator may cancel a persons nomination for operational
control over a facility if they have an unsatisfactory compliance record.
The Main Repeal Bill amends the definition of ,,unsatisfactory compliance
record to remove contraventions of the CE Act from the list of prescribed
actions. [Schedule 1, items 282 to 284, sections 11D(1)(c), (e)-(f) and (i)-(j),
NGER Act]
38
Chapter 2: Consequential amendments concerning
emissions and energy reporting, carbon units
and the Clean Energy Regulator
Changes to definitions
2.27 After the repeal of the carbon tax, certain definitions included in
the NGER Act reference the definitions set out in section 5 of the CE Act,
which will no longer exist. As a result new definitions for these terms are
included in section 7 of the NGER Act to ensure their continued operation
in the context of the NGER Act. These include definitions for ,,carbon
dioxide equivalence, ,,foreign country and ,,foreign corporation.
[Schedule 1, items 204, 211 and 212, section 7, NGER Act]
2.28 The Main Repeal Bill introduces the term, ,,designated financial
year, which means a financial year that begins on 1 July 2012 or any later
financial year. This term replaces the term eligible financial year, which
was inserted as part of the introduction of the carbon tax. To provide
clarity and remove any potential for unintended consequences, all
references to ,,eligible financial year are replaced with ,,designated
financial year. [Schedule 1, items 205, 207, 249, 260 and 268, section 7, NGER Act]
2.29 The Main Repeal Bill removes a number of definitions and
measurement provisions from sections 7, 7B, 7C and 10 of the NGER Act
because they are redundant, having been included solely for the purpose
of underpinning the reporting and measurement of liabilities under the
carbon pricing mechanism. [Schedule 1, items 206, 208 to 210, 213, 215 to 220,
222 to 232, 234, 238 and 241, sections 7, 7B and 7C, NGER Act]
Administrative amendments
2.30 The NGER Act will no longer have the object of underpinning
the CE Act. Accordingly, the Main Repeal Bill removes this object from
section 3 of the NGER Act. [Schedule 1, items 196 to 198, section 3, NGER Act]
2.31 As a consequence of the CE Act being repealed, references to
the CE Act in the NGER Act are redundant. The Main Repeal Bill
removes these references. [Schedule 1, items 199, 233, 235, 236, 239, 240, 242,
245, 254, sections 4(1), 7A(1), 8(1), 9(1), 10(1), 10(3), 11(1), 11(3) and 11A(2),
NGER Act]
2.32 With the introduction of the carbon tax, section 4 of the
NGER Act was amended to include the constitutional powers
underpinning the CE Act. With the repeal of the CE Act, these additional
powers are no longer required. The Main Repeal Bill amends the
constitutional basis of the NGER Act to remove reference to those
powers that supported the CE Act. [Schedule 1, items 199 to 200,
sections 4(1)-(2), NGER Act]
2.33 The Main Repeal Bill also amends the NGER Act provision
dealing with the relationship between the NGER Act and State and
Territory laws to return it to its pre-CE Act form. Section 5(2) was added
to the NGER Act to ensure that the Act excluded State and Territory laws
which required reporting of greenhouse gas emissions by most of the legal
persons covered by the CE Act (and who were required to report under the
39
Carbon Tax Repeal Bills
NGER Act). It will not be needed once the CE Act is repealed and
reference to greenhouse gas emissions is reinstated in section 5(1).
[Schedule 1, items 201 to 203, section 5, NGER Act]
Australian National Registry of Emissions Units
Removal of carbon units
2.34 The repeal of the carbon tax will involve cancellation of all
carbon units, as these units will not need to exist after repeal of the carbon
tax. The Main Repeal Bill amends the ANREU Act to repeal redundant
references to ,,carbon units. [Schedule 1, items 13, 25, 31, 38 to 39, 41, 45, 55, 58
to 60, 64, 71, 72, 78, 79, 80, 82, sections 3, 4, 9(4)(a), 11(5)(b), 15(2)(aa) 26(3)(a)(ia),
27(3B)(c), 28A(1)(aa), 28B(1)(aa), 28D(5)(ii), 61A and 64, ANREU Act]
2.35 The amendments made by the Main Repeal Bill to the
ANREU Act will commence on 1 July 2014. [clause 2]
2.36 However, carbon units will remain in existence until the
,,designated carbon unit day on Monday, 9 February 2015 (or a later day
as specified by the Regulator) so that they can be used to satisfy liabilities
for the 2013-14 eligible financial year. For that reason, the Main Repeal
Bill provides that the ANREU Act in its unamended form continues to
operate in relation to carbon units issued before the designated carbon unit
day. This is a transitional arrangement, designed to support the
finalisation of carbon tax liabilities for 2012-13 and 2013-14. [Schedule 1,
item 332]
Removal of other references to the CE Act
2.37 The Main Repeal Bill makes consequential amendments to the
ANREU Act to remove references to the CE Act and provisions of that
Act. [Schedule 1, items 13, 15, 16, 22, 25, 26, 29, 31, 37, 40, 48, 51, 54, 58 to 59, 63, 67
to 70, 72 and 73, sections 3, 4, 14A, 17(1A), 19(3B), 22(4B), 27(3B), 28A(4)(aa),
28B(11), 28C(17)(aa), 28D(5)(b) and 28D(16(aa), ANREU Act]
Removal of capacity to link to non-Kyoto markets
2.38 The Registry will no longer need the capacity to record trade in
units that are not Kyoto units. The category of ,,prescribed international
unit was intended to encompass a broad range of non-Kyoto international
emissions units to facilitate trade in those units. As this category is no
longer needed, the definition of prescribed international unit will be
removed. [Schedule 1, item 30, section 4, ANREU Act]. The Main Repeal Bill
provides for references to the term to be removed from the ANREU Act.
[Schedule 1, items 13, 18-19, 23, 32 to 34, 38, 42 to 44, 46 to 47, 52 to 53, 56 to 57, 61 to
62, 65 to 66, 68 to 69, 75 to 76, 79, 81, 87 to 89, sections 3, 4, 9(4)(a), 15(2)(d),
16(2)(b)(ii), 16(5), 16(7)(b), 21, 22(4A)(a), 26(3)(iii), 28A(1), 28B(1), 28B(11), 58, 63 to
63G, 64 and 82, ANREU Act]
2.39 Operational provisions allowing the Regulator to facilitate trade
in prescribed international units will be removed. [Schedule 1, item 74, Part 4,
ANREU Act]
40
Chapter 2: Consequential amendments concerning
emissions and energy reporting, carbon units
and the Clean Energy Regulator
2.40 The Main Repeal Bill removes other Regulator functions
necessary to give effect to trading instructions relating to prescribed
international units, for example to make entries for prescribed
international units on the Registry or to transfer prescribed international
units between accounts. [Schedule 1, items 36 and 49, sections 4, 17(3) and 50 to
53, ANREU Act]
Removal of capacity to link to international emissions trading schemes
2.41 To facilitate linking with other international emissions trading
schemes, including the EU ETS, the definition of ,,prescribed international
units included European Union Allowances (EUAs) and Australian
Issued International Units (AIIUs). With the repeal of the carbon tax, it
follows that linking to other emissions trading schemes will not proceed.
Definitions and provisions that were inserted into the ANREU Act to
achieve that outcome are no longer required and will be removed.
[Schedule 1, items 14, 17, 20, 21, 24, 27 to 29, 83 to 86 and 90 to 91, sections 4, 48A, 66,
79(1), 82 and 86A and Parts 6A and 6B, ANREU Act]
2.42 As there will be no EUAs or AIIUs held in the Registry, the
Main Repeal Bill removes anti-fraud and oversight arrangements relating
to EUAs and AIIUs as they are redundant. [Schedule 1, items 35 and 84,
sections 4 and Parts 6A and 6B, ANREU Act]
Clean Energy Regulator
Change in the role of the Regulator
2.43 Under section 12 of the Regulator Act, the Regulator has the
functions conferred on it by a climate change law or another
Commonwealth law. Sections 43 and 44 of the Regulator Act provide the
Regulator with the power to disclose protected information for the
purpose of a climate change law, including the Clean Energy Legislation.
2.44 The Main Repeal Bill removes the Clean Energy Legislation
from the definition of ,,climate change law as a consequence of the repeal
of that legislation. [Schedule 1, item 97, section 4, Regulator Act] [Schedule 1,
item 95, sections 3, 4 and 41(3)(a), Regulator Act]
2.45 The Main Repeal Bill also updates the simplified outline of the
Regulator Act and the objective of the Regulator to take account of the
changed functions of the Regulator. [Schedule 1, item 95 and 101,
sections 3 and 4, Regulator Act]
2.46 These amendments take effect on 1 July 2014. [clause 2]
2.47 The Regulator will need to perform functions under the Clean
Energy Legislation in its preserved form and to disclose protected
information for the purposes of that legislation. A transitional provision
continues the existing definition of ,,climate change law to ensure that
these things can happen. It also deems the definition to include the repeal
legislation so that the Regulator can perform functions under those laws
41
Carbon Tax Repeal Bills
and disclose protected information for the purposes of those laws.
[Schedule 1, item 333]
Other consequential amendments
2.48 Other consequential amendments to the Regulator Act are:
· to remove a reference to consistency with the objects of the
CE Act in the provision authorising the Minister to give
directions to the Regulator; [Schedule 1, item 103, section 41(3)(a),
Regulator Act]
· to transfer definitions currently contained in the CE Act to
the Regulator Act because they are required for the continued
operation of the Regulator Act after repeal of the carbon tax.
The relevant definitions are ,,Climate Change Convention,
,,international climate change agreement, ,,greenhouse gas,
and ,,international agreement; and [Schedule 1, items 96, 98, 99
and 100, section 4, Regulator Act]
· to remove references in the Regulator Act to ,,prescribed
international units, consistent with the removal of the
concept from the ANREU Act. [Schedule 1, items 102 and 104,
sections 4 and 49(1)(z), Regulator Act]
Financial regulation and carbon units
ASIC Act Amendments
2.49 The Main Repeal Bill removes references to ,,carbon units in
the ASIC Act, which means that a carbon unit ceases to be a financial
product from a date specified in the legislation. [Schedule 1, items 92 and 93,
sections 12BAA(7)(ka) and 12BAB(1)(g), ASIC Act]
2.50 A new Part 20 to the ASIC Act is inserted to provide transitional
provisions to ensure that carbon units issued before the designated carbon
unit day continue to be regulated as financial products. [Schedule 1, item 94,
Part 20, ASIC Act]
2.51 ,,Designated carbon unit day has the same meaning as in
Schedule 1, Part 3 of the Main Repeal Bill, that is, 9 February 2015, or a
later day as specified by the Regulator. [Schedule 1, item 94, section 295, ASIC
Act]
2.52 Carbon units issued prior to the designated carbon unit day will
continue to be subject to the ASIC Act. For example, up until the
designated carbon unit day, carbon units will continue to be subject to the
consumer protection provisions provided for in the ASIC Act. [Schedule 1,
item 94, section 296, ASIC Act]
Corporations Act amendments
2.53 The Main Repeal Bill removes references to ,,carbon units in
the Corporations Act which has the effect of a carbon unit ceasing to be a
42
Chapter 2: Consequential amendments concerning
emissions and energy reporting, carbon units
and the Clean Energy Regulator
financial product from the date specified in the legislation. [Schedule 1,
items 105 and 106, sections 9 and 764A(1)(kaa), Corporations Act]
2.54 The Main Repeal Bill inserts a new Part 10.23 into the
Corporations Act to provide transitional arrangements relating to removal
of carbon units as a financial product and ensure that carbon units issued
before the ,,designated carbon unit day continue to be regulated as
financial products. [Schedule 1, item 107, Part 10.23, Corporations Act]
2.55 ,,Designated carbon unit day has the same meaning as in the
Main Repeal Bill, that is, 9 February 2015, or a later day as specified by
the Regulator. [Schedule 1, item 107, section 1542, Corporations Act]
2.56 Carbon units issued prior to the designated carbon unit day will
continue to be subject to the Corporations Act. For example, up until the
designated carbon unit day, carbon units will continue to be subject to the
financial services laws under the Corporations Act. [Schedule 1, item 107,
section 1543, Corporations Act]
2.57 Where ASIC varies a condition of an AFS licence and that
variation only has the effect of removing a carbon unit authorisation,
section 914A(3), (4) and (5) of the Corporations Act does not apply.
Primarily, ASIC is not required to give the licensee the opportunity to
appear, or be represented at a hearing before ASIC or to make a
submission to ASIC in relation to the removal of the carbon unit
authorisation. [Schedule 1, item 107, section 1544, Corporations Act]
2.58 ASIC will have the ability to cancel an AFS licence that only
has authorisations in respect of carbon units. Where ASIC cancels an
AFS licence, ASIC is not required to provide a statement outlining the
reasons for the cancellation (which is required under section 915G of the
Corporations Act when a licence is ordinarily cancelled) because the
question of cancellation is a purely factual one, rather than a discretionary
decision, and should have no adverse effect on the licence holder.
However, affected licensees will continue to have the ability to apply to
have ASICs actions reviewed by the Administrative Appeals Tribunal or
the court system. [Schedule 1, item 107, sections 1545 and 1546, Corporations Act]
2.59 In order to vary a condition of an AFS licence or cancel a
licence as a result of carbon units ceasing to be a financial product, it will
not be necessary for a licensee to apply to ASIC for this to occur - ASIC
will have the ability to take such action without an application from the
affected licensee.
Removal of carbon units from money laundering legislation
2.60 Security and anti-fraud measures introduced to address the risk
of money laundering through trading in carbon units will no longer be
needed after carbon units are cancelled.
43
Carbon Tax Repeal Bills
2.61 References to carbon units in the Anti-Money Laundering Act
will be removed. This will have the effect of ending the requirement for
financial institutions to report on trade in carbon units to the Australian
Transaction Reports and Analysis Centre (AUSTRAC). [Schedule 1, items
10 to 12, sections 5 and 6(2) (paragraph (baa) and (d) in table item 33), Anti-Money
Laundering Act]
2.62 The amendments to the Anti-Money Laundering Act will
commence on 1 July 2014. [clause 2] However, carbon units will remain in
existence until the ,,designated carbon unit day on 9 February 2015 (or a
later day specified by the Regulator) so that they can be used to satisfy
liabilities for the 2013-14 eligible financial year. For that reason, the
Main Repeal Bill also makes transitional provision that the Anti-Money
Laundering Act in its unamended form continues to operate in relation to
carbon units issued before the designated carbon unit day. [Schedule 1,
item 331, sections 5 and 6(2) (paragraph (baa) and (d) in table item 33), Anti-Money
Laundering Act]
44
Chapter 3
Consequential taxation amendments
Outline of chapter
3.1 Chapter 3 explains the consequential amendments to taxation
provisions associated with repeal of the carbon tax. Specifically, these
amendments repeal redundant provisions in the:
· income tax, goods & services tax (GST) and petroleum
resource rent tax (PRRT) legislation relating to emissions
units issued and charges imposed under the carbon tax; and
· taxation administration legislation relating to the disclosure
of taxpayer information by the Commissioner of Taxation
(Tax Commissioner) to the Regulator.
Context of amendments
3.2 The establishment of the carbon tax introduced a number of
amendments to the existing tax provisions to provide specific income tax
and GST treatment for emissions units. These amendments reduced the
compliance costs that taxpayers would have otherwise faced in using the
ordinary income tax and GST provisions.
3.3 Amendments also provided that where a liable entity failed to
meet its surrender obligations the resulting unit shortfall charge was not
deductible expenditure for income tax and PRRT purposes.
This approach was designed to ensure that taxpayers who are non-
compliant liable entities face the full costs of non-compliance.
3.4 Due to the repeal of the carbon tax these amendments are no
longer required and are removed from the taxation provisions.
45
Carbon Tax Repeal Bills
Comparison of key features of new law and current law
New law Current law
Income tax treatment of redundant units
The discrete income tax provisions Discrete income tax provisions apply
that apply to emissions units on the to emissions units on the Registry,
Registry no longer apply to redundant including carbon units, Kyoto units,
units, namely carbon units and prescribed international units and
prescribed international units. ACCUs.
GST treatment of redundant units
GST-free treatment is removed from Carbon units, eligible ACCUs and
redundant emissions units, namely eligible international emissions units
carbon units and prescribed are GST-free.
international units.
Petroleum Resource Rent Tax treatment of redundant units
As a result of ending the JCP, the Amounts received in relation to a
provision which includes in the petroleum project from the sale of
assessable receipts of a petroleum free JCP carbon units are included in
project amounts received from the assessable receipts of that project.
sale of free JCP carbon units is
removed as it is redundant.
Unit shortfall charge
Redundant income tax and PRRT Unit shortfall charge is not deductible
provisions relating to the unit expenditure under the income tax
shortfall charge are removed. provisions and is excluded
expenditure under the PRRT
provisions.
International Unit Surrender Charge
Redundant income tax provisions An income tax deduction is available
relating to a charge imposed on the for a charge imposed on the surrender
surrender of an eligible international of an eligible international emissions
emissions unit are removed. unit.
Provision of information by the Tax Commissioner to the Regulator
Redundant taxation administration The taxation administration
provisions which allow the Tax provisions allow the Tax
Commissioner to provide carbon tax Commissioner to provide carbon tax
related information to the Regulator related information to the Regulator.
are removed.
46
Chapter 3: Consequential taxation amendments
Detailed explanation of new law
Taxation treatment of redundant units
Income tax treatment of units
3.5 Discrete income tax provisions were introduced as a part of the
Clean Energy Legislation concerning the income tax treatment of units
registered on the Registry, namely carbon units, Kyoto units, prescribed
international units and ACCUs. The amendments inserted Division 420
of the ITAA 1997, which provided for a rolling balance treatment for
units registered on the Registry.
3.6 As the taxation provisions in respect of carbon units and
prescribed international units become redundant with the repeal of the
carbon tax, these amendments remove these provisions from the
ITAA 1997. [Schedule 1, items 158 to 195 (excluding 179), sections 104-5,
104-205(1)(a)(i) to (iv), 112-97, 118-15(2), 420-10(a) and (c), 420-15(1) (note),
420-15(3), 420-20(3), 420-21(1)(a)(i)-(iv), 420-21(1) (example), 420-21(2)(a)(i)-(iv),
420-35(b)(i) and (ii), 420-35 (example), 420-51(1) and (2), 420-52(a)(i), 420-52(b),
420-55(6), 420-57(9), 420-58, 420-60(1), (2) and (4), 420-65(3), 420-70(3) and 995-1(1),
ITAA 1997]
3.7 Division 420 continues to apply to the other categories of
emissions units that continue to be held on the Registry, namely ACCUs
and Kyoto units. Retaining these provisions ensures continued certainty
and reduced compliance costs for entities using these units, as it provides
clarity on the tax treatment of these units without the need for further
interpretation under various provisions of the tax law.
GST-free status of units
3.8 The Clean Energy Legislation also amended the GST Act to
ensure that the supplies of eligible emissions units, as defined in the
CE Act, are GST-free. These provisions in respect of carbon units and
prescribed international units become redundant with the repeal of the
carbon tax.
3.9 A definition of ,,eligible emissions unit is included in the
GST Act to ensure that GST-free status continues to apply to the
categories of emissions units that continue to exist. This definition
effectively excludes redundant carbon units and prescribed international
units. [Schedule 1, items 7, 8 and 9, section 195-1, GST Act]
3.10 The amendments achieve this by importing definitions of
eligible international emissions unit and eligible Australian carbon credit
unit into the GST Act under the definition of an ,,eligible emissions unit.
,,Eligible Australian carbon credit unit has the same meaning as in the
CE Act prior to its repeal and ,,eligible international emissions unit has
the same meaning as in the ANREU Act, which no longer includes
prescribed international units due to the repeal of the carbon tax.
The effect of importing these definitions into the GST Act is that ACCUs
47
Carbon Tax Repeal Bills
and eligible international emissions units (excluding prescribed
international units) retain their GST-free status. [Schedule 1, items 7, 8, 9
and 19, section 195-1, GST Act and section 4, ANREU Act]
Treatment of units under the Petroleum Resource Rent Tax provisions
3.11 The Petroleum Resource Rent Tax Assessment Amendment Act
2012 made amendments to the Petroleum Resource Rent Tax Assessment
Act 1987 (PRRTA Act) to ensure that amounts received from the sale of
free carbon units issued under the JCP in relation to a petroleum project
are included in assessable receipts of that project. The carbon tax repeal
terminates the JCP and as a result a consequential amendment is required
to remove provisions relating to this program. [Schedule 1, items 316 and 317,
section 28(1)(b)(iii) and 28(1)(c), PRRTA Act]
Application and transitional provisions relating to redundant units
3.12 The amendments to the taxation provisions apply from the
repeal of the carbon tax, effective on 1 July 2014. However, transitional
amendments ensure that units issued up to the designated carbon unit day,
that day being 9 February 2015 or a later date if specified in a
disallowable legislative instrument made by the Regulator, continue to
receive the tax treatment that existed prior to 1 July 2014. This ensures
that where there is a requirement to issue carbon units to satisfy 2013-14
carbon tax liabilities on or after 1 July 2014, these carbon units continue
to remain subject to the discrete taxation provisions that apply to
emissions units. [Schedule 1, items 322, 323, 330, 336(2) and 339(1)]
3.13 As no prescribed international units have been issued, registered
or prescribed no transitional provisions are needed in respect of these
units in the income tax and GST provisions.
Taxation treatment of charges imposed under the Clean Energy
Legislation
Unit shortfall charge
3.14 Under the current carbon tax arrangements, if liable entities do
not surrender enough eligible emissions units to satisfy their liability, a
unit shortfall charge is payable. To ensure non-compliant entities bear the
full cost of this charge, provisions included in the ITAA 1997 prevent
taxpayers from claiming an income tax deduction in respect of this charge.
Provisions are also included in the PRRTA Act to ensure this charge is not
recognised as expenditure (that is, it is excluded expenditure).
3.15 The Main Repeal Bill removes redundant provisions relating to
the unit shortfall charge with 2013-14 being the last year in which the unit
shortfall charge can be applied. Therefore, as the charge can be last
applied in respect to the 2013-14 year, this Bill removes these redundant
provisions in the ITAA 1997 and the PRRTA Act. Transitional provisions
ensure these provisions continue to operate in respect to the periods for
48
Chapter 3: Consequential taxation amendments
which the charge can be applied. [Schedule 1, item 156, section 12-5, ITAA 1997]
[Schedule 1, item 157, section 26-18, ITAA 1997] [Schedule 1, item 318,
section 44(1)(ia), PRRTA Act] [Schedule 1, item 336(1)] [Schedule 1, item 339(2)]
International Unit Surrender Charge
3.16 Section 420-43 of the ITAA 1997 provides that a taxpayer can
deduct an amount of charge imposed by the Clean Energy (International
Unit Surrender Charge) Act 2011 on the surrender of an eligible
international emissions unit. As this charge was repealed by the
Clean Energy (International Emissions Trading and Other Measures) Act
2012, this provision is redundant and as such is removed from the ITAA
1997. [Schedule 1, item 179, section 420-43, ITAA 1997]
Provision of information by the Tax Commissioner to the Regulator
3.17 Table 6, section 355-65(7) of Schedule 1 to the Taxation
Administration Act 1953 allows the Tax Commissioner to provide
information to the Regulator in respect of the carbon pricing mechanism
and the equivalent carbon price on taxable fuels.
3.18 As both of these mechanisms are repealed with effect from
1 July 2014, the information sharing provisions are also repealed with
effect from this date. However, the repeal of these provisions does not
affect the ability of the Tax Commissioner to continue to provide
appropriate information to the Regulator in respect to relevant transactions
relating to the operation of the carbon pricing mechanism and equivalent
carbon price. For example, the Tax Commissioner may seek verification
from the Regulator that a taxpayer was covered by the Opt-in scheme for
liquid petroleum fuels when they lodge their claim for fuel tax credits in
the second half of 2014 in respect of fuel acquired earlier that was covered
by the Opt-in scheme. [Schedule 1, items 319 and 340, section 355-65(7)
(table item 3), TAA 1953]
3.19 These amendments provide that provisions relating to the
true-up shortfall levy are associated provisions for the purposes of the
CE Act. As the existing disclosure of taxpayer information provisions
allows the Tax Commissioner to disclose information to the Regulator for
the purposes of the associated provisions of that Act, this has the effect
that the Tax Commissioner can also disclose information to the Regulator
for the purposes of the true-up shortfall levy. [Schedule 1, items 340 and 358A]
49
Chapter 4
Amendments to the Competition and
Consumer Act 2010
Outline of chapter
4.1 Schedule 2 to the Main Repeal Bill amends the CC Act to
prohibit carbon tax-related price exploitation and false or misleading
representations about the effect of the carbon tax repeal. It also provides
the ACCC with additional price monitoring powers in relation to the
carbon tax repeal.
Context of amendments
Overview
4.2 The removal of the carbon tax is expected to lower input costs
for some businesses. In some markets this will flow on in the form of
lower consumer prices. However, in selected markets, especially where
competition is limited, businesses may choose not to pass through savings
from the carbon tax repeal.
4.3 The amendments contained in Schedule 2 to the Main Repeal
Bill will help to ensure that consumers and businesses are not exploited by
suppliers following the repeal of the carbon tax by prohibiting price
exploitation with respect to certain key goods (such as electricity and gas)
and false or misleading representations about the effects of the carbon tax
repeal on prices. These amendments are similar to those made when the
GST was first introduced.
4.4 The amendments will also give the ACCC monitoring powers to
assess the general effect of the carbon tax repeal on certain prices, and for
the purpose of assisting the ACCCs considerations with respect to the
new price exploitation prohibition.
4.5 Under the CC Act as it currently stands, there is no prohibition
against price exploitation. However, there are existing provisions that
prohibit false and misleading misrepresentations, including about price.
The amendments will complement these existing provisions of the
CC Act.
51
Carbon Tax Repeal Bills
Comparison of key features of new law and current law
New law Current law
Introduces a new prohibition on There is currently no price
businesses engaging in exploitation provision under the
carbon-specific price exploitation CC Act.
with respect to certain key goods in
relation to the carbon tax repeal, with
contraventions incurring maximum
pecuniary penalties of 6,471 penalty
units ($1,100,070) for a corporation
and 1,295 penalty units ($220,150)
for an individual.
Introduces new powers for the ACCC Under Part VIIA, Division 5 of the
to: monitor the prices of certain goods CC Act, the Minister may direct the
before and during the carbon tax ACCC to monitor prices, costs and
repeal transition period; assess the profits relating to the supply of goods
general effect of the carbon tax repeal or services for defined businesses or
on these prices; and assist the ACCC sectors.
in considering whether a corporation
has engaged, is or may engage in
price exploitation.
Introduces a new prohibition Currently, section 29(1)(i) of the
preventing corporations from making Australian Consumer Law (ACL)
false or misleading representations prohibits false or misleading
about either the effect of the carbon representations in connection with the
tax repeal or the carbon tax scheme supply or possible supply of goods or
on prices during the carbon tax repeal services, and the promotion of the
transition period. supply or use of goods and services
with respect to price. Section 18 of
the ACL provides a general
prohibition on misleading or
deceptive conduct.
Detailed explanation of new law
4.6 With a view to ensuring that consumers and businesses are not
exploited by suppliers following the repeal of the carbon tax, the Main
Repeal Bill:
· inserts a new Part V in the CC Act prohibiting carbon
tax-related price exploitation and false or misleading
representations about the effect of the carbon tax repeal; and
[Schedule 2, item 3, Division 1, CC Act]
· provides the ACCC additional price monitoring powers in
relation to the carbon tax repeal. [Schedule 2, item 3, section 60G,
CC Act]
52
Chapter 4: Amendments to the Competition and Consumer Act 2010
4.7 New Part V of the CC Act applies to the States and Territories
insofar as they conduct business either directly or through an authority of
the State or Territory. [Schedule 2, item 1, section 2B(1), CC Act]
4.8 Section 6(2)(b) of the CC Act currently extends the application
of parts of the CC Act in reliance of the Commonwealths constitutional
trade and commerce power. It is amended to similarly extend the
application of the new Part V (other than Division 5). [Schedule 2, item 2,
section 6(2)(b), CC Act]
Price exploitation in relation to the carbon tax repeal
4.9 The Main Repeal Bill amends the CC Act to include a new
prohibition against price exploitation in relation to the carbon tax repeal.
This will let the ACCC take action against corporations that engage in
price exploitation following the repeal of the carbon tax. [Schedule 2, item 3,
section 60, CC Act]
4.10 The amendments to the CC Act include a summary of new
Part V, which provides a simplified outline of the new price exploitation
and monitoring provisions. [Schedule 2, item 3, section 60, CC Act]
4.11 The price exploitation prohibition applies to the regulated supply
of regulated goods during the carbon tax repeal transition period, which is
the period beginning at the start of 1 July 2014 and ending at the end of
30 June 2015. [Schedule 2, item 3, Part V, CC Act]
4.12 ,,Regulated supply means a supply of regulated goods that
occurs during the carbon tax repeal transition period (from 1 July 2014 to
30 June 2015). [Schedule 2, item 3, section 60A, CC Act]
4.13 ,,Price means a charge of any description for the supply and any
pecuniary or other benefit, whether direct or indirect, received or to be
received by a person for or in connection with the supply. [Schedule 2,
item 3, section 60A, CC Act]
4.14 ,,Regulated goods means natural gas, electricity, SGGs,
SGG equipment or any other kind of good prescribed by the Minister
through a legislative instrument, which is disallowable by either
House of the Parliament under section 42 of the Legislative Instruments
Act 2003. This power will allow the Minister, in the event that there are
significant concerns about pricing behaviour in other markets or sectors,
to extend the operation of the price exploitation power to these additional
markets or sectors. The list of regulated goods is intended to cover retail
and wholesale electricity and natural gas, as well as supplies of SGGs
throughout the supply chain. [Schedule 2, item 3, section 60B, CC Act] [Schedule
2, item 3, section 60A, CC Act] [Schedule 2, item 3, section 60B(1), CC Act]
4.15 Definitions for ,,synthetic greenhouse gases and ,,synthetic
greenhouse gas equipment are the same as their respective meanings in
the Ozone Protection and Synthetic Greenhouse Gases Management Act
1989 (Ozone Management Act). [Schedule 2, item 3, section 60A, CC Act]
53
Carbon Tax Repeal Bills
4.16 New section 60C of the CC Act sets out the prohibition on price
exploitation in relation to the carbon tax repeal. It contains a number of
elements. A corporation engages in price exploitation in relation to the
carbon tax repeal if, and only if:
· it makes a regulated supply;
· the price for the supply is unreasonably high, having regard
alone to the carbon tax repeal; and
· the price for the supply is unreasonably high even taking into
account the suppliers costs, supply and demand conditions,
and any other relevant matter. [Schedule 2, item 3, section 60C,
CC Act] [Schedule 2, item 3, section 60C(2), CC Act]
4.17 The amendments to the CC Act do not insert a definition of
,,suppliers costs. This is deliberate as the costs faced by a supplier will
vary on a case-by-case basis, and it would not be possible to draft a useful,
all-inclusive definition.
4.18 A corporation engages in price exploitation where it makes a
regulated supply at an unreasonably high price having regard to the
carbon tax repeal, the suppliers costs, supply and demand conditions, and
any other relevant matter. The test of what constitutes an ,,unreasonably
high price is one of reasonableness. The court is expected to take into
account the specific circumstances of the case in considering whether the
price of supply was unreasonably high. Further, while prices may reduce
in some markets following the carbon tax repeal, in other markets there
may be valid reasons as to why they may not. [Schedule 2, item 3,
section 60C(2), CC Act]
4.19 If a Court finds that a corporation or an individual has
contravened this prohibition, then it may be subject to maximum civil
pecuniary penalties of 6,471 penalty units ($1,100,070) and 1,295 penalty
units ($220,150) for a corporation and an individual respectively.
These penalty amounts are in line with the penalty amounts under the
ACL for a wide range of offences, including false and misleading
representations. [Schedule 2, items 5, 6 and 7, section 76(1)(a), 76(1A)(b) and
76(1B)(a), CC Act]
4.20 The levels of pecuniary penalties reflect the seriousness of the
contraventions and represent clear and strong disincentives for
non-compliance. The effectiveness of the new prohibitions hinges on the
ability to deter, and where necessary enforce, contraventions. This is
particularly important given that a person who does not comply could
obtain substantial financial gain through charging unreasonably high
prices.
4.21 Other redress and enforcement mechanisms include actions for
damages, injunctions and a range of punitive, non-punitive and other
54
Chapter 4: Amendments to the Competition and Consumer Act 2010
orders, including a new power for the court to make orders limiting prices
and requiring refunds.
4.22 The ACCC may issue a written notice to a corporation if it
considers the corporation has engaged in price exploitation in relation to
the carbon tax repeal. New section 60D(2) of the CC Act sets out the
form and content of the notice. [Schedule 2, item 3, section 60D, CC Act]
4.23 In proceedings seeking pecuniary penalties, injunctions or orders
(both punitive and non-punitive) in relation to a contravention of new
section 60C of the CC Act, the notice will be prima facie evidence that the
price charged for the supply was unreasonably high, and that
unreasonably high price was not attributable to the matters referred to in
new section 60C(2)(c) of the CC Act. The ACCC is able to vary or
revoke the notice, either on its own initiative, or on application by the
corporation to which the notice is issued. New section 60D of CC Act
creates additional incentive for compliance by putting the onus on the
supplier to prove that price was not unreasonably high in any relevant
court proceedings. The issuing of such notices would also serve as a
warning for suppliers to stop or refrain from future conduct that may be
considered by the ACCC to be in breach of the new section 60C of the
CC Act. [Schedule 2, item 3, section 60D(3) and (4), CC Act]
4.24 The ACCC may also issue a written notice to a corporation
which allows the ACCC to indicate to a corporation that supplies
specified in the notice should not be made above a maximum price.
In effect these notices will give a warning to a corporation that supplies
above the maximum price specified will, in the ACCCs opinion, indicate
price exploitation. [Schedule 2, item 3, section 60E, CC Act]
4.25 Unlike notices issued under new section 60D of the CC Act,
notices issued under new section 60E of the CC Act will not constitute
prima facie evidence in any subsequent proceedings. However, the
ACCC will be able to publish notices issued under new section 60E of the
CC Act, and will also be required to include them in its report to the
Minister under new section 60J of the CC Act. [Schedule 2, item 3,
sections 60E(4) and 60J(2), CC Act]
4.26 To the extent that the operation of a provision in new Part V of
the CC Act would result in an acquisition of property from a person
without just terms within the meaning of section 51(xxxi) of the
Constitution, the provision does not have any operation and the Act
remains constitutionally valid. [Schedule 2, item 3, section 60F, CC Act]
Price monitoring in relation to the carbon tax repeal
4.27 New section 60G of the CC Act provides the ACCC with new
powers to monitor the prices of certain goods to assess the general effect
of the carbon tax scheme and carbon tax repeal on prices charged by
corporations for supplies for a period before and during the carbon tax
55
Carbon Tax Repeal Bills
repeal transition period, and to assist it in considering whether a
corporation has engaged, is or may engage in price exploitation. This will
inform the ACCCs reports to the Minister under new section 60J of the
CC Act. [Schedule 2, item 3, section 60G, CC Act] [Schedule 2, item 3,
section 60G(1), (3), (6) and (8), CC Act]
4.28 The ACCCs monitoring power will extend beyond the prices
actually charged for supplies. In assessing the general effect of the carbon
tax scheme and carbon tax repeal on prices, it may also monitor prices
advertised, displayed and offered. This allows for the general effect of the
carbon tax repeal to be monitored more comprehensively, and potentially
allows the ACCC to become aware of possible price exploitation before it
has actually occurred. [Schedule 2, item 3, section 60G(2), (4), (7), and (9), CC Act]
4.29 In addition to the monitoring for the purpose of assessing the
general effects of the carbon tax scheme and carbon tax repeal on pricing,
the ACCC will also be able to monitor prices to assist its consideration of
whether a corporation has engaged, is engaging or may in the future
engage in price exploitation in relation to the carbon tax repeal. It is
expected that targeted price monitoring will be an important element of
the ACCCs enforcement regime with respect to the price exploitation
prohibition. [Schedule 2, item 3, section 60G(5), CC Act]
4.30 The new ACCC monitoring powers will not be economy-wide,
but will be focused in scope. The provisions apply to ,,relevant goods and
any goods supplied by a corporation when that corporation is on the
Liable Entities Public Information Database. [Schedule 2, item 3,
section 60G(11), CC Act]
4.31 ,,Relevant goods include all ,,regulated goods and any other
kind of goods specified by regulation under the section. In addition, as
,,relevant goods capture all ,,regulated goods, any kind of goods added to
the scope of ,,regulated goods would automatically flow through to
expand the scope of price monitoring. This focused monitoring approach
will allow the ACCC to identify the most important price effects of the
carbon tax scheme and carbon tax repeal in the economy, and target its
monitoring efforts under the new section. [Schedule 2, item 3, section 60G(11),
CC Act]
4.32 The power to prescribe additional relevant goods will allow the
Minister, in the event that there are significant concerns about pricing
behaviour in other markets or sectors, to extend the operation of the price
monitoring power to these additional markets or sectors. [Schedule 2, item 3,
section 60G(12), CC Act]
4.33 ACCC monitoring powers will have effect for the ,,carbon tax
repeal transition period (that is from 1 July 2014 to 30 June 2015) and the
,,pre-repeal transition period (that is from the commencement of the
section until 30 June 2014). For example, if Schedule 2 commences on
1 January 2014, then the monitoring power will last from that time until
56
Chapter 4: Amendments to the Competition and Consumer Act 2010
30 June 2015. It is expected that the ACCC will commence monitoring
six months prior to the repeal of the carbon tax to establish baseline
prices. [Schedule 2, item 3, section 60G(1)-(4), (6)-(9) and (13), CC Act]
4.34 However, the new section does not limit the ACCCs existing
price surveillance powers under Part VIIA of the CC Act. [Schedule 2,
item 3, section 60G (10), CC Act]
4.35 To enable the ACCC to effectively exercise its new monitoring
powers, it will also be given complementary information-gathering
powers, similar to those it was given for its role in relation to the
introduction of the GST. [Schedule 2, item 3, section 60H, CC Act]
4.36 Under these powers, a member of the ACCC may request a
person to produce specified information or to produce documents
containing information relating to prices or the setting of prices, that the
member reasonably believes will or may be useful to the Commission in
monitoring prices (the new section 60G(1) to (9) of the CC Act).
[Schedule 2, item 3, section 60H, CC Act]
4.37 The information or documents that may be required by the
ACCC may relate to prices, or the setting of prices:
· before or after the carbon tax repeal;
· before or after the start of the carbon tax repeal transition
period; and
· in a situation, or during a period, specified in the notice.
[Schedule 2, item 3, section 60H(2), CC Act]
4.38 Therefore, it will be possible for the ACCC to request
information or documents relating to prices and the setting of prices prior
to the repeal of the carbon tax, and prior to the commencement of the
carbon tax repeal transition period, in order to compare them with prices
and pricing decisions after the changes take place.
4.39 New section 60H(4) of the CC Act provides that it is an offence
to refuse or fail to comply with a request under section 60H(1) of the
CC Act, with a maximum penalty of 20 penalty units ($3,400).
This penalty amount is equal to the penalty amount provided for under the
ACCCs general information gathering powers (section 155 of the
CC Act) for an equivalent breach. [Schedule 2, item 3, section 60H, CC Act]
4.40 The new information-gathering powers do not limit the general
information-gathering powers of the ACCC under section 155 of the
CC Act. [Schedule 2, item 3, section 60H(6)]
4.41 The ACCC will be required to give the Minister a written report
about its operations under the new Part V of the CC Act within 28 days
after the end of each quarter. [Schedule 2, item 3, section 60J, CC Act]
57
Carbon Tax Repeal Bills
False or misleading representations about the effect of the carbon tax
repeal on prices
4.42 The Main Repeal Bill introduces a new provision to prohibit a
corporation, in connection with the supply or possible supply of goods or
services, from making false or misleading representations about the effect
of the carbon tax scheme and carbon tax repeal on prices for the supply of
those goods or services during the carbon tax repeal transition period
(from 1 July 2014 to 30 June 2015). Unlike the price exploitation
provisions, these carbon-specific prohibitions will apply across the
economy, to cover all goods and services. [Schedule 2, item 3, section 60K,
CC Act]
4.43 There are existing provisions under the ACL that prohibit false
and misleading misrepresentations, including with respect to price
(section 29 of Schedule 2 to the CC Act). The new carbon-specific
prohibition on false or misleading representations will complement and
operate in conjunction with existing law to help ensure that consumers are
not exploited by those businesses that make false or misleading
representations in relation to the pricing effect of the carbon tax scheme
and carbon tax repeal. The explicit inclusion of a carbon-specific
prohibition on false or misleading representations is intended to make it
very clear that misrepresentations with respect to the carbon tax are
prohibited.
4.44 Corporations that contravene this prohibition can be subject to
maximum civil pecuniary penalties of 6,471 penalty units ($1,100,070)
and 1,295 penalty units ($220,150) for a corporation and an individual
respectively. These penalty amounts reflect the seriousness of the
contravention and are in line with the penalty amounts under the ACL for
false and misleading representations. [Schedule 2, items 5, 6 and 7, section
76(1)(a), 76(1A)(b) and 76(1B)(a), CC Act]
Infringement notices and other enforcement provisions
4.45 New Part V, Division 5 of the CC Act provides the ACCC with
the power to issue infringement notices in relation to provisions
concerning price exploitation related to the carbon tax repeal. This power
is consistent with the ACCCs existing powers to issue infringement
notices in relation to the ACL. The use of infringement notices will
supplement the civil pecuniary penalties as well as the other enforcement
powers included in the Main Repeal Bill. [Schedule 2, item 3, Division 5,
CC Act]
4.46 The capacity to issue an infringement notice is not intended to
amount to the imposition of a financial penalty by the ACCC. It is
intended, instead, to provide a mechanism through which a person who, in
the opinion of the ACCC, has contravened new sections 60C or 60K of
the CC Act may forestall an application to the courts by the ACCC for the
imposition of a civil pecuniary penalty. [Schedule 2, item 3, Division 5, CC Act]
58
Chapter 4: Amendments to the Competition and Consumer Act 2010
4.47 Infringement notices allow the ACCC to take action against
minor breaches of the provisions more efficiently and effectively than
through court action alone, and provide the potential for a speedier
resolution of matters than is possible through the courts (although this
would depend on the complexity of each matter). [Schedule 2, item 3,
section 60L, CC Act]
4.48 For infringement notices relating to those contraventions of the
new section 60C and 60K, with corresponding maximum civil pecuniary
penalty of $1,100,070 for bodies corporate and $220,150 for persons other
than bodies corporate, the infringement notice amounts are:
· 600 penalty units (presently $102,000) for listed
corporations;
· 60 penalty units (presently $10,200) for bodies corporate that
are not listed corporations; and
· 12 penalty units (presently $2,040) for persons other than
bodies corporate. [Schedule 2, item 3, section 60L(5), CC Act]
4.49 These infringement notice amounts are consistent with the
infringement notice amounts that apply for the rest of the ACL set out in
section 134C of the CC Act.
4.50 These penalties are substantially less than the maximum civil
pecuniary penalties proposed for contraventions of these provisions,
which reflects their intended application to minor infringements of the
law.
4.51 Compliance with an infringement notice requires payment of the
financial penalty within a certain period of time to avoid legal proceedings
in respect of the alleged contravention. [Schedule 2, item 3, section 60M(1),
CC Act]
4.52 Compliance with an infringement notice brings the process for
enforcing the alleged contravention to an end after its administrative
phase. This reflects the intention behind the infringement notice
mechanism of providing a process through which the entity may forestall
court proceedings by the ACCC in relation to the alleged contravention.
4.53 Compliance with an infringement notice is not taken as an
admission of liability or a contravention of the CC Act. Furthermore, if a
person complies, he or she is not subject to further civil or criminal
proceedings in relation to the alleged contravention.
4.54 An infringement notice does not give rise to an enforceable
requirement to pay the financial penalty. If a person does not comply with
the infringement notice within the period of time specified, the ACCC
cannot enforce the infringement notice. Instead, the ACCC may bring
civil or criminal proceedings against the person in relation to the same
59
Carbon Tax Repeal Bills
alleged contravention, but not for failure to pay the penalty in the
infringement notice. [Schedule 2, item 3, section 60N, CC Act]
4.55 The ACCC will have the power both to issue and revoke an
infringement notice, as well as the ability to extend the compliance period.
[Schedule 2, item 3, section 60P, CC Act]
4.56 The infringement notice compliance period is initially 28 days.
However, the ACCC may extend the infringement notice compliance
period once for a further period of 28 days. [Schedule 2, item 3, section 60P,
CC Act]
4.57 The ACCC may withdraw an infringement notice if it considers
it appropriate, by written notice to the person. The mechanism under
which an infringement notice can be withdrawn is set out in the new
section 60Q. [Schedule 2, item 3, section 60Q, CC Act]
Amendments of CC Act consequential on new ACCC powers
Enforcement and penalties
4.58 Part VI of the CC Act deals with enforcement and remedies.
Section 75B(1) of the CC Act provides that a reference in Part VI to a
person involved in a contravention of Part IV, IVB or section 95AZN
shall be read as a reference to a person who has been involved in the
contravention, for example, by aiding, abetting, being knowingly
concerned or conspiring in the contravention. Section 75B(1) is amended
so that it also applies in relation to a contravention of new sections 60C
and 60K. [Schedule 2, item 4, section 75B(1), CC Act]
4.59 Section 76(1)(a)(i) of the CC Act is amended to provide that a
contravention of new sections 60C and 60K will attract around the same
penalties as a contravention of the prohibition on false or misleading
representations in section 29 of Schedule 2 to the CC Act. Contravention
of the new sections 60C and 60K of the CC Act will incur maximum
pecuniary penalties of 6,471 penalty units for a corporation and 1,295
penalty units for an individual, which equates to $1,100,070 and
$220,150, respectively. [Schedule 2, items 5, 6 and 7, sections 76(1)(a), 76(1A)(b)
and 76(1B)(a), CC Act]
4.60 The levels of pecuniary penalties reflect the seriousness of the
contraventions and represent clear and strong disincentives for
non-compliance. The effectiveness of the new prohibitions hinges on the
ability to deter, and where necessary enforce, contraventions. This is
particularly important given that a person who does not comply could
obtain substantial financial gain through charging unreasonably high
prices. Further, these penalty amounts are in line with the penalty
amounts under the ACL for a wide range of offences, including false and
misleading representations.
60
Chapter 4: Amendments to the Competition and Consumer Act 2010
Civil remedies
4.61 Section 77A of the CC Act prevents a body corporate from
indemnifying a person against a civil liability incurred as an officer of the
body corporate. The definition of ,,civil liability under section 77A(3) is
amended to include the new Part V of the CC Act. [Schedule 2, item 8,
section 77A, CC Act]
4.62 Section 80(1) of the CC Act states who may apply for
injunctions, and in what circumstances. Section 80(1)(a) is amended so
that an injunction may be granted if the Court is satisfied that a person has
engaged, or is proposing to engage, in conduct that constitutes or would
constitute a contravention of new sections 60C and 60K. [Schedule 2, item 9,
section 80(1), CC Act]
4.63 Section 80(1A) of the CC Act places restrictions on who may
apply for an injunction in relation to certain provisions. Currently, the
ACCC may apply for an injunction in relation to a contravention of
section 50 of the CC Act. Section 80(1A) of the CC Act is amended to
similarly provide that the ACCC may also apply for an injunction relating
to a contravention of new sections 60C and 60K of the CC Act.
[Schedule 2, item 10, section 80(1A), CC Act]
4.64 New section 80A of the CC Act provides that, if on the
application of the ACCC, the Court is satisfied that new section 60C of
the CC Act has been contravened, it may make orders requiring the person
who contravened the section, or someone involved in the contravention,
not to make a regulated supply at a price above that specified in the order.
The Court may also make an order requiring the person who contravened
new section 60C of the CC Act, or a person involved in the contravention,
to refund money to a person specified in the order. [Schedule 2, item 11,
section 80A, CC Act]
4.65 In essence new section 80A of the CC Act makes clear that
where new section 60C has been contravened, the Court may make orders
restraining supplies above a certain price and/or requiring refunds.
However, the discretion whether to grant such orders remains with the
Court and new section 80A does not limit the Courts general power to
grant injunctions under section 80 of the CC Act.
4.66 Section 82 of the CC Act currently provides that a person who
suffers loss or damage by conduct of another person done in contravention
of a provision of Part IV or IVB may recover that amount against any
person involved in contravention. Section 82(1) of the CC Act is
amended to apply it in relation to new sections 60C and 60K of the
CC Act. [Schedule 2, item 12, section 82(1), CC Act]
4.67 Section 83 of the CC Act provides that findings of fact in which
a person has been found to have contravened or been involved in a
contravention of Part IV or Part IVB of the CC Act is prima facie
evidence of that fact for the purposes of section 82 proceedings.
61
Carbon Tax Repeal Bills
Section 83 is amended to apply it in relation to new sections 60C and 60K
of the CC Act. [Schedule 2, item 13, section 83, CC Act]
4.68 Section 84(1) of the CC Act provides for the state of mind of a
body corporate to be established by reference to the state of mind of a
director, employee or agent of the body corporate in certain
circumstances. Section 84(1) of the CC Act is amended to apply it in
relation to the new Part V of the CC Act. [Schedule 2, item 14, section 84(1),
CC Act]
4.69 Section 84(3) of the CC Act makes a person vicariously liable
by imputing the state of mind of an employee or agent to the person in
certain circumstances. Section 84(3) of the CC Act is amended to apply it
in relation to the new Part V of the CC Act. [Schedule 2, item 14, section 84(3),
CC Act]
4.70 Section 85 of the CC Act provides a defence to conduct in
breach of Part IV of the CC Act or conduct referred to in section 76(1)(b),
(c), (d), (e) or (f) if the person ought fairly to be excused. Section 85 is
amended to ensure defences apply in relation to new sections 60C and
60K. [Schedule 2, item 15, section 85(a), CC Act]
4.71 Section 86C of the CC Act provides for the Court to impose an
order to undertake a community awareness program, publish an
advertisement, attend trade practices awareness training or implement a
trade practices compliance program. Section 86C is amended so that
these types of non-punitive orders are available as a remedy for a
contravention of new sections 60C and 60K. The amendments expressly
provide that a community service order or a probation order is not
available as a remedy for either of these new sections. [Schedule 2, items 16,
17 and 18, section 86C, CC Act]
4.72 Section 87 confers a wide power on the Court to make remedial
orders in appropriate cases relating to conduct engaged in contravention of
Part IV or Division 2 of Part IVB. Section 87 is amended to apply in
relation to new sections 60C and 60K. [Schedule 2, items 19 to 23, section 87,
CC Act]
4.73 Section 155AAA of the CC Act protects information given to
the ACCC in confidence. The definition of ,,core statutory provision is
amended to include the new Part V of the CC Act. The definition of
,,protected information is amended to apply to information given to the
ACCC under new section 60H of the CC Act. [Schedule 2, items 24 and 25,
section 155AAA, CC Act]
4.74 Section 163A of the CC Act confers on the Court jurisdiction to
order prohibition, certiorari or mandamus, or to make a declaration, in
relation to the operation or effect of any provision of the CC Act and the
ACL (other than the implied warranties provisions of ACL, Part 3-2,
Division 1 and Part 5-4) and the validity of any Act or thing done, or
purporting to have been done under the CC Act. However provisions
62
Chapter 4: Amendments to the Competition and Consumer Act 2010
under Part XIB and XIC of the CC Act are exempted. The Main Repeal
Bill expressly provides that new Part V is also exempted from the
application of section 163A. [Schedule 2, item 26, section 163A, CC Act]
63
Chapter 5
Removal of equivalent carbon price from
taxable fuels
Outline of chapter
5.1 Chapter 5 describes the changes to relevant legislation to remove
the equivalent carbon price from liquid and gaseous fuels. These
amendments:
· adjust fuel tax credits (FTCs) for certain uses of taxable fuel;
and
· reduce excise and excise equivalent customs duty imposed on
aviation fuel.
Context of amendments
5.2 All taxable fuel (including petrol and diesel) produced in, or
imported into, Australia has excise or excise equivalent customs duty (fuel
tax) imposed on it when it enters the Australian market. To reduce the
incidence of fuel tax on certain business users, fuel tax credits (FTCs) are
provided to business taxpayers for a variety of uses of fuel.
5.3 In particular, FTCs are provided to:
· all off-road business users of taxable fuel; and
· business users of heavy vehicles (over 4.5 tonnes) for fuel
used for travelling on public roads (these FTCs are reduced
by the road user charge).
5.4 FTCs are also available for non-business users for taxable fuel
that they acquire or manufacture in, or import into, Australia to the extent
that it is used to generate electricity for domestic use.
5.5 The equivalent carbon price was applied to certain uses of
taxable fuels through several mechanisms. These mechanisms included
reducing the entitlement to FTCs for fuels such as petrol and diesel as
well as increasing the rates of excise and excise equivalent customs duty
applied to aviation fuel. The rates of duty were not increased on other
types of fuel.
65
Carbon Tax Repeal Bills
5.6 These amendments remove the equivalent carbon price from
taxable fuels by repealing the changes which were made to impose the
equivalent carbon price.
Comparison of key features of new law and current law
New law Current law
Increases to FTCs for certain uses of taxable fuel
FTCs for certain uses of taxable fuel Reduced FTCs provided for certain
are increased to remove the reduction uses of taxable fuel to reflect an
attributable to the equivalent carbon equivalent carbon price.
price.
Reductions in excise and excise equivalent customs duty for aviation fuel
Rates of duty on aviation fuel are Rates of duty on aviation fuel are
reduced to exclude the equivalent increased to include the equivalent
carbon price. carbon price.
Removal of other additional FTCs to reflect the repeal of the carbon tax
The additional FTC for non-transport An additional FTC is available for
gaseous fuel used in specified non-transport gaseous fuel used in
agriculture, forestry and fisheries specified agriculture, forestry and
activities is removed. fisheries activities.
This additional FTC was provided to
compensate those users for the carbon
tax that was passed though in the cost
of non-transport gaseous fuels.
No FTCs are available for aviation A FTC is available for aviation fuel
fuel. covered by the Opt-in scheme.
Detailed explanation of new law
Increases to FTCs for certain uses of taxable fuel
5.7 To implement an equivalent carbon price on certain uses of
taxable fuel, FTCs were reduced for some recipients with effect from
1 July 2012. However, specified uses of fuel were exempt from the
equivalent carbon price. For example, there was no reduction in FTCs for
business users of fuel in heavy vehicles travelling on public roads or for
fuel used otherwise than by combustion. Fuel used in specified
agriculture, forestry and fisheries activities was also exempt from the
equivalent carbon price.
5.8 The amount of the reduction in FTCs to remove the carbon
reduction from taxable fuels subject to the equivalent carbon price is
called the ,,amount of carbon reduction. The amount of carbon reduction
66
Chapter 5: Removal of equivalent carbon price from taxable fuels
is different for different fuel types, reflecting the different emission rates
for different fuels.
5.9 These amendments increase FTCs for taxable fuel that was
subject to the equivalent carbon price through a reduction in FTCs.
For these recipients, FTCs are increased by the applicable amount of
carbon reduction. This ensures that FTCs for fuel use subject to the
equivalent carbon price are restored to what they would have been had the
carbon tax not been implemented. The current and new FTC rates are set
out below for taxable fuels subject to the equivalent carbon price.
[Schedule 1, items 121, 122 and 123, sections 43-5 and 43-8, Fuel Tax Act]
Table 5.1 Changes in rates of FTCs for liquid fuels
Use Eligible liquid FTCs at 1 July FTCs at 1 July
fuel 2013 (cents per 2014 (cents per
litre) litre)
Off-road business Petrol 32.347 38.143
activities where the
fuel is combusted Diesel and 31.622 38.143
(except for specified other liquid
agriculture, forestry fuels
and fisheries
activities).
Supply of fuel for Heating oil and 31.622 38.143
domestic heating. kerosene
Table 5.2 Changes in rates of FTCs for gaseous fuels
Use Eligible FTCs at 1 July FTCs at 1 July
gaseous fuel 2013 2014
Off-road business Duty paid LPG 3.636 cents per 10.0 cents per
activities where the - transport litre litre
fuel is combusted
(except for specified Duty paid LNG 8.666 cents per 20.9 cents per
agriculture, forestry or CNG - kilogram kilogram
and fisheries transport
activities).
Supplying LPG: Duty paid LPG 3.636 cents per 10.0 cents per
- transport litre litre
· by filling
cylinders of
210kg capacity or
less for non-
transport use; and
· in tanks for
residential use
67
Carbon Tax Repeal Bills
Table 5.3 Rate of fuel tax credit for blended fuels
Use Eligible blended FTCs at 1 July FTCs at 1 July
fuel 2013 (cents per 2014 (cents per
litre) litre)
Off-road business B5 31.94805 38.143
activities where the B20 32.9262 38.143
fuel is combusted
(except for specified E10 32.9266 38.143
agriculture, forestry E85 4.85205 5.72145
and fisheries
activities).
5.10 Consequential amendments are also made to Fuel Tax
(Consequential and Transitional Provisions) Act 2006 to remove
references to the reductions in FTCs due to the equivalent carbon price.
These references are not required following the repeal of the carbon tax.
[Schedule 1, items 108, 109, 110, 122, 135, 136, 138, 143, 147, 152 and 155, sections 2-1,
40-5, 43-5 and 110-5, Fuel Tax Act; item 12(2A), Schedule 3, Fuel Tax (Consequential
and Transitional Provisions) Act 2006]
Reductions in excise and excise equivalent customs duty for aviation
fuel
General provisions
5.11 The reductions in excise and excise equivalent customs duty will
be implemented by the Excise Amendment Bill and the Customs
Amendment Bill. When enacted, the names of those Bills will be the
Excise Tariff Amendment (Carbon Tax Repeal) Act 2014 and the Customs
Tariff Amendment (Carbon Tax Repeal) Act 2014. [Excise Amendment Bill,
clause 1] [Customs Amendment Bill, clause 1]
5.12 All amendments made by the Excise Amendment Bill and the
Customs Amendment Bill have effect according to the terms set out in the
Bills. [Excise Amendment Bill, clause 3] [Customs Amendment Bill, clause 3]
5.13 The formal provisions in sections 1, 2 and 3 of the Excise
Amendment Bill and the Customs Amendment Bill commence on the day
that the Governor-General gives the Royal Assent. The operative
provisions commence on 1 July 2014. [Excise Amendment Bill, clause 2]
[Customs Amendment Bill, clause 2]
Changes in rates of duty for all aviation fuel
5.14 Prior to the implementation of the carbon tax, FTCs were not
available for aviation fuel in any circumstances. Increases to the rates of
excise and excise equivalent customs duty were made to implement an
equivalent carbon price on aviation fuel. The equivalent carbon price was
represented by increases in the rates of duty equal to a ,,carbon component
rate. The carbon component rates are different for aviation kerosene and
68
Chapter 5: Removal of equivalent carbon price from taxable fuels
aviation gasoline, reflecting the different emission rates for the different
aviation fuels.
5.15 Prior to the imposition of the equivalent carbon price on aviation
fuel, the rates of duty on aviation fuel were equal to the amount
representing a levy to fund the Civil Aviation Safety Authority (CASA).
5.16 These amendments remove the ,,carbon component rate from
the rates of excise and excise equivalent customs duty imposed on
aviation fuels. With the removal of the carbon component rate, the rates
of duty for both aviation kerosene and aviation gasoline are reduced to the
pre-carbon tax rate of 3.556 cents per litre, which represents the
hypothecated levy to fund CASA. [Excise Amendment Bill, items 6 and 7,
Schedule (cell at table subitem 10.6 and 10.17, column headed "Rate of Duty"),
Excise Tariff Act 1921] [Customs Amendment Bill, items 2 to 37, Schedule 3
(subheadings 2710.12.61, 2710.19.40, 2710.91.40, 2710.91.61, 2710.99.40 and
2710.99.61, column 3), Schedule 5 (cells at table items 60, 66, 76, 80, 88 and 92,
column 3), Schedule 6 (cells at table item 63, 69, 79, 83, 91 and 95, column 3), Schedule
7 (cells at table item 62, 68, 78, 82, 90 and 94, column 3), Schedule 8 (cells at table
item 68,74, 84, 88, 96 and 100, column 3), Schedule 9 (cells at table item 67, 74, 85, 89,
99 and 103, column 3), Customs Tariff Act 1995]
Table 5.4 Aviation fuel duty rates
Aviation fuel Rate of duty as at 1 July Rate of duty as at 1 July
2013 (cents per litre) 2014 (cents per litre)
Aviation kerosene 9.835 3.556
Aviation gasoline 8.869 3.556
5.17 Consequential amendments are made to the Excise Tariff Act
1921 and Customs Tariff Act 1995 to accommodate the removal of the
carbon component rate from excise and excise equivalent customs duty on
aviation fuel. [Excise Amendment Bill, items 1 to 5, sections 3(1) and 5(1) and
sections 6FA, 6FB and 6FC, Excise Tariff Act 1921, Schedule (note 2 to Schedule
heading and table heading), Excise Tariff Act 1921] [Customs Amendment Bill, item 1,
section 19A, Customs Tariff Act 1995]
Removal of additional FTC for aviation fuel subject to the Opt-in
scheme
5.18 As large users of aviation fuel were able to opt-in to be covered
by the carbon pricing mechanism from 1 July 2013, the increases in rates
of excise and excise equivalent customs duty were offset by the provision
of an additional FTC for aviation fuel covered by the Opt-in scheme.
However, only the part of the fuel tax attributable to the carbon
component rate was eligible for FTCs (the part of the fuel tax comprising
the hypothecated levy to fund CASA was not eligible for a FTC).
5.19 These amendments remove the additional FTC for aviation fuel
covered by the Opt-in scheme, to reflect that the rates of duty on aviation
fuel are reduced by the removal of the equivalent carbon price and that the
69
Carbon Tax Repeal Bills
fuels are also no longer covered by the carbon pricing mechanism.
[Schedule 1, items 117 and 126, sections 41-30(2) and 43-11, Fuel Tax Act]
5.20 Consequential amendments are made to the Fuel Tax Act to
reflect the removal of the additional FTC for aviation fuel covered by the
Opt-in scheme. [Schedule 1, items 108, 110, 111, 112, 115, 116, 120, 124, 125 and
138, sections 2-1, 40-5, 41-1, 41-5(3)(b), 41-30, 43-1, 43-10 and 110-5, Fuel Tax Act]
Consequential amendments to reflect the removal of the carbon pricing
mechanism
Removal of additional FTC for certain uses of non-transport gaseous
fuels
5.21 The equivalent carbon price is imposed on the non-transport use
of gaseous fuels through the carbon pricing mechanism. However, as
specified agriculture, forestry and fishery activities are exempt from the
carbon tax, the non-transport use of gaseous fuels used in these activities
receive an additional FTC to compensate for the effect of the equivalent
carbon price which is embedded in the price of the gaseous fuel.
5.22 With the repeal of the carbon tax, this additional FTC for the
non-transport use of gaseous fuels used in these activities is no longer
required. Therefore, this additional FTC for the non-transport use of
gaseous fuels used in specified agriculture, forestry and fishery activities
is removed. [Schedule 1, item 119, Division 42A, Fuel Tax Act]
5.23 Consequential amendments are also made to the Fuel Tax Act to
reflect the removal of this additional FTC. [Schedule 1, items 113, 114, 118,
127 to 134, 137, 139 to 142, 144 to 146, 148 to 151, 153 and 154, sections 41-15(1),
41-25(2)(a)(ii), 41-35 and 110-5 and Subdivision 43-B, Fuel Tax Act]
Application provisions
5.24 The changes to FTCs apply to taxable fuel acquired,
manufactured or imported on or after 1 July 2014. [Schedule 1, items 334 and
335]
5.25 Nothing in the Carbon Tax Repeal Bills is intended to alter the
existing definitions in the Fuel Tax Act. The meaning of the terms
,,acquire, ,,manufacture and ,,import are set out in Fuel Taxation Ruling
FTR 2007/1. The changes to rates of excise duty apply to goods that are
entered for home consumption on or after 1 July 2014. [Excise Amendment
Bill, item 8]
5.26 The changes to rates of excise equivalent customs duty apply to
goods imported into Australia on or after 1 July 2014, and to goods
imported before that time where the time for working out the rate of
import duty on the goods has not yet occurred. [Customs Amendment Bill,
item 38]
70
Chapter 6
Removal of equivalent carbon price from
synthetic greenhouse gases
Outline of chapter
6.1 Chapter 6 describes the arrangements necessary for repealing the
equivalent carbon price applied to SGGs and equipment containing SGGs
through the Ozone Management Act, Ozone (Import Levy) Act and
Ozone (Manufacture Levy) Act, including the following specific
amendments:
· repealing the equivalent carbon price from the Ozone (Import
Levy) Act;
· repealing the equivalent carbon price from the Ozone
(Manufacture Levy) Act;
· allowing the importation or manufacture of SGGs to be used
in medical equipment to be exempt from the Ozone (Import
Levy) Act and Ozone (Manufacture Levy) Act;
· repealing provisions to allow for refund of the equivalent
carbon price on SGGs and products containing these gases on
export (export refund scheme); and
· providing transitional provisions for the export refund
scheme.
Context of amendments
Repealing the equivalent carbon price
6.2 The Clean Energy Legislation introduced an equivalent carbon
price, which applies to the import or manufacture of bulk SGGs and
import of all products containing these gases. The equivalent carbon price
is applied and calculated at the point of import or manufacture.
6.3 The equivalent carbon price for SGGs is calculated using the
value of the carbon tax and the global warming potential for each gas
relative to carbon dioxide. The combination of these is called the
,,applicable charge rate in the Ozone (Import Levy) Act or Ozone
(Manufacture Levy) Act. The applicable charge rate is part of the levy
charged on the import or manufacture of SGGs or products that contain
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Carbon Tax Repeal Bills
these gases. The other part of the levy (the cost recovery component),
outlined in section 65D of the Ozone Management Act, was applied
before the introduction of the Clean Energy Legislation and will continue
after the carbon tax is repealed as it relates to administering the Ozone
Protection and SGG Program, including the legislation.
6.4 The Main Repeal Bill, the Ozone Manufacture Amendment Bill
and the Ozone Import Amendment Bill remove the applicable charge rate
from the Ozone Management Act, Ozone (Import Levy) Act and the
Ozone (Manufacture Levy) Act from 1 July 2014. This ensures that
importers and manufactures of SGG and products containing these gases
will not incur a liability to pay the equivalent carbon price for gas
manufactured, and gas and equipment imported, from 1 July 2014.
Comparison of key features of new law and current law
New law Current law
Repealing the equivalent carbon price on SGGs
An equivalent carbon price applies to An equivalent carbon price applies to
SGGs imported or manufactured the import or manufacture of bulk
before 1 July 2014 but not from that SGGs and import of all products
date. containing these gases.
The equivalent carbon price is applied
and calculated at the point of import
or manufacture.
Detailed explanation of new law
General provisions
6.5 When enacted, the names of the Ozone Manufacture
Amendment Bill and the Ozone Import Amendment Bill will be the
Ozone Protection and Synthetic Greenhouse Gas (Manufacture Levy)
Amendment (Carbon Tax Repeal) Act 2014 and the Ozone Protection and
Synthetic Greenhouse Gas (Import Levy) Amendment (Carbon Tax
Repeal) Act 2014. [Ozone Manufacture Amendment Bill, clause 1] [Ozone Import
Amendment Bill, clause 1]
6.6 All amendments made by the Ozone Manufacture Amendment
Bill and the Ozone Import Amendment Bill have effect according to the
terms set out in the Bills. [Ozone Manufacture Amendment Bill, clause 3]
[Ozone Import Amendment Bill, clause 3]
6.7 The formal provisions in sections 1, 2 and 3 of the Ozone
Manufacture Amendment Bill and the Ozone Import Amendment Bill
commence on the day that the Governor-General gives the Royal Assent.
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Chapter 6: Removal of equivalent carbon price from synthetic greenhouse gases
The operative provisions commence on 1 July 2014. [Ozone Manufacture
Amendment Bill, clause 2] [Ozone Import Amendment Bill, clause 2]
Repealing the equivalent carbon price
Repealing the equivalent carbon price
6.8 The equivalent carbon price does not apply to the importation or
manufacture of SGGs or products that contain these gases on or after 1
July 2014. This is achieved by repealing the applicable charge rate of the
levy applied to the import or manufacture of SGGs or products containing
these gases and removing all definitions that are associated with these
provisions. [Ozone Manufacture Amendment Bill, items 1 to 9 and 13, sections 2A,
2B and 3A, Ozone (Manufacture Levy) Act] [Ozone Import Amendment Bill, items 1 to
9, 13 to 14, sections 2A, 2B, 3A and 4A, Ozone (Import Levy) Act ]
Payment of levies after the repeal of the equivalent carbon price
6.9 Prior to the introduction of the Clean Energy Legislation, all
imports and manufacture of SGG and some products containing these
gases were charged a cost recovery levy. The cost recovery component of
the levy, referred to as the prescribed rate in the Ozone (Import Levy) Act
and Ozone (Manufacture Levy) Act, will continue after the repeal of the
equivalent carbon price.
6.10 The cost recovery component of the levy will be $165 per tonne
of SGG imported or manufactured, or a lower rate if specified in the
regulations. The rate currently set in regulations, and which also applied
prior to 1 July 2012, is $165 per tonne. [Ozone Manufacture Amendment Bill,
item 9, section 3A, Ozone (Manufacture Levy) Act] [Ozone Import Amendment Bill,
items 9 and 13, sections 3A and 4A, Ozone (Import Levy) Act ]
Treatment of levy exemptions for medical equipment
6.11 The Ozone Management Act, Ozone (Import Levy) Act and
Ozone (Manufacture Levy) Act contain exemptions from the equivalent
carbon price and in some cases from the entire Ozone Management Act.
These exemptions are available in circumstances where it is impractical to
apply the tax, or where the SGGs are used for medical, veterinary, health
or safety purposes. These exemptions are specifically available for the
cost recovery component of the levy through other provisions in the Act.
6.12 The Ozone (Import Levy) Act and Ozone (Manufacture Levy)
Act contain an exemption for SGGs used in medical equipment.
The exemption for SGGs to be used in medical equipment will apply to
the cost recovery levy from 1 July 2014. The amendment ensures a
consistent treatment for all SGGs imported for use in medical equipment.
[Ozone Manufacture Amendment Bill, items 10 to 12, section 3A, Ozone (Manufacture
Levy) Act] [Ozone Import Amendment Bill, items 10 to 12, section 3A, Ozone (Import
Levy) Act ]
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Carbon Tax Repeal Bills
Amounts to be credited to the Ozone Protection and SGG Account
6.13 The cost recovery levy, referred to as the prescribed rate
component in the Ozone (Import Levy) Act and Ozone (Manufacture
Levy) Act, is paid into the Ozone Protection and SGG Account.
The equivalent carbon price is paid into the Consolidated Revenue Fund.
6.14 Once the equivalent carbon price is repealed and no longer
collected, the cost recovery levy collected through the Ozone (Import
Levy) Act and Ozone (Manufacture Levy) Act will continue to be paid
into the Ozone Protection and SGG Account as it is necessary for the
administration of the Ozone Protection and SGG Program. [Schedule 1,
items 313 to 314, section 65D, Ozone Management Act] [Schedule 1, item 338(1),
section 65C, Ozone Management Act]
Export refund scheme
6.15 Under the Ozone and SGG Management Act, Controlled
Substance licensees and Synthetic Greenhouse Gas Equipment licensees
are able to claim a refund of the equivalent carbon price paid on SGGs
through the export refund scheme. Licensees can claim an export refund
if they are able to demonstrate that an amount of SGG has been imported
in the previous 12 months, the equivalent carbon price has been paid on
this and that the gases have been exported within 12 months of import.
6.16 The export refund scheme will be repealed on 1 July 2014 as it
is no longer required after the carbon tax ends. [Schedule 1, item 315, sections
69AA to 69AD, Ozone Management Act]
6.17 Transitional provisions are included to allow licensees to claim
the export refund on gases imported prior to the repeal of the equivalent
carbon price. Applications will be accepted and assessed by the
Department administering the Ozone Management Act until
1 January 2016. At this time, the export refund scheme will cease. This
time extension is to provide time for licensees to use the SGGs on-hand
and export as either SGGs or products containing these gases. [Schedule 1,
item 338(2), sections 69AA to 69AD, Ozone Management Act]
74
Chapter 7
Specific repeal issues
Outline of chapter
7.1 Chapter 7 describes the provisions necessary to:
· repeal the Steel Transformation Plan Act 2011 (STP Act);
· repeal the Steel Transformation Plan 2012;
· repeal the refundable tax offset for conservation tillage
(conservation tillage offset); and
· adjust funding for the Australian Renewable Energy Agency
(ARENA).
Context of amendments
Repeal of the Steel Transformation Plan
7.2 The STP Act was introduced to establish the legislative
framework and administrative details for the STP. The STP is a
self-assessment entitlement scheme designed to encourage investment,
innovation and competitiveness in the Australian steel manufacturing
industry in order to assist the industry to transition to a low carbon
economy. Industry assistance is no longer required due to the repeal of
the carbon tax, and steel manufacturers no longer face a cost burden
associated with the production of greenhouse gas emissions.
Repeal of the conservation tillage offset
7.3 The conservation tillage offset was introduced as part of the
Clean Energy Legislation.
7.4 Under the ITAA 1997, from 2012-13 a taxpayer is eligible to
claim the conservation tillage offset for an income year if:
· during the income year the taxpayer used for the first time, or
installed ready for use, a new eligible no-till seeder that they
held for the purposes of carrying on a primary production
business; and
· the taxpayer held a Research Participation Certificate for the
income year.
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Carbon Tax Repeal Bills
7.5 The amount of the offset is 15 per cent of the cost of the eligible
no-till seeder and the offset was refundable. The offset was legislated to
be a temporary measure and was to only be available from 2012-13 to
2014-15 (inclusive) and only for seeders first used or installed between
1 July 2012 and 30 June 2015.
7.6 Research Participation Certificates are issued by the Secretary of
the Department of Agriculture in respect of an income year. Before
issuing a certificate, the Secretary must be satisfied that the taxpayer has
completed a conservation tillage survey during the relevant income year.
Adjusting funding for the Australian Renewable Energy Agency
7.7 The Main Repeal Bill changes the future funding for the
ARENA as a result of a 2013 Budget measure to re-profile funding and
the decision to reduce funding to partially offset the costs associated with
repealing the carbon tax.
7.8 Changes to the ARENAs future funding require amendment to
the Australian Renewable Energy Agency Act 2011 (ARENA Act), which
outlines the maximum amounts payable to the ARENA for each financial
year up to 2019-2020.
Comparison of key features of new law and current law
New law Current law
Repeal of the STP
No further STP payments are made Funding provided to the Australian
from 1 July 2014. steel manufacturing industry to assist
the industry transition to a low carbon
economy.
Adjusting funding for the ARENA
Funding for the ARENA is reduced to The ARENAs future funding
reflect budget re-profiling and cost arrangements are set out in the
savings. ARENA Act.
Repeal of the conservation tillage offset
Taxpayers who first use or install an Taxpayers may claim the
eligible no-till seeder from conservation tillage offset for an
1 July 2014 will not be entitled to eligible no-till seeder that they first
claim the conservation tillage offset. used or installed between 1 July 2012
and 30 June 2015.
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Chapter 7: Specific repeal issues
Detailed explanation of new law
Repeal of the Steel Transformation Plan
7.9 The STP Act is repealed in its entirety, with effect from
1 July 2014. The legislative instrument under the STP Act, the Steel
Transformation Plan 2012, also ceases to have effect from 1 July 2014.
[Schedule 4, item 1]
7.10 The consequences for the STP participants is that after
30 June 2014:
· no further STP payments are payable;
· any conditions associated with previous payment of
competitiveness assistance advances, under Part 2 of the STP
Act, including reporting requirements relating to the half-
year ending on 30 June 2014, no longer apply; and
· any conditions, such as document retention obligations,
under Part 3 of the STP Act and the Steel Transformation
Plan 2012 are no longer enforceable. [Schedule 4, item 2]
7.11 From 1 July 2014 the Department of Industry is no longer
required to include details in its annual report regarding aspects of the
STP. This includes details of the total amount of STP payments paid to
the STP participants and information about the progress of the Australian
steel manufacturing industry towards improved environmental outcomes
and workforce skills development. [Schedule 4, item 2]
7.12 Definitions for ,,old Act and ,,old Plan are provided to clearly
identify and differentiate references to the STP Act and the Steel
Transformation Plan 2012, respectively. [Schedule 4, item 2, 2]
Conservation tillage offset
Repealing the offset
7.13 The conservation tillage offset provisions set out in the
ITAA 1997 are repealed for 2014-15 and subsequent years. As a result,
taxpayers will no longer be able to claim the tax offset when they first use
or install an eligible no-till seeder. [Schedule 3, item 4, Subdivision 385-J,
ITAA 1997]
7.14 References to the offset in the general rules for offsets, the
Dictionary and the explanatory and guidance material for the Act are also
repealed. [Schedule 3, items 3 and 5, table item 24 in sections 67-23 and
section 995-1(1), ITAA 1997]
7.15 A sunset clause was included when the offset was introduced to
repeal the provisions after the offset ceased to be available from
1 July 2015. As this sunset clause is no longer needed it
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Carbon Tax Repeal Bills
is repealed. [Schedule 3, items 1 and 2, table item 6 in section 2(1) and Part 3 of
Schedule 2, Clean Energy (Consequential Amendments) Act 2011]
Application date and transitional arrangements
7.16 This repeal applies to 2014-15 and later income years.
[Schedule 3, item 6]
7.17 Taxpayers who have claimed, or who are eligible to claim, the
offset for prior income years will not lose their entitlements as a result of
this change. Further, related administrative processes will continue to
operate. For example, Research Participation Certificates may still be
issued in respect of income years prior to 2014-15, and the Secretary of
the Department of Agriculture may revoke a Research Participation
Certificate issued before or after the repeal if it is demonstrated that the
certificate was issued as a result of fraud or misrepresentation. [Schedule 3,
item 7]
7.18 The Main Repeal Bill also includes a transitional provision,
which ensures that the new end date for the offset (30 June 2014) is
treated in the same way as the old end date for the offset (30 June 2015).
The transitional provisions are not subject to the application provision for
the repeal and so apply from the commencement of the Main Repeal Bill.
[Schedule 3, items 6 and 7]
Adjusting funding for the Australian Renewable Energy Agency
7.19 The Main Repeal Bill repeals the table at section 64(1) of the
ARENA Act and inserts a revised table of yearly maximum payments to
the ARENA. [Schedule 5, item 1, section 64(1)(table), ARENA Act] The yearly
maximum payments listed in the amended table include:
· a 2013 Budget measure to re-profile $370 million in funding
for the ARENA over the forward estimates (2014-15 to
2016-17) into later years (2019-20 to 2021-22); and
· a reduction in funding for the ARENA by $434.9 million
over the forward estimates (2014-15 to 2016-17).
7.20 The new table does not include the 2012-13 year, which has
passed. In relation to the amount originally specified in the ARENA Act,
the unspent funds for the 2012-13 year have been carried over into the
amended forward year figures, consistent with section 64(2) of the
ARENA Act.
7.21 The Main Repeal Bill repeals section 64(3) to 64(6) of the
ARENA Act, as it is now redundant. [Schedule 5, items 2 and 3, sections 64(3)-
(6) and 65(4)(note), ARENA Act]
7.22 The transfers of the credit balance of the Clean Energy Initiative
Special Account and additional money from ASI Limited to the ARENA
have already occurred and these funds have been incorporated into the
funding amounts included the table in section 64(1) of the ARENA Act.
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Chapter 7: Specific repeal issues
7.23 To provide clarity, the Main Repeal Bill includes an application
provision to ensure the amendments do not affect funding for the ARENA
prior to commencement of the Main Repeal Bill. Funding carried over
from 2012-13 into 2013-14 has been factored into the amended table in
section 64(1) of the ARENA Act. [Schedule 5, item 4]
7.24 The new amount specified for 2013-14 includes funds already
spent by the ARENA in 2013-14.
79
Chapter 8
Regulation impact statement
Introduction
This is a Regulation Impact Statement (RIS) for the Governments
commitment to repeal the carbon tax (the carbon pricing mechanism).
The Australian Government is committed to repealing the carbon tax to
reduce households living costs and input costs for business.
The Australian Government is also committed to reducing Australias
emissions of greenhouse gases (GHG) by 5 per cent below 2000 levels by
2020 but it believes there is a simpler, more practical way to achieve it
than by taxing carbon.
The carbon tax is directly applied to a limited range of inputs, and is paid
by a relatively small number of ,,liable entities. Directly, the carbon tax
increases the cost of:
· electricity and gas;
· managing landfill and wastewater;
· taxable fuels for off-road use; and
· synthetic greenhouse gases.
However, the importance of many of these inputs to the Australian
economy means that the incidence of the tax is felt by households as well
as throughout the business sectors. As a result of the carbon tax, liable
entities are required to either absorb the higher costs of production or pass
them on to their customers (or, more likely a combination of both); to the
extent that higher costs are passed through to customers, the prices that
businesses and households pay for goods and services are indirectly
increased. As an example the regulated retail electricity prices in New
South Wales were allowed to increase by an average of 8.9 per cent in
2012-13 as a result of the carbon tax (IPART 2012).
As of the Final Budget Outcome 2012-13, the carbon tax is estimated to
raise $6.5 billion of revenue in 2012-13.1
1
This estimate is considered preliminary as certain emitters are not required to report in
interim emissions reports, and emitters may base their interim report on the previous years
emissions. Information on actual 2012-13 emissions will become available following the
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Carbon Tax Repeal Bills
See Attachment A for further detail on how the carbon tax operates.
Problem
The problem the Government is addressing through the repeal legislation
is twofold. Firstly, the carbon tax increases the cost of living for the
household sector. Secondly, it increases costs for business, both in terms
of higher input costs, and the costs incurred by liable entities in complying
with carbon tax obligations.
Household costs of living
Broadly, the carbon tax impacts households through increases in
consumer prices. The carbon tax has increased prices for goods and
services consumed by households that are emissions-intensive in their
production or supply chains.
Impacts on business
The carbon tax has two broad impacts on business costs: the impacts
associated with the imposition of the tax itself; and the additional costs the
liable entities face in complying with the administrative requirements
associated with the carbon tax.
Objectives
The objectives of Government action in this area are to remove the carbon
tax altogether to:
· reduce cost of living pressures on households; and
· reduce cost pressures faced by business.
The Government does not propose to transition to an emissions trading
scheme. The Government will implement its direct action plan to achieve
its emission reduction target in the absence of the carbon tax. However
the purpose of this RIS is to consider the impacts of repealing the Clean
Energy Act and associated regulations. Further RISs will be prepared, as
required, for the Governments alternative emissions-reduction measures.
final emissions reporting in October 2013. This estimate does not include the equivalent
carbon taxes on liquid fuels or synthetic greenhouse gases.
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Chapter 8: Regulation impact statement
Option: The Government's election commitments
The Government was elected with a commitment to abolish the carbon
tax. In practice, this involves:
· the repeal of six Clean Energy Acts, the Climate Change
Authority Act, the Steel Transformation Plan Act and
consequential amendments to other legislation;
· the extinguishment of carbon tax liabilities for approximately
370 liable entities under the carbon pricing mechanism, as
well as equivalent carbon taxes on liquid fuels and synthetic
greenhouse gases;
· ending mandatory audit of reported emissions for large
emitters;
· ending the requirement for liable entities to report emissions;
· ending industry support schemes related to the carbon tax;
and
· abolishing the Climate Change Authority.
In addition, the Government made an election commitment to require the
Australian Competition and Consumer Commission (ACCC) to monitor
and enforce reasonably expected price reductions following the abolition
of the carbon tax. This will include:
· changes to the Consumer and Competition Act 2010 to
provide the ACCC with new powers to monitor prices and
prohibit carbon-related price exploitation and
misrepresentations following its repeal; and
· pecuniary penalties of around $220,000 for individuals and
$1.1 million for corporations that engage in carbon-related
price exploitation or misrepresentations following its repeal.
The Government also made an election commitment to discontinue, or
take savings from a range of carbon-related programs.
Impact Analysis
Carbon abatement
The Government remains committed to reducing GHG emissions by
5 per cent below 2000 levels by 2020. This is the same target the carbon
tax was implemented to achieve. The Government considers that its
Direct Action Plan, including an Emissions Reduction Fund, is a simpler,
more practical way of achieving abatement. The Direct Action Plan is
under development. Further RISs will be prepared, as required, for
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Carbon Tax Repeal Bills
various elements of the plan as they are developed. Stakeholders will be
closely engaged in this process.
Terms of Reference for the development of a White Paper in relation to an
Emissions Reduction Fund were released to assist interested parties in
making submissions on the design of the Fund on 16 October 2013.
Submissions in response to the Terms of Reference will inform the
development of a Green Paper setting out the Government's preferred
options for the design of the Fund which will be released in
December 2013. A White Paper outlining the final design of the Fund
will be released in early 2014, in order to enable it to commence
operations on 1 July 2014.
Household costs of living
Household costs will be lower than they otherwise would be under a
$25.40 carbon price. Recent modelling by the Australian Treasury
suggests that the removal of the carbon tax in 2014-15 will reduce the
Consumer Price Index by around 0.7 percentage points than it otherwise
would be in 2014-15. This is based on the currently legislated fixed
carbon price of $25.40 for 2014-15 and the scope intended by the former
government, including fuel use by heavy on-road transport.
Treasury modelling suggests that the removal of the carbon tax in 2014-15
will leave average costs of living across all households (based on existing
expenditure patterns) around $10.50 per week (or around $550 over the
year) lower than they would otherwise be in 2014-15.
It is also estimated that retail electricity and gas prices should on average
be around 9 and 7 per cent lower respectively in 2014-15 than they would
otherwise be. On this basis, household average electricity and gas bills
would on average be around $3.80 per week (or around $200 over the
year) and $1.40 per week (or $70 over the year) lower respectively than
they would otherwise be in 2014-15 with a $25.40 carbon tax.
The prices of other goods and services are more difficult to estimate.
A range of factors, including general movements in inflation and other
broader economic impacts, have influenced prices over the intervening
period since the carbon tax was introduced, and it is possible that prices
will not, in all cases, reduce to their former levels. However to the extent
that the cost bases of goods and services are affected by the repeal of the
carbon tax, and there is competitive pressure in the market to pass these
cost reductions on, price reductions could reasonably be expected.
As noted above, the ACCC will be provided additional powers to monitor
and enforce reasonably expected price reductions following the abolition
of the carbon tax. This element of the repeal package is discussed in more
detail later in this RIS.
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Chapter 8: Regulation impact statement
The removal of the carbon tax is likely to affect different households in
different ways. For example, low income households are currently
disproportionately affected by the carbon tax as they spend, on average, a
higher proportion of their disposable income on emission-intensive goods,
such as electricity and gas.
A range of measures were put in place to assist households with the cost
of living pressures associated with the introduction of the carbon tax.
These measures include increases to fortnightly pension and benefit rates
and income tax cuts equivalent to around $300 per annum for most
taxpayers. This assistance will continue after the repeal of the carbon tax.
However, the second round of personal income tax cuts legislated to
commence in 2015-16 will no longer proceed.
Impacts on business
The primary impact of repealing the carbon tax on businesses is to reduce
the cost of inputs. While the carbon tax is directly applied to a relatively
small number of activities and liable entities, the size and importance of
these activities means that as these costs are passed on through the
economy the carbon tax results in an increase in input costs for the
majority of businesses. The main driver of these input cost increases is
the impact of the carbon tax on energy prices - primarily electricity and
gas prices.
Table 1 provides an indication of which sectors are likely to have been
affected the most by the imposition of the carbon tax. It shows the
projected changes in industry gross output (a measure of economic
activity) in 2020 under the carbon tax compared with a no carbon tax
scenario.
Within the services sector, the production of electricity (particularly
coal-fired electricity) was most heavily affected and should benefit most
from the repeal of the carbon tax. In the mining sector, coal mining would
be the major beneficiary. In the manufacturing sector, producers with
emissions- or energy-intensive activities that were unable to access carbon
tax-related assistance would be the main beneficiaries of repeal.
There would be minimal impact on dwelling ownership2.
2
While modelling undertaken for the Strong Growth, Low Pollution update report provides a
robust picture of the Clean Energy Package at an aggregate industry and macroeconomic
level, it does not capture the impacts of those programs and measures that had not been
finalised at the time the modelling task was undertaken in September 2011. While impacts
on the CPI were estimated, changes in producer prices were not. Similarly impacts on
investment and capital stock were estimated at the national level. For more details see
http://carbonpricemodelling.treasury.gov.au/carbonpricemodelling/content/update/Modellin
g_update.asp.
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Carbon Tax Repeal Bills
Table 8.1 Change in gross output in 2020 as a result of the carbon
tax, compared with a `no carbon tax' scenario
Industry sector Change in gross output
(per cent) a
Agriculture 0.4
Sheep and cattle 0.3
Dairy cattle 0.2
Other animals 0.4
Grains 0.5
Other agriculture 0.2
Agricultural services and fisheries 0.6
Forestry 0.3
Mining -0.9
Coal -2.4
Oil 0.0
Gas -1.5
Iron ore 0.8
Non-ferrous ore -0.9
Other 0.6
Manufacturing 0.3
Meat products 0.2
Other food 0.1
Textiles, clothing and footwear 0.7
Wood products -0.1
Paper products 0.3
Printing 0.0
Refinery 0.0
Chemicals 1.7
Rubber and plastic products 0.5
Non-metallic construction products -0.7
Cement -0.8
Iron and steel 0.9
Alumina 2.3
Aluminium 0.8
Other metals -0.3
Metal products -0.1
Motor vehicles and parts 0.6
Other 0.2
Construction -0.9
Services -0.3
Electricity generation - coal fired -9.4
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Chapter 8: Regulation impact statement
Industry sector Change in gross output
(per cent) a
Electricity generation - gas fired 0.2
Electricity generation - hydro -1.4
Electricity generation - other 21.6
Electricity supply -3.2
Gas supply -1.2
Water supply -0.3
Trade -0.2
Accommodation and hotels -0.4
Road transport - passenger -0.1
Road transport - freight -0.2
Rail transport - passenger 0.2
Rail transport - freight -0.1
Water transport -0.1
Air transport -0.2
Communication -0.3
Financial -0.2
Business -0.2
Public 0.0
Other -0.4
Ownership of dwellings -0.1
Note: a. Modelled estimates include the impact of industry and household assistance
measures. Source: Strong growth, low pollution: modelling a carbon price - update, p. 8
Investment in emissions reduction
Some businesses may incur costs following the repeal of the carbon tax
where they have made investments in clean technology solely on the basis
of avoiding emissions liabilities. In most cases, such investments are
likely to have associated benefits, such as lower energy usage or lower
waste disposal costs, as was intended. These benefits will be ongoing.
In such cases, the repeal of the carbon tax is likely to extend the payback
period or reduce the internal rate of return. The risks associated with
stranded investments or sunk costs were not raised as significant issues in
stakeholder consultation.
Carbon price pass-through
The extent to which the carbon tax has been absorbed by businesses or has
been passed on to consumers depends on the nature and structure of each
market, including relative demand and supply elasticities, and the type of
competition in the market.
In some cases, it is likely that the carbon price would have been passed
through in full (for example, in the case of synthetic greenhouse gases
where a carbon-tax equivalent levy or excise was imposed).
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Carbon Tax Repeal Bills
The range and complexity of sector specific factors, including commercial
and contractual arrangements and the specific features at each point in any
given supply chain mean it is not possible to say with certainty what
proportion of the carbon price may have been passed through or was
absorbed in any given sector. In addition, other changes in the production
cost base and general inflationary impacts since the carbon tax was
introduced mean that at this stage any specific price changes that could
occur are difficult to quantify. However, as noted above, likely price
changes in energy markets are more easily quantified.
As such, while price reductions are expected, they may not be entirely
symmetrical to price increases that occurred after the carbon tax was
introduced and may not be uniform across sectors of the economy. We
note that the Australian Government has not collected detailed sectoral or
industry-level data on price movements that specifically measure the
impact of introducing the carbon tax.
The ACCCs new monitoring and enforcement powers
To address potential pricing concerns, the ACCC will be provided new
time-limited powers in relation to price monitoring and enforcement of
carbon-specific prohibitions on price exploitation and false or misleading
representations.
Under its price monitoring role, the ACCC may be able to monitor the
prices of regulated goods such as natural gas, electricity, synthetic
greenhouse gas (SGG) and SGG equipment, goods supplied by entities
that have an entry in the Liable Entities Public Information Database, and
any other goods designated by regulation.
The ACCC will be provided with information-gathering powers allowing
it to compel certain businesses to provide relevant pricing information
with respect to certain key goods relating to the carbon tax repeal.
The direct costs of complying with the ACCCs price monitoring
requirements cannot be easily quantified as the ACCC has the discretion
to determine which businesses will be subject to price monitoring and
how it will monitor. The vast majority of businesses in the economy will
not be affected by price monitoring at all.
For those affected businesses, there will be some administrative and
compliance costs incurred, however these requirements should not be
overly onerous or expensive as businesses would already have detailed
pricing information available. In addition, these compliance costs would
not be ongoing and be limited to the duration of the ACCCs new powers
(for example, for a six month period prior to the repeal, and for one year
afterwards).
Where the ACCC cannot otherwise access public information, it may
request primary information. To comply with a monitoring request a
business will need to provide copies of the current prices it is offering in
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Chapter 8: Regulation impact statement
the market. If the request is made after the carbon tax repeal, the business
may also need to explain how the carbon tax repeal has affected their
input costs and how that has been reflected in its current prices. Current
price offerings will need to be compiled by the business but are not likely
to require detailed searches. For example, in the energy sector, similar
information is already provided to the Energy Made Easy comparator
website. Input costs, including the carbon tax, will already be known to
the business in its price setting.
The ACCC will take a targeted approach to the use of its new powers. It
is likely to monitor around 500 businesses, including liable entities, plus
energy retailers and synthetic greenhouse gas importers and wholesalers.
As a preliminary estimate, the estimated total compliance cost for 500
businesses is $2,320,000 per year, with an average ongoing compliance
cost of $4,640 per business. As noted above, these compliance costs will
ultimately depend on the number of businesses monitored by the ACCC
and the individual costs for each business to respond to these
requirements.
The ACCC was given a similar price monitoring role for a period of three
years following the introduction of the New Tax System (NTS).
Submissions by business focussing on ACCC issues suggest they are
conscious of the need to pass through cost savings. However some
submissions claim there may be practical difficulties in immediately
passing on savings in some sectors due to sectoral and structural
complexities (such as the treatment of intermediate inputs).
Carbon tax compliance costs
The removal of the carbon tax is expected to reduce annual ongoing
compliance costs for liable entities by $85.3 million per annum3.
The avoided costs fall into two categories: administrative costs (including
remaining abreast of changes in carbon pricing legislation, meeting
recording and reporting obligations, negotiating contracts for carbon price
pass-through, and discharging emissions liabilities) and substantive costs
(emissions verification costs for large emitters).
All liable entities will no longer face the administrative costs associated
with emissions monitoring, reporting, unit acquisition and surrendering
obligations under the carbon tax. These costs are estimated at $67.1
million per annum and are in addition to those imposed on entities under
separate reporting obligations under the National Greenhouse and Energy
3
These estimates exclude the costs of complying with assistance arrangements, including the
Jobs and Competitiveness Program, which were included in the total figure of $94.8 million
set out in the earlier Options Stage RIS, as these costs are incurred voluntarily by applicants.
They include the costs of complying with price monitoring arrangements which, as noted
above, are uncertain but non-ongoing.
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Carbon Tax Repeal Bills
Reporting Scheme. This estimate is based on feedback from liable entities
that the introduction of the CPM has required the equivalent of one
additional F.T.E. position to monitor, record and report emissions, to
understand, and keep abreast of changes in, the legislation, and to acquit
emissions liabilities4. A labour rate of 1.7 times average earnings5was
adopted reflecting the higher than average skills of those entrusted with
these tasks (generally accounting, legal or engineering professionals), and
the higher level of management oversight compared with the oversight
given to emissions reporting when there were no associated financial
liabilities. (The ongoing administrative cost of separate reporting
obligations under NGER legislation is estimated at between 0.5 and 0.75
F.T.E. per reporting entity.)
These estimates do not include the additional costs businesses may have
incurred in managing permit obligations (for example purchasing, banking
or selling) when the carbon tax moved to a flexible pricing period in 2015.
These estimates were made public through the consultation process, but
no substantive comments were received through formal submissions or in
meetings with stakeholders.
Approximately 154 large liable entities will also avoid the substantive
costs associated with verifying their total emissions. (Verification costs
currently apply to entities with more than 125,000 tonnes carbon dioxide
equivalent (CO2-e) emissions per year.) The average avoided cost of
emissions verification audits for large emitters is estimated at
approximately $133,000 per entity per annum (an ongoing reduction in
compliance costs of around $20.5 million per annum).
These estimates were also made public through the consultation process,
but no substantive comments were received through formal submissions
or in meetings with stakeholders.
4
In keeping with the Victorian approach to measuring compliance costs and the methodology
used in the Business Cost Calculator, the cost categories used to analyse administrative costs
included: education/capacity building; enforcement; monitoring/record keeping;
reporting/notification; and internal assurance (sub-set of reporting/notification). The costs of
external assurance/verification are discussed later in the RIS.
5
Source: ABS Cat. No. 6302.0 - Average Weekly Earnings, Australia, May 2013.
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Chapter 8: Regulation impact statement
Table 8.2 Compliance Cost and Offset (CCO) Estimate Table6
Average Annual Compliance Costs (from Business as usual)
Sector/Cost Business Not-for- Individuals Total by
Categories profit cost
category
Administrative -$67.1m $- $- -$67.1m
Costs
Substantive -$20.5m $- $- -$20.5m
Compliance Costs
Delay Costs $- $- $- $-
Total by Sector -$87.6m $- $- -$87.6m
Contingent $2.3m $- $- $2.3m
administrative
costs7
Potential total by -$85.3m $- $- -$85.3m
sector
Annual Cost Offset
Agency Within Outside Total
portfolio portfolio
Business $ $ $ $
Not-for-profit $ $ $ $
Individuals $ $ $ $
Total $ $ $ $
Proposal is cost neutral? no
Proposal is deregulatory yes
Balance of cost offsets $85.3m
Measures currently in place to address carbon tax cost pressures
A number of Australian Government programs were put in place to
address some of the cost pressures faced by households and businesses.
For households, these measures include increases to fortnightly pension
and benefit rates and income tax cuts equivalent to around $300 per
annum for most taxpayers. Assistance provided in 2013-14 will remain.
6
These estimates exclude the costs of complying with assistance arrangements, including the
Jobs and Competitiveness Program, as these costs are incurred voluntarily by applicants.
They include the costs of complying with price monitoring arrangements which, as noted
above, are uncertain but non-ongoing.
7
Contingent administrative costs are those that would only be incurred if a business was
subject to an ACCC price monitoring notice.
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Carbon Tax Repeal Bills
However, the second round of personal income tax cuts legislated to
commence in 2015-16 will no longer proceed.
For businesses, these measures include the Jobs and Competitiveness
Program (JCP) to support emissions intensive, trade exposed industries;
the Energy Security Fund to maintain secure energy supplies through
supporting electricity generators that are strongly affected by a carbon tax;
and targeted grants to provide transitional assistance to specific industries.
Removing these programs will impact on a range of stakeholders and
potential grant recipients. Sectors likely to be affected are the steel
industry, energy intensive manufacturing, emissions-intensive electricity
generators and the land sector.
Consultation
The draft legislation to repeal the carbon tax was released for public
consultation by the Government on 15 October 2013. The consultation
period closed at 5 pm on 4 November 2013.
The Department received formal submissions and campaign e-mails
during the consultation period. Formal submissions were received from
industry peak bodies and companies, legal and academic institutions,
individuals and non-government organisations
In addition, the Government held meetings or teleconferences with a
range of stakeholders including:
· industry peak bodies, including the Business Council of
Australia (BCA), the Australian Chamber of Commerce and
Industry (ACCI), the Australian Greenhouse Industry
Network (AIGN) and the Australian Industry Group (AIG);
· local governments through the Australian Local Government
Association;
· electricity suppliers, retailers and users;
· state government electricity price regulators;
· synthetic greenhouse gas manufacturers, importers and
suppliers;
· resource peak bodies and companies;
· manufacturing peak bodies and companies;
· natural gas suppliers, users and pipeline organisations;
· landfill and recycling peak bodies;
· financial peak bodies and institutions;
· non-government organisations;
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Chapter 8: Regulation impact statement
· renewable energy organisations; and
· legal experts.
Further details are provided in Attachment B.
With regard to the options-stage RIS, the agency has fully complied with
the RIS requirements.
· The options-stage RIS did not include at least three options
as this is a specific election commitment.
· The options-stage RIS was certified at the secretary or deputy
secretary level and provided to the OBPR before
consideration by the decision-maker.
· The options-stage RIS was published following the public
announcement of an initial decision to regulate.
Issues related to the bills
The principal concern of all business stakeholders were the consequences
of delayed passage of the repeal legislation. Several stakeholders noted
that existing contractual and other commercial arrangements are likely to
complicate cost pass-through arrangements if passage is delayed. Others
noted that cost reductions may not be passed through in the supply chain
immediately, and in full, if passage was delayed, despite public
expectations.
For example, electricity suppliers and major users raised concerns
including: the practical implications of how price reductions will be
passed through to consumers; how expectations about the timing of these
price reductions will be managed; and how the ACCC will apply its new
powers to prevent price exploitation.
The Governments clear intention is that the carbon tax repeal legislation
will be passed before 30 June 2014. If there is a delay, the legislation will
apply retrospectively from 1 July 2014. The Government will not become
involved in commercial issues between companies, including contracts.
Most business stakeholders, particularly the energy and synthetic
greenhouse gas sectors, were concerned by the expanded temporary scope
of the ACCCs powers. Several suggested that the ACCC should consider
industry circumstances and the difficulty in immediate and full cost
pass-through when determining whether price exploitation has occurred.
The Department of the Environment notes that in undertaking its price
monitoring and enforcement activities, the ACCC has advised it will
engage stakeholders to ensure that they understand their regulatory
obligations; issue guidance material; and emphasise that its regulatory
approach will be carefully considered and proportionate.
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Carbon Tax Repeal Bills
If necessary, the Treasurer has the power, under section 29 of the
Competition and Consumer Act 2010 to direct the ACCC in connection
with the performance of its functions, including issuing sector-specific
guidance in relation to the carbon tax repeal.
Other issues raised in submissions included:
· allowing imports of synthetic greenhouse gases imported
before 1 July 2014 not to accrue a carbon tax liability unless
sold before 1 July 2014 (Refrigerants Australia);
- Consideration will be given to use of the bonded
warehouse system to avoid the payment of carbon tax
liabilities until SGGs are entered for domestic sale.
This provision will impact on up to forty seven licensed
importers.
· simplifying transition arrangements for holders of Financial
Liability Transfer Certificates for NGERs purposes
(Baker & McKenzie);
- The Clean Energy Regulator is considering ways to
streamline the transitioning of LTCs into Reporting
Transfer Certificates for the purpose of future NGERs
reporting.
During the workshops with stakeholders a number of other minor
technical items were raised and discussed, including: the operation of the
true-up process for the Jobs and Competitiveness Program and the process
for developing the true-up process rules; the proposed approach for
continuation of industry assistance, including the steel transformation
plan; and the structure of the Renewable Energy Target (RET) reviews
after abolition of the Climate Change Authority, and the timing, frequency
and scope of RET reviews.
Conclusion
Repeal of the Clean Energy Act and associated regulations is expected to
reduce cost of living pressures on households and cost pressures on
business.
Recent modelling by the Australian Treasury suggests that the removal of
the carbon tax in 2014-15 will reduce the Consumer Price Index by
around 0.7 percentage points than it would otherwise be. This is based on
the currently legislated fixed carbon price of $25.40 and the scope
intended by the former government, including fuel use by heavy on-road
transport.
Treasury modelling also suggests that the removal of the carbon tax in
2014-15 will leave average costs of living across all households (based on
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Chapter 8: Regulation impact statement
existing expenditure patterns) around $10.50 per week (or around $550
over the year) lower than it would otherwise be in 2014-15.
It is also estimated that retail electricity and gas prices should be around
9 and 7 per cent lower respectively than they would otherwise be. On this
basis, household average electricity and gas bills would be around $3.80
per week (or around $200 over the year) and $1.40 per week (or $70 over
the year) lower respectively than they would otherwise be in 2014-15 with
a $25.40 carbon tax.
The prices of other goods and services are more difficult to estimate.
A range of factors have influenced prices over the intervening period
since the carbon tax was introduced, and it would therefore be likely that
prices would not return to their former levels. However to the extent that
the cost bases of goods and services are affected by the repeal of the
carbon tax, and there is competitive pressure in the market to pass these
cost reductions on, price reductions could reasonably be expected.
The primary impact on business of repealing the carbon tax is to reduce
the cost of inputs. While the carbon tax is directly applied to a relatively
small number of activities and liable entities, the size and importance of
these activities means that as these costs are passed on through the
economy the carbon tax results in an increase in input costs for the
majority of businesses. The main driver of these input cost increases is
the impact of the carbon tax on energy prices - primarily electricity and
gas prices. Due to the complexity in many commercial arrangements it is
difficult to provide a detailed breakdown of where producer prices could
be expected to change.
The removal of the carbon tax is expected to increase gross output in the
mining, construction and services sectors. Within the services sector, the
production of electricity (particularly coal-fired electricity) is expected to
benefit most from the repeal of the carbon tax. In the mining sector, coal
mining is expected to be the major beneficiary. In the manufacturing
sector, producers with emissions- or energy-intensive activities that were
unable to access carbon tax-related assistance would be the main
beneficiaries of repeal.
Business compliance costs are expected to fall by around $85.3 million
per annum as a consequence of repealing the carbon tax although many
businesses have concerns around the potential costs imposed by the
ACCC exercising its proposed price monitoring and enforcement powers.
These estimates exclude the costs of complying with assistance
arrangements, including the Jobs and Competitiveness Program, as these
costs are incurred voluntarily by applicants. The costs of complying with
price monitoring arrangements are also excluded, being uncertain and
non-ongoing.
The Government remains committed to reducing GHG emissions by 5
per cent below 2000 levels by 2020. This is the same target adopted by
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Carbon Tax Repeal Bills
the carbon tax. The Government believes its direct action plan is a
simpler, less costly way of achieving abatement. The direct action plan is
under development and the details of the plan are beyond the scope of this
RIS. Further RISs will be prepared, as required, for various elements of
the direct action plan.
Implementation and review
Legislation to repeal the Clean Energy Act and associated regulations will
be introduced in November 2013. The legislation will remove carbon tax
liabilities from 30 June 2014 which, rather than a date part-way through
the 2013-14 financial year, will simplify the transition for business. This
is because it avoids the need to change compliance systems and
renegotiate contracts that involve carbon tax pass-through in the middle of
a financial year. It will also allow liquid fuel users to better manage their
inventories during the transition period to reduce the risk of a shortage.
The ACCC will monitor and enforce reasonably expected price reductions
following the abolition of the carbon tax.
· Amendments to the Consumer and Competition Act 2010
(CC Act) will prohibit carbon-related price exploitation and
misrepresentations following its repeal; and introduce
pecuniary penalties of around $220,000 for individuals and
$1.1 million for corporations that engage in carbon-related
price exploitation or misrepresentations following its repeal.
· In undertaking its price monitoring and enforcement
activities, the ACCC will engage stakeholders to ensure that
they understand their regulatory obligations; issue guidance
material; and emphasise that its regulatory approach will be
carefully considered and proportionate.
· The Treasurer may also under section 29 of the CC Act direct
the ACCC to issue sector-specific guidance where that would
assist businesses in meeting their obligations under the Act.
RIS Attachment A: Carbon Tax Background
The carbon tax puts a price on Australia's carbon pollution, and applies
directly to Australia's biggest carbon emitters (called liable entities). In
addition, a number of businesses pay ,,effective carbon taxes on liquid
fuels and on synthetic greenhouse gases.
Under the mechanism, liable entities must pay a tax on the carbon
emissions they produce each year. As at July 2013, there were
approximately 370 liable entities, covering approximately 60 per cent of
Australia's carbon emissions. The carbon tax covers a range of large
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Chapter 8: Regulation impact statement
business and industrial facilities, and includes emissions from electricity
generation, natural gas supply, stationary energy, landfills, wastewater,
industrial processes and fugitive emissions.
How does it work?
Liable entities must report annually on their emissions or potential
emissions under the National Greenhouse and Energy Reporting Act 2007
(NGER Act).
Under current arrangements, liable entities must surrender one carbon unit
for every tonne of carbon dioxide equivalent (CO2-e) that they have
produced in that year.
There are two stages to the carbon tax:
· Fixed price - The price of carbon units - effectively the
carbon tax - is fixed for the first three years. In 2012-13 it
was $23 a tonne of carbon pollution, in 2013-14 it is $24.15
a tonne and in 2014-15 it will be $25.40 a tonne. Liable
entities can purchase units up to their emissions levels.
Purchased units cannot be traded or banked.
· Flexible price - From 1 July 2015 the price will be set by the
market. Most units will be auctioned by the Clean Energy
Regulator - auctions are scheduled to take place before June
2014, in the lead up to the flexible price. The number of
units the Government issues each year will be limited by a
pollution cap set by regulations.
If a liable entity does not surrender any or enough units, it must pay a 'unit
shortfall charge':
· from 2012 to 2015, this charge is set at 130 per cent of the
fixed price for the relevant fixed price year; and
· from 2015 onwards, once the carbon tax moves to the
flexible price period, the unit shortfall charge will be up to
200 per cent of the benchmark average auction price for the
relevant period.
The shortfall charge creates an incentive to surrender units under the
mechanism rather than pay the higher shortfall charge. The carbon tax
arrangements include systems for assessing liability for emissions,
meeting liability for emissions through payment and surrender processes
for eligible emissions units, and relinquishing units (in certain
circumstances units are returned to the Commonwealth without them
being surrendered).
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Carbon Tax Repeal Bills
What are `liable entities'?
Entities are liable if they operate facilities that exceed the threshold for
covered direct emissions, or if they supply or use natural gas. The types
of direct emissions covered by the carbon tax include:
· carbon dioxide (CO2);
· methane (CH4);
· nitrous oxide (N2O); or
· perfluorocarbons specified in the NGER Regulations and that
are attributable to aluminium production,
but do not include:
· agricultural emissions;
· fugitive emissions from decommissioned underground
mines;
· emissions from legacy waste or closed landfill facilities;
· emissions of certain synthetic greenhouse gases;
· emissions from biomass, biofuels or biogas; or
· emissions from the combustion of fuels subject to duties
under the Excise Tariff Act 1921 or the Customs Tariff Act
1995.
The threshold for covered scope 1 emissions is 25 000 tonnes CO2-e per
year. Information collected through national greenhouse and energy
reporting provides the basis for assessing liability under the tax
arrangements.
The carbon tax covers approximately 60 per cent of Australia's carbon
emissions including from electricity generation, natural gas supply,
stationary energy, landfills, wastewater, industrial processes and fugitive
emissions; Table A1 displays the proportion of emissions by industry
according to reported interim emissions numbers for 2012-13. It should
be noted that these are interim numbers and do not represent the full
years emissions data and that, due to the effect of the industry support
programs described in this RIS, do not fully reflect the relative impact of
the carbon tax on the various industries.
Equivalent carbon taxes
In addition to the carbon tax on liable entities, a number of businesses pay
an equivalent carbon tax on liquid fuels and on synthetic greenhouse
gases.
· Some businesses effectively pay no excise or excise-
equivalent customs duty (fuel tax) on the fuel they use off-
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Chapter 8: Regulation impact statement
road, as their ,,fuel tax is offset under the fuel tax credits
scheme. By reducing applicable fuel tax credits by an
amount equal to the carbon tax, the Government imposes an
effective carbon tax on businesses liquid fuel emissions
through the existing fuel tax regime. Aviation fuel that is not
covered by the carbon pricing mechanism has had an
increase in fuel tax representing the equivalent carbon price.
· Synthetic greenhouse gases are industrial chemicals used
mainly as refrigerant gases in air conditioning and
refrigeration equipment, but also for other purposes.
Importers of synthetic greenhouse gases, including in
manufactured products, are required to pay an equivalent
carbon tax based on the carbon tax and the global warming
potential of each gas relative to carbon dioxide. There are no
Australian manufacturers of these gases.
Table 8.3 Reported emissions by industrya
Proportion of emissionsb
(per cent)
Electricity Gas, Water and Waste Services 63.9
- Electricity generation 63.1
b
- Gas and water supply 0.7
Manufacturing 16.7
- Basic nonferrous metal manufacturing 5.1
- Basic ferrous metal manufacturing 3.3
- Cement, lime, plaster and concrete product 2.5
manufacturing
- Petroleum and coal product manufacturing 1.8
- Fertiliser and pesticide manufacturing 1.2
- Other manufacturingc 2.7
Mining 14.7
- Coal mining 7.6
- Oil and gas extraction 6.5
- Metal ore mining 0.7
d
Natural Gas Supply embodied emissions 4.8
Notes: a. Emissions are the Interim Emissions Numbers reported in June 2013. An
Interim Emissions Number is: for a direct emitter 75 per cent of the provisional emissions
numbers relating to the relevant facilities for the 2011-12 financial year, or an estimate of
75 per cent of the person's provisional emissions number relating to the relevant facilities
for 2012-13; for a natural gas supplier that person's provisional emissions number in
relation to the supply of natural gas/fuel for the nine months to 31 March 2013. Emissions
from waste to landfill are not included in estimates as waste deposited prior to 2012-13 is
not liable. Numbers may not add due to rounding.
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Carbon Tax Repeal Bills
b. Includes emissions from water supply, waste and drainage services and gas supply
(both through a pipeline or mains system).
c. Includes 14 ANZSIC subdivisions including emissions associated with agricultural
manufacturing processes (e.g. dairy, meat and grain product manufacturing).
d. Includes embodied emissions from natural gas supply. Excludes emissions from
natural gas supplied to large gas consuming facilities, which are included in the totals for
each industry sector above.
Source: Clean Energy Regulator, unpublished.
RIS Attachment B: List of Stakeholders consulted
Carbon Tax Repeal Stakeholder Engagement
Summary of stakeholder engagement (as at 5:00 pm on Thursday,
7 November 2013):
Total number of 42
meetings or
teleconferences:
Submissions or emails 82 submissions from industry peak bodies and
addressing content of companies
bills received: 8 submissions from state and local governments
10 submissions from legal and academic institutions
142 submissions from individuals
28 submissions from non-government organisations
720 emails as part of the Australian Ethical
Investment Campaign
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Chapter 8: Regulation impact statement
Summary of stakeholder meetings and teleconferences (as at 5:00 pm
on Thursday, 7 November 2013):
Date Participants
11 October Energy Suppliers Association of Australia (ESAA)
15 October Carbon Markets Institute
16 October ESAA and Energy Network Association of
Australia (ENAA)
16 October Origin Energy
17 October Energy Retailers Association of Australia (ERAA),
Energy Users Association of Australia (EUAA),
National Generators Forum and ESAA
17 October Synthetic Greenhouse Gases Roundtable
ABB, Actrol, A-Gas, Air conditioning and Heating
(AIRAH), Air Conditioning and Mechanical
Contractors' Association (AMCA), Air
Conditioning and Refrigeration Equipment
Manufacturers Association (AREMA), ARKEMA,
Australian Airports Association (AAA), Australian
Federation of International Forwarders (AFIF),
Australian Industry Group (AIG), Australian
Institute of Refrigeration, Australian Refrigeration
Association (ARA), Automotive Air-conditioning,
BOC, Consumer Electronics Suppliers' Association
(CESA), Customs Brokers & Forwarders Council
of Australia (CBFCA), Du Pont, Electrical and
Cooling Technicians of Australia (AAECTA),
Federal Chamber of Automotive Industries (FCAI),
Fire Protection Association of Australia (FPAA),
Ford, Heatcraft, Holden, Institute of Automotive
Mechanical Engineers (IAME), National Electrical
and Communications Association (NECA), Plastics
and Chemicals Industry Association (PACIA),
Refrigerant Reclaim Australia, Refrigerants
Australia, Refrigeration and Air Conditioning
Contractors Association (RACCA), Schneider
Electric, Siemens, Solvents Australia, Toyota and
Victorian Automobile Chamber of Commerce
(VACC),
18 October Australian Industry Group
ABB, AGL, Alcoa, Alstom, Amcor, Arrium
(Onesteel), B&R Enclosures, Bluescope,
Checkpoint Systems, CSR, Dow, ERM Power,
GDF Suez, Incitec Pivot, Murray Goulburn, Orica,
Pacific Hydro, Qenos, Rio Tinto, Schneider
Electric, Veolia and Wilson Transformer
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Carbon Tax Repeal Bills
Date Participants
18 October Business Council of Australia
Adelaide Brighton, AGL Energy, Alcoa, ANZ,
APA Group, BP, BG Group, BHP, Brickworks,
Energy Australia, General Electric (GE), GDF
Suez, Incitec Pivot, Leighton Holdings, Lend
Lease, Macquarie Group, Norton Rose Fulbright,
Origin Energy, Parsons Brinckerhoff,
PricewaterhouseCoopers Australia (PwC), Rio
Tinto, Santos, Shell, Transurban Group and
Westpac
21 October Dampier-Bunbury Pipeline (DBP)
21 October Australian Energy Market Operator (AEMO)
21 October ESAA
21 October International Emissions Trading Association
Baker & McKenzie, BG, BP, Chevron, Climate
Friendly, Energy Australia, Norton Rose, Rio Tinto
and Shell
22 October Australian Financial Markets Association
AGL Energy, Alinta Energy, AMP, ANZ, Ashurst,
Australian Energy Market Operator (AEMO),
Baker & Mackenzie, Clayton Utz, Clean Energy
Regulator (CER), Commonwealth Bank, Delta
Electricity, Deutsche Bank, Energy Developments,
EnergyAustralia, ERM Power, Financial and
Energy Exchange, GDF Suez, Hydro Tasmania,
ICAP, Infigen, InterGen, Johnson Winter &
Slattery, K&L Gates, King & Wood Mallesons,
Macquarie Generation, NAB, Nextgen, Norton
Rose Fulbright, Origin Energy, Snowy Hydro and
Westpac
22 October Energy Retailers Association of Australia (ERAA)
22 October Fuel industry stakeholders including Association of
Mining & Exploration Companies (AMEC) and
Caltex (arranged by ATO)
22 October Fuel industry stakeholders including the Australian
Institute of Petroleum, Caltex, Exxon Mobil, Shell,
and Woodside (arranged by ATO)
23 October Aviation fuel stakeholders including Caltex, Qantas
and Shell (arranged by ATO)
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Chapter 8: Regulation impact statement
Date Participants
23 October Australian Industry Greenhouse Network
AI Group, Australian Aluminium Council,
Australian Food & Grocery Council,
Australian Institute of Petroleum, Australian
Pipeline Industry Association (APIA),
Australian Plastics & Chemicals Industries
Association, Australian Sugar Milling Council, BP,
Business Council of Australia (BCA), Caltex,
Cement Industry Federation, Chevron, CSR,
Dampier-Bunbury Pipeline (DBP), Exxon, Minerals
Council of Australia, National Generators Forum,
Origin, Rio Tinto, Santos, Shell, Wesfarmers,
23 October Legal experts (Sydney)
Ashurst, Baker & McKenzie, Clayton Utz, Dr
Damien Lockie (Victorian Bar), Hunt & Hunt,
Johnson Winter & Slattery, K&L Gates, the Law
Council of Australias Climate Change Law
Committee and Sparke Helmore
24 October Legal experts (Melbourne)
Allens, Ashurst, King & Wood Mallesons, Minter
Ellison and Norton Rose
24 Oct Waste sector
Australian Landfill Operators Association,
Australian Local Government Association (ALGA)
and Waste Management Association of Australia
24 October BlueScope Steel
24 October Minerals Council of Australia
Downer EDI, Glencore and Rio Tinto
25 October Australian Aluminium Council
Alcoa, Rio Tinto and others
25 October Energy Australia
28 October Gas Energy Australia and members
28 October Energy Users Association of Australia (EUAA) and
members
28 October Cement Industry Federation
28 October Tasmanian Regulation Authority
29 October AGL
29 October WA Economic Regulatory Authority
30 October Clean Energy Council
Acciona, Energy Developments Limited (EDL),
Finlaysons, Hydro Tasmania, Infigen, Marchment
Hill, Pacific Hydro and Rheem
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Carbon Tax Repeal Bills
Date Participants
30 October Ergon
30 October Non-government organisations
Australian Conservation Foundation, Australian
Council of Trade Unions (ACTU), Australian
Youth Climate Coalition, Climate Action Network
Australia (CANA), ClimateWorks,
Climate Institute, Grattan Institute UnitingJustice
and World Wildlife Fund (WWF),
30 October Australian Slag Association
30 October Australian Pipeline Industry Association
APA, Dampier-Bunbury Pipeline, Epic Energy and
SEAGAS,
30 October ACT Independent Competition & Regulatory
Commission
31 October NSW Independent Pricing and Regulatory
Authority
31 October EUAA and members
4 November Synergy
6 November Queensland Competition Authority; Glencore
RIS References
Australian Government 2011a, Strong growth, low pollution: modelling a
carbon price
(http://carbonpricemodelling.treasury.gov.au/carbonpricemodelling/conte
nt/report/downloads/Modelling_Report_Consolidated_update.pdf).
Australian Government 2011b, Strong growth, low pollution: modelling a
carbon price - update,
(http://carbonpricemodelling.treasury.gov.au/carbonpricemodelling/conte
nt/update/downloads/Modelling_update.pdf).
Australian Government 2013, Portfolio Budget Statements 2013-14 -
Industry, Innovation, Climate Change, Science, Research and Tertiary
Education Portfolio.
IPART (Independent Pricing and Regulatory Tribunal), 2012, Final
Report - Changes in regulated electricity retail prices from 1 July 2012.
104
Index
Main Repeal Bill: Preliminaries
Bill reference Paragraph number
Clause 1 1.13
Clause 2 2.35, 2.46, 2.62
Clause 2, table item 1 1.15
Clause 3 1.14
Main Repeal Bill Schedule 1: Repeal of the carbon tax
Bill reference Paragraph number
Items 1 to 6 1.17
Items 7, 8 and 9, section 195-1, GST Act 3.9
Items 7, 8, 9 and 19, section 195-1, GST Act and section 4, ANREU 3.10
Act
Items 10 to 12, sections 5 and 6(2) (paragraph (baa) and (d) in table 2.61
item 33), Anti-Money Laundering Act
Items 13, 25, 31, 38 to 39, 41, 45, 55, 58 to 60, 64, 71, 72, 78, 79, 2.34
80, 82, sections 3, 4, 9(4)(a), 11(5)(b), 15(2)(aa) 26(3)(a)(ia),
27(3B)(c), 28A(1)(aa), 28B(1)(aa), 28D(5)(ii), 61A and 64, ANREU
Act
Items 13, 15, 16, 22, 25, 26, 29, 31, 37, 40, 48, 51, 54, 58 to 59, 63, 2.37
67 to 70, 72 and 73, sections 3, 4, 14A, 17(1A), 19(3B), 22(4B),
27(3B), 28A(4)(aa), 28B(11), 28C(17)(aa), 28D(5)(b) and
28D(16(aa), ANREU Act
Items 13, 18-19, 23, 32 to 34, 38, 42 to 44, 46 to 47, 52 to 53, 56 to 2.38
57, 61 to 62, 65 to 66, 68 to 69, 75 to 76, 79, 81, 87 to 89, sections 3,
4, 9(4)(a), 15(2)(d), 16(2)(b)(ii), 16(5), 16(7)(b), 21, 22(4A)(a),
26(3)(iii), 28A(1), 28B(1), 28B(11), 58, 63 to 63G, 64 and 82,
ANREU Act
Items 14, 17, 20, 21, 24, 27 to 29, 83 to 86 and 90 to 91, sections 4, 2.41
48A, 66, 79(1), 82 and 86A and Parts 6A and 6B, ANREU Act
Item 30, section 4, ANREU Act 2.38
Item 35 and 84, sections 4 and Parts 6A and 6B, ANREU Act 2.42
Items 36 and 49, sections 4, 17(3) and 50 to 53, ANREU Act 2.40
105
Carbon Tax Repeal Bills
Bill reference Paragraph number
Item 74, Part 4 ANREU Act 2.39
Items 92 and 93, sections 12BAA(7)(ka) and 12BAB(1)(g), ASIC 2.49
Act
Item 94, Part 20, ASIC Act 2.50
Item 94, section 295, ASIC Act 2.51
Item 94, section 296, ASIC Act 2.52
Item 95 and 101, sections 3 and 4, Regulator Act 2.45
Item 95, sections 3, 4 and 41(3)(a), Regulator Act 2.44
Items 96, 98, 99 and 100, section 4, Regulator Act 2.48
Item 97, section 4, Regulator Act 2.44
Items 102 and 104, sections 4 and 49(1)(z), Regulator Act 2.48
Item 103, section 41(3)(a), Regulator Act 2.48
Items 105 and 106, sections 9 and 764A(1)(kaa), Corporations Act 2.53
Item 107, section 1544, Corporations Act 2.57
Item 107, sections 1545 and 1546, Corporations Act 2.58
Item 107, Part 10.23, Corporations Act 2.54
Item 107, section 1542, Corporations Act 2.55
Item 107, section 1543, Corporations Act 2.56
Items 108, 109, 110, 122, 135, 136, 138, 143, 147, 152 and 155, 5.10
sections 2-1, 40-5, 43-5 and 110-5, Fuel Tax Act; item 12(2A),
Schedule 3, Fuel Tax (Consequential and Transitional Provisions)
Act 2006
Items 108, 110, 111, 112, 115, 116, 120, 124, 125 and 138, sections 5.20
2-1, 40-5, 41-1, 41-5(3)(b), 41-30, 43-1, 43-10 and 110-5, Fuel Tax
Act
Items 113, 114, 118, 127 to 134, 137, 139 to 142, 144 to 146, 148 to 5.23
151, 153 and 154, sections 41-15(1), 41-25(2)(a)(ii), 41-35 and 110-
5 and Subdivision 43-B, Fuel Tax Act
Items 117 and 126, sections 41-30(2) and 43-11, Fuel Tax Act 5.19
Item 119, Division 42A, Fuel Tax Act 5.22
Items 121, 122 and 123, sections 43-5 and 43-8, Fuel Tax Act 5.9
Item 156, section 12-5, ITAA 1997 3.15
Item 157, section 26-18, ITAA 1997 3.15
106
Index
Bill reference Paragraph number
Items 158 to 195 (excluding 179), sections 104-5, 104-205(1)(a)(i) 3.6
to (iv), 112-97, 118-15(2), 420-10(a) and (c), 420-15(1) (note),
420-15(3), 420-20(3), 420-21(1)(a)(i)-(iv), 420-21(1) (example),
420-21(2)(a)(i)-(iv), 420-35(b)(i) and (ii), 420-35 (example),
420-51(1) and (2), 420-52(a)(i), 420-52(b), 420-55(6), 420-57(9),
420-58, 420-60(1), (2) and (4), 420-65(3), 420-70(3) and 995-1(1),
ITAA 1997
Item 179, section 420-43, ITAA 1997 3.16
Items 196 to 198, section 3, NGER Act 2.30
Items 199 to 200, sections 4(1) to (2), NGER Act 2.32
Items 199, 233, 235, 236, 239, 240, 242, 245, 254, sections 4(1), 2.31
7A(1), 8(1), 9(1), 10(1), 10(3), 11(1), 11(3) and 11A(2), NGER Act
Items 201 to 203, section 5, NGER Act 2.33
Items 204, 211 and 212, section 7, NGER Act 2.27
Items 205, 207, 249, 260 and 268, section 7, NGER Act 2.28
Items 206, 208 to 210, 213, 215 to 220, 222 to 232, 234, 238 and 2.29
241, sections 7, 7B and 7C, NGER Act
Item 214, section 7, NGER Act 2.16
Item 220, section 7, NGER Act 2.19
Items 221, 247, 281 and 307, sections 7, 11(4), 11C and 56(aab), 2.25
(aa), (ga) and (gb), NGER Act
Items 224, 243, 246, 248, 250, 251, 253, 255 to 258, 261 to 266, 2.17
269, 272, 276, 278 to 279 and 286, sections 7, 11(1), 11A, 11B and
13(2) and (3), NGER Act
Items 237, 244, 252, 259, 280 and 305-309, sections 7, 54A, 55A, 2.20
56(j) and 56(k)-(l), NGER Act
Item 267, section 11B(7), NGER Act 2.24
Items 270 to 277, sections 11B(15)-(19) and 11B(15)(b)-(c) and 2.24
11B(17)(b)-(c), NGER Act
Items 282 to 284, sections 11D(1)(c), (e)-(f) and (i)-(j), NGER Act 2.26
items 287, 292 to 295 and 298 to 304, sections 13(4), 19(1)(note 4), 2.10
22(1)(a)-(b) and 22(2)(a)-(b), Parts 3A and 3D, sections 24(1AD),
(1AE)(a), (1H), (1J), (8), 25(1) and 30(2A), NGER Act
items 288 to 291 and 303, sections 15A, 15AA, 18A, 18B(3)(b) and 2.9
25(1), NGER Act
items 293 to 295, section 22(1)(a)-(b), 22(2)(a)-(b) and Parts 3A and 2.8
3D, NGER Act
Item 296, section 22X(1)(a), NGER Act 2.22
Items 297 and 303, sections 24(1AA) and 25(1), NGER Act 2.12
Item 310, section 74AA, NGER Act 2.11
107
Carbon Tax Repeal Bills
Bill reference Paragraph number
Items 311 and 312, sections 74B(1) and 74C(1), NGER Act 2.21
Items 313 to 314, section 65D, Ozone Management Act 6.14
Item 315, sections 69AAto 69AD, Ozone Management Act 6.16
Items 316 and 317, section 28(1)(b)(iii) and 28(1)(c), PRRTA Act 3.11
Item 318, section 44(1)(ia), PRRTA Act 3.15
Items 319 and 340, section 355-65(7) (table item 3), TAA 1953 3.18
Item 320 1.20
Item 321 1.33
Items 322, 323, 330, 336(2) and 339(1) 3.12
Item 322 1.33, 1.34
Item 323 1.19, 1.23
Item 323, table items 1, 27, 40 and 48A 1.40
Item 323, table items 2, 5 to 6 1.39
Item 323, table item 3 1.47, 1.49
Item 323, table items 3 and 4 1.21
Item 323, table item 8 1.39
Item 323, table items 7, 28, 29 and 41 1.21
Item 323, table item 9 1.40
Item 323, table items 10 to 11 1.37
Item 323, table item 11 1.36
Item 323, table items 12 to15 1.38
Item 323, table item 16 1.36
Item 323, table items 19 and 21 1.36
Item 323, table items 20 and 22 1.37
Item 323, table items 24 to 26 1.37
Item 323, table item 26 1.36
Item 323, table items 30 to 37 1.39
Item 323, table items 37 and 39 1.39
Item 323, table items 42 to 43, 45 to 47, 64 to 65 1.39
Item 323, table item 44 1.25
Item 323, table item 58 1.38
Item 323, table items 59, 61 to 63 1.39
Item 323, table item 60 1.39
Item 323, table items 67 to 68 1.40
Item 323, table items 70 to 72 1.40
Item 323, table item 69 1.43
108
Index
Bill reference Paragraph number
Item 323(3) and (4) 1.40
Item 324(1) and (3) 1.22
Item 324(2) 1.29
Item 325 1.32
Item 327 1.32
Item 328(4) 1.26
Item 328 1.25
Item 329 1.36
Item 331, sections 5 and 6(2) (paragraph (baa) and (d) in table item 2.62
33), Anti-Money Laundering Act
Item 332 2.36
Item 333 2.47
Items 334 and 335 5.24
Item 336(1) 3.15
Item 337 2.11, 2.13, 2.14
Item 338(1), section 65C, Ozone Management Act 6.14
Item 338(2), sections 69AA to 69AD, Ozone Management Act 6.17
Item 339(2) 3.15
Items 340 and 358A 3.19
Item 342 1.44
Item 343A 1.30
Item 343 1.27
Items 344 and 345 1.42
Item 345C 1.40
Item 345A 1.41
Item 345B 1.41
Item 345D 1.45
Item 346 1.60
Item 347 1.62, 1.63
Items 348-350 1.62
Item 351 1.51
Item 352 and 353 1.52
Item 354 and item 355 1.53
Items 356 to 358 1.56
Item 358A 1.57
Item 359 1.58
109
Carbon Tax Repeal Bills
Main Repeal Bill Schedule 2: Price exploitation in relation to
the carbon tax repeal
Bill reference Paragraph number
Item 1, section 2B(1), CC Act 4.7
Item 2, section 6(2)(b), CC Act 4.8
Item 3, section 60D, CC Act 4.22
Item 3, section 60D(3) and (4), CC Act 4.23
Item 3, section 60E, CC Act 4.24
Item 3, sections 60E(4) and 60J(2), CC Act 4.25
Item 3, section 60F, CC Act 4.26
Item 3, section 60G(1), (3), (6) and (8), CC Act 4.27
Item 3, section 60G(2), (4), (7), and (9), CC Act 4.28
Item 3, section 60G(5), CC Act 4.29
Item 3, section 60G(11), CC Act 4.30, 4.31
Item 3, section 60G(12), CC Act 4.32
Item 3, section 60G (1)-(4), (6)-(9) and (13), CC Act 4.33
Item 3, section 60G (10), CC Act 4.34
Item 3, section 60G, CC Act 4.6, 4.27
Item 3, section 60H, CC Act 4.35, 4.36, 4.39
Item 3, section 60H(2), CC Act 4.37
Item 3, section 60H(6) 4.40
Item 3, section 60J, CC Act 4.41
Item 3, section 60K, CC Act 4.42
Item 3, Division 5, CC Act 4.45, 4.46
Item 3, section 60L, CC Act 4.47
Item 3, section 60L(5), CC Act 4.48
Item 3, section 60M(1), CC Act 4.51
Item 3, section 60N, CC Act 4.54
Item 3, section 60P, CC Act 4.55
Item 3, section 60P, CC Act 4.56
Item 3, section 60Q, CC Act 4.57
Item 3, Division 1, CC Act 4.6
Item 3, section 60, CC Act 4.9, 4.10
Item 3, Part V, CC Act 4.11
Item 3, section 60A, CC Act 4.12, 4.13, 4.14, 4.15
Item 3, section 60B, CC Act 4.14
110
Index
Bill reference Paragraph number
Item 3, section 60B(1), CC Act 4.14
Item 3, section 60C, CC Act 4.16
Item 3, section 60C(2), CC Act 4.16
Item 3, section 60C(2), CC Act 4.18
Item 4, section 75B(1), CC Act 4.58
Items 5, 6 and 7, section 76(1)(a), 76(1A)(b) and 76(1B)(a), CC Act 4.19, 4.44, 4.59
Item 8, section 77A, CC Act 4.61
Item 9, section 80(1), CC Act 4.62
Item 10, section 80(1A), CC Act 4.63
Item 11, section 80A, CC Act 4.64
Item 12, section 82(1), CC Act 4.66
Item 13, section 83, CC Act 4.67
Item 14, section 84(1), CC Act 4.68
Item 14, section 84(3), CC Act 4.69
Item 15, section 85(a), CC Act 4.70
Items 16, 17 and 18, section 86C, CC Act 4.71
Items 19 to 23, section 87, CC Act 4.72
Items 24 and 25, section 155AAA, CC Act 4.73
Item 26, section 163A, CC Act 4.74
Main Repeal Bill Schedule 3: Repeal of tax offset for
conservation tillage
Bill reference Paragraph number
Items 1 and 2, table item 6 in section 2(1) and Part 3 of Schedule 2, 7.15
Clean Energy (Consequential Amendments) Act 2011
Items 3 and 5, table item 24 in sections 67-23 and section 995-1(1), 7.14
ITAA 1997
Item 4, Subdivision 385-J, ITAA 1997 7.13
Item 6 7.16
Items 6 and 7 7.18
Item 7 7.17
111
Carbon Tax Repeal Bills
Main Repeal Bill Schedule 4: Repeal of the Steel
Transformation Plan Act 2011
Bill reference Paragraph number
Item 1 7.9
Item 2, 1(a), (b) and (c) 7.10
Item 2, 1(d) 7.11
Item 2, 2 7.12
Main Repeal Bill Schedule 5: Australian Renewable Energy
Agency's finances
Bill reference Paragraph number
Item 1, section 64(1)(table), ARENA Act 7.19
Items 2 and 3, sections 64(3)-(6) and 65(4)(note), ARENA Act 7.21
Item 4 7.23
True-up Shortfall Levy (General) Bill
Bill reference Paragraph number
Clause 1 1.55
Clause 2 1.59
Clause 3 1.61
Clause 4 1.63
Clauses 4 and 9 1.62
Clauses 5 to 7 1.62
Clause 8 1.55
112
Index
True-up Shortfall Levy (Excise) Bill
Bill reference Paragraph number
Clause 1 1.55
Clause 2 1.59
Clause 3 1.61
Clause 4 1.63
Clauses 4 and 9 1.62
Clauses 5 to 7 1.62
Clause 8 1.55
Customs Tariff Amendment Bill
Bill reference Paragraph number
Clause 1 5.11
Clause 2 5.13
Clause 3 5.12
Item 1, section 19A, Customs Tariff Act 1995 5.17
Items 2 to 37, Schedule 3 (subheadings 2710.12.61, 2710.19.40, 5.16
2710.91.40, 2710.91.61, 2710.99.40 and 2710.99.61, column 3),
Schedule 5 (cells at table items 60, 66, 76, 80, 88 and 92, column 3),
Schedule 6 (cells at table item 63, 69, 79, 83, 91 and 95, column 3),
Schedule 7 (cells at table item 62, 68, 78, 82, 90 and 94, column 3),
Schedule 8 (cells at table item 68,74, 84, 88, 96 and 100, column 3),
Schedule 9 (cells at table item 67, 74, 85, 89, 99 and 103, column 3),
Customs Tariff Act 1995
Item 38 5.27
113
Carbon Tax Repeal Bills
Excise Amendment Bill
Bill reference Paragraph number
Clause 1 5.11
Clause 2 5.13
Clause 3 5.12
Items 1 to 5, sections 3(1) and 5(1) and sections 6FA, 6FB and 6FC, 5.17
Excise Tariff Act 1921, Schedule (note 2 to Schedule heading and
table heading) Excise Tariff Act 1921
Items 6 and 7, Schedule (cell at table subitem 10.6 and 10.17, 5.16
column headed "Rate of Duty"), Excise Tariff Act 1921
Item 8 5.26
Ozone Import Amendment Bill
Bill reference Paragraph number
Clause 1 6.5
Clause 2 6.7
Clause 3 6.6
Items 1 to 9, 13 to 14, sections 2A, 2B, 3A and 4A, Ozone (Import 6.8
Levy) Act
Items 9 and 13, sections 3A and 4A, Ozone (Import Levy) Act 6.10
Items 10 to 12, section 3A, Ozone (Import Levy) Act 6.12
Ozone Manufacture Amendment Bill
Bill reference Paragraph number
Clause 1 6.5
Clause 2 6.7
Clause 3 6.6
Items 1 to 9 and 13, sections 2A, 2B and 3A, Ozone (Manufacture 6.8
Levy) Act
Item 9, section 3A, Ozone (Manufacture Levy) Act 6.10
Items 10 to 12, section 3A, Ozone (Manufacture Levy) Act 6.12
114