Commonwealth of Australia Explanatory Memoranda Commonwealth of Australia Explanatory Memoranda[Index] [Search] [Download] [Bill] [Help]
2019-2020-2021
THE PARLIAMENT OF THE COMMONWEALTH OF AUSTRALIA
HOUSE OF REPRESENTATIVES
TREASURY LAWS AMENDMENT (2020 MEASURES NO. 4) BILL 2020
SUPPLEMENTARY EXPLANATORY MEMORANDUM
Amendments to be moved on behalf of the Government
(Circulated by authority of the
Assistant Treasurer, Minister for Housing and Minister for Homelessness, Social and
Community Housing, the Hon Michael Sukkar MP)
Table of contents
Glossary................................................................................................. 3
General outline and financial impact ...................................................... 5
Chapter 1 Amendments to Schedule 3 - Industry code
penalties under Part IVB of the Competition and
Consumer Act 2010 ..................................................... 7
Chapter 2 Amendments to Schedule 4 - Modification
power ........................................................................... 9
Chapter 3 Statement of Compatibility with Human Rights .......... 13
Glossary
The following abbreviations and acronyms are used throughout this
explanatory memorandum.
Abbreviation Definition
the Bill Treasury Laws Amendment (2020 Measures
No. 4) Bill 2020
CCA Competition and Consumer Act 2010
Coronavirus (Measures No. 2) Coronavirus Economic Response Package
Act Omnibus (Measures No. 2) Act 2020
Franchising Industry Code Competition and Consumer (Industry
Codes--Franchising) Regulation 2014
ICCPR International Covenant on Civil and Political
Rights
3
General outline and financial impact
Amendments to Schedule 3 - Industry code penalties under
Part IVB of the Competition and Consumer Act 2010
On 28 October 2020, the Australian Government introduced the Bill.
The amendments to the Bill make revisions to increase the amount of
pecuniary penalties available for contraventions of civil penalty provisions
in an industry code of conduct relating to franchising, and for 600 penalty
units for other industry codes of conduct.
Date of effect: The day after the Bill receives the Royal Assent.
Proposal announced: This measure was partially announced in the
Government's response to the Parliamentary Joint Committee on
Corporations and Financial Services inquiry into the operation and
effectiveness of the Franchising Code of Conduct report: Fairness in
Franchising.
Financial impact: Nil.
Human rights implications: Schedule 3, as amended, engages human
rights, but does not raise any human rights issues -- Chapter 3.
Compliance cost impact: Nil.
A Regulation Impact Statement was prepared and certified by the
Department of Industry, Science, Energy and Resources. It has been
included at Chapter 4 of the Explanatory Memorandum to the Bill.
Summary of regulation impact statement
Regulation impact on business
Impact: Nil.
Main points:
• The increase in penalty units will not impose any additional
regulatory burdens on businesses that comply with the law.
Amendments to Schedule 4 - Modification power
This amendment was prepared by the Attorney-General's Department.
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Treasury Laws Amendment (2020 Measures No. 4) Bill 2020
Schedule 4 to the Bill, as amended, amends Schedule 5 to the Coronavirus
Economic Response Package Omnibus (Measures No. 2) Act 2020
(Coronavirus (Measures No. 2) Act) to reintroduce a temporary
mechanism for responsible Ministers to change arrangements for meeting
information and documentary requirements under Commonwealth
legislation, including requirements to give information and produce,
witness and sign documents, in response to the challenges posed by
COVID-19. This mechanism was previously included in Schedule 5 to the
Coronavirus (Measures No. 2) Act as a temporary measure terminating at
the end of 31 December 2020. Schedule 4 to the Bill originally sought to
extend the operation of the mechanism in Schedule 5 to the Coronavirus
(Measures No. 2) Act, however extension is no longer possible as the
measure was repealed at the end of 31 December 2020. The proposed
amendments to Schedule 4 to the Bill will ensure that the mechanism is
reintroduced under Schedule 5 to the Coronavirus (Measures No. 2) Act,
in response to the ongoing challenges posed by COVID-19, and the
mechanism will have effect until 31 December 2021.
Date of effect: The day after this Act receives Royal Assent.
Proposal announced: This measure was previously included in the
Coronavirus Economic Response Package Omnibus (Measures No. 2)
Act 2020.
Financial impact: Nil.
Human rights implications: Schedule 4, as amended, does not raise any
human rights issues. See Statement of Compatibility with Human
Rights -- Chapter 3.
Compliance cost impact: The exemption from Regulation Impact
Statement requirements previously granted by the Prime Minister in
relation to measures responding to the impacts of COVID-19 applies to
this proposal. This is on the basis that this proposal is simply to extend a
measure that was originally implemented in response to the COVID-19
pandemic.
6
Chapter 1
Amendments to Schedule 3 - Industry
code penalties under Part IVB of the
Competition and Consumer Act 2010
Amendments to section 51AE of the CCA
1.1 For any industry code of conduct, the code may prescribe a
pecuniary penalty of up to 600 penalty units for a contravention of a civil
penalty provision of the code. [Amendment 1, subsection 51AE(2) of the CCA]
1.2 For an industry code of conduct relating to franchising, a breach
of a civil penalty provision may prescribe a pecuniary penalty for a body
corporate to be the greatest of:
• $10 million; or
• if the Court can determine the value of the benefit that the
body corporate, and any body corporate related to the body
corporate, has obtained directly or indirectly and that is
reasonably attributable to the contravention--multiplied by
three; or
• if the Court cannot determine the value of that benefit--
10 per cent of the annual turnover of the body corporate
during the period of 12 months ending at the end of the
month in which the contravention occurred. [Amendment 1,
subsection 51AE(2A)(a) of the CCA]
1.3 The amendment specifies that this carries the same meaning as
section 76(1A)(b) of the CCA. [Amendment 1, subsection 51AE(2B) of the CCA]
1.4 The amendments also provide that for a person (other than a
body corporate), a penalty of up to $500,000 may be prescribed in an
industry code of conduct relating to franchising. [Amendment 1,
subsection 51AE(2A)(b) of the CCA]
1.5 Otherwise, a penalty of up to 600 penalty units may be
prescribed. [Amendment 1, subsection 51AE(2A)(c) of the CCA]
Application and transitional provisions
1.6 For the avoidance of doubt, the amendment includes a
further savings provision to clarify nothing in this Schedule affects
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Treasury Laws Amendment (2020 Measures No. 4) Bill 2020
the validity of regulations made under the CCA made before the
commencement of Schedule 3 to the Bill. [Amendment 2]
1.7 These amendments commence at the same time as
Schedule 3 to the Bill commences.
8
Chapter 2
Amendments to Schedule 4 - Modification
power
Outline of chapter
2.1 Schedule 4 to the Bill, as amended, amends Schedule 5 to the
Coronavirus Economic Response Package Omnibus (Measures No. 2)
Act 2020 to reintroduce a temporary mechanism for responsible Ministers
to change arrangements for meeting information and documentary
requirements under Commonwealth legislation, including requirements to
give information and produce, witness and sign documents, in response to
the challenges posed by COVID-19.
Context of amendments
2.2 This mechanism was previously included in Schedule 5 to the
Coronavirus (Measures No. 2) Act as a temporary measure terminating at
the end of 31 December 2020. Schedule 4 to the Bill initially sought to
extend the operation of Schedule 5 to the Coronavirus (Measures No. 2)
Act. However, extension is no longer possible as the measure was
repealed at the end of 31 December 2020.
2.3 The proposed parliamentary amendments to Schedule 4 to the Bill
will ensure that the mechanism is reintroduced under Schedule 5 to the
Coronavirus (Measures No. 2) Act, in response to the ongoing challenges
posed by COVID-19.
2.4 Schedule 5 to the Coronavirus (Measures No. 2) Act introduced a
temporary mechanism for responsible Ministers to change arrangements
for meeting information and documentary requirements under
Commonwealth legislation, including requirements to give information
and produce, witness and sign documents, in response to the challenges
posed by COVID-19.
2.5 Schedule 5 to the Coronavirus (Measures No. 2) Act was
implemented to address difficulties created by COVID-19 restrictions in
meeting information and documentary requirements under
Commonwealth legislation.
2.6 The social distancing measures and the restrictions on movement
and gathering introduced in Australia and overseas in response to the
COVID-19 pandemic have caused ongoing difficulties with meeting
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Treasury Laws Amendment (2020 Measures No. 4) Bill 2020
information and documentary requirements under Commonwealth
legislation.
2.7 In recognition of the importance of continued business
transactions and government service delivery during the COVID-19
pandemic, Schedule 4 to the Bill was introduced to extend Schedule 5 to
the Coronavirus (Measures No. 2) Act to 31 March 2021, and provide a
mechanism for further extension to provide continued flexibility to enable
necessary temporary adjustments to legal obligations.
2.8 The Bill was not passed by Parliament before it rose in 2020, and
Schedule 5 to the Coronavirus (Measures No. 2) Act was repealed at the
end of 31 December 2020 under subitem 1(8). As such, an extension of
Schedule 5 to the Coronavirus (Measures No. 2 Act) is no longer possible.
2.9 In light of the ongoing nature of COVID-19 both in Australia and
globally, including the possibility of restrictions on movement or
gatherings being suddenly imposed, the power to amend arrangements for
meeting information and documentary requirements remains necessary.
2.10 Amendments to the Bill will amend Schedule 4 to reintroduce the
mechanism in Schedule 5 to the Coronavirus (Measures No. 2) Act, which
was repealed at the end of 31 December 2021.
2.11 The Senate Standing Committee on Scrutiny of Bills
recommended that the power to further extend the mechanism by
legislative instrument be removed from Schedule 4 to the Bill. On the
basis of this recommendation, and in view of the extended operation of
the amendments to Schedule 4 that will terminate on 31 December 2021,
the extension mechanism has been removed from Schedule 4.
Summary of new law
2.12 Schedule 4 to the Bill, as amended, amends Schedule 5 to the
Coronavirus (Measures No. 2) Act to allow the responsible Minister for an
Act or legislative instrument that requires or permits certain matters
(including the giving of information and the signature, production and
witnessing of documents) to temporarily alter or adjust these requirements
or permissions in response to circumstances relating to the Coronavirus.
2.13 A determination under this mechanism may apply retrospectively.
However, a determination will be beneficial to individuals and business
by retrospectively validating approaches to providing information or
meeting documentary and witnessing requirements that may otherwise
have been invalid.
2.14 This mechanism is necessary to respond flexibly to the
unprecedented challenges of the Coronavirus, particularly the challenges
posed by social distancing measures.
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Amendments to Schedule 4 - Modification power
2.15 The mechanism is temporary and will cease to have effect at the
end of 31 December 2021.
Comparison of key features of new law and current law
New law Current law
A Minister responsible for an Act or No equivalent.
legislative instrument that requires or
permits certain matters relating to
information and documentation may
determine that different arrangements
apply in response to the Coronavirus.
Detailed explanation of new law
2.16 Item 1 replaces existing Schedule 4 with a new Schedule 4, which
repeals Schedule 5 of the Coronavirus (Measures No. 2) Act and
substitutes a new Schedule 5.
2.17 This item applies in relation to a provision of an Act or legislative
instrument (known as an affected provision) that requires or permits any
of the following matters (known as relevant matters):
• the giving of information in writing;
• the signature of a person;
• the production of a document by a person;
• the recording of information;
• the retention of documents or information;
• the witnessing of signatures;
• the certification of matters by witnesses;
• the verification of the identity of witnesses; and
• the attestation of documents.
[Schedule 5, item 1(1)]
2.18 The responsible Minister for an affected provision may determine
by legislative instrument that, for a specified time period:
• the affected provision is varied or does not apply; or
• another provision specified in the determination applies.
[Schedule 5, item 1(2)]
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Treasury Laws Amendment (2020 Measures No. 4) Bill 2020
2.19 The time period specified in a determination can be a period that
starts before Schedule 4 to the Bill, as amended, commences. Applying
the determination retrospectively will be beneficial to individuals and
business as it will retrospectively validate approaches to providing
information or meeting documentary and witnessing requirements that
may otherwise have been invalid.
[Schedule 5, item 1(3)]
2.20 The responsible Minister must not make a determination unless
they are satisfied that the determination is in response to circumstances
relating to the Coronavirus.
[Schedule 5, item 1(4)]
2.21 A responsible Minister is defined as:
• any Minister who administers the Act which is being varied;
or
• if the affected provision is a provision of a legislative
instrument - any Minister who administers the enabling
legislation under which a legislative instrument is made.
[Schedule 5, item 1(5)]
2.22 A determination made by a responsible Minister has effect
accordingly and will not operate after 31 December 2021. Likewise, the
instrument-making power is intended to be temporary. The provisions
inserted by Schedule 4 to the Bill, as amended, will be repealed at the end
of 31 December 2021. [Schedule 5, items 1(6), (7) and (8)]
Application and transitional provisions
2.23 Schedule 4 to the Bill, as amended, will commence on the day
after the day on which the Bill receives Royal Assent. Determinations
made under the powers provided for by Schedule 5 to the Coronavirus
(Measures No. 2) Act, amended by Schedule 4 to the Bill, as amended,
can apply retrospectively.
2.24 The provisions inserted by Schedule 4 to the Bill, as amended,
will be repealed at the end of 31 December 2021. Any determination
made under the new mechanism will also cease to operate at the end of
31 December 2021.
12
Chapter 3
Statement of Compatibility with Human
Rights
Prepared in accordance with Part 3 of the Human Rights
(Parliamentary Scrutiny) Act 2011
Amendments to Schedule 3 - Industry code penalties under Part IVB of
the Competition and Consumer Act 2010
3.1 This amendments 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
3.2 The amendments to Schedule 3 to the Bill make revisions to
increase the maximum amount of penalty units that can be included in
regulations that prescribe an industry code, with specific amendments for
industry codes relating to the industry of franchising.
Human rights implications
3.3 The amendment may, or may not, engage Article 14 of the
ICCPR.
3.4 Consideration has been specifically given to the guidance in the
Parliamentary Joint Committee on Human Rights' Guidance Note 2:
Offence provisions, civil penalties and human rights (Guidance Note 2)
and to the Attorney General's Department's A Guide to Framing
Commonwealth Offences, Infringement Notices and Enforcement Powers,
September 2011 edition.
3.5 The amendment allows an industry code of conduct to prescribe
a penalty of up to 600 penalty units for body corporates and other persons.
3.6 The amendments provides that for a person (other than a body
corporate), a penalty of $500,000 may be prescribed in an industry code of
conduct relating to the industry of franchising. Otherwise, a penalty of up
to 600 penalty units may be prescribed.
3.7 Given the civil nature of these penalty provisions, applications
to the court for civil penalty orders will be dealt with in accordance with
the rules and procedures that apply in relation to civil matters. The
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Treasury Laws Amendment (2020 Measures No. 4) Bill 2020
penalties in the amendment do not impose a criminal penalty, nor carry a
penalty of imprisonment.
3.8 Guidance Note 2 observes that civil penalty provisions may
engage criminal process rights under Articles 14 and 15 of the ICCPR,
regardless of the distinction between criminal and civil penalties in
domestic law.
3.9 The increased penalties contained in the Schedule are intended
to encourage industry to comply with the code of conduct schemes. In
particular, the $500,000 penalty amount is to encourage compliance with
the Franchising Industry Code.
3.10 On 22 March 2018 the Senate referred an inquiry to the
Parliamentary Joint Committee on Corporations and Financial Services
into the operation and effectiveness of the Franchising Industry Code.
3.11 The Committee's report noted that where penalties are
insufficient, franchisors are likely to factor the risk of a penalty into the
cost of doing business. The Committee's report recommended that the
quantum of penalties available for a breach of the Franchising Industry
Code be significantly increased to ensure the penalties are a meaningful
deterrent from non-compliance.
3.12 Having regard to the specific regulatory context and the nature
of the industry being regulated, the severity of the civil penalties that may
be imposed on individuals is not sufficiently severe to be considered
'criminal'. The franchising industry which is generally comprised of small
businesses as the franchisee, and larger, multinational companies as the
franchisor. The Franchising Industry Code aims to improve transparency
and fairness within the franchising industry.
3.13 The Committee's report indicated that the current penalties were
not strong enough to deter poor conduct as some franchisors incorporated
the penalty into the cost of doing business. Therefore, the Committee
concluded that increased penalties may further deter parties form
breaching the Franchising Industry Code.
3.14 Therefore, the imposition of higher civil penalties on industry
participants--who should reasonably be aware of their obligations under
the code--will enable an effective disciplinary response to
non-compliance.
3.15 For enforcement and compliance, the ACCC is the most
common litigant for enforcing breaches under the code. In doing so, the
ACCC retains the flexibility to take the most appropriate, and likely to be
most effective, administrative action in each individual case.
3.16 Where the ACCC applies for a civil penalty in relation to a
breach, the operation of section 76 of the CCA means that the court will
14
Statement of Compatibility with Human Rights
continue to have discretion to apply an appropriate penalty up to the
maximum amount.
3.17 In ascertaining this amount, the court would consideration of the
relevant facts of any given case, and impose a penalty that is proportionate
to that conduct, making it unlikely that the maximum penalty would be
imposed in every instance. In practice, the maximum amount would only
be applied in the most egregious instances of non-compliance.
3.18 Based on the above factors, including the cumulative effect of
the nature and severity of the civil penalties in the amendment, these
penalties are not 'criminal' for the purposes of human rights.
3.19 For the reasons given above, the amendment is consistent with
the right to a fair trial.
Conclusion
3.20 To the extent that these amendments limit the rights under
Article 14 of the ICCPR, they are compatible with human rights as:
• the increased penalty amounts are aimed at deterring
non-compliance with the code, and not punitive in nature;
• the maximum penalty amount will only be used in the most
egregious instances; and
• the imposition of high civil penalties are on industry
participants who should be reasonably aware of their
obligations under the code of conduct.
Amendments to Schedule 4 - Modification power
3.21 Schedule 4 to the Bill, as amended, is compatible with the
human rights and freedoms recognised or declared in the international
instruments listed in section 3 of the Human Rights (Parliamentary
Scrutiny) Act 2011.
Overview
3.22 Schedule 4 to the Bill, as amended, amends Schedule 5 to the
Coronavirus (Measures No. 2) Act to provide a temporary mechanism to
change arrangements for meeting information and documentary
requirements under Commonwealth legislation, in response to
circumstances relating to the Coronavirus. In particular, social distancing
measures are expected to cause difficulties with meeting information and
documentary requirements, including signature, witnessing and
production of documents.
15
Treasury Laws Amendment (2020 Measures No. 4) Bill 2020
3.23 Under this mechanism, a responsible Minister may determine
that provisions in Commonwealth legislation containing particular
information or documentary requirements are varied, do not apply or that
another provision specified in the determination applies, for a specified
time period. The mechanism must not be exercised by a responsible
Minister unless the Minister is satisfied that the determination is in
response to circumstances relating to the Coronavirus.
3.24 The mechanism is temporary and will be repealed at the end of
31 December 2021. Any determination made under the mechanism will
also cease to operate at the end of 31 December 2021.
Human rights implications
3.25 Schedule 4 to the Bill, as amended, does not engage any of the
applicable rights or freedoms.
3.26 Each instrument made under the power provided for in
Schedule 5 to the Coronavirus (Measures No. 2) Act, amended by
Schedule 4 to the Bill, as amended, will be disallowable and will include a
human rights compatibility statement assessing the impact of the
instrument on human rights and freedoms.
Conclusion
3.27 Schedule 4 to the Bill, as amended, is compatible with human
rights as it does not raise any human rights issues.
16
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