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Bills Digest No. 53 1999-2000
Appropriation (Supplementary Measures) Bill (No. 2) 1999

WARNING:
This Digest was prepared for debate. It reflects the legislation as introduced and does not canvass subsequent amendments. This Digest does not have any official legal status. Other sources should be consulted to determine the subsequent official status of the Bill.

CONTENTS

Passage History
Purpose
Background
Main Provisions
Endnotes
Contact Officer & Copyright Details

Passage History

Appropriation (Supplementary Measures) Bill (No. 2) 1999

Date Introduced: 26 August 1999

House: House of Representatives

Portfolio: Finance and Administration

Commencement: On Royal Assent

Purpose

To appropriate $896 million from the Consolidated Revenue Fund for the expenditure over four years on a range of environment measures, particularly relating to greenhouse gases, renewable energy and transport issues.

Background

Policy Commitment

On 29 March 1999, the Senate Environment, Communication, Information Technology and the Arts References Committee tabled a report(1) on the impact of the proposed Goods and Services Tax (GST)/A New Tax System (ANTS) package on the environment and other matters. The broad findings of the (majority) non-government members of that Committee were that ANTS would have significant negative impacts on the environment and as a consequence they recommended substantial changes. The Government members did not accept these findings, concluding that 'the benefits delivered to all Australians [by the proposed tax reforms] will increase the strength and diversity of the economy..[which] will enhance the capacity to respond to a variety of challenges, including those facing the environment'.(2)

The initial failure of the Senate to pass the ANTS legislation led to the agreement - announced on 28 May 1999 - between the Government and the Australian Democrats, which modified the ANTS proposal in a number of important respects, including in relation to the environment. The changes dealing directly with the diesel fuel rebate scheme have been implemented by earlier legislation.(3) This Bill deals with a greenhouse gas abatement program and a range of renewable energy and transport measures.

The Government - Democrat agreement has been subject to criticism by Labor, the Australian Greens (Senator Brown) and the WA Greens (Former Senator Margetts) as well a range of environment groups. This criticism mainly focuses on the potential impact on greenhouse gas emissions. For example, an Australia Institute report commissioned by the Australian Conservation Foundation and Greenpeace Australia concluded:

On 11 August 1999, the Senate referred an inquiry on Australia's response to global warming to the Senate Environment, Communication, Information Technology and the Arts References Committee. The Committee is due to report by August 2000 and its findings may in due course have a bearing on the implementation of measures detailed under the Bill.

Summary of proposed measures to be funded

The broad measures and amount of funding for each were agreed between the Government and the Democrats in their 29 May announcement.

All vehicles above 3.5 gross vehicle mass are potentially eligible for grants under this program. Subject to strict environmental conditions, the program will provide either:

• up to 50 percent grant to purchasers for the difference in the purchase price between original equipment manufacture alternative fuel vehicles and conventionally fuelled vehicles,
• up to 50 percent grant towards the cost of converting vehicles to alternative fuels such as CNG or LPG.

Evidence given before the Senate References Committee indicates that, on 1996 figures, approximately 540 million litres of new oil was sold in Australia of which 149 million litres was collected for recycling.(5) The main product from recycled oil is 'diesel extender' which is blended with diesel for uses such as running remote power stations.

Under the proposed measure, the Commonwealth will fund the development of a comprehensive product stewardship arrangement(6) and provide transitional assistance to ensure the environmentally sustainable management and re-refining of waste oil and its reuse. It will support economic recycling options and the development of stewardship arrangements. Any diesel extenders or other products manufactured from recycled oil will be required to meet the relevant Commonwealth environmental standards.

According to the Government the long-term solution to avoiding environmentally damaging disposal of waste oil is the 'development of an effective product stewardship partnership linking the oil companies, the States and the Commonwealth...[which]...will see the oil companies progressively assuming a greater share of these costs'.(7)

A consultant engaged by Environment Australia is currently undertaking a review of possible options to implement this measure and is due to report to Environment Australia by around the end of September 1999. A summary report will be circulated by Environment Australia to stakeholders and recommendations presented to the Government. It is envisaged that the recommendations will include possible funding arrangements for the establishment of a national product stewardship system.

Photovoltaic systems convert sunlight into electricity.

Cash rebates will be available to householders and owners of community use buildings, such as schools, who install grid-connected photovoltaic systems. The rebates will be available for up to 50% of system capital costs, with a maximum rebate of $5 500.

Draft guidelines have been developed for consultation with stakeholders.

Support will be provided for the further development and commercialisation of renewable energy in Australia. The extra funding will build on the Renewable Energy Commercialisation Program (RECP), almost doubling its expenditure.

Since the RECP has been operating for a year, and is now being almost doubled in size, the Australian Greenhouse Office (AGO) is taking the opportunity to review the scope and objectives of the program.

Renewable energy is often a viable alternative to diesel-generated electricity in those areas of Australia not serviced by a main electricity grid.

Funding will be made available to the States and Territories in the form of Special Purpose Payments to subsidise cash rebates up to 50% of the capital value of renewable remote area power supply (RAPs) systems, where it can be demonstrated that the renewable RAPs system will replace an existing diesel system, or for new systems. Consultation has commenced with stakeholders regarding implementation.

In November 1996 work commenced on a proposal for a National Environment Protection Measure (NEPM) through the National Environment Protection Council to reduce the impact of diesel emissions on ambient air quality.

Emissions from the stock of existing diesel vehicles make up the bulk of particle pollution in urban areas. New vehicle standards only progressively improve performance as the stock is turned over. It is therefore important to minimise pollution from existing vehicles.

In relation to development of in-service testing capabilities, a project is currently underway through Environment Australia to evaluate the suitability of previously identified test procedures. This project is expected to be completed around the end of 1999.

Measures under this initiative will be specifically designed to reduce greenhouse emissions and increase sink capacity. The AGO commenced consultations with stakeholders in July to develop options to implement the program. No details are publicly available as yet. However, the AGO has said that 'it is proposed that the measures being developed under the Program will:

• have long-lasting results that translate into sustained reduction in emissions during the period 2008-2012 and beyond
• be cost-effective and have a least cost impact on economic activity, and
• be consistent with ecologically sustainable development'.(8)

Main Provisions

Clause 3 provides that, for the purposes of implementing the prescribed purposes (measures) referred to above, amounts not exceeding those listed in the table included in the clause may be appropriated from the Consolidated Revenue Fund, starting from 2000-2001. The table is reproduced at Attachment 1 to this Digest.

Subclause 4(1) defines the primary objective of the greenhouse gas abatement program (measure seven) as being to reduce Australia's net greenhouse gas emissions by supporting activities that are likely to result in substantial emission reductions or substantial sink(9) enhancement.

Subclause 4(2) provides a non-exhaustive list of matters that are to be taken into account when determining what activities are to be supported (ie funded) under the greenhouse gas abatement program. These are:

• the potential for employment growth
• new technologies
• innovative processes
• export potential, and
• the capacity for the program to act as a catalyst for further non-government investment.

Subclause 5 (1) provides that funds appropriated under the Bill may be used to make grants to a State, Territory, person or a body.

Subclauses 5(2) and 5(3) provide that grants may be made with or without conditions attaching to them.(10) Conditional grants must have written terms and conditions.

Subclause 5(4) provides that any Minister may enter into any grant agreement with State, Territory, person or a body on behalf of the Commonwealth where that agreement includes conditions. Presumably the effective purpose behind this is to allow the Minister of the administering Department to delegate to other Ministers power of approval over conditional grants. Note that at this stage, no decision has been made by the Government which 'line' Department or Agency (e.g. Environment and Heritage) will administer the funds appropriated under the Act, including in relation to the provision of grants.

Subclauses 5(5), 5(6) and 5(7) allow for a grant to be given in the form of a bounty (ie a financial inducement in relation to the production or export of goods) so long as it is uniform throughout the Commonwealth as required under s.51(iii) of the Constitution. Given that some of the activities that may receive grants are likely to involve a commercial element, it may be these grants could be legally considered as bounties. These subclauses clarify that this is permissible.

Clause 6 allows a Minister to delegate their power to enter into clause 5 grants to certain officials including a Departmentary Secretary, substantive or acting Senior Executive Service employee or a person appointed by the Governor General under s.67 of the Constitution. In exercising delegated power, officials must comply with any directions from the Minister concerned.

Clause 8 amends the Diesel and Alternative Fuel Grants Scheme Act 1999. The Diesel and Alternative Fuel Grants Scheme Act 1999, which received Royal Assent on 8 July 1999, foreshadowed the introduction of the measures contained in this Bill but used slightly different wording in describing the measures. The proposed amendment deletes the references to those measures foreshadowed in the Diesel and Alternative Fuel Grants Scheme Act 1999 to eliminate any perceived inconsistency.

Endnotes

1. Inquiry into GST and a New Tax System, Report of the Senate Environment, Communication, Information Technology and the Arts References Committee March 1999.
2. ibid, p 143.
3. Diesel and Alternative Fuels Grants Scheme Act 1999 and the Customs and Excise Amendment (Diesel Fuel Rebate Scheme) Act 1999.
4. The Australia Institute The Environmental Implications of the Revised ANTS package June 1999.
5. Inquiry into GST and a New Tax System, op. cit, paragraph 3.147, p 48.
6. In this context 'stewardship' presumably means oil producers / manufacturers adopting some degree of responsibility for oil products throughout their life-cycle rather than responsibility ceasing after the initial sale to a consumer.
7. Prime Minister's Website 'Changes to the Goods and Services Tax', http://www.pm.gov.au/media/pressrel/1999/changes3105.htm
8. Australian Greenhouse Office Website 'New tax package boosts Australia's capacity to meet international greenhouse commitments', http://www.greenhouse.gov.au/measures/index.html
9. A 'sink' is something that removes or stores carbon dioxide from the atmosphere, for example growing vegetation.
10. It may assist readers to note that the explanatory memorandum has misnumbered the references to subclauses 5(2)-5(7) in the 'Notes on Clauses' section, points 6-8. The reference to subclause 6(2) should be read as subclause 5(2) and so on.

Contact Officer and Copyright Details

This paper has been prepared for general distribution to Senators and Members of the Australian Parliament. While great care is taken to ensure that the paper is accurate and balanced, the paper is written using information publicly available at the time of production. The views expressed are those of the author and should not be attributed to the Information and Research Services (IRS). Advice on legislation or legal policy issues contained in this paper is provided for use in parliamentary debate and for related parliamentary purposes. This paper is not professional legal opinion. Readers are reminded that the paper is not an official parliamentary or Australian government document.

IRS staff are available to discuss the paper's contents with Senators and Members
and their staff but not with members of the public.

ISSN 1328-8091
© Commonwealth of Australia 1999

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Published by the Department of the Parliamentary Library, 1999.

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