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Renewable Energy (Electricity) (Charge) Bill 2000
Date Introduced: 22 June 2000
Portfolio: Environment and Heritage
Commencement: At the same as the Renewable Energy (Electricity) Act 2000
To set the rate of charge to be used to calculate a renewable energy shortfall charge under Division 1 of Part 4 of the Renewable Energy (Electricity) Bill.
The Renewable Energy (Electricity) (Charge) Bill is a very short Bill of 7 clauses. It prescribes the dollar amount for the 'rate of charge' which is used to calculate how much an electricity buyer must pay if they fail to buy sufficient electricity from renewable sources. This penalty payment is called the renewable energy shortfall charge. The calculation of the shortfall, as well as all the other legislative aspects of the renewable energy scheme is covered by the Renewable Energy (Electricity) Bill 2000. Further detail on the policy context can be found in the relevant Digest for that Bill. Bills Digest no. 198, 1999-2000.
The reason that Renewable Energy (Electricity) (Charge) Bill is separate from the Renewable Energy (Electricity) Bill is that the rate of charge set by former Bill is effectively a tax. Section 55 of the Constitution requires any law imposing a tax cannot deal with any other matter. The Renewable Energy (Electricity) Bill covers non-tax issues.
Clause 4 provides that the Act binds State and Territory (including Norfolk Island) governments, but not the Commonwealth Government. Presumably this is intended to cover the situation were State and Territory Governments are 'liable entities' (ie buyers of electricity) within the meaning of the Renewable Energy (Electricity) Bill 2000 and thus potentially required to pay renewable energy shortfall charges.
Clause 5 formally imposes the renewable energy shortfall charge.
Clause 6 sets the rate of charge at $40 per megawatt hour (MWh) per year.
Clause 7 states that 'the Act does not impose a tax on property of any kind belonging to a State'. It also defines the phrase 'property of any kind belonging to a State' as having the same meaning given to it by section 114 of the Constitution. Section 114 prevents both the Commonwealth and the States from imposing a tax on each other's property. Given that rate of charge is a tax (or it can at least be argued that it is), the Bill would be invalid if it taxed State property.
It appears that neither the second reading speech nor the Explanatory Memorandum provides any legal precedent or other evidence to back up the statement in clause 7 that the rate of charge is not a tax on State property. In limited circumstances, Section 114 may allow taxes on transactions that relate to State property (eg a tax on fringe benefits provided by State to its employers(1)) but not if these were in effect taxes on the ownership or holding of property by the State (eg a tax on a capital gain on the disposal of a State asset(2)).
If a Court found that the rate of charge was in fact an unconstitutional tax on state property, the shortfall charge could not be collected from State entities. It may also be possible that a Court would strike down the Bill as a whole as clause 7 doesn't clearly express the intention the rest of the scheme may survive if a Court rules that it does impose a tax on the property of a State. If the entire Bill was found to be unconstitutional, this would mean that the shortfall charge could not be set with the result that the economic basis of the renewable scheme would collapse. To avoid any doubt, it may be prudent if the Government could clarify that it is on firm legal ground regarding its assertion in clause 7. Ultimately, of course, it is the role of the High Court, not the Parliament, to determine if the Bill actually imposes a tax on the property of a State.
- Queensland v Commonwealth (1987) 162 CLR 74.
- South Australia v Commonwealth (1992) 174 CLR 235.
15 August 2000
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