Bills Digest no. 140 2006–07
Liquid Fuel Emergency Amendment Bill 2007
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
Financial implications
Main Provisions
Endnotes
Contact Officer & Copyright Details
Passage History
Liquid
Fuel Emergency Amendment Bill 2007
Date introduced:
28 March 2007
House: House of Representatives
Portfolio: Industry, Tourism and
Resources
Commencement:
The Bill s formal
provisions commence on Royal Assent. The substantive provisions
commence six months after Royal Assent unless commenced earlier by
proclamation.
The purpose of
the Bill is to implement legislative amendments responding to the
report, Review of the Liquid Fuel Emergency Act
1984. The report was prepared by the consultancy firm ACIL
Tasman on behalf of the Department of Industry, Tourism and
Resources.
The Liquid Fuel Emergency Act 1984
(LFE Act) commenced in March 1984. As the then sponsoring Minister,
the Hon Barry Jones MP, said in his second reading speech:
The Government has a clear national responsibility
to prepare contingency plans against any foreseeable national
emergency. The fundamental objectives of a national response to a
major fuel shortage should be to minimise the total impact on the
community in terms of maintaining essential services and minimising
economic dislocation and to ensure that available supplies are
distributed as equitably as possible.
The purpose of this Bill is to equip the
Commonwealth Government with the authority needed to prepare for
and handle a national liquid fuel supply emergency. This would be
done in close cooperation with the governments of the States and
the Northern Territory.(1)
The LFE Act gives the Australian Government a
range of powers to prepare for and manage a possible liquid fuel
supply emergency. In particular, Part II of the Act provides the
powers to plan for an emergency and take contingency actions, as
necessary, at times before an actual emergency is identified. These
powers include requiring relevant fuel industry organisations to
maintain minimum levels of reserve stocks, develop certain
emergency procedures and to maintain and provide statistical
information.(2)
Part III of the Act provides the
Governor-General with the power to declare a national liquid fuel
emergency during periods of shortfall in liquid fuels. Part III
also provides the Australian Government with emergency powers to
regulate supplies of liquid fuels to bulk and retail customers, to
regulate maintenance of stock levels and their transfer, to direct
the sale of liquid fuels to specified customers and to regulate
refinery operations. Many of the powers conferred by the Act can be
delegated to Commonwealth officials, and State and Territory
Ministers and officials. The Act also provides for the
implementation of a national system to ration fuels consistent with
Australia s obligations as a member of the International Energy
Agency.(3)
During a national liquid fuel emergency, the
Minister has the power to allocate bulk supplies and ensure
supplies to certain essential or high priority users. The
determination of essential or high priority users is subject to
procedures set out in the Act and the Guidelines created under the
Act.(4)
The LFE Act only contemplates the declaration
of an emergency in extreme circumstances. The Act can not be used
to manage intermittent supply shortages, and does not enable the
Australian Government to override State and Territory authority
during a localised liquid fuel emergency.(5)
To date, the LFE Act has never been activated
to deal with a national liquid fuel emergency.
ACIL Tasman Review of the Liquid
Fuel Emergency Act 1984
In 2004, a consultancy firm, ACIL Tasman, was
contracted by the Department of Industry, Tourism and Resources to
conduct a review of the LFE Act for the National Oil Supplies
Emergency Committee (NOSEC)(6). The key task of this
Review was to assess whether government intervention for the
preparation for and management of a national liquid fuel emergency
is appropriate and, if so, in what circumstances and what methods
of intervention would be the most efficient, effective and
fair.
The Review in its
report made 31 recommendations, across a range of matters,
including several proposed legislative changes to improve the
operation of the Act. Many of these were accepted by the
Ministerial Council on Energy and by the Government in its response
in December 2005. The Bill gives effect to the
Government response with respect to the recommended legislative
amendments.
The Explanatory Memorandum states that the
changes proposed in the Bill are intended to facilitate two
outcomes:
- to encourage the more effective management of fuel supply risks
by those persons or organisations that have the capacity to do so,
and
- to ensure that the Act s administrative arrangements remain
efficient, effective and sufficiently flexible to deal with the
many different circumstances that could require the exercise of the
Government s powers under the Act.(7)
On 29 March 2007, the Senate referred the
Liquid Fuel Emergency Amendment Bill 2007 to the Economics
Committee for
inquiry and report by 8 May 2007. As at 1 May 2007, only one
submission had been received, from the Australian Institute of
Petroleum (AIP). AIP is an industry association, its core member
companies being BP Australia Pty Ltd, Caltex Australia Ltd, Mobil
Oil Australia Pty Ltd and Shell Company of Australia
Ltd.(8) AIP, in its submission and at public hearings,
indicated it had been consulted extensively at all stages of the
review of the current legislation and was in broad support of the
Bill.
Apart from the AIP submission to the Senate
inquiry, there does not appear to be any public comment on the Bill
from interest groups, media commentators or from the opposition and
minor parties.
The Explanatory Memorandum states that the
Bill has no financial impact.(9)
Discussion of the main provisions is according
to themes rather than by item numbers.
Parts II and III of the LFE Act deals in the
main with Ministerial powers to issue directions for both the
planning of and managing a liquid fuel emergency. The Bill repeals
a number of the provisions dealing with Ministerial directions
(i.e. sections 9 15 and 17 24) and rewrites them so that they
conform with the Legislative Instruments Act 2003.
The Legislative Instruments Act commenced on 1
January 2005 and was designed to establish a comprehensive regime
for the registration, tabling, scrutiny and sunsetting of
Commonwealth legislative instruments .
The Legislative
Instruments Act defines a legislative instrument as a written
instrument:
- that is of a legislative character; and
- that is or was made in the exercise of a power delegated by the
Parliament.
If an instrument
is a legislative instrument then, in general, it must be registered
in the Federal Register of Legislative Instruments, tabled in
Parliament, is subject to parliamentary scrutiny and disallowance
and is subject to sunsetting (i.e. automatic repeal 10 years after
it commences or is required to be registered.)
Not all
instruments are legislative instruments for example, they may not
be legislative in character, the Legislative Instruments Act may
identify them specifically as not being legislative instruments,
their primary legislation may declare them not to be legislative
instruments or the Attorney-General may certify that they are not
legislative instruments.
The Bill provides
that a number of instruments made under it are not legislative
instruments. In particular, the following Ministerial directions
are not legislative instruments.
Ministerial
directions:
- identifying bulk customers of fuel industry corporations
(new subsection 10(1))
- identifying essential users of refined liquid petroleum
products (new section 11)
- directing relevant fuel industry corporations to maintain
reserve supplies of liquid fuels (new subsection
12(1))
- approving the bulk allocation procedures of relevant fuel
industry corporations (new subsections 13(5) and
(7))
- directing relevant fuel industry corporations to make available
statistical information they are required to maintain (new
subsection 14A(1))
- directing relevant fuel industry corporations to maintain and
accumulate specified quantities of reserve supplies of liquid fuels
during a period of national liquid fuel emergency (new
subsection 17(1))
- directing relevant fuel industry corporations to transfer
specified quantities of liquid fuel during a period of national
liquid fuel emergency (new subsection 18(1))
- directing relevant fuel industry corporations to make available
specified quantities of liquid fuel available for purchase during a
period of national liquid fuel emergency (new subsection
19(1))
- directing relevant fuel industry corporations to produce
specified quantities and/or types of liquid fuel during a period of
national liquid fuel emergency (new subsection
20(1)).
Under the
Legislative Instruments Act, the default commencement date of a
legislative instrument is the beginning of the day after
it is registered (subsection 12(2)). This rule is subject to any
contrary provision in the enabling legislation.
Many of the new
provisions in the Bill have been exempted from subsection 12(2) of
the Legislative Instruments Act so as to enable certain legislative
instruments to take effect prior to their registration. For
example, under the re-written sections such as new sections
10 14A, 17, and 20 24, the Minister is required to make
guidelines to assist decision makers when exercising their powers
of issuing directions in relation to liquid fuel emergency planning
and procedures. These guidelines are exempted from subsection 12(2)
of the Legislative Instruments Act, and are to take effect
prior to registration the stated rationale being that the
Minister may need to revise and amend the Guidelines to respond
quickly to changing circumstances, such as where the circumstances
of the emergency had not been previously contemplated and the
existing Guidelines cause an unforeseen and/or unintended
effect.(10)
Several of the
legislative instruments that are to be made under the Act will not
be subject to the disallowance or sunsetting provisions of the
Legislative Instruments Act. In particular, these are Ministerial
directions to:
- relevant fuel industry corporations to develop procedures that
will enable the allocation of bulk supplies of a particular fuel
product (new section 13)
- relevant fuel industry corporations and relevant persons to
maintain specified statistical information relating to liquid fuels
in their possession or under their control (new section
14)
- relevant fuel industry corporations to institute a bulk
allocation procedure that was approved under section 13 in order to
make certain amounts of fuel available to bulk customers
(new section 21)
- relevant persons to institute a bulk allocation procedure which
is specified in the direction to make certain amounts of fuel
available to bulk customers (new section 22)
- regulate or prohibit the supply of fuel by a relevant fuel
industry corporation to particular persons or to persons generally
(new section 23)
- regulate or prohibit the supply of fuel by a relevant person to
particular persons or to persons generally (new section
24)
The effect is that these directions can not be
disallowed by the Parliament and will remain in force until they
end or are revoked by the Minister.
Existing section 41 deals with Parliamentary
disallowance procedures for instruments made under the Act.
Item 77 repeals section 41 as it encompasses
procedures that predate the Legislative Instruments Act
2003. Item 77 also inserts new
sections 41 and 41A. New section 41
confirms that guidelines under the Act may be made at any time
(whether or not during an emergency). New section
41A is another confirmation clause stating that where the
Act grants a power to make directions, guidelines and other
instruments, this also includes the power to vary or revoke those
instruments. Item 82 is a related amendment.
Under existing section 11, the Minister has
the power to identify essential or high priority users for the
purpose of providing them with priority access to fuel during a
national liquid fuel emergency. Item 14 rewrites
section 11. Amongst other things it removes the concept of high
priority user(11) and tightens the definition of
essential user.
Under existing section 11, the Minister may
identify essential or high priority users where their activities
relate to:
- the defence of Australia
- the provision of fuel for ships and aircraft engaged in trade
or commerce, both domestic and international
- the export of liquid fuels from Australia, and
- activities that the Minister determines to be activities of
national significance .
New subsection 11(3) retains
the first three categories of users but removes users involved in
activities that the Minister determines to be of national
significance. Instead, the Minister may identify an essential
user where satisfied that the user undertakes activities which are
essential to the health, safety and welfare of the
community .
The stated purpose of this amendment is to
provide a clearer indication of the types of activities that are
going to receive priority access to fuel in the event of a fuel
supply disruption. The Explanatory Memorandum states:
The change sends a clear signal to fuel users
that, unless they clearly fall within the definition, they will not
be given priority access to scarce liquid fuels and should take
whatever steps they deem necessary to mitigate a future supply
disruption.(12)
The AIP, in its submission to the Senate
inquiry, supports this change and states that discussions are well
advanced between Commonwealth and State/Territory governments to
develop an agreed schedule of essential users.(13)
The LFE Act provides that the Minister may
issue directions to certain fuel industry participants to achieve
the objectives of the Act. For example such directions could
require an oil refinery to maximise its production of particular
fuels, or could require a fuel distributor to transfer its products
from one location to another. Where such directions incur costs
that would otherwise not have been incurred, the Act makes
provision for compensation. Items 83 and
84 amend section 46, one of these compensation
provisions. The effect is that the right to compensation is removed
for persons that suffer loss, injury or damage as a result of
complying with a direction issued during a national liquid
fuel emergency. Compensation would still be available for such loss
suffered as a result of complying with a direction issued during
the planning period prior to the emergency (i.e. under
Part II of the Act). However such compensation would no longer take
into account the loss of the community at large and the
compensation would only be payable where the loss can not be
recouped from the market (new subsection
46(2)).
The Explanatory Memorandum explains the
rationale for this change arguing that providing for Part II
compensation (but not Part III compensation) is more equitable and
would reduce the burden of compensation on the
Government.(14)
There are several amendments to the penalty
provisions that reflect more up-to-date drafting practices.
For example, item 66 repeals
and replaces subsection 34(1), the pecuniary penalty provision. It
separates the concepts into three separate subsections, changes
references from dollar penalties to penalty units and updates
references to the various sections of the Act which, if breached
may attract a pecuniary penalty. New subsection
34(1A) provides that in determining the pecuniary penalty,
the Court must have regard to all relevant matters including the
nature and extent of the contravention, its consequences, the
circumstances in which the contravention took place and the
previous conduct of the person. Item 68 repeals
the existing references to Part 2.4 of the Criminal Code
(dealing with attempt, conspiracy etc) and sets out in new
subsection 34(3) the specific activities that are
sufficient to contravene a civil penalty provision. If a
person:
- attempts to contravene a civil penalty provision
- encourages, assists or induces a third person to contravene a
civil penalty provision
- has been knowingly involved in a contravention of a civil
penalty provision or
- conspired with others to contravene a civil penalty
provision
they will be taken to have contravened the
provision.
Items 1, 11, 39, 48, 54, 59, 66
72 and 74 make amendments that update the
references to offences under the Act and insert the term civil
penalty provision in preference to the term relevant provision of
this Act . Pages 31 to 35 of the Explanatory Memorandum provide a
useful list of the offences against the Act and the relevant
offence provisions in the Crimes Act 1914.
There are other proposed amendments to the
enforcement provisions, for example:
- search warrants are to be issued by a magistrate rather than a
justice of the peace (item 56), and
- the powers of authorised officers(15) in relation to
inspection and seizure are clarified (items 31, 36, 54, 56,
61 and 64 and 65).
Directions issued during a national liquid
fuel emergency may cause a breach of contract. Existing section 47
provides immunity from legal action for a breach of contract in
these circumstances. Items 86 and
87 have the effect of extending this exemption so
that directions issued prior to a national liquid fuel emergency
(i.e. directions issued under Part II of the Act) would be immune
from legal action for a breach of contract.
Section 44 provides a regime for the review of
decisions made under the Act. Item 80 amends this
section by updating the list of reviewable decisions to reflect the
redrafting and renumbering of provisions in the Bill. Page 57 of
the Explanatory Memorandum provides a useful list of the decisions
that would be reviewable. It is of interest that the Government did
not support the Review s recommendation to exclude Ministerial
directions from review.(16)
Item 79 repeals and replaces
section 43. The effect of new section 43 is to
provide an exemption from prosecution for a breach of Part IV of
the Trade Practices Act 1974 where the conduct was
required by a direction under the Liquid Fuel Emergency Act. Part
IV of the Trade Practices Act deals with anti-competitive conduct.
This amendment is a response to concerns in the petroleum industry
that any uncertainty associated with the Trade Practices Act be
removed so that pro-active rather than cautious preparatory work
can be undertaken to mitigate the effects of a liquid fuel
emergency.(17)
As stated above, the purpose of the Act is to
equip the Commonwealth Government with the authority needed to
prepare for and handle a national liquid fuel supply emergency.
This is to be done in close cooperation with the governments of the
States and the Territories. In 1984, at the time of introduction of
the Act, the Australian Capital Territory had not become a
self-governing entity and therefore was not referred to in the Act.
Items 3 6, 8, 13, 18, 30, 92 and
98 propose amendments to include references to the
Australian Capital Territory in its own right.(18)
Section 49 deals with the Minister s power of
delegation. Amongst other things, it provides that the Minister may
delegate any powers under the Act, apart from those powers listed
in paragraphs 49(1)(a), (b) and (c). Item 88 96
make several amendments to this section, the most significant being
a new power of further delegation. Specifically new
subsection 49(2) provides that a delegate of the Minister
under subsection 49(1) may further delegate any of his or her
delegated powers or functions to another person. This power of
further delegation must be done with the Minister s approval
(new subsection 49(3)).(19)
Minor drafting amendments include:
- replacement of references to servant with employee (for example
items 75 and 76)
- replacement of references to matter with article (for example
paragraph 31(1)(e) provides that an authorized person may inspect
any land, premises, vehicle, ship aircraft, matter or
thing for the purposes of determining whether an offence under the
Act has been committed. Item 49 proposes to amend
this so that an authorised person may inspect any [ ]
article or thing.
- replacement of the word authorized with authorised (for example
items 45 47, 58 and 61)
- removal of gender specific language throughout the LFE Act
(Schedule 2).
Endnotes
-
Hansard, House of Representatives, 24 August, 1983, p. 156.
-
Explanatory Memorandum, p. 7.
-
ACIL Tasman, Review of the Liquid Fuel Emergency Act
1984, p. 1.
-
Explanatory Memorandum, p. 7.
-
ibid.
-
NOSEC is a committee established by the Federal, State and
Territory Governments to formulate an overall response to a
widespread fuel shortage. NOSEC comprises officials from the
Australian, State and Territory Governments and the oil industry,
and reports to the Ministerial Council on Energy.
-
Explanatory Memorandum, p. 2.
-
AIP, Submission to the Inquiry into the Liquid Fuel Emergency
Amendment Bill 2007, 19 April 2007, p. 2.
-
Explanatory Memorandum, p. 2.
-
ibid., p. 47.
-
Australian Government Response to Review Recommendations,
recommendation 19.
-
Explanatory Memorandum, p. 38.
-
AIP, Submission to the Inquiry into the Liquid Fuel Emergency
Amendment Bill 2007, 19 April 2007, p. 6
-
Explanatory Memorandum, p. 23.
-
The Explanatory Memorandum states that authorised officers would
normally be police officers in the relevant jurisdiction.
-
Australian Government Response to Review Recommendations,
recommendations 23 and 24.
-
ACIL Tasman, Review of the Liquid Fuel Emergency Act
1984, p. xix.
-
This implements recommendation 25 of the ACIL Tasman Review.
-
This implements recommendation 27 of the ACIL Tasman Review.
Mary Anne Neilsen
7 May 2007
Bills Digest Service
Parliamentary Library
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ISSN 1328-8091
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