Bills Digest no. 176 2008–09
National Greenhouse and Energy Reporting Amendment Bill
2009
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
Concluding comments
Contact officer & copyright details
Passage history
Date
introduced: 18 March
2009
House: House of Representatives
Portfolio: Climate Change and Water
Commencement:
On the 28th day after
Royal Assent
Links: The
relevant links to the Bill, Explanatory Memorandum and second
reading speech can be accessed via BillsNet, which is at http://www.aph.gov.au/bills/.
When Bills have been passed they can be found at ComLaw, which is
at http://www.comlaw.gov.au/.
The Bill proposes minor
amendments to the National Greenhouse and Energy Reporting Act
2007 (the Act) to enhance the robustness of its operation
making it more consistent with the original policy intent by:
- clarifying the definition of certain key operational terms
relating to greenhouse and energy audits conducted under the
Act
- making it a requirement that the results of greenhouse and
energy audits be included in the National Greenhouse and Energy
(corporation) Register
- broadening the secrecy provisions to include audit
information
- enabling a decision by the Greenhouse Data Officer (GEDO) not
to register an auditor under the Act to be reviewed by the AAT
- expanding the scope of guidelines that may be determined by
legislative instrument (pursuant to section 75 of the Act) to
include requirements for the preparation, conduct and reporting of
audits, and for these determinations to be made by the Minister
rather than the GEDO
- requiring potential auditors to register with GEDO and
providing for detailed conditions on auditor registration to be
made by way of regulations and a legislative instrument to be
determined by the GEDO; and
- removing the obligation for the GEDO to publish corporate level
energy production information, due to difficulties in providing
meaningful corporate level totals .
The Act, passed in September
2007, established a national mandatory corporate reporting system
for, and dissemination of information related to, greenhouse gas
emissions, energy use and production. The reporting obligations
under section 24 of the Act provide useful public information and
serve as an important guide for government policy; also laying the
foundation for the proposed national Carbon Pollution Reduction
Scheme.[1] The first
reporting year under the Act commenced on 1 July 2008. By August
2008 many of the largest corporate groups in Australia began
compiling data to comply with the Act, which made emissions
registration and reporting mandatory for controlling corporations
whose corporate groups produce energy or consume energy at or above
specified quantities over a financial year (1 July to 30 June).
Corporations may also voluntarily register if they are undertaking
a greenhouse gas emissions reduction project.
According to the Department
of Climate Change s website: [2]
By the 2010-11 reporting period the legislation
is expected to cover around 700 medium and large
corporations.
The reporting system will improve data coverage
to over 70% of greenhouse gas emissions in the
covered sectors.
Lower thresholds for corporate groups will be
phased in by 2010-11. The final thresholds will be 50 kilotonnes of
greenhouse gases (CO2 equivalent) or 200 terajoules of
energy.[3]
It is expected that a
significant number of companies required to report in the third
phase (2010-2011) may lack the requisite reporting experience and
make costly errors in their calculations and thus reporting.
The system is backed up by a
variety of tough pecuniary penalties for a failure to register and
report, and there is also the potential for personal liability for
CEOs under certain circumstances. The penalties highlight the
significance of diligent bona fide reporting for the purposes of
effective policy planning.
Ensuring the highest
integrity of the data produced under this system will better enable
analysts and the market to meaningfully assess the impact of
companies' emissions profiles on their valuations following the
introduction of the Government s proposed Carbon Pollution
Reduction Scheme.
In October 2008 the
Department of Climate Change released The National Greenhouse
and Energy Reporting Act and Carbon Pollution Reduction Scheme
External Audit Consultation Paper[4] to the public
for comment. The paper proposed options for the development of
external auditor regulations and an external audit guidelines
legislative instrument under the NGER Act. Organisations and
individuals were invited to provide feedback on the approaches
suggested by the paper by 14 November 2008. Also, External Audit
Workshops were held on the consultation paper in a number of
capital cities during October 2008. Just under 300 people attended
the workshops and 58 written submissions were received on the
consultation paper.[5] The outcomes of the consultation were used to inform a
number of amendments to the NGER Act, required to strengthen the
audit framework to provide for more robust reporting under both the
NGER Act. This will assist with meeting Australia s international
obligations and is a key component of the Government s proposed
Carbon Pollution Reduction Scheme.
In February 2009, the Department of Climate Change released an
exposure draft of the Bill for public consultation for a one week
period commencing 23 February 2009. 22 formal submissions were
received, focusing mainly on the technical details of the Bill and
were reportedly supportive of the proposed amendments.[6] Following this, the
Department stated that it:
is in the process of developing draft
regulations and a legislative instrument to outline the detail of
the audit framework to be developed under the NGER Act. Further
public consultation on this subordinate legislation is planned for
May/June 2009 for a four week period.[7]
On 19 March 2009 the Bill
was referred to the Senate Finance and Public Administration
Committee for inquiry. The Committee reported on 7 May 2009.
Details of the inquiry are at
http://www.aph.gov.au/Senate/committee/fapa_ctte/national_greenhouse_energy_reporting/index.htm
The final conclusion of the
committee:
[ ] notes that much of the detail of the
legislation will depend on the development of regulations and
legislative instruments referenced in the amendments. The committee
encourages the department to ensure that adequate consultation
continues in the formulation of these regulations and legislative
instruments.[8]
The Explanatory Memorandum states
that the Bill will have no financial impact.
Items 1-3 and 5-6 propose the
following definitions be inserted into section 7
of the Act:
audit
information: means information obtained
by or on behalf of an audit team leader in the course of carrying
out a greenhouse and energy audit . This clarifies the information
that will enjoy protection by the secrecy provisions provided for
in the proposed amendment to section 23 of the Act.
audit team leader: means a
registered greenhouse and energy auditor appointed to carry out a
greenhouse and energy audit . They will be responsible for the
overall conduct of the audit. Their tasks typically include:
providing briefing about the scope, details of the audit, and
signing-off on the audits conducted pursuant to the Act.
audit team member: a person
assisting the audit team leader to carry out the audit . Reference
to an audit team member is designed to provide for flexibility to
be used in selecting persons with cross-disciplinary expertise to
be valuably and appropriately used in confidently conducting a
successful meaningful audit.
greenhouse and energy audit:
means an audit under any of sections 73 to 74A of the Act. The
Explanatory Memorandum points out that the term auditor is used as
a generic indicator of the activity to be performed and does not
have the same meaning as auditor under the Corporations Act
2001.[9]
registered greenhouse
and energy auditor: an individual
registered in the register of greenhouse and energy auditors kept
under section 75A .
Publication of results of greenhouse and energy
audits
Item 7 amends paragraph
16(4)(b) so that the results of a greenhouse and
energy audit carried out in relation to a corporation must be made
public by the GEDO. The significance of this lies in its
contribution to transparency, accountability and reliability of
data. Currently, the regulator does not have the power to make
audit results publicly available. However, what (level) of
information may be made available will be dealt with by regulations
which will be tailored to take account of issues such as
commercially sensitive information.
Guarding against breaches of commercial
confidence
Item 8 amends paragraph
23(1)(a) so as to deal with potential commercial breaches
by making it an offence to release audit information , other than
for the purpose of the Act or other Commonwealth, state and
territory laws.
Furthermore, under proposed paragraph 23(2)(d)
audit team members will be required to keep greenhouse and energy
information and audit information obtained under the Act
confidential (item 10).
AAT review of refusal to register auditor
Item 15 enhances transparency and
accountability by enabling the Administrative Appeals Tribunal
(AAT) to review decisions by the regulator not to register an
individual as an auditor in the register of greenhouse and energy
auditors (proposed paragraph 56(j)).
Appointment of Auditors
Item 17 enables the GEDO to provide a list of
possible auditors (rather than only specifying a particular
auditor) in a written notice requiring that a corporation undertake
an audit (proposed paragraph 73(2)(a)).
Audit Specification
Item 21 imposes an obligation by the GEDO to
specify the type of audit that is to be undertaken, as well as an
existing obligation such as stating the matters to be covered by
the audit in any notice provided by the GEDO (proposed
paragraph 73(3)(a)).
Auditor Assistance and Facilities
Item 22 the proposed amendment to
paragraph 73(4) is designed to make it clear that
a corporation is to provide all reasonable facilities and
assistance necessary for the effective exercise of duties of the
auditor to all members of the audit team [emphasis added].
The amendment however, is silent as to what may be included under
the rubric of reasonable facilities and assistance . While this
phrase is commonly used in other pieces of Commonwealth legislation
without elaboration, it may be useful to provide some guidance in
this context for practical purposes.
Power to audit information under section
20[10]
Item 24 ensure that entities providing
information to the GEDO pursuant to section 20 of the Act are also
subject to audit provisions (proposed section
74A). Item 34 mirrors this amendment.
Legislative instruments and audit
requirements
Item 35 expands the scope of guidelines that
may be determined by legislative instrument to include requirements
for the preparation, conduct and reporting of audits and making
these subject to ministerial rather than the GEDO determination
(proposed section 75). The instrument provides
opportunity for flexibility in tailoring for different audit
requirements.
Item 36 provides that a Minister may determine
by legislative instrument, requirements to be met by audit team
leaders in preparing for and carrying out greenhouse and energy
audits and in preparing audit reports. The Ministerial
determination may set out different requirements for different
types of audits (proposed section 75).
Auditor registration
Item 37 creates a requirement that auditors
register with GEDO and provides detail of the registration
requirements (proposed section 75A). Requirements
for registration are that an individual:
- has applied for registration in accordance with
regulations;
- meets such requirements as to qualifications, knowledge,
expertise, competence, independence, and
- other matters as are set out in the regulations or in a
legislative instrument made under the regulations.
It is unclear as to whether the requirement of auditor
independence (sufficiently) covers the issue of conflict of
interest, and if not, then whether this needs to be included in the
legislation or may be dealt with by way of legislative
instrument.
Publication of corporate total levels of
production
Item 37 proposes that paragraph
24(1)(c) of the Act be repealed, thus removing the
obligation of the GEDO to publish corporate level totals of energy
production because of the difficulties in providing meaningful
corporate level totals . This is significant because as the
government s consultation paper explains:
the current use of the term totals in section
24(1) of the Act means all energy produced or manufactured in a
corporation s group will be aggregated for public disclosure by the
GEDO. This could result in an overestimation (or double counting )
of energy produced.[11]
Members, Senators and Parliamentary staff can obtain further
information from the Parliamentary Library on (02) 6277 2404.
Juli Tomaras
19 June 2009
Bills Digest Service
Parliamentary Library
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