Chapter 2 - Issues raised in the inquiry
Introduction
2.1
All stakeholders supported the development of a national greenhouse gas reporting
scheme. The Australian Industry Greenhouse Network (AIGN), representing
industry associations and corporations, stated that:
AIGN members have long supported the need to develop a rigorous,
transparent, nationally consistent, energy and greenhouse reporting system,
underpinned by purpose built Commonwealth legislation.[1]
2.2
Environmental groups were also supportive. The Australian Network of
Environmental Defender's Offices (ANEDO) stated that '[it] has consistently
supported proposals for comprehensive and transparent public reporting of
greenhouse gas emissions'.[2]
State governments also indicated their support. The Victorian government for
example stated that:
The implementation of a national mandatory emissions reporting
system is a critical building block in the introduction of a national emissions
trading scheme. The Victorian Government supports the development of the most efficient
emissions reporting system that imposes the least cost and least regulatory
burden on business. [3]
2.3
However, several significant specific issues were raised by a range of
groups and these are discussed below.
Clause 5
2.4
A number of submissions raised concerns regarding clause 5 of the bill,
which, according to submitters, appears to provide the Commonwealth with the
power to override and exclude existing state and territory greenhouse and
energy measurement and reporting programmes for the purposes of the Act. Clause
4 of the bill sets out the constitutional bases of the bill as paragraphs
51(xi), (xx), (xxix) and (xxxix) of the Constitution.
2.5
In his second reading speech, the minister stated that the bill would 'eliminate
duplicative reporting and reduce red tape currently imposed by the patchwork of
separate state, territory and national reporting schemes'.[4]
Clause 5 of the bill states that, at a date to be proclaimed, the Act would
exclude the operation of some state and territory laws. Subclause 5(2) sets out
the scope of the exclusion, being all laws of a state or territory which
provide for reporting or disclosure of information related to:
- greenhouse gas emissions: or
- greenhouse gas projects; or
- energy consumption; or
- energy production;
so far as they apply in
relation to a constitutional corporation.
2.6
Subclause 5(3) allows the minister to determine, by legislative
instrument, that a state or territory law is not excluded by the operation of
clause 5.
2.7
State and territory reporting schemes will be excluded from operation so
long as they fall within the categories set out in clause 5, regardless of
whether they require different or more detailed information from the scheme set
out in the bill. To help offset the transfer of the management of a national scheme
to the Commonwealth and move reporting obligations away from the states and
territories, subclause 19(9) of the bill stipulates that regulations made for
the purposes of a report or part of a report may specify information that a
state or territory has requested the Greenhouse and Energy Data Officer to
collect. This clause provides the opportunity for the states and territories to
request that reports to the Commonwealth include certain information, such as
that currently required by their existing reporting schemes. The inclusion of
such information at a state or territories’ request is ultimately decided by
the minister, and the minister is not bound by the bill to fulfil such
requests. The explanatory memorandum states that:
The Government’s intention is to apply this subclause
judiciously and to work cooperatively with states and territories to ensure
that programme needs can be met in the most efficient way.[5]
2.8
State governments highlighted some specific concerns about the impact of
clause 5 upon their activities. The submission from the South Australian
government was concerned that clause 5 of the bill had far-reaching
consequences for the states and territories. They stated:
Taken in isolation, clause 5 can be viewed as the implementation
of the streamlining agreed by all jurisdictions as being desirable and
necessary. However, when considered in the context of the rest of the
legislation, it has the potential to disrupt legitimate activities being
undertaken by other jurisdictions, which were never intended to be prohibited
by this legislation.[6]
2.9
The South Australian government also concluded that clause 5 could
affect the relationship between the state governments and incorporated
entities, that the regulatory role of some corporations might be adversely
affected, as would the state government's ability to acquire information from its
own corporations to make decisions about its own emissions profile.[7]
2.10
Other governments had similar concerns. The Western Australian
government suggested that the bill was in contravention of the spirit of the
Intergovernmental Agreement because:
Clause 5 ...gives the Commonwealth Minister complete control over
all reporting of greenhouse gas emissions and projects, energy consumption and
energy production by constitutional corporations to the exclusion of existing
and future State laws that enable or require the collection of emissions and
energy information.[8]
2.11
The State Government of Victoria went further and argued that:
Clause 5 of the legislation has the potential to impact more
widely than just the reporting of greenhouse and energy data from business to
Government. This clause potentially impinges on States’ abilities to
efficiently provide essential services such as the safe and reliable provision
of energy. References in clause 5 to the dissemination of energy use and
production information raise serious questions about possible impacts to the
operation of the national electricity market.[9]
2.12
The Queensland government specifically drew attention to the potential
for clause 5 to restrict the government's capacity to 'implement its own
legislation, policy and programs to combat climate change'[10],
while the Tasmanian government pointed out that:
The device of providing for the reinstatement of State
legislation at the discretion of the Commonwealth Minister has the perverse
effects of giving the Federal Minister power of veto over State programs and
functions ranging from resource development, planning and development controls,
energy regulation, energy planning, infrastructure planning, and climate change
policy and programs.[11]
2.13
Similarly, the NSW government was concerned that clause 5 unreasonably
excluded state and territory legislation, leaving state and territory governments'
climate change policy developments exposed to the discretion of the
Commonwealth minister and the Greenhouse and Energy Data Officer (GEDO).[12]
2.14
It was not only the state and territory governments that were concerned
about the effects of clause 5 of the bill. The Chamber of Commerce and Industry
of Western Australia submitted in relation to clause 5 that:
Whilst CCI strongly supports the intent of the bill to eliminate
overlap, duplication, inconsistency and conflicts in greenhouse emissions and
energy reporting, we caution against any unintended consequences, such as the
preclusion of states from regulating their own energy markets or developing
policy.[13]
2.15
Concern was also raised that clause 5 could slow down the deployment of
low emission and renewable energy technologies, by stymieing state or territory
schemes designed to facilitate such innovation.[14]
2.16
Constitutional law expert Professor George Williams remarked:
that by denying an effective operation to state and territory
laws providing for reporting and disclosure this will prevent those
jurisdictions from enacting carbon trading or other schemes. Section 5 may
strike at the heart of such schemes and prevent them from being put into place.
The Commonwealth may well not wish to operate such a scheme, but until it
actually establishes its own regime it should not provide legislation denying
the states information vital to their own.
Section 5 should be removed from the Bill. Section 109 of the
Constitution... regulates where a federal law cannot operate consistently with a
state law. It provides a sufficient mechanism for dealing with such conflicts
without needing a Commonwealth Bill to cover the field so widely as to
undermine any related state laws.[15]
WWF-Australia was of the same view.[16]
2.17
Professor Williams described the clause as unusual and inconsistent with
a cooperative approach to federalism. He noted that an effect of the clause
could be actually to prevent state governments gathering information from their
own entities, such as state-owned power generators, where they are
corporations. He raised the prospect of significant uncertainty resulting in expensive
legal advice and possible litigation in the High Court.[17]
Tasmania also expressed concern that the current design of clause 5 was
undesirable because any oversight in Commonwealth exemptions under clause 5(3)
might only emerge in subsequent legal proceedings.[18]
2.18
Professor Williams noted that one of the advantages of taking an
alternative cooperative approach is that it could allow inclusion of entities
other than constitutional corporations that could and should report.[19]
These might include local governments, non-trading corporations, large
non-government organisations that might be significant energy consumers, as
well as partnerships and sole traders, including many businesses in the
agricultural sector.
2.19
Professor Williams, while favouring the deletion of clause 5, also suggested
that an alternative formulation of it would allow the exclusion of state laws
only when they fell within the scope of regulations made under the bill. This
would effectively involve 'reversing the operation 180 degrees', so that
regulations would be made to exclude state laws, rather than having to exempt
them under clause 5(3).[20]
The Tasmanian, South Australian and Western Australian governments also
supported this approach.[21]
2.20
The Nature Conservation Council of NSW expressed concern that the clause
might have the capacity to actually inhibit environmental reporting
initiatives:
It appears this will provide the Environment Minister with the
power to stop the operation of valuable schemes like the NSW Renewable Energy
Target and the Greenhouse Gas Abatement Scheme. Without the ability to require
reporting it is difficult to see how these schemes could continue operation or
measure whether they are being successful.
We believe it is a highly inappropriate use of Federal
Government powers to stop the operation of State based schemes aimed at
reducing greenhouse gas emissions and protecting our environment for future
generations. This is particularly true given the Mandatory Renewable Energy
Target has not been extended and the proposed Federal Emissions trading Scheme
would not commence operation for 4 to 5 years. We are very concerned that this Bill
would stop programs that have shown some success given the scale of rapid
action needed to prevent dangerous climate change. Section 5 should therefore
be removed from the Bill.[22]
2.21
ANEDO and a number of environment groups warned against clause 5
resulting in a 'lowest common denominator approach that weakened existing
schemes.[23]
States indicated that the bill would have the capacity to slow down greenhouse
gas abatement programs, though this could depend on the details of the
regulations, and how clause 5 was implemented.[24]
South Australia expressed concern that giving the current clause 5 effect could,
for example, present a challenge to implementing recent South Australian
legislation on greenhouse targets.[25]
In contrast, the intention that had been expressed in the COAG Plan on climate
change was that a possible national reporting system would 'strengthen
emissions reporting approaches'.[26]
2.22
While there were concerns about clause 5, the committee emphasises that
these were expressed in the context of widespread desire (including from state
governments) to see removal of regulatory duplication. The Waste Management
Association of Australia (WMAA) supported 'the Bill's exclusion of similar
regulatory reporting obligations'.[27]
Others generally supported the removal of duplicative reporting requirements.[28]
State governments indicated that a number of issues raised by them could
potentially be dealt with in regulations, but expressed concern that clause 5
was not tenable in its current form.[29]
Clause 5 and the limits of
Commonwealth power
2.23
The Constitution gives the Commonwealth power to make laws in many
areas, including in respect of corporations. At the same time, the Constitution
clearly envisages the ongoing independent capacity of both Commonwealth and the
states to exist and exercise powers. The extent to which each level of
government may be immune from each other's laws is referred to as
intergovernmental immunity.[30]
The resolution of conflict between state and Commonwealth laws is a matter of
inconsistency of laws.[31]
The committee recognises that constitutional issues, particularly in relation
to intergovernmental immunities and inconsistency of laws, must be taken into
account in the drafting of the current bill. The extent of the Commonwealth's
powers in these respects has been discussed in numerous High Court cases,
including Melbourne Corporation v Commonwealth (the Melbourne
case),[32]
Queensland Electricity Commission v Commonwealth[33]
and Austin v Commonwealth.[34]
2.24
The committee received no direct evidence in relation to the
implications of the Melbourne case and intergovernmental immunities in
relation to the current bill. However the committee did receive evidence on
some of the issues to which case law in this field speaks. Professor Williams
noted that clause 5 may impact on state utilities:
It is true that certain state agencies can be constitutional
corporations, particularly utilities, water authorities and the like, and this
might prevent the states collecting information from their own bodies where
those bodies are engaged in the energy industry. That itself seems to be me to
be clearly overbroad.[35]
2.25
Some states echoed this concern:
Some government instrumentalities are also constitutional
corporations, and so you could have a situation where the state government
needed to go to the Commonwealth government to ask about greenhouse gas
emissions from its own instrumentalities.[36]
...we are concerned that the bill contains certain provisions that
could effectively restrict the ability of the state and territory governments
to take action to address climate change and energy related matters. In
particular, the Victorian government is concerned that the bill in its current
form may limit important state functions, particularly those where we have
powers to provide essential services. An example of that would be the operation
of energy markets as set out in Victorian legislation under the Electricity
Industry Act 2000 and the Gas Industry Act 2001 and other matters that are
currently being progressed through the national energy reform agenda. It also
limits, we believe, state functions in respect of environmental assurance
processes such as the Environment Protection Authority’s works approvals and
licensing system and sustainability covenants, and also environmental effects
statements as required under relevant Victorian state statutes for major
projects and other activities.[37]
2.26
State utilities reporting to state governments are likely to be
constitutional corporations, and thus potentially subject to clause 5. The
possibility that a state-controlled entity might be prevented from reporting to
its state government may be a circumstance in which intergovernmental immunity,
as expressed in the Melbourne case, might be an issue. A
cooperative approach to the law in this area could obviate such concerns.
2.27
The committee notes that the bill has clauses explicitly designed to
allow the gathering of data at the request of state or territory governments
(clause 19), and the conveying of that information to governments once gathered
(clause 27). Whether the discretionary nature of these clauses (discussed
separately by the committee below) could have a bearing on the validity of
clause 5 is not something that was discussed during this inquiry.
2.28
The committee does not wish, and is not qualified, to explore the
constitutional law in any detail. However it notes that the basic principle
enunciated in the Melbourne case is that the Commonwealth's power to
legislate with respect to the states is limited by the 'federal system of
government which requires the existence of separate governments exercising
independent functions'.[38]
The committee notes that amendment of clause 5 of the bill so that certain
state laws might be excluded from operation, rather than its current
construction which would exclude a whole class of laws unless exemptions were
provided, would surely be a construction that has the potential to intrude less
into the operations of states than the current wording. The committee therefore
does not see intergovernmental immunity as a barrier to considering the
alternative construction of clause 5 advocated by many witnesses to this inquiry.
The priority should be to ensure a legislative foundation upon which
cooperation regarding streamlining greenhouse and energy reporting can continue
to be built.
The committee's view
2.29
The committee noted the Commonwealth's intention regarding clause 5,
expressed in the Explanatory Memorandum, 'is to work cooperatively with State
and Territory governments to transition towards a single reporting system
across all jurisdictions'.[39]
The committee supports the continuing cooperation between governments in implementing
a national greenhouse reporting scheme. It is pleased to note that all parties
remain committed to making progress with this initiative, and believes that
some fine tuning of clause 5 may help ensure that this cooperation continues.[40]
Recommendation 1
2.30
The committee recommends that clause 5 be re-drafted along the lines
proposed by Professor Williams and others, to have the effect that the minister
may by regulation exclude the operation of a state or territory law that duplicates
reporting under the national reporting scheme.
Interaction with existing Commonwealth laws
2.31
The WMAA sought clarification of how the bill would interact with the
Commonwealth's Energy Efficiency Opportunities Act 2006.[41]
The Western Australian government noted that the bill appeared not to exclude
duplicative Commonwealth laws, despite excluding state laws.[42]
2.32
The committee notes the Commonwealth's intention is to streamline its
reporting requirements under the new bill:
Senator MILNE—...Speaking of energy efficiency, how does this bill
interact with the Energy Efficiency Opportunities Act, which requires reporting
on energy efficiency opportunities and on measurement? How do these two pieces
of legislation overlap?
Mr Carter—We have sought to be consistent with the thresholds
and definitions of companies in the EEO legislation and we are looking also to
streamline that program into this reporting over time as well.
Senator MILNE—How will that operate? Can you explain what you
mean by that?
Mr Carter—In terms of the integration of it, all the reporting
requirements of EEO would eventually be met through the reporting requirements
under this legislation.[43]
Thresholds
2.33
The bill provides for certain thresholds for greenhouse and energy
reporting (clause 13), which were outlined in chapter 1.
2.34
Some submissions commented on the complexity of the threshold
arrangements. The Australian Petroleum Production & Exploration Association
(APPEA) argued that a simpler threshold methodology should be applied. The
Association argued that the threshold be set at >125
kilotonnes carbon dioxide equivalent or 500 TJ energy (reducing to > 50 kilotonnes carbon dioxide equivalent
over three years) and that this be set at a company level (with no facility
level threshold equivalent).[44]
2.35
The Australian Industry Group (AI Group) argued that the provisions
dealing with reporting triggers are 'confusing' with respect to the interaction
between different thresholds. The AI Group raised the following concerns:
Will the facility threshold also trigger the company-wide
threshold where the company falls below the company threshold? AI Group’s view
is that it should not. Will companies that trigger the facility and/or
corporate level energy threshold be required to report on their greenhouse
emissions even if they not they meet the threshold for direct emissions? AI
Group’s view is that they should not. Where a company triggers the
corporate-wide threshold but has 98% of its energy consumption on one site, is
it required to conduct audits of a number of small sites that are part of the
corporate group?[45]
2.36
The Australian Conservation Foundation (ACF) argued that the facility
level threshold has been set 'unnecessarily high' and should be reduced to 10
kilotonnes.[46]
The Nature Conservation Council of NSW also argued that the thresholds should
be lowered to capture more reporting by facilities, arguing that only
approximately 20 per cent of the facilities that report under the NPI will
be required to report under the proposed bill.[47]
The South Australian government also expressed concern that the thresholds set
by the bill are too high, pointing out that:
We are concerned about the companies that do not cross the
threshold—less than 50,000 tonnes a year still makes you a significant emitter.
It is roughly equivalent to spending $5 million a year on energy. So, a company
that is spending $4 million a year on energy is someone in our jurisdiction
that we would regard as worth bringing into the fold. We are concerned at the
ability that might be there in the final legislation for companies to use this
as a shelter to protect them from scrutiny.[48]
2.37
Victoria indicated that it hoped to work toward thresholds lower than
those in the bill in the area of energy efficiency programs.[49]
2.38
The Explanatory Memorandum noted that the proposed model introduces a 'greater
level of complexity' to the threshold design than has been considered in
previous consultations, however, the different elements are intended to address
the aims of maintaining a robust data set and minimising costs to business:
The company-level threshold is intended to exclude companies
with relatively low total emissions/energy use or production, while the lower,
facility-level threshold is intended to capture large facilities operated by
companies that do not trigger the company-level threshold, recognising the
significance of facility-level data to existing data collections.[50]
2.39
The Investor Group on Climate Change argued that phasing in of reporting
under the bill should be accelerated so that all facilities report in the
second financial year.[51]
The ACF also argued that the staged implementation of reporting obligations has
the potential to 'undermine' the timely introduction of a national emissions
trading scheme. [52]
2.40
The committee notes that reporting under the new national scheme appears
not to preclude the gathering of data for existing schemes, either through
parallel reporting during a transition period, or through ensuring relevant
data is gathered under regulations made under clause 19.
Reporting obligations
2.41
The Australian Industry Greenhouse Network expressed concern about the
reporting obligations under clause 19(1). While supportive of reporting
responsibilities under the bill, they sought greater clarity about the scope of
emissions captured by the clause. The clause requires reporting of greenhouse
gas emissions, energy production and energy consumption:
from the operation of facilities under the operational control
of the corporation and entities that are members of the corporation’s group,
during that financial year (emphasis added).
2.42
AIGN were concerned to get further clarification of this clause:
Senator WORTLEY—I was interested in this comment in your
submission:
AIGN has concerns about the lack of
clarity of Section 19(1)—
and you touched on that—
which requires a registered
corporation to report in respect of emissions, production and consumption from
facilities (defined) under its control “and entities that are members of the
corporation’s group”.
Would you be able to elaborate on that perceived lack of clarity
and shed some light on why you believe the reporting on those entities to be
unreasonably burdensome, given that your members supported the need for a
vigorous and transparent reporting system?
Mr Dwyer—To put it briefly, the concern is: do the thresholds
that are in the bill apply to all of the reporting by those controlled
entities? If you read that clause in one particular way, you can interpret it
to mean a situation where every single piece of information related to all
facilities under the control of that entity, regardless of their size, might be
captured, in which case you are getting down into potentially some very small
facilities with very burdensome reporting requirements. If it relates only to
those entities that breach the thresholds, whatever the thresholds may be in
the bill—and there are thresholds in there—and all of the reporting relates to
those facilities, then that is an outcome that we are supportive of.[53]
2.43
They advised the committee that DEW had provided them with some
reassurance.[54]
2.44
The Explanatory Memorandum and the second reading speech both describe
the scheme as based on emissions from facilities (defined in clause 9),
including when there is company-wide reporting.[55]
The department indicated that it was the intention of the bill to apply to both
facilities of corporations and facilities of entities that are members of the corporation's
group:
CHAIR—Is it the intention of clause 19(1) that corporations that
have met the threshold under clause 13 will report on emissions from facilities
under the operational control of the corporation and facilities under the
operational control of entities that are members of the corporation’s group? If
they meet the threshold, do they have to report on everything in the group?
Ms Barclay—Yes. Clause 19(1) allows for both facilities under
the control of a corporation and entities that are members of a corporation’s
group; 19(8) also allows for regulations to specify different requirements for
registered corporations that only meet one of the thresholds.[56]
2.45
The committee notes the capacity to modify the detail of reporting
requirements through regulations under clause 19(8).
Maintenance and dissemination of information
2.46
The bill provides that company-level data will be made publicly
available online by the national reporting system. For greenhouse gas
emissions, the basic level of disclosure will be a single aggregated total of
gross emissions in CO2-e.
Only total energy consumed and produced will be required for public disclosure.
Provision is made to publicly disclose additional data where the company had
given its consent or requested to do so.[57]
2.47
The ACF noted that the public disclosure of each company's emissions
will not necessarily be a specific quantitative value:
Section 24(3) of the Bill allows the relevant authority either
to report specific emissions levels for a corporation, or simply to report that
the corporation's emissions fall "within a particular range of
values". This kind of disclosure would not be particularly useful.[58]
2.48
Some submissions argued that greenhouse emissions and energy data should
be disclosed at the facility level.[59]
ANEDO stated that:
The community ‘right to know’ principle requires accurate
information at a facility level. The Bill must not allow aggregated totals of
corporate groups to subvert this principle. The Bill requires only total gross
GHG emissions and total energy produced and consumed to be made public. While
there is scope for companies to voluntarily provide more specific detail on
emissions, offsets, policies and initiatives, this would only be at the company
level, and is not mandatory.[60]
2.49
The department explained the rationale for providing that public
disclosure should be at a company level:
Concerning public right to know at a facility level, public
right to know generally applies to emissions that might be of the nature that
would have a potential local impact on people’s health or amenity, and
greenhouse gas emissions are a global impact rather than a localised impact.[61]
2.50
The bill provides that confidential data may be exempted from public
disclosure under certain circumstances. Some submissions argued that this
provision may undermine the quality of the publicly available data set as a
whole and undermine the public accountability function of the emissions register.[62]
The Australian Business Council for Sustainable Energy (BCSE) argued that where
commercially sensitive material is not published, there should be public
disclosure to this effect.[63]
Industry groups pointed to the importance of rigorous data confidentiality and
access protocols to protect the data required to be reported by corporations.[64]
DEW also noted that a major issue with disclosure at the facility level:
is the commercial-in-confidence nature of that. It can go
directly to the efficiency of production and their competitiveness with other
facilities.[65]
2.51
The Investor Group on Climate Change (IGCC) argued that the information
publicly available should be expanded to include disaggregation of different
emissions and a list of facilities covered by the emissions inventory.
The total sum of greenhouse emissions does not provide investors
with sufficient information to make accurate and appropriate decisions on the
nature of the greenhouse risk or opportunities associated with a particular
company. This is particularly the case given the existing uncertainty about
both the rules for the emissions trading scheme and the need for investors to
understand potential equity exposure of companies.[66]
2.52
DEW explained that it is encouraging a greater scope of reporting with
regard to disaggregation and that it could be included in the future once
technical issues are resolved:
In fact there has been quite a bit of interest from some
companies in being able to report more precisely on the non-CO2 emissions from fuel combustion.
It is just whether or not it is robust reporting that is a bit of an issue.[67]
2.53
ANEDO argued that the reporting scheme should provide a clear overview
of the emission of greenhouse gases by corporation and facility. Both it and
state governments believed that if the bill was implemented in its current form
it would lead to reduced reporting of information compared to existing
reporting schemes.[68]
ANEDO suggested that there should be a mandatory provision on submitting a
publicly accessible report if significant changes appear in the emissions of a
corporation or facility.[69]
2.54
DEW, responding to this issue, noted that:
There will be the opportunity for companies to provide some
contextual information around their emissions. We know there is interest from both
the companies themselves and data users...So there are things that companies are
interested in reporting—things like offsets and things like actions that they
are undertaking to reduce their emissions profile. We will be looking at the
voluntary disclosure as an administrative task.[70]
2.55
The committee notes that clause 16, which establishes the National
Greenhouse and Energy Register, is complex. Clause 16(5) appears to contain an
unnecessary double negative, making it hard to understand, particularly as it has
to be read in conjunction with clause 24. The department undertook to raise
this issue with the Office of Parliamentary Counsel,[71]
and the committee hopes that a more straightforward wording of the clause will
be possible.
State access to information
2.56
The bill includes provisions for releasing information to states and territories
that has been gathered by the GEDO:
The Greenhouse and Energy Data Officer, or a person authorised
by the Greenhouse and Energy Data Officer, may disclose greenhouse and energy information
to a State or Territory or an authority of a State or Territory if:
- it is information mentioned in subsection 19(9); or
- it is information relating to facilities that are wholly or
partly located in the State or Territory.
(2) The Greenhouse and Energy Data Officer may make disclosure
of information under this section subject to conditions including:
- restrictions on disclosure of the information to other
persons; and
- security measures required in relation to the
confidentiality of the information; and
- the State, Territory, or authority not requiring the
reporting or disclosure of other information of a kind similar to greenhouse
and energy information.[72]
2.57
Clause 19 requires corporations that meet certain criteria under the
legislation to provide regular reports to the GEDO on their greenhouse gas
emissions, energy production and energy consumption. The bill proposes that:
(6) A report or part of a report under this section must:
...
(c) include any information specified
by the regulations for the purposes of this paragraph;
...
(9) Regulations made for the purposes of paragraph (6)(c) may
also specify information that a State or Territory has requested the Greenhouse
and Energy Data Officer to collect.[73]
2.58
All state governments objected to the formulation of these clauses.[74]
They were all of the view, as expressed by South Australia, that:
One of the fundamental principles of the original proposal to
COAG for the streamlining of mandatory reporting was that state jurisdictions
would forego their reporting requirements in return for guaranteed access to
the data collected as part of the national scheme. Clause 27 provides the
Greenhouse and Energy Data Officer (GEDO) with discretion as to whether or not
information is provided to a State or Territory that relates to facilities in
that State. The GEDO can make the provision of information subject to
conditions including confidentiality and the State or Territory not collecting
the same information that is being collected under the legislation.[75]
2.59
State governments reiterated at the public hearing their concerns about
clause 27.[76]
They sought removal of the GEDO's discretion in providing data, and a narrowing
of the conditions that could be placed upon the data when released.[77]
The South Australian government emphasised the inappropriateness of the release
of data being discretionary even where the states have satisfied the conditions
laid out in the clause:
about clause 27...the default is either the minister’s discretion
or that default is that the states have automatic access. The point in the
middle there is about the conditions. What we are saying is that at the moment
27 has got both. If you satisfy the conditions, the data officer may give you
access to the data. In our judgement a balanced approach would be that, if you
satisfied the conditions, what else have you got to do? You should be given
access to the data.[78]
Environmental groups supported the states' position.[79]
2.60
It is clear that the provision of information to states and territories
is envisaged to be part of the scheme. The Regulatory Impact Statement (RIS)
(which is incorporated into the Explanatory Memorandum) concluded that the
preferred option for regulation would involve legislation that would 'require
the administrator to make available to each jurisdiction' information gathered
under the scheme,[80]
to 'ensure that all jurisdictions had access to data'.[81]
2.61
It was proposed that the matter be addressed by replacing the word 'may'
in subclause 27(1) with an alternative: either 'will'[82]
or 'must'.[83]
The department indicated that an alternative formulation such as this would be
feasible, but that the intention was to enable providing data subject to conditions.[84]
The committee's view
2.62
The committee notes that the intention of the scheme, as set out in the
RIS, was that it 'required' the provision of data to other jurisdictions. It
also notes the point emphasised by South Australia that the provision of data
is subject to conditions that should meet the needs of participants in the
reporting scheme for the protection of sensitive data. The committee can see
advantages, discussed earlier, in continuing to ensure a cooperative approach
amongst all jurisdictions to greenhouse reporting. In these circumstances, and
recognising the department's acknowledgement that an alternative construction
of this clause may be feasible, the committee believes that it should be made
clear that data will be provided to states and territories on an appropriate
basis.
Recommendation 2
2.63
The committee recommends that:
- subclause 27(1) be redrafted to replace the word 'may' with the
word 'must'; and
- (for consistency) consideration be given to the deletion of
subclause 27(2)(c).
External audit
2.64
The bill proposes that external audits may be initiated:
if the Greenhouse and Energy Data Officer has reasonable grounds
to suspect that a registered corporation has contravened, is contravening, or
is proposing to contravene, this Act or the regulations.[85]
2.65
Concerns were raised about the rigour of the audit process under the
bill. The Tasmanian government outlined the problem as it saw it:
Tasmania supports the inclusion of mandatory validation, so that
provision is made in the Bill for a proportion of company reports to be
independently verified each year through a random sample. The quality and
integrity of data collected under the scheme is vital to build confidence in
the carbon market that will be established by a national emissions trading
scheme.
The current provision in the Bill requires the regulator to have
reasonable grounds to suspect an offence. This is not consistent with good
audit practice and does not provide a systematic or sufficiently rigorous
approach to verifying data. This would serve to undermine business confidence
in the integrity of the data collected under the scheme.[86]
The Victorian government likewise endorsed a less
restrictive external audit framework.[87]
2.66
Two proposals were made to modify the external audit provision. Tasmania
suggested the bill be amended to include a new provision 'that provides for
mandatory independent audit/verification of a randomly selected proportion of
companies registered with the scheme'.[88]
ANEDO made a more modest suggestion that external auditors operating under
clause 73 should be accredited by the GEDO.[89]
2.67
CPA Australia commented that:
A key element influencing the success of the reporting and
dissemination of [greenhouse gas emissions] in Australia and an emissions
trading scheme is the ability for users to rely on information prepared and
disclosed by organisations. An independent and robust verification of emission
data will help achieve this.[90]
2.68
While supportive of the bill, CPA Australia appeared concerned that less
sustainability reporting is done by major accounting firms in Australia than
other countries. Australian firms appear more likely to favour technical or
environmental consulting firms.[91]
2.69
The committee notes that the framework for monitoring and auditing
companies varies from sector to sector, and from state to state. The audit
regulations made under the NSW Electricity Supply Act 1995 do not
confine the scope of audits under that act to those situations where
contravention of the law is suspected.[92]
On the other hand, the form of the audit provision in the Commonwealth's bill
is broadly similar to that contained in Tasmania's Environmental Management
and Pollution Control Act 1994 (s. 30).[93]
The external audit provision of the bill should also not be considered in
isolation. The committee notes that the powers of Commonwealth officials to
enter premises to monitor compliance are governed by Division 4 of the bill.
The exercise of these powers is not confined to situations where there is doubt
about compliance with the law. The committee believes that, taken together, the
compliance powers and the audit provisions are adequate.
Conclusion
2.70
The committee is satisfied with the bill as a whole. The committee
believes that the bill lays the foundation for a rigorous, transparent and
nationally consistent greenhouse and energy reporting system. This will also help
form the vital foundation for any future emissions trading scheme in Australia.
2.71
The committee recognises the need, expressed by many stakeholders, for
on-going consultation in the development of the regulations that will underpin
the proposed system. The committee is confident that the government is
committed to processes that will ensure constructive dialogue with stakeholders
in the development of these regulations.
Recommendation 3
2.72
The committee recommends that, apart from those recommendations made
above, the bill be passed.
Senator Alan
Eggleston
Chair
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