On 10 December 2020, the Senate referred the provisions of the following bills to the Senate Environment and Communications Legislation Committee (the committee) for inquiry and report by 11 March 2021:
Industrial Chemicals Environmental Management (Register) Bill 2020;
Industrial Chemicals Environmental Management (Register) Charge (Customs) Bill 2020;
Industrial Chemicals Environmental Management (Register) Charge (Excise) Bill 2020;
Industrial Chemicals Environmental Management (Register) Charge (General) Bill 2020; and
Industrial Chemicals Legislation Amendment Bill 2020.
Conduct of the inquiry
Following usual practice, the committee advertised the inquiry on its website and wrote to relevant organisations inviting submissions by 22 January 2021.
The committee received seven submissions which are available on the committee's website and listed at Appendix 1 of this report.
The committee would like to thank all the organisations and individuals that contributed to the inquiry.
Structure of this report
This report comprises two chapters:
This chapter provides a background to the bills, as well as an overview of their purpose and provisions; and
Chapter 2 considers the issues raised in evidence about the bills' intentions and provisions, and sets out the committee's views and recommendations.
Background of the bills
In July 2015, at a Council of Australian Governments (COAG) meeting, environment ministers agreed to the development of a national cooperative framework to establish a national standard in relation to the management of industrial chemicals and their risk to the environment in accordance with the preferred option outlined in COAG’s Decision Regulation Impact Statement. This decision was made in line with recommendations in the Productivity Commission’s Research Report on Chemicals and Plastics Regulation, published in 2008.
The Productivity Commission’s report found that the risk assessment and management of industrial chemicals was fragmented across jurisdictions leading to inefficiencies and inadequate environmental protection, and that it was less effective than other chemical risk management regimes. The report recommended the establishment of an independent standard-setting body to develop nationally consistent risk management decisions for industrial chemicals that should be adopted uniformly and automatically by the states and territories.
In November 2015, out of session, all jurisdictions reached formal agreement on the development of a national framework.
From 2015 to 2018, a consultation process run by the former Environment and Energy Department was held in conjunction with stakeholders in the drafting of the National Standard for Environmental Risk Management of Industrial Chemicals.
The draft legislation was released for public consultation from 7 January to 21 February 2020. Eleven formal responses were received from national bodies, government agencies and other organisations and individuals with an interest in the legislation.
The bills were presented to the House of Representatives on 3 December 2020 by the Hon Sussan Ley MP, Minister for the Environment (the Minister).
Purpose and overview of the bills
Prior to 1 July 2020, industrial chemicals were assessed for health and environmental risks through the National Industrial Chemicals Notification and Assessment Scheme (NICNAS) under the Industrial Chemicals (Notification and Assessment) Act 1989. This assessment process was replaced by the Australian Industrial Chemicals Introduction Scheme (AICIS) under the Industrial Chemicals Act 2019. The AICIS conducts scientific risk assessments on the introduction and intended use of industrial chemicals in Australia and makes risk management recommendations based on the impact to human health and the environment for consideration by state, territory or Australian Government agencies under their legislation, regulations and standards.
Presently, there is no mechanism to consistently implement the recommendations made by AICIS across jurisdictions for the management of environmental risks caused by industrial chemicals. The Industrial Chemicals Environmental Management (Register) Bill 2020 (the ICEMR Bill) aims to rectify this gap through the establishment of an intergovernmental scheme which creates a national register of scheduling decisions for relevant industrial chemicals, thereby creating a nationally consistent framework for the management of industrial chemicals which can be applied by each state and territory.
The Explanatory Memorandum states that the ICEMR Bill would:
…establish a national framework to manage the ongoing use, handing and disposal of industrial chemicals, in order to reduce impacts on the environment and limit people’s exposure to industrial chemicals.
The ICEMR Bill assigns a number of roles to the Minister for the Environment, including:
establishing the decision-making principles for categorising industrial chemicals based on their environmental impact. These principles will underpin the making, varying or revoking of scheduling decisions;
making scheduling decisions, guided by the decision-making principles, to categorise and set out the controls applicable to the use, handling and disposal of an industrial chemical. These scheduling decisions will be recorded on a register. These scheduling decisions will only be enforceable if another law of the Commonwealth, or a law of a state or territory applies or adopts the register;
consulting with the public and states and territories on matters relating to the making, variation or revocation of scheduling decisions or the decision-making principles;
establishing the Advisory Committee on the Environmental Management of Industrial Chemicals to advise the Minister on making, variation or revocation of scheduling decisions, the decision-making principles and the register; and
the ability to make rules prescribing matters required or permitted by the ICEMR Bill to be prescribed by the rules, or matters that are necessary or convenient to be prescribed for carrying out or giving effect to the ICEMR Bill.
Importantly, the Explanatory Memorandum explains that:
Following the establishment of this legislative framework, and as agreed [by environment ministers in a COAG Decision Regulation Impact Statement] in 2015, the Commonwealth and states and territories will be responsible for implementation of the scheduling decisions, recorded in the Register, within their jurisdictions. This will drive national consistency in the management of industrial chemicals through a more streamlined, transparent, efficient and predictable approach to environmental risk management, providing better protection for the environment.
The Commonwealth, state or territory may:
apply or adopt the register (with or without modification); and
make provision for, or in relation to, its implementation and enforcement, as so applied or adopted.
Accompanying the primary bill is a package of bills, collectively referred to as the ICEMR Charges Bills, which includes:
Industrial Chemicals Environmental Management (Register) Charge (Customs) Bill 2020;
Industrial Chemicals Environmental Management (Register) Charge (Excise) Bill 2020; and
Industrial Chemicals Environmental Management (Register) Charge (General) Bill 2020.
The purpose of this package of bills is to underpin the enabling legislation by establishing a cost recovery mechanism to recoup the costs of implementing the framework in the ICEMR Bill for making, varying and revoking scheduling decisions for industrial chemicals.
The ICEMR Bill sets out who is liable to pay the scheduling charge which would be imposed under the package of bills. A person who is a 'registered introducer' for a registration year (i.e. if he or she is granted a registration under section 17 of the Industrial Chemicals Act 2019 for that year) would be liable to pay the scheduling charge for the registration year. In practice, this will mean that a person who is liable under the Industrial Chemicals Act 2019 to pay a registration charge in respect of the introduction of a new industrial chemical (or a new use of an existing industrial chemical) would also be liable to pay a scheduling charge under this Bill.
In relation to the amount of the scheduling charge and exemptions to the charge, each of the charge-related bills outline the following:
The amount of charge payable by a registered introducer for a registration year is: (a) the amount prescribed by the regulations; or (b) the amount worked out in accordance with the method prescribed by the regulations.
Without limiting the above, the regulations may specify different amounts or methods for different classes of registered introducers.
The amount of the charge may be nil.
The regulations may provide for exemptions from charge.
The Explanatory Memorandum notes a need for flexibility in prescribing the detail of the amount of the charge and states with a focus on cost-recovery:
Consistent with the Australian Government Charging Framework, the amount of the scheduling charge imposed under the relevant charges Bills would be determined through a Cost Recovery Implementation Statement. The amount will also be required to recover no more than the Commonwealth’s likely costs and, as such, will be limited in amount to the approximate cost of services rendered by the Commonwealth.
Comment of the Scrutiny of Bills Committee
The Senate Standing Committee for the Scrutiny of Bills (Scrutiny Committee) commented on several elements of the ICEMR Bill and on the ICEMR Charges Bills, which will be discussed in turn.
The Scrutiny Committee raised concerns about some ‘significant matters in non-disallowable delegated legislation’ that are relevant to the operation of the proposed new framework for managing industrial chemicals, including:
subclause 22(1) would allow the minister to establish a register of scheduling decisions for industrial chemicals;
subclause 23(1) would allow the minister to determine principles to be complied with in making, varying or revoking scheduling decisions; and
clause 76 would enable the minister to make rules prescribing matters required or permitted by the bill to be prescribed by the rules, or matters that are necessary or convenient to be prescribed for carrying out or giving effect to the bill.
The following note accompanies each of the above provisions:
Section 42 (disallowance), and Part 4 of Chapter 3 (sunsetting), of the Legislation Act 2003 do not apply to the instrument: see subsections 44(1) and 54(1) of that Act.
The Scrutiny Committee’s view was that ‘matters which may be significant to the operation of a legislative scheme should be included in primary legislation unless sound justification for the use of delegated legislation is provided’ and that ‘any exemption of delegated legislation from the usual disallowance and sunsetting processes should be fully justified in the explanatory memorandum’ as well as ‘specify[ing] why the exemption is appropriate in the particular circumstances.’
In raising these matters, the Scrutiny Committee sought the Minister's advice as to why these matters would be included in delegated legislation and whether the ICEMR Bill could be amended to ensure these matters are subject to the usual parliamentary disallowance and sunsetting processes.
In the Minister’s response, the operation of subsections 44(1) and 54(1) of the Legislation Act 2003 were referred to as the rationale for the ICEMR Bill’s Principles, Register and Rules being exempt from disallowance and sunsetting. The Minister explained:
The explanatory memorandum for the Legislative Instruments Bill 2003, which enacted section 44, describes the rationale for its inclusion as being that ‘the Commonwealth Parliament should not, as part of a legislative instruments regime, unilaterally disallow instruments that are part of a multilateral scheme'. Similarly, the same explanatory memorandum explains the need for subsection 54(l) as being that instruments that are part of a multilateral agreement 'should therefore not be subject to a unilateral sunsetting process which would cause them to cease to exist in only one of the jurisdictions that are party to the agreement'.
On the Principles, the Minister explained that they would be included in a technical document based on up-to-date scientific information and as such, ‘it is appropriate that the Principles be set out in delegated legislation to allow for them to be amended as necessary in response to evolving scientific knowledge.’
Similar reasons were given in relation to the Register and Rules. However, the Minister also explained that as the states and territories will draw from the scheduling decisions in the Register, if the Register were subject to sunsetting, certainty could be undermined for both governments and industry, and disallowance ‘would affect the content of State and Territory legislation, which would be inconsistent with the intergovernmental agreement.’
ICEMR Charges Bills
In relation to the package of bills accompanying the primary bill, the Scrutiny Committee raised similar concerns about ‘significant matters in delegated legislation’ as each of these bills seeks to impose a charge as a tax in relation to the amount payable by a registered introducer of industrial chemicals for a registration year.
The Scrutiny Committee’s view is that:
…it is for the Parliament, rather than makers of delegated legislation, to set a rate of tax. Therefore, where there is any possibility that a charge could be characterised as general taxation, the committee considers that guidance in relation to the level of a charge should be included on the face of the primary legislation. In particular, where charges are to be prescribed by regulation the committee considers that, at a minimum, some guidance in relation to the method of calculation of the charge and/or a maximum charge should be provided on the face of the primary legislation, to enable greater parliamentary scrutiny.
In raising these matters, the Scrutiny Committee sought the Minister's advice as to:
whether guidance in relation to the method of calculation of these charges and/or a maximum charge can be specifically included in each bill; or
whether the ICEMR Charges Bills could at least be amended to specify that, before the Governor-General makes regulations prescribing an amount of charge, the minister must be satisfied that the amount of the charge is set at a level that is designed to recover no more than the Commonwealth’s likely costs in connection with the administration of the framework established by the Industrial Chemicals Environmental Management (Register) Bill 2020.
The Minister responded to these concerns by clarifying how the charges would be administered. These matters will be discussed in further detail in chapter 2 in the context of comments contained in submissions received by the committee.