Re Australian Paper Pty LTDApplicant And Renewable Energy REGULATORRespondent
[2012] AATA 67
•7 February 2012
CATCHWORDS – RENEWABLE ENERGY – eligible renewable energy source – black liquor - accreditation of power station comprised within a pulp and paper mill – later refurbishment and application for accreditation – identification of components of power station – power station eligible for accreditation unless previous determination of components of power station should be varied – purpose of legislation to encourage additional generation of electricity from eligible renewable energy sources – decision to vary consistent with purpose of legislation.
RENEWABLE ENERGY – whether s 14(2A) confers a discretionary power to vary accreditation – power found in s 30C – s 14(2A) prescribes ineligibility by reference to consequences of exercise of power under s 30C.
RENEWABLE ENERGY – determining the limits of a discretionary power – general principles – whether power of variation extends to power to omit a component from previous accreditation.
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DECISION AND REASONS FOR DECISION [2012] AATA 67
ADMINISTRATIVE APPEALS TRIBUNAL )
) 2009/3155
GENERAL ADMINISTRATIVE DIVISION )
Re AUSTRALIAN PAPER PTY LTD
Applicant
AndRENEWABLE ENERGY REGULATOR
Respondent
DECISION
Tribunal: Deputy President S A Forgie
Senior Member E Fice
Date: 7 February 2012
Place: Melbourne
Decision:The Tribunal decides to:
1.affirm the decision of the respondent dated 11 June 2009 in so far as it confirms his earlier decision dated 13 January 2009 that the power station for which the applicant sought accreditation is not eligible for accreditation under s 14(2A) of the Renewable Energy (Electricity) Act 2000; and
2.in relation to the decision of the respondent dated 11 June 2009 affirming the decision dated 23 March 2009 to vary under s 30C of the Renewable Energy (Electricity) Act 2000 the determination made on 31 January 2002 in respect of the components of the Maryvale Mill Power Station:
(1)set aside that decision;
(2)substitute a decision that the decision dated 23 March 2009 be set aside; and
(3)remit the matter to the respondent to vary under s 30C the determination made on 31 January 2002 under s 14(1)(a) to reflect the Tribunal’s decision that the wood handling and pulping processes at the Maryvale Mill are not components of the electricity generation system that is taken to be a power station for the purposes of the Renewable Energy (Electricity) Act 2000.
S A Forgie
Deputy President
REASONS FOR DECISION
Since 1937, a pulp and paper mill has been in operation at Maryvale near Morwell in Victoria. It is known as the Maryvale Mill and is now owned and operated by Australian Paper Pty Ltd (Australian Paper). It processes pine and eucalyptus logs to produce wood pulp in order to manufacture paper products. Black liquor is a by-product of the process and is used as a fuel in the Maryvale Mill. It cannot be disposed of in the environment.[1] Between 1974 and 1998, a system relying on black liquor was introduced to produce steam and electricity used in the pulping and manufacturing processes. On 15 May 2002, the Renewable Energy Regulator (Regulator) determined that the Maryvale Mill Power Station (MMPS) was eligible for accreditation as a power station under s 15 of the Renewable Energy (Electricity) Act 2000 (REE Act). He approved Australian Paper’s application for accreditation in relation to the generation of electricity using black liquor as its eligible renewal energy source. At the time, the Regulator identified the components taken to be a power station for the purposes of the REE Act and determined a 1997 eligible renewable power baseline (baseline) of 151,955MWh, which was later varied to 154,445MWh. In each year since its accreditation became effective on 31 January 2002, the MMPS has created Renewable Energy Certificates for electricity generated above its baseline.
[1] Black liquor is not generally available for purchase from outside sources as it is not economically or technologically viable to produce it for sale: Supplementary statement of Mr Garry Jones, Exhibit B at [5].
Australian Paper has since redeveloped its facilities at the Maryvale Mill including that part accredited as the MMPS. The power station was closed and decommissioned on 24 November 2008. It commenced operation once more on 10 December 2008 and was in full operation by in early 2009. While the MMPS continues to use black liquor as a renewable energy source, Australian Paper applied on 3 October 2008 for accreditation of the MMPS under s 13 of the REE Act on the basis that the power station had been effectively rebuilt since its earlier accreditation in 2002. Relying on s 14(2A), the Regulator refused the application finding that, although Australian Paper had made substantial changes to its paper and pulp production facilities at MMPS, the changes did not significantly change the componentry making up the power station from that he had identified in 2002. In his view, the power station for which accreditation was sought was the same power station as that which he had already accredited and that his previous determination should be varied to include the components of the system specified in the application for accreditation. Therefore, under s 14(2A) of the REE Act,[2] the power station described by Australian Paper in its application was not eligible for accreditation. Consequently, on 13 January 2009, the Regulator refused Australian Paper’s application under s 15. At the same time, he decided to vary the previous determination of the components of the MMPS under s 30C of the REE Act. The Regulator affirmed both decisions on 11 June 2009. We have also affirmed both decisions and now set out our reasons for doing so.
[2] “However, a power station is not eligible for accreditation if the Regulator is satisfied that a previous determination under paragraph (1)(a) should be varied to include the components of the system specified in the application for accreditation.”
BACKGROUND
In this section of our reasons, we set out the background to the issues we must decide. The source of the events or matters to which we refer is to be found in the text or in the footnotes.
Processes at the Maryvale Mill
In his statement, Mr Garry Jones outlined the processes that occur at the Maryvale Mill. He explained them further in giving oral evidence.[3] Mr Jones is the Planning and Development Manager at Australian Paper. He has a BE (Hons) (Electrical Engineering) and a PhD (Electrical Engineering) from the University of Tasmania as well as a Master of Business Administration from Deakin University. In addition, he is a Chartered Professional Engineer and a Fellow of the Institution of Engineers Australia. He has worked with Australian Paper and its predecessors, including Amcor and Associated Pulp and Paper Mills, since 1968. He has held various positions at their mills at Burnie and Shoalhaven. We accept his evidence as we do that of Mr Petri Jokinen, who is a Senior Consultant in the Management Consulting Department of Pӧyry Management Consulting Oy of Vantaa in Finland.
[3] Exhibit A at [8]-[19]
A.Receiving and chipping wood
The process begins with the receipt of pine (softwood) and eucalyptus (hardwood) logs. They must be debarked and converted into woodchips of a uniform size. That takes place in a wood chipping mill. In addition to those it makes itself, Australian Paper uses woodchips it purchases from local sawmills from off-cuts and rejected timber. All woodchips are screened to ensure that only woodchips of a uniform size are used.
The pine and eucalypt woodchips lead to different products. The pine woodchips are used to produce unbleached pulp for the production of packaging papers. Manufacturers other than Australian Paper use that packaging paper to manufacture corrugated cartons, paper bags and sacks. The eucalypt woodchips are used in the manufacture of bleached pulp that is, in turn, used in the manufacture of printing and communication paper such as copy paper, envelope paper, printing paper and scholastic paper. A small volume of eucalyptus chips are also processed into a low strength unbleached pulp to add stiffness to certain packaging papers.
B.Pulping woodchips
Once screened for size, the woodchips are fed into digesters where they are cooked under pressure with white liquor[4] in order to separate the cellulose fibres from the non-cellulous material. This process is known as a “kraft” pulping process. It can take place in batches or continuously. The Maryvale Mill uses both processes.
[4] Solution of sodium hydroxide and sodium sulphide
It uses the batch pulping process for softwood. Pulping takes place in a series of pressure vessels which are loaded with woodchips from a travelling chip conveyor and with chemicals and cooked under pressure. The vessels are depressurised and emptied before the process starts once more with a fresh batch of woodchips and chemicals. The product that comes out of the digesters is a mixture comprising the wood pulp (i.e. the cellulous fibres) and non-cellulous material in solution as black liquor. Unbleached kraft pulp is produced in this way.
The Maryvale Mill uses the continuous pulping process for eucalyptus hardwood. The woodchips are pre-steamed and mixed with chemicals before being fed into the cooking vessel through a pressure lock. The woodchips proceed slowly down the vessel with steam-heated cooking chemicals circulating through the chips in several stages. The processed pulp is continuously discharged as a mixture. The cooking vessel is not depressurised. This leads ultimately to bleached kraft pulp.
While there are variations due to species of tree, wood age and growing conditions, approximately 50% of the dry weight of wood chips becomes wood pulp used in the production of paper products. The remaining 50% comprises lignins, oils, hemicellulous and other organic material which bind the cellulous fibres together. This mixture is known as “black liquor”, which looks like black coffee, and contains approximately 10 to 15% of dissolved solids.
C.Separating wood pulp (cellulous material) from non-cellulous materials (black liquor) and preparing the wood pulp for manufacture of paper products
Whichever cooking process is used, the mixture that results has to be screened, cleaned and washed in order to separate the wood pulp from the non-cellulous materials, which are in solution as black liquor. Once separated, the unbleached pine pulp is ready for the manufacture of packaging papers.
The eucalypt pulp, which will be used to manufacture white papers, must undergo two more processes before it is ready to be used. The first is oxygen delignification, which releases more residual lignin and other non-cellulous materials from the cellulous fibres. The wood pulp is washed once again to remove the non-cellulous materials and so more black liquor. Bleaching follows washing. The wood pulp is bleached in three stages using first ozone, then hydrogen peroxide and, finally, oxygen and chlorine dioxide. It is washed after each stage and is then ready for the manufacture of white papers.
D.The refinement of the black liquor
The black liquor contains 10 to 15% of dissolved solids but must be concentrated in stages using evaporators and concentrators. In those stages, the black liquor flows over steam-heated plates or tubes in a pressure vessel. The heat drives off the excess water and so increases the concentration of combustible material in the black liquor. The material that comes out of that process is highly viscous and has physical and combustion properties similar to heavy fuel oil. At room temperature, it is a sticky near-solid with the appearance of tar or vegemite. It will only flow at temperatures well above room temperature.
E.Producing high pressure steam and recovering chemicals for reuse
The concentrated black liquor is burned in recovery boilers to produce high pressure steam. Together with high pressure steam from natural gas-fired boilers, that steam flows to four steam turbines, which generate electricity. Low pressure steam is emitted from the steam turbines’ exhaust. That low pressure steam is used to heat the last, and so the highest concentration, vessel in each evaporator set. The steam that is produced from that process is itself used to heat the next weakest strength evaporator vessel in the sequence. In addition, it is used as process heat in the pulping and bleaching processes for paper drying. This releases the white liquor used in the pulping process in the form of molten salt. That salt is recovered, dissolved in water and reactivated in a “recausticising process” to become white liquor. That white liquor is then used in the wood pulping process.
Application for accreditation and components of accredited power station
In its application for accreditation of a power station in 2001, Australian Paper’s parent company, Paper Australia Pty Ltd, applied for accreditation of a power station known as the MMPS. It included a general description of the power station, which used both bio liquids and natural gas:
“The power station consists of two black liquor chemical recovery boilers (5 & 6), three natural gas fired boilers and 4 backpressure steam turbine generators that generate electricity at 11kV.
The recovery boilers operate in base-load mode as their primary task is to recover the valuable chemicals from the black liquor pulping process. The recovery boilers also use natural gas for the purpose of start-up fuel and to stabilise the firing of the black liquor solids. The natural gas fired boilers produce the balance of the steam load and are used to trim the steam load in accordance with the demand of the paper making process.
The total nameplate generating capacity of the power plant is approx. 54 MW, while the effective capacity in terms of the typical operating mode is approx. 48 MW.
The entire electrical and steam output of the power plant is consumed on the site and it is supplemented by approx. 20 MW of electrical power that is imported from the grid to make up the balance of the electrical energy consumed by the paper mill.”[5]
[5] Documents lodged under s 37 of the Administrative Appeals Tribunal Act 1975 (T documents) at 14-15
On the basis of the evidence in Mr Jones’s statement, we find that chemical recovery boiler A was commissioned in 1976 and B in 1983. The coal-fired boilers were fully de-commissioned in 1987. Mr Jones attached a diagram of the components that the Regulator had determined were part of the electricity generation system that was taken to be the power station that was the MMPS at the Maryvale Mill in 2002.[6] We have attached that at Attachment A to these reasons.
[6] Exhibit A at GJ-6 referred to at [8.1]
Redevelopment of Maryvale Mill
Mr Jones also addressed this aspect as did Mr Peter Williams, who has been the Chief Financial Officer of Australian Paper since 2009. Mr Williams has been employed by Australian Paper or by the previous owner of the business conducted by Australian Paper, Amcor Ltd, since 1987. Between 2001 and 2005, he was the Commercial Manager at the Maryvale Mill and between 2006 and 2009, Divisional Chief Financial Officer for Australian Paper when it was a division of PaperlinX. We accept the evidence of both Mr Williams and Mr Jones.
In approximately 1995, Australian Paper decided that the pulp mill at the Maryvale Mill was becoming technologically obsolescent and that its capacity was insufficient for the needs of its paper mill. That was the year in which Australian Paper had commissioned an additional paper machine in the paper mill and had imported wood pulp to meet the volume required by the paper mill. It found that the wood pulp it produced in its own pulp mill did not meet the higher quality and brightness levels in accordance with world standards and marketplace expectations. In addition, there were concerns that the chlorine gas used in the bleaching process did not meet regulatory, environmental and safety standards.
As a result, Australian Paper conducted a number of pre-feasibility studies examining alternatives to expand or replace the existing pulp mill. In June 2003, it commenced a detailed feasibility study into the major redevelopment of the Maryvale Mill to meet the future requirements. Various options were studied including:
(1)modify and upgrade the existing pulp mill with a view to extending its life by several years;
(2)construct a new pulp mill and explore the range of alternatives available as to its size and configuration; and
(3)shut down the existing pulp mill and rely on imported wood pulp in its paper production.
Australian Paper’s then parent company, PaperlinX, decided to redevelop the Maryvale Mill in stages. The work began in June 2006 and proceeded in stages alongside the existing plant so that the mill could continue to operate and maintain the supply of paper products to its customers. The process involved a number of mill shutdowns and the progressive commissioning of new equipment but the work was completed late in 2008. Mr Jones stated that the previous pulp mill was closed and decommissioned on 24 November 2008 with the new Maryvale pulp mill commencing operation on 10 December 2008.
Australian Paper’s changes to the Maryvale Mill
In documentation supporting its 2008 application for accreditation, Australian Paper stated that changes had been made in two areas of the Maryvale Mill: infrastructure and components constituting the wood handling and processing plants; and the power station plant. With regard to the former, much of the infrastructure and components had been shut down, replaced or recycled. The new plant would increase the volume of black liquor that is processed through the recovery boilers and so increase the ratio of renewable energy (in the form of steam to electricity) to energy from fossil sources that is used in processing wood pulp to paper. With regard to the latter, Australian Paper stated that much of the power station plant that drove the paper mill and processing plants at the time of the 2001 accreditation has been decommissioned, shut down, replaced or recycled. The rebuilt paper mill and power station plant would minimise dependence on natural gas to generate steam and increase the amount generated from renewable sources. It generates, uses and captures renewable power and constitutes a new power station plant rather than merely an incremental increase or rearrangement of that accredited in 2002.
Mr Jones identified the components of the MMPS as he understands them to have been used in power generation since 2009. We have set them out in the following table as well as attaching, at Attachment B, his diagram of the processes involved in the production of electricity at the MMPS in 2009:[7]
[7] Exhibit B at GJ-6
| “a. chip mill; | p. recovery boiler R5 emissions control; |
| b. pine batch digesters system; | q. recovery boiler R6; |
| c. pine pulp screening and cleaning; | r. recovery boiler R6 emissions control; |
d. pine pulp washing: | s. gas fired boiler 8; |
| e. eucalyptus pulp continuous digester system; | t. gas fired boiler 9; |
| f. eucalyptus pulp cleaning and screening; | u. gas fired boiler 10; |
| g. eucalyptus pulp washing (post digestion); | v. steam turbine alternator 6; |
| h. eucalyptus pulp oxygen delignification; | w. steam turbine alternator 7; |
| i. eucalyptus pulp washing (post delignification); | x. steam turbine alternator 7N; |
j. oxygen manufacturing plant; | y. steam turbine alternator 8; |
k. E3 liquor evaporators; | z. recovered cooking chemicals recausticising plant; |
l. E3 liquor concentrator; | aa. electrical distribution system; |
m. E4 liquor evaporators; | bb. steam distribution system; |
n. high strength concentrator; | cc. water supply and treatment; and |
o. recovery boiler R5; | dd. wastewater collection and treatment.”[8] |
[8] Exhibit B at [2]
Mr Jones also prepared a table showing those components of the MMPS that were completely new after the redevelopment of the power station, those that had been extensively modified, significantly modified, modified in a minor way or decommissioned. That is at Attachment C to these reasons. It is colour coded to distinguish components according to whether they are completely new (orange), extensively modified (bright yellow), significantly modified (pale yellow), modified in a minor way or decommissioned since 2002.[9]
[9] Exhibit B at [6] and GJ-14
The costs of the project were substantial and we accept Mr Williams’ evidence that the total costs exceeded $500 million. As Mr Williams is the Chief Financial Officer, we prefer that figure to that shown by Mr Jones in Exhibit GJ-15 to his statement. Mr Jones would also defer to Mr Williams on that matter but the table in Exhibit GJ-15 is indicative of the scale of the costs and the areas in which it was spent. It is at Attachment D to these reasons and the colour coding is the same as in Attachment C.
Components identified by Regulator as taken to be MMPS for the purposes of REE Act in initial decision
In this table, we set out the components identified by the Regulator as comprising the MMPS in January 2002 and in December 2008 as reflected in his decision of 13 January 2009.[10] He varied the determination of the components of the MMPS to include those specified in the 2008 application and set out in the third column of the following table:
[10] T documents at 140-143
| “Component Category | January 2002 | December 2008 |
| Steam Turbine generators | Total 4 Steam Turbine generators with a combined capacity of approximately 54 MWe Name Plate Capacities (year) 1. 12 MWe (1974) 2. 12 MWe (1974) | Total 4 Steam Turbine generators with a combined capacity of approximately 54 MWe Name Plate Capacities (year) 1. 12 MWe (1974) 2. 12 MWe (1974) |
| Boilers | 5 Boilers with a combined steam generation capacity of 732 tonnes per hour (tph) Capacities: Black Liquor Chemical Recovery Boilers: Recovery Boilers using black liquor with 64% black liquor solids. REC 6 receives 970 tonnes of Black Liquor Solids/day. Chemical Boilers fire black liquor of 64% solids. | 5 Boilers with a combined steam generation capacity of 777 tph Capacities: Black Liquor Chemical Recovery Boilers: Recovery Boilers have been upgraded to receive black liquor with 74% black liquor solids. Produce total of 325 tph of steam. REC 6 receives 1250 tonnes of Black Liquor Solids/day. Chemical Boilers fire black liquor of 74% solids. |
| Electricity Meters | Power – 4 Reyolle S14CJ CC Class B – 3 phase meter for each turbine generator | Power – 4 Reyolle S14CJ CC Class B – 3 phase meter for each turbine generator |
| Steam Meters | Steam – 1 Bailey Flow Nozzle Meter and 1 Foxboro Flow Nozzle Meter attached to recovery boilers | Steam – 1 Bailey Flow Nozzle Meter and 1 Foxboro Flow Nozzle Meter attached to recovery boilers |
| Cooling Towers | Cooling Towers | Cooling Towers (related to Black Liquor concentration) have been replaced and expanded. |
| Electricity Network | As described by a simplified single line diagram 2 x 66/22kV 33 MVA transformers | Complete single line diagram attached with new application, electrical network remains largely unchanged Third 66/22 kV 33MVA transformer installed (total of 3) |
| Pine Kraft Mill Eucalypt Kraft Mill | Established in 1969 – Processing chipped wood pine Established in 1940 – Processing chipped Eucalypt wood to produce paper pulp and cooking liquor to the Chemical Recovery Plant. | The previous mill components have largely been replaced, with some digester vessels retained. Previous digester is the basis for a new digester, new cooking process ‘Down Flow Slow Solids’. Claimed that previous Eucalypt Kraft Mill has been decommissioned. ‘Existing continuous digester’ has been used as base for a new continuous digester for Eucalypt pulp. |
| Concentrators | 2 Evaporator concentrators to receive dilute black liquor from pulp mills and increase the percentage of solids to be sent to the recovery boilers. Output 64% Solids | New concentrator has been installed to increase the solid concentrations of the black liquor removed from the pulp mills. Output 74% solids |
| Infrastructure of the System | Maryvale Mill is located off Tanjil East Rd, Maryvale VIC. It is an 850 acre site for paper production, along with wetlands, 3 Mills, 5 paper machines and chemical recovery plant (inclusive of generators). The Mill also has an internal roadway. | Location and size of site remains unchanged. No changes to roadways detailed. Some changes have been made to production related buildings and equipment. Some new equipment has also been installed.”[11] |
[11] T documents at 142-143. The year identified in brackets after each Steam Turbine Generator and Boiler indicates the year it was commissioned.
The Regulator issued an Instrument of Variation on 25 March 2009 to reflect the variations:
“1) the following components are included as components of the Power Station:
a)An additional 66/22 kV, 33MVA transformer (increase number from two to three)
b)Batch pine softwood pulp digester constructed using new components and components from old pulp mills.
c)Continuous eucalyptus pulp digester constructed using new components and components from old pulp mills.
d)Additional black liquor concentrator
e)New and expanded cooling towers related to black liquor concentration.
2)the following components are no longer components of the Power Station:
a)Continuous pine softwood pulp digester has been removed.
b)Batch eucalyptus wood pulp digester has been removed.
c)Cooling towers related to black liquor production have been removed or expanded.[12]
[12] T documents at 155
The Regulator’s decision on review
The Regulator’s delegate reviewed the decision dated 8 October 2008 that the MMPS was not eligible for accreditation. He also reviewed the decision dated 23 March 2009 varying the determination under s 30C. In the course of his consideration, he found that:
“The majority of the modifications described in the 8 October 2008 application for accreditation related to the wood handling and pulping processes for the pulp mill (which are not components of the power station) rather than for the renewable energy source (black liquor) used in the power station.”[13]
That finding should have led to his varying the earlier decision dated 23 March 2009 to omit those processes. Rather, he affirmed that decision.[14] The Regulator has not maintained this position and that he had intended to vary the determination to omit those components relating to the wood handling and pulping processes. It was clear at the hearing that Australian Paper was aware of his view although it continued to be of the view that they were included.
LEGISLATIVE FRAMEWORK
[13] T documents at 202
[14] T documents at 205
The relevant legislation
Since Australian Paper applied for accreditation of the Maryvale Mill on 3 October 2008, the REE Act has been amended on eight occasions and the Renewable Energy (Electricity) Regulations 2001 (Regulations) on far more. The general rule is that the law that is applied is that in force at the date the decision is reviewed. That general rule may be altered by legislation either explicitly or implicitly but it is a rule that also has an exception. Whether the exception applies so that the decision must be reviewed at some earlier time depends on the nature of the decision, the law under which it was made and any transitional provisions in the legislation by which the amendment to the relevant legislation was effected. The Tribunal must look to the repealing legislation in order to determine whether there are transitional provisions or whether it is intended to operate retrospectively. If there are no such provisions, there must still be a consideration of the repealed legislation to determine whether a right has accrued under that repealed legislation.[15]
[15]
We do not need to undertake that consideration in this case. Except where we have indicated, none of those amendments has been made to provisions with which we are concerned in this matter. Furthermore, none has made any material difference to the provisions for the purposes of our consideration of this matter.
A broad description of the features of the Act
The Act provides “… for the establishment and administration of a scheme to encourage additional electricity generation from renewable energy sources …”.[16] It is intended:
“(a) to encourage the additional generation of electricity from renewable sources; and
(b)to reduce emissions of greenhouse gases in the electricity sector;[[17]] and
(c)to ensure that renewable energy sources are ecologically sustainable.”[18]
[16] REE Act, Long Title
[17] The effect of s 3 and Schedule 1, Clause 1 of the Renewable Energy (Electricity) Amendment Act 2009; Act No 78 of 2009
[18] REE Act, s 3
In broad terms and in so far as it is relevant in this case, the Act seeks to achieve its objects by:
“… issuing … certificates for the generation of electricity and requiring certain purchasers (called liable entities) to surrender a specified number of certificates for the electricity that they acquire during a year.
Where a liable entity does not have enough certificates to surrender, the liable entity will have to pay renewable energy shortfall charge.
…”[19]
[19] REE Act, s 3. Section 3 and Clause 1 of Schedule 2 to Act No 78 of 2009 also added a third qualification to the objectives: “A partial exemption relating to one or more emissions-intensive trade-exposed activities may be taken into account in working out a liable entity’s renewable energy certificate shortfall for a year. If it is, it will reduce the renewable energy charge otherwise payable.”
Renewable energy certificates
Part 2 of the REE Act is concerned with renewable energy certificates (RECs). Section 18(1) provides that:
“The nominated person for an accredited power station may create a certificate for each whole MWh of electricity generated by an accredited power station that the person operates during a year that is in excess of the power station’s 1997 eligible renewable power baseline.”[20]
[20] The eligible renewable power baseline is determined under s 14.
A power station’s eligible renewable power baseline is determined according to Schedule 3 to the Regulations.[21] In broad terms, that baseline is determined by when a power station started generating electricity from renewable energy sources. If it did not generate from such sources before 1 January 1997 or only began generating from them or was built after that day, its renewable power baseline is nil.[22] If it did generate electricity from eligible renewable sources before that date, its eligible renewable power baseline is generally determined by the average of the electricity it generated from such sources in 1994, 1995 and 1996.[23] That is its default eligible renewable power baseline. The general rule is qualified where the power station has not generated electricity from those sources continuously or has done so intermittently.[24]
[21] Regulations, r 5
[22] Regulations, Schedule 3, cl 1
[23] Regulations, Schedule 3, cll 2.1 and 2.2
[24] Regulations, Schedule 3, cll 2.3 to 2.5
A power station’s nominated person[25] may ask the Regulator to assess the eligible renewable power baseline under cl 3 of Schedule 3 and so on a different basis if it considers that another reference period would be more representative of the normal operational cycles of the power station.[26] The Regulator may decide to do so without being asked. In either case, a further condition must also be satisfied before an assessment may be made under cl 3. That condition must be one of those set out in cl 3.2:
“The Regulator may determine a 1997 eligible renewable power baseline for the power station in a manner different from that set out in clause 2 if:
(a)electricity generated using an eligible renewable energy source by the power station is linked to seasonal variations of longer than 3 years; or
(aa)measurement for the reference period would not be representative of 1997 levels of generation; or
(b)at any time in the reference period, there were major changes to the infrastructure or operating environment of the power station; or
(c)determining the baseline in accordance with clause 2 would cause hardship for the nominated person; or
(d)the amount of electricity generated by the power station before 1994 using an eligible renewable energy source was significantly different from that generated in the reference period for reasons other than the capacity of the power station, demand for electricity or other operating constraints; or
(e)at any time in the reference period, the power station’s capacity to generate electricity using an eligible renewable energy source, or its output, was significantly reduced by unplanned outages or other operating constraints; or
(f)an action or policy of the Commonwealth government directly reduced the power station’s capacity to generate electricity using an eligible renewable energy source for a sustained period.”
[25] Unless another person has been approved under s 30B, the nominated person is the person who applied for accreditation: REE Act, s 5(1).
[26] Regulations, Schedule 3, cll 3.1 and 3.1A
RECs may be created immediately after the generation of the final part of the electricity in relation to which it was created.[27] The Regulator must register a certificate when it is created in order to be valid.[28] It may be transferred[29] but the Regulator must be notified of any transfer and the Regulator must alter the register of certificates to show the transferee as the owner of the certificate.[30] No certificates can be created and no liability can arise in respect of electricity generated on or after 1 January 2031.[31]
[27] REE Act, s 19
[28] REE Act, s 26(1)
[29] REE Act, s 27
[30] REE Act, s 28
[31] REE Act, s 4. Before its amendment with effect from 7 September 2009 by s 3 and Clause 2 of Schedule 2 of Act No 78 of 2009, s 4 specified a date of 1 January 2021.
In determining a 1997 eligible renewable power baseline for a power station on a basis different from that set out in cl 2, the Regulator may take into account information about the 1997 years or later years.[32] In addition, the Regulator:
“… should take into account:
(a)the need for the baseline to be representative of the amount of electricity the power station could have generated using an eligible renewable energy source in 1997 under normal conditions; and
(b)the generation capacity of the power station; and
(c)the amount of electricity the power station has had to generate using an eligible renewable energy source to meet the requirements of the electricity grid; and
(d)any other matters that might have affected the amount of electricity the power station generated using an eligible renewable energy source; and
(e)any other information provided by the nominated person about electricity generated by the power station.”[33]
[32] Regulations, Schedule 3, cl 3.3A
[33] Regulations, Schedule 3, cl 3.3
A power station may be considered to be a new power station if it is a power station:
“(a) that is closed for at least 3 years continuously after 1 January 1997; and
(b)that is refurbished at a cost of at least half the replacement cost of the power station at the same capacity.”[34]
[34] Regulations, Schedule 3, cll 3.4 and 3.5
The creation, transfer and surrender of certificates
RECs have a commercial value as they can be used to avoid or reduce the amount of renewable energy shortfall charge that liable entities who acquire electricity have to pay. That may be the nominated person generating electricity from an accredited power station or the person to whom that nominated person has transferred the certificates. Consequently, certificates can provide a means of reducing the renewable energy shortfall charge that nominated person might otherwise be liable to pay or, by transferring them to a liable entity, represent a secondary stream of income to that nominated person.
A person who makes a wholesale acquisition of electricity within the meaning of s 32 or a national wholesale acquisition within the meaning of s 33 makes a relevant acquisition of electricity.[35] Section 35 provides that the person is called a “liable entity”.[36] Except in limited circumstances, a liable entity is liable to pay a renewable energy shortfall charge in respect of any renewable energy certificate shortfall.[37] That is to say, it is liable to pay a charge in relation to its relevant acquisitions of electricity in so far as they exceed the value, shown in MWh, of any RECs surrendered by the liable entity.[38]
[35] REE Act, ss 5(1) and 31
[36] See also REE Act, s 5(1)
[37] REE Act, s 36
[38] This was previously the subject of ss 36 to 38 of the REE Act but those sections were repealed by s 3 and Clause 6 of Schedule 2 of the Renewable Energy (Electricity) Amendment Act 2010, Act No 69 of 2010. Although now providing for large-scale generation shortfall charge and a small-scale technology shortfall charge and varying the way in which and time at which shortfalls are calculated, the broad description of this part of the scheme provided under the REE Act remains the same despite the amendments.
Who is a registered person and who is a nominated person?
Any person may be registered under the Act[39] and may apply for registration in accordance with s 10. Once the Regulator receives that application, he must either approve or refuse it. The Regulator must refuse the application if satisfied that the person has previously been a registered person.[40]
[39] REE Act, s 9(1)
[40] REE Act, s 11 and now s 11(3)
A nominated person is either the person who applied for accreditation of a power station under s 13 (and so the registered person) or, if the Regulator has, under s 30B, approved a registered person who is a stakeholder in an accredited power station as the nominated person, that person.
When is a power station eligible for accreditation?
An accredited power station is a power station accredited under Division 3 of Part 2 of the REE Act.[41] A power station is eligible for accreditation if some or all of the power it generates is generated from an eligible (eligible renewable[42]) energy source and it satisfies any prescribed requirements.[43] Black liquor is an eligible renewable energy source under s 17(1)(p) and so is an eligible energy source.[44] It is defined as “… the mixture arising from the chemical wood pulping process”.[45]
[41] REE Act, s 5(1)
[42] The word “renewable” was deleted by s 3 and Schedule 1, Clause 3E of Act No 78 of 2009
[43] REE Act, s 14(2)
[44] REE Act, s 5(1)
[45] Regulations, r 6
Eligibility for accreditation is subject to the provisions in s 14(2A):
“… a power station is not eligible for accreditation if the Regulator is satisfied that a previous determination under paragraph (1)(a) should be varied to include the components of the system specified in the application for accreditation.” (emphasis added)
Once he has determined that a power station is eligible for accreditation, the Regulator must also determine the 1997 eligible renewable energy baseline (baseline) for the power station and any energy sources that it uses and that are not eligible energy sources.[46] He determines the baseline by reference to the guidelines set out in Schedule 3 to the Regulations.[47] If an accredited power station began generating electricity using an eligible renewable energy source on or after 1 January 1997, the baseline is nil.[48]
[46] REE Act, s 14(3) Before its amendment by s 3 and Schedule 1, Clause 3F of Act No 78 of 2009, the reference was to “eligible renewable energy sources”.
[47] REE Act, s 14(4)
[48] Regulations, Schedule 3, cl 1
Provisional accreditation of a power station
A registered person may apply for “… provisional accreditation of the proposed components of an electricity generation system that the person considers would, if assembled, be a single power station.”[49] The application must meet the requirements in s 12A(2) but, if it does and if “the Regulator is satisfied that some or all of the proposed components of the system would, if assembled, be a power station for the purposes of this Act”, the Regulator must give the applicant a written notice.[50] In that written notice, the Regulator must:
“(c) specify which of those proposed components (the provisional components) would, if assembled, be a power station for the purposes of this Act; and
(d)specify that, if an application is properly made under section 13 in relation to the power station:
(i)the Regulator will determine that the components specified in that application are taken to be a power station for the purposes of this Act if the Regulator is satisfied that they are not materially different from the provisional components; and
(ii)the power station will be eligible for accreditation if subsection 14(2) is satisfied.”
The Regulator must refuse the application if not satisfied that the application has been properly made or if “… not satisfied that some or all of the proposed components of the system would, if assembled, be a power station for the purposes of this Act …”.[51] The Regulations made for the purposes of the determination of the components of a power station under s 14 apply equally in relation to the determination of the components of a power station on the provisional application.[52]
[49] REE Act, s 12A(1)
[50] REE Act, s 12B
[51] REE Act, s 12B(2)
[52] REE Act, s 12B(3)
Applying for accreditation
A registered person may apply to the Regulator:
“… for accreditation, as an accredited power station, of the components of an electricity generation system that the person considers are a single power station if the person:
(a)operates those components (whether alone or together with one or more other persons); or
(b)owns all, or a part, of those components (whether alone or together with one or more other persons).”[53]
[53] REE Act, s 13(1)
The application for accreditation must comply with s 13(2). That provision provides, in part, that the application must:
“(a) be made in a form and manner required by the Regulator; and
(b)specify those components of the system that the applicant considers are a single power station; and
(baa)…
(ba)list:
(i)the eligible
renewable[[54]] power sources from which power is intended to be generated; and(ii)the estimated average annual output of each source listed under subparagraph (i); and
(c)-(e)…”
[54] Deleted by s 3 and of Schedule 1, Clause 3C of No 78 of 2009
If the Regulator receives an application that is properly made under s 13, then s 14(1) provides that:
“… the Regulator must:
(a)determine which components of the system are to be taken to be a power station for the purposes of this Act; and
(b)determine whether the power station is eligible for accreditation.”
If the Regulator decides that the power station is eligible for accreditation, he must approve the application for accreditation. Otherwise, he must refuse it.[55] We will return to the determination of the components of the system in a moment.
[55] REE Act, s 15
Section 14(1A) applies in those circumstances in which a registered person has applied for provisional accreditation and the Regulator has given that person a notice under s 12B(1) in relation to the power station. Provided the Regulator is satisfied that the components specified in the application under s 13 are not materially different from the components specified under s 12B(1), he must determine under s 14(1)(a) that the components specified in the application under s 13 are taken to be a power station.
The Regulator must determine which components of the system are taken to be a power station in accordance with guidelines prescribed in the Regulations.[56] Section 14(5) provides that:
[56] REE Act, s 14(4)
“To avoid doubt:
(a)the regulations may provide that a power station includes components that are integral to the operation of the power station or to the generation of electricity by the power station; …
(b)…”
We will return to those below[57] but, for the moment, note that, once the Regulator has determined which components of the system are taken to be a power station for the purposes of the REE Act, s 30C(1) provides that:
“The Regulator may, by writing, vary a determination under paragraph 14(1)(a). The Regulator may do so only in relation to an accredited power station.”
The Regulator may do so on his own initiative or upon the application made by the nominated person for the accredited power station.[58]
[57] See [49 - 52] below
[58] REE Act, s 30C(2)
Determining which components of a system are taken to be a power station
We referred to the Regulator’s having to determine which components of the system are to be taken to be a power station for the purposes of the REE Act by reference to guidelines prescribed in the Regulations. They are found in set out in Schedule 1 to the Regulations.[59]
[59] Regulations, r 4(2)
Clause 1 of Schedule 1 sets out general provisions relating to the determination of the components that may be taken to be part of a power station. They are:
“1.1 Components of an electricity generation system that may be taken to be part of a power station for the Act include any of the following, whether or not they are owned by the operator of the system, that are integral to the operation of the system and the generation of electricity:
(a)any component that operates to transform an eligible
renewable[[60]] energy source into electricity;(b)any infrastructure of the system, including buildings, fuel storage areas, fuel handling devices, information technology, instrumentation and controls.
1.2The components of a supplementary power supply for the system are taken to be components of the system.
Note To the extent that a supplementary power supply uses energy sources that are not eligible
renewable[[61]] energy sources or that are generated during any period of suspension of accreditation of the accredited power station, the electricity generated is to be omitted in calculating the amount of electricity generated by the power station: see Act, subsection 18 (4).1.3If fuel is processed in an electricity generation system before it is converted to electrical energy, the fuel processing and delivery components of the system may be taken to be part of a power station for the Act.
1.4A long-term storage hydro-electric dam that provides water to 2 or more power stations is to be taken to be a component of each power station affected by release of water from the dam.
1.5This Schedule is not intended to limit the kinds of components of an electricity generation system that may be taken to be part of a power station for the Act.”
[60] Deleted by the Renewable Energy (Electricity) Amendment Regulations (No. 6) Regulations No 270 of 2011; r 3 and Schedule 1, Clause [4]
[61] Deleted by the Renewable Energy (Electricity) Amendment Regulations (No. 6) Regulations No 270 of 2011; r 3 and Schedule 1, Clause [4]
Clauses 2 to 10 go on to specify the components of an electricity generation system that may be taken to be part of a power station using particular types of energy sources. It is clear from Clause 1.5 that the components of those systems using energy sources that are specified are not limited to those components specified in Clauses 2 to 10.
Clause 2 sets out components of an electricity generation system using bioenergy that may be taken to be part of a power station. “Bioenergy”:
“… means the energy derived from the biomass components of an energy source mentioned in any of paragraphs (i) to (s) of the definition of eligible renewable energy source in subsection 17(1) of the Act.”[62]
[62] Regulations, r 3(1)
“Black liquor” is an eligible renewable energy source under s 17(1)(p). Clause 2 sets out a list of components of an electricity generation system using bioenergy that may be taken to be part of a power station. They are:
“(a) buildings and stationary infrastructure;
(b)combustion system, including waste heat boilers;
(c)combustion or steam turbine;
(d)compressor;
(e)control system;
(f)cooling tower;
(g)digestion tank;
(h)feedstock preparation;
(i)fuel storage, transport and processing system;
(j)gas cleaning system;
(k)gasifier;
(l)generator;
(m)heat recovery system;
(n)mechanical cleaner;
(o)oxygen supply system;
(p)particulate removal system;
(q)pumping equipment;
(r)switchyard and transformer;
(s)thermal reactor;
(t)water supply and treatment system.”
OUTLINE OF CONTENTIONS
On behalf of Australian Paper, Dr Hanscombe with Ms McKenzie submitted that the MMPS in 2008 is not the same power station as the MMPS in 2002. Rather, it is a new power station eligible for accreditation. Its components are materially different and it uses different processes resulting in the production of an increased volume of black liquor at a higher concentration of solids and a consequent increase in its capacity to generate electricity and a reduction in environmental impacts. Had similar works been carried out on a different area of land rather than on the same premises, there would have been little doubt that the power station as constructed in 2008 was a new power station. The outcome should be no different because Australian Paper chose to use the same site and to carry out the work alongside the existing plant in order to minimise the disruption to the operations of the Maryvale Mill.
The first task is to identify the components of the system that are taken to be part of the power station as required by s 14(1)(a). The second task is to determine eligibility as required by s 14(1)(b). The provisions of s 14(2A) cannot, as a matter of statutory construction, override the fundamental requirement in s 14(1)(a).
Under s 14(2A), a power station is only ineligible if the Regulator is satisfied that a previous determination under s 14(1)(a) in relation to an accredited power station should be varied under s 30C “to include the components of the system specified in the application for accreditation” (emphasis added). The power to vary the components, Dr Hanscombe submitted, is directed to situations in which an application is made for separate accreditation of equipment which is added to an existing accredited power station. Wind turbines added to an existing wind farm would be an example.[63] It is not appropriate to exercise the power when dealing with a new power station comprising substantially different components from those used in the previously accredited power station, which has now been decommissioned. The components used in 2008 in MMPS cannot be considered to be part of the 2002 MMPS. That is so even if some of the components and equipment used in 2002 are now used in 2008. The works that have been undertaken have been significant both in scale and cost and have led to a new power station’s replacing the old. The applicability of s 30C is, in any event, to be doubted because the identification of the components of MMPS in 2002 was ambiguous.
[63] Dr Hanscombe and Ms McKenzie referred to the Revised Explanatory Memorandum to the Renewable Energy (Electricity) Amendment Bill 2006 at [44] and [100]-[101]
Australian Paper also contended that the Regulator had proceeded wrongly when concluding that the wood handling and pulping processes for the pulp mill were not components of the power station. He had done so even though, on 13 December 2009, he had accepted that the pine kraft pulp mill and the eucalypt kraft pulp mill were components of the MMPS in 2002. At that time, the Regulator varied the determination under s 14(1)(a) to remove the old pulp digesters and to include the new pulp digesters as components. In the generation of electricity, the wood handling and pulping processes are the source of the black liquor used as the renewable energy source. Those processes are, Australian Paper contended, analogous to the dam wall and the pipes that carry water to the turbines as part of a hydroelectric power station.[64] This interpretation its contention continued, is supported by cl 1.1 of Schedule 1 to the Regulations:
“… Under cl 1.1 of Schedule 1 of the Regulations, components of an electricity generation system that may be taken to be part of a power station include any component that operates to transform an eligible renewable energy source into electricity and any infrastructure of the system (including buildings, fuel storage areas, fuel handling devices, information technology, instrumentation and controls) that is integral to the operation of the system and the generation of electricity. Clause 1.3 provides that, if the fuel is processed in an electricity generation system before it is converted to electrical energy, the fuel processing and delivery components of the system may be taken to be part of a power station. Where an electricity generation system uses bioenergy, the components that may be taken to be part of a power station include ‘feedstock preparation’: clause 2.1(h).”[65]
[64] Reference was made to Hydro Power Pty Ltd v Renewable Energy Regulator [2008] AATA 385 (Deputy President Forgie)
[65] Submissions of Dr Hanscombe and Ms McKenzie at [29.4]
On behalf of the Regulator, Mr O’Donovan submitted that the REE Act establishes a market based system for stimulating investment in renewable energy. That provides the context in which the Regulator’s power is exercised and which guides its exercise. Accreditation under the REE Act is not determined by reference to whether a power station is new or old but by whether accreditation encourages the further generation of electricity from renewable sources. To put new RECs into the market when there is no further power station generating electricity from renewable sources is to devalue them and so to act contrary to the purpose of the REE Act. Mr O’Donovan acknowledged that the MMPS’s baseline is not in issue in this case but observed that, if its application were successful, Australian Paper would presumably contend that its baseline should be nil or, if unsuccessful, at a figure indicative of the amount of electricity the MMPS could have generated using an eligible renewable energy source in 2002 under normal conditions.[66]
[66] See Regulations, r 3 generally
The Regulator’s contention is that the changes made to the components making up the power station were relatively minor. The power conferred by s 14(2A) to accredit new power stations should, as far as possible, be exercised in a way that ensures generators have incentives to add additional capacity rather than simply replacing existing capacity. That is to say, it:
“… should be exercised in a way which discourages the shutting down of existing renewable energy power stations and the replacement with new power stations which would not be subject to a 1997 eligible renewable power baseline. Doing this would further the Act’s objective of encouraging the additional generation of electricity from renewable energy sources. Doing otherwise would foster incentives to replace existing facilities without generating more electricity from renewable sources.
It would be a perverse result if the REE Act, or a particular exercise of discretion, created incentives for the partial shutting down of existing renewable energy generation capacity and replacing it with the new capacity in order to obtain the economic benefits in getting a reset of the 1997 eligible renewable power baseline to nil.”[67]
[67] Respondent’ Statement of Facts and Contentions at [62]-[63]
Mr O’Donovan submitted that the power, as expressed in s 14(2A), is discretionary and a decision made under that power must be made consistently with the scope and purpose of the REE Act. Section 14(2A) should not be approached with an eye to the role of individual components in a power station but whether a variation to an existing accreditation would promote, or detract from, the purposes of the REE Act. The Regulator’s view is that a variation to an existing accreditation would not promote those purposes for they would lead to 150,000 more RECs in the market and a consequent reduction in the price of existing RECs.
CONSIDERATION
Identifying the task
There was no dispute between the parties that the Australian Paper properly made its application under s 13 and we accept that. Once that point has been reached, it seems to us that the first step is to identify which components of the electricity generation system considered by Australian Paper to be a single power station and the subject of its application are taken to be a power station for the purposes of the REE Act. That is the task set by s 14(1)(a). It is consistent with the task first facing the Regulator under ss 12B(1)(b) and (c) when an application is made for provisional accreditation and so with his subsequent task under s 14(1A)(b) when an application for accreditation is made under s 13.
Having identified the components that are taken to be part of the power station, the next task is to determine whether the power station is eligible for accreditation. Reading ss 14(1)(b), (2) and (2A) together, the task becomes:
(1)is that power station eligible for accreditation under s 14(1)(b) within the meaning of s 14(2) i.e.
(a)is some or all of its power generated from an eligible energy source; and
(b)does it satisfy any prescribed requirements; and
(2)despite its being eligible for accreditation under s 14(2), should a determination of the components of an electricity generation system made under s 14(1)(a) on an earlier occasion be varied to include the components of the electricity generation system specified in the application;
(a)if answered in the affirmative, the power station is not eligible for accreditation; and
(b)if answered in the negative, the power station is eligible for accredition.
Given that there is no question that the MMPS generates some or all of its power from an eligible energy source and that it meets the prescribed requirements, if any, our task requires us to answer four questions:
(1)Does s 14(2A) confer a discretionary power on the Regulator?
(2)What are the parameters within which the power to vary under s 30C may be exercised?
(3)What are the components of the electricity generation system that is taken to be a power station for the purposes of the REE Act?
(4)Should the previous determination relating to the MMPS be varied to include the components specified in Australian Paper’s application?
Does s 14(2A) confer a discretionary power on the Regulator?
The second question we have set out in [62] is raised by s 14(2A). Mr O’Donovan submitted that it confers a discretionary power on the Regulator to decide when a previous determination should be varied and when a power station should be accredited. He must do so having regard to the purpose of the REE Act. If varied, the determination may be varied to include or exclude components.
Dr Hanscombe rejected that submission on the basis that the provision does not use words providing for the exercise of a discretion. It uses the word “satisfied” and gives only the power to “include the components of the system specified in the application for accreditation” but not the power to exclude components. Variation should occur when components are added such as another turbine on a wind farm for one more wind turbine does not make a new wind farm. The word “satisfaction” does not confer a broad discretion as to whether or not a decision-maker “chooses” to be satisfied. Rather, it confers a function upon that decision-maker to assess or determine something objectively in accordance with the statute in which it is used.
In support of her submission, Dr Hanscombe referred us to the dissenting judgment of Gummow ACJ and Kiefel J in Minister for Immigration v SZMDS[68] (SZMDS). Section 36(2)(a) of the Migration Act 1958 provides that “A criterion for a protection visa is that the applicant for the visa is … a non-citizen in Australia to whom the Minister is satisfied Australia has protection obligations under the Refugees Convention …”. The Minister is to grant the visa if, after considering a valid application for it, he or she is “satisfied” that certain criteria have been satisfied. Among the criteria is that prescribed by s 36(2)(a).[69] If not satisfied, the Minister must refuse to grant the visa. We note that Gummow ACJ and Kiefel J began by noting the two senses in which the word “satisfy” has been used:
“ The term ‘satisfy’ has various shades of meaning. Two of them are involved in the collocation presented by ss 36 and 65 of the Act. One is that the applicant for a protection visa answers or meets the requirement or condition that Australia has protection obligations to the applicant. The second is that the decision maker accepts or is content that the applicant answers or meets that requirement or condition.”[70]
[68] (2010) 240 CLR 611; 266 ALR 367; 84 ALJR 369; 115 ALD 248; Heydon, Crennan and Bell JJ; Gummow ACJ and Kiefel J dissenting
[69] Migration Act, s 65(1)(a)(ii)
[70] [2010] HCA 16; (2010) 240 CLR 611; 266 ALR 367; 84 ALJR 369; 115 ALD 248 at [2]; 615; 369; 372; 249
Their Honours later said, in a passage to which Dr Hanscombe referred us:
“… The criterion for attraction of the jurisdiction of the decision maker in deciding an application under the Act for a protection visa is not expressed in terms of ‘fact’ as simply understood. Rather, as explained earlier in these reasons, the Act fixes upon a criterion of ‘satisfaction’ as to the existence of a certain state of affairs respecting the status of the applicant.
In that regard, a statement of principle by Lord Wilberforce made in 1976, before the tectonic shifts in English public law which occurred in later decades, is of first importance. In Secretary of State for Education and Science v Tameside Metropolitan Borough Council …,[[71]] his Lordship said of a provision conditioning the power of the Secretary of State to act upon satisfaction as to a certain state of affairs:
‘The section is framed in a “subjective” form – if the Secretary of State ‘is satisfied’. This form of section is quite well known, and at first sight might seem to exclude judicial review. Sections in this form may, no doubt, exclude judicial review on what is or has become a matter of pure judgment. But I do not think that they go further than that. If a judgment requires, before it can be made, the existence of some facts, then, although the evaluation of those facts is for the Secretary of State alone, the court must inquire whether those facts exist, and have been taken into account, whether the judgment has been made upon a proper self-direction as to those facts, [and] whether the judgment has not been made upon other facts which ought not to have been taken into account.’ (Emphasis added.)”[72]
[71] [1977] AC 1014 at 1047; [1976] 3 All ER 655 at 681
[72] [2010] HCA 16; (2010) 240 CLR 611; 266 ALR 367; 84 ALJR 369; 115 ALD 248 at [20]-[21]; 619-620; 372-373; 375; 253
Dr Hanscombe also drew our attention to the judgment of Crennan and Bell JJ, who, with Heydon J, formed the majority in SZMDS. After referring to the need to exercise discretions, even wide discretions, “… judicially, according to the rules of reason and justice, and not arbitrarily or capriciously …”, their Honours noted that:
“ Just as the unreasonableness of a result was referred to in Avon Downs, correspondingly, the ‘reasonableness’ of a decision has often been considered in circumstances where a public officer must be ‘satisfied’ of some fact or circumstance. In R v Connell; Ex parte Hetton Bellbird Collieries Ltd, it was not suggested that such an officer must prove his or her satisfaction. However it was found that a requirement that a public officer be ‘satisfied’ of certain facts or have ‘reasonable cause’ to believe facts imports a requirement that the opinion is one that could be formed by a reasonable person …[[73]]. The Chief Justice went on to state:
‘If the opinion which was in fact formed was reached by taking into account irrelevant considerations or by otherwise misconstruing the terms of the relevant legislation, then it must be held that the opinion required has not been formed. In that event the basis for the exercise of power is absent, just as if it were shown that the opinion was arbitrary, capricious, irrational, or not bona fide …’ [[74]]
Further, satisfaction of the existence of facts must amount in point of law to what an empowering provision prescribes or specifies …[[75]]. As explicated subsequently by Gibbs J in Buck v Bavone … [[76]], this means a decision-making authority which must be satisfied of certain facts ‘must act in good faith; it cannot act merely arbitrarily or capriciously’. His Honour went on to say that even if certain specified errors could not be established ‘the courts will interfere if the decision reached by the authority appears so unreasonable that no reasonable authority could properly have arrived at it’ …[[77]]. Such formulations convey the idea that a court should not lightly interfere with administrative decision-making.”
[73] R v Connell; Ex parte Hetton Bellbird Collieries Ltd [1942] AC 206 at 224-225 per Viscount Maugham; at 228 per Lord Atkin
[74] R v Connell; Ex parte Hetton Bellbird Collieries Ltd (1944) 69 CLR 407 at 432
[75] R v Australian Stevedoring Industry Board; Ex parte Melbourne Stevedoring Co Pty Ltd (1953) 88 CLR 100 at 117 per Disxon CJ, Williams, Webb and Fullagar JJ
[76] (1976) 135 CLR 110 at 118
[77] (1976) 135 CLR 110 at 118
From these passages, Dr Hanscombe drew the conclusion that:
“In the case of Maryvale, this means that a state of satisfaction can only be reached after a rational assessment of the facts in the context of the legislation. In other words, the Tribunal must consider the list of components which it has determined to be part of the electricity generation system (in accordance with s 14(1)(a)), and then rationally assess whether the changes brought about between 2002 and 2008 resulted in a ‘new’ power station.”[78]
Of relevance in that context are the extent of removal of old components and their replacement, the extent of substantive modifications to components, the cost of those modifications and their cost when compared to the value of the power station as a whole whether assessed by reference to book value, written down value or replacement cost. The effect on the market of an increased number of RECs were the MMPS to be accredited under the current application is, therefore, irrelevant.[79]
[78] Applicant’s outline of submissions at [47]
[79] See Applicant’s Outline of Submissions at [50] and transcript at 84
We agree with Dr Hanscombe that the principles set out in SZMDS are equally applicable to a discretionary power given to the Regulator under the REE Act. If she is suggesting that s 14(2A) confers a discretionary power on the Regulator to make a variation of the determination under s 14(1)(a), we do not agree. The power to make a variation is given to the Regulator under s 30C. What s 14(2A) is concerned with is eligibility for accreditation. If the Regulator is satisfied that a previous determination should be varied to include the components of the system specified in the application for accreditation, that power station is not eligible for accreditation. That does not mean that the Regulator’s power to vary a determination is necessarily limited by the reference in s 14(2A) to the inclusion of components in the system of the power station put forward for accreditation. Eligibility is one thing and variation of a determination is another. The two need to be separated and we will consider them separately.
What are the parameters within which the power to vary under s 30C may be exercised?
The power to vary found in s 30C must be exercised in writing and may be exercised on the Regulator’s own initiative or at the request of a nominated person for an accredited power station. Apart from that, s 30C does not impose any express limitations on the Regulator’s power to vary an earlier determination made under s 14(1)(a) on an application for accreditation. In this section of our reasons, we consider whether there are limits on the power to vary and, if so, what they are. That has taken us not only to s 30C but also to the wider context of the REE Act in which it appears and the Regulator’s obligation to determine the components of an electricity generation system that may be taken to be part of a power station for it is that determination that is varied under s 30C. At Attachment E, we have set out the principles that guide us in determining the limits of a discretionary power and the basis on which it may be exercised.
A. The limits of the power under s 30C: general principles
In the case of s 30C, the limits of the power are not circumscribed by the confines of s 14(1)(a). That provision which is concerned only with an application for accreditation whereas the power conferred by s 30C may only be exercised in relation to a power station that has already been accredited; not a power station for which accreditation is sought. It may be exercised in relation to an accredited power station either on the Regulator’s own initiative or on the application of the nominated person of that accredited power station.
The power is expressed in terms of being a power to “vary a determination under paragraph 14(1)(a)”. The ordinary meanings of the word “vary” include “… to change, or be of different kinds, especially according to different circumstances. …”.[80] It is not limited to “including” and so, in this context, “… to tak…[ing] in or consider[ing] something or someone along with other things … as part of a group …”.[81] Certainly, s 30C permits a variation to be made to add a component to a determination so that it is a component taken to be part of a power station but a power to vary extends to the power to omit a component from that determination so that it is no longer part of a power station.
[80] Chambers 21st Century Dictionary, 1999, reprinted 2004, Chambers
[81] Chambers 21st Century Dictionary, 1999, reprinted 2004, Chambers
B. Relevance of Regulations
During the course of the hearing, it was said that cll 3.4 and 3.5 of Schedule 3 to the Regulations are not relevant in our consideration of the limits of the discretionary power to vary the determination. Schedule 3 sets out guidelines for determining the 1997 eligible renewable power baseline for a power station. The submission would apply equally to the provisions of Schedule 1 setting out guidelines for determining the components of an electricity generation system that are taken to be part of a power station.
Generally, we would not be permitted to look to the Regulations in interpreting the provisions of the REE Act or the criteria to be used in exercising powers conferred under it. The Australian authorities supporting this position are referred to in Statutory Interpretation in Australia by DC Pearce and RS Geddes[82] (Pearce and Geddes) and include Hunter Resources Ltd v Melville[83] and Secretary, Department of Health, Housing, Local Government and Community Services v Kaderbhai[84] in which reference was made to the passage from the judgement of Brennan J in Webster v McIntosh:[85]
“… the intention of Parliament in enacting an Act is not to be ascertained by reference to the terms in which a delegated power to legislate has been exercised.”[86]
As Deane J said in Brayson Motors Pty Ltd (in liq) v Federal Commissioner of Taxation:[87]
“It is generally accepted that one looks at regulations only as an indication of what a government department thinks about the construction of an Act.”
[82] 7th edition, LexisNexis Butterworths, Sydney, 2006 at [3.41]
[83] (1988) 77 ALR 8 at 14 per Mason CJ and Gaudron J
[84] (1994) 122 ALR 577 at 583-4 per Foster, Whitlam and Cooper JJ
[85] (1980) 32 ALR 603 at 606
[86] (1980) 32 ALR 603 at 606
[87] [1985] HCA 20; (1985) 156 CLR 651 at 652
There are exceptions to the general rule. An obvious exception occurs if the Act deems the provisions of the delegated legislation to be part of the Act.[88] That situation does not arise in this case. Another exception may occur if the Act provides that it may be amended by regulations or its meaning modified.[89] Section 17 of the REE Act provides an example. It sets out energy sources that are eligible renewable energy sources in s 17(1) and those that are not in s 17(2). It then goes on to provide that, for the purposes of the REE Act, the Regulations may provide that an energy source prescribed under either subsection has the meaning prescribed by those regulations. The Regulations may limit the meaning of an energy source that is an eligible source and extend the meaning of those that are not.[90] Division 2.2 of the Regulations provides for these matters.
[88] Pearce and Geddes at [3.42]
[89] Hanlon v Law Society [1891] AC 124 at 193 and considered by Moore J in Ward v Commissioner of Police (1998) 80 FCR 427 at 437-438
[90] REE Act, ss 17(3), (4) and (5)
Where the Act “… provides a framework built on contemporaneously prepared regulations”,[91] another exception arises. When that is the case, reference to the delegated legislation may be:
“… not to construe an overall scheme or to throw light on an ambiguity in a statutory provision but to ascertain what the scheme is.”[92]
When the provisions of an Act and those of Regulations made under it form part of a scheme and the components of each are interdependent on those of the other, reference to the delegated legislation may be made as a direct aid in the interpretation of an ambiguous or obscure statutory provision in the Act. An example is found in Elazac Pty Ltd v Commissioner of Patents[93] (Elezac) in which Heerey J concluded that the Patents Act 1990 and the Patents Regulations 1991:
“… establish a quite detailed regime concerning amendments to patent requests, specifications and other filed documents. This is one of the exceptional occasions when regulations can be used as an aid to the construction of an Act of Parliament. The Act ‘provides a framework built on contemporaneously prepared regulations’. Hanlon v Law Society [1981] AC 124 at 193 per Lord Lowry.”[94]
[91] Hanlon v Law Society [1981] AC 124 at 193 per Lord Lowry
[92] Brayson Motors Pty Ltd (in liq) v Federal Commissioner of Taxation (1985) 156 CLR 651 at 652 per Mason J
[93] [1994] FCA 1315; (1994) 53 FCR 86; 125 ALR 663
[94] [1994] FCA 1315; (1994) 53 FCR 86; 125 ALR 663 at [12]; 90; 666-667
Is this a situation in which the REE Act provides a framework upon which contemporaneously prepared regulations build a scheme of regulation? We think that it is. Although they did not come into operation contemporaneously, the Regulations followed closely upon the heels of the Act. The Regulations came into operation on 6 February 2001 and the Act a little earlier on 18 January 2001. The REE Act contains a general regulation making power of the sort found in most legislation. It provides that the Governor‑General may make regulations prescribing all matters required or permitted by this Act to be prescribed or necessary or convenient to be prescribed for carrying out or giving effect to this Act. Power is given to prescribe penalties. General regulation making power of this sort establishes neither a scheme nor interdependency between the REE Act and the Regulations of the sort contemplated in Elezac.
To decide not to vary the determination would lead to the outcome that the power station for which Australian Paper has applied for accreditation is eligible for accreditation under s 14(1)(b). We cannot consider s 14(2A) without bearing that in mind. To determine that the MMPS is, in effect, a new power station eligible for accreditation would be a determination inconsistent with the object of the REE Act to encourage the additional generation of electricity from renewable sources. If it were accredited, its 1997 eligible renewable power baseline would be nil. That would mean that its nominated person could create RECs for each whole MWh of electricity generated by the power station from renewable sources. If it were not accredited and its components varied, it may only create RECs for each whole MWh of electricity generated by the power station from renewable sources above that which it was generating from those sources immediately before 1 January 1997.
Bearing these matters in mind, we have decided that accreditation is not consistent with the object of increasing the additional generation of electricity from renewable sources. The changes in its components should be recognised in the determination of the components taken to be the MMPS. Therefore, the power under s 30C should be exercised to vary the determination under s 14(1)(a) so that it identifies the components of the electricity generation system that are now taken to be the components of the MMPS for the purposes of the REE Act. That will require the omission of components that were identified in the earlier determination but that are no longer part of the system and the inclusion of others that now are part of it. To the extent that the work at the MMPS has achieved increased output of electricity from eligible renewable energy sources, that increase would be recognised in the ability of its nominated person to create new RECs.
For these reasons, we are satisfied that the power under s 30C should be exercised to vary the components of the system taken to be the MMPS to include those specified in Australian Paper’s application for accreditation. The Regulator did that in his decision dated 23 March 2009 and affirmed on 11 June 2009 but that decision does not reflect our decision that the Regulator is correct in his contention that the components do not include those relating to wood handling and pulping processes at the Maryvale Mill. Therefore, we set aside his decision in that regard and remit it to him to issue an Instrument of Variation under s 30C of the REE Act to reflect our decision that the wood handling and pulping processes are not components of the electricity generation system that is taken to be the power station at the Maryvale Mill for the purposes of that legislation.
Decision in relation to accreditation
Having made that decision, the effect of s 14(2A) is that the power station for which Australian Paper sought accreditation is not eligible for accreditation. As s 15 requires of us, we have refused Australian Paper’s application for accreditation and affirm the Regulator’s decision in that regard.
ATTACHMENT A
ATTACHMENT B
ATTACHMENT C
ATTACHMENT D
ATTACHMENT D – page 2
ATTACHMENT E
PRINCIPLES RELEVANT IN DETERMINING LIMITS OF A DISCRETIONARY DECISION
As we said at [70] of our reasons, we now set out the principles that have been established by the High Court and the Federal Court to guide us in determining the limits of a discretionary power and the basis on which it may be exercised.
General principles
The power given under s 30C of the REE Act is a discretionary power but, by its very nature as a statutory power, it cannot be an unfettered power. It has long been established that the circumstances in which a statutory power may be exercised and any limits on that power must be found in the enactment conferring the power, its subject matter and its object as well as its underlying policy.[111] This is an approach consistent with the modern approach to statutory interpretation as discussed by Brennan CJ, Dawson, Toohey and Gummow JJ in CIC Insurance Ltd v Bankstown Football Club Ltd:[112]
“ …. Moreover, the modern approach to statutory interpretation (a) insists that the context be considered in the first instance, not merely at some later stage when ambiguity might be thought to arise, and (b) uses ‘context’ in its widest sense to include such things as the existing state of the law and the mischief which, by legitimate means such as those just mentioned, one may discern the statute was intended to remedy …. Instances of general words in a statute being so constrained by their context are numerous. In particular, as McHugh JA pointed out in Isherwood v Butler Pollnow Pty Ltd (1986) 6 NSWLR 363 at 388, if the apparently plain words of a provision are read in the light of the mischief which the statute was designed to overcome and of the objects of the legislation, they may wear a very different appearance. Further, inconvenience or improbability of result may assist the court in preferring to the literal meaning an alternative construction which, by the steps identified above, is reasonably open and more closely conforms to the legislative intent…”[113]
[111] Alexandra Private Geriatric Hospital Pty Ltd v Blewett (1984) 2 FCR 368; 56 ALR 265 at 375; 272 per Woodward J
[112] (1997) 187 CLR 384; 141 ALR 618
[113] (1997) 187 CLR 384; 141 ALR 618 at 408; 634-5 (footnotes omitted) per Brennan CJ, Dawson, Toohey and Gummow JJ, and see also Wacando v The Commonwealth (1981) 148 CLR 1; 37 ALR 317 at 25-26; 335-6 per Mason J and TCN Channel Nine Pty Ltd v Australian Mutual Provident Society (1982) 42 ALR 496 at 507-508
As Mason and Wilson JJ had said in the earlier case of Cooper Brookes (Wollongong) Pty Ltd v Federal Commissioner of Tax:[114]
“... The fundamental object of statutory construction in every case is to ascertain the legislative intention by reference to the language of the instrument viewed as a whole. But in performing that task the courts look to the operation of the statute according to its terms and to legitimate aids to construction.”[115]
[114] [1981] HCA 26; (1981) 147 CLR 297; 35 ALR 151
[115] [1981] HCA 26; (1981) 147 CLR 297; 35 ALR 151 at 320, 169-170
In more recent times, the President of the Tribunal, Justice Downes, has considered discretionary decision making. He has done so in Re Visa Cancellation Applicant and Minister for Immigration and Citizenship[116] (Visa Cancellation Applicant) and earlier, with Deputy President Hack SC, in Re Rent to Own (Aust) Pty Ltd and Australian Securities and Investments Commission[117] (Rent to Own). Visa Cancellation Aplicant concerned a decision by the Minister for Immigration and Citizenship under s 501(2) of the Migration Act 1958 to cancel a visa on character grounds. Rent to Own concerned a decision by the Australian Securities and Investments Commission refusing to grant an Australian Credit Licence under the National Consumer Credit Protection Act 2009.
[116] [2011] AATA 690 at [52]-[91]
[117] [2011] AATA 689 at [45]-[68]
We have extracted the following passages from the President’s approach in Visa Cancellation Applicant. Illustrative material has been omitted but not, we think, at the expense of an accurate portrayal of the points made by the President:
“56. The essential characteristic of a discretionary decision is that there will be alternatives which will be equally lawful. …
57. … Of course, the Tribunal must correctly determine what the law is and apply it correctly. However, outside this role, the nature and functions of the Tribunal are quite different to the usual functions of a court.
58. The Tribunal, in its determinations, must be informed by matters of good administration. It needs to be conscious that it is in this case, for example, contributing to the many decisions made within government which together determine how the population of Australia should be made up.
59. None of this is to deny the very important role of the Tribunal in ensuring that individual justice is done. …
60. Ideals of individual justice do not, however, replace the demands of good administration.
61. Nor does focussing on the role of the Tribunal as an administrative decision-maker qualify the Tribunal’s power to depart from government policy: Drake v Minister for Immigration and Ethnic Affairs (No 2) (1979) 2 ALD 634, 644-5. The ability of the Tribunal to depart from government policy in a particular case is closely associated with the importance of achieving individual justice. Individual justice will generally be achieved, however, by making the preferable decision – even when that decision does not accord with government policy.
62. This leads to the question of just how the preferable decision is to be arrived at. Decision-makers are apt to say that they are satisfied about a discretionary matter. They may offer ‘an opinion’ or ‘view’ as to what is appropriate. The test, however, cannot be subjective. It cannot admit of idiosyncratic ideas. Evaluation in accordance with the decision-maker’s own personal standards or philosophy must not guide the determination.
63. … Administrative decision-makers at all levels frequently make decisions which affect the operations of government where individuals are affected. Very often the only clearly applicable measure or touchstone is the public interest. So how is the public interest to be determined?
64. It must be the case that the proper basis of evaluation, of reaching the preferable decision, in these cases, is reference to community standards or community values. It is not the decision-maker’s personal or idiosyncratic view of what will adequately protect the public which is relevant, but what the decision-maker determines will achieve that result in accordance with community standards or values.”
The President went on to note four cases in which the courts had referred to community values at the international or national level in establishing the content of a particular aspect of the general law. They were Mabo v Queensland [No. 2],[118] Onus v Alcoa of Australia Ltd, [119] Donoghue v Stevenson[120] and Miller v Miller.[121] He concluded:
“81. Drawing on these considerations, even without detailed analysis of them, in reasons for decision, will lead to better formed judgments which more truly reflect community standards. An assessment expressed to be guided by community standards or values, without more, will still be likely to lead to better decision-making than if no attempt at such an assessment is made. Expressing an opinion that current community standards require a particular outcome will be likely to represent a better decision than one couched in personal terms. Such an approach will sometimes lend itself to reasons. Where there are no reasons, however, the decision and the basis for it will still be better expressed than with reasons couched in personal belief.
82. An additional benefit may be that making decisions in terms expressed to accord with community values will present administrative decisions more persuasively to the public. The decision-maker will be making it clear that the decision is not based on any personal conviction, but on the decision-maker’s belief as to what community values require. Some of the criticism that decisions receive from time to time in the media may be avoided.”
[118] (1992) 175 CLR 1 at 42 per Brennan J, who said “Whatever the justification advanced in earlier days for refusing to recognize the rights and interests in land of the indigenous inhabitants of unsettled colonies, an unjust and discriminatory doctrine of that kind can no longer be accepted. The expectations of the international community accord in this respect with the contemporary values of the Australian people.”
[119] (1981) 149 CLR 27 at 42 per Stephen J, who dealing with the standing of members and descendants of the Gournditch-jmara Aboriginal people to bring proceedings for contravention of legislation to protect aboriginal relics said that the “Courts necessarily reflect community values and beliefs, according greater weight to, and perceiving a closer proximity to a plaintiff in the case of, some subject matters than others.”
[120] [1932] AC 562 at 580 per Lord Atkins, who said that“…the basis for a tort of negligence was founded not only in the universal moral code but in “a general public sentiment of moral wrongdoing for which the offender must pay”.
[121] [2006] 2 AC 618 at 631 per Lord Nicholls who said, in the context of a family law case: “Fairness is an elusive concept. It is an instinctive response to a given set of facts. Ultimately it is grounded in social and moral values. These values, or attitudes, can be stated. But they cannot be justified, or refuted, by any objective process of logical reasoning. Moreover, they change from one generation to the next. It is not surprising therefore that in the present context there can be different views on the requirements of fairness in any particular case.”
We respectfully agree with the President that an administrative decision-maker’s personal standards or philosophy are irrelevant when making an administrative decision. We also agree that every administrative decision must be correct in law and correctly made on the evidentiary material before the administrative decision-maker. Where we part company with the President’s statement of principle in Visa Cancellation Applicant is with two assumptions that he appears to make about discretionary administrative decision-making. The first is that the power to make a discretionary administrative decision is a broadly based power generally exercisable without reference to any express limitations. It may be exercised to achieve individual justice without regard to policy considerations be they Ministerial or otherwise. The second assumption is that, regardless of the legislative context,[122] an administrative decision-maker can, or even must, have regard to community standards in reaching the preferable decision.
[122] This seems to be implicit in the President’s views given that he expressed them not only in the context of visas under the Migration Act in Visa Cancellation Applicant but also, in Rent to Own, in the very different context of the provisions of the National Consumer Credit Protection Act 2009 regulating Australian Credit Licences.
Our reason for parting company with the first assumption is based on our understanding of the task reflected in cases such as Alexandra Private Geriatric Hospital Pty Ltd v Blewett and by which we are bound. We are a statutory tribunal exercising statutory powers and so must find both our powers and their limits in statute. We are also bound by certain provisions of the law such as that relating to legal professional privilege. Unlike the general law such as that referred to by the High Court in Mabo v Queensland [No. 2] and Onus v Alcoa of Australia Ltd and the House of Lords in Donoghue v Stevenson, we are not free to look to community standards or social or moral values to determine the bounds of our power. We must look to the statute itself to find the boundaries. If it sets a boundary defined by reference to community values then we have regard to them but not otherwise.
Our reason for parting company with the second assumption is based on the role that ministerial and other policy plays in the Tribunal’s exercising its discretionary powers. Although there is no suggestion that the Regulator has set a policy by which he makes decisions under the REE Act, the law relating to the role of policy in the Tribunal’s discretionary administrative decision-making underlines that it is imperative that every administrative decision-maker in the continuum of administrative decision-making have regard to the legislative provisions for the boundaries in which the power may be exercised. The Tribunal must have regard to them and find its power with them just as much as a Minister making policy guidelines.
Policy developed by an administrative decision-maker such as a Minister may provide guidance in the exercise of discretionary administrative powers provided that policy is consistent with the Act under which the decision is made[123] and it does not require a decision-maker to take irrelevant circumstances into account[124] or to exercise a power for improper purposes. Brennan J explained the reason for adopting a policy in relation to decision-making:
“… It can serve to focus attention on the purpose which the exercise of the discretion is calculated to achieve, and thereby to assist the Minister and others to see more clearly, in each case, the desirability of exercising the power in one way or another. Decision-making is facilitated by the guidance given by an adopted policy, and the integrity of decision-making in particular cases is the better assured if decisions can be tested against such a policy. By diminishing the importance of individual predilection, an adopted policy can diminish the inconsistencies which might otherwise appear in a series of decisions, and enhance the sense of satisfaction with the fairness and continuity of the administrative process.”[125]
[123] Re Drake and Minister for Immigration and Ethnic Affairs (No. 2) (1979) 2 ALD 634 at 640 per Brennan J
[124] Re Drake and Minister for Immigration and Ethnic Affairs (No. 2) (1979) 2 ALD 634 at 641
[125] (1979) 2 ALD 634 at 640
In Drake v Minister for Immigration and Ethnic Affairs,[126] Smithers J had also referred to these concepts:
“ Of course, a policy must be consistent with the statute. It must allow the Minister to take into account the relevant circumstances, it must not require him to take into account irrelevant circumstances, and it must not serve a purpose foreign to the purpose for which the discretionary power was created. A policy which contravenes these criteria would be inconsistent with the statute (see Murphyores Incorporated Ltd v The Commonwealth (1976) 136 CLR 1; Drake’s case, supra, at 589, and the cases there cited). …
That is not to deny the lawfulness of adopting an appropriate policy which guides but does not control the making of decisions, a policy which is informative of the standards and values which the Minister usually applies. There is a distinction between an unlawful policy which creates a fetter purporting to limit the range of discretion conferred by a statute, and a lawful policy which leaves the range of discretion intact while guiding the exercise of the power. (see British Oxygen Co v Board of Trade [1971] AC 610 at 625 and 631). Lord Denning referred to the distinction in Sagnata Investments Ltd v Norwich Corporation [1971] 2 QB 614 at 626, where he said:
‘I take it to be perfectly clear now that an administrative body, including a licensing body, which may have to consider numerous applications of a similar kind, is entitled to lay down a general policy which it proposes to follow in coming to its individual decisions, provided always that it is a reasonable policy which it is fair and just to apply. Once laid down, the administrative body is entitled to apply the policy in the individual cases which come before it. The only qualification is that the administrative body must not apply the policy so rigidly as to reject an applicant without hearing what he has to say. It must not “shut its ears to an application”: see [1971] AC 610, 625 per Lord Reid. The applicant is entitled to put forward reasons urging that the policy should be changed, or saying that in any case it should not be applied to him. But, so long as the administrative body is ready to hear him and consider what he has to say, it is entitled to apply its general policy to him as to others.’”[127]
Brennan J’s view is consistent with the judgments of Bowen CJ and Deane J in Drake v Minister for Immigration and Ethnic Affairs[128] and of Smithers J.[129]
[126] (1979) 24 ALR 577; 2 ALD 60 at 590; 70 per Bowen CJ and Deane J
[127] (1979) 2 ALD 634 at 640-641
[128] (1979) 24 ALR 577; 2 ALD 60 at 590; 70 per Bowen CJ and Deane J
[129] (1979) 24 ALR 577; 2 ALD 60 at 602; 80
As a rule, the power to give directions and make guidelines is determined by reference to “… the subject matter, scope and purpose of the statute …”.[130] Equally, the scope of any discretion given to a decision-maker under an enactment depends on the latitude of the subject matter, scope and purpose of the Act and of the particular power conferred on the decision-maker.[131] A decision-maker is free to adopt a policy to guide it in the exercise of its discretion provided its policy is consistent with the Act[132] and does not require the decision-maker to take irrelevant circumstances into account.[133] A policy “… must leave … [the decision-maker] free to consider the unique circumstances of each case … [It] does not control the making of decisions … [but] is informative of the standards and values which a … [decision-maker] usually applies. …”.[134]
[130] Minister for Aboriginal Affairs v Peko-Wallsend Ltd (1986) 162 CLR 24; 66 ALR 299 at 40; 309 per Mason J. See also R v Australian Broadcasting Tribunal; Ex parte 2HD Pty Ltd (1979) 144 CLR 45; 27 ALR 321 at 49; 325 per Stephen, Mason, Murphy, Aickin and Wilson JJ citing with approval Water Conservation and Irrigation Commission (NSW) v Browning (1947) 74 CLR 492 at 505.
[131][132] Re Drake and Minister for Immigration and Ethnic Affairs (No. 2) (1979) 2 ALD 634 at 640 per Brennan J
[133] Re Drake and Minister for Immigration and Ethnic Affairs (No. 2) (1979) 2 ALD 634 at 641
[134] Re Drake and Minister for Immigration and Ethnic Affairs (No. 2) (1979) 2 ALD 634 at 641 and see also the general discussion of the principles by Mr SC Fisher, Member, in Re Gray and Australian Securities and Investments Commission [2004] AATA 1235
Why this is so is apparent from the following passage from the judgment of Bowen CJ and Deane J in Drake v Minister for Immigration and Ethnic Affairs:
“… the Tribunal is not, in the absence of specific statutory provision, entitled to abdicate its function of determining whether the decision made was, on the material before the Tribunal, the correct or preferable one in favour of a function of merely determining whether the decision made conformed with whatever the relevant general government policy might be.”.[135]
[135] Drake v Minister for Immigration and Ethnic Affairs (1979) 24 ALR 577; 2 ALD 60 at 590; 70 per Bowen CJ and Deane J
That is consistent with the point made by Senior Member Taylor SC in Re Paeu and Minister for Immigration and Citizenship:[136]
“35. The third point to bear in mind is that there cannot be, in any particular case, deference by the Tribunal to the reviewable decision itself, or to other decisions of the Minister. The first of these propositions has long been authoritatively determined in the Federal Court: Collins v Minister for Immigration and Ethnic Affairs (1981) 36 ALR 598. It is in fact emphasised in Visa Cancellation Applicant itself at [2011] AATA 690 [88] & [89]. There is an obviously compelling reason for that approach. The quality of the reviewable decision depends on the information on which it was based, and the reasons with which it was expressed. Those matters must always govern any significance that could properly be accorded to the decision. But the Tribunal’s review function requires it to assess the totality of the relevant circumstances, not just those that were considered by the primary decision maker. The Tribunal must also develop and express its own reasons for its decision in the circumstances it considers. The Tribunal’s statutory function does not permit it to accord evaluative significance to either the decision under review or to decisions in other matters. …”[137]
[136] [2011] AATA 792
[137] [2011] AATA 792 at [35]
We note that the President in Visa Cancellation Applicant made a similar point at [88] and [89] of his reasons for decision.[138] He went on to say that:
“90. The Tribunal remains, however, part of the one administration of the Commonwealth. Consistency of administrative decision-making is an important aspect of good administration. The opinion of a Minister on a matter of discretion and any supporting reasons should accordingly be carefully considered and evaluated by the Tribunal before it comes to a different decision.”
[138] “[88] None of this affects or threatens the independence of the Tribunal, which has never been in doubt, as the Tribunal’s recent decisions show.
[89] In the usual case in which the Tribunal has jurisdiction to review the decision of a Minister or a delegate of the Minister it is the decision of the Tribunal which is the final decision on the merits. Because, in those cases, the Tribunal is exercising the power given to it by the parliament to definitively review the Minister’s decision, the Minister’s decision cannot bind the Tribunal in any way.”
There is no question that Ministerial policy should be carefully considered and evaluated but would add that it is important to distinguish between Ministerial policy that relates to the exercise of the particular discretionary administrative power by an administrative decision-maker and Ministerial policy that relates to the exercise of a different discretionary administrative power. It is equally important to distinguish between administrative decisions made by administrative decision-makers and Ministerial decisions made exercising a power either not relied upon or not available to the administrative decision-maker.[139] Ministerial policy that does not relate to the exercise of the particular administrative power under consideration or Ministerial decisions made in the exercise of a different administrative power are not relevant considerations. Administrative decision-makers are bound to act according to law and the evidentiary material and must find the limits of their power within that law when making an administrative decision be it a discretionary decision or not. Unless, when properly interpreted, notions of public interest, national interest[140] or community interest lie expressly or implicitly within the limits of their statutory power, they may not pay regard to interests of that sort.
[139] The President’s careful statements in [88] and [89] are at risk of becoming lost when regard is had to the earlier passage of his reasons at [86] and [87]. Those paragraphs followed a list of six cases in which the Tribunal had decided under ss 501(1) or (2) to set aside the Minister’s decision and the Minister had subsequently set them aside exercising his power under s 501A of the Migration Act. The President first noted at [85] that the six cases were:
[140] The expression “the national interest”, which is different from “the public interest”, may draw into consideration a wide range of subject matters determined only by the substantive and procedural context in which the expression appears: Re Patterson; Ex parte Taylor [2001] HCA 51; (2001) 207 CLR 391 Gaudron, McHugh, Kirby and Callinan JJ; Gleeson CJ, Gummow and Hayne JJ dissenting; at [331] and [336]; 502 and 504 per Kirby J. By analogy, the expression “the community interest” differs also from “the national interest”.
I certify that the preceding one hundred and twenty three paragraphs are a true copy of the reasons for the decision herein of
Deputy President S A Forgie and Senior Member E Fice,
Signed: ....................................................................
Leah Berardi Associate
Dates of Hearing 11 & 12 July 2011
Date of Decision 7 February 2012
Counsel for the Applicant Dr K Hanscombe SC with Ms F McKenzie
Solicitor for the Applicant Ms A Osborn
Madgwicks Lawyers
Counsel for the Respondent Mr D O’Donovan
Solicitor for the Respondent Ms V Masters
Australian Government Solicitor
Re Costello and Secretary, Department of Transport (1979) 2 ALD 934 at 939-45, then Senior Member Hall and CCH Thompson and AH Marsh, Members, s 8 of the Acts Interpretation Act 1901 and see more recently Esber v Commonwealth of Australia and Another [1992] HCA 20; (1992) 174 CLR 430;
106 ALR 577, Mason CJ, Deane, Toohey and Gaudron JJ, Brennan J dissenting
Coal and Allied Operations Pty Ltd v Australian Industrial Relations Commission and Others (2000) 203 CLR 194; 174 ALR 585 at 205; 591 and see also Drake v Minister for Immigration and Ethnic Affairs (1979) 24 ALR 577; 2 ALD 60 at 590; 70 per Bowen CJ and Deane J and 602; 80
per Smithers J
“…were considered decisions of the Minister. They represent occasions in which the Minister has determined that the decision of the Tribunal was not the preferable decision in circumstances in which the Act permits the Minister, when it “is in the national interest” to do so, to set aside a Tribunal decision.”
He continued:
“86. … It was not necessary to consider precisely where the balance tips in terms of the preferable decision or precisely what community standards or values require. It was not necessary to address the differences in assessment which led the Minister to arrive at different results to the Tribunal in the six cases referred to. It must be recognised, however, that these cases suggest that with respect to some recent decisions of the Tribunal, the Minister, where he has the right to make the final decision, has formed the opinion that community values or standards have pointed in favour of cancelling visas when the Tribunal has come to a different conclusion. These are matters which the Tribunal should take into account for the future in assessing in similar cases what “is in the national interest” and what is required by community values or standards.
and at
“87 … A necessary consequence of the Minister having this unusual power to overrule the tribunal is that the Tribunal should take note of occasions in which the power is exercised.”
We note that, in exercising his power under s 501A, the Minister exercised a power that is not available to the Tribunal in exercising its power under ss 501(1) or (2), is not bound by his own Directions issued under s 499 as the Tribunal is bound in exercising its power and made his decisions on a basis quite different from that on which the Tribunal could make its decisions.
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