EXPLANATORY STATEMENT
Issued by the Authority of the Minister for the Environment
Clean Energy Legislation (Carbon Tax Repeal) Act 2014
Clean Energy Legislation (Carbon Tax Repeal)
(Jobs and Competitiveness Program) Amendment Rule 2015
Purpose
Under the Jobs and Competitiveness Program (JCP), industry assistance was provided in the form of free carbon units for 2012‑13 and 2013‑14 to eligible persons that undertook specific activities as outlined in the Clean Energy Regulations 2011. The number of free carbon units allocated each year was calculated on the basis of the previous year’s production at the relevant facility or facilities. Actual production figures for that year were then reported as part of a JCP application for the following year, and the level of assistance previously provided was adjusted accordingly. That is, the allocation of free carbon units in any particular year was always ‘trued-up’, with the eligible person being allocated more or fewer free carbon units for the coming year to adjust for any under- or over-allocation in the previous financial year.
The repeal of the Clean Energy legislation, effective as of 1 July 2014, meant that no applications for JCP assistance could be made for 2014‑15 (and beyond). A final true-up of allocations for the 2013-14 financial year was consequently required. The Clean Energy Legislation (Carbon Tax Repeal) (Jobs and Competitiveness Program) Rules 2014 (‘the Rules’) were made on 11 August 2014 to enable this final true-up process.
The purpose of the Clean Energy Legislation (Carbon Tax Repeal) (Jobs and Competitiveness Program) Amendment Rule 2015 (the ‘Amendment Rule’) is to widen the definition of all activities listed in the JCP, for the purposes of the final true-up process, that include products that have a purity concentration range with an upper limit. The amendment operates to remove the upper limit of purity ranges set out in those JCP activity definitions. This will enable entities undertaking those activities to retain their assistance where an improvement in production processes has resulted in production of a higher purity product than that defined in the activity definition. Whereas previously any entity producing a purer product would have been required, during final true-up, to relinquish some or all of its assistance due to an upper range of purity having been exceeded, it will now be entitled to keep it. Further details of the Amendment Rule are outlined below.
Authority
Item 359 of Schedule 1 to the Clean Energy Legislation (Carbon Tax Repeal) Act 2014 (‘the Repeal Act’) permits the making of rules prescribing matters required or permitted by Part 4 of Schedule 1 to the Repeal Act to be prescribed by the rules. Items 352(b) and 354(b) in Part 4 permit rules to be made specifying conditions to be satisfied in order for a person to have an ‘over-allocation of free carbon units’ or an ‘under-allocation of free carbon units’, and so such conditions are matters that are required or permitted by Part 4 of Schedule 1 to the Repeal Act to be prescribed by the rules. The Amendment Rule alters the conditions that a person needs to satisfy to have an over-allocation of free carbon units or an under-allocation of free carbon units.
There are no statutory pre-conditions that need to be satisfied before the power to make the Amendment Rule may be exercised.
Consultation
The Department of the Environment (the ‘Department’) undertook an extensive consultation process to develop the Rules, including undertaking public consultation on an exposure draft of the Rules during June and July 2014. The Department received submissions from stakeholders who provided comment on the technical and implementation aspects of the Rules. The Department also held an information session with interested stakeholders to discuss and explain the intended operation of the Rules. The feedback provided in submissions and during the information session was taken into account in finalising the Rules and the Explanatory Statement.
The Amendment Rule makes a minor amendment to those Rules to address a technical issue that has arisen late in the process of the final true-up of the allocation of 2013-14 JCP assistance. The Clean Energy Regulator has worked closely with the set of around 100 recipients who were required to have their JCP assistance trued-up, including a small sub-set of those who might be affected by this technical issue. The Department has consulted with the Regulator, with the Office of Best Practice Regulation, and with the Australian Government Solicitor in drafting this amendment.
General
A statement of the Amendment Rule’s compatibility with human rights is set out below.
The Amendment Rule is a legislative instrument for the purposes of the Legislative Instruments Act 2003.
The Amendment Rule commences on the day after it is registered on the Federal Register of Legislative Instruments.
Details
Schedule 1, Item 1
Item 1 of Schedule 1 inserts new provisions into section 10 of the existing Clean Energy Legislation (Carbon Tax Repeal) (Jobs and Competitiveness Program) Rules 2014. The new paragraphs 10(2A)(a) and (b) set out when the changes to the activity definitions (for the purposes of removing the upper limit of purity ranges) will apply. Where there is another way of undertaking an emissions-intensive trade-exposed activity (as defined in the JCP), which produces a purer form of the product (the ‘improved process’) and as a result does not technically fall under the current activity definition, then paragraphs 10(2A)(c) and (d) will apply.
When an improved process exists for an activity, paragraph 10(2A)(c) essentially widens the definition of relevant activities to include that improved process, for the purpose of allocating JCP assistance. Paragraph 10(2A)(d) provides that the ‘corresponding activity’ (the improved process and resulting product) is considered the same activity as the ‘relevant activity’ (the activity defined in the JCP), so that a new final true-up report does not need to be submitted where a corresponding activity has been identified.
Sub-section 10(2B) clarifies the definition of corresponding activity. The corresponding activity is simply the modified version of the same original activity in the JCP.
Statement of Compatibility with Human Rights
Prepared in accordance with Part 3 of the Human Rights (Parliamentary Scrutiny) Act 2011
Clean Energy Legislation (Carbon Tax Repeal) (Jobs and Competitiveness Program) Amendment Rule 2015
This Legislative Instrument is compatible with the human rights and freedoms recognised or declared in the international instruments listed in section 3 of the Human Rights (Parliamentary Scrutiny) Act 2011.
Overview of the Legislative Instrument
With the repeal of the carbon tax legislation and no applications for JCP assistance for 2014‑15, a final true-up of allocations for the 2013-14 financial year was required. The Clean Energy Legislation (Carbon Tax Repeal) (Jobs and Competitiveness Program) Rules 2014 were made on 11 August 2014 to enable this final true-up process.
The purpose of the Clean Energy Legislation (Carbon Tax Repeal) (Jobs and Competitiveness Program) Amendment Rule 2015 is to widen the definition of all activities defined in the JCP that include products that have a purity concentration range with an upper limit, in regards to the final true-up process. The amendment operates to remove the upper limit of the defined purity range. This will enable entities undertaking the relevant activities to retain their assistance where an increase in production efficiency has resulted in production of a higher purity product than defined in the activity definition. Where any entity producing a purer product would have been required to relinquish its assistance due to an upper range of purity having been exceeded, it will now be entitled to keep it.
Human rights implications
This Legislative Instrument does not engage any of the applicable rights or freedoms.
Conclusion
This Legislative Instrument is compatible with human rights as it does not raise any human rights issues.
The Hon Greg Hunt MP
Minister for the Environment