Financial Framework (Supplementary Powers) Amendment (Climate Change, Energy, the Environment and Water Measures No. 5) Regulations 2023

EXPLANATORY STATEMENT

Issued by the Authority of the Minister for Finance

Financial Framework (Supplementary Powers) Act 1997

Financial Framework (Supplementary Powers) Amendment

(Climate Change, Energy, the Environment and Water Measures No. 5) Regulations 2023

The Financial Framework (Supplementary Powers) Act 1997 (the FFSP Act) confers on the Commonwealth, in certain circumstances, powers to make arrangements under which money can be spent; or to make grants of financial assistance; and to form, or otherwise be involved in, companies. The arrangements, grants, programs, and companies (or classes of arrangements or grants in relation to which the powers are conferred) are specified in the Financial Framework (Supplementary Powers) Regulations 1997 (the Principal Regulations). The powers in the FFSP Act to make, vary or administer arrangements or grants may be exercised on behalf of the Commonwealth by Ministers and the accountable authorities of non‑corporate Commonwealth entities, as defined under section 12 of the Public Governance, Performance and Accountability Act 2013.

The Principal Regulations are exempt from sunsetting under section 12 of the Legislation (Exemptions and Other Matters) Regulation 2015 (item 28A). If the Principal Regulations were subject to the sunsetting regime under the Legislation Act 2003, this would generate uncertainty about the continuing operation of existing contracts and funding agreements between the Commonwealth and third parties (particularly those extending beyond 10 years), as well as the Commonwealth’s legislative authority to continue making, varying or administering arrangements, grants and programs.

Additionally, the Principal Regulations authorise a number of activities that form part of intergovernmental schemes. It would not be appropriate for the Commonwealth to unilaterally sunset an instrument that provides authority for Commonwealth funding for activities that are underpinned by an intergovernmental arrangement. To ensure that the Principal Regulations continue to reflect government priorities and remain up to date, the Principal Regulations are subject to periodic review to identify and repeal items that are redundant or no longer required.

Section 32B of the FFS) Act authorises the Commonwealth to make, vary and administer arrangements and grants specified in the Principal Regulations. Section 32B also authorises the Commonwealth to make, vary and administer arrangements for the purposes of programs specified in the Principal Regulations. Section 32D of the FFSP Act confers powers of delegation on Ministers and the accountable authorities of non-corporate Commonwealth entities, including subsection 32B(1) of the Act. Schedule 1AA and Schedule 1AB to the Principal Regulations specify the arrangements, grants and programs.

Section 65 of the FFSP Act provides that the Governor-General may make regulations prescribing matters required or permitted by the Act to be prescribed, or necessary or convenient to be prescribed for carrying out or giving effect to the Act.

The Financial Framework (Supplementary Powers) Amendment (Climate Change, Energy, the Environment and Water Measures No. 5) Regulations 2023 (the Regulations) amend Schedule 1AB to the Principal Regulations to establish legislative authority for government spending on certain activities to be administered by the Department of Climate Change, Energy, the Environment and Water.

Funding is provided for the:

Community Energy Upgrades Fund for energy efficiency and electrification upgrades to facilities owned or operated by local governments ($103.9 million over five years from 2023-24); and
Emergency Services Training for Electric Vehicles (EVs) program for the development and communication of EVs safety guidance, demonstrations and training for emergency service workers responding to EV-related accidents and fires involving lithium-ion or other batteries ($2.0 million over two years from 2023-24).

Details of the Regulations are set out at Attachment A. A Statement of Compatibility with Human Rights is at Attachment B.

The Regulations are a legislative instrument for the purposes of the Legislation Act 2003.

The Regulations commence on the day after registration on the Federal Register of Legislation.

Consultation

In accordance with section 17 of the Legislation Act 2003, consultation has taken place with the Department of Climate Change, Energy, the Environment and Water.

A regulatory impact analysis is not required as the Regulations only apply to non‑corporate Commonwealth entities and do not adversely affect the private sector.

Attachment A

Details of the Financial Framework (Supplementary Powers) Amendment

(Climate Change, Energy, the Environment and Water Measures No. 5) Regulations 2023

Section 1 – Name

This section provides that the title of the Regulations is the Financial Framework (Supplementary Powers) Amendment (Climate Change, Energy, the Environment and Water Measures No. 5) Regulations 2023.

Section 2 – Commencement

This section provides that the Regulations commence on the day after registration on the Federal Register of Legislation.

Section 3 – Authority

This section provides that the Regulations are made under the Financial Framework (Supplementary Powers) Act 1997.

Section 4 – Schedules

This section provides that the Financial Framework (Supplementary Powers) Regulations 1997 are amended as set out in the Schedule to the Regulations.

Schedule 1 – Amendments

Financial Framework (Supplementary Powers) Regulations 1997

Item 1 – In the appropriate position in Part 4 of Schedule 1AB (table)

This item adds two new table items to Part 4 of Schedule 1AB to establish legislative authority for government spending on certain activities to be administered by the Department of Climate Change, Energy, the Environment and Water (the department).

New table item 640 establishes legislative authority for government spending on the Community Energy Upgrades Fund (the CEUF) to provide funding for energy efficiency and electrification upgrades to facilities owned or operated by local governments.

The CEUF supports the Government’s broader efforts to reduce greenhouse gas emissions and improve energy performance. The program will contribute to Australia meeting its emission reduction targets of 43 per cent by 2030, net zero emissions by 2050 and support 82 per cent renewable electricity generation by 2030. It will also support the
Commonwealth-led National Energy Performance Strategy, which will provide a forward plan for demand-side action, including energy efficiency and electrification.

On 16 June 2023, the Government announced it is partnering with local government to deliver energy upgrades and bill savings for community facilities like local pools, sporting clubs and community centres, which will be supported by the CEUF (www.pm.gov.au/media/
helping-communities-save-energy-save-energy-bills). The CEUF aims to support local governments to decarbonise their operations and reduce energy bills through energy efficiency upgrades and electrification of their facilities. It will also support the improvement in energy performance necessary to utilise renewable electricity more easily and improve system reliability.

The intended outcomes of the program are:

reduced energy bills and emissions from local government owned and/or operated facilities;
installed energy efficiency, load flexibility and electrification technology that is commercially available;
improved capability of local governments and the wider community to implement energy upgrades and electrification projects in their facilities;
increased capacity of domestic supply chains and labour force to support significant future investment in energy efficiency upgrades; and
improved workforce skills in delivering and operating energy transition projects.

The CEUF will deliver grant funding of $100.0 million over three years from 2023-24 in two funding rounds. Applications for round 1 will open by January 2024 and close by April 2024, with grants to be executed by September 2024. Round 1 comprises up to $50.0 million of grants between $25,000 and $2.5 million. Applications for round two will open from 1 January 2025 to April 2025 and will be executed in July 2025.

Funding will be open to a local government (or groups of local governments) for their owned and/or operated facilities, with a maximum of one grant for capital upgrades per local government over the life of the CEUF. The maximum co-funding contribution by the Australian Government will be 50 per cent of project costs. Eligible sources of co-investment funds are the local government, state governments, private sector or philanthropic funding, but not in-kind support.

Projects eligible for funding will need to meet the objectives of delivering energy efficiency upgrades or electrification of existing facilities, reduced costs, and emissions for the local government’s operations, and demonstrate value. Projects should increase the energy efficiency of a facility, improve the demand flexibility of a facility through energy storage and load shifting, and/or undertake electrification projects to replace the use of fossil fuels such as natural gas, liquid fuels, or solid fuels such as coal, including but not limited to:

load flexibility/demand management systems, e.g., air-conditioning controls upgrades including demand management capabilities at a civic centre;
electrification upgrades, e.g., the replacement of a gas boiler with a heat pump and heat recovery at an aquatic centre;
electric vehicle charging infrastructure, e.g., smart electric vehicle charging for multiple vehicles at a depot for local government vehicles;
energy efficiency upgrades, e.g., variable speed drives fitted to electric motors at a wastewater treatment plant; and
behind the meter renewables generation and storage, e.g., a rooftop solar power system with a virtual power plant enabled energy storage system at a childcare centre.

Projects would be ineligible if they use fossil fuels, even if they improve efficiency, the purchase of electric vehicles (not including enabling infrastructure such as charging infrastructure), and if projects are for Remote Area Power Supplies.

The department will deliver the CEUF through a targeted competitive multi-year grant process in accordance with applicable legislative requirements under the Public Governance, Performance and Accountability Act 2013 (PGPA Act) and the Commonwealth Grants Rules and Guidelines 2017 (CGRGs).

A committee comprised of departmental officials will assess applications. The committee may also seek additional advice from independent technical experts or advisors to inform the assessment process. The committee will consider each eligible application on its merits, and make an assessment based on:

how well it meets the criteria;
how it compares to other applications; and
whether it provides value with relevant money.

The committee will make a recommendation to the decision maker for approval. The decision maker will decide which grants to approve taking into account the recommendations of the committee and the availability of grant funds. The decision maker will not approve funding if there are insufficient program funds available across relevant financial years for the program. The accountable authority’s delegate, a Senior Executive Service officer with relevant expertise will be the decision maker and will be responsible for the final decision(s) about the Commonwealth expenditure.

The grant opportunity guidelines, assessment criteria and information about the grant decision will be available at www.business.gov.au and GrantConnect (www.grants.gov.au). The Minister for Climate Change and Energy will approve the grant guidelines and the Business Grants Hub within the Department of Industry, Science and Resources will administer the selection process and deliver the CEUF, noting the grant agreement will be managed by the department.

Persons who are otherwise affected by decisions or who have complaints about the CEUF will be able to provide feedback to the department. The department investigates any complaints about the CEUF in accordance with its complaints policy and procedures. If a person is not satisfied with the way the department handles the complaint, they may lodge a complaint with the Commonwealth Ombudsman.

Funding decisions made in connection with the grant are not considered suitable for independent merits review, as they are decisions relating to the allocation of a finite resource between competing applicants and an allocation already made to a party would be affected by overturning the original decision. The Administrative Review Council (ARC) has recognised that it is justifiable to exclude merits review in relation to decisions of this nature (see paragraphs 4.11 to 4.19 of the guide, What decisions should be subject to merit review? (ARC guide)).

In addition, the review and audit process undertaken by the Australian National Audit Office provides a mechanism to review Australian Government spending decisions and report any concerns to the Parliament. These requirements and mechanisms help to ensure the proper use of Commonwealth resources and appropriate transparency around decisions relating to making, varying or administering arrangements to spend relevant money.

Further, the right to review under section 75(v) of the Constitution and review under section 39B of the Judiciary Act 1903 may also be available. Persons affected by spending decisions would also have recourse to the Commonwealth Ombudsman where appropriate.

The department consulted with key stakeholders, including local government associations, industry bodies, state and territory governments, and Commonwealth entities and agency.

Industry bodies that focus on energy efficiency have expertise in the sector addressed by the CEUF. Organisations in this group were consulted on technical and implementation issues for energy efficiency and electrification projects. Consultations were conducted with the Energy Efficiency Council, the Smart Energy Council, the Clean Energy Council and the Australian Alliance for Energy Productivity.

The CEUF is targeted at local governments who will be the main group likely to be affected by the program. Consultations were held with local government representative organisations including the Australian Local Government Association, each state and territory local government association and the Australian Capital Territory government. These consultations focused on informing the outcomes, funding contribution, application process, timeline and knowledge sharing for the program.

The Australian Renewable Energy Agency and the Department of Infrastructure, Transport, Regional Development, Communications and the Arts were also consulted.

Consultations with stakeholders were universally supportive of the CEUF. Many stakeholders noted that the CEUF was addressing an important issue in the local government sector. Comments from stakeholders were noted and a summary report of local government consultations was published on www.energy.gov.au/government-priorities/energy-programs/community-energy-upgrade-fund-program. All feedback from consultations was taken into consideration when developing the CEUF and grant guidelines.

Funding of $103.9 million over five years from 2023-24 for the CEUF is included in the 2023-24 Mid-Year Economic and Fiscal Outlook and the Portfolio Additional Estimates Statements for the Climate Change, Energy, the Environment and Water portfolio. Funding will come from Program 1.2: Support reliable, secure and affordable energy, which is part of Outcome 1.

Noting that it is not a comprehensive statement of relevant constitutional considerations, the objective of the item references the external affairs power (section 51(xxix)) of the Constitution.

External affairs power

Section 51(xxix) of the Constitution empowers the Parliament to make laws with respect to ‘external affairs’. The external affairs power supports legislation implementing Australia’s international obligations under treaties to which it is a party.

Australia has obligations relating to the Kyoto Protocol, the Paris Agreement and the United Nations Framework Convention on Climate Change (UNFCCC).

Article 10(b) of the Kyoto Protocol obliges parties to ‘formulate, implement, publish and regularly update national and […] regional programmes containing measures to mitigate climate change and measures to facilitate adequate adaptation to climate change’.

Article 4.2 of the Paris Agreement obliges parties to ‘pursue domestic mitigation measures with the aim of achieving’ nationally determined contributions.

Article 4.1(b) of the UNFCCC obliges parties to ‘formulate, implement, publish and regularly update national and […] regional programmes containing measures to mitigate climate change by addressing anthropogenic emissions […] of all greenhouse gases not controlled by the Montreal Protocol’. Article 4.1(c) obliges parties to ‘promote and cooperate in the development, application and diffusion, including transfer of technologies, practices and processes that control, reduce or prevent […] emissions of greenhouse gases’. Article 4.2(a) obliges parties to ‘adopt national policies and take corresponding measures on the mitigation of climate change’.

The CEUF will support investment in decarbonising through energy efficiency upgrades and electrification of those facilities. In doing so, the CEUF will promote measures to mitigate climate change by addressing emissions in greenhouse gases.

New table item 641 establishes legislative authority for government spending on the Emergency Services Training for Electric Vehicles program (the program).

The program responds to the National Electric Vehicle Strategy (the Strategy), which sets a vision to increase the uptake of electric vehicles (EVs) to reduce emissions and improve the wellbeing of Australians. The Strategy (https://www.dcceew.gov.au/sites/default/files/
documents/national-electric-vehicle-strategy.pdf) was launched by the Government on 19 April 2023. The media release is available at https://minister.dcceew.gov.au/bowen/media
-releases/joint-media-release-australias-first-national-electric-vehicle-strategy-drive-cleaner-cheaper-run-vehicles.

To realise this vision, the Strategy sets out three key objectives: increase the supply of affordable and accessible EVs; establish the resources, systems, and infrastructure to enable rapid EV uptake; and encourage increased EV demand.

The program forms part of the Government’s $5.2 million package to support Australia’s smooth and safe transition to EVs announced in the 2023-24 Budget. Funding of $2.0 million over two years from 2023-24 is allocated to Australia’s emergency service workers and other first responders who called for focused training to ensure their safety when responding to EV-related accidents or fires involving lithium-ion batteries.

The program of works is to develop leading safety guidance, EV road rescue demonstrations and fire safety training to address knowledge gaps in Australia about EVs, EV charging and EV batteries. This will positively impact and support Australia’s emergency service workers through improved safety and reduced risk. Globally, there is limited research, data and emergency response procedures available to inform responses to EV related incidents.

The department has commenced the initial scoping and preliminary consultation with states and territories since July 2023. The department will also engage and collaborate with states, territories, and industry to fund data gathering and collect insights to inform guidance for emergency service workers and the subsequent development and roll out of appropriate EV safety training.

The program will support the delivery of multi-agency road rescue demonstrations, including multi-agency road rescue and opportunities for testing EV fire potential while connected to charging, with a training focus on the different model EVs high voltage components and batteries. Funding activities will include:

frontline training course for emergency services personnel;
train the trainer course for emergency services organisations;
training product(s), resources and identified repository for ongoing resource access;
research, international scan and technology recommendations to input into training;
round tables and conference of the parties for training scope design;
training places - available nationally for frontline emergency services training; and
training places - available nationally for Train the Trainer credentials.

The program intends to benefit emergency services personnel; EV drivers and passengers; vehicle rescue and recovery organisations; first responders; bystanders and the general Australian public.

The department will deliver the program through a procurement process, which may include multiple parts, via both open and limited tender where applicable. The procurements will be undertaken in accordance with applicable legislative requirements under the PGPA Act, the Commonwealth Procurement Rules (CPRs) and the Australian Qualifications Framework.

The department’s Emissions Reduction Transport team will be responsible for administering the selection process for suitable vendors and co-ordinating and overseeing the delivery of program components. Qualified and appropriate third-party service providers will be engaged for various procurement elements, such as Registered Training Organisations (RTOs).

Information and any approaches to market associated with this program delivery will be made available on AusTender (www.tenders.gov.au).

The Secretary of the department will utilise a delegate who will be responsible for the final decision(s) about the Commonwealth expenditure. The delegate will be the General Manager of the Land and Transport Branch within the department.

Funding decisions made in connection with the procurement are not considered suitable for independent merits review, as they are decisions relating to the allocation of a finite resource, from which all potential claims for a share of the resource cannot be met. In addition, any funding that has already been allocated would be affected if the original decision was overturned. The ARC has recognised that it is justifiable to exclude merits review in relation to decisions of this nature (see paragraphs 4.11 to 4.19 of the ARC guide).

The remaking of a procurement decision after entry into a contractual arrangement with a successful provider is legally complex, impractical, and could result in delays to providing services under the program. The Government Procurement (Judicial Review) Act 2018 enables suppliers to challenge some procurement processes for alleged breaches of certain procurement rules. This legislation might provide an additional avenue of redress (compensation or injunction) for dissatisfied providers or potential providers, depending on the circumstances.

Preliminary consultation has occurred around the proposed program of works, including but not limited to:

Commonwealth Government and agencies;
state and territory governments;
the National Council for Fire and Emergency Services in Australia and New Zealand (AFAC), as the not-for-profit peak body that represents the collaborative interests of fire, emergency services and land management agencies in Australia;
the Department of Employment and Workplace Relations; and
Jobs and Skills Councils (JSC), specifically the Public Skills Australia JSC and Australian Mining and Automotive JSC.

Consultation has been supportive and inclusive, and stakeholders’ feedback so far is in strong support for this parcel of work to be developed and delivered.

For industry input and communications into the training scope and design, it is important that consultation will be guided and led by the newly formed JSCs, which are still in the early stages of establishment. The JSCs are an outcome of the Jobs and Skills Australia Amendment Bill 2023 that was introduced to Parliament on the 22 March 2023. The bill delivers on the Government’s commitment to establish JSCs as a permanent arrangement as a tripartite statutory body.

Once government consultation and JSCs consultation is finalised, external consultation may be led by the relevant JSC (most likely Public skills Australia), which will begin with all other relevant stakeholders including but not limited to:

motor groups such as the NRMA, RAA, MTA and other;
research institutions and safety/emergency services experts;
International Emergency Services organisations;
unions and peak bodies; and
RTOs and training design specialists.

Consultation is expected to commence in the first quarter of 2024 via a series of professionally facilitated round tables and conferences of the parties, to then inform the required content of the training products. The consultation will also include international findings and research recommendations, which will most likely be led by the Jobs and Skills Council Public skills Australia. A specialist training and professional development organisation will then be engaged to write and develop the training products, at the direction of the AFAC.

Funding of $5.2 million was included in the 2023-24 Budget under the measure ‘Reducing Transport Emissions’ for a period of four years commencing in 2023-24. Details are set out in Budget 2023-24, Budget Measures, Budget Paper No. 2 at pages 180.

Funding of $2.0 million over two years from 2023-24 for this item will come from Program 1.1: Reduce Australia’s greenhouse gas emissions Program, which is part of Outcome 1. Details are set out in the Portfolio Budget Statements 2023-24, Budget Related Paper No. 1.3, Climate Change, Energy, the Environment and Water Portfolio at pages 27 and 38.

Noting that it is not a comprehensive statement of relevant constitutional considerations, the objective of the item references the external affairs power (section 51(xxix)) of the Constitution.

External affairs power

Australia has obligations relating to the Kyoto Protocol, the Paris Agreement and the United Nations Framework Convention on Climate Change (UNFCCC).

Article 4.2 of the Paris Agreement obliges parties to ‘pursue domestic mitigation measures with the aim of achieving’ nationally determined contributions.

Article 4.1(b) of the UNFCCC obliges parties to ‘formulate, implement, publish and regularly update national and […] regional programmes containing measures to mitigate climate change by addressing anthropogenic emissions of all greenhouse gases’. Article 4.1(c) obliges parties to ‘promote and cooperate in the development, application and diffusion, including transfer of technologies, practices and processes that control, reduce or prevent […] emissions of greenhouse gases’. Article 4.2(a) obliges parties to ‘adopt national policies and take corresponding measures on the mitigation of climate change’.

The program will support investment in EV through providing training for emergency service workers and other first responders to respond to EV and battery incidents. In doing so, the program will promote measures to mitigate climate change by addressing emissions in greenhouse gases.

Attachment B

Statement of Compatibility with Human Rights

Prepared in accordance with Part 3 of the Human Rights (Parliamentary Scrutiny) Act 2011

Financial Framework (Supplementary Powers) Amendment (Climate Change, Energy, the Environment and Water Measures No. 5) Regulations 2023

This disallowable 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

Section 32B of the Financial Framework (Supplementary Powers) Act 1997 (the FFSP Act) authorises the Commonwealth to make, vary and administer arrangements and grants specified in the Financial Framework (Supplementary Powers) Regulations 1997 (the FFSP Regulations) and to make, vary and administer arrangements and grants for the purposes of programs specified in the Regulations. Schedule 1AA and Schedule 1AB to the FFSP Regulations specify the arrangements, grants and programs. The powers in the FFSP Act to make, vary or administer arrangements or grants may be exercised on behalf of the Commonwealth by Ministers and the accountable authorities of non‑corporate Commonwealth entities, as defined under section 12 of the Public Governance, Performance and Accountability Act 2013.

The Financial Framework (Supplementary Powers) Amendment (Climate Change, Energy, the Environment and Water Measures No. 5) Regulations 2023 amend Schedule 1AB to the FFSP Regulations to establish legislative authority for government spending on certain activities to be administered by the Department of Climate Change, Energy, the Environment and Water.

This disallowable legislative instrument adds the following table items to Part 4 of
Schedule 1AB:

table item 640 ‘Community Energy Upgrades Fund’; and
table item 641 ‘Emergency Services Training for Electric Vehicles’.

Table item 640 – Community Energy Upgrades Fund

Table item 640 establishes legislative authority for government spending on the Community Energy Upgrades Fund (the CEUF) to provide funding for energy efficiency and electrification upgrades to facilities owned or operated by local governments.

The CEUF supports the Government’s broader efforts to reduce greenhouse gas emissions and improve energy performance. The CEUF will contribute to Australia meeting its emission reduction targets of 43 per cent by 2030, net zero emissions by 2050 and support 82 per cent renewable electricity generation by 2030. It will also support the Commonwealth-led National Energy Performance Strategy, which will provide a national plan to accelerate demand-side action, including energy efficiency and electrification.

The CEUF aims to support local governments to decarbonise their operations and reduce energy bills through energy efficiency upgrades and electrification of their facilities. It will also support the improvement in energy performance necessary to utilise renewable electricity more easily and improve system reliability.

Total funding of $103.9 million over five years from 2023-24 will be available to the CEUF. Funding will be open to a local government (or groups of local governments) for their owned and/or operated facilities, with a maximum of one grant for capital upgrades per local government over the life of the CEUF.

Human rights implications

Table item 640 does not engage any of the applicable human rights or freedoms.

Conclusion

Table item 640 is compatible with human rights as it does not raise any human rights issues.

Table item 641 – Emergency Services Training for Electric Vehicles

Table item 641 establishes legislative authority for government spending on the Emergency Services Training for Electric Vehicles program (the program).

The program responds to the National Electric Vehicle Strategy, which sets a vision to increase the uptake of electric vehicles (EVs) to reduce emissions and improve the wellbeing of Australians. Funding of $2.0 million over two years from 2023-24 is allocated to Australia’s emergency service workers and other first responders who called for focused training to ensure their safety when responding to EV-related accidents or fires involving lithium-ion batteries.

Human rights implications

Table item 641 does not engage any of the applicable human rights or freedoms.

Conclusion

Table item 641 is compatible with human rights as it does not raise any human rights issues.

Senator the Hon Katy Gallagher

Minister for Finance

Administered by Department of Finance

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