House of Representatives

Explanatory Memorandum

(Circulated by authority of the Minister for Energy and Emissions Reduction, the Honourable Angus Taylor MP)

Statement of Compatibility with Human Rights

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

Fuel Security (Consequential and Transitional Provisions) Bill 2021

This Bill 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 Bill

The Fuel Security (Consequential and Transitional Provisions) Bill 2021 (this Bill) will make limited but necessary amendments to existing legislation to support the minimum stockholding obligation (MSO) and fuel security services payment (FSSP) proposed to be implemented under the related Fuel Security Bill 2021 (the Main Bill).

Part 1 of Schedule 1 to this Bill will establish authority for Government agencies to share relevant fuel information with the Department to reduce the regulatory burden for regulated entities. It will also enable the Department to check the veracity and accuracy of reported data to improve the implementation, integrity and administration of the MSO and FSSP.

This will be achieved by making consequential amendments to the following laws:

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Competition and Consumer Act 2010 (CC Act)

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Taxation Administration Act 1953 (TA Act)

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Fuel Quality Standards Act 2000 (FQS Act)

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Petroleum and Other Fuels Reporting Act 2017 (POFR Act).

Part 2 of Schedule 1 to this Bill will provide for consequential amendments to be made to accommodate proposed changes to laws, likely to be made before early September 2021, which will make machinery changes to merge the Federal and Family Courts of Australia.

Schedule 2 to this Bill will establish transitional provisions required for the implementation of the MSO and FSSP measures under the Main Bill, to ensure the MSO does not take effect before 1 July 2022, and applications for the FSSP cannot be made until rules prescribing the application and assessment process have been made under the Main Bill.

Human rights implications

This Bill engages, or may engage, the following rights:

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the rights to an adequate standard of living and to continuous improvement of living conditions - Article 11 of the International Covenant on Economic, Social and Cultural Rights (ICESCR)

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the right to privacy - Article 17 of the International Covenant on Civil and Political Rights (ICCPR)

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the right to freedom of expression - Article 19 of the ICCPR

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the right to a fair trial - Article 14 of the ICCPR

The Bill will primarily regulate entities rather than individuals

As noted at paragraph 1.11 of the Parliamentary Joint Committee on Human Rights - Guide to Human Rights, published in June 2015, which is a freely available document that outlines the key human rights that form part of the Parliamentary Joint Committee on Human Rights' mandate (available at https://www.aph.gov.au/Parliamentary_Business/Committees/Joint/Human_Rights/Guidance_Notes_and_Resources):

"Under the UN human rights treaties, human rights belong to individuals and groups of individuals. The treaties do not confer rights on companies or other incorporated bodies."

This Bill will consequentially amend legislation such as the POFR Act, which would place various obligations on "regulated entities", as defined under section 5(1) of the POFR Act. This term includes corporations, other bodies corporate and trusts (predominantly where the trustees are all constitutional corporations)).

Further, as noted above, this Bill will facilitate relevant fuel information relating to entities that are proposed to be regulated under the Main Bill to be shared with the Department, to promote the proper administration and integrity of the proposed MSO and FSSP schemes. As noted in the Statement of Compatibility accompanying the Main Bill, the classes of "persons" that will be regulated under the Main Bill include:

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"constitutional corporations" as defined under clause 5 together with paragraph 40(2)(a);

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"regulated entities" as defined under clause 5 (e.g. constitutional corporations, other bodies corporate, trusts (predominantly where the trustees are all constitutional corporations)); and

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"Australian controlling corporations" as defined under clause 5 together with paragraph 8(2)(a).

Given the above, the Bill is unlikely to regulate and limit the human rights of individuals.

Right to an adequate standard of living - Article 11 ICESCR

Despite the fact the Bill does not generally regulate the conduct of individuals, it nevertheless engages positively with the right to an adequate standard of living and to continuous improvement of living conditions.

Article 11 of ICESCR recognises the right of everyone to an adequate standard of living, including adequate food, clothing and housing, and to the continuous improvement of living conditions. This Bill helps to promote this human right by alleviating the risks to fuel supply currently borne by Government and consumers.

Specifically, by supporting the integrity and administration of the MSO and FSSP measures under the Main Bill, this Bill will indirectly help to ensure that domestic fuel stocks can be maintained to meet liquid fuel needs and increase Australia's resilience during any future disruptions to the supply chain. In this way, the Bill will also support fuel-dependent and critical industries as well as Australian households.

Ensuring both the ongoing commercial viability of domestic fuel refiners, and access to minimum local holdings of key transport fuels, would offer protection during extreme disruptions to fuel supply to Australia, and protect consumers from fuel price increases that would likely ensue if Australia's remaining oil refineries were to discontinue operations.

The proposed reforms are therefore likely to ensure the availability and accessibility of the energy resources that are essential to the realisation of the right to an adequate standard of living. They will also support Australia's obligation under Article 2.1 of the ICESCR to take reasonable measures within its available resources to progressively secure broader enjoyment of this right.

Right to freedom of expression - Article 19 ICCPR

This Bill also engages the right to freedom of expression in Article 19 of the ICCPR. Among other things, the Bill will consequentially amend the POFR Act, by inserting new sections 13B-13D relating to auditing of fuel information reports provided by regulated entities.

Under these new provisions, the POFR Rules may provide in relation to the auditing of compliance with section 11 of the POFR Act (i.e. mandatory reporting of fuel information to the Secretary), so far as that section concerns the giving of reports that relate to the refining of FSSP fuels or compliance with MSO obligations under the Main Bill.

Further, Ministerial rules may empower the Secretary to require that an audit be conducted, and prescribe the matters to which an audit may or must relate, the persons who may conduct the audit, and require reports of audits to be given to the Secretary. This, together with the existing secrecy provisions pertaining to "protected information" under Part 4 of the POFR Act, therefore engages the right to freedom of expression by establishing measures that may restrict the communication or publication of certain information collected in the conduct of such audits.

However, the limitations on freedom of expression that may be imposed by these measures are reasonable and proportionate, as they will ensure that audits are conducted consistently with international standards and are of sufficient quality and vigour to provide a meaningful assessment of the accuracy of data reported by entities. The veracity and accuracy of such data will be crucial to the integrity of the proposed MSO and FSSP schemes proposed to be established under the Main Bill.

Article 19(3) of the ICCPR permits restrictions on the freedom of expression as provided by law and necessary to protect the rights of others and national security or public order, and this would extend to the right to protection of sensitive commercial-in-confidence information reported by regulated entities and/or collected during the course of compliance audits.

Given the above, the restrictions are considered compatible with Article 19 of the ICCPR because they will promote the integrity of the MSO and FSSP schemes and ensure entities' commercial-in-confidence information is sufficiently protected when used by the Department to assess their compliance with the obligations under the Main Bill.

Right to privacy - Article 17 ICCPR

While noting that the consequential amendments proposed to be made by the Bill will primarily regulate the conduct of, or otherwise impact, entities that are unlikely to be individuals, out of an abundance of caution, consideration has been given to the possibility that the Bill engages the right to privacy of individuals.

As noted above, the Bill will make limited minor consequential amendments to provisions regulating the disclosure of information under the CC Act, FQS Act, POFR Act and TA Act. Such amendments will establish lawful authority for Government agencies, including the ACCC and ATO, as well as entrusted persons under the POFR Act and inspectors and other officers involved in administering the FQS Act, to share relevant fuel information (e.g. types of fuels and volumes refined in and/or imported into Australia, compliance with relevant fuel standards, etc.) with the Department (e.g. officers within the Department with responsibilities under the Main Bill). These amendments will play an important role in enabling the Department to check the veracity and accuracy of data reported by regulated entities under the POFR Act and the Main Bill, relating to fuel refining and importing activities.

While the information permitted to be shared with the Department under the amended provisions will almost solely relate to refinery operations, fuel production volumes, imports of fuel stocks and other matters relating to the business of refining and importing fuel, it is nevertheless possible some personal information about identifiable individuals may be collected under the provisions proposed to be consequentially amended.

However, any such collection of personal information - to the extent that it occurs - will be limited to what is necessary to ensure the functional operation of the legislative scheme, including its enforcement, so that the intended benefits of the proposed fuel security measures can be realised.

Further, the Bill will make consequential amendments to the definition of "protected information" (which includes personal information) under section 5 of the POFR Act to ensure that information mandatorily reported under section 11 of that Act, which also relates to entities' MSO obligations or refining of FSSP fuels, is handled appropriately and not used or disclosed for purposes unrelated to the administration of the POFR Act or the Main Bill.

Existing Part 4 (Secrecy and Disclosure) of the POFR Act will also continue to place appropriate prohibitions and limitations on the manner in which "protected information" may be used and disclosed, including the significant limitation that an entrusted person under the POFR Act may only make a record of, use or disclose protected information if the record is made, or the information is used or disclosed, in the course of exercising powers, or performing functions or duties, as an entrusted person (see sections 20 and 21 of the POFR Act). The Bill will make a minor consequential amendment to section 21 of the POFR Act to insert a note advising that the powers, functions and duties of entrusted persons are not limited to those conferred or imposed by the POFR Act. This will remove any doubt that information reported by regulated entities under the POFR Act may also be used and disclosed for the limited purpose of administering the MSO and FSSP schemes under the Main Bill.

Therefore, while the Bill may engage and limit the right to privacy, given the objects of the proposed fuel security reforms under the Main Bill, the fact that the vast majority (if not all) regulated entities will not be individuals, and the protections proposed with respect to the handling of information reported under existing POFR laws, it is clear that any such limitation will be reasonable, necessary and proportionate.

Right to a fair trial - Article 14 ICCPR

The Bill potentially also engages the right to the criminal process guarantees under Articles 14 and 15 of the ICCPR, given the substantial maximum pecuniary penalties attached to the civil penalty provisions under proposed new sections 13A, 13C and 13D of the POFR Act (i.e. 250-300 penalty units) and the fact that the purpose of such penalties is to punish and deter.

However, in a vast majority of (if not, all) cases, the entities that will be subject to the proposed civil penalty provisions are large, sophisticated multinational corporations. The measures aren't directed at individuals, and therefore, it is unlikely the Bill engages any criminal process human rights. For example, proposed new sections 13A, 13C and 13D of the POFR Act are anticipated to apply predominantly in relation to entities that are not individuals, as they will place obligations on:

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the "persons" required to report under section 11 of the POFR Act, where such reports relate to MSO products/activities or the refining of FSSP fuels (within the meaning of the Main Bill) (see new sections 13A and 13D of the POFR Act). This will include corporate refinery operators and/or other owners of refinery stock, importers and holders of stock relevant to the MSO (all of which are anticipated to be constitutional corporations).

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the "persons affected" by an audit of compliance with the mandatory reporting obligations under section 11 of the POFR Act (see new section 13C POFR Act). That is, "regulated entities" (see description above), Australian controlling corporations of regulated entities, entities in possession of stocks of MSO products held by a regulated entity, and other "constitutional corporations".

While it is therefore unlikely the civil penalty provisions to be inserted by the Bill engage any criminal process human rights, out of an abundance of caution, consideration has been given to whether the Bill unjustifiably limits the right of individuals under Article 14 of the ICCPR, such that the civil penalty provisions proposed to be established would be regarded as "criminal" under human rights law.

The new civil penalty obligations relate to the existing requirement of regulated entities to report fuel-related information under section 11 of the POFR Act, and will provide that a person must:

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not report false or misleading information which relates to whether a regulated entity is complying with their MSO under the Main Bill or whether a constitutional corporation is entitled to payment of the FSSP under the Main Bill (s13A) - maximum 300 penalty units. This would also be consistent with the analogous civil penalty provision that will be established under clause 49 of the Main Bill;

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provide reasonable facilities and assistance to an auditor conducting an audit of compliance with section 11 relating to MSO activities/products by regulated entities or the refining of FSSP fuels (s13C) - maximum 250 penalty units;

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comply with any rules requiring a report of an audit of compliance with section 11 reporting obligations (s13D(1)) - maximum 250 penalty units; and

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give a report of an audit to the Secretary if required by the rules (s13D(2) - maximum 250 penalty units.

Each of these proposed civil penalties provisions relate to requirements that operate in a regulatory context - that is, regulation of refinery operators and importers of fuel to ensure compliance with various reporting obligations under both the MSO and FSSP aspects of the Main Bill - and will not apply to the general public.

Further, the primary object of the civil penalty provisions is to ensure the accuracy of fuel information reported by regulated entities, which data will be relied on to administer the MSO and FSSP schemes under the Main Bill. The veracity and integrity of this information is crucial to the success of the fuel security measures under the Main Bill, and therefore is also essential to achieving the overarching objectives of improving national fuel security and assisting in preventing disruptions in fuel supplies.

In light of the above, while substantial maximum penalties may apply under the civil penalty provisions of the Bill, they are not "criminal" in nature in the context of international human rights law, given the narrow class of corporate entities subject to the provisions, the specific regulatory context in which they apply, and the need to ensure compliance with entities' MSO and FSSP obligations to promote the national fuel security policy objectives of the Bill. Therefore, to the extent that the Bill engages and limits the criminal process rights under Article 14 of the ICCPR, such limitations are reasonable, necessary and proportionate.

Conclusion

The Bill is compatible with human rights because it promotes the protection of the rights to an adequate standard of living and to continuous improvement of living conditions. While there are very few provisions of the Bill that regulate or engage the human rights of individuals, to the extent that it may limit human rights, those limitations are reasonable, necessary and proportionate.