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Liquid Fuel Emergency Amendment Bill 2007

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2004-2005-2006-2007

 

 

THE PARLIAMENT OF

THE COMMONWEALTH OF AUSTRALIA

 

 

 

 

 

 

 

HOUSE OF REPRESENTATIVES

 

 

 

 

 

 

 

LIQUID FUEL EMERGENCY AMENDMENT BILL 2007

 

 

 

 

 

 

 

 

 

 

EXPLANATORY MEMORANDUM

 

 

 

 

 

 

(Circulated by authority of the Hon Ian Macfarlane MP,

Minister for Industry, Tourism and Resources)



 

 



Explanatory Memorandum

Liquid Fuel Emergency Amendment Bill 2007

 

Purpose

The Liquid Fuel Emergency Amendment Bill 2007 (the Bill) will make a number of changes to the Liquid Fuel Emergency Act 1984 (the Act) to improve the administrative and economic efficiency of the Australian Government's national liquid fuel emergency response arrangements. 

The Act and its associated Guidelines provide the Australian Government with a range of powers to prepare for and manage a prospective liquid fuel supply emergency.  The Act is not intended to be used to manage minor or intermittent supply shortages, and does not enable the Australian Government to override the powers of State and Territory authorities for the purpose of dealing with a localised liquid fuel emergency.

The majority of the changes that will be given effect by this Bill were identified in the course of the 2004 ACIL Tasman Review of the Liquid Fuel Emergency Act 1984 .  ACIL Tasman made 31 recommendations across a range of matters, including several proposed legislative changes to improve the operation of the Act.  The major thrust of the recommendations is to encourage all parties in the liquid fuel market to undertake their own contingency planning, on the basis that market mechanisms will generally be the most economically efficient and effective means of allocating supplies in a national liquid fuel emergency.

While the Australian Government accepts its responsibility to prepare contingency plans against a national liquid fuel emergency, Government policy is, where possible, to allow industry to manage fuel supply shortfalls.  The Act does not, and was never intended to, manage or reduce fuel supply risks for fuel users. 

As a result, the changes outlined in this Bill are intended to facilitate two outcomes:

§   to encourage the more effective management of fuel supply risks by those persons or organisations that have the capacity to do so; and

§   to ensure that the Act's administrative arrangements remain efficient, effective and sufficiently flexible to deal with the many different circumstances that could require the exercise of the Government's powers under the Act.

This Bill has no financial impact.

 

Changes Introduced by this Bill

The Bill introduces a number of significant changes to the operation of the Act.

§   The concept of "high priority" users has been removed, with the intention that this will encourage contingency planning amongst those fuel users that are capable of doing so.  Further discussion on this point is included in the Regulation Impact Statement .

§   The concept of "essential" users has been narrowed to include those users that are "essential to the health, safety and welfare of the community."

§   At the time of its introduction, the Australian Capital Territory had not yet become a self-governing entity.  The Australian Capital Territory is therefore included in the Act in its own right.



§   The capacity to delegate and sub-delegate the powers and functions conferred or imposed by the Act has been extended to facilitate a more devolved emergency response.  The power to refuse a sub-delegation and/or to revoke a delegation continues to provide the Minister with a significant degree of control over the exercise of the powers and functions of the Act.

§   The compensation provisions of the Act have been amended to provide greater assistance to corporations that are subject to a direction prior to the commencement of a national liquid fuel emergency.  The compensation provisions have also been amended to remove the right to compensation for all persons or corporations that are the subject of a direction during a national liquid fuel emergency.  Further discussion on these changes is included in the Regulation Impact Statement .

§   A direction issued during a national liquid fuel emergency may cause a breach of contract.  The Act already provides immunity from legal action (also known as an exemption from suit) for breach of contract in these circumstances.  The Bill extends the immunity to breaches caused by directions issued prior to a national liquid fuel emergency.  An exemption from suit for officials exercising a power or performing a function under the Act reasonably and in good faith has also been included.

§   An exemption from prosecution for breach of Part IV of the Trade Practices Act 1974 (dealing with anti-competitive conduct) has been included where the conduct was required by a direction.  The exemption is restricted to conduct which occurs during a period of national liquid fuel emergency.

§   Several provisions of the Act have been exempted from the operation of some sections of the Legislative Instruments Act 2003 to provide the Government of the day with the capacity to respond as quickly as possible to changing circumstances in preparing for or managing a national liquid fuel emergency.  The effect of these amendments is to enable certain legislative instruments under the Act to take effect prior to their registration, or to prevent the Parliament from disallowing or sun-setting certain legislative instruments.

§   The enforcement provisions of the Act are amended to require a search warrant to be issued by a magistrate rather than a justice of the peace.  The Bill also clarifies the powers of authorised persons appointed under the Act, and includes the requirements for consent when an authorised person exercises their powers.

§   Where necessary, the penalty provisions and the archaic or gender-specific language of the Act have been updated to reflect current drafting practices.



Regulation Impact Statement for a

Liquid Fuel Emergency Amendment Bill 2007

A Bill to amend the Liquid Fuel Emergency Act 1984

Introduction

This Regulation Impact Statement examines the anticipated impact of two proposed amendments to the Liquid Fuel Emergency Act 1984 (the LFE Act), which were initially proposed in the 2004 ACIL Tasman Review of the LFE Act.

The Statement explores the following subjects:

  • Industry Overview;
  • the History of the LFE Act (including the ACIL Tasman Review and risk analysis);
  • Australian Government Liquid Fuel Emergency Policy; and
  • the Australian Government’s Response to the Review.

The Statement then examines the two amendments proposed by the Liquid Fuel Emergency Amendment Bill 2007.

 

 

 

Industry Overview

The petroleum industry is a significant contributor to the Australian economy. 

Substantial investments have been made to develop Australia’s offshore petroleum resources, located mainly in the Bass Strait and the North West Shelf.  Australia has eight major refineries, though only seven are currently operation following the 2003 mothballing of ExxonMobil’s Port Stanvac refinery in Adelaide.  These refineries were constructed in the 1950s and 1960s, and although they have been extensively modified and currently have a total capacity of 796,500 barrels per day (bpd), these refineries are relatively small in comparison with refineries in Asia.  Current demand is slightly higher than refining capacity at around 809,000 bpd, and this gap is forecast to increase in coming years.  

 

 

Supply Security

Australian refineries use both domestic and imported crude oil as feedstock for downstream petroleum products including petrol, diesel, jet fuel, liquefied petroleum gas, lube oil and bitumen.  Around 80 percent of Australia’s fuel needs can be obtained from domestic crude resources.  The nature of Australian crude oils, the proximity of the offshore Western Australia and Northern Territory oilfields to Asia, Australian refinery configurations and the composition of the product slate demanded by Australian consumers mean that much of Australia’s indigenous production is exported.  As a consequence, while net imports are typically in the range of 20 to 30 percent of consumption, around 60 percent of Australia’s refinery feedstock is imported as well as some 20 percent of refined product demand.  Australian crude and condensate could, to a significant extent, replace imports to refineries if necessary in an emergency, although there could be a loss in the overall efficiency of refinery operations.

The length of the crude supply chain in Australia is on average a few days to a week for Australian crudes, fifteen days for crude sourced from Asia and around four weeks for crude sourced from the Middle East.  Crude supply chain lengths are illustrated by the diagram below.  

 

 

Refineries on average hold five days worth of crude oil in their tanks, two days worth of product in the refinery, ten days worth of product stock at the refinery terminals, three days in service station stocks and an average of three days in the motor car.  Stocks as days' consumption coverage in the supply line are illustrated by the diagram below.  

 

 



Australian stocks of crude and petroleum products are held voluntarily by industry throughout the supply chain.  Total stocks of petroleum products at the end of March 2005 amounted to approximately 47 days consumption cover including:

·          23 days of crude oil;

·          15 days of LPG;

·          17 days of automotive gasoline;

·          28 days of aviation turbine fuel; and

·          16 days of automotive diesel oil.

 

Refineries are operated on an economic basis, and cheaper alternatives to processing crude through local refineries will be taken advantage of.  It is, for instance, cheaper at times to source finished product from Singapore; if this course of action is taken, either by independent suppliers or local refiners, refinery operations are scaled back to compensate.  

Australia ’s reliance on petroleum products as transport fuels and as a feedstock for other industries means that a secure supply of liquid fuels is essential for the economy.  In the longer term the emergence of new technologies, new energy resources, changing market characteristics and international obligations will also play a role in determining the overall energy security environment.  In the meantime, petroleum products will remain the dominant transport fuel for the foreseeable future and therefore the prevention, monitoring and response capabilities to address major interruptions are critically important.

The Australian Institute of Petroleum released a paper in 2003 that deals with some of these supply security issues in more detail.  This can be accessed at http://www.aip.com.au/pdf/supply.pdf .

 

 

 

History of the Liquid Fuel Emergency Act 1984

 

The Act

The LFE Act commenced in March 1984.  As the Hon Barry Jones MP said as the then sponsoring Minister in his second reading speech,

 

“The Government has a clear national responsibility to prepare contingency plans against any foreseeable national emergency.  The fundamental objectives of a national response to a major fuel shortage should be to minimise the total impact on the community - in terms of maintaining essential services and minimising economic dislocation and to ensure that available supplies are distributed as equitably as possible.

The purpose of this Bill is to equip the Commonwealth Government with the authority needed to prepare for and handle a national liquid fuel supply emergency.  This would be done in close cooperation with the governments of the States and the Northern Territory.” [1]  

 



The original LFE Act envisaged that the Commonwealth, State and Northern Territory Governments would work together to develop common-form legislation for dealing with liquid fuel emergencies, and therefore included a three year sunset clause in anticipation that the Act would be superseded. [2]   However, agreement on a common form of legislation was not able to be achieved and the sunset clause was repealed in 1987, leaving the LFE Act otherwise intact. [3]

To date, the LFE Act has never been activated to deal with a national liquid fuel emergency.

 

 

Australian Government Powers under the LFE Act

The LFE Act gives the Australian Government a range of powers to prepare for and manage a prospective liquid fuel supply emergency.

Part II of the Act confers certain contingency planning powers on the Australian Government to facilitate the effective management of a national liquid fuels emergency should it occur.  These powers include requiring relevant fuel industry organisations to maintain minimum levels of reserve stocks, develop certain emergency procedures and to maintain and provide statistical information.

Part III provides the Governor-General with the power to declare a national liquid fuel emergency during periods of shortfall in liquid fuels.  Part III also provides the Australian Government with emergency powers to regulate supplies of liquid fuels to bulk and retail customers, to regulate maintenance of stock levels and their transfer, to direct the sale of liquid fuels to specified customers and to regulate refinery operations.  The Act also provides the mechanism by which demand reduction and supply measures would be implemented in observance of Australia’s treaty obligations as a member of the International Energy Agency (IEA).

During a national liquid fuel emergency the Minister has the power to allocate bulk supplies and ensure supplies to certain ‘essential’ or ‘high priority’ users.  The determination of ‘essential’ or ‘high priority' users is subject to procedures set out in the LFE Act and in the Guidelines created under certain sections of the Act.  In addition, the Minister is able to delegate some of their powers under the Act to facilitate the management of a national liquid fuel emergency.

The LFE Act and Guidelines only contemplate the declaration of an emergency in extreme circumstances.  The Act can not be used to manage intermittent supply shortages, and does not enable the Australian Government to override State and Territory authority during a localised liquid fuel emergency.

In addition to the LFE Act, each State and Territory Government has implemented its own emergency fuels legislation and developed a response plan for dealing with a liquid fuel emergency within its own jurisdiction.

 

 



Meeting the Challenges of a Liquid Fuel Emergency

The Australian, State and Territory Governments have established the National Oil Supplies Emergency Committee (NOSEC) to formulate an overall response to a widespread fuel shortage.  The NOSEC comprises officials from the Australian, State and Territory Governments and the oil industry, and reports to the Ministerial Council on Energy (MCE).  The MCE is responsible to the Council of Australian Governments (COAG).

NOSEC’s role is to ensure that Australia’s governments are prepared to deal with the practical challenges of a prospective national liquid fuel emergency.  The NOSEC is in the process of updating its National Liquid Fuel Emergency Response Plan (NLFERP), which sets out the likely decision-making processes and the steps that administrators would be expected to take to respond to a national fuel shortage.  In addition, the MCE has signed an Inter-Governmental Agreement (IGA) that deals with the distribution of roles, responsibilities, coordination, communication, and the allocation of available fuels and resources during a national liquid fuel emergency.

 

 

Testing Australia’s Liquid Fuel Emergency Preparedness

A national simulation, known as ‘Exercise Tanker’, was conducted in June 2003 to test Australia’s national liquid fuel emergency preparedness.  Given the lack of experience in dealing with and the potentially grave impact of a national liquid fuel emergency, it was considered essential that the simulation test the various operational aspects of the legislation and the consultation and communication arrangements necessary to achieve the obligations and outcomes required. [4]

The simulation, which involved over seventy participants, increased awareness of a range of issues relevant to the management of fuel shortages and some of the practical, legal and logistical issues that need to be resolved.  In particular, the Independent Assessment of the simulation recommended that a legislative review of the LFE Act be undertaken to ensure consistency with the implementation mechanisms, delegations and directions, and other arrangements under the NLFERP.

 

 

Review of the Act

A CIL Tasman was subsequently engaged by NOSEC and the Australian Government in July 2004 as an independent consultant to assess whether the current legislative scheme and associated operational arrangements comprise best practice for achieving the Australian Government’s objectives in managing a national liquid fuel emergency.  A key task of the review was to assess whether government intervention is appropriate and, if so, in what circumstances and what methods of intervention would be the most efficient and effective.



As part of its review, ACIL Tasman released a discussion paper in August 2004 and called for submissions through advertisements in the Financial Review and the Weekend Australian newspapers.  Twenty submissions were received in response, and public consultations were subsequently held in Perth, Melbourne and Sydney in September 2004.  ACIL Tasman’s draft report was released in November 2004, with a further six public submissions received.

The Review Steering Committee (chaired by Mr Malcolm Irving and consisting of Department of Industry, Tourism and Resources (DITR), Treasury and State Government representatives) provided ACIL Tasman with feedback on the draft report on 25 October 2004 and the final report on 3 December 2004.  ACIL Tasman incorporated this feedback and earlier public comments into the final report.  This report was delivered to DITR on 16 December 2004.  The final report was posted on the ACIL Tasman [5] and DITR [6] websites on the same day.

ACIL Tasman made 31 recommendations across a range of matters, including several proposed legislative changes to improve the operation of the LFE Act.  The major thrust of the recommendations is to encourage all parties in the liquid fuel market to undertake their own contingency planning, arguing that market mechanisms will be the most economically efficient and effective means of allocating supplies in a national liquid fuel emergency.

 

 

ACIL Tasman Risk Analysis

It is reasonably clear that the intention of the LFE Act is to manage risks associated with extreme supply shortfalls and to meet Australia’s IEA obligations.  However, the effectiveness of these arrangements depends on the risk management approach taken by each participant in the fuel supply chain, including users. 

Taking these general principles into account, ACIL Tasman developed a conceptual framework through which the level of risk of a particular event can be identified.  This framework uses the following definitions of consequence and likelihood:

 

Consequence or Impact

Catastrophic

Total loss of supply

Major

Significant loss of supply

Moderate

Restriction of supply

Minor

Minimal restriction to supply

Not significant

No restriction to supply

 

 

 



 

Likelihood

Almost certain

Expected to occur at least once per year

Likely

Expected to occur several times - at least once in 10 years

Possible

Not likely to occur - expected to occur between 10 and 100 years

Unlikely

Very unlikely to occur - frequency of 100 to 1000 years

Rare

Theoretically possible

 

 

 

 

 

 

 

 

 

 

 

When plotted on an axis, below, the combination of likelihood and consequence of a particular event therefore determines its risk.

 

Consequence

or Impact

ê

Likelihood è

Rare

Unlikely

Possible

Likely

Almost certain

Catastrophic

High

Extreme

Extreme

Extreme

Extreme

Major

High

High

Extreme

Extreme

Extreme

Moderate

Medium

Medium

High

High

Extreme

Minor

Low

Low

Medium

High

High

Not significant

Low

Low

Low

Medium

High

 

On this basis, if an event is unlikely but would cause major damage if it were to occur, the risk of the event is “high”. 

 

Consequence

or Impact

ê

Likelihood è

Rare

Unlikely

Possible

Likely

Almost certain

Catastrophic

High

Extreme

Extreme

Extreme

Extreme

Major

High

High

Extreme

Extreme

Extreme

Moderate

Medium

Medium

High

High

Extreme

Minor

Low

Low

Medium

High

High

Not significant

Low

Low

Low

Medium

High

In the same way, events having a minor impact will rate somewhere between a “low” risk and a “high” risk depending on the likelihood of the event occurring.  On this basis, the destruction of an Australian oil refinery as a result of terrorist attack, regardless of the specific location and its broader impact, would probably be rated at a “high” or “extreme” risk level. 

Alternatively, industrial action at Australian ports that prevents the landing of crude oil might be rated as a “medium” or “high” risk, or complying with a directive from the IEA might be classified as being a “low” to “high” risk.  In each case, the rating can encompass a range of likelihoods and consequences.

Although the identification of risk using this process is highly subjective, it does provide a starting point for the comparison of potential risks.  Once the scale of a risk is identified, steps can be taken to ameliorate them; that is, unacceptable risk levels can be lowered by either reducing the likelihood of the event occurring or by reducing the consequence should it occur.  The management of risk along the supply chain involves both contingency measures by participants and actions that might be taken in the event of a severe interruption.  The more effective the contingency action, the less likely is the need for intervention by government.

Most of the activities and arrangements established under the LFE Act are aimed at reducing the consequences of a supply disruption.  However, in some sectors of the supply chain it may be more economically efficient and equitable to reduce the likelihood of an event.  The steps that might be appropriate in each case will depend on a comparison between the costs of taking action as compared with the risk weighted damage costs that would result if the event did occur. [7]

 

 

 

Australian Government Liquid Fuel Emergency Policy

Preparing for and managing a national liquid fuel emergency is, for the most part, a public good.  It is clear that, in the types of circumstances that would give rise to a national liquid fuel emergency, the normal actions of suppliers and consumers may not be capable of meeting Australia’s national objectives.

The market is therefore not in a position to prepare for or manage a national liquid fuel emergency in an efficient manner.  Given the public good characteristics of this matter, it is appropriate for government to fulfil this role.

 

 

Government Intervention under the LFE Act

The purpose of the Act is to ensure that Australia is prepared to respond to a national liquid fuel emergency.  Section 6 of the Act identifies seven specific triggers that enable the Australian Government to take action to achieve this, which include the defence of Australia and giving effect to the IEA agreement.  Each trigger is based upon a power contained within the Constitution.

While the Australian Government accepts its responsibility to prepare contingency plans against a national liquid fuel emergency, Government policy is, where possible, to allow industry to manage supply shortfalls.  Consistent with this approach, the measures being developed by the NOSEC in the NLFERP to manage a national fuel supply shortage would attempt to minimise Government intervention.  

As a result, Australian Government intervention would generally be limited to the five actions outlined below.

 

1.  Allowing the Market to Reduce Fuel Demand

Section 25 of the LFE Act prevents the Australian Government from controlling prices in the event of a national liquid fuel emergency.  In practice, the Australian Government’s initial response would be to monitor the effect of natural price increases on patterns of demand and the extent to which this strategy could alleviate the supply shortage. 

Although price rises would not lead to uniform demand restraint across all incomes, the use of price controls could prove costly in the longer term given that overseas suppliers and refiners would be unlikely to supply to, or invest in, a market where prices are kept artificially low.

It is recognised that allowing the price mechanism to freely operate may raise equity and social welfare concerns.  An existing framework for the provision of recovery assistance exists in the context of disaster recovery planning.  NOSEC is in the process of developing a disaster/emergency recovery assistance plan in conjunction with the Disaster Relief Sub-Committee of the Community Services Ministerial Advisory Council to address this problem.  The need for, extent of, and eligibility for, assistance would be determined at the time of the emergency depending on the scale and duration of the emergency event and its impact on low income earners.

Further, the Australian Government would engage the Australian Competition and Consumer Commission (ACCC) to monitor retail fuel prices against international and domestic benchmarks, noting that a primary role of the ACCC is to promote effective competition and prevent anti-competitive practices.

 

 

2.     Encouraging Voluntary Restraint

If price rises through the normal operation of the market did not lead to an adequate decline in consumption, the option of seeking voluntary reductions in demand or supply would be considered.  On the supply side, the voluntary bulk rationing of petroleum by industry would be less likely to lead to panic buying than the implementation of retail controls.  It is possible however, that this response will have already been implemented by oil companies, as is common practice currently.

On the demand side, the Australian Government can implement measures to encourage retail consumers to voluntarily reduce their fuel consumption via initiatives such as:

  • public awareness campaigns to encourage greater public transport use, fewer or shorter trips, car-pooling, multiple taxi-hire arrangements;
  • staggering work hours to reduce traffic congestion;
  • reducing speed limits to increase fuel efficiency; and
  • establishing clearways to reduce queues at roadside service stations.

 

In past international case studies, voluntary restraint measures have proven successful in reducing fuel consumption during a significant shortage. [8]

 

 

3.  Direct Rationing

Where a further government response to a fuel supply shortage is required, measures would focus on regulatory controls which could be placed on either bulk or retail sales of petroleum products and further demand side management responses.  The objective of these measures would be to reserve supplies for ‘essential’ users and to ensure that other users have petroleum supply for as long as possible.



Depending on the severity and expected / actual duration of an emergency, people may be restricted in their fuel consumption for certain periods of time.  The measures set out in the NLFERP cover the implementation of bulk and retail rationing arrangements and recognise the desirability of maintaining public awareness campaigns throughout.  While these types of measures would take longer to implement and could be more difficult to administer, their implementation may be the preferred response to a prolonged shortage.

 

 

4.     Addressing Supply Impediments

It is possible that the supply of petroleum products during an emergency could be extended by relaxing fuel standards.  Although some aspects of fuel standards have implications for vehicle operability and the environment, others might be varied for a limited period without significant adverse consequences.  Relaxing fuel standards, however, has the potential to create a commercial advantage for some participants in the market. 

If necessary, the Government could move to address other impediments to the supply of petroleum products wherever possible and appropriate.

 

 

5.     Other Response Options - IEA Agreement

If Australia experienced a decline in fuel supplies of more than 7 percent and this decline was not globally widespread, Australia may also consider the merit of drawing on its rights as a member of the International Energy Agency (IEA) to seek additional petroleum supplies from other IEA member countries, if available and feasible.

 

 

 

Australian Government Response

The 2003 simulation and the 2004 ACIL Tasman Review have identified a number of areas of the LFE Act that could be improved to achieve the most effective and economically efficient management of a national liquid fuel emergency. 

Some provisions of the Act or the Guidelines have been identified as being difficult to implement, whilst others may require amendment to reflect the significant structural and market changes that have occurred in the petroleum industry since 1984.  The NOSEC is currently working on a number of these matters to continue to improve the NLFERP.

In the years since the LFE Act was first proclaimed, it has never been activated to deal with a national liquid fuel emergency.  As a result, there are no metrics which can provide an insight into the actual impact a national liquid fuel emergency will have on liquid fuel suppliers, refiners, wholesalers, consumers, or any other part of the community.  Nor is there metrics that can indicate with any certainty what impact a national liquid fuel emergency will have on the economy in general, not to mention our way of life.



The circumstances which would warrant the declaration of a national liquid fuel emergency and the use of the LFE Act, however, are extremely rare.  For example, although the loss of power to the Caltex refinery at Kurnell in late 2005 resulted in a loss of some fuel supply to Sydney, the situation was not significant enough for either the LFE Act or the corresponding New South Wales legislation to be activated.  In the majority of situations like Kurnell the normal operation of the market leads to higher prices (thus reducing demand) and the industry itself takes steps to maintain continuity of supply (such as re-directing fuel from other locations).  Barring an escalation of the situation, there is rarely a need for government intervention.

However, as a result of the ACIL Tasman Review and discussions with NOSEC, the Australian Government has identified two amendments to the LFE Act which, if passed, will have a regulatory impact and therefore need to be examined in this Statement.  These matters are:

·          whether the definitions of ‘essential’ and ‘high priority’ users remain appropriate; and

·          whether the compensation provisions of the Act are effective to achieve the aims of the legislation.

 

 

 

Defining Essential & High Priority Users

Background

The LFE Act “provides arrangements for nationally uniform proportionate reductions in the level of supplies of scarce liquid fuels, ensuring that the burden of a shortage is shared equitably as far as possible throughout Australia…  In addition to making supplies available to all users on a uniform basis, the [Act] will also provide extra supplies of fuel to users whose activities are classified as ‘essential’ or ‘high priority’.” [9]

Section 11 of the LFE Act enables the Australian Government Minister to identify ‘essential’ and ‘high priority’ users if they are engaged in one of the following categories of activity:

·          activities related to the defence of Australia;

·          activities related to the provision of fuel for ships and aircraft engaged in trade or commerce, both domestic and international; [10]

·          activities related to the export of liquid fuels from Australia; and

·          activities that the Minister determines to be activities of national significance.

 

The Guidelines under section 11(1) provide definitions to aid the Minister to determine what activities are of “national significance”.  An essential user is therefore:

·          one that provides goods and services that are essential for the preservation of the health, safety and general welfare of the community;

·          one that, if they could not carry on their activities, would incur costs or losses in profits substantially greater than the rest of the community; or

·          one that, if they could not carry on their activities, would result in employees being laid-off or dismissed where the number of employees involved is substantially greater than the average number of employees being laid-off or dismissed.

A high priority user is defined as one that, while not providing goods and services essential to the preservation of the health, safety and welfare of the community, contributes substantially to the general welfare of the community.

 

 

The Problem

Both of these definitions are broad, clumsy and difficult to apply.  Although the defence forces, police, ambulance and fire services are obviously essential users, it is much less clear what types of activity would result in “costs or losses in profits substantially greater than the rest of the community”, “an above average number of employees being dismissed” or substantially contributes “to the general welfare of the community” and are therefore also deserving of protection.

In order to be effective the LFE Act and Guidelines must provide a mechanism that enables the ready identification of essential and high priority users prior to (or in anticipation of) a liquid fuel supply emergency.  A prompt and accurate identification will expedite the response to a national liquid fuel emergency.  The current Guidelines under Section 11(1) are ill-equipped to achieve this goal for a number of reasons.

Firstly, these criteria effectively require the Minister to predict what effect a disruption would have on a particular fuel user, and compare that with a prediction of what will happen to other fuel users, their employment practices and the broader loss likely to be suffered by the community.  Given the imprecise nature of identifying an essential or high priority user in anticipation of a supply disruption, it is inevitable that some fuel users will be wrongly excluded from (or wrongly included in) the priority categories. 

Secondly, the only time that these criteria can be applied with any certainty would be in retrospect: that is, after the national liquid fuel emergency has already occurred.  In effect, this is the administrative equivalent of shutting the gate after the horse has bolted - providing a means of protecting certain fuel users from the effects of a fuel supply disruption will not be effective if it can only be applied with certainty once the damage is done. 

Thirdly, the broad nature of the essential and high priority user categories reduces the incentive for fuel users to take steps to mitigate a potential national liquid fuel emergency.  By including persons or organisations that would suffer “substantial financial losses or expenses that would be extremely difficult to recover” in the definition of ‘essential’ users, a much wider range of fuel users may be able to claim ‘essential’ status than originally intended. [11]   The lesser claim, that a person or organisation “contributes substantially to the general welfare of the community,” is equally vague and may include persons or organisations that were never intended as falling under this definition.

As a result, the current criteria almost certainly induce underinvestment in contingency planning by fuel users in anticipation of preferential treatment by the Australian Government.  This broad approach may also encourage rent seeking behaviour, adding a further burden to the Government’s response to a national liquid fuel emergency.

 

 

 

Objectives

Identifying those users that should have the highest priority access to fuel during a national liquid fuel emergency is necessary to achieve the goals of the LFE Act.  As a result, the Australian Government’s objective is to establish clear, concise and economically defensible criteria to enable the easy identification of those fuel users that ought to be given the highest priority during a national liquid fuel emergency.

The criteria should also signal to the market that those users which require a supply of liquid fuels to facilitate their work ought to consider their potential exposure during, and take steps to mitigate, a future shortage if they do not fall within a category that will be given priority in the event of a national liquid fuel emergency.

 

 

The Options

Maintain the Status Quo

The current definitions of essential and high priority users will give fuel supply priority to a broad range of fuel users in the event of a national liquid fuel emergency. 

Change the Definition

Although changing the definition is the only alternative to maintaining the status quo, there are two forms a change could take.

1.     Clarification

The current definitions would be amended to explicitly identify particular categories of user as being ‘essential’ or ‘high priority’.  The relevant provision would be drafted to provide the Government with some discretion to alter the list of users considered ‘essential’ depending on the circumstances of the emergency. [12]

2.     Narrowing

Alternatively, the definitions could be stripped back to include only those users that “provide goods or services that are essential to the health, safety or general welfare of the community.”  All other priority categories would be removed.  The Guidelines would include principles that will aid in the identification of the fuel users that fall within this definition.  The relevant provision would be drafted to provide the Government with some discretion to alter the list of users considered ‘essential’ depending on the circumstances of the emergency.

 

 

Impacts

Primary Stakeholders

The primary stakeholders in the LFE Act are the liquid fuel industry participants, including the four oil majors (BP, Shell, Caltex and ExxonMobil), fuel distributors, wholesalers and retailers, consumers and the Australian, State and Territory Governments.  Although a national liquid fuel emergency will have significant impacts throughout the economy, these stakeholders are of most significance when considering change to the Act.



Impacts of Maintaining the Status Quo

The difficulty with maintaining the status quo is that, if the group of fuel users identified as being ‘essential’ and ‘high priority’ is too large, the available fuel supply could be reduced much more quickly than is intended or appropriate in the event of a national liquid fuel emergency.  Potentially, such a reduction could take supply away from priority services such as police, health, defence and other emergency service providers.  Although there is little or no cost to fuel industry participants in such a scenario, the cost to Government, consumers and the general community as a result of a failure to supply the necessary liquid fuels to these users would be high to extreme.  In addition, if a fuel user perceives that they are likely to fall within the current definitions of essential and high priority users, that user is unlikely to invest in steps designed to prepare for or mitigate a potential supply disruption.  This lack of investment is likely to lead to a greater burden being borne by members of the community, who are generally unable to invest to mitigate a national liquid fuel emergency.

Impacts of Clarifying the Definition

Changing the definition of priority users under the LFE Act would greatly improve its clarity.  Specifically identifying the types of users that will fall within the relevant categories would achieve this, enabling fuel users to make an informed judgement as to whether they would be included and respond accordingly.  However, the current definitions of nationally significant activities remain very broad and will do little to encourage investment to mitigate a disruption.  Many fuel users are likely to expect preferential supply on the basis that their activities are analogous to those engaged in by users already included in the definition, or may alternatively argue that their activities should have been included in the first place.

Impacts of Narrowing the Definition

Alternatively, narrowing the definitions to include only those fuel users that “provide goods or services that are essential to the health, safety or general welfare of the community”, when used in conjunction with identification principles under the Guidelines, would provide a clearer indication of the types of activities that are going to receive priority in the event of a fuel supply disruption.  Although this approach may not provide a definitive explanation of the types of users that are included within the definition, it is clear that a much more restricted pool of fuel users will be included.  As a result, this approach would maximise the amount of fuel that will be available to those activities which are deemed most deserving.  In addition, the more narrow definition would send a clear signal to fuel users that, unless they clearly fall within the more narrow definition, they will not be given priority access to scarce liquid fuels.  It is expected that this will create an additional burden upon a number of fuel users to take whatever steps they deem necessary to mitigate a future supply disruption.  

Maintaining the status quo effectively created three classes of users: ‘essential’, ‘high priority’ and ‘ordinary’.  By eliminating the concept of ‘high priority’ from the LFE Act, the administrative burden of identifying and issuing permits (or their equivalent) is reduced.



In both the clarification and narrowing scenarios the burden on the Australian Government would be diminished.  By reducing the number of users that could claim preferential supply, the restricted amount of fuel would be expected to remain available for a longer period of time.  This will also lessen the impact of a national liquid fuel emergency on the community more broadly, best align with the communities needs, and may reduce the cost of already scarce fuels for consumers if other demand restraint measures are successful.  Some steps that fuel users may take to mitigate a potential supply disruption as a result of being removed from the priority categories, however, could result in higher fuel prices in the shorter term. [13]   Either scenario is unlikely to have a significant impact on fuel industry participants.

Potentially, the most significant burden will be imposed on those users that anticipated priority access to fuels but have their protection removed by changes to the ‘essential’ and removal of the ‘high priority’ user categories.  Such users would include those engaging in “indispensable” activities that “contribute substantially to the general welfare of the community” or would exacerbate the supply shortage if discontinued; interstate goods and passenger transport companies are likely to be the largest group falling within this definition.  The burden that these users will suffer will depend on the timing of a national liquid fuel emergency and whether they have been in a position to take steps to mitigate such a disruption.  In any event, it is possible for users to be added to the definition of ‘essential’ over the course of a disruption as deemed necessary by the Australian Government Minister.



The impacts of these options are summarised in this table:

 

Options

Impact on Stakeholders

Fuel Industry Participants

Governments

Consumers

Maintain the Status Quo

þ   No additional cost.

ý   Too many users fall within the definitions of priority users, leading to a faster reduction in supply during an emergency.

ý   Loss of supply to essential services would have a significant adverse impact on the community.

ý   Not in a position to invest in steps to mitigate a supply disruption.

ý   Loss of supply to essential services would have a significant adverse impact on the community.

Clarify the Definition

þ   No additional cost.

ý   Definition may remain unclear if users perceive they are analogous to other users falling within the definition.

ý   Investment by consumers in measures that will mitigate a disruption unlikely to occur, resulting in greater reliance on Government to “do something”.

þ   Fuel users could make a more informed judgement as to whether they fall within the definition and respond accordingly.

ý   However, the definition may remain unclear if users perceive that they are analogous to other users falling within the definition.

Narrow the Definition

þ   No additional cost.

þ   More narrow range of priority users encourages investment by non-priority users, reducing the likelihood of fuel scarcity and encouraging more economically efficient results.

þ   Administrative burden of identifying priority users is reduced.

þ   Availability of fuel for highest priority users is maximised.

þ   Availability of fuel for highest priority users is maximised.

ý   Some fuel users will no longer receive priority access to scarce liquid fuels.

?          Investment in mitigation of a supply disruption may increase.

?          Some increase in fuel costs in the short term may occur as a result.

 

 

 

Consultation

During the ACIL Tasman review of the LFE Act, comments were received from a number of stakeholders on issues raised by the above discussion.

The Australian Institute of Petroleum (AIP) noted that consumers view any disruption as a crisis because they assume supplies will always be available and do not have their own risk management arrangements in place.  AIP suggest that decisions regarding risk management should be based on information about price and availability, and users should manage their risk according to their economic and social interests.  AIP believe that the perception that all consumers are essential users has to change. 

AIP argues that the definition of ‘essential user’ is unclear and that all jurisdictions need to define their essential users and make the definition known publicly.  AIP notes that once all of the essential users are defined, supply modelling and other measures to manage a supply disruption can be undertaken.  AIP supports the views of the ACIL Tasman Discussion Paper regarding consumers, noting particularly that bulk users and essential users should bear certain responsibilities for identifying adequate fuel demands, assessing the costs and risks and then taking appropriate action.

The Australian Government Department of Agriculture, Fisheries & Forestry (DAFF) believes that the current definition of essential and high priority users is unhelpful and too broad, suggesting that, arguably, the current arrangements would allow virtually all DAFF portfolio industries to be classified as ‘essential’.  DAFF points out that defining users would be an onerous task; using food suppliers as an example, categorising wholesalers, retailers and other members of the supply chain would be problematic.

The NSW State Government (NSW) states that the empirical evidence shows there is little or no risk management by users who have come to rely on the uninterrupted supply of liquid fuels, and argues that it is essential that all users of fuel must manage their own disruption risk.  NSW believes that services such as public transport, food production and distribution, electricity, gas, water and sewerage systems ought to be also given priority in the event of a national liquid fuel emergency.  Including private businesses may discourage them from managing their own risk levels, and relying on government for their fuel supplies.  NSW argues in favour of the LFE Act providing guidance, but allowing Ministers to apply discretion and allow variation in each jurisdiction.  NSW asserts that this may remove the need for excessive classification.

The Western Australian Department of Industry & Resources (DoIR) believes that the current definitions are “practically difficult to implement”, and suggests that there is a need to specify classes of users, prioritising them on an industry grouping basis along with other potential user categories.  DoIR argues that this scheme must include sufficient flexibility to allow for adjustments.  DoIR perceives that the current definitions remove any incentive for parties to maintain fuel reserves as they expect to receive fuel to keep operating in the event of a national liquid fuel emergency.



The Department of Consumer & Employment Protection (Western Australia) (DoCEP) notes that the current arrangements (that is, how a severe liquid fuel shortage would be managed) are not sufficiently understood in the community to enable fuel users to optimise their risk management strategies.  However, DoCEP notes that if the fuel users do not have the capacity to manage their risk, an understanding of the arrangements is meaningless.

The Pharmacy Guild of Australia (PGA) argue that pharmacists and health care professionals should be included in a definition of priority users, as during emergencies these professionals may need fuel to deliver vital medicines and operate generators in regional areas.

The Australian Liquefied Petroleum Gas Association (ALPGA) suggests that consideration should be given to mandating the use of dual-fuelled vehicles by essential users if they wish to retain their priority.

 

 

Conclusion

The LFE Act was not designed to manage or reduce the risk for consumers of a fuel supply shortage.  Further, there are no compelling reasons for the Australian Government to provide financial or other incentives to industry to encourage investment in measures that will mitigate the impact of a national liquid fuel emergency.  It is therefore incumbent on all fuel users whose activities are dependent on uninterruptible fuel supplies to undertake their own risk assessments and make their own emergency arrangements. 

As a result, the Australian Government’s preferred option is to amend the LFE Act to narrow the definition of what constitutes an ‘essential’ user to give priority to fuel users that “provide goods or services that are essential to the health, safety or general welfare of the community.”  The concept of ‘high priority’ user would be removed from the Act.  The Guidelines will be used to develop principles that identify the limits of this definition.  This position accords with the recommendations of the ACIL Tasman Report. [14]

 

 

Implementation & Review

NOSEC will develop a nationally consistent list of essential users in the NLFERP.  This list will be continually reviewed with a formal review at least every 5 years (as per Recommendation 4 of the ACIL Tasman Review).

Additionally, as part of the legislative review of the LFE Act, guidelines for determining essential users will be clarified in consultation with NOSEC and industry.

 

 

 



Providing Appropriate Compensation

Background

The Australian Government Minister has powers under Parts II and III of the LFE Act to issue Directions to certain fuel industry participants to achieve the objectives of the Act.  These Directions can, for example, require an oil refinery to maximise its production of particular fuels, or can require a fuel distributor to transfer its products from one location to another.  In these and many other cases, the directed party is likely to incur costs that they otherwise would not have incurred but for the Direction.

The LFE Act recognises that this may occur, and makes provision for compensation (or protection from liability) in a variety of circumstances:

§   an acquisition of property otherwise than on just terms is specifically compensated under section 45;

§   compensation for any loss, injury or damage sustained whilst complying with a Part II or Part III Direction where that damage is greater than the loss suffered by the community at large and can not (or is unlikely to) be recouped from the market is available under section 46; and

§   if a contract is breached by a party as a direct result of complying with a Part III Direction, the breaching party is exempted from legal claims under section 47.

 

In addition, section 49 provides that a power exercised by a delegate of the Australian Government Minister is deemed to have been exercised by the Australian Government Minister.  On this basis, compensation for a loss suffered as a result of complying with a Direction would be payable by the Commonwealth, regardless of whether the Direction was given by the Australian Government Minister or by a State or Territory official who is a delegate under section 49. 

 

 

The Problem

Concerns exist with the administrative effectiveness and equity of the compensation provisions presently contained in the Act.

The qualifications concerning the assessment of loss under section 46 have never been tested.  The requirement for a Court to have to assess the amount of loss suffered by the “community at large, or a substantial part of the community at large” is a highly uncertain process.  In addition, there are logistical difficulties for all parties concerned in making an accurate assessment. [15]   There is also a danger that section 46 could expose the Commonwealth to a significant but as yet unknown compensation liability.

The uncertainty regarding Commonwealth compensation exposure and the measurement of ‘loss’ is complicated by the fact that some States and Territories have legislation which allows jurisdictions to fix a maximum price for goods, including petroleum.  Should a fuel industry participant be unable to recoup their losses from the market, perhaps because a jurisdiction applied a price cap below the additional cost incurred through complying with a Direction, compensation from the Australian Government under section 46 may be sought.

The amount of compensation which is payable under section 46 is limited to where the claimant’s loss is in excess of the loss suffered by the community in general, and if the claimant is unable to make good their losses from the market.  This is a relatively high threshold to cross before compensation will be made available, and by definition it is limited to fuel industry representatives acting in accordance with a Direction.  The community at large and those persons or organisations that are not the subject of a Direction are unlikely to be eligible for compensation during a national liquid fuel emergency, notwithstanding that many could be adversely affected by the Direction.  The Australian Government is concerned that the current arrangements are therefore inequitable.

 

 

Objectives

The Australian Government’s objective is to provide an economically efficient compensation regime that minimises Commonwealth compensation exposure and encourages the most expedient and effective industry response to a national liquid fuel emergency.  This scheme must also ensure it does not reduce the incentive for parties to undertake appropriate risk management.  In addition, the regime ought to be easily understood and, as far as possible, facilitate expedient outcomes should judicial deliberation be required.

 

 

The Options

Maintain the Status Quo

If a national liquid fuel emergency was to occur, the LFE Act invoked and a fuel industry participant directed to engage in an action that resulted in a loss that could not be recouped from the market, the Australian Government would be obliged to compensate the participant for such loss they suffered that was in excess of the loss suffered by the community at large.  

Amending the Compensation Provisions

The alternative to maintaining the status quo is to amend the compensation provisions of the LFE Act.  There are a number of ways in which this could be achieved. [16]

  1. 100% Compensation

This option would involve removing the concept of “the loss suffered by the community at large” and committing the Australian Government to compensating all losses suffered by fuel industry participants as a result of complying with a Direction under the LFE Act. 

  1. Partial Compensation - Losses Under Part II Only

The Australian Government would distinguish between losses suffered in preparation for and losses suffered during a national liquid fuel emergency, compensating only the former on the assumption that all other losses will be recoverable from the normal operation of the market.  In practice, this would be achieved by amending subsection 46(2).

  1. Nil Compensation

Alternatively, the Australian Government could eliminate all rights to compensation for losses suffered as a result of complying with a Direction, allowing the normal price mechanisms of the market to achieve the most efficient result.  In practice, this would be achieved by repealing section 46 of the LFE Act.

 

 

Impacts

Primary Stakeholders

The primary stakeholders in the LFE Act are the liquid fuel industry participants, including the four oil majors (BP, Shell, Caltex and ExxonMobil), fuel distributors, wholesalers and retailers, consumers and the Australian, State and Territory Governments.  Although a national liquid fuel emergency will have significant impacts throughout the economy, these stakeholders are of most significance when considering change to the Act.

Jurisdictional Use of Price Controls

There are two matters which should be considered in the context of this discussion. 

The first is that the State and Territory Governments retain powers to implement price controls.  Given the political pressures of a national liquid fuel emergency and the likelihood of significant price rises, it is possible that price caps may be introduced to restrain prices in a national liquid fuel emergency.  Depending on the circumstances, a decision to utilise price caps could mean that fuel industry participants will be unable to recoup their losses from the market in all cases.  The State and Territory Governments have indicated through the NOSEC that the circumstances in which price controls would be exercised are rare, and likely to be limited to preventing fuel industry participants from abusing their market power. 

The second is that an inability to make good on an investment is likely to discourage that investment.  Fuel industry participants are unlikely to develop contingency plans or stockpiles of liquid fuels in anticipation of a supply disruption if there is a strong likelihood that they will be unable to seek compensation from the market or from the Australian Government under the LFE Act for doing so.  An inability to recoup their losses from the market could discourage fuel industry participants from complying with a Direction issued by the Australian Government in the event of a national liquid fuel emergency, potentially exaggerating the impact of the supply disruption. 

In both cases, if the market is allowed to operate normally and the cost of complying with a Direction is passed on to the consumer, any increase in costs would be shared amongst fuel users. [17]   If the market is not allowed to operate normally, there is a risk that the Australian Government would be required to compensate a large number of fuel industry participants.



Impacts of Maintaining the Status Quo

Maintaining the status quo presents significant logistical difficulties for potential claimants in the fuel industry, the courts and the Australian Government as defendant under the compensation provisions of the LFE Act.  Depending on the effectiveness of the normal operation of the market, fuel industry participants may suffer the burden of making a claim for compensation and the Australian Government the cost of potentially challenging those claims and/or providing compensation.  Fuel industry participants, however, will of course receive the benefit of that compensation.  The status quo does not impose any significant burden on consumers.

Impacts of 100% Coverage

Establishing a compensation regime that provides for 100 percent coverage of fuel industry participants for losses suffered as a result of complying with a Direction under the LFE Act has the advantage of being simple, clear and concise.  It also provides a financial benefit to fuel industry participants that would have otherwise suffered a loss.  However, such an option would remove any incentive for fuel industry participants to minimise their exposure to potential losses should they be required to comply with a Direction issued prior to or during a national liquid fuel emergency.  If this approach encouraged an excessive number of claims for relief, there would be increased costs to the Australian Government of meeting its compensation liability.  These costs would result in opportunity costs for government, potentially flowing through to consumers.  In addition, it is inequitable to fully compensate fuel industry participants when they are able to invest in measures that will limit their exposure to potential loss.  The broader community is not in a position to respond in the same way.

Impacts of Partial Compensation (Part II Only)

A second option is to only provide compensation for losses suffered as a result of complying with a Direction under Part II of the LFE Act.  Although it is possible in theory to compensate all members of the community for their losses in the event of a national liquid fuel emergency, the cost of doing so would place an enormous burden upon the Government.  In addition, there is no compelling reason for the Australian Government to provide compensation to those persons or organisations that are in a position to mitigate potential losses in the event of a national liquid fuel emergency.  There is also a possibility that non-fuel industry participants will suffer losses as a result of a Direction, but because they are not the subject of the Direction would be unable to obtain compensation.  It is therefore inequitable for the Australian Government to compensate only those persons or organisations that are fuel industry participants and subject to comply with a Direction under Part III of the LFE Act. 

However, compensation should continue to be available under Part II of the Act.  A Direction under Part II can be issued at any time, including prior to a supply disruption, and can require fuel industry participants to act in a non-commercial manner and potentially suffer a significant loss as a result.  This is a burden that is unlikely to be shared by consumers, particularly with regard to Directions aimed at the collection of statistics and the development of bulk allocation plans, and it is equitable that fuel industry participants should be compensated for any losses suffered as a result that can not be recouped from the market.



Amending subsection 46(2) of the LFE Act would be sufficient to implement this option.  It would eliminate the awkward requirement to identify the loss of the community at large, instead allowing the courts to apply general law principles when assessing the amount of compensation that is appropriate in the circumstances.  Claimants will still need to demonstrate that a loss was actually suffered as a result of complying with a Direction in order to be eligible for relief.  This option would also encourage fuel industry participants to take whatever steps they deem necessary to mitigate potential losses during a national liquid fuel emergency.

The position of fuel industry participants, Governments and consumers under Part II remains unchanged under this option.  Further, any losses suffered by fuel industry participants as a result of complying with a Direction under Part III of the Act are expected to be passed on to consumers in most cases. 

However, should the State and Territory Governments utilise price caps once a national liquid fuel emergency has been declared, no compensation would be available under the LFE Act for fuel industry participants that suffer a loss as a result of complying with a Direction under Part III.  The Australian Government’s liability for compensation would be significantly reduced as a result and the cost to consumers would be minimised, though fuel industry participants would be unable to recoup their losses. 

Impacts of Nil Compensation

Alternatively, removing section 46 altogether from the LFE Act would mean that no compensation is available for any losses suffered as a result of complying with a Direction.  A clear signal would therefore be sent to fuel industry participants that the Australian Government will not absolve them of their responsibility to guard against potential loss in the event of a national liquid fuel emergency.

However, there are significant disadvantages to this option.  State and Territory Governments retain powers to implement price controls, and given the political pressures of a national liquid fuel emergency and the likelihood of significant price rises, there is a possibility that price caps will be introduced.  As a result it is possible that fuel industry participants will be unable to recoup their losses from the market in all cases.  If no compensation is available for complying with a Direction, it is likely that a larger number of claims would be made for relief under section 45 of the Act, potentially increasing the legal costs of the Australian Government.  The impact on consumers would depend on whether price caps were introduced.



The impacts of these options are summarised in this table:

 

Options

Impact on Stakeholders

Fuel Industry Participants

Governments

Consumers

Maintain the Status Quo

ý   Significant logistical difficulties in making a claim for compensation.

þ   If a claim is successful, compensation would be available.

ý   Significant logistical difficulties in defending a claim for compensation.

ý   Costs are likely to be passed on to consumers unless price capping is introduced.

100% Coverage

þ   All costs would be compensated.

ý   No incentive to minimise exposure to losses suffered as a result of a future Direction.

ý   Significant financial and opportunity costs.

þ   Eliminates the awkward definitional problems of subsection 46(2).

þ   Costs are unlikely to be passed on to consumers.

?          Opportunity costs for government could have adverse impact on the community at large.

ý   Inequitable impact on consumers as they are rarely in a position to mitigate potential disruptions.

Partial Compensation

þ   Compensation available for Directions under Part II.

þ   More equitable allocation of compensation.

þ   Although compensation is not available under Part III, costs would be recouped from the market in most circumstances.

ý   Price caps would prevent costs from being recouped from the market.

þ   Cost of providing compensation is reduced.

þ   More equitable allocation of compensation.

þ   Eliminates the awkward definitional problems of subsection 46(2).

ý   Costs are likely to be passed on to consumers unless price capping is introduced.

þ   More equitable allocation of compensation.



 

Nil Compensation

ý   Would be unable to recoup their costs from the Government.

ý   Fuel industry participants may seek to recoup costs from the market more aggressively.

ý   Price caps would prevent costs from being recouped from the market.

þ   Eliminates the cost of providing compensation for complying with a Direction.

þ   Eliminates the awkward definitional problems of subsection 46(2).

?          Possible increase in legal costs as fuel industry participants seek to recover their costs via other provisions in the LFE Act (eg s.45).

ý   Costs are likely to be passed on to consumers unless price capping is introduced.

ý   Fuel industry participants may seek to recoup costs from the market more aggressively, resulting in higher costs.

þ   More equitable allocation of compensation.

 

 

Consultation

During the ACIL Tasman review of the LFE Act, comments were received from a number of stakeholders on this subject.

The Australian Institute of Petroleum (AIP) note that there will be additional compliance and security costs for the fuel industry when rationing is implemented, and argue that compensation for these costs should be explicitly included in an inter-governmental agreement.  The AIP has also indicated that it is seriously concerned about the proposed changes to the LFE Act, arguing that industry does not have sufficient assurance that it will be able to raise prices to offset its losses without interference from State and Territory Government price controls.

The Motor Trades Association of Australia (MTAA) suggest that service stations may bear an inequitable share of the financial burden of implementing a Direction under the LFE Act, and have no general right to claim against their suppliers of the Commonwealth for their loss in these circumstances.  The MTAA believes that this is an unconscionable outcome, arguing that compensation should be apportioned in such a way that the respective abilities of the parties’ to cope with the loss are taken into account.

The Australian Petroleum Production & Exploration Association (APPEA) queried how compensation would be quantified, arguing that economic and commercial loss as well as the loss of reputation (for breach of contract as a result of complying with a Direction) should be included.

The NSW State Government (NSW) argues that businesses should manage their risk appropriately and not rely on governments for their fuel supplies.  NSW believes that compensation should not be available where losses are suffered because the Government is acting to maintain public order and the welfare of the community.  However, NSW states that reasonable additional costs incurred as a result of complying with a Direction should be recoverable.  NSW also notes that there are “insurmountable practical difficulties” in measuring community loss and losses in excess of average community loss, and suggests that the Australian Government should be responsible for all compensation issues.

The Western Australia Department of Industry & Resources (DoIR) note that it is still unclear as to which area of the Australian Government has responsibility for the payment of compensation.  DoIR argues that the Australian Government should fully compensate industry where the Government is required to intervene and industry suffers loss as a consequence.

The Western Australia Department of Consumer & Employment Protection (DoCEP) argues that oil companies should not be compensated for their loss of opportunity as a result of complying with a Direction because of their significant public profit announcements in past years.

 

Conclusion

ACIL Tasman recommends that the most equitable course is to not compensate any party for complying with a Direction under the LFE Act once a national liquid fuel emergency has been declared, but to continue to make compensation available for complying with a Direction under the contingency planning powers in Part II of the LFE Act. [18]   The Australian Government has reached an agreement with the State and Territory Governments that price caps will be a measure of last resort in the event of a national liquid fuel emergency, and is satisfied that the market will be allowed to operate normally in all but the most exceptional of circumstances. 

As a result, and in accordance with the recommendations of the ACIL Tasman report, [19] the Australian Government’s preferred option is that subsection 46(2) of the LFE Act be amended, with the effect that compensation is only provided for fuel industry participants that suffer a loss as a result of complying with a Direction under Part II of the Act.  This position will remove the requirement to assess loss by reference to the loss of the community at large, facilitate a more efficient allocation of resources to enable more effective Government responses during a national liquid fuel emergency and reduce the compensation exposure of the Commonwealth.

 

 

Implementation & Review

The Liquid Fuel Emergency Amendment Bill 2007 will give effect to the changes outlined in this Statement. 

Since a national liquid fuel emergency has never been proclaimed and the LFE Act never invoked, it is most appropriate to review the effectiveness of these changes through a future simulation or after an emergency has occurred.  The MCE and industry through the NOSEC will continue to be involved in the development of policy in this area.

 

 

 

 

 



Notes on Clauses

Liquid Fuel Emergency Amendment Bill 2007

 

1.       Short title

This clause is a formal provision specifying the short title of the Bill.

 

2.       Commencement

Clauses 1, 2 and 3 of this Bill will commence on the day on which this Act receives the Royal Assent.

The Schedules will take effect from a single day to be fixed by Proclamation.  If any of the provisions have not yet commenced within six months of the giving of the Royal Assent, the provisions will commence on the first day after that six month period.

 

3.       Schedules

The Liquid Fuel Emergency Act 1984 is amended according to the terms of Schedules 1 and 2.

 

 



Schedule 1

 

Item

Section

Explanation

1

3(1)

A definition of "civil penalty provision" is inserted into the Act to identify those sections that, if breached, may attract a civil penalty.

2

3(1)

The definition of "contravention" is repealed because it has the same meaning as paragraph 22(1)(j) of the Acts Interpretation Act 1901 .

Acts Interpretation Act 1901 : Paragraph 22(1)(j)

 (1)          In any Act, unless the contrary intention appears:

….

(j)            Contravene includes fail to comply with.

3

3(1)

The item inserts the word "and" to the end of the paragraph for grammatical consistency in the sub-section.

4

3(1)

The item includes the Australian Capital Territory Minister with responsibility for liquid fuel emergency measures within the definition of "Energy Minister".

5

3(1)

The item inserts the word "and" to the end of the paragraph for grammatical consistency in the sub-section.

6

3(1)

The definition of "Energy Minister" includes the Minister administering the Jervis Bay Territory Acceptance Act 1915 and the Minister administering the Australian Antarctic Territory Acceptance Act 1933 where a national liquid fuel emergency affects the territories generally and/or the Australian Antarctic Territory.

7

3(1)

The item replaces the definition of "offence against this Act" with updated references to provisions amended by this Bill and to the current provisions of other Acts. 

§   Sub-sections 14(8) and 14(9) make it an offence to knowingly include false or misleading information in statistics maintained under that section;

§   Sub-sections 14A(8) and 14A(9) make it an offence to knowingly make available false or misleading information in statistics requested under that section;

§   Sub-section 29(5) makes it an offence to fail to return an identity card to the Minister after ceasing to be an authorised person;

§   Sub-section 30(2) makes it an offence to fail to provide an authorised person with information or documents relating to a possible contravention of the Act where:

o    the authorised person has reason to believe that the information or documents will reveal the contravention; and

o    the authorised person has requested that information or those documents in writing;

§   Sub-section 33(2) makes it an offence to fail to provide reasonable assistance to an authorised person to exercise their inspection and seizure powers when they have entered a premises, vehicle, ship etc.

Sections 7 (attempt), 7A (incitement) and 86(1) (conspiracy) of the Crimes Act 1914 have been repealed since the commencement of the Act, and are therefore removed from this definition.

The references to other sections in this definition include Section 6 of the Crimes Act 1914 (dealing with being an accessory after the fact), and Sections 11.1, 11.4, 11.5, 137.1, 137.2 of the Criminal Code (dealing with attempt, incitement, conspiracy, false and misleading information and false and misleading documents, respectively).

As a result, a person or organisation can be found guilty of an offence under the Act if they breach (or attempt to breach, or incite another to breach etc) one of the sections listed in this definition.

Crimes Act 1914 :  Section 6 - Accessory after the fact

Any person who receives or assists another person, who is, to his knowledge, guilty of any offence against a law of the Commonwealth, in order to enable him to escape punishment or to dispose of the proceeds of the offence shall be guilty of an offence.

Penalty: Imprisonment for 2 years

 

Criminal Code :  11.1 - Attempt

(1)                  A person who attempts to commit an offence is guilty of the offence of attempting to commit that offence and is punishable as if the offence attempted had been committed.

(2)                  For the person to be guilty, the person’s conduct must be more than merely preparatory to the commission of the offence. The question whether conduct is more than merely preparatory to the commission of the offence is one of fact.

(3)                  For the offence of attempting to commit an offence, intention and knowledge are fault elements in relation to each physical element of the offence attempted.

Note:      Under section 3.2, only one of the fault elements of intention or knowledge would need to be established in respect of each physical element of the offence attempted.

                (3A)        Subsection (3) has effect subject to subsection (6A).

(4)                  A person may be found guilty even if:

(a)                  committing the offence attempted is impossible; or

(b)                  the person actually committed the offence attempted.

(5)                  A person who is found guilty of attempting to commit an offence cannot be subsequently charged with the completed offence.

(6)                  Any defences, procedures, limitations or qualifying provisions that apply to an offence apply also to the offence of attempting to commit that offence.

(6A)        Any special liability provisions that apply to an offence apply also to the offence of attempting to commit that offence.

(7)                  It is not an offence to attempt to commit an offence against section 11.2 (complicity and common purpose), section 11.5 (conspiracy to commit an offence) or section 135.4 (conspiracy to defraud).

 

Criminal Code :  11.4 - Incitement

(1)                  A person who urges the commission of an offence is guilty of the offence of incitement.

(2)                  For the person to be guilty, the person must intend that the offence incited be committed.

                (2A)        Subsection (2) has effect subject to subsection (4A).

(3)                  A person may be found guilty even if committing the offence incited is impossible.

(4)                  Any defences, procedures, limitations or qualifying provisions that apply to an offence apply also to the offence of incitement in respect of that offence.

(4A)        Any special liability provisions that apply to an offence apply also to the offence of incitement in respect of that offence.

(5)                  It is not an offence to incite the commission of an offence against section 11.1 (attempt), this section or section 11.5 (conspiracy).

Penalty:

(a)                  if the offence incited is punishable by life imprisonment—imprisonment for 10 years; or

(b)                  if the offence incited is punishable by imprisonment for 14 years or more, but is not punishable by life imprisonment—imprisonment for 7 years; or

(c)                  if the offence incited is punishable by imprisonment for 10 years or more, but is not punishable by imprisonment for 14 years or more—imprisonment for 5 years; or

(d)                  if the offence is otherwise punishable by imprisonment—imprisonment for 3 years or for the maximum term of imprisonment for the offence incited, whichever is the lesser; or

(e)                  if the offence incited is not punishable by imprisonment—the number of penalty units equal to the maximum number of penalty units applicable to the offence incited.

Note:      Under section 4D of the Crimes Act 1914 , these penalties are only maximum penalties. Subsection 4B(2) of that Act allows a court to impose an appropriate fine instead of, or in addition to, a term of imprisonment. If a body corporate is convicted of the offence, subsection 4B(3) of that Act allows a court to impose a fine of an amount not greater than 5 times the maximum fine that the court could impose on an individual convicted of the same offence. Penalty units are defined in section 4AA of that Act.

 

Criminal Code :  11.5 - Conspiracy

(1)                  A person who conspires with another person to commit an offence punishable by imprisonment for more than 12 months, or by a fine of 200 penalty units or more, is guilty of the offence of conspiracy to commit that offence and is punishable as if the offence to which the conspiracy relates had been committed.

Note:      Penalty units are defined in section 4AA of the Crimes Act 1914 .

(2)                  For the person to be guilty:

(a)                  the person must have entered into an agreement with one or more other persons; and

(b)                  the person and at least one other party to the agreement must have intended that an offence would be committed pursuant to the agreement; and

(c)                  the person or at least one other party to the agreement must have committed an overt act pursuant to the agreement.

                (2A)        Subsection (2) has effect subject to subsection (7A).

(3)                  A person may be found guilty of conspiracy to commit an offence even if:

(a)                  committing the offence is impossible; or

(b)                  the only other party to the agreement is a body corporate; or

(c)                  each other party to the agreement is at least one of the following:

(i)                    a person who is not criminally responsible;

(ii)                  a person for whose benefit or protection the offence exists; or

(d)                  subject to paragraph (4)(a), all other parties to the agreement have been acquitted of the conspiracy.

(4)                  A person cannot be found guilty of conspiracy to commit an offence if:

(a)                  all other parties to the agreement have been acquitted of the conspiracy and a finding of guilt would be inconsistent with their acquittal; or

(b)                  he or she is a person for whose benefit or protection the offence exists.

(5)                  A person cannot be found guilty of conspiracy to commit an offence if, before the commission of an overt act pursuant to the agreement, the person:

(a)                  withdrew from the agreement; and

(b)                  took all reasonable steps to prevent the commission of the offence.

(6)                  A court may dismiss a charge of conspiracy if it thinks that the interests of justice require it to do so.

(7)                  Any defences, procedures, limitations or qualifying provisions that apply to an offence apply also to the offence of conspiracy to commit that offence.

(7A)        Any special liability provisions that apply to an offence apply also to the offence of conspiracy to commit that offence.

(8)                  Proceedings for an offence of conspiracy must not be commenced without the consent of the Director of Public Prosecutions. However, a person may be arrested for, charged with, or remanded in custody or on bail in connection with, an offence of conspiracy before the necessary consent has been given.

 

Criminal Code :  137.1 - False or misleading information

(1)                  A person is guilty of an offence if:

(a)                  the person gives information to another person; and

(b)                  the person does so knowing that the information:

(i)                    is false or misleading; or

(ii)                  omits any matter or thing without which the information is misleading; and

(c)                  any of the following subparagraphs applies:

(i)                    the information is given to a Commonwealth entity;

(ii)                  the information is given to a person who is exercising powers or performing functions under, or in connection with, a law of the Commonwealth;

(iii)                 the information is given in compliance or purported compliance with a law of the Commonwealth.

Penalty: Imprisonment for 12 months.

(1A)        Absolute liability applies to each of the subparagraph (1)(c)(i), (ii) and (iii) elements of the offence.

(2)                  Subsection (1) does not apply as a result of subparagraph (1)(b)(i) if the information is not false or misleading in a material particular.

Note:      A defendant bears an evidential burden in relation to the matter in subsection (2). See subsection 13.3(3).

(3)                  Subsection (1) does not apply as a result of subparagraph (1)(b)(ii) if the information did not omit any matter or thing without which the information is misleading in a material particular.

Note:      A defendant bears an evidential burden in relation to the matter in subsection (3). See subsection 13.3(3).

(4)                  Subsection (1) does not apply as a result of subparagraph (1)(c)(i) if, before the information was given by a person to the Commonwealth entity, the Commonwealth entity did not take reasonable steps to inform the person of the existence of the offence against subsection (1).

Note:      A defendant bears an evidential burden in relation to the matter in subsection (4). See subsection 13.3(3).

(5)                  Subsection (1) does not apply as a result of subparagraph (1)(c)(ii) if, before the information was given by a person (the first person ) to the person mentioned in that subparagraph (the second person ), the second person did not take reasonable steps to inform the first person of the existence of the offence against subsection (1).

Note:      A defendant bears an evidential burden in relation to the matter in subsection (5). See subsection 13.3(3).

(6)                  For the purposes of subsections (4) and (5), it is sufficient if the following form of words is used:

“Giving false or misleading information is a serious offence”.

 

Criminal Code :  137.2 - False or misleading documents

(1)                  A person is guilty of an offence if:

(a)                  the person produces a document to another person; and

(b)                  the person does so knowing that the document is false or misleading; and

(c)                  the document is produced in compliance or purported compliance with a law of the Commonwealth.

Penalty: Imprisonment for 12 months.

(2)                  Subsection (1) does not apply if the document is not false or misleading in a material particular.

Note:      A defendant bears an evidential burden in relation to the matter in subsection (2). See subsection 13.3(3).

(3)                  Subsection (1) does not apply to a person who produces a document if the document is accompanied by a written statement signed by the person or, in the case of a body corporate, by a competent officer of the body corporate:

(a)                  stating that the document is, to the knowledge of the first-mentioned person, false or misleading in a material particular; and

(b)                  setting out, or referring to, the material particular in which the document is, to the knowledge of the first-mentioned person, false or misleading.

Note:      A defendant bears an evidential burden in relation to the matter in subsection (3). See subsection 13.3(3).

8

3(1)

A definition of "officer of the Australian Capital Territory" is inserted into the Act, which includes an officer or employee of the Australian Capital Territory, its authorities and/or members of the Australian Federal Police that are providing police services to the ACT.

9

3(1)

A definition for "penalty unit" is inserted into the Act, which has the same meaning as section 4AA of the Crimes Act 1914 .

10

3(1)

A definition for "planning period" is inserted into the Act, being a period determined under sub-section 9(1).  In practice, a period of national liquid fuel emergency is broken into specific planning periods.  Directions under the Act relate to particular planning periods, which enables the Minister to escalate (or reduce) the Government's response to match the circumstances of the supply disruption.  Refer also to Item 14.

11

3(1)

The definition of "relevant provision of this Act" is repealed.  The legal effect of the old "relevant provisions" has been captured by the civil penalty provisions of Section 34 and other amendments given effect by this Bill.

12

5(1)

NEW

The existing sub-section is replaced by two new sub-sections.  The Act binds the Crown in each of its capacities.  The Act does not make the Crown liable to be prosecuted for an offence.

13

5(2)

A direction under the Act has no effect if it would prevent the exercise of powers or performance of functions of the Australian Capital Territory Government.

14

9

10

11

This Item rewrites and amends the existing sections.

Section 9 - Minister must determine planning periods

Section 9 of the Act enables the Minister to determine planning periods in relation to a period of national liquid fuel emergency.  Planning periods enable the Minister to divide a period of national liquid fuel emergency into shorter time periods to enable the more effective planning for and management of an emergency.  For example, if a national liquid fuel emergency is declared by the Governor-General under Section 16 to exist during the period from 1 January until 30 June in the same year, the Minister may determine that a first planning period will last from 1 January until 31 January, that a second planning period will last from 1 February until 28 February, and so on. 

Directions of the Minister under Part III of the Act have effect only by reference to a particular planning period.  For example, a direction to a corporation under Section 21, requiring the corporation to provide a certain percentage of normal fuel allocations to its bulk customers, could specify that the direction applies to planning periods two to four.  Such a system enables an escalation or contraction of the Government's liquid fuel emergency response to match the circumstances of the fuel supply disruption whilst still providing a degree of certainty to the recipient of a direction.

The Minister must determine one or more planning periods during a period of national liquid fuel emergency, and that a planning period will terminate at the end of the period of national liquid fuel emergency.  Notice of the planning periods that the Minister has determined must be provided to the Energy Minister for each State and Territory, which as a minimum will be communicated in accordance with the service requirements set out under Section 28A of the Acts Interpretation Act 1901 (Item 97 refers).

The item removes the requirement that a planning period determination must be published in the Gazette, and exempts the determination from the operation of sub-section 12(2) of the Legislative Instruments Act 2003 .  In some cases, a national liquid fuel emergency could be a relatively short-lived event, or could escalate more dramatically than was originally anticipated.  The intention of the item is to provide the Minister with the power to establish planning periods from the date of the disruption, retrospectively if necessary, to enable directions under Part III of the Act to have effect as soon as possible (rather than from the time of publication in the Gazette or its registration on the Federal Register of Legislative Instruments). 

Depending on the circumstances of the supply disruption, a direction will take effect from the date that it is received by a relevant person or relevant fuel industry corporation or from a date specified in the direction rather than upon its registration.  It is not intended that a direction under Part III of the Act will commence retrospectively, with the effect that its recipient is not likely to be disadvantaged as a result of the operation of this section.

Section 10 - Bulk customers of relevant fuel industry corporations or of relevant persons

Section 10 of the Act enables the Minister to identify a customer of a relevant fuel industry corporation or relevant person as a bulk customer, in accordance with Guidelines made by the Minister.  The identification of bulk customers is intended to facilitate the use of directions under Section 13 (bulk allocation procedures) and Part III of the Act.

The item clarifies the status of an instrument under this section.  An instrument that identifies a bulk customer is not intended to be a legislative instrument.  This amendment entitles bulk customers to receive an allocation of fuel immediately, rather than having to wait until the instrument of identification is registered.

An instrument identifying a bulk customer can only be revoked if the Minister is satisfied that the bulk customer is no longer carrying on the activities that lead to their identification as a bulk customer.  The revocation will take effect from the end of the planning period in which the revocation was made.

A bulk customer identified as a bulk customer prior to a period of national liquid fuel emergency will remain a bulk customer throughout the period of the emergency.  The item clarifies that a bulk customer identified as such during a planning period will remain a bulk customer throughout that planning period and all subsequent planning periods of that national liquid fuel emergency.

Guidelines prepared under this section are exempted from the operation of sub-section 12(2) of the Legislative Instruments Act 2003 .  The purpose of this amendment is to enable the Minister to revise and amend the Guidelines made under the Act and allow them to take effect prior to their registration.  This enables the Minister to respond quickly to changing circumstances, such as where the circumstances of the national liquid fuel emergency had not been previously contemplated and the existing Guidelines cause an unforeseen and/or unintended effect.  It is the Government's intention that relevant parties will be consulted on the terms of prospective Guidelines under this section in accordance with Part III of the Legislative Instruments Act 2003 .

The Guidelines under this section will help to give effect to a direction under Section 13 (bulk allocation procedures) and Sections 21 and 22 (direction to implement a bulk allocation procedure).

The Minister must, as soon as practicable, give notice of their decision to the person or organisation that is the subject of the decision.   As a minimum, notice will be communicated in accordance with the service requirements set out under Section 28A of the Acts Interpretation Act 1901 (Item 97 refers).

Section 11 - Essential users of refined liquid petroleum products

Section 11 of the Act enables the Minister to identify essential and high priority users for the purpose of providing them with priority access to fuel under Part III of the Act during a supply disruption. 

The item removes the concept of high priority user from the Act.  The purpose of this change is discussed in greater detail in the Regulation Impact Statement , but is intended to provide a clearer indication of the types of activities that are going to receive priority access to fuel in the event of a fuel supply disruption.  The change sends a clear signal to fuel users that, unless they clearly fall within the definition, they will not be given priority access to scarce liquid fuels and should take whatever steps they deem necessary to mitigate a future supply disruption.

The Minister may identify essential users where the Minister is satisfied that the user undertakes activities which are essential to the health, safety and welfare of the community.  The Minister must make Guidelines to assist in the identification of an essential user, and these Guidelines must be followed before a fuel user can be identified as being "essential".

The instrument that identifies an essential user is not intended to be a legislative instrument.  An instrument that determines activities for the purposes of paragraph 1(d) is a legislative instrument, but by the operation of paragraph 6(a) is exempted from the operation of sub-section 12(2) of the Legislative Instruments Act 2003 .  These amendments will enable essential users to receive priority access to fuel immediately, rather than having to wait until the instrument of identification or the instrument determining an activity as essential to the health, safety and welfare of the community has been registered.

Guidelines prepared under Section 11 are exempted from the operation of sub-section 12(2) of the Legislative Instruments Act 2003 .  The purpose of this amendment is to enable the Minister to revise and amend the Guidelines made under the Act and allow them to take effect prior to their registration.  This enables the Minister to respond quickly to changing circumstances, such as where the circumstances of the national liquid fuel emergency had not been previously contemplated and the existing Guidelines cause an unforeseen and/or unintended effect.  It is the Government's intention that relevant parties will be consulted on the terms of prospective Guidelines under this section in accordance with Part III of the Legislative Instruments Act 2003 .

An instrument identifying an essential user can only be revoked if the Minister is satisfied that the user is no longer carrying on the activities that lead to their identification as an essential user.  The revocation will take effect from the end of the planning period in which the revocation was made.

An essential user identified as such prior to a period of national liquid fuel emergency will remain an essential user throughout the period of the emergency.  The item also clarifies that an essential user identified as such during a planning period will remain an essential user throughout that planning period and all subsequent planning periods of that national liquid fuel emergency.

The Minister must, as soon as practicable, give notice of a decision to the person or organisation that is the subject of the decision and to the Energy Minister for that State or Territory.  As a minimum, notice will be communicated in accordance with the service requirements set out under Section 28A of the Acts Interpretation Act 1901 (Item 97 refers).

15

12

13

14

NEW

15

This Item rewrites and amends the existing sections, and introduces two new sections.

Section 12 - Minister may direct relevant fuel industry corporations to maintain reserves etc.

Section 12 enables the Minister to direct relevant fuel industry corporations to accumulate and/or maintain reserves of a specified type of fuel at a specified place within Australia.  Such a direction can not be given during a period of national liquid fuel emergency (though, as identified in the note following sub-section 12(2), Section 17 of the Act is an effective equivalent during a period of emergency).

The Minister can not issue a direction under this section unless it is for the purpose of ensuring that the recipient of the direction will be in a position to comply with a direction under Part III of the Act (that is, during a period of national liquid fuel emergency).

A direction under this section is not a legislative instrument.

The Minister must make Guidelines for the purposes of this section.  Guidelines prepared under this section are exempted from the operation of sub-section 12(2) of the Legislative Instruments Act 2003 .  The purpose of this amendment is to enable the Minister to revise and amend the Guidelines made under the Act and allow them to take effect prior to their registration.  This enables the Minister to respond quickly to changing circumstances, such as where the circumstances of the national liquid fuel emergency had not been previously contemplated and the existing Guidelines cause an unforeseen and/or unintended effect.  It is the Government's intention that relevant parties will be consulted on the terms of prospective Guidelines under this section in accordance with Part III of the Legislative Instruments Act 2003 .  Further, given the similar nature of the powers, it is anticipated that the Guidelines under Section 12 will be broadly consistent with Guidelines issued under Section 17.

The Minister may vary a direction under this section if they are satisfied that particular temporary circumstances exist.  These circumstances may vary widely, but could include a short-term supply disruption which is of insufficient scale to require the use of the Minister's powers under the Act. 

A relevant fuel industry corporation must not breach its obligations under this section without a reasonable excuse.  For the purposes of this section, "reasonable excuse" is to be cast widely but is anticipated to typically relate to circumstances beyond the relevant fuel industry corporation's control.  It is expected that a relevant fuel industry corporation will advise the Minister if there are impending temporary circumstances which warrant the short-term variation of the direction.

The Minister must provide notice of a direction (or variation of a direction) under this section.  The direction comes into force from the time the notice is received by the relevant fuel industry corporation.

A direction under sub-section 12(1) is intended to have effect for so long as it is in place, even if a period of national liquid fuel emergency is proclaimed.  However, if a direction under sub-section 12(1) is issued to a relevant fuel industry corporation and a direction under sub-section 17(1) is subsequently received, the latter direction cancels the direction under sub-section 12(1).

Section 13 - Minister may direct relevant fuel industry corporations to develop bulk allocation procedures

Section 13 enables the Minister to direct a relevant fuel industry corporation to develop procedures that will enable the allocation of bulk supplies of a particular fuel product.

The item provides that neither Section 42 (disallowance of legislative instruments) nor Part 6 (sun-setting of legislative instruments) of the Legislative Instruments Act 2003 apply to an instrument made under this section.  The effect of this amendment is that a direction to a relevant fuel industry corporation to develop bulk allocation procedures can not be disallowed by the Parliament and will remain in force until revoked by the Minister.

Legislative Instruments Act 2003 :  Section 42

(1)      If:

(a)      notice of a motion to disallow a legislative instrument or a provision of a legislative instrument is given in a House of the Parliament within 15 sitting days of that House after a copy of the instrument was laid before that House; and

(b)      within 15 sitting days of that House after the giving of that notice, the House passes a resolution, in pursuance of the motion, disallowing the instrument or provision;

the instrument or provision so disallowed then ceases to have effect.

(2)      If:

(a)      notice of a motion to disallow a legislative instrument or a provision of a legislative instrument is given in a House of the Parliament within 15 sitting days of that House after a copy of the instrument was laid before that House; and

(b)      at the end of 15 sitting days of that House after the giving of that notice of motion:

(i)        the notice has not been withdrawn and the motion has not been called on; or

(ii)      the motion has been called on, moved and (where relevant) seconded and has not been withdrawn or otherwise disposed of;

the instrument or provision specified in the motion is then taken to have been disallowed and ceases at that time to have effect.

(3)      If:

(a)      notice of a motion to disallow a legislative instrument or a provision of a legislative instrument is given in a House of the Parliament within 15 sitting days of that House after a copy of the instrument was laid before that House; and

(b)      before the end of 15 sitting days of that House after the giving of that notice of motion, the House of Representatives is dissolved or expires, or the Parliament is prorogued; and

(c)      at the time of the dissolution, expiry or prorogation, as the case may be:

(i)        the notice has not been withdrawn and the motion has not been called on; or

(ii)      the motion has been called on, moved and (where relevant) seconded and has not been withdrawn or otherwise disposed of;

the legislative instrument is taken, for the purposes of subsections (1) and (2), to have been laid before the first-mentioned House on the first sitting day of that first-mentioned House after the dissolution, expiry or prorogation, as the case may be.

The Minister must make Guidelines under this section to facilitate the development of bulk allocation procedures to provide bulk customers (as identified under Section 10 of the Act) with fuel during a period of national liquid fuel emergency.

A direction under sub-section 13(1) and Guidelines under sub-section 13(3) are exempted from the operation of sub-section 12(2) of the Legislative Instruments Act 2003 .  The purpose of this amendment is to enable the Minister to issue a direction or revise and amend the Guidelines made under the Act and allow them to take effect prior to their registration.  This enables the Minister to respond quickly to changing circumstances, such as where the circumstances of the national liquid fuel emergency had not been previously contemplated and the existing Guidelines cause an unforeseen and/or unintended effect.  It is the Government's intention that relevant parties will be consulted on the terms of prospective Guidelines under this section in accordance with Part III of the Legislative Instruments Act 2003 .

The Guidelines under this section will rely on the identification of a bulk customer under Section 10, and will help to give effect to a direction under Sections 21 and 22 (direction to implement a bulk allocation procedure).

The Minister must approve a relevant fuel industry corporation's bulk allocation procedures if they are satisfied that the procedures are in accordance with the Guidelines and will enable the effective allocation of bulk fuel supplies in the event of an emergency.  If the Minister is not satisfied, the Minister must direct the relevant fuel industry corporation to make specific changes to those procedures within a specified timeframe.  If the procedures have been subsequently amended in accordance with the Minister's direction, the Minister must approve the procedures.  An approval of a bulk allocation procedure or a direction to amend a bulk allocation procedure is not a legislative instrument.  In all cases, the Minister must provide notice of their decisions to the relevant fuel industry corporation.

A relevant fuel industry corporation must not contravene a direction to develop or amend its bulk allocation procedures under sub-sections 13(1) or 13(6) without reasonable excuse.  For the purposes of this section, "reasonable excuse" is to be cast widely but is anticipated to relate to circumstances beyond the relevant fuel industry corporation's control.  It is expected that a relevant fuel industry corporation will advise the Minister if there are circumstances which it anticipates will cause it to breach this section; for example, a relevant fuel industry corporation may adopt different business practices for operational reasons that would breach an approved bulk allocation procedure.  It is anticipated that in these circumstances the corporation would seek the approval of the Minister to amend its bulk allocation procedures accordingly.  A breach of this section may attract a pecuniary penalty under Section 34 of the Act.

Section 14 - Minister may direct relevant fuel industry corporations and relevant persons to maintain statistical information

Section 14 enables the Minister to direct relevant fuel industry corporations and relevant persons to maintain specified statistical information relating to liquid fuels in their possession or under their control.

The Minister must make Guidelines under this section.  These Guidelines will set out the matters to which a decision-maker must have regard when exercising their power to issue a direction under this section.  It is the Government's intention that relevant parties will be consulted on the terms of prospective Guidelines under this section in accordance with Part III of the Legislative Instruments Act 2003

The item provides that neither Section 42 (disallowance of legislative instruments) nor Part 6 (sun-setting of legislative instruments) of the Legislative Instruments Act 2003 apply to an instrument made under this section.  The effect of this amendment is that a direction to a relevant fuel industry corporation to develop bulk allocation procedures can not be disallowed by the Parliament and will remain in force until revoked by the Minister.

A direction under sub-section 14(1) and Guidelines under sub-section 14(4) are exempted from the operation of sub-section 12(2) of the Legislative Instruments Act 2003 .  The purpose of this amendment is to enable the Minister to issue a direction or revise and amend the Guidelines under the Act and allow them to take effect prior to its registration.  This enables the Minister to respond quickly to changing circumstances, such as where a national liquid fuel emergency is looming and the maintenance of statistical information is necessary to assist with the Government's emergency planning.  In practice, it is anticipated that the Government will consult with the intended recipient of a direction under this section in order to confirm that the direction will be effective to achieve its objectives.

A breach of a direction under sub-section 14(1) may attract a pecuniary penalty under Section 34 of the Act.  A breach of a direction which knowingly involves the maintenance of false and misleading statistical information may attract a criminal penalty under this section.

14A - Minister may direct relevant fuel industry corporations and relevant persons to make available statistical information

Section 14A enables the Minister to direct a relevant fuel industry corporation or a relevant person to make available the statistics which are being kept as a result of a direction under Section 14. 

The Minister must make Guidelines under this section.  These Guidelines will set out the matters to which a decision-maker must have regard when exercising their power to issue a direction under this section.  It is the Government's intention that relevant parties will be consulted on the terms of prospective Guidelines under this section in accordance with Part III of the Legislative Instruments Act 2003 .

Guidelines under sub-section 14A(4) are exempted from the operation of sub-section 12(2) of the Legislative Instruments Act 2003 .  The purpose of this amendment is to enable the Minister to revise and amend the Guidelines under the Act and allow them to take effect prior to their registration.  This enables the Minister to respond quickly to changing circumstances, such as where a national liquid fuel emergency is looming and the statistical information is necessary to assist with the Government's emergency planning.

A direction under this section is not a legislative instrument, and a failure to comply with the direction without reasonable excuse may attract a pecuniary penalty under Section 34 of the Act.  For the purposes of this section, "reasonable excuse" is to be cast widely but is anticipated to typically relate to circumstances beyond the relevant fuel industry corporation's or relevant person's control.  It is expected that a relevant fuel industry corporation or relevant person will advise the Minister if there are circumstances which are anticipated to cause a breach of this section.

In practice, it is anticipated that the Government will consult with the intended recipient of a direction under this section in order to confirm that the direction will be effective to achieve the objectives of the Government.  The information obtained by the Government under this section will be treated confidentially, to the extent that doing so does not impede the effective management of a national liquid fuel emergency response.

A breach of a direction which knowingly involves the making available of false and misleading statistical information may attract a criminal penalty under this section.

The Minister must provide notice of a direction under this section to the relevant fuel industry corporation or relevant person.  The direction takes effect from the time the notice is received.

14B - Prosecution of offences against section 14 or 14A

Section 14B sets out the way in which an offence against Sections 14 or 14A will be prosecuted.  Offences against sub-sections 14(8), 14(9), 14A(8) and 14A(9) are indictable offences, but a court of summary jurisdiction can determine the charge summarily if it is proper to do so and the defendant and prosecutor give their consent.

If a court of summary jurisdiction convicts a relevant fuel industry corporation of maintaining or providing false and misleading information in its statistics, the court may impose a fine of up to 100 penalty units.  If a court of summary jurisdiction convicts a relevant person of maintaining or providing false and misleading information in its statistics, the court may impose a fine of up to 20 penalty units and/or 12 months imprisonment.

Section 15 - Minister may enter into arrangements to enable directions under sections 23 and 24 to be implemented

Section 15 enables the Minister to enter into arrangements with a Minister of a State or Territory or with an authority that will facilitate the implementation of directions under Sections 23 and 24 of the Act (dealing with the regulation and prohibition of the supply of fuel).  The arrangement may explicitly allow for the Commonwealth to reimburse the costs of carrying out measures under the arrangement.

16

16(2)(a)

 

Section 16 enables the Governor-General to proclaim a period of national liquid fuel emergency.  This item clarifies that the Governor-General will only act on the advice of the Minister, where the Minister is satisfied that it is in the public interest to issue the proclamation.

17

16(2)(b)

Section 16 enables the Governor-General to proclaim a period of national liquid fuel emergency.  This item clarifies that the Governor-General will only act on the advice of the Minister, where the Minister is satisfied that he or she has provided a reasonable opportunity for the Energy Minister for each State and Territory to consult with them.

18

16(2)(b)

The item inserts a requirement that the Energy Minister for the Australian Capital Territory be consulted prior to the proclamation of a national liquid fuel emergency.

19

16(3)

The item gives further effect to the replacement of the Governor-General as the decision-maker under Items 16 and 17, noting that the Minister must have regard to the matters set out in the section before recommending that a period of national liquid fuel emergency be proclaimed.

20

16(5)

The item gives further effect to the replacement of the Governor-General as the decision-maker under Items 16 and 17, noting that if the Minister is satisfied that it is no longer in the public interest, the Governor-General may, by proclamation, revoke the original proclamation of a period of national liquid fuel emergency.

21

17

18

19

20

21

22

23

24

This Item rewrites and amends the existing sections.

Section 17 - Minister may direct relevant fuel industry corporations to maintain reserves etc.

Section 17 enables the Minister to direct a relevant fuel industry corporation to accumulate and maintain reserves of a liquid fuel at a particular location from a specified date.  Such a direction can only be given for the purposes of dealing with a likely or current shortage of liquid fuels , and cancels any pre-existing direction given under Section 12.

A direction under this section is not a legislative instrument.

The Minister must make Guidelines under this section.  These Guidelines will set out the matters to which a decision-maker must have regard when exercising their power to issue a direction under this section.  It is the Government's intention that relevant parties will be consulted on the terms of prospective Guidelines under this section in accordance with Part III of the Legislative Instruments Act 2003 .  Further, given the similar nature of the powers, it is anticipated that the Guidelines under Section 17 will be broadly consistent with Guidelines issued under Section 12.

Guidelines under sub-section 17(5) are exempted from the operation of sub-section 12(2) of the Legislative Instruments Act 2003 .  The purpose of this amendment is to enable the Minister to revise and amend the Guidelines under the Act and allow them to take effect prior to their registration.  This enables the Minister to respond quickly to changing circumstances, such as where the circumstances of the national liquid fuel emergency had not been previously contemplated and the existing Guidelines cause an unforeseen and/or unintended effect.

A relevant fuel industry corporation must not breach its obligations under this section without a reasonable excuse.  For the purposes of this section, "reasonable excuse" is to be cast widely but is anticipated to typically relate to circumstances beyond the relevant fuel industry corporation's control.  It is expected that a relevant fuel industry corporation will advise the Minister if there are impending temporary circumstances which warrant the short-term variation of the direction.  A breach of a direction under this section may attract a pecuniary penalty under Section 34 of the Act.

The Minister must provide notice of a direction (or variation of a direction) under this section.  The direction comes into force from the time the notice is received by the relevant fuel industry corporation.

Section 18 - Minister may direct transfer of liquid fuel

Section 18 enables the Minister to direct that liquid fuel held by a relevant fuel industry corporation in one location be transferred to another location within a specified timeframe.  The transfer can only be directed if there are suitable storage facilities for the fuel in the new location, and, if the transfer is not for the purposes set out in sub-section 18(3), the new location must be in a different State or Territory. 

The Minister can direct the transfer of liquid fuel within a particular State or Territory jurisdiction if it is for the purposes of:

§   defence;

§   providing fuel for ships or aircraft involved in trade or commerce between more than one jurisdiction;

§   the export of liquid fuels from Australia; or

§   activities which are determined by the Minister to be essential to the health, safety and welfare of the community under paragraph 11(1)(d).

A direction under this section can only be given for the purposes of dealing with a likely or current shortage of liquid fuels .  A direction under this section is not a legislative instrument.

A relevant fuel industry corporation must not breach its obligations under this section without a reasonable excuse.  For the purposes of this section, "reasonable excuse" is to be cast widely but is anticipated to typically relate to circumstances beyond the relevant fuel industry corporation's control.  It is expected that a relevant fuel industry corporation will advise the Minister if there are circumstances which prevent its compliance with the direction prior to the direction being issued.  A breach of a direction under this section may attract a pecuniary penalty under Section 34 of the Act.

The Minister must provide notice of a direction under this section.  The direction comes into force from the time the notice is received by the relevant fuel industry corporation.

Section 19 - Minister may direct liquid fuel to be available for purchase

Section 19 enables the Minister to direct a relevant fuel industry corporation to make a specific quantity and/or type of fuel available for purchase by specified persons at a particular time.  A direction under this section does not regulate the supply of fuel by a relevant fuel industry corporation (which can be regulated under Section 23), and can only be given for the purposes of dealing with a likely or current shortage of liquid fuels.

A direction under this section can require that the recipient of the direction and the beneficiary of the fuel being made available for purchase must agree to a price for the fuel, or the direction can identify a third person that will arbitrate a price in the absence of an agreement. 

A direction under this section is not a legislative instrument.

A relevant fuel industry corporation must not breach its obligations under this section without a reasonable excuse.  For the purposes of this section, "reasonable excuse" is to be cast widely but is anticipated to typically relate to circumstances beyond the relevant fuel industry corporation's control.  It is expected that a relevant fuel industry corporation will advise the Minister if there are circumstances which prevent its compliance with the direction prior to the direction being issued.  A breach of a direction under this section may attract a pecuniary penalty under Section 34 of the Act.

The Minister must provide notice of a direction under this section.  The direction comes into force from the time the notice is received by the relevant fuel industry corporation.

Section 20 - Minister may give directions as to output from refineries

Section 20 enables the Minister to direct a relevant fuel industry corporation to produce or refine specific amounts of fuel during a particular period.  In practice, such a direction must take into account any practical limitations of the refining process and the capacity of the relevant fuel industry corporation to respond.

A direction under this section can only be given for the purposes of dealing with a likely or current shortage of liquid fuels.  A direction under this section is not a legislative instrument.

The Minister must make Guidelines under this section.  These Guidelines will set out the matters to which a decision-maker must have regard when exercising their power to issue a direction under this section.  It is the Government's intention that relevant parties will be consulted on the terms of prospective Guidelines under this section in accordance with Part III of the Legislative Instruments Act 2003 .

Guidelines under sub-section 20(5) are exempted from the operation of sub-section 12(2) of the Legislative Instruments Act 2003 .  The purpose of this amendment is to enable the Minister to revise and amend the Guidelines under the Act and allow them to take effect prior to their registration.  This enables the Minister to respond quickly to changing circumstances, such as where the circumstances of the national liquid fuel emergency had not been previously contemplated and the existing Guidelines cause an unforeseen and/or unintended effect.

A relevant fuel industry corporation must not breach its obligations under this section without a reasonable excuse.  For the purposes of this section, "reasonable excuse" is to be cast widely but is anticipated to typically relate to circumstances beyond the relevant fuel industry corporation's control.  It is expected that a relevant fuel industry corporation will advise the Minister if there are circumstances which prevent its compliance with the direction prior to the direction being issued.  A breach of a direction under this section may attract a pecuniary penalty under Section 34 of the Act.

The Minister must provide notice of a direction under this section.  The direction comes into force from the time the notice is received by the relevant fuel industry corporation.

Section 21 - Minister may give directions with respect to allocation by corporations of liquid fuel to bulk customers

Section 21 enables the Minister to direct relevant fuel industry corporations to institute a bulk allocation procedure that was approved under Section 13 in order to make certain amounts of fuel available to bulk customers.  A direction under this section can only be given for the purposes of dealing with a likely or current shortage of liquid fuels. 

A direction under this section has effect for each planning period that is specified in the direction from the time that the direction comes into force.  Planning periods are established under Section 9.

A direction under this section is a legislative instrument, but neither Section 42 (disallowance of legislative instruments) nor Part 6 (sun-setting of legislative instruments) of the Legislative Instruments Act 2003 applies.  The effect of this amendment is that a direction to a relevant fuel industry corporation to give effect to a bulk allocation procedure can not be disallowed by the Parliament and will remain in force until it ends or is revoked by the Minister.

The Minister must make Guidelines under the section, which will set out the matters which a direction must address to facilitate an effective allocation of fuels to bulk customers under this section.  It is the Government's intention that relevant parties will be consulted on the terms of prospective Guidelines under this section in accordance with Part III of the Legislative Instruments Act 2003 Further, Guidelines under Sections 10 (identification of bulk customers) and 13 (bulk allocation procedures) will help to inform the use of directions under this section.

A direction under sub-section 21(1) and Guidelines under sub-section 21(7) are exempted from the operation of sub-section 12(2) of the Legislative Instruments Act 2003 .  This amendment enables the Minister to issue a direction or make Guidelines that will take effect prior to their being registered.  This enables the Minister to respond quickly to changing circumstances, such as where the supply of fuel during a national liquid fuel emergency deteriorates more quickly than anticipated and a revised allocation to bulk customers is required. 

A relevant fuel industry corporation must not fail to provide fuel to a bulk customer without a reasonable excuse.  "Reasonable excuse" includes (but is not limited to) situations where a person or organisation fails to produce a notice under sub-section 10(9) which identifies them as a bulk customer or a notice under sub-section 11(10) which identifies them as an essential user.

A relevant fuel industry corporation also breaches the requirement of this section if they supply fuel to a person or organisation who is not a bulk customer.  There is no reasonable excuse defence for breaching this requirement.

In both cases, a breach may attract a pecuniary penalty under Section 34 of the Act.

Section 22 - Minister may give directions with respect to allocation by relevant persons of liquid fuel to bulk customers

Section 22 enables the Minister to direct relevant persons to institute a bulk allocation procedure which is specified in the direction to make certain amounts of fuel available to bulk customers.  A direction under this section can only be given for the purposes of dealing with a likely or current shortage of liquid fuels. 

A direction under this section has effect for each planning period that is specified in the direction from the time that the direction comes into force.  Planning periods are established under Section 9.

A direction under this section is a legislative instrument, but neither Section 42 (disallowance of legislative instruments) nor Part 6 (sun-setting of legislative instruments) of the Legislative Instruments Act 2003 applies.  The effect of this amendment is that a direction to a relevant person to institute a bulk allocation procedure can not be disallowed by the Parliament and will remain in force until it ends or is revoked by the Minister.

The Minister must make Guidelines under the section, which will set out the matters which a direction must address to facilitate an effective allocation of fuels to bulk customers under this section.  It is the Government's intention that relevant parties will be consulted on the terms of prospective Guidelines under this section in accordance with Part III of the Legislative Instruments Act 2003 .  Further, Guidelines under Sections 10 (identification of bulk customers) and 13 (bulk allocation procedures) will help to inform the use of directions under this section.

A direction under sub-section 22(1) and Guidelines under sub-section 22(7) are exempted from the operation of sub-section 12(2) of the Legislative Instruments Act 2003 This amendment enables the Minister to issue a direction or make Guidelines that will take effect prior to their being registered.   This enables the Minister to respond quickly to changing circumstances, such as where the supply of fuel during a national liquid fuel emergency deteriorates more quickly than anticipated and a revised allocation to bulk customers is required.

A relevant person must not fail to provide fuel to a bulk customer without a reasonable excuse.  "Reasonable excuse" includes (but is not limited to) situations where a person or organisation fails to produce a notice under sub-section 10(9) which identifies them as a bulk customer or a notice under sub-section 11(10) which identifies them as an essential user.

A relevant person also breaches the requirement of this section if they supply fuel to a person or organisation who is not a bulk customer.  There is no reasonable excuse defence for breaching this requirement.

In both cases, a breach may attract a pecuniary penalty under Section 34 of the Act.

Section 23 - Minister may give directions to corporations regulating or prohibiting supply of liquid fuel

Section 23 enables the Minister to regulate or prohibit the supply of fuel by a relevant fuel industry corporation to particular persons or to persons generally.  A direction under this section can only be given for the purposes of dealing with a likely or current shortage of liquid fuels.  A direction which regulates or prohibits the supply of fuel under this section can not relate only to bulk customers. 

A direction under this section has effect for each planning period that is specified in the direction from the time that the direction comes into force.  Planning periods are established under Section 9.

A direction under this section is a legislative instrument, but neither Section 42 (disallowance of legislative instruments) nor Part 6 (sun-setting of legislative instruments) of the Legislative Instruments Act 2003 applies.  The effect of this amendment is that a direction regulating or prohibiting the supply of fuel by a relevant fuel industry corporation to certain persons can not be disallowed by the Parliament and will remain in force until it ends or is revoked by the Minister.

The Minister must make Guidelines under the section, which will set out the matters which a direction must address to regulate or prohibit the sale of fuels under this section.  It is the Government's intention that relevant parties will be consulted on the terms of prospective Guidelines under this section in accordance with Part III of the Legislative Instruments Act 2003 .

A direction under sub-section 23(1) and Guidelines under sub-section 23(7) are exempted from the operation of sub-section 12(2) of the Legislative Instruments Act 2003 .  This amendment enables the Minister to issue a direction or make Guidelines that will take effect prior to their being registered.  This enables the Minister to respond quickly to changing circumstances, such as where the supply of fuel during a national liquid fuel emergency deteriorates more quickly than anticipated and the amount of fuel being sold (or the manner in which it is being sold) requires revision.

A relevant fuel industry corporation must not breach its obligations under this section without a reasonable excuse.  It is expected that a relevant fuel industry corporation will advise the Minister if there are circumstances which prevent its compliance with the direction prior to the direction being issued.  A breach of a direction under this section may attract a pecuniary penalty under Section 34 of the Act.

Section 24 - Minister may give directions to relevant persons regulating or prohibiting supply of liquid fuel

Section 24 enables the Minister to regulate or prohibit the supply of fuel by a relevant person to particular persons or to persons generally.  A direction under this section can only be given for the purposes of dealing with a likely or current shortage of liquid fuels.  A direction which regulates or prohibits the supply of fuel under this section can not relate only to bulk customers. 

A direction under this section has effect for each planning period that is specified in the direction from the time that the direction comes into force.  Planning periods are established under Section 9.

A direction under this section is a legislative instrument, but neither Section 42 (disallowance of legislative instruments) nor Part 6 (sun-setting of legislative instruments) of the Legislative Instruments Act 2003 applies.  The effect of this amendment is that a direction regulating or prohibiting the supply of fuel by a relevant person to certain persons can not be disallowed by the Parliament and will remain in force until it ends or is revoked by the Minister.

The Minister must make Guidelines under the section, which will set out the matters which a direction must address to regulate or prohibit the sale of fuels under this section.  It is the Government's intention that relevant parties will be consulted on the terms of prospective Guidelines under this section in accordance with Part III of the Legislative Instruments Act 2003 .

A direction under sub-section 23(1) and Guidelines under sub-section 23(7) are exempted from the operation of sub-section 12(2) of the Legislative Instruments Act 2003 .  This amendment enables the Minister to issue a direction or make Guidelines that will take effect prior to their being registered.  This enables the Minister to respond quickly to changing circumstances, such as where the supply of fuel during a national liquid fuel emergency deteriorates more quickly than anticipated and the amount of fuel being sold (or the manner in which it is being sold) requires revision.

A relevant person must not breach its obligations under this section without a reasonable excuse.  It is expected that a relevant person will advise the Minister if there are circumstances which prevent its compliance with the direction prior to the direction being issued.  A breach of a direction under this section may attract a pecuniary penalty under Section 34 of the Act.

22

25(1)

The item updates the references to other sections within the Liquid Fuel Emergency Act 1984 .  As a result, a direction under amended sub-sections 21(1) or 22(1) to provide fuel in bulk to customers shall not determine the price or maximum price at which the fuel is to be sold.

23

25(2)

The item updates the references to other sections within the Liquid Fuel Emergency Act 1984 .  As a result, a direction under amended sub-sections 23(1) or 24(1) to regulate or prohibit the supply of fuel to customers shall not determine the price or maximum price at which the fuel is to be sold.

24

25(3)(a)

Section 51 makes it clear that the Liquid Fuel Emergency Act 1984 is not intended to override State or Territory legislation which is capable of operating concurrently with the Act.  The item therefore amends the existing sub-section to update the references to other sections of the Act, with the effect that a direction under amended sub-sections 21(1) or 22(1) will not be rendered ineffective simply because a State or Territory law determines the price or maximum price at which the fuel may be sold.

25

25(3)(b)

Section 51 makes it clear that the Liquid Fuel Emergency Act 1984 is not intended to override State or Territory legislation which is capable of operating concurrently with the Act.  The item therefore amends the existing sub-section to update the references to other sections of the Act, with the effect that a direction under amended sub-sections 23(1) or 24(1) will not be rendered ineffective simply because a State or Territory law determines the price or maximum price at which the fuel may be sold.

26

27

A direction given under Part III of the Liquid Fuel Emergency Act 1984 will remain in force throughout the period of national liquid fuel emergency until it is revoked or set aside by a court.  The direction will also remain in force if a sub-sequent period of national liquid fuel emergency is proclaimed to commence immediately after the first period, unless it is revoked or set aside by a court.

27

29(1)

The item changes the spelling of "authorized" to "authorised".

28

29(2)

The item gives effect to the new sub-section introduced by Item 31.

29

29(2)

The item changes the spelling of "authorized" to "authorised".

30

29(2)

The item enables the Minister to appoint officers of the Australian Capital Territory as authorised persons under the Liquid Fuel Emergency Act 1984 .

31

29(2)

NEW

The item inserts a new sub-section that requires the Minister not to appoint an authorised person unless the Minister is satisfied that a person has suitable qualifications and experience to properly exercise the powers of an authorised person under the Act.  In most cases, an authorised person will be a police officer of the relevant jurisdiction in which they have been appointed.

32

29(3)

The item changes the spelling of "authorized" to "authorised".

33

29(4)

The item changes the spelling of "authorized" to "authorised".

34

29(5)

NEW

The item sets out the elements of the existing offence to comply with current drafting conventions.  The item also inserts a new sub-section which enables the Minister to nominate a person to whom the identity cards may be returned.

35

29(6)

The item changes the spelling of "authorized" to "authorised".

36

NEW

The item inserts a new section (29A - Authorised persons to carry and produce identity cards) which requires an authorised person to carry their identity card at all times when exercising their powers under the Act.  An authorised person is not able to exercise any of their powers under Part IV of the Act (relating to requiring the production of documents, inspection, seizure etc) if they fail to produce their identity card upon the request of an owner or occupier of premises, a vehicle, ship etc.

37

30(1)

The item changes the spelling of "authorized" to "authorised".

38

30(1)

The range of information and/or documents which an authorised person can seek from a person under this section includes those which relate to the exercise of a power or the performance of a function that is conferred or imposed on the Minister by the Act.

39

30(1)

The item gives effect to the amendments set out under Item 11 and to Section 34 - Civil penalty orders.

40

30(1)(b)

The item changes the spelling of "authorized" to "authorised".

41

30(1)

The item adds a note to the end of the section which clarifies that the offence of knowingly providing false and misleading information or documents under sections 137.1 and 137.2 of the Criminal Code are capable of applying to this section.

42

30(2)

The penalty for a refusal or failure to comply with a notice under sub-section 30(1) is 30 penalty units.

43

30(3)

30(4)

The sub-sections are repealed.

44

30(5)

A person is not excused from providing information or documents to an authorised person under sub-section 30(1) on the grounds that they may tend to incriminate the person or render the person liable to a pecuniary penalty.  The information or documents are not admissible in evidence in any criminal proceedings, except for proceedings relating to:

§   a refusal or failure to comply with a notice under sub-section 30(2); or

§   an offence against sections 137.1 and/or 137.2 of the Criminal Code (relating to false and misleading information or documents) that relates to this section.

45

30(7)

The item changes the spelling of "authorized" to "authorised".

46

30(8)

The item changes the spelling of "authorized" to "authorised".

47

30(9)

The item changes the spelling of "authorized" to "authorised".

48

31(1)

The item gives effect to the amendments set out under Item 11 and to Section 34 - Civil penalty orders.

49

31(1)

The item gives effect to grammatical changes to Section 31 - Inspection.  For the purpose of ascertaining whether a person has contravened or is committing an offence under the Act, an authorised person may enter and search any land, premises, vehicle, ship or aircraft, break open containers, inspect and examine any article or thing, secure the vehicle or thing, take samples and/or extracts from the vehicle or thing etc. 

Item 54 inserts a new sub-section (31(1A)) which states that these powers can only be exercised:

§   if the owner or occupier of the land, premises, vehicle etc consents;

§   if a warrant is in force under sub-section 31(4); or

§   if the authorised person believes on reasonable grounds that the exercise of the power is necessary to prevent the loss, concealment or destruction of the thing (Item 56, sub-section 31(6) refers).

50

31(1)(a)

The item gives effect to grammatical changes to Section 31 - Inspection.

51

31(1)(b)

The item gives effect to grammatical changes to Section 31 - Inspection.

52

31(1)(e)

31(1)(f)

31(1)(g)

The item gives effect to grammatical changes to Section 31 - Inspection.

53

31(1)(g)

The item removes the "or" from the end of the paragraph for grammatical consistency in the sub-section.

54

NEW

The item inserts a new sub-section which clarifies that an authorised person can only exercise their powers under sub-section 31(1) if:

§   the occupier consents to the exercise of the power;

§   a warrant is in force; or

§   the authorised person believes on reasonable grounds that evidence of a contravention of a civil penalty provision of the Act is contained in the place, and the exercise of the authorised person's powers is necessary to prevent the loss, concealment or destruction of that evidence (Item 56, sub-section 31(6) refers).

55

31(2)

The item replaces the word "matter" with "article" to clarify the meaning of the section with more modern language.

56

31(3)

31(4)

31(5)

31(6)

NEW

The terms of sub-sections 31(3) to 31(6) are self-explanatory.  The item also inserts several new sub-sections.

Sub-section 31(7) clarifies that the emergency powers under sub-section 31(6) can only be exercised in situations which are urgent and/or serious enough to justify the immediate use of those powers without the authorisation of a warrant.

Sub-section 31(8) enables an authorised person to stop or detain a vehicle, ship or aircraft to enable the exercise of their powers.

Sub-section 31(9) requires that an authorised person is to be provided with such assistance as is necessary and reasonable in the circumstances for the exercise of their powers. 

Sub-section 31(10) enables an authorised person to obtain assistance and use force as is necessary and reasonable in the circumstances to exercise their powers in accordance with a warrant or in an emergency situation (sub-section 31(6) refers), or to stop a vehicle for the purposes of sub-section 31(8), or for the purposes of seizing an article or thing under Section 32.

57

NEW

The item inserts a new section (31A - Nature of powers conferred on magistrates) which provides that the power to issue a warrant under Section 31 is conferred on the magistrate in their personal capacity.  The magistrate does not have to accept the power, and in exercising the power to issue a warrant receives the same protection and immunity that they would receive if they were performing the same function as the court, or as a member of the court.

58

32(1)

The item replaces the word "matter" with "article" to clarify the meaning of the section with more modern language and changes the spelling of "authorized" to "authorised".

59

32(1)

The item gives effect to the amendments set out under Item 11 and to Section 34 - Civil penalty orders.

60

32(1)

The item replaces the word "matter" with "article" to clarify the meaning of the section with more modern language.

61

32(1)

The item inserts a new sub-section which clarifies that an authorised person can not exercise their seizure powers under sub-section 32(1) unless a warrant is in force or if the authorised person believes on reasonable grounds that evidence of a contravention of a civil penalty provision of the Act is contained in the place, and the exercise of the authorised person's seizure powers is necessary to prevent the loss, concealment or destruction of that evidence (Item 56, sub-section 31(6) refers).

62

32(2)

The item changes the spelling of "authorize" to "authorise".

63

32(2)

The item replaces the word "matter" with "article" to clarify the meaning of the section with more modern language.

64

32

The item inserts a new section (32A - Consent) which sets out the requirements for consent under paragraph 31(1A)(a) (Item 54 refers).  If an authorised person is preparing to enter premises, they must inform the occupier of the premises that they may refuse their consent to entry and that any consent they give must be voluntary.  If the occupier consents to the entry of the authorised person and then withdraws their consent, the authorised person must leave the premises.

65

33

A person in charge of a vehicle, ship or aircraft or occupying land or premises must provide an authorised person with whatever assistance is reasonably necessary to enable the authorised person to exercise their powers under Section 32 of the Act (seizure).

The new penalty reflects current convention, where the ratio between penalty units and months imprisonment is 5:1.

66

34(1)

NEW

The item updates the existing penalties to more closely align with current practices by referring to penalty units, separates the concepts of the existing provisions into new sub-sections, and updates the references to other sections within the Act which, if breached, may attract a pecuniary penalty.

The item inserts a new sub-section 34(1A) which requires the Court to take into account all relevant matters when determining the amount of a pecuniary penalty, including the nature and extent of the contravention, its consequences, the circumstances in which the contravention took place and the previous conduct of the person.

The item inserts a new sub-section 34(1B) which sets out the maximum penalties for a breach of the civil penalty provisions throughout the Act.

67

34(2)

The item gives effect to the amendments set out under Item 11 and to Section 34 - Civil penalty orders.

68

34(3)

The item repeals the existing references to Part 2.4 of the Criminal Code (dealing with attempt, conspiracy etc) and sets out specific activities that are sufficient to contravene a civil penalty provision.

If a person:

§   attempts to contravene a civil penalty provision;

§   encourages, assists or induces a third person to contravene a civil penalty provision;

§   has been knowingly involved in a contravention of a civil penalty provision; or

§   conspired with others to contravene a civil penalty provision;

they will be taken to have contravened the provision.

69

36

The item gives effect to the amendments set out under Item 11 and to Section 34 - Civil penalty orders.

70

37(1)

The item gives effect to the amendments set out under Item 11 and to Section 34 - Civil penalty orders.

71

37(2)(b)

The item gives effect to the amendments set out under Item 11 and to Section 34 - Civil penalty orders.

72

38(1)(a)

The item gives effect to the amendments set out under Item 11 and to Section 34 - Civil penalty orders.

73

39

Section 39, which dealt with indictable offences under sub-sections 14(4) and (5), is repealed.  Sub-sections 14(4) and 14(5) have been amended by Item 15 to reflect the convention that the substantive elements of an offence will be included in context.

74

40(1)

The item gives effect to the amendments set out under Item 11 and to Section 34 - Civil penalty orders.

75

40(1)

The item replaces the archaic term "servant" with the modern term "employee".

76

40(2)

The item replaces the archaic term "servant" with the modern term "employee".

77

41

NEW

The item removes the formal requirements for the disallowance of certain instruments by the Parliament.  Unless specifically excluded from the operation of the Legislative Instruments Act 2003 , instruments under the Liquid Fuel Emergency Act 1984 are required to be registered and can be disallowed by the Parliament.

The item clarifies that Guidelines under the Act can be made at any time. 

The item also inserts a new section (41A - Variation or revocation of instruments ) which clarifies that any direction, Guideline or instrument under the Act can be varied or revoked in accordance with sub-section 33(3) of the Acts Interpretation Act 1901

Acts Interpretation Act 1901 :  Sub-section 33(3)

Where an Act confers a power to make, grant or issue any instrument (including rules, regulations or by-laws) the power shall, unless the contrary intention appears, to be construed as including a power exercisable in the like manner and subject to the like conditions (if any) to repeal, rescind, revoke, amend, or vary any such instrument.

78

42(1)

The item updates the reference in the existing section, with the effect that the Minister must provide an opportunity to the Energy Minister for each State and Territory to consult with him prior to the determination of activities which are "essential to the health, safety and welfare of the community".  (Item 14 refers).

79

43

The item repeals the existing section, replacing it with an exemption from prosecution for a breach of the Trade Practices Act 1974 where the breach was as a result of a company's compliance with a direction under the Act. 

For example, in some situations the Minister may direct the transfer of fuel from one company in one location to another company in a different location in order to provide fuel for essential users in that second location.  Rather than transfer the physical stocks (costing time and money), it may be more expedient for the companies involved to simply pool their stocks in the target location, potentially forcing one company to abandon that market for a period of time.  Such an arrangement may be the preferred result from a national liquid fuel emergency management perspective, yet could also breach the Trade Practices Act 1974 .  This is an undesirable result. 

The Government is relying on the cooperation of fuel corporations to help it respond to a national liquid fuel emergency, and the inclusion of this item will provide greater certainty as to a corporation's potential liability.  However, the inclusion of this item is not intended to signal open season on anti-competitive practices.  It is the Government’s intention that directions under the Act will specifically indicate the types of conduct that will be acceptable as a means of achieving the Government’s aim in issuing the direction, and industry will be expected to comply.  In any event, the Minister has the power to revoke a direction if it is not achieving its purpose or if it is being abused.

This item fulfils the requirement of Section 51(1)(a) of the Trade Practices Act 1974 , which provides an exemption from contravention of Part IV of that Act for actions taken or authorised by federal legislation.

Trade Practices Act 1974 :  Sub-section 51(1)

In deciding whether a person has contravened this Part, the following must be disregarded:

(a) anything specified in, and specifically authorised by:

(i) an Act (not including an Act relating to patents, trade marks, designs or copyrights); or

(ii) regulations made under such an Act[.]

80

44(1)

The item updates the references to reviewable decisions as a result of other changes outlined in this Bill.  The reviewable decisions are:

(a)     a decision which identifies a bulk customer of a relevant fuel industry corporation or relevant person in relation to a particular refined petroleum product under proposed sub-section 10(1); or

(b)    a decision to revoke a bulk customer identification under proposed sub-section 10(1); or

(c)     a decision to identify a fuel user as an essential user of a particular refined petroleum product in a particular State or Territory under proposed sub-section 11(1); or

(d)    a decision to revoke an essential user identification under proposed sub-section 11(1); or

(e)     a decision to require a relevant fuel industry corporation to maintain reserves or to accumulate and maintain reserves of a particular refined petroleum product under proposed sub-section 12(1), or a decision to vary such a direction under proposed sub-section 12(8); or

(f)     a decision to require a relevant fuel industry corporation to amend their bulk allocation procedures under proposed sub-section 13(6); or

(g)    a decision by the Minister as to the period in which an application for review can be lodged under sub-section 44(2).

81

44(7)

The item updates the section to match other amendments to the delegation provisions of Section 49 (Item 88 refers).

82

44(10)

The item repeals the sub-section, as its terms are captured by new section 41A - Variation or revocation of instruments (Item 77 refers).

83

46(1)

The item removes the reference to Part III.  The effect of this change is that no compensation will be available for persons that suffer loss, injury or damage as a result of complying with a direction issued under Part III of the Act (that is, during a period of national liquid fuel emergency). 

Further discussion on this change is included in the Regulation Impact Statement .

84

46(2)

The item removes the requirement to take into account the loss of the community at large when calculating the amount of compensation which is payable for a loss arising under sub-section 46(1).  The new provision allows compensation to be payable only where the loss can not be recouped from the market.

Further discussion on this change is included in the Regulation Impact Statement .

85

NEW

The item inserts a new section (46A - Exemption from suit - Ministers and delegates) which protects certain persons from civil liability arising as a result of their doing (or failing to do) something under a power or function under the Act where the person has acted reasonably and in good faith.

Section 49 of the Act enables the Minister to delegate their powers or functions widely to Energy Ministers and other officials.  The exercise of those powers or performance of those functions are taken to have been exercised or performed by the Minister, which attracts the liability of the Commonwealth for a loss suffered as a result of an acquisition of property (Section 45) or as a result of complying with a direction (Section 46). 

At common law, an employer is generally liable for the actions of their employees and/or their agents.  However, if an employee fails to act in accordance with their contract of employment, irrespective of whether the terms of the contract are explicit or implied, the employee may be described as being on “a frolic of their own.”  In these circumstances, an employer may not be held liable for the actions of that employee. 

Using these principles in a liquid fuel emergency context, if a delegate is reckless, indifferent to their responsibilities, negligent or otherwise deficient in exercising their delegated powers or performing their delegated functions, it is possible that the delegate would be held personally liable for any loss suffered by a fuel industry corporation as a result of their conduct. 

Though in practice it is unlikely that an action would be brought against a delegate in their personal capacity, and notwithstanding the practical difficulties of demonstrating that a delegate’s actions were both outside the terms of their employment and were the cause of the loss which was suffered, there is a risk that such a case could be brought.  The purpose of the section is to therefore protect delegates that act reasonably and in good faith from being sued personally for any losses arising as a result of their conduct.

86

47(1)

The item extends the exemption from suit for a breach of contract to breaches caused by a relevant fuel industry corporation's compliance with a direction under both Parts II and III of the Act.  Previously, the exemption from suit applied only to a breach of contract caused by a direction under Part III of the Act (sections 17, 18, 19, 20, 21 or 23). 

On that basis, a corporation would be protected from suit for a breach of contract caused, for example, by a Minister's direction to transfer fuel from one location to another during a period of national liquid fuel emergency (refer to Section 18).  However, a confidentiality clause in a contract between a relevant fuel industry corporation and another corporation or person could be breached as a result of a direction to make statistical information available to the Minister (refer to sub-section 14A(1), Item 15).  The existing section does not provide any protection from suit in these circumstances. 

By extending the exemption, the item encourages greater compliance with directions issued in advance of a national liquid fuel emergency.

87

47(2)

The Item extends the exemption from suit for a breach of contract to breaches caused by a relevant person's compliance with a direction under both Parts II and III of the Act.  Previously, the exemption from suit applied only to a breach of contract caused by a direction under Part III of the Act (sections 22 or 24). 

On that basis, a relevant person would be protected from suit for a breach of contract caused, for example, by a Minister's direction to transfer fuel from one location to another during a period of national liquid fuel emergency (refer to section 18).  However, a confidentiality clause in a contract between a relevant person and a corporation or other relevant person could be breached as a result of a direction to make statistical information available to the Minister (refer to sub-section 14A(1), Item 15).  The existing section does not provide any protection from suit in these circumstances.

By extending the exemption, the item encourages greater compliance with directions issued in advance of a national liquid fuel emergency.

88

49(1)

49(2)

49(3)

NEW

The item repeals the existing sub-sections and replaces them with a new delegations regime.  Proposed sub-section 49(1) allows the Minister to delegate, in writing, any or all of their powers or functions under the Act except:

§   the power to make guidelines under the Act;

§   the power to direct a fuel industry corporation to provide the Minister with bulk allocation procedures;

§   the power to direct a fuel industry corporation to maintain statistics and to provide those statistics to the Minister and Energy Ministers; and

§   the power to agree to a further delegation of the Minister's powers or functions.

Sub-section 49(2) enables the further delegation of powers and functions if it is done with the Minister's agreement (sub-section 49(3) refers). 

New sub-sections 49(3A) and 49(3B) clarify that sections 34AA, 34AB and 34A of the Acts Interpretation Act 1901 are intended to apply to delegations made under the Act insofar as they are compatible with the terms of the Act, and that a power or function that is exercised or performed by a delegate is taken to have been exercised or performed by the Minister.  The Minister retains the ability to revoke a delegation made under Section 49 as a result of Section 41A (Item 77 refers).

Acts Interpretation Act 1901 :  Section 34AA

Where an Act confers power to delegate a function or power, then, unless the contrary intention appears, the power of delegation shall not be construed as being limited to delegating the function or power to a specified person but shall be construed as including a power to delegate the function or power to any person from time to time holding, occupying, or performing the duties of, a specified office or position, even if the office or position does not come into existence until after the delegation is given.

 

Acts Interpretation Act 1901 :  Section 34AB

Where an Act confers power on a person or body (in this section called the authority ) to delegate a function or power:

(a)                  the delegation may be made either generally or as otherwise provided by the instrument of delegation;

(b)                  the powers that may be delegated do not include that power to delegate;

(c)                  a function or power so delegated, when performed or exercised by the delegate, shall, for the purposes of the Act, be deemed to have been performed or exercised by the authority;

(d)                  a delegation by the authority does not prevent the performance or exercise of a function or power by the authority; and

(e)                  if the authority is not a person, section 34A applies as if it were.

 

Acts Interpretation Act 1901 :  Section 34A

Where, under any Act, the exercise of a power or function by a person is dependent upon the opinion, belief or state of mind of that person in relation to a matter and that power or function has been delegated in pursuance of that or any other Act, that power or function may be exercised by the delegate upon the opinion, belief or state of mind of the delegate in relation to that matter.

89

49(4)

The item inserts the phrase "on behalf of the Commonwealth" to clarify the role of the Minister in entering into arrangements under sub-section 49(4).

90

49(4)

The item inserts the phrase "on behalf of that State" to clarify the role of the Energy Minister in entering into arrangements under sub-section 49(4).

91

49(4)

The item enables arrangements to be made with the Energy Minister of a State for the delegation of the Minister's powers or functions under the Act.

92

49(4)

The item inserts a new sub-section to provide the Minister with the power to enter into arrangements with the Energy Minister of the Australian Capital Territory that will facilitate the delegation of powers or functions under the Act.

93

49(5)

The item inserts the phrase "on behalf of the Commonwealth" to clarify the role of the Minister in entering into arrangements under sub-section 49(5).

94

49(5)

The item inserts the phrase "on behalf of the Northern Territory" to clarify the role of the Energy Minister in entering into arrangements under sub-section 49(5).

95

49(5)

The item enables arrangements to be made with the Energy Minister for the Northern Territory for the delegation of the Minister's powers or functions under the Act.

96

49(6)

The item repeals the sub-section.  Sub-section 49(3B), which states that the exercise of a power or function by a delegate is taken to have been an exercise of a power or function by the Minister, and sub-section 10(9), which requires the Minister to provide notice of a decision to identify a person or organisation as a bulk customer, already give effect to the requirements of this sub-section.

97

50

The item repeals the section.  Section 28A of the Acts Interpretation Act 1901 sets out the formal requirements for the service of documents.

Acts Interpretation Act 1901 : Section 28A

(1)                  For the purposes of any Act that requires or permits a document to be served on a person, whether the expression “serve”, “give” or “send” or any other expression is used, then, unless the contrary intention appears, the document may be served:

(a)                  on a natural person:

(i)        by delivering it to the person personally; or

(ii)      by leaving it at, or by sending it by pre-paid post to, the address of the place of residence or business of the person last known to the person serving the document; or

(b)                  on a body corporate—by leaving it at, or sending it by pre-paid post to, the head office, a registered office or a principal office of the body corporate.

(2)                  Nothing in subsection (1):

(a)                  affects the operation of any other law of the Commonwealth, or any law of a State or Territory, that authorizes the service of a document otherwise than as provided in that subsection; or

(b)                  affects the power of a court to authorize service of a document otherwise than as provided in that subsection.

98

53

The item brings the Australian Capital Territory within the scope of the section, with the effect that nothing in the Act is to be taken, by implication, as conferring a power upon any Energy Minister.

99

Transitional Regulations

The item enables the Governor-General to make regulations of a transitional nature, and that these regulations can be expressed to take effect before they are registered under the Legislative Instruments Act 2003

Though unlikely, if a period of national liquid fuel emergency was to be proclaimed in the period between the passage of the Bill and the commencement of the Bill as an Act, it may be unclear which regime is in place.  This item enables the Governor-General to specify a date on which the new regime will take effect to avoid this discrepancy. 

 

 



Schedule 2

 

Item

Section

Rationale

1

6(1)

The item replaces the gender-specific language of the Act.

2

29(4)

The item replaces the gender-specific language of the Act.

3

30(1)

The item replaces the gender-specific language of the Act.

4

30(1)(a)

30(1)(b)

The item replaces the gender-specific language of the Act.

5

30(5)

The item replaces the gender-specific language of the Act.

6

30(8)

The item replaces the gender-specific language of the Act.

7

30(9)

The item replaces the gender-specific language of the Act.

8

32(1)

The item replaces the gender-specific language of the Act.

9

38(2)

The item replaces the gender-specific language of the Act.

10

38(2)

The item replaces the gender-specific language of the Act.

11

42(1)

The item replaces the gender-specific language of the Act.

12

42(1)

The item replaces the gender-specific language of the Act.

13

42(1)

The item replaces the gender-specific language of the Act.

14

42(2)

The item replaces the gender-specific language of the Act.

15

42(2)

The item replaces the gender-specific language of the Act.

16

44(4)

The item replaces the gender-specific language of the Act.

17

44(5)

The item replaces the gender-specific language of the Act.

18

44(5)

The item replaces the gender-specific language of the Act.

19

44(7)(a)

44(7)(b)

The item replaces the gender-specific language of the Act.

20

44(8)

The item replaces the gender-specific language of the Act.

21

49(4)

49(5)

The item replaces the gender-specific language of the Act.

 

 

 




[1] Hansard , House of Representatives, 24 August 1983, p.156.

[2] Liquid Fuel Emergency Act 1984 , section 54.

[3] The ACIL Tasman Review, below, also recommends that complementary legislation should be developed.  This approach has again been rejected by all State, Territory and Australian Governments.

[4] MC 2 Pacific Pty Ltd, NOSEC Liquid Fuel Emergency Simulation ‘Exercise Tanker’: Independent Assessment & Debrief Outcomes , p.7

[5] http://www.aciltasman.com.au/Clients/clients_LFE.html

[6] http://www.industry.gov.au

[7] For more information, refer to the ACIL Tasman Risk Analysis included in its 2004 Discussion Paper: http://www.aciltasman.com.au/images/pdf/Appendix_E_Discussion_paper.pdf.

[8] Lyons, G. & Chatterjee, K. (eds) 2002, Transport Lessons from the Fuel Tax Protests of 2000 , Ashgate Publishing Limited, UK.

[9] Hansard , House of Representatives, 24 August 1983, p.157.

[10] Note that road and rail transport activities are not specifically included.

[11] Refer to the Guidelines under sub-section 11(1) of the LFE Act, paragraph 2(1)(b)(ii).

[12] For example, farmers might be deemed ‘essential’ users at certain times of the year, broadly utilising the power already contained in subsection 11(3) of the Act.

[13] For example, some users might choose to stockpile fuel.

[14] Recommendations 11 and 19.

[15] ACIL Tasman Report, p.38-39.  Given that a national liquid fuel emergency has yet to occur, there is no precedent as to how loss is calculated under the Act.  On this basis, collecting data to identify ‘community loss’ would be a significant burden, based on a best guess as to what is an effective methodology.  In addition, it is possible that the Australian Government would contest a calculation of loss if it seemed excessive, or to establish a precedent for how losses should be quantified in these circumstances.

[16] In all three options, the acquisition of property other than on just terms under section 45 is still compensable.  The protection afforded to breaches of contract under section 47 as a result of complying with a Direction under Part III is also retained.

[17] This does not preclude the Australian Government from using other measures to minimise the impact of a national liquid fuel emergency on the community.

[18] Recommendation 17.

[19] Recommendation 20.