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Carbon Pollution Reduction Scheme (Consequential Amendments) Bill 2009

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2008-2009

 

THE PARLIAMENT OF THE COMMONWEALTH OF AUSTRALIA

 

 

 

HOUSE OF REPRESENTATIVES

 

 

 

CARBON POLLUTION REDUCTION SCHEME (CONSEQUENTIAL AMENDMENTS) bill 2009

 

 

 

 

SUPPLEMENTARY EXPLANATORY MEMORANDUM

 

 

 

 

(Circulated by the authority of the Minister for

Climate Change and Water, Senator the Honourable Penny Wong)

 



 

G eneral outline and financial impact

Parliamentary Amendments to the Carbon Pollution Reduction Scheme (Consequential Amendments) Bill 2009 - Amendments 1 and 2

The amendments insert clause 74AA in the National Greenhouse and Energy Reporting Act 2007.  This clause relates to mandatory audit of emissions reports and records before the report is lodged with the Australian Climate Change Regulatory Authority.

Date of effect:   1 July 2011.

Proposal announced:   December 2008.

Financial impact: The amendment will not have a financial impact on the Commonwealth.

Compliance cost impact:  A Regulation Impact Statement formed part of the Explanatory Memorandum for the Carbon Pollution Reduction Scheme Bill 2009.  The Regulation Impact Statement addresses, among other things, audit of reports.



 

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C hapter 1

Amendments 1 and 2

Outline of chapter

1.1                   Amendments 1 and 2 relate to the audit of emissions reports and records of some liable entities.

Detailed explanation of the amendments

1.2                   Amendment 2 inserts proposed section 74AA into Item 194 of Part 2, Schedule 1 of the Carbon Pollution Reduction Scheme (Consequential Amendments) Bill 2009.  This item relates to amendments to the National Greenhouse and Energy Reporting Act 2007 (the NGER Act).

To whom the mandatory audit requirement applies

1.3                   This proposed section will apply to a person who is required to provide a report under proposed section 22A of the NGER Act (which applies to entities which are liable under the Carbon Pollution Reduction Scheme), and whose gross emissions number exceeds the number specified in the regulations.  The gross emissions number is the sum of the provisional emissions numbers (before any excess surrender number or make good number is taken into account).

1.4                   It is expected that the gross emissions number which is initially prescribed will be 125,000, corresponding to emissions of 125,000 tonnes of carbon dioxide equivalence. 

Audit requirements

1.5                   In these circumstances an audit of the emissions report, such other matters relating to the report as are prescribed, and compliance with the record-keeping requirement will be mandatory.

1.6                   The proposed amendment requires a liable entity to appoint an audit team leader who is a registered greenhouse and energy auditor (proposed section 74AA(2)(a)), describes the ambit of the audit (proposed section 74AA(2)(b)), and requires the audit report to be provided to the Authority on the day the emissions report is submitted (proposed section 74AAA(2)(d)).  There is provision for further detail about the type of audit, the matters to be covered by the audit and the form of the audit report to be addressed in regulations (proposed section 74AA(2)(b)(ii)).  The relevant liable entity is required to provide all reasonable facilities and assistance to the audit team leader (proposed section 74AA(4)). 

Penalties

1.7                   Civil penalties comparable to those included in other audit-related provisions would apply, for example, if a person fails to make the necessary arrangements for the audit to be carried out and fails to provide reasonable facilities and assistance.

1.8                   Amendment 1 adds proposed section 74AA to the list of provisions in relation to which penalties for continuing contravention apply.  This list is in section 30 of the NGER Act and is amended by Item 188 of the Carbon Pollution Reduction Scheme (Consequential Amendments) Bill 2009.  Failure by a body corporate to comply with the mandatory audit requirement can lead to a civil penalty of 100 penalty units per day. 

1.9                   Ensuring the accuracy of emissions reports will be vital in achieving the environmental objectives of the Scheme.  The penalties must therefore be of a sufficient level to encourage prompt and effective auditing of emissions reports.  For a body corporate with the minimum emissions number of 125,000, the proposed penalty of 1,000 penalty units — currently equivalent to $110,000 — represents 8.8 per cent of the cost of purchasing emissions units at $10 each in 2011-12, or 4.4 per cent if the price of units is $20.  The daily penalty for a continuing contravention — equivalent to $11,000 — represents less than 1 per cent of these costs at $10 per unit and less than 0.5 per cent at $20 per unit.  These proportions will be significantly smaller for many liable entities which are expected to have an emissions number that is an order of magnitude greater than the minimum threshold for mandatory auditing.

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