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Treasury Laws Amendment (2020 Measures No. 4) Bill 2021

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2019-2020-2021

 

THE PARLIAMENT OF THE COMMONWEALTH OF AUSTRALIA

 

 

 

HOUSE OF REPRESENTATIVES

 

 

 

Treasury Laws Amendment (2020 Measures No. 4) Bill 2020

 

 

 

 

SUPPLEMENTARY EXPLANATORY MEMORANDUM

 

Amendments to be moved on behalf of the Government

 

 

(Circulated by authority of the

Assistant Treasurer, Minister for Housing and Minister for Homelessness, Social and Community Housing, the Hon Michael Sukkar MP)

 

 



Table of contents

Glossary............................................................................................................. 3

General outline and financial impact........................................................... 5

Chapter 1 ........... Amendments to Schedule 3 - Industry code penalties under Part IVB of the Competition and Consumer Act 2010............................. 7

Chapter 2 ........... Amendments to Schedule 4 - Modification power....... 9

Chapter 3 ........... Statement of Compatibility with Human Rights.......... 13

 

 



The following abbreviations and acronyms are used throughout this explanatory memorandum.

Abbreviation

Definition

the Bill

Treasury Laws Amendment (2020 Measures No. 4) Bill 2020

CCA

Competition and Consumer Act 2010

Coronavirus (Measures No. 2) Act

Coronavirus Economic Response Package Omnibus (Measures No. 2) Act 2020

Franchising Industry Code

Competition and Consumer (Industry Codes—Franchising) Regulation 2014

ICCPR

International Covenant on Civil and Political Rights



Amendments to Schedule 3 - Industry code penalties under Part IVB of the Competition and Consumer Act 2010

On 28 October 2020, the Australian Government introduced the Bill.

The amendments to the Bill make revisions to increase the amount of pecuniary penalties available for contraventions of civil penalty provisions in an industry code of conduct relating to franchising, and for 600 penalty units for other industry codes of conduct.  

Date of effect The day after the Bill receives the Royal Assent.

Proposal announced This measure was partially announced in the Government’s response to the Parliamentary Joint Committee on Corporations and Financial Services inquiry into the operation and effectiveness of the Franchising Code of Conduct report: Fairness in Franchising .

Financial impact Nil.

Human rights implications :  Schedule 3, as amended, engages human rights, but does not raise any human rights issues — Chapter 3.

Compliance cost impact Nil.

A Regulation Impact Statement was prepared and certified by the Department of Industry, Science, Energy and Resources. It has been included at Chapter 4 of the Explanatory Memorandum to the Bill.

Summary of regulation impact statement

Regulation impact on business

Impact Nil.

Main points :

•        The increase in penalty units will not impose any additional regulatory burdens on businesses that comply with the law.

 

 

Amendments to Schedule 4 - Modification power

This amendment was prepared by the Attorney-General’s Department.

Schedule 4 to the Bill, as amended, amends Schedule 5 to the Coronavirus Economic Response Package Omnibus (Measures No. 2) Act 2020 (Coronavirus (Measures No. 2) Act) to reintroduce a temporary mechanism for responsible Ministers to change arrangements for meeting information and documentary requirements under Commonwealth legislation, including requirements to give information and produce, witness and sign documents, in response to the challenges posed by COVID-19. This mechanism was previously included in Schedule 5 to the Coronavirus (Measures No. 2) Act as a temporary measure terminating at the end of 31 December 2020. Schedule 4 to the Bill originally sought to extend the operation of the mechanism in Schedule 5 to the Coronavirus (Measures No. 2) Act, however extension is no longer possible as the measure was repealed at the end of 31 December 2020. The proposed amendments to Schedule 4 to the Bill will ensure that the mechanism is reintroduced under Schedule 5 to the Coronavirus (Measures No. 2) Act, in response to the ongoing challenges posed by COVID-19, and the mechanism will have effect until 31 December 2021.

Date of effect The day after this Act receives Royal Assent.

Proposal announced :  T his measure was previously included in the Coronavirus Economic Response Package Omnibus (Measures No. 2) Act 2020.

Financial impact Nil.

Human rights implications Schedule 4, as amended, does not raise any human rights issues. See  Statement of Compatibility with Human Rights  — Chapter 3 .

Compliance cost impact The exemption from Regulation Impact Statement requirements previously granted by the Prime Minister in relation to measures responding to the impacts of COVID-19 applies to this proposal. This is on the basis that this proposal is simply to extend a measure that was originally implemented in response to the COVID-19 pandemic.

 



Amendments to section 51AE of the CCA

1.1                   For any industry code of conduct, the code may prescribe a pecuniary penalty of up to 600 penalty units for a contravention of a civil penalty provision of the code. [Amendment 1, subsection 51AE(2) of the CCA]

1.2                   For an industry code of conduct relating to franchising, a breach of a civil penalty provision may prescribe a pecuniary penalty for a body corporate to be the greatest of:

•        $10 million; or

•        if the Court can determine the value of the benefit that the body corporate, and any body corporate related to the body corporate, has obtained directly or indirectly and that is reasonably attributable to the contravention—multiplied by three; or

•        if the Court cannot determine the value of that benefit— 10 per cent of the annual turnover of the body corporate during the period of 12 months ending at the end of the month in which the contravention occurred. [Amendment 1, subsection 51AE(2A)(a) of the CCA]

1.3                   The amendment specifies that this carries the same meaning as section 76(1A)(b) of the CCA. [Amendment 1, subsection 51AE(2B) of the CCA]

1.4                   The amendments also provide that for a person (other than a body corporate), a penalty of up to $500,000 may be prescribed in an industry code of conduct relating to franchising. [Amendment 1, subsection 51AE(2A)(b) of the CCA]

1.5                   Otherwise, a penalty of up to 600 penalty units may be prescribed. [Amendment 1, subsection 51AE(2A)(c) of the CCA]

Application and transitional provisions

1.6                    For the avoidance of doubt, the amendment includes a further savings provision to clarify nothing in this Schedule affects the validity of regulations made under the CCA made before the commencement of Schedule 3 to the Bill. [Amendment 2]

1.7                    These amendments commence at the same time as Schedule 3 to the Bill commences.



Outline of chapter

2.1               Schedule 4 to the Bill, as amended, amends Schedule 5 to the Coronavirus Economic Response Package Omnibus (Measures No. 2) Act 2020 to reintroduce a temporary mechanism for responsible Ministers to change arrangements for meeting information and documentary requirements under Commonwealth legislation, including requirements to give information and produce, witness and sign documents, in response to the challenges posed by COVID-19.

Context of amendments

2.2               This mechanism was previously included in Schedule 5 to the Coronavirus (Measures No. 2) Act as a temporary measure terminating at the end of 31 December 2020. Schedule 4 to the Bill initially sought to extend the operation of Schedule 5 to the Coronavirus (Measures No. 2) Act. However, extension is no longer possible as the measure was repealed at the end of 31 December 2020.

2.3               The proposed parliamentary amendments to Schedule 4 to the Bill will ensure that the mechanism is reintroduced under Schedule 5 to the Coronavirus (Measures No. 2) Act, in response to the ongoing challenges posed by COVID-19.

2.4               Schedule 5 to the Coronavirus (Measures No. 2) Act introduced a temporary mechanism for responsible Ministers to change arrangements for meeting information and documentary requirements under Commonwealth legislation, including requirements to give information and produce, witness and sign documents, in response to the challenges posed by COVID-19.

2.5               Schedule 5 to the Coronavirus (Measures No. 2) Act was implemented to address difficulties created by COVID-19 restrictions in meeting information and documentary requirements under Commonwealth legislation.  

2.6               The social distancing measures and the restrictions on movement and gathering introduced in Australia and overseas in response to the COVID-19 pandemic have caused ongoing difficulties with meeting information and documentary requirements under Commonwealth legislation.

2.7               In recognition of the importance of continued business transactions and government service delivery during the COVID-19 pandemic, Schedule 4 to the Bill was introduced to extend Schedule 5 to the Coronavirus (Measures No. 2) Act to 31 March 2021, and provide a mechanism for further extension to provide continued flexibility to enable necessary temporary adjustments to legal obligations.

2.8               The Bill was not passed by Parliament before it rose in 2020, and Schedule 5 to the Coronavirus (Measures No. 2) Act was repealed at the end of 31 December 2020 under subitem 1(8). As such, an extension of Schedule 5 to the Coronavirus (Measures No. 2 Act) is no longer possible.

2.9               In light of the ongoing nature of COVID-19 both in Australia and globally, including the possibility of restrictions on movement or gatherings being suddenly imposed, the power to amend arrangements for meeting information and documentary requirements remains necessary.

2.10           Amendments to the Bill will amend Schedule 4 to reintroduce the mechanism in Schedule 5 to the Coronavirus (Measures No. 2) Act, which was repealed at the end of 31 December 2021.

2.11           The Senate Standing Committee on Scrutiny of Bills recommended that the power to further extend the mechanism by legislative instrument be removed from Schedule 4 to the Bill. On the basis of this recommendation, and in view of the extended operation of the amendments to Schedule 4 that will terminate on 31 December 2021, the extension mechanism has been removed from Schedule 4.

Summary of new law

2.12           Schedule 4 to the Bill, as amended, amends Schedule 5 to the Coronavirus (Measures No. 2) Act to allow the responsible Minister for an Act or legislative instrument that requires or permits certain matters (including the giving of information and the signature, production and witnessing of documents) to temporarily alter or adjust these requirements or permissions in response to circumstances relating to the Coronavirus.

2.13           A determination under this mechanism may apply retrospectively. However, a determination will be beneficial to individuals and business by retrospectively validating approaches to providing information or meeting documentary and witnessing requirements that may otherwise have been invalid.

2.14           This mechanism is necessary to respond flexibly to the unprecedented challenges of the Coronavirus, particularly the challenges posed by social distancing measures.

2.15           The mechanism is temporary and will cease to have effect at the end of 31 December 2021.

Comparison of key features of new law and current law

New law

Current law

A Minister responsible for an Act or legislative instrument that requires or permits certain matters relating to information and documentation may determine that different arrangements apply in response to the Coronavirus.

No equivalent.

Detailed explanation of new law

2.16           Item 1 replaces existing Schedule 4 with a new Schedule 4, which repeals Schedule 5 of the Coronavirus (Measures No. 2) Act and substitutes a new Schedule 5.

2.17           This item applies in relation to a provision of an Act or legislative instrument (known as an affected provision) that requires or permits any of the following matters (known as relevant matters):

•        the giving of information in writing;

•        the signature of a person;

•        the production of a document by a person;

•        the recording of information;

•        the retention of documents or information;

•        the witnessing of signatures;

•        the certification of matters by witnesses;

•        the verification of the identity of witnesses; and

•        the attestation of documents.

[Schedule 5, item 1(1)]

2.18           The responsible Minister for an affected provision may determine by legislative instrument that, for a specified time period:

•        the affected provision is varied or does not apply; or

•        another provision specified in the determination applies.

[Schedule 5, item 1(2)]

2.19           The time period specified in a determination can be a period that starts before Schedule 4 to the Bill, as amended, commences. Applying the determination retrospectively will be beneficial to individuals and business as it will retrospectively validate approaches to providing information or meeting documentary and witnessing requirements that may otherwise have been invalid.

[Schedule 5, item 1(3)]

2.20           The responsible Minister must not make a determination unless they are satisfied that the determination is in response to circumstances relating to the Coronavirus.

[Schedule 5, item 1(4)]

2.21           A responsible Minister is defined as:

•        any Minister who administers the Act which is being varied; or

•        if the affected provision is a provision of a legislative instrument - any Minister who administers the enabling legislation under which a legislative instrument is made.

[Schedule 5, item 1(5)]

2.22           A determination made by a responsible Minister has effect accordingly and will not operate after 31 December 2021. Likewise, the instrument-making power is intended to be temporary. The provisions inserted by Schedule 4 to the Bill, as amended, will be repealed at the end of 31 December 2021. [Schedule 5, items 1(6), (7) and (8)]

Application and transitional provisions

2.23           Schedule 4 to the Bill, as amended, will commence on the day after the day on which the Bill receives Royal Assent. Determinations made under the powers provided for by Schedule 5 to the Coronavirus (Measures No. 2) Act, amended by Schedule 4 to the Bill, as amended, can apply retrospectively.

2.24           The provisions inserted by Schedule 4 to the Bill, as amended, will be repealed at the end of 31 December 2021. Any determination made under the new mechanism will also cease to operate at the end of 31 December 2021.



Chapter 3          

Statement of Compatibility with Human Rights

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

Amendments to Schedule 3 - Industry code penalties under Part IVB of the Competition and Consumer Act 2010

3.1                   This amendments are compatible with the human rights and freedoms recognised or declared in the international instruments listed in section 3 of the Human Rights (Parliamentary Scrutiny) Act 2011 .

Overview

3.2                   The amendments to Schedule 3 to the Bill make revisions to increase the maximum amount of penalty units that can be included in regulations that prescribe an industry code, with specific amendments for industry codes relating to the industry of franchising.

Human rights implications

3.3                   The amendment may, or may not, engage Article 14 of the ICCPR.

3.4                   Consideration has been specifically given to the guidance in the Parliamentary Joint Committee on Human Rights’ Guidance Note 2: Offence provisions, civil penalties and human rights (Guidance Note 2) and to the Attorney General’s Department’s A Guide to Framing Commonwealth Offences, Infringement Notices and Enforcement Powers , September 2011 edition.

3.5                   The amendment allows an industry code of conduct to prescribe a penalty of up to 600 penalty units for body corporates and other persons.

3.6                   The amendments provides that for a person (other than a body corporate), a penalty of $500,000 may be prescribed in an industry code of conduct relating to the industry of franchising. Otherwise, a penalty of up to 600 penalty units may be prescribed.

3.7                   Given the civil nature of these penalty provisions, applications to the court for civil penalty orders will be dealt with in accordance with the rules and procedures that apply in relation to civil matters. The penalties in the amendment do not impose a criminal penalty, nor carry a penalty of imprisonment.

3.8                   Guidance Note 2 observes that civil penalty provisions may engage criminal process rights under Articles 14 and 15 of the ICCPR, regardless of the distinction between criminal and civil penalties in domestic law.

3.9                   The increased penalties contained in the Schedule are intended to encourage industry to comply with the code of conduct schemes. In particular, the $500,000 penalty amount is to encourage compliance with the Franchising Industry Code.

3.10               On 22 March 2018 the Senate referred an inquiry to the Parliamentary Joint Committee on Corporations and Financial Services into the operation and effectiveness of the Franchising Industry Code.

3.11               The Committee’s report noted that where penalties are insufficient, franchisors are likely to factor the risk of a penalty into the cost of doing business. The Committee’s report recommended that the quantum of penalties available for a breach of the Franchising Industry Code be significantly increased to ensure the penalties are a meaningful deterrent from non-compliance.

3.12               Having regard to the specific regulatory context and the nature of the industry being regulated, the severity of the civil penalties that may be imposed on individuals is not sufficiently severe to be considered 'criminal'. The franchising industry which is generally comprised of small businesses as the franchisee, and larger, multinational companies as the franchisor. The Franchising Industry Code aims to improve transparency and fairness within the franchising industry. 

3.13               The Committee’s report indicated that the current penalties were not strong enough to deter poor conduct as some franchisors incorporated the penalty into the cost of doing business. Therefore, the Committee concluded that increased penalties may further deter parties form breaching the Franchising Industry Code.

3.14               Therefore, the imposition of higher civil penalties on industry participants—who should reasonably be aware of their obligations under the code—will enable an effective disciplinary response to non-compliance.

3.15               For enforcement and compliance, the ACCC is the most common litigant for enforcing breaches under the code. In doing so, the ACCC retains the flexibility to take the most appropriate, and likely to be most effective, administrative action in each individual case.

3.16               Where the ACCC applies for a civil penalty in relation to a breach, the operation of section 76 of the CCA means that the court will continue to have discretion to apply an appropriate penalty up to the maximum amount.

3.17               In ascertaining this amount, the court would consideration of the relevant facts of any given case, and impose a penalty that is proportionate to that conduct, making it unlikely that the maximum penalty would be imposed in every instance. In practice, the maximum amount would only be applied in the most egregious instances of non-compliance.

3.18               Based on the above factors, including the cumulative effect of the nature and severity of the civil penalties in the amendment, these penalties are not ‘criminal’ for the purposes of human rights.

3.19               For the reasons given above, the amendment is consistent with the right to a fair trial.

Conclusion

3.20               To the extent that these amendments limit the rights under Article 14 of the ICCPR, they are compatible with human rights as:

•        the increased penalty amounts are aimed at deterring non-compliance with the code, and not punitive in nature;

•        the maximum penalty amount will only be used in the most egregious instances; and

•        the imposition of high civil penalties are on industry participants who should be reasonably aware of their obligations under the code of conduct.

Amendments to Schedule 4 - Modification power

3.21               Schedule 4 to the Bill, as amended, is compatible with the human rights and freedoms recognised or declared in the international instruments listed in section 3 of the Human Rights (Parliamentary Scrutiny) Act 2011 .

Overview

3.22               Schedule 4 to the Bill, as amended, amends Schedule 5 to the Coronavirus (Measures No. 2) Act to provide a temporary mechanism to change arrangements for meeting information and documentary requirements under Commonwealth legislation, in response to circumstances relating to the Coronavirus. In particular, social distancing measures are expected to cause difficulties with meeting information and documentary requirements, including signature, witnessing and production of documents.

3.23               Under this mechanism, a responsible Minister may determine that provisions in Commonwealth legislation containing particular information or documentary requirements are varied, do not apply or that another provision specified in the determination applies, for a specified time period. The mechanism must not be exercised by a responsible Minister unless the Minister is satisfied that the determination is in response to circumstances relating to the Coronavirus.

3.24               The mechanism is temporary and will be repealed at the end of 31 December 2021. Any determination made under the mechanism will also cease to operate at the end of 31 December 2021.

Human rights implications

3.25               Schedule 4 to the Bill, as amended, does not engage any of the applicable rights or freedoms.

3.26               Each instrument made under the power provided for in Schedule 5 to the Coronavirus (Measures No. 2) Act, amended by Schedule 4 to the Bill, as amended, will be disallowable and will include a human rights compatibility statement assessing the impact of the instrument on human rights and freedoms.

Conclusion

3.27               Schedule 4 to the Bill, as amended, is compatible with human rights as it does not raise any human rights issues.