Statutes Amendment (National Energy Laws) (Penalties and Enforcement) Bill

Introduction and First Reading

Received from the House of Assembly and read a first time.

Second Reading

The Hon. R.I. LUCAS (Treasurer) (18:28): I move:

That this bill be now read a second time.

I seek leave to have the second reading explanation and the detailed explanation of clauses inserted in Hansard without my reading them.

Leave granted.

We would all agree that the energy sector in this State, in this country, and indeed, across the world, is constantly changing. This is true now, more than ever. It is therefore crucial that the regulatory framework that underpins our energy market is able to adapt and respond to evolving technologies and customer behaviours, all while continuing to ensure the affordability, security and reliability of the system.

Inherent in this regulatory framework, which comprises the National Energy Laws, Regulations and Rules, is the assumption that where breaches occur, there is a sufficiently robust and flexible enforcement regime to respond to them.

This includes not only the penalty regime that will be applied where there is a breach but the powers available to the Australian Energy Regulator, whose role it is to monitor, investigate and enforce compliance with the national energy laws.

This ensures that all participants in our electricity and gas markets remain confident in the integrity of the system and in the protections it affords us.

That is why the COAG Energy Council commissioned the Review of Enforcement Regimes under the National Energy Laws. Although the review found the existing regimes were generally effective and consistent with current norms and best practice, it identified a number of areas where the effectiveness of the regime could be enhanced.

The Statutes Amendment (National Energy Laws)(Penalties and Enforcement) Bill 2020 I present to you today, follows successive policy decisions of the COAG Energy Council Ministers that began with that initial Review and culminated with the findings of the Retail Electricity Pricing Inquiry Report of the Australian Competition and Consumer Commission.

These key decisions include:

Adopting a three-tier civil penalty regime in the laws where breaches of a Tier One provision incur a maximum penalty of the greater of either $10 million, three times the benefit gained from breaching the rules, or 10 per cent of annual turnover; a breach of a Tier Two provision carries a penalty of up to $1.435 million and breaches of Tier Three provisions incur penalties of up to $170,000;

Increasing civil and offence penalty levels, aligning them with those of the Australian Consumer Law;

Indexing these maximum penalty levels to CPI to ensure they remain relevant, thereby continuing to provide a sufficient disincentive for those market participants contemplating breaches and assigning a maximum monetary value to such breaches for both the community and the courts. The first such indexation will take place on 1 July 2023 and on 1 July every three years thereafter;

Enhancing the Australian Energy Regulator's information gathering powers to allow it to compel the giving of oral evidence while at the same time requiring annual reporting on the use of this power to maintain transparency and hence deter its excessive use; and

Lastly, expanding the orders the Australian Energy Regulator can seek from a court, including non-pecuniary orders, and an order requiring compliance with a compulsory notice. Each of these orders adds another element to the suite of enforcement options available to the regulator to carry out its important work.

These policy changes I have described will be implemented through amendments to the National Electricity Law, National Gas Law and National Energy Retail Law, as contained in the Statutes Amendment (National Energy Laws) (Penalties and Enforcement) Bill.

The Bill sets the civil penalty classification for a breach of a Reliability Obligation at Tier One and Tier Two.

To ensure flexibility of the regime is maintained into the future, however, and is able to adapt to changes in the market, the classification of all other penalty provisions will be prescribed by Regulation.

Breaches of the rebidding provisions will be subject to the most severe penalty, being Tier One. A decision matrix will be used to classify each of the other civil penalty provision into its respective tier. This is to ensure that breaches of the national energy laws, Regulations or Rules, carry with them an appropriate penalty, commensurate with the gravity and impact of that breach.

I am pleased to confirm that at the COAG Energy Council meeting on 20 March 2020, Ministers agreed to the draft legislation.

By establishing a more flexible and sophisticated penalty regime more akin to that of the Australian Consumer Law, increasing the maximum penalties and providing for periodic indexation of those penalties, strengthening and ultimately, expanding, the legal tools available to the AER to carry out its role as energy regulator, the Government is sending a clear signal to all Australian households, businesses and industries that as the energy industry continues to evolve, so too will the enforcement regime that underpins it.

I commend the bill to the Chamber.

EXPLANATION OF CLAUSES

Part 1—Preliminary

1—Short title

2—Commencement

3—Amendment provisions

These clauses are formal.

Part 2—Amendment of National Electricity Law

4—Amendment of section 2—Definitions

Definitions are inserted for the purposes of the measure.

5—Amendment of section 2AA—Meaning of civil penalty provision and conduct provision

The meaning of civil penalty provision and conduct provision is amended for the purposes of the measure.

6—Insertion of section 2AB

New section 2AB is inserted:

2AB—Civil penalty amounts for breaches of civil penalty provisions

Civil penalty amounts for breaches of civil penalty provisions are provided for.

7—Insertion of section 2G

New section 2G is inserted:

2G—Related bodies corporate

The Corporations Act 2001 of the Commonwealth provisions for related bodies corporate are applied.

8—Amendment of section 20B—Return of identity cards

A maximum penalty is amended.

9—Amendment of section 27—Obstruction of person authorised to enter

A maximum penalty is amended.

10—Amendment of section 28—Power to obtain information and documents in relation to performance and exercise of functions and powers

Various amendments are made relating to the AER's power to obtain information and documents in relation to performance and exercise of functions and powers.

11—Amendment of section 28R—Providing to AER false and misleading information

A maximum penalty is amended.

12—Amendment of section 28ZF—AER enforcement guidelines

One amendment relates to the AER being required to prepare guidelines about the exercise of its powers under section 28. Another amendment is consequential.

13—Amendment of section 53E—Providing false or misleading information

A maximum penalty is amended.

14—Amendment of section 61—Proceedings for breaches of a provision of this Law, the Regulations or the Rules that are not offences

Various amendments are made relating to proceedings for breaches of the Law, Regulations or Rules that are not offences.

15—Amendment of section 61A—Proceedings for declaration that a person is in breach of a conduct provision

These amendments are technical.

16—Amendment of section 62—Additional Court orders

These amendments are technical.

17—Amendment of section 64—Matters for which there must be regard in determining amount of civil penalty

Various amendments are made relating to the matters for which there must be regard in determining amount of civil penalty.

18—Amendment of section 73—Definition

The definitions of tier 1, 2 and 3 civil penalty provisions are inserted.

19—Amendment of section 74—Power to serve a notice

20—Amendment of section 75—Form of notice

The above amendments are technical or consequential.

21—Substitution of section 76

Section 76 is substituted:

76—Infringement penalties

Infringement penalties are provided for.

22—Amendment of section 81—Payment expiates breach of civil penalty provision

23—Amendment of section 82—Payment not to have certain consequences

24—Amendment of section 83—Conduct in breach of more than one civil penalty provision

25—Amendment of section 85—Offences and breaches by corporations

The above amendments are technical or consequential.

26—Amendment of section 86—Corporations also in breach if officers and employees are in breach

This amendment is technical.

27—Amendment of section 118—Obstruction and non-compliance

Maximum penalties are amended.

28—Amendment of section 141—Disclosure of information

A maximum penalty is amended.

29—Amendment of section 143—Failing to attend as a witness

A maximum penalty is amended.

30—Amendment of section 144—Failing to answer questions etc

A maximum penalty is amended.

31—Amendment of section 145—Intimidation etc

A maximum penalty is amended.

32—Insertion of section 159

New sections 159 and 160 are inserted:

159—Penalty privilege

Provisions relating to penalty privilege are inserted.

160—Court may grant relief from liability

Provisions relating to the power of the court to grant relief from liability are inserted.

33—Amendment of Schedule 2—Miscellaneous provisions relating to interpretation

This clause amends Schedule 2 of the Law.

Part 3—Amendment of National Energy Retail Law

34—Amendment of section 2—Interpretation

Definitions are inserted for the purposes of the measure.

35—Insertion of section 4A

New section 4A is inserted:

4A—Civil penalty amounts for breaches of civil penalty provisions

Civil penalty amounts for breaches of civil penalty provisions are provided for.

36—Insertion of section 7A

New section 7A is inserted:

7A—Related bodies corporate

The Corporations Act 2001 of the Commonwealth provisions for related bodies corporate are applied.

37—Amendment of section 107—Power to revoke retailer authorisation

This amendment is technical.

38—Amendment of section 158—Providing false or misleading information

A maximum penalty is amended.

39—Amendment of section 206—Power to obtain information and documents

Various amendments are made relating to the AER's power to obtain information and documents in relation to performance and exercise of functions and powers.

40—Amendment of section 218—AER enforcement guidelines

One amendment relates to the AER being required to prepare guidelines about the exercise of its powers under section 28. Another amendment is consequential.

41—Amendment of section 291—AER proceedings for breaches of this Law, the National Regulations or the Rules that are not offences

Various amendments are made relating to proceedings for breaches of the Law, Regulations or Rules that are not offences.

42—Amendment of section 292—Proceedings for declaration that a person is in breach of a conduct provision

These amendments are technical.

43—Amendment of section 294—Matters for which there must be regard in determining amount of civil penalty

Various amendments are made relating to the matters for which there must be regard in determining amount of civil penalty.

44—Insertion of sections 300A and 300B

New sections 300A and 300B are inserted:

300A—Indexation of civil penalty amounts

The indexation of civil penalty amounts is provided for.

300B—Indexation of criminal penalties

The indexation of criminal penalties is provided for.

45—Amendment of section 305—Corporations also in breach if officers and employees are in breach

This amendment is technical.

46—Insertion of sections 321 and 322

New sections 321 and 322 are inserted:

321—Penalty privilege

Provisions relating to penalty privilege are inserted.

322—Court may grant relief from liability

Provisions relating to the power of the court to grant relief from liability are inserted.

Part 4—Amendment of National Gas Law

47—Amendment of section 2—Definitions

Definitions are inserted for the purposes of the measure.

48—Insertion of section 3A

New section 3A is inserted:

3A—Civil penalty amounts for breaches of civil penalty provisions

Civil penalty amounts for breaches of civil penalty provisions are provided for.

49—Insertion of section 19A

New section 19A is inserted:

19A—Related bodies corporate

The Corporations Act 2001 of the Commonwealth provisions for related bodies corporate are applied.

50—Amendment of section 34—Return of identity cards

A maximum penalty is amended.

51—Amendment of section 41—Obstruction of persons authorised to enter

A maximum penalty is amended.

52—Amendment of section 42—Power to obtain information and documents in relation to performance and exercise of functions and powers

Various amendments are made relating to the AER's power to obtain information and documents in relation to performance and exercise of functions and powers.

53—Amendment of section 60—Providing to AER false and misleading information

A maximum penalty is amended.

54—Amendment of section 68—AER enforcement guidelines

One amendment relates to the AER being required to prepare guidelines about the exercise of its powers under section 28. Another amendment is consequential.

55—Amendment of section 83D—False or misleading statements

A maximum penalty is amended.

56—Amendment of section 91BC—AEMO's power of direction

A maximum penalty is amended.

57—Amendment of section 91FE—Providing false or misleading information

A maximum penalty is amended.

58—Amendment of section 91FEC—Giving to AEMO false and misleading information

A maximum penalty is amended.

59—Amendment of section 91FEG—Giving to AEMO false and misleading information

A maximum penalty is amended.

60—Amendment of section 91FEI—Giving false and misleading information used for capacity auctions

A maximum penalty is amended.

61—Amendment of section 200—Disclosure of information

A maximum penalty is amended.

62—Amendment of section 202—Failing to attend as a witness

A maximum penalty is amended.

63—Amendment of section 203—Failing to answer questions etc

A maximum penalty is amended.

64—Amendment of section 204—Intimidation etc

A maximum penalty is amended.

65—Amendment of section 231—AER proceedings for breaches of this Law, Regulations or the Rules that are not offences

Various amendments are made relating to proceedings for breaches of the Law, Regulations or Rules that are not offences.

66—Amendment of section 232—Proceedings for declaration that a person is in breach of a conduct provision

These amendments are technical.

67—Amendment of section 234—Matters for which there must be regard in determining amount of civil penalty

Various amendments are made relating to the matters for which there must be regard in determining amount of civil penalty.

68—Amendment of section 277—Power to serve notice

This amendment is technical.

69—Substitution of section 279

Section 279 is substituted:

279—Infringement penalties

Infringement penalties are provided for.

70—Amendment of section 289—Corporations also in breach if officers and employees are in breach

This amendment is technical.

71—Insertion of section 335A

New sections 335A and 335B are inserted:

335A—Penalty privilege

Provisions relating to penalty privilege are inserted.

335B—Court may grant relief from liability

Provisions relating to the power of the court to grant relief from liability are inserted.

72—Amendment of Schedule 2—Miscellaneous provisions relating to interpretation

This clause amends Schedule 2.

Debate adjourned on motion of Hon. I.K. Hunter.