Commonwealth of Australia Explanatory Memoranda

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INDUSTRIAL CHEMICALS CHARGES (GENERAL) BILL 2017

                                        2016-2017



          THE PARLIAMENT OF THE COMMONWEALTH OF AUSTRALIA




                           HOUSE OF REPRESENTATIVES




          INDUSTRIAL CHEMICALS CHARGES (GENERAL) BILL 2017



                                  ADDENDUM TO THE

                           EXPLANATORY MEMORANDUM




This addendum responds to concerns raised by the Senate Standing Committee for the
Scrutiny of Bills in Scrutiny Digest No. 8, dated 9 August 2017.


(Circulated by authority of the Assistant Minister for Health, the Hon Dr David Gillespie MP)
CLAUSE 7 - AMOUNT OF CHARGE

After second paragraph - add:

Specifying the amount of a charge or the method for calculating the amount of a charge in
regulations, as opposed to the Act itself, ensures that there is appropriate flexibility to change
the amount of a charge or the method for calculating the amount of a charge over time. This
helps to avoid over or under recovery and will eliminate the need to amend primary
legislation as necessary changes to cost recovery arrangements evolve because the efficient
administrative costs of the new scheme become more evident.

AICIS will undertake a detailed annual consultation process (in accordance with the Public
Governance and Accountability Act 2013, the Australian Government Charging Framework
and the Australian Government Cost Recovery Guidelines), in order to inform the value of
the charge included in the regulations for each registration class.

Consistent with current practice, AICIS will publish an annual Cost Recovery
Implementation Statement (CRIS) that will detail AICIS activities that are cost recovered, the
cost recovery model (outputs and business processes, costs of the activity and design of the
cost recovery charges), as well as options for cost recovery. The CRIS will include detailed
information about financial estimates and performance, and the rationale for the proposed
fees and charges for the coming year.

This approach is compliant with the Australian Government Cost Recovery Guidelines which
also provide that, where a cost recovery levy is being imposed (via a Taxation Act), the
relationship between the charges and the costs should reflect the efficient overall costs of the
activity where revenue generated for the activity approximates the expenses incurred in
providing the activity (and this is also reflected in the annual CRIS).

There are two additional controls that govern the extent of cost recovery from the regulated
industry:

   Fees and charges are set by regulation, which requires them to be proposed to the
    Executive Council by the responsible Minister. The Minister would therefore need to be
    satisfied that the fees and charges are not excessive prior to proposing the regulations.

   Regulations must be tabled in the Senate, and are subject to motions of disallowance. This
    Parliamentary scrutiny of fees and charges provides another safeguard against over-
    recovery.

This provides a high degree of accountability and transparency to stakeholders regarding the
annual registration charge, such that the need to include a maximum charge in the bills is
reduced.

Further, an arbitrary maximum has not been included in the bills because:

   any maximum described in the bills would necessarily be higher than the maximum
    amount charged (misrepresenting the amount payable by any registrant). This would be
    confusing for stakeholders and is likely to lead to criticism


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   it would misrepresent the amount likely to be payable by most registrants. Under current
    arrangements, the amount of registration charge payable by a registrant varies between
    $138 and $24,800 per year, based on the value of the chemical introduced by the
    registrant in a registration year. In 2016-17, only around 5% of registrants are expected to
    pay the highest amount. Under the new legislation, the registration charges will also be
    tiered (based on brackets of introduction values). If the bills were to set a maximum
    charge, it would misrepresent the magnitude of charge likely to be payable by most
    registrants (reducing transparency), and

   there is minimal risk that the charge would be characterised as a general taxation
    (increasing the necessity for a maximum to be set in the bills). Rather, the charge is
    clearly a cost recovery levy, earmarked to fund activity that relates to the group of
    persons being charged (namely registrants introducing industrial chemicals into Australia
    in a registration year). As detailed in the Australian Government Cost Recovery
    Guidelines, this is an appropriate circumstance in which to apply the guidelines to
    determine the relevant charge.

For these reasons, the bills do not set an upper limit for the charge and instead rely on the
general cost recovery rules to provide the necessary assurances and transparency to
stakeholders.




(Circulated by authority of the Assistant Minister for Health, the Hon Dr David Gillespie MP)




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