02 Governance, Structure & People OTHER LEGISLATION, POLICIES OF THE AUSTRALIAN GOVERNMENT AND KEY GOVERNANCE EVENTS

CEFC ANNUAL REPORT / 2014–15

Other Legislation, Policies of the Australian Government and Key Governance Events

Transfer of remaining assets and deregistration of Low Carbon Australia Limited

Low Carbon Australia Limited (LCAL) was a Commonwealth company formed in 2010 with $84.6 million in funds, primarily to invest in energy efficiency and activity resulting in greenhouse gas abatement. As a loan-based program in an area traditionally associated with grants, in many ways LCAL was a much smaller forerunner of the CEFC.

On 19 December 2012, the then Australian Government and Boards of both the CEFC and LCAL announced the intention that the CEFC and LCAL integrate. Integration of staff occurred on 17 April 2013, and during the 2013–14 financial year integration of the LCAL investment portfolio was completed.

On 25 June 2013, LCAL’s then Responsible Minister, the Hon Greg Combet AM MP, directed that the balance of the LCAL assets be transferred to the CEFC and that LCAL be deregistered. This process was suspended during the operation of the caretaker period following 5 August 2013.

On 18 September 2013, the Abbott Ministry was sworn in and on 14 October 2013, the new Minister for the Environment, the Hon Greg Hunt MP, wrote to the Board of Low Carbon Australia Limited directing the company to cease the deregistration process while the Government examined its options.

On 1 May 2014, the National Commission of Audit report was released which recommended abolition of Low Carbon Australia Limited, and on 13 May 2014, the Environment Portfolio Budget Statement affirmed that LCAL would be abolished.

On 1 August 2014, the LCAL Board received correspondence from Minister Hunt directing the recommencement of the deregistration process and the transfer of any remaining assets to the CEFC (as disclosed at Notes 12 and 18 to the Financial Statements), and as a related entity transaction (see pages 169 and 177 respectively).

Low Carbon Australia Limited was deregistered by the Australian Securities and Investments Commission as of 17 December 2014 and ceased to exist at that date. Up until that time, and from 17 April 2013, the CEFC provided the necessary services for LCAL to continue to meet its remaining legal and reporting obligations.

Public Governance, Performance and Accountability Act 2013 (PGPA Act)

The PGPA Act was passed to repeal and replace the former Commonwealth Authorities and Companies Act 1997 (the CAC Act) from July 1, 2014. However, the Commonwealth Authorities (Annual Reporting) Orders 2011 remains in force and has been applied in the preparation of this annual report.

As a corporate Commonwealth entity, apart from the CEFC Act, the PGPA Act and its subordinate instruments are the main legislation that govern the Corporation’s activities. The PGPA Act imposes various duties, responsibilities and accountabilities on the CEFC Board (both as a collective and as individuals) and on employees.

As the main finance law for government at the federal level, the PGPA Act sets the standard for the use of public resources and the management of risk. The Public Governance, Performance and Accountability Rule 2014 specifies further requirements at a more operational level of detail. Australian Accounting Standards Board (AASB) standards are applied to the Corporation by force of the Public Governance, Performance and Accountability (Financial Performance) Rule 2015.

The CEFC makes an annual representation to Ministers as to compliance under this legislation, and in 2015 reported full compliance.

Government Policy Orders

The PGPA Act also allows the Australian Government to issue directions to the Corporation by means of a Government Policy Order (GPO). As at the time of writing there were no GPOs in effect, but the CEFC has received notice of intended future application of the Australian Government Protective Security Policy Framework to the Corporation by this means.

In relation to General Policy Orders under the CAC Act:

  • The CEFC was established on 3 August 2012, therefore no pre-1 July 2008 General Policy Orders apply

  • During the reporting period, there were no General Policy Orders that applied to the CEFC.

Australian Government energy and environmental policies

The 2014–15 year was characterised by a number of important reviews and policy changes at the intersection of energy and environment policy – i.e. where the CEFC tends to invest as a ‘clean energy’ financier. Some of these policy reviews and changes included:

  • A green paper/white paper process on the future of the energy sector

  • A green paper/white paper process on the Emissions Reduction Fund, followed by new legislation and the scheme’s successful introduction

  • Termination of the former carbon pricing legislation and associated industry grant assistance measures under the various Clean Technology Innovation and Investment programs

  • Termination of the former Energy Efficiency Opportunities legislation

  • A review and legislation to reduce the Renewable Energy Target (RET)

  • Reduction and re-phasing of funding to ARENA.

As investors generally seek policy clarity and certainty, many of these changes and processes had a dampening effect on demand for clean energy take up, as is reported in Section 1 of this report.

Other Australian Government policy affecting the CEFC

Since the change of Government on 18 September 2013, the Corporation has been notified of several changed policies of the Australian Government that have sought to extend their application to the CEFC.

While these are not of legal effect, they have been notified to the CEFC, usually as an interim arrangement to assist in the rapid adoption of Australian Government policy. Some of these could take shape in future as Rules or Government Policy Orders made as part of the PGPA Act reforms.

The CEFC has sought to adopt a co-operative approach to engagement with Government and seeks to comply with the policy of the Government wherever possible. Complying in this way may circumscribe the CEFC’s scope of operations, despite the formal operational independence prescribed in the CEFC Act.

With respect to the Australian Government Public Sector Workplace Bargaining Policy, the CEFC has been in practical compliance. An exemption from the need to commence a process of enterprise bargaining was sought while the bill to abolish the Corporation remained in the Parliament.

To 30 June 2015, policies informally notified to the CEFC by correspondence are set out in Figure 35. 

Figure 35: Policies informally notified to the CEFC by correspondence 

Date

Description

24 September 2012,

5 February 2013

Co-operation with Parliamentary Budget Office – the Australian Government published Australian Government Protocols Governing the Engagement Between Commonwealth Bodies and the Parliamentary Budget Officer

6 January 2014

International Travel – Requests that all officials travel at business class or lower, notwithstanding any entitlement established by Remuneration Tribunal to travel at first class

6 January 2014

(clarified 2 July 2014)

International Travel – Requests that officials refuse complimentary upgrades to first class travel notwithstanding any entitlement established by Remuneration Tribunal to travel at first class

13 May 2014

International Travel – Reporting international travel over a threshold of $50k as stipulated in Whole of Government Travel Arrangement Advice 2014/15

20 February 2012

Recruitment – Requests that the CEFC comply with the APSC’s Interim Recruitment Arrangements for non-APS Agencies (effective until 1 July 2015)

28 March 2014

Employment Framework – Requests that the CEFC conduct bargaining under the Australian Government Public Sector Workplace Bargaining Policy

Other Statutory Requirements Affecting the CEFC

As a corporate Commonwealth authority which acts actively and commercially in the finance sector, there are a range of other statutory reporting requirements.

These are outlined below.

Anti-Money Laundering/Counter-Terrorism Financing Act 2006 (AML/CTF Act)

Compliance with the AML/CTF Act is embedded into CEFC’s business. As the name suggests, the AML/CTF Act is directed to combatting money laundering and terrorist finance. The principal responsibilities are ensuring that the CEFC understands who its customers are and that suspect transactions are reported. A range of reporting and review obligations apply, and the CEFC has an internal compliance group to run AML/CTF Act compliance and assurance.

Equal Employment Opportunity (Commonwealth Authorities) Act 1987 (EEO Act)

Under the EEO Act the timing of the annual reporting requirement depends on when the entity first gained 40 employees or more.

The CEFC was formed as a Corporation on 3 August 2012, and the Corporation’s first EEO program report fell due on 17 July 2014 (that is, one year and three months after the anniversary of which the Corporation first had 40 employees). The 2015 Report was tabled in Parliament on 1 September 2015. The report is available online at the CEFC website.

Environment Protection and Biodiversity Conservation Act 1999 (EPBC Act)

The CEFC is required to report annually under the EPBC Act, and a full report can be found at Appendix B.

Freedom of Information Act 1982 (FOI Act)

The CEFC is an applicable agency for FOI Act purposes. Agencies subject to the FOI Act are required to grant access to non-exempt material on application and publish information as part of the Information Publication Scheme (IPS).

The CEFC is also required to lodge an annual statistical return with the Information Commissioner on statistics relating to time spent by employees of the CEFC in managing obligations under the FOI Act and the IPS, and the non-employee costs attributed to these functions. The CEFC lodged its Annual Statistical Return for 2014–2015 with the Information Commissioner on 31 July 2015.

During the reporting period, the Corporation received no FOI applications. More information on FOI applications and the CEFC’s IPS is available on the CEFC website.

Public Interest Disclosure Act 2013 (PID Act)

The PID Act puts in place a scheme to encourage public officials to report suspected wrongdoing in the Australian public sector. Under the PID Act, the CEFC has responsibilities in establishing effective and clearly articulated policies and procedures for facilitating and responding to public interest disclosure requests.

The CEFC also provides the Commonwealth Ombudsman with the statistical information annually. The CEFC received no public interest disclosures during 2014–2015.

Work Health and Safety Act 2011 (WHS Act)

The CEFC is required to report annually under the WHS Act, and a full report can be found at Appendix C.

Judicial Decisions and Parliamentary Committees

The CEFC is not aware of any judicial decisions or decisions of administrative tribunals that have had, or may have, a significant effect on the operations of the CEFC in 2014–2015. There were also no reports about the CEFC made by the Commonwealth Ombudsman or the Office of the Australian Information Commissioner. There were no reports about the CEFC from the Auditor-General other than the 2013–14 annual audit report accompanying the financial statements (as reproduced in the CEFC’s 2013–14 Annual Report).

As far as the CEFC is aware the only Parliamentary Committee reports which substantially involved the CEFC during 2014– 2015 were as follows:

  • Senate Economics Legislation Committee which reported on Additional Estimates 2014–15 (March 2015)

  • Senate Economics Legislation Committee which reported on Budget Estimates 2015-16 (June 2015)

  • Senate Select Committee on Wind Turbines which reported its Final Report after the end of financial year (August 2015).