Wednesday, 6 March 2024

Bills

Constitution Amendment (SEC) Bill 2023

Statement of compatibility

Harriet SHING (Eastern Victoria – Minister for Housing, Minister for Water, Minister for Equality) (17:03): I lay on the table a statement of compatibility with the Charter of Human Rights and Responsibilities Act 2006:

In accordance with section 28 of the Charter of Human Rights and Responsibilities Act 2006 (Charter), I table a statement of compatibility for the Constitution Amendment (SEC) Bill 2023 (Bill).

In my opinion, the Bill, as introduced to the Legislative Council, is compatible with human rights as set out in the Charter. I base my opinion on the reasons outlined in this statement.

Overview

The Bill aims to entrench the SEC in the Constitution Act 1975 (Constitution) to safeguard its existence and ownership by the State.

Specifically, the Bill will amend the Constitution to:

• require the State to always have a controlling interest in the SEC;

• provide the SEC is to have the objects of:

o supporting Victoria’s transition to net zero greenhouse gas emissions;

o generating, purchasing and selling electricity in Victoria;

o owning, operating, or participating in the operation of, renewable energy generation and storage systems and facilities;

o developing or supporting, or participating in the development of, or investing in renewable energy generation and storage systems and facilities; and

o supplying energy related products or services to energy consumers in Victoria;

• prohibit the SEC from doing anything which would result in the State no longer having a controlling interest in the SEC, as ‘controlling interest’ is defined in the Bill;

• prohibit the SEC from owning, operating or investing in a fossil fuel facilities; and

• constrain the Victorian Parliament’s power to repeal, alter or vary provisions relating to the SEC by requiring Parliament to comply with the special majority manner and form requirements set out in s 18(2) of the Constitution.

Human Rights issues

The Bill engages the following rights under the Charter:

• right to life (section 9);

• right to take part in public life (section 18); and

• right to property (section 20).

For the following reasons, having taken into account all relevant factors, I am satisfied that the Bill is compatible with the Charter and, if any rights are limited, the limitation is reasonable and justified in a free and democratic society based on human dignity, equality and freedom in accordance with section 7(2) of the Charter.

Right to life

Section 9 of the Charter provides that every person has the right to life and has the right not to be arbitrarily deprived of life.

The Charter applies to public authorities in Victoria, which includes entities, such as the SEC, established by a statutory provision that have public functions. Section 9 requires public authorities to act in a way that is compatible with each person’s right to life and to give proper consideration to this right when making decisions.

Climate change has been described by the United Nations Human Rights Council as one of ‘the most pressing and serious threats to the ability of present and future generations to enjoy human rights, including the right to life’. Reducing greenhouse gas emissions by transitioning to renewable energy sources is a necessary measure in addressing this threat, which is why Victoria has set renewable energy targets of 65 per cent by 2030, 95 per cent by 2035 and net zero by 2045.

Clause 4 of the Bill inserts into the Constitution the objects of the SEC, which will include supporting Victoria’s transition to a net zero greenhouse gas emissions electricity system and owning, operating, supporting, developing, or investing in the operation or development of, renewable energy generation storage systems and facilities.

In this way, the Bill contributes to positively support Victorians’ right to life under section 9 of the Charter, both now, and in the future, by entrenching these objects in the Constitution, making it more difficult for future parliaments to repeal, change or vary them by requiring any amending Bill to be passed by a special majority (three-fifths of the whole number of members) in each House of Parliament.

Right to take part in public life

Section 18(1) of the Charter provides that every person in Victoria has the right, and is to have the opportunity, without discrimination, to participate in the conduct of public affairs, directly or through freely chosen representatives.

The right applies to a wide range of activities such as state and local politics and public administration. It might include being involved in politics or sharing your opinion in an election or referendum. Every eligible person has the right to vote in state and local council elections.

Clause 3 of the Bill amends the Constitution to constrain the power of the Parliament to make laws that repeal, alter or vary the provisions relating to the SEC, by requiring the amending Bill to be passed by a special majority in each House of Parliament.

This requirement may indirectly limit the right of Victorians to participate in the conduct of public affairs (with respect to the SEC) to the extent it constrains the actions of Victorians’ freely chosen representatives, making it more difficult for them to change current laws due to their entrenchment in the Constitution.

However, this potential limitation of the right to take part in public life is reasonable in terms of section 7(2) of the Charter, which allows for limitations on Charter rights insofar as they can be justified in a free and democratic society, taking into account relevant factors. Such factors include the importance and purpose of the limitation and its nature and extent.

The purpose of the Bill and the limitation on the right is to entrench the objects of the SEC and the requirement that the State maintain a controlling interest, measures which will support Victoria’s transition to a net zero greenhouse gas emissions electricity system; help achieve Victoria’s renewable energy targets; and support the operation and development of, and investment in, renewable energy generation and storage systems and facilities on behalf of Victorians. By entrenching these provisions in the Constitution, the Bill will safeguard those measures in the future by making it more onerous for future parliaments to change the objects or ownership requirements of the SEC.

In contrast to the importance of its purpose, the extent of the limitation on the right to take part in public life is minimal. The limitation is an indirect one, affecting Victorians’ individual rights by way of limiting what their elected officials may do. Furthermore, the limitation on the conduct of elected officials is not absolute – future parliamentarians will not be prevented from voting to change the Constitution so that the SEC provisions may be repealed, altered or varied; they will just be required to meet the more onerous burden of achieving a three-fifths majority to do so.

Accordingly, I consider the potential limitation reasonable, necessary, justified and proportionate in the circumstances. The Bill is consistent with the right to take part in public life in section 18 of the Charter.

Right to property

Section 20 of the Charter provides that a person must not be deprived of their property other than in accordance with law. This right requires that powers which authorise the deprivation of property are conferred by legislation or common law, are specific and limited, accessible to the public, and formulated precisely.

The Bill will contain provisions that provide the following are of no effect:

• any transfer of shares in the SEC to another person resulting in the State no longer having a controlling interest in the SEC; and

• any contract, arrangement or deed made by the SEC with another person that would mean the SEC is owning, operating or investing in a fossil fuel facility.

The Bill will also displace provisions of the Corporations Act 2001 (Cth) (Corporations Act) which may result in property rights being impacted. For example, if the Corporations Act granted any rights in property, or required any transfer of assets, liabilities or other forms of property, this would be prevented by the Bill’s displacement provisions.

The provisions in the Bill which relate to property are reasonable and necessary to ensure that the State retains a controlling interest in the SEC, and to prevent the SEC investing in fossil fuel facilities, and are therefore a justified and proportionate limit on the right to property. The provisions are also specific and clear, so that the SEC and any person who would attempt to transact with the SEC, will be aware of the limitations before completing a transfer of shares, or entering into any arrangement, contract, deed, or transaction.

Accordingly, the Bill is consistent with the right to property in section 18 of the Charter.

Hon Ingrid Stitt MP

Minister for Mental Health

Minister for Ageing

Minister for Multicultural Affairs

Second reading

Harriet SHING (Eastern Victoria – Minister for Housing, Minister for Water, Minister for Equality) (17:03): I would like to draw to the attention of the house that the bill was amended in the Assembly. The context and policy intent of this bill is to enshrine the State Electricity Commission – the SEC – in the Constitution Act 1975. For the benefit of the house, I will briefly explain the nature of the minor amendments to clause 4 of the bill. The intention of the house amendments is to make more explicit elements of the original bill. The first amendment provides some additional clarity to general prohibition on the SEC investing in fossil fuel-based projects. The remaining amendments give additional clarity to the government’s total ownership and control of the SEC as an entity, regardless of what corporate form the SEC entity might take in the future. I move:

That the bill be now read a second time.

Ordered that second-reading speech be incorporated into Hansard:

The Bill will entrench the SEC in the Constitution Act 1975 (Constitution) to safeguard its enduring existence and ownership by the State. The Bill fulfils the Victorian Government’s 2022 election commitment to ‘enshrine’ the SEC in the Constitution this year.

The SEC has been established as a government-owned renewable energy company. The SEC will support Victoria’s energy transition by investing in new renewable energy generation and storage, supporting households to go all-electric, and building the renewable energy workforce we need to drive Victoria’s energy transition.

Enshrining the SEC in our State’s Constitution will help ensure Victorians can continue to rely on the SEC to invest in renewables, support households and help create training and work opportunities for generations to come.

The Bill will entrench the SEC in the Constitution in a way that will make it difficult for a future government or Parliament to significantly alter the State’s interest in the SEC and the SEC’s objectives, whilst ensuring the SEC can operate effectively as an active energy market participant.

Specifically, the Bill will amend the Constitution to:

• require that the State always has a controlling interest in the SEC (being, the SEC Victoria Pty Ltd) and its successor entity;

• provide that the SEC is to have the objectives of:

o supporting Victoria’s transition to net zero greenhouse gas emissions;

o generating, purchasing and selling electricity in Victoria;

o owning, operating, or participating in the operation of renewable energy generation and storage systems and facilities;

o developing or supporting, or participating in the development of, or investing in renewable energy generation and storage systems and facilities;

o supplying energy related products or services to energy consumers in Victoria;

• prohibit the SEC from doing anything that would result in the State not having a controlling interest in the SEC; and

• prohibit the SEC from owning, operating or investing in a fossil fuel facility.

The Bill will entrench these features of the SEC by amending the Constitution to provide that the new Part may only be repealed, altered or varied if the third reading of a Bill is passed by a special majority of all members of the Legislative Assembly and Legislative Council. A special majority is three-fifths of each House of Parliament.

A special majority requirement is intended to create a more onerous threshold on a future Parliament seeking to amend or repeal the SEC provisions in the Constitution.

The State will have a controlling interest if it controls the composition of the board of the SEC and is in a position to cast or control the casting of more than 50 per cent of the maximum number of votes that might be cast at a general meeting of the SEC.

This ensures that the State will always have ownership of the SEC’s operational and strategic decision-making processes, including control of appointments to the board, while providing the SEC and government with flexibility in the long-term.

The Bill recognises that the SEC will require some flexibility to change legal form in the future, for example, it may need to become a statutory corporation or another type of legal entity. To provide this flexibility, but also to ensure there is a check on a future government interfering with the SEC in a way that may be contrary to the Bill’s objectives, the Bill includes provisions that enables the Parliament to declare a single successor entity to the SEC. The provisions will require each House of Parliament to pass a resolution declaring the entity which is the successor to the SEC. This ensures that a future government is not able to simply change its legal form to undermine the Bill’s purpose.

The SEC’s entrenched objectives will give the SEC an enduring purpose beyond its immediate-term role in accelerating the transition to renewable energy in Victoria.

These objectives are sufficiently broad so as not to limit the SEC’s future role or commercial flexibility, but still provide sufficient clarity and certainty. This ensures the future endeavours of, or government priorities for, the SEC are not unduly constrained.

The Bill will allow the SEC to change corporate structure or legal form in the future, and allow the SEC to establish subsidiary entities to meet its commercial needs.

Anything that would result in the State no longer having a controlling interest in the SEC will be of no effect. This will prevent a future government interfering in the government’s majority ownership of the SEC unless the new Part is repealed by a special majority of the Parliament.

The SEC will be prohibited from owning, operating or investing in fossil fuel facilities directly.

As the SEC is a Corporations Act 2001 (Cth) (Corporations Act) company, the Bill includes provisions that would seek to prevent the Commonwealth government from interfering with the matters enshrined by this Bill, by displacing the operation of the Corporations Act to the extent that it is inconsistent with the matters enshrined by this Bill.

The Premier will be responsible for the provisions of the Constitution inserted by the Bill after they commence operation.

I commend the Bill to the House.

David DAVIS (Southern Metropolitan) (17:05): I move:

That debate on this bill be adjourned for one week.

Motion agreed to and debate adjourned for one week.