Regulation and compliance
Fuel Security Framework
Under the Fuel Security Framework, the Department of Climate Change, Energy, the Environment and Water administers a number of pieces of fuel security legislation and carries out related regulatory activities under one cohesive structure.
The framework allows the department to deliver vital fuel security measures effectively and efficiently, with a relative and appropriate amount of regulatory burden on industry. Bringing together the administration of related legislation allows the department to focus on open, transparent communication with regulated entities and other stakeholders.
The department regulates fuel security and fuel quality in four pieces of legislation under the framework:
- The Fuel Security Act 2021 – gives a legislative framework for administering the Fuel Security Services Payment and Minimum Stockholding Obligation.
- The Petroleum and Other Fuels Reporting Act 2017 – ensures reliable monitoring of the transport fuel market through reporting of selected petroleum and other fuel data to government (for more information see mandatory reporting of petroleum statistics).
- The Fuel Quality Standards Act 2000 – ensures the supply of quality liquid fuels and, where appropriate, information about the fuel (for more information see regulating Australian fuel quality).
- The Liquid Fuel Emergency Act 1984 – provides authority for government action to prepare for and manage liquid fuel resources during a national liquid fuel emergency (for more information see modernising Australia’s fuel legislation and the LFE Act 1984.
Given the different regulatory requirements, the department’s compliance actions will likely be different across these pieces of legislation. However, the overarching approach to regulation and compliance under the framework is outlined in the Regulatory Posture Statement (below). The Compliance and Enforcement Matrix demonstrates how the department will implement this approach.
Regulatory Posture Statement
The department will oversee administration of new and existing liquid fuel security regulatory functions under the framework. These include the Fuel Security Services Payment, the Minimum Stockholding Obligation and fuel quality standards.
While developing these new functions, the department will engage with the regulated community to ensure the regulatory settings are meeting the policy objectives of the government and are fit for purpose. The department will ensure there is ongoing clear and consistent communication of its approach to regulation, providing transparency of our processes, expectations, and compliance responses.
Due to minimum stockholding and reporting obligations as a result of the Fuel Security Act 2021, the department will work with entities, particularly in the initial 12 months, to assist them to comply with the framework. This approach supports the department’s aim of achieving voluntary compliance from regulated entities and recognises that non-compliance during the early stages of implementation may be inadvertent. Under the framework, the department will take a risk-based approach to compliance, escalating or decreasing intervention in response to the behaviour of regulated entities. The compliance and enforcement matrix provides an overview of the tools and interventions available to the department to scale its response to varying levels of non-compliance.
The department’s approach to regulation under the framework is based on the following principles:
- Minimal regulatory costs: Develop efficient processes and clear guidance that help industry achieve compliance with minimal regulatory costs.
- Effective engagement: Actively engage with regulated entities using clear and effective communication, working with them to help them understand their rights, meet their obligations and minimise instances of inadvertent non-compliance.
- Risk-based approach: Enable proportionate enforcement, with clear accountability and transparency in actions and consistency in decision making.
- Data-driven assessments: Use data and analysis, including verification through data sharing arrangements to assess compliance and inform our regulatory response and risk differentiation.
- Continuous improvement: Continuously improve regulatory performance, capability and culture to ensure processes remain appropriate as the regulatory setting matures. This includes acting on analysis of, and stakeholder feedback on, the effectiveness of the regulation.
The department will monitor and assess compliance under the framework through online systems, and will report on compliance in line with our legislative requirements. As our compliance functions mature, the department will continue to consult with industry to ensure our systems remain fit for purpose.
Compliance and Enforcement Matrix
The department will take intelligence-led, risk-based action against suspected non-compliance in line with legislation, and consistent with our regulatory posture statement. The diagram below outlines how the department will:
- use available tools to gather intelligence on compliance. This will inform how we scale our responses to instances of non-compliance.
- scale actions in response to the behaviour of regulated entities and the risks to fuel security.
This diagram provides an overview of how the department will interact with entities under the Framework and how our response to non-compliance will be informed by intelligence to ensure it is appropriate and proportionate. In formulating a response to non-compliance, the department will consider:
- the level of risk and severity of harm caused by the behaviour
- the compliance history and stance of the alleged offender
- the cooperation and intent of the alleged offender
- whether the enforcement action will discourage future non-compliance.
The department will ensure compliance activities are undertaken in a manner that demonstrates accountability, timeliness, and proportionality. We will make evidence-based decisions and be firm but fair, considering the appropriate action within the context of the risks to Australia’s fuel security. The department will take the least burdensome approach to change non-compliant behaviour. This approach seeks to foster a culture of voluntary compliance under the framework.
See the text alternative for the compliance and enforcement matrix