Climate Change and Energy Minister Chris Bowen says while the mechanism's framework is sound, its implementation had failed under the previous government.
"The baselines are set, in many instances, above existing emissions," he told the ABC on Thursday.
"That's why the system so far, the safeguards, have failed and emissions have gone up from facilities covered by the safeguard mechanism.
"We are keeping the architecture, as the architecture is quite elegant, but the actual way it was implemented was very, very poor."
Whether large emitters will be able to purchase international carbon credits will also be reviewed, Mr Bowen said, adding schemes needed to be credible and verifiable.
Such schemes would be allowed "only if the government was 100 per cent guaranteed and satisfied about the integrity of those emissions reductions".
'"I'm very much looking forward to getting some feedback from industry and climate groups about some of the finer details," he said.
The current mechanism applies to large facilities in certain industries that produce more than 100,000 tonnes of greenhouse gases a year.
It currently covers about 215 facilities.
The government's reforms are scheduled to come in from July 1, 2023.
Meanwhile, the climate change bill is to go under the microscope when a Senate inquiry into emissions-reduction measures begins.
Senators will hear from science and environmental groups, as well as business bodies, unions and research panels, on possible improvements to the bill before it is debated in the upper house next month.
The legislation, which passed the House of Representatives earlier in August, enshrined an emissions-reduction target of 43 per cent, based on 2005 levels, by 2030.
The bill also locks in plans to reach net-zero emissions by 2050, with the government required to provide annual updates on how well the targets are on track.
Among those appearing before the inquiry on Thursday is the Business Council of Australia, which has welcomed the legislation.
"This legislation brings Australia a step closer to ending the climate wars that have put a handbrake on progress and become a serious economic barrier," the BCA said in a submission.
The inquiry will also hear from renewable energy body the Clean Energy Council, which has advocated for strengthened emissions targets.
"It is important that the 2030 target, and all future targets, represent a minimum level of achievement, rather than an upper bound on effort," its submissions said.
"There is also merit in providing flexibility for the net-zero target to be brought forward ahead of 2050, based on the independent, expert advice of the Climate Change Authority."
The focus on improved climate change legislation comes as the Greens' deputy leader Mehreen Faruqi called on the government to put in place fuel-efficiency standards.
In an upcoming speech to the National Electric Vehicle Summit, Senator Faruqi said investment in charging infrastructure, and discounts on electric vehicles, was urgently needed.
The Greens have called for investment of more than $1 billion to support electric vehicle manufacturers in Australia.
"We need policies to push out old, dirty and obsolete vehicles and policies to bring in clean, better, more efficient electric vehicles," she will say in the speech.
"We need the infrastructure to power up Australia's new electric vehicles and our vehicle manufacturing industry."
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