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Monday, 15 June 2009
Page: 3095


Senator FAULKNER (Minister for Defence) (4:39 PM) —I table revised explanatory memoranda relating to the Carbon Pollution Reduction Scheme Bill 2009 and the Carbon Pollution Reduction Scheme (Consequential Amendments) Bill 2009 and move:

That these bills be now read a second time.

I seek leave to have the second reading speeches incorporated in Hansard.

Leave granted.

The speeches read as follows—

CAR DEALERSHIP FINANCING GUARANTEE BILL 2009

On 5 December 2008, the Prime Minister and I announced the establishment of a Special Purpose Vehicle (SPV) with the support of leading Australian banks, to provide liquidity to eligible car dealers who had been left without wholesale floor plan financing as a result of the departure of GE Money Motor Solutions and GMAC from the Australian market following the onset of the global financial crisis.

The SPV - otherwise known as ‘OzCar’ - was legally established as a Trust on 2 January 2009.

Under the agreements negotiated with the four major Australian banks, i.e. the ANZ, Commonwealth Bank of Australia, the National Australia Bank and Westpac - the four major banks will provide liquidity to OzCar through the purchase of ‘AAA’ rated OzCar securities.

Most of these OzCar securities will require a Commonwealth Guarantee so that they qualify as ‘AAA’ rated securities thereby allowing the four major banks to purchase them.

Having raised funds through the sale of securities, OzCar will make available funding for 12 months to those dealers who need it and to those who qualify.

It is very pleasing that, since the 5 December announcement that the Prime Minister and I made, most of the former GE and GMAC dealerships have managed to secure alternative wholesale floorplan financing, primarily through the remaining lenders.

This, and the commendable commitment by both GE and GMAC to wind down their loan books in an orderly manner, has meant that it has not yet been necessary for the OzCar SPV to issue securities and lend funds.

There is no doubt that the establishment of the OzCar facility so quickly after GE and GMAC announced their planned exit from the Australian market provided a critical boost to confidence when it was needed most.

This and the work of Treasury and Credit Suisse with GE and GMAC resulted in a much better outcome than what otherwise would have been the case if we had just sat back and done nothing.

As a result of the success of this initiative, the financing task now confronting us is much less than initial expectations.

Last December, it was expected that OzCar would need to finance around $2 billion worth of loans.

That has come down to around $850 million. The final figure will probably be much less.

Commonwealth Guarantee of OzCar Securities

It will soon be necessary to activate the OzCar facility given the exit plans of GMAC and GE.

As I announced last week, the Government has decided to make the OzCar facility available to Ford Credit for the next 12 months so that Ford Credit’s network of almost 200 Ford dealers can continue to access wholesale floorplan finance.

This decision has been necessary in light of the immense pressures the global financial crisis has placed on Ford Credit’s ability to continue to raise the liquidity it needs to support the Ford dealer network and through that network, the manufacturing operations of Ford Australia.

In order to allow for the activation of the OzCar facility, this bill seeks to enact a standing appropriation to support the Commonwealth Guarantee that will apply to around $550 million of the securities issued by the OzCar facility.

The major banks will need the certainty of a Commonwealth Guarantee with legislative backing before they will purchase the necessary volume of OzCar securities.

This Bill is therefore a very important legislative underpinning to the OzCar SPV facility.

Transparency and Accountability Mechanisms

The OzCar SPV is a complex trust facility. To ensure transparency and accountability, the Treasury has published the relevant Trust Deeds and supporting material on the Treasury website - www.treasury.gov.au

Treasury has also entered into a contractual arrangement with Credit Suisse, the OzCar Program Manager, and a range of service providers, on the operation and administration of the OzCar SPV facility.

Treasury will be providing me with regular reports on the operation and performance of the OzCar facility and will prepare quarterly reports on the operation of the SPV that will be made available to the Parliament.

These reports will identify the overall amount of securities issued, the proportion of securities covered by the Commonwealth Guarantee and the overall financial performance of the OzCar SPV.

Moving Forward

The OzCar SPV is designed to advance loans until 30 June 2010. The standing appropriation that this bill puts in place will support any securities issued by the SPV until that date for the term of their maturity, which will not exceed 3 years.

There is no doubt that the next 12 months will be a very challenging time for Australian industry - none more so than for the Australian car industry.

It is critically important that initiatives such as the OzCar facility are put in place not only to provide material support - but also to help provide confidence at a time when confidence is so badly needed.

I urge the parliament to support what to date has been a highly successful initiative - and which should become even more important in the weeks and months ahead.

I commend the bill to the Senate.


EVIDENCE AMENDMENT (JOURNALISTS’ PRIVILEGE) BILL 2009

This bill implements an important reform to the Commonwealth Evidence Act 1995 by amending the existing privilege provisions which are available to protect confidential communications between journalists and their sources, in appropriate circumstances. It forms part of the Rudd government’s commitment to enhancing open and accountable government. It also delivers on the Rudd government’s election commitment to strengthen protection for journalists’ sources.

This Bill recognises the important role that journalists play in informing the public on matters of public interest and, in my view, appropriately balances that against the public interest in the administration of justice. It does this by inserting an objects clause into the Division to ensure that the court keeps both of these factors firmly in mind when exercising its discretion in the particular case.

In doing so, the Bill improves on the version of the privilege introduced by the former Coalition government in 2007. That was a version I described at the time as a ‘quick fix to a somewhat complex issue’.

While this Bill just deals with journalist shield, the government is also committed to enhancing our mechanisms to allow public interest disclosures and Freedom of Information laws. The government is currently considering the report of the House of Representatives Legal and Constitutional Affairs Committee on whistleblowers and is committed to introducing legislation this term. My colleague the Special Minister of State is looking to release an exposure draft Freedom of Information legislation as soon as practicable. Together with the measures in this Bill, those measures will improve the openness, transparency and accountability of government and the public service.

The value of a well informed community was highlighted by the Commonwealth Ombudsman in its 1994-95 Annual Report, where it stated:

‘Information is the currency that we all require to participate in the life and governance of our society. The greater the access we have to information, the greater will be the responsiveness of our governments to community needs, wants, ideas and creativity…’

Protection of journalists’ sources is one of the basic conditions of press freedom. As recognised by the European Court of Human Rights in 1996, without such protection, sources may be deterred from assisting the press in informing the public on matters of public interest.

The bill strengthens protections for journalists’ sources by changing the way in which a court is able to address communications which have been made to a journalist. The bill will require the court to consider whether a communication was made contrary to law in determining whether to direct that the evidence not be given. The current law has operated too severely in mandating the loss of privilege in these circumstances. Clearly, the court will weigh the competing objects. The greater the gravity of the relevant misconduct, the greater the weight the court will be expected to give that factor.

The bill will also require the court to consider not only any potential harm to the source but also to the journalist if the evidence is given. This gives specific recognition to the fact that journalists can also suffer harm, such as harm to their reputation and their ability to obtain information, if they are required to disclose a source. Where a likelihood of harm has been established to the journalist or the source or both, and the court is satisfied that the nature and extent of this harm outweighs the desirability of the evidence being given, the court must uphold the privilege.

I want to make it very clear that these amendments are not designed to prevent or frustrate legal action being taken against a person who makes an illegal disclosure. Nor are the amendments intended to encourage such disclosures. And I don’t anticipate they will do so. What these amendments do is to clarify the circumstances in which a journalist should be required to provide evidence to a court about the confidential communication or its source.

As I said earlier, the Rudd government is also currently developing whistleblower protections which have the capacity to complement journalist shield laws by providing avenues other than the media for public interest disclosures. The court has the ability under the existing Evidence Act provisions to consider whether the source could have utilised, where available, laws protecting public interest disclosures. Failure by a source to access the protections provided by these laws would be a relevant consideration in the court’s determination of whether the confidential communication between a journalist and source should be privileged.

The bill specifies that the court in exercising its discretion must consider potential prejudice to national security. But the factors that are listed are not weighted one above the other. The amendment will provide greater flexibility for the court by allowing it to determine the weight to be given to a particular risk of prejudice to national security based on the evidence before it. Clearly, again, the greater the risk of prejudice to national security and the greater the gravity of that prejudice, the greater the weight the court would give to this factor.

The bill will extend the application of the new journalists’ privilege beyond proceedings in federal and ACT courts, to all proceedings in any other Australian court for an offence against a law of the Commonwealth. This provision will ensure that the Rudd government’s commitment to enhancing transparency and accountability in the Australian government is effectively implemented by these reforms. In practice, the prosecution of an Australian government official charged with disclosing confidential government information is usually conducted in a state or territory court rather than a federal court. It is in these proceedings that journalists are often called upon to reveal their sources. This amendment will enable the new journalists’ privilege to apply to all prosecutions for Commonwealth offences.

There will be some that will say this bill does not go far enough. They will point to laws in New Zealand and the United Kingdom which contain a presumption in favour of protecting journalist.

But let me say in answer to those critics - this legislation enables an appropriate balance to be struck between the public interest in free press and the public interest in the administration of justice. It provides a guided discretion but leaves the balancing of competing interests and particular facts in each case to the court. As I said in 2007 when the opposition introduced its flawed legislation, judicial discretion in these matters is not something to be afraid of. Indeed, no other profession - not even lawyers - has the benefit of an absolute privilege to protect confidential information.

A broader judicial discretion to maintain confidentiality between a journalist and their source in court proceedings is not just about protecting journalists. The bill aims to benefit the wider community by facilitating the free flow of public interest information in cases where courts find journalists’ privilege should be upheld.

I believe that this bill finds the appropriate balance between the desirability of protecting confidential communications between journalists and their sources and the public interest in ensuring that all relevant evidence is before our courts.

I started this speech by saying that the media has an important role to play in our democracy. Let me finish by saying, Mr President, that this role comes with significant responsibilities; responsibilities of fairness and, most importantly, accuracy. It is not a mere platitude to say that a well informed, well functioning and responsible media is a vital cog in the democratic wheel.


FAMILY ASSISTANCE AND OTHER LEGISLATION AMENDMENT (2008 BUDGET AND OTHER MEASURES) BILL 2009

This bill introduces one measure from the 2008 Budget on family tax benefit and two further non-Budget measures from the Families, Housing, Community Services and Indigenous Affairs portfolio.

The Budget measure is part of the Better Targeting and Delivery of Family Tax Benefit package. The measure will streamline the administration of family tax benefit by removing from 1 July 2009 the option of claiming payments through the tax system.

Only around seven per cent of current family tax benefit customers claim through the Australian Taxation Office. Removing the tax system option for delivery of family tax benefit payments will simplify the system, reduce duplication in delivery of the payments, and improve consistency for claimants.

The choice of payment in fortnightly instalments (including end-of-year top-ups if applicable), or in an annual lump sum, will remain through Centrelink and Medicare. Furthermore, there will be no change in payment rates from this change in delivery arrangements.

Information will still be exchanged between the Australian Taxation Office and Centrelink to ensure entitlements are as accurate as possible. Adjusted taxable income will continue to be used for family tax benefit income testing and end-of-year reconciliation processes. Tax refunds will also continue to be available to offset family tax benefit debts, and vice versa. In most of these administrative respects, the family tax benefit system will continue to work in the way customers are familiar with.

This bill includes an important non-Budget measure foreshadowed by the government in its announcement on 23 October 2008 in response to the recommendations of the Northern Territory Emergency Response Review Board. This measure will ensure people subject to the Northern Territory income management regime have access to the Social Security Appeals Tribunal and Administrative Appeals Tribunal appeal mechanisms afforded to other Australians in relation to their income support and family payments.

Further measures from the same response will be introduced in the 2009 Spring sittings, as announced.

Lastly, the bill makes amendments to implement part of the government’s announced reforms to the Community Development Employment Projects (CDEP) program, which aim to improve employment participation for Indigenous Australians.

The amendments will provide new CDEP participants commencing on or after 1 July 2009 with access to the CDEP program while receiving income support payments, instead of CDEP wages from CDEP providers.

The amendments will mean that new CDEP participants will not receive the CDEP Scheme Participant Supplement as such participants will be able to claim other additional benefits through the income support system. The amendments will allow continuing CDEP participants to receive CDEP wages from CDEP providers, and the CDEP Scheme Participant Supplement, until 30 June 2011, when continuing participants will transfer to income support.


FAMILY ASSISTANCE LEGISLATION AMENDMENT (CHILD CARE) BILL 2009

The Family Assistance Legislation Amendment (Child Care) Bill 2009 marks another step along this government’s unswerving path to accessible, affordable, high-quality child care for Australian children, their parents and carers.

This government has already made an enormous investment in early education and child care—$3.7 billion in new funding between now and 2013—and rightly so.

That’s because this government understands how crucial the early years are in a child’s life and education.

That’s why parents now get a Child Care Tax Rebate of 50 per cent of their out of pocket child care costs rather than 30 per cent.

That’s why parents can now get the rebate paid to them quarterly, to ensure the assistance is there for them, closer to the time they incur their child care expenses.

This government is on a mission to expand the accessibility of child care.

As a government we understand that families’ situations change, particularly in this uncertain time ahead of us.

This is why we are making some technical changes in this bill which will improve the administration and accessibility of child care entitlements.

One of these changes is to allow the final quarterly payment of the Child Care Tax Rebate to be withheld until a carer’s taxable income is determined for that financial year.

This will help reduce the amount of under- and overpayments, and the need for subsequent payments or debt recovery.

Where there is overpayment these amendments will allow the debt to be recovered in a way that will minimise the impact on families.

Sometimes families have to deal with the most difficult of circumstances, when a parent or carer who is entitled to the Child Care Tax Rebate dies.

In these circumstances, changes in this bill will allow for the substitution of the entitlement to the person who is taking over guardianship of the child.

In other cases carers may receive a ‘zero rate’ for the Child Care Benefit.

Again this government understands that people’s situations and income change.

Amendments in this bill will allow those assessed at a ‘zero rate’ of CCB to request a review of their entitlements within two years of the relevant year they received the zero rating.

All of these changes focus on improving the administration of child care and squaring the ledger with parents in a timely manner.

All of them build on changes such as the quarterly Child Care Tax Rebate payment system the government has already implemented.

I mentioned earlier the government’s considerable investment in child care, and we are committed to safeguarding this investment through the proper administration of child care payments and services.

Given the events of last year with the collapse of ABC Learning, we are especially mindful that Australian families need to have the greatest possible certainty around continuity of care.

Last year the Rudd government extended civil penalties to a broad range of child care service obligations.

In this bill we will take compliance a step further by allowing the imposition of civil penalties through regulations.

We will tighten the requirements on operators around when and how they notify their intention to cease operations. A civil penalty will apply where a service fails to meet this requirement.

The bill will also clarify the link between a service and an operator by ensuring that operators are held liable for the obligations imposed on the service they maintain.

We acknowledge of course that the majority of child care providers are doing the right thing when it comes to compliance.

But we want to ensure that those who are negligent are pressed to do the right thing.

Another consequential change is the renaming of the Child Care Tax Rebate which will now be called the Child Care Rebate, as it is paid through the Family Assistance Office, not through the Australian Taxation Office.

To sum it in three words, this bill is about administration, accessibility and accountability—which I suppose you could call our own ‘Triple A’ rating.

With the government’s landmark commitment this week to a Paid Parental Leave scheme I am proud to say that in the future we will be helping deliver children, as we continue to deliver for them in early childhood, from cradle to crèche and beyond.


FINANCIAL SECTOR LEGISLATION AMENDMENT (ENHANCING SUPERVISION AND ENFORCEMENT) BILL 2009

The Financial Sector Legislation Amendment (Enhancing Supervision and Enforcement) Bill 2009 introduces measures to regulate the non-operating holding companies (NOHCs) of life insurers, and harmonise the injunctions that may be issued in respect of prudentially regulated entities.

This Bill removes a gap in Australia’s prudential regulation framework by ensuring that the Australian Prudential Regulation Authority (APRA) supervises life insurance NOHCs, which can have a significant impact on the conduct and financial health of life insurance companies. This measure is consistent with the Insurance Core Principle ICP17 of the International Association of Insurance Supervisors on Group-wide supervision, which is that ‘[t]he supervisory authority supervises its insurers on a solo and a group-wide basis.’

This Bill also ensures that the injunctions that may be issued under the prudential legislation are effective tools to enforce financial entities’ compliance with prudential requirements.

Non-operating holding companies of life insurers

Schedule 1 of this bill introduces a prudential regulation framework for the NOHCs of life insurers, and brings the prudential supervision of such companies into line with the prudential supervision of the NOHCs of general insurers and authorised deposit-taking institutions.

The prudential requirements that will apply to life insurance NOHCs are consistent with those that apply to life insurers. The scope of the prudential regulation regime introduced by this Schedule is closely modelled on the existing regulation of the NOHCs of general insurers and authorised deposit-taking institutions.

This approach will minimise compliance costs for industry and ensure a smooth transition.

The main elements of the prudential regulation regime for life insurance NOHCs are as follows.

Life insurance NOHCs will be required to be registered under the Life Insurance Act 1995 and be subject to APRA’s supervision. They will be required to comply with prudential standards, reporting obligations, directions issued by APRA and investigations authorised by the Act. APRA will be able to seek the disqualification of persons in specified positions in the body corporate. Registered NOHCs may also be liable to pay a financial institutions levy.

Where appropriate, prudential standards and reporting obligations will also apply to the subsidiaries of NOHCs and life insurers. Again, this is in line with the treatment of the subsidiaries of general insurers, ADIs and their holding companies. APRA is expected to consult with industry before determining or amending prudential standards. The auditors of NOHCs and the subsidiaries of NOHCs and life insurers will also have obligations to report significant prudential breaches to APRA.

International experience has demonstrated the interconnection between companies in a corporate conglomerate, including between prudentially regulated entities and unregulated entities. This measure will strengthen the prudential regulation of life insurance conglomerates in line with the regulation of other financial conglomerates.

Injunctions in prudential legislation

Schedule 2 of the Bill introduces measures to harmonise court injunction powers across prudential legislation (namely, the Banking Act 1959, Insurance Act 1973, Life Insurance Act 1995 and Superannuation Industry (Supervision) Act 1993 (SIS Act)). The harmonised provisions will enable APRA to seek a comprehensive and consistent set of injunctions in appropriate circumstances.

The amendments will give APRA flexibility to respond to a range of circumstances relating to the financial health of an entity in a timely and appropriate way.

APRA will be able to seek an injunction where a person engages, or proposes to engage, in contravention of the prudential Acts, fails to comply with a requirement of these Acts, fails to comply with a direction issued by APRA or breaches a condition on the authorisation or registration of a prudentially regulated entity. The Federal Court of Australia may issue restraining, performance, consent and interim injunctions.

Under the SIS Act, affected persons such as superannuation beneficiaries retain their existing ability to seek an injunction.

The amendments to the SIS Act will apply to the conduct of superannuation trustees that offer first home saver accounts. This is because the First Home Saver Accounts Act 2008 applies relevant provisions of the SIS Act to superannuation trustees that provide first home saver accounts.

Conclusion

The government is bringing these measures forward because they remove a gap in the prudential regulation framework for the life insurance industry and enhance APRA’s ability to use injunctions to respond to emerging prudential concerns in a timely and appropriate way.

Full details of the amendments are contained in the explanatory memorandum. I commend the Bill to the Senate.


FUEL QUALITY STANDARDS AMENDMENT BILL 2009

The Fuel Quality Standards Act 2000 is designed to regulate the quality of fuel supplied in Australia to reduce harmful emissions from vehicles, facilitate the adoption of better engine and emission control technology, and allow the more effective operation of engines. The Act also ensures that information on fuels is provided for consumers, where necessary.

The Fuel Quality Standards Amendment Bill 2009 will amend the Act to implement recommendations from the first statutory review of the Act and to address a number of issues that have arisen from the practical application of the Act and its subordinate legislation. The Act provides that an independent review of its operation be undertaken every five years. The first review reported in April 2005.

The bill will improve the efficiency and effectiveness of the Act. In particular, these amendments are needed to improve the development and enforcement of fuel standards which in turn benefit the public and the environment through cleaner fuels and reduced vehicle emissions.

The Act currently allows for approval for the variation of fuel standards and imposition of conditions to the approval. However, such conditions must relate to the supply of fuel. The bill will broaden the scope for imposing conditions so that, for example, the adverse impacts of the supply of sub-standard fuel could be offset. This means that a company that supplied petrol with a higher benzene content under an approval could be required to fund an air quality monitoring program that monitored benzene levels in the atmosphere in the region where the fuel was to be supplied.

The bill also includes a streamlined process for certain variations of approvals. If the variation is of a minor nature, or only adds regulated persons to an approval, the Minister need only notify, rather than consult, the Fuel Standards Consultative Committee. The bill also provides for the Secretary to be able to initiate a variation to an approval, for example, to correct an error in an approval. In each case a notice of the variation would still need to be published in the Gazette.

The bill will also establish a process for granting an emergency approval to avoid a potential fuel supply shortfall in exceptional circumstances. An emergency approval will be able to be granted for a maximum period of 14 days with the Fuel Standards Consultative Committee only notified of the decision, rather than needing to be consulted before a decision can be made. The bill will also allow for the period of an emergency approval to be extended but only after consultation with the committee.

The bill will allow delegation of powers to grant approvals to the secretary or an SES officer, except in relation to emergency approvals which will only be delegated to the secretary. This will allow the more routine approvals, such as those relating to racing fuels, to be handled by the department. It will also provide some flexibility for the department in those situations where an emergency approval is required to address a potential fuel supply.

The bill will also allow consideration of the circumstances in which fuel is supplied as one of the matters that constitute a fuel standard. This provision will allow the inclusion or exclusion of certain end uses, where appropriate, from the application of fuel standards and it will assist in addressing issues relating to the complexity of defining fuels used for different purposes and the management of blends, for example, diesel blended with biodiesel. Existing fuel standards will continue in effect as if they had been made under the provisions of the bill. This will clarify that the fuel standard for petrol does not cover supplies of leaded petrol for use in aircraft. This is intended but not achieved under the current law because fuel standards do not relate to end use.

The Act contains criminal offences for breaches of the legislation. The bill will introduce a more comprehensive range of enforcement measures, including a civil penalties regime so that there will be, for each offence, an equivalent civil penalty provision. Other enforcement measures include the ability to issue an infringement notice and, if appropriate, accept an enforceable undertaking. These measures will ensure that appropriate action can be taken in respect of breaches of the Act.

The bill also extends the type of courts that have jurisdiction for various matters under the Act. For example, an application for an injunction will be able to be made to the Supreme Court of a State or Territory and not just the Federal Court of Australia. This change recognises that state and territory courts already have a role in prosecutions for offences against the Act and allows them to deal with other matters.

Unless a warrant is obtained, the Act requires inspectors to obtain the consent of a fuel retailer before exercising monitoring powers which are quite broad. The bill will allow inspectors to enter the public area of business premises during normal hours of operation and exercise a limited range of monitoring powers without the consent of the retailer or without a warrant. The retailer’s right to refuse to allow an inspector to enter, or remain on, the premises, as is the case with any member of the public, will not be affected.

The bill will expand current information sharing powers to allow the Secretary to share information obtained under the Act to assist in the administration or enforcement of various laws, for example, the Energy Grants (Cleaner Fuels) Scheme Act 2004 and state and territory fair trading laws. This will facilitate communication with other regulators to increase the intelligence base on potential offenders. It will also assist in addressing gaps in the Act’s coverage of the industry.

There is only one new offence in the bill. A new section 65D provides that the secretary can require a person, other than the person who is suspected of contravening a civil penalty provision, who may have information relevant to an application for a civil penalty order, to provide all reasonable assistance in connection with the application. An offence applies for failure to give assistance as required. While this offence is a new offence under this Act, it is a procedural offence common to other Commonwealth legislation.

The Act as currently written is difficult to enforce. This bill will make the legislation much more robust in ensuring that the quality of fuel supplied in Australia is of the high standard required for new advanced engine technology in vehicles. This will be important to enable us to respond to new fuels and vehicle technologies as they emerge.


HEALTH WORKFORCE AUSTRALIA BILL 2009

There can be no doubting that Australians enjoy one of the best health systems in the world.

One of the reasons we have such good health outcomes is because of the quality of our health workforce.

Our doctors, nurses, midwives, allied health professionals, paramedics and researchers are the backbone of our health system.

It is absolutely essential that we do all we can to support our health workforce in their work.

That is why today I rise to introduce the Rudd government’s latest initiative to building a sustainable health workforce—the Health Workforce Australia Bill 2009.

Unfortunately, we are currently dealing with the legacy of an historic underinvestment in our health workforce.

The end result of this neglect by the previous government is there are now chronic shortages in general practice, various medical specialities, dentistry, nursing and certain allied health professions.

These shortages are particularly acute in rural and remote communities around the country and some communities having limited access to health services and state and territory health departments spending vast sums of money to send health professionals to work in understaffed facilities.

Workforce shortages and inflexibilities and inefficiencies in training and service delivery can contribute to poor health outcomes, particularly in certain regions such as our rural and remote areas and for certain population groups such as Indigenous Australians.

We also currently have very poor national data on the health workforce which further inhibits our ability to better plan for the health workforce needs of the community.

In addition to existing shortages, a number of imminent supply and demand issues will exacerbate pressures on Australia’s health system and its workforce in the near future. These factors include:

  • population and workforce ageing;
  • lower average working hours;
  • potential decreases in availability of the overseas supply of health workers;
  • changes to population health and patterns of disease burden;
  • increasing community expectations for health care; and
  • broader labour market issues.

For instance, the ageing of the population will have significant implications for the health workforce in terms of demand, with the over 55s being the heaviest consumers of medical services, and supply, with increasing numbers of health professional expected to retire in the near future. Increasing levels of chronic disease are expected to increase the demand for services even further in coming years.

The Productivity Commission’s ‘Australia’s Health Workforce’ report concluded that the workforce is a fundamental enabler in ensuring all Australians have access to high quality, effective, efficient and financially viable health services. Long term planning and policy development are needed now and are needed on a national level.

Without action, access to appropriately trained health workers will be further reduced, ultimately affecting the health outcomes of the Australian population.

Although all jurisdictions are now investing more heavily in training of the health workforce, increased university and TAFE training places have resulted in a significant increase in the requirement for effective clinical training, which is essential to the development of practical skills and the quality of future health professionals. Training of health professionals is further hampered by the current split in clinical training responsibility between education providers and the health sector.

Improvements to clinical training arrangements, including funding and supervision, are urgently needed. There is also a clear need for greater effort and more effective governance arrangements around health workforce training, planning and policy development that can work across and with jurisdictions and the health and education sectors.

For too long the previous government ignored the warning signs and chose to do nothing, and play the blame game with the states.

But the Rudd government has chosen to Act, and work with the states on solutions.

That’s why in November 2008 the Council of Australia Governments (COAG) signed off on an historic $1.6 billion health workforce package.

The package forms part of the National Partnership Agreement on Hospital and Health Workforce Reform, signed by all states and territories in March 2009. The package, comprising $1.1 billion of Commonwealth funding and $539.2 million from states and territories, is the single largest investment in the health workforce ever made by Australian governments.

This investment will improve health workforce capacity, efficiency and productivity by improving clinical training arrangements, increasing postgraduate training places for medical graduates, improving health workforce planning across Australia and enhancing training infrastructure particularly in regional and rural areas.

A critical component of the COAG package is the establishment of a national health workforce authority—Health Workforce Australia—to produce more effective, streamlined and integrated clinical training arrangements and to support workforce planning and policy.

The Health Workforce Australia Bill 2009 establishes Health Workforce Australia (HWA) and implements a majority of the COAG health workforce initiatives.

The bill specifies the functions, governance and structure of HWA, enables health ministers to provide directions to HWA and requires HWA to report to health ministers.

HWA will be responsible for:

  • funding, planning and coordinating undergraduate clinical training across all health disciplines;
  • supporting clinical training supervision;
  • supporting health workforce research and planning, including through a national workforce planning statistical resource;
  • funding simulation training; and
  • providing advice to Health Ministers on relevant national workforce issues.

The authority will also ensure best value for money for these workforce initiatives and a more rapid and substantive progression of the necessary policy and planning activities.

Given the functions and level of funding for which the authority will be responsible, it is essential that there is a legislative basis for its operations and governance arrangements that reflect the shared funding and policy interest of all jurisdictions.

HWA will be established as a statutory authority under the Commonwealth Authorities and Companies Act 1997.

HWA will be governed by a board comprising a nominee from each state and territory, an independent chair, and may also include up to three other members selected by health ministers. A chief executive officer will be responsible for the day-to-day administration of HWA, and expert committees and consultants will be engaged to assist with HWA functions as required.

HWA is to commence management of undergraduate clinical training from January 2010. The bill is required to establish HWA by July 2009 to ensure it is operational within the timeframes agreed to in the COAG National Partnership Agreement.

The COAG health workforce package is a major investment to making the necessary improvements to the health workforce through effective planning and policy development.

HWA, which will work with and across jurisdictions and the education and health sectors, is pivotal to the success of the COAG package.

For the first time, there will be one single body responsible for the delivery, funding, planning and oversight of all clinical training in this country.

I want to our hard working and dedicated health professionals to know that the Rudd government is committed to addressing the chronic shortages which are afflicting our health system.

I am pleased to be able to present the Health Workforce Australia Bill 2009 which will equip us with the tools we need to help improve the health workforce, and therefore the health system, for the Australian community.


LAW AND JUSTICE (CROSS BORDER AND OTHER AMENDMENTS) BILL 2009

Introduction

The Law and Justice (Cross Border and Other Amendments) Bill 2009 contains a range of measures relating to the Commonwealth’s legal framework for resolving disputes that have a connection to more than one jurisdiction.

Simple and efficient processes for conducting legal proceedings with a cross border element are essential in our federal system, where travel between States and transactions across jurisdictions are a routine part of life. In the same way, Australia’s proximity to, and close relationship with, New Zealand makes it important to have special processes in place for the resolution of disputes across the Tasman.

The measures contained in this bill are consistent with the government’s continuing commitment to making legal processes more flexible, cheaper and less complicated.

Cross border amendments

Most significantly, the bill includes amendments to the Service and Execution of Process Act 1992 to support the operation of the Cross Border Justice Scheme. This scheme will be established to streamline the delivery of justice services and improve public safety in cross border regions in Western Australia, South Australia and the Northern Territory.

Initially the Scheme will operate in the NPY Lands in Australia’s central desert region. People in the NPY lands live and travel throughout this region according to traditional culture and customs, across state and territory borders. This creates particular challenges for the delivery of justice services.

The Cross Border Justice Scheme will take an innovative and cooperative approach to addressing these challenges. It will allow police, magistrates and other officials to deal with offenders from any one of the participating jurisdictions where the offender has a connection to the cross border region.

The scheme will be established under state and territory legislation. However, amendments to the Service and Execution of Process Act are required to enable it to operate as intended. SEPA establishes a cooperative scheme for the service and execution of process and the enforcement of judgments between states and territories.

To support this significant initiative, the Bill will amend SEPA to confirm that the Cross Border Justice Scheme, and similar schemes set up in the future, can operate in parallel with the scheme established under that Act. The bill will also amend SEPA to provide that in any cases of indirect inconsistency, the cross border laws will prevail.

Ability for prisoners to give evidence by audio and audio visual link

The bill also contains amendments to SEPA to allow for more flexibility in the way in which evidence can be given in proceedings with an interstate aspect. The bill amends SEPA to enable prisoners to give evidence by audio or audio visual link when subpoenaed to give evidence before an interstate court, tribunal or person.

State and territory legislation already allows a prisoner to give evidence in this way where the proceedings are in the jurisdiction of their imprisonment. However, there is currently no explicit provision under SEPA for a prisoner to give evidence by audio or audio visual link in proceedings in another state or territory. The bill addresses this gap.

Expansion of Trans-Tasman subpoena scheme to family proceedings

Finally, the bill amends the Evidence and Procedure (New Zealand) Act 1994 to expand the range of proceedings covered by the cooperative scheme established between Australia and New Zealand for the service of subpoenas across the Tasman. Currently the Act excludes family proceedings from the operation of the scheme.

The amendments will remove this general exclusion, consistent with Australia’s longstanding view that the scheme should apply broadly to civil proceedings, including proceedings involving family law.

Conclusion

In conclusion, the amendments in this bill introduce or support measures to make the process for resolving disputes with an interstate or Trans-Tasman connection simpler, quicker, cheaper and more flexible. This is consistent with the government’s broader efforts to improve access to justice for all Australians.

I commend the bill.


NATION BUILDING PROGRAM (NATIONAL LAND TRANSPORT) AMENDMENT BILL 2009

I am pleased to introduce the Nation Building Program (National Land Transport) Amendment Bill 2009.

It renames the AusLink (National Land Transport) Act 2005 (the Principal Act), as the Nation Building Program (National Land Transport) Act 2009.

This bill is central to the effective delivery of the government’s road and rail infrastructure investment through the Nation Building Program—a program currently worth more than $26 billion.

In New South Wales we are investing over $8.7 billion through the Nation Building Program.

We are making a record investment in the Pacific Highway which will see a range of projects delivered, including: the Ballina Bypass; the upgrade to the Sapphire to Woolgoola section; the Banora Point deviation; the Buladelah bypass; and the Glenugie Upgrade.

We are also investing in the Hume Highway to finalise its duplication by 2012.

The final work on the Hume Highway is the construction of the bypasses at Tarcutta, Woomargama and Holbrook.

Due to the funding the government brought forward in its December 2008 Nation Building Package, the Tarcutta and Woomargama bypasses will commence earlier and be completed in late 2011 - more than six months ahead of schedule.

The Holbrook Bypass is scheduled for completion by 2012.

Further projects in New South Wales include:

  • the Alstonville Bypass on NSW’s mid-north coast.
  • the duplication of the Great Western Highway from the M4 at Penrith to Katoomba.
  • the upgrade of the Great Western Highway between Katoomba to Lithgow.
  • a package to improve road and rail access in Port Botany.
  • an investment towards freight rail upgrades between Sydney and Newcastle - a future North Sydney Freight Link.

An investment towards a new intermodal facility at Moorebank.

In Queensland we are investing $7.3 billion through the Nation Building Program.

We are investing in the Pacific Motorway, including the Daisy Hill to Springwood South upgrade, the Robina and Varsity Lakes interchanges and the Nerang South Interchange.

We are making a record investment in the Ipswich Motorway, including the upgrade between Dinmore to Goodna and Wacol to Darra and the Logan Interchange.

Our record investment in the Bruce Highway includes:

  • The upgrade of the southern approach to Cairns
  • The Douglas Arterial duplication
  • The Cardwell Range realignment
  • The work on the Townsville Port Access Road
  • The upgrade of the southern approach to Mackay
  • The Calliope Crossroads upgrade
  • The upgrading of the southern approaches to Gin Gin
  • The Cooroy to Curra project (Section B)
  • The upgrade of Caboolture to Caloundra

In Victoria we are investing a record $4.3 billion through the Nation Building Program.

Projects in Victoria include:

  • The Western Ring Road upgrade
  • The West Gate Bridge Strengthening
  • Works on the Princes Highway East (Traralgon to Sale)
  • Works on the Geelong Ring Road Stage 4A (Anglesea overpass)
  • Works on the Geelong Ring Road Stage 4B (Anglesea Road to Princes Highway)
  • Realignment of Anthony’s Cutting on the Western Highway
  • Duplication from Ballarat to Stawell on the Western Highway
  • Upgrade between Stawell and the South Australian border on the Western Highway
  • The Nagambie Bypass on the Goulburn Valley Highway
  • The Kings Road Interchange on Calder Freeway
  • The rail upgrades at Geelong Port and on the Melbourne-Adelaide Line
  • Funding towards the Dandenong Intermodal Terminal
  • Funding towards the Somerton Intermodal Terminal
  • The duplication of the Princes Highway from Waurn Ponds to Winchelsea
  • The upgrade of the Springvale Road Intersection
  • The Clyde Road upgrade

In West Australia we are investing $2.8 billion through the Nation Building Program.

Projects include:

  • Works on the Great Eastern and Roe Highway interchange
  • The upgrade of the Great Eastern Highway from Kooyong Road to Tonkin Highway
  • Works on the Bunbury Port Access and Outer Ring Road
  • The duplication of Dampier Highway
  • Works on the Mandurah Entrance Road
  • Works on the Reid Highway and Alexander Drive Interchange
  • Works on the Esperance Port Access Road
  • The Daddo Road Grade Separation
  • The extension of Hepburn Avenue
  • Works on the Ocean Reef Road

In South Australia we are investing $1.7 billion through the Nation Building Program.

Projects include:

  • The Northern Expressway & Port Wakefield Road upgrade
  • The Dukes Highway Upgrade
  • Work on Victor Harbour, Main South Road and Seaford Road junction
  • Work on the Main North Road Gawler to Tarlee
  • The Mount Gambier Northern Bypass
  • Work on Crystal Brook to Redhill
  • Work on Montague Road
  • In Tasmania we are investing $800 million through the Nation Building Program.
  • The Brighton Bypass
  • Rail capacity improvements at Rhyndaston
  • Planning for Bagdad Bypass and new Bridgewater Bridge
  • Upgrade of the Midland Highway
  • Work to improve capacity on the Main North-South Rail Line
  • The Kingston bypass
  • The upgrade of North East Freight Roads
  • The upgrade of Illawarra Link Road

In the Northern Territory we are investing over $580 million through the Nation Building Program.

Projects include:

  • Work on the Tiger Brennan Drive
  • Improving flood immunity on Port Keats Road
  • The upgrade of the Plenty Highway
  • The sealing of the Buntine Highway
  • The upgrade of the Central Arnhem Road
  • The upgrade of the Tanami Road
  • A high level bridge over the Macarthur River at Borroloola
  • The upgrade of the Maryvale Road and Hughes Stock Route

In the ACT we are investing close to $200 million through the Nation Building Program.

This funding includes the road upgrade in Canberra’s Airport precinct as well as the Tharwa Road - Lanyon Drive upgrade.

Other investments through the Nation Building Program include:

  • $1.75 billion in the Roads to Recovery Program
  • $500 million in the Black Spots Program
  • Our additional investment in this program through our Stimulus packages is seeing an additional 607 black spots addressed across the nation.
  • $70 million in the Heavy Vehicle Safety and Productivity Program
  • $150 million in the Boom Gates for Level Crossing Program

All states and territories have signed up to deliver the Nation Building Program.

It should also be noted that, when in government, it took the Opposition more than a year to get all states and territories to sign up to their AusLink program.

Our Nation Building Program has the full support of all states and territories and its implementation is underway.

Last night we announced an additional investment of $8.5 billion in rail, roads and ports infrastructure for Australia to lift productivity.

Investing in nation building today to support jobs and provide infrastructure for tomorrow.

The Rudd Labor government will invest $35 billion over 6 years on transport infrastructure.

The Howard government failed to deliver on Australia’s infrastructure needs - and left us with an infrastructure deficit.

In relation to the bill, the amendments to the Act put in place the appropriate provisions to ensure the effective delivery of the suite of initiatives now funded under this program.

The bill proposes changes to ensure:

  • more effective provisions for major road and rail infrastructure projects on the National Land Transport Network, as well as for those projects that are off the network; and
  • more effective provisions for the Roads to Recovery Program and the Black Spots Program.

Given the transition over the last 18 months from AusLink to the implementation of the Nation Building Program, this Bill changes the references to AusLink in the Act so that it is now referred to as the Nation Building Program.

The bill will also amend the principal Act to make it clear that part 6 can be used to approve funding for projects which are off the National Land Transport Network in both regional and metropolitan areas of Australia.

This bill also makes appropriate provisions to allow sites that are on the National Land Transport Network to become eligible for Black Spot Projects’ funding under the Act. Previously, only off-network black spots were eligible under this part.

This change will facilitate the effective implementation of the additional $150 million investment in Black Spot Projects by the government.

The bill will also provide further flexibility around the Roads to Recovery Program by enabling the amounts of funding to Local Government Authorities to be increased if the minister sees fit.

Previously, no increases could be made to the amounts specified in the Roads to Recovery List after the initial list for a funding period had been determined.

The bill will also enable the minister to exempt a funding recipient from having to call for tenders on a project approved under section 9 of the Act, where the cost of the work will be under an amount prescribed in the regulations.

Finally, an amendment to the Principal Act is being made to ensure the minister can specify a funding condition that a funding recipient adheres to the terms of a matter contained in any other instrument or document as in force or existing from time to time.

The intention of this amendment is to enable the minister to require recipients of federal funds to adhere to the terms of a nominated instrument or document as they are at any given time.

So, if the terms change in any way, the funding recipient is required to adhere to the changed terms, not those which were in force at the time the funding condition was originally made.

This Bill plays an integral part in advancing the government’s Nation Building Program, and deserves the support of the parliament.


NATIVE TITLE AMENDMENT BILL 2009

The Native Title Amendment Bill 2009 will make amendments to the Native Title Act 1993 that will contribute to broader, more flexible and quicker negotiated settlements of native title claims. These changes will result in better outcomes for participants in the native title system.

The Rudd Labor government is committed to a new partnership with the Indigenous community and closing the gap between Indigenous and non-Indigenous Australians. Native title has a role to play in this new partnership; a native title system which delivers real outcomes in a timely and efficient way can provide Indigenous people with an important avenue of economic development.

The government’s key objective for the native title system is to resolve land use and ownership issues through negotiation, where possible, rather than through litigation.

This objective has been a central plank of the Native Title Act since the Keating Labor government introduced it in 1994. The preamble to the Act makes clear that recognition of native title rights should occur where possible by agreement and with due regard to the unique character of those rights.

Regrettably this admirable intention of the Act has not been realised. For over 15 years, millions of dollars have been wasted on unproductive and unnecessary litigation. An opportunity for reconciliation has all too often become an instrument of division. On current estimates, it may take another 30 years to resolve all native title claims. It is a tragedy to see people dying before their peoples’ claims are resolved. Australia’s Indigenous people deserve better.

The key amendments in this bill support the government’s objective of achieving more negotiated native title outcomes in a more timely fashion. They give the Federal Court a central role in managing all native title claims, including deciding who mediates a claim. The government is confident that the court has the necessary skills to actively manage native title claims in a way which will lead to resolution of claims in the shortest possible time frames.

In recent years, the court has achieved strong results in mediating native title matters. The amendments will draw on the court’s significant alternative dispute resolution experience to achieve more negotiated outcomes.

Having one body actively control the direction of each case with the assistance of case management powers means opportunities for resolution can be more easily identified. Parties that are behaving with less than good faith can also be more forcefully pulled into line. Where parties are deadlocked or unwilling to see common ground, the court can bring a discipline and focus on issues through the use of its case management powers to ensure that matters do not languish.

This change is in line with consistent stakeholder feedback. It is also in line with the government’s position in opposition.

Other amendments contained in the Bill aim to facilitate the faster resolution of negotiated settlements. Importantly, outcomes can extend beyond the bare recognition of legal rights. They can include sustainable benefits that deliver improved economic and social outcomes for generations of traditional owners.

To assist in facilitating broader agreements like these, the bill will enable the court to make consent orders concerning matters beyond native title.

The bill also includes specific provisions that confirm the court has discretion to rely on an agreed statement of facts between the parties in making a consent determination, where those parties include at a minimum the native title claim group and the main government party. This is intended to allow for greater efficiency in the native title process, particularly where it is clear that there is no disagreement between the key parties about the facts.

The government recently introduced amendments to the Evidence Act 1995 that, among other things, will make it easier for a court to hear evidence of Aboriginal and Torres Strait Islander law and customs, where appropriate. Of particular relevance to native title matters are amendments to the hearsay and opinion rules, and to the rules relating to narrative evidence. This bill introduces amendments that will allow the recent changes contained in the Evidence Amendment Bill 2008 to apply to native title proceedings which commenced before these amendments came into force. This will ensure that native title claimants receive the fullest possible benefit from these new laws.

This bill also contains a number of amendments to Part 11 of the Act, which deals with representative bodies. One of the aims of these measures is to streamline those parts of the Act dealing with the recognition processes for native title representative bodies. The bill’s provisions will allow for a very simple application process for the re-recognition of current representative bodies, saving significant time and paperwork.

At the moment, the Act deals with extension, variation and reduction of areas as three separate processes, which essentially have the same elements. The bill amalgamates these into one straightforward variation process but maintains the individual and public notification processes, and makes provision for extensions of time for representative bodies to make submissions if that is required.

The provisions in the bill relating to the minister’s consideration of whether a body is satisfactorily performing its functions will align with those provisions in the Act which set out how a representative body is to perform those functions.

The bill also removes transitional provisions relating to the recognition process for representative bodies which are no longer required.

In addition to the measures in this bill, the government is considering a range of options to make our courts more flexible and improve access to the civil justice system for all Australians. For example, the government recently introduced legislation to allow the court to refer questions arising in a proceeding to an appropriately qualified person for inquiry. The ability to refer questions for expert assistance should lead to faster resolution of native title litigation, as contested matters such as claim overlaps and complex issues such as the existence and extent of native title rights and interests can be referred to experts for inquiry and report.

The amendments in this bill will help to encourage a broader and more flexible approach to the resolution of native title. Importantly, they can help us move away from the traditional adversarial approach which, as we know, has proved costly and slow. No one but the lawyers benefit from costly and time consuming litigation.

The government has consulted widely in relation to these amendments and there is considerable support for the changes among the various participants in the native title system.

Native title is about more than just delivering symbolic recognition. Native title is an opportunity to create sustainable, long-term outcomes for Indigenous Australians. The effect of the amendments contained in this bill, combined with a dedication to behavioural change by all participants in the system, will improve both the operation of the system and the outcomes we can achieve under it.

I commend the bill.


SOCIAL SECURITY LEGISLATION AMENDMENT (DIGITAL TELEVISION SWITCH-OVER) BILL 2009

The Social Security Legislation Amendment (Digital Television Switch-over) Bill 2009 makes amendments to the Social Security (Administration) Act 1999.

The government has announced that all free-to-air television broadcasters in Australia will complete the switch from analog transmission to digital-only transmission by the end of 2013.

For viewers, this will require a number of changes to the way in which television broadcasts are received, including obtaining new equipment to receive digital signals.

Switching to digital television will be a straightforward and inexpensive task for the vast majority of Australians. However, some viewers may need practical, in-home assistance to make the switch to digital. To ensure these Australians are not disadvantaged by the switch-over, the Government will implement an assistance program in regions switching from analog to digital transmission between 1 January 2010 and 31 December 2011. These regions are the television licence areas of Mildura/Sunraysia, regional Victoria, regional South Australia and regional Queensland. Lessons learned from switching over these regions will inform the broader switch-over of the rest of Australia.

The amendments in this bill are necessary to enable the implementation of the Digital Switch-over Household Assistance Program to households in regions switching from analog to digital transmission between 1 January 2010 and 31 December 2011. A household will qualify for the assistance program where one or more residents are in receipt of the maximum rate of any of the following payments: age pension; disability support pension; carer payment; or Department of Veterans’ Affairs service pension or income support supplement.

To determine qualification for the Digital Switch-over Household Assistance Program, Centrelink needs legislative authority to be able to use protected information it holds regarding recipients of age pension, disability support pension and carer payment. In addition, Centrelink needs to be able to provide the information about qualified Centrelink customers to the contractors engaged to supply the Digital Switch-over Household Assistance Program. A similar amendment for veterans to participate in the program is not required.

The amendments will authorise a person to obtain, make a record of, disclose and use protected information under the Social Security Administration Act for the purposes of the Digital Switch-over Household Assistance Program.

The amendments will ensure that Centrelink and the Department of Broadband, Communications and the Digital Economy (DBCDE) do not breach the confidentiality provisions of the social security law. They will allow Centrelink to use information currently within their systems to advise customers of their qualification for, and to invite them to participate in, the Digital Switch-over Household Assistance Program.

Information disclosed to contractors and DBCDE will be limited to that strictly necessary for the implementation of the Digital Television Switch-over Household Assistance Program. Contractors will not receive specific information about the customers’ age, payment type, disability or marital status.

DBCDE will also put in place appropriate privacy safeguards with contractors to ensure that Centrelink customers’ personal information is treated appropriately.


SOCIAL SECURITY LEGISLATION AMENDMENT (IMPROVED SUPPORT FOR CARERS) BILL 2009

This bill is the Government’s legislative commitment following the report of the Taskforce for the Carer Payment (child) Review.

The report of the Taskforce, titled Carer Payment (child): A New Approach, was released last year, finding primarily that the qualification criteria for carer payment paid in respect of a child are too restrictive and the assessment process overly rigid and producing inequitable outcomes.

The government is committed to improving significantly the level of assistance for carers of children with disability or severe medical conditions. This bill delivers on that commitment, making substantive changes to be implemented from 1 July 2009.

The changes in this bill are the latest in a series of recent support initiatives that have extended to carers. The 2008 one-off payment legislation delivered $1,000 to carer payment recipients and certain other pensioners with a caring role, and carer allowance recipients were generally paid $600 for each person cared for. Then the economic security strategy legislation of late 2008 provided $1,400 to carer payment recipients and, generally, $1,000 to carer allowance recipients for each person cared for.

These new measures are part of an $822 million package from the 2008 Budget to support and recognise carers. As well as the 2008 one-off payments, and the amendments to the carer legislation included in this bill (worth about $273 million over five years), the Government set aside $100 million for supported accommodation facilities for people with disability whose ageing parents can no longer care for them at home and $20 million for carers who have experienced a catastrophic event involving a young child.

This bill makes amendments in relation to carer payment paid in respect of a child. Carer payment is an income support payment for carers who, because of the demands of their caring role, are unable to support themselves through substantial participation in the workforce.

Due to the narrow set of medical and behavioural criteria currently determining qualification for the payment, the payment is currently received by the parents of just under 7,000 children. The amendments will deliver a new, fairer set of qualification criteria for carer payment paid in respect of a child, based on the level of care required, rather than the rigid medical criteria currently used to assess qualification for the payment. As a result, the department estimates around 19,000 more carers will have access to carer payment from 1 July 2009.

The new assessment will be known as the Disability Care Load Assessment (Child) and it will improve the overall efficiency and effectiveness of assessments even in complex cases such as where children have multiple carers, where carers have multiple care receivers, and where there is care required for an adult with disability at the same time as a child with disability. Administration will be improved, with better claims processing and capacity for the more complex claims to be handled by a dedicated complex claims assessment team.

The Disability Care Load Assessment (Child) will be established by a legislative instrument. The instrument will allow a test, comprising a carer questionnaire and a treating health practitioner questionnaire, that will be used to assess the functional ability, behaviour and special care needs of children under 16, and the level of care provided by their carers. The process will accommodate assessment of eligibility for carer payment across a wide range of household situations, including situations where there is more than one child or more than one carer involved in the qualification process. This test will provide a method for determining a qualifying rating for the carer based on the level of care associated with caring for a child or children with severe disability or a severe medical condition.

For the first time, there will be access to carer payment paid in respect of a child on a short term or episodic basis. Episodic care will cover care required for recurring conditions where the care recipient is aged under 16 years and each episode is expected to last at least three months and less than six months. This could include, for example, treatments for medical conditions such as cancer, brain injury or mental illness.

Short term care will apply if the care recipient is aged under 16 years and has a condition that is expected to be short-term (at least three months and less than six months) from a one-off incident. For example, an accident resulting in multiple broken limbs, a serious illness, or a surgical intervention may necessitate constant care in the short-term, but that care need is not expected to recur. Some short and intensive treatments for childhood cancer may also fit this category.

There will be more generous arrangements for carers of children who are in hospital so the carers can keep their carer payment and, if payable, their carer allowance, while the child is in hospital. This means that the current limit on payment in these circumstances of 63 days in a calendar year will no longer apply and will be replaced by a 12-week review cycle.

The qualification rules will also be relaxed in the tragic situation of a person caring for a child with a terminal illness. The current criteria require a medical professional to certify that the child has a terminal condition and will not live for substantially longer than 12 months. This will be replaced with a process that assesses the average life expectancy for a child with the same or a similar condition and provides for payment on that less intrusive basis.

The bill also amends some of the carer allowance provisions in the social security law. Carer allowance is an income supplement for people who provide daily at-home care and attention to an adult or child who has a physical, intellectual or psychiatric disability that is permanent and likely to affect the person for an extended period. Carer allowance is not means-tested and may be paid in addition to an income support payment.

A person in receipt of carer payment in respect of a child will become automatically eligible for carer allowance.

In conclusion, these measures will provide a more flexible and accessible income support payment for Australians facing some of the toughest circumstances - caring for a child with severe disability or a severe medical condition. Parents providing the extra care and support needed by these children are often restricted in how much time they can be available to perform paid work - the hospitalisation of a child with a serious illness or the diagnosis of a disability can often mean one parent has to stay home to take on the caring role, which can therefore mean the loss of an income. For many single parents in this circumstance, it may be impossible to sustain full-time work and provide the care needed. Parents like these who meet the usual income and assets tests associated with income support payments will now be able to access this payment based on their caring load.


TAX LAWS AMENDMENT (2009 BUDGET MEASURES NO. 1) BILL 2009

This bill amends various taxation laws to implement a range of improvements to Australia’s tax laws.

Schedule 1 amends section 45-400 of Schedule 1 to the Taxation Administration Act 1953 to provide a 20 per cent reduction of the pay as you go instalment for the quarter that includes 31 December 2008 for certain small business taxpayers.

Section 45-400 sets out how the Commissioner of Taxation determines the amount of the pay as you go instalments on the basis of GDP adjusted notional tax for taxpayers who pay quarterly instalments.

The GDP uplift factor used in the calculation can be unrepresentative of expected profit growth in income years where economic and business conditions change quickly. Consequently, this can require taxpayers to pay too much pay as you go instalments compared with their actual tax liability, with the overpaid tax being refunded to them at the conclusion of the income year when their final tax liability is assessed. 

For the 2008-09 income year, the GDP uplift factor is eight per cent while the expected profit growth for the small business sector (as forecast in the recent mid-year economic and fiscal outlook) is two per cent. As such, small business taxpayers who pay their quarterly PAYG instalments on the basis of GDP-adjusted notional tax would be required to pay too much throughout the year towards their annual tax liability. 

The 20 per cent PAYG instalment reduction will alleviate small business taxpayers of this cash flow pressure in the current economic environment and provide immediate and much needed cash flow relief to small businesses and encourage small business confidence.

To provide flexibility, a regulation making power will be inserted into the law to allow reductions to be made in the future should that be considered necessary because of changing economic circumstances.

Schedule 2 amends various acts relating to temporary residents’ unclaimed superannuation payments.

The government made amendments to the unclaimed money regime last year, to require superannuation funds to pay the unclaimed superannuation of former temporary residents to the Australian Tax Office. This was done to help reduce the number of lost accounts and unclaimed money in the superannuation system which arises when temporary residents depart Australia without taking their superannuation with them.

Schedule 2 amends various Acts as a consequence of the amendments required to support the temporary resident unclaimed superannuation regime, including the income tax legislation, small superannuation accounts legislation, superannuation guarantee legislation and company contribution legislation.

The amendments also make changes to the broader unclaimed money regime to make the existing unclaimed superannuation provisions more compatible with the provisions for the payment of temporary residents’ unclaimed superannuation to the Australian government.  Most of the changes are consistent (in many cases identical) with the requirements for the new temporary residents’ unclaimed superannuation regime.

Without these changes superannuation providers would need to maintain two very different unclaimed money regimes, one for general unclaimed superannuation money, and another for the temporary residents’ unclaimed superannuation. 

Apart from the amendments to the company-contribution legislation, the consequential temporary residents’ superannuation amendments will all have effect from the day after Royal Assent.  The amendments to the company-contribution will have effect from the 2009-10 income year.

Schedule 3 introduces reforms to income tests which were announced in the 2008-09 budget.  The reforms expand income tests used in determining eligibility for a range of government financial assistance programs to include certain salary sacrificed contributions to superannuation, total net investment losses and adjusted fringe benefits.

Affected programs include student financial assistance programs, family assistance payments, income support payments for individuals below age pension age and various means-tested tax benefits.  Particular drought assistance payments are specifically excluded.

The reforms also align the income tests used to determine eligibility for the dependency tax offsets with the income test used for family assistance payment purposes.

The measures bring income testing up to date with contemporary remuneration arrangements.  In particular, superannuation contributions will be assessed including all deductible personal contributions made by an individual and any employer superannuation contributions made on behalf of an employee that the employee has or has had capacity to influence.  An example is contributions made under a salary sacrifice agreement.  These contributions will need to be reported on payment summaries from 1 July 2009.

The reforms will provide an overall saving of $545 million over the forward estimates period and will apply to the 2009-10 and later income years.

Full details of the measures in this bill are contained in the explanatory memorandum.


TAX LAWS AMENDMENT (2009 MEASURES NO. 2) BILL 2009

This bill amends various taxation laws to implement a range of improvements to Australia’s tax laws.

Schedule 1 ensures there are no inappropriate tax consequences arising from payments made under the financial claims scheme, which this parliament enacted in October last year. Under that scheme, APRA can make payments to account holders in failed financial institutions and to claimants under general insurance policies with failed insurance companies. The specific amendments cover capital gains tax, farm management deposits, retirement savings accounts, first home saver accounts and various withholding and reporting obligations.

Schedule 2 increases access to the small business capital gains tax concessions for taxpayers owning passively held capital gains tax assets.

These amendments will extend access to the small business capital gains tax concessions to circumstances that are not currently eligible. Owners of passively held assets will now be able to qualify for the concessions under the small business entity test, which was introduced in 2007 to simplify eligibility requirements for the small business concessions.

This means that a taxpayer that owns a capital gains tax asset used in a business by an affiliate or entity connected with the taxpayer, and partners owning certain capital gains tax assets used in the partnership business, will have access to the small business capital gains tax concessions via the small business entity test from the 2007-08 income year.

The schedule also makes a number of minor amendments to refine and clarify aspects of the existing small business capital gains tax concessions provisions so that they operate flexibly and as intended.

Schedule 3 provides a general exemption from capital gains tax for capital gains or capital losses arising from a right or entitlement to a tax offset, deduction or similar benefit. A highly technical interpretation of the income tax law may result in a capital gain or capital loss arising to taxpayers who have a right to receive an urban water tax offset on the satisfaction of the right. This amendment will put beyond doubt that a capital gain or capital loss would not arise for taxpayers in such circumstances, or in other circumstances where taxpayers have a right or entitlement to a tax offset, deduction or other taxation benefit.

Schedule 4 provides refundable tax offsets for eligible projects under the government’s $1 billion National Urban Water and Desalination Plan. Under the plan, eligible projects may receive assistance at a rate of 10 per cent of eligible capital costs, up to a maximum of $100 million per project.

This schedule implements the refundable tax offset component of the Plan and delivers on the Government’s election commitment.

Schedule 5 amends the list of deductible gift recipients, known as DGRs, in the Income Tax Assessment Act 1997. Subject to conditions, taxpayers can claim income tax deductions for gifts to organisations with DGR status. DGR status will assist the listed organisations to attract public support for their activities. This schedule adds four new organisations to the act:

  • Australasian College of Emergency Medicine
  • ACT Region Crime Stoppers Limited
  • The Grattan Institute, and
  • Parliament of the World’s Religions Melbourne 2009 Limited.
  • This Schedule also extends the time limit on the DGR status of three further organisations:
  • Bunbury Diocese Cathedral Rebuilding Fund
  • State George’s Cathedral Restoration Fund, and
  • Yachad Accelerated Learning Project

Schedule 6 amends the A New Tax System (Australian Business Number) Act 1999, or ABN Act, to allow the Registrar of the Australian Business Register to act as the Multi-agency Registration Authority to enable representatives of businesses to be identified for the purpose of communicating electronically with multiple government agencies on behalf of businesses. This is a part of the government’s Standard Business Reporting program. There are also a number of other amendments to the ABN Act that improve the integrity and efficiency of the Australian Business Register and help position the Registrar to take on the role of the Multi-agency Registration Authority.

Schedule 7 amends the Fuel Tax Act 2006 and related provisions elsewhere in the tax law, to remove the provision that businesses must be a member of the Greenhouse Challenge Plus program to claim more than $3 million of fuel tax credits in a financial year. This amendment to the Fuel Tax Act will have effect from 1 July 2009.

The Greenhouse Challenge Plus program will cease after 30 June 2009. The Greenhouse Challenge Plus program provision in the Fuel Tax Act was originally included so that large fuel users would monitor and take measures to reduce their carbon emissions. This outcome will be better achieved through the government’s Carbon Pollution Reduction Scheme.

Without this amendment, businesses would be unable to claim fuel tax credits in excess of $3 million in a financial year after 30 June 2009. This would be inconsistent with the policy intent of the fuel tax credit system.

Finally, Schedule 8 provides an exemption from tax for the Clean up and Restoration Grants paid to small businesses and primary producers affected by the Victorian bushfires. This measure recognises the extraordinary hardship suffered by small businesses and primary producers in affected areas, and provides certainty for recipients in terms of tax treatment at a time when they should not need to worry about tax matters.

Full details of the measures in this bill are contained in the explanatory memorandum.


TAX LAWS AMENDMENT (2009 MEASURES NO. 3) BILL 2009

This Bill amends various taxation laws to implement a range of improvements to Australia’s tax laws.

Schedule 1 amends the Taxation Administration Act 1953 to set the GDP adjustment for the 2009-10 income year at 2 per cent for taxpayers who pay quarterly pay as you go (PAYG) instalments on the basis of the GDP-adjusted notional tax method.

Without this amendment, the GDP adjustment using the formula in the PAYG instalment provisions of the Tax Administration Act 1953 would be around 9 per cent for the 2009-10 income year. Consequently, many taxpayers may have been required to pay tax instalments that would exceed their actual tax liability, with the overpaid tax being credited to them after the end of the income year when their final tax liability is assessed.

While taxpayers can vary their PAYG instalments, they may be reluctant to do so as penalties may apply for significant under estimation.

The amendment will provide cash flow benefits to small businesses, self-funded retirees and other eligible taxpayers by ensuring that their PAYG instalment amounts more closely approximate their actual income tax liability for the 2009-10 income year.

This is an important part of the Government’s efforts to assist business through the global recession.

Schedule 2 amends the Taxation Administration Act 1953 to allow taxpayers who are voluntarily registered for goods and services tax (GST) and who choose to remit GST annually to also choose to make their PAYG instalments annually, if they satisfy the other eligibility tests for annual PAYG instalments.

The introduction of annual GST payments in 2004 without changing the annual PAYG instalment conditions at that time has created a misalignment between the PAYG and GST instalment systems. In some cases this prevents annual GST payers from making annual PAYG instalments solely because of their voluntary GST registration. This imposes unnecessary compliance costs on these taxpayers.

The amendments introduced by this Bill will reduce compliance costs for eligible taxpayers.

Schedule 3 of the Bill amends the Petroleum Resources Rent Tax Assessment Act 1987 to implement four minor measures.

The first measure involves introducing a functional currency rule into the Petroleum Resources Rent Tax (or PRRT), similar to the functional currency rule in income tax although adapted to the different features of the PRRT. This will allow PRRT taxpayers the option of electing to work out their PRRT position in a functional currency (or foreign currency) which in turn is converted to Australian dollars.

The functional currency measure is expected to reduce compliance costs for those PRRT taxpayers who keep their financial accounts is a foreign currency.

The second PRRT measure deals with exploration expenditure related to a production licence derived from an exploration permit or a retention lease. This measure ensures that all exploration expenditure in an exploration permit area, or retention lease area, is deductible for PRRT purposes against the appropriate area’s production licence.

The third PRRT measure introduces internal petroleum provisions into the PRRT to deal with the case where one participant in a petroleum project processes another participant’s petroleum prior to the PRRT taxing point. A project is currently under construction where this scenario may apply. The measure will provide consistency with the external petroleum provisions, which deal with the circumstance where a petroleum project sources petroleum for processing from outside its production area.

The fourth PRRT measure extends the offshore exploration designated frontier area incentive by one year. The incentive allows a 150 per cent uplift on PRRT deductions for exploration expenditure incurred in designated offshore frontier areas. This will enable this incentive to apply to the 2009 annual offshore acreage release. Any assistance provided beyond 2009 will be considered in light of the final report of the Australia’s Future Tax System review and the Energy White Paper, which are both scheduled to be completed by the end of 2009.

Finally, Schedule 4 amends the list of deductible gift recipients (DGRs) in the Income Tax Assessment Act 1997. Taxpayers can claim income tax deductions for certain gifts to organisations with DGR status. DGR status will assist the listed organisations to attract public support for their activities. This Schedule adds three new organisations to the Act, namely the Diplomacy Training Program Limited, the Royal Institution of Australia Incorporated and the Leeuwin Ocean Adventure Foundation Limited.

The Royal Institute based in Adelaide promotes science and scientific applications in the community and is the first international affiliate of the Royal Institute of Great Britain.

Diplomacy Training Program affiliated with UNSW provides training for representatives of non-government organisations in the Asia Pacific region focusing on human rights and good governance.

Leeuwin Ocean Adventure Foundation based in Fremantle provides educational and self development training for young people to stimulate personal development, self reliance, teamwork, confidence, responsibility and community spirit.

I wish these organisations well.

Full details of the measures in this Bill are contained in the explanatory memorandum.


THERAPEUTIC GOODS AMENDMENT (2009 MEASURES NO. 1) BILL 2009

This Bill represents the next step in the Government’s move to introduce much needed amendments to the Therapeutic Goods Act 1989.

Many of these amendments were to have been adopted as part of the legislation underpinning the proposed Australia New Zealand Therapeutic Products Authority, or ANZTPA.

The Rudd Government has now decided to proceed to implement these amendments as changes to the Australian legislation.

The first change is to introduce into the Act a power for the Secretary to suspend the registration or listing on the Australian Register of Therapeutic Goods (ARTG) of a medicine if there are concerns about its safety.

Under the Act as it currently stands, medical devices can be suspended from the ARTG for up to six months if there are concerns about the safety of the device that could be addressed by corrective action during the period of suspension.

However, such action is not possible with medicines. If serious concerns emerge about the safety of a medicine, the Secretary’s only option is to cancel the registration or listing, even if the problems are such that they could be quickly addressed by the manufacturer.

If the registration or listing is cancelled, once the problem has been addressed the sponsor of the medicine must apply to have the medicine re-registered or re-listed, and pay the relevant application fees. This is inefficient and costly.

The proposed amendments in Schedule 1 of the Bill will address this problem.

The second set of changes relate to manufacturing licences. At present a number of licences cover more than one site, and licences do not clearly indicate the steps in manufacture or the range of goods that may be produced under the licence. There is no ability for manufacturers to apply to vary their licences, and no ability to transfer licences from one manufacturer to another.

The proposed amendments in Schedule 2 of the Bill address these issues by providing that a licence may only cover one site, and must specify the manufacturing processes and the range of goods that it covers.

However, the amendments provide for guidelines to be made allowing the Secretary to consider applications covering more than one site. These will allow warehouses or mobile blood collection facilities to be added to a manufacturing licence covering another site.

Schedule 2 also provides for licensees to apply to vary their licences, and for regulations to be made setting out a process for transferring licences.

Thirdly, the Act presently contains a number of provisions empowering authorised officers to enter premises and take samples of therapeutic goods regulated under the Act.

However, these powers do not allow samples to be taken of related material, such as ingredients intended for use in therapeutic goods, even though the quality of these ingredients is directly relevant to the quality and safety of the finished product.

And these powers are limited to the therapeutic goods that are expected to be on the premises. For example, listing of goods on the ARTG is subject to the condition that the person in relation to whom the goods are listed will allow an authorised officer to enter premises where the person deals in the goods and take samples of those goods. If the officer found other, potentially unapproved, goods on the premises he or she would not be empowered to take samples of them.

The amendments in Schedule 3 of the Bill address this problem by extending the power to sample any therapeutic goods or anything related to therapeutic goods on the premises.

It also updates the kind of records authorised persons are allowed to take of premises by replacing references to photographs or sketches, with references to any still or moving image or recording.

The fourth set of amendments put in place a regulatory framework for homoeopathic and anthroposophic medicines.

Under current arrangements the regulations exempt many of these medicines from the need to be listed on the ARTG and from the manufacturing quality requirements of the Act.

The Expert Committee on Complementary Medicine in the Health System recommended, in 2003, that:

  • homoeopathic medicines and related remedies making therapeutic claims be regulated to ensure they meet appropriate standards of safety, quality and efficacy.

The Government has consulted extensively with homoeopathic and anthroposophic practitioners and suppliers on an appropriate level of regulation for these substances.

The amendments proposed in Schedule 4 of the Bill put in place a framework allowing standards for these medicines to be set by reference to various pharmacopoeias from July 2011. This delayed commencement date is intended to allow time for this industry sector to prepare to comply with the framework, and to allow time for further consultation on changes to the regulations to give effect to details of the new scheme.

Schedule 5 of the Bill relates to the ingredients that are permitted to be included in medicines, and gives a clear legislative backing for current practice.

At present the TGA’s Electronic Listing Facility has built into it a list of permitted ingredients. This list is based on schedules included in the regulations to the Act, but includes many substances that were ‘grandfathered’ into the scheme when the Act came into effect in 1991 and are not identified in the regulations. The list is published on the TGA website.

Persons wishing to add substances to the list of permitted ingredients currently apply to the TGA and, if the application is accepted, the new ingredient is notified in the Gazette.

As a result there is no single legal source for the ingredients which may be included in medicines.

The proposed amendments will address this by empowering the Minister to make a legislative instrument setting out lists of permitted ingredients and prohibited ingredients for different classes of medicines. Persons wishing to list a medicine for domestic use must certify that it contains only permitted ingredients and no prohibited ones, and the Secretary, in considering an application to list a medicine for export purposes, must have regard to whether it complies with the list.

A person may apply to include a new ingredient on the permitted ingredients list, and the Minister must consider this application.

At present there is no right of review under the Act of applications to the TGA to list new ingredients, and the Government does not propose to include one for the new provision allowing persons to apply to the Minister.

There are two reasons for this. Firstly, the making of the list is a legislative decision - the inclusion of an ingredient on the list will allow general use, rather than use only by the applicant. As a legislative decision the list will be subject to Parliamentary scrutiny. Second, the Minister, in considering the application, will have regard to expert advice from the TGA and its advisory committees.

The sixth group of amendments, made by Schedule 6 of the Bill, change various references to orders published in the Gazette, and to disallowable instruments, to references to legislative instruments, to clarify that these orders and instruments are legislative instruments and subject to the Legislative Instruments Act 2003.

Schedule 7 contains a range of miscellaneous amendments intended to improve the operation of the Act and clarify its operation. I will briefly outline the most significant of these.

Since 2003 the TGA has operated an electronic system to permit sponsors to list low-risk medicines containing pre-approved ingredients on the ARTG without prior scrutiny by the TGA. As part of the listing process sponsors must certify a range of matters relating to the safety and quality of the medicines, and are subject to prosecution under section 21A of the Act for providing incorrect certifications. A similar system has recently been introduced for including low-risk medical devices on the ARTG.

The proposed new section 7C regularises this process by providing for computer programs to make decisions that could be made by the Secretary, and allowing the Secretary to substitute her or his own decision within 60 days of the day on which the decision is made by the computer program in case an error is made.

Under section 30 of the Act, sponsors can apply to the Secretary to cancel the registration or listing of medicines. However, sometimes sponsors incorrectly apply for cancellation. The proposed new section 30A allows them to apply to the Secretary within 90 days to revoke the cancellation.

Section 28 of the Act allows the Secretary to impose conditions on the registration or listing of individual medicines on the ARTG. However, in practice, the same standard set of conditions are imposed on every product as it is listed or registered, together with a very limited number of product-specific conditions.

To improve transparency and scrutiny the Bill will amend section 28 to enable the Minister, by legislative instrument, to determine the standard conditions to apply in relation to categories of medicine.

The Secretary would retain the power to impose specific conditions on particular goods that are to be included on the ARTG.

Section 28 will also be amended to add to important conditions to apply to all registered or listed medicines:

  • that they are not to be supplied or exported after their expiry date; and
  • that they are not to be advertised for any indication other than that accepted for the listing or registration on the ARTG.

Finally, Schedule 7 includes provisions intended to strengthen scrutiny of overseas manufacturing of listed medicines.

Under current provisions, applicants seeking to list a medicine under section 26A of the Act and proposing to manufacture the medicines overseas must have obtained prior certification from the Secretary that the manufacturing and quality control procedures at the overseas manufacturer are acceptable.

However, after listing has occurred, a sponsor can move the manufacture of a medicine to an overseas manufacturer and simply notify the TGA of the change. The move can be either from a previously approved Australian or overseas manufacturer. As a matter of administrative practice the TGA then reviews the quality of the new overseas manufacturer.

The proposed amendments will underpin this process by imposing a statutory condition on listed medicines that any overseas manufacture must be subject to a certification from the Secretary that the manufacturing and quality control procedures are acceptable, and establishing a procedure for a person to apply to the Secretary for such a certification.

The Government intends to make further changes to the therapeutic goods regulatory regime later in the year.

In particular, we intend to introduce further legislation to give effect to a new framework for the regulation of human cellular and tissue-based therapies, foreshadowed as part of the ANZTPA process.

We will also be introducing legislation to give effect to the recommendations of the 2001 Galbally Report on scheduling of medicines and poisons.

The Council of Australian Governments agreed in 2008 to support reforms to the national decision-making mechanism for scheduling of medicines and poisons suggested by the Productivity Commission. I expect that the National Coordinating Committee on Therapeutic Goods, a subcommittee of the Australian Health Ministers’ Advisory Council, will soon be releasing a discussion paper on the detailed model to be adopted.

As I said when introducing the Therapeutic Goods Amendment (Medical Devices and Other Measures) Bill 2008 in the Spring sittings last year, Australia has been served well by the TGA in the past.

It is important that the regulatory regime the TGA implements is kept up to date so that the TGA and the industry it regulates can operate as efficiently as possible, and so that Australian consumers can continue to have timely access to safe and effective therapeutic goods.


CARBON POLLUTION REDUCTION SCHEME BILL 2009

The Carbon Pollution Reduction Scheme (CPRS) is one of the most significant environmental and economic reforms in the history of our nation.

The Rudd Government accepts the science on the issue of climate change - increasing concentrations of carbon pollution in our atmosphere are causing global warming.

Global action is needed to reduce carbon pollution to avoid the dangerous impacts of climate change.

Australia must play its part in this international action. Tackling the challenge of climate change is one of the Government’s highest priorities.

To achieve this the Rudd Government is committed to three pillars of action on climate change; reducing Australia’s emissions, adapting to the effects of climate change we cannot avoid, and playing a strong role in the global effort.

As part of the first pillar of action the Government is committed to achieving a targeted reduction in our emissions through the implementation of a ‘cap and trade’ emissions trading scheme.

The CPRS will reduce Australia’s emissions by placing a market price on carbon pollution, and link our efforts with those of other countries.

Through the CPRS Australia will address the need to reduce carbon pollution and the environmental impact of climate change, and at the same time support the transition in our economy to a low pollution future.

The need for action

Mainstream scientific opinion is clear. Climate change is real and there is a high probability of serious consequences if greenhouse gas emissions are not restrained.

The science tells us that unmitigated climate change is very likely to result in environmental and social disruption, including significant species extinctions around the globe, threats to food production and severe health impacts, with dramatic increases in morbidity and mortality occurring from heatwaves, floods and droughts.

Australia is highly exposed to the impacts of climate change. The effects on Australia’s environment - and economy - will be serious. The health of our population, the security of our water and energy supplies, and impacts on coastal communities and infrastructure all face unprecedented tests.

If we don’t act, average temperatures across Australia are expected to rise by just over 5°C (compared to 1990) by 2100. To put this in perspective, a 1°C rise in temperature risks a 15 per cent reduction in stream flow in the Murray-Darling Basin, Australia’s biggest river system.

The Government accepts the advice of the Garnaut Report that it is in Australia’s national interest to achieve a global agreement that will stabilise greenhouse gases in the atmosphere at a concentration of 450 parts per million carbon dioxide equivalent or lower. This is the level above which we face significant risk of dangerous climate change - that is, significant damage to our environment, our economy and our way of life.

That is why the Government has said it will commit to a national target to reduce net greenhouse emissions 25 per cent by 2020 over 2000 levels if there is an ambitious global agreement to achieve the 450 parts per million goal.

Australia can play its part in reducing greenhouse gas emissions while continuing to grow the economy.

Last year, the Treasury conducted one of the largest and most sophisticated economic modelling projects ever undertaken in Australia.

Like the Stern Report, this modelling concluded that responsible action now is less expensive than later action. The modelling found that under a variety of scenarios, significant cuts could be made to emissions at a cost to potential annual average economic growth of around one tenth of a percentage point. And this doesn’t take account of the benefits of avoided climate change - that is minimising costs such as lower agricultural productivity, damaged infrastructure, impacts on health and so on.

This modelling shows that all major employment sectors in the Australian economy continue to grow out to 2020 as we reduce our emissions through cap and trade, including the most emissions intensive trade-exposed industries.

The Government is of course very conscious of the global recession, and has been careful to ensure that the Carbon Pollution Reduction Scheme is economically responsible.

There will be a phased introduction to the Scheme. Mandatory obligations will commence one year later than originally proposed, on 1 July 2011.

A fixed price phase will apply between 1 July 2011 and 30 June 2012. During the fixed price phase, each carbon pollution permit will cost $10.

Substantial assistance will be provided to emissions-intensive trade-exposed industries - including a Global Recession Buffer of additional assistance for the first 5 years of the scheme.

In addition, eligible businesses will receive funding to undertake energy efficiency measures in 2009-10 as part of a $200 million tranche of the Climate Change Action Fund. This is part of nearly $13 billion in a range of programs to increase energy efficiency and to research, develop, commercialise and deploy low carbon transport and energy solutions, and renewable sources of energy production.

These and other features of the Scheme ensure that it will set Australia on the path to a low-carbon economy in an economically responsible way.

The Government recognises that Australians should have the opportunity to do their bit to reduce Australia’s emissions. This Bill will ensure the Government is able to take account of the individual Australians’ voluntary reductions in carbon pollution when setting Scheme caps.

It is important that the bills to enact the Scheme be passed this year - both to maximise the chances of a global deal at Copenhagen in December, and to provide business certainty.

For Copenhagen, passage of this bill would ensure that Australia has a mechanism in place to meet its international commitments. The Government could agree to a target at Copenhagen, knowing that the country has the capacity to deliver on that target in an economically responsible way.

To major developing countries, it would send the signal that Australia is serious about delivering the emissions reductions to which we have committed - and therefore encourage action from them.

For all nations, it will help build confidence that, even in one of the world’s most resource-intensive economies, we can start to reduce our emissions while continuing to grow our economy.

For the business community investment certainty is essential if we are to foster continuing investment and growth in our economy and jobs. The CPRS will provide that.

For example, our energy and resources sectors engage in investment decisions with a horizon of anywhere from 15 to 30 years - a time period in which there can be no doubt carbon pricing of some form will be introduced into the domestic and international economy.

Uncertainty about the passage of the CPRS generates uncertainty over these long term investments. Some of these investments are worth billions of dollars and will result in thousands of new jobs - provided that certainty can be delivered. The converse, as Heather Ridout of the Australian Industry Group has said, is that ‘uncertainty is death for business’.

The need for investment certainty is the reason why the Business Council of Australia, among others, has called for a bipartisan approach and the passage of these bills this year. Indeed, the CEO of the BCA, Katie Lahey, said last week:

‘To drag on the debate whilst we have got this global financial crisis is just one more complexity that business has got to factor into its planning cycle, and for some businesses it could be the straw that breaks the camel’s back.’

Objective of the CPRS

The main policy objective of the CPRS is to reduce greenhouse gas emissions, and to do so at the least cost to the Australian economy.

There is a key reason why a cap and trade scheme delivers emissions reductions at least cost, and that is the flexibility it gives to individual firms.

It is important to appreciate that a cap and trade scheme works by reducing pollution across the economy rather than dictating exactly where and when this occurs. An economy-wide emissions cap is set by regulations and an independent regulator - in this case, the Australian Climate Change Regulatory Authority - auctions or allocates emissions units up to that cap. Liable firms must obtain, and surrender to the Authority, emissions units equal to their emissions in each financial year.

This model provides flexibility and minimises costs. The government does not dictate to individual firms how emissions should be reduced, or by how much. That judgment is left to individual firms, taking into account the price of permits and their assessment of emissions reductions opportunities.

In short, this is an incentives-based model rather than one based on prescriptive directions. There is an economy-wide incentive to reduce emissions, which over time drives the uptake of low carbon technologies.  This will place the economy in a better position over the longer term and avoid the need for large and sudden adjustments in the carbon intensity of the economy.

We should not ignore the international trend towards cap and trade schemes. By introducing the Carbon Pollution Reduction Scheme, Australia will join other developed nations in the fight to reduce carbon pollution. Emissions trading is already underway in 27 European countries. New Zealand has passed legislation to introduce a cap and trade scheme. In the United States, President Obama has reinforced his election commitments to mid and long term carbon pollution reduction goals and has called on Congress to send him legislation to establish a cap and trade system, similar to that we are establishing with the CPRS.

Key features of the Bill

I would like to outline some of the main features of the bill.

Caps and gateways

As I have said, the CPRS is a ‘cap and trade’ scheme. This involves setting a greenhouse gas emissions cap for a particular year and issuing units, equal to one tonne of carbon pollution, within that cap.

Scheme caps will be lower than the emissions path required to meet the national targets because some emissions sources - emissions from agriculture and deforestation - are not covered by the Scheme, and because direct emissions from facilities are only covered if they exceed specified thresholds.

To provide certainty, the Minister will be required to take all reasonable steps to ensure that regulations to specify scheme cap numbers for 2012-13, 2013-14 and 2014-15 are made before 1 July 2010. Caps beyond this point will be set annually to provide certainty over a five-year horizon at all times.

To provide further guidance to liable entities and participants in the carbon market more generally, national scheme gateways may be prescribed for years beginning on and after 1 July 2015. A gateway is a range, comprising an upper bound and a lower bound of emissions, expressed in terms of tonnes of carbon dioxide equivalent, for a particular year. The Minister is required to take all reasonable steps to ensure that the scheme caps are within the range specified for the relevant year.

The Rudd Government has listened to Australian households who have raised concerns that their individual efforts to reduce emissions will not be adequately taken into account under the CPRS. The bill provides for the Minister to take into account voluntary action in the setting of caps and gateways. As a matter of policy, the Government is committed to taking account of uptake of GreenPower in setting caps. The Government will take additional GreenPower purchases, above 2009 levels, into account in setting future scheme caps. A range of other indicators of voluntary action may also be taken into account. The Explanatory Memorandum to this bill outlines in detail how the Government intends to implement this policy.

The Minister is required to report annually to Parliament on reasons for her recommendations in relation to caps and gateways, and as a matter of policy will set out how voluntary action has been taken into account.

Liable entities

The Scheme applies liability in two main ways.

First, liability generally arises where the greenhouse gases emitted from the operation of a facility has a carbon dioxide equivalence of 25,000 tonnes or more per year.

In relation to landfill facilities, there has been an important change from the exposure draft bill released for public comment. The Government has accepted the argument from the waste sector that ‘legacy waste’ emissions - that is, emissions from waste that was placed in landfill prior to the start of the Scheme - should not be covered by the Scheme. Also, where a landfill facility is within a prescribed distance from a landfill facility that has a carbon dioxide equivalence of 25,000 tonnes or more, and is accepting similar classifications of waste, the threshold is 10,000 tonnes carbon dioxide equivalent. This is to prevent potential avoidance of waste related liability under the Scheme. The prescribed distance will be set in regulations following consultation with industry.

Secondly, where there are large numbers of small emitters, it is more practical to cover emissions by applying liability at another point along the supply chain. For example, to avoid imposing a compliance burden on many individual suppliers or users of fossil fuels and synthetic greenhouse gases, while sending the same price signal, the Scheme applies liability at the earliest point of the fuel supply chain within Australia, for example the importer or manufacturer of the fuel or synthetic greenhouse gas.

In some situations, entities that purchase fuel from that ‘upstream’ entity will be required or allowed to quote an ‘obligation transfer number’ and to take responsibility for emissions that would result from the combustion of the purchased fuel.

Obligations of liable entities

Persons liable under the Scheme have two main obligations: to calculate their emissions for each financial year, and to transfer a corresponding number of emissions units to the Authority.

When the Scheme is in full operation, most liable persons will purchase emissions units through regular auctions conducted by the Authority, or through private transactions. However, for the first year of the Scheme, in 2011-12, permits will be available from the Authority for a fixed price of $10. This one-year fixed price phase will allow the Australian economy more time to recover from the impacts of the global recession.

The Government has been consulting with industry on whether amendments can be made to resolve some contract pass through issues using the liability transfer certificate mechanism. The Government will continue to consult industry and legal experts on this issue and may introduce amendments should there be a satisfactory policy outcome.

Transitional industry assistance

Free emissions permits will be issued to our emissions-intensive, trade-exposed industries to reduce the risk of ‘carbon leakage’. Carbon leakage occurs when industries move from Australia to elsewhere, with no benefit in terms of global emissions reductions, upon introduction of a carbon price in Australia. This risk occurs when Australia imposes a carbon price on our trade exposed industries ahead of competitor economies. Transitional industry assistance is designed to reduce this risk. Regulations will provide the detail of eligible industries and rates of assistance, but the key parameters have been elaborated in significant detail in the White Paper and the Prime Minister’s announcement of 4 May 2009.

As announced on 4 May 2009, a Global Recession Buffer will be provided for emissions-intensive trade-exposed (EITE) industries for the first five years of the Scheme, in addition to previously announced rates of assistance.

This Buffer will provide an additional 5 per cent free permits for EITE activities eligible for 90 per cent assistance, giving an effective rate of assistance of almost 95 per cent to these highly emissions-intensive trade-exposed activities in the first year of the scheme.

The Buffer will provide an additional 10 per cent free permits for EITE activities eligible for 60 per cent assistance, giving an effective rate of assistance of 66 per cent to these moderately emissions-intensive trade-exposed activities in the first year of the scheme.

Rates of assistance will decline at a rate of 1.3 per cent per year, in line with the Carbon Productivity Contribution set out in the White Paper.

Free permits will also be issued, on a once-off basis over the first 5 years of the Scheme, to investors who purchased or constructed coal-fired generation assets prior to the Commonwealth Government’s announcement of its support for an emissions trading scheme.

While such a policy change could have been foreseen prior to this announcement, the Government considers it appropriate to partially recognise significant losses of asset value experienced by investors that were committed to such investments prior to a clear announcement by the Commonwealth Government of its support for such a scheme.

International linking

The Scheme has been designed to be able to link with international carbon markets. Linking allows the import of emissions units from other schemes, which will reduce global and Australian abatement costs by ensuring that the cheapest abatement opportunities are pursued first, regardless of where they occur in the world. If emissions units are robust - and only such units will be accepted - it should not matter where abatement occurs.

This is not only a matter of minimizing costs to business. Trade in international emissions units helps developing countries move to a low emissions pathway. And the more that trade in emissions rights can lower the overall cost of abatement, the more likely it is that governments around the world will be able to commit to more stringent targets in future.

Use of permit revenue

Revenue raised by sale of emissions permits will be used to help householders adjust to a carbon price. A further bill will be introduced in the 2009 Winter sittings to deliver a household assistance package under the Carbon Pollution Reduction Scheme. This package of cash assistance, tax offsets and other measures will be provided by the Government to help low- and middle-income households in adjusting to a low pollution future.

Reforestation

To encourage reductions in carbon pollution before the scheme starts, reforestation will be eligible to voluntarily generate emission units for increases in carbon sequestration from 1 July 2010, creating economic opportunities in regional Australia. It should be noted that, in response to stakeholder feedback, the Government will be introducing amendments to the reforestation provisions in the bill.

Commencement

While mandatory obligations under the Scheme will start from 1 July 2011, a number of elements of the Scheme will be activated before that date.

Regulations, including regulations setting the rates of assistance for emissions-intensive, trade exposed industries, will be progressively made after stakeholder consultation.

The Australian Climate Change Regulatory Authority will be established from enactment. This will give time for ACCRA to develop a good working relationship with industry and ensure that the Scheme is implemented efficiently. ACCRA will undertake important preparatory work, such as testing auction systems and publishing guidelines on the practical operation of the Scheme.

As noted above, scheme caps and gateways will be set before 1 July 2010 - after the Copenhagen conference but well before the full commencement of the scheme.

From 1 July 2010, landholders will be able to earn permits from increased carbon stored in forests - ensuring that the CPRS will encourage action to reduce carbon pollution from that date.

Auctions for permits will commence in 2010-11, for emissions units that can be used to meet obligations in the 2012-13 and following financial years.

This timetable underlines the practical advantages of passage of the bill this year.

Legislative package

The Carbon Pollution Reduction Scheme Bill 2009 is part of a package of related bills, including:

  • The Australian Climate Change Regulatory Authority Bill 2009;
  • The Carbon Pollution Reduction Scheme (Charges - Customs) Bill 2009, Carbon Pollution Reduction Scheme (Charges - Excise) Bill 2009 and Carbon Pollution Reduction Scheme (Charges - General) Bill 2009;
  • Carbon Pollution Reduction Scheme (Consequential Amendments) Bill 2009;
  • Excise Tariff Amendment (Carbon Pollution Reduction Scheme) Bill 2009 and Customs Tariff Amendment (Carbon Pollution Reduction Scheme) Bill 2009; and
  • Carbon Pollution Reduction Scheme (CPRS Fuel Credits) Bill 2009 and Carbon Pollution Reduction Scheme (CPRS Fuel Credits) (Consequential Amendments) Bill 2009.

Conclusion

There has been more than ten years of discussion in Australia on the introduction of an emissions trading scheme.

In the late 1990s the Australian Greenhouse Office published a series of papers setting out how such a scheme might work and invited submissions in response.

In 2004 state and territory governments formed the National Emissions Trading Task Force, and in 2006 that task force published a discussion paper on the possible design of a national greenhouse gas emissions trading system, which was the subject of extensive public consultation.

In December 2006 the former government established its task group on emissions trading, which reported in May 2007. Again, an extensive public consultation process followed and that task group recommended that an emission trading scheme should be implemented in Australia.

From April 2007 Professor Garnaut, conducted his important review of climate change issues, which also included extensive consultation.

The Government’s Carbon Pollution Reduction Scheme Green Paper was then released for public consultation in June 2008. The Department of Climate Change undertook extensive stakeholder consultation in developing the Green Paper, including meetings with more than 260 organisations in technical workshops and bilateral meetings. To inform consultation, the department released 16 papers on different aspects of scheme design.

Final policy positions were set out in the Carbon Pollution Scheme White Paper, released in December 2008. In developing these policy positions, the Government considered 1026 submissions on the Green Paper, the final report of the Garnaut Climate Change Review, feedback from meetings, workshops and one-on-one stakeholder consultation and outcomes from a number of industry workshops.

In March 2009, the Government released for consultation draft legislation to implement the Carbon Pollution Reduction Scheme. In finalising the legislation, the Government has considered approximately 160 non-campaign submissions on the draft legislation, the outcomes of workshops with industry, technical and legal experts and review of the legislation by the Solicitor-General.

In April 2009, the Government also released the exposure draft legislation and commentary for the Carbon Pollution Reduction Scheme Fuel Tax Adjustment Arrangements. The Treasury conducted consultations with stakeholders on the draft legislation in Melbourne and Sydney.

I would also like to take the opportunity to acknowledge the huge amount of work that has gone into this legislation by the very smart and professional officials within the Department of Climate Change. They have played a key role in the design of this fundamental environmental and economic reform.

It is nearly two years since the now Leader of the Opposition, then Minister for Environment stood in this place and introduced the National Greenhouse and Energy Reporting Bill 2007. At the time he said:

‘This Bill is the first major step in the establishing the Australian emissions trading scheme.’

With this Bill, Mr Turnbull has the chance to see it through. There have been ten years of talk about establishing an emissions trading scheme. Now is the time for action.

The time has come to rise to the challenge, provide business certainty and to act on climate change.

The Government is determined to meet this challenge and protect our way of life.

The Government’s scheme will combat climate change, sustain our society and protect our economy now and into the future.

The Government is determined to have the scheme enacted and I urge all parties to support the bill.


CARBON POLLUTION REDUCTION SCHEME (CONSEQUENTIAL AMENDMENTS) BILL 2009

The Carbon Pollution Reduction Scheme (Consequential Amendments) Bill 2009 contains consequential and transitional provisions relating to the Carbon Pollution Reduction Scheme.

The Bill seeks to amend 11 Acts and one set of regulations.

National Greenhouse and Energy Reporting

The most significant amendments relate to the National Greenhouse and Energy Reporting Act 2007.

This Act provides the existing national framework for the reporting of information on greenhouse gas emissions, energy consumption and energy production. To maintain the Government’s commitment to the streamlining of reporting of greenhouse and energy data, the Act will be the starting framework for monitoring, reporting and assurance under the Carbon Pollution Reduction Scheme.

A number of changes are proposed to strengthen the Act and align it with the requirements of the Scheme, as outlined in the Government’s White Paper titled Carbon Pollution Reduction Scheme: Australia’s Low Pollution Future, which was released on 15 December 2008. Under the amendments, one report will satisfy an entity’s reporting requirements for the Scheme and current reporting requirements under the National Greenhouse and Energy Reporting Act 2007.

Coverage of synthetic greenhouse gases

The Carbon Pollution Reduction Scheme covers synthetic greenhouse gases. As some of these gases are already regulated under the Ozone Protection and Synthetic Greenhouse Gas Management Act 1989, amendments will be made to that Act to align it with the Scheme.

Establishment of the Australian Climate Change Regulatory Authority

The bill contains a number of consequential amendments relating to the establishment of the Australian Climate Change Regulatory Authority.

As well as administering the Carbon Pollution Reduction Scheme, the new Authority will take over administration of both greenhouse and energy reporting and the renewable energy target. This necessitates a number of legislative amendments to replace two existing statutory bodies - the Office of the Renewable Energy Regulator and the Greenhouse and Energy Data Officer - and transfer their functions to the Authority.

The creation of the Australian Climate Change Regulatory Authority also gives rise to a number of other consequential amendments - for example, to apply financial management and accountability requirements to the Authority.

Measures to prevent market manipulation and misconduct

Australian emissions units and eligible international emissions units are to be financial products for the purposes of the Chapter 7 of the Corporations Act 2001 and Division 2, Part 2 of the Australian Securities and Investments Commission Act 2001. The bill amends these Acts accordingly.

These amendments will provide a strong regulatory regime to reduce the risk of market manipulation and misconduct relating to emissions units. Appropriate adjustments to the regime to fit the characteristics of units and avoid unnecessary compliance costs will be made. The Government has committed to consulting further on those adjustments and recently released a discussion paper on this issue.

As required by the Corporations Agreement between the Commonwealth, States and Territories, the Ministerial Council for Corporations has been consulted about the amendments to the corporations legislation and, to the extent necessary, has approved those amendments.

Taxation treatment of emissions units

Schedule 2 of the bill amends various taxation laws to clarify the income tax and Goods and Services Tax treatment of emissions units.

The main consideration in designing the tax treatment of units is that the tax treatment should not compromise the main objectives of the Scheme. This means that tax should not influence decisions between purchasing, trading and surrendering units or alternatively reducing emissions. The preferred tax treatment will help implement the Scheme and reduce compliance and administration costs for taxpayers and the Australian Government.

For income tax, the amendments establish a rolling balance treatment of registered emissions units which is similar to that for trading stock. The result of the treatment is that the cost of a unit is deductible, with the effect of the deduction generally being deferred through the rolling balance until the sale or surrender of the unit.

The proceeds of selling a unit are assessable income with any difference in the value of units held at the beginning of an income year and at the end of that year being reflected in taxable income. Any increase in value is included in assessable income and any decrease in value allowed as a deduction.

The Bill also amends the Goods and Services Tax law. It characterises a supply of an eligible emissions unit or a Kyoto unit specifically as a supply of a personal property right and not a supply of or directly connected with real property. The amendments will promote certainty about the application of the normal GST rules to Scheme transactions.

Conclusion

The consequential amendments contained in this bill are important for the efficient and effective operation of the Carbon Pollution Reduction Scheme. The amendments seek, where possible, to streamline institutional and regulatory arrangements and minimise administrative costs with the Scheme.


AUSTRALIAN CLIMATE CHANGE REGULATORY AUTHORITY BILL 2009

This bill would establish the Australian Climate Change Regulatory Authority - a new statutory authority that would be responsible for administering the Carbon Pollution Reduction Scheme.

It is one of a package of bills to establish the Scheme.

The Authority will be responsible for auctioning and allocating emissions units, maintaining a national registry of emissions units and ensuring that firms comply with their obligations under the Scheme.

The Government’s intention is to establish an effective, efficient and independent regulator.

The Authority will be a body corporate headed by a Chair and between 2 and 4 other members. Through the Chair, it will employ Australian Public Service employees on behalf of the Commonwealth.

It will have a modern set of information-gathering, inspection and enforcement powers, conferred on it by the Carbon Pollution Reduction Scheme Bill 2009.

The Authority will be at arm’s length from Government. As with other independent regulators, the Minister will only be able to provide directions on general matters and there are limited grounds on which a member of the Authority may be removed from office.

The Authority will also be accountable. It will be required to produce 3-yearly corporate plans and annual reports, and comply with the Financial Management and Accountability Act 1997.

The Authority will take over the functions of the existing Office of the Renewable Energy Regulator and the Greenhouse and Energy Data Officer, so that a single regulatory body will have overall responsibility for administration of climate change laws. This transfer of functions is to be affected through the Carbon Pollution Reduction Scheme (Consequential Amendments) Bill 2009.

While it will have strong powers to ensure that Scheme obligations are complied with, the Authority will also have an important role in advising and assisting persons in relation to their obligations under the Scheme - something that is formally reflected in the Authority’s functions.


CARBON POLLUTION REDUCTION SCHEME (CHARGES - CUSTOMS) BILL 2009

This bill, which is part of the legislative package to establish the Carbon Pollution Reduction Scheme, is one of three technical bills which anticipate the possibility that the charge payable by a person to the Commonwealth for issue of an Australian emissions unit as the result of an auction, or for a fixed charge, is a tax within the meaning of section 55 of the Constitution.

The Commonwealth does not consider that these charges are taxes for constitutional purposes. However, the Government has taken an approach of abundant caution, with the charges bills providing safeguards in case a court reaches a different view on this question.

Section 55 of the Constitution provides:

  • Laws imposing taxation shall deal only with the imposition of taxation, and any provision therein dealing with any other matter shall be of no effect.
  • Laws imposing taxation, except laws imposing duties of customs or of excise, shall deal with one subject of taxation only; but laws imposing duties of customs shall deal with duties of customs only, and laws imposing duties of excise shall deal with duties of excise only.

This bill caters for the possibility that the charges I have mentioned are, in whole or part, both a tax and a duty of customs by providing for the imposition of such a charge under this bill.


CARBON POLLUTION REDUCTION SCHEME (CHARGES - EXCISE) BILL 2009

This bill, which is part of the legislative package to establish the Carbon Pollution Reduction Scheme, is one of three technical bills which anticipate the possibility that the charge payable by a person to the Commonwealth for issue of an Australian emissions unit as the result of an auction, or for a fixed charge, is a tax within the meaning of section 55 of the Constitution.

The Commonwealth does not consider that these charges are taxes for constitutional purposes.  However, the Government has taken an approach of abundant caution, with the charges bills providing safeguards in case a court reaches a different view on this question.

Section 55 of the Constitution provides:

Laws imposing taxation shall deal only with the imposition of taxation, and any provision therein dealing with any other matter shall be of no effect.

Laws imposing taxation, except laws imposing duties of customs or of excise, shall deal with one subject of taxation only; but laws imposing duties of customs shall deal with duties of customs only, and laws imposing duties of excise shall deal with duties of excise only.

This bill caters for the possibility that the charges I have mentioned are, in whole or part, both a tax and a duty of excise by providing for the imposition of such a charge under this bill.


CARBON POLLUTION REDUCTION SCHEME (CHARGES - GENERAL) BILL 2009

This bill, which is part of the legislative package to establish the Carbon Pollution Reduction Scheme, is one of three technical bills which anticipate the possibility that the charge payable by a person to the Commonwealth for issue of an Australian emissions unit as the result of an auction, or for a fixed charge, is a tax within the meaning of section 55 of the Constitution.

The Commonwealth does not consider that these charges are taxes for constitutional purposes. However, the Government has taken an approach of abundant caution, with the charges bills providing safeguards in case a court reaches a different view on this question.

Section 55 of the Constitution provides:

Laws imposing taxation shall deal only with the imposition of taxation, and any provision therein dealing with any other matter shall be of no effect.

Laws imposing taxation, except laws imposing duties of customs or of excise, shall deal with one subject of taxation only; but laws imposing duties of customs shall deal with duties of customs only, and laws imposing duties of excise shall deal with duties of excise only.

This bill caters for the possibility that the charges I have mentioned are, in whole or part, a tax. In those circumstances, this bill imposes the charge, but only to the extent the charge is neither a duty of customs nor a duty of excise.


CARBON POLLUTION REDUCTION SCHEME (CPRS FUEL CREDITS) BILL 2009

The Bill that I am introducing today seeks to establish in legislation the ‘CPRS fuel credit’ measure.  It will provide transitional assistance to eligible industries and fuels that will not benefit from the cent-for-cent fuel tax reduction made under the Excise Tariff Amendment (Carbon Pollution Reduction Scheme) Bill 2009.

The CPRS fuel credit will offset the increase in eligible fuel prices by an amount equal to the reduction in the fuel tax rate.  CPRS fuel credit amounts will be adjusted automatically with adjustments to the fuel tax made under the Excise Tariff Amendment (Carbon Pollution Reduction Scheme) Bill 2009. 

The CPRS fuel credit program will give transitional assistance to the agriculture (excluding forestry) and fishing industries for the period 1 July 2011 to 30 June 2014.  For the period the Government has fixed the emissions unit charge at $10 per tonne, based on current taxation arrangements, this credit will equal 2.455 cents per litre.

Activities incidental to the agriculture and fishing industries currently receive 50 per cent of the fuel tax credit under the Fuel Tax Act until 30 June 2012 after which they will be entitled to a full fuel tax credit.  As these incidental activities will therefore receive a partial benefit from the reduction in fuel tax until 30 June 2012, they will be entitled to a partial CPRS fuel credit until that date.  This CPRS fuel credit will be 50 per cent of the full CPRS fuel credit while the reduced fuel tax credit rate applies, and the full CPRS fuel credit thereafter until 30 June 2014.

CPRS fuel credits will also provide transitional assistance to heavy on-road transport users for the period 1 July 2011 to 30 June 2012.  The industry will be entitled to a CPRS fuel credit of 2.455 cents per litre based on current taxation arrangements and the introduction of a emissions unit charge fixed at $10 per tonne..

Liquid petroleum gas (LPG), liquid natural gas (Leave not granted.) and compressed natural gas (CNG) are alternative transport fuels and will face a Carbon Pollution Reduction Scheme emissions unit obligation.  However, as LPG, Leave not granted. and CNG are currently outside the fuel excise system they will not benefit from the fuel tax reductions applying to other fuels.  The CPRS fuel credit program will therefore be extended to these fuels.

To be eligible for a CPRS fuel credit for the supply of gaseous fuels, an entity must be the liable entity for that fuel under the Carbon Pollution Reduction Scheme Bill 2009. 

Suppliers will benefit from a CPRS fuel credit for differing transitional periods depending on the fuel.

The CPRS fuel credit will be provided to LPG suppliers for the period 1 July 2011 to 30 June 2014 as it is predominantly used for private motoring as an alternative to petrol. 

The CPRS fuel credit will be provided to Leave not granted. and CNG suppliers for the period 1 July 2011 to 30 June 2012.  This treatment is the same as for heavy on-road transport as Leave not granted. and CNG are predominantly used for this purpose. 

The Government will review these measures upon their conclusion. 

As the volume of emissions from these fuels is substantially lower than the volume from petrol and diesel, the Australian emissions unit auction charge impact on them will be lower.  To reflect this, these fuels will receive less than the full amount of the CPRS fuel credit. 

From 1 July 2011, based on current taxation arrangements and the introduction of the emissions unit charge fixed at $10 per tonne for one year, CNG will receive a CPRS fuel credit of 1.91 cents per litre which is 78 per cent of the full credit, Leave not granted. will receive a credit of 1.23 cents per litre which is 50 per cent of the full CPRS fuel credit.  LPG, which has the three year assistance period, will receive a credit of 1.64 cents per litre, which is 67 per cent on the full CPRS fuel credit, for the first year after which the credit will be adjusted in accordance with increases in the emissions unit charge.

The CPRS fuel credit program will be administered by the Australian Taxation Office and claims will be made in the Business Activity Statement in the same manner as fuel tax credits. 

Full details of the Carbon Pollution Reduction Scheme (CPRS Fuel Credits) Bill 2009 are contained in the Explanatory Memorandum.


CARBON POLLUTION REDUCTION SCHEME (CPRS FUEL CREDITS) (CONSEQUENTIAL AMENDMENTS) BILL 2009

The Carbon Pollution Reduction Scheme (CPRS Fuel Credits) (Consequential Amendments) Bill 2009 will legislate amendments to the Fuel Tax Act 2006 (‘the Fuel Tax Act’), the Income Tax Assessment Act 1997 and the Taxation Administration Act 1953 necessitated by the introduction of the CPRS Fuel Credits Bill and the administrative arrangements announced by the Government.

The measures in the CPRS Fuel Credits (Consequential Amendments) Bill are mechanical in nature.  For example the existing formula in the Fuel Tax Act for determining the net fuel amount, which is the amount either owed to the Commissioner of the Commissioner owes, is being replaced.  The new formula includes the CPRS fuel credit and increasing or decreasing adjustments for CPRS fuel credits.

Full details of the Carbon Pollution Reduction Scheme (CPRS Fuel Credits) (Consequential Amendments) Bill 2009 are contained in the Explanatory Memorandum.


EXCISE TARIFF AMENDMENT (CARBON POLLUTION REDUCTION SCHEME) BILL 2009

I am introducing today a Bill to amend the Excise Tariff Act 1921 to confirm in legislation the Government’s commitment in the Carbon Pollution Reduction Scheme: Australia’s Low Pollution Future White Paper. The Government will cut fuel taxes on a ‘cent for cent’ basis to offset the initial price impact on fuel of introducing the Carbon Pollution Reduction Scheme.

The Government recognises that people have limited flexibility to respond quickly to changes in fuel prices but that, over time, transport choices can respond to price changes.

To give households and businesses time to adjust to the Scheme, this    legislation introduces a mechanism to automatically adjust the rate of fuel tax on all fuels that are currently subject to the 38.143 cents per litre rate of excise.

Fuel tax consists of excise duty on domestically manufactured fuels and excise-equivalent customs duty on imported fuels. Fuel tax is predominantly applied at a rate of 38.143 cents per litre across the range of fuels including petrol, diesel, kerosene, fuel oil, heating oil, biodiesel and fuel ethanol.

Different fuels emit different amounts of carbon when they burn and their prices will increase according to the volume of their emissions. To minimise compliance costs, the fuel tax cut will be made ‘across the board’ to currently taxed fuels. The fuel excise adjustment will be based on the expected rise in the price of diesel resulting from the introduction of the Scheme. This will ensure there is ‘cent for cent’ assistance for diesel users.

Diesel emits more carbon than petrol on a per litre basis so the fuel tax cut will provide more than ‘cent for cent’ assistance for petrol users, which make up the majority of motorists. However, diesel use is becoming more common as fuel and vehicle standards improve. Basing the fuel tax cut on diesel will therefore ensure that the Government’s ‘cent for cent’ commitment is delivered for the most common fuels used by households.

Any reductions will take place on 1 January and 1 July of each year, to harmonise with the Business Activity Statement reporting period.

The first fuel tax reduction will occur on 1 July 2011 with the commencement of the Carbon Pollution Reduction Scheme. On 1 July 2011, based on current taxation arrangements and that the emissions unit charge will be fixed at $10 per tonne, the fuel tax will be reduced by 2.455 cents per litre to 35.688 cents per litre.

After the fixed emission unit price of $10 per tonne lapses on 30 June 2012, the need for further reductions, and the amount, will be assessed based on the average Australian emissions unit auction charge over the preceding six month period. If the average unit charge at the time of the assessment is greater than the average unit charge that formed the basis of the previous reduction, then the fuel tax rate will be further reduced. This approach will apply to adjustments that occur from 1 July 2012.

If the current average unit charge amount is less than the previous average unit charge amount then the rate of fuel tax will remain the same—the fuel tax rate will not be increased if the emissions charge has fallen.

Information on the six-month average Australian emissions unit auction charge will be published by the Australian Climate Change Regulatory Authority in accordance with section 271 of the CPRS Bill.

The final reduction will be made, if necessary, on 1 July 2014. The fuel tax rate at that date will be the ongoing rate, that is, the fuel tax rate will not revert to the 38.143 cents per litre rate. At this time the Government will review the mechanism introduced by these amendments.

The amendments to the Excise Tariff Act will commence on 1 July 2011 assuming that the Carbon Pollution Reduction Scheme commences on that date.

Full details of the Excise Tariff Amendment (Carbon Pollution Reduction Scheme) Bill 2009 are contained in the Explanatory Memorandum.


CUSTOMS TARIFF AMENDMENT (CARBON POLLUTION REDUCTION SCHEME) BILL 2009

I am introducing today a Bill to amend the Customs Tariff Act 1995 to confirm in legislation the Government’s commitment in the Carbon Pollution Reduction Scheme: Australia’s Low Pollution Future White Paper. The commitment is to cut fuel taxes on a ‘cent for cent’ basis to offset the initial price impact on fuel of introducing the Carbon Pollution Reduction Scheme.

This amendment will introduce a new section into the Customs Tariff Act to ensure that the reductions made to the excise rates on fuels due to the introduction of the Scheme also apply to the relevant imported products.

Where a relevant excise rate, as defined in the Excise Tariff Amendment (Carbon Pollution Reduction Scheme) Bill 2009, is reduced, this amendment will substitute the same rate to the excise-equivalent customs duty rates. The substitution will apply to the subheadings in Schedules 3, 5, 6, 7 and item 50(1A) in Schedule 4 to the Customs Tariff Act.

Only the rate of excise-equivalent duty - that is, the non-ad valorem - component of the duty will be substituted.

The amendments to the Customs Tariff Act will commence on 1 July 2011 assuming the Carbon Pollution Reduction Scheme Bill 2009 commences on that date.

Full details of the Customs Tariff Amendment (Carbon Pollution Reduction Scheme) Bill 2009 are contained in the Explanatory Memorandum.


CARBON POLLUTION REDUCTION SCHEME (HOUSEHOLD ASSISTANCE) BILL 2009

This bill delivers on the Government’s commitment to assist low and middle-income households with the expected increases in the cost of living arising from the introduction of the Carbon Pollution Reduction Scheme.

Climate change threatens Australia’s way of life and our future prosperity.

Australians want action on climate change.

That’s why the Government has moved to introduce the Carbon Pollution Reduction Scheme.

It will allow economic growth without growth in emissions.

However, the introduction of the Scheme will have a modest impact on the cost of living for households.

That is why the Government is providing low and middle-income households with upfront assistance to adjust to the impacts of the scheme.

Through a package of cash assistance, tax offsets and other measures, the Government will help these households maintain their standard of living while moving to a low pollution future.

This bill delivers on the Government’s commitments given in the Carbon Pollution Reduction Scheme White Paper that:

  • pensioners, seniors, carers, veterans, people with disability, the unemployed, students and other allowees will receive additional support, above indexation, to fully meet the expected overall increase in the cost of living flowing from the scheme;
  • low-income households will receive additional support, above indexation, to fully meet the expected overall increase in the cost of living flowing from the scheme; and
  • middle-income households will receive additional support, above indexation, to help meet the expected overall increase in the cost of living flowing from the scheme.

The assistance in this bill delivers on these commitments.

This bill takes account of changes to the Carbon Pollution Reduction Scheme announced on 4 May 2009 that introduces an initial $10 per tonne fixed carbon price in 2011-12 and a flexible carbon price in 2012-13. The composition of the Household Assistance package reflects this staged approach.

The Bill also takes account of other policy changes in the Budget, principally the Government’s Secure and Sustainable Pension Reform, which will affect how assistance is paid.

The Carbon Pollution Reduction Scheme will see a modest increase in the overall cost of living as we start to recognise the costs of carbon pollution in our everyday lives.

It is anticipated that the Carbon Pollution Reduction Scheme will result in increases in the cost of living of 0.4 per cent in 2011-12 and 0.8 per cent in 2012-13, resulting from an initial $10 per tonne fixed carbon price in 2011-12 and a flexible carbon price in 2012-13.

For many households government payments only represent a share of their income. Therefore increasing payments in line with headline Consumer Price Index impacts alone will not fully restore their standard of living following the introduction of the Carbon Pollution Reduction Scheme.

To adequately compensate these households, compensation needs to go beyond the average household Consumer Price Index impact.

To ensure fairness, household composition has also been taken into account in designing the assistance.

This household assistance will be funded from the sale of carbon pollution permits. The Government has committed to use every cent raised from the introduction of the scheme and the sale of carbon pollution permits to help households and businesses adjust and move Australia to the low pollution economy of the future.

Increases to pension, benefit and allowance payments

The measures contained in this bill will increase the amount of certain social security and Veterans’ Affairs pension and allowance payments by 2.8 per cent over two years. This includes a 1 per cent increase from 1 July 2011 and a further 1.8 per cent increase on 1 July 2012, including upfront indexation.

These payment increases include the bring forward of the expected Consumer Price Index related indexation increases that will automatically flow from the Scheme’s introduction. These indexation increases are expected to be 0.4 per cent in 2011-12 and 0.8 per cent in 2012-13. The 0.4 per cent expected indexation increase for 2011-12 will be brought forward and paid from 1 July 2011. The 0.8 per cent increase in the expected indexation increase will be brought forward and paid from 1 July 2012.

Because assistance for the cost of living increase provided through certain payments will be brought forward, subsequent indexation arrangements will be adjusted to avoid duplicate assistance.

These increases will apply to a range of income support payments including the age pension, carer payment, veteran service pensions, disability support pension, Newstart allowance, Youth Allowance, parenting payments and the special benefit. A list of affected payments is included in the bill.

Increases to family tax benefit

Similar to pension and allowance increases, family tax benefit will be increased to help low and middle-income families meet the expected overall increase in the cost of living flowing from the Carbon Pollution Reduction Scheme. The increases to family tax benefit will include the upfront payment of the expected automatic indexation increases that will flow from the scheme’s introduction. These automatic increases are expected to be 0.4 per cent in 2011-12 and 0.8 per cent in 2012-13. Subsequent indexation points for family tax benefit payments will be adjusted to avoid the duplication of assistance.

The per-child maximum standard rates of family tax benefit Part A for under 16 year olds and the family tax benefit Part A supplement will be increased by 2.8 per cent over two years, in line with changes to pensions and allowances.

Per-family standard rates of family tax benefit Part B and the Part B supplement will also be increased by 2.8 per cent over two years.

Additional increases are also being made to the base rate of family tax benefit Part A to assist recipients of these payments.

Adjustments will be made to indexation of family tax benefit Part A and Part B rates on 1 July 2012 and 1 July 2013 (and over further indexation points if necessary) to prevent duplication of the amounts brought forward on 1 July 2011 and 1 July 2012.

A new family tax benefit combined end-of-financial-year supplement will be created for families eligible for both family tax benefit Part A and Part B, where the main income earner has income above $60,000 per year. The value of the supplement will be up to $240 per family in 2011-12 and up to $680 per family in 2012-13 and later years. The supplement will phase in at four cents in the dollar when the primary earner’s income reaches $60,000 until the supplement reaches the maximum amount. The entitlement to this supplement will cease when a family’s entitlement to family tax benefit Part A or Part B ceases.

Measures delivered through the tax system

Assistance is also being provided through the tax system. These measures provide additional assistance to eligible low and middle-income households through increases to the low income tax offset and various tax offsets for taxpayers who maintain a dependant.

Low income tax offset

From 1 July 2011, the low income tax offset will increase by $150 from $1,500 to $1,650. From 1 July 2012, it will increase a further $280 to $1,930. This will increase the taxable income up to which a taxpayer is entitled to an amount of low income tax offset to $71,250 for the 2011-12 income year and to $78,250 for the 2012-13 income year and later income years.

Senior Australians tax offset

These increases in the low income tax offset will increase the income level above which senior Australians eligible for the senior Australians tax offset begin to pay tax. From 1 July 2011, eligible senior Australians will have no tax liability until their income reaches $31,474 for singles and $27,680 for each member of a couple. From 1 July 2012, eligible senior Australians will have no tax liability until their income reaches $32,948 for singles and $29,547 for each member of a couple. Adjustments will also be made to the Medicare levy thresholds for senior Australians.

Dependency tax offsets

Measures for households include assistance to eligible adults who maintain a dependant. These increases will apply to the dependent spouse offset, the child-housekeeper offset, the invalid-relative offset, the parent/parent-in-law offset and the housekeeper offset.

From 1 July 2011, these dependency offsets will increase by $60 while, from 1 July 2012, they will increase by $105. These increases will be in addition to the annual increases in these offsets that occur due to automatic indexation.

Transitional payments

A carbon pollution reduction transitional payment will be payable for each of the 2011-12 and 2012-13 income years to independent adults in low-income households who can show they have not been assisted in line with the Government’s commitments.

The amount of the carbon pollution reduction transitional payment for the 2011-12 income year will be $200 per claimant and $550 per claimant in 2013.

The carbon pollution reduction transitional payment will become payable to qualifying individuals for the first year from 1 July 2012 and will be assessed with reference to the individual’s income in the 2011-12 financial year. The person will have until 30 June 2014 to lodge a claim for the 2012 carbon pollution reduction transitional payment.

The second year of carbon pollution reduction transitional payment will be assessed with reference to the individual’s income in the 2012-13 financial year and will become payable from 1 July 2013. A person will have until 30 June 2015 to lodge a claim to receive the 2013 carbon pollution reduction transitional payment.

Interaction with pension reform legislation

The bill includes several provisions that enable legislative instruments to be made, providing for increases of payment rates and adjustments of subsequent indexation factors beyond those explicitly included in the bill.

These provisions have been included because of the interaction between this bill and forthcoming amendments to the social security and Repatriation systems flowing from the Government’s Secure and Sustainable Pension Reform.

The Government proposes to pay Carbon Pollution Reduction Scheme household assistance to pensioners through the new Pension Supplement, announced in the Budget as part of the pension reform package. As this supplement does not yet exist in law, this bill cannot pre-empt its existence. The legislative instrument provisions allow this timing discrepancy to be addressed.

In practice, the Government intends that the legislative instruments are only a transition measure. It is proposed instead that a bill implementing the pension reforms will make substantive amendments to this current bill (when enacted) to reflect the structure of the new pension system following the Government’s pension reforms and pay the household assistance to pensioners via the new Pension Supplement.

In the meantime, the legislative instrument provisions included in this bill will ensure that the Government’s commitments as set out in the White Paper for the Carbon Pollution Reduction Scheme can be implemented regardless of Parliament’s consideration of the pension reform legislation, when that is introduced. The Government intends the pension reform legislation to remove the relevant powers to create legislative instruments regarding payment amounts and mechanisms for pensioners, and these details are to be included in the primary legislation.

Any legislative instrument that may possibly be made under these provisions will be subject to full Parliamentary scrutiny in accordance with normal arrangements.

Conclusion

Through the measures introduced by this bill, the Government will provide upfront support to low and middle-income households to help in adjusting to a low pollution future.

The Government will update the household assistance package on the basis of any new information on the estimated carbon price before the scheme starts. Each year, the adequacy of this assistance will be reviewed in the context of the Budget.


FAIRER PRIVATE HEALTH INSURANCE INCENTIVES BILL 2009

The Fairer Private Health Insurance Incentives Bill 2009 will amend various Acts to give effect to the recent Budget measure to introduce three new ‘Private Health Insurance Incentives Tiers’.

The new arrangements will commence on the later of 1 July 2010; or the day on which the Fairer Private Health Insurance Incentives (Medicare Levy Surcharge) Act 2009 receives the Royal Assent; or the day on which the Fairer Private Health Insurance Incentives (Medicare Levy Surcharge—Fringe Benefits) Act 2009 receives the Royal Assent. However, they will not commence at all unless both the Fairer Private Health Insurance Incentives (Medicare Levy Surcharge) Act 2009 and the Fairer Private Health Insurance Incentives (Medicare Levy Surcharge—Fringe Benefits) Act 2009 also receive Royal Assent.

The Government supports a mixed model of balanced private and public health services.

The Government is also committed to a sustainable private health system, and to ensure it remains sustainable, the Government will rebalance support for private health insurance to provide a fairer distribution of benefits.

The new arrangements will make the private health rebate fairer. Firstly, singles earning $75,000 or less and couples and families earning $150,000 or less will received the same rebate as they currently enjoy and will not be adversely affected.

Currently, approximately 14 per cent of single taxpayers who have incomes above $75,000 receive about 28 per cent of the total PHI rebate paid to singles - or twice their population share. Under the Government’s reforms, these singles will receive about 12 per cent of the total PHI rebate paid to singles.

Similarly, approximately 12 per cent of couple taxpayers who have incomes above $150,000 receive about 21 per cent of the total PHI rebate paid to couples - almost twice their population share. Under the Government’s reforms, these couple taxpayers will receive about 9 per cent of total PHI rebate paid to couples.

These reforms will bring Government support for private health insurance in line with the principle underpinning the Australian tax-transfer system - that the largest benefits are provided to those on lower incomes.

Spending on the current private health insurance rebate is growing rapidly and is expected to double as a proportion of health expenditure within the next 40 years.

Clearly this presents challenges in this fiscal environment. These reforms will result in a saving to Government expenditure of $1.9 billion over four years which will help ensure that Government support for private health insurance remains fair and sustainable.

From 1 July 2010 the Government proposes to introduce three new ‘Private Health Insurance Incentive Tiers’. The tiers will mean high income earners receive less Government payments for private health insurance but will face an increase in costs if they opt out of private health cover.

The Government’s commitment to retaining the private health insurance rebate remains. Rebates for eight million low and middle income earners will be unchanged with the Government continuing to pay 30 per cent of the premium cost for a person earning $75,000 or less and couples and families earning $150,000 or less. The existing higher rebates for older Australians will remain in place for people earning below these thresholds: 35 per cent for people aged 65 to 69 years and 40 percent for people aged 70 years and over.

These people will continue to have no surcharge liability if they decide not to take out appropriate private health insurance.

The new tiered system will be introduced for higher income earners and will set three different rebate levels and surcharge levels based on income and age. The purpose of this is to reduce the carrot but increase the stick and ensure those who can afford to contribute more for their health insurance do so. The Government doesn’t believe it is appropriate for low income earners to subsidise the private health insurance of high income earners.

The first incentive tier will apply to singles with an income of more than $75,000 and couples and families with an income of more than $150,000. For these people the Private Health Insurance Rebate will be 20 per cent for those up to 65 years, 25 per cent for those aged 65 - 69, and 30 per cent for those aged 70 and over. The Medicare Levy Surcharge for people in this tier who do not hold appropriate private health insurance will remain at one per cent.

Tier 2 applies to singles earning more than $90,000 and couples and families earning more than $180,000. The rebate will be 10 per cent for those up to 65 years, 15 per cent for those aged 65 - 69, and 20 per cent for those aged 70 and over. The surcharge for people in this tier who do not have appropriate private health insurance will be increased to 1.25 per cent of income.

Tier 3 affects singles earning more than $120,000 and couples and families earning more than $240,000. No private health insurance rebate will be provided for people who fall within the third tier and the surcharge for avoiding private health insurance will be increased to 1.5 per cent of income for these people.

Annual indexation to average weekly earnings of the tiers will ensure that these changes remain equitable and can be maintained into the future.

The increased surcharge for people on higher incomes will help ensure that about 99.7 per cent of insured people remain in private health insurance. This is because those high income earners who receive a lower rebate will face a higher tax penalty for avoiding private health insurance.

By retaining this system of carrots and sticks the reforms are unlikely to affect private health insurance premiums.

It is estimated that approximately 25,000 people may no longer be covered by private health insurance hospital cover, and that it might therefore result in 8,000 additional public hospital admissions over two years. When considered against the fact that public hospitals have around 4.7 million admissions per year, the impact of the measure will be insignificant.

And the measure will be particularly insignificant for public hospitals given the Government’s investment under the new $64 billion COAG agreement, where hospitals receive 50 per cent over and above the old Australian Health Care Agreements.

Further, the historic $872 million investment in preventative health will assist in keeping people out of hospitals in the first place.

In summary, this measure will make private health fairer and more balanced, more sustainable into the long term, and by maintaining a carefully designed system of carrots and sticks, have a negligible effect on both premiums and the public hospital system.

At the same time, 8 million low and middle income earners who chose to have private health insurance will continue to enjoy the benefit of a significant government rebate.


FAIRER PRIVATE HEALTH INSURANCE INCENTIVES (MEDICARE LEVY SURCHARGE) BILL 2009

The Fairer Private Health Insurance Incentives (Medicare Levy Surcharge) Bill 2009 will amend the Medicare Levy Act 1986 to give effect to the Budget measure to introduce three new ‘Private Health Insurance Incentives Tiers’.

The Bill will commence immediately after the commencement of the Fairer Private Health Insurance Incentives Act 2009.

The Medicare Levy Act 1986 determines whether an individual is liable to pay the Medicare levy surcharge in respect of their taxable income or that of their spouse. The individual’s income for surcharge purposes determines whether a person must pay the surcharge. If the individual’s income exceeds prescribed income thresholds they will need to pay the appropriate level of surcharge.

This Bill inserts the new tier system in order to determine which level of surcharge a person must pay where they do not hold appropriate private health insurance.


FAIRER PRIVATE HEALTH INSURANCE INCENTIVES (MEDICARE LEVY SURCHARGE - FRINGE BENEFITS) BILL 2009

The Fairer Private Health Insurance Incentives (Medicare Levy Surcharge—Fringe Benefits) Bill 2009 will amend the A New Tax System (Medicare Levy Surcharge - Fringe Benefits) Act 1999 to give effect to the recent Budget measure to introduce three new ‘Private Health Insurance Incentives Tiers’.

The Bill will commence immediately after the commencement of the Fairer Private Health Insurance Incentives Act 2009.

The A New Tax System (Medicare Levy Surcharge - Fringe Benefits) Act 1999 determines whether an individual is liable to pay the Medicare levy surcharge in respect of a reportable fringe benefits total they or their spouse may have. The individual’s income for surcharge purposes determines whether a person must pay the surcharge. If the individual’s income exceeds prescribed income thresholds they will need to pay the appropriate level of surcharge.

This Bill inserts the new tier system in order to determine which level of surcharge a person must pay where they do not hold appropriate private health insurance.

Debate (on motion by Senator Faulkner) adjourned.

Ordered that:

(a) the Carbon Pollution Reduction Scheme Bill 2009, the Carbon Pollution Reduction Scheme (Consequential Amendments) Bill 2009, the Australian Climate Change Regulatory Authority Bill 2009, the Carbon Pollution Reduction Scheme (Charges—Customs) Bill 2009, the Carbon Pollution Reduction Scheme (Charges—Excise) Bill 2009, the Carbon Pollution Reduction Scheme (Charges—General) Bill 2009, the Carbon Pollution Reduction Scheme (CPRS Fuel Credits) Bill 2009, the Carbon Pollution Reduction Scheme (CPRS Fuel Credits) (Consequential Amendments) Bill 2009, the Excise Tariff Amendment (Carbon Pollution Reduction Scheme) Bill 2009, the Customs Tariff Amendment (Carbon Pollution Reduction Scheme) Bill 2009 and the Carbon Pollution Reduction Scheme Amendment (Household Assistance) Bill 2009; and

(b) the Fairer Private Health Insurance Incentives Bill 2009, the Fairer Private Health Insurance Incentives (Medicare Levy Surcharge) Bill 2009 and the Fairer Private Health Insurance Incentives (Medicare Levy Surcharge—Fringe Benefits) Bill 2009,

be listed on the Notice Paper as two orders of the day and the remaining bills be listed as separate orders of the day.