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Wednesday, 22 June 2011
Page: 3575


Senator LUDWIG (QueenslandMinister for Agriculture, Fisheries and Forestry, Manager of Government Business in the Senate and Minister Assisting the Attorney-General on Queensland Floods Recovery) (15:50): 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—

APPROPRIATION (PARLIAMENTARY DEPARTMENTS) BILL (No. 1) 2011-2012

The total appropriation sought through Appropriation (Parliamentary Departments) Bill (No. 1) 2011-2012 is $180.1 million.

Details of the proposed appropriations are set out in the Schedule to the Bill.

 

APPROPRIATION BILL (NO. 1) 2011-2012

Appropriation Bill (No. 1) 2011-2012, together with Appropriation Bill (No. 2) 2011-2012 and Appropriation (Parliamentary Departments) Bill (No. 1) 2011-2012, is one of the principal pieces of legislation underpinning the Government’s Budget.

Appropriation Bill (No. 1) 2011-2012 seeks authority for meeting the expenses of the ordinary annual services of Government.

Bill 1 includes a one-off contingency clause for the Department of Human Services. This clause is outlined in the Introduction to Budget Paper No. 4 and the Explanatory Memoranda.

This Bill seeks approval for appropriations from the Consolidated Revenue Fund totalling $72.8 billion.

Details of the proposed appropriations are set out in Schedule 1 to the Bill.

 

APPROPRIATION BILL (No. 2) 2011-2012

Appropriation Bill (No. 2) 2011-2012 seeks approval for appropriations from the Consolidated Revenue Fund totalling $7.39 billion.

Bill 2 includes a one-off contingency clause for the Department of Human Services. This clause is outlined in the Introduction to Budget Paper No. 4 and the Explanatory Memoranda.

Bill 2 also provides for amendments to the Commonwealth Inscribed Stock Act 1911. These amendments are outlined in the Introduction to Budget Paper No. 4 and the Explanatory Memoranda.

Details of the proposed appropriations are set out in Schedule 2 to the Bill.

 

FAMILY ASSISTANCE AND OTHER LEGISLATION AMENDMENT BILL 2011

This Bill delivers on five measures from the recently announced 2011-2012 Budget, and a minor non-Budget measure.

Reform of family payments

The Bill introduces three measures that make important changes to the family payments system to make it fairer and simpler, and ensure its long-term sustainability.

The first measure lowers the maximum child age of eligibility for Family Tax Benefit Part A from 24 to 21, from 1 January 2012.

Family payments are designed to support families with the costs of raising children while they are dependent. This change recognises that young people aged 22 and over are considered independent, and will bring Family Tax Benefit Part A in to line with the reduction in the Youth Allowance age of independence from 1 January 2012.

Young people aged 22 and over in full-time study may be able to access Youth Allowance independent of their parents' income, subject to means testing and academic progress rules.

Transitional arrangements will mean that families with a young person who is already enrolled in a course which started before 1 January 2012 will continue to receive Family Tax Benefit Part A until that course finishes.

The second measure builds on reforms introduced in the 2009-10 Budget that better targeted the family payments system to focus on low and middle income families.

The Government is a strong supporter of the family payments system. Family payments are a fundamental part of the Australian social fabric.

Next year, we will spend around $30 billion combined on Family Tax Benefit, the Baby Bonus, Paid Parental Leave and child care assistance.

We have added to the system since coming to government by increasing the child care rebate to 50 per cent, introducing Australia's first national Paid Parental Leave scheme and the Education Tax Refund, and also, in the recent Budget, increasing family payments for older teenagers by up to $4200 a year.

But we also believe in a targeted system that is sustainable for the long term.

That's why the Government is extending indexation pauses on higher income limits for a further two years, until 30 June 2014, for Family Tax Benefit Part A and B, the Baby Bonus and Paid Parental Leave.

This Bill will extend indexation pauses on higher income limits for a further two years, until 30 June 2014, in the following areas:

the Family Tax Benefit Part B primary earner income limit will remain at $150,000;

the Baby Bonus eligibility limit will remain at $75,000 family income in the six months following the birth or adoption of a child (equivalent to $150,000 a year);

the Paid Parental Leave income limit will stay at $150,000 for the primary carer in the previous financial year before the birth or adoption of a child; and

the higher income free area, and the per child add on, of Family Tax Benefit Part A will remain constant. This threshold is the income level at which the base rate of Family Tax Benefit Part A begins to reduce, until the benefit ends completely. The income level at which a family's benefit is completely withdrawn varies by family circumstance, depending on the number and age of the children.

The Family Tax Benefit Part A lower income free threshold and the Family Tax Benefit Part B secondary earner income threshold will continue to be indexed, providing support to low and middle income households.

Fortnightly payment rates for Family Tax Benefit and the Baby Bonus will also continue to be indexed every year to meet increases in the cost of living. The rate of Parental Leave Pay is linked to the National Minimum Wage and is also not affected by this change.

Pauses to the upper income limits mean that some families will no longer be eligible for payments, and some families will get less family payments - but only if their income rises.

No family will lose any family payments unless their income rises.

Families whose income does not increase will also have more money in their pockets as the fortnightly rates of Family Tax Benefit continue to rise, due to normal indexation.

In the first year, fewer than two per cent of families will no longer be eligible for family payments as the result of these changes.

Indexation on the upper income limits for Family Tax Benefit Part A and B, and the Baby Bonus, was paused in the 2009-2010 Budget.

The Opposition supported this very same measure in 2009. In the Parliament two years ago, on 13 May 2009, the Leader of the Opposition, the relevant Shadow Minister at the time, said these changes were too "soft".

The extension of these pauses will save $1.2 billion over the forward estimates. These are the decisions an economically-responsible Government must make - to bring the Budget back to surplus, and make sure our family payments system is sustainable now and into the future.

Under the third measure, indexation of Family Tax Benefit end of year supplements will also be paused for three years. End of year supplements were first introduced to address overpayments of family payments because of underestimation of income.

The number of families with overpayments has decreased since supplements were first intro­duced, and pausing indexation of these supple­ments will help make family payments more sustainable.

The end of year supplements are generally paid as a lump sum after the end of an entitlement year, when a family has completed their tax return and reconciled their actual Family Tax Benefit entitlement.

This amendment will keep the end of year supplements at their current level of $726.35 per child for Family Tax Benefit Part A, and $354.05 per family for Family Tax Benefit Part B, for the next three entitlement years.

Building Australia ' s Future Workforce implementing more efficient and accurate assessments for disability support pension

This Bill also introduces changes to the assessment arrangements for Disability Support Pension to help Australians with a disability into work wherever possible, while continuing to provide an essential safety net for Australians unable to work.

To qualify for Disability Support Pension, a person must have a physical, intellectual or psych­iatric impairment of 20 points or more under the Impairment Tables, and have a continuing inability to work for at least 15 hours per week.

Currently a person's inability to work can be assessed before the person has investigated alternative employment options or assistance from employment services, or had any retraining or rehabilitation.

This means that assessments of a person's inability to work, for the purposes of Disability Support Pension, can occur without the person having tested whether the help available could find them suitable work.

This Bill refines the test for determining whether a person has a continuing inability to work.

Under the new rules, most people applying for Disability Support Pension will be required to have actively participated in a program of support to find employment through an open employment service or vocational rehabilitation.

People with a severe impairment, such as those who are clearly unable to work and are fast-tracked to ensure they receive financial support more quickly, will not need to have actively participated in a program of support.

These changes were first announced in the 2010-2011 Budget and, in the most recent Budget, were fast-tracked so that they will now apply from 3 September 2011, rather than from 1 January 2012.

These reforms will provide faster, more sustainable support for people with severe disabilities, while referring others with the potential to work to employment services including Job Services Australia and Disability Employment Services.

The new assessment procedure for Disability Support Pension will help people with disabilities return to the workforce wherever possible by focusing on their ability, rather than their disability.

Enabling the extension of the Cape York Welfare Reform Trial

In the 2011-2012 Budget, the Government provided $16.1 million for a proposed extension of the Cape York Welfare Reform Trial for an additional year.

The Trial is a partnership between the communities of Aurukun, Coen, Hope Vale and Mossman Gorge, the Australian Government, the Queensland Government and the Cape York Institute for Policy and Leadership. It aims to restore positive social norms, re-establish local Indigenous authority and support community and individual engagement in the real economy.

To date, the Trial has made a real and lasting difference in the lives of Indigenous people in the Cape. Since it began in July 2008, the Cape York Welfare Reform communities have seen improved school attendance, care and protection of children and community safety.

The Queensland Government is currently leading a process of consultation with Cape York communities about extension of the Trial. Queensland Government legislation would also need to be changed in order for the Trial to be extended.

While these discussions occur, the Government is seeking to put in place the amendments required to enable the extension of the income management element of the Trial.

It is important these enabling legislative changes are put in place to ensure they do not delay any extension of the Trial and to ensure the four communities are not adversely affected.

The extension of the Trial will not go ahead until the communities of Aurukun, Coen, Hope Vale and Mossman Gorge have been consulted and the Queensland Government legislates to extend the operation of the Family Respon­sibilities Commission.

The Family Responsibilities Commission, which is established under Queensland Government legislation, is a key plank of Cape York Welfare Reform. Local Family Respon­sibility Commissioners hold conferences with community members, refer people to support services and, when necessary, arrange income management.

Currently, a person can only be subject to income management under the Trial after a decision by the Family Responsibilities Com­mission, made before 1 January 2012.

The Bill before the Parliament extends this date to 1 January 2013, to enable income management to continue in Cape York for a further 12 months.

Minor measure

The Bill also includes a minor non-Budget measure, which clarifies that the Public Works Committee Act 1969 does not apply to Aboriginal Land Trusts established in the Northern Territory under the Aboriginal Land Rights (Northern Territory) Act 1976.

The concept of an authority of the Commonwealth was first introduced into the Public Works Committee Act by way of amendment in 1981. Aboriginal Land Trusts are a mechanism to give effect to what is private ownership of land for the benefit of Aboriginal traditional owners. Land Trusts were never intended to be Commonwealth authorities to which that Act applies. This amendment puts that position beyond doubt.

This amendment will not affect the application of the Public Works Committee Act to any proposed arrangement that involves the carrying out of a work by or for the Commonwealth, or by or for an authority of the Commonwealth to which the Public Works Committee Act applies.

Where the Parliamentary appropriation requirements of section 5AA of the Public Works Committee Act are otherwise satisfied, the work will be a 'public work' for the purposes of that Act, even if the work is proposed to be carried out on land owned by a Land Rights Act Aboriginal Land Trust.

 

TAX LAWS AMENDMENT (2011 MEASURES NO. 5) BILL 2011

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

Schedule 1 amends the income tax law to allow trust beneficiaries to continue to use the primary production averaging and farm management deposits provisions in a year where the trust has a loss for trust law purposes.

After the High Court decision in Com­missioner of Taxation v Bam ford, the Com­missioner withdrew a public ruling under which he had accepted that in certain circumstances a beneficiary could be eligible for the primary production averaging and farm management deposits rules, despite the trust incurring a loss for trust law purposes.

Schedule 1 will restore the ability of beneficiaries to access both sets of rules in an income year where the trust has incurred a loss and certain conditions are met. The amendments will secure continuity for taxpayers because they apply from the 2010-11 income year and the Commissioner's ruling applies up to and including the 2009-10 income year.

If the amendments in Schedule 1 are not enacted by 30 June 2011, the beneficiaries of up to approximately 23,000 trusts will be uncertain as to their eligibility for the primary production averaging and farm management deposits rules in the 2010 11 income year by the time they start to lodge their income tax returns.

Schedule 2 amends Subdivision 115-C and Subdivision 207-B of the Income Tax Assessment Act 1997 to ensure that, where permitted by the trust deed, the capital gains and franked distributions (including any attached franking credits) of a trust can be effectively streamed to beneficiaries for tax purposes, by making them 'specifically entitled' to those amounts.

This Schedule also amends Division 6 of Part III of the Income Tax Assessment Act 1936 to include specific anti-avoidance rules to address the inappropriate use of exempt entities to 'shelter' the taxable income of a trust.

The Government announced on 16 December 2010, that it would update and re-write the trust income tax law to deal with the ongoing discrepancies between the treatment of trust income by trust laws, on the one hand, and the tax system on the other. These issues were highlighted by the High Court's decision in Commissioner of Taxation v Bamford.

In the interim, the Board of Taxation recommended (following consultation with industry) that changes were urgently needed to provide certainty about the streaming of capital gains and franked distributions (including any attached franking credits).

These amendments provide this certainty and ensure that the streaming of capital gains and franked distributions (including any attached franking credits) is effective for tax purposes.

The Government is aware that due to the short timeframe involved in developing these amendments, there may be scope for unintended consequences. The operation of these amend­ments will therefore be closely monitored and if unintended consequences are identified, the Government will act to remedy these consequences retrospectively where appropriate.

The broader review of the trust income tax provisions remains the primary focus for the Government. This will simplify the system, rewrite the rules and give more certainty to the many thousands of small businesses and farmers who use trusts.

If the amendments in Schedule 2 are not enacted by 30 June 2011, trustees of the approximately 660,000 trusts in Australia that are required to make their resolutions by 30 June 2011 will face significant uncertainty.

Schedule 3 relates to the National Rental Affordability Scheme tax offset provisions.

The National Rental Affordability Scheme, which commenced on 1 July 2008, is a Government initiative to stimulate the supply of new affordable rental dwellings.

The NRAS incentive was $9,140 per dwelling in 2010-11, comprising $6,855 from the Australian Government and $2,285 from the States. These amounts are indexed annually in line with the rents component of the consumer price index.

These amendments simplify the operation of NRAS for participants and provide some additional flexibility to NRAS participants in how the incentive is shared between members of the NRAS consortium participating in NRAS.

Importantly, these amendments introduce the concept of an NRAS consortium, which is less restrictive than the existing non entity joint venture provisions.

The Australian Taxation Office Interpretive Decision in 2009 highlighted that certain head lease and sub lease arrangements used in NRAS might not allow the NRAS tax offset entitlement to flow through from the 'approved participant' to the ultimate investor.

These amendments address this situation by allowing NRAS approved participants deriving NRAS rent to make an election to relinquish their entitlement to an NRAS tax offset in favour of other members of their NRAS consortium.

These amendments also recognise that certificates issued by the Housing Secretary under NRAS are issued to the approved participants (rather than the consortium) and ensure that certain payments provided under NRAS indirectly, such as through an NRAS consortium, are treated as 'non-assessable non-exempt income'.

Although the amendments do provide additional flexibility to those participating in NRAS, it is prudent for taxpayers to seek advice from the Australian Taxation Office about the detailed structure of their particular NRAS models and their ability to access the NRAS tax offset before investing in NRAS.

Schedule 4 implements the 2011-12 Budget measure to phase out the dependent spouse tax offset.

The dependent spouse tax offset originated around three quarters of a century ago — a time when the single income family was the norm and the welfare system was in its infancy. This was a time when a breadwinner was expected to 'maintain' a spouse even without children, and there were limited employment opportunities for women.

In today's modern economy, where unemployment is forecast to fall to 4.5 per cent, an expanding workforce is vital for the strength of our economy and the living standards of our community.

That is why the Government is phasing out the tax offset for dependent spouses currently aged less than 40 to help encourage more Australians into paid employment.

From 1 July 2011, taxpayers with a dependent spouse born on or after 1 July 1971 will no longer be eligible for the dependent spouse tax offset.

Dependent spouses with children are not affected by this measure, nor are taxpayers whose dependent spouse is a carer, an invalid or permanently unable to work. Taxpayers eligible for the zone, overseas forces or overseas civilian tax offsets are also not affected by this measure.

If the amendments in Schedule 4 are not enacted by 30 June 2011, some taxpayers may not be able to use the PAYG withholding system to claim their benefit during the 2011-12 income year.

Schedule 5 implements the 2011-12 Budget measure to introduce a single statutory rate of 20 per cent, regardless of distance travelled, for car fringe benefits valued under the statutory formula method.

Under the current statutory formula method, the calculated fringe benefit from a salary-sacrificed or employer-provided car decreases as the distance travelled by the vehicle increases. People can therefore increase their tax concession by driving their vehicle further. This Schedule removes the current incentive for people to drive vehicles further than they otherwise would, in order to increase their tax concession.

The log book method will still be available for cars with significant genuine work-related use. This means that users will be able to ensure that actual work-related kilometres of travel continue to be tax exempt.

This reform applies to commitments made after the Budget announcement on 10 May 2011, and will be phased in over four years. Existing contracts will not be affected.

Both Schedule 4 and Schedule 5 implement further recommendations of the Australia's Future Tax System Review, and continue the process of tax reform started in May last year with the release of the Government's Stronger, Fairer, Simpler package of reforms.

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

 

VETERANS’ ENTITLEMENTS AMENDMENT BILL 2011

I am pleased to present legislation that delivers on the Government’s budget measures to help support our veteran community. These measures further improve the operation of Australia’s repatriation system and provide special recogni­tion to those Australians who were prisoners of war. The 2011-12 Budget reflects the Govern­ment’s ongoing commitment to more than 360,000 veterans and their families.

The Bill will introduce a new payment for surviving Australian prisoners of war (POW) recognising the hardships these men and women endured. More than 30,000 Australians became prisoners during the Second World War and the Korean War.

We have all heard of the hardships these men and women endured during captivity.

Subject to extremely harsh conditions and deprivation, many have lived with the physical and psychological scars for decades. All in service to their country. There are around 900 former POWs still alive today and this Government believes that they deserve special recognition. This Bill introduces a new payment of $500 per fortnight which will be known as the Prisoner of War Recognition Supplement. Pay­ments will begin automatically for former POWs known to my Department. The Supplement will be payable from 20 September 2011 with the first payment being made on 6 October 2011. The Supplement will be payable in addition to any existing benefits the person receives from the Commonwealth. It will be exempt income for the purposes of income tax and for the purposes of the veterans’ entitlements and social security income tests.

Further amendments in the Bill will affirm the longstanding arrangements under the Veterans’ Entitlements Act for compensation offsetting. Offsetting is intended to prevent double payments of compensation. This can happen when a vet­eran or member is eligible for compensation for the same incapacity under different schemes.

This Bill will clarify the longstanding compensation offsetting arrangements that have been in place in the Repatriation system since 1973. This follows a Full Federal Court decision which highlighted the need to clarify the legislation. It does not vary the disability pension for any veteran.

Finally, the Bill will rationalise and better target payments for veterans and members who are undergoing treatment for war or defence-caused injuries or diseases. There is currently an overlap in the allowances paid to veterans and members who are unable to work due to episodes of medical treatment and recuperation for war or defence-caused injuries or diseases. This Bill will better target payments through the loss of earnings allowance. Abolishing the temporary incapacity allowance ensures individuals are recompensed where there is actual loss of income. It has no impact on a veteran or member’s existing disability payment. From 20 September 2011, all eligible veterans and members in this situation will be assessed consistently against the criteria for loss of earnings allowance.

This Government is committed to streamlining and enhancing the services and support that our veterans, members and their families so rightly deserve.

Debate adjourned.

Ordered that the Appropriation (Parlia­mentary Departments) Bill (No. 1) 2011-2012, the Appropriation Bill (No. 1) 2011-2012 and the Appropriation Bill (No. 2) 2011-2012 be listed on the Notice Paper as one order of the day, and the remaining bills be listed as separate orders of the day.