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Monday, 18 June 2012
Page: 3463


Senator WONG (South AustraliaMinister for Finance and Deregulation) (18:30): I table revised explanatory memoranda relating to the Aviation Transport Security Amendment (Screening) Bill 2012 and the Environment Protection and Biodiversity Conservation Amendment (Independent Expert Scientific Committee on Coal Seam Gas and Large Coal Mining Development) Bill 2012 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—

AGRICULTURE, FISHERIES AND FORESTRY LEGISLATION AMENDMENT BILL (NO. 1) 2012

The Agriculture, Fisheries and Forestry Legislation Amendment Bill (No. 1) 2012 reflects the government's commitment to more effective regulation by cutting red tape and creating clearer Commonwealth laws.

The bill will amend eight portfolio acts and repeal one act entirely.

It contains no significant policy changes, but the amendments will provide consistency, amend outdated or unclear provisions and reduce the likelihood of reader confusion. The bill responds to industry requests for reform of existing regulation. It will streamline existing administrative arrangements and improve response times.

The bill will amend requirements of the Label Integrity Program under the wine legislation. The program aims to ensure truthfulness of label claims on vintage, variety or geographical indication of wine. It relies on accurate record keeping so that wines and label claims can be audited effectively.

Retailers have demonstrated the need for differentiation of record keeping requirements between producers and retailers and the proposed amendments are supported by retailers, wholesalers and the wine industry.

The proposed amendments will reduce the record keeping requirements of people who supply or receive wine goods that are packaged for sale to a consumer. Suppliers and retailers who do not change or affect any label claims about wine goods will be required to provide the Wine Australia Corporation auditors with details of the manufacturer or supplier of the wine goods, rather than all the details to substantiate vintage, variety or geographical indication label claims. This maintains the integrity of the program, while meeting the practical requirements of suppliers and retailers.

For the purposes of defining 'vintage' on a wine label, the bill will amend the Wine Australia Corporation Act 1980 to assist producers by ensuring grapes grown in the same growing season can be labelled with the same vintage year. For example, producers will now be able to label wine made from grapes harvested from 1 September 2012 through to 31 August 2013 as a 2013 wine, not a 2014 wine.

The bill will amend the Fisheries Management Act 1991 to ensure that provisions are consistent and wording is clear. The amendments will correct a grammatical error and remove redundant wording in provisions relating to directions to close a fishery, or a part of a fishery. They will also make compliance with a direction to close a fishery a condition on all types of statutory fishing concessions. The amendments will better reflect the intention of the provisions, clarify requirements and simplify the administration of the act.

The amendments to the Fisheries Administration Act 1991 will correct a drafting error made in an earlier amending act so that agreed co-management arrangements can be implemented. The drafting error applied a delegation of powers provision to section 93 rather than section 92. Once the provision is applied correctly to section 92, co-management arrangements—in which stakeholders will assist the Australian Fisheries Management Authority to perform powers and functions for the sustainable management of fisheries—can be implemented.

The Primary Industries Levies and Charges Collection Act 1991 is being amended to allow the Secretary of the Department of Agriculture Fisheries and Forestry to consider all requests for the remission of late levy payment penalties. At present, only the portfolio minister can remit penalties exceeding $5000. The proposed amendment mirrors efficient penalty remission arrangements for the Dairy Adjustment Levy. The process will be more streamlined and response times will be improved for levy payers. Levy payers will still be able to approach the minister to review a decision made by the secretary.

To assist with clearer Commonwealth legislation, the bill will make the following technical amendments.

It will re-number an alphabetical list in the Primary Industries and Energy Research and Development Act 1989 to remove any doubt about whether the list is incorrect or incomplete.

It will replace the United States spelling of 'authorized' with the Australian spelling of 'authorised' in the Export Control Act 1982 and the Quarantine Act 1908. The Australian spelling is the preferred style for Commonwealth legislation and these changes improve readability by ensuring consistent spelling throughout the two acts.

It will remove redundant text in the Fisheries Management Act 1991, including several cross-references to provisions that have been repealed. These amendments will promote consistency in the act and reduce the likelihood of reader confusion.

In line with legislative drafting protocols, it will remove specific references to departments and secretaries in the Farm Household Support Act 1992. This will mean any references to department or secretary are related to the correct portfolio responsible for administering the act and will reduce the need for future amendments arising from changes to the Administrative Arrangements Orders.

The bill will also repeal an entire act—the States Grants (War Service Land Settlement) Act 1952. The War Service Land Settlement Scheme commenced in 1945 to assist returned soldiers into farming after World War II. Authority for the scheme was established under Commonwealth legislation. The Australian Government has negotiated the sale and transfer of the scheme to each of the states, and now the Commonwealth legislation is redundant and suitable for repeal. The scheme served its purpose but has generally outgrown its original intent. Repeal of this act marks the end of an era and closes a chapter in Australia's history.

AVIATION TRANSPORT SECURITY AMENDMENT (SCREENING) BILL 2012

On the 25th of December 2009, a passenger attempted to bomb North West Airlines flight 253 en route from Amsterdam to Detroit.

The would-be bomber successfully smuggled a viable improvised explosive device through aviation security screening and onto the aircraft without being detected.

The device, which was concealed inside the passenger's underwear, contained no metallic components and was therefore able to be carried through a walk through metal detector without triggering any alarm.

This event highlighted a significant vulnerability in global aviation security screening practices, including Australia.

In response to this incident, on the 9th of February 2010, the Government announced a package of measures to strengthen Australia's aviation security.

This package included $28.5 million to assist the aviation industry to introduce a range of optimal technologies, including body scanners, multi-view X-ray machines, bottled liquid scanners and additional explosive trace detection units at international screening points.

These new technologies will mitigate current vulnerabilities in the aviation security screening regime.

The Aviation Transport Security Amendment (Screening) Bill 2012 will support the upcoming introduction of body scanners at Australian international airports.

This will ensure that Australian travellers are afforded the highest level of protection against aviation terrorism, bringing Australia into line with countries such as the United States of America, Canada, the United Kingdom and the Netherlands.

The Bill will provide flexibility in the future for the Government to introduce new screening tools as improvements are made to existing technologies.

It will also ensure that these technologies are used in such a way that achieves both a maximum security outcome and minimal impact on passenger facilitation.

It is important to note that the new body scanner technology will operate alongside existing walk through metal detectors at airports.

This bill contains four amendments to the Aviation Transport Security Act 2004 that allow for the introduction of body scanners and enhance current screening procedures.

The first amendment will ensure that passenger through-put rates are not unnecessarily affected by the introduction of body scanners and other technologies.

It will allow aviation screening officers to assume that a person who presents at an aviation security screening point consents to any screening procedure, with the exception of a frisk search, unless the person expressly states their refusal to undergo a particular screening procedure.

This measure will minimise the impact of body scanners on passenger facilitation by removing the requirement for screening officers to ask every passenger whether or not they consent to undergo a body scan.

It will also increase facilitation rates for screening procedures already in use at aviation security screening points, such as explosive trace detection.

It is essential that passengers are fully informed of their rights and obligations at a screening point.

As such, the Government is making changes to the Aviation Transport Security Regulations 2005 to mandate appropriate signage requirements at screening points.

These signs will inform passengers that they will be taken to have consented to screening procedures, with the exception of a frisk search, once they enter a screening point unless they specifically indicate otherwise.

The signs will take a form similar to those currently used to inform passengers of requirements regarding the carriage of liquid, aerosol and gel products through screening points at Australia's international airports.

The second amendment will allow the Aviation Transport Security Regulations to prescribe persons that must not pass through a screening point.

This will allow for a subsequent change to the Regulations, whereby a person who refuses to undergo a screening procedure they have been randomly selected for will not be granted clearance and will be unable to pass through the screening point.

The benefit of introducing body scanning technology is that it can identify a variety of sophisticated threats that cannot be detected by existing screening technology.

Australia's current security environment is such that we are vulnerable to these types of threats.

Walk through metal detectors and the style of frisk search currently used at Australian airports simply cannot provide the same security outcome that a body scanner can.

The only method of screening that could provide a similar security outcome to that of a body scanner is the type of invasive body search that is conducted in the US.

The Government has been resolute in not introducing invasive body searches as part of our airport security arrangements.

For this reason and in the interests of security and privacy, passengers selected for body scanner screening cannot choose inferior or significantly intrusive alternatives.

Accordingly, the Government has decided that a no opt out policy will be enforced in relation to screening at airports.

As such, the third amendment to this Bill will be to repeal the current provision in the Aviation Transport Security Act 2004 that allows passengers to request a frisk search as an alternative to another screening procedure.

This policy will not only apply to passengers, but also airport and airline staff.

Provision will be retained so that persons who have a physical or medical condition that prevents them from being screened by a body scanner can be screened by alternative means appropriate to their circumstances.

The Government has carefully considered what can be done to alleviate concerns that passengers may have about being screened by body scanners.

A voluntary body scanner trial was conducted at Sydney and Melbourne international airports last year.

Over 23 000 passengers volunteered to go through the body scanners during the trial period.

Market research conducted during the trial found that a great majority of passengers who underwent a body scan reported a positive experience.

Nonetheless, the Government has been focused on ensuring that health concerns regarding body scanners are understood and addressed.

There are two types of body scanning technology used for aviation security screening internationally; millimetre-wave and backscatter X-ray.

After consideration of the merits of both technologies and extensive consultation with relevant federal and state government agencies, including the Australian Radiation Protection and Nuclear Safety Agency, the Therapeutic Goods Administration, the Department of Health and Ageing, state health agencies and international partner agencies, the Government decided that only body scanners that use millimetre-wave technology will be used in Australia.

Active millimetre-wave body scanners use safe non-ionising radiation and produce emissions well below the permissible limits set by the Australian Radiation Protection and Nuclear Safety Agency.

One body scan emits 10 000 times less radio frequency energy than a single mobile phone call.

Health and safety information about millimetre-wave body scanners is available on my Department's website.

The second key area of concern regarding body scanners is in relation to privacy.

The Department of Infrastructure and Transport has consulted extensively with privacy and civil society groups in order to address any privacy concerns.

These consultations have been productive and have allowed us to strike the right balance between security and privacy.

Importantly, only body scanners equipped with automatic threat detection technology will be used.

This technology has the ability to identify areas of concerns on a generic human representation, similar to that of a 'stick figure'. The operator will not view raw or 'naked' images such as those produced by first generation body scanning technology.

In addition, body scanners that are introduced in Australia will not be allowed to store or transmit any information or data.

My Department has worked closely with the Office of the Australian Information Commission (OAIC) to address stakeholder issues.

Two round-table discussions have been held with various privacy and civil society groups to discuss the impact of body scanners.

Stakeholders were also invited to attend the body scanner trial last year, giving them the opportunity to view the body scanner in operation.

A comprehensive privacy impact assessment was prepared in consultation with the OAIC.

A draft of this assessment was released for public comment in September last year.

The final amendment will list, but not limit, the equipment that can be used for screening.

The list contains equipment already in use at screening points in Australia, including metal detection and explosive trace detection equipment, and also includes body scanning equipment to clarify that the use of such equipment in aviation security screening is lawful.

These amendments will ensure that Australia continues to enjoy a robust and effective aviation security screening regime.

I commend the Bill to the Senate.

BROADCASTING SERVICES AMENDMENT (DIGITAL TELEVISION) BILL 2012

The Broadcasting Services Amendment (Digital Television) Bill 2012 introduces amendments to the Broadcasting Services Act 1992 to facilitate earlier access, in particular circumstances, to the digital commercial satellite television services known as the Viewer Access Satellite Television service, or VAST.

The VAST service is a first class direct-to-home digital TV satellite service which covers all of Australia. For the first time, viewers not served by terrestrial transmitters have access to the full range of digital television services. Every Australian can now access the full range of commercial and national free-to-air digital television services. This includes the digital-only channels Go!, GEM, 7Two, 7Mate, ONE, and Eleven. As at 1 April 2012, over 60,000 households in remote and regional Australia had been connected to VAST.

However, viewers in metropolitan and regional areas that will never receive adequate commercial digital television terrestrial reception are currently ineligible to apply to access VAST until six months before switchover in their licence area.

This Bill will allow the administrator of a VAST conditional access scheme to specify areas, known as 'open access areas', where viewers will not be able to receive adequate reception of digital terrestrial commercial television services. Viewers residing in open access areas will be automatically entitled to immediate access to VAST.

The Bill will also amend the way in which the scheme administrator for a VAST conditional access scheme assesses a person's eligibility to access VAST.

Before providing access to VAST, the scheme administrator must assess if viewers have adequate reception of 'applicable digital terrestrial commercial television broadcasting services' (or 'applicable services'). The current definition of applicable services is restricted to those services provided by commercial television broadcasting licensees. A retransmission service provided by a third party provider does not constitute an 'applicable service'.

The commercial television broadcasters have agreed to convert to digital a number of analog self-help retransmission sites that were previously operated by local councils or other community groups. In most circumstances, the transmitters operating at these sites are licensed to Regional Broadcasting Australia, the peak body representing all regional and remote commercial broadcasters.

The amendments in this Bill will allow a scheme administrator to take account of services provided by organisations which represent commercial broadcasters, such as the Regional Broadcasting Australia, when assessing whether a viewer has adequate reception of 'applicable services'.

The Bill also contains minor amendments to allow broadcasters operating in the Remote Central and Eastern Australia licence areas to use services from VAST as a source of programming for their terrestrial transmitters and to authorise viewers in the Territory of Christmas Island and the Territory of Cocos (Keeling) Islands, the Coral Sea Islands Territory and Norfolk Island to access VAST if they choose.

Finally, in 2008 the Minister for Broadband, Communications and the Digital Economy announced a firm timetable for the switch off of analog signals. Regional Victoria, South Australia, and Queensland have all switched to digital only television and regional New South Wales will follow later this year.

On 2 November 2009, the Minister determined that digital switchover would occur in the Brisbane TV1 and Perth TV1 licence areas on 30 June 2013, and in the Adelaide TV1, Melbourne TV1 and Sydney TV1 licence areas on 31 December 2013.

Following further consultation with broadcasters, it is apparent that the switchover dates in all of the metropolitan licence areas are likely to require change. These variations in the switchover dates are to facilitate a staggered approach to the transition to digital television in metropolitan areas to ensure both Government assistance schemes and broadcaster engineering resources are available and appropriately managed to achieve digital switchover by the end of 2013. For example, the broadcasting industry has recently requested that the switchover date in the Adelaide licence area be varied to a date in the first half of 2013.

In some cases, these amended dates could fall outside the maximum variations currently permitted by the Broadcasting Services Act. At the moment, where the Minister has made a digital switchover determination, the end date for the simulcast period can be varied by up to three months before or after the originally determined date.

The Bill will allow the Minister to vary the date for a licence area's digital switchover to any other future date the Minister specifies, provided that the date determined occurs before 31 December 2013. Similar amendments will be made in respect of digital-only local market area determinations to allow the Minister to vary the date when a local market area becomes a digital-only local market area.

The Government is committed to working with local communities on the switchover to digital television. It will continue to set and publicise the dates well in advance of switchover just as it has done in other switchover areas.

CLEAN ENERGY FINANCE CORPORATION BILL 2012

The Gillard Government has passed historic reforms to build a clean energy future which will strengthen our economy and protect our environment.

The Clean Energy Finance Corporation is a key part of the Government's plan. It will encourage private investment and help overcome financial barriers to commercialising and deploying cleaner energy technologies.

There is global recognition of the importance of moving to cleaner energy sources. Due to its endowment and use of low cost fossil fuels, Australia is a late starter in the transformation to clean technology.

The Clean Energy Future plan, along with the Renewable Energy Target, will cut carbon pollution and drive investment and innovation in clean energy technologies. This will ensure our economy and industries remain competitive in a world that is becoming carbon constrained.

The transformation of our economy will be most evident in the electricity sector. It is expected that the sector will over time move away from coal-fired generation to renewables, with renewable energy growing from 10 per cent to 40 per cent of the generation mix by 2050, and conventional coal-fired generation falling from 70 per cent to below 10 per cent.

The Clean Energy Finance Corporation will facilitate increased flows of finance into the clean energy sector to support this transformation, removing barriers that would otherwise prevent the financing of projects.

Several factors can inhibit the financing of clean energy projects, including current global financial conditions, the complex nature of Australia's electricity markets, the cost of renewable energy, the preference of investment institutions for listed assets and a limited track record of returns.

Given the complexities involved, the Gillard Government appointed an Expert Review Panel to design the $10 billion Clean Energy Finance Corporation. The Review was chaired by Ms Jillian Broadbent, an eminent Australian with extensive experience in the financial sector.

The Review recommended a framework for how the corporation should operate. The Government is implementing the recommendations through this Bill.

The Clean Energy Finance Corporation will be independent from government, with no ability for the government to direct the Corporation in relation to specific projects for investment. This will ensure an independent decision making process.

The Corporation will operate based on three principles:

Firstly, the Corporation is a mechanism to help mobilise private investment in renewable energy, low-emissions and energy efficiency projects and technologies in Australia. The Corporation will also invest in manufacturing businesses that provide inputs to the clean energy sector.

The Corporation will focus on catalysing private finance into Australia's clean energy sector. It will provide financial products and structures that address the financial barriers currently inhibiting private investment. Such facilitation is critical in transitioning the Australian energy market.

To ensure the effectiveness of this capital mobilisation the Corporation is expected to require private co-investment in projects. It is unlikely to ever be a sole financier. This approach will build investor experience and confidence in the clean energy sector.

The Corporation will invest at least half of its funds in renewable energy technologies. The other half will be available to fund energy efficiency and low-emissions technologies.

Secondly, the Corporation will apply a commercial filter when making its investment decisions. It will focus on projects and technologies at the later stages of development, consistent with the Report of the Expert Review Panel.

The commercial filter will apply private sector skills and disciplines to investment selection. Having a public policy purpose, the Corporation has different financial risk/return requirements and values any positive externalities from investments. For a given financial return, the Corporation may take on higher risk and, for a given level of risk, due to positive externalities, may accept a lower financial return.

Thirdly, the Corporation has the capacity to offer concessional finance and directly influence financial barriers that inhibit the financing of this sector. The individuality of each project necessitates a case-by-case approach.

The Corporation can tailor concessionality in each case and apply it through availability, tenor or cost of finance. In setting the terms, the Corporation will provide only the least generous terms required for a proposal to go ahead.

Guaranteed funding

The funding that the Corporation will receive for making investments is set out in this Bill. This will provide long-term support and continuity to the clean energy sector.

The Corporation will receive $2 billion per year for five years from 2013-14 through the special appropriation in this Bill. The Corporation will also be provided three years of funding through the annual appropriation bills to assist with the establishment and operations of the Corporation.

The Corporation is intended to be self-sustaining once mature. That is, it won't require further assistance from the Budget. Rather, the Corporation's profits and funds returned from its investments will be available for reinvestment.

To allow the Corporation to focus on its primary function of investing in the clean energy sector, a Special Account is being created to manage surplus funds and limit the Corporation's need to undertake a cash management function.

This Bill establishes mechanisms for flows of payments between the Special Account and the Corporation that guarantees access to funds as needed to undertake its investment function.

Board

This Bill establishes the Clean Energy Finance Corporation as a Commonwealth authority under the Commonwealth Authorities and Companies Act 1997.

The Corporation will be managed by an independent board comprised of experts in areas such as banking, finance, economics and energy markets to ensure a robust and rigorous organisation.

The Board will be appointed by the Government and will be responsible for the management, operational and investment decisions of the Corporation.

The Board will be responsible for appointing the chief executive officer, who will take on the day-to-day administration of the Corporation under the directions of the Board

The staff of the Corporation will be well experienced to provide the necessary support to the Board and CEO to determine the best investments and manage tax payers money appropriately.

Investment mandate

The Government will provide the Board with an investment mandate that, combined with the legislation, will set the parameters for its management of investments. This allows the Board to develop its own investment strategy, in line with the Government's broad directions.

Similar to the Future Fund, this Bill ensures the Board is consulted on the investment mandate and their response tabled in parliament.

The Government expects the Corporation to apply a commercial filter when making its investment decisions. Investments will focus on projects beyond the research and development stage, have a positive rate of return and have the capacity to repay capital. This approach will ensure the Corporation invests responsibly and manages risk to achieve a target rate of return and ultimately be financially self-sufficient.

Technologies with a track record have generally had fewer problems accessing finance as the financial market has experience with their risk/return metrics. As such the Corporation is not expected to fund these projects. One example of this would be conventional gas which may technically be eligible for funding as a low-emission technology

The Government also intends on requiring the Corporation to apply Australian Industry Participation Plans through the investment mandate. Industry Participation Plans ensure Australian industry is afforded full, fair and reasonable opportunity to participate in projects.

As a part of the Clean Energy Future plan, the Clean Energy Finance Corporation will complement other Australian Government policies and programs. This includes the Renewable Energy Target, the Australian Renewable Energy Agency (ARENA), the Clean Technology Investment Program and the Clean Technology Innovation Program.

It will be particularly important for the Corporation and ARENA to maintain an active ongoing dialogue as projects funded by ARENA provide a potential pipeline of projects for the Corporation.

The Clean Energy Finance Corporation will bring to bear the utmost rigour in assessing its investments, but will also give effect to its important public policy objectives by facilitating transactions where financial barriers are inhibiting the mobilisation of private sector funds.

Passing the legislation in this sitting will enable the Corporation to undertake the necessary preparations to commence its investment operations from 1 July 2013.

I commend the Bill to the Senate.

NATIONAL HEALTH AMENDMENT (PHARMACEUTICAL BENEFITS SCHEME) BILL 2012

The National Health Amendment (Pharmaceutical Benefits Scheme) Bill 2012 will amend the National Health Act 1953 to support the operation of a more efficient Pharmaceutical Benefits Scheme.

The PBS is a major Government health program with expenditure expected to reach $9.7 billion in 2012-13. The Bill reflects the Gillard government's commitment to on-going improvement of Australia's health system, to ensure that every health dollar continues to be used as effectively as possible.

The Bill is also in keeping with the Statement of Principles signed by the Government with industry and consumer organisations in September 2011.

The main amendments in this Bill relate to the pricing structure for PBS medicines. From 1 October 2012, PBS prices will be expressed at ex manufacturer level based on one price for each pharmaceutical item. This is instead of pricing at approved price to pharmacists which includes the ex manufacturer price and wholesale margin. This will create uniform pricing for all brands of a medicine across different PBS programs and mechanisms of supply.

The new pricing structure will be carried through to all functions involving PBS prices, including calculating the Commonwealth price for subsidies, provisions for price disclosure, and applying price reductions.

[Current arrangements - nature of the problem]

Under the current legislation, the price of a PBS medicine includes a margin for the wholesaler, but this margin varies depending on the price of the medicine. A percentage rate applies for less expensive items and changes to a flat fee for very expensive items over $1,000. The margin also varies depending on where a medicine is supplied. For example, the margin is different for supply of a medicine through a community pharmacy and a hospital. For some PBS supplies, there is no wholesale margin. In this circumstance, a notional approved price to pharmacists is used to satisfy the requirement to price at that level.

This is further confused by different PBS pricing calculations applying at different points in the pricing process. For example, statutory price reductions apply to the approved price to pharmacists, but price disclosure calculations take place at manufacturer price level.

In essence, the difficulties arise because the approved price to pharmacists is not at the beginning of the pricing sequence and is no longer suitable as the core PBS pricing level.

This means that pricing amounts continually need to be converted administratively between the two pricing levels. This is cumbersome and can create inconsistencies due to rounding and increases the risk of error in PBS listing and pricing processes.

[Amendments]

The amendments in the Bill remove the concept of approved price to pharmacists, as the level at which pricing agreements are made, and replace it with approved ex manufacturer price - the price set at the beginning of the process.

In doing so, only one ex manufacturer price will need to be agreed or determined for a brand of pharmaceutical item - by reference to the quantity in the lowest PBS pack size for any brand of the item. The price for different pack sizes of any brand will then be calculated from the approved ex manufacturer price as a proportional ex manufacturer price.

There are many provisions and functions in the Act that currently rely on approved price to pharmacists. They will work equally well, or better, using ex manufacturer prices.

For example, the Bill also amends provisions for calculating the Commonwealth price, the 16 per cent price reductions for new brand listings, and price disclosure, so they operate using ex manufacturer prices. However, the processes for undertaking those calculations remain effectively the same.

The Commonwealth price includes the manufacturer price, wholesale margin, pharmacy or hospital mark-ups, and pharmacy dispensing and other fees. It is the amount which determines the government subsidy and the Safety Net amount for the patient.

Wholesale mark-ups will continue to be based on the pricing provisions in the Fifth Community Pharmacy Agreement. They will be included in the existing legislative instrument that determines the manner for calculating the Commonwealth price. In moving from approved price to pharmacists to approved ex manufacturer price, the pharmacy level price which includes the wholesale mark up will now be referred as the price to pharmacists or 'PTP'.

The new pricing arrangements will still allow for a premium or special patient contribution to be claimed by companies in addition to the amount the Commonwealth is willing to agree for subsidy. As is currently the case, this becomes the additional amount payable by the patient for higher priced brands.

[Transitional - convert to ex-manufacturer prices]

Transitional provisions in the Bill set out the method for converting current PBS prices to an ex manufacturer amount. This involves the applicable wholesale margin being subtracted from each price in force on the day before the commencement date.

For over 98 per cent of the 2,400 pharmaceutical items on the PBS, the conversion calculation will result in a single ex manufacturer price for the quantity in the lowest pack size. For those items, the converted price is expected to become the approved ex manufacturer price.

Indicative ex manufacturer prices calculated using this method will be made available publicly on the PBS website by the end of May, with notice of this being provided to all companies and other stakeholders. This gives companies over six weeks to review prices and discuss them with the Department before they need to be finalised for 1 October 2012.

A small number of conversion calculations from current prices will result in multiple prices, so adjustments will be necessary to achieve a uniform ex manufacturer price. This will occur for around 40 pharmaceutical items, which is less than two per cent of total PBS items. For many of those 40 items, the difference in price will be only one or two cents.

The legislation provides that where a price change is required, the new price may be negotiated with companies or, failing this, a default price will apply.

All pharmaceutical companies with a listed brand of an item requiring any price adjustment will be contacted by the Department and invited to negotiate a new price on a case-by-case basis.

The transitional arrangements are designed to achieve new prices that are as close to equivalent to current prices as possible, either directly or through new agreements.

There are no savings associated with this proposal. The intention is that the move to the new pricing structure will have a neutral effect on PBS prices overall, and no impact on PBS expenditure.

For the vast majority of negotiations, the Commonwealth will advise companies of a weighted average price for the item based on prices and volumes of supply of different pack sizes or supply via different PBS programs. Once a new price is agreed it will apply for all brands.

The weighted price has not been legislated as the new price for these items because it would not produce the best result in all situations. Importantly, it would not provide the necessary flexibility for negotiating based on individual circumstances where appropriate. The aim is not to get a price reduction, but to arrive at an average across existing prices that is most representative of the effective PBS price and, thus, give the most neutral pricing impact.

However, for the PBS to operate, all listed products must have a known price. In the event that a price is not negotiated for an item, a default price which is the lowest of the converted ex manufacturer prices for the item will apply.

In a very small number of cases, about eleven items, the method in the Bill does not arrive at the current lowest ex manufacturer price. For these items, the default will be set in the National Health (Pharmaceutical Benefits) Regulations.

Reliance on a default price is not the Government's preferred method. The Bill makes clear that a negotiated price will always take precedence over a converted default price. Nonetheless, the default provision is important and necessary to ensure continuity for the PBS.

Once an approved ex manufacturer price is in place, prices for different pack sizes of those items will be calculated proportionally. For all brands, the price for the same quantity is the same.

[Premiums on transition]

Where brands currently have claimed prices resulting in premiums or special patient contributions, those premiums are expected to remain very similar to current amounts. Claimed prices will be converted to ex manufacturer level by applying a change equivalent to the change in the approved price.

This is the same approach used for premiums affected by statutory price reductions and price disclosure. Companies can discuss with the Department any impact on a premium resulting from a converted price.

If a new ex manufacturer price is negotiated for an item, the existing premium for a brand can also be adjusted.

Single brand combination pharmaceutical items will need new price agreements as there are special considerations when pricing these medicines. The new prices will be negotiated taking into account the converted ex manufacturer portion of the component drug prices.

[In keeping with agreements]

The Government understands the importance of the agreements it has with pharmaceutical industry, consumer, wholesaler, and pharmacy bodies.

When the expanded price disclosure arrangements were put in place, it was as a result of the policies negotiated with industry in the 2010 Memorandum of Understanding between the Government and Medicines Australia.

Consistent with this Government's approach to partnering with industry, the amendments in this Bill formed part of the 2011 Statement of principles of commitment between stakeholders. This was signed by the Government, the Consumers Health Forum, the Generic Medicines Industry Association, and Medicines Australia.

The amendments in this Bill are in keeping with those agreements and honour commitments made in good faith. The transitional arrangements regarding negotiation of prices are true to the method described in the Statement of principles.

[Timing]

Each year there are generally three price change dates, April, August and December.

Transitioning to the new structure in October, a month that is not normally subject to pricing changes, will reduce complexity for industry and provide transparency for any price differences.

In the event that a company wishes to pursue a price that is different from the 1 October pricing outcome, they will of course be able to use the usual price change processes for 1 December 2012.

[Relevance of the changes - a better more efficient PBS]

This Bill recognises that pricing practices that have grown up with the PBS and served us well in the past are no longer the best fit for the many different subsidy and supply arrangements in use now.

The changes will support improved pricing practices generally, and more efficient application of price disclosure across an increasing number of PBS medicines.

The Bill also contains a technical change which will improve the efficiency of listing medicines on the PBS for supply only via PBS prescriber bags.

[Industry cooperation and acknowledgement]

This legislation is due in no small part to the commitment shown by the pharmaceutical industry to support pricing changes needed to improve the efficiency of the PBS pricing structure. It also reflects the support of consumer, wholesaler, and pharmacy groups.

Implementation will rely on Government and industry working together to achieve the outcomes needed to fulfil the undertakings given on both sides in the agreements.

I have asked the Department to work with pharmaceutical companies so that, in the relatively small number of cases where prices need to change, the effects are shared between companies, and with Government, as evenly as possible.

[Summary - efficiency & benefits]

Sound pricing arrangements are vital to the PBS. In effect, the pharmaceutical industry has always used ex-manufacturer prices. There are benefits for the Government and users if the PBS does the same.

The new pricing structure will improve the application of current PBS policies with no change to the operation of the Scheme for patients, pharmacies and suppliers. There is no effect on PBS funding, on the medicines listed on the Scheme, nor access to them.

However, the benefits from better, more efficient PBS practices will flow on indirectly to all users of the PBS - and that is a good outcome for everyone.

I am confident that, based on the goodwill shown thus far, that result will be delivered.

NATIONAL VOCATIONAL EDUCATION AND TRAINING REGULATOR (CHARGES) BILL 2012

The establishment of the National Vocational Education and Training (VET) Regulator on 1 July 2011 was a significant milestone. Fragmented regulation across nine regulators has been streamlined and a more nationally consistent and rigorous approach taken to enforcing standards in the VET sector.

The National VET Regulator, known as the Australian Skills Quality Authority (ASQA) is established under the National Vocational Education and Training Regulation Act 2011 (the NVETR Act). The new regulatory framework was developed in consultation with those who stood to be most affected by the changes. State and territory regulators, industry and RTOs all contributed their ideas and concerns during the consultation period undertaken in 2010.

The Council of Australian Governments (COAG) agreed ASQA would operate on a cost recovery basis and ASQA's cost recovery arrangements were subject to extensive consultation in 2011. The feedback from those consultations were extremely helpful in designing the final fee and charge structure and ensuring that the new cost arrangements are appropriate for the sector.

A Cost Recovery Impact Statement covering the period from ASQA's commencement on 1 July last year to 30 June 2014 has been publicly available on ASQA's website since April 2011. That statement clearly outlined ASQA's proposed fee and charge structure and the need for the Bill I introduce today.

The purpose of the bill I introduce today, the National Vocational Education and Training Regulator (Charges) Bill 2012, is to support ASQA's cost recovery arrangements by enabling it to recover reasonable costs and expenses related to additional compliance activities that are not application-based, including compliance audits and complaint investigations. Application-based fees are authorised by the NVETR Act.

I now turn to the specifics of the Bill.

Object

One of ASQA's key functions is to encourage and monitor provider compliance with registration standards - training providers must be able to demonstrate compliance at all times.

The main method by which ASQA monitors compliance is by conducting compliance audits. ASQA also investigates complaints it receives about the performance of training providers.

This Bill will enable ASQA to recover reasonable costs and expenses associated with these additional monitoring activities.

This is in line with Australian Government cost recovery policy and part of ASQA's implementation path to full cost recovery by 2014-15.

Compliance audits

It is necessary for ASQA to conduct compliance audits to ensure ongoing compliance with the VET Quality Framework and identify issues relating to the quality of VET.

ASQA conducts a risk assessment on all registered training organisations (RTO) and this risk assessment is used to determine whether to conduct a compliance audit. Providers who have been assessed as high-risk will receive more rigorous monitoring by ASQA.

Compliance audits require a significant regulatory effort. This Bill provides that, where the ASQA undertakes such an audit, a charge is payable for the audit and - where the audit is conducted outside of Australia - any other reasonable expenses incurred.

Audit compliance charges will represent the resources required to effectively audit a provider.

Complaint Investigations

Complaints provide important information about the performance of RTOs and their compliance with standards for registration.

ASQA's process for investigating complaints against an RTO will improve stakeholder confidence in the VET sector. Students, employers, training personnel, parents, industry or any member of the community may lodge a complaint with the National VET Regulator if they are not satisfied with the quality of training delivered by an RTO.

This Bill enables the ASQA to charge RTOs for complaint investigations. Charges only apply where the complaint is substantiated by ASQA. In this circumstance, charges will be payable for the costs and expenses of conducting the investigation, any compliance audit conducted as part of the process and if the investigation is conducted outside of Australia, any other reasonable expenses incurred.

Conclusion

The National VET Regulator has been established with the powers to examine quality concerns in all areas of the VET sector. It is important that the National VET Regulator is properly resourced in order to conduct its functions thoroughly and deliver high-quality services. This is needed to ensure more robust regulation which will lead to better training outcomes.

A core function of the National VET Regulator is to encourage and monitor compliance of the VET sector. It is appropriate that the costs of ensuring a quality VET system are borne by the businesses that benefit from the system.

PAID PARENTAL LEAVE AND OTHER LEGISLATION AMENDMENT (DAD AND PARTNER PAY AND OTHER MEASURES) BILL 2012

This bill extends the Government's Paid Parental Leave scheme to include dad and partner pay, a new payment for eligible working fathers and other eligible partners.

Other amendments made by this bill provide more clarity and consistency to the Paid Parental Leave scheme, and make consequential amendments to the Fair Work legislation.

Last year, Australia caught up with the rest of the developed world when this Labor Government delivered our first national, government-funded Paid Parental Leave scheme.

It was this Labor Government that asked the Productivity Commission to inquire into the benefits of paid parental leave.

It was this Labor Government that delivered Australia's first national scheme.

But it was the thousands of Australian women, and men - spanning generations - who fought the battle and won the fight for this fundamental workplace entitlement.

Paid Parental Leave gives eligible working parents up to 18 weeks' parental leave pay at the National Minimum Wage - currently about $590 a week before tax.

It gives working parents the chance to stay at home to care for and bond with their newborn in those critical first months of a child's development.

For many low-paid, casual and part-time working women, this is the first time they have had access to this sort of support.

And more than 150,000 families across the country are already benefiting from the Gillard Government's Paid Parental Leave scheme.

When you take some time off work to care for your new baby, you want to know that you can focus on the time with your child and not on the household budget.

You want to know that you can take some time off work without losing touch with the workplace.

Because of the Paid Parental Leave scheme - delivered by this Labor Government - Australian families no longer have to choose between making ends meet and taking time off to spend with a new baby.

This was a historic reform. It took a Labor Government to do it - and today we build on it.

The bill being introduced today delivers on a 2010 election commitment to give Australian dads and other eligible partners the chance to also have some time off from work to support mums and partners in the care of their baby - right from the start.

Dad and Partner Pay will give eligible fathers and partners two weeks' pay at the rate of the National Minimum Wage.

It will be available to eligible fathers and partners - including adopting parents and parents in same-sex couples - who care for a child born or adopted from 1 January 2013.

This means that, from next year, eligible families welcoming a new child into the world can access up to 20 weeks' payments of parental leave pay and dad and partner pay from the Gillard Government.

We know that it isn't just new mothers who need that time to form important bonds with a new baby.

Dads and partners need that chance too - so families can be together after the birth of a child.

We know that most fathers do currently take some time off work around the time of the birth, but that this time is usually short and most have to use non-parental leave - such as annual leave - to do so.

New fathers and partners often have to balance their responsibilities as the main source of family income after the birth of their child with wanting to spend more time with their new baby and wanting to support their partner.

Some families can face extra challenges in balancing the budget when a child is born, including casual employees without annual leave entitlements and self-employed people such as business owners, tradespeople and people working on the family farm.

Dad and partner pay will change that for thousands of Australian families.

For the first time, thousands of parents will be able to spend time as a family, bonding with their new baby and supporting their partner, in those precious first weeks.

Like Paid Parental Leave, dad and partner pay will be available to eligible full-time, part-time, casual, seasonal, contract and self-employed workers.

The work test and residency requirements for dad and partner pay will be consistent with those for Paid Parental Leave. Dad and partner pay will also have the same income test as for Paid Parental Leave.

Consistent with the recommendations of the Productivity Commission, the payment will be available in addition to any employer-funded paid leave. Eligible fathers and partners must be caring for the child - either as the primary carer or jointly caring with the other parent - and must not be working or on paid leave during the period they receive the payment.

This will encourage dads and other partners to take more time off to care for their newborn in those first few months, confident that they have the financial support to do so.

Eligible fathers and partners will receive dad and partner pay from the Family Assistance Office in the Department of Human Services, and claims for the payment can be made from 1 October this year.

Dad and partner pay will be available to fathers and partners who meet the eligibility requirements, regardless of whether the mother or primary carer has been in paid work or at home before the birth or adoption.

A father may be eligible for dad and partner pay even if a mother is not receiving parental leave pay. Families eligible for dad and partner pay may also continue to receive other family assistance payments such as baby bonus and family tax benefit.

However, dad and partner pay cannot be transferred to the primary carer (usually the mother) of the child. This 'use it or lose it' provision will encourage fathers and other partners to take more time off work, and signals to employers that a father's role in caring for a new baby is important.

Eligible fathers and partners who are the primary carers of their children will be able to receive both dad and partner pay and any parental leave pay transferred from the mother. To maintain fairness with the maximum parental leave pay entitlement for mothers, fathers and partners will have the same maximum 18-week entitlement under the extended Paid Parental Leave scheme.

Like parental leave pay, the new payment will be available during the first 12 months after the birth or adoption of a child.

Our Paid Parental Leave scheme - now with dad and partner pay - reduces the caring and work pressures on parents when their children are young.

Our scheme encourages the involvement of both parents in the early months of a child's life. Our scheme encourages bonding between fathers and their children, with lasting benefits for a child's development.

Our scheme meets the challenges of modern family life - letting families make their own choices about what works for them.

Our scheme sends a strong signal that taking time out of the paid workforce to care for a child is part of the usual course of life and work for both parents.

Our scheme for dad and partner pay is evidence-based.

It was recommended by the Productivity Commission, and the plan brought before the chamber today is informed by consultation with employer and employee groups, family and community groups and other interested individuals.

We commenced this consultation on Father's Day last year, and it has been a valuable tool in the development of dad and partner pay, as has the feedback provided by the Paid Parental Leave Implementation Group.

The Government's dad and partner pay- like Paid Parental Leave - is affordable, sustainable and secure.

It is fair for families, and fair for business.

Like Paid Parental Leave, dad and partner pay will be funded by the Government.

It does not require a new tax on business to pay for it.

Unlike the plan proposed by those opposite, it will not drive up grocery bills.

Dad and partner pay is good for new dads, it is good for new mums, and it gives Australian children the best start in life.

This bill also introduces amendments originally introduced on 3 November 2011 in the Paid Parental Leave and Other Legislation Amendment (Consolidation) Bill 2011. These amendments are being reintroduced as part of this bill to streamline the consideration of current amendments to the legislation underpinning the Paid Parental Leave scheme. These amendments improve clarity and consistency and make consequential amendments to the fair work legislation.

PARLIAMENTARY COUNSEL AND OTHER LEGISLATION AMENDMENT BILL 2012

The Parliamentary Counsel and Other Legislation Amendment Bill 2012 amends the Parliamentary Counsel Act 1970, Acts Publication Act 1905 and the Legislative Instruments Act 2003 to enable the functions of the Office of Legislative Drafting and Publishing in the Attorney General's Department to be transferred to the Office of Parliamentary Counsel.

The Bill is part of a range of measures being conducted to facilitate the transfer of these functions.

As many would be aware, there are currently two Commonwealth offices responsible for drafting laws:

The Office of Parliamentary Counsel is an independent agency, within my portfolio, which is responsible for drafting all Government Bills.

The Office of Legislative Drafting and Publishing is a division within my Department, which has responsibility for drafting a range of legislative instruments, as well as ensuring the compilation and publication of all laws, predominantly through the Federal Register of Legislative Instruments.

These two separate offices were originally established to deal with increasing demands on the Commonwealth for drafting resources, as the need for greater federal regulation grew, government responsibilities expanded, and government policies became increasingly complex.

Given the specialist and discrete nature of this work, it is important that the role of the Commonwealth drafter remain independent .

However it is common practice across other Australian jurisdictions, for the one office to draft both Bills and subordinate legislation.

These days, Regulations commonly contain major elements of substantive law, and are a vital part of the Commonwealth's statute book.

And with the volume of legislation rapidly increasing year by year, it is becoming imperative that Commonwealth legislation be drafted as consistently, clearly and effectively as possible.

The Commonwealth drafting offices were already working cooperatively to improve the consistency of Bills and subordinate legislation presented to Parliament. However, practical differences in their administrative systems and drafting standards have created a range of inconsistencies and difficulties.

It was for this reason that the Strategic Review of Small and Medium Agencies in the Attorney-General's Portfolio, conducted by Mr Stephen Skehill, recommended to Government that the Office of Parliamentary Counsel take on the functions of the Office of Legislative Drafting and Publishing.

This change will significantly improve the efficient and effective management of the Commonwealth's legislative drafting resources.

The Bill will confer on the Office of Parliamentary Counsel and the First Parliamentary Counsel, all the functions formerly undertaken by the Office of Legislative Drafting and Publishing and the Secretary of my Department with regard to subordinate legislation, compilations and publishing.

This includes:

drafting subordinate legislation

preparation of compilations, reprints and information about Commonwealth laws

making arrangements to print and publish Commonwealth laws

preparation and publishing of Government Notices Gazettes

provision of assistance to foreign countries in the drafting, printing, publishing of their laws

maintenance of the Federal Register of Legislative Instruments

and generally, promoting the legal effectiveness and clarity of legislative instruments, wherever possible.

By conferring all of the functions on one Commonwealth drafting office, the Bill will facilitate the introduction of a consistent approach for drafting Bills and legislative instruments and, more broadly, maximise the use and flexibility of Commonwealth drafting resources.

It will also ensure the most efficient use of specialised information technology arrangements for the drafting of both Acts and subordinate legislation.

These additional responsibilities and functions accepted by the Office of Parliamentary Counsel, along with the movement of experienced and highly skilled staff from the Office of Legislative Drafting and Publishing, will result in clearer and more consistent Commonwealth laws overall.

This, in turn, will make Commonwealth laws clearer and easier to understand.

I commend the Bill to the Senate.

SOCIAL SECURITY AND OTHER LEGISLATION AMENDMENT (2012 BUDGET MEASURES) BILL 2012

This Bill introduces several measures from the 2012 Budget and some other amendments to family assistance and child support provisions.

Income test exemptions for WA seniors

The first of the Budget measures will provide a permanent exemption from the social security and veterans' entitlements income tests for the Western Australian Government's Country Age Pension Fuel Card and the Cost of Living Rebate Scheme.

The Country Age Pension Fuel Card Scheme provides a card for eligible people living in country areas of Western Australia to purchase fuel and taxi fares - worth $500 a year for single people and for couples. The Cost of Living Rebate Scheme provides an annual payment to help with cost of living pressures for holders of a Western Australian seniors card - in 2012, the payment is $155.25 for single people and $232.90 for couples.

The Australian Government previously exempted the value of the WA Country Fuel Card and the Cost of Living Rebate Scheme from the social security and veterans' income tests up till 30 June 2012. This exemption has operated for the last three years, and ensured that people benefiting from the schemes did not have their income support payments reduced under the means tests.

The exemption is due to end on 30 June 2012.

This Bill now makes that exemption permanent, so eligible people can have confidence in the long-term that their income support payments will not be reduced because of benefits received through either Western Australian scheme.

This Australian Government exemption will benefit around 13,000 recipients of the WA Country Fuel Card and around 60,000 recipients of the Cost of Living Rebate Scheme who are in receipt of a social security or Veterans' Affairs income support payment.

Portability of income support and family payments

In a further Budget measure, the Bill tightens the rules for people who travel overseas while receiving income support payments and family payments.

From 1 January 2013, the length of time that people on most income support payments will be able to be overseas, and continue to receive payments, will be reduced from 13 to six weeks.

Many Australians have strong family and friendship connections overseas and it is appropriate to provide a limited portability period for Government welfare payments.

However, we believe that people of working age should be in Australia participating in the community and preparing to return to work if they can.

Six weeks is a reasonable period of time for an Australian resident to manage family or personal matters that may arise from time to time overseas, and have their overseas stay funded by the Australian taxpayer.

There is also discretion to extend portability periods in genuine exceptional circumstances, such when a person falls ill overseas and cannot return.

Family Tax Benefit Part A will continue to be paid for up to three years but will reduce to the base rate at six weeks, rather than at 13 weeks under current rules.

This change doesn't affect the Age Pension or Disability Support Pension recipients who have been assessed under new rules from 1 July 2012 as having a severe and permanent disability and no future work capacity.

Some payments such as Special Benefit and Newstart Allowance do not have general 13-week portability. They can currently only be paid outside Australia in limited and defined circumstances such as attending an acute family crisis or legal proceedings overseas. These payments will now only be payable for a maximum of six weeks.

The Bill also makes complementary amendments to the rules relating to waiting periods to receive some payments.

Family Tax Benefit Part A eligibility

As also announced in the Budget, the Bill limits Family Tax Benefit Part A to children aged under 18.

Families of children aged 18 and 19 who are studying full-time may continue to get the payment until the end of the calendar year in which they complete secondary education or equivalent vocational education.

This Government is ensuring that the family payment system helps low and middle-income families with the costs of raising children when they are young and while they are at school.

We believe that young people (over the age of 18) leaving high school should embrace the opportunities that come from further education or getting a job.

That is why we think it is reasonable that family assistance stops when a young adult turns 18 and leaves school.

Of course, Youth Allowance is available to young people if they need financial support while they are studying or looking for work.

This Government understands the costs of raising children. That is why we have already delivered up to $4,200 extra per year to FTB families with teenagers aged 16 to 19 who are in full-time secondary school or equivalent vocational education.

And our new Schoolkids Bonus - already passed by this Parliament despite attempts to block it by those opposite - and further Family Tax Benefit boosts that are part of this Budget, will continue to help families to make ends meet.

Non-Budget amendments

The Bill also makes some other minor non-budget amendments.

An amendment will clarify existing policy in relation the Low Income Supplement, part of the Government's clean energy future household assistance package.

This Bill will ensure that Family Tax Benefit households will qualify for a payment of Low Income Supplement where a person has an FTB child for 39 weeks or more during the year, where both partners have a notional tax liability of less than $300 a year, and where the person meets the other qualification conditions for the Low Income Supplement.

Another minor amendment in the Bill corrects an inequity in the Family Tax Benefit Part A rate provisions concerning whether reasonable maintenance action is considered to have been taken in certain cases in which child support is privately-collected.

A further amendment will allow a person's percentage of care for child support and Family Tax Benefit purposes to be based on the actual care of the child immediately, rather than follow­ing a 14-week delay that applies currently when there is a change in care that departs from a formal care arrangement. This amendment will apply only in special circumstances, such as where there is evidence of violence or other unusual behaviour.

The Bill will also clarify in the child support legislation the authority for the practice of automated decision-making using computer programs.

SUPERANNUATION LEGISLATION AMENDMENT (TRUSTEE OBLIGATIONS AND PRUDENTIAL STANDARDS) BILL 2012

When most people go on an extended holiday they will find someone they trust to look after their home. A person they have confidence in to do all of things that might be necessary to protect their home while they are away.

For most Australians, superannuation will be their second greatest source of wealth after their home but usually we will not know the people we've entrusted to look after this important asset.

As participants in a compulsory superannuation system, Australians are entitled to be confident that governance across the superannuation industry is of a high standard and that their superannuation is being managed efficiently, prudently and in their best interests.

However, the Cooper Review, initiated by the Government, found that superannuation governance standards had not kept up with developments in the industry. It suggested there were difficulties for trustees and directors on trustee boards to understand what is expected of them. Further it found that, as the industry consolidated and became more integrated, conflicts of interest arose more regularly.

The Cooper Review also found that there was a need for "a more finely calibrated capacity for APRA to supervise and regulate the superannuation industry."

Consequently, a critically important part of the Government's Stronger Super package is reforming the governance and supervision of our superannuation system.

This is the objective of the Superannuation Legislation Amendment (Trustee Obligations and Prudential Standards) Bill 2012.

A key element of the Bill is to close a regulatory gap, by providing APRA with the ability to make prudential standards. APRA already has this ability in banking and insurance.

As Ross Jones of APRA put it recently:

"That is something we have been after for a long time -- 10 years -- to try to ensure that the quality of supervision in superannuation is what you get in other industries."

Prudential standards will allow APRA to develop, in consultation with the industry, targeted rules that improve the management of these institutions.

Prudential standards will provide APRA with greater flexibility to effectively adapt to industry developments in superannuation and the ability to provide regulated entities with clearer and more tailored legal requirements.

Prudential standards will be able to be made on any prudential matter that includes:

protecting the interests of members;

ensuring the conduct of an RSE licensee or connected entity meets the reasonable expectation of members;

keeping an RSE licensee or connected entity in a sound financial position;

ensuring the conduct of an RSE licensee does not cause or promote instability;

the appointment of auditors and actuaries; and

the conduct of audits and actuarial investigations.

Prudential standards can apply to APRA-regulated superannuation funds, connected entities of those funds, a specified class of fund or connected entity or any individual fund or connected entity.

Prudential standards are disallowable legislative instruments. Therefore, APRA must comply with the Legislative Instruments Act 2003 in making any prudential standard, including conducting appropriate consultation with the industry.

There will also be new duties applying to trustees and individual directors.

New duties for trustees include:

exercising the same degree of care, skill and diligence as a prudent superannuation trustee;

acting fairly in dealing with classes of beneficiaries and beneficiaries within a class; and

where a conflict exists, giving priority to the duties to, and interests of, beneficiaries over other persons.

Trustees will have expanded requirements in relation to their investment strategies. In developing an investment strategy the trustee must have regard to valuation information, expected tax consequences and expected costs in their investment strategies, and offer a range of options sufficient to allow members to choose a diversified asset mix.

Trustees will have a new requirement to develop an insurance strategy for members of their fund. This reflects that insurance provided by a trustee has a direct impact on the retirement benefits of members. Trustees will have to consider the kinds and level of insurance that is appropriate for their members having regard to the cost of that insurance and whether that cost may inappropriately erode retirement incomes of members.

Trustees will also have to develop a risk management strategy and meet a requirement to maintain financial resources, either as trustee capital or as fund reserves, to cover the operational risks of the funds they manage.

Duties applying to individual directors of corporate trustees of superannuation funds will be separately identified. These duties include:

acting honestly;

exercising the degree of care, skill and diligence that a prudent superannuation entity director would;

performing their duties and powers in the best interests of beneficiaries;

where a conflict exists, giving priority to the duties to, and interests of, beneficiaries over other persons;

not entering into a contract that would prevent the director or corporate trustee from properly performing their functions and powers; and

exercising a reasonable degree of care and diligence for the purposes of ensuring that the corporate trustee carries out its duties.

These new requirements for trustees and directors will improve trustee decisions, fund efficiency and effectiveness, and thereby help grow member superannuation entitlements.

However, a trustee's responsibility will be no greater than the responsibility they owe to those members who accept the default MySuper product.

Therefore, trustees that are authorised by APRA to offer a MySuper product will also have additional obligations. This reflects that these members have effectively delegated all decisions for their superannuation to the trustee.

There will be a primary obligation to promote the financial interests of members of the MySuper product, in particular returns after the deduction of fees, costs and taxes.

A primary focus on the returns put into the pockets of members will ensure that members of a MySuper product can have the confidence that they will receive the maximum possible superannuation at retirement.

Supporting this obligation, a determination will have to be made on an annual basis whether a fund has sufficient assets and members for both the MySuper product and superannuation fund as a whole to continue to meet the obligation to promote the financial interests of members of the MySuper product.

Trustees will also have to clearly articulate a target investment return and level of risk appropriate for the MySuper product. This highlights a trustee's obligation to focus on the returns to members after the deduction of fees, costs and taxes.

I am proud to introduce this Bill today as it marks this Government's ongoing commitment to improve the superannuation system for all Australians.

This is especially so given the Government's historic commitment to increase superannuation guarantee to 12 per cent, which combined with existing growth is expected to see superannuation assets reach $6.2 trillion by 2036.

Subsequent tranches of legislation will introduce further Stronger Super reforms that will improve system transparency.

Full details of the amendments are contained in the Explanatory Memorandum.

I commend the Bill to the Senate.

TAX LAWS AMENDMENT (MEDICARE LEVY AND MEDICARE LEVY SURCHARGE) BILL 2012

This Bill increases the Medicare levy and Medicare levy surcharge low income thresholds for individuals and families in line with increases in the Consumer Price Index. These changes will ensure that low income individuals and families that are currently exempt from the Medicare levy and the Medicare levy surcharge will continue to be exempt when their incomes have risen in line with the Consumer Price Index.

The Bill also increases the Medicare levy low income threshold for pensioners below Age Pension age. This will ensure that individuals in this cohort do not pay the Medicare levy when they do not have an income tax liability.

These increases will apply to the 2011 12 year.

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

ENVIRONMENT PROTECTION AND BIODIVERSITY CONSERVATION AMENDMENT (INDEPENDENT EXPERT SCIENTIFIC COMMITTEE ON COAL SEAM GAS AND LARGE COAL MINING DEVELOPMENT) BILL 2012

I rise in support of the Environment Protection and Biodiversity Conservation Amendment (Independent Expert Scientific Committee on Coal Seam Gas and Large Coal Mining Development) Bill 2012.

On 21 November 2011, the Prime Minister announced the Government’s intention to establish an Independent Expert Scientific Committee to provide scientific advice to federal, state and territory governments on coal seam gas and large coal mining developments where they have significant impacts on water.

The Committee is part of a new science-based framework introduced by the Government to provide more certainty for regional communities around coal seam gas and large coal mining developments, jobs and investment and the protection of water resources.

The Committee will provide independent scientific advice to governments on coal seam gas and large coal mining projects when they consider applications for these types of development.

The establishment of this committee will also provide local communities and other stakeholders with accessible and reliable scientific information that will build confidence in government assessment processes.

In support of this, the Government is negotiating a National Partnership Agreement with relevant state and territory governments.

Under the agreement, signatory governments are required to seek the Independent Expert Scientific Committee’s advice when considering applications for coal seam gas and large coal mining developments that have a significant impact on water resources.

Queensland was the first signatory to the National Partnership Agreement on 14 February 2012 and New South Wales followed on 6 March 2012. Negotiations with the other states and territories are continuing.

The Bill being introduced into Parliament today formally establishes the Committee and makes it a requirement that the Environment Minister must seek and take account of the Committee’s advice in certain specific circumstances.

The Bill also establishes a number of functions for the Committee:

•   At the request of governments that are signatories to the National Partnership Agreement, the Committee will provide scientific advice on proposed coal seam gas or large coal mining developments that are likely to have a significant impact on water resources.

   This scientific advice will be provided within two months of the date of the request.

•   As part of its functions, the Committee will also scope and advise on bioregional assessments in areas where coal seam gas and/or large coal mining developments are underway or planned, including priority areas for these assessments.

•   It will advise on research priorities that tackle critical gaps in scientific understanding including in circumstances where further information is required to assist in regulatory decisions.

•   It will provide advice on ways to improve the consistency and comparability of research on coal seam gas and/or large coal mining developments, including possible standards for protecting water resources from these impacts.

The Independent Expert Scientific Committee will be an open committee, providing regular public updates of its work on a dedicated website, publishing its advice and the outcomes of bioregional assessments and commissioned research.

The Government considers the establishment of the Independent Expert Scientific Committee as important given the potential impacts associated with the large number of applications for coal seam gas and large coal mining exploration and development currently in the pipeline.

Independent expert scientific advice to provide quality recommendations for the protection of water resources has formed part of consideration of applications where they have been under national environmental law.

To date, this quality independent advice has been limited to the extent of environmental powers in relation to matters of national environmental significance set out under the Environment Protection and Biodiversity Conservation Act 1999.

The work of the Committee will provide industry with greater guidance on sustainable management of water resources in areas where coal seam gas and coal mining exploration and developments are proposed.

An independent assessment process will help build community confidence in coal seam gas and coal mining developments in sensitive areas.

These arrangements will provide Australians with greater confidence that projects will be subject to the most rigorous and objective scientific assessment.

I recommend the Amendment Bill to the Senate.

Debate adjourned.

Ordered that bills be listed on the Notice Paper as separate orders of the day.