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Wednesday, 17 June 2009
Page: 3614

Senator SHERRY (Assistant Treasurer) (6:29 PM) —Thank you for your three-minute time limit, Senator Xenophon. It is just as well you did not mention superannuation, or we might have been here for a while. I would like to thank Senators Coonan, Milne and Xenophon for their contributions in this debate. I will cover the concerns raised by Senator Xenophon and Senator Milne a little later in my contribution. They were essentially the same issue, although I think Senator Milne was a little more broad ranging than you, Senator Xenophon, in her themes and contributions.

Schedule 1 makes amendments to a number of acts which are required as a result of payments which might be made under the Financial Claims Scheme which this parliament enacted in October last year. Under the scheme, APRA can make payments to claims under general insurance policies with failed insurance companies and to account holders in failed financial institutions. These amendments ensure that no inappropriate tax consequences will occur if payments are made under the scheme.

Schedule 2 amends the tax law to expand access to the small business capital gains tax concessions for taxpayers owning passively-held CGT assets whose circumstances mean they are currently ineligible. This will extend access to taxpayers who own a CGT asset used in a business by an affiliate or entity connected with the taxpayer and partners owning certain CGT assets used in the partnership business. These taxpayers will have access to the small business CGT concessions via the small business entity test from the 2007-08 income year. Schedule 2 also refines and clarifies aspects of the existing small business CGT concession provisions so that they operate flexibly and as intended. This is done via a number of minor amendments.

Schedule 3 amends the law to provide a general exemption from CGT for capital gains or capital losses arising from a right or entitlement to receive a tax offset deduction or similar benefit. This amendment will ensure that the value of these benefits is not reduced by the possible application of the CGT in these circumstances, or where taxpayers have a right or entitlement to other similar taxation benefits.

Schedule 4 amends the 1997 Income Tax Assessment Act to provide a refund tax offset in relation to certain projects approved under the National Urban Water and Desalination Plan. Under the plan, the government will provide assistance to large infrastructure projects which assist cities and towns to meet future water demand. Eligible projects may receive assistance at a rate of 10 per cent of eligible capital costs, up to a maximum of $100 million per project. This financial assistance will be provided as refundable tax offsets for private sector applicants. The plan finishes in 2013-14. Accordingly, the provisions are repealed with effect from 1 July 2014.

Schedule 5 amends division 30 of the 1997 Income Tax Assessment Act to specifically list four new organisations and extend the listing of three organisations as deductible gift recipients—DGRs. Taxpayers can claim income tax deductions for certain gifts to organisations with DGR status. DGR status will assist the listed organisations to attract public support for their activities. The schedule specifically lists or extends the listing of the Australian College for Emergency Medicine; the Grattan Institute; ACT Region Crime Stoppers Limited; PWR Melbourne 2009 Limited, which is the Parliament of the World’s Religions; Yachad Accelerated Learning Project Limited, and apologies if I have mispronounced that; the St George’s Cathedral Restoration Fund; and the Bunbury Diocese Cathedral Rebuilding Fund.

The amendments in part 1 of schedule 6 assist the registrar of the Australian Business Register to prepare to take on the role of the multiagency registration authority and they improve the integrity and efficiency of the Australian Business Register. The amendments in part 2 of schedule 6 establish the role of the multiagency registration authority to facilitate the standard business reporting program, which will enable businesses to streamline their reporting to government agencies through the use of the Australian Business Number. The amendments assist the registrar to identify representatives of businesses for the purpose of online reporting to multiple government agencies. The program is designed to reduce reporting burdens by eliminating unnecessary or duplicated reporting.

Schedule 7 deals with some issues raised by Senator Xenophon and Senator Milne, and I will come back to that at the end. Schedule 8 amends the 1997 Income Tax Assessment Act to exempt from tax the clean-up and restoration grants which form part of the government’s assistance to small business and primary producers affected by the Victorian bushfires in February this year. This exemption applies to the 2008-09 and the 2009-10 income years and involves a cost to revenue of less than $7 million.

I will now deal with the issues raised in respect of Schedule 7. Senator Milne took the opportunity—as many of us do—to enter into a reasonably wide-ranging commentary and debate. That is not a criticism. She has long had concerns about peak oil and she took the opportunity to raise a range of issues which, without being critical, are not integral to the matters we are dealing with in this bill. However, she, like Senator Xenophon, raised some issues around what is known as the Greenhouse Challenge Plus program. In schedule 7, amendments to the Fuel Tax Act 2006 and related provisions elsewhere in the tax law to remove the provision that businesses must be a member of the Greenhouse Challenge Plus program to claim more than $3 million of fuel tax credits in a financial year will have effect from 1 July 2009. The Greenhouse Challenge Plus program will cease after 30 June 2009. This bill is not bringing it to an end; the program known as Greenhouse Challenge Plus ceases automatically.

Senator Xenophon —So what is the compliance?

Senator SHERRY —I will get to that in a moment. The Greenhouse Challenge Plus program provision in the Fuel Tax Act was originally included so that large fuel users would monitor and take measures to reduce their carbon emissions. This outcome will be better achieved through the government’s Carbon Pollution Reduction Scheme. Without this amendment—this is a cross-reference amendment—business would be unable to claim fuel tax credits in excess of $3 million in a financial year after 30 June 2009. This would be inconsistent with the policy intent of the fuel tax credits system. As I have mentioned, a condition that businesses may not claim more than $3 million worth of fuel tax credits in a financial year unless they are a member of the Greenhouse Challenge Plus, GCP, was included in the Fuel Tax Act 2006 so that large fuel users would monitor and take measures to reduce their carbon emissions.

In November 2008, Minister Garrett advised that Greenhouse Challenge Plus, GCP, will lapse after 30 June 2009, so this was announced some seven months ago. The GCP commenced in 1995 and was always scheduled to finish and lapse in mid-2009. There is no legislation required; it lapses automatically. The lapsing of the GCP was supported by the Wilkins review of Australian government climate change programs. The key elements of the Greenhouse Challenge Plus program—emissions, inventory reporting and assisting companies in reducing their greenhouse emissions—have been superseded by the National Greenhouse and Energy Reporting System, NGERS, and the Climate Change Action Fund, CCAF, respectively. So that is what has replaced it, Senator Xenophon. This is a removal of a cross-reference to the Fuel Tax Act. This act does not bring to an end Greenhouse Challenge Plus. That is coming to an end via another mechanism. The GCP required reporting on (1) emissions and (2) any reduction programs from 1 July 2008. Large fuel users are required by the National Greenhouse and Energy Reporting System to report on these emissions.

So that is the explanation. I thank Senator Xenophon for his brief and probing question and I thank Senator Milne. I acknowledge her longstanding interest in, particularly, peak oil. I have heard her contributions on many occasions—and she has a perfect right to raise them. I understand the reasons she has done so; however, the particular concern around Greenhouse Challenge Plus lapsing—not being brought to an end by this legislation—is not directly relevant to any actions that flow from this particular piece of legislation. I thank senators for their contribution and commend the bill to the Senate.

Question agreed to.

Bill read a second time.