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Thursday, 13 November 2008
Page: 64

Senator WONG (Minister for Climate Change and Water) (3:39 PM) —I present three government responses to committee reports as listed on today’s Order of Business. In accordance with the usual practice, I seek leave to have the documents incorporated in Hansard.

Leave granted.

The document read as follows—

  • Community Affairs Committee--A matter relating to the PET review of 2000
  • Joint Standing Committee on Foreign Affairs, Defence and Trade--Review of the Defence annual report 2005-06
  • Joint Committee of Public Accounts and Audit--410th report: Tax administration


Majority Report Recommendation:

That Department of Health and Ageing and the Medical Services Advisory Committee coordinate to issue a disclaimer or erratum to institutions likely to hold physical or electronic copies of the MSAC Assessment Report: Positron Emission Tomography or the Report of the Review of Positron Emission Tomography to indicate which members of the Supporting Committee did not agree that the final report reflected their views. (Majority and Minority Report)

Minority Report Recommendations:

1.   The MSAC 2000 assessment of PET be withdrawn.

2.   That Department of Health and Ageing and the Medical Services Advisory Committee coordinate to issue a disclaimer or erratum to institutions likely to hold physical or electronic copies of the MSAC Assessment Report: Positron Emission Tomography or the Report of the Review of Positron Emission Tomography to indicate which members of the Supporting Committee did not agree that the final report reflected their views.

3.   MSAC, like the Pharmaceutical Benefits Advisory Committee be constituted as a statutory body at arm’s length from government.

4.   The Department be required to provide documentary evidence of who inserted the “Primary Finding” of the 2000 PET Review.

5.   The Australian Public Sector Commissioner be asked to inquire into, report on and recommend action on the Department’s conduct in relation to PET with regard to the APS Code of Conduct and its responsibility to assist Ministers “to fulfill their accountability obligations by providing full and accurate information to the Parliament about the factual and technical background to policies and their administration”.


Majority Report Recommendation and Minority Report Recommendations 1. & 2.

The Government accepts that the report reflects the views of the Medical Services Advisory Committee (MSAC) at the time and it therefore should not be withdrawn. 

The Government has asked the Department of Health and Ageing and the MSAC to issue a disclaimer to institutions likely to hold physical or electronic copies of the MSAC Assessment Report: Positron Emission Tomography or the Report: Review of Positron Emission Tomography indicating members of the Supporting Committee who believe the final MSAC report did not reflect their views.  The Department will contact all members of the Supporting Committee to confirm their position.

The Government has also asked the Department to upload the disclaimer once responses have been received by members of the Supporting Committee to the MSAC website, and to mail it to the likely holders of copies of the original reports including 44 libraries participating in the Library Deposit Scheme, the members of the 2000 PET Supporting Committee and Steering Committee, health portfolios in the States and Territories, and the medical colleges.

Minority Report Recommendation 3.

The Government will consider whether MSAC should be constituted as a statutory body in the context of any future review of health technology assessment.

Minority Report Recommendation 4.

The Government accepts that the Department of Health and Ageing is unable to identify any further documentary evidence and notes that the evidence provided at the Senate Committee hearing of 30 March 2007, in particular the evidence given by Professor King, and the Department’s response to questions taken on notice at the 14 June 2007 Senate Committee hearing addressed this matter.

Minority Report Recommendation 5.

The Australian Public Service Commissioner has recently advised that she has considered the matter insofar as her powers permit and does not propose to take any further action.


Proliferation Security Initiative (PSI)

Recommendation 1

The Committee recommends that an invitation be extended to Defence sub-committee members to observe and/or participate in the next Pacific Protector exercise hosted by Australia.


Agreed. The next Proliferation Security Initiative (PSI) exercise will be the New Zealand sponsored Exercise MARU 08 to be conducted in Auckland 15 - 19 September 2008.  It is not anticipated that Australia will volunteer to conduct another PSI exercise until at least 2010 or 2011. 

The committee’s recommendation that an invitation be extended to Defence sub-committee members to observe and/or participate in the next Pacific Protector exercise hosted by Australia has been noted.

When Australia volunteers to host another PSI exercise, and the proposal has been accepted onto the PSI Master Event List, then an invitation will be issued for Defence sub-committee members to observe and/or participate in the exercise.

Army - Current and Future Projects

Recommendation 2

The Committee recommends that Defence reports to the Defence sub-committee on the implementation of HNA and ELF programs, with a focus on the delivery schedule of the additional battalions.


Agreed.  The Chief of Army is available to provide an oral briefing to the Defence sub-committee on the current status of these initiatives.

The Hardened and  Networked Army (HNA) program is based on the philosophy of the combined arms approach to combat, whereby infantry, armour, artillery, aviation and engineers work together to support and protect each other while defeating their adversary.  It will optimise the capabilities delivered within the Army under the Defence Capability Plan (DCP). 

The utility and strength of the combined arms approach continues to be proven in current operations.  A combined arms approach enables the ADF to provide the right level of mobility, protection and firepower to support the functions of a team and sustain and rotate those capabilities appropriately.

HNA was to have funded the establishment of a mechanised battle group in Adelaide by converting the parachute-enabled Third Battalion, the Royal Australian Regiment (3 RAR), based in Holsworthy, to a mechanised infantry battalion and includes the building of a new base facility and personnel costs.  However, the conversion of 3 RAR has been superseded by the introduction of the Enhanced Land Force (ELF) program.

This program was announced in August 2006 and expands the capacity of the ADF, and the Army in particular, to support regional stabilisation operations as well as Australia’s other interests.  It will raise two additional infantry battalions with their essential battle group and joint and Defence enabling capabilities. 

ELF is being implemented as one program, although it was funded in two stages: with Stage 1, which funds the first of the new battalions, approved in December 2006 and Stage 2, which funds the second battalion, approved in October 2007. 

The first additional battalion will be raised by:

  • accelerating the raising of a second mechanised battalion (announced under the HNA), the 7th Battalion, the Royal Australian Regiment (7 RAR), from January 2007 in Darwin, with operational capability as a battalion by 2010 and subsequently relocating the unit to Adelaide not before 2011; and
  • as a result, retaining the 3rd Battalion, the Royal Australian Regiment (3 RAR) as a light infantry battalion, instead of restructuring as the second mechanised battalion as previously announced under the HNA. 3 RAR remains in Holsworthy until relocating to Townsville not before 2011.

It should be noted that, once 7 RAR relocates to Adelaide, it is funded under the HNA program. Facilities for the Adelaide base are also provided under HNA.

The second additional battalion will be raised by re-raising the 8th/9th Battalion, the Royal Australian Regiment (8/9 RAR) in south-east Queensland from October 2007, with operational capability by 2010 and being fully deployable by 2011.

The decision to locate 8/9 RAR in south-east Queensland is based on a number of capability, cost and personnel factors that together make this region the best location for the battalion, even though  8/9 RAR is likely to utilise the Rockhampton area (Shoalwater Bay Training Area) as a major training location.

The additional battalions will be supported by a range of essential combat support, combat service support and joint and Defence enablers, including additional Special Forces capability, airfield and airlift capabilities, ADF health services and strategic communications.


At the end of the two programs:

  • 7 RAR will be located in HNA-funded facilities in Edinburgh Defence Precinct, Adelaide, having relocated from Darwin in 2011;
  • 3 RAR will be located in ELF-funded facilities at Lavarack Barracks, Townsville, having relocated from Holsworthy in 2011; and
  • 8/9 RAR will be located in ELF-funded facilities either at Gallipoli Barracks, Enoggera or at Amberley.


  • 7 RAR and 8/9 RAR are each to deliver an operational general infantry battalion capability by 2010.
  • The HNA battle group (7 RAR and engineer, artillery and logistic supporting capabilities) is due to begin occupying facilities in Adelaide from 2011.
  • Specialised infantry battalion capabilities under ELF are to be delivered subsequently (Mechanised for 7 RAR by 2012-2013 and Motorised for 8/9 RAR by 2011). 
  • Most single Service (Army and Air Force) and joint enabling capabilities commence being raised under ELF from the beginning of 2009, through until 2014.


Capability. Most Army units have had their organisational structures adjusted to plan for their growth over the next ten years under HNA and ELF.

  • 7 RAR is ahead of schedule, while 8/9 RAR is on schedule. 7 RAR has deployed a subunit to Security Detachment Baghdad.
  • It is likely some Air Force capabilities will slip by one year. This will not affect delivery of the infantry battalions by 2010.

Personnel. Strong personnel growth, particularly in the Army, continues to support the growth of the HNA and ELF capabilities.

While personnel growth is currently strong in ELF capabilities, it currently consists of a significant component of relatively easy to grow trades such as infantry. As additional capabilities are added to the ELF program, particularly those outside the battalions, the increased component of technical and skilled trades required increases the difficulty of growing the capabilities.

Training. The number of personnel being trained through induction and trade skills training in the Army and the Air Force has increased. In the Army, the training target was increased from July 2007 to meet a five-year ‘surge’ to grow the Army to its combined HNA, ELF and ADF Gap Year Scheme targets. Performance is matching the number of personnel being recruited, with several hundred more personnel trained than in the equivalent period in the previous year.

The ELF program is making contributions to increasing the number of personnel instructors, facilities and support costs in training organisations.

Facilities. Interim facilities are in the process of being delivered in Darwin (for 7 RAR) and are nearly complete at four Training Command - Army locations (Kapooka, Singleton, Liverpool and Puckapunyal)

  • HNA Facilities (Adelaide). The HNA-funded permanent facilities for 7 RAR in Adelaide have been endorsed through the Parliamentary Standing Committee on Public Works (PWC).
  • ELF Facilities. A proposal to provide interim working accommodation to support the growth of 8/9 RAR involving three separate medium works projects will be submitted for consideration by the PWC in 2008.   Subject to PWC clearance, two of these projects will be completed at Enoggera by early 2009 and the third will be completed in Townsville by mid-2009 at an overall cost of $11.5 million for all three projects.  PWC submissions for consideration of permanent facilities for 3 RAR in Townsville are planned to be referred in late 2008 and for 8/9 RAR in south-east Queensland in 2009.


  • The initial ELF Stage 1 provided Defence, at 2006-07 Additional Estimates, a total of $4.1 billion over 11 years (PAES 2006-07 Outturned).
  • At 2007-08 Additional Estimates, ELF Stage 2 provided Defence an additional $4.4 billion (PAES 2007-08 Outturned).
  • Figures represented below are represented in their respective dollar bases.
  • Approximately $940 million from Stage 1 and $1.019 billion from Stage 2 was provided to supplement several DCP projects to procure new equipment for the ELF capabilities. In particular, ELF will fund the delivery of 143 Bushmaster Infantry Mobility Vehicles, 81 Upgraded M113AS4 Armoured Personnel Carriers, and the additional heavy weapons, communications, target and acquisition, and logistics systems required for the two Army Battle Groups and other Defence elements.
  • Approximately $534 million from Stage 1 and $278 million from Stage 2 was provided to fund the procurement of a large range of current in-service equipment, including everything from blankets to major weapons systems to cater for the increase in service personnel.
  • This procurement activity is underway with the Defence Materiel Organisation in the process of delivering on 98 per cent of the initial 947 items ordered by Defence for the ELF capabilities. The bulk of the in-service equipment is required to be delivered by 2010 in order for the two battalions to achieve their operational capability milestone.


Government response to Report 410: Tax Administration


Recommendation 2

The Government ensure that tax agents who give advice on tax evasion techniques, such as phoenixing, are subject to civil penalties, either through new legislation or enforcement of existing legislation.

There are several measures in the existing law that could potentially apply to deter advice on tax evasion techniques such as phoenixing.  These include Part VIIA of the Income Tax Assessment Act 1936 (registration of tax agents) and the draft Tax Agent Services Bill 2009 which proposes to replace that Part; Part II of the Crimes (Taxation Offences) Act 1980; and Division 290 in Schedule 1 to the Taxation Administration Act 1953 (promotion and implementation of schemes).  The Government has asked Treasury, in consultation with the Australian Taxation Office, to continue to monitor the effectiveness of these laws.  The Government will consider further legislative measures if necessary.


Recommendation 3

The Government introduce legislation to require:

  • the reporting of compliance with the Best Practice Regulation Handbook in all explanatory material accompanying a regulatory proposal
  • a summary of the requirements of the Best Practice Regulation Handbook in all explanatory material accompanying a regulatory proposal
  • the relevant minister to table an explanation with the relevant Bill or Legislative Instrument in either House of Parliamentif this reporting of compliance does not occur.

The Government does not support this recommendation.

Introducing a legislative requirement will provide greater clarity to the Parliament and the community when legislation is tabled as to compliance by the relevant department or agency with the Governments best practice regulation requirements.  However, as is noted in the JCPAA report, the best practice regulation requirements themselves are administrative not legislative.

Currently, under the Government’s best practice regulation requirements, departments and agencies are required to table the Regulation Impact Statement (RIS) or Business Cost Calculator report (a report quantifying compliance costs) prepared for the decision-making stage.  This is generally in the explanatory memorandum when the regulation is tabled.  However, the Office of Best Practice Regulation (OBPR) assessment of the RIS is not made public until the OBPR releases its Best Practice Regulation Report.  This may be up to 18 months after a proposal has been tabled.

Changes currently under consideration by the Government will lead to RISs prepared under the enhanced arrangements being made public before regulations come into effect.  Similar changes are proposed to make the OBPR’s assessment of compliance public when the RIS is made public. 

This could have a significant impact on the development of tax proposals.  By publishing RISs when policy decisions are made, the Government will be providing information on its assessment of the likely impacts of regulatory change when elements of the policy have been settled but before details of the implementation arrangements have been determined.  Stakeholders will therefore be better informed earlier in the process than currently.

It is more likely, however, to have quite limited impacts - as the JCPAA point out, the Australian tax system is one of the most complex in the world.  Accordingly most (if not all) of the ‘changes’ to tax law introduced in any particular year have very narrow impacts.  Such changes, more often than not, fall under the ‘significance’ thresholds for requiring a RIS or Business Cost Calculator report. 

Placing a legal obligation on departments and agencies to report their compliance with the best practice regulation requirements when tabling legislation may work against the self-assessment system introduced as part of the enhanced best practice regulation requirements.  Agencies self-assess the impacts of all regulatory proposals and where they determine that the impact is nil or low, no further analysis is required.1  When faced with a legal obligation, agencies may stop ‘self-assessing’ in favour of obtaining confirmation from the OBPR that only a preliminary assessment is required, with consequent resource implications for the OBPR.

While proposed changes to bring forward the OBPR’s assessment of RISs to when the RIS is made public will enhance transparency, the Government is not convinced that adding a legislative requirement to report on compliance in explanatory material will necessarily increase transparency.

The Government does not believe it is necessary to introduce legislation to require a summary of the requirements of the Best Practice Regulation Handbook in all explanatory memorandum accompanying a regulatory proposal. 

The Best Practice Regulation Handbook provides Australian Government agencies with comprehensive guidance on undertaking regulatory impact analysis and the best practice regulation requirements.  This Handbook and related guidance material is publicly available on the OBPR website and on request. 

Noting the low number of instruments for which RISs may be required, the OBPR does not see a need to duplicate this information in all explanatory material.  Further, where an agency self-assessed and no further analysis was required, including such a summary in the explanatory memorandum may potentially be confusing. 

As discussed above, the OBPR independently reports on compliance with the best practice regulation requirements and it is likely that this will occur at the same time the RIS or Business Cost Calculator report is made public in the near future.  Therefore, it is unclear what will be gained by requiring the relevant minister to explain why compliance reporting has not occurred.

Recommendation 5

The Government and Treasury improve consultation on tax measures by:

  • increasingthe number of public consultations compared with confidential consultations
  • increasingthe number of consultations conducted prior to the announcement of the policy intent
  • increasing the use of exposure drafts of legislation, where practicable.

The Government supports this recommendation.

On 22 August 2008, the Assistant Treasurer and Minister for Competition Policy and Consumer Affairs, the Hon Chris Bowen MP, announced the Government’s acceptance in principle of the 26 recommendations made by the Tax Design Review Panel in its report Better Tax Design and Implementation.  The Assistant Treasurer established the Review Panel in February 2008 to examine ways to reduce delays in the introduction of tax legislation and improve the quality of tax law changes. 

In particular, the Government has accepted the following recommendations:

  • Public post-announcement consultation on tax measures - Public consultation will generally be adopted for post-announcement consultations to ensure that all stakeholders have the opportunity to contribute to the process (Recommendation 7).
  • Pre-announcement consultation on policy design - Consultation on tax changes will generally occur at the initial policy design stage, prior to any Government announcement (Recommendation 1). 
  • Two-stage public consultation after the announcement of tax measures - Post-announcement consultation on substantive tax measures will occur at two stages: (i) on the design of the announced policy; and (ii) on the draft legislation (Recommendation 6).

Recommendation 6

In the discussion paper for the review, Australia’s Future Tax System, Treasury and the review panel include the topic of basing the tax system on financial relationships and economic outcomes, ahead of legal forms.

Recommendation 7

In the discussion paper for the review, Australia’s Future Tax System, Treasury and the review panel include the topic of reducing the number of taxpayers who need to lodge a return, and simplifying the experience for those who need to lodge, in particular:

  • the costs and benefits of making work related expenses deductible
  • whether tax offsets, rebates and benefits should be delivered as direct payments, rather than tax measures
  • examining the number of tax rates and the tax free threshold
  • improving the coverage and accuracy of the withholding system
  • whether, if large numbers of taxpayers were no longer required to lodge returns, it would be appropriate to provide structural adjustment assistance to tax agents.

Recommendation 8

The discussion paper for the review, Australia’s Future Tax System, consider the benefits of harmonising with New Zealand’s tax system, even if just for particular taxes like fringe benefits tax, or for particular classes of tax.

Response to Recommendations 6, 7 and 8

As acknowledged by the Committee, the Government has announced a comprehensive review of Australia’s tax and transfer system.  The Review Panel wants to ensure views and ideas from a wide cross-section of the community are considered in the development of Australia’s future tax system and has recently commenced a consultation process.  As this is an independent review the content of the papers it releases is a matter to be determined by the Review Panel.

The Treasurer announced that the review will be conducted in several stages with an initial discussion paper to be developed by Treasury on the architecture of the present tax and transfer systems. 

The Treasury paper was released on 6 August 2008 and describes Australia’s tax and transfer systems, from a factual and analytical perspective, to inform public discussion.  It does not make any recommendations about the future direction of the tax and transfer systems in Australia or attempt to determine issues which the Review Panel may wish to consider as part of the review. 

The Review Panel will make recommendations to enhance overall economic, social and environmental wellbeing, with a particular focus on ensuring there are appropriate incentives for:

  • workforce participation and skill formation;
  • individuals to save and provide for their future, including access to affordable housing;
  • investment and the promotion of efficient resource allocation to enhance productivity and international competitiveness; and
  • reducing tax system complexity and compliance costs.


Recommendation 14

The ATO amend its policies to limit the practice of issuing assessments that are contingent on each other, and specify in what circumstances such assessments may be validly issued.   In the absence of administrative change, the Government introduce legislation to this effect.

The Government notes that ATO Practice Statement PS LA 2006/7 sets out the circumstances in which alternative assessments may be made and does not consider that any legislative change is needed at this time.


   1      It should be noted that where the OBPR subsequently determines that the impacts of a regulatory proposal are medium or significant, the proposal will be assessed as non-complaint with the best practice regulation requirements.