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Seafarers Safety and Compensation Levies Bill 2016

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2016

 

 

THE PARLIAMENT OF THE COMMONWEALTH OF AUSTRALIA

 

 

 

HOUSE OF REPRESENTATIVES

 

 

 

 

SEAFARERS SAFETY AND COMPENSATION LEVIES BILL 2016

 

 

 

 

 

EXPLANATORY MEMORANDUM

 

 

 

 

 

(Circulated by authority of the Minister for Employment, Senator the Hon. Michaelia Cash)



 

 

 

 

 

 

 

 



SEAFARERS SAFETY AND COMPENSATION LEVIES BILL 2016

OUTLINE

The Seafarers Safety and Compensation Levies Bill 2016 (the Bill) imposes two levies (an insurance levy and a cost recovery levy) on seafarer berths. The levies will fund two cost components of the Seacare scheme , which is a national work health and safety and workers’ compensation scheme for a very small proportion of employees in the maritime industry .

 

The seafarers insurance levy will support a safety net fund for seafarers where the employer cannot meet its workers’ compensation obligations because of financial circumstances. This component of the levy is unchanged from the levy collected under the Seafarers Rehabilitation and Compensation Levy Act 1992 . The levy will continue to be calculated on the basis of seafarer berths and will be set at $15 unless changed by regulations. Any increase will be based on the recommendation of an actuarial assessment of the amounts payable from the safety net fund. The cost of the administrative component of maintaining the fund will be based on a recommendation made by the Safety, Rehabilitation and Compensation Commission (SRCC). This will be added to the actuarial component which will also be funded from the seafarers insurance levy.

 

The seafarers cost recovery levy is intended to recover the costs of the SRCC, Comcare and the Australian Maritime Safety Authority (AMSA) in performing their respective regulatory functions in relation to the Seacare scheme where these costs are not readily attributable to a specific organisation or individual. The initial levy is set at $0. This levy will be introduced on a staggered basis, with the levy amount set by regulations. The cost recovery levy will also be calculated on the basis of seafarer berths and will be collected in the same way as the insurance levy.

 

The Bill and the Seafarers Safety and Compensation Levies Collection Bill 2016 (the Levies Collection Bill) replace the Seafarers Rehabilitation and Compensation Levy Act 1992 and the Seafarers Rehabilitation and Compensation Levy Collection Act 1992 , respectively.

 

The Bills form part of a package of legislative reforms to modernise aspects of the Seacare scheme, aligning work health and safety with the model work health and safety laws, giving effect to recommendations in a review of workers compensation and making the scheme consistent with the government’s cost recovery guidelines.

 

 

 



Financial Impact Statement

N/A



Regulation Impact Statement

This Bill forms part of a package of legislative reforms - s ee the regulatory impact statement for the Seafarers and Other Legislation Amendment Bill 2016, which addresses all Bills in the package.



Statement of Compatibility with Human Rights

Prepared in accordance with Part 3 of the Human Rights (Parliamentary Scrutiny) Act 2011 .

Seafarers Safety and Compensation Levies Bill 2016

The Seafarers Safety and Compensation Levies Bill 2016 (the Bill) is compatible with the human rights and freedoms recognised or declared in the international instruments listed in section 3 of the Human Rights (Parliamentary Scrutiny) Act 2011 .

Overview

The Bill imposes two levies (an insurance levy and a cost recovery levy) on seafarer berths. The levies will fund two cost components of the Seacare scheme , which is a national work health and safety and workers’ compensation scheme for a very small proportion of the maritime industry .

 

·          The seafarers insurance levy will support a safety net fund for seafarers where the employer cannot meet its workers’ compensation obligations because of financial circumstances.

 

·          The seafarers cost recovery levy will recover the costs of the Safety, Rehabilitation and Compensation Commission, Comcare and the Australian Maritime Safety Authority in performing their respective regulatory functions in relation to the Seacare scheme which are not readily attributable to a specific organisation or individual.

 

The Bill forms part of a package of legislative reforms to modernise the Seacare scheme.

 

Human rights implications

The Bill does not engage any of the applicable rights or freedoms.

 

However, the Committee has previously raised comments around the engagement of the right to an adequate standard of living with regard to taxation measures generally. For the purpose of completeness, the assessment against that right has been included below.

 

Right to an adequate standard of living

Article 11 of the International Covenant on Economic, Social and Cultural Rights recognises the right of everyone to an adequate standard of living for himself (or herself) and his (or her) family, including adequate food, clothing and housing, and to the continuous improvement of living conditions.

 

The Committee has commented that a change in tax rates could limit the standard of living available to Australians.

 

The levies will be payable by employers in the maritime industry and therefore constitute a business expense for those persons who employ seafarers that are covered by the Seacare scheme. As such, payment of the levy by employers is unlikely to reduce an individual’s standard of living or have any direct impact on the adequacy of an individual’s food, clothing and housing.

 

The Bill achieves a legitimate objective in that the levies imposed by the Bill will:

·          support a safety net for injured seafarers where the employer is unable to meet its liabilities which, in turn, promotes the right to social security; and

·          ensure effective funding of new work health and safety arrangements of vessels in the Seacare scheme which, in turn, promotes the right to safe and healthy workplaces.

 

Conclusion

The Bill is compatible with human rights as it does not raise any human rights issues.

 

 

Minister for Employment, Senator the Hon. Michaelia Cash

 



NOTES ON CLAUSES

In these notes on clauses, the following abbreviations are used:

AMSA

the Australian Maritime Safety Authority

Bill

Seafarers Safety and Compensation Levies Bill 2016

Levies Collection Bill

Seafarers Safety and Compensation Levies Collection Bill 2016

Seafarers Act

Seafarers Rehabilitation and Compensation Act 1992

Seafarers Bill

Seafarers and Other Legislation Amendment Bill 2016

SRCC

Safety, Rehabilitation and Compensation Commission

 

Part 1 - Preliminary

Clause 1 - Short title

1.                   Clause 1 provides for the short title of the Act to be the Seafarers Safety and Compensation Levies Act 2016 .

Clause 2 - Commencement

2.                   The table in this clause sets out when the provisions of the Bill commence.

3.                   Sections 1 and 2 commence on the day the Act receives the Royal Assent. The substantive provisions commence on the same day specified in Part 3 of Schedule 2 of the Seafarers Bill, that is, on 1 July 2017. Clause 14 will commence the day after Royal Assent to allow time for the assessment provided for in that clause to be undertaken before the levies commence.

Clause 3 - Definitions

4.                   This clause contains the principal definitions of terms used in the Bill. The definitions of terms will be explained in the context of the provisions within which they appear.

Clause 4 - Extent of Act

5.                   This clause provides that the Bill will have extra-territorial operation.

Part 2 - Seafarers insurance levy

Clause 5 - Imposition of seafarers insurance levy

6.                   This clause imposes the seafarers insurance levy, assessed on the first day of a quarter, on seafarer berths on a prescribed vessel normally used by seafarers employed by a particular employer.

7.                   A quarter is defined in clause 3 as a period of three months beginning on 1 January, 1 April, 1 July or 1 October.

8.                   A prescribed vessel has the same meaning as in the Seafarers Bill, that is, a vessel registered or required to be registered under the Shipping Registration Act 1981 or a foreign vessel where the majority of the crew are Australian residents but excluding the types of vessels specified in paragraphs (d)-(j) of that definition. In addition, the legislative rules under the Seafarers Bill can declare a vessel to be, or alternatively not to be, a prescribed vessel.

9.                   A seafarer berth is defined in clause 3 to mean a berth on a prescribed vessel that is normally used by a seafarer to whose employment the Seafarers Actapplies. The levy only applies to seafarers employed by a particular employer. An employer has the same meaning as in the Levies Collection Bill, that is, a person who employs one or more seafarers on a prescribed vessel.

10.               The note to the clause draws readers’ attention to sections 25M and 25N of the Seafarers Act, which set out the effect of an exemption under the Seafarers Act. Exemptions under the Seafarers Act will also exempt the employer from paying the levies imposed by the Bill.

11.               Sections 107-109 of the Seafarers Act will govern the management and use of funds raised by the seafarers insurance levy.

Clause 6 - Amount of seafarers insurance levy

12.               This clause establishes the formula for determining the amount of levy payable for the insurance levy. This is the product of the number of seafarer berths and the insurance amount. The insurance amount is initially set at $15 and can be changed by regulations.

13.               A regulation to change the insurance amount can only be made after a recommendation from the designated actuary under clause 9 and the SRCC under clause 9A have been made. These recommendations will establish the maximum rate which can be prescribed by the regulations.

Clause 7 - By whom the seafarers insurance levy is payable

14.               This clause provides that the insurance levy is payable by the employer who employs seafarers who normally use the seafarer berths on a prescribed vessel subject to the levy. More than one employer may be liable to pay the levy relevant to a particular prescribed vessel.

Clause 8 - Designated actuary

15.               This clause provides that the SRCC may, by written determination, specify an actuary to be the designated actuary for the purposes of the Act. The designated actuary will recommend the maximum amount that can be prescribed by regulation under clause 6 as the actuarial component of the insurance levy.

16.               For the avoidance of doubt, subclause 8(2) clarifies that a written determination under subclause 8(1) is not a legislative instrument within the meaning of section 8 of the Legislation Act 2003 . This provision is declaratory of the law and does not amount to an exemption from the Legislation Act 2003 .

17.               Subclause 8(3) requires the SRCC to publish the determination specifying an actuary on the SRCC’s website.

Clause 9 - Recommendation about the actuarial component

18.               This clause provides that the designated actuary may recommend the amount of the actuarial component of the insurance amount that should be specified, setting out reasons for the recommendation. The designated actuary is required to have regard to the principle that the amounts received under the actuarial component of the seafarers insurance levy are sufficient to offset the costs of Comcare, as the default employer under the Seafarers Bill and the premiums payable for a policy of insurance to underwrite the safety net fund established under the Seafarers Act. The actuary must give the statement containing the recommendation together with reasons to the SRCC who must then give a copy to the Minister. The Minister must cause a copy of the statement to be published on the Department’s website.

19.               The recommendation made by the designated actuary establishes the maximum amount of the actuarial component of the seafarers insurance levy that can be prescribed under clause 6. The Governor-General, acting on the advice of the Minister, may prescribe a lower levy rate. Subclause 9(4) makes it clear that the designated actuary must disregard any government policy to establish a rate lower than full cost recovery. This avoids a possible conflict for the designated actuary, who must recommend an amount that should be sufficient to maintain the safety net fund, as set out in subclause 6(2).

Clause 10 - Recommendation about the administrative component

20.               This clause provides that the SRCC may recommend to the Minister the amount of the administrative component of the insurance amount that should be specified, setting out reasons for its recommendation. The SRCC is required to have regard to the principle that amounts received under the administrative component should be sufficient to offset the expenditure incurred by Comcare in administering the safety net fund as the default employer under the Seafarers Bill and administering the special account for the safety net fund. These administrative costs relate solely to the safety net fund management and are separate from the general administrative costs of the SRCC, Comcare and AMSA recoverable under the cost recovery levy.

21.               The recommendation made by the SRCC establishes the maximum amount of the administrative component of the seafarers insurance levy that can be prescribed under clause 6. The Governor-General, acting on the advice of the Minister, may prescribe a lower rate. Subclause 10(4) makes it clear that the SRCC must disregard any government policy to establish a rate lower than the amount sufficient to maintain the safety net fund. This avoids a possible conflict for the SRCC, which must recommend an amount that should be sufficient to cover the administration of the safety net fund.

Part 3 - Seafarers cost recovery levy

Clause 11 - Imposition of seafarers cost recovery levy

22.               This clause imposes the seafarers cost recovery levy, assessed on the first day of a quarter, on seafarer berths on a prescribed vessel normally used by seafarers employed by a particular employer. The terms used in imposing this levy are the same as the levy described in clause 5.

Clause 12 - Amount of seafarers cost recovery levy

23.               This clause establishes the formula for determining the amount of levy payable. The amount payable is the product of the number of seafarer berths and the cost recovery amount. The cost recovery amount is initially set at $0 and can be changed by regulations. For clarity, the term ‘amount’ is defined in clause 3 as including a zero figure.

24.               A cost recovery amount cannot be prescribed by the regulations until the SRCC has made a recommendation under section 14. The SRCC’s recommendation establishes the maximum amount which can be prescribed—a smaller or equal amount may be prescribed, but not an amount above that most recently recommended by the SRCC.  If a Seacare Advisory Group has been formed, the SRCC must consult the Group before making a recommendation (see subclause 14(6)). 

25.               The Government’s intention is to phase in the cost recovery levy over the course of four years. As the note to subclause 12(3) indicates, paragraph 12(3)(b) enables this to occur. The SRCC will recommend an amount that would provide for full cost recovery, in accordance with clause 14. The regulations will then prescribe amounts which are progressively larger proportions of the amount recommended, with the amount prescribed from the 4 th year onwards being the amount recommended for a full cost recovery levy.

Clause 13 - By whom the seafarers cost recovery levy is payable

26.               This clause provides that the cost recovery levy is payable by the employer who employs seafarers who normally use the seafarer berths on a prescribed vessel subject to the levy.

Clause 14 - Recommendation about the cost recovery amount

27.               This clause provides that the SRCC may recommend to the Minister the cost recovery amount that should be specified in the regulations, setting out reasons for its recommendation. The SRCC is required to have regard to the principle that amounts received under the cost recovery levy are sufficient to offset the expenditure incurred by the SRCC and Comcare in administering the Seafarers Act and by AMSA, Comcare and the SRCC in administering the maritime component under subsections 12(8A) of the Work Health and Safety Act 2011 . These costs do not include the administrative costs of managing the safety net fund under the Seafarers Act, costs covered by fees charged under the Seafarers Act (for example a fee for an application for an opt-in declaration, see clause 25B) or other

non-maritime related work health and safety costs.

28.               The recommendation made by the SRCC establishes the maximum amount of the cost recovery levy that can be prescribed under clause 11. The regulations may prescribe a lower rate. This will enable the government’s policy of phasing in the levy over four years to be implemented. Subclause 14(5) makes it clears that the SRCC must disregard any government policy to establish a rate lower than the amount sufficient for full cost recovery, as set out in subclause 14(2). This avoids a possible conflict for the SRCC, which must recommend an amount that should be sufficient for full cost recovery. If a Seacare Advisory Group has been formed the SRCC must consult the Group before making its recommendation.

29.               Because the substantive provisions commence after clause 14, subclause (7) sets out transitional provisions to allow clause 14 to be given effect.

Part 4—Miscellaneous

Clause 15 ­- Regulations

30.               This provision allows for the Governor-General to make regulations setting the amount for the insurance levy under clause 6 and for the cost recovery levy under clause 12.